Stagger System

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DEFINITION

A method of electing a company's board of directors that puts up only part of the board for re-election in any one year. This method contrasts the system in which all board members go up for re-election annually.

INVESTOPEDIA EXPLAINS

Supporters of shareholder rights argue that the stagger system prevents continuity in the boardroom and poses an obstacle in the communication between shareholders and directors. If a director or a group of directors is negatively impacting shareholder value, the stagger system can prolong the damage since shareholders may not be able simply to vote out the undesirable board members at the next annual general meeting.


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