Chapter 17, Problem 9P

a.

Summary Introduction

To determine: The number of directors that Mr. Clark is sure of electing.

Introduction:

Cumulative Voting:

It is a voting system helpful in strengthening the rights of minor shareholders. It also allows the shareholders to cast their vote to elect the board of directors of the company.

Shares Outstanding:

They are referred to as the common shares of the authorized company, which are actually held by the investors and represent ownership of the company. They are also termed as issued shares.

Answer to Problem 9P

The number of directors Mr. Clark is sure of electing while cumulative voting is practiced is 4.

Explanation of Solution

Calculation of the number of directors:

$\begin{array}{c}\text{No}\text{. of directors elected}=\frac{\left(\text{Shares owned}-1\right)\times \left(\text{Total no}\text{. of directors to be elected}+1\right)}{\text{Total no}\text{.of shares outstanding}}\\ =\frac{\left(34,001-1\right)\times \left(12+1\right)}{103,000}\\ =\frac{442,000}{103,000}\\ =4\text{ directors}\end{array}$

b.

Summary Introduction

To determine: The number of directors that Ms. Ramsey and friends are sure to vote for.

Introduction:

Cumulative Voting:

It is a voting system helpful in strengthening the rights of minor shareholders. It also allows the shareholders to cast their vote to elect the board of directors of the company.

Shares Outstanding:

They are referred to as the common shares of the authorized company, which are actually held by the investors and represent ownership of the company. They are also termed as issued shares.

Answer to Problem 9P

The number of shares that Ms. Ramsey and friends are sure to vote for is 5.

Explanation of Solution

Calculation of the number of directors:

$\begin{array}{c}\text{No}\text{. of directors elected}=\frac{\left(\text{Shares owned}-1\right)\times \left(\text{Total no}\text{.of directors to be elected}+1\right)}{\text{Total no}\text{.of shares outstanding}}\\ =\frac{\left(44,001-1\right)\times \left(12+1\right)}{103,000}\\ =\frac{572,000}{103,000}\\ =5\text{ directors}\end{array}$

c.

Summary Introduction

To determine: The number of directors that can be elected by Mr. Clark if all the proxies for the votes that remain uncommitted are obtained by him as well as whether the board will be controlled by him or not.

Introduction:

Cumulative Voting:

It is a voting system helpful in strengthening the rights of minor shareholders. It also allows the shareholders to cast their vote to elect the board of directors of the company.

Shares Outstanding:

They are referred to as the common shares of the authorized company, which are actually held by the investors and represent ownership of the company. They are also termed as issued shares.

Answer to Problem 9P

The number of directors that can be elected by Mr. Clark if all the proxies for the votes that remain uncommitted are obtained by him is 7.

Yes, the board will be controlled by him.

Explanation of Solution

Calculation of the number of directors:

$\begin{array}{c}\text{No}\text{.of directors elected}=\frac{\begin{array}{l}\left(\text{Shares owned}+\text{Shares of other voters}-1\right)\times \\ \left(\text{Total no}\text{. of directors elected}+1\right)\end{array}}{\text{Total no}\text{. of shares outstanding}}\\ =\frac{\left(34,001+24,998-1\right)\times \left(12+1\right)}{103,000}\\ =\frac{766,974}{103,000}\\ =7\text{ directors}\end{array}$

d.

Summary Introduction

To determine: The number of directors that can be elected by Mr. Clark.

Introduction:

Cumulative Voting:

It is a voting system helpful in strengthening the rights of minor shareholders. It also allows the shareholders to cast their vote to elect the board of directors of the company.

Shares Outstanding:

They are referred to as the common shares of the authorized company, which are actually held by the investors and represent ownership of the company. They are also termed as issued shares.

Answer to Problem 9P

The number of directors to be elected by Mr. Clark is 4.

Explanation of Solution

Calculation of the number of directors to be elected:

$\begin{array}{c}\text{No}\text{.of directors elected}=\frac{\begin{array}{l}\left(\text{Shares owned}+\text{Shares of other voters}-1\right)\times \\ \left(\text{Total no}\text{.of directors elected}+1\right)\end{array}}{\text{Total no}\text{.of shares outstanding}}\\ =\frac{\left(40,001+9,999-1\right)\times \left(9+1\right)}{120,000}\\ =\frac{499,990}{120,000}\\ =4\text{ directors}\end{array}$