You want a seat on the board of directors of Four Keys, Incorporated. The company has 195,000 shares of stock outstanding and the stock sells for $84 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?

Multiple Choice

73,126 shares

97,501 shares

65,000 shares

48,751 shares

43,876 shares

Under cumulative voting, the number of shares required to secure a seat on the board is calculated using this formula:

\[
\text{Shares needed} = \left(\frac{\text{Total shares outstanding}}{\text{Seats up for election} + 1}\right) + 1
\]

In this case:

- Total shares outstanding ($N$) = 195,000
- Seats up for election ($S$) = 3

Substituting these values:

\[
\text{Shares needed} = \left(\frac{195,000}{3 + 1}\right) + 1
\]

\[
= \left(\frac{195,000}{4}\right) + 1
\]

\[
= 48,750 + 1
\]

\[
= 48,751
\]

Therefore, you would need **48,751 shares** to guarantee a seat on the board.

**Answer:** 48,751 shares

Would you like further clarification or have any questions?

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**Additional Questions:**
1. How does cumulative voting differ from straight voting?
2. What are the advantages of cumulative voting for minority shareholders?
3. How many shares would be required if there were 5 seats up for election instead of 3?
4. How does the stock price affect the voting power in cumulative voting?
5. Can cumulative voting impact the board's diversity? If so, how?

**Tip:** Cumulative voting allows shareholders to concentrate their votes, increasing the chances for minority shareholders to elect their preferred candidates.

You want a seat on the board of directors of Four Keys, Incorporated. The company has 195,000 shares of stock outstanding and the stock sells for $84 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?

Understand how to calculate the number of shares needed to secure a seat on the board of directors using cumulative voting. For Four Keys, Incorporated, with 195,000 shares outstanding and 3 seats up for election, discover the formula and steps to determine the required 48,751 shares. Perfect for students and professionals interested in corporate finance.

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