Voting system allows shareholders to cast all their director votes for a single candidate

• For each shareholder, number of director votes equals
  (x) number of voting shares held, multiplied by
  (y) number of directors being elected
• Can facilitate board representation for minority shareholders

Delaware law allows for cumulative voting
if provided for by certificate of incorporation

Effect of cumulative voting can be frustrated by:

• Reducing the number of directors,
  thereby raising the number of cumulative votes
  necessary to elect a single director
• Board classification which, by reducing the number of directors standing for election in a single year,
  has the same effect

Delaware GCL § 214
Cumulative voting

Campbell v Loew's  (Del Ch 1957)

• Held that a director elected by cumulative voting could be removed by majority vote of the other directors

AAR Corp v Brooks & Perkins (Del Ch 1980)

• Upheld a reduction in number of directors
• Even though it frustrated minority shareholder's cumulative voting

Abolishing cumulative voting

Nanometrics 2005

Ocean West Holdings 2005

Proxy statement for cumulative voting

• Hewlett-Packard 2005

Delaware General Corporation Law

Shareholder Proposals: 2008