Alaska Airlines and Horizon Air 2007 Annual Report Download - page 72

•Poison pill: Our directors have the
power to adopt a poison pill that is
never subject to a shareholder vote.
•Three directors had 16 to 25 years
tenure — Independence concern and
director retirement concern.
•Mr. Langland, with 16 years director
tenure, chaired our nomination
committee — Independence concern
and recruitment concern.
•Ms. Bedient chaired our Audit
Committee and yet was not even an
Audit Financial Expert.
•Plus Ms. Bedient received our most
withheld votes in 2007.
The above concerns show there is need for
improvement and reinforces the reason to
encourage our board to respond positively to this
proposal:
Poison Pill Vote –
Yes on 3
BOARD OF DIRECTORS’ RESPONSE TO STOCKHOLDER PROPOSAL 3
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST PROPOSAL 3
FOR THE FOLLOWING REASONS:
The Board opposes the proposal as
unnecessary and duplicative because the
Company currently does not have a stockholder
rights plan (sometimes referred to as a “poison
pill”), and has already adopted as part of its
Corporate Governance Guidelines a policy
regarding stockholder approval of any future
stockholder rights plans.
A stockholder rights plan or “poison pill” is a
defensive measure against a hostile takeover of
a company that works by diluting the ownership
of a potential acquiror upon the occurrence of
specific events. Stockholder rights plans are
designed to strengthen the ability of a board of
directors to maximize stockholder value and
protect stockholders from abusive or
opportunistic takeover tactics by encouraging
negotiations with the board of the target
company. The ability to adopt a stockholder
rights plan does not, however, give a board of
directors absolute discretion to veto a proposed
business combination. Under Delaware law, the
Company’s Board must always act in accordance
with its fiduciary duties in adopting and
maintaining a stockholders rights plan.
The Company does not have and has not
had a stockholder rights plan since 2002, and
has no current plans to adopt one. In 2004, in
response to a stockholder proposal that received
a majority of affirmative votes at our annual
meeting, the Company adopted a policy on rights
plans that is designed to balance the concerns
of stockholders and the Board’s fiduciary
obligations under Delaware law. This policy
states that the Company will adopt a stockholder
rights plan only if stockholders have approved
the plan, or if the Board determines, in
exercising its fiduciary duties, that such a plan is
in the best interests of the stockholders. Under
this policy, if the Board were to adopt a
stockholder rights plan without stockholder
approval, it would submit the plan to
stockholders for ratification, and if the plan is
not ratified, it would terminate or allow the plan
to expire no later than one year after adoption.
In recommending a vote against the
proposal, the Board of Directors has not
determined that a rights plan should be adopted
by the Company. Any such determination would
be made only after careful deliberation, in light of
all circumstances then prevailing, in compliance
with the Company’s policy statement on
stockholder rights plans as summarized above,
and in the exercise of the Board’s fiduciary
duties under Delaware law to represent and
protect the Company’s stockholders when
evaluating the merits of any acquisition proposal.
In this regard, it should be noted that our Board
of Directors is elected by the stockholders, and
all but one of its members are independent
directors who are not employed by the Company.
In considering how to vote on the proposal,
it is also important to note that the proponent
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