Comstock Resources, Inc. (CRK) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm Jay Allison, Chairman and CEO of Comstock Resources. It's my pleasure to welcome all of you this morning. It is a little bit past 10 o'clock. And in accordance with the notice of the meeting, I call to order the Annual Meeting of Stockholders. Before proceeding to the business of the meeting, I would like to introduce Roland Burns, he's to my left, our President and CFO, who will serve as Inspector of Election for the meeting. I would also like to introduce the other directors that are nominees in addition to Roland and myself; Elizabeth Davis, and I saw that she's on the phone; Morris Foster; John Jacobi, Jordan Marye; and Jim Turner. Scott Hickson, I saw, joined the call as an Audit Partner; and Craig Lindsay, Senior Manager, are representing Ernst & Young, our independent auditing firm. And then Jack Jacobsen has joined us. He's a partner with Locke Lord, our legal counsel, is also participating on this call. If questions arise after this meeting during the discussion period that those professionals should appropriately address, they will be glad to respond. As stated in the rules of conduct governing the meeting, stockholders should not address the meeting until recognized. Should you desire to ask a question or speak during the meeting, wait for me to ask for questions. After being recognized, please identify yourself and your status as a stockholder or proxy holder and then state your point or ask your question, please. As stated in the rules of conduct, please limit your remarks to corporate business only and make them no longer than 2 minutes. So Mr. Burns now -- will now report on the mailing of the notice of the meeting and the presence of a quorum.

All right. Thanks, Jay. This meeting is held pursuant to printed notice distributed on April 21, 2020, to each stockholder of record as of April 6, 2020, who is entitled to vote today. A list of stockholders entitled to vote at this meeting has been available for examination at the company headquarters during normal business hours for the past 10 days and is available for examination by any stockholder desiring to do so. All documents concerning the call and notice of the meeting will be filed with the records of the meeting. We have received proxies representing 189,980,509 shares of the company's voting capital stock, including 7,716,579 broker votes, which can only vote on Proposal 2. This is 98% of the outstanding voting stock of the company.

I hereby declare a quorum present at the meeting. This meeting is now duly convened for the purpose of transacting business properly before it. On behalf of the Board of Directors of the company, I'd like to express my appreciation to all stockholders who returned their proxies. I'd also like to point out that most of you who returned proxies authorized the persons named in the proxy to vote on all propositions coming before the meeting. Those of you who requested ballots so that you could vote individually have been provided them. Proposal 1 is the election of 7 nominees to the Board of Directors. The first proposal to be acted upon by the stockholders is the election of our Board of Directors. Our Corporate Governance Committee has nominated me, Roland Burns, Elizabeth Davis, Morris Foster, John Jacobi, Jordan Marye and Jim Turner for reelection to the Board of Directors. All of the nominees will serve a 1-year term until 2021 annual meeting of stockholders. Are there any other nominations to be properly presented? Hearing none, I declare the nominations closed. Proposal 2 is the ratification of appointment of auditors. The second proposal being submitted to shareholders for action is the ratification of the appointment by the Board of Directors of Ernst & Young as independent auditors of the company. I would like to call upon Ms. Davis, Chairman of the Audit Committee, for the recommendation of the Board of Directors. Elizabeth?

Mr. Chairman, the Audit Committee was assigned the responsibility of recommending auditors to be appointed by the Board of Directors. My committee is recommending the reappointment of Ernst & Young. Therefore, I move to approve the appointment of Ernst & Young to audit the financial statements of the company for 2020.

You've heard the motion. Is there a second?

I second.

Thank you for the second. Are there any questions or discussions? Proposal #3, the advisory vote on executive compensation. With the third proposal, we are asking our stockholders to indicate their support for our executive officer compensation as described in the proxy statement prepared for the meeting. This proposal, commonly known as say-on-pay proposal, gives all of our stockholders the opportunities to express their views on our executive officers' compensation. I would like to call upon Mr. Turner, Chairman of the Compensation Committee, for the recommendation of the Board of Directors. Jim?

Mr. Chairman, the Compensation Committee sets the objectives for Comstock's executive compensation and benefit programs and determines the compensation of Comstock's executive officers. A description of our compensation plans and practices are outlined in the proxy statement prepared for this meeting. We are asking the stockholders for an advisory vote to indicate if they support our executive compensation. Therefore, I move for the stockholders to approve the following resolution. Be resolved that the compensation of the named executive officers as disclosed in the company's proxy statement for the 2020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the 2020 summary compensation table and the other related tables and disclosures is hereby approved.

Thank you, Jim. The inspector of votes will now collect the ballots and count the votes. Since the ballots have been collected, I now declare the polls closed. Will the inspector of elections, please report the results of the balloting. Roland?

As the ballots have accounted and 178,299,539 shares voted on the election of the directors. Over 99.3% of the shares voted for the election for each of Mr. Allison, Mr. Burns, Dr. Davis, Mr. Foster, Mr. Jacobi, Mr. Marye and Mr. Turner. The second proposal, the ratification of the appointment of Ernst & Young, had a total of 186,305,497 shares voted. Of that amount, 99.9% voted for the ratification of Ernst & Young. The third proposal, the advisory vote on compensation of our named executive officers had a total of 178,299,539 shares voted. Of that amount, 99.8% voted for the approval of the compensation of our named executive officers.

Well, I hereby declare that the Board's nominees for directors have been duly elected; that the appointment of Ernst & Young to audit the financial statements of the company for the year 2020 has been ratified; and that the resolution approving the compensation of the company's named executive officers has been approved. I will now conclude our annual meeting of stockholders. The meeting is adjourned. I'd like to have -- make a few comments and then open it up for any questions. Going through my elementary school, junior high, high school, undergrad, Master's, law degree, all this stuff, I don't know if I've ever made a 99.3%, 99.9% or 99.8% in any given class on my report card or even on the art exam. But to go through an Enduro acquisition, the Shelby purchase, the Covey Park $2.2 billion acquisition, issue $207 million of common stock to pay Denham on an agreement that we were bound to pay them on, which we should do to have a bank facility and have it redetermined a couple of times and to have free cash flow and to be profitable and to have 2,000 -- almost 2,000 net locations is pretty amazing when a lot of the oil and gas companies today are not even standing. So we've been playing a lot of offense because of Jerry Jones and his commitment and their family's commitment and to get a 99.8% approval for say on pay, it will never be any better than that. And EY, you always expect them to get almost 100% or 99.9%. And the Board, obviously, maybe I don't include myself, but the other 6 are Tier 1 people, 99.3%. So I appreciate the 32, 33 years you've allowed me to be at the helm. I appreciate that Jerry Jones and his family have allowed me to do that. And of course, I serve it to will of the Board and will of the major stockholder. So that is my comment. And I would ask if anybody else has a comment that they can -- they would raise it now, any questions. Okay. I think it's adjourned. I want to tell all of you that we are very blessed as a company. We're very fortunate as a company. We're going to lean forward as a company, and we're going to keep doing the right thing in a hard market and show you that we're even better than what you think we might be. Thank you.

Thank you, everybody, for participating today.