Series 79 practice questioneasyAnti-Takeover Defenses
Which of the following best describes a staggered board as an anti-takeover defense?
- AA board with outside directors only
- BA board that must be fully re-elected each year
- CA board divided into classes with only a subset up for election in a given year✓ Correct answer
- DA board controlled by management after a takeover
Explanation
Why C — A board divided into classes with only a subset up for election in a given year
A staggered board is divided into classes, so only a portion is elected each year, making hostile takeovers more difficult. The trap is to equate staggered with annual full board elections.
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