8-KSecurities & Listing

COSTCO WHOLESALE CORP /NEW 8-K Report, Listing Notice (May 7, 2015)

Filed May 7, 2015For Securities:COST

Summary

Costco Wholesale Corporation (COST) filed an 8-K on May 6, 2015, reporting a material event related to its board of directors' independence. The filing discloses the resignation of Dr. Benjamin S. Carson, Sr. from the board, effective May 1, 2015. As a result of this resignation, the company is no longer in compliance with Nasdaq Listing Rule 5605(b)(1), which mandates that a majority of the board must consist of independent directors. Nasdaq has granted Costco a cure period until its next annual shareholders' meeting to regain compliance with this listing rule. The company has stated its intention to appoint new directors to ensure its board meets the independence requirements and maintains its listing on the Nasdaq Stock Market. Investors should monitor Costco's subsequent filings for updates on board composition and compliance efforts.

Key Highlights

  • 1Dr. Benjamin S. Carson, Sr., an independent director and Chairman of the Compensation Committee, resigned from Costco's board on May 1, 2015.
  • 2The resignation caused Costco to fall out of compliance with Nasdaq Listing Rule 5605(b)(1), requiring a majority of the board to be independent.
  • 3Costco notified Nasdaq of the non-compliance on May 4, 2015.
  • 4Nasdaq issued a letter on May 6, 2015, confirming the non-compliance and granting a cure period.
  • 5The company has until its next annual shareholders' meeting to regain compliance with the independent director requirement.
  • 6Costco intends to take action to ensure its board meets Nasdaq's independence standards and to maintain its listing on the exchange.

Frequently Asked Questions

The 8-K filing is primarily to report that Costco Wholesale Corporation is no longer in compliance with Nasdaq's requirement that a majority of its board of directors be independent, due to the resignation of a key independent director, Dr. Benjamin S. Carson, Sr.

While Costco is currently not in compliance, Nasdaq has provided a cure period. The company fully intends to regain compliance by its next annual shareholders' meeting, which should prevent any negative impact on its continued listing on the Nasdaq Stock Market.

Costco has stated its intention to regain compliance with the independence requirement. This typically involves appointing new directors to the board who meet the independence criteria, a process that investors will likely see detailed in future SEC filings.

Costco has until its next annual shareholders' meeting to appoint new directors and ensure its board is comprised of a majority of independent directors, thereby regaining compliance with Nasdaq Listing Rule 5605(b)(1).