MFIN1127 Study Guide - Final Guide: Capital Asset Pricing Model, Risk Premium, Shareholder Rights Plan
Document Summary
Staggered boards or classified boards are boards in which the different directors" terms expire during different years. As the figure highlights, there has been a big decrease in the number of. S&p500 firms with staggered boards since 2005: explain how staggered boards can be a powerful anti-takeover mechanism (4 points, 4 sentences max. ) classified boards or staggered boards are boards in which directors serve staggered, multiyear terms. It is a powerful anti-takeover mechanism because it limits the ability for outsiders to replace the entire board quickly. If every board director had a one-year term, it would make the replacement of the board (with pro-bidder people) much easier. Possible answers: scorched-earth strategy (increase debt massively, sell crown jewels, etc. ) These are actions that make the acquisition much less attractive. classified boards used to be the norm in the u. s. But in recent years many companies, often under pressure from shareholders, have shifted to holding annual election for every board seat.
