Asked by Alawia Alawi on Apr 24, 2024
Verified
If three seats on the board of directors are up for election, cumulative voting on common stock allow stockholders to:
A) cast one vote per share owned for three different candidates.
B) cast up to three votes per share owned for any one candidate.
C) save votes from a prior board of directors' election and cast them in the current election.
D) cumulative voting only applies to preferred stock.
E) None of the above are true
Cumulative Voting
A voting system that allows shareholders to allocate all of their votes to one candidate, enhancing minority shareholders' chances of influencing board election outcomes.
Board of Directors
A group of individuals elected by shareholders to oversee the major decisions and policies of a corporation.
Common Stock
A form of corporate equity ownership, a type of security that represents ownership in a corporation, entitling the owner to a proportion of the company's assets and profits.
- Understand the concept of cumulative voting and its impact on shareholder power.
Verified Answer
AW
Allyson Weightman7 days ago
Final Answer :
B
Explanation :
Cumulative voting allows stockholders to allocate their votes in a flexible manner, including the option to cast all their votes for a single candidate. This means if a stockholder owns shares, they can multiply the number of shares by the number of seats available (in this case, three) and then cast all those votes for one candidate if they choose. This method enhances the voting power of minority shareholders.
Learning Objectives
- Understand the concept of cumulative voting and its impact on shareholder power.