Cumulative Voting

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Cumulative Voting

A method of election of the board of directors used by corporations whereby a stockholder may cast as many votes for directors as he or she has shares of stock, multiplied by the number of directors to be elected.

A plan used for the election of members to the lower house of the Illinois legislature by which voters, each of whom is given three votes, may cast all of the votes for one candidate or allocate them among two or three candidates.

The purpose of cumulative voting is to facilitate the representation of minority stockholders on the board. The stockholder may cast all of his or her votes for one or more, but not all, of the directors on the ballot, which therefore promotes representation of small shareholders. Cumulative voting is mandatory under the corporate laws of some states and is allowed in most states.

cumulative voting

n. in corporations, a system of voting by shareholders for directors in which the shareholder can multiply his voting shares by the number of candidates and vote them all for one person for director. This is intended to give minority shareholders a chance to elect at least one director whom they favor. For example, there are five directors to be elected, and 10,000 shares issued, a shareholder with 1,000 shares could vote 5,000 for his candidate rather than being limited to 1,000 for each of five candidates, always outvoted by shareholders with 1,001 or more shares.