There are four open positions on the board of directors of Double Tree Restaurants. The company has 180,000 shares of stock outstanding. Each share is entitled to one vote. How many shares of stock must you own to guarantee your personal election to the board of directors if the firm uses cumulative voting?

Question

Quizplus · Accepted Answer

To guarantee election to the board, a shareholder must own enough shares to cast a majority of the total votes. With cumulative voting, a shareholder can cast all of their votes for a single candidate. Therefore, the shareholder must own at least 50% of the total shares outstanding. 180,000 shares * 50% = 90,001 shares. However, since shares are not divisible, the shareholder must own at least 90,002 shares. The closest answer choice is A) 36,001 shares, which is incorrect.

There Are Four Open Positions on the Board of Directors