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 ?
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.
Staggered boards 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.