What is cumulative voting?

What is cumulative voting?

• A. A system permitting shareholders to cast all votes for one candidate
• B. A voting method that limits shareholder votes to two per candidate
• C. A process for shareholders to divide votes among board candidates
• D. A method whereby only majority shareholders vote on board members

Answer: (A)

Cumulative voting is a system that allows shareholders to concentrate their votes on one or more candidates when electing members to a corporate board. This method empowers minority shareholders by enabling them to pool their votes for a specific candidate, thereby increasing the chances of that candidate being elected. The framework enhances shareholder influence and promotes a more diverse representation on the board. In contrast, other options do not encapsulate the concept accurately. For example, the second option regarding limiting votes to two per candidate does not reflect cumulative voting, which does not impose such restrictions. The third option inaccurately describes cumulative voting as merely dividing votes among candidates instead of casting all votes for one. Lastly, the fourth option suggesting that only majority shareholders vote lacks the fundamental principle of cumulative voting, which is inclusive of all shareholders, not just those with majority stakes.

Cumulative voting is a system that allows shareholders to concentrate their votes on one or more candidates when electing members to a corporate board. This method empowers minority shareholders by enabling them to pool their votes for a specific candidate, thereby increasing the chances of that candidate being elected. The framework enhances shareholder influence and promotes a more diverse representation on the board.

In contrast, other options do not encapsulate the concept accurately. For example, the second option regarding limiting votes to two per candidate does not reflect cumulative voting, which does not impose such restrictions. The third option inaccurately describes cumulative voting as merely dividing votes among candidates instead of casting all votes for one. Lastly, the fourth option suggesting that only majority shareholders vote lacks the fundamental principle of cumulative voting, which is inclusive of all shareholders, not just those with majority stakes.