Summary
Salesforce.com, Inc. (CRM) announced on February 22, 2013, its intention to seek stockholder approval to declassify its Board of Directors at the upcoming 2013 Annual Meeting of Stockholders. This move, if approved by a 66 2/3% supermajority vote of outstanding stock, would transition the board to annual elections for all directors, phasing out staggered, multi-year terms. The company's board will recommend a 'for' vote on this proposal, which will require an amendment to the company's certificate of incorporation.
Key Highlights
- 1Salesforce.com intends to declassify its Board of Directors.
- 2Stockholder approval is required for the declassification proposal.
- 3A supermajority vote of 66 2/3% of outstanding stock is needed for approval.
- 4The declassification will transition the board to annual director elections.
- 5The company's board will recommend that stockholders vote in favor of the proposal.
- 6The proposal will be included in the proxy statement for the 2013 Annual Meeting, expected in June 2013.
- 7This change requires an amendment to Salesforce's certificate of incorporation.
Frequently Asked Questions
The primary purpose of this filing is to announce Salesforce.com's intention to propose the declassification of its Board of Directors to its stockholders for approval at the 2013 Annual Meeting. This means moving away from staggered director terms to annual elections for all board members.
A classified board, also known as a staggered board, divides directors into classes with overlapping multi-year terms. This structure can make it harder for activist investors to gain control quickly. Salesforce is seeking to declassify it, presumably to align with corporate governance best practices and allow shareholders more direct and frequent say in board composition.
The declassification is planned as a phase-out. Directors who have already been elected will serve out their current terms. The change will only affect newly elected and re-elected directors, who will then serve one-year terms going forward, until the board is fully declassified.
The proposal to declassify the board requires a supermajority vote of 66 2/3% of Salesforce's outstanding stock for approval. The company's board will recommend that stockholders vote in favor of this measure.