Question

In: Finance

Candle box Inc. is going to elect nine board members next month. The firm has 1,000,000...

Candle box Inc. is going to elect nine board members next month. The firm has 1,000,000 shares outstanding. Lucy Liu owns 12.5 percent of the total shares outstanding.

a) How confident can she be of having one of her candidate friends elected under the cumulative voting rules? b) Will her friend be elected if the voting procedure is changed to the staggering rule, under which shareholder vote on 1/3 of total board members at a time?

c) If Candle Box Inc. adopted the straight voting rule and if Lucy wants to ensure that at least one of her candidate friends will be elected, how many additional shares she need to obtain?

Solutions

Expert Solution

Total Outstanding Share = 1000000

Lucy owns(12%) =120000

Ans a) Yes Lucy liu shold be confident enough as she is holding 12.5% out of total share as the procedure for selection of the Board member is based on the Cumulative share and on this pattern,

If shares= 100

She have =12.5 then it is divided in 8 parts so she have right to elect his Friend.

Ans b) Considering Staggered Rule,

  • Staggered board structure is the process of structuring the board of directors so that members fall into different classes with different terms.
  • In a staggered board, some committee members are designated longer terms compared to others.
  • Sometimes boards are staggered to assign different levels of responsibility to each class.
  • Elections are held when terms expire, with a one-year classification requiring voting each year.
  • Staggered boards may deter interventions or takeovers and protect existing management.

Shareholder right is 1/3 *12.5(Her Part) = 4.125% so there is less chance of her friend selection.

Ans c) If Candle Box Inc. adopted the straight voting rule and if Lucy wants to ensure that at least one of her candidate friends will be elected, Lucy wil Not Require Further share as she have 12.5% which give her right to select one Board Member.


Related Solutions

Beasley Inc. is going to elect Eight board members next month. Betty Brown owns 16.7 percent...
Beasley Inc. is going to elect Eight board members next month. Betty Brown owns 16.7 percent of the total shares outstanding. What percentage of stock is needed to have one of her friends elected under the cumulative voting rule? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)      Percent of stock needed   % _________    What percentage of stock is needed to have one of her friends elected under...
Highway 65, Inc., is going to elect six board members next month. Betty Brown owns 16.8...
Highway 65, Inc., is going to elect six board members next month. Betty Brown owns 16.8 percent of the total shares outstanding. a. What percentage of stock is needed to have one of her friends elected under the cumulative voting rule? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What percentage of stock is needed to have one of her friends elected under the staggered cumulative voting rule...
Members of the Board of Directors for a certain firm that has 12 seats on the...
Members of the Board of Directors for a certain firm that has 12 seats on the Board for which members are elected for six-year terms. The firm is currently using an election system that puts all members of the Board up for reelection every six years. An alternative is proposed by the CEO that will put only two Board members up for reelection every single year. He justifies this request by saying that reelecting entire board carries the risk that...
The Club has 9 members. The club needs to elect a President, Vice President, Secretary and...
The Club has 9 members. The club needs to elect a President, Vice President, Secretary and Treasurer, how many different ways are possible? How many ways are there to find a committee of size three. The Club has 10 members, 3 freshman, 4 sophomores and 3 juniors. How many ways are there to find a committee of size three with no freshmen? How many ways are there to find a committee of size three with one freshmen?
Montross Inc. needs to raise $300,000 for a nine-month term. Montross’s bank has offered to lend...
Montross Inc. needs to raise $300,000 for a nine-month term. Montross’s bank has offered to lend Montross the money at a 12.00% simple interest rate. Montross will receive the $300,000 upon approval of the loan and will pay back the principal and interest at maturity. Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effective annual rate (EAR) of this loan. Value Interest payment ______________    Amount of cash received ______________ Annual percentage...
How many ways can a Snail Darter Society, who has 25 members, elect an executive committee...
How many ways can a Snail Darter Society, who has 25 members, elect an executive committee of 2 members, an entertainment committee of 3 members, and a welcoming committee of 2 members if members can serve on at most 2 committees?
At a corporate board meeting, one of the members indicates that the FASB has passed a...
At a corporate board meeting, one of the members indicates that the FASB has passed a new accounting update to take effect concerning the nature of lease accounting. As of now the company has leases which are both capital in nature and operating. The company also has several forms of debt with banks. The board member asks you as the Chief Financial Officer to give a 5-10 minute presentation on a summary of changes and how those changes could impact...
The board of directors of Arizona Motor Shops, Inc., authorized the issuance of $1,000,000 face value,...
The board of directors of Arizona Motor Shops, Inc., authorized the issuance of $1,000,000 face value, 10-year, 6 percent bonds dated April 1, 2016, and maturing on April 1, 2026. Interest is payable semiannually on April 1 and October 1. DATE TRANSACTIONS FOR 2016 Apr. 1 Issued $300,000 face value bonds at 102.2. Oct. 1 Paid the semiannual interest on the outstanding bonds and amortized the bond premium. (Make two entries. Use the straight-line method to compute the amortization.) Dec....
Croy Inc. has the following projected sales for the next five months:    Month Sales in...
Croy Inc. has the following projected sales for the next five months:    Month Sales in Units April 3,480 May 3,880 June 4,600 July 4,180 August 3,980 Croy’s finished goods inventory policy is to have 70 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.50 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at...
The board of directors for Southern Alberta Insurance Company has 8 members. (a) If a committee...
The board of directors for Southern Alberta Insurance Company has 8 members. (a) If a committee of 3 is formed by random selection, what is the probability that it consists of the 3 wealthiest members? (b) If the board must elect a chairperson, vice-chairperson, and a secretary, how many different slates of candidates are possible? If also, you could show your work, and help me understand why I would appreciate that too. Thank you!
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT