Question
From: [redacted]
To: "mverne@ftc.gov"<mverne@ftc.gov>
Date: Tue, Apr 25, 2000 3:08 PM
Subject: 801.12
Mike - I have another question for you on applying the fun formula in 801.12. I have a situation where X's articles state that the holders of Series A shares voting as a class elect 2 of 5 directors. The holders of Common voting as a class elect 2 of 6 directors, and the fifth director is selected upon the approval of (i) holders of the majority of the A shares and (ii) the holders of Common Stock voting as a class. If X just holds A shares, would I calculate Y's percentage as follows?
The A shares held by Y divided by all A shares outstanding time (2 divided by 5) plus (the A shares held by Y divided by all A and Common shares outstanding) time (1 divided by 5)?
If am concerned that application of the formula may not work in a case where the last director must approved by the majority of the A voting as a class and the majority of the Common voting stock as a class. Strict application of the formula overstates Y's holdings in X because even if Y holds a majority of the A shares, Y cannot unilaterally elect the fifth director because a majority of the Common could veto his choice.
What do you think?
Thanks
[redacted]
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