Question

You want a seat on the board of directors of Four Keys, Inc. The company has 240,000 shares of stock outstanding and the stock sells for $57 per share. There are currently 3 seats up for election. If the company uses cumulative voting, how many shares do you need to guarantee that you will be elected to the board?

Answer 1

$3420057

Explanation:

the company uses cumulative voting, the board of directors are all elected at once. You will need 1/(N+ 1) percent of the stock (plus one share) to guarantee election, where N is the number of seats up for election. So, the percentage of the company’s stock you need will be:Percent of stock needed = 1 / (N+ 1)Percent of stock needed =

1 / (3 + 1)Percent of stock needed = .25 or 25%So, the number of shares you need to purchase is:Number of shares to purchase = (240,000 × .25) + 1Number of shares to purchase = 60,001 And the total cost to you will be the shares needed times the price per share, or: Total cost = 60,001  $57Total cost =$ 3420057