NetFlix 2002 Annual Report Download - page 44

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Please find page 44 of the 2002 NetFlix annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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Jay Hoag, one of our directors, beneficially owns approximately 34% of our common stock, and Reed Hastings, our president, chief executive officer, and chairman of our board of directors
beneficially owns approximately 13% of our common stock and Michael Schuh, one of our directors, beneficially owns approximately 12% of our common stock. These stockholders may
have individual interests that are different from yours and will be able to exercise significant control over all matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions, which could delay or prevent someone from acquiring or merging with us.
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
Our charter documents may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable because they will:
• authorize our board of directors, without stockholder approval, to issue up to 10,000,000 shares of undesignated preferred stock;
• provide for a classified board of directors;
• prohibit our stockholders from acting by written consent;
• establish advance notice requirements for proposing matters to be approved by stockholders at stockholder meetings; and
• prohibit stockholders from calling a special meeting of stockholders.
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 capital 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.
Our stock price is volatile
The price at which our common stock has traded since our Initial Public Offering in May of 2002 has fluctuated significantly. The price may continue to be volatile due to a number of
factors, including the following, some of which are beyond our control:
• variations in our operating results;
• variations between our actual operating results and the expectations of securities analysts, investors and the financial community;
• announcements of developments affecting our business, systems or expansion plans by us or others;
• market volatility in general; and
• the operating results of our competitors.
As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.
In the past, securities class action litigation often has been instituted against companies following periods of volatility in the market price of their securities. This type of litigation, if directed
at us, could result in substantial costs and a diversion of management’s attention and resources.