Statutory voting
Also known as: straight voting
Statutory voting is a shareholder voting method that grants one vote per share for each open board seat or ballot item, with no ability to pool votes. It contrasts with cumulative voting, which lets shareholders concentrate all their votes on a single candidate.
Statutory voting, also called straight voting, is the default method most corporations use when common stockholders elect the board of directors. Each share carries one vote per open seat, and votes must be spread evenly — a shareholder cannot stack extra votes behind a favorite candidate.
Here's how the math works. Suppose you own 100 shares and three board seats are up for election. You have 300 total votes, but under statutory voting you may cast at most 100 votes per seat. Under cumulative voting, by contrast, you could pour all 300 votes into one candidate and ignore the other two races.
The distinction matters because of whom each method favors. Statutory voting benefits large shareholders: whoever holds a majority of shares can win every single seat. Cumulative voting gives small shareholders a fighting chance to elect at least one director by concentrating their voting power. Exam questions frequently test exactly this point — statutory favors majority owners, cumulative favors minority owners.
Voting rights are a core piece of the common stock material on securities exams. The SIE exam covers statutory versus cumulative voting within the rights of common stockholders, and the Series 7 exam revisits it in its common stock review. Be ready to compute the maximum votes a shareholder can cast for one candidate under each method.
Key takeaways
- Statutory voting allows one vote per share for each open board seat, spread evenly across candidates.
- Cumulative voting lets shareholders pool all their votes on a single candidate.
- Statutory voting favors large (majority) shareholders; cumulative voting favors small (minority) shareholders.
- With 100 shares and 3 open seats, a shareholder has 300 votes but can cast only 100 per seat under statutory voting.
- The SIE and Series 7 exams test the difference between statutory and cumulative voting.