Interlocking Directorates

A common business practice where a member of a company's board of directors also serves on another company's board or within another company's management. Under antitrust legislation, interlocking directorates are not illegal as long as the corporations involved do not compete with each other.

Interlocking directorates were outlawed in specific instances where it gave a few board members control over an entire industry and allowed them to synchronize pricing changes, labor negotiations and so on. This does not prevent a board director from Company A from serving on the board of a Company B, which is a client of Company A.

Although there are still many opportunities for collusion through interlocking directorates, recent trends in corporate governance have shifted much more power to the CEO. Due to this shift, many CEOs have been able to appoint and dismiss board members as they please, as opposed to being influenced by them.


Investment dictionary. . 2012.

Look at other dictionaries:

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  • interlocking directorates — n. boards of directors having some members in common, so that the corporations concerned are more or less under the same control …   English World dictionary

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  • interlocking directorate — noun : a directorate linked with that of another corporation by interlocking directors so that the businesses managed by them are to some degree under one control * * * a corporate directorate that includes one or more members who serve… …   Useful english dictionary

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  • Directorate — An organization headed by a director. In finance, directorate is sometimes used in place of board of directors, which is the group of individuals that makes decisions for a corporation on behalf of its shareholders. In politics, directorates are… …   Investment dictionary

  • directorate — n. interlocking directorates * * * [d(a)ɪ rekt(ə)rɪt] interlocking directorates …   Combinatory dictionary

  • United States — a republic in the N Western Hemisphere comprising 48 conterminous states, the District of Columbia, and Alaska in North America, and Hawaii in the N Pacific. 267,954,767; conterminous United States, 3,022,387 sq. mi. (7,827,982 sq. km); with… …   Universalium

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