Question

Danali Corporation has 2,500,000 shares of common stock outstanding. Danali has a 15-member board, and five will leave at the end of this year. There are nine candidates for these five open seats. The minority group of stockholders controls 45 percent ofthe shares, and the majority group controls the other 55 percent. How many voting shares would be needed to elect 3 directors

Answer 1

3,125,501

Step-by-step explanation:

No of directors seat desired = 5

Total number of voting share = 2,500,000 shares

Total number of directors to be elected = 3

We are using the cumulative voting approach to calculate how many voting shares would be needed to elect 3 directors:

Voting shares needed = [(Number of Directors desired * Total number of voting shares) / (Total number of directors to be elected + 1 )] + 1

Voting shares needed = [(5*2,500,000) / (3 + 1)] + 1

Voting shares needed = [12,500,000 / 4] + 1

Voting shares needed = 3,125,000 + 1

Voting shares needed = 3,125,001

So, the number of voting shares needed to elect 3 directors is 3,125,501.