ECO100

Correct. Generally, board members are classified into one of three groups. Insiders are active top- level managers in the company who are elected to the board because they are a source of information about the firm’s day- to-day operations.  Related outsiders have some relationship with the firm that may create questions about their independence. However, these individuals are not involved with the corporation’s day- to- day activities. Outsiders provide independent counsel to the firm and may hold top- level managerial positions in other companies or may have been elected to the board prior to the beginning of the current CEO’s tenure.