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.

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.)

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.)

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.)

c-2. Will he control the board?

• Yes

• No

d. If nine directors were to be elected, and Ms. Ramsey and her friends had 62,001 shares and Mr. Clark had 42,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect? Assume the same number of total shares as the original question. (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

Answer 1

A company is controlled by its board of directors. The shareholders represent the primary owners or decision makers of a company. The board of directors are voted on and confirmed annually by the shareholders of a firm.

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

a. How many directors can Mr. Clark be sure of electing?

• Number of directors = 4

b. How many directors can Ms. Ramsey and her friends be sure of electing?

• Number of directors = 5

c-1. How many directors could Mr. Clark elect if he obtains all the proxies for the uncommitted votes?

• The number of directors = 7(36001+24998/107000*12)

c-2. Will he control the board?

• Yes, he would control the board because he would control a majority of the seats on the board.

d. If nine directors were to be elected, and Ms. Ramsey and her friends had 60,001 shares and Mr. Clark had 40,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect?

• Number of directors = 4

Stockholder	Shares Controlled	% of shares controlled	Shareholders
Mr. Clark	42,001	32.56%	4
Ms. Ramsey	62,001	48.06%	6
Other Stockholders	24,998	19.38%	2
Total	129000	100.00%	12