Preferred stockholders generally are given the right to vote for directors if
A) the preferred stock is participating preferred stock.
B) the directors are elected under the cumulative method.
C) the common stockholders do not vote in new directors with a clear majority.
D) the company cannot pay its interest payments.
E) the company has not paid the preferred dividend for a specified period.

Question

Quizplus · Accepted Answer

Preferred stockholders are typically given the right to vote for directors if the company has not paid the preferred dividend for a specified period. This is known as a "cumulative" or "non-cumulative" dividend requirement, and the length of the specified period will vary depending on the specific terms of the preferred stock. If the company fails to pay the preferred dividend for this period, the preferred stockholders will often be given the right to elect some or all of the company's directors.

Preferred Stockholders Generally Are Given the Right to Vote for Directors