Microchip Technology Incorporated (MCHP) Earnings Call Transcript & Summary

Good morning. It's now 9 a.m. and the 2021 Annual Meeting of the Stockholders of Microchip Technology Incorporated will please come to order. I'm Steve Sanghi, Executive Chair of the Board of Microchip Technology. I would also like to introduce additional members of the audience. First, I will introduce the other members of the Board of Directors. Starting with Matt Chapman, retired CEO of software assessment company, Northwest Evaluation Association; next Esther Johnson, retired executive of Carrier Electronics; Karlton Johnson, CEO of Delaine Strategy Group LLC; Wade Meyercord, President of Meyercord & Associates; Ganesh Moorthy, President and CEO of Microchip Technology, and Karen Rapp, CFO of National Instruments. Next, I will introduce the company's executive staff that are in attendance today, Eric Bjornholt, Senior Vice President and Chief Financial Officer; Steve Drehobl, Senior Vice President of MCU8 and MCU16 business units; Rich Simoncic, Senior Vice President, Analog Power and Interface business unit; Matthew Bunker, Senior Vice President of Back-End Operations and Memory Products; Lauren Carr, Senior Vice President, Global Human Resources; Mike Finley, Senior Vice President, Fab Operations; Patrick Johnson, Senior Vice President, Mixed Signal, Timing and FPGA business units, Joe Krawczyk, Vice President, Worldwide Client Engagement; Sumit Mitra, Senior Vice President, 32-bit MCU, MPU and Wireless business units; Mitch Obolsky, Senior Vice President, Networking and Data Center business units; and finally, Mark Reiten, Vice President, Technology Licensing business unit. Two partners of the firm of Ernst & Young, the company's independent registered public accounting firm, are also here today. They are Ron Butler and John Gaylord. I would also like to introduce Rob Suffoletta, Rob is in the back, a partner with the law firm of Wilson Sonsini Goodrich & Rosati, who serves as the company's outside legal counsel. Pursuant to the company's bylaws, I have been appointed by the Board of Directors to serve as Chairman of the meeting. Rob Suffoletta will serve as Secretary of the meeting. Notice of this meeting stating the time, place and purposes was mailed on or about July 19, 2021, postage prepaid, to each stockholder of record at the close of business on June 28, 2021. Affidavits of mailing have been received by the company and are available for inspection at this meeting. 274,040,144 shares of common stock were outstanding at the close of business on June 28, 2021, and are entitled to vote at this meeting. Now with respect to the voting of your shares, if you have already mailed in your proxy and you do not want to change your vote, then you do not need to do anything at this time. If you did not turn in your proxy, if you wish to change a proxy you previously submitted, or if you hold a proxy to vote the shares of another stockholder, please submit those proxies to us at this time. Anyone carrying a proxy that they need to turn in, Kerry can collect those proxies now. No one. Lastly, if there's anyone here who did not submit a proxy and who wishes to vote their shares in person, please raise your hand and Kerry will distribute a ballot to you. We'll collect those ballots when we open the polls for voting in a few minutes. So anyone actually who wants a live ballot? Okay. In accordance with the provisions of Delaware law, the Board of Directors has appointed Rob Suffoletta to serve as the inspector of election at this meeting. And Rob subscribed the oath of his office prior to the meeting. Rob has informed me that a quorum is present, and I declare the meeting open for business. If there are any questions that relate directly to one of the proposals, I would like to receive that question at the time we consider each of the proposals. Otherwise, we have reserved time after we complete the business matters of the meeting for the question-and-answer period. This time, we are not making a presentation. Some of the stockholders who are present here may have seen us in the past, we make a presentation. Because of COVID, we didn't expect much attendance, so we didn't prepare a presentation, but we can have an expanded question-and-answer period and answer all your questions. Please hold all questions not related to the proposals until the question-and-answer period. The first proposal is to elect 7 directors to serve for the ensuing year and until their successors are elected and qualified. A nominee for director shall be elected if the votes cast for such nominee's election exceed the votes cast against such nominee's election. Nominations for directors will now be received. I recognize Eric Bjornholt.

My name is Eric Bjornholt. I nominate Matthew W. Chapman, Esther L. Johnson, Karlton D. Johnson, Wade F. Meyercord, Ganesh Moorthy, Karen Rapp and Steve Sanghi for election as directors of the company.

Steve Drehobl.

I second the nomination.

Since no other nominations were received, the nominations are now closed. Is there any discussion on this proposal? The second proposal is to approve an amendment and restatement of our Certificate of Incorporation to increase the number of authorized shares of common stock for the purpose of effecting a 2-for-1 forward stock split. The affirmative vote of the holders of a majority of the outstanding shares of our common stock on the record date is required to approve this proposal. Is there any discussion on this proposal or any questions on this proposal. A motion calling for a vote on this proposal will now be received. I recognize Steve Drehobl.

My name is Steve Drehobl. I move for the adoption of the following resolution resolved that the proposal to approve an amendment and restatement of our Certificate of Incorporation to increase the number of authorized shares of common stock for the purpose of affecting a 2-for-1 forward stock split be approved.

Rich Simoncic.

I second that motion.

The third proposal is to approve an amendment and restatement of our 2004 Equity Incentive Plan to extend the term of the plan by 10 years to August 24, 2031. The affirmative vote of the holders of a majority of the votes cast at the annual meeting is required to approve this proposal. Is there any discussion or any questions on this proposal? A motion calling for a vote on this proposal will now be received. I recognize Rich Simoncic.

My name is Rich Simoncic. I move for the adoption of the following resolution resolved that the proposal to approve an amendment and restatement of our 2004 Equity Incentive Plan to extend the term of the plan by 10 years to August 24, 2031 be approved.

Mike Finley?

I second the motion.

The fourth proposal is to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of Microchip for the fiscal year ending March 31, 2022. The affirmative vote of the holders of a majority of the shares of common stock represented at the meeting is required to adopt the proposal. Is there any discussion or are there any questions on this proposal? A motion calling for a vote on this proposal will now be received. I recognize Mike Finley.

My name is Mike Finley. I move for the adoption of the following resolution resolved that the proposal to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of Microchip for the fiscal year ending March 31, 2022, be approved.

Mitch Obolsky?

I second the motion.

The fifth proposal is to hold an advisory nonbinding vote regarding the compensation of our named executives. The affirmative vote of the holders of a majority of the shares of common stock represented at the meeting is required to approve this proposal. Is there any discussion or are there any questions from any of the stockholders regarding this proposal? A motion calling for a vote on this proposal will now be received. I recognize Mitch Obolsky.