AVIX has 6.8 million shares outstanding, and the firm's charter provides for cumulative voting. The company has a seven-member board of directors, all of whom are up for reelection. What is the minimum number of shares needed to ensure the election of two directors?

Question

Quizplus · Accepted Answer

To ensure the election of two directors using cumulative voting, we need to calculate the minimum number of votes required for 2 seats.

First, we calculate the total votes available: 
Total votes = Number of shares outstanding * Number of directors to be elected = 6.8 million * 7 = 47.6 million

Next, we divide the total votes by the number of open positions plus one (2 directors plus one = 3) and add 1 to get the minimum number of votes required for each seat:

Minimum votes per seat = (Total votes / (Number of seats + 1)) + 1 
= (47.6 million / 3) + 1 
= 15.87 million

Therefore, the minimum number of shares needed to ensure the election of two directors is: 
2 seats * 15.87 million votes per seat = 31.74 million votes

Therefore, the answer is D: 1,700,001. Any shareholder holding at least 1,700,001 shares can ensure the election of two directors through cumulative voting.

AVIX Has 6