Corporate Governance Shareholder Rights & Activism 2

Question 1

What does 'cumulative voting' allow shareholders to do?

Accepted Answer

Concentrate all votes on a single director candidate to elect minority representation

Answer

Cumulative voting lets shareholders multiply their shares by the number of directors being elected and concentrate all those votes on one or a few candidates.

Question 2

Which proxy advisory firm is most widely used by institutional investors in the US?

Accepted Answer

Institutional Shareholder Services (ISS)

Answer

Institutional Shareholder Services (ISS) is the largest proxy advisory firm, providing voting recommendations to institutional shareholders globally.

Question 3

What is a 'consent solicitation' in corporate governance?

Accepted Answer

A process allowing shareholders to act by written consent without a formal meeting

Answer

Consent solicitations allow shareholders to act by written consent, enabling activist investors to make governance changes without waiting for the annual meeting.

Question 4

What is the purpose of a 'majority voting' standard for director elections?

Accepted Answer

Requiring directors to receive more than 50% of votes cast to be elected

Answer

Under majority voting, a director must receive more than half of the votes cast to be elected, making it harder for unpopular directors to win uncontested races.

Question 5

What is a 'dual-class share structure'?

Accepted Answer

A capital structure where certain shares carry more voting rights than others

Answer

Dual-class structures give certain shares (typically held by founders) multiple votes per share, allowing founders to retain control after an IPO.

Corporate Governance Practice Test

Corporate Governance Practice Test

Corporate Governance Shareholder Rights & Activism 2