OneSpan Inc. (OSPN) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to your OneSpan, Inc. 2020 Annual Meeting of Stockholders. At this time, it is my pleasure to turn the floor over to your host, Steven Worth, General Counsel and Corporate Secretary. Sir, the floor is yours.

Thank you very much. Good morning, everyone. My name is Steven Worth. I'm the General Counsel, Chief Compliance Officer and Corporate Secretary of OneSpan, Inc. and I'm very pleased to welcome you to our 2020 Annual Meeting of Stockholders. Thank you all for attending. I'm also pleased to introduce you to Mr. Scott Clements, our Director and our President and Chief Executive Officer of OneSpan, and he will be presiding over today's meeting. Scott?

Steven, thank you very much. Hello, everyone. We're pleased to conduct our annual meeting virtually via the internet for the first time. While the global pandemic has forced most of our business meetings into the virtual space these recent months, virtual shareholder meetings have already become common in recent years, and we anticipate that our future shareholder meetings will continue to follow this online format. Before I call the meeting to order, I'd like to introduce the additional 9 directors who are joining us today. Those directors include Mr. Marc Boroditsky, Mr. Mike Cullinane, Mr. John Fox, Ms. Naureen Hassan, Ms. Jean Holley, Mr. Kendall Hunt, Ms. Marianne Johnson, Mr. Matthew Moog and Mr. Marc Zenner. Thank you very much to each of you for your dedicated service to our company. The Board believes that these nominees possess important skills, experiences and backgrounds that are described in our proxy materials that were distributed for this meeting. Next, I'd like to introduce Mr. Mark Hoyt, our Executive Vice President and Chief Financial Officer, who's with us. And you've already heard from Mr. Steven Worth, our General Counsel, Chief Compliance Officer and Corporate Secretary. Also joining us from KPMG LLP, our independent registered public accounting firm, are Mr. Rob Skubic, Partner; Mr. Christopher Balzarini, Partner; and also we have Mr. Pete Sablich of Broadridge Financial Solutions, our inspector of election. Mr. Worth will record the minutes of this meeting. Thanks to all of you for your attendance. Now ladies and gentlemen, the 2020 Annual Meeting of Stockholders will please come to order. As stated in the notice of the meeting, there are 4 matters to be considered and voted on today, which include the following: one, to elect 10 directors to serve on the Board of Directors; two, the advisory nonbinding vote on executive compensation; number three, the advisory nonbinding vote on the frequency of the vote on executive compensation; and four, to ratify the appointment by the Audit Committee of the Board of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. In particular, I'd like to direct your attention to the meeting procedures that are available in the Extra Materials section and remind all attendees that we will follow these procedures. Broadridge Financial Solutions has been previously appointed by the company's Board of Directors as the inspector of election, and that firm is represented here today by Mr. Pete Sablich. I've received from the inspector his oath of office, which I direct the secretary to file with the minutes of this meeting. Will the inspector of election now report whether a quorum of stockholders is represented here today in person or by proxy as required by the bylaws of the company. Pete?

Mr. President, as of the record date, there were 40,313,630 shares of common stock issued and outstanding and entitled to notice of and to vote at this meeting. Each such share is entitled to cast one vote on any matter submitted to the stockholders for approval. From a preliminary survey of the proxies received in account of the stockholders present in this meeting, it appears that a total of 35,401,405 shares are represented either in person or by proxy at this meeting, which number represents more than a majority of the issued and outstanding shares of common stock.

Thank you, Pete. On the basis of the report of the inspector of election, I declare that the required quorum has been met and that the 2020 Annual Meeting of Stockholders is duly convened and confident to proceed with the transaction of business. I'd now like to recognize the secretary to provide a report on the mailing of the notice of the meeting and the circulation of proxy materials. Mr. Secretary?

Thank you, Mr. President, I am pleased to report that a notice of the meeting, notice regarding the availability of materials for the meeting or the related proxy materials themselves were mailed on or about April 30, 2020, to stockholders of record on April 13, 2020. The notice regarding the availability of proxy material informed shareholders of voting methods on how to access the proxy statement, our annual report and the form of proxy by mail, e-mail or internet. For those stockholders wishing to vote today for the first time or to change their previous proxy votes, ballots are available in the portal we are using today. Please look for the vote here button in order to do that. And then we will pause for a moment to allow you to do that.

Thank you, Mr. Secretary. It's now 10:08 a.m. Central Time, and I declare the polls to be open for the recording and tally of the stockholder votes on all matters. At this time, any shareholders that are logged in and who have already submitted a proxy and wish to change their vote for their shares or vote for the first time they may now do so by clicking on the vote here button on your screen. If you've mailed in your proxy card or voted online, it will be voted in accordance with your instructions. You do not need to vote now if you have already returned your proxy card or voted online, unless you want to change your vote. I will discuss each matter to be acted on at this meeting. And at the conclusion of the discussion of all matters, the polls will be closed. The first order of business today is the proposal for the election of directors. Our certificate of incorporation and bylaws provide that the number of directors should be not less than 4 or more than 20 and authorize the exact number to be determined from time to time by the Board of Directors. At this time, the President recognizes the secretary to report the nominees recommended by our Corporate Governance and Nominating Committee and nominated by our Board of Directors to serve as directors of the company.

Thank you, Mr. President. I am pleased to report that the following 10 persons have been recommended by the Corporate Governance and Nominating Committee and nominated by the company's Board of Directors to serve as directors until the 2021 Annual Meeting of Stockholders and until their successors shall have been duly elected and qualified. Those individuals are Marc Boroditsky, Scott Clements, Michael Cullinane, John Fox, Jr., Naureen Hassan, Ken Hunt, Jean Holley, Marianne Johnson, Matthew Moog and Marc Zenner. The backgrounds and experience of the director nominees as well as other relevant information are included in the company's proxy materials previously distributed to the stockholders.

Thank you, Mr. Secretary. The names of the director nominees have been placed in nomination. The company did not receive any other nominations meeting the company's advanced notice requirements. Thus, I declare the nominations to be closed. The second order of business today is the advisory nonbinding vote to approve executive compensation. This advisory resolution commonly referred to as a say on pay resolution is nonbinding on the company. Although nonbinding, the company's Board of Directors and the Compensation Committee will review and carefully consider the voting results when evaluating our executive compensation program. An explanation of this proposal is contained in the proxy statement for this meeting, previously distributed to stockholders. The third order of business today is the advisory nonbinding vote regarding the frequency of future advisory votes on executive compensation. For this proposal, the option of every 1 year, every 2 years or every 3 years that receives the highest number of votes cast by the stockholders will be considered the frequency for the advisory vote on executive compensation that is preferred by our stockholders. The Board of Directors and the Compensation Committee will consider our stockholder preference as reflected in the vote on this proposal and determining how frequently the advisory vote on executive compensation occurs in the future. An explanation of this proposal is contained in the proxy statement for this meeting that was previously distributed to the stockholders. The last order of business today is the ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2020. An explanation of this proposal is contained in the proxy statement previously distributed to stockholders. If you are voting on the portal today, please complete your virtual ballots at this time. I'll pause for a minute, and we'll check the portal activity. [Voting]

It is approximately 10:13 a.m. Central Time. Since all stockholders desiring to vote appear to have done so, I declare the polls closed and ask that the inspector of elections tally the votes and prepare a preliminary report of the results. We'll take a brief intermission to allow that to occur. Is the inspector of election ready to provide the preliminary report of tabulation?

Yes. Thank you, Mr. President. The preliminary results are as follows: the number of votes for each director nominee is at least a majority of the total votes cast on the election of each such director nominee; number two, the number of votes for the approval of executive compensation is at least the majority of the votes cast on the proposal; number three, the number of votes to hold a nonbinding vote on executive compensation every 1 year received at least the plurality of the total votes cast; and number four, the number of votes for the replication and appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2021, is at least a majority of the total votes cast on such proposal.

Thank you, Mr. Sablich. Based on the report of the inspector of elections, I declare that, one, all of the director nominees have been elected to serve as members of the company's Board of Directors as described in the company's proxy materials; two, the stockholders of OneSpan approved on a nonbinding advisory basis the compensation of the company's named executive officers disclosed in the compensation discussion and analysis, the summary compensation table and the related compensation tables and narrative in the proxy statement for the company's 2020 Annual Meeting of Stockholders; three, the stockholders of OneSpan approved on a nonbinding advisory basis that future nonbinding votes on executive compensation will occur every year, thus annually; and four, the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2020, has been ratified. I direct the secretary to include the final report of the inspector of election with the minutes of the meeting. At this time, I'd also like to note that Mr. Rob Skubic, the audit partner from KPMG, who is with us today, informed me that he does not wish to make any statement today. There being no further business to properly come before this meeting today, I declare the 2020 Annual Meeting of Stockholders to be adjourned. I'd like to thank you all very much for attending and for being stockholders in our company. I'd now like to allow for a brief question-and-answer session. For those of you who are joining over the internet, you can refer -- I refer you to the question box on your screen where you can type in any questions that you may have. Steven, have any questions been submitted at this point?

I do not see any active questions at this time.

Okay. Thank you very much, Steven. So that's all that we have for today. On behalf of the company and the Board, I'd like to thank you all for joining today and for your continued support as shareholders in our company. We have over 700 employees in more than 20 countries who work every day throughout even this difficult time period the last 3 months to help our customers fight fraud and protect their users' digital lives. I look forward to our interactions and discussions in the future with you, our owners. In the meantime, stay safe and take care.

Thank you, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.