by Erik Krusch for Reuters, March 23rd, 2011.
Classified boards may be moving towards the endangered species list, as investors and even management are hunting them down.
Valero and Biogen Idec’s management teams, for example, are recommending that shareholders approve amendments declassifying their respective boards. Other corporations, such as Alcoa and McDonald’s Corp, however, are fighting their shareholders’ attempts to level their staggered boards. It remains to be seen how many staggered boards emerge from this proxy season unscathed.
Despite the success of classified boards in fending off many hostile acquirers, they can sometimes entrench management and disenfranchise shareholders. Given these possibilities, it should come as no surprise that staggered boards are on many shareholders’ hit list.
The overwhelming trend in corporate governance is towards the declassification of boards and this year is no exception, with several shareholder proposals calling for declassification making their way onto 2011 proxies. Other companies are seeing the proverbial writing on the wall and declassifying their boards. Despite these clear trends, some companies are attempting to quash shareholder declassification proposals and at least one company is asking its shareholders to sign off on a staggered board. (continue reading… )