staggered terms

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Staggered Terms

An arrangement whereby only a certain number of members of a board of directors are elected in a given year. For example, a board of directors may have 10 members serving five year, staggered terms where two new members are elected each year. In addition to giving the board consistency in its membership, staggered terms makes hostile takeovers more difficult because the potential acquirer can replace only so many directors at a time.

staggered terms

Membership terms for a firm's directors that expire in different years. A firm with 12 directors might have 4-year terms with 3 seats up for election each year. Staggered terms make it more difficult for a raider to gain control of a board.
References in periodicals archive ?
against a per se ban of a staggered board. Instead, our findings point
to the staggered board being idiosyncratic and endogenous, good for
support state intervention either to ban or require the staggered board.
Because Bebchuk and Cohen (2005) focus on a staggered board as a key antitakeover provision, we refer to the staggered board indicator as an index as well.
We assign announcing firms with a below-median G/BCF/ATI index or firms without a staggered board to the good-governance portfolio and announcing firms with an above-median G/BCF/ATI index or firms with a staggered board to the weak-governance portfolio.
Glass Lewis also endorsed many of the ideas to unlock shareholder value at Argo that Voce has presented." In reaching its conclusion that shareholders should back Voce's case for change at Argo, Glass Lewis determined:"We believe Voce has underscored several inferior corporate governance practices at Argo, including maintaining a staggered board, no plurality carveout voting standard for contested elections and allowing share pledging by executives and directors.
(33) Some merely make an unwelcome takeover more difficult (e.g., barring shareholders from acting by written consent), while others, when used in combination, can make a takeover virtually impossible (e.g., a poison pill plus a staggered board).
Two of the most famous provisions adopted by boards of directors were (1) the poison pill; and (2) the staggered board. A poison pill can be adopted or removed at any time by a company's board of directors.
The concept of the staggered board was implemented as an anti-takeover measure, Mr.
"The staggered board was put in place so somebody might be able to come in and buy a company in the public market, but it would take them some time to be able to replace the directors because there would usually be just one-third of the board reelected each year, but [staggering] is now rightly going away," he says.
"The types of structural protections that you have in the US, like poison pills or staggered boards, are either much less common or just not permissible in Europe."