This excerpt taken from the EOG DEF 14A filed Mar 30, 2005.
Reasons for the Proposed Amendment
On February 2, 2005, the Board of Directors approved a two-for-one stock split in the form of a stock dividend. The Companys Restated Certificate of Incorporation currently authorizes the Company to issue up to 320,000,000 shares of Common Stock and up to 10,000,000 shares of Preferred Stock. As of the record date for the Annual Meeting, approximately 238,981,689 shares of Common Stock and 100,000 shares of Preferred Stock were outstanding. The Board of Directors believes it is desirable and in the best interests of the Company and the stockholders to increase the number of authorized shares of Common Stock from 320 million shares to 640 million shares to provide the Company with sufficient authorized shares for future corporate purposes, which may include, but are not limited to the following:
The Company has no present plans, arrangements or understandings to issue additional shares of Common Stock, although it reserves the right to do so in the future. If approved by the stockholders, the additional authorized shares of Common Stock would be available for issuance, at the discretion of the Companys Board of Directors, in such amounts and upon such terms, as the Board of Directors may determine, without further stockholder approval (subject to applicable Delaware law and New York Stock Exchange rules).
Holders of the Companys Common Stock do not have preemptive rights with respect to future issuances of additional shares of Common Stock, which means that current stockholders do not have a prior right to purchase any new issue of the Companys Common Stock to maintain their proportionate ownership interest. As a result, the issuance of a significant amount of additional authorized Common Stock (other than as the
result of a stock split or other pro rata distribution to stockholders) would result in a significant dilution of the beneficial ownership interests and/or voting power of each stockholder who does not purchase additional shares to maintain his or her pro rata interest. As additional shares are issued, the shares owned by existing stockholders would represent a smaller percentage ownership interest in the Company.
The Companys Board of Directors does not intend or view the proposed increase in the number of authorized shares of Common Stock as an anti-takeover measure. The proposal to increase the authorized shares of the Companys Common Stock was not prompted by any takeover or acquisition effort or threat. The Company is not aware of any threat of takeover or change in control, nor is the Company proposing to stockholders any anti-takeover measures.
The proposal to amend the Companys Restated Certificate of Incorporation will require for approval the affirmative vote of holders of a majority of the outstanding shares of Common Stock.