February 15, 2007
Professor Subramanian on Staggered Boards
Professor Subramanian notes in a recent editorial to the Wall Street Journal that staggered boards are slowly being eliminated under pressure by shareholder advocacy groups. He recommends that staggered boards be moved to the bylaws from the articles of incorporation as a "best of both worlds" solution. The board can be staggered to minimize elections but shareholders can amend the bylaws to eliminate and replace a staggered board in a single year in takeover situations. Of interest to his claim, however, is the new popularity of two-tier voting stock in IPOs however. Google and now Fortress are two of many, many examples. One does not need a staggered board to defend against takeovers when the votes are concentrated in a Class B stock held solely by the founders.
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