Classified Board


DEFINITION of 'Classified Board'

A structure for a board of directors in which a portion of the directors serve for different term lengths, depending on their particular classification. Under a classified system, directors serve terms usually lasting between one and eight years; longer terms are often awarded to more senior board positions (i.e. chairman of the corporate governance committee).

Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered.

BREAKING DOWN 'Classified Board'

The classified board structure features continuity of direction and preservation of skill, but has come under harsh criticism from shareholder advocacy groups for a number of reasons. Opponents to the classified structure argue that the system breeds board member complacency and forces directors to develop close relations with management.

Classified boards also serve as a powerful anti-takeover measure.

  1. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  2. Outside Director

    Any member of a company's board of directors who is not an employee ...
  3. Stagger System

    A method of electing a company's board of directors that puts ...
  4. Anti-Takeover Measure

    Measures taken on a continual or sporadic basis by a firm's management ...
  5. Inside Director

    A board member who is an employee, officer or stakeholder in ...
  6. Corporate Governance

    The system of rules, practices and processes by which a company ...
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  1. What is a staggered board?

    A staggered board of directors (also known as a classified board) is a board that is made up of different classes of directors. ... Read Full Answer >>
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    Before a business can assess or mitigate business risk, it must first identify probable or likely risks to its bottom line. ... Read Full Answer >>
  3. Why has emphasis on corporate governance grown in the 21st century?

    Corporate governance refers to operational practices, management protocols, and other governing rules or principles by which ... Read Full Answer >>
  4. What impact did the Sarbanes-Oxley Act have on corporate governance in the United ...

    After a prolonged period of corporate scandals involving large public companies from 2000 to 2002, the Sarbanes-Oxley Act ... Read Full Answer >>
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