The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Wed, 27 May 2026 15:57:01 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Activism and the Move toward Annual Director Elections – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Activism and the Move toward Annual Director Elections https://corpgov.law.harvard.edu/2012/01/15/activism-and-the-move-toward-annual-director-elections/?utm_source=rss&utm_medium=rss&utm_campaign=activism-and-the-move-toward-annual-director-elections https://corpgov.law.harvard.edu/2012/01/15/activism-and-the-move-toward-annual-director-elections/#comments Sun, 15 Jan 2012 16:17:10 +0000 http://blogs.law.harvard.edu/corpgov/?p=24903?d=20150105141253EST Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday, January 15, 2012
Editor's Note:

The following post comes to us from Tom Nohel, Associate Professor of Finance at Loyola University, and is based on a Conference Board Director Note by Mr. Nohel, Re-Jin Guo of the University of Illinois at Chicago, and Timothy Kruse of Xavier University. Work from the Program on Corporate Governance on staggered boards includes The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence & Policy by Bebchuk, Coates and Subramanian, and Staggered Boards and the Wealth of Shareholders: Evidence from Two Natural Experiments by Bebchuk, Cohen and Wang.

Staggered boards, a structure under which the board is divided into classes, with one class of directors standing for re-election annually, are perhaps the most consequential takeover defense. They also are a favorite target of activist shareholders and governance experts. The effect of collective pressure to move to annual elections for all directors has been dramatic: the proportion of public companies with staggered boards has fallen from 60 percent in 2002 to less than half in 2011 (and less than one-third among S&P 500 companies). Non-binding shareholder proposals have been an important catalyst in the move away from staggered boards. [1] More recently, activist hedge funds have emerged as an alternate and better-financed vehicle to channel shareholder displeasure. This report documents the extent to which activism of any type continues to push corporations to implement annual director elections and compares the influence different forms of activism have had on this governance practice.

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