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 36,001 shares. Ms. Ramsey and her friends on the board control 46,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 24,998 shares. The company uses cumulative voting.

Answer 1

Answer-

Stockholder	Shares Controlled	% of shares controlled	Shareholders
Mr. Clark	36001	33.65%	4
Ms. Ramsey	46001	42.99%	5
Other Stockholders	24998	23.36%	3
Total	107000	100.00%	12

Number of directors that can be elected = Number of controlling shares *(Number of directors up for election +1)/ Total number of votes

a) Number of directors Mr. Clark can elect = 36001*(12+1)/107,000 (36001+46001+24998) = 4.37 You cannot elect 0.37 director.

So, number of directors Mr. Clark can elect = 4 directors

b) Number of directors Mr Ramsey can elect = 46001*(12+1)/107,000 = 5.88

So, number of directors Mr. Ramsey can elect = 5 directors

c-1) Total number of votes for clark = 36,001+ 24,998 = 60,999

Number of directors Mr. Clark can elect = 60999*(12+1)/107,000 = 7.41

So, number of directors Mr Clark can elect = 7 directors

c-2) Yes, he will have control of the board because he would control a majority of the seats on the board.