Midland Petroleum is holding a stockholders’ meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 13 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 30,001 shares. Ms. Ramsey and her friends on the board control 50,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 20,998 shares. The company uses cumulative voting.

Midland Petroleum is holding a stockholders’ meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 13 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 30,001 shares. Ms. Ramsey and her friends on the board control 50,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 20,998 shares. The company uses cumulative voting.

 

a.	How many directors can Mr. Clark be sure of electing? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

 

Number of directors

b.	How many directors can Ms. Ramsey and her friends be sure of electing? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

 

Number of directors

c-1.	How many directors could Mr. Clark elect if he obtains all the proxies for the uncommitted votes? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

 

Number of directors

c-2.	Will he control the board?
	Yes

d.	If nine directors were to be elected, and Ms. Ramsey and her friends had 51,001 shares and Mr. Clark had 31,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect? (Do not round intermediate calculations. Round down your answer to the nearest whole number.)

  

Number of directors

 
Explanation:

a.

Number of directors that can be elected	=	(Shares owned − 1) × (Total number of directors to be elected + 1)
		Total number of shares outstanding
	=	(30,001 − 1) × (13 + 1)
		101,000
	=	4.16, or 4 directors when rounded down

Mr. Clark can be assured of electing four directors.

b.

Number of directors that can be elected	=	(Shares owned − 1) × (Total number of directors to be elected + 1)
		Total number of shares outstanding
	=	(50,001 − 1) × (13 + 1)
		101,000
	=	6.93, or 6 directors, when rounded down

Ms. Ramsey and her friends can be assured of electing six directors.

c-1.

Number of directors that can be elected	=	(Shares owned − 1) × (Total number of directors to be elected + 1)
		Total number of shares outstanding
	=	(30,001 + 20,998 − 1) × (13 + 1)
		101,000
	=	7.07, or 7 directors when rounded down

  

In this case, the shares owned used in the formula is equal to the dissident's shares plus the uncommitted shares.

c-2.

He can elect seven directors. Yes, Mr. Clark will control the board.

d.

Number of directors that can be elected	=	(Shares owned − 1) × (Total number of directors to be elected + 1)
		Total number of shares outstanding
	=	(31,001 + 9,499 − 1) × (10 + 1)
		101,000
	=	4.41, or 4 directors when rounded down