INNOVATE Corp. (VATE) Earnings Call Transcript & Summary

Hello, and welcome to the 2021 Annual Meeting of Stockholders of HC2 Holdings, Inc. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Avram Glazer, Chairman of the Board of Directors. Mr. Glazer, the floor is yours.

Thank you. Will the meeting please come to order? I'm Avram Glazer, Chairman of the Board of HC2 Holdings, Inc. Along with my fellow directors and executive officers of the company, I would like to welcome you to our 2021 Annual Meeting of Stockholders. We appreciate your attendance, your interest and most importantly, your support of HC2. Stockholders may submit questions that relate to the purpose of this meeting at any time during the meeting in the space provided on the virtual meeting screen. After introducing the directors and officers and attendance and dealing with a few procedural matters, we will take up the items to be acted upon. I would like to introduce the directors of HC2, who are in attendance today. We welcome Wayne Barr, Jr., our President and CEO; Ken Courtis; Warren Gfeller; Michael Gorzynski; and Shelly Lombard. The HC2 executives who are in attendance are Michael Sena, our Chief Financial Officer; Suzi Herbst, our Chief Administrative Officer; and Joseph Ferraro, our Chief Legal Officer and Corporate Secretary. Also attending this meeting are Russell Diller and Benjamin Klein of BDO USA LLP, the company's independent registered public accounting firm, who will respond to any appropriate questions submitted at the conclusion of the meeting. I'd like to turn the meeting over now to Mr. Ferraro to proceed with the formal business of the meeting as set forth in the notice of annual meeting and proxy statement as supplemented.

Thank you, Mr. Chairman. My name is Joe Ferraro, and I am the Chief Legal Officer and Corporate Secretary of the company. The agenda for the meeting and the rules of conduct are located on the meeting site. In order to conduct an orderly meeting and give all eligible stockholders an opportunity to participate, we ask that participants abide by these rules. [ Amelia Regan ] of Computershare Investor Services has been appointed to serve as the independent inspector of the election for this meeting. Ms. Regan has subscribed to the oath of office, which will be filed with the records of the meeting. I have a copy of the 2020 annual report on Form 10-K, which includes financial statements certified by BDO. 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, and the 2020 annual report will be filed with the minutes of this meeting. A complete list of the stockholders of record of the company's common stock and preferred stock as of the close of business on April 23, 2021, the record date for this meeting, is available on the meeting website for inspection by any stockholder during this meeting. A copy of the list of stockholders will be filed with the records of the company. Our inspector of election, Ms. Regan, submitted her report, establishing the existence of a quorum at this meeting. Proper notice having been given, this meeting has therefore been properly convened. It is 11:03 am on June 17, 2021, and the polls for voting on all matters are open. All HC2 stockholders entitled to vote at this meeting have the ability to do so online. 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 election will provide her preliminary report. We'll move now to a review of the proposals. The first proposal to come before the meeting is the election of directors. At this meeting, we will be electing each of the 6 directors for a 1-year term, expiring at the 2022 Annual Meeting of Stockholders. The nominees are: Avram A. Glazer, Wayne Barr, Jr., Kenneth S. Courtis, Warren H. Gfeller, Michael Gorzynski and Shelly C. Lombard. Information concerning their principal occupations, service as HC2 board members, skills and qualifications and other matters which may be of interest are contained in the 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. Are there any questions or comments on the first proposal? We've received a couple of questions asking why Mr. Gorzynski was renominated and will remain on the Board slate. Avi, with your permission, I'd like to respond.

Sure.

So in response to this question, please let me direct you to Pages 13, 16 and 17 of our notice of 2021 annual meeting and proxy statement. Specifically under the headlines analysis of our directors in light of our business and director nomination process, we discussed the nomination process, including all the factors taken into consideration when nominating and renominating directors. For example, our Board considered, among other things, the risks and uncertainties associated with and resulting from the COVID-19 pandemic, the importance of board continuity, board experience and stability in light of the circumstances and the requirements of any investor agreements entered into with certain of our stockholders, including the Lancer Capital investment agreement entered into as part of our rights offering and any standstill provisions included therein. Seeing no further questions, we'll move on to the second proposal. Proposal #2 asks stockholders to approve an advisory resolution on the fiscal year 2020 compensation of the named executive officers, all as described in our proxy statement. 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. Are there any questions or comments on this proposal? Seeing none, we'll move on to the third proposal. Proposal #3 is the ratification of the appointment of BDO as the company's independent registered public accounting firm. The Board of Directors recommends the ratification of the appointment of BDO to serve as the company's independent registered public accounting firm and to audit the company's financial statements for the fiscal year ending December 31, 2021. Are there any comments or questions on this proposal? Seeing none, we'll move on to finalize voting on the proposals presented. The polls are about to close. So if you have not yet voted, please do so. [Voting]

Since everyone has had the opportunity to vote, it is now 11:07 am, and the polls are closed. Will the inspector of election please deliver her preliminary report?

Having examined all of the ballots filed with me, I report that each of the nominees for Director as submitted in Proposal #1 has been duly elected, and that each of Proposal #2 and Proposal #3 has received at least a majority of the votes cast and is approved.

Thank you, Amelia. 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 at this meeting. That concludes the business for the meeting, and the meeting is now adjourned. We'll now respond to any appropriate questions submitted during the meeting.

We did receive a couple of questions concerning the pending sale of our Insurance segment, including the Board's decision to move forward with selling Continental to an affiliate of one of our directors. Mr. Wayne Barr, our CEO, I'd like you to say a few words about that.

Sure, Joe. Thanks. So as we've previously disclosed for the last couple of quarters, the Continental sale process was actually initiated as a result of an indication of interest that was submitted to us by Mike Gorzynski, one of our directors. Given that the indication was received from a related party, the disinterested members of the Board undertook an appropriate process to review, in a sense, a related party transaction to assess the offer that was made including taking into consideration any other inbound indications of interest that we may have received. In addition to using our internal resources, the company retained outside counsel and an independent financial adviser to assist the disinterested members of the Board in its deliberations. Following that process, the Board decided to move forward with the sale to the affiliate of Mr. Gorzynski. Following the negotiation, an appropriate Form A was filed with the Texas Department of Insurance. That regulatory review is currently still underway. And as developments are warranted, we will be obviously making appropriate disclosures moving forward to advise everybody as to the status of that transaction.

Thank you, Wayne. There being no other questions submitted during the meeting relevant to today's agenda, I want to thank you all for attending today's meeting.

This concludes the meeting. You may now disconnect, and have a pleasant day.