Finance

1.Katie Homes and Garden Co. has 13,500,000 shares outstanding. The stock is currently selling at $56 per share. If an unfriendly outside group acquired 15 percent of the shares, existing stockholders will be able to buy new shares at 25 percent below the currently existing stock price.

a.How many shares must the unfriendly outside group acquire for the poison pill to go into effect?

b.What will be the new purchase price for the existing stockholders?

2. Mr. Meyers wishes to know how many shares are necessary to elect 5 directors out of 9 directors up for

election in the Austin Power Company. There are 79,000 shares outstanding.

Number of shares __________

3. Betsy Ross owns 933 shares in the Hanson Fabrics Company. There are 11 directors to be elected and 34,500 shares outstanding. The firm has adopted cumulative voting.

a.How many total votes can be cast?

b.How many votes do Betsy Control?

c.What percentage of the total votes does she control?

4.Midland Petroleum is holding a stockholders' meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 12 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 47,001 shares. Ms. Ramsey and her friends on the board control 57,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 21,998 shares. The company uses cumulative voting.

a.How many directors can Mr. Clark be sure of electing?

b.How many directors can Ms. Ramsey and her friends be sure of electing?

c-1.How many directors could Mr. Clark elect if he obtains all the proxies for the uncommitted votes?

c-2.Will he control the board?

Yes

No

d.If nine directors were to be elected, and Ms. Ramsey and her friends had 71,001 shares and Mr. Clark had 49,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect?

5. Rust Pipe Co. was established in 1994. Four years later the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to nine votes per share. The normally traded common stock, designated as Class B, is entitled to one vote per share. In late 2010, Mr. Stone, an investor, was considering purchasing shares in Rust Pipe Co. While he knew the existence of founders' shares were not often present in other companies, he decided to buy the shares anyway because of a new technology Rust Pipe had developed to improve the flow of liquids through pipes.

Of the 1,750,000 total shares currently outstanding, the original founder's family owns 52,425 shares.

What is the percentage of the founder's family votes to Class B votes?