Question

Which one of the following statements is TRUE? a. If a company has a classified board, fewer board seats are filled each year. b. A classified board is one in which an announcement requesting applications for board members appears in the newspaper. c. One tool of corporate governance is choosing a good investment banker. d. A classified board is one in which the board members serve anonymously. e. In a classified board, it is easier for dissidents to gain representation since fewer seats are up for election each year.

Answer 1

The true statement about a classified board is:

a. If a company has a classified board, fewer board seats are filled each year.

Step-by-step explanation:

If Company A has a classified board of directors, it implies that it has a structure that enthrones continuity and stability, enables some portion of the directors to be elected each year, and ensures that different directors have different terms to serve the company. Depending on their classifications, some directors serve one or two years, some three or four years, some five or six years, and others servicing seven or eight years. This type of structured board staggers the board membership, helping to save the company from unintended takeover bids, and ensuring stability and continuity.