EMCOR Group, Inc. (EME) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the EMCOR Group Annual Shareholder Meeting. At this time, the meeting will begin. It is now my pleasure to turn the floor over to your host, Anthony Guzzi. Sir, the floor is yours.

Thank you. The meeting will please come to order. I am Anthony J. Guzzi, Chairman of the Board, President and CEO of the company, and I will act as the presiding officer of this annual meeting. We welcome those attending in person and remotely via the Internet. Before we get started, I will introduce the participants in today's meeting. It is my pleasure to introduce the following members of the Board: John W. Altmeyer; Richard F. Hamm; David H. Laidley; Carol P. Lowe; M. Kevin McEvoy; William P. Reid; Steven B. Schwarzwaelder; and Robin Walker-Lee. I am also pleased to introduce from our senior management team, Mark A. Pompa, Executive Vice President and Chief Financial Officer and Treasurer; R. Kevin Matz, Executive Vice President, Shared Services; and Maxine L. Mauricio, Senior Vice President and General Counsel. Also present are [ Jed Lovitt ] of Broadridge Financial Solutions; and Steve Borsy from Ernst & Young LLP. Maxine Mauricio will act as a secretary of the meeting; and [ Jed Lovitt ] of Broadridge Financial Solutions, Inc., will act as inspector of elections for the receipt, validation and tabulation of proxies and balance. Mr. [ Lovitt ] has executed an appropriate oath of office. Mr. [ Lovitt ] has confirmed that a quorum is present, and I have received proof that proper notice of the meeting has been given to every holder of the record of the company's common stock as of April 14, 2020, the record date for this annual meeting. An alphabetical list of the registered stockholders as of April 14, 2020, certified by the company's transfer agent, is available in person at the meeting and by clicking on the link in the lower right, labeled Registered Shareholder List for Inspection by Stockholders. Before continuing with the formal business of the meeting, I will first briefly explain the order and voting procedures of this hybrid in-person and virtual meeting. We will first run through the specific proposals on the agenda for the meeting. Following the presentation of the proposals and voting and the conclusion of the formal portion of the meeting, there will be an opportunity for stockholders to ask general questions in person or in the designated field of the web portal. Please note that participants attending in person or via the Internet are not permitted to use any audio or video recording device. Stockholders attending in person may vote by paper ballot. Does anyone attending in person wish to receive a paper ballot? Stockholders attending virtually may vote online during this meeting by clicking on the voting button on the virtual meeting web portal and following the instructions there. Polls for voting on all matters are open at this time, which is 10:03 on June 11, 2020. Stockholders who executed written proxies or voted online or by telephone prior to this meeting do not need to vote again unless they wish to change their vote. After all the proposals have been considered at this meeting, the polls will close, and Mr. [ Lovitt ], our inspector of elections, will provide a preliminary report of the voting results. Now for the presentation of matters. We are now ready to proceed with the business of the meeting and consider the specific proposals before us, which were described in the company's 2020 proxy statement for the Annual Meeting of Stockholders previously made available to you. No additional nominations or proposals were received in advance of this meeting in accordance with the company's bylaws and the SEC's proxy rules, so no other nominations or proposals will be considered today. I will now present the items on the agenda for this meeting and call for a vote with respect to each proposal. After all proposals have presented and voted on, we will close the polls. Proposal #1. The first proposal we will consider today is the election of the 9 directors to the Board of Directors of the company, as described in the company's 2020 proxy statement for the Annual Meeting of Stockholders. The qualifications of the nominees are described in the proxy statement. The proposed resolution is as follows: resolved, that each of John W. Altmeyer; Anthony J. Guzzi; Richard F. Hamm; David H. Laidley; Carol P. Lowe; M. Kevin McEvoy; William P. Reid; Steven B. Schwarzwaelder; and Robin Walker-Lee be elected as directors of the company until the company's next Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified. Proposal #2. The second proposal we will consider today is the approval on a nonbinding advisory basis on the compensation of the company's named executive officers as set out in the proxy statement for this annual meeting. The proposal is as follows: resolved, that the stockholders of EMCOR Group, Inc., approve on an advisory basis, the compensation of EMCOR's named executive officers as described in the compensation discussion and analysis, executive compensation tables and accompanying narrative disclosures in the EMCOR's proxy statement for the 2020 Annual Meeting of Stockholders. Proposal #3. The third proposal we will consider today is the ratification of the appointment of Ernst & Young LLP as the company's independent auditors for 2020. The proposed resolution is as follows: resolved, that the Audit Committee's selection of Ernst & Young LLP as the company's independent registered public accounting firm for 2020 is ratified. Proposal #4. The fourth proposal we will consider today is the approval of the company's amended and restated 2010 incentive plan. The proposed resolution is as follows: resolved, that the company's amended and restated 2010 incentive plan in the form approved by the Board of Directors attached as an exhibit to the company's 2020 proxy statement is adopted and approved. Proposal #5. One of the company's stockholders, John Chevedden, will now have the opportunity to present a proposal regarding action by written consent. At this time, I invite Mr. Chevedden or his qualified representative to present his proposal. As Mr. Chevedden's representative, Mr. [ Glenn Baty ], is attending the meeting remotely via the Internet, his remarks will be audible to the attendants in this boardroom and virtually via the online virtual shareholder meeting portal. Operator, please open the line for Mr. [ Baty ] to present the proposal.

Mr. Baty, your line is now open.

Good morning, this is [ Glenn Baty ]. Can you hear me?

Yes, go ahead.

Proposal 5, shareholder right to act by written consent, submitted by John Chevedden. Shareholders request that the Board of Directors take the steps necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. Hundreds of major companies enable shareholder action by written consent. This proposal topic won major -- won majority shareholder support at 13 large companies in a single year. This included 67% support at both Allstate and Sprint. This proposal topic also won 63% support at Cigna Corp in 2019. This proposal topic would have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice. Taking action by written consent is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director. Plus, the higher EMCOR 25% threshold for shareholders to call a special meeting has bureaucratic pitfalls that trigger minor shareholder errors that could mean that 50% of shares would need to ask for a special meeting in order to be sure of obtaining the threshold of 25% of requests without errors. One can be sure that management will be sharp to spot any technical errors. The right for shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However, Intel's shareholders responded with greater support for written consent in 2019 compared to 2018. With the onslaught of online shareholder meetings, the opportunity for shareholders to deliberate at a special shareholder meeting is greatly diminished. After a 45% vote, less than a majority vote for a written consent shareholder proposal, The Bank of New York Mellon Corporation said it adopted written consent in 2019. This proposal is of increased importance because this topic won more than 44% support at the 2017 and the 2019 EMCOR Annual Meetings. This 44% support means that it receives more than 50% support from the shareholders who had access to independent proxy voting recommendations. EMCOR apparently has an echo chamber form of shareholder outreach. The 2019 proxy erroneously said that the shareholders were not interested in written consent. How can EMCOR explain 2 44% votes for written consent, especially when a large number of shareholders did not even have access to independent proxy voting advice? The flawed EMCOR shareholder outreach may give shareholders biased information and then asks their opinion. Please vote yes, shareholder right to act by written consent, proposal 5.

Thank you. For the reasons described in the proxy materials, the Board of Directors unanimously recommends stockholders vote against the proposal regarding action by written consent. If any stockholder wishes to comment or raise any questions regarding the proposals being voted on today, please raise your hand or submit your question or comment in the designated field on the web portal. There being no further discussion on these proposals, we will now pause to allow for the completion of voting. [Voting]

The polls for voting on all matters before this meeting are hereby closed at 10:12 a.m., June 11, 2020. Preliminary report of the inspector of elections. [ Jed Lovitt ], our inspector of elections, will now report on preliminary voting results.

Ladies and gentlemen, I have prepared the preliminary report of the inspector of election. John W. Altmeyer; Anthony J. Guzzi; Richard Hamm; David Laidley; Carol Lowe; M. Kevin McEvoy; William P. Reid; and Steven Schwarzwaelder; and Robin Walker-Lee have been duly elected as directors of the company by a plurality of the votes cast. Proposal #2 was approved by a majority of the votes cast. Accordingly, the stockholders have approved in a nonbinding advisory vote the compensation paid to the company's named executive officers as disclosed in the company's 2020 proxy statement for the annual meeting. Proposal #3 was approved by a majority of the votes cast. Accordingly, the stockholders have ratified the Audit Committee's selection of Ernst & Young as the company's independent registered public accounting firm for 2020. Proposal #4 was approved by the majority of the votes cast. Accordingly, the amended and restated 2010 incentive plan has been approved. Proposal #5 was not approved, not passed by a majority of the votes cast. Such proposal has not passed.

Thank you, Mr. [ Lovitt ]. After the inspector of elections has prepared his final report, the final voting results will be made available to the public through a Form 8-K filed with the SEC. A statement by Ernst & Young. Mr. Steve Borsy, a representative of Ernst & Young, is participating in this meeting remotely through the online virtual shareholder meeting portal and has indicated to me that he does not wish to make a statement at this time. There being no formal business to come before the meeting, the 2020 Meeting of the Annual Stockholders of EMCOR Group is now adjourned.

Stockholder questions. Do any stockholders present or remotely via the online virtual shareholder meeting portal have questions concerning the affairs of the company? Maxine Mauricio will act as moderator. Please note the rules of conduct available at the in-person meeting and on the virtual online portal. Maxine?

Mr. Guzzi, we have 2 questions. First, has the Board moved to telephonic meetings? And if so, when did they last meet?

The Board last met at late April. We have moved to telephonic meetings. In fact, we will follow this meeting with a telephonic meeting. We look forward to getting together again, hopefully this fall in person.

The second question is, when -- does the company intend to do additional share repurchases this year?

As we stated in our April first quarter earnings call, we've suspended share repurchases at this time. We think that's the prudent thing to do, although we are very, very bullish on our ability to generate cash and the liquidity of our company through this crisis.

There are no further questions.

With no further questions from stockholders, we will now conclude the question-and-answer session. I want to thank all of you for attending today's annual meeting and for your continued support of EMCOR.

Thank you, ladies and gentlemen. This does conclude today's shareholder meeting. Thank you for your participation, and have a wonderful day.