Staggered Board
A board structure where directors serve staggered multi-year terms, requiring several years to replace the full board.
What is Staggered Board?
A staggered board (also called a classified board) divides a company's board of directors into classes — typically two or three — with only one class standing for shareholder election at each annual meeting. Directors in each class serve multi-year terms (usually three years), meaning that replacing the entire board requires winning two or three consecutive annual elections. Staggered boards are a significant anti-takeover defense because a hostile acquirer cannot gain majority board control in a single shareholder vote. Proxy advisors such as ISS and Glass Lewis generally recommend voting against directors at companies maintaining staggered boards, citing reduced accountability to shareholders.
Example
Delaware General Corporation Law Section 141(d) explicitly permits classified board structures. Many technology companies adopt staggered boards at their IPO — often alongside dual-class share structures — to protect founders from early activist pressure. Following sustained institutional investor opposition, many S&P 500 companies have declassified their boards since the early 2000s, with the proportion holding staggered boards declining sharply.