Grocery Outlet Holding Corp. (GO) Earnings Call Transcript & Summary

Good day, and welcome to the Grocery Outlet Holding Corp. 2020 Annual Meeting of Stockholders. I would now like to turn the conference over to Erik Ragatz, Chairman of the Board. Please go ahead.

Good afternoon, everyone. I guess I would ask if you can hear me, but I'm not sure I have a way of being able to know if you can hear me at that. So I presume someone will let me know if the audio here is not working well. But welcome to the Grocery Outlet 2020 Annual Meeting of Stockholders. It's our first, obviously, public meeting here. And I would like to call this meeting to order at this time. As it was just mentioned, I'm Erik Ragatz, Chairman of the Board of Directors at Grocery Outlet. And in accordance with our bylaws, I will be acting as chairman of this meeting here today. I have along with me a number of our directors and executive officers who I will let the CEO of Grocery Outlet, Eric Lindberg, introduce here momentarily. But I would like to thank you all for your attendance today, your interest in the company and most of all, your support of Grocery Outlet here over the course of the last year of being public. As you are aware, due to the public health impact of COVID-19 and to protect everyone's health and wellbeing, we are holding this meeting virtually. [Operator Instructions] This Annual Meeting of the Stockholders is held pursuant to the bylaws of the company and written notice to all stockholders. [Operator Instructions] Stockholders wishing to ask other questions will be given an opportunity to do so following the meeting. Please note the rules of conduct and procedures for the meeting, which are also posted on that virtual meeting website. At this time, I would like to introduce Eric Lindberg, the CEO of Grocery Outlet, who will introduce the Board members and certain other members of the management team who have joined us here today. After introducing the directors and officers in attendance, we will confirm the appropriate steps that have been taken to conduct this meeting and the associated elections and then take up the items to be acted upon today. So with that, let me turn it over to you, Eric.

Thanks, Erik. I will go ahead and introduce some folks to the rest of you. But first, just welcome and thank you for your interest, and thanks for joining us today. I'm going to introduce the other members of the Board and a few of our attending executives that will be with us today. With us, we'll have Erik Ragatz, who's already introduced himself, our Chairman; MacGregor Read, our Vice Chairman. I'm Eric Lindberg, CEO of Grocery Outlet. We'll also have Ken Alterman, Chairman of our Compensation Committee; Jeb Bachman, Chairman of our Audit Risk Management Committee. Also in attendance, we'll have Matt Eisen; Tom Herman; Mary Kay Haben; Norman Matthews; Sameer Narang; and Jeff York. I will introduce you as well to a few of the members of our executive management team that are present on the call today. RJ Sheedy is our President. Charles Bracher is our CFO. Pam Burke is our Chief Administrative Officer as well as General Counsel and Secretary to the Board. Joseph Pelland is our VP of Investor Relations. And then we also have joining with us, Kelli Schultz, who is outside counsel with Simpson Thacher & Bartlett. Ms. Pamela Burke will act as secretary and timekeeper of the meeting for us today. In addition to that group just introduced to, I am also pleased to welcome Mr. James Bodner, representative of Deloitte, an independent registered public accounting firm. Although Deloitte has indicated that it does not wish to make any statements on the call, Mr. Bodner is available to respond to any appropriate questions during the general question-and-answer period. I will now turn the call back over to Erik to introduce our inspector of the election. Thank you.

Terrific. Thank you, Eric. The first item on our agenda is the recognition of our inspector of elections, Mr. Lou Larsen of Broadridge Financial Solutions. Prior to this meeting, Mr. Larsen was appointed by the Board of Grocery Outlet to act as inspector of elections for this meeting. He has previously taken his oath to perform his duties impartially and to the best of his abilities and will oversee the election today. So with Mr. Larsen now formally announce and in place, we will tick through several items to ensure that we have taken the proper steps to hold this election. The first of these is the proof of meeting notice. Will the secretary, Ms. Pam Burke, please report on the proof of notice of the meeting?

Thanks, Erik. I have an affidavit of mailing from Broadridge Financial Solutions certifying as to the giving of notice of this meeting and the sending to stockholders of record as of April 13, 2020, the notice of Internet availability of proxy material, all of which Broadridge commenced distributing to stockholders on April 24, 2020. I also have a copy of the company's annual report for fiscal year 2019, which includes financial statements certified by Deloitte. A copy of this annual report was sent or made available to each stockholder entitled to vote at this meeting, and an electronic copy of the annual report is available on the website used to access this meeting. The notice of meeting and the affidavit of mailing, together with the attachments thereto, the annual report and the oath of the inspector of elections will be filed with the minutes of this meeting. Okay, Erik. Back to you.

Thank you, Pam. In addition to the proof of meeting notice, we are required to document the availability of the list of stockholders as of the record date. The secretary, Ms. Burke, has the list of holders of record of the common stock of the company at the close of business on April 13, 2020, which, as you heard previously, was the record date set by the Board. This list of stockholders has been open for examination to any stockholder for any purpose germane to the annual meeting for a period of 10 days prior to this meeting by contacting our Investor Relations department. In addition, this list has been available for inspection at the headquarters of Grocery Outlet during the last 10 days and is available upon request. The secretary will please file a copy of the list of stockholders with the records of the company. Finally, before we get started, we must ensure that we have a quorum for the meeting. Ms. Burke, will you please present your report of attendance at this meeting so that we can determine whether a quorum is present?

Yes. Thanks, Erik. Mr. Chairman, on April 13, 2020, the record date for this annual meeting, there were outstanding and entitled to vote a total of 90,006,592 shares of common stock. I have been informed by the inspector of election that a majority of the shares of stock entitled to vote at this annual meeting are represented by proxy. The shares so represented exceed 50% of the total shares entitled to vote at this meeting and therefore, constitute a quorum.

Terrific. Thank you, Pam. On the basis then of this report of the secretary under the oversight of the inspector of elections, I find that proper notice has been given, the list of shareholders as of the record date has been made available and that a quorum is present. Accordingly, this meeting has been duly convened. It is now 1:08 p.m. Pacific Time on June 8, 2020, and the polls for voting on all matters are now open. All Grocery Outlet stockholders entitled to vote at this meeting have the ability to do so online by clicking the button Vote Here. If you are a stockholder entitled to vote and have not yet voted or if you want to change your previously cast vote, please do so via the website used to access this meeting. Please remember that if you have already voted by proxy, it is not necessary to vote again. After voting has been completed on all matters on the agenda, we will close the polls and the inspector of elections will provide his preliminary report. So with that as the setup, we will now move to review the proposals. I will go through each of the proposals, there are 4 of them, and then pause for questions or comments after each proposal. [Operator Instructions] The first proposal to come before this meeting is the election of directors. At this meeting, we will be electing 4 Class I directors to hold office until our 2022 Annual Meeting of Stockholders. If elected, these directors shall serve until the successors have been duly elected and qualified or until any such director's earlier resignation or removal. The nominees are Ken Alterman, Jeb Bachman, Tom Herman and myself, Erik Ragatz. The Board has recommended that you vote in favor of each of these nominees. The 4 nominees receiving the highest number of votes at this meeting will be elected. Information concerning these nominees and other matters, which may be of interest, are contained in the company's proxy statement. No other nominations were received prior to the deadline established in the company's bylaws. Therefore, no additional nominations may be made at this meeting, and I declare the nominations to be closed. Let me pause there. Are there questions or comments on the first proposal? [Operator Instructions]

There are no questions on this proposal, Erik.

Okay. We will now then move to the second proposal. Proposal 2 is the ratification of an independent registered public accounting firm. The next matter will be appointing Deloitte as that independent registered public accounting firm for the fiscal year ending January 2, 2021. The Board recommends that you approve the appointment of Deloitte to serve as the company's independent registered public accounting firm and to audit the company's financial statements for the fiscal year ending January 2, 2021. I will pause then again for questions or comments.

There are no questions on this proposal.

Okay. We will move to the third proposal, which asks stockholders to approve a nonbinding advisory resolution on the fiscal year 2019 compensation of the company's named executive officers, all as described in the proxy statement. The Board recommends that the stockholders vote in favor of the approval of the compensation of the company's named executive officers. This proposal is advisory. Although nonbinding, the vote will provide information to our Compensation Committee and our Board of Directors regarding investor sentiment about our executive compensation philosophy, policies and practices, which our Compensation Committee and our Board of Directors will be able to consider when making future executive compensation decisions. Questions or comments on proposal 3?

There are no questions on this proposal.

Okay. I will then move on to our fourth and final proposal, which asks stockholders to approve an advisory resolution about how frequently they believe we should seek an advisory vote from shareholders on compensation of our named executive officers. Stockholders have the option of recommending an advisory vote every year, every 2 years or every 3 years or abstaining from making a recommendation at all. The Board of Directors recommend that stockholders approve the company to seek future advisory votes on compensation of our named executive officers every year. As with the previous proposal, this proposal is advisory. However, as noted above, although nonbinding, the vote will provide information to our Compensation Committee and our Board of Directors regarding investor sentiment about how frequently our investors would like to approve on an advisory basis the compensation of the company's named executive officers. Questions or comments on proposal 4?

Erik, there are no questions on this proposal.

Okay. With that then, we will conclude our presentation and discussion of the proposals at this meeting. And I will then turn it over to Pam, our secretary, to bring the election to a close and present the results of the poll.

Thanks, Erik. The polls are about to close. So if you have not yet voted, please do so. We'll give you a few minutes here. [Voting]

Okay. Since everyone has had the opportunity to vote, it is now 1:15 p.m., and the polls are closed. The inspector of election has delivered his preliminary report, and I will now announce the preliminary results. Mr. Chairman, based on the inspector of election's preliminary report, on the first proposal, the 4 nominees receiving the highest number of votes cast in favor of this election are, in alphabetical order, Mr. Alterman, Mr. Bachman, Mr. Herman and yourself, Mr. Ragatz. As a result, each of these individuals has been reelected as a Class I director of the company to hold office until our 2022 Annual Meeting of Stockholders. Congratulations to you all. On the second proposal, a majority of the votes cast were in favor of the ratification of the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm and therefore, the appointment has been ratified. On the third proposal, the resolution on an advisory basis for the compensation of our named executive officers for fiscal 2019 received approval from more than 98% of the votes cast and has been approved. And on the fourth proposal, the stockholders have approved the resolution on an advisory basis for the frequency of future advisory votes on executive compensation votes to take place every year by more than 94% in favor. We will file the final report of the inspector of election with the records of this meeting. We expect to report the results of the voting on a Form 8-K to be filed with the SEC within 4 business days of this meeting. And with that, Erik, I will turn it back over to you to adjourn the meeting and open it up for Q&A.

Terrific. Thank you, Pam. That does indeed conclude the business of this meeting. It is 1:17 p.m. Pacific Time, and the meeting is now officially adjourned. We would, however, now like to invite you to ask any questions you may have regarding the company and its business. Eric Lindberg mentioned he is here, along with members of the management team. Please follow the instructions provided on the virtual meeting screen, that is the web portal you used to access this meeting, to submit questions, and be mindful of the rules of conduct, especially regarding the time limit for questions.

It does not appear that we have any questions in the queue. Erik?

Okay. Well, with that, then I will suggest that we bring this telephonic meeting to a close. Ladies and gentlemen, thank you for attending today's meeting. And again, thank you for the partnership and interest in Grocery Outlet.

Great. Thank you.

Thanks, everyone.

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