Sprouts Farmers Market 2014 Annual Report Download - page 37

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:
• 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.
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.
If securities or industry analysts cease publishing research or reports about us, our business, or
our market, or if they adversely change their recommendations regarding our stock, our stock price
and trading volume could decline.
The trading market for our common stock is influenced by the research and reports that industry or
securities analysts may publish about us, our business, our market or our competitors. If we do not
maintain adequate research coverage, or if any of the analysts who may cover us downgrade our stock or
publish inaccurate or unfavorable research about our business or provide relatively more favorable
recommendations about our competitors, our stock price could decline. If any analyst who may cover us
were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in
the financial markets, which in turn could cause our stock price or trading volume to decline.
34