Snyder Meat Packing Co. is a small firm that has been very profitable over the past five years and has also exhibited a strong earnings growth trend. Mr. Snyder owns 35 percent of the three million shares of common stock outstanding, but he is nevertheless worried about being taken over by a larger firm in the future. He has read some articles in the "Financial Post" about techniques used to discourage forced mergers and takeovers. The firm currently uses majority voting for nine directors. Mr. Snyder wonders which of the following proposals would make it easier for him to reject a takeover bid.
a. What would be the effect of cumulative voting?
b. What would be accomplished if shareholders could vote for only one-third of the directors every year (staggered terms)?
c. Should Mr. Snyder reduce or increase the number of directors? Does the answer to this question depend on majority rule or cumulative voting?