Pep Boys 2007 Annual Report Download - page 37

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29
(ITEM 3) THE AMENDMENT OF OUR ARTICLES OF INCORPORATION
TO PROVIDE FOR MAJORITY VOTING IN UNCONTESTED ELECTIONS OF DIRECTORS
Pep Boys has a longstanding commitment to solid corporate governance, and is committed to providing
shareholders a meaningful role in the election of Directors. Accordingly, we are recommending to our shareholders
the amendment of our Articles of Incorporation to include a majority vote standard in uncontested elections of
Directors.
If adopted, the majority vote standard would provide that in uncontested elections - elections where the number
of nominees equals the number of Directors to be elected - a Director nominee will only be elected if the number of
votes cast “for” the nominee exceeds the number of votes cast “against” the nominee. An “abstain” vote will have
no effect on the outcome of the election, but will be counted for purposes of determining whether a quorum is
present. New nominees, if any, not already serving on the Board who fail to receive a majority of votes cast in
uncontested elections will not be elected to the Board in the first instance. Under Pennsylvania law, if an
incumbent Director nominee does not receive such majority vote in an uncontested election, the incumbent Director
will continue to serve on the Board until his or her successor is elected and qualified. Accordingly, if the proposed
amendment is adopted, an incumbent director who does not receive the required majority vote for re-election will be
required to tender a resignation to the Board of Directors. The Board of Directors will then accept or reject the
resignation, or take other appropriate action, based upon the best interests of the Company and its shareholders and
will publicly disclose its decision and rationale within 90 days.
In contested elections, those in which the number of nominees exceed the number of Directors to be elected, the
voting standard will continue to be a plurality of votes cast - those nominees receiving the most votes cast are
elected. In addition, the proposed amendment clarifies that a shareholders right to cumulate votes - the right to
multiply the number of votes to which he or she may be entitled by the total number of Directors to be elected in
such election and he may cast the whole number of his votes for (but not against) any one nominee or he may
distribute them among two or more nominees – will continue to apply only in contested elections.
The text of the proposed amendment to our Articles of Incorporation is attached to this Proxy Statement as
Appendix B.
Under Pennsylvania law, the affirmative vote of a majority of the votes cast at a shareholder meeting is required
to approve the amendment. The Board urges each shareholder to read Appendix B carefully before voting on this
proposal. If the proposed amendment is approved by our shareholders, it will become effective upon filing with the
Secretary of the Commonwealth of Pennsylvania.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR"
THE AMENDMENT OF OUR ARTICLES OF INCORPORATION
TO PROVIDE FOR MAJORITY VOTING IN UNCONTESTED ELECTIONS OF DIRECTORS
Proxy