Google 2015 Annual Report Download - page 21

Table of Contents Alphabet Inc. and Google Inc.
17
• Our certificate of incorporation provides for a tri-class capital stock structure. As a result of this structure, Larry,
Sergey, and Eric have significant influence over all matters requiring stockholder approval, including the election
of directors and significant corporate transactions, such as a merger or other sale of our company or our
assets. This concentrated control could discourage others from initiating any potential merger, takeover, or
other change of control transaction that other stockholders may view as beneficial. As noted above, the issuance
of the Class C capital stock could have the effect of prolonging the influence of Larry, Sergey, and Eric.
• Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board
of directors or the resignation, death, or removal of a director, which prevents stockholders from being able
to fill vacancies on our board of directors.
• Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority of our
capital stock would not be able to take certain actions without holding a stockholders' meeting.
• Our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of
minority stockholders to elect director candidates.
• Stockholders must provide advance notice to nominate individuals for election to the board of directors or to
propose matters that can be acted upon at a stockholders’ meeting. These provisions may discourage or deter
a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or
otherwise attempting to obtain control of our company.
• Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The
ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred
stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.
As a Delaware corporation, we are also subject to certain Delaware anti-takeover provisions. Under Delaware
law, a corporation may not engage in a business combination with any holder of 15% or more of its outstanding voting
stock unless the holder has held the stock for three years or, among other things, the board of directors has approved
the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us.
Risks Related to Our Holding Company Reorganization
As a holding company, Alphabet will be dependent on the operations and funds of its subsidiaries.
On October 2, 2015, we completed a reorganization pursuant to which Alphabet became a holding company with
no business operations of its own. Alphabet’s only significant assets are the outstanding equity interests in Google
and any other future subsidiaries of Alphabet. As a result, we rely on cash flows from subsidiaries to meet our obligations,
including to service any debt obligations of Alphabet.
We may not obtain the anticipated benefits of our reorganization into a holding company structure.
We believe that our holding company reorganization and a new operating structure will increase management
scale and allow us to focus on running our diverse businesses independently with the goal of maximizing each of the
business’ potential. The anticipated benefits of this reorganization may not be obtained if circumstances prevent us
from taking advantage of the strategic and business opportunities that we expect it may afford us. As a result, we may
incur the costs of a holding company structure without realizing the anticipated benefits, which could adversely affect
our reputation, financial condition, and operating results.
Alphabet’s management is dedicating significant effort to the new operating structure. These efforts may divert
management’s focus and resources from Alphabet’s business, corporate initiatives, or strategic opportunities, which
could have an adverse effect on our businesses, results of operations, financial condition, or prospects. Additionally,
our subsidiaries may be restricted in their ability to pay cash dividends or to make other distributions to Alphabet, as
the new holding company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved staff comments at December 31, 2015.
ITEM 2. PROPERTIES
Our headquarters are located in Mountain View, California, where we own approximately 4.8 million square feet
of office and building space and approximately fifteen acres of developable land to accommodate anticipated future
growth. In addition, we own and lease office and building space, research and development, and sales and support
offices primarily in North America, Europe, South America, and Asia. We operate and own data centers in the U.S.,