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[arve url=”http://youtu.be/i_BGpYh3_oY” title=”Stagger Voting for Board of Directors” description=”This video explains what it means to stagger Voting for director seats on the Board of Directors.” /]
Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP
Staggering the Board Election
Lastly, the default rule calls for the election of each director, each year. This situation can be an administrative burden, as holding an election generally requires extensive notice with regard to eachopen positionand arrangement of a meetingto elect the directors. In order to maintain some level of continuity year after year and avoid some of the administrative burden, corporations will often stagger their voting over a two or three year period. This means that either 1/2 or 1/3 of the directors will come up for election on any given year. In practical terms this limits the ability of a majority shareholder to completely change the board out in any given year. Since the election of directors takes place over multiple years, it will at least take two years to completely change the board of directors.