JetBlue Airways Corporation
Extract: Charter Amendment (Plain English Desc) from a DEF 14A on 04/03/2020   Download
SEC Document
SEC Filing

MANAGEMENT PROPOSAL 6

TO APPROVE AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO REQUEST THAT THE COMPANY CALL A SPECIAL MEETING

 

 

The Board recommends that the Company’s stockholders approve and adopt an amendment to Article VII of the Company’s Amended and Restated Certificate of Incorporation to provide stockholders who comply with the requirements of the Company’s Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws with the right to request that the Company call a special meeting of stockholders (the “Special Meeting Amendment”). Our Board has recommended that stockholders vote in favor of the Special Meeting Amendment and has approved corresponding changes to our Amended and Restated Bylaws which outline the notice, information and other requirements related to the right to call a special meeting (the “Special Meeting Bylaw Amendments”) that will become effective upon the effectiveness of the Special Meeting Amendment.

 

The text of the Special Meeting Amendment is contained in Appendix E. The Board has also approved, subject to the effectiveness of the Special Meeting Amendment, corresponding Special Meeting Bylaw Amendments. The proposed Bylaw Amendments are contained in Appendix B. Stockholders should review both Appendices E and B, together with the Company’s existing Amended and Restated Certificate of Incorporation, which is included as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC.

 

The Board believes that permitting stockholders who have held at least a 20% voting power in our outstanding Common Stock to request that the Company call a special meeting of stockholders is in the best interests of our stockholders. The Governance and Nominating Committee of the Board, which is composed entirely of independent directors, regularly considers and evaluates a broad range of corporate governance issues affecting the Company and has recommended the Amendments to the Board.

 

The Board and the Governance and Nominating Committee have carefully considered the implications of the Special Meeting Amendment and the Special Meeting Bylaw Amendments to allow stockholders to request that the Company call a special meeting of stockholders. The ability of stockholders to call special meetings is increasingly considered by some investors to be an important aspect of good corporate governance. The Board is strongly committed to good corporate governance and supports the practice of permitting stockholders to request that the Company call special meetings, provided that the request is made by stockholders owning (in an economic sense) a significant percentage of the shares of the Company. Organizing and preparing for a special meeting involves a significant commitment of management time and attention that may disrupt focus on other corporate priorities, and imposes substantial legal, administrative and distribution costs on the Company. The Board believes that a special meeting of stockholders should only be held in special or extraordinary circumstances, dictated by fiduciary, strategic, significant transactional or similar considerations that should be addressed immediately and not delayed until the next annual meeting and that are of interest to a broad base of stockholders. The Board believes that establishing a 20% ownership threshold to request that the Company call a special meeting strikes a reasonable balance between enhancing stockholder rights and protecting against the risk that a small minority of stockholders, including stockholders with special interests which may not be shared by the majority of the Company’s stockholders, could request that the Company call one or more special meetings that could result in unnecessary financial expense and disruption to our business. Likewise, the Board believes that only stockholders with a true economic and non-transitory interest in the Company should be entitled to utilize the special meeting mechanism and, after reviewing a number of factors, has determined that a threshold of 20% is appropriate.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    81

 

 

The Board also considered that the power to call a special meeting of stockholders has historically been a tool for acquirers in the hostile merger and acquisition context. Potential acquirers seeking to take over the Company for an inadequate price could threaten to call a a special meeting of stockholders to replace members of the Board to increase their negotiating leverage or to avoid negotiating at all with the Board, which has the legal duty to protect the interests of all stockholders.

 

Additionally, the Company has an established process by which stockholders may communicate directly with the Board of Directors throughout the year on any topics of interest to stockholders. The Board and the Company will continue to maintain existing governance mechanisms that afford management and the Board the ability to respond to the concerns of all stockholders regardless of the level of share ownership.

 

In light of these considerations, establishing a 20% threshold for the right of stockholders to request that the Company call a special meeting provides stockholders with a meaningful ability to request that the Company call a special meeting while helping protect the long-term interests of the Company and its stockholders. The Board believes that an ownership threshold of 20% is appropriate based on the Company’s current size and stockholder composition, as it would provide the Company’s stockholders with a meaningful right to request a special meeting, while mitigating the risk that corporate resources are wasted to serve the narrow self-interests of a few minority stockholders. In addition, a 20% special meeting ownership threshold is in line with current market practice.

 

The proposed right of stockholders to request that the Company call special meetings is also subject to the notice, information and other requirements and limitations set forth in the amendments to the Company’s Amended and Restated Bylaws. If a requesting stockholder does not comply with the requirements and conditions provided in the Bylaws, a special meeting request by that stockholder will be invalid. Likewise requests to call a special meeting to vote on matters recently voted on by stockholders or that will considered by stockholders imminently at an upcoming meeting of stockholders will not be permitted. The Board believes that the requirements described above are important to, among other things, avoid duplicative and unnecessary special meetings regarding matters recently considered by stockholders or that stockholders will imminently consider at an upcoming stockholder meeting.

 

This description of the proposed Special Meeting Amendment and the Special Meeting Bylaw Amendments is a summary and is qualified by and subject to the full text of the Special Meeting Amendment and the Special Meeting Bylaw Amendments, which are attached to this proxy statement as Appendices E and B, respectively. Additions of text are indicated by underlining, and deletions of text are indicated by strike-outs.

 

Approval and adoption of the proposed Amendments require the affirmative vote of the holders of at least a majority in voting power of the stock entitled to vote on the subject matter. If the Amendment is approved and adopted by our stockholders, the Company will file a certificate of amendment setting forth the Special Meeting Amendment with the Secretary of State of the State of Delaware, which will become effective upon its filing. Effective upon the effectiveness of the Special Meeting Amendment, the Special Meeting Bylaw Amendments will become effective. If the Special Meeting Amendment is not approved and adopted by the stockholders, stockholders will not be permitted to request that the Company call a special meeting of stockholders and the related Special Meeting Bylaw Amendments will not become effective.

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENTS TO THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO REQUEST THAT THE COMPANY CALL A SPECIAL MEETING OF STOCKHOLDERS, WHICH IS DESIGNATED AS PROPOSAL NO. 6.

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    82

 

 

MANAGEMENT PROPOSAL 7

TO APPROVE AN AMENDMENT OF THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO ACT BY WRITTEN CONSENT

 

The Board is submitting for stockholder approval and adoption a proposal to amend Article VII of our Amended and Restated Certificate of Incorporation to allow stockholders who comply with the requirements set forth in our Amended and Restated Certificate of Incorporation to take certain actions they could take at a meeting of stockholders by written consent (the “Written Consent Amendment”). Our Board has recommended that stockholders vote in favor of the Written Consent Amendment, and has approved conforming changes to our Amended and Restated Bylaws (the “Consent Bylaw Amendments”) that will become effective upon the effectiveness of the Written Consent Amendment.

 

The text of the Written Consent Amendment is contained in Appendix B. The Board has also approved, subject to the effectiveness of the Written Consent Amendment, the Written Consent Bylaw Amendments. The proposed Written Consent Bylaw Amendments are contained in Appendix B. Stockholders should review both Appendices B and E, together with the Company’s existing Amended and Restated Certificate of Incorporation, which is included as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC.

 

At our 2019 annual meeting, we received a stockholder proposal requesting that the Board take the necessary steps to allow stockholders to act by written consent. The stockholder proposal was approved by more than 50% of the shares present and entitled to vote on the proposal, which constituted approximately 48.4% of our shares outstanding.

 

We seek out and highly value the perspectives of our stockholders and have a strong record of responsiveness to stockholder concerns. Consistent with these practices, as part of our ongoing engagement efforts and in response to the vote, following the 2019 annual meeting, we conducted stockholder outreach and sought their input on the desirability of a stockholder right to act by written consent. Many of these stockholders expressed the view that the Company should be responsive to the majority-supported proposal and, therefore, should provide stockholders with the right to act by written consent.

 

After careful consideration of the feedback we heard from our stockholders, the Board is proposing the Written Consent Amendment to permit stockholders who comply with certain procedural and other requirements to act by written consent. The Board believes the procedural and other requirements included in the Written Consent amendments are necessary to protect the Company and its stockholders against potential risks associated with permitting stockholders to act by written consent and therefor are in the best interests of the Company and its stockholders:

 

To reduce the risk that a small group of short-term, special interest or self-interested stockholders initiate actions that are not in the best interests of the Company or its stockholders and to reduce the financial and administrative burdens on the Company, the proposed Written Consent Amendment requires that holders of at least 25% of outstanding shares of the Company’s stock request that the Board set a record date to determine the stockholders entitled to act by written consent. The Board believes the 25% threshold strikes the right balance between enhancing the ability of stockholders to initiate stockholder action and limiting the risk of subjecting stockholders and the Company to numerous requests for actions by written consent that may only be relevant to particular constituencies and of imposing significant costs of both time and money on the Company. The stockholders with whom we engaged on this topic were supportive of such a threshold.
   
To provide transparency, stockholders requesting action by written consent must provide the Company with certain information and representations including, but not limited to, the applicable information and representations currently required of any Company stockholder seeking to bring a nomination or other business before a meeting of stockholders pursuant to the advance notice provisions contained in the Company’s Bylaws.

 

 

JETBLUE AIRWAYS CORPORATION  |  2020 PROXY STATEMENT    83

 

 

To provide the Board with a reasonable timeframe to properly evaluate and respond to a stockholder request, the proposed Written Consent Amendments requires that the Board must act, with respect to a valid request, to set a record date by the later of (i) 20 days after delivery of a valid request to set a record date and (ii) 5 days after delivery by the stockholder(s) of any information requested by the Company to determine the validity of the request for a record date or to determine whether the action to which the request relates may be effected by written consent. The record date must be no more than 10 days after the Board action to set a record date.
   
To ensure that stockholders have sufficient time to consider the proposal, as well as to provide the Board the opportunity to present its views regarding the proposed action, delivery of executed consents cannot begin until 60 days after the delivery of a valid request to set a record date.
   
To ensure that the written consent is in compliance with applicable laws and is not duplicative, the written consent process would not be available in a limited number of circumstances, including:

 

  for matters that are not a proper subject for stockholder action under applicable law,
     
  if the record date request was made in a manner that involved a violation of Regulation 14A under the Exchange Act or other applicable law,
     
  if the request to set a record date is delivered to the Company during the period beginning 120 days prior to the first anniversary of the date of the most recent annual meeting and ending on the earlier of (x) the date of the next annual meeting and (y) 30 calendar days after the first anniversary of the date of the immediately preceding annual meeting,
     
  if an annual or special meeting of stockholders that included an item of business identical or substantially similar to the proposed action was held within 12 months before the Company received the request for a record date, or
     
  if an identical or substantially similar item is included in our notice for a meeting of stockholders that has been called but not yet held.