Question

The shareholders of the Stackhouse Company need to elect nine new directors. There are 910,000 shares outstanding currently trading at $51 per share. You would like to serve on the board of directors; unfortunately no one else will be voting for you. How much will it cost you to be certain that you can be elected if the company uses straight voting? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Total cost How much will it cost you if the company uses cumulative voting? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Total cost $

Answer 1

1). Total Cost = Share Price * [(No. of shares outstanding / 2) + 1]

= $51 * [(910,000 / 2) + 1]

= $51 * $455,001 = $23,205,051

2). Total Cost = Share Price * [{No. of shares outstanding / (N + 1)} + 1]; N = No. of seats open for election

= $51 * [{910,000 / (9 + 1)} + 1]

= $51 * $91,001 = $4,641,051