Under the Massachusetts Business Corporation Act, unless a corporation’s articles of organization provide for a different percentage, the affirmative vote of at least two-thirds of the outstanding shares of the corporation entitled to vote is required for certain matters, as described below. Currently, ADI’s articles of organization do not provide for a different percentage and the supermajority default under state law is applicable to any shareholder votes on these matters.
After careful consideration and review, our Board of Directors has determined, subject to shareholder approval, to amend our articles of organization to provide that each matter for which Massachusetts corporate law provides a default supermajority voting standard will be decided by a simple majority standard.
While the Board of Directors believes that certain fundamental matters should not be taken without the support of a substantial proportion of our shareholders, the Board of Directors is committed to corporate governance best practices and effectively addressing issues that matter to our shareholders. In determining to recommend the amendments, the Board of Directors considered the view of shareholders who believe that supermajority voting provisions are inconsistent with corporate governance best practices because they may limit the ability of a simple majority of shareholders to take certain actions by essentially providing a veto to a large minority of the shareholders. The Board of Directors also considered views noting the difficulty of obtaining a two-thirds vote, and those suggesting that a lower shareholder voting threshold can increase shareholders’ ability to participate effectively in corporate governance. At the 2024 Annual Meeting, a significant majority of our shareholders approved a proposal asking us to implement a simple majority voting standard rather than the state law default supermajority vote requirements.
On December 10, 2024, the Board of Directors adopted resolutions approving and declaring the advisability of adopting amendments to our articles of organization and recommends that shareholders approve the amendments by voting in favor of this proposal. The amendments provide that for any shareholder vote required in connection with:
(i) amendments to the articles of organization; and
(ii) (A) the sale, lease, exchange or other disposal of all or substantially all of the Company’s property; (B) a merger or consolidation of the Company with or into another entity; (C) a share exchange with any other entity; (D) a voluntary dissolution of the Company; or (E) a plan of domestication or conversion of the Company,
the voting standard will be the affirmative vote of a majority of the outstanding shares of capital stock of the Company entitled to vote on such matter. This is the lowest voting standard allowed under Section 7.27(b) of the Massachusetts Business Corporation Act for these matters.
If this proposal is approved by our shareholders, the amendments will become effective upon filing of Restated Articles of Organization (the Restated Articles) with the Secretary of the Commonwealth of Massachusetts, which we will make promptly after the Annual Meeting.
The form of the Restated Articles is attached as Appendix A to this Proxy Statement, with additions of text implementing the proposed amendments indicated by underlining. The above descriptions of the amendments are qualified in their entirety by reference to the actual text of the Restated Articles set forth in Appendix A.