Magnachip Semiconductor Corporation (MX) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting of Stockholders of MagnaChip Semiconductor Corporation. Presiding at the meeting will be Nader Tavakoli, the Chairman of the Board of MagnaChip. And joining him, will be Ted Kim, the Chief Compliance Officer, General Counsel and Secretary of the company. Now I'll turn the meeting over to Mr. Tavakoli.

Will the meeting please come to order? Along with my fellow directors and the executive officers of the company, I would like to welcome you to our Annual Meeting of Stockholders. We appreciate your attendance at this annual meeting and your support of MagnaChip. This annual meeting of stockholders is held pursuant to the bylaws of the company and written notice to all stockholders. You're participating in the meeting virtually. We request that if you have questions, please enter and submit them in the space provided on the virtual meeting screen. During the annual meeting, questions from stockholders should pertain to the proposals being considered at that particular time. To the extent that any questions pertaining to such proposals are submitted online, the company will address them after the proposals have been presented. After introducing the directors and officers in attendance and dealing with a few procedural matters, we will take up the items to be acted upon by stockholders. I would now like to introduce the directors of MagnaChip who are in attendance today. We welcome Melvin Keating, Ilbok Lee, Camillo Martino and Gary Tanner, each of whom have joined us via telephone. YJ Kim, who is a member of the Board and our Chief Executive Officer; as well as Young-Soo Woo, our Chief Financial Officer; and Ted Kim, our Chief Compliance Officer, General Counsel and Secretary, are also in attendance. In accordance with our bylaws, I will act as Chairman of the meeting, and Ted Kim will act as Secretary of the meeting. Ted, please proceed with the introduction of our auditors.

Thank you, Mr. Chairman. Attending this meeting via telephone are Steven Kang, lead engagement partner; Kwang Shik Jang, engagement partner; and [ Kwang Yoon Kim ], engagement manager, all from Samil PricewaterhouseCoopers, our independent auditors. Although Samil PricewaterhouseCoopers has indicated that it does not wish to make a statement, Mr. Kang is available to respond to appropriate questions. In addition, Jim Raitt of American Election Services, LLC, has been appointed and will serve as the independent inspector of elections for this meeting. Jim is in attendance today via telephone. I request that he file his oath of office with me for inclusion in the minutes of this meeting. The polls are open for voting on the 4 matters designated in the proxy. All MagnaChip 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 by online ballot. The proxies solicited by the Board of Directors will be tallied at one time even though they contain 4 matters for consideration. Similarly, the ballots cast today can be handled the same way. After voting has been completed on all matters on the agenda, the ballots will be collected and counted. The inspector of election will collect any ballots submitted online during this meeting. YJ Kim and I are the named proxies for this stockholder meeting. If you have returned your proxy card, the named proxies will vote your shares as you indicated on the proxy card. After the votes for all matters are collected and tabulated, the polls will be closed and Chairman Tavakoli will ask the inspector to report the preliminary results of such voting, which I then will announce. Broadridge Financial Solutions is the company's investor communications agent. Broadridge has delivered to us an affidavit of mailing, certifying as to the giving of notice of this meeting and the mailing of such notice, together with the proxy statement and the proxy card to the stockholders of record as of the close of business on April 15, 2020. We commenced the mailing of the notice, the proxy statement and the proxy card on April 29, 2020. I would also like to present a copy of the company's 2019 annual report to stockholders, which includes financial statements certified by Samil PricewaterhouseCoopers. A copy of this annual report was mailed to each stockholder entitled to vote at this meeting, and copies are available on the website used to access this.

The Secretary will please incorporate a copy of the notice of meeting and the affidavit of mailing together with the attachments thereto and the 2019 annual report in the minutes of this meeting.

I will do so, Mr. Chairman. I have the list of holders of record of common stock of the company as of the close of business on April 15, 2020. This list of stockholders has been open for examination at the company for any purpose relevant to this meeting during ordinary business hours for the past 10 days. This list is available for inspection during this meeting by any stockholder on the website used to access this meeting.

The Secretary will please file a copy of the list of stockholders with the records of the company.

Mr. Chairman, I will do so.

Ted, will you please present your report of attendance at this meeting so that we can determine whether a quorum is present.

Yes, Mr. Chairman. On April 15, 2020, which was the record date for this annual meeting, there were outstanding and entitled to vote a total of 35,054,682 shares of common stock. I have been informed by the inspector of election that there are no less than 28,734,005 shares of stock represented by proxy or approximately 81.97% of all of the shares entitled to vote at this annual meeting. The shares so represented exceeds 50% of the total shares entitled to vote at this meeting and thus, constitute a quorum.

Thank you, Ted. On the basis of the report of the Secretary and the inspector of election, I find that proper notice has been given and that a quorum is present. Accordingly, this meeting has been properly convened. The next matter to come before the meeting is the approval of the following proposals. Ted, please review the proposals.

I will do so, Mr. Chairman. The first proposal to come before the meeting is the nomination of candidates for election as directors. At this meeting, we will be electing 6 directors for a term expiring at the 2021 Annual Meeting of Stockholders. The nominees are Nader Tavakoli, Melvin Keating, Ilbok Lee, Camillo Martino, Gary Tanner and YJ Kim. Information concerning each director candidate's principal occupations, service with MagnaChip, skills and qualifications and other matters that may be of the 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. Proposal 2 asks stockholders to approve an advisory resolution on the compensation of the named executive officers described in our proxy statement. The Board of Directors recommends that the stockholders approve the following resolution. Resolved that the stockholders of MagnaChip Semiconductor Corporation approve on an advisory basis, the compensation of the company's named executive officers as disclosed in the proxy statement for the company's 2020 Annual Meeting of Stockholders. Pursuant to the compensation disclosure rules of the Securities Exchange Act of 1934, as amended, which disclosure includes the Compensation Discussion and Analysis section, the summary compensation table for 2019 and the related compensation tables and narrative disclosure within the Executive Compensation sections of the proxy statement. The third matter to come before the meeting is the ratification of the appointment of Samil PricewaterhouseCoopers as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. The Board of Directors recommends that the stockholders ratify the appointment of the independent registered public accounting firm of Samil PricewaterhouseCoopers 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, 2020. The last matter to come before the meeting is the approval of the MagnaChip Semiconductor Corporation 2020 Equity and Incentive Compensation Plan. Information concerning the MagnaChip Semiconductor Corporation 2020 Equity and Incentive Compensation Plan is contained in the proxy statement. The Board of Directors recommends that the stockholders approve the MagnaChip Semiconductor Corporation 2020 Equity and Incentive Compensation Plan.

Are there any questions on proposals 1, 2, 3 or 4?

Mr. Chairman, there are no questions which have been submitted via the website.

Since all those desiring to vote have done so, I hereby declare the polls for voting on the matters before the meeting closed at 8:12 p.m. Eastern Daylight Time. The inspector of election has tallied the ballots and proxies and has delivered the preliminary report to the Secretary, who is now prepared to announce the preliminary results.

Mr. Chairman, the inspector of election has tallied the ballots and proxies cast for the proposal presented at this meeting and has submitted his preliminary report. First, each of the directors has received a plurality of the votes cast and has been elected as a director of the company to serve for a term that will expire in 2021. Second, the resolution on an advisory basis for the compensation of our named executive officers, as such compensation is disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis section, the compensation tables and other narrative executive compensation disclosures required by such rules in the proxy statement has been approved. The vote is nonbinding. However, your advisory vote will serve as an additional tool to help guide the Board of Directors in promoting continued alignment of the company's executive compensation programs with the interest of the company and its stockholders. Third, the appointment of Samil PricewaterhouseCoopers as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020, has been ratified. And fourth, the MagnaChip Semiconductor Corporation 2020 Equity and Incentive Compensation Plan has been approved.

I direct that the final report of the inspector of election be filed with the records of this meeting. This concludes the official business of the meeting. The meeting is now adjourned. Ladies and gentlemen, thank you for your attendance to today's meeting. As we announced on June 4, Mr. Martino will now succeed me as the company's Chairman. It has been an honor to have served as Chairman of the Board of Directors over the past 2 years under the goal of keeping -- of helping the company unlock its significant shareholder value and position it for future success. I'm very happy about the successful completion of the strategic evaluation process. Now as MagnaChip enters an exciting new chapter, I firmly believe that Mr. Martino is the right person to take over the chairmanship. His decades of expertise, particularly in the semiconductor products, will play a vital role. I would like to thank everyone for joining us today at MagnaChip's 2020 Annual Meeting of Shareholders. Enjoy the rest of your evening. Good night.