LendingClub Corporation
Extract: Charter Amendment (Plain English Desc) from a DEF 14A on 04/25/2019   Download
SEC Document
SEC Filing
PROPOSAL FIVE:
REVERSE STOCK SPLIT AND REDUCE THE NUMBER OF AUTHORIZED SHARES

Overview

The Company is asking stockholders to approve and adopt an amendment to the Company’s Restated Certificate of Incorporation to (i) effect a reverse stock split of the issued and outstanding shares of common stock of the Company, at a reverse stock split ratio of 1-for-5, and (ii) reduce the number of authorized shares of common stock of the Company by a corresponding ratio, rounded to the nearest whole share. Our Board has unanimously adopted resolutions approving, declaring advisable and recommending to our stockholders for their approval a proposed amendment to the Company’s Restated Certificate of Incorporation that would, at the discretion of the Board, (i) effect a reverse stock split of all of the issued and outstanding shares of the common stock of the Company and those shares held by the Company in treasury stock, whereby each five (5) shares of common stock would be combined converted and changed into one (1) share of common stock of the Company and (ii) reduce the number of authorized shares of the common stock of the Company by a corresponding ratio, rounded to the nearest whole share.

The text of the proposed form of Certificate of Amendment to the Company’s Restated Certificate of Incorporation to effect the reverse stock split is attached to this Proxy Statement as Annex II. However, such text is subject to amendment to include such changes as may be required by the office of the Secretary of State of the State of Delaware or as our Board deems necessary and advisable to effect the reverse stock split. Whether to proceed with the effectiveness or abandonment of such amendment will be determined by our Board in its sole discretion.

If stockholders approve this proposal, our Board will cause an amendment to the Company’s Restated Certificate of Incorporation to be filed with the Secretary of State of the State of Delaware and effect the reverse stock split only if the Board determines thereafter that the reverse stock split would be in the best interests of the Company and its stockholders. Our Board also may determine in its discretion not to effect any reverse stock split and not to file the corresponding amendment to the Company’s Restated Certificate of Incorporation, with the effectiveness or abandonment of such amendment to be determined by the Board of Directors as permitted under Section 242(c) of the Delaware General Corporation Law. No further action on the part of stockholders will be required to either effect or abandon the reverse stock split.

Background and Rationale

Our Board is seeking approval for the reverse stock split with the primary intent of reducing our annual listing fees with the NYSE by reducing the number of outstanding shares of Company common stock and facilitating investment in our common stock.

We are aware that certain institutional investors and investment funds may be reluctant to invest, and, in some cases, may be prohibited from investing, in a stock whose price is below a certain threshold. Additionally, retail brokerage firms may be reluctant to recommend lower-priced stocks to their clients. The reverse stock split could increase our market price to a level that would be viewed more favorably by potential investors and may increase or broaden the Company’s potential investor base for our stock. Further, brokerage commissions, as a percentage of the total transaction, tend to be higher for lower-priced stocks. As a result, certain investors may also be dissuaded from purchasing lower-priced stocks. A higher stock price after the reverse stock split may reduce this concern. The proposed amendment, if effected, will effect a reverse stock split of the issued and outstanding shares of common stock of the Company, at a reverse stock split ratio of 1-for-5, and reduce the number of authorized shares of common stock of the Company by a corresponding ratio, rounded to the nearest whole share. As of March 31, 2019, the Company had 431,920,251 shares of common stock issued and outstanding. The closing price of the common stock on the NYSE on April 12, 2019 was $3.32 and over the prior 52 weeks the closing price of the common stock has ranged from a 52-week high of $4.55 to a 52-week low of $2.46.

Additionally, our annual listing fees with the NYSE are calculated based on the number of outstanding shares of our common stock and is currently approaching the maximum fees possible. The reverse stock split would substantially reduce the number of outstanding shares of our common stock, which would result in a reduction in the Company’s NYSE listing fees.