Walgreens 2015 Annual Report Download - page 31

Certain stockholders may have significant voting influence over matters requiring stockholder approval.
As of August 31, 2015, affiliates of Stefano Pessina, our Executive Vice Chairman and Chief Executive Officer
(the “SP Investors”), and affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”, and together with certain of
its affiliates, the “KKR Investors”) together had sole or shared voting power, directly or indirectly, over an
aggregate of approximately 20.2% of our outstanding common stock, based on filings by such persons with the
SEC. This total includes the approximately 12.8% of our outstanding common stock (as of August 31, 2015) held
by Sprint Acquisitions Holdings Limited (f/k/a AB Acquisitions Holdings Limited) (“Sprint Acquisitions”),
which is jointly controlled by Mr. Pessina (indirectly through controlled entities) and the KKR Investors, which
could be distributed to the various shareholders of Sprint Acquisitions (including the SP Investors and the KKR
Investors) in fiscal 2016 as described below. The SP Investors and the KKR Investors have agreed to, for so long
as the SP Investors and the KKR Investors (as applicable) have the right to designate a nominee for election to
the Board, to vote all of their shares of common stock in accordance with the Board’s recommendation on
matters submitted to a vote of the Company’s stockholders (including with respect to the election of directors).
Whether or not subject to these voting provisions, the SP Investors’ and/or the KKR Investors’ significant
interest in our common stock potentially could determine the outcome of matters submitted to a vote by our
stockholders. The influence of the SP Investors and/or the KKR Investors could result in our taking actions that
other stockholders do not support or failing to take actions that other stockholders support. As a result, the market
price of our common stock could be adversely affected.
Shares issued to Alliance Boots stockholders in connection with our strategic combination with Alliance
Boots are or soon will be eligible for future sale.
In connection with our strategic combination with Alliance Boots, we issued a total of approximately
227.7 million shares of our common stock to former Alliance Boots shareholders. These shares represented
approximately 20.9% of our outstanding shares as of August 31, 2015. We also entered into, on August 2, 2012,
a shareholders agreement (the “Company Shareholders Agreement”) with certain of the SP Investors and the
KKR Investors that imposed certain contractual restrictions that generally prohibited them from transferring
these shares of our common stock for specified time periods. These transfer restrictions have now lapsed.
However, unless the SP Investors and the KKR Investors have elected to put certain guarantees in place, the
Purchase and Option Agreement prohibits Sprint Acquisitions from distributing more than 10% of the shares of
our common stock it received on completion of the Second Step Transaction to its investors until December 31,
2015. Accordingly, subject to these provisions of the Purchase and Option Agreement and certain obligations
pursuant to the Company Shareholders Agreement, these shares may now be sold pursuant to Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), depending on the holding period and subject to
restrictions in the case of shares held by persons deemed to be our affiliates. The Company Shareholders
Agreement also contains registration rights that would obligate us, in certain instances, to file future registration
statements under the Securities Act covering resales of these shares or to permit a “piggyback” on a future
registration statement. A sale, or the perception that a sale may occur, of a substantial number of shares of our
common stock could adversely impact the market price of our common stock.
Conflicts of interest, or the appearance of conflicts of interest, may arise because certain of our directors
and officers are also owners or directors of our largest stockholder.
As of August 31, 2015, Sprint Acquisitions was the holder of approximately 12.8% of our outstanding common
stock. Sprint Acquisitions is jointly controlled by Stefano Pessina (indirectly through controlled entities) and the
KKR Investors. Mr. Pessina is our Executive Vice Chairman and Chief Executive Officer, and Mr. Dominic
Murphy is both a partner of KKR and one of our directors. Additionally, each of Marco Pagni, our Executive
Vice President, Global Chief Legal and Administrative Officer, and Ornella Barra, our Executive Vice President,
President and Chief Executive, Global Wholesale and International Retail, serves as a director of Sprint
Acquisitions and/or its affiliates. This overlap could create, or appear to create, potential conflicts of interest,
when our interests diverge with those of Sprint Acquisitions and/or its affiliates. For example, potential conflicts
of interest could arise if a dispute were to arise between the Company and Sprint Acquisitions in connection with
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