8-KCorporate ChangesExhibits & Filings

COSTCO WHOLESALE CORP /NEW 8-K Report, Bylaw Amendment (Sep 30, 2016)

Filed September 30, 2016For Securities:COST

Summary

Costco Wholesale Corporation (COST) has filed an 8-K report detailing an amendment to its Amended and Restated Bylaws, effective immediately as of September 26, 2016. This amendment implements proxy access, a mechanism that allows eligible shareholders to nominate directors for inclusion in the company's proxy materials. This action follows the approval of a non-binding shareholder proposal at the 2016 annual meeting requesting such a provision. The new bylaws permit a shareholder, or a group of up to 20 shareholders, collectively holding at least 3% of the company's outstanding common stock for a minimum of three consecutive years, to nominate director candidates. The nominated directors can constitute up to the greater of two directors or 20% of the Board. These provisions align with those adopted by many other corporations and aim to enhance shareholder engagement and governance.

Key Highlights

  • 1Costco amended its bylaws to implement proxy access, allowing shareholders to nominate directors.
  • 2Shareholders owning 3% or more of stock for at least three years are eligible to use proxy access.
  • 3The proxy access provision allows nomination of up to two directors or 20% of the Board, whichever is greater.
  • 4This change was initiated following a non-binding shareholder proposal approved at the 2016 annual meeting.
  • 5The amendments also update advance notice requirements for shareholder nominations and business.
  • 6Proxy access will be effective for the Company's 2018 Annual Meeting of Shareholders.
  • 7The full text of the amended bylaws is available as an exhibit to this 8-K filing.

Frequently Asked Questions

Proxy access is a bylaw provision that allows eligible long-term shareholders to nominate director candidates and have them included in the company's own proxy materials for shareholder meetings. Costco implemented proxy access in response to a non-binding shareholder proposal approved at its 2016 annual meeting, reflecting a move towards greater shareholder governance involvement.

To utilize proxy access, a shareholder or a group of up to 20 shareholders must collectively own at least 3% of Costco's outstanding common stock. This ownership stake must be maintained continuously for a minimum of three years prior to the nomination.

Through the proxy access mechanism, shareholders can nominate director candidates constituting up to the greater of two directors or 20% of the total number of directors on Costco's Board of Directors.

While the amendments to the bylaws are effective immediately as of September 26, 2016 (with some provisions effective November 1, 2016), the proxy access provision itself will first apply with respect to Costco's 2018 Annual Meeting of Shareholders.