Freshpet, Inc. (FRPT) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Freshpet, Inc. Annual Meeting. At this time, I would like to turn the conference over to Mr. Billy Cyr.

Good morning. For those of you I haven't had the pleasure of meeting yet, I'm Billy Cyr, Chief Executive Officer of Freshpet. On behalf of our company and our Board of Directors, I would like to welcome you to Freshpet's 2020 Annual Meeting of Stockholders. Due to the coronavirus outbreak and the protocols being imposed in response to the outbreak like federal, state and local governments, in the interest of the health and well-being of our employees, stockholders and other meeting participants, we've made the decision that this year's annual meeting will be virtual only. Please take a moment to review the agenda and rules of conduct for this meeting posted on the portal. I would like to specifically point out that we will be strictly following the agenda and that all questions must come from the properly logged-in shareholders submitting them in writing through the portal. I will now turn the meeting over to Charlie Norris, Freshpet's Chairman of the Board of Directors.

Thanks, Billy. Ladies and gentlemen, the Annual Meeting of Stockholders of Freshpet, Inc., will come to order. I would like to introduce Freshpet's current directors: Billy Cyr, Chief Executive Officer of Freshpet; David Basto; Larry Coben; Walt George; Craig Steeneck; Daryl Brewster; Rob King; Leta Priest; Jacki Kelley; and Olu Beck. Four of our directors, Ms. Priest, Ms. Beck, Mr. Cyr and myself, are up for reelection today. In addition, Margaret Gonzales, a partner with KPMG LLP, the company's independent registered public accounting firm, is online with us today and will be available to receive and answer questions that stockholders may have. Also joining us today is Mr. Lou Larsen. Mr. Larsen has been appointed by Broadridge Financial Solutions, our tabulation agent, to act as Inspector of Elections for this meeting. Written notice of this annual meeting was first mailed on August 14, 2020, to all stockholders of record at the close of business on July 31, 2020. All stockholders of record as of the close of business on that date are entitled to notice of and to vote at this meeting. Just a reminder that if you are a stockholder of record and wish to vote your shares directly as opposed to by proxy, you must do so on the portal after using your 16-digit control number that you received with your proxy card on your ballot to register. During the meeting, shareholders participating online are welcome to submit questions through the virtual meeting platform by typing your question into the Ask a Question field and clicking Submit. Questions pertinent to meeting matters will be answered following the formal portion of this meeting, subject to time constraints. Mr. Lou Larsen will now present the record as to the giving of notice of this meeting. Lou?

I present the notice of this meeting.

Thank you, Lou. The company's tabulation agent, Broadridge Financial Solutions, has provided a certificate of mailing dated August 21, 2020, certifying that commencing on August 14, 2020, in Farmingdale, New York, a notice of Internet availability of proxy materials or the proxy materials themselves were properly mailed to the company's stockholders of record as of the record date to this annual meeting. If there are no objections, the certificate of mailing will stand approved and the secretary will attach it to the minutes of this meeting. The inspector of elections will report as to proxies that have been received and the number of shares represented by proxy.

I report that there are represented at this meeting by stockholders voting by proxies that have been received in due and proper form an aggregate of 37,706,219 shares of common stock out of a total of 40,474,693 shares of common stock outstanding on July 31, 2020. This constitutes approximately 93.15% of the shares outstanding and entitled to vote at this meeting.

Having heard the report of the inspector of elections, I declare that a quorum is present and that this meeting may proceed to transact the business set forth in the notice of annual meeting of stockholders. We will now proceed to the transaction of business. The polls are now open for voting. Each stockholder may vote the number of shares that he or she held of record on July 31, 2020. The first item of business is to elect 4 directors to the company's Board of Directors to serve until the third succeeding annual meeting of stockholders after their reelection and until their respective successors are duly elected and qualified. The Board of Directors has nominated Charles A. Norris, Leta D. Priest, Olu Beck and William B. Cyr to be reelected as Directors of Freshpet Inc. As no other persons were nominated in accordance with the company's governing documents, we will not be considering any other nominations at this meeting. The second item of business is to ratify the selection of KPMG LLP as the independent registered public accounting firm for the company for the year ending December 31, 2020. The third item of business is to approve by advisory vote the compensation of named executives. The fourth item of business is to approve an amendment of our third amended and restated certificate of incorporation to eliminate all of its supermajority voting requirements. The fifth and final item of business is to approve our second amended and restated 2014 omnibus incentive plan. I will now turn the floor over to Billy for questions on these items.

Thank you, Charlie. If you have any questions, we are happy to take them at this time. At a consideration for others, please limit yourself to one question. At this point, Charlie, I'm seeing no questions. So I will turn the meeting back over to Charlie Norris.

Through our direct dialogue with our shareholders, the Board received feedback that you would like to see Freshpet evolve its corporate governance practices commensurate to its long-term business goals and want greater access to information about how we are linking purpose with profit. As I stated earlier, in this year's proxy statement, our Board has submitted a proposal to eliminate all of the supermajority voting provisions from the company's certificate of incorporation. This proposal, if approved, will allow us to initiate a step-by-step process to evolve from the governance practices of the small-cap private equity-backed company that went public in 2014 to the governance practices our shareholders would expect by 2025. Our plan is to implement a director resignation policy, a director retirement policy and a majority voting standard in contested elections before the next annual meeting in 2021. At our 2021 meeting, we will be asking you to modify our certificate of incorporation to fully declassify our Board by 2025. In 2022, we plan to amend the bylaws to increase shareholder proxy access. And finally, at the 2022 meeting, we plan to ask you to approve giving stockholders the ability to call a special meeting. We hope that you will have approved this measure along with our other recommendations when you submitted your votes this year. As no other business were properly brought before the annual meeting, no other business will be voted on at today's meeting. We will now close the polls for voting. The inspector of elections is now prepared to report on the preliminary results of the election of directors.

Thank you. I have tabulated the votes cast on the election of directors and report that: Charles Norris received 33,685,621 affirmative votes or 98.57% of the shares present or represented by proxy and entitled to vote on this -- on the proposal. Leta Priest received 34,025,772 affirmative votes or 99.57% of the shares present or represented by proxy and entitled to vote on the proposal. Olu Beck received 34,027,941 affirmative votes or 99.57% of the shares present or represented by proxy and entitled to vote on the proposal. William Cyr received 34,035,480 affirmative votes or 99.60% of the shares present or represented by proxy and entitled to vote on the proposal.