Chemed Corporation (CHE) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Annual Meeting of Stockholders of Chemed Corporation.

Ladies and gentlemen, it's now 11:00, and the meeting will please come to order. Good morning and welcome to the Annual Meeting of Stockholders. My name is Kevin McNamara, and I'm CEO and member of the Board of Directors of Chemed Corporation. Given the restrictions imposed by the Coronavirus pandemic, we are holding this meeting virtually. The floor will be open for stockholders' general questions following the legal business of the meeting. Now I would like to introduce the candidates standing for election today, in addition to myself. George J. Walsh III, partner with the law firm of Thompson Hein, LLP, and Chairman of the Board of Directors of the corporation; Ron DeLyons, Managing Member and Chief Executive Officer of Creekwood Energy Partners; Joel F. Gemunder, who retired as President and Chief Executive Officer of Omnicare, Inc.; Patrick P. Grace, President and CEO of the Grace Institute Foundation; Christopher J. Heaney, former President and Chief Executive Officer of Service America Systems, Inc.; Thomas C. Hutton, Vice President of Chemed; Andrea R. Lindell, Dean of the School of Nursing, and Vice Provost of the College of Health Sciences at Walden University; Thomas P. Rice, General Manager and Partner of Columbia Investments, LLC; and Donald E. Saunders, who retired as a professor at the Farmer School Business Administration at Miami University in Oxford, Ohio. As you've read in the notice of the annual meeting and proxy statement, there are 4 items of business on the agenda. After we've established that a quorum is present and have complied with the other requirements of opening the meeting, we will address these items, including the stockholder proposal, if it is properly presented. Mr. Dan Lepler, Officer of Equiniti Trust Company, Chemed's transfer agent, has been appointed to act as inspector to examine the proxies. Mr. Todd Klinik, of PricewaterhouseCoopers LLP, is also available today to answer any questions you may have about his firm's auditing functions for the company. I will now ask Naomi Dallob, who is Vice President, Chief Legal Officer and Secretary of Chemed, to render the report of the inspector.

On behalf of the inspector, I'm pleased to report that the inspector has certified that proxies have been received covering 14,381,687 shares of capital stock, which is 90.62% of the outstanding stock of the company entitled to vote at the meeting.

On basis of the report of the inspector of voting, a quorum is present. The secretary is now requested to submit an affidavit as due notice of this meeting.

Mr. Chairman, I present an affidavit showing due service of the notice of this meeting and the proxy statement on all stockholders' record at the close of business on March 26, 2020. Such stockholders were notified on April 22, 2020, of the virtual nature of this meeting. The list of such stockholders has been opened for examination at the company for the past 10 days. It is available for inspection during this meeting by any shareholder on the meeting website.

Thank you, Madam Secretary. The affidavit, along with the oath of the inspector, is received and filed. The next order of business is the election of Directors. The nominees for election of Directors, as proposed by Chemed's Board and previously introduced are listed on Page 7 through 9 of the company's proxy statement. They are to be elected until the next Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. Does any stockholder wish be heard before we proceed to vote? Please be aware that we will limit discussions on the agenda items to 10 minutes for each item. The next order of business is the ratification of the audit committee's selection of independent accountants. I request the secretary to read the proposed resolution.

Resolved that the selection of PricewaterhouseCoopers LLP as independent accountants for the corporation and its consolidated subsidiaries for the year 2020 is hereby ratified.

Is there any discussion from stockholders on the selection of independent accountants?

No question.

Neigh. The next order of business is the advisory vote to approve executive compensation. Will the secretary read the proposed resolution.

Resolved is compensation paid to the company's executive officers, as disclosed pursuant to Item 402 of Regulation SK described in the proxy statement under executive compensation, including the compensation discussion and analysis, compensation tables and narrative discussion contained in the proxy statement is hereby approved.

Is there any discussion on the approval of the advisory vote to approve executive compensation? The next order of business is the stockholder proposal. We understand the proponent is on the line. We ask the operator to unmute his line. Will the proponent please introduce himself and the proposal.

Yes. Thank you, and good morning. My name is [ Jesse Alba ], and I am presenting proposal #4 on behalf of John Chevedden. Proposal 4, political spending disclosure, sponsored by John Chevedden. If you have already voted against this proposal, please give this proposal the benefit of the doubt and change your vote before the polls close in a few minutes. This proposal topic won 46% support at the 2019 annual meeting of this company. The shareholders of Western Union also gave the same proposal, 46% support in 2019, and then gave a majority support last week. Shareholders request that management provide a company website report disclosing the company's one: policies and procedures for making with corporate funds or assets, contributions and expenditures to participate or intervene in any campaign on behalf of any candidate for public office, or to influence the general public with respect to an election or referendum; two, disclosure of monetary and nonmonetary contributions used in the manner described above. As a long-term shareholder of Chemed Corporation, the sponsor supports transparency and accountability in a corporate election spending. This includes any activity considered intervention in a political campaign under the IRS code, such as direct or indirect contributions to political candidates, parties or organizations and independent expenditures or electioneering communications on behalf of federal, state or local candidates. Disclosure is in the best interest of the company and its shareholders. The Supreme Court recognized this in its 2010 Citizens United decision, which said, "Disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way." Relying on publicly available data does not provide a complete picture of the company's election spending. For example, the company's payments to trade associations that may be used for election-related activities are undisclosed and unknown. This proposal asks the company to disclose all of its election spending, including payments to trade associations and other tax-exempt organizations, which may be used for election purposes. This would bring the company in line with a growing number of leading companies, including Walgreens Boots Alliance and CVS Health, which present this information on their websites. The company's Board and shareholders need comprehensive disclosure to fully evaluate the use of corporate assets in elections. Please support this critical governance reform, which won impressive 46% support at the 2019 annual meeting. Management needs a wake-up call because management had not taken one small step in the direction of this proposal in the year since the impressive 46% vote. Please vote yes, political spending disclosure, proposal 4. Thank you.

Thank you for sharing your proposal with us. We ask the operator to mute your line. The Board of Directors' statement and opposition is found on Pages 50 through 52 of our proxy statement. The company already makes its political contribution policy public and its political contributions and other activities are undertaken pursuant to transparent policies and comply with all applicable laws and regulations. The company's political contributions and other activities are limited in scope and subject to a consultation and pre-approval process. Also in the current political climate, specific unilateral disclosure of political spending could hurt the company. The Board of Directors unanimously recommends a vote against this proposal. Is there any discussion on the stockholder proposal? Madam Secretary, have the balance been tallied?

We have a preliminary tally. We will provide a final tally after the meeting by filing a Form 8-K with the SEC. On the voting for Directors, more than 79.82% of the total votes cast was vote in favor of the election of each of the candidates. Therefore, the candidates were elected. On the proposal with respect to ratification of the appointment of independent accountants, 95.96% of the total voting power represented at the meeting was voted in favor. The resolution was therefore adopted. On the proposal with respect to the advisory vote to approve executive compensation, 95.76% of the total voting power of the stock represented at the meeting was voted in favor. The resolution was, therefore, adopted. On the stockholder proposal, 52.49% of the total voting power of the stock represented at the meeting was voted in favor of management's recommendation. The resolution to provide a semiannual report on the company's policies on political spending and political contributions was therefore not adopted.

This concludes the items on the agenda for the annual meeting. We will now address any general questions. Okay. I hope all our technology is working but we don't show any questions. And since there are no questions, I would like to thank you for attending today's meeting and for your continuing support of the company. The meeting is officially adjourned.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may all disconnect.