Graham Holdings Company (GHC) Earnings Call Transcript & Summary

Right. Well, good morning, everyone. I am Tim O'Shaughnessy, the CEO of Graham Holdings, and I will serve as the Chairman of the meeting. We have Wally Cooney, to my right, who's the CFO; and Nicole Maddrey, who is our General Counsel, who will act as the Secretary of the meeting. It's wonderful to welcome everybody back after a couple of years of remote only. As you see, our location has changed. We are in the Hamilton Live, which for those that are unfamiliar, is the live events space of the Hamilton, which is, as you can see here, one of the larger restaurants within the Clyde's Restaurant Group unit. So we're thankful to John McDonnell for playing his host to us here and being able to show off our space a little bit. And somebody did ask if the Board was going to do any sort of vocal or dancing performance, and I can assure you that our eyes will all be spared from that. So depending on how things go, maybe stage diving, but that's TBD. So let me welcome you all to our annual meeting, and I'll briefly describe what the program for the morning will be. First, we'll dispense with the technical part of the meeting, which involves such matters as the submission of documents and the determination of a quorum. After my remarks and several remarks from company executives, namely Andy Rosen from Kaplan; Catherine Badalamente from Graham Media Group; and David Curtis and Justin Dewitte from Graham Healthcare. We'll then proceed to the election of directors, the proposal to approve the company's 2022 incentive comp plan and the proposal to be voted on by the Class A shareholders related to executive compensation. After that, then we will open the meeting for comments and questions. So before turning to the opening formalities of the meeting, I would like to introduce those nominees for election as a director who are present: Don Graham, our Chairman; Tony Allen, Chris Davis, Tom Gayner, Anne Mulcahy, Rick Wagoner, Katharine Weymouth and myself. Also present from PricewaterhouseCoopers are the company's independent registered public accounting firm, are Tom Leonard and Jason Tuinstra. Will the secretary please present to the meeting all supporting documents?

Statement forms of proxy and annual reports for 2021 to each stockholder of record at the close of business on March 16, 2022, the record date for determining stockholders entitled to receive notice of and to vote at this meeting. A complete list of holders of Class A and Class B common stock as of the close of business on March 16, 2022, which has been available for at least 10 days preceding this meeting, a copy of the certificate of incorporation and the bylaws of the company and the minutes of the last annual meeting of the stockholders of the company held on May 6, 2021.

[ Alisa Zagare and Elaine Wolff ] have been appointed to act as inspectors of votes at the meeting. I direct that an executed copy of their oath be filed with the records of the meeting. Will the Secretary please ascertain that a quorum is present?

Mr. O'Shaughnessy, the inspectors of votes have canvassed the stockholders present in person or by proxy and have presented to me their first report, which shows that there are present in person or by proxy 27 stockholders holding 964,001 shares of the Class A common stock of the company, which is 100% of the Class A common stock entitled to vote at this meeting and not less than 3,050,635 shares of the Class B common stock of the company or 77.3% of the 3,943,130 shares of Class B common stock entitled to vote at this meeting.

I direct that the first report of the inspectors of votes be filed with the records of the meeting. I declare that a quorum is present and this meeting may proceed to the transaction of the business for which it has been called. As stated in the notice of the meeting, the purposes of the meeting are: one, to elect directors of the company; 2, to approve the company's 2022 incentive compensation plan; 3, for the Class A shareholders on an advisory basis to vote to approve the compensation paid in 2021 to the named executive officers of the company; 4, to transact such other business as may properly come before the meeting or any adjournment thereof. At this point, I'd like to give a brief commentary on the company's operations. After that, company business leaders from Kaplan, Graham Media Group and Graham Healthcare will speak about their operations, then we'll proceed to the nomination of directors. While the votes are being tabulated, the floor will be open to questions relating to business matters. Great to see everyone at this year's annual meeting. I will start by saying that 2021 was a year that continued to be meaningfully impacted by the effects of COVID, but also had steady improvement as the calendar progressed. As we exited the year, we were hopeful the impact of COVID on our businesses would begin to subside in Q1, and we've seen real improvements of Kaplan's International Languages business, Dekko, and Clyde's Restaurant Group. For newer shareholders, I thought I should spend a minute on how the company has changed from previous years. In 2015, In 2015 after we spun off CableOne, we had 2 reportable divisions, Broadcasting and Education, and a third catchall, creatively named "Other Businesses". As we fast forward to 2021, Graham Holdings Company now has 5 reportable divisions, with the additions of Manufacturing, Healthcare and Automotive. In 2021, these 3 new segments generated $89 million in adjusted operating income and $31 million in Q1 of 2022, including earnings from Healthcare joint ventures. The company is more durable with these newer income streams. Our managers in these areas have done a remarkable job growing businesses that have moved from gleams in our eyes to real earners. Our Investor Day was held almost exactly 5 months ago. I'd like to call out several key items that have happened in the intervening period. Our automotive group acquired Ford of Manassas, one of the largest Ford dealerships in the mid-Atlantic; Graham Healthcare and Kaplan each completed 2 small bolt-on transactions; we invested $18.5 million in our northern Illinois healthcare operations, as our 2 joint ventures in Illinois expanded by acquiring the home health and hospice assets of NorthShore University HealthSystem, one of the largest hospital systems in the state; and Our revolving credit facility was extended to 2027 with a lower credit spread and improved terms and conditions. Revenue in 2021 increased by 10% while adjusted operating income decreased by $19 million. The decrease in adjusted operating income was largely due to the lack of meaningful political revenue at Graham Media Group. These declines were partially offset by improvements at Kaplan and elsewhere. For Q1 of 2022, revenue increased by 28% and adjusted operating income increased $6 million, or 12%. Operating cash flow in 2021 was $263 million, down modestly from 2020. Free cash flow fell much more substantially, mainly due to large capital expenditure outlays to acquire a long-term, permanent home in London for our sixth form school, Mander Portman Woodward, as well as the acquisition of property for Honda of Tyson's Corner. Our current 2022 CapEx is estimated at USD 75 million to USD 85 million. In Q1 of 2022, operating cash flow increased 13% and free cash flow increased 14%. The story at Kaplan, which Andy Rosen will cover in more depth shortly, is the recovery underway at Kaplan International. Adjusted operating income at Kaplan International was slightly more than double in 2021 as compared to 2020, and in Q1 of this year the trend continued. Overall, Kaplan's revenue in 2021 grew 4% and adjusted operating income increased by $29 million, or 70%. We believe Kaplan's 2021 earnings reflect substantial COVID impacts that we are hopeful will be diminishing factors over 2022. Graham Media Group has a new CEO, Catherine Badalamente. Catherine is a 22 year veteran of the company and knows our operations inside and out. I could not be more thrilled that she has taken the reins. I'd also like to thank Emily Barr who is retiring after a 42 year career in television broadcasting, the last 10 of which were our great fortune, as the CEO of Graham Media Group. Shareholders owe a great deal of thanks to Emily for her work on our behalf. Results at GMG were strong in 2021, a trend that continued in Q1 of 2022. Income fell from 2020 to $155 million, largely due to minimal political spend. In Q1, we saw an increase of 20% in adjusted operating income compared to Q1 of 2021. Digital also continues to grow nicely and increase its share of revenue. Earnings at our manufacturing segment remained depressed in 2021, falling modestly since 2020 from $40 million to $37 million. Continued weakness at key Dekko end markets resulted in lower sales volumes throughout the year. As we headed into 2022, the tide began to turn. After 2 years of depressed capital expenditures in the commercial office and hospitality segments, we have seen signs of change. Dekko began to see order recovery in Q1, a trend we hope continues as the year progresses. Manufacturing revenue in Q1 was flat, with adjusted operating income down by $1 million. Continued volatility in wood prices, which is largely a pass through cost at Hoover, can result in volatile quarter to quarter results. We always recommend not over-analyzing any one quarter at Graham Holdings; with our manufacturing segment, this is particularly true because of that wood price volatility. I am pleased with the underlying recovery and business progress we are seeing in our manufacturing segment. Shortly, David and Justin will walk you through our healthcare results. I would pay close attention. Under their leadership, our operations have improved beyond my expectations. We believe the business can continue to grow, and we are investing in our team and capabilities to set up the next phase at Graham Healthcare. In 2021, healthcare revenue increased by 13% with flat operating income. In Q1, revenue grew 34% with operating income falling modestly as we see higher labor costs and invest in capabilities to allow further growth. Our automotive business, managed in partnership with Chris Ourisman, was broken out as a segment for the first time in 2021. Revenue increased for the year, largely due to increased average selling price per unit. Adjusted operating income increased in 2021 due to increased gross profit per unit and a reduction in losses at Jeep, as Jeep moved from a startup to a scaled operation. These trends continued in Q1 of 2022 and were also augmented by the addition of Ford of Manassas. We are delighted to have added another rooftop to our operations and are happy ownership partners with Chris. Our "Other Businesses" segment houses 10 businesses of different sizes and scales. By revenue, the largest is Leaf Group and the smallest is City Cast. Some are profitable, others should be and/or will be shortly, and some are in investment mode. As a group, revenue increased 73% from 2020 to 2021 while losses were roughly flat. Revenue increased mainly due to the acquisition of Leaf Group and organic growth. In Q1 of 2022, revenue increased 177% for the same reasons. As indicated at Investor Day in December, I view this collection of businesses at roughly peak losses and operating income should see improvement over the coming quarters and years. The biggest driver of operating losses in the segment is Framebridge. We are excited about the capital we can put into growing this business. Susan Tynan and team have created a better model for framing, in an extremely fragmented market with no national leader. Framebridge provides a customer the opportunity to get a high-quality, custom framed product faster and more inexpensively than the competition. Our customers can buy online or at our retail locations. This omnichannel approach meets customers at their comfort levels and simply just makes it easier to frame. We are investing heavily to seize the opportunity at Framebridge. Since the acquisition, we have grown from 2 retail locations to 15 with 5 more planned in 2022, and we have opened up an additional manufacturing facility. As unit volume increases from these investments, increasingly expansion will be funded from Framebridge's income statement as opposed to the Graham Holdings balance sheet. We believe a scaled market leader in the framing business can be a very large business and we are investing in that opportunity. The balance sheet of the company remains strong. As of March 31, cash and securities totaled $975 million against $628 million in debt, resulting in a net cash and securities position of $347 million. As discussed in the Annual Letter to Shareholders, there are 4 key components to understand about Graham Holdings. I just reviewed the operating businesses at a high-level, and momentarily my colleagues will further inform you. The marketable securities are somewhat self-explanatory. Now I'll provide you with a brief update on the other 2 areas. Our pension plan continues to be comfortably overfunded in both an absolute and relative sense. As of December 31, assets were approximately $3.4 billion and the funding ratio was 3.1x. Both of these are somewhat lower at present due to year to date declines in the equity markets. We continue to actively explore concepts around pension utilization discussed at Investor Day, including a Qualified Replacement Plan or QRP and the ability to use the pension for other retirement expenses. We will keep you posted if we have material news to report. I also want to take this opportunity to provide a brief summary and insight into other investments and properties, which we broadly classify into the following 3 buckets: Minority investments in businesses we operate: These are primarily joint ventures at Graham Healthcare Group and Kaplan. The GAAP carrying value as of March 31 for these JVs was $54 million. Minority investments in businesses we do not operate: These are equity or cost-method investments such as in an investment fund or a private stake in a business like Intersection. The GAAP carrying value as of March 31 was $169 million. Buildings and properties. Over the decades we have acquired real estate as part of operations in our various businesses. Some of these acquisitions occurred decades ago, others occurred just last year. Locations range from New York City to London to Houston. GAAP carrying value as of March 31 was $265 million. We have not historically discussed these items and I do not expect to give regular updates, but I thought it prudent to highlight some facts about these assets to help you better understand other parts of Graham Holdings. At this time, you've certainly heard enough from me, so I'd like to turn it over to my colleague Andy Rosen to discuss the operations at Kaplan.

For the last couple of years, my comments in our Annual Meetings and Investor Day meetings have had a lot of detail about the impact of COVID on our business, primarily on its impact on our transnational education businesses, the timing and availability of high-stakes tests, and its impact on our operations. It that we're seeing real signs that the negative short-term impacts of COVID on our business are in rapid retreat. But the long-term impacts are coming into focus, and we think many of them could be quite positive for Kaplan. A decade ago, in my book Change.edu, I predicted that the future of education would be more mobile, more personalized, more outcomes-focused, more accessible; and more global. Kaplan spent much of the last decade building toward that future. Then came the pandemic. Almost overnight, essentially every learner in the world became an online learner, and every instructor became an online instructor. Sure, it was clunky; people were forced to fundamentally change how they experienced education on the fly, often without prior planning, preparation or experience. But hundreds of millions of people saw for the first time the possibility of a world where education comes to you, tailored to your needs. They started to understand how quality education doesn't necessarily require elaborate campuses or even physical textbooks, revealing a less expensive, more accessible future. They saw a new model for education, one that, frankly, looks something like the kind of education we have been pioneering and evolving for decades. We're hardly the only innovators over that period, but we believe our deep experience in digital education, our broad global presence, and our reputation for high-quality, affordable, practical, skills-oriented learning that can lead to good jobs, position us well for the emerging future. Over the last 2 years, we've had to overcome the negative impact of COVID. In the coming years, we hope to be beneficiaries of the changed world that COVID leaves behind. It's probably worth reminding you once again that Kaplan has 4 key priority areas, which include, first, helping students qualify for, access and succeed in school from high school through graduate and professional school. Second, helping students and working professionals qualify for and succeed in jobs. Third, helping universities achieve their goals, including attracting and serving students, and ensuring those students become successful and ready for work. Fourth, helping companies identify and employ highly qualified candidates, and ensure their employees are equipped to succeed. Kaplan has an exceptionally wide range of programs and services for students, universities and companies. In an education world that is more international, more online, more connected to employment and more focused on access, Kaplan is increasingly becoming a consultant to universities and businesses as they try to figure out how to adapt, transform and thrive. We believe the diversity of our offerings and the quality of our relationships provide us with distinct advantages, particularly in the fast-changing education world where new competitors always seem to be popping up and then disappearing. From a large, global base of students whom we can serve at multiple points throughout their learning journeys, to our partnerships with universities and businesses, we can create a wide array of solutions to help our customers achieve their goals. We're working hard to capitalize on these advantages. Just as Kaplan recognized early the potential for technology to impact education, we anticipate that the coming globalization will be transformative to the industry, as students and universities increasingly are crossing borders virtually and physically creating new opportunities, and new forms of competition. This plays to Kaplan's strengths, as our international presence is significant. We believe we recruit more international students to study in Western countries than any company on the globe. We serve around a quarter million students in our international businesses in a normal year, a large percentage of whom travel overseas to study, and we are increasingly serving international students online. We have a substantial recruiting function, with close to 80 sales offices and more than 3,000 agent relationships in just about every country in the world. We continue to look for ways to help students and universities achieve their goals by thinking and behaving globally. Even as some of the fundamental developments in the education world shift in our favor, we've used the COVID period to build upon our assets and technical expertise, adding capabilities that have meaningfully enhanced the earning power of our businesses. Examples of this include the migration of many of our classroom courses to online, significant enhancement of our digital products, and deeper development of student and client support systems, particularly in an all-digital environment. You may recall we undertook a number of strategic changes during the pandemic, including the integration of our 3 primary U.S.-based units into a single division we call Kaplan North America, or KNA. In addition, we consolidated our Languages Group within Kaplan International, resulting in lower fixed costs and greater operating efficiencies. From a financial perspective, we're seeing solid results in our International portfolio, led by Kaplan International CEO David Jones and his exceptional leadership team, who have navigated the pandemic with dexterity and skill. Through the pandemic, this team has continued to provide outstanding support to students and partners, navigating lockdowns, vaccine requirements, and a host of other challenges that differ by country. Our international recruiting businesses for universities have not just held up, but they've grown nicely. Revenue in these offerings have grown 15% from 2019 pre-pandemic to 2021. In our Pathways programs, we help deliver the first year of university education for international students in our partner universities. While some students postponed their studies during the height of the pandemic, many were willing to begin their degrees online when circumstances prevented them from attending. Now as COVID restrictions and family concerns abate, we are seeing students return to campuses, and our Kaplan-owned student residences are once again filling up. Our direct recruiting businesses are also doing well. The pandemic cast a temporary but significant pall on our Languages business, which is based on providing an immersive language and cultural experience for students in a country other than their own. Our decision to stick with the business and provide consistent support for students, partners and agents, which was unusual in the industry, has reaffirmed for our stakeholders that Kaplan is the kind of organization they want to do business with. With the pandemic beginning to recede, we are seeing significantly improved results. Our "booked future" positions for the upcoming busy summer travel season tells us that as long as there's not a problematic new COVID variant, we'll do materially better in our Languages business. Moreover, the reductions in our expense base mean that we now require 35% fewer language students to break even in that business than we did in 2019. We also anticipate seeing significant relief from the COVID challenges in Australia, and we're beginning to see slow improvements at MPW, our sixth-form college in the UK that also got hit by the disappearance of international students. When the economy is strong and jobs are readily available, prospective students find it less necessary to pursue education to enhance their employability. That hurts our higher education and our test prep business. On the other hand, when the unemployment rate starts to creep up, people refocus on gaining marketable skills and enrollments tend to increase. We've seen this trend for many, many cycles, and while the current strong employment picture creates a trend for many, many cycles, and while the current strong employment picture creates a headwind for our U.S. businesses, cycles are cycles and the picture will change over time. All of this contributes to the decline in the number of test-takers in markets like BAR, LSAT, GMAT or GRE, which impacts our supplemental education unit. In addition to the volume reduction in certain products, the market's transition to online delivery has lowered prices and generated downward pressure on revenue. At the same time, rising media costs have offset some of the gains we achieved with the more efficient expense base of our North American business. Our financial and medical product lines, on the other hand, are performing quite well, and we anticipate solid performance overall in supplemental education across the year. Our market leadership positions us well for when exams resume normal schedules and demand. Further, as the KNA team led by Greg Marino, continues to make progress integrating technology platform and sales as well as marketing and consumer service capabilities in our North American operations. I expect that our exam prep businesses will increasingly bring the scale, power of Kaplan's portfolio to bear, yielding lower costs, enhanced delivery and bundled offerings. At our U.S. higher education business, our financial results continue to be driven primarily by the performance of Purdue Global. whose results have been stable despite some cash flow timing issues that impacted our fee recognition. Here too, in the nontraditional higher education world where demand is driven by the desire for a strong job, this strong employment picture is dampening demand. Through the first quarter of 2022, Purdue Global served an average of 35,000 students, essentially even with the number of students served during the same period in 2021 and about 22% more than at the time of the sale of Kaplan University. As we have reported previously, Purdue has taken a long-term approach to the growth of Purdue Global, investing heavily in academic support, new policies and academic outreach. While these decisions are produced to make, they are consistent with our own long-term philosophy, and we think will serve the institutions well over time. In summary, I'm pleased with Kaplan's power position as we knock on wood put the pandemic in the rearview mirror. We remain the most diverse global education company. Our commitment to quality outcomes for students, university partners and corporate clients guides our daily decision-making, which, combined with our rich assets and capabilities, gives me confidence that Kaplan is well positioned to grow. We can be sure we will face headwinds in parts of our portfolio from time to time, but this has always been the case. Overall, I like our hand. I believe we're set up to continue our tradition of innovation and leadership with some meaningful long-term advantages. And now I will turn it over to Catherine Badalamente for an update on Graham Media Group. Catherine?

Thanks Andy. Good morning. I am Catherine Badalamente, the newly named President and CEO of Graham Media Group. Before I start, I wanted to take some time to talk about my predecessor, Emily Barr. I have had the privilege of working with and for Emily Barr for the past 10 years. In that time, I have seen her drive revenue, audience and innovation with tenacity and grace. She is a fierce advocate for the broadcast industry and a champion for journalism, local news and its hardworking people. Congratulations to Emily on her well-earned retirement, she will be missed by everyone at Graham Media Group and across the entire industry that she has served with unending passion for the past 42 years. If you have been following the news about Graham Media Group and my new role, you may have heard that we moved our corporate headquarters back to Detroit, Michigan; which is the former home of Post-Newsweek stations. Our corporate offices will be once-again housed at the WDIV building in downtown Detroit. As a reminder, Graham Media Group has large media hubs in Michigan, Texas, Florida and Virginia. Our award-winning Graham Digital team is based in Detroit as well; and, our social media SAAS business, Social News Desk, is based in Atlanta. I come to my new role with over 25 years of experience in the media business, with the last 12 years primarily focused on emerging opportunities, innovation and digital as Graham Media Group's Vice President of Digital Media and most recently, Chief Innovation Officer. I am a fierce supporter of the local media industry and serve on several Boards including The Local Media Association, The Local Media Foundation, The Alliance for Women in Media and the Television Bureau of Advertising. I like to say I have one foot firmly planted in broadcast and one foot firmly planted in digital. This morning, I am pleased to share a few thoughts on Graham Media Group and our excellent 2021 results, as well as our performance to date. 2021 was a much better year than we had anticipated. Our revenue was $494 million, $31 million over 2019 for an odd year to odd year comparison. As a reminder, 2020 was a presidential election year which included substantial political revenue. Our adjusted operating income margin in 2021 was 31.3%. A bright spot continues to be the growth we see in digital revenue. As Tim mentioned in the Annual Letter to Shareholders, our digital operations continue to grow profitably, with another year of double-digit growth in revenue and earnings. If Graham Digital was a television station, it would be the equivalent of one of our medium to large television stations in terms of profitability. Q1 of 2022 has us optimistic for the year, despite its share of challenges. Revenue was $123 million, up 9% due to higher retransmission and political revenues, as well as increases from winter Olympics and Super Bowl advertising at GMG's 3 NBC affiliates. Overall, operating results were up 20%, with adjusted operating income of $41 million and a 33.4% adjusted operating income margin. Speaking of challenges, our biggest ad category, Automotive, continues to have its fair share. Chip shortages, record dealer profits and inventory issues continue to impact this revenue line. Last year was not a good year for automotive ad spend and we are pacing behind it in 2022. We do not expect to see this trend change anytime soon. However, there is good news in that most of our other ad categories are up, and the bright spot continues to be our new ad category of Sports Betting/Online Gambling. 2021 was a big market launch year for sports betting in Michigan and Virginia. And as expected, revenue is down this year due to the money moving to other markets across the country; but, as you can see, the category continues to deliver meaningful results. We are expecting a solid political year, albeit down from the 2020 presidential year, but close to our 2018 political numbers. The difference between 2018 and 2022 is the lack of senatorial races in Virginia, Texas and Michigan. However, we are looking forward to strong political revenue in Michigan and Florida due primarily to their governor's races. Drilling down by state, Florida is a highly competitive state in general and the primary is scheduled in August. With both a governor and a senate race this year, we are anticipating strong advertising demand at our Orlando and Jacksonville stations. In Texas, candidates are actively fundraising after early spending in the March primary. In the governor's race, there may be substantial political spending at our Houston and San Antonio stations as the polls continue to predict a tight race. We look forward to 2024 for the next Senate race in Texas. In Michigan, the governor's hotly contested reelection bid should translate into significant spending, including a competitive GOP Primary in August. Additionally, Michigan is expected to have several competitive House seats. This year will be a comparatively quiet year in Virginia with no statewide races. Before I transition into what we are building at GMG to ensure a bright future, I'd like to share what we've been working towards achieving over the past 10 years, being a leader in each of our markets as the number one local media web and mobile site. Note that this means number one against all media, including newspapers. As we look to the future, you are probably wondering where we are investing. It should come as no surprise that we are heavily investing in video, and specifically LIVE video technology. If the Grand View Research forecasts are correct, Livestreaming has the potential to be a $184 billion market by 2027. For every hour of video currently watched online, LIVE viewing makes up 40 minutes. Livestreaming content is expected to increase 15-fold in 2022 alone. LIVE video content, and specifically, unique LIVE local video content will continue to be at the heart of everything we do. Some of the big innovations we have led in LIVE video include multiple 24/7 streaming channels and multiview live event streaming which we call "choose your own adventure." We had over 18 consecutive livestreams available for a recent SpaceX rocket launch in Orlando at WKMG. We have also introduced "Plus Stations," which are new 24/7 streaming channels on OTT and connected TV, mobile and web. These new plus stations allow us to expand and reimagine our local news coverage beyond our traditional broadcast, experiment with new formats, and deliver an addressable ad experience. The plus station apps are available on Roku, Apple TV, Amazon Fire and Google TV. Another big area of focus and investment is our ATSC 3.0/NexGen TV effort. We have launched NextGen TV apps in Detroit, Orlando, and Houston. These apps allow us to merge content from broadcast and broadband, creating a TV experience with features viewers have come to expect from digital. The Graham Digital team and our chief technology officer are among the leaders in the industry, pushing both the digital and broadcast technology. In fact, our team was asked to present our 1st Party Data solution for NextGen TV on the floor of the National Association of Broadcaster's convention this past week. Our team demonstrated an interactive and personalized user experience. Running these tests and experiments are vital to our business. It allows us to compete with digital attribution and targeting, critical for both content and advertising. Finally, Graham Media Group is all-in on Membership, or what we call "Insiders." We launched our first Membership program, Detroit's WDIV Insiders in 2020 and since then, we've built our Insiders program to nearly 400,000 members. Our goal is to have users register on our digital sites; and, once they do, we have the opportunity to 'super-serve' them and treat them like a premium audience. We know that if we can get people to become members or Insiders, they are far more likely to watch more video, click more ads, send us news tips, attend in-person events, and download our apps. If we know who they are, we can give them what they want from both the content side and the advertising side. Why these bets? Because video and serving our community is in our DNA. We have the right to win with video and to super-serve our audiences and clients. It is not only what our viewers have come to expect from us, it is our responsibility and what our customers need to move their businesses forward. Our mission is to inform, celebrate, and represent our communities, while also helping the businesses in those communities to grow and thrive. Technology has allowed video to become the medium of choice on digital platforms. Our video and ad serving expertise will continue to give us a competitive edge. Our data-driven video efforts will deliver measurable results, ensuring our customer's continued investment and successful campaigns. This commitment to serving our community is illustrated everyday by our extensive local news coverage, local programming, product development, community events and public service. I am excited about the future of Graham Media Group and I am honored to lead the company into its next chapter. Thank you, and with that, I will turn it over to David and Justin to update you on Graham Healthcare Group. Thank you.

Thank you, Catherine. Good morning. Justin and I appreciate the opportunity to provide an overview and update on Graham Healthcare Group. At last year's Annual Meeting of Shareholders, we highlighted 3 ways we intended to grow. First, we expected to grow our existing businesses organically through expansion of our sales efforts and clinical capacity combined with excellence in patient outcomes and customer service. Second, we hoped to capitalize on our track record with health systems and secure additional home health and hospice joint ventures. Finally, we intended to pursue acquisitions within our existing sectors and other healthcare service lines. Since we last spoke, Graham Healthcare Group executed on all 3 of these growth initiatives. Consolidated revenue for our existing businesses grew 13% over the course of 2021. In Q4 of 2021, we acquired InTeliCare Health Services, expanding our home health offering under the Residential brand into 13 counties across Florida; and, Weiss Medical, an asthma, allergy, and immunology physician practice in New Jersey. In Q1 of 2022, we secured a home health and hospice joint venture with NorthShore University Health System, headquartered in Evanston, IL with 6 hospitals, 900 and 140 locations in the Chicago area. As a result of our expansion efforts, Graham Healthcare Group consists of 5 service lines including home health, hospice, specialty infusion pharmacy, physician practice management and a SaaS solution for patient-physician communication. Home health and hospice represent 83% of last year's $356 million in revenue under management with approximately 50% of the total home health and hospice revenue from wholly owned assets and the remainder from our joint ventures. These 2 services are typically offered as a continuum to provide optimal care coordination for chronically ill patients. These operations, under 3 unique brands, span Michigan, Illinois, Pennsylvania and Florida, which includes 7 wholly owned units and 5 joint ventures. In our long standing markets, Michigan, Illinois and Pennsylvania, Graham Healthcare Group is number one in market share for home health and hospice Medicare beneficiaries served in 2021. I will now hand-off to Justin to discuss the rest of our healthcare portfolio and our consolidated financial results.

Thank you, David. CSI, our specialty pharmacy focused on providing infusions at home for patients with rare conditions, is licensed in 42 states providing biologics and plasma-derived therapies and the associated in-home nursing. Typically, patients receive an in-home infusion every 4 to 6 weeks to manage the symptoms of their chronic conditions and are on service for multiple years. Since our Q4 2019 acquisition, CSI's patients on service have more than doubled, highlighting the value CSI brings to this population and the preference to receive care at home. Weiss Medical provides asthma, allergy and immunology physicians services and therapies to more than 30,000 patients in New Jersey. With a significant focus on immunology, Weiss provides in-office infusions similar to the infusion services provided by CSI. Clarus is our SaaS business enabling better patient-physician communication than the traditional medical answering service. With nearly 6,000 providers on the platform, Clarus helps physicians respond to patients quickly, securely, and efficiently while maintaining a digital record. Our ownership of Clarus is consistent with GHC's strategy and stated competency of investing in early-stage technology adjacent to our other businesses. Since 2018, consolidated revenues increased by 49% from USD 149 million to USD 223 million while adjusted operating income grew from USD 6 million to USD 30 million and equity earnings from our joint ventures grew from USD 3 million to USD 10 million. Comparing Q1 of 2022 to Q1 of 2021, consolidated revenues increased by 34% to $67 million while adjusted operating income was down 8% to $7 million and equity earnings decreased 32% to $2 million. The decline in adjusted operating income and equity earnings between Q1 of 2022 and Q1 of 2021 was driven by increased labor costs, transaction expenses related to our acquisitions and investments in our leadership team to support our integration and growth efforts. David and I would like to publicly acknowledge our Graham Healthcare Group colleagues for our progress over the last several years. These recent investments only serve to strengthen our centralized structure and leadership team that oversees quality, compliance, recruiting, professional development, revenue cycle and operational standards. While there is unprecedented demand for our services, nurse staffing remains the primary industry constraint. Although our units have been regularly recognized by third parties as a top workplace, we cannot take our eye off the ball as it relates to nurse recruitment, retention, and quality. This year we launched an industry leading total rewards package with a unique pension benefit to help further differentiate Graham Healthcare Group as an employer of choice. In conclusion, David and I are encouraged about the sector in which we currently care for patients and the opportunities that exist more broadly for Graham Healthcare Group. And now, I'll turn it back over to Tim.

I'd like to thank the speakers for all leading us through a presentation, and I'll note Catherine, you must have been a hit because you got applause and Andy and David and Justin... And myself. So continuing on with the formal portion of the meeting. The meeting is now open to nominations for election of directors. We will then have the voting on directors followed by voting on the proposal before the Class A shareholders. While the ballots are being counted, the floor will be open to any questions on business matters or comments you may have. It is now in order to proceed with the election of directors. There are 8 directors to be elected, 5 by the holders of Class A common stock and 3 by the holders of Class B common stock. The chair recognizes Mr. Cooney, who is a holder of Class B common stock and who is also a substitute proxy for a holder of Class A common stock.

I nominate the following persons for election as directors of the company to hold office until the next Annual Meeting of Stockholders and until their respective successors shall be elected and shall qualify or as otherwise provided in the bylaws. For election by the holders of Class A common stock, Tom Gayner, Don Graham, Tim O'Shaughnessy, Rick Wagoner, Katharine Weymouth; for election by holders of Class B common stock, Tony Allen, Chris Davis, Anne Mulcahy.

There being no further nominations, I declare the nominations closed. I now declare the polls open for voting for the election of directors for the proposal to approve of the company's 2022 incentive compensation plan and for the proposal before the Class A shareholders. I have been informed by the inspector of votes that the holders of all the Class A common stock present in person or by proxy have voted their shares. Therefore, the only ballots to be distributed will be those for the election of directors by holders of Class B common stock. Many of you have already sent in your proxies for this meeting. If you've already sent in or voted your proxy by phone or Internet, your shares will be voted as you instructed. So please do not request a ballot now unless you wish to change your vote. Otherwise, tabulation of the vote will be unnecessarily complicated and delayed. Bearing that in mind, will all stockholders who wish to vote by ballot, please raise their hands so that the inspectors of votes may locate you. I direct the inspectors of votes to distribute the ballots and after the voting inform me when they have completed the tabulation of the ballots. We'll now pause briefly while the ballots are handed out. After they have been marked and the ushers have collected them, we will proceed with questions or comments from stockholders. While we are waiting for the results of the voting to be tabulated, we will open the floor to any questions or comments you may have relating to the nominees for election as directors or about the business operations of the company. We want everyone to have a chance to ask a question or make a comment. So please raise your hand so I can call on you, tell us your name and what company you are with. That, we'll open it up for questions.

My name is Kelvin and I am with Madison Avenue Partners, and we are a shareholder in Graham Holdings. My question is your, annual letter states that you own a variety of properties in value markets, which you noted in your presentation is have a value of $265 million at cost. What is your sense for the market value of these properties? And does holding these properties unlevered meet our return hurdles and do you intend to mortgage these properties?

Yes. So a few questions within there. So I should make this clear for everybody, we do not consider ourselves real estate investors. So that is something I want to be unequivocal about. When we have acquired properties, whether in the past or recently, it has been because it's been the economic choice that made sense when compared to lease costs, we run an economic model against that. So that's how we think about the acquisition of properties and how we've accumulated them over time. We really look at overall leverage profile of the company. Obviously, if you have a physical property, the lenders look at that slightly differently than if it's sort of goodwill related leverage. But we think of it as an overall leverage profile. And so that's how we look at it more than anything. I think we certainly continue to -- recently with the MPW acquisitions and the acquisition of the property in Tysons Corner, we look at what's the right level of the way to finance that, and we're using cash, are we adding them leverage to the balance sheet. So we look at it more at the parent level than we do tied to the specific property overall.

There's couple of questions in the back there.

It's James Pan, CP&E Partners. Just kind of a follow-up to Kelvin's question. The $265 million, most of it is needed for operations, correct? So how much excess value do you see there in your opinion?

Yes. I mean that's right. As I said, because it's not from a real estate investment standpoint, it is tied to the operations business. Probably the biggest value associated with it is it is an asset, and that asset can be used when thinking about the overall capital structure of the business. So it's possible over time that there may be pieces of -- as the world has changed and our operational footprint has changed where there might be a facility that we own that is no longer required because maybe there's more remote work, maybe some of the landscape of a particular business has changed. In which case, there might be the opportunity to do something. But I tend to think of it more as part of ability to be utilizing the overall capital structure of the business than anything else.

Justin Pan, Intrinsic Insights LLC. I recently walked into the -- maybe a couple of months ago into the Framebridge and Mosaic, the new location. And it kind of got me just thinking about it, like could you provide a little more color on the unit economics of it? It seems like a pretty cool concept. And just -- and then in addition to that, like what's sort of the store footprint expansion strategy with it?

Sure. So the model of Framebridge, it is different than the competitive world because in just about most framers essentially need to pay for retail, high expense retail rates for property. And then they also are paying that rate for a small manufacturing facility in the back of the shelf, and Framebridge does a centralized production through 2 facilities at this point in time. So the model associated with that is different. I also -- if you haven't been into a Framebridge store, when you walk in there, it probably feels very different than any other framing store that you have been into. It's sort of kind of updated for the world that we live in today in terms of the simplicity of how everything operates as well. So we do think that there is just a fundamental economic model. You don't need as much space. You don't store inventory on site. You're not paying retail-related rents for manufacturing type of space. The model itself is there is a fixed cost structure associated with both facilities and kind of SG&A, and you need to get the unit volume up to cover that fixed cost structure, which is why we've been investing in additional store locations and rolling out other growth opportunities. Once you get and you've covered that fixed cost base, the economics of incremental sales are very, very, very attractive. And so that's why we're investing against that. As I mentioned, there were 2 stores, and we're at 15 with another 5 planned. How big and what a footprint could look like, I think that's a little still TBD. I think it's more likely we are not anywhere on the West Coast at this point in time. I would say we are not penetrated in most of the major markets or maybe any of the major markets within the U.S. And if you look at the overall sector that's out there, it's by our estimates, it's much bigger than you might think at first blush. So I think at scale, it's more likely that we're not very far along in what an overall retail rollout could look like at ultimate scale. We keep seeing the positive consumer demand and positive kind of sort of unit economic data that we see. The last thing I would say about why we like the model is all the data we see is that once somebody frames with Framebridge, they don't do it every day, every week, but it's how they frame on a go-forward basis. So they don't actually go back to a shop that might be a mile away. This is what they do. They have changed their experience. So we think in terms of what an overall lifetime value looks like because of that dimension, it could be pretty positive overall. Mark?

I've told you this privately, but 2 weeks ago, my sons were held here at the Hamilton and what an extraordinary job the group did here. It couldn't have gone any better. And many thanks to [ Haley Egart ], who was the person primarily responsible for putting it altogether. So thank you to the Hamilton. Question. The Leaf Group, there's a lot of information available from when it was a public company and knowing the shareholders in this room, I'm sure everybody has read quite a bit of that. But within Graham, information is not going to be as prevalent. How should we, on the outside, be watching that -- I think you said the largest group within the other businesses, what markers can we follow to see the progress at that company?

Yes. It's a good question. I am hopeful that it would become a broken out segment and I would update that slide, and there would be a sixth one filled in someday because it means that it would have grown into that and deserved it. Least the markers to look at externally because it's the largest driver of revenue within that category, if revenue is growing within the category, it won't be a perfect correlation, but it's probably a little insightful. The external markers on how to look at that overall. On the media side of the business, I think traffic is a pretty good proxy. So if you look at some of the brands that are there Well and Good and Hunker and eHow, if you kind of see how traffic is trending on that, that will be a pretty good proxy overall. On Society6 and on Saatchi, those businesses are really tied to the more inventory they have. It tends to be the better they will do. Saatchi is a marketplace business, the greater the amount of marketplace of unique inventory, usually, there's a correlation between sales associated with that. So to the extent that those are things that can be looked at that are not going to be one-to-one tied to P&L, but can give you a sense of are they growing? Are they not growing? Those might be a couple of things that are probably accessible to check out.

[ Martin Wigan ], shareholder. I have a question about Kaplan and the partnership with Purdue and looks like [indiscernible] is starting here. Could you discuss the opportunities for growth in that area with other universities? And who might the competitors be in that field?

Sure. So as Andy noted in his remarks, and then I might actually turn it over to him. We do have some additional university relationships that we've built up recently. And there are those that follow the space. Normally, you have a little bit of start-up cost and then you start to benefit on that. But Andy, do you want to -- we get a microphone over to him, you want to comment on kind of higher education beyond Purdue?

Yes. We do believe that there is a material opportunity to work with other universities, and we have added a number of university partners on a bunch of different fronts. Kaplan, it's important to emphasize, doesn't simply do the online enablement portion of assistance fee universities. We bring international students. We help attract younger students to universities. We help universities make sure that their students are ready for work when they graduate. We do a whole host of services, and we have a lot of partners that we work with. And once we start working with a partner, we try to extend that relationship. And we've got a lot of examples of universities that we started working with them on one area and then gradually extend it into others. So that, I think, is an important part of our solution set and one of our differentiators is that we don't just do one thing. There are competitors for all of the things that we do. I don't think there's anybody who can do the range of things we do, but they're competitors for each of them. And you've referred significantly to Purdue Global. There's a market that we don't view ourselves as part of, but it's called online program managers that go into a university and say, "Hey, you've got some programs that you offer on the ground, we can help you take that opportunity and bring it online." 2U is an example, is probably the one that's best known, and they've had -- their stock price is going up and it's going down. I mean, the market -- they haven't made any money yet. And so the market is trying to figure out how to value them. I think we can assume that there will be more online learning in the future than there is now. It is going to be a growth industry. But the question of what companies, what universities will benefit from that. That's what's going to be battled out over the course of the next decade.

Jeff?

You've had a very, very long hugely successful relationship with Berkshire Hathaway. You currently have significant shares on the balance sheet as well as in the pension fund. Particularly in light of the fact the Berkshire meeting unusually occurred prior to this meeting, could you comment on Berkshire Hathaway, its prospects, its management and your views of your shareholdings?

Well, I think it -- I'm unlikely to do deep dissection of any particular equity holding that we may have. I would say I am, first off, we voted -- we didn't vote with CalPERS. We think it's very good to have him as the Chair of Board. So we're very comfortable with Berkshire as it's about 5% of assets of the company. And we feel good about the collection of businesses, how they operate, what risk-adjusted rate of return will occur with that 5% of assets. So I think without kind of getting into specifics of insurance and views and what are they going to do with the Allegheny bond portfolio and all of that sort of pieces of things. I mean that is really how I think about it at a high level. It's about 5% of the assets of the business. And on a risk-adjusted basis, we feel quite good about that, that will grow at an acceptable rate of return over time. So that isn't the deep dissection, but maybe give you insight how we think about it overall. I can ask Don. Don, you're probably. Do you have any... I have a question, John?

John [indiscernible] from Raymond James. Tim, thank you first for disclosing what the holdings are. I think this is the first quarter we were able to see the publicly traded holdings and there's great overlap between what you own and what I own for my clients. So I'm really rooting for you. But I want to know how you think about that. That is a big asset. It's concentrated. I heard the answer on Berkshire. And it seems to be so many needs for add-ons, whether it's Kaplan or what you're doing with Framebridge. So I'm just wondering thinking about future purchases. It would take a lot to move the needle with your size positions with Berkshire, Alphabet, et cetera. So just any more color on how you think about the publicly traded securities. What would make you add to it or take away from it? Just a little bit more knowledge and I hope you haven't regretted putting that in there. Now that you're going to get questions on. Anyway, that's my question.

So we don't manage -- boy, we have a portfolio that's going to be excise. It's really -- we feel like we understand a business well -- and do we want to be an owner for it -- or owner of it for the foreseeable future. And that is even before the 13F were out, our turnover is quite low. I mean, if you look at the appreciated value, it substantially implies pretty long hold period. So we do think of it as we're buying a piece of the business, one that we can't buy all of in the vast majority of cases. With no set, we need to be of a certain size, either big or small. I think if there are needs of our wholly owned businesses, in a tiebreaker scenario, those are likely to win. So that is I don't think anybody on our Board would say otherwise on that. But we don't manage to a specific target or size I think I or other people that help think about this, we might be good for -- we're good for an idea a year that we feel strong enough on that front. I probably feel like we're coming out ahead. So it is not a hugely actively managed portfolio in the traditional sense, and we don't think about it in that way. Question over there?

I'm [ Marty LeClaire ]. I'm a local financial adviser here in D.C. I have my own firm. I've owned Graham Holdings for quite a while. And I understand my question really is about return on invested capital. And for you to really maybe go deeper into how you guys think about it. One of the reasons and I guess the stock is probably worth $900 a share, just doing a back of the envelope, not much thinking. So you're trading at, at least 25%, if not 30% or greater discount to the intrinsic value. And I think there are 2 reasons. One, it's a holding company. But the other real reason is I think you don't screen very well because you spun off CableOne. And so if you look at the -- so you won't screen well again until probably 2026 or 2027 And part of not screening very well is also the paltry dividend, which I'm fine with, but I do have clients I answer to and so forth. So hence, my question, if you can comment a little bit about the stock price, you probably can't. But if you could, I'd love to hear about that. And then secondly, but get more to deeper dive in terms of how you think about ROIC.

Yes. So on the stock, you're right. I can't tell people what value they should put on it. I mean you see we've been a repurchaser of shares in recent history. And I do believe we have been growing intrinsic value at a rate that I'm comfortable with over the last few years. So how that manifests in stock and share price is up to all of you in the room and others not in the room. And one piece on dividend as well just because you mentioned that. The dividend has historically gone up each year. I do think in a world where we are going to likely in most scenarios have a preference for repurchase over dividend unless we think the stock is -- unless we would be repurchasing above intrinsic value. So that is likely to be -- look at capital we've returned to shareholders over the last years. The share repurchase has far exceeded the amount that's come out in dividend. And I suspect that is a trend that will continue, all things equal. And in terms of ROIC, I'm not going to talk about hurdle rates and things like that, that we have, but maybe a little bit of our process internally. We believe pretty strongly capital needs to go where it's going to be best utilized. And that's how we think about capital allocation broadly, with a healthy degree of respect that we can be wrong. So we don't -- we are unlikely to ever want to have disproportionate into one particular area or bucket because of that healthy respect. And if we are wrong, then that will be value destructive at a substantial level. We manage internally most of our businesses if they're asking for capital either in terms of an acquisition or for an organic initiative, there is a relatively rigorous process that we go through. If it's for an internal initiative, we have internally, we call them QBRs, but it is essentially what are you -- what capital is required, what time frame is required if it goes well, what incremental capital would be required because that's something that for both a good and a bad thing, sometimes people miss is you might have an initial amount of capital. But if things go well, what does that actually mean? And so we really think about that piece. And I think Bank Framebridge is an example of that, where we -- there's a period of time where we actually -- if we're investing more heavily in it, it's a pretty good thing, not a bad thing. So that is how we manage and track and we -- I talk with the managers of our businesses, many of whom are here about what does the risk-adjusted rate of return that we think is acceptable for this and what does that spectrum look like? And we tend to have a really healthy respect for if we're wrong, does it mean that our returns are going to be okay, but not great. Or are they going to be terrible? And that is another thing we think about quite a bit as well, what does that downside actually look like? Question in the -- that's Kelvin…

Thank you, Tim, before for providing an overview on Framebridge strategy. It seems like a great opportunity. To dig a little bit deeper, what is the approximate mature AUV per Framebridge store? If you could provide some detail on that?

We haven't disclosed that. When we put out a new location, a couple of things that might be helpful. We think we have world-beating squares per -- sales per square foot. If you look at kind of a fairly common retail metric, when you look at that, we do very, very, very well. And so that gives us a lot of confidence in the ability to continue to expand on that front. The other thing I would say is in New York alone, we think that there -- it's somewhat likely that there's over $1 billion a year in custom framing that happens in the New York market alone. So to give you a sense of the size and the scale of the market associated with that. So how many stores, both Framebridge and the industry at large are supported within that? I don't think we entirely know the answer yet, because we look at it. I mean that's a macro sort of opportunity view, but then we look at it on our unit level and what can we do. And when we build a store, we are measuring our kind of payback time frame rigorously. And I think we're generally targeting retail unit payback time frames that are -- most people would look at and say, yes, that's very reasonable relative to the industry and the whole and how people think about new unit payback. Question in the back?

It's [ Tim March ] from [indiscernible] Investments. And I just had a follow-up question for Andy. You had mentioned 2U. I know they recently bought edX to try to become sort of a digital platform. I was just wondering, do you think you will have to make similar investments? And then also just talk about some of the other initiatives like in the corporate sector and your ability to penetrate that.

Yes. I don't know if everybody could hear that question. It was about whether referred to 2U's acquisition of edX, whether we thought we might need to follow that kind of acquisition. I'd start by saying there's not a lot of edXs, there's Coursera, which is a multibillion-dollar public company now, and I don't see us acquiring that. Well, I think what 2U was seeking to do, there are a number of things, there's a halo element of acquiring something that was started by Harvard and MIT. It has all those great associations. But also at its core, they're hoping that the tens of millions of members of edX, people who come to the edX platform that some percentage of them will buy a high-priced 2U partner program. And that's a legitimate goal on their part. And while we don't follow that particular approach, we are constantly looking for ways to identify students that doesn't require us to emulate what everybody else can do, go to Google, go to Facebook and so on. That's become increasingly expensive and everyone can chase it. And so we work on creating relationships with other organizations that will give us access to what we call a preferential source of students. And so I don't think we're going to do it in one fell swoop like 2U did with edX, 2U spent $800 million on that one fell swoop, and that's a pretty -- at least that was what -- there's some -- how much it actually settled out at I don't remember. But that's a very expensive -- we think that we can acquire our students for less than what 2U ended up having to pay. Yes. I mean, that is a big priority of ours is building relationships with companies, and we have relationships with thousands of companies that we use as both for the benefit of our students and for the benefit of our university partners and vice versa. And it's attractive to our students that we have corporate partners, but it's attractive to our corporate partners that we have relationships with students and universities.

[ Kevin Quick ], independent shareholder. I wanted to ask about Leaf, and maybe you could talk a little bit about the investments going on at Leaf and give us an example of how Graham's long-term focus has benefited that business versus its prior public shareholders?

Yes. So I've got a real simple example of that. Leaf was a small micro-cap public company that was public by virtue of legacy and had a complicated situation. I won't go into more here. But when we acquired Leaf, the Leaf Media business is a really strong profitable cash flowing business. And they came to us and they said, "Hey, there's a set of no-brainer content investments with really, really strong paybacks where even if we're wrong by a bit, it still looks very good. But we've got to spend an amount of money in order to go and hit that, and we never really could because we were so tied to a specific quarterly number that we felt like we had to deliver in the environment that we're in. And so this is not a huge number in the context of Graham Holdings. But in the context of Leaf in its prior environment was something, it wasn't figuring an extra 100,000 or something. So we kind of talked through the investment case associated with that, and it was pretty compelling. And so they are in the process of making that investment that we feel quite confident is, from a content standpoint will have really good ROIs. So that is an example of something that I don't think that they would have done otherwise that they are now doing under our ownership. We had one question that was e-mailed in that I wanted to cover as well. And then we have a -- we go straight into this to a Graham Holdings Board meeting. So we'll be -- we'll wrap up after -- but that was a good question I want to cover, which was the question is around the kind of central corporate costs of the group, which ran at about $60 million last year, just under up from a little over $50 million. And the questioner -- the shareholder compares it to -- it's about 2% of the market cap of the business. How do we think about that as a percent of assets. And then overall, what's the expectation on corporate costs. So -- and what that future profile looks like. So 2 pieces to that. One is, our absolute cost base actually came down in probably the 2015, 2016-ish time frame quite a bit. And then it is there, I think, very slowly grown. I expect that trend to continue. I don't expect us to see a really substantive sustained increase in corporate costs. And as -- assuming we were able to grow the business, it is something that you would see operating leverage on over time. So there -- I think it's unlikely if it is something that we should have leverage on. So a good question, continue on... Okay. Well, that was an easy one. So the polls have now been closed and the ballots for the election of directors to approve the company's 2022 incentive compensation plan and the proposal before the Class A shareholders have all been tabulated.

Mr. O'Shaughnessy, the inspectors of votes have presented their report showing the following results: On the election of directors to hold office until the next Annual Meeting of Stockholders and until their respective successors have been elected and shall qualify or as otherwise provided in the bylaws, the following directors have been elected by the holders of Class A common stock and all received 964,001 votes: Tom Gayner, Donald Graham, Tim O'Shaughnessy, Rick Wagoner and Katharine Weymouth, The following directors have been elected by the holders of Class B common stock and all received at least 2,470,211 votes. Tony Allen, Christopher Davis, Anne Mulcahy. On the proposal to approve the company's 2022 incentive compensation plan, the holders of 2,257,599 shares of Class B stock or 74% of the outstanding Class B stock and the holders of all 964,001 shares of Class A stock or 100% of the outstanding Class A stock voted for the proposal. On the proposal to approve the compensation paid to the named executive officers of the company in 2021 on an advisory basis, the holders of all 964,001 shares of Class A stock or 100% of the outstanding Class A stock voted for the proposal.

I hereby declare that based on the report of the inspectors of votes, the individuals nominated by the Board of Directors and named in the report have been duly elected directors of the company. In addition, the proposal to approve the company's 2022 incentive compensation plan has been approved and the proposal for the Class A shareholders have been approved by the holders of all outstanding shares of Class A stock entitled to vote thereon. I direct that the report of the inspectors of votes be filed with the records of the meeting. Any further business to be brought before the meeting? If not, I suggest we adjourn.

I move that this meeting be adjourned.

All those in favor of the motion? Opposed? Motion cleared. I hereby declare the meeting adjourned.