Purple Innovation, Inc. (PRPL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It is time to call the Annual Meeting of Stockholders of Purple Innovation, Inc. to order. I am Casey McGarvey, Secretary and Chief Legal Officer of the company. I will be conducting and acting as secretary of today's meeting. At this time, I want to welcome you and express appreciation on behalf of the Board of Directors and management of the company for your virtual attendance here today. I would also like to introduce various officers and directors of the company and other guests who have been invited to attend this meeting. For our Board of Directors and officers, Paul Zepf, the Chairman of the Board of Directors and other directors in alphabetical order: Pano Anthos, Gary DiCamillo, Adam Gray, Claudia Hollingsworth and Dawn Zier; Robert DeMartini, a director and also our Chief Executive Officer and other officers, including Bennett Nussbaum, Interim Chief Financial Officer; Tres White, Chief Retail Officer; Patrice Varni, Chief Marketing Officer; Jack Roddy, Chief People Officer; and Jeff Hutchinson (sic) [ Hutchings ], Chief Innovation Officer. Other guests include Nolan Taylor and Dan Lyman of the law firm of Dorsey & Whitney; Tim McGovern and Cassie Carnahan from BDO USA LLP; and Angela Lamb from Philadelphia Stock Transfer. We are holding this year's annual meeting virtually. Everyone in attendance has successfully registered have been verified as a shareholder as of the record date. You can find the agenda for today's meeting in the Resources section on the right side of your screen. You're able to submit any questions using the function on your screen, and we will provide written answers to those questions next week. Additionally, if you are a stockholder of record or a proxy for a stockholder of record, you have the opportunity via the voting link on the right side of your screen to vote or to change your vote if you previously voted by proxy. I will now present proof of the due calling of the meeting. A copy of the printed notice of Annual Meeting of Stockholders stating the time, place and purpose of this meeting is available on the Resources tab on your screen. I will dispense with the reading of the notice. A complete list of the record holders of the common stock of the company as of the close of business on March 21, 2022, the record date fixed for stockholders entitled to notice and to vote at this meeting was received by the company from its stock transfer agent and is maintained by the company. This list shows that at the close of business on March 21, 2022, there were 66,537,740 shares of Class A common stock issued and outstanding and 448,279 shares of Class B common stock issued and outstanding. The affidavit of Philadelphia stock transfer, the company's stock transfer agent, showing that by April 6, 2022 a notice of Internet availability was mailed to each of the stockholders of record as of the record date also is available in the Resources tab on your screen. This document will be included in the minute book of the company as part of the minutes of this meeting. Scott Askew and Tanya Sestak have been appointed as inspectors of election to act at this meeting. Scott Askew is the Deputy General Counsel for the company. Tanya Sestak is the Senior Director of Legal Operations for the company. The inspectors have duly taken their oath of office in writing. I direct that the same be filed with the minutes of this meeting. Our first order of business at this meeting is to determine whether the shares represented at the meeting, either in person or by proxy, are sufficient to constitute a quorum for the purpose of transacting business.

Mr. Secretary, we have confirmed that there are present, in person or by proxy, holders of the company's common stock at the close of business on March 21, 2022, representing more than 50% of the votes entitled to be cast by such holders on the matters to be presented at this meeting.

Thank you, Scott. Because holders of the majority of the shares entitled to vote at this meeting are present, in person or by proxy, I declare this meeting to be properly convened for purposes of transacting such business as may properly come before it. Before discussing each of the proposals that are subject to stockholder action in this meeting, we open the polls for voting on them. The polls will close upon the conclusion of the discussion of the last proposal being voted on here today. Stockholders of record or their proxies may vote or change or revoke any prior votes on any matter using the link found on the right side of your screen. However, upon the closing of the polls, no ballots will be accepted. We are now ready to proceed to the 3 items that you will vote on this morning. We will introduce each item and then ask for a motion and the second on the item. After treating each item individually, we will be ready for the balloting. We ask that you bear with us as we follow this procedure. The first item to be voted on is the election of 7 directors, each to serve a term of 1 year expiring at the Annual Meeting of Stockholders to be held in fiscal year 2023 and until their successors have been duly elected and qualified. The proxy statement made available to you earlier listed the following 7 individuals who have been nominated by the Board of Directors: Pano Anthos, Robert DeMartini, Gary DiCamillo, Adam Gray, Claudia Hollingsworth, Paul Zepf and Dawn Zier. In accordance with the amended and restated bylaws of the company, stockholders are required to provide advance notice of their intent to nominate candidates for directors. No such notice was received. Therefore, I declare the nominations for directors closed. May I receive a motion to elect 7 directors as described in the proxy statement?

Mr. Secretary, I move that the director nominees listed in the company's proxy statement be elected as directors as described.

Is there a second?

Mr. Secretary, I second the motion.

For your information, each of the nominees is currently serving as a director and a business biography of each director is contained in the company's proxy statement and Form 10-K that you received. The second item to be voted on is the advisory vote on our executive compensation. Pursuant to Section 14A of the Securities Exchange Act of 1934 as amended, we are requesting stockholder approval of a nonbinding advisory resolution, approving the compensation of our named executive officers as disclosed in the proxy statement made available to you earlier, which resolution reads, "Resolved, that the stockholders hereby approve on an advisory basis, the compensation of the company's named executive officers as disclosed in the proxy statement pursuant to item 402 of Regulation S-K, including the compensation tables and narrative disclosure." May I receive a motion to approve the nonbinding advisory resolution approving the compensation of our named executive officers as disclosed in the proxy statement?

Mr. Secretary, I move that the nonbinding advisory resolution approving the compensation of our named executive officers as disclosed in the proxy statement be approved.

Is there a second?

Mr. Secretary, I second the motion.

Although this advisory resolution is nonbinding, the Board values input from stockholders on our executive compensation. Our Human Capital & Compensation Committee will review and consider the voting results for this proposal and take into account the outcome of the vote in making future decisions concerning our executive compensation program. The third and final item of business to consider today is the ratification of the appointment of the company's independent auditors. The accounting firm of BDO USA, LLP has been selected and recommended by the Audit Committee to serve as independent auditor for the fiscal year ending December 31, 2022. Therefore, I now ask for a motion to ratify the appointment of BDO USA, LLP as the company's independent auditor for the fiscal year ending December 31, 2022.

Mr. Secretary, I move that the appointment of BDO USA, LLP as the company's independent auditor for the fiscal year ending December 31, 2022, be ratified and approved by the stockholders of the company.

I second the motion.

We note that representatives of BDO USA, LLP are attending this meeting, and as previously stated, will provide written answers next week to shareholders' questions directed to them using the question function on the screen. We are ready to proceed to the balloting on the items presented. If you already voted by proxy, you do not need to vote again at this time unless you wish to change your vote. Those of you who have not voted by proxy can proceed to cast your vote by clicking on the link found on the right side of your screen. From here, please follow the instructions until your vote is submitted. Will the stockholders voting by ballot please proceed to complete the online ballot with respect to each of the matters of business presented. The polls will be open for the next couple of minutes or until it appears that voting has stopped during which time I will pause. Please submit your final vote now. [Voting]

All the stockholders present, virtually or by proxy, having had an opportunity to vote, the polls are now declared closed. With the polls now closed, I would like to call for the inspectors of election to deliver their report on the results of the voting. The election inspectors have certified that there are at present at this meeting, in person or by proxy, stockholders holding shares of common stock totaling at least 59,561,800 shares, which represents 88.9% of the votes entitled to be cast by such holders on the matters to be presented at this meeting. First, the election inspectors have certified that each of the 7 Board of Director nominees have received at least a majority of votes cast in favor of such nominees' election. Therefore, Pano Anthos, Robert DeMartini, Gary DiCamillo, Claudia Hollingsworth, Adam Gray, Paul Zepf and Dawn Zier are hereby declared elected to serve as directors of the company, each to serve for a 1-year term expiring at the Annual Meeting of Stockholders held in 2023 or until their successors shall have been duly elected and so qualified. Second, the election inspectors have certified that the number of shares voted in favor of the compensation of the company's named executive officers as set forth in the proxy statement on an advisory basis was 55,445,016. The number of shares voted against such ratification was 401,150. The number of shares that abstained was 26,497. And therefore, the proposal approving the compensation of the company's named executive officers as set forth on the proxy statement on an advisory basis has been approved. Third, the election inspectors have certified that the number of shares voted in favor of the ratification of the appointment of BDO USA, LLP as the company's independent auditor for the fiscal year ending December 31, 2022 was 59,495,237. The number of shares voted against such ratification was 55,109. The number of shares that abstained was 11,454. And therefore, the proposal ratifying the appointment of BDO USA, LLP as independent auditor has been approved. All numbers are preliminary and represent votes cast prior to this meeting. Final results will be reported in an 8-K filing after the close of the meeting. As a reminder, next week, we will respond in writing to any questions submitted today. There being no further business properly before this meeting, we will entertain a motion to adjourn.

I move that the meeting be adjourned.

I second the motion.

The meeting is hereby adjourned. Thank you for your attendance today, and I look forward to next year's meeting.