What is cumulative voting in stockholder voting?

Cumulative voting is a method that allows stockholders to pool their votes together and allocate them as they wish among the candidates. This approach differs from traditional voting methods where shareholders can only cast one vote per candidate for each available position. With cumulative voting, if a shareholder has multiple votes (for example, if there are three seats available and a shareholder holds three shares, they would have three votes), they can distribute those votes among the candidates in any way they choose. This means they might allocate all their votes to one candidate to ensure they achieve a majority or split them among several candidates to increase the chances of multiple desired candidates being elected.

This system is often implemented in corporate governance to give minority shareholders a better chance of having their preferred candidates elected to the board, as it can empower them with the ability to consolidate their voting power strategically. The other voting methods listed, such as voting for each seat individually or distributing votes equally, do not provide the same flexibility and strategic advantage offered by cumulative voting.