AMN Healthcare Services, Inc. (AMN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the Annual Meeting of Shareholders of AMN Healthcare Services, Inc. I am Doug Wheat, Chairman of the Board of Directors of AMN Healthcare Services, Inc. I would like to introduce the company's Directors who are all present today remotely: Mr. Foletta, Mr. Harris, Dr. Johns, Ms. Marsh, Ms. Fontenot, Ms. Jones, and Ms. Trent-Adams, each a Director of the company as well as Ms. Salka, also a Director and the Chief Executive Officer of the company. Before we begin and turn the meeting over to Ms. Salka, who I've designated to conduct the business portion of the meeting, I would like to first call your attention to the rules of conduct for the meeting, which have been posted to our Investor Relations website and the virtual annual meeting website in the virtual meeting website. You can review the rules of conduct by clicking on the button titled Materials and then clicking on the link to open the document in a web browser. Among other things, the rules of conduct address the rules presenting proposals to be considered at this meeting. Our shareholders proponent will be afforded 3 minutes to present the proposal. Further, any remarks or questions must be related to the agenda or today -- of today's meeting and on the topic of the proposal being presented. Shareholders may submit questions by clicking on the Q&A button towards the bottom right of the screen and entering your question in the field titled submit a question. I would also like to extend a very sincere thank you to Dr. Johns who is retiring from the Board at the conclusion of his services here today. During his 12 years as Director, Dr. Johns has offered measurable insights on health care policy and was instrumental in establishing the company's leading academic position search practice. I, together with the company and the Board, would like to thank Dr. Johns for his dedicated service and wish him and his wife, Trina, all the best in their retirement. Mike, thank you very much. We'll miss you. I would like now to explain for the benefit of shareholders, the mechanics of the proxy process as it relates to the annual meeting. Shareholders unable to attend the meeting had the opportunity to participate in matters before the meeting through the proxy process. Shareholders' proxies received in time to be voted at the meeting will be voted according to the shareholders' instructions, together with any votes cast at the meeting, Mr. Harris, Mr. Foletta and myself have been appointed as proxy agents for all shareholders of the company who have properly returned their proxy cards representing shares to be voted at this meeting. The record date for shareholders entitled to notice of and can vote at this meeting was February 23, 2021. The notice and proxy materials were mailed to all shareholders of record as of such date. The Corporate Secretary has advised me that proxies representing 93.35% of the company's outstanding shares of stock entitled to vote at this meeting have thus far been received as this represents more than a majority of the outstanding shares of stock entitled to vote at the meeting. A quorum is present for the conduct of business. Accordingly, I declare that a quorum is present, that the meeting is duly qualified to transact business, and the meeting is called to order. At this point, I would like to turn the meeting over to Susan Salka, a Director and the company's Chief Executive Officer, to proceed with the formalities of the meeting.

Thank you so much, Doug. For the orderly conduct of the meeting, arrangements have been made for Mr. Harris to make a motion with respect to the proposals before this meeting and seconded by Mr. Foletta. The proposals are explained in detail in our proxy statement. I will now explain to you the agenda of the annual meeting. As stated in the notice of meeting and further described in the proxy statement, there are 5 items of business on the agenda. Each item will be presented followed by an opportunity for discussion on the proposal. The polls are now open and will remain open until all items of business have been presented and discussed. At this time, I wish to appoint the company's Chief Legal Officer and Corporate Secretary, Denise Jackson, as the inspector of election to catch the ballots and report the results of the voting. We will begin with the election of the 8 Directors to serve until the next annual meeting of shareholders or until successors are duly elected and qualified. Your Board of Directors recommends the election of the nominees set forth in the proxy.

I hereby nominate the following persons to serve as Directors of the company until the next annual meeting or until their successors are duly elected and qualified; Susan R. Salka, Mark G. Foletta, R. Jeffrey Harris; Martha H. Marsh, Teri G. Fontenot, Daphne E. Jones, Sylvia Trent-Adams and Douglas D. Wheat.

I second the nominations.

There being no further nominations, I shall entertain a motion that the nominations be closed.

I move that the nominations be closed.

I second the motion.

The second proposal to be considered and voted upon is the proposal to approve the compensation of the company's named executive officers. This proposal is a nonbinding shareholder advisory vote. The company's executive compensation is discussed in the proxy statement. Your Board of Directors recommends you vote for the approval of the compensation of the company's named executive officers. Mr. Harris, will you please set forth the motion?

I move that the compensation of the company's named executive officers as disclosed in the proxy statement pursuant to the compensation disclosure rules of the SEC be approved.

I second the motion.

The third proposal to be considered and voted upon is the proposal to recommend the frequency of holding a shareholder advisory vote on executive compensation. This proposal is a nonbinding shareholder advisory vote. The Board of Directors recommends a vote for the option of every year as the frequency with which shareholders are provided an advisory vote on executive compensation.

I move that the every year option by which the company's shareholders are provided an advisory vote on the compensation of the company's named executive officers be approved.

I second the motion.

The fourth proposal to be considered and voted upon is the proposal to ratify the appointment by the company's Board of Directors of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. Your Board of Directors recommends that you vote for the ratification of the appointment of KPMG as our independent public accounting firm. Mr. Harris, will you please set forth the motion?

I move to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021.

And I second the motion.

Mr. John Chevedden has provided notice to present a proposal for consideration at this meeting. Would our operator, please, open the line for Mr. Chevedden or his representative? Mr. Chevedden or his representative, your line is open. Please introduce yourself, and you may proceed.

This is John Chevedden. Can you hear me okay?

Yes, we can, John.

Proposal 5, improve our Catch-22 proxy access. Shareholders request that our Board of Directors take the steps necessary to enable as many shareholders as may be needed to combine their shares to equal 3% of our stock owned continuously for 3 years in order to enable shareholder proxy access. Proxy access allows a group of shareholders to nominate a Director who will compete with management nominated Directors to see who gets more votes. Competition is good for our Board of Directors. Currently, 20 shareholders must have owned $100 million of AMN stock for an unbroken 3 years in order to nominate 1 candidate for the Board under our proxy access rules. A limit of 20 very deep pocket shareholders does not allow for a diverse group of shareholders. It is disappointing that management does not support the diversity that this proposal calls for. As a practical matter, it is unlikely that more than 50 shareholders would participate in nominating a Director using proxy access with this proposal. There is hardly any difference in 20 shareholders submitting proof of ownership of $100 million of our stock compared to 50 shareholders submitting proof of owning $100 million of our stock. And adopting this proposal would show management's commitment to diversity. The beauty of good governance proposal like this proposal is that it would not result in more cost because the mere presence of good governance serves as a guide rail to make sure that management elects the best Directors on their own. Because if management does not elect the best Directors, then shareholders have a practical remedy, which is to make their Director nominations known to management. Our current proxy access is way out of balance. There has not been 1 proxy access candidate placed on the ballot of any company during the past 5 years. There have been 500 companies with a shareholder right for proxy access during these 5 years. 500 companies times 5 years equals 2,500 company years without 1 proxy access candidate. This means that AMN under the current rules would not expect 1 proxy access candidate during the next 2,500 years. This is way out of balance as far as shareholders are concerned. Plus the proxy access candidate then has the challenge of getting more votes than at least 1 established Director. This would require overwhelming shareholder support. Please vote yes and approve our Catch-22 proxy access Proposal 5.

Thank you, Mr. Chevedden. The Board of Directors recommends that our shareholders vote against this proposal. The Board considered the proponent's proposal to revise the company's shareholder proxy access mechanism to allow an unlimited number of shareholders to aggregate their shares to satisfy the existing requirement that shareholders must continuously own 3% for 3 years in order to enable shareholder proxy access. And we do not find it in the best interest of all shareholders because the company's current shareholder proxy access mechanics already provide a meaningful and appropriate mechanism for shareholders to nominate individuals to the Board and are consistent with overwhelming market practice. The company's current shareholder proxy access mechanics are consistent with the approach taken by more than 85% of companies that have proxy access. This overwhelming consensus reflects that the belief that capping nominating groups at 20 shareholders strikes the appropriate balance between empowering shareholders to effectively utilize proxy access while limiting the administrative burden and related company expenses that would come from groups of a larger size. Mr. Harris, will you please set forth the motion?

I move for a vote on the proposal to request that our Board amend the company's shareholder proxy access mechanism to allow an unlimited number of shareholders to aggregate their shares to satisfy the existing requirement that shareholders must continuously own 3% for 3 years in order to enable shareholder proxy access.

And I second the motion.

This being all of the items of business to be taken up at this meeting, we open up the floor for any questions or discussion of any of the foregoing proposals. Thank you. I've been informed that there are no questions related to the formal agenda in compliance with our meeting rules. There being no other matters of shareholder business having been properly brought before this annual meeting in accordance with our bylaws and no further discussion, the polls will now be closed. We will now turn to the voting results. Ms. Jackson, will you now please report the results of the voting.

On the matter of the election of the 8 Directors based upon the votes received, the percentage of shares entitled to vote that voted for each of the Directors was as follows: Mark G. Foletta, 99%; Teri G. Fontenot, 99%; R. Jeffrey Harris, 96%; Daphne E. Jones, 99.5%; Martha H. Marsh, 98.8%; Susan R. Salka, 98.6%; Sylvia Trent-Adams, 99.5%; Douglas D. Wheat, 94.6%.

Accordingly, the following individuals are hereby elected Directors of the company: Mark G. Foletta, R. Jeffrey Harris, Sylvia Trent-Adams, Daphne E. Jones, Martha H. Marsh, Susan R. Salka, Teri G. Fontenot and Douglas D. Wheat.

Regarding the proposal for the approval on a nonbinding advisory basis for the compensation of our named executive officers. There were 38,941,383 shares entitled to vote and present or represented by proxy that voted for the proposal, which equals 92.2% of all shares entitled to vote that were present or represented by proxy.

The number of votes cast in favor of the proposal represents more than the majority of shares entitled to vote and present or represented by the proxy. Therefore, the proposal to approve on a nonbinding advisory basis, the compensation of our named executive officers is hereby adopted. Although this proposal is not binding on the company, the Board of Directors and the Compensation Committee value the opinions of the shareholders, and we'll take the recommendations of our shareholders into account when making future decisions regarding executive compensation.

Regarding the proposal on the frequency of holding a shareholder advisory vote on executive compensation on a nonbinding advisory basis, there were 40,785,189 shares entitled to vote and present or represented by proxy that voted for in every year frequency, which equals 96.5% of all shares entitled to vote that were present or represented by proxy.

The number of votes cast in favor of the every year frequency represents more than a majority of the shares entitled to vote and present or represented by proxy. Therefore, the proposal to recommend by nonbinding advisory vote, a shareholder advisory vote every year on the compensation of our named executive officers is hereby adopted.

Regarding the proposal for the ratification of the appointment by the Board of Directors of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021, there were 42,950,444 shares entitled to vote and present or represented by proxy that voted for the proposal, which equals 97.5% of all shares entitled to vote that were present or represented by proxy.

The number of votes cast in favor of the proposal represents more than a majority of the shares entitled to vote and present or represented by proxy and the proposal to ratify the Board of Directors' appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021 is therefore adopted.

Regarding the shareholder proposal to revise the company's shareholder proxy access mechanism to allow an unlimited number of shareholders to aggregate their shares to satisfy the existing requirement that shareholders must continuously own 3% for 3 years in order to enable shareholder proxy access. There were 29,243,969 shares entitled to vote and present or represented by proxy that voted against the proposal, which equals 69.2% of all shares entitled to vote that were present or represented by proxy.

The number of votes cast against the proposal represents more than a majority of the shares entitled to vote and present or represented by proxy. Therefore, the shareholder proposal to revise the company's shareholder proxy access mechanism to allow an unlimited number of shareholders to aggregate their shares is dismissed. There were a couple of questions that came in during our meeting. So I wanted to share those questions and the responses.

One was with regard to our auditors' fees during 2019 and 2020. The question was how much did we pay our auditors? And that amount is disclosed in the proxy in detail, but I'll share it with you here as well. Those fees were approximately $2.3 million in both 2019 and 2020, and there was approximately $400,000 of other fees related to other matters that we needed their assistance with. These have remained very consistent through the years and again are detailed in the proxy. Another question we received is what percent of employees currently work from home? Of course, our clinicians and other health care workers are primarily working out in the field other than our remote language interpretation team, which is working primarily from their homes. Our corporate staff has been working primarily from home since last March, and that is still the case today. We are not going to have a mandatory return to any of our offices until the beginning of next year, although we will be doing some pilots and soft launches throughout 2021. Of course, safety is our #1 priority when it comes to our team members, and so we'll be approaching that with the utilization of best practices and certainly be well prepared. And then the last question was regarding share buybacks. We do have an open share buyback authorized by the Board that we've not utilized it for some time. I don't have the exact date on when we last utilized that buyback authority. And so that's something that we will get for you and post on our Investor Relations website. And those were our only questions. So if there's no further business, I will entertain a motion to adjourn.

I move that the meeting be adjourned.

I second the motion.

Well, those in favor, please say, aye? [Voting]

Any opposed? [Voting]

Thank you all for joining us. The meeting is now adjourned.