Question

4. Midland Petroleum is holding a stockholders’ meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 11 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 45,001 shares. Ms. Ramsey and her friends on the board control 65,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 25,998 shares. The company uses cumulative voting.

a. How many directors can Mr. Clark be sure of electing? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

	Number of directors

b.How many directors can Ms. Ramsey and her friends be sure of electing? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

	Number of directors

c. How many directors could Mr. Clark elect if he obtains all the proxies for the uncommitted votes? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

	Number of directors

d.If nine directors were to be elected, and Ms. Ramsey and her friends had 68,001 shares and Mr. Clark had 45,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

	Number of directors

Answer 1

a.	Number of directors that can be elected=[(Shares owned-1)*(Total number of directors to be elected+1)]/Total number of shares outstanding
	Shares owned=45001
	Total number of directors to be elected=11
	Total number of shares outstanding=45001+65001+25998=136000
	Number of directors that can be elected=[(45001-1)*(11+1)]/136000=540000/136000=3.97 or 3 directors
b.	Number of directors that can be elected=[(Shares owned-1)*(Total number of directors to be elected+1)]/Total number of shares outstanding
	Shares owned=65001
	Total number of directors to be elected=11
	Total number of shares outstanding=45001+65001+25998=136000
	Number of directors that can be elected=[(65001-1)*(11+1)]/136000=780000/136000=5.74 or 5 directors
c.	Number of directors that can be elected=[(Shares owned-1)*(Total number of directors to be elected+1)]/Total number of shares outstanding
	Shares owned=45001+25998=70999
	Total number of directors to be elected=11
	Total number of shares outstanding=45001+65001+25998=136000
	Number of directors that can be elected=[(70999-1)*(11+1)]/136000=851976/136000=6.26 or 6 directors
d.	Number of directors that can be elected=[(Shares owned-1)*(Total number of directors to be elected+1)]/Total number of shares outstanding
	Shares owned=45001+(25998*1/2)=58000
	Total number of directors to be elected=9
	Total number of shares outstanding=45001+68001+25998=139000
	Number of directors that can be elected=[(58000-1)*(9+1)]/139000=579990/139000=4.17 or 4 directors