CF: What exactly are "inter-locking directorships?"

[CFA.Rhythm]

Anybody know of the top of their head what “inter-locking directorships are?”
CFAI, reading 31, p. 229, #9
“Lack of inter-locking directorships does not indicate lack of independence” – but what exactly is an interlocking directorship?

 

[cpk123]

director in co. a is also a director in co. b?

 

[swaptiongamma]

Means the board members are serving multiple boards at the same time which raises a question on their independence.

 

[CFA.Rhythm]

thanks for quick and awesome responses.

 

[BlueCollarHero]

There are different levels of board interlock. One form of board interlock is when firms share directors. Though the most egregious form of board interlock is this:
CEO/Chairman of Firm A serves on Board of Firm B
CEO/Chairman of Firm B serves on Board of Firm A
SWG, just because a person serves different boards doesn’t make it an interlocked board. Your point is more focused on how much time can that board member really give to any individual companies if he/she serves on like 3-4. I think it states board members should not be allowed to serve on more than 2 boards as a good corporate governance.