LensCrafters 2015 Annual Report Download - page 28

Management Report as of December 31, 2015 Page 24 of 35
against other assets, including, but not limited to, accounts receivable. If we determine that impairments or other events
have occurred that lead us to believe we will not fully realize these assets, we record a write-down or a valuation allowance
equal to the amount by which the carrying value of the assets exceeds their fair market value. Although we believe our
inventory and other asset-related provisions are currently adequate, no assurance can be made that, given the rapid and
unpredictable pace of product obsolescence, we will not incur additional inventory or asset-related charges, which charges
could have a material adverse effect on our results of operations.
q) Leonardo Del Vecchio, our chairman and principal stockholder, controls61.45% of our voting power and is in a
position to affect our ongoing operations, corporate transactions and any matters submitted to a vote of our
stockholders, including the election of directors and a change in corporate control.
As of December 31, 2015, Mr. Leonardo Del Vecchio, the Chairman of our Board of Directors, through the company Delfin
S.à r.l., has voting rights over 297,218,025 Ordinary Shares, or 61.45% of the issued share capital. As a result, Mr. Del
Vecchio has the ability to exert significant influence over our corporate affairs and to control the outcome of virtually all
matters submitted to a vote of our stockholders, including the election of our directors, the amendment of our Articles of
Association or By-laws, and the approval of mergers, consolidations and other significant corporate transactions.
Mr. Del Vecchio’s interests may conflict with or differ from the interests of our other stockholders. In situations involving a
conflict of interest between Mr. Del Vecchio and our other stockholders, Mr. Del Vecchio may exercise his control in a
manner that would benefit him to the potential detriment of other stockholders. Mr. Del Vecchio’s significant ownership
interest could delay, prevent or cause a change in control of our company, any of which may be adverse to the interests of
our other stockholders.
r) If we are not successful in transitioning our leadership structure as currently intended, our future growth and
profitability may suffer.
In October 2014, we announced the introduction of a management structure based on a co-CEO model, pursuant to which
two co-chief executive officers are appointed to manage the principal executive officer responsibilities of the Group, with
one chief executive officer focused on Markets and the other focused on Product and Operations. The co-CEO leadership
structure allocates distinct yet complementary responsibilities between the two co-chief executive officers and is designed to
promote stronger management of the Group, which has rapidly increased in size, complexity and global presence in recent
years. In January 2016, our Board of Directors approved a modification to our governance structure by assigning executive
responsibility for Markets, a role formerly held by Mr. Adil Mehboob-Khan, to Mr. Leonardo Del Vecchio, the Company’s
Chairman of the Board and majority shareholder, as Executive Director. Mr. Massimo Vian continues in his role of CEO for
Product and Operations. If the new model proves ineffective, there may be delays in the implementation of the Group’s
strategic plans and reductions or slowdowns of our future growth and profitability.
s) If our procedures designed to comply with Section 404 of the Sarbanes-Oxley Act of 2002 cause us to identify
material weaknesses in our internal control over financial reporting, the trading price of our securities may be
adversely impacted.
Our annual report on Form 20-F includes a report from our management relating to its evaluation of our internal control
over financial reporting, as required under Section 404 of the U.S. Sarbanes-Oxley Act of 2002, as amended. There are