Coty Inc. (COTY) Earnings Call Transcript & Summary

Good morning, and welcome to the Coty Inc. Annual Meeting of Stockholders' Audio Webcast. [Operator Instructions] Please note, this is being recorded, and a replay will be available shortly after the meeting concludes. Now I would like to turn the conference over to your host, Ms. Kristin Blazewicz, Chief Legal Officer and Secretary of Coty. Please go ahead.

Good morning, ladies and gentlemen. My name is Kristin Blazewicz, and I am the Chief Legal Officer and Secretary of Coty Inc. I will be chairing today's meeting. It is my pleasure to welcome you to Coty Inc. 2020 Annual Stockholders Meeting. We are hosting this meeting virtually, which is a cost-efficient way for us to reach a greater number of our stockholders and protect the health of our various constituencies in light of COVID-19. We have designed this live audio webcast to provide the same rights to participate as stockholders would have had at an in-person meeting, including the opportunity to submit questions. There will be a general Q&A session held later in the meeting after we adjourn the business portion of the meeting. It is now 8:35 a.m. Eastern Time and I officially call this meeting to order. First, it is my pleasure to introduce the members of the Coty Board of Directors and to thank them for their service to our company. Peter Harf, our Chairman of the Board; Beatrice Ballini, who also serves as Chair of our Remuneration and Nomination Committee; Sabine Chalmers; Joachim Creus; Nancy Ford; Olivier Goudet; Johannes Huth; Sue Nabi, who also serves as our Chief Executive Officer; Paul S. Michaels; Isabelle Parize; Erhard Schoewel; Robert Singer, who also serves as our lead independent Director and Chair of our Audit and Finance Committee; and Justine Tan. Ms. Chalmers is not standing for election at this meeting and we express our sincerest gratitude for her service. Coty has appointed a third party to act as inspector of elections. [ Christopher J. Woods ] is with us today and has taken the oath of inspector of elections. As noted in the notice and proxy statements sent to you, the record date for voting at this meeting was at close of business on September 9, 2020. Notice of the meeting was provided to all stockholders of record on or about September 24, 2020, and Broadridge Financial Solutions, Inc. has delivered an affidavit of mailing to show that notice of this meeting was given. A list of stockholders of record entitled to vote at today's meeting is available to stockholders of record on our Annual Meeting website and is open to inspection. All documents concerning the notice of the meeting will be filed with the records of the meeting. Our stockholder list shows that holders of 765,127,050 shares of Class A common stock of the company are entitled to vote at this meeting. In addition, the holders of 1 million shares of Series B preferred stock of the company are entitled to 163.803362 votes per share for a total of 163,803,362 votes. We are informed by the inspector of elections that there are represented by proxy 682,216,092 shares of Class A common stock or approximately 89.16% of all shares of Class A common stock entitled to vote at this meeting, and 1 million shares of Series B preferred stock or 100% of all shares of Series B preferred stock and together, 91.07% of all 928,930,412 votes entitled to be voted at the meeting. Since this represents more than a majority of the voting power of all issued and outstanding stock entitled to vote on the record date, a quorum is present for purposes of transacting business. We will now present and vote on the 6 proposals listed on the agenda, which are the 6 matters properly brought before today's meeting in accordance with our bylaws. For stockholders who wish to vote at the meeting, you may vote by clicking the vote here button. For stockholders who have already voted, no additional actions required with respect to the matters being voted upon. The polls are now open, but will be closed as soon as all the proposals are presented and related questions asked. An opportunity for questions on the proposals will be available after all the proposals have been presented. Stockholders who wish to ask a question may submit a question, writing at any time during the meeting as directed on the Annual Meeting website. Only stockholders will be permitted to ask questions, and the stockholder must have his or her control number to submit a question on the website. Stockholder questions and comments not relating to an item of business properly brought before the meeting, or other matters relating to the company, may be raised during the general question-and-answer session. Our rules of procedure found on the Annual Meeting website through which you joined the meeting will apply to the question-and-answer session. Proposal #1 is the election of Directors. There are 12 nominees for Director up for election. Directors elected today will hold office until the 2021 Annual Stockholders' Meeting or until their successors have been duly elected and qualified. The 12 nominees are: Beatrice Ballini, Joachim Creus, Nancy Ford, Olivier Goudet, Peter Harf, Johannes Huth, Paul S. Michaels, Sue Nabi, Isabelle Parize, Erhard Schoewel, Robert Singer and Justine Tan. Johannes Huth and Nancy Ford are the nominees designated by the holders of the Series B preferred stock. Additional information about the qualifications of each Director nominee may be found in the Proposal #1, Election of Directors section of the proxy statement under the heading Director Nominees. The Board unanimously recommends that you vote for the election of each nominee for Director. Proposal #2 is a proposal to approve the amended and restated Coty Inc. equity and long-term incentive plan. Information regarding this proposal is set forth in the proxy statement under the heading Proposal #2, Approval of the Amended and Restated Coty Inc. Equity and Long-term Incentive Plan. The Board unanimously recommends a vote for this proposal. Proposal #3 is a proposal to approve the amended and restated Coty Inc. stock plan for Directors. Information regarding this proposal is set forth in the proxy statement under the heading Proposal #3, Approval of the Amended and Restated Coty Inc. Stock Plan for Directors. The Board unanimously recommends a vote for this proposal. Proposal #4 is a nonbinding advisory vote to approve the compensation paid to our named executive officers, as disclosed in the proxy statement. This proposal, which is commonly referred to as a say-on-pay proposal, is required by the Dodd Frank Act. Information regarding this proposal is set forth in the proxy statement under the heading Proposal #4, Approval of Advisory Resolution on Named Executive Officer Compensation (Say-on-Pay). The Board unanimously recommends a vote for this proposal. Proposal #5 is a nonbinding advisory vote to approve the frequency of the advisory say-on-pay vote as disclosed in the proxy statement. This proposal is required to be presented to stockholders at least every 6 years. Information regarding this proposal is set forth in the proxy statement under the heading Proposal #5, Approval of Advisory Resolution on the Frequency of the Vote on Named Executive Officer Compensation. The Board unanimously recommends a vote for a frequency of every year on this proposal. Proposal #6 is the vote on the proposal to ratify this election by our Audit and Finance Committee of Deloitte & Touche LLP as Coty's independent auditor to audit our consolidated financial statements for the fiscal year ending June 30, 2021. Information regarding this proposal is set forth in the proxy statement under the heading Proposal #6, Ratification of Appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm and the Board unanimously recommends that you vote for this proposal. Deloitte representatives are available to answer questions during the question-and-answer session near the end of the meeting. We will now take a short pause to allow you to submit your questions related to the proposals.

I will now read the question that we received about the actual proposal. We received a question about the executive compensation paid to our named executive officers. I'll go ahead and answer this question for the company. As discussed in the proxy statement, we pay base salaries to provide our executives with a secure fixed base of cash compensation in recognition of individual responsibilities and job performance. In addition, the Remuneration and Nomination Committee relies on an independent third-party consultant to help us monitor the external landscape with respect to executive compensation, and we make changes from time to time to make sure we remain competitive and that we are able to attract and retain very highly qualified executives. We will now continue. If you still have a question, please submit it, and we will be able to address your questions during the question-and-answer session at the end of the meeting. Management, as a proxy holder, has delivered its ballot to the inspector of elections to vote as directed by the stockholders. There being no other matters to come before the meeting, voting is now completed and the polls for voting are now closed. The inspector of election has confirmed that the ballots have been counted and validated, and we have the preliminary vote totals for the 6 proposals that appeared in the proxy statement. On Proposal #1 related to the election of Directors, preliminary vote counts indicate that all 12 nominees for the election as Directors were elected. The size of the full Board is now 12 members. On Proposal #2, preliminary vote counts indicate that the proposal concerning the amended and restated Coty Inc. equity and long-term incentive plan was approved. On Proposal #3, preliminary vote counts indicate that the proposal concerning the amended and restated Coty Inc. stock plan for Directors was approved. On Proposal #4, preliminary vote counts indicate that the proposal concerning a nonbinding advisory vote on our named executive officer compensation was approved. On Proposal #5, preliminary vote counts indicate that on the proposal concerning a nonbinding advisory vote on the frequency of the vote of our named executive officer compensation, a frequency of every year was approved. On Proposal #6, preliminary vote counts indicate that the ratification of Deloitte & Touche as our independent auditor was approved. We will publicly report the final voting results for all items of business once all votes have been tabulated and verified by the inspector of elections. That concludes the scheduled official business for today's meeting. In accordance with the company's bylaws, I hereby adjourn the business portion of the meeting. We will now take a short pause for you to submit your additional questions. We have 2 additional questions that we'll address at this time. The first question relates to whether or not when our meeting was held in physical format, the question-and-answer period was limited to 15 minutes. The answer to that question is that since Coty had its initial public offering, it has always held its Annual Meeting virtually. The second question that was submitted is if our Directors believe in our company, why do they not buy shares in the same way that other stockholders did with money out of their personal accounts. And the answer to that, our proxy statement includes a listing of share ownership levels by Directors. In addition, our Directors receive compensation in the form of RSUs for their service as Directors of our company. There being no further questions, having concluded the Q&A session, today's meeting is adjourned. On behalf of the Board of Directors and the management team, I would like to thank you for attending the 2020 Coty Inc. Annual Stockholders Meeting. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may all disconnect.