Almost nine in 10 companies chose classified boards at IPO, research shows

Some 88 percent of companies adopt classified boards immediately following their IPO, while 80 percent of those who remain publicly listed hold onto the governance structure, new research shows.

The statistic from Cooley’s Post-IPO Governance Trends 2025 report – which surveyed 225 US-based, post-IPO companies – underscores one of the clearest themes in the study: newly public companies continue to hold tight to protective governance structures long after going public.

Classified boards are not the only IPO-era protection that proves durable. Supermajority voting requirements remain widespread, the study found, with 91 percent of surveyed companies adopting them at IPO and 82 percent retaining them today.

These levels significantly exceed those of more mature public companies, where supermajority provisions have steadily declined. Only 7 percent of active IPO companies have removed such requirements, suggesting that unwinding protective measures is more evolutionary than immediate.

Multi-class share structures present another area where newly public companies diverge noticeably from broader public markets. Some 38 percent of active IPO companies maintain multi-class structures, compared to 8 percent in the Russell 3000. Although 12 percent have transitioned to single-class structures post-IPO, the data suggests that concentrated voting power remains a preferred feature for founders and early investors.

The report also shows that investors are uneasy with persistent protective structures: 40 percent of active IPO companies have received at least one director vote below 80 percent support and 25 percent have received at least one below 70 percent.

Say-on-pay support follows similar patterns, with significant pockets of low support emerging even in early years. Adding to the pressure, almost all active IPO companies have received at least one negative ISS recommendation for director nominees.

Board refreshment continues at a steady pace: median board size has grown from 8 and a half directors at IPO to nine today and companies have added an average 3.5 new directors since going public. Although 65 percent of IPO directors remain, the rate of change indicates that boards evolve quickly to meet public company expectations.

Moreover, 62 percent of companies now maintain formal overboarding policies and 64 percent have share ownership guidelines, with both more prevalent among older IPO cohorts. Hedging prohibitions are nearly universal while pledging prohibitions remain slightly less common.

Executive turnover is even more striking: 68 percent of active IPO companies have changed either their CEO or CFO and more than a third have changed their CEO. This level of leadership transition emphasizes the need for robust succession planning and board oversight during a company’s early public years.

Industry differences stand out in performance-based equity awards. Only one third of life sciences companies grant performance-based awards to CEOs, compared to roughly two thirds or more in other industries. Annual incentive structures display similar divergence, with only 13 percent of life sciences companies tying at least 75 percent of CEO cash incentives to preset goals.

Proxy disclosure continues to advance, though unevenly: 44 percent of companies include a director skills matrix in their proxy materials, rising to 84 percent among companies with market caps above $5 bn. ESG disclosure is gaining traction as well, with 47 percent providing substantive ESG content and 64 percent disclosing ESG-related statistics. Newer IPO cohorts, however, are less likely to include shareholder engagement disclosure, which appears far more common among companies that have been public longer.