WeightWatchers 2015 Annual Report Download - page 24

Artal effectively controls us and may have conflicts of interest with other shareholders in the future.
Artal effectively controls us and is effectively able to control the election and removal of our directors and
determine our corporate and management policies, including potential mergers or acquisitions, payment of
dividends, asset sales, the amendment of our articles of incorporation or bylaws and other significant corporate
transactions. This concentration of our ownership may delay or deter possible changes in control of our company,
which may reduce the value of an investment in our common stock. So long as Artal owns 10% or more of our
common stock, Artal will have the right pursuant to an agreement with us to nominate directors to our Board of
Directors in proportion to its stock ownership. In addition, Artal Luxembourg entered into a Voting Agreement
with Ms. Winfrey on October 18, 2015, pursuant to which Ms. Winfrey has agreed to vote all of her shares of our
common stock so as to elect such individuals designated as directors by Artal. The interests of Artal may not
coincide with the interests of other holders of our common stock.
We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a
result, qualify for exemptions from certain corporate governance requirements.
A group comprised of Artal and Ms. Winfrey controls a majority of the voting power of our outstanding
common stock. Under the New York Stock Exchange, or the NYSE, rules, a listed company of which more than
50% of the voting power for the election of directors is held by another person or group of persons acting
together is a “controlled company” and such a company may elect not to comply with certain NYSE corporate
governance requirements, including (1) the requirement that a majority of the Board of Directors consist of
independent directors, (2) the requirement that the nominating and corporate governance committee be composed
entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities,
(3) the requirement that the compensation committee be composed entirely of independent directors with a
written charter addressing the committee’s purpose and responsibilities, (4) that the compensation committee be
required to consider certain independence factors when engaging compensation consultants, legal counsel and
other committee advisors and (5) the requirement for an annual performance evaluation of the nominating and
corporate governance and compensation committees. We have elected to be treated as a “controlled company.”
Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are
subject to all of the NYSE corporate governance requirements.
Our articles of incorporation and bylaws and Virginia corporate law contain provisions that may
discourage a takeover attempt.
Provisions contained in our articles of incorporation and bylaws and the laws of Virginia, the state in which
we are incorporated, could make it more difficult for a third party to acquire us, even if doing so might be
beneficial to our shareholders. Provisions of our articles of incorporation and bylaws impose various procedural
and other requirements, which could make it more difficult for shareholders to effect certain corporate actions.
For example, our articles of incorporation authorize our Board of Directors to determine the rights, preferences,
privileges and restrictions of unissued series of preferred stock, without any vote or action by our shareholders.
Thus, our Board of Directors can authorize and issue shares of preferred stock with voting or conversion rights
that could adversely affect the voting or other rights of holders of our common stock. These rights may have the
effect of delaying or deterring a change of control of our company. In addition, a change of control of our
company may be delayed or deterred as a result of our having three classes of directors. These provisions could
limit the price that certain investors might be willing to pay in the future for shares of our common stock.
Item 1B. Unresolved Staff Comments
None.
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