Ii give class a 10 votes class b 5 votes etc d

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(ii)Give class A 10 votes, Class B 5 votes, etc.(d)Classified stock: can have diff voting risk and other benefits/limits(i)EXAMPLE: Ford Motor Co. -> classified stock w/ diff. rights/benefits(7)PROBLEM: who fills vacancy in class when D dies and is sole holder of class of stock?iv)Precision Tools Part 1-revisited(1)M, J, B agree tentatively on 4 member board, and B can elect 1 D.(2)Advice on 4 member board?(a)Would be better to have odd (5) for more diversity, compromise, and if someonecannot attend(3)Why want to be on board?(a)Control to elect officers and make mgmt. decisions, better monitoring(b)Bwants VOICE and ability to make decisions about corporate strategy(c)Default rules-straight voting(i)Must opt-in for cumulative(4)Agree to give B non-voting preferred stock and voting common stock. Allocated 20-40-40 between B, M, and J. If 4 member board with 1000 voting shares issued/outstanding.(a)B=200 sh. J=400 sh. M=400 sh.(b)Under cumulative voting, B needs: 201 to ensure own election, 401 to elect 2 D, and601 to win maj. control(i)Problem-M and J won't agree to this bc each want 40% econ. Rights(5)Consider using capital structure to achieve B able to choose 2 D, and M and J each 1.(a)Use class voting->more votes depending on capital b puts in(6)Would voting agreement achieve purpose? Provisions/restrictions include?(a)Would bind M and J to vote in certain way for D.(b)Restrictions-hard to enforce; under MBCA 10 yr limit and require public record(i)Invalid if doesn't comply w trust statute(c)Enforcement mech. If don't comply?(i)Proxy vote all shares subject to agreement; or court can order specificenforcement (MBCA)
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Corporations Sawyer 201532(7)B would prefer class voting-divide into M, J, and B classes and give B ability to elect 2directors(8)Can combine classified stock and cumulative voting(a)Give M and J-> 80% econ. Rights and 60% voting rights.(b)B->20% econ. Rights and 40% voting rights(c)Can say M and J bet 6/8 of a vote for each stocke)SHAREHOLDER VOTING ARRANGEMENTSi)Voting Trusts(1)SH (beneficiary) conveys legal title to stock to voting trustee or group pursuant to termsof agreement(a)Beneficiaries receive Voting Trust Cert. in exchange for shares->evidence of SHfinancial equitable interest in stock (aka retain financial rights)(b)Cert. transferable-entitle owner to receive dividends(2)Voting Trustee: exclusive voting power to vote shares according to terms in agreement(3)Trust Agreement:(a)Defined period of time K will last(i)MBCA 7.30-limited to 10 yrs(ii)DGCL 218(e)-eliminated 10 yr limit(b)Provides whatever instructions/terms agree to(i)May limit to voting for D's or allow voting on any other matter that comesbefore SH(4)EXAMPLE: Head of family who is in charge, but econ. benefits spread out acrossdecedents(5)Court Distain-many cts found void bc separated ownership power from voting power(a)state leg. enacted statues subjecting them to regulations (limit to 10 years) andrequire terms are public record so shareholders can learn that it exists. (MBCA 7.30)(b)If voting trust doesn’t comply w/ statute->invalid(c)EX: duration and publicity limitsii)

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Term
Fall
Professor
Sawyer
Tags
Corporation, sh, Sawyer, Corporations Sawyer
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Cornerstones of Cost Management
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Chapter 6 / Exercise 4
Cornerstones of Cost Management
Hansen/Mowen
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