Wendy's 2011 Annual Report Download - page 26

This concentration of ownership gives Messrs. Peltz and May significant influence over the outcome of actions
requiring stockholder approval, including the election of directors and the approval of mergers, consolidations and the
sale of all or substantially all of the Company’s assets. They are also in a position to have significant influence to
prevent or cause a change in control of The Wendy’s Company. If in the future Messrs. Peltz and May were to
acquire more than a majority of The Wendy’s Company outstanding voting power, they would be able to determine
the outcome of the election of members of the Board of Directors and the outcome of corporate actions requiring
majority stockholder approval, including mergers, consolidations and the sale of all or substantially all of The
Wendy’s Company assets. They would also be in a position to prevent or cause a change in control of The Wendy’s
Company.
The Wendy’s Company’s certificate of incorporation contains certain anti-takeover provisions and permits our
Board of Directors to issue preferred stock without stockholder approval and limits its ability to raise capital
from affiliates.
Certain provisions in The Wendy’s Company’s certificate of incorporation are intended to discourage or delay a
hostile takeover of control of The Wendy’s Company. The Wendy’s Company’s certificate of incorporation
authorizes the issuance of shares of “blank check” preferred stock, which will have such designations, rights and
preferences as may be determined from time to time by its Board of Directors. Accordingly, its Board of Directors is
empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or
other rights that could adversely affect the voting power and other rights of the holders of its common stock. The
preferred stock could be used to discourage, delay or prevent a change in control of The Wendy’s Company that is
determined by its Board of Directors to be undesirable. Although The Wendy’s Company has no present intention to
issue any shares of preferred stock, it cannot assure you that it will not do so in the future.
The Wendy’s Company’s certificate of incorporation prohibits the issuance of preferred stock to affiliates,
unless offered ratably to the holders of The Wendy’s Company’s common stock, subject to an exception in the event
that The Wendy’s Company is in financial distress and the issuance is approved by its audit committee. This
prohibition limits the ability to raise capital from affiliates.
Risks Related to Wendy’s Restaurants
Wendy’s Restaurants is dependent on dividends and/or loans or advances from its subsidiaries to meet its debt
service obligations.
The ability of Wendy’s Restaurants’ subsidiaries to pay cash dividends and/or make loans or advances to
Wendy’s Restaurants will be dependent upon their respective abilities to achieve sufficient cash flows after satisfying
their respective cash requirements, including subsidiary-level debt service and revolving credit agreements, to enable
the payment of such dividends or the making of such loans or advances. The ability of any of its subsidiaries to pay
cash dividends or other payments to Wendy’s Restaurants will also be limited by restrictions in debt instruments
currently existing or subsequently entered into by such subsidiaries, including the Credit Agreement and the Senior
Notes indenture, which are described above in this Item 1A.
Item 1B. Unresolved Staff Comments.
None.
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