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Matt Levine

Purple Innovation’s PRPLS Innovation

Also distressed-debt fights, Disney activism, crypto taxes and bonus caps.

There are two ways for companies to hold elections for their boards of directors. The normal way is that the company has, say, seven board seats, and each shareholder gets to vote for up to seven directors, and each share voted for a candidate counts as one vote, and whichever seven candidates get the most votes win. Most of the time, the company nominates seven people, they are the only choices, and the shareholders just vote for them. But sometimes there will be a contested election: An activist shareholder will nominate candidates (perhaps seven, perhaps fewer) and run a proxy fight to try to get shareholders to vote for her candidates, and the shareholders will end up electing either the company’s candidates or the activist’s or, occasionally, a mix of the two slates.

The other way — it is called “cumulative” voting — is that each shareholder gets seven votes per share, but can assign them to whichever candidate or candidates she wants. She can vote all seven votes for one candidate, if she wants, or four for one and three for another, or one each for seven candidates, or whatever. And then whichever candidate gets the most total votes wins.