Definition of "Cumulative Voting"

A method of voting for corporate directors. In contrast to statutory voting, cumulative voting allows shareholders to multiply the number of shares owned by the number of directorships being voted. The votes may be cast in any manner that the holder chooses--all for one director or any combination thereof. If a corporation, for example, has 6 openings to the Board of Directors, in statutory voting, a stockholder who owns 100 shares may cast 100 votes for each opening, thus having 600 votes. In cumulative voting, the stockholder may vote in the same manner as statutory voting or cast 600 votes for only one nominee, 300 for two, 200 for three, or any other combination. Cumulative voting allows small shareholders to have a better chance of naming representatives on the board of directors. Cumulative voting is required under the corporate laws of some states, and is at the discretion of the corporation in most others.