Armstrong World Industries, Inc. (AWI) Earnings Call Transcript & Summary

Good morning, and welcome to Armstrong World Industries Annual Meeting of Shareholders. I would now like to turn the call over to Larry McWilliams. Please go ahead.

Good morning, and welcome to Armstrong World Industries 2020 Annual Meeting of Shareholders. My name is Larry McWilliams, and I am Chairman of the Board of Directors. As you noticed from our proxy materials, we are holding this meeting virtually via the Internet, and I am pleased to serve as Chair under this format. In attendance is Mark Hershey, Senior Vice President, General Counsel and Corporate Secretary. As Secretary of the company, Mark will be assisting me with this meeting. In addition to Mark, other executive officers in attendance include: Vic Grizzle, President and CEO; and Brian MacNeal, Senior Vice President and CFO. Also present today by invitation are Jennifer Kriebel, a partner with KPMG LLP, the company's independent registered public accounting firm; Stephen McNamara, Vice President and Controller; and Bryan Tham, Senior Counsel, Corporate Governance and Transactions. Mark Hershey will act as the judge of elections. I will be introducing our nominees for election to our Board of Directors momentarily. But before proceeding with the business of today's meeting, I would like to ask Mark Hershey to state a few rules of conduct and procedures.

Thank you, Larry. Most shareholders have already voted by proxy. If you did so, you need not vote again today. If you choose to vote during the meeting, please follow the instructions for doing so online. Please note that doing so will revoke any prior proxy vote you have made. All proxies filed with the judge of election will be voted as indicated thereon. Thank you for your cooperation with the rules.

This meeting has been called pursuant to due notice mailed to each shareholder who was a holder of record on April 21, 2020. Proxies were solicited on behalf of the Board of Directors. The judge of elections oath of office will be filed with the minutes of this meeting. The judge of election has a certified list of shareholders entitled to vote at this meeting. The list is available for inspection by shareholders via the online platform. Also available for inspection by shareholders are copies of the notices, the proxy materials and the annual report. Mr. Hershey, would you please report on the shares represented at this meeting?

Shareholders of record on April 21, 2020, are entitled to vote at this meeting. As of that date, excluding shares held in treasury, the total number of outstanding common shares of the company was 47,830,890. There are represented, as of this meeting, either via the Internet or by proxy, 45,929,230 common shares of the company. This represents approximately 96% of the company's outstanding common shares entitled to vote and therefore, a quorum is present, and this meeting is lawfully convened.

In order to minimize the time consumed in tabulating the vote on each of the proposals to be acted upon today, we will discuss and vote on each proposal and then allow Mr. Hershey to report on all votes at the end of the process. The first order of business on our agenda is Proposal 1, the election of 9 directors to hold office until the 2021 Annual Shareholders' Meeting and until their respective successors are duly elected and qualified. Before discussing our current director nominees, I would like to take a moment to recognize and to thank Mr. John Roberts, who will be retiring from our Board following this annual meeting. During his 14 years on the Board, Mr. Roberts has been an outstanding Chair of our Audit Committee and has made valuable contributions to shaping our strategic priorities and creating value for our shareholders as a Board member and as a member of the Nominating, Governance and Social Responsibility Committee. On behalf of all of us, thank you, John, for your tremendous contribution. All director nominees are current directors who are standing for reelection to the Board. It is now my pleasure to introduce our nominees: Stan Askren. Mr. Askren is CEO and Founder of Quiet Trail Advisors and former President and CEO of HNI Corporation. He has served on our Board since October 2008 and is Chair of our Management Development and Compensation Committee. Vic Grizzle. Mr. Grizzle is President and CEO of Armstrong World industries. He has served on our Board since April 2016 when he was appointed our President and Chief Executive Officer. Tao Huang. Mr. Huang is Founder and Managing Partner of Range Light LLC and the former Chief Operating Officer of Morningstar, Inc. He has served on our Board since 2010. Barb Loughran. Ms. Loughran is a former partner with PricewaterhouseCoopers LLP. She has served on our Board since July 2019. Jim Melville. Mr. Melville is a member of the Kaplan, Strangis and Kaplan Law firm in Minneapolis. He previously served as a member of our Board from September 2009 until July 2010, was subsequently appointed to the Board in 2012 and is Chair of our Nominating, Governance and Social Responsibility Committee. Wayne Shurts. Mr. Shurts is the former Executive Vice President and Chief Technology Officer at Cisco Corporation. He has served on our Board since July 2019. Roy Templin. Mr. Templin is the former Executive Vice President and Chief Financial Officer of Whirlpool Corporation. He has served on our Board since September 2016 and is the Chair of our Finance Committee. Cherryl Thomas. Ms. Thomas is the Chief Strategy Officer and Vice President of Ardmore Roderick. She has served on our Board since April 2016. And finally, I am also standing for reelection to the Board, and I'm the former President and Chief Executive Officer of Keystone Foods. I have served on this Board since 2010. There being no further nominations submitted in advance of this meeting, may I have a motion to elect the director nominees?

Mr. Chairman, I so move.

Is there a second?

I second.

The second order of business is the ratification of KPMG LLP as the company's independent registered public accounting firm to audit the company's consolidated financial statements and internal control over financial reporting for 2020. May I have a motion?

Mr. Chairman, I so move.

Is there a second?

I second.

The third order of business is the approval, on an advisory basis, of our executive compensation program as presented in the compensation discussion and analysis section and the accompanying tables contained in the company's 2020 proxy statement. The company's compensation program plays a material role in the company's ability to drive strong financial results and attract and retain a highly experienced team to manage the company. May I have a motion?

Mr. Chairman, I so move.

Is there a second?

I second.

We have a motion and a second for each of the 3 orders of business. Polls to vote on each matter are now open and will remain open until I announce that they are closed. No ballots will be accepted after the polls are closed, and no ballots or proxies may be changed or revoked after the polls are closed. Those who have not yet submitted their ballots are requested to access their ballots on the online platform and mark and execute their ballots with respect to the election of directors, the ratification of KPMG and the advisory approval of Armstrong's executive compensation and to submit their completed ballots electronically to the judge of election. [Voting]

The polls are now closed and the votes will be tabulated. While the votes are being tabulated, I would like to reintroduce Ms. Kriebel of KPMG. She has indicated that she has not prepared a formal statement, but if anyone present has any questions he or she would like to submit to Ms. Kriebel through the online platform, she will be pleased to answer them. I would now like to ask Mr. Hershey to read the results of the voting.

This report is subject to final verification by the judge of election. The final tabulations will be published in a Form 8-K filing with the SEC. Proposal 1 was the election of 9 directors. All nominees have been elected to the Board of Directors. On average, the directors received affirmative votes representing 44,687,580 shares, which represents approximately 99.6% of the votes cast. Proposal 2 was the ratification of the company's appointment of KPMG as its independent registered public accounting firm for 2020. The appointment of KPMG has been ratified. The proposal received affirmative votes representing 45,135,414 shares, which represents more than 98.2% of the votes cast. Proposal 3 was the approval, on an advisory basis, of our executive compensation program. The company's executive compensation program has been approved on an advisory basis. The proposal received affirmative votes representing 44,525,755 shares, which represents more than 99.3% of the votes cast.

This concludes the formal portion of the 2020 Annual Meeting of Shareholders. There is no further formal business to come before the meeting. As there is no further formal business to come before the meeting, I will now entertain a motion to adjourn.

Mr. Chairman, I so move.

I second.

It has been moved and seconded that the meeting be adjourned. The motion is carried and the meeting is now adjourned. Thank you all for attending.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.