Booking Holdings Inc. (BKNG) Earnings Call Transcript & Summary

Good morning, and welcome to the Booking Holdings 2021 Annual Meeting of Stockholders. I would now like to turn the call over to Mr. Bob Mylod, Chairman of the Board of Directors of Booking Holdings.

Good morning, and welcome to the 2021 Annual Meeting of the Stockholders of Booking Holdings. I'm Bob Mylod, Chair of the Board of Directors of Booking Holdings. Thank you for joining us today. We recognize that the recovery rate of the COVID-19 pandemic is varying greatly in many parts of the world and that many people continue to suffer as a result, whether it be physically, economically or emotionally, including within our company. And our hearts go out to them. While we regret the circumstances of the COVID-19 pandemic that have led us to holding our annual meeting virtually once again, we're hopeful that this format is providing the opportunity for many of our stockholders to attend the meeting this morning. As is our custom, we will conduct the formal stockholder meeting first. And after the formal meeting is concluded, Glenn Fogel, the company's CEO, will comment on the company's business, and we'll then answer questions. We refer you to our proxy statement available on the web portal, which provides information regarding the proposals we are considering today and instructions regarding how to vote. We also refer you to the rules of conduct available on the web portal, which provide additional details regarding the conduct of the meeting and the question-and-answer period. This meeting is now officially called to order. If you have your control number and have not voted or would like to change your vote, the polls are now open, and you may proceed to vote through the web portal by clicking on the Voting button and following the instructions there. If you have already voted and do not want to change your vote, you do not need to vote again. After the proposals have been presented, the polls will close. Also, while we do not anticipate any technical difficulties today, if technical difficulties do arise, we ask that you remain on the line or reconnect if you are disconnected for 15 minutes. If the meeting is unable to resume after 15 minutes, the matters to be voted on will be deemed to be properly before the meeting. The polls will be closed. All votes received prior to the closing of the polls will be counted. And the meeting will be automatically adjourned and will not be reconvened. I would now like to take a moment to introduce the other nominees for election to the company's Board of Directors at this meeting, each of whom is present: Tim Armstrong; Glenn Fogel, the company's President and Chief Executive Officer; Mirian Graddick-Weir, Chair of the company's Compensation Committee; Wei Hopeman; Chuck Noski, Chair of the company's Nominating and Corporate Governance Committee and Lead Independent Director; Nick Read; Tom Rothman; Bob van Dijk; Lynn Vojvodich; and Vanessa Wittman, Chair of the company's Audit Committee. I would also like to take a moment to acknowledge Jeff Boyd, who is retiring from our Board of Directors effective as of today. Jeff has served our Board of Directors for nearly 2 decades, including 7 as Chair of the Board. We extend our deepest gratitude to Jeff for his leadership and service and wish him the very best. We are joined here today by Deloitte & Touche, our independent auditors. Melissa Naple, the lead audit partner, is available to respond to appropriate questions. Broadridge Financial Solutions has been appointed to serve as Inspector of Election for this meeting. Ms. Beth Vanderbeck is with us today and has taken the oath of Inspector of Election. At this point, I'd like to take a moment to summarize today's agenda. First, we will describe and then present for a vote each of the proposals being presented at the meeting. Second, we will provide time for you to ask questions or make comments about those proposals. Third, the polls will then close, and we will report the preliminary results of the vote. Final vote totals will be filed with the SEC on Form 8-K within the required time period. Fourth, the formal meeting will then be adjourned. And fifth, we will then hear from Glenn Fogel, the company's CEO, after which we will respond to appropriate questions that meet the rules of conduct for the annual meeting. The question-and-answer period will conclude at noon Eastern Time or earlier if there are no remaining questions. Please abide by this procedure. It will provide you with the opportunity to make a statement or have your question answered with respect to a particular proposal before the polls close. It will also give you an opportunity to ask questions about the business at the appropriate time. At this point, I would like to turn the meeting over to Peter Millones, Booking Holdings' Corporate Secretary.

Thank you, Bob. I will now address a few administrative items. Speakers today may make forward-looking statements. These forward-looking statements reflect the current views of the speakers regarding current expectations about future events. They are not guarantees of future performance, decisions or actions and are subject to risks and uncertainties, including those set forth in the company's periodic reports filed with the SEC. Use of words such as will, may, could and believes and other words denoting something other than historical fact are intended to identify forward-looking statements. The Board of Directors fixed April 8, 2021, as the record date for determining stockholders entitled to vote at this meeting. An affidavit has been filed -- has been delivered attesting to the fact that either: a notice of Internet availability of the notice of the meeting, a proxy statement and the 2021 annual report to stockholders; or two, the documents themselves were mailed on or about April 21, 2021, to all stockholders as of the record date and will be incorporated into the minutes of this meeting. As of the record date, there were 41,052,665 shares of common stock outstanding and entitled to vote at this meeting. We are informed by the Inspector of Election that there are represented, in person or by proxy, shares of common stock representing 35,692,708 votes or approximately 87% of the outstanding voting power on the record date. Since this represents more than a majority of all issued and outstanding stock entitled to vote on the record date, a quorum is present for purposes of transacting business. The list of stockholders eligible to vote at this meeting is available to stockholders on the web portal. Now that we've dealt with those administrative issues, I'll now describe the proposals to be voted on at this meeting, all of which are described in detail in the proxy statement furnished to stockholders and available on the meeting web portal. As a reminder, the polls are open. If you have your control number and have not voted or would like to change your vote, you may proceed to vote through the web portal by clicking on the Voting button and following the instructions there. If you've already voted and you do not want to change your vote, you do not need to vote again. After the proposals have been presented, the polls will close. The first item of business is the election of directors. In accordance with the bylaws, the number of directors to be elected at this meeting has been fixed by the Board at 11. The Board's nominees for directors for the ensuing year or until their successors are duly elected and qualified are listed in the proxy statement provided to all stockholders. They are: Tim Armstrong, Glenn Fogel, Mirian Graddick-Weir, Wei Hopeman, Bob Mylod, Chuck Noski, Nick Read, Tom Rothman, Bob van Dijk, Lynn Vojvodich, Vanessa Wittman. The Board recommends that stockholders vote for each of the director nominees. The nominees for election to the Board are formally submitted for stockholder vote. The second item of business is concerning a nonbinding advisory vote on the company's 2020 executive compensation, which is also described in detail in the proxy statement. The Board recommends that stockholders vote for approval on an advisory nonbinding basis of the company's 2020 executive compensation. Proposal #2 is formally submitted for stockholder vote. The third item of business is management's proposal to amend the company's 1999 Omnibus Plan, which is also described in detail in the proxy statement. The Board recommends that stockholders vote for amending the company's 1999 Omnibus Plan. Management's proposal to amend the company's 1999 Omnibus Plan is formally submitted for stockholder vote. The fourth item of business is the ratification of the selection of Deloitte & Touche LLP as the company's independent auditors for the year ending December 31, 2021. Melissa Naple of Deloitte & Touche is present at this meeting and is available to respond to appropriate questions from stockholders. The Audit Committee of the Board of Directors has approved the selection of Deloitte & Touche LLP as the company's independent auditors for 2021, and the Board recommends that stockholders ratify that selection by voting for Proposal #4. Proposal #4, the selection of Deloitte & Touche LLP, is formally submitted for stockholder ratification. The fifth item of business is management's proposal to amend the company's Certificate of Incorporation to allow stockholders the right to act by written consent. This proposal is detailed in the proxy statement, including the differences between this proposal and the stockholder proposal that we will discuss next. The Board recommends that stockholders vote for Proposal #5. Proposal #5 is formally submitted for stockholder vote. The sixth item of business is the consideration of a nonbinding stockholder proposal submitted by Mr. John Chevedden, requesting that the Board take the steps necessary to allow stockholders to act by written consent, which is also described in detail in the proxy statement. Mr. Chevedden is on the line and will now present his proposal. Operator, please open Mr. Chevedden's line. Mr. Chevedden, you may now proceed to present your proposal.

Mr. Chevedden, your line is now open.

Hello, this is John Chevedden. Can you hear me okay?

Yes, we can.

On Proposal 6, adopt a mainstream shareholder right a real version of written consent. Shareholders request our Board of Directors to take the steps necessary to permit written consent by the shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting and which also is entitled to vote thereon were present and voting. Hundreds of major companies enable shareholder action by written consent. This proposal topic won 79% support at Xerox and 95% support at Dover Corporation. This proposal already won 49% support at our 2020 Annual Meeting. This 49% support represented well over 51% support from the shares that have access to independent proxy voting advice. Most small shareholders do not have access to independent proxy voting advice. Management is thus getting a free ride on the backs of small shareholders who are forced to rely upon the biased recommendations of management. In response to this 51% vote, management put forth its Proposal 5, a version of written consent that is made useless by its restrictions and thus would not be used by any group of shareholders in their right mind. Under Proposal 5, it would take the formal backing of 25% of all shares outstanding to do so little as to ask for a record date for written consent. Why would any group owning 25% of our stock seek to do so little as to get a date on a calendar for management when the same group of shareholders with less effort can compel a management to hold a special shareholder meeting on a topic of their choosing? Door #1 is a date on a calendar from management that shareholders can frame. And door #2 takes less effort and compels management to hold a special shareholder meeting. Thus, door #2, a special shareholder meeting, is the clear choice, and our current proposed written consent is thus useless, Proposal 5. Clearly, shareholders, if made fully aware of the uselessness of our proposed right deck by written consent, would not approve it. Yet management recommends that shareholders approve it. This shows how management is abusing shareholder engagement by withholding key information on the not-so-obvious limitations management put on its own version of written consent in order for management to get shareholder approval and, in return, fail to give shareholders any meaningful right. Management failed to disclose that the Securities and Exchange Commission did not agree with management's claim that this Proposal 5 will properly implement shareholder Proposal 6. The Securities and Exchange Commission issued its formal decision on April 9, 2021, and plenty of time for management to be upfront with shareholders. Management is force-feeding shareholders the same argument to fill to gain any traction at the Securities and Exchange Commission. If shareholder engagement is so great, why is management force-feeding shareholders with glossy advertisements just before the annual meeting, touting how importantly great this shareholder engagement is. Booking Holdings is becoming a poster company for abusing shareholder engagement. Please vote yes, adopt a mainstream shareholder right, a real version of written consent Proposal 6.

Thank you, Mr. Chevedden. The Board recommends that stockholders vote against this proposal. Proposal #6 is formally submitted for stockholder vote. I'm now going to present Proposal 7 and 8. The seventh item of business is the consideration of a stockholder proposal submitted by As You Sow on behalf of The Thornhill Company, requesting that the Board issue a climate transition report, which is also described in detail in the proxy statement. The eighth item of business is the consideration of a stockholder proposal submitted by As You Sow on behalf of Booth Investments, LLC, requesting to the company hold an annual advisory stockholder vote on the company's climate policies and strategies, which is also described in detail in the proxy statement. A representative of As You Sow, David Shugar, will now present Proposal 7 and 8.

Good morning. My name is David Shugar, and I want to thank you for the opportunity to present Item #7, requesting Booking Holdings produce a net 0 climate transition report to respond to the imperative risks of climate change. Climate-related risks continue to intensify and pose material threats for companies and the economy. 2020 set a new record for weather and climate disasters in the U.S. with over $95 billion of costs associated with storms, cyclones, wildfire and drought. In response to growing climate risks, investors are calling for every company to develop clear, consistent, incredible net 0 transition plans. If every company takes responsibility for reducing its emissions, the world will be well placed to achieve the Paris goal of maintaining global temperature rise at 1.5-degree Celsius. Appropriately, the transition to net 0 is picking up speed. We are seeing daily reports of governments, investors, banks and companies aligning their enterprise plans to be net 0 by 2050 or sooner. 1 in 5 of the world's 2,000 largest public listed companies have now adopted net 0 emissions targets. By developing a climate transition plan, Booking Holdings can join these climate leaders in becoming a net 0-aligned business. This is not only good for the climate, but it is good for Booking's business. As BlackRock CEO writes, there is no company whose business model won't be profoundly affected by the transition to a net 0 economy. Companies that have developed climate transition plans will be well placed to take advantage of the opportunities presented by a net 0 economy while avoiding the risks of falling behind competitors. While our company recently reported in the 2020 sustainability report that it has become carbon-neutral, this effort relies on the purchase of carbon offsets. Carbon offsets alone, without reductions in our company's emissions, is insufficient. The use of carbon offsets, instead of actual emission reduction targets, makes it difficult to solve climate change at a global level and does not prepare the company to meet the challenges and opportunities of a carbon-constrained economy. With outstanding goals to reduce operational and supply chain emissions, Booking Holdings will not contribute to solving the global climate crisis or ensure that the company is prepared to thrive in a net 0 economy. We urge a yes vote on this resolution for Booking Holdings to issue a climate transition report with emission reduction targets aligned with science-based standards. Thank you for the opportunity to present on this important issue.

Thank you.

I would also like to put forth item #8 to hold an annual advisory stockholder vote on the company's climate policies and strategies. This will provide the opportunity for shareholder feedback on Booking Holdings' climate policies.

Thank you. The Board recommends that stockholders vote against Proposals 7 and 8. Proposals #7 and 8 are formally submitted for stockholder vote. Over to you, Bob.

Thank you, Peter. At this time, if any stockholders would like to make a comment or have a question regarding any of the proposals, please submit your comment or question to the question box on the web portal. As a reminder, at this time, we are addressing only the proposals. There will be time later for other questions.

Thanks, Bob. We do have one question that has come in. Regarding management proposal. Have metrics for CEO incentive pay changed in the last 12 months due to the pandemic or otherwise?

Sure. I'll respond to that. The short answer is, yes, the way we have approached compensation for the executive Booking Holdings, but really for all employees of Booking Holdings has changed during this period. We have various performance features to our equity plans that are tied to various metrics that, during the course of the COVID pandemic when our business was essentially, for a certain number of months, almost shut down and in fact, several weeks and months where we were processing more refunds than we were taking in revenue, it basically obviated any and all of the metrics associated with our performance-based plans. So the Compensation Committee of the Board and the Board has been actively addressing our compensation plans during the course of that period. And the changes that we made to those plans are described in detail in our proxy statement, and I would refer you to the description of those changes in the plan.

Thanks, Bob. That's all the questions we have on the proposal. So back over to you, Peter.

Okay. Thank you, Leslie. So the proposals have now been presented, and we are going to now pause for 30 seconds before we close the polls to allow anybody who wants to vote. So starting now, we're going to pause for 30 seconds and then the polls will close. Okay. The polls are now formally closed. Mr. Chair, we have been informed by the Inspector of Election that the preliminary vote report shows that the nominees for election to the Board have been duly elected. The compensation of the named executive officers for 2020 has been approved by advisory vote. The amendment to the company's 1999 Omnibus Plan has been approved. The ratification of Deloitte & Touche as the company's independent auditor for the fiscal year ending 2021 has been approved. The management proposal to amend the Certificate of Incorporation to provide for stockholder action by written consent has been approved. The stockholder proposal requesting the right of stockholders to act by written consent did not pass. The stockholder proposal requesting the Board issue a climate transition report did pass. And the stockholder proposal requesting the company hold an annual advisory stockholder vote on the company's climate policies and strategies did not pass. We will be reporting the final vote results in a Form 8-K to be filed with the SEC within 4 business days. Bob, back to you.

Thank you, Peter. The meeting is now formally adjourned. At this point, I'd like to turn the time over to Glenn Fogel, the company's President and Chief Executive Officer, who will give some brief comments. After Glenn's comments, we'll have time to answer appropriate questions.