VMware 2015 Annual Report Download - page 29

TableofContents
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.
Anti-takeover provisions in Delaware law and our charter documents could discourage takeover attempts.
Asourcontrollingstockholder,EMChastheabilitytopreventachangeincontrolofVMware.Provisionsinourcertificateofincorporationandbylawsmay
alsohavetheeffectofdelayingorpreventingachangeofcontrolorchangesinourmanagement.Theseprovisionsincludethefollowing:
• 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(includingDenali,iftheDellAcquisitioniscompleted)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.
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
28