Maximus, Inc. (MMS) Earnings Call Transcript & Summary

Good morning, and welcome to the Maximus, Inc. 2021 Annual Shareholders Meeting. At this time, I would like to turn the conference over to Bruce L. Caswell, President and Chief Executive Officer of Maximus. Please go ahead, sir.

Thank you, and good morning, everyone. On behalf of the entire Board of Directors who are in attendance today, our officers and employees, I'd like to thank you for attending our virtual annual meeting of shareholders. I'd like now to turn the call over to Dave Francis, our General Counsel and Corporate Secretary, who will conduct the formal portion of the meeting.

Thank you, Bruce. This meeting was called by the Board of Directors of Maximus, Inc. by a vote taken at a meeting duly held on December 15, 2020. Notice of the meeting was furnished by the company on or about January 27, 2021, to every holder of record of common stock as of January 15, 2021, the record date of the meeting. The Board has appointed Dominic Corley as the inspector of elections for this meeting, and I have a report from the inspector stating holders of the majority of the outstanding shares of common stock of the company entitled to vote at this meeting are present in person or are represented by proxy, and thus, we have a quorum. At this time, any shareholders who are in attendance and who have not already submitted a proxy and wish to vote their shares may do so now by clicking on the Vote Here button on your screen. [Voting]

Also, shareholders may submit questions through the virtual meeting portal by typing in the box indicated. Please be sure to include your first and last name as well as your organization or company name, if applicable, if you're submitting a question. We will try to answer those at the conclusion of the formal business of the meeting. The next order of business is voting on the matters described in our proxy statement. The first proposal is the election of 1 Class 1 Director, John Haley, for a 1-year term; 1 Class 2 Director, Jan Madsen, for a 2-year term; and 3 Class 3 directors, Bruce Caswell, Richard Montoni and Raymond Ruddy for 1-year terms. The nominees are described in your proxy materials. The second proposal is the approval of the Maximus 2021 Omnibus Incentive Plan. The third proposal is the ratification of the appointment of Ernst & Young as our independent auditor for fiscal year 2021. The fourth proposal is an advisory vote to approve the named Executive Officer compensation. The fifth proposal is a shareholder proposal regarding disclosure of lobbying activities and expenditures to the extent properly presented at the meeting. I understand that representative of the SEIU Pension Plans Master Trust, the shareholder proponent is here today. We would ask that you limit your presentation to 5 minutes. Operator, can you please open that line?

Hi. Good morning, Fellow shareholders and members of the Board. My name is Daniel Bass. I'm a strategic research associate for the Communications Workers of America. On behalf of the Service Employees International Union Pension Plans Master Trust, I hereby move Proposal 5, asking our company to report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations. After the January 6 riots, many companies announced they will stop making political contributions to lawmakers who would to reject the certification of the electoral college votes. The question being asked is whether these temporary emergency measures to repair reputational damage will become something more lasting? As a result, investors are asking companies to commit to corporate political responsibility by disclosing all dark money payments to third-party groups that were used to -- that money to influence policy. Maximus currently provides no details to shareholders on its lobbying and payments to trade associations and social welfare groups that also lobby. Since 2010, Maximus has spent more than $6.2 million on federal lobbying. And there is incomplete disclosure about spending at the state level, where our company spends millions on lobbying in at least 33 states. For example, looking up New York lobbying grids, we found Maximus spend over $1.9 million from 2011 to 2018. An investigative report found that Maximus had contracts with at least 41 states in the last decade, and at a minimum, spends more than $1 million each year to persuade political leaders to pay more money to police the poor. Maximus is required to report its lobbying and already has this information, so it can easily provide this information to shareholders. Corporations contribute millions to trade associations that lobby indirectly on their behalf without specific disclosure or accountability. Yet Maximus fails to even disclose its trade association memberships and payments, nor the portions of these payments used for lobbying. Maximus also fails to disclose payments to 501(c)(4) social welfare organizations, which can also lobby. For example, the Rule of Law Defense Fund is a social welfare group that helped organize the protest before the riots and as an arm of the Republican Attorneys General Association. Maximus contributed $100,000 from 2017 to 2020 to the Republican Attorneys General Association. But has our company also made contributions to the Rule of Law Defense Fund, we have no way to know because Maximus fails to disclose its contributions to social welfare groups. We remain concerned that lack of lobbying disclosure presents significant reputational risk when its lobbying contradicts company public positions. For example, Maximus state that it is "Driven by a mission to strengthen communities and improve the lives of those we serve" yet Maximus has drawn press scrutiny for profiting from inequality. Proxy advisor, ISS, supports this proposal, noting Maximus "Does not disclose its public policy priorities nor how much money is spent on trade association dues or payments." And our company does not provide ease of access to aggregate or itemize disclosure of its lobbying expenses. Lobbying transparency is a safety mechanism for our company and its reputation as what gets disclosed gets managed. Full disclosure of Maximus' lobbying, including all third-party payments, will ensure proper oversight of our company's lobbying, and we urge shareholders to vote for this proposal. Thank you.

Hi. This is Dave Francis, again. I declare that the polls are now closed, and I will now report on the preliminary voting results. The inspector has tabulated the ballots and informed us that the nominees for Director have been elected. The vote to approve our 2021 Omnibus Incentive Plan has passed. Ernst & Young's appointment as independent auditor for 2021 has been ratified. The vote to approve named Executive Officer compensation has passed, and the shareholder proposal did not pass. The final voting results will be filed with the SEC. Since there is no further business, I declare the meeting to be officially adjourned. We'll now check to see if there are any questions submitted. We have no questions. So therefore, the meeting is concluded. Thank you very much for your participation today.

This now concludes the meeting. Thank you for joining, and have a pleasant day.