CFA Question Bank (Corporate Finance)- interlocking directorship

CFA Level II Corporate Finance
#1

Could somebody please comment:

What i understand about interlocking directorship is that where an executive manager of company A is a Board Member of company B, and executive manager of company B is a Board Member of company A- Is this correct?

In the CFA Q-bank (Corporate finance- 1st Problem)- while Kocher is the CEO and board member (of another company), but Herman is only a board member of both the companies…Herman is NOT an executive manager of either of the two companies, so how is it an interlocking directorship?

#2

Anybody? S2000?

thanks

#3

If you post the page number and question # from CFAI EOC we could probably help.

#4

Actuallys it’s in the online CFA Question bank (Corporate finance- 1st Problem)

#5

http://en.wikipedia.org/wiki/Interlocking_directorate

#6

Thanks for the link S2000. So, here is the CFA question (offcourse cannot copy & paste the question). would appreciate your thoughts:

Person A joined company C1 as an independed board member. At the same time, Person A is also an independent board member for company C2. Person A has now been hired to become CEO of company C1.

Now Person B who is another independent board member of C2 has been proposed to join company C1 as an independent board member.

By the virtue of above situation, does Person B becomes a non-independent board member?

#7

He doesn’t sound very independent to me; he’s a buddy of C1’s CEO.

#8

I’ll second that!