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)poison pill.
B)golden parachute.
C)white knight.
D)classified board.

Question

Quizplus · Accepted Answer

The situation described is a classified board, where the directors are divided into classes and serve staggered terms. This structure is often used as a defense mechanism against hostile takeovers, as it makes it more difficult for an acquiring company to gain control of the board all at once. Poison pills and golden parachutes are also defense mechanisms, but they function differently. A poison pill is a tactic that makes a company less attractive to potential acquirers by creating a financial deterrent, while a golden parachute is a compensation package for top executives that kicks in if the company is acquired or they lose their job. A white knight is a third-party who comes in to save a company from a hostile takeover.

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