American Electric Power Company, Inc. (AEP) Earnings Call Transcript & Summary

Good morning, everyone. Ladies and gentlemen, fellow shareholders, welcome to the company's 113th Annual Meeting of Shareholders. I am Nick Akins, Chairman, President and Chief Executive Officer of AEP. I want to thank you all for joining us today, and I hope you're healthy and well, especially with the current situation unfolding in the past few months. This is truly an unprecedented time, both for our country and our company. Due to the COVID-19 pandemic, the company earlier announced a change in the location of this annual meeting to our Transmission building here in New Albany, Ohio. When we announced this change in location, we also urged all of our shareholders to call into this meeting rather than attend by person. This was done to support the health and safety of our employees, shareholders and directors. All of our directors have called in to the meeting today and are listening, and just like our shareholders, the meeting today will be abbreviated and will be limited to the 3 agenda items outlined in our proxy statement. I did want to provide a few introductory remarks before proceeding with the official portion of this meeting. AEP has been monitoring the COVID-19 pandemic since January and continues to be proactive in taking steps to protect our employees and the communities we serve. While many aspects of how and where we work have changed temporarily, AEP's top priority is keeping people safe and healthy while ensuring the lights stay on for our customers. All of our employees who are able to work remotely have been doing so since March 16. For those who are reporting to physical work locations, we have put in place physical distancing strategies and provided medical coverage and other supplies to help protect our frontline employees. We also have put in place new benefits and leave options to support our employees as they navigate the challenges stemming from the pandemic. It's never been more apparent that the service AEP provides is vital to our community and society. Our employees keep the power flowing for hospitals, police and fire stations, grocery stores and manufacturers producing critical products through the pandemic, while also keeping everyone safe and comfortable in their homes. Our communities and -- our customers and communities depend on us, and I'm proud to say our employees have answered the call. Their hard work and commitment have been nothing short of extraordinary. While 2020 so far has proven to be challenging, I'm confident we'll be able to weather this storm. 2019 provides a strong foundation for us financially, and I'd like to highlight some of AEP's recent accomplishments before we conduct the voting. Our focus on strategic investments to enhance service for our customers and support a clean energy future continues to contribute to our strong earnings performance and allows us to deliver solid shareholder value. In 2019, AEP delivered a total shareholder return of 30.5%, exceeding the 27.5% total return for the S&P 500 Electric Utilities Index. We ended 2019 at the top end of our increased operating earnings guidance range, driven by performance across our regulated and contracted renewables businesses. In 2019, we also raised our regular quarterly cash dividend to $0.70 a share on the company's common stock, an increase of $0.03 per share. Over the past 2 years, we've increased the dividend, an average of 6.3%, in line with our 5% to 7% earnings growth range. We've also made significant progress in reducing carbon dioxide emissions from our power generation fleet and expect our emissions to continue to decline. We revised our 2030 earnings reduction target to 70% from 2000 levels and are confident we can cut carbon dioxide emissions by more than 80% from 2000 levels by 2050. We also continue to aspirationally move toward 100% by 2050, and we'll continue that progress. In 2019, we began seeking approval for 3 new wind energy facilities that would add 1,485 megawatts of clean energy to our generation portfolio, serving Public Service Company of Oklahoma and Southwestern Electric Power Co. customers. We've had some positive regulatory outcomes in our states for the North Central Wind energy facilities, and we're pleased to be closer to providing more low-cost renewable energy to our customers. We continue to build the workforce of the future, encouraging an inclusive culture that values all perspectives. We know this is critical for helping us innovate and better serve our customers. This year, we were named one of the Best Places to Work for LGBTQ Equality by the Human Rights Campaign, and also, we're included in the Bloomberg Gender-Equality Index. With a successful 2019 behind us, AEP is focused on continuing to deliver shareholder value for our customers and our shareholders in 2020. With that, we'll move on to the official portion of the meeting. This annual meeting will be conducted according to the formal agenda outlined in the proxy statement dated March 11, 2020. We are here to conduct the business on that agenda and to consider any further matters that properly may be brought before the meeting by the shareholders. Mr. David M. Feinberg, Executive Vice President, General Counsel and Secretary, will be assisting me in the conduct of this meeting. As I mentioned earlier, the other directors are not with us in person today. However, I do want to identify the 12 other director nominees: Mr. David J. Anderson of Greenwich, Connecticut is the former Chief Operating Officer and Chief Financial Officer of Nielsen Holdings plc, he is also a retired Senior Vice President and Chief Financial Officer of Honeywell International; Mr. J. Barnie Beasley, Jr. of Sylvania, Georgia is the retired Chairman, President and Chief Executive Officer of Southern Nuclear Operating Company; Mr. Ralph D. Crosby Jr. of McLean, Virginia is the retired Chairman of EADS North America; Mr. Art A. Garcia of Southwest Ranches, Florida is the retired Chief Financial Officer of Ryder Systems, Inc.; Ms. Linda A. Goodspeed of Marco Island, Florida is the retired Senior Vice President and Chief Information Officer of The ServiceMaster Company; Mr. Thomas E. Hoaglin of Columbus, Ohio is the retired Chairman and Chief Executive Officer of Huntington Bancshares Incorporated; Ms. Sandra Beach Lin of Flower Mound, Texas is the retired Chief Executive Officer of Calisolar, Inc.; Ms. Margaret M. McCarthy of North Chatham, Massachusetts is the retired Executive Vice President, Technology Integration of CVS Health Corporation; Mr. Richard C. Notebaert of Naples, Florida is the retired Chairman and Chief Executive Officer of Qwest Communications International; Mr. Stephen S. Rasmussen of West Des Moines, Iowa is the retired Chief Executive Officer of Nationwide Mutual Insurance Company; and Mr. Oliver G. Richard III of Lake Charles, Louisiana, who is the Owner and President of Empire of the Seed LLC and former Chief Executive Officer of Columbia Energy Group; Ms. Sara Martinez Tucker of Dallas, Texas is the former Chief Executive Officer of the National Math and Science Initiative and is a former Undersecretary of Education in the United States Department of Education. I also want to thank Mr. Lionel L. Nowell III for his 16 years of service on our Board. He retires from the Board today. Let us now proceed with the meeting. Notice of this annual meeting was mailed on March 11, 2020, to all shareholders on record on February 24, 2020, which was the date -- the record date fixed by the Board of Directors for determining shareholders entitled to notice of and to vote at this meeting. The Board of Directors of the company has appointed Ms. [ Amelia Rayden ] and Mr. Kevin Laurita of Computershare to act as Inspectors of Election at this meeting. The inspectors have advised me that there are present in person or represented by proxy the holders of over 78% of the shares entitled to vote. This is a sufficient number of shares to constitute a quorum. Since holders of majority of the shares of the common stock of the company entitled to vote are present in person or represented by proxy at this meeting, there is a quorum present for the transaction of business. I declare that the 113th Annual Meeting of Shareholders is officially convened. The first order of business is the election of 13 directors to hold office for 1 year and until their successors are elected and have been qualified. The Board of Directors recommends the following 13 directors: Nicholas K. Akins; David J. Anderson; J. Barnie Beasley, Jr.; Ralph D. Crosby Jr.; Art A. Garcia; Linda A. Goodspeed; Thomas E. Hoaglin; Sandra Beach Lin; Margaret M. McCarthy; Richard C. Notebaert; Stephen S. Rasmussen; Oliver G. Richard, III; and Sara Martinez Tucker for election as directors of the company. I note for the record that no nomination for Director has been properly made in advance of this meeting by any shareholder. Accordingly, all nominations are closed. I declare the polls open for shareholders to cast their votes for the election of officers. [Voting]

The next business to come before the meeting is to consider and take action on the proposal to ratify the appointment by the Audit Committee of the Board of Directors of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the company for the year 2020. As indicated in the proxy statement, the Audit Committee of the Board of Directors considers PricewaterhouseCoopers LLP to be the firm best qualified to perform this important function. The Board of Directors recommends that the shareholders ratify the appointment of PricewaterhouseCoopers LLP as the company's auditors. [Voting]

The next business to come before the meeting is to consider and take action of the proposal to approve the compensation of the company's named executive officers as described in the proxy statement. This proposal is a nonbinding shareholder advisory vote. The Board of Directors recommends that the shareholders approve the compensation of the company's executive officers as disclosed in the proxy statement. [Voting]

This concludes the business to be presented to this meeting by the company's Board of Directors. The Inspectors of Election have provided preliminary voting results. The final voting results will be reported in an 8-K that will be filed with the Securities and Exchange Commission in the next few days. Mr. Feinberg, will you please inform the meeting as to the vote -- voting results?

Yes, Mr. Chairman. The inspectors have tabulated the votes cast for the election of directors, and they have recorded that the shareholders represented by proxy at the meeting have elected the following 13 persons directors of this company: Nicholas K. Akins; David J. Anderson; J. Barnie Beasley, Jr.; Ralph D. Crosby, Jr.; Art A. Garcia; Linda A. Goodspeed; Thomas E. Hoaglin; Sandra Beach Lin; Margaret M. McCarthy; Richard C. Notebaert; Stephen S. Rasmussen; Oliver G. Richard, III; and Sara Martinez Tucker.

You have heard the inspector's report. I hereby declare that the persons named by the Secretary have been duly elected directors of this company. Mr. Feinberg, will you please provide the other voting results?

Mr. Chairman, the inspectors also have tabulated the votes cast for the other proposals presented through this meeting as follows. On Proposal 2, the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the company, shares representing approximately 99% of the votes cast at this meeting voted in favor of this proposal, so the proposal passed. On Proposal 3, the proposal to approve the company's compensation of the named executive officers as described in the proxy statement, shares representing approximately 96% of the votes cast at this meeting voted in favor of this proposal, so this proposal also passed.

There being no further business to come before the meeting, I declare this meeting adjourned. Thank you all for attending.