Expedia Group, Inc. (EXPE) Earnings Call Transcript & Summary

Good morning, and welcome to the Expedia Group, Inc. 2020 Annual Stockholder Meeting. Today's meeting is being recorded. At this time, I would like to turn the proceedings over to Mr. Barry Diller, Chairman and Senior Executive of Expedia Group. Please go ahead, sir.

Thank you, and good morning. We'll have time later in this meeting to answer any questions from stockholders. First, though, we will go through the -- all the procedures. And for that, this is Bob Dzielak, the Expedia Group's Chief Legal Officer, and he'll conduct the formal portion of the meeting.

Thank you, Mr. Diller. Good morning, everyone. I would like to officially call this meeting to order. Before we move to the business before us today, I would like to introduce a few additional individuals. First, we have [ Mr. Carideo ] from Broadridge, who is the inspector of elections. From Expedia Group, we have Peter Kern, Vice Chairman and CEO; Eric Hart, CFO; and Michael Senno, who is Vice President of Investor Relations. And finally, we have Matthew Taggart from Ernst & Young, Expedia Group's independent auditors. Expedia Group stockholders who may vote on the matters presented at this meeting are stockholders of record at the close of business on April 13, 2020. Stockholders of the company have been voting since we mailed the company's notice of meeting, proxy statement and proxy card on or about May 6, 2020. If you have already cast your votes, then your votes have been tallied and you need not vote again today. If you are entitled to vote and wish to revoke a previously submitted proxy or cast your vote during the meeting, you may do so online now until the polls are closed. The record will show that we have received a report from [ Mr. Carideo ] certifying that sufficient shares of the company's outstanding capital stock and of the outstanding voting power are represented at this meeting to constitute a quorum for the items of business to be voted on. Quorum is accordingly present, and we may proceed with the transaction of business stated in the notice of meeting. This year, there are 5 items on the agenda. The first item is a proposal to elect 13 directors. Nine of the nominees will be voted upon collectively by the holders of Expedia Group's common stock and Class B common stock. They are: Samuel Altman, Susan Athey, Chelsea Clinton, Barry Diller, Peter Kern, Dara Khosrowshahi, Greg Mondre, David Sambur and Alex von Furstenberg. The remaining 4 nominees will be voted upon by the holders of the Expedia Group common stock only. They are Skip Battle, Jon Gieselman, Craig Jacobson and Julie Whalen. For all nominees, the affirmative vote of a plurality of the total number of votes cast is required for approval. Items 2 through 5 will be voted upon collectively by the holders of all Expedia voting securities voting together as a single class, and in each case, approval requires the affirmative vote of a majority of the voting power of the shares present and entitled to vote. The second proposal is the advisory vote on the compensation of our named executive officers. The third proposal is to approve the fifth amended and restated Expedia Group stock and annual incentive plan, which includes an increase in the number of shares authorized under the current plan by 8 million shares, among other amendments. The fourth proposal is to ratify the appointment of Ernst & Young as the company's independent registered public accounting firm for the year ending December 31, 2020. The last item on the agenda for consideration is a stockholder proposal being brought by Friends Fiduciary Corporation. The stockholder proposal is being presented by Kate Monahan on behalf of Friends Fiduciary Corporation. The full text of the proposal is set forth on Page 19 of the 2020 proxy statement. Ms. Monahan, I would ask that you please present your proposal at this time.

Good morning fellow shareholders and Mr. Chairman. My name is Kate Monahan, Shareholder Engagement Manager at Friends Fiduciary Corporation. I hereby move Proposal 5, the shareholder proposal asking our company to provide a report on its direct and indirect contributions made to influence the outcome of elections at the federal, state and local levels. As long-term shareholders of Expedia, we support transparency and accountability and corporate electoral spending. We commend the company on its recently released policy related to political and lobbying expenditures, which establishes Board oversight of the company's election spending and provides context for management decision-making, an important first step in ensuring appropriate risk management of these expenditures. However, we believe the second step, disclosure of political contributions is necessary and in the best interest of the company and its shareholders. Publicly available records show Expedia has contributed at least $1,600,000 in corporate funds since the 2010 election cycle. However, relying on publicly available data does not provide a complete picture of the company's electoral spending. This proposal asks the company to disclose all of its electoral spending, including payments to tax-exempt organizations, which may be used for electoral purposes. This would bring our company in line with a growing number of leading companies, including salesforce.com, Host Hotels & Resorts and Intuit, which present this information on their websites. Disclosing contributions, as many other companies do, would help mitigate the potential legal or reputational risks posed to Expedia by these relationships. Our request for disclosure is a call for transparency and accountability in the spending of shareholder resources, and we urge shareholders to vote for this proposal. Thank you.

Thank you, Ms. Monahan. The Board of Directors has recommended a vote against the stockholder proposal for the reasons set out fully in the proxy statement. The proposals for this meeting, having been presented, I now declare the polls closed. Before the meeting, [ Mr. Carideo ] informed me of the results based on proxies already received and tabulated, and based on those preliminary voting results and pursuant to the Delaware General Corporation Law and the company's certificate of incorporation and bylaws, the 13 director nominees have been elected; the compensation of Expedia Group's named executive Officers has been approved on an advisory basis; the fifth amended and restated Expedia Group's stock and annual incentive plan has been approved; the appointment of Ernst & Young as the company's independent registered public accounting firm for 2020 has been ratified; and the stockholder proposal regarding reporting on political contributions and expenditures has not passed as a majority of the shares present at today's meeting have not been cast for the proposal. We will report the final voting results in a Form 8-K, which will be filed with the Securities and Exchange Commission within 4 business days. With no other business to conduct at this meeting, I declare the meeting adjourned. We have received a couple of questions from our shareholders via the meeting portal, and I will now turn the call over to Michael Senno to lead the Q&A. Michael?

Thanks, Bob. Before we begin the Q&A, a reminder that the following discussion, including responses to stockholder questions, reflects management's views as of today, June 10, 2020, only. We do not undertake any responsibility to update or revise this information. In addition, some of our comments and responses to stockholder questions may include forward-looking statements, which are based on certain assumptions and are subject to a number of risks that are described in Expedia Group's SEC reports, including our 2019 annual report on Form 10-K and our 10-Q for the first quarter of 2020. And now moving to the questions. First question is asking what our plans are for financial recovery.

This is Barry Diller. Our plans for recovery have been in place since the crisis began. First of all, we've raised a great deal of liquidity and that assures us that we looked at through almost whatever this crisis brings. Travel is recovering slowly, but it is beginning to recover. And we are using this period to come out of this crisis far better than when we went into it in all areas, given our product, relationship with the consumers, et cetera. Thank you.

Our next question asks, why is Board compensation so high?

Well, Board compensation of Expedia, I would say, is not high. Board compensation at Expedia is probably around the 50th percentile of what most companies compensate their directors. We also have not changed that in many years. So I just -- I don't think the question as it's posed, i.e. so high, is accurate. It's -- in terms of the largest, I would say, probably 1,000 corporations, it is not high at all. Thank you.

Those are all the questions we have received from stockholders. I will, therefore, conclude today's proceedings. Thank you to all the stockholders for their ongoing support of Expedia Group. Operator, you may now conclude the call.

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