This section is from the book "Business Finance", by William Henry Lough. Also available from Amazon: Business Finance, A Practical Study of Financial Management in Private Business Concerns.
At the other extreme is the small corporation which makes all its officers directors and allows its directors to make themselves officers. It is, of course, quite proper and customary that some of the leading officials should be included in the directorate, but a directorate that is made up wholly of officers is obviously a body in which there is great danger of "log rolling." An officer who is also a director cannot easily afford to oppose fellow officers and directors who have complete power over him. If there are no outside directors who are not involved in the internal affairs of the corporation to whom he may appeal, an honest, zealous officer is peculiarly in a position of disadvantage. The custom of having all or nearly-all of the directors chosen from the officers of the corporation may work well for temporary periods just as any other unsound arrangement may work for a time. It is, however, fundamentally incorrect and has many times proved a fruitful source of friction and inefficiency.