Pottery Barn 2010 Annual Report Download - page 123

Provision W-S California W-S Delaware
Cumulative Voting; Vote
Required to Elect Directors
California law provides that if any
shareholder has given notice of his or
her intention to cumulate votes for the
election of directors, all other
shareholders of the corporation are
also entitled to cumulate their votes at
such election. California law permits a
corporation that is listed on a national
securities exchange to amend its
articles or bylaws to eliminate
cumulative voting by approval of the
board of directors and of the
outstanding shares voting together as a
single class.
The California Articles and the
California Bylaws have not eliminated
cumulative voting.
The Board of W-S California has
adopted a majority voting policy in
uncontested elections.
Under Delaware law, cumulative
voting is not permitted unless a
corporation provides for cumulative
voting rights in its certificate of
incorporation. Further, a corporation
may adopt a policy that specifies the
vote necessary for the election of
directors, such as a majority.
The Board of W-S Delaware has
adopted a majority voting bylaw in
uncontested elections. As a result, we
will not provide for cumulative voting
in director elections following the
Reincorporation. Most Delaware
corporations have not adopted
cumulative voting.
The Board believes that cumulative
voting is incompatible with the
objectives of a majority voting
standard. Majority voting enables all
stockholders to have a greater voice in
director elections and facilitates the
election of directors who most closely
represent the interests of all
stockholders. By contrast, cumulative
voting gives stockholders the ability to
vote all of their shares for a single
nominee or to distribute the number of
shares that they are entitled to vote
among two or more nominees.
Cumulative voting thus allows
minority stockholders to elect a
director, and the absence of cumulative
voting would make it more difficult for
a minority stockholder whose interests
may be adverse to a majority of the
stockholders to obtain representation
on the Board.
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