Staggering the Board

Cite this article as:"Staggering the Board," in The Business Professor, updated October 17, 2014, last accessed May 26, 2020, https://thebusinessprofessor.com/lesson/staggering-board/.
Video Thumbnail
Stagger Voting for Board of Directors
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 each open position and arrangement of a meeting to 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.

Was this article helpful?