A situation where every director serves a three-year term and the terms are staggered so that only one-third of the directors are up for election each year is called a:
A)white knight.
B)classified board.
C)poison pill.
D)golden parachute.
E)recapitalization.

Question

Quizplus · Accepted Answer

This is called a classified board because the directors are classified into three groups based on their term expiration and elections are held for only one group each year. It is a common practice in corporate governance to ensure continuity and stability of the board. A white knight is a potential acquirer who is welcomed by the target company, a poison pill is a defensive mechanism against hostile takeovers, a golden parachute is a compensation package for executives in case of a change in control, and recapitalization is a restructuring of a company's financial structure.

A Situation Where Every Director Serves a Three-Year Term and the Terms