A Classified Board of Directors is a structure where the board is divided into multiple classes with staggered terms, typically making it harder for shareholders to replace the entire board at once, as only a portion of directors is up for election in any given year.
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Last Updated: January 22, 2026
A classified board has multiple classes of board members (typically three). Each class has a different term length, generally ranging from one to five years. Thus, a classified board of directors is defined as a board with different classes of directors.
The classified board of directors meaning includes having directors with overlapping terms that vary in length so that not all of the directors terms end at the same time. Thus, elections for board members are spaced out or staggered.
Because a classified board of directors business definition is about staggering board member elections, it can help to prevent rapid changes in the company. A classified board of directors is one of the best defenses against a hostile takeover. A hostile takeover is where a company tries to take over another company against the wishes of the target company’s management. Since the directors in a classified board aren’t up for election at the same time, it would take longer for the hostile company to replace them.
One of the classified board of directors advantages is that it’s a defense against a hostile takeover. A hostile company cannot quickly replace a board when the directors have varying term lengths expiring at different times. Plus, since a board of directors is responsible for hiring and firing senior managers, a hostile company can’t quickly replace senior management either.
Another one of the classified board of directors benefits is consistency in leadership. Staggering board members’ terms allow for overlapping terms; thus, the senior board members can help onboard new board members.
One of the disadvantages of the classified board of directors is that a company could be stuck with directors its owners don’t like. Having a classified board of directors means shareholders can’t change it as easily if they don’t like what the board is doing. Additionally, many believe that a classified board of directors can breed complacency. Because the board members serve for a fixed period, they don’t necessarily have to meet the demands of the shareholders.
A classified board of directors definition is a board with staggered term lengths. This definition lends itself to the other name a classified board is known by: a staggered board of directors.
Here’s an example of a classified board of directors. Suppose that a company has a board with twelve directors, and it’s divided into thirds with three different classes. Class A directors serve for one year, Class B directors serve for three, and Class C directors serve for five. If a hostile company acquired a majority of shares in the company, it wouldn’t be able to replace the entire board of directors for several years.
A classified board of directors is a board with members who serve terms of varying, staggered lengths of time. A classified board of directors can help protect a company against a hostile takeover by another company.
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
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