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How do staggered elections work?
Staggered elections are elections where only some of the places in an elected body are up for election at the same time. For example, United States Senators have a six-year term, but they are not all elected at the same time. Rather, elections are held every two years for one-third of Senate seats.
How do you stagger a board term?
During each election term, only one class of positions are open to new members, thereby staggering the number of openings available within the board directorship at any one time. For example, a company with nine board members divided into three classes—Class 1, Class 2 and Class 3—will assign three members per class.
Are there staggered terms of office in the Senate?
Members of the House of Representatives serve two-year terms and are considered for reelection every even year. Senators however, serve six-year terms and elections to the Senate are staggered over even years so that only about 1/3 of the Senate is up for reelection during any election.
What is the minimum time of citizenship for members of the Senate?
nine years
The Constitution sets three qualifications for service in the U.S. Senate: age (at least thirty years of age); U.S. citizenship (at least nine years); and residency in the state a senator represents at time of election.
Why are staggered boards bad?
A staggered board is considered a poor governance choice because it prevents an activist investor from taking majority control of a board in a single election and instead requires two years for a proxy contest to be successful. For this reason, proxy advisory firms oppose classified boards.
What is the advantage of a staggered board?
An advantage of a staggered board is that it can increase the difficulty of dissident group of shareholders taking control of the board by proxy contest; a dissident group cannot replace an entire staggered board in a single proxy contest.
What is staggered terms?
An arrangement whereby only a certain number of members of a board of directors are elected in a given year. For example, a board of directors may have 10 members serving five year, staggered terms where two new members are elected each year.
What is a staggered board of directors example?
For example, Company A is using a staggered board of directors to govern the company. The board consists of 12 directors who each serves a 3-year term. 4 directors are placed into each class, resulting in Class 1, Class 2, and Class 3. In addition, elections are held every year.
What is the staggered term structure for members-at-large?
The initial varied terms will create a staggered term structure; thereafter the chair and two (2) members-at-large shall be elected in the even-numbered years to serve a term of two (2) years or until their successors are elected.
Why is staggered board an important takeover defense?
A staggered board is a very important takeover defense. Let us determine the implications for a potential hostile takeover of both Company A and Company B. Company C thinks that it can run Company A more efficiently, and thus attempts a takeover. To gain control of Company A, Company C will need a board majority.