Sprouts Farmers Market 2013 Annual Report Download - page 43

Table of Contents
Our principal stockholders have substantial control over us and are able to influence corporate matters.
As of December 29, 2013, our directors, executive officers, and holders of more than 5% of our common stock, together with
their affiliates, beneficially own, in the aggregate, approximately 54.6% of our outstanding common stock. In particular, as of
December 29, 2013 the Apollo Funds beneficially owned, in the aggregate, approximately 38.2% of our outstanding common stock.
As a result, these stockholders, acting together, or the Apollo Funds acting alone, will be able to exercise significant influence over
all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such
as a merger or other sale of our company or its assets. This concentration of ownership could limit your ability to influence
corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us.
Anti-takeover provisions could impair a takeover attempt and adversely affect existing stockholders.
Certain provisions of our certificate of incorporation and bylaws and applicable provisions of Delaware law may have the effect
of rendering more difficult, delaying, or preventing an acquisition of our company, even when this would be in the best interest of
our stockholders. Our corporate governance documents include the following provisions:
In addition, Delaware law imposes conditions on the voting of “control shares” and on certain business combination
transactions with “interested stockholders.”
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our
management. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring
a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and
could also affect the price that some investors are willing to pay for our common stock.
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• creating a classified board of directors whose members serve staggered three-year terms;
• authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval
and may contain voting, liquidation, dividend, and other rights superior to our common stock;
• limiting the liability of, and providing indemnification to, our directors and officers;
• prohibiting our stockholders from acting by written consent, thereby requiring stockholder action to be taken at an annual
or special meeting of stockholders;
•
prohibiting our stockholders from calling special meetings of stockholders, which may delay the ability of our stockholders
to force consideration of a proposal or the ability of holders controlling a majority of our capital stock to take any action,
including the removal of directors;
• requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for
nominations of candidates for election to our board of directors;
•
controlling the procedures for the conduct and scheduling of board and stockholder meetings;
• providing the board of directors with the express power to postpone previously scheduled annual meetings and to cancel
previously scheduled special meetings;
• permitting newly created directorships resulting from an increase in the authorized number of directors or vacancies on
our board of directors to be filled only by a majority of our remaining directors, even if less than a quorum is then in office,
or by a sole remaining director; and
• providing that our board of directors is expressly authorized to make, repeal, alter, or amend our bylaws.