ShmoopTube

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Finance, a la shmoop. What is cumulative voting? All right people there are two

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flavors of voting in the land of common stock, there's cumulative and statutory. [Two ice cream cones held next to each other]

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Cumulative voting just somehow sounds cooler, doesn't it? It allows teams to [Guy points at the ice cream cone and drops it]

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join forces and pool their votes cumulatively

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for target candidates to get elected that is it allows for the disaggregation,

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$5 word there, of board members when voting. That is if a shareholder has one [5 dollar price tag appears]

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percent of the common shares outstanding of a company and cumulative voting is [Pie chart showing the small 1% holding]

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allowed and there are five candidates being elected, well that shareholder can

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vote effectively five percent of their total shares voteable for just one

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candidate. Said graphically with blood and guts it looks like this. Cumulative [Table showing shares equalling number of votes per candidate]

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voting helps the little guy to have a big presence, with only 1% of the shares [Kid sat at a shareholder meeting]

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the little guy can be felt as a 5% holder which makes you know him or her a [Kid jumping to hit a Mario coin box]

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relatively major player. It also encourages boards to rotate seats [People swapping seats in the boardroom]

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gradually, that is if there were seven seats coming up for election while that

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1% could feel like 7% which starts to get dangerous in a contentious board and [The people in the boardroom start fighting]

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company situation. You can imagine someone who only owns a small part of

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the shares outstanding could elect a whole lot of board. Yeah that'd be a [Wooden boards replace the people in suits]

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little scary. Well, score one for the little guy... [Kid laughing will an evil face]

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