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CFA Level I · CFA Level I Exam · Equity Jurisdictions, Classes, and the Voting Process

A company with a staggered board has 12 directors, and one-third are elected each year. Under majority statutory voting, compared with a board where all directors face election annually, the staggered structure is most likely to:

A staggered board most likely slows an acquirer or dissident group from replacing the board, since only one-third of seats are contested each year and a majority takes two election cycles. It therefore works as a takeover defense and weakens shareholder control.

  1. Amake a hostile acquirer's control of the board faster to achieve
  2. Bincrease the number of votes each share carries per seat
  3. Cslow the ability of an acquirer or dissident group to replace the boardCorrect

Explanation

With only four seats up annually, a dissident needs two election cycles to win a majority of the board. This acts as an anti-takeover mechanism and reduces shareholder influence. Staggering does not change votes per share.

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