BJ's Wholesale Club Holdings, Inc. (BJ) Earnings Call Transcript & Summary

Good morning. I'm Chris Baldwin, the Executive Chairman of the Board of BJ's Wholesale Club Holdings, Inc. and the chairperson of today's meeting. Welcome to our 2020 annual meeting of stockholders. We are pleased to conduct this year's annual meeting virtually via the Internet. Before I call the meeting to order, I'd like to introduce the other members of the Board and the officers of the company who are with us today. The other members of the Board here today are: Lead Director, Robert Steele; Maile Clark; Lee Delaney, the BJ's President and Chief Executive Officer; Michelle Gloeckler; Thomas A. Kingsbury; Ken Parent; Christopher Peterson; and Judith Werthauser. Also here today are the following: Robert Eddy, our Executive Vice President, Chief Financial and Administrative Officer; Graham Luce, our Senior Vice President and Corporate Secretary. I would also like to introduce Erin Devine; and Melissa Palmer of PricewaterhouseCoopers, the company's independent auditor, who will be available to respond to questions, including via the Ask A Question function on the annual meeting web page. The meeting has now officially come to order. We will proceed with the formal business of the meeting as set forth in the Notice of Annual Meeting and Proxy Statement. When you join the meeting, an agenda should have become available at the bottom of your screen. Also available at the bottom of your screen are the Rules of Conduct.

Our Board of Directors at April 27, 2020, as the record date for those stockholders entitled to vote at this meeting. We have a certified list of stockholders of the company as of the close of business on the record date who are entitled to notice of and to vote at this meeting. The list was available for inspection for 10 days prior to this meeting and will be available at the bottom of your screen during the business portion of the meeting for any stockholder wishing to inspect it. I also have an affidavit of mailing establishing that notice of this meeting was duly given to all stockholders of record of the company as of the close of business on April 27, 2020. A copy of the notice of meeting and the affidavit of mailing will be included with the minutes of this meeting. At this time, I'd like to introduce [ Joseph McClellan ], a representative of Broadridge Investor Communications Solutions. The Board of Directors has appointed a representative of Broadridge to act as inspector of election at today's meeting. [ Mr. McClellan ] has signed the customary oath of office to execute his duties with strict impartiality. We will file this oath with the records of the meeting. Mr. McClellan has informed me that a quorum is present. Therefore, I declare this meeting to be duly constituted for the transaction of business.

We will now proceed with the formal business of this meeting. There are 4 proposals to be considered by the stockholders at this meeting. The company recommends that the stockholders vote for each of these proposals. The first item of business is the election of Maile Clark and Thomas A. Kingsbury to serve as Class II directors of the company to hold office until the annual meeting of stockholders to be held in 2023, and until their respective successors have been duly elected and qualified. The plurality of the votes cast, meaning that the 2 nominees receiving the highest number of affirmative For votes is the voting standard for this item of business and is required for each of the nominees to be elected as Class II directors. In accordance with the advanced notice provision in the bylaws of the company stockholders are required to provide advanced notice of their intent to nominate candidates for directors. No such notice was received. Therefore, I declare the nominate -- nominations for Director closed. We will now move to the other proposals. The second item of business is the ratification in a nonbinding vote of the Audit Committee's appointment of PricewaterhouseCoopers as our independent registered public accounting firm for the year fiscal 2020. The affirmative vote of the holders of a majority of voting power of the votes cast affirmatively or negatively, excluding abstentions and broker nonvotes at this annual meeting by the holders entitled to vote on this item of business, is required for the approval of this proposal. The third item of business is the approval of an advisory nonbinding basis of the compensation of our named executive officers or the say-on-pay vote. The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively, excluding abstentions and broker nonvotes at this annual meeting by the holders entitled to vote on this item of business, is required for the approval of this proposal on an advisory nonbinding basis. The fourth and final item of business is the approval of an amendment to the second amended and restated certificate of incorporation of the company to declassify the Board of Directors. The affirmative vote of the holders of at least 2/3 of the voting power of our outstanding shares of stock entitled to vote on this item of business, voting as a single class is required for the approval of the amendment to the second amended and restated certificate of incorporation of the company to declassify the Board of Directors. That was the final proposal for today's meeting. Are there any questions on the proposals? If so, stockholders who have logged in using their control number may submit questions via the Ask A Question function on the annual meeting web page. We're happy to respond to any questions regarding the proposals. However, we will not be responding to questions on other topics, including regarding financial or general business updates at this time. To the extent you have questions about these matters, please refer to our previous public statements. You may also reach out to our investor team. I will now pause for a minute to allow any stockholders with questions relating to the proposals to submit them. There are no questions at this time. The polls opened today, June 18, 2020, at 8 a.m. Eastern for voting on all matters before the meeting. If you have not already voted and wish to vote, the polls will remain open until we announce closing of the polls. The voting is by proxy and online ballot. You do not need to vote by online ballot if you have already voted and do not wish to change your vote. The record will reflect that all shares for which proxies were returned to the company were voted in accordance with the instructions received. If anyone joining the live webcast who is logged in using their control number wishes to change their previously submitted vote, who has not previously voted, you may now do so by clicking on the Vote Here button found on the annual meeting web page. I will now pause again for a minute to allow stockholders who wish to vote to do so. [Voting]

The time is now 8:09 a.m. on June 18, 2020, and the polls are now closed for voting. The Inspector of Elections will count the votes. Based on the preliminary report of the Inspector of Elections, each of Maile Clark and Thomas A. Kingsbury have been elected as directors to serve until our annual meeting to be held in 2023. The appointment of PricewaterhouseCoopers as our independent registered public accounting firm for our 2020 fiscal year has been ratified. The compensation of our named executive officers has been approved. And stockholders have approved the amended -- amendment to our second amended and restated certificate of incorporation to declassify the Board of Directors. The final tally of votes will be published within 4 business days in the current report on the Form 8-K to be filed with the Securities and Exchange Commission. It is now 8:09 am, and the formal portion of this meeting has concluded. This meeting is now adjourned.

Thank you very much. The management team and I are now available to answer any appropriate questions. Only stockholders who have logged in using their control number will be able to ask questions. You may submit any questions via the Ask A Question function on the annual meeting page. Each stockholder is limited to no more than 3 questions or comments, no more than 2 of which may be on any single topic. And each question or comment is limited to 2 minutes. We also remind you that we will not be making any remarks or answering any questions about our expected second fiscal quarter results or business developments at this time and invite you to read our second quarter earnings release and join our earnings call when available. Before we respond to any questions or address any comments, please note that these remarks may include forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed. More information about important factors that could cause our actual results to differ materially from our expectations expressed in our forward-looking statements are included in the company's SEC filings including the company's 2019 annual report on Form 10-K and quarterly report on Form 10-Q for the first quarter of fiscal year 2020. Additionally, in response to your questions, we may reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliations of non-GAAP financial measures where appropriate to the corresponding GAAP measures can be found in the company's earnings releases and other filings with the SEC.

With that, ladies and gentlemen, this concludes our annual meeting. I want to thank you for attending and for your interest in the affairs of BJ's Wholesale Club.

So Mr. Chairman, we have we have a couple of shareholder questions that have come in via the Ask A Question function. The first question is from Jerry Matthews, a representative of the United Brotherhood of Carpenters. Mr. Matthews states that it has come to his attention that company construction personnel stated that our Board of Directors has directed that all construction be open shop. The question goes on to say that the union members in New York spend tens of millions of dollars at BJ's Wholesale Club and the union's pension funds invest millions of dollars in company common stock. Asking that we explain the Board's position on construction contracting.

Mr. Matthews, first of all, thank you for your question. In response, our Board does not determine specific initiatives related to club-specific constructions. As such, this is not a board-level decision. We will certainly make sure management is sensitive to your question. Thank you for your question.

The second question, Mr. Chairman, is on behalf of the carpenters union pension funds. The question states those long-term shareholders, they commend the efforts of the company to prioritize employee and member health and safety during the COVID-19 pandemic. It goes on to note that BJ's has a plurality voting standard for director elections and indicates that the pension funds have been advocates for the use of a majority vote standard in uncontested director elections as it provides shareholders a meaningful vote in this important board accountability event. Question is has the Board considered the adoption of a majority vote standard for director elections? And if so, why is it chosen to retain a plurality vote standard?

Thank you for the question. And I want to also thank you for the recognition of our prioritization of employee safety during this difficult time in our country as we deal with the pandemic. Our Board annually reviews these practices. In its most recent review have determined that a plurality vote standard is most appropriate for this company at this time. This will be under a consistent review on about an annual basis, and the Board appreciate the feedback.

Thank you, Mr. Chairman. Are there any other questions or comments?

With that, ladies and gentlemen, this concludes our annual meeting. I want to thank you for attending and for your interest in the affairs of BJ Wholesale Club.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.