In Part one we looked at conflicts between individual directors and the company. In Part two, we will look at Tier-II conflicts, or those between directors and stakeholders.
Tier-II conflicts arise when a board member’s duty of loyalty to stakeholders or the company is compromised. This can happen when certain board members exercise influence over the others through compensation, favors, a relationship, or psychological manipulation.
To whom do board members owe their loyalty? This depends very much on law and tradition, and the prevailing legal system, social norms or the company’s specific situation.
The complex institutional loyalty of board directors – in the US, directors often have a duty of loyalty toward the…