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A recent report by GovernanceMetrics International
Research Associate Beth Young on the Airgas poison pill decision expounds upon
a point we made in our Director Notes report, Poison Pills in 2011, in that the small and
mid-cap companies are relying on classified boards and poison pills much more
than their larger brethren.
In the GMI report, Lessons from the Airgas Battle [Registration
required], Young points out how 53 percent of S&P MidCap 400 index
companies have a classified board and how 62 percent of S&P SmallCap 600
firms also have a classified board. She also states that about 20 percent of
these companies have adopted a poison pill.
"Most dramatic is the difference in classified board
incidence between new IPO companies and their already-public counterparts,"
Young wrote. "In a 2009 study of the top 50 IPOs (by size) in 2007 and 2008, law
firm Davis Polk & Wardwell found that 74% had a classified board. So
while the largest U.S. companies are embracing more shareholder-friendly
governance arrangements, smaller companies are not on the same track, and new
IPO companies are headed in the opposite direction."
Read the rest of this article on the Corporate Governance
Blog, a blog by Gary Larkin
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