Definition - What does Classified Boards mean?
Classified boards is a type of organizational structure for a firm's board of directors. Classified boards stagger the term lengths served by different board members, often based on seniority.
Divestopedia explains Classified Boards
In a classified boards system, a board member's classification depends on their length of service. This type of system has proven to be an effective way to stave off acquisition attempts. With this system, board members serve overlapping terms and all of the members cannot be replaced at the same time. Therefore, if the firm was to experience a hostile takeover, the takeover firm would be unable to replace all board members immediately.
When Selling Your Business, What Sale Process Is Best?
Join thousands of others with our weekly newsletter