Question

Question 14

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Marine Enterprises. Unfortunately, you will be the only individual voting for you. If Marine Enterprises has 350,000 shares outstanding and the stock currently sells for $52, which of the following scenarios would be the least expensive in order for you to buy a seat on the board?

Group of answer choices

Only one open seat; Voting method does not matter

Two open seats; Company uses straight voting

Two open seats; Company uses cumulative voting

Three open seats; Company uses straight voting

Three open seats; Company uses cumulative voting

Answer 1

If there are three open seats and company is using cumulative voting, then it will mean that I have the liberty of having my all vots towards one seat and it can help me in order to buy a seat on the board, so it will be a least expensive method because I can use my entire vote towards one seat and since there are 3 Seats, so I will be having a lower amount to expand.

Straight voting is not applicable in lower cost scenarios.

Correct answer will be option (E) free open seat, company uses cumulative voting.