Question

Suppose a firm has 69 million shares of common stock outstanding and eight candidates are up for election to six seats on the board of directors. a. If the firm uses cumulative voting to elect its board, what is the minimum number of votes needed to ensure election to the board? b. If the firm uses straight voting to elect its board, what is the minimum number of votes needed to ensure election to the board? (For all requirements, enter your answers in dollars, not millions of dollars.) Minimum number of votes b. Minimum number of votes

Answer 1

a). % of stock needed = 1 / (N + 1); N = Number of seats up for election

= 1 / (6 + 1) = 1 / 7 = 0.1429, or 14.29%

Number of Votes = [No. of shares outstanding * % of stock needed] + 1

= [69,000,000 * 0.1429] + 1 = 9,857,142.86 + 1 = 9,857,143.86, or 9,857,144

b). Number of Votes = [No. of shares outstanding / 2] + 1

= [69,000,000 / 2] + 1 = 34,500,000 + 1 = 34,500,001