Bob Has Decided to Solicit Proxies from Shareholders of Sunset

question 57

Multiple Choice

Bob has decided to solicit proxies from shareholders of Sunset Corporation.Bob owns two shares of Sunset,which have a share price of $48.Bob is soliciting the proxies in order to elect a friend of his to the board of directors.Bob's friend is reasonably intelligent,but he has no business experience.In his proxy solicitation,Bob accurately describes his friend and his background and,indicates that the proxy is being sought in order to elect this friend to the board of directors.Bob does not disclose why he thinks his friend should be on the board of directors,nor does Bob disclose what effect he thinks his friend's membership on the board will have on company earnings.Two weeks before starting to solicit proxies,Bob filed copies of his proxy materials with the Securities and Exchange Commission.Bob:

• A) has not properly prepared the proxy statement, because he did not disclose the potential effect on company earnings of his friend's membership on the board.
• B) cannot solicit proxies because, he does not own a sufficient amount of stock in the corporation.
• C) can solicit the proxies, but only if he has obtained approval from the board of directors.
• D) will be able to recover the costs of this proxy contest, even if his friend is not elected.
• E) has complied with all applicable proxy requirements.

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Definitions:

Economic Aid

Economic aid is assistance given by one country or international organization to another in forms such as grants, loans, or credits to support the receiving country's economy.

Military Alliances

Formal agreements between nations to support each other militarily in the event of war or conflict.

Peace Corps

An agency of the United States government that sends American volunteers abroad to work on projects related to education, health, and economic development in developing countries.

Hydrogen Bomb

A highly destructive nuclear weapon that uses fusion of hydrogen isotopes to release massive amounts of energy, significantly more powerful than an atomic bomb.