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Cumulative Voting

Cumulative voting is a method of voting that benefits minority shareholders when electing directors to the board by allowing shareholders to cast all of their votes for a single board candidate when there are multiple board openings. For example, if there are five openings available on the board, a shareholder with 100 shares would have 500 votes. They could choose to cast 100 votes per nominee or cast all 500 votes for one candidate.

This benefits minority shareholders because it gives them the option to focus all of their attention on a single candidate or point of contention. If multiple minority shareholders focus in a single direction together, they often have the power to influence the decision with their combined power.

In contrast, statutory voting means each shareholder has just one vote per share that they own. The total number of votes is split evenly.

EXAMPLE:

Even though I’m just a itty bitty minority shareholder, I’m going to cast ALL my votes for Carl because he is the most awesome.

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