Answer: Characteristic 2

## Explanation **Characteristic 2** best reflects effective corporate governance because: - **Majority of independent members on key board committees** (such as audit, compensation, and nominating committees) is a fundamental principle of good governance - Independent committees provide objective oversight of management and protect shareholder interests - This structure helps prevent conflicts of interest and ensures proper checks and balances **Why the other characteristics are NOT effective:** - **Characteristic 1**: Having more executive directors than independent directors weakens board independence and oversight capabilities. Effective governance requires a majority of independent directors. - **Characteristic 3**: CEO duality (CEO also serving as board chair) concentrates too much power in one individual and reduces board independence. Best practice calls for separating these roles to maintain proper oversight. **Key Governance Principles:** - Board independence is crucial for effective oversight - Independent committees ensure objective decision-making - Separation of CEO and chair roles maintains checks and balances - Majority independent directors on key committees is a recognized best practice in corporate governance Therefore, Characteristic 2 represents the most effective governance practice among the three options.

Author: LeetQuiz .