To have a staggered board, or not to have a staggered board? That’s the corporate governance question sparked by this week’s progress report from the Harvard Law School Shareholder Rights Project (SRP), and an ensuing sharp rejoinder penned by AmLaw 100 firm Wachtell, Lipton, Rosen & Katz.
Harvard’s SRP, a clinical program at the law school, has been assisting public pension funds to get rid of—or declassify—staggered boards of directors. When a company has a staggered board, only a minority of directors face election in a given year, so it takes longer to replace a majority of board members. The SRP cites empirical research—including studies authored by the clinic’s director, Prof. Lucian Bebchuk—that show an association between staggered boards and “lower firm valuation and/or worse corporate decision-making.” [PDF]
