There are 5 seats open on the board of directors of Alpha, Inc. Jason wants to be positive that he can be elected to one of these positions. Alpha uses cumulative voting. There are 1,500 shares of Alpha stock outstanding. Twenty% of the shares are owned by Midge, 30% are owned by Peter, 10% are owned by Jeff, 25% are owned by Jason and the rest are owned by Edward. How many additional shares of stock must Jason buy to ensure that he wins a seat?

Question

Quizplus · Accepted Answer

In cumulative voting, each shareholder may cast all of their votes for a single candidate. To ensure a win in a 5-seat board with 1,500 shares outstanding, a candidate needs more than 1/6 of the total votes because 1,500 shares divided by 6 equals 250 shares, and to guarantee a win, one more than this fraction is needed, i.e., 251 shares. Jason already owns 25% of 1,500 shares, which equals 375 shares, more than the 251 needed to ensure a win. Therefore, Jason does not need to buy any additional shares.

There Are 5 Seats Open on the Board of Directors