Bob Has Decided to Solicit Proxies from Shareholders of Sunset

question 77

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 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 being on the board will have on the earnings of the company.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 effect on the earnings of the company of electing his friend to the board
• B) cannot solicit proxies because he has not owned at least $1,000 of stock for 2 years
• C) can solicit the proxies 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 applicable proxy requirements

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Definitions:

Employer-paid Health Insurance

A benefit where the employer covers part or all of the health insurance premium for their employees.

Employer-paid Retirement Program

A retirement savings plan funded by the employer, contributing to an employee’s retirement benefits.

Warranty Costs

Expenses associated with repairing or replacing products under warranty.