That person, shareholder activist John Chevedden, faced legal action from KBR last year on proof-of-ownership issues. He's still appealing a U.S. District Court decision made against him last year.
Classified boards are unfriendly to shareholders because they divide directors into different "classes" for election on a staggered basis. These classes have different term lengths. Simply put, shareholders lack the ability to replace an entire board in any given year under a classified board policy. Another potential problem is long-serving directors becoming complacent or too cozy with management.
Last year eBay
This year more companies are responding to shareholders' desire for declassified boards. For example, Western Union
All told, 42 large-cap companies are making such moves, according to Harvard Law School's Shareholder Rights Project, which has been championing the cause. Other major companies that have bowed to shareholder calls for the practice include blue-chip behemoths like McDonald's
Obviously the trend is positive for corporate governance-minded activists like Chevedden, although some victories are hard-won, given the litigious battle scars suffered to get there. Shareholders everywhere should be grateful to see the declassification movement gaining ground -- and grateful to those who have taken some knocks to help move the cause forward.
Alyce Lomax does not own shares of any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of eBay, McDonald's, and Western Union, as well as writing puts on eBay and writing a covered straddle position in Western Union. The Motley Fool has a disclosure policy.
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