SIE (Securities Industry Essentials) Practice Exam

Boards of Directors in the publicly-traded sphere are elected by which method?

1. Any of the above possible voting procedures

2. By a committee

3. Direct appointment by the CEO

4. Random selection

The correct answer is: Any of the above possible voting procedures

Boards of Directors in the publicly-traded sphere are typically elected by various voting procedures, such as cumulative voting, proxy voting, or majority voting. These processes allow shareholders to have a say in the election of board members and ensure a level of accountability within the company. Therefore, any of the above voting procedures is the most accurate and comprehensive answer. The other options are incorrect because they do not reflect the common practice of electing board members through democratic voting methods. B By a committee may refer to an internal committee within the board, but it does not necessarily involve shareholder input. C: Direct appointment by the CEO may lead to conflicts of interest and lack of diversity on the board. D: Random selection would not provide the necessary qualifications and expertise needed for effective board decision-making.