Agilent Technologies, Inc.
Extract: Charter Amended/Restated (Plain English Desc) from a DEF 14A on 02/03/2023   Download
SEC Document
SEC Filing



Listening to Our Stockholders and Stockholder Outreach Efforts


At our 2022 annual meeting, our stockholders approved a stockholder proposal for creation of a stockholder right to call special meetings. While the proposal was not properly presented at the 2022 annual meeting by the stockholder proponent or her representative, we believed the topic at issue was of importance to our stockholders and we actively solicited stockholder feedback on the proposal.



Recognizing the importance of responsiveness to the company’s stockholders, after our 2022 annual meeting, as part of our commitment to effective governance practices, management and the Board undertook a review of current corporate governance trends and broadly solicited feedback from our stockholders. We reached out to our 50 largest stockholders regarding their views on the stockholders’ right to call a special meeting and received feedback from 13 of them, who collectively hold 36.11% of our common stock, including 7 of our top 10 largest stockholders. In addition, our management, investor relations team and/or the Board, including the Chairperson of our Board, spoke with 8 of those 13 investors who provided feedback, seeking input on the stockholders’ right to call a special meeting and other governance matters. During these meetings, consulted stockholders expressed their general support for creation of an appropriately tailored and structured new stockholders’ right to call a special meeting. However, many stockholders noted that the 10% threshold is too low and that their support for the special meeting right proposal at the 2022 annual meeting was intended to convey a desire for an appropriate special meeting right (which right does not currently exist at Agilent for unilateral use by stockholders), rather than an endorsement of the specific 10% threshold referenced in the 2022 proposal. We had three stockholders, representing 14.22%, who indicated that a 25% threshold was appropriate and five stockholders, representing 13.24%, who indicated that they were comfortable with a threshold within the range of 15%-25%. Two stockholders, representing 3.89%, indicated that a threshold of 15% or lower was appropriate. The other stockholders who provided feedback either deferred to management or did not indicate specific thresholds. Given this feedback, our Board determined that 20% was the appropriate threshold for the stockholder special meeting right. In addition, stockholders consulted indicated that they are supportive of safeguards around the exercise of the special meeting right, including a holding period, blackout periods and disclosure requirements. The 2022 proposal did not include these safeguards. We also reached out to the proxy advisors, Institutional Shareholder Services and Glass Lewis, regarding their views on the stockholders’ right to call a special meeting. There was broad support from the proxy advisors for the stockholders’ right to call a special meeting and they provided feedback on their views and philosophy. We summarized our stockholders’ feedback and emphasized the Board’s reasoning behind the threshold amount and guardrails.



Management Proposal


After careful consideration of the collective input from our stockholders, the Board has approved, and recommends that stockholders approve, amendments to our Certificate of Incorporation to permit stockholders holding not less than 20% of our voting stock continuously for at least 1 year to call a special meeting of stockholders.


Special meetings require the expenditure of considerable time, effort and resources, and diversion of Board and management time away from overseeing and running our business. Accordingly, special meetings called by stockholders should be limited to circumstances where stockholders holding a meaningful minority of the company’s common stock believe a matter is sufficiently urgent or extraordinary to justify considering such matters between annual meetings. With a 10% ownership threshold, a small minority of stockholders (or even one or two stockholders) could use the special meeting mechanism to advance their own more narrow agenda, without regard to the broader, long-term interests of the company and its other stockholders.


In addition, we believe that the company already provides our stockholders with numerous avenues to make their views known and to communicate with the Board, management, and other stockholders to effect change. The company maintains a robust stockholder engagement program with a track record of taking action in direct response to stockholder feedback, as evident in our expansive stockholder outreach undertaken after the approval of the special meeting right proposal at our 2022 annual meeting. We






encourage and facilitate regular communication with large and small stockholders about important issues relating to our business and corporate governance and regularly incorporate feedback from those engagements into our policies and practices.


Based on the above, we believe that a 20% threshold strikes the right balance between avoiding an imprudent use of the company and stockholder resources to address the special interests of a select group of stockholders, on one hand, and ensuring that stockholders holding a meaningful minority of our shares have a mechanism to call a special meeting if they deem it appropriate, on the other hand. We note that among the 66% of S&P 500 companies that permit stockholders to call a special meeting, two-thirds have set their threshold at 20% or higher (FactSet).


The proposed Second Amended and Restated Certificate of Incorporation of the company is attached hereto as Annex A. If our stockholders approve this proposal to amend our Certificate of Incorporation, we will promptly file the Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, upon which the amendment to our Certificate of Incorporation will become effective. Contingent upon the effectiveness of this proposed amendment to our Certificate of Incorporation, the Board will effect certain changes to our Bylaws to provide appropriate procedures for the calling of special meetings of stockholders. Such amendments to the Bylaws will ensure, among other things, that meaningful disclosure is provided to the company and our stockholders and that special meetings are not held redundantly in close proximity to our annual meetings and/or other stockholder meetings in which a similar item was considered. Stockholder feedback was taken into account in designing these elements. In particular, amendments to our Bylaws would include:

Ownership threshold and “net long” elements: Requesting stockholders must hold the requisite ownership threshold of 20% in “net long” shares, defined in accordance with the definition of “ownership” set forth in our Bylaws’ proxy access provision.
Holding period: Stockholders requesting a special meeting must have held the requisite percentage of shares continuously for 1 year. In addition, such requesting stockholders must maintain that position through the date of the special meeting.
Blackout periods: A request for special meeting may not be delivered (1) during the period commencing 90 days prior to the first anniversary of the immediately preceding annual meeting and ending on the date of the next annual meeting, (2) beginning on the 60th day after the earliest valid special meeting request relating to an identical or substantially similar item other than election or removal of directors (a “Similar Item”) and ending on the 1-year anniversary of such earliest date, (3) within 90 days before a stockholder meeting at which a Similar Item will be submitted for stockholder approval, or (4) within 180 days after a stockholder meeting at which a Similar Item was presented.
Other invalidity: A request for special meeting that does not comply with the relevant provisions of our Bylaws or our Certificate of Incorporation, that relates to an item of business that is not a proper subject for stockholder action under applicable law, or that was made in a manner that involved a violation of Regulation 14A under the Exchange Act or other applicable law will not be accepted and will be ineffective.
Information required: Requesting stockholders must provide, among other things, the same information required under our Bylaws’ advance notice provisions.


Vote Required


The affirmative vote of the holders of at least eight percent (80%) of the outstanding voting stock of the company is required for approval of the proposed amendments to the Certificate of Incorporation.


The Board of Directors recommends a vote FOR the approval of the proposed amendments to our Certificate of Incorporation.