Brookfield Corporation (BN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It's now 11:30 a.m. My name is Frank McKenna. I'm Chair of the Board. It's my pleasure to chair today's meeting of shareholders of Brookfield Asset Management being held in connection with the public [indiscernible] distribution of a 25% interest in our asset management business. I will refer to the new public company resulting from this transaction as the manager. This creates a separate security for our American leading pure-play global alternative asset manager. We hope it will provide an added optionality for inorganic growth, further adding scale and diversification to our platform. Our asset manager has best-in-class long-term annuity-like cash flow streams. Our product offering is highly diversified, focused across alternative strategies and well positioned to benefit from the tailwinds around decarbonization and the global build-out of infrastructure. The manager has our robust liquidity position and will be [indiscernible] zero debt. The dividend payout ratio is attractive, targeting approximately 90% of distributable earnings. Concurrent with this transaction, we will rename our company, Brookfield Corporation. Going forward, the manager will continue to benefit from the synergies and the benefits that Brookfield Corporation brings which should further support the strong growth profile of this business. Further information about this exciting step in our evolution are detailed in the Management Information Circular that was issued in connection with this meeting as well as the presentation by management that was delivered at our most recent Investor Day. All of these materials can be found on our website at www.brookfield.com. On behalf of the Board and management, I would like to extend a warm welcome to everyone joining us today through our live webcast. Similar to our annual meeting in June, voting during the meeting will take place on our webcast platform. I will now explain this process. We will conduct the votes on the matters before us by a poll. On a poll, every shareholder entitled is entitled to vote on the matter has 1 vote in respect of each share entitled to be voted on the matter, and held by that shareholder. The poll will be open for all resolutions at the same time and throughout the formal portion of the meeting. This will allow you to choose to vote on each resolution immediately or wait until the conclusion of discussion on each resolution prior to casting your vote. If you voted in advance of the meeting and do not wish to revoke your previously submitted proxies, that no action is required. We will welcome questions from our shareholders. [Operator Instructions] Moving on, we wish to thank you for your participation in today's meeting. I now call the meeting to order, and I would ask TSX Trust Company by its representatives, Helen Kim and Kay Harrison, to act as scrutineers. I will also ask that our Chief Legal Officer and Corporate Secretary, Justin Beber, to act as Secretary of today's meeting. There are 4 items of business to be considered today; first, to consider a special resolution approving the plan of arrangement to facilitate the public listing of and distribution of a 25% interest in our asset management business; second, if the special resolution is passed to consider an ordinary resolution approving a stock option plan for the manager; third, if the special resolution is passed to consider an ordinary resolution approving an unqualified stock option plan for the manager; and fourth, if the special resolution is passed to consider an ordinary resolution approved approving an escrowed stock plan for the manager. The full text of each of these resolutions is set out in our management information circular. The matters to be approved at the meeting are conditional upon each other, and we will not proceed with the plan of arrangement unless shareholders have also approved the other matters to be voted on at the meeting. As mentioned in connection with the business to be dealt with today, all voting will be conducted by online ballot through the live audio webcast platform. Voting is now open on all resolutions. In order to expedite the formal part of today's meeting, I've asked certain shareholders to move and second various resolutions. Although this procedure will assist in the handling of the formal matters, it is not intended to discourage anyone from submitting questions in reference to any resolution after it has been proposed and seconded. I'm advised that the notice calling this meeting and the Management Information Circular were [indiscernible] to voting shareholders in accordance with all applicable laws. I've asked the Corporate Secretary to keep a copy of the notice and proof of mailing with the minutes of the meeting. Now based upon the scrutineers' preliminary report and attendance, the secretary has confirmed that there is a quorum and that the meeting is open for the conduct of business. So I now, therefore, officially declare the meeting is properly constituted for the transaction of the business for which it has been called. The final scrutineers' report will be filed with the minutes of this meeting. The first item of business today is the approval of the special resolution on the plan of arrangement described in the management information circular, which I will refer to as the arrangement resolution. This meeting is being held pursuant to an order of the Ontario Superior Court of Justice. A copy of the order is available for inspection. If the arrangement resolution is approved, the final hearing of the court to approve the arrangement is scheduled to take place on November 14, 2022 at 9:30 a.m. As stated in the management information circular, the Board of Directors has recommended that shareholders vote in favor of the arrangement resolution.

Mr. Chair, I move that the arrangement resolution as set forth in Appendix A of the management information circular be approved.

Thank you, Jasmine.

Mr. Chair, I second the motion.

Thank you, Monica. The resolution has been moved and seconded, and the motion is now before the meeting for discussion.

Mr. Chair, we have not received any questions or comments submitted in connection with the arrangement resolution.

Adoption of the motion requires the favorable vote of at least 66 and 2/3% of the votes cast at the meeting by our proxy by the shareholder -- by the holders of each of the Class A limited voting shares and Series 8 and Series 9 Class A preference shares, voting together as a class and the Class B limited voting shares voting separately as a class. As described in greater detail in the management information circular, the arrangement resolution must also be approved by at least a majority of the votes cast by minority shareholders. Management has received proxies representing 73.6% of the corporation Class A limited voting shares, approximately 36.5% of the Series 8 Class A pref shares and approximately 58.3% of the Series 9 Class A preference shares. Additionally, management has received 100% of the Class B limited voting shares. These proxies direct me to vote 99.8% of the Class A limited voting shares, 99.9% of the Series 8 Class A pref shares and 99.7% of the Series 9 Class A preference shares. Additionally, these proxies direct me to vote 100% of the Class B limited voting shares in favor of the resolution. I will now call for shareholders and proxy holders to submit their vote if they have not already done so. The second item of business today is the approval of the ordinary resolution and on the stock option plan of the manager described in the management information circular. As stated in the management information circular, the Board of Directors has recommended that shareholders vote in favor of the manager MSOP resolution.

Mr. Chair, I move that the ordinary resolution, accepting the stock option plan of the manager set forth in Appendix I of the Management Information Circular be approved.

Thank you, Jasmine.

Mr. Chair, I second the motion.

Thank you, Monica. The resolution has been moved and seconded. The motion is now before the meeting for discussion.

Mr. Chair, we have not received any questions or comments submitted in connection with the stock option plan of the manager.

Adoption of the motion requires the favorable vote of a majority of the votes cast at the meeting by the holders of each of the Class A limited voting shares and the Class B limited voting shares voting as separate classes. Management has received proxies representing approximately 73.6% of the corporation's Class A limited voting shares and 100% of the Class B limited voting shares. These proxies direct me to vote 97% of the Class A limited voting shares and 100% of the Class B limited voting shares in favor of the resolution. I will now call for shareholders and proxy holders to submit their vote if they have not already done so. [Voting]

The third item of business today is the approval of the ordinary resolution on the nonqualified stock option plan of the manager described in the management information circular. As stated in the management information circular, the Board of Directors has recommended that shareholders vote in favor of the nonqualified stock option plan resolution.

Mr. Chair, I move that the ordinary resolution accepting the nonqualified stock option plan of the manager set forth in Appendix J of the Management Information Circular be approved.

Thank you, Jasmine.

Mr. Chair, I second the motion.

And thank you, Monica. The resolution has been moved and seconded, and the motion is now before the meeting for discussion.

Mr. Chair, we have not received any questions or comments submitted in connection with the nonqualified stock option plan at the manager.

Adoption of this motion requires the favorable vote of a majority of the votes cast at the meeting by the holders of each of the Class A limited voting shares and the Class B limited voting shares voting as separate classes. Management has received proxies representing approximately 73.6% and of the corporation's Class A limited voting shares and 100% of the Class B limited voting shares. These proxies direct me to vote 72.8% of the Class A limited voting shares and 100% of the Class B limited voting shares in favor of the resolution. I will now call for shareholders and proxy holders to submit their vote if they have not already done so. The fourth item of business today is the approval of the ordinary resolution on the escrowed stock plan of the manager described in the Management Information Circular. As stated in the management information circular, the Board of Directors has recommended that shareholders vote in favor of the manager escrowed stock plan resolution.

Mr. Chair, I move that the ordinary resolution accepting the escrowed stock plan of the manager set forth in Appendix K of the Management Information Circular be approved.

Thank you, Jasmine.

Mr. Chair, I second the motion.

Thank you, Monica. The resolution has been moved and seconded and the motion is now before the meeting for discussion.

Mr. Chair, we have not received any questions or comments submitted in connection with the escrowed stock plan of the manager.

Adoption of this motion requires a favorable vote of a majority of the votes cast at the meeting by the holders of each of the Class A limited voting shares and the Class B limited voting shares voting as separate classes. Management has received proxies representing approximately 73.6% of the corporation's Class A limited voting shares and 100% of the Class B limited voting shares. These proxies direct me to vote 97.6% of the Class A limited voting shares and 100% of the Class B limited voting shares in favor of the resolution. I will now call for shareholders and proxy holders to submit their vote if they have not already done so. [Voting]

Voting is now closed on all resolutions. I'm advised that our Corporate Secretary has the results of the vote based on the final tabulations of proxy votes received.

Thank you, Mr. Chair. On the approval of the arrangement resolution, I declare the motion carried. On the approval of the ordinary resolution on the stock option plan of the manager, I declare the motion carried. On the approval of the ordinary resolution on the nonqualified stock option plan at the manager, I declare the motion carried. On the approval of the ordinary resolution on the escrowed stock plan at the manager, I declare the motion carried. The final voting results will be available after the meeting and posted to SEDAR at www.sedar.com.

Thank you, Justin. Ladies and gentlemen, that completes the formal business of today's [indiscernible] meeting. There being no other business, I declare the meeting terminated.