Loews Corporation (L) Earnings Call Transcript & Summary

Good morning, and welcome to the Loews Corporation Annual Meeting for 2020. At this time, I'd like to turn the conference over to Jim Tisch, Chief Executive Officer of Loews Corporation.

Good morning, everyone. I'm Jim Tisch, the Chief Executive Officer of Loews Corporation. On behalf of the Board of Directors of the company, it's my pleasure to welcome you to the 2020 Annual Meeting of Shareholders, which we are holding virtually for the first time to protect the health and the well-being of all of our shareholders, Directors and employees during the ongoing COVID-19 pandemic. A few things to note before we begin the meeting. We will be following the agenda posted on the meeting site. We will first conduct the formal part of the meeting by acting on the agenda items. And then after the meeting has officially adjourned, turn to a Q&A session, where we will address questions from our shareholders. The shares owned by shareholders who have sent in their proxies will be voted by ballot cast by the proxy committee named in the proxy. If you have already submitted a proxy, it's not necessary for you to vote at the meeting. If you do wish to vote at the meeting, you may do so by clicking on the Voting button on the web portal and following the instructions there. Shareholders may submit questions now and at any time during the meeting in the space provided on the meeting platform. [Operator Instructions] Before we proceed, I would now like to introduce the other members of your Board present at this meeting: Ann Berman, Joe Bower, Chuck Davidson, Chuck Diker, Paul Fribourg, Walter Harris, Susan Peters, Phil Laskawy, Andrew Tisch, Jonathan Tisch and Tony Welters. And now on to the business of the meeting. We have received proxies representing more than 94% of our outstanding shares. Accordingly, there is a quorum present. Greg Denman, who is a representative of Carl T. Hagberg & Associates, has been appointed to serve as inspector of election for the meeting. We will first introduce all of the proposals. After we introduce the proposal, I will declare the polls closed. We will then review the preliminary report of the inspector of election on each of the proposals, after which the official meeting will be adjourned, and we will then move to the Q&A session. The first proposal is the election of Directors. You have seen the proxy statement listing the slate of nominees for election as Directors. Each nominee is presently serving as a Director of the company. The second proposal is the advisory vote on executive compensation. The third proposal is the ratification of the appointment of the auditors. Eileen Crowley and [ Mercer Dalligan ] of the firm, Deloitte & Touche, are present at the meeting today. The fourth proposal is the shareholder proposal requesting certain political contributions disclosures. Ms. Molly Betournay of Clean Yield Asset Management, the shareholder proponent, is on the line and will introduce the proposal. Over to you, Ms. Betournay.

Thank you. Good morning, Chairman, Board of Directors and my fellow shareholders. My name is Molly Betournay, and I submit this statement on behalf of my firm and the filers of this proposal, Clean Yield Asset Management. Our proposal, #4 on the ballot, calls on Loews Corporation to fully disclose the extent of its political spending. Why do we ask for this? Corporate political spending is a controversial activity that must be carefully managed and overseen at the most senior levels of management. Mismanagement or misjudgment around political contributions can bring reputational damage, political risk and even legal consequences. While we applaud Loews' for increasing its political activity disclosure this year, the company's policy still lacks in many important areas. This new policy will only marginally improve its score on the leading rating system for corporate political disclosure and accountability, the CPA-Zicklin Index. In contrast, 57% of S&P 500 companies make, public, a detailed policy, governing political contributions from corporate funds. Peers such as AIG, Hartford Financial Services and Unum are among the top performers in this index. Specifically, we have concerns regarding contributions to state-focused 527 political committees, something the company's policy does not address. Over the past decade, partisan state-focused 527 political kitty committees have dramatically reshaped state and national politics and policymaking. Since the 2010 election cycle Loews, through CNA Financial, has contributed nearly $850,000 in corporate treasury funds to a national 527, that has supported the election of candidates, whose agendas may run counter to our company's dated policies. For example, the CNA has made contributions to 527s, which support candidates that have undermined efforts to address climate change. In contrast, Loews Corporation acknowledges risks related to climate change and is taking steps to reduce its environmental and climate impact. Our company and its subsidiaries need to be transparent about their election-related spending, so shareholders know how their dollars are being spent and can help ensure that company spending is in line with the best interests of the company. If you agree, we ask that you please vote in favor of proposal 4. Thank you.

Thank you very much, Ms. Betournay. The polls will close in 15 seconds, so this is your last chance to vote. And we're going to pause while those who would like to vote have a chance to do so. [Voting]

I will now declare the polls closed. We have the preliminary report of the inspector of election on the election of Directors. At least 207 million votes have been cast for the election of each of the nominees named in the proxy statement, which is a majority of the votes cast with respect to each nominee, all of whom I hereby declared to be duly elected as Directors of the company. We also have the preliminary reports of the inspector on the advisory vote on executive compensation and the ratification of the appointment of auditors. At least 244 million votes, which is more than 95% of the votes cast, have been cast in favor of each of these proposals. Therefore, each of these proposals has been approved. Finally, we have the preliminary report of the inspector on the shareholder proposal requesting certain political contributions disclosures. At least 172 million votes, which is more than 67% of the votes cast, have been cast against this proposal. Therefore, this proposal is defeated. The inspector of election will continue with his definitive count of the exact number of votes and will deliver his certificates of the results to the secretary to be filed within minutes of this meeting. We will report the final results of the voting on a Form 8-K filed with the SEC after the meeting. This concludes the business of the meeting. I will now declare the meeting officially adjourned. We will now have a Q&A session, during which, we will address questions that have been received from our shareholders through the virtual meeting platform. Mary Skafidas, our Vice President of Investor Relations, will relay these questions. Mary, over to you.

Thank you, Jim. [Operator Instructions] And now for our first question. Jim, how will Loews view share buybacks in the future?

So we view them in the future this -- the way we always do. We look at the value that we think Loews Corporation -- the price at Loews is trading at compared to the management's perception of the value of the stock. And if the share price is a significant discount to what we consider to be the fair value of the stock, then we'll purchase the shares. But that's subject to one very important factor. And that is that we have no additional uses for the cash that we have on our balance sheet. In times of great uncertainty, like we are in now, you would expect that the company would naturally ease off on its share repurchase program because the future is seemingly so uncertain. Having said that, it surprises me that the share price of Loews and also the share price of CNA are at the levels they're at. Going back 2, 3 months and even now, in fact, I am surprised and flabbergasted that Loews' shares are trading under $30; and likewise, CNA shares are trading under $30. And it's just -- those prices are a reminder of just how volatile stock markets can be. I believe that in the fullness of time, both Loews and CNA will recover and go on to significantly higher prices. But as of our last filing, we haven't bought any shares simply because in these very difficult and unpredictable economic times. We want to make sure that we have maximum cash in order to be able to support all of our businesses. And I feel very comfortable and sleep well at night because we have that cash on hand.

Thank you. Next question is about shareholder engagement. Loews is known for being very active and engaged with its shareholders. Can you talk a little bit about your engagement with your top shareholders?

Sure. We speak to our top shareholders all the time. We have good and interesting conversations with them. They oftentimes have interesting ideas that we take very seriously and listen carefully to. My view is anybody that's serious about the company that has interesting ideas, we're happy to engage and listen. We, in management, do not think that we have all the answers. We're always happy to hear with others have to say. And we oftentimes do adjust what we do based on suggestions and ideas that we hear from people outside the company.