Burger King 2006 Annual Report Download - page 36

Environmental groups, some scientists and consumers, particularly in Europe, are raising questions regarding
the potential adverse side effects, long-term risks and uncertainties associated with genetically modified foods.
Regulatory agencies in Europe and elsewhere have imposed labeling requirements on genetically modified
food products. Increased regulation of and opposition to genetically engineered food products have in the past
forced us and may in the future force us to use alternative non-genetically engineered sources at increased
costs.
Our current principal stockholders have significant influence over us, and they could delay, deter or prevent a
change of control or other business combination or otherwise cause us to take action with which you may
disagree.
The private equity funds controlled by the Sponsors together beneficially own approximately 75.9% of our
outstanding common stock. In addition, six of our 13 directors are representatives of the private equity funds
controlled by the Sponsors. Each Sponsor retains the right to nominate two directors, subject to reduction and
elimination as the stock ownership percentage of the private equity funds controlled by the applicable Sponsor
declines. As a result, these private equity funds have significant influence over our decision to enter into any
corporate transaction and have the ability to prevent any transaction that requires the approval of stockholders,
regardless of whether or not other stockholders believe that such transaction is in their own best interests.
Such concentration of voting power could have the effect of delaying, deterring or preventing a change of
control or other business combination that might otherwise be beneficial to our stockholders.
We are a ""controlled company'' within the meaning of the New York Stock Exchange rules, and, as a result,
qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide
protection to stockholders of other companies.
The private equity funds controlled by the Sponsors collectively own more than 50% of the total voting
power of our common shares and thus we are a ""controlled company'' under the New York Stock Exchange,
or NYSE, corporate governance standards. As a controlled company, we utilize certain exemptions under the
NYSE standards that free us from the obligation to comply with certain NYSE corporate governance
requirements, including the requirements:
‚ that a majority of our board of directors consists of independent directors;
‚ that we have a nominating and governance committee that is composed entirely of independent
directors with a written charter addressing the committee's purpose and responsibilities;
‚ that we have a compensation committee that is composed entirely of independent directors with a
written charter addressing the committee's purpose and responsibilities; and
‚ for an annual performance evaluation of the nominating and governance committee and compensation
committee.
While our executive and corporate governance committee and our compensation committee have
charters that comply with the NYSE requirements, we are not required to maintain those charters. As a result
of our use of these exemptions, our stockholders will not have the same protection afforded to stockholders of
companies that are subject to all of the NYSE corporate governance requirements.
Your percentage ownership in us may be diluted by future issuances of capital stock, which could reduce your
influence over matters on which stockholders vote.
Our board of directors has the authority, without action or vote of our stockholders, to issue all or any part
of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options,
or shares of our authorized but unissued preferred stock. Issuances of common stock or voting preferred stock
would reduce a stockholder's influence over matters on which our stockholders vote, and, in the case of
issuances of preferred stock, would likely result in a stockholder's interest in the Company being subject to the
prior rights of holders of that preferred stock.
24