VMware 2013 Annual Report Download - page 37

Table of Contents
Additionally, broad market and industry factors may decrease the market price of our Class A common stock, regardless of our actual operating
performance. The stock market in general and technology companies in particular have often experienced extreme price and volume fluctuations. In addition,
in the past, following periods of volatility in the overall market and the market price of a company’
s securities, securities class action litigation has often been
instituted, including against us, and, if not resolved swiftly, can result in substantial costs and a diversion of management’s attention and resources.
If securities or industry analysts change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our Class A common stock is influenced by the research and reports that industry or securities analysts publish about us, our
business, our market or our competitors. If any of the analysts who cover us change their recommendation regarding our stock adversely, or provide more
favorable relative recommendations about our competitors, our stock price would likely decline.
Delaware law and our certificate of incorporation and bylaws contain anti
-takeover provisions that could delay or discourage takeover attempts that
stockholders may consider favorable.
Provisions in our certificate of incorporation and bylaws will have the effect of delaying or preventing a change of control or changes in our
management. These provisions include the following:
Until such time as EMC or its successor-in-interest ceases to beneficially own 20% or more of the outstanding shares of our common stock, the
affirmative vote or written consent of the holders of a majority of the outstanding shares of the Class B common stock will be required to:
In addition, we have elected to apply the provisions of Section 203 of the Delaware General Corporation Law. These provisions may prohibit large
stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us. These provisions in our certificate
of incorporation and bylaws and under Delaware law could discourage potential takeover attempts and could reduce the price that investors might be willing
to pay for shares of our common stock.
35
• the division of our board of directors into three classes, with each class serving for a staggered three-year term, which prevents stockholders from
electing an entirely new board of directors at any annual meeting;
•
the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors;
• following a 355 distribution of Class B common stock by EMC to its stockholders, the restriction that a beneficial owner of 10% or more of our
Class B common stock may not vote in any election of directors unless such person or group also owns at least an equivalent percentage of Class A
common stock or obtains approval of our board of directors prior to acquiring beneficial ownership of at least 5% of Class B common stock;
• the prohibition of cumulative voting in the election of directors or any other matters, which would otherwise allow less than a majority of
stockholders to elect director candidates;
• the requirement for advance notice for nominations for election to the board of directors or for proposing matters that can be acted upon at a
stockholders’ meeting;
•
the ability of the board of directors to issue, without stockholder approval, up to 100,000,000 shares of preferred stock with terms set by the board of
directors, which rights could be senior to those of common stock; and
• in the event that EMC or its successor-in-interest no longer owns shares of our common stock representing at least a majority of the votes entitled to
be cast in the election of directors, stockholders may not act by written consent and may not call special meetings of the stockholders.
•
amend certain provisions of our bylaws or certificate of incorporation;
•
make certain acquisitions or dispositions;
•
declare dividends, or undertake a recapitalization or liquidation;
• adopt any stockholder rights plan, “poison pill”
or other similar arrangement;
• approve any transactions that would involve a merger, consolidation, restructuring, sale of substantially all of our assets or any of our subsidiaries or
otherwise result in any person or entity obtaining control of us or any of our subsidiaries; or
•
undertake certain other actions.