Paramount Group, Inc. (PGRE) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Paramount Group, Inc. Our host for today's call is Mr. Albert Behler, Chairman, Chief Executive Officer and President of Paramount Group Inc. [Operator Instructions] I will now turn the call over to your host, Mr. Behler, you may begin, sir.

Thank you. Welcome to the Annual Meeting of the Stockholders of Paramount Group, Inc., which this year, we are conducting virtually in an effort to keep everyone healthy and safe. I am Albert Behler. As Chairman, Chief Executive Officer and President of the company, I will be presiding and hereby call the meeting to order. I'm assisted here by Gage Johnson, our Corporate Secretary, who is also acting as the Inspector of Elections. Mr. Johnson has informed me that a quorum is present, so we will now proceed to the formal business of the meeting. Is that correct?

Yes, that is correct, Mr. Chairman. The meeting is duly convened.

Okay, then we will proceed. Before we get started, I would like to remind you that only stockholders who have logged in using their 16-digit control number will be able to ask questions and vote at the meeting. In addition, please note that questions should be limited to those relating to the proposals to be voted on at this meeting. We will not be providing financial or general business updates at this meeting. To the extent you have the questions, about these matters, please reach out to our Investor Relations team. Each of you should be able to see on the screen or a separate detachment tab on the virtual meeting platform, both a copy of the agenda as well as the meeting procedures and rules of conduct. And hopefully, each of you has had a chance to familiarize yourselves with those. Note that in accordance with the rules, no one attending via the webcast or telephone is permitted to use any recording device. There are 3 proposals to be acted on at the meeting, which are set forth in the company's notice and proxy statement delivered to stockholders in connection with this meeting. These proposals relate to: first, the election of 9 Directors; second, a nonbinding advisory vote on compensation of the named executive officers; and third, the ratification of the company's auditor for the 2020 fiscal year. I now declare the polls open for a vote of the stockholders on these matters, which we'll call out one at a time during the voting. [Voting]

We will also be taking any questions about these proposals that have been submitted in advance or that arise while the polls are open. So if you are having something to ask and have not already done so, please submit it now via the chat feature, and we will do our best to address it before the end of the polling. A partner from Deloitte Touche, the company's independent registered public accounting firm, is also participating and will be available to answer appropriate questions if they arise. Note that if you submitted a proxy in advance of the meeting, then you do not need to do anything further to vote now. We are submitting all of those votes via electronic master ballot here at the meeting. But if you have not voted or want to change your vote, now you will be able to do so by clicking on the Vote Here button on your screen. With those preliminaries, let's move to the 3 items of business. Proposal #1, the election of the proposed 9 Director nominees for the upcoming term as follows: Albert Behler, Thomas Armbrust, Martin Bussmann, Colin Dyer, Karin Klein, Peter Linneman, Katharina Otto-Bernstein, Mark Patterson and Greg Wright. Proposal #2 is to approve, on an advisory basis, the compensation of the company's named executive officers as described in our proxy statement: Albert Behler, CEO and President; Wilbur Paes, Executive Vice President and our CFO; Peter Brindley, Executive Vice President Leasing; David Zobel, Executive Vice President, Head of Acquisitions; and Gage Johnson, Senior Vice President, Secretary and General Counsel. Proposal #3 is to ratify the selection of Deloitte & Touche as our independent registered public accounting firm for the upcoming fiscal year. Before we close the polls and move on to count the votes, I'd like to ask Mr. Johnson and our technical team, if there are any questions that have been submitted to the chair about any of these proposals?

Yes, Mr. Chairman, there are a couple of questions, if you can just give us a moment. Okay. We have a question from an institutional shareholder who thanks us for our actions in keeping tenants and everyone safe. The question is, the company spent $100 million on share repurchases in the first quarter. Are there any plans to suspend the share repurchase program? And if not, what factors will go into Board decisions to make further repurchases? Thank you.

It's a very good question. It's true we have spent $100 million on buying back shares. We like to only buy back shares if we can do it on a leverage-neutral basis, and that's the procedure we keep in mind. We have been historically normally selling assets in order to acquire shares to keep it leverage-neutral. In this case, it was that we -- in the process of selling 1899 Pennsylvania Avenue, an asset in Washington, D.C. for over $100 million, it would give us a liquidity for the share buyback program. We discuss the buyback program on a quarterly basis with the Board, and we will decide on the Board level whether we proceed with buyback -- with the buyback program or not.

Thank you, Mr. Chairman. We have another question for our auditors. So we're going to have the operator open the line for Patrick Henry, who is one of the Co-Lead Partners at Deloitte to answer the next question for us. If you could just move it up so I can see the question. Yes, so we have Patrick Henry. So the question is that, says audit firm independence is critically important to protecting the integrity of our corporate financial reporting system. Partner rotation is one of the means of protecting audit firm independence. Could the Deloitte representatives describe the periodic lead partner rotation process at Paramount and indicate who has the decision-making authority to select the new lead partner? Thank you.