Rambus Inc. (RMBS) Earnings Call Transcript & Summary

Good day, and welcome to the Rambus Inc. Annual Meeting of Stockholders. I would now like to turn the conference over to Chuck Kissner. Please go ahead.

Thank you. Good morning, ladies and gentlemen. I'm Chuck Kissner, Chairman of the Board of Directors of Rambus Inc. It's my pleasure to welcome you to Rambus' 2020 Annual Meeting of Stockholders. Before proceeding any further, let me introduce the other directors and director nominees of the company who are present today. Our Class I directors present today and who are also our 2020 Board nominees are: Necip Sayiner, Luc Seraphin and me. Our Class II directors are: Emiko Higashi, Meera Rao, Sanjay Saraf and Eric Stang. I'd also like to introduce the corporate officers who are in attendance today: Luc Seraphin, our Chief Executive Officer and President; Rahul Mathur, Chief Financial Officer and Senior Vice President, Finance; and Jae Kim, Senior Vice President, General Counsel and Secretary. Also with us today are Alan Woolery, who's representing PricewaterhouseCoopers; and Michael Coke, who represents Wilson Sonsini Goodrich & Rosati, who is our outside corporate counsel. Now on to the agenda of the meeting. I will act as Chairman of this meeting, and I've asked Jae Kim to cover the agenda to facilitate the business of the agenda and record the minutes. Jae?

Thank you, Chuck. This annual meeting is being held in accordance with the company's bylaws and Delaware law. We will first address the matters described in the company's proxy statement dated March 13, 2020. We will then complete the balloting process. An announcement will be made regarding the voting results, then the official portion of the meeting will be adjourned. After that, there will be a brief company presentation. Stockholders attending the meeting may submit questions regarding the meeting or the company presentation via the virtual meeting Q&A portal. Stockholder questions will not be answered during the formal portion of the meeting or during the company's presentation but at the conclusion of the meeting. While we welcome full stockholder participation at the meeting, we may not be able to answer all stockholder questions to the extent we are restricted from doing so for reasons of confidentiality, or if the questions are deemed inappropriate subject matter for this meeting. Notice of the Meeting. I have proof by affidavit that notice of this meeting has been duly given and that the notice, proxy statement and proxy were mailed on or about March 13, 2020, to all stockholders of record at the close of business on March 4, 2020, the record date for this meeting. We have at this meeting a record of stockholders as of that date. The affidavit, together with copies of the notice, proxy statement and proxy will be filed with the minutes of the meeting. Inspector of election. We have appointed John Shinn, Vice President and Deputy General Counsel, to act as inspector of election for this meeting. The inspector of election has signed an oath of office which will also be filed with the minutes of this meeting. Quorum. Based on a review of the proxy cards submitted prior to this meeting, the inspector of election has determined that out of an aggregate of 113,273,471 shares issued and outstanding as of the record date, the holders of at least 100,882,992 shares of common stock are present and represented at the meeting, which represents approximately 89% of all outstanding shares. That constitutes a majority of votes eligible to be cast by holders of shares issued and outstanding. A quorum is therefore present. The meeting is duly constituted, and the business of the meeting may proceed. I will now describe the voting procedures. You may vote by proxy and by online ballot. Each holder of common stock is entitled to 1 vote for each share of common stock held of record at the close of business on the record date. If you've previously submitted your proxy, and you do not intend to change your vote, it is not necessary that you submit another proxy or vote online. Your vote will be counted. If you are eligible to vote and have not submitted your proxy or if you want to change your vote, please vote online now. I will announce the preliminary results of voting at the end of the meeting. It is now approximately 9:04 a.m. Pacific time, and the polls for each matter to be voted on at this meeting are now open. Proposal 1, the election of directors. The first item of business is the election of directors. The Board of Directors presently has 7 members and is divided into 2 classes, each with an overlapping 2-year term. There are 3 Class I directors and 4 Class II directors. As indicated in the company's proxy statement, the following 3 individuals have been nominated by a Board to serve as Class I directors: Chuck Kissner, Necip Sayiner and Luc Seraphin. All of these nominees are currently serving as directors of the company. Directors elected at today's meeting will hold office until the 2022 Annual Meeting of Stockholders or until their successors are duly elected and qualified. Pursuant to notice of this annual meeting and the proxy statement dated March 13, 2020, the proxy solicited by the Board of Directors will be voted in favor of these nominees. The company's bylaws require that each director be elected by a majority of the votes cast with respect to such director in uncontested elections. The Board of Directors, after taking into account -- consideration the recommendation of the Corporate Governance and nominating committee of the Board, will determine whether or not to accept the pretendered resignation of any nominee for director who receives a greater number of votes against his or her election than votes for such election. There are no cumulative voting rights in the election of directors. Stockholders as of the record date may vote their shares for or against some or all of the nominees. Proposal 2, the ratification of appointment of independent registered public accounting firm. The next item of business is to ratify the appointment of PricewaterhouseCoopers, LLP, PwC, as independent registered public accounting firm for the company for the fiscal year ending December 31, 2020. The Audit Committee of the Board recommended to the Board of Directors that PwC be appointed as the independent registered public accounting firm. As our independent registered public accounting firm, PwC would audit our consolidated financial statements for the fiscal year ending December 31, 2020, and perform other audit-related and nonaudit-related services, as described in the proxy statement. The Board has approved the selection of PwC as independent registered public accounting firm for the fiscal year ending December 31, 2020, and is asking the stockholders for ratification of the selection. If the stockholders do not approve the selection of PwC as independent registered public accounting firm, the Board and the Audit Committee will reconsider the appointment. The Board of Directors recommends that stockholders vote in favor of this proposal. Approval requires the affirmative vote of the holders of a majority of the votes cast. Abstentions will have the same effect as a negative vote. Brokers will have the discretion to vote any uninstructed shares. However, broker nonvotes are not considered votes cast. Alan Woolery is present from PwC when we discuss any questions that we receive with respect to this proposal. Proposal 3 is the advisory vote to approve named executive officer compensation. The next item of business concerns the nonbinding advisory vote to approve named executive officer compensation. This proposal seeks approval of the compensation of our named executive officers, as disclosed in our proxy statement and specifically in the compensation discussion and analysis section. The Board has recommended a vote in favor of the compensation of our named executive officers, as described in the proxy statement. Approval requires the affirmative vote of the holders of a majority of the votes cast. Abstentions have the same effect as a negative vote. Broker nonvotes are not considered votes cast. Proposal 4 relates to the company's equity incentive plan. The next item of business concerns amending the company's 2015 equity incentive plan to increase the number of shares reserved under the plan by 7,800,000 shares. The Board has recommended a vote in favor of amending the plan to increase the number of shares, as described in the proxy statement. Approval requires the affirmative vote of the holders of the majority of the votes cast. Abstentions have the same effect as a negative vote. Broker nonvotes are not considered votes cast. Approval -- Proposal 4 relates to the approval of an amendment to the 2015 employee stock purchase plan. The next item of business concerns amending the company's 2015 employee stock purchase plan to increase the number of shares reserved under the plan by 2 million shares. The Board has recommended a vote in favor of amending the plan to increase the number of shares, as described in the proxy statement. Approval requires the affirmative vote of the holders of a majority of the votes cast. Abstentions have the same effect as a negative vote. Broker nonvotes are not votes -- considered votes cast. Now we'll collect the proxy cards and ballots. If you have not voted and intend to vote, please do so online. You may submit your vote in order -- you must submit your vote in order for them to be counted as the polls will close momentarily. The inspector of elections may not accept ballots, proxies or votes or any changes or revocations submitted after the closing of the polls. [Voting]

It is now approximately 9:10 a.m. Pacific Time. The polls for each matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes, no changes or revocations will be accepted. With the votes -- with the polls now closed, I will provide the preliminary voting results. The proxies and ballots have been tabulated by the inspector of election. The inspector of election has provided me with a preliminary report on the voting results. With regard to proposal 1, the 3 nominees: Chuck Kissner, Necip Sayiner and Luc Seraphin were each elected with a majority of votes cast and will hold office until the 2020 Annual Meeting of Stockholders or until his successor is duly elected and qualified. With regard to proposal 2, the appointment of PwC to act as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020, has been ratified by a majority of the shares present in person or by proxy at this meeting. With regard to proposal 3, a majority of the votes cast have voted in favor of the advisory vote on executive compensation. With regard to proposal 4, a majority of the votes cast have voted in favor of amending the company's 2015 equity incentive plan to increase the plan's share reserve by 7,800,000 shares. With regard to proposal 5, a majority of the votes cast have voted in favor of amending the company's 2015 employee stock purchase plan to increase the plan's share reserve by 2 million shares. The final results of voting, including any ballots and proxies recorded during this meeting, will be set forth in the report of the inspector of election and will be included in the minutes of the meeting. The final results will also be reported in a Form 8-K to be filed with the SEC.

Thanks, Jae. This is the closing of the annual meeting, the official portion of the meeting. So having reached the end of the agenda, this Annual Meeting of Stockholders is now adjourned. Thank you for your attendance, and we'll now proceed with our company presentation.

Before we provide the presentation, I'd like to note that during the presentation, we may make forward-looking statements regarding future events or the future financial performance of the company, which involve risks and uncertainties. Such statements are only predictions, and actual events or results could differ materially from those predictions due to a number of risks and uncertainties. I refer you to the documents we file with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K filed on February 26, 2020, as well as any risks and adverse impacts related to or arising from COVID-19. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. As Chuck noted, with the formal business of the meeting now completed, I turn the meeting back to -- over to Luc for a presentation on the company.

Thank you, Jae. We are in unprecedented times as the industry navigates the uncertainty created by COVID-19. Our top priority is the health and safety of our global workforce, customers and partners. And I'm extremely proud of the collective commitment, patience and ingenuity from all Rambus employees in this challenging time. While we cannot predict the long term with certainty, the combination of our business model and focus areas enables the company to be resilient to the near-term financial effects of COVID-19. We remain confident in our strategy and ability to execute. Rambus' top priorities as a company are centered around 3 primary objectives. The first is to focus our product portfolio around our core strengths in semiconductor, namely high-speed memory and chip-to-chip interfaces, memory buffer chips and embedded security cores and provisioning software. We're targeting leading-edge high-growth markets like data centers, networking, artificial intelligence and 5G infrastructure. These markets are even more critical to meet the demands of social distancing and working from home and require increasing levels of performance and security. The research priorities in Rambus Labs on innovation and patent development are aligned in these key areas as well. This positions Rambus as an ideal choice for high-speed interfaces and embedded security solutions. Our patents remain foundational to our industry. By reinforcing our commitment to invention and advancing semiconductor technology, we enhance our value and relevance in our target markets and create a platform for investments in product development. The second objective is continued optimization of the company for operational efficiency and profitability, leveraging synergies across our businesses and customer base. There is a significant overlap in our ecosystem of customers, partners and influencers. By focusing on hardware and software solutions for secure, connected semiconductors, we are able to bring better value to our customers and improve profitability for the company. And finally, the third objective is to leverage our demonstrated ability to generate cash and reinvest in ourselves through organic and inorganic growth to amplify our market and technology position. These priorities make up the foundations of the company, emphasizing operational excellence and enable Rambus to further its position as a global semiconductor leader in high-speed interfaces, memory buffer chips and embedded security cores. In summary, our business model and focus on core areas of expertise position Rambus for success in our target markets with sustained product growth even in times of turbulence in the industry. Our foundation for success is fueled by innovation, high-speed products and operational efficiency to drive continued strong cash generation. I want to thank you all for attending today's meeting and hope each of you stay safe and healthy throughout this challenging time. We very much appreciate your attendance. And as always, thank you for your support. I will now turn the call to Rahul Mathur, our CFO, to facilitate answering any questions from our stockholders at this time. Rahul?

Thank you, Luc. There are no questions at this time. This concludes our meeting. Thank you again for attending, and you are free to disconnect.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.