Question

You want a seat on the board of directors of Red Cow, Inc. The company has 210,000 shares of stock outstanding and the stock sells for $84 per share. There are currently 4 seats up for election. The company uses straight voting. How much will it cost you to guarantee that you will be elected to the board

Answer 1

It will cost $3,528,084 to guarantee that you will be elected to the board

Step-by-step explanation:

We will use following formula to calculate the share to be controlled for guarantee.

Shares to be controlled = [ ( S x N ) / ( D + 1 ) ] + 1

Where

S = Numbers of shares = 210,000 shares

N = Numbers of directors to be appointed = 1

D = Total number of directors to be elected = 4

Placing values in the formula

Shares to be controlled = [ ( 210,000 x 1 ) / ( 4 + 1 ) ] + 1

Shares to be controlled = [ 210,000 / 5 ] + 1

Shares to be controlled = 42,000 shares + 1 share

Shares to be controlled = 42,001 shares

Selling Price per share = $84

Total Cost = 42,001 x $84 = $3,528,084