2018 Annual Meeting of Shareholders

Proposal 5: Proposal to Eliminate Certain Supermajority Vote Requirements

The Board of Directors is submitting proposed amendments to eliminate certain supermajority voting provisions in our Restated Articles of Incorporation (the “Articles of Incorporation”) and our Bylaws (the “Bylaws”) described below, and replace these requirements with a simple majority vote requirement of the outstanding shares of capital stock. Our Articles of Incorporation and Bylaws currently contain the following supermajority voting provisions (including the items that are the subject of Proposal 5):

  • Removal of Directors. Currently, Article Twelve, Section (1)(d) of our Articles of Incorporation and Article II, Section 1(d) of our Bylaws requires the affirmative vote of the holders of at least four-fifths of all outstanding shares of capital stock to remove directors with or without cause (except removal may be effected by the affirmative vote of the holders of a simple majority of the outstanding shares of capital stock if the Board recommends removal of the director).

  • Amendment of Provisions of our Articles of Incorporation. Currently, Article Twelve, Section 1(e) of our Articles of Incorporation requires the affirmative vote of the holders of at least four-fifths of all outstanding shares of capital stock to amend or repeal, or adopt any provision inconsistent with, the following provisions of our Articles of Incorporation: Article Eleven (Amendment of Bylaws), Article Twelve (Number and Term of Office of Directors) and Article Eight (Approval of Business Combinations). Consistent with the default voting requirements set forth in the Texas Business Organizations Code, currently a vote of the holders of at least two-thirds of all outstanding shares of capital stock is required to amend any provision of our Articles of Incorporation other than those set forth above.

  • Amendment of Certain Provisions of our Bylaws. Currently, Article Eleven of our Articles of Incorporation and Article VII of our Bylaws requires the affirmative vote of the holders of at least four-fifths of all outstanding shares of capital stock to amend or repeal, or adopt any provision inconsistent with, the following provisions of our Bylaws: Article VII (Amendment of Bylaws) and Article II, Section 1 (Number and Term of Office of Directors). 

If the proposal is approved, the above-referenced supermajority voting provisions of our Articles of Incorporation (except for the supermajority voting provisions in respect of the approval of business combinations and amendments thereto, which is the subject of Proposal 6) will be replaced by a requirement that (i) the affirmative vote of the holders of a majority of the outstanding shares of capital stock will be required to remove directors (irrespective of a recommendation of removal by the Board) and (ii) the affirmative vote of the holders of a majority of the outstanding shares of capital stock will be required to amend the above referenced provisions of our Articles of Incorporation. In addition, as is currently the case generally under our Bylaws with respect to shareholder approved Bylaw amendments, the above-referenced supermajority voting provisions relating to amendment of our Bylaws by shareholders will be replaced by a simple majority vote requirement of the outstanding shares of capital stock.

This proposal results from an ongoing review of corporate governance matters by the Nominating and Corporate Governance Committee (the “Committee”) and the Board. In its review, the Committee and the Board recognized that eliminating the supermajority voting provisions for removing directors and for effecting changes to those certain provisions of our Articles of Incorporation and Bylaws increases the ability of shareholders to participate in the governance of the Company. The Committee and the Board also considered the views of our shareholders regarding these supermajority voting requirements, including the support of the holders of a majority of our outstanding shares of capital stock for a shareholder proposal to eliminate such requirements at our 2017 Annual Meeting of Shareholders. In addition, the Committee and the Board considered the views expressed in recent outreach efforts to holders of approximately 62% of our capital stock. Finally, if this proposal is approved, then the Committee and the Board believe that it would be consistent with our ongoing efforts to adopt “best practices” in corporate governance.

After carefully considering these factors, including consideration of advice from outside experts, the Committee recommended to the Board the elimination of the supermajority vote requirements in our Articles of Incorporation and Bylaws to provide for a simple majority vote requirement of the outstanding shares of capital stock (except for such requirements in respect of business combinations, which is the subject of Proposal 6). Copies of the proposed amendments to our Articles of Incorporation and Bylaws are attached to this Proxy Statement as Annex E and Annex F, respectively. Our Board has approved the amendment to our Articles of Incorporation and recommends that shareholders adopt the amendments to our Articles of Incorporation and Bylaws by voting in favor of this proposal.

Under Article Twelve, Section 1(e) of our Articles of Incorporation and Article VII of our Bylaws, this proposal must be approved by the affirmative vote of the holders of at least four-fifths of the outstanding shares of capital stock of the Company entitled to vote thereon. Accordingly, this proposal will be approved, and the proposed amendments to the Articles of Incorporation and Bylaws adopted, upon the affirmative vote of the holders of four-fifths of our outstanding capital stock. Abstentions, broker non-votes and failures to vote will have the same effect of an “Against” vote on this proposal. This proposal is not conditioned upon the approval of any other proposal in this Proxy Statement. If this proposal is not approved, the supermajority voting provisions that are the subject of this proposal will remain in our Articles of Incorporation and Bylaws without modification.

The Board of Directors recommends a vote "FOR" the proposal.