Question

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 12 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 50,001 shares. Ms. Ramsey and her friends on the board control 68,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 24,998 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-1.	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

c-2.	Will he control the board?
	Yes No

d.	If nine directors were to be elected, and Ms. Ramsey and her friends had 72,001 shares and Mr. Clark had 50,001 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

Total no. of shares outstanding = Shares owned by Mr. Clark + Shares owned by Mr. Ramsey + Remaining Shares

= 50,001 + 68,001 + 24,998 = 143,000

a). No of directors that can be elected = [(Shares Owned - 1) * (Total No. of directors to be elected + 1)] / Total No. of shares outstanding

= [(50,001 - 1) * (12 + 1)] / 143,000

= [50,000 * 13] / 143,000 = 650,000 / 143,000 = 4.55

So, No. of directors that can be elected = 4 directors

b). No of directors that can be elected = [(Shares Owned - 1) * (Total No. of directors to be elected + 1)] / Total No. of shares outstanding

= [(68,001 - 1) * (12 + 1)] / 143,000

= [68,000 * 13] / 143,000 = 884,000 / 143,000 = 6.18

So, No. of directors that can be elected = 6 directors

c-1). No of directors that can be elected = [(Shares Owned - 1) * (Total No. of directors to be elected + 1)] / Total No. of shares outstanding

= [{50,001 + 24,998) - 1} * (12 + 1)] / 143,000

= [74,998 * 13] / 143,000 = 974,974 / 143,000 = 6.82

So, No. of directors that can be elected = 6 directors

c-2). Yes, Mr. Clark can control the board; he can control 6 directors.

d). No of directors that can be elected = [(Shares Owned + Remaining Votes/2) - 1} * (Total No. of directors to be elected + 1)] / Total No. of shares outstanding

= [{(50,001 + (24,998/2)) - 1} * (9 + 1)] / 143,000

= [62,499 * 10] / 143,000 = 624,990 / 143,000 = 4.37

So, No. of directors that can be elected = 4 directors