You own 20 % of the stock of a company that has 10 directors on its board. How much representation can you get on the board if the company has cumulative voting? How much representation can you ensure if the company has straight voting? How much representation can you get on the board if the company has cumulative voting?

Answer and Explanation:

1. If the company uses cumulative voting, I will be able represented by 2 directors on the board because I own 20% of the stock of the company. Since there are 10 seats (for 10 directors) on the board, I will be represented by: (20 : 100) * 10 = 2 directors.

2. If the company uses straight voting, then I shall be entitled to vote for only one candidate per each of the 10 seats for the positions of board of directors. However, the number of seats I will be represented by will depend on the winner for each seat or position of director. In straight voting, if someone else owns a higher stock than me, the person can easily defeat the people I would vote for, and control the entire 10 seats on the board, thus leaving me with no representation (seats or directors).