The ATI index focuses on only three key antitakeover provisions--the presence of staggered boards
, of a preferred blank check ("poison pill"), and of restrictions on shareholder voting to call special meetings or act through written consent.
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.
This would explain why staggered boards
and incorporation in states with more anti-takeover statutes can deter future activist interventions, while the poison pill, surprisingly, does not.
typically have only a portion of the directors up for election each year, with each member serving a multi-year term.
modest increase in expenses (42) For companies with staggered boards
37) Moreover, recent work by Cremers, Litov, and Sepe challenges the conclusion that staggered boards
have uniformly negative wealth effects.
to advise on strategy and to monitor performance and risk management"; and "Unless directors resist [campaigns regarding poison pills, staggered boards
, Chairman/CEO split, etc.
For this reason, shareholder activists view staggered boards
as a form of managerial entrenchment and have sought to eliminate such boards since the 1980s.
Many firms have already eliminated anti-takeover provisions in recent years, removing staggered boards
and supermajority requirements for mergers.
In the past, staggered boards
and plurality voting for directors were very common," Little says, "but that's changing.
135) Staggered boards
classify directors into several classes, whereby only one class of directors stands for election in each year.
For example, the theory that staggered boards
are a proven suboptimal governance practice has been a centerpiece of recent corporate legal scholarship.