company's operations, and $(2)$ affect the relationships between a business's stakeholders. These stakeholders include the company's executives and managers, shareholders, creditors, current and former employees, competitors, and local and global communities.

In simple terms, corporate governance provisions can take two forms: and $,$ with the former generally taking the form of designed to reward management for benefitting the firm's stakeholders, and the latter resulting in their for making damaging decisions or undertaking unacceptable activities.

These governing forces are both internal and external to the organization, and they can either align management's interests with those of their shareholders $($a positive outcome$)$ or further entrench the firm's management $($a not$-$so$-$positive outcome$).$ An entrenched management is one that is likely to be removed, all other things remaining equal.

Internal and external corporate governance provisions and activities can take many forms, including a classified board. Which of the following best describes this practice?

This practice encourages the classification of board members as insiders or outsiders, depending upon their role or relationship with the company.

This practice requires that only a fraction of a firm's board of directors will be elected in each election.

This practice requires that $100\%$ of the members of a firm's board of directors be elected in each election.

If you were designing the composition and acceptable practices for the board of directors of a new corporation, which of the following practices would you suggest be implemented?