Corportations – Cumulative Voting, Classified Boards and Proportional Representation

In two recent decisions, Wolfson v. Avery and Janney v. Philadelphia Transportation Co., a constitutional provision guaranteeing to every corporate shareholder the right to cumulate his votes in an election of directors was construed in light of a statute authorizing the classification of directors and the election of only one class annually. In both, it was argued by a minority shareholder that the constitutional provision guaranteed him representation on the board proportional to his stock holdings, and that the classification statute, authorizing a reduction of the number of directors to be elected at each election, required a greater number of share votes to elect a single director and thereby impaired his constitutional right to proportional representation on the board. The Wolfson case accepted the shareholder’s argument; the Janney case rejected it.