Conflict of interest is usually understood by all involved

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One major conflict of interest for a board member is when the CEO of the company is on the board, in anyway, but especially as the chair of the board. This is a problem for the company and shareholders because the board determines the salary of the CEO. The board is also in place to make decisions that would be in the best interest of the company and the shareholders, not just for the CEO, who is more likely to be looking for a way to build the company in order to increase their own salary. This could be avoided by no allowing the CEO to sit on the board at all.

Another way that a board could act unethically is to buy up major shares in the company to keep a buyout from happening. Often the buyout is necessary for growth, but the board will act in a way to keep their jobs, salaries and benefits. It seems like this could be unavoidable, but shareholders should determine the amount of shares needed to accomplish a buy out.

A conflict of interest is usually understood by all involved and can be found in rules or regulations set by a company, for example, it is a conflict of interest in the U.S. Government or Military to have a spouse in command of their spouse. Morale reasoning is individually based and can change depending on who has to evaluate the situation.

Reference no: EM132137724

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