DEFA14A: 10x Genomics Seeks Bylaw Amendment to Streamline Governance, Align with Industry Standards

10x Genomics is seeking shareholder approval to amend its bylaws, allowing the Board to make changes without requiring a shareholder vote, a practice aligned with the vast majority of public companies.

Summary

• 10x Genomics is proposing an amendment to its bylaws that would allow the Board of Directors to change the company's bylaws without requiring a shareholder vote.
• Currently, amendments to certain portions of 10x Genomics' bylaws require approval by two-thirds of shareholders in addition to Board approval.
• The company argues that this provision is an artifact of its time as a private company and that the proposed change would bring it in line with 98.1% of all Russell 3000 companies.
• The company believes the amendment would allow it to flexibly and efficiently comply with changes to Delaware and other applicable laws and rules.
• It would also reduce administrative burdens on the company, save costs, and allow management and the Board to focus on strategic matters.
• Shareholders will still retain their ability to amend the bylaws, but it would require a two-thirds vote.
• The company's only current plan to amend the bylaws, if the proposal is approved, is to add new shareholder protections stemming from the universal proxy card rules recently approved by the SEC.

Sentiment

Score: 7

Explanation: The document presents a clear and logical argument for the proposed bylaw amendment, emphasizing its alignment with industry standards and potential benefits for the company. While there are potential concerns about reducing shareholder influence, the company addresses these concerns and highlights the continued ability of shareholders to elect directors and amend bylaws.

Positives

• The proposed bylaw amendment would allow 10x Genomics to more flexibly and efficiently comply with changes to Delaware and other applicable laws and rules.
• It would reduce administrative burdens on the company, saving costs and allowing management and the Board to focus on strategic matters.
• The company plans to add new shareholder protections stemming from the universal proxy card rules recently approved by the SEC if the amendment is approved.
• The company would be in line with 98.1% of all Russell 3000 companies.

Negatives

• Some shareholders may be concerned that the proposed amendment will reduce shareholder influence on the company.
• The supermajority required for shareholders to amend the bylaws may be effectively negated by the remaining high-vote 10x shares.

Risks

• If the bylaw amendment is not approved, 10x Genomics may face increased administrative burdens and costs associated with seeking shareholder approval for routine bylaw amendments.
• Shareholder opposition to the amendment could lead to negative publicity and reputational damage.

Future Outlook

If the proposal is approved, the only plan the company currently has to amend its bylaws would be to add new shareholder protections stemming from the universal proxy card rules recently approved by the SEC.

Management Comments

• Eric S. Whitaker, Chief Legal Officer: 'We view the proposed change as a housekeeping measure to facilitate routine, administrative bylaws amendments to respond to routine legal and regulatory changes.'

Industry Context

The proposed bylaw amendment aligns 10x Genomics with the governance practices of the vast majority of public companies, particularly those in the Russell 3000 index, where 98.1% of companies allow their boards to amend bylaws without shareholder approval. This is a common practice that is generally recognized as a basic authority of a board.

Comparison to Industry Standards

• The document states that 98.1% of all Russell 3000 companies permit their boards of directors to adopt, amend and repeal the bylaws of such companies.
• This suggests that 10x Genomics is an outlier in requiring a supermajority shareholder vote to approve Board-approved changes to bylaws.
• Comparable companies that allow their boards to amend bylaws without shareholder approval include most of the companies in the Russell 3000 index.

Corporate Governance

Stakeholder Impact

• Shareholders: The proposed amendment could reduce shareholder influence on bylaw amendments, but shareholders will retain the right to elect directors and amend bylaws with a two-thirds vote.
• Board of Directors: The amendment would give the Board more flexibility and control over bylaw amendments.
• Management: The amendment would reduce administrative burdens and allow management to focus on strategic matters.

Keywords

bylaws, amendment, shareholder vote, proxy, governance, 10x Genomics, board of directors