LivaNova PLC (LIVN) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of LivaNova PLC. Please note that today's meeting is being recorded. [Operator Instructions]. It is now my pleasure to turn today's meeting over to Mr. William Kozy, Chair of the Board of LivaNova. Mr. Kozy, the floor is yours.

Thank you. Hello, and welcome to all attending LivaNova's Annual General Meeting. I'm Bill Kozy, and it's my pleasure to be speaking on behalf of the Board of Directors of LivaNova for my first Annual General Meeting as Chair of the Board. We are conducting this meeting virtually to facilitate and maximize participation of our shareholders remotely, regardless of their location around the world. This virtual meeting is a live audio cast and you may raise questions by typing your remarks in the designated box on your screen using the message icon. To ensure that the questions raised reach us in a timely manner, please submit any questions as soon as possible. We will address those questions at the end of the meeting before the polls close. When asking a question, please first give your name and state whether you are a shareholder, proxy or corporate representative. If you are a proxy or corporate representative, please state the name of the shareholder you are representing. Please note that a copy of the agenda and the rules of conduct are located on the meeting center screen. I understand from the company's Secretary that the notice of Annual General Meeting has been sent to all shareholders and to all other people entitled to receive it and that the quorum requirements have been met. It is now just after 3:00 p.m. in London, and I am pleased to declare LivaNova's 2022 Annual General Meeting formally open. I will start by introducing LivaNova's Board of Directors, our Chief Executive Officer, Mr. Damien McDonald, is present. And on the line, we have Mr. Francesco Bianchi, Ms. Stacy Enxing Seng; Mr. Dan Moore, Mr. Alfred Novak, Dr. Sharon O'Kane, Dr. Arthur Rosenthal, Ms. Andrea Saia and Mr. Todd Schermerhorn. It is my pleasure to also introduce a number of company officers. We have our General Counsel and Company Secretary, Ms. Keyna Skeffington; our Chief Financial Officer, Mr. Alex Shvartzburg; our Chief Human Resources Officer, Ms. Trui Hebbelinck; and our Senior Vice President for Business Development, Mr. Matt Dodds. We are also joined today by representatives of PricewaterhouseCoopers LLP, LivaNova's independent registered public accounting firm in the United States, which we refer to as PwC US. And representatives from our U.K. statutory auditors, Pricewaterhouse LLP, which we refer to as PwC UK. These representatives will be available for questions during the Q&A portion of the meeting. Computershare, our transfer agent and registrar is acting as scrutineer for the voting today and is being represented by Mr. Mark Cano. Now it's my pleasure to introduce Keyna Skeffington, our General Counsel and Company Secretary, who will discuss the voting procedures.

Thank you, Bill. Notice of this meeting, together with LivaNova's proxy statement, U.K. annual report and accounts for the year ended December 31, 2021, and the U.S. annual report on Form 10-K for the year ended December 31, 2021, were posted and mailed to shareholders of the company starting April 29, 2022. Accordingly, requisite notice of the meeting has been given. Based on a preliminary report from the scrutineer of the approximately 53.4 million shares entitled to vote at the meeting, more than 46.5 million shares, representing approximately 87% of all the voting rights of all the shareholders entitled to vote, voted as of the start of the meeting. The final results of the vote, including the proxy votes on each of the resolutions will be published on our website and notified through a Form 8-K filed with the U.S. Securities and Exchange Commission as soon as possible after today's meeting. Shareholders and proxies who have not yet voted by completing a proxy card and delivering it to our registrars before the meeting or by submitting a proxy via the Internet or the telephone may vote now by clicking on the Cast Your Vote icon. Voting will close at the end of the meeting. You have 3 options for each resolution. You may vote for the proposed resolution, against the proposed resolution or you may abstain from voting on the proposed resolution. Abstentions have no legal effect under English law and will not be counted in the calculation of the proportion of votes for or against a resolution. I now give the floor back to Bill Kozy, who will present the resolutions.

We will now proceed to vote on the resolutions proposed for the meeting. There are 11 resolutions with resolution #1 comprising separate resolutions for the election of each of the proposed directors. Resolution #6 is a special resolution, which means it requires approval by shareholders representing at least 75% of the votes cast to be passed. All other resolutions are ordinary resolutions, requiring approval by a simple majority of the votes cast to be passed. The full text for each resolution is set out in the notice of the meeting and all are described in detail in the proxy materials, copies of which you have received. In accordance with the recommendation of the Board of Directors, I move the following resolutions for approval. Resolution 1 is to elect, by separate resolutions, each of the following 9 directors for a term expiring at the AGM to be held in 2023. Number one, Francesco Bianchi; number two, Stacy Enxing Seng; number three, William Kozy; number four, Damien McDonald; number five, Daniel Moore; number six, Sharon O'Kane; number 7, Andrea Saia; number 8, Todd Schermerhorn and number 9, Peter Wilver. Resolution 2 is to approve on an advisory basis, LivaNova's compensation of its named executive officers as set out in the proxy statement. This is known as U.S. Say-on-Pay. As a shareholder, you are entitled to cast an advisory vote to approve the compensation of our named executive officers as disclosed in the proxy statement. Although the vote is nonbinding, the Board values your opinion and considers the outcome of the vote in establishing compensation philosophy and making future compensation decisions. Resolution 3 is to ratify the appointment of PwC USA as the company's independent registered public accounting firm for the year ending December 31, 2022, and Resolution 4 is to approve the LivaNova PLC 2022 Incentive Award Plan and the French subplan thereof. Resolution 5 authorizes the directors to allot shares in the company and to grant rights to subscribe for or to convert any security into shares in the company up to an aggregate nominal amount of GBP 17,635,220. This authority is proposed to last for the period up to the next AGM or if earlier, the close of business on the date that is 15 months after the date on which this resolution is passed. If passed, Resolution 5 would provide the company with the ability to raise additional capital and continue to grant equity awards to nonemployee directors under its incentive plan. Resolution 6 grants the directors the power to disapply preemption rights for the allotment of equity securities, subject to the passing of Resolution 5: a, up to an aggregate nominal amount of GBP 2,672,003 for any purpose; and b, in addition, up to an aggregate nominal amount of GBP 2,672,003 to be used only for the purposes of financing and acquisition or other capital investments. This power is proposed to last for the period up to the next AGM or if earlier, the close of business on the date that is 15 months after the date on which this resolution is passed. If passed, Resolution 6 will allow the Board to allot new equity securities or sell treasury shares held by the company without first offering them to shareholders in proportion to their existing holdings up to the amounts just described. Resolution 7 is to approve on an advisory basis, the U.K. directors' remuneration report in the form set out in the company's U.K. annual report for the period ended December 31, 2021. The Director's remuneration report is concerned solely with the remuneration of our executive and nonexecutive directors and is required under the U.K. company's app. Resolution 8 is to approve the direct remuneration policy contained in the director's remuneration report as set forth in the U.K. annual report. Resolution 9 is to receive and adopt the company's audited U.K. statutory accounts for the year ended December 31, 2021, together with the reports of the directors and the auditors thereon. Resolution 10 is to reappoint PwC U.K. as the company's U.K. statutory auditor to hold office from the conclusion of this 2022 Annual General Meeting until the conclusion of the next general meeting at which the annual report and accounts are laid. Resolution 11 is to authorize the directors and/or the Audit and Compliance Committee of the company to determine the remuneration of PwC U.K. in its capacity as the company's U.K. statutory auditor under the company's act. For those who have not already voted, please select the Cast Your Vote icon and vote for the resolution, against it or you may abstain from voting. You may vote either now or once you've had an opportunity to consider the ensuing Q&A. As a reminder, voting will close at the end of the meeting. I would like now to open the floor to any questions. Please send your questions using the message icon. Keyna have we received any questions?

No, we haven't, Bill.

Okay. Thank you, and thank you for your participation during this meeting. As Keyna mentioned, the results of the voting will be published on our website and noticed by through a Form 8-K filed with the U.S. Securities and Exchange Commission as soon as possible. The formal business having been conducted, I would like to take this particular moment to thank Al Novak, and Art Rosenthal for their tenure on the Board of Directors at LivaNova and their service to the Audit and Compliance Committee as well as the Compensation Committee. We are quite grateful for their contributions to the company. LivaNova has evolved over the last several years, and we wish them the best of luck going forward. I would also like to announce that Keyna Skeffington, has informed us of her plan to retire in 1 year. Keyna has done a wonderful job serving as General Counsel since 2017 and has decided that next year, it will be time to retire, return home to the U.S. and be closer to family. Keyna has provided sound advice and counsel on many sensitive issues over the last several years, and we are most grateful to her for her many contributions to LivaNova's success. I now declare this meeting closed at 3:15 British standard time. And at this time, I welcome Damien McDonald, our Chief Executive Officer of LivaNova, to deliver brief remarks.

Thank you, Bill, and welcome, and thank you for joining us at our Annual General Meeting. It's been over 2 years since the COVID pandemic began and amidst varying levels of impact from the pandemic and other macroeconomic challenges, we've made meaningful progress across our business and the strategic pipeline initiatives. Our results during this time were a testament to both the resilience and the diverse portfolio we have, which allowed us to weather challenging market conditions. And for that reason, I would like first to acknowledge and thank our employees' determination in overcoming these unique challenges and the commitment to providing patients with life-saving and life-changing innovation. Our employees and management team, with the support of the LivaNova Board of Directors, continued to focus on executing our core growth drivers, delivering our extensive clinical and product pipeline opportunities and further improving our profitability and cash generation. This emphasis on what we refer to as the strategic triangle is underpinned by the LivaNova business system and positions us to increase shareholder value. We remain committed to our shareholders by continuously evaluating our portfolio and the strategic footprint as well as to making the most appropriate decisions to maximize the growth of our 3 business segments, neuromodulation, cardiopulmonary and Advanced Circulatory Support. The markets we participate in are significant and growing, and we have strong leadership positions in many of them. Our innovative differentiated products and therapies have very specific patient and clinician benefits, providing us a strong foothold in several areas while creating significant barriers to entry. We will continue to work to create significant value for all stakeholders while striving to bring positive change to patients around the world. Before taking additional questions, I'd also like to take a minute to recognize and thank our retiring directors Al Novak and Art Rosenthal. Both Al and Art have brought valuable perspectives and skill sets to the boardroom. And on behalf of the management team and the employees, we thank you for your years of dedicated service to LivaNova. I'd also like to extend my own congratulations and praise to Keyna in light of her retirement. Keyna is a thoughtful, pragmatic legal adviser and a deeply respected colleague at LivaNova. Her leadership and legal advice have helped guide the company through key litigation matters and strategic debt and equity raises. We are grateful to be able to work with her to ensure a smooth transition. In addition, I'd like to thank Bill for his leadership during his first year as Board Chair, and I look forward to working with him further. And with that, to wonder, we're ready to take any of your questions. No additional questions, Keyna?

No, no questions.

Okay. With that, let me thank you for joining us today and for your continued support and ownership of LivaNova. Thank you.

Ladies and gentlemen, this concludes the meeting. You may now disconnect.