Midland Petroleum is holding a stockholders’ meeting next month. Ms. Ramsey is t
ID: 2716568 • Letter: M
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 14 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 34,001 shares. Ms. Ramsey and her friends on the board control 44,001 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?
b. How many directors can Ms. Ramsey and her friends be sure of electing?
c. How many directors could Mr. Clark elect if he obtains all the proxies for the uncommitted votes? (uneven values must be rounded down to the nearest whole number regardless of the amount.) Will he control the board?
d. If nine directors were to be elcted, and Ms. Ramsey and her friends had 60,001 shares and Mr. Clark had 40,001 shares plus half of the uncommitted votes, how many directors could Mr. Clark elect?
Explanation / Answer
a Number of directors that can be elected = (Shares owned 1) × (Total number of directors to be elected + 1) /Total number of shares outstanding = (34,001 1) × (14 + 1))/ 103,000 =4.95 4 members b Number of directors that can be elected = (Shares owned 1) × (Total number of directors to be elected + 1) /Total number of shares outstanding = (44,001 1) × (14 + 1)/ 103,000 = 6.40 6 members c . Number of directors that can be elected = (Shares owned 1) × (Total number of directors to be elected + 1) Total number of shares outstanding = (34,001 + 24,998 1) × (14 + 1) 103,000 = 8.59 8 members C1 He can elect eight directors. Yes, Mr. Clark will control the board. d . Number of directors that can be elected = (Shares owned 1) × (Total number of directors to be elected + 1) Total number of shares outstanding = (40,001 + 24,998/2 1) × (9 + 1) 103,000 =5.09 5 members