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Staggered Board of Directors
From Wikipedia, the free encyclopedia
A staggered board of directors occurs when a corporation elects its directors a few at a time, with different groups of directors having overlapping multi-year terms, instead of en masse, with all directors having one-year terms. This strategy is usually implemented to thwart hostile takeover attempts. When a board is staggered, hostile bidders must win more than one proxy fight at successive shareholder meetings in order to exercise control of the target firm.
Institutional shareholders are increasingly calling for an end to staggered boards of directors. Although staggered boards can provide leadership security and continuity -- similar staggering of terms are used for that reason in the election of U.S. Senators, members of the Securities and Exchange Commission, and other public bodies -- they limit shareholder control over directors.
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