Choice Hotels International, Inc. (CHH) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Stockholders of Choice Hotels International, Inc. Please note that today's meeting is being recorded. During the meeting, we'll have a question-and-answer session. [Operator Instructions] It is now my pleasure to turn today's meeting over to Simone Wu, Senior Vice President, General Counsel, Corporate Secretary and External Affairs of Choice Hotels International, Inc. Ms. Wu, the floor is yours.

Thank you. Good morning, everyone. Welcome to the Choice Hotels International 2024 Annual Shareholders Meeting. I'm Simone Wu, the company's Senior Vice President, General Counsel, Corporate Secretary and Head of External Affairs, and we are very pleased to welcome everyone who has joined in. As was the case for last year, at the conclusion of the formal portion of the meeting, there will be a Q&A session with Pat Pacious, our President and CEO. [Operator Instructions] I now call this meeting to order. The Choice Hotels' Board of Directors set March 18, 2024, as the record date for this meeting. So only holders of shares of common stock at the close of business on the record date were entitled to notice of and to vote at this meeting. On the record date, there were 49,666,578 shares of common stock outstanding and entitled to vote. Each of the 11 people standing for election to our Board of Directors today is present at the meeting, including our Chairman, Stewart Bainum, Jr.; and our President and Chief Executive Officer, Pat Pacious. I would also like to welcome Jordan DeDona and Pam Masterson of Ernst & Young, the company's independent registered public accounting firm. Jeff Lobb, our Deputy General Counsel, has been appointed as inspector and judge of the election. And Jeff has previously delivered his oath to the Chairman. Jeff will now give us a report on attendance. Jeff?

Thanks, Simone. There's a total of 47,441,058 shares of the company's common stock present at this meeting, either in person or by proxy, and this represents approximately 96% of the outstanding common stock of the company. Therefore, a quorum is present, and this meeting is authorized to transact any business that may properly come before it.

Thank you, Jeff. We have delivered to the Chairman for filing affidavit to the effect that on or about April 15, 2024, a notice of the Annual Meeting of Shareholders, proxies and the proxy statement were mailed to all shareholders of record on the record date. A complete list of shareholders who own shares of the company's common stock as of the record date, duly certified by the company's transfer agent, Computershare, is available for inspection by shareholders during this meeting on the meeting portal. It is now my pleasure to introduce Stewart Bainum, Chairman of the Board of Directors. In accordance with the bylaws of the company, Stewart will preside over the meeting. Mr. Chairman?

Thank you, Simone, and welcome all to Choice Hotels Annual Shareholders Meeting. Before we get right down to business, I want to just thank Pat Pacious and our entire team for all of their very, very smart and diligent work this past year when they focused on creating significant value for our franchisees, our shareholders and our associates. We're all in this together, and they focused really hard on driving down the cost of doing business for our franchisees, which benefits all of us. Let's get going right away and proceed to the business at hand. The polls are now open, and I'll introduce each item of business. First, just a quick housekeeping note, and this is pretty important. If you previously sent in your proxy or have already voted by telephone or Internet, you do not need to take any further action unless you wish to change your vote. Shareholders who have signed in using their control number and who have not yet voted or wish to change their votes, they do so by just clicking on the Vote icon on the meeting portal and following the instructions. Any votes received prior to the polls closing will be collected and delivered to our election inspector. We'll begin with the election of 11 directors. As Simone mentioned, all of whom are participating in this meeting. Each will serve a 1-year term until the 2025 Annual Meeting should they be elected today. Before we move to the vote, I'd like to just express my deep appreciation and thanks to the current Board members for their contributions each of them provides to the company. It's an honor for me personally to serve alongside these women and men as the Chair of the Board. The Board has nominated the following individuals for reelection: Brian Bainum, Bill Jews, Monte Koch, Liza Landsman, Pat Pacious, Erv Shames, Gordon Smith, Maureen Sullivan, John Tague, Donna Vieira and me, Stewart Bainum. If you're interested in learning more about the backgrounds of any of these individuals or have questions at all about their qualifications, there is a lot of good information in our proxy statement. I suggest you take a look there. A majority of shares is required to elect the nominees for director. Jeff, would you please report on the preliminary results of the voting if you have them? I think you do have them.

I do. Thanks, Stewart. A majority of the shares represented at this meeting have voted in favor of each of the nominees for election to the Board. And therefore, each of those 11 named nominees are hereby elected for a 1-year term that will expire at our next annual meeting in 2025.

So Jeff, you say it's the majority, but is it a slim majority? Or is it a large majority? Or tell us where we're at here.

It's a fairly large majority, and we're still counting a few votes. It takes a long time to count 50 million votes. So I don't want to give the exact percentages, but those will be available in the 8-K we file on Friday.

Well, how about just for me? Was it a comfortable margin for me?

It was pretty comfortable.

Okay. It sounds like you're qualifying it a bit. Okay. Let's go into the second item. The second item on our agenda is to approve the amendment to the Restated Certificate of Incorporation to permit the exculpation of officers. Again, a majority of shares is required to approve the proposal. Jeff, give us a report maybe on the preliminary results.

Thanks, Stewart. The amendment to the Restated Certificate of Incorporation to permit exculpation of officers has been approved by a majority of the outstanding shares.

Okay. Thank you. Thank you, sir. You're doing a good job so far. As required by the Dodd-Frank Act, the third item on our agenda is to seek a shareholder advisory vote regarding the compensation of the company's named executive officers. The vote is advisory, but even so, the Board's Compensation Committee will consider the outcome of the vote as it continues to consider the company's executive compensation program. Again, majority of shares is requested. Jeff, I think you have there some preliminary results for the report.