Straight Voting vs Cumulative Voting: Understanding the Differences, Benefits, and Limitations
Doing the right choice of directors is one of the most crucial decisions that shareholders make. The members of a company's Board have a say in the company's direction, hold the management to account and assist in safeguarding shareholders' interests. This makes the voting process that is employed when electing to the Board an important factor in determining who is elected. The most popular ones are straight voting and cumulative voting. They are both methods that enable shareholders to vote in director elections, but work differently and can lead to very different results. Investors, business owners and students will better understand the voting systems and how this affects corporate governance. Straight Voting Disadvantage The advantages of straight voting are that it is easy to comprehend, but it also has some drawbacks. In this form of organization, shareholders vote for one office for each office being voted on. They are not allowed to "transfer" votes fro...