HSB 42 would amend the Iowa Business Corporation Act to mandate that publicly-held Iowa corporations have staggered terms for board of directors and only permit directors of such boards to be removed for cause. Casey's, Inc. is advocating passage of the bill in order to add another roadblock to a hostile takeover bid like the one it avoided last year. In a memo to the president of the Iowa Bar Association the ISBA Business Law Council opposes the bill because it is contrary to one of the principles of corporate law that shareholders should have a say in all fundamental corporate governance issues. Because the Casey's shareholders won't approve staggered terms for the board of directors, management is asking the Legislature to do for them what the shareholders won't do. Another reason the Business Law Council opposes the legislation is due to the belief, supported by research, that staggered terms suppress stock values. You can read the Council's memo here.
- Marc Ward