Raymond James Financial, Inc. (RJF) Earnings Call Transcript & Summary

Good afternoon, everyone. We're going to go ahead and get started. And welcome for all of you who've showed up to attend. It's 4:30 -- well, maybe 4:37, and I will call the meeting to order. I am Paul Reilly, Chairman and CEO of Raymond James Financial, and I'll be presiding at this meeting. On behalf of the directors and officers and associates of Raymond James Financial, it's my pleasure to welcome everyone to the Annual Meeting of Shareholders, not just those in the room, but we have -- since we're live casting, we have plenty of shareholders, analysts, investors also listening in today. The rules of procedure for our meeting were made available to you as you entered the room today. Notice of the meeting was contained in our proxy materials mailed on January 10, 2020 to shareholders of record on December 23, 2019. In accordance with our bylaws, I hereby appoint Mr. Jonathan Santelli, our General Counsel and Company Secretary, as the meeting's Inspector of Elections. Jonathan, will you please announce the number of shares known to be present in person or by proxy?

Over 128,472,047 shares of common stock of the company are represented at the meeting, either in person or by proxy, which represents more than 92.3% of the 139,178,823 shares of common stock outstanding on the record date of December 23, 2019. Accordingly, a quorum is present and voting.

Great. Thank you, Jonathan. That's a great turnout, over 92%. Because the holders of a majority of the outstanding stock entitled to vote at the meeting are present in person or by proxy, I declare a quorum to be present and the meeting has been duly convened for purposes of transacting such business as may properly come before it. I now call the annual meeting of the shareholders of Raymond James Financial to order. First, I'd like to introduce our Board of Directors and ask them to stand quickly. Charles Arentschildt. Charlie? Shelley Broader, and a bittersweet moment for us. Shelley, after a long time, will be retiring; Robert Dutkowsky; Jeff Edwards; Ben Esty; Anne Gates; Francis Godbold; Tom James; Gordon Johnson; Rod McGeary; Raj Seshadri, sorry, Raj; Susan Story; and I guess I'm already standing, I'm Paul Reilly. I would now like to welcome our KPMG representatives. So John Crish is our lead engagement partner; and Julie Barba, who's our engagement partner. John's our lead engagement partner, so welcome. They will be present to answer any questions directed to them during the questions and answers. Moving to our items of business for the meeting. I shall present the proposals included in our proxy statements for your consideration. I will then open the floor to questions or discussion related to these proposals and open the polls for voting. While the ballots are being counted and collected, I shall deliver my Chairman's report until we close the polls. I will then ask Tom James, our Chairman Emeritus, to speak about the SEC's best interest standard, and market environment and, knowing Tom, about any other thing that's on his mind at the moment. There are 4 agenda items set forth in the proxy. First is the election of directors named in the proxy statement. The board has nominated the following 12 directors to serve on the company's Board of Directors until the Annual Meeting of Shareholders in 2021 and until their successors shall be elected and qualified. The proxy statement contains information on their backgrounds and experience, and I can tell you, they've been a great team and advisers for Raymond James. So Charles Arentschildt, Robert Dutkowsky, Jeff Edwards, Benjamin Esty, Anne Gates, Francis Godbold, Tom James, Gordon Johnson, Roderick McGary, Paul Reilly, Raj Seshadri and Susan Story. Second, to prove the advisory nonbinding resolution on the company's executive compensation plan. Shareholders are required by the Dodd-Frank Act to be given an opportunity to cast a nonbinding advisory vote on the company's executive compensation for fiscal 2019. Third, approve and amend the restated 2012 stock incentive plan. The plan provides for an increase in the maximum number of shares authorized for issuance over the term of the plan by 12 million shares from approximately 40 million shares to approximately 52 million shares. Fourth is to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for fiscal 2020. KPMG has served as the company's independent registered public accounting firm since 2001. So first, this is a question. Are there any questions or discussion regarding the proposals prior to the vote? Any questions? Okay. Having none, I now declare the polls are open. If you desire a ballot, please raise your hand and it will be provided. The inspector of election, Mr. Santelli, will provide ballots to those who desire them. If you previously voted by proxy, you do not need to vote again, unless you wish to change your vote. Once you have completed your ballot, please submit to the inspector general. So now while they -- while we are taking ballots and closing the polls, I will deliver my comments. So it's interesting, we've come to an end of a decade, and we're going to take a little walk down the past, as over 50 years ago, this firm was founded by Bob James on a simple premise that people -- our business is people and their financial well-being. That core tenet has stuck with us through all these times and, I believe, has been the success of our growth. Bob took that from his father and grew this into a substantial global competitive business, and we're still benefiting from these core values today. And I really believe it's our only differentiator. The fact that we put clients first. Advisers are our clients, and we treat them as such, that we always act open and integrity to everyone, both our -- all of our associates, our shareholders, our advisers and their clients, that we take a conservative, long-term view and that we value [ advisers' independence ] and our own. And back in 2010, after Tom took over the reins, the management team, we all came together and kind of laid out a vision for the next 10 years. And we said, in 10 years, we wanted to be perceived not only as a great regional firm of great values but as a premier alternative to Wall Street, a firm that was founded in those values and didn't lose any of those values, but could compete on any basis with any of the big wirehouse firms, not a slam on Wall Street, but a unique positioning really for Raymond James. And we focused the plan around growth. And that growth is important because with profitable growth, you can make investments. And over this decade, and I'll talk about it a little later, we've made substantial investments in people, in our businesses, in our technology and our infrastructure. And those improvements have enabled us to offer more services and solutions to our advisers, to our clients and fueled more growth, and that growth loop is really key to our success and continues to be based on our values. And we've had significant growth over the decade. And you can see the mix of the firm's businesses, the purple being Private Client Group, about 2/3, really hasn't changed too much if you look at the mix. We're still the same type of business, still focused, and all of our businesses have really grown. Now you're going to see different distributions in the profits. So the bank shows a bigger part of the profits than it ever has. The Private Client Group, a little bit different. And part of that is just the way we count the beans. If we put cash in the bank for them to grow the loan portfolio, they'll earn more and Private Client Group will earn a little less. If we keep the bank off-balance sheet and sweep it to our clients, I mean, to our -- to third party banks, PCG earns it. So you can look at the different segments and their profitability, but you've got to look at the overall profitability of the firm because it is interrelated. And all the businesses work together. So the fact that this great growth engine, the Private Client Group, has been supported because the bank has SBL loans because it's allowed to give its clients mortgages and all the products and services as well as it gives the other business. The bank also supports equity capital markets and fixed income, our capital markets business and lends to its clients that are at low risk and have a good return for the bank. And this cycle of all of our businesses working together, asset management, our inside asset management, thrives as new advisers come on and put them on our platform, but also our third-party asset management business supplies great products to our advisers who choose to use them and also to advisers at other firms. And this synergy has really created that growth. And if you look at the growth over the last decade, we've had 11.5% compounded growth on revenue, but more importantly, a 16% compounded growth on our earnings. And I wish I could brag that with this team, it was an isolated decade, but you can see a history of Raymond James, as we'll talk about later, achieving just great growth, which I will say is challenging the larger you get. And today, I believe we've earned that position as the premier alternative to Wall Street. Where does it show up? It shows up that we're the leading recruiter of advisers, by far, really, in the industry in the last few years. But more importantly, because of the values, we've been able to retain the great advisers we have, that we create an environment that they want to stay because we've given all of our advisers book ownership whether employees, we do it outwardly if they're independent, by structure [ if ] they own their clients. No one has to stay here, and that really makes us focused on making it a great place for them to be. Now 2019 was a good year. And a little different than some firms, we had a net revenue growth of 6%, which was actually pretty good given the first quarter of last year was a bad quarter. The December quarter was a bad market quarter, and we got off to a slow start, but we raced back, I think, to having a very good finish. Now our net income was up 21%. Most people only use non-GAAP adjustments to show you when it's better, but I'm going to show you, we actually -- 21% is probably a little overstated. If you took onetime expenses from the year before, our year-over-year was really about 11%. So we use it both ways. We use -- we only use non-GAAP adjustments to show the truth, not to try to make it look better or worse. But 6% growth and 11% on the bottom line for the firm was a very, very good year. Same with our earnings per share, it was up 25%. But if you take out some of the onetime changes and adjustment, again, it was up 14%, which is a very, very strong number, really, both for us and for our industry. More important, rock-solid balance sheet. We had over $6.6 billion of capital, and I'll talk about capital a little later. But again, we've been very conservative, great stewards of our shareholders, of your capital, and very focused on only using it for things that either make money or have good returns for shareholders. Now if you look at the different segments, and I've shown them in 5 years because you can see some of the trends happening in this year. Private Client Group had a record revenue and you can see good revenue growth of over $260 million. But you can see the profit growth is only [ up ] 3%. There was some margin compression, but a lot of that was a lot of cash. Again, this year, went to bank earnings versus to the Private Client Group earnings. So I'm going to go through the numbers. You have to look at how Raymond James accounts because how we look at the business is sometimes different than other people. But still a record top line, still record revenue growth. And what drove that is our advisers, as they bring in client assets, they almost hit $800 billion. I used to joke that someday, we would get $0.5 trillion. But at this rate, you can see we're on our way, without any market adjustments, heading towards $1 trillion in our growth. And record number of financial advisers. Again, we've led the industry and the net recruitment of advisers by a good margin. Most of our large competitors shrunk, and we actually continued to grow advisers, despite we have a number of advisers who tired (sic) [ retired ]. Some were ill or passed away. Those are still not in those -- those are in those net numbers. We subtract them out, but you can see we continue to grow our advisers. So a great run, really, for the Private Client Group. Capital markets is a little choppier. We've had 2 kind of instances. Although we had record revenue, we didn't have record profits for 2019, caused by a few things is that our fixed income business was down a little, 2018 started coming back. And today, it's a very vibrant business, but it is off to a slower start in the first part of the year. And then equity capital markets had great banking revenue, mainly merger and acquisition revenue. But sales and trading revenue has been declining for our own industry and for ourselves. So that has really held down the profits on what was relatively a good year. Hopefully, it'd be nice, fixed income and equity capital markets continue to fire at the same time, that's really where you get to kind of your record years. In the asset management business, again, the recruiting of advisers really drove the growth in revenues and assets. Again, records, both on the revenue line. And the pretax line, you can see the steady growth. And a lot of that is really due to the recruitment of financial advisers as we bring in assets, they bring them on to our platforms. And our third-party asset manager, Carillon Towers, has, like the rest of the industry, struggled a little bit as active managers have had a hard time gaining assets. So its growth hasn't been as big as the inside asset managers, but still, we believe, a valuable business. And then Raymond James Bank has been kind of our Steady Eddie that we've had, solid both revenue growth, pretax growth and assets or loans. The net loans are what drives the business. It's easy to make the loans, but you have to make loans that you actually collect at some day. So loans are a tough thing. It's something you want to make to earn money, but you're afraid to death until they pay you back because that's when you find out if you really earned money. But we've had a good run in the bank, and we believe very solid credit metrics and a good view on our credit. And we're always looking at a possible downturn in the business, and I think the bank's been a very, very good steward. And 2020 came off to a good start. We started with 4% on net revenue in the quarter, which was a big number, and 8% on profits. And this is pretty impressive, really, given that a big change last year is the Fed started dropping interest rates, one in July, August and September. If you annualize those interest rate drops, that's $140 million of pretax income or 10% of our bottom line that went away from interest rates. And yet between the markets, our recruiting and advisers, we're able to overcome some of that in the next quarter. It doesn't mean it will be easier. If there's a next Fed drop, it will be tougher on the whole industry. But so far, so good. The challenge also is interest -- net interest for us is non-compensable. We don't pay anybody for our net interest. We do pay clients, but the net is ours. When that gets replaced by commission revenue or management fees or asset fees, that's great because our advisers are doing a good job, but we pay them for that. So it's hard to make up that $140 million on the bottom line just on revenue. You almost have to have 2.5x as much revenue to replace that, in the fee business, to replace the interest business. But good year, good balance sheet. I probably should have had a slide on today's stock closing price just because it would have been fun. I didn't think we'd see over $100 in the near term. Tom told me we would, so I don't know how he -- who told you that. He was right. We are there again. Now who knows, with markets, I can't say, but markets are undervalued right now. And it's been a long time since we've had a 10-year bull run that we've had now without some kind of adjustment. But so far, the markets continue to perform and the firm continues to perform. So we now have 128 consecutive quarters of profitability. I'd like to remind people the only quarter since being public we didn't make money was the Black Monday quarter when Tom kept the retail trading desk open. Many firms were very slow to answer calls or didn't answer calls because the market was falling that day. Raymond James did, and we've lost a whopping $100,000 or it would have been a much longer number. And I think it's a great testament to Tom's long-term stewardship. And also, one of his key partners and my key partners is the longest-serving CFO in the Fortune 500 or S&P 500 stepped down. I really think at the urge of [ Karen ] in his life, who magically retired just before him from Raymond James, but Jeff, you're not retired, he's active on the bank Board, still Chairman on the loan committee. He's still on the executive committee, helping Paul Shoukry, who's a very able replacement. But -- so we're not going to give you any retirement accolades, but thanks so much, Jeff, from both Tom and I have been obviously very [ grateful ]. So this slide looks a little bit different when we first made it versus 2 weeks later, we're back up. But you can see, every time I make a presentation, no matter what day it is, I show this slide. And that's our performance against the S&P in the U.S. Financial Services Index. So over the last 5 years, we certainly have had a great run. These 3 years have been a little slower for us, I mean, in terms of net income growth and stock growth, mainly because a lot of the investments we've made in infrastructure, risk and other things I'll talk about in a moment, but still great financial results. And I think the infrastructure that we've built is leverageable and is really going to pay its way in the future. Tom's favorite slide because he has more than 200 shares, that if you had 200 shares when we went public in 1983, you will have $611,000 return if you reinvested the dividends. And it's just quite a remarkable story. Many companies can perform for 5 years, 10 years, 20 years, but over 50 years of performance, we haven't been public 50 years, but it shows what -- really what a stable, great valued company that we've built. Our ROE helped by interest rates really in the last couple of years, but it's over 16%. And that's really kind of a feat based on our capital that I'll talk about a little bit. Our ROTCE, our return on tangible common equity, is actually about 17.5%. We don't like that measure, but the industry uses it, so we started reporting on it. Why don't we like it? Well, you get to pull out intangibles and you get to take out preferred stock and you come up with a number. Well, when you buy something, it's when you get intangible. So you get to forget you paid to buy it, and we don't think that's the greatest measure. But with or without that, still good returns, really, for our shareholders. I mentioned during that period of time, and especially in the last few years, that we've invested a lot in tech really for the last, now, 7 years and [ op ]starting 3 or 4 years ago, as we rolled out some systems. We really beefed it up. You look at our infrastructure growth in finance, the number of people we've hired. You look in HR, where we really went from an HR organization 5 years ago that was pretty thin to a robust, really great partner today. And the risk management areas, whether it's risk, AML, compliance and supervision. We've spent a lot of money building that out in the last 3 years. And I think we're there now. You can see if I had expense curves, those expenses, the expense growth coming down. So it's been a good investment for the firm. I believe it's going to suit us well for the future. I do want to talk about the blueprint. And what we recognize as we've grown so quickly, we brought so many people in, and they joined us for the culture. They didn't -- they understood the words, they didn't understand the nuances. It's how do we talk, how do we treat each other. And so now we've put out a blueprint that explains not just the culture that clients are first, but it's how we talk to each other, how do we treat each other, what do we expect, how do we return phone calls. Those little things that make it so important for people that want to be there. We've also updated our kind of mission statement to say we're a financial services firm that's unique as the people we serve. And you're going to see this in our advertising, you're going to see it in everything else. And we're going to talk about, as people, that our mission is to transform the lives of clients in our communities through financial advice and personal relationships. So we come out with a much more aspirational goal because we think that's what we do, and we remind people every day that's why we're in business. Now we've had some awards on this, too, that we're proud that we're getting all sorts of diversity and inclusion awards. We just received 100 score for the Human Rights Index, which is issued by the LGBTQ community. We just found out that we were rated 280 on Forbes Most Diverse Company list. So we don't do this to get at these awards or lists, but it's great to see that all the effort that we spend, making sure this is a good home for everyone, is being recognized, both inside and outside. And that's why last year, I signed the diversity pledge, along with a lot of CEOs around the country, to say this is important to us, and we want to make sure that people feel it. Now just because we had a great 10 years gives us no right to have a great next 10 years. We've got to earn it. And there's a lot of change. The industry's really changed over 10 years. We have technology firms coming in. We have banks that were not really in our space trying to get in our space. Some down market, Goldman Sachs buying markets. Or just today, Morgan Stanley announcing they bought E*TRADE. Or Schwab doubled down -- doubling down buying TD Ameritrade. We have competitors coming in our space. We have technology firms trying to give options not only to invest but to invest cash, which is valuable to us and we need for our enterprise. So we've got to be able to address this. So we're spending the weekend, just as we did to lay out this 10-year plan or we did 5 years ago in clients of the future, to look at what this firm is going to look like in 10 years, to look at our strategy and how are we going to implement both making this a great place for advisers, how are we going to take care of clients and how are we going to use this life wealth plan, which is part of it. I'm not going to go through the strategy today. But to tie it together with our digital technology. We've done some great things in digital technology. Today, we're the only firm where an adviser can use their iPhone and do almost everything they can at the desk, including taking notes at a meeting, after meeting with the client and have it populate CRM. That is a -- as we recruit, no one else has that. We're going to bring those same types of technologies to our retail clients. We wanted to start with the advisers to make sure they had it, and we're going to have to move it in. And we have to be well positioned for the future, whether the markets stay up or not, and we are with capital. I always used to brag at this that we are over 20% total capital, over $1 billion of excess cash, which we have today. The problem is we've climbed 25% and now to 25.6% or 25.7% total capital. So at some point, what we told investors is, today, look, I used to say when we had enough capital, I'd tell you, then we kid that we have a lot of capital right now. So we're going to manage the capital by share buybacks, not to increase the dilution but where we want to spend the money, and we're still committed, is to employ it -- deploy it back into the businesses. We've looked at strategic acquisitions. And frankly, anything that's been available has been priced way too high. If it's not a good return for shareholders, we're not going to do something just to be bigger. And I want to take this time to thank both our Board. We've had a great Board these last 10 years, and I know, with the group we have, will be very helpful. A fantastic executive team who have worked really hard and are going to work really hard as the Board drills them on their plans this whole weekend. If you've been around the Board, you know they're not shy either. And I really want to thank this group, if you can stand up, I think probably everybody in the room today knows who you are. But I appreciate -- Steve, you can stand, too, you're on the slide, and Paul. And two, just to show the depth is, here's our new operating committee. Something we didn't even have before. And I believe everyone in the top line has been new in the last 5 years. So not only do we have an operating committee, you can see, we have a great base of people that have been here a long time, and a great people, people that have come in and brought value really to our team. And so I always start and end with this slide. This is about it. I believe as long as we follow these guidelines, and every decision we make is based in the values and culture that Bob and Tom have put down, we will succeed for the long term. So I appreciate your time today. Okay. So now I get to read again for a little bit. So I have -- we've had the polls open. Are there any other questions that have the floor on the motions in front of us? If not, rules of procedure say, if you have a question, raise your hand. So if there are no more questions -- no more questions? I will now close the polls. The inspector of election will now collect any outstanding ballots. If you wish to vote by ballot, please provide your ballot to the inspector of elections. Again, if you've already voted by proxy, you need not vote again today, unless you would like to change your vote. Please hold your card up -- your hand up if you want a ballot collected. Tom, you're not changing anything? That's good. We now have all the ballots. And while they count the ballots, I'm going to ask Tom James to come up and make his remarks. But before Tom gets to his remarks, I'm going to ask Susan Story to come up and help with a special presentation. And I know you will hate this, but I'm going to ask Shelley to stand up -- to come on up for an award. She's got to read it. Sit here a little bit.

Can you hear me okay? So what I'd like to do is read a resolution of gratitude for the exemplary Board service of Shelley G. Broader. Shelley, come over here. You're kind of like out there, and we're -- this is for you. So okay, just sit in, it's going to be a little bit long, but we still couldn't get all the things that you've done for us, Shelley, on the resolution. Whereas Shelley Broader, independent Non-Executive Director of the Board of Directors of Raymond James Financial, Inc. will retire effective February 20, 2020, after almost 12 years of service to our shareholders, employees and communities; whereas she has served in an outstanding capacity as a highly respected Board member since February 2008, and as a member of the Audit and Risk Committee from 2008 to 2020. That deserves applause, by the way. Whereas during her tenure as a Director, she has helped oversee the tripling of the firm's stock value, growth of net income at a 14% CAGR and growth in market capitalization at 13% CAGR. Whereas during her tenure as a Director, she has witnessed the number of company employees grow from approximately 8,000 to more than 18,000, a 125% increase. Whereas during her tenure as a Director, she was active in the firm's operations and development of its associates, regularly supported the firm's managers and associates, participating in conferences, serving on panels and as keynote speaker and advising its executives. Whereas she has brought to the company's Board, a distinguished and remarkable career of outstanding leadership in the consumer industry, including service as President and CEO of Chico's, President and CEO of Walmart EMEA region, which is Europe, Middle East, sub-Saharan Africa and Canada, President and Chief Executive Officer for Walmart, Canada, Senior Vice President for Sam's West, Inc., President and Chief Operating Officer at Michaels Companies and President and Chief Executive Officer for Sweetbay Supermarket. And I know for a fact that she has been on the Board in every one of those positions. So you've kind of come up through your career through this. Whereas, she has served as a board member of Moffitt Cancer Center, the Retail Industry Leaders Association, Massmart Holdings Limited, Catalyst Canada, the Consortium of Florida Education Foundations, the Florida Council 100 and the Friends Foundation as well as a member of the advisory council on doing business and to trustee at Saint Leo University. Hold on, we're almost there. Whereas, she has mentored and developed countless men and women over the years as both coworkers and fellow Board members; and whereas her steadfast optimism, impressive intellect, deep experience, high integrity, piercing objectivity and unwavering commitment to Raymond James Financial have been exemplary and an inspiration to this Board and the executive leadership team and to all who've worked with her. Now therefore, be it resolved that the Board of Directors of Raymond James Financial, Inc., hereby extends to our fellow Board member, mentor and our friend, Shelley Broader, our best wishes for good health, happiness and prosperity and continued success in her future endeavors. We are deeply grateful for all she has done, and we will sorely miss her.

You can see that this was a good advertisement for our diversity actually here. You realize these are 2 long-serving women members of our Board, and we had some new ones here in -- with us. And we've always found that women give us a whole new perspective on the Board, and it's one of our biggest markets. As you know, most of -- we men die before our spouses or peers die. And as a result, they control most of the money. So if you're not paying attention to women, you're not going to be very successful. So we've been working very hard through the years, through the years to build the firm in terms of its female financial advisers and females here at the home office. And they actually make up, I think, the majority of our home office personnel. And we're still working hard to get them to the level that we have in the male sales force, but we're making progress. And we even have a committed group of female advisers who are working to be mentors, recruiters of talented young women to bring them into our industry and help them, as we do through our training classes, to help build the firm in terms of the diversity in the sales force. So I think it's a very important thing, kind of ties into some of the things that Paul said. Now you heard him introduce me as someone who's going to talk about best interest. I'm going to talk a little bit about best interest. Those of us in the industry here, which are most of the people actually, understand that there had been a push to require that financial advisers meet a new level of service to their clients through meeting fiduciary-type standards. And originally, the Fiduciary Act was established for registered investment advisers who were actually managing money, asset managers, and not so much financial advisers. But there has been a group of financial advisers who have joined firms usually that are fee oriented that have pushed, as we have pushed over our entire existence, the standards that you find with CFP, certified financial planners, and essentially began to do asset management for fees, a change in the compensation system, if you will. One of the many changes that I've seen over the number of years, and Paul mentioned some of them that we just faced here recently, which I think are going to provide some interesting challenges for us to adapt to over time. But the industry fought against this because they really believe, as we believe, that we already met best interest standards or fiduciary standards with our financial advisers, who are extremely well-trained, experienced. You heard the numbers on our net recruiting. We're recruiting top-notch financial advisers and we're training a larger group every year to make sure that the industry does not continue to shrink by diminution of financial advisers as they retire and leave the industry. So I think it's -- we've always believed that we have met those standards. You saw that our business is you and your financial well-being or people and their financial well-being. And I always refer to that as really a commitment not just to clients, it is to clients, but it's also to our financial employees and associates here who are interfacing with each other to be able to serve those clients because if we don't have satisfied employees here who are hired from among really talented people, often with no financial experience that we trained from ground up here, or now that we have a reputation and a brand in the industry, we can bring in people from outside of our area, and in fact, from the major financial centers. And with other firm experience to join us. And that, I think, is if you want to really think about it, I would tell you, the key building block of the whole firm. My father always used to say it's all about the people. Well, it certainly is all about the people who are our clients. It's certainly about all the people who are our associates. It's certainly about all the people in our community because we must have an attractive place to attract workers to. And I think we have done a good job of doing that over the years. What Paul didn't say for that amount of money put up there, that $600,000-plus, that was $2,800 investment for those 200 shares. So that's a pretty good return on capital. I think all of you would admit, you would have just taken your money and put it in that stock and had it the whole time. And we didn't do that because we still believe that our clients should have diversified portfolios. And to be perfectly frank, at the time, after going through a tough market condition a couple of times in our history, we were nervous about selling too much, and we had a lot of client demand for the securities we were offering. So we sold it in 200-share lots, and that's the reason we do that instead of doing it by 100 shares. To show you the numbers, it's really what those initial clients invested with us, I still have clients who have all the stock that they bought on that original offer. So when I think about that, I think that's really an important thing to demonstrate that we were doing our best. Now it wasn't easy because when it came out, it went down originally, it was a little tough to walk down the street and look people in the eye, but at least we didn't take so much of their money and put it in the market that they left the firm. And a lot of them have stuck around and benefited from all of the growth that these wonderful people we have recruited and trained and developed over time have built. And I can tell you, the same thing goes for the Board members that we have brought in to help us do this job. So as we faced this meeting of 4 days of long-range planning in addition to a normal Board meeting starting tonight, you will understand that we continue to invest in these people and listen to their advice and counsel, so that we can grow the firm. But I would tell you that we do have a lot of challenges though. And some of those acquisitions you've heard in the industry, you're essentially seeing a whole reordering of the discount brokerage business that was apparently causally affected or catalyzed by the decision of Schwab to go to 0 for commission on a stock trade, and then they rapidly acquired TD Ameritrade to strengthen their firm. And you see Morgan Stanley buying E*TRADE, which essentially puts them -- at least they have the facility to be in the business of doing discount trading with customers online and through the Internet. So it's -- you're seeing some reordering going on now. And what I would tell you is we've always been committed to our financial advisers as advisers and counselors to their clients. And we think they're the connectivity that enables us to grow the firm the way we have over the years. And while once in a while, you have someone that gets off track, I would tell you that our force of financial advisers is generally committed to that, our business is you and your financial well-being. So I know we can meet some of these challenges, but believe me, we're going to be discussing some this weekend that won't be easy. This is going to be a competitive marketplace, like it's always been going forward. So -- but I have confidence that the best interest standard being adopted by the whole industry will affect some things that I've actually tried to incorporate in the practice of all of our financial advisers over the years. But we haven't quite done it all the way through, meaning that we don't have all of our sales force that I would call fully capable financial planners. And I think in today's world going forward, you better be because you're going to have to be providing services that deal with all forms of financial challenges to our clients. And that's no mean task here. You've got to really educate yourself in a lot of areas. For example, every day, we give advice to seniors that are our clients or parents of our clients about what good nursing homes might be in the community and what kind of changes they're going to have to go through to live in that kind of an environment. We give counsel on -- to divorce couples, sometimes while the divorce is going on, in an effort to make sure that both of them survive the divorce with minimal asset loss and limited animosity so that they can cooperate together to grow their children and cooperate in their training as opposed to creating enemies within their own families. And I think these kinds of tasks are extremely important. And money always plays a part, I don't have to tell any of you that, especially those who have gone through a prior divorce because if you have aggressive attorneys, you can end up in that place. So best interest is an interesting concept. Best interest is a value statement, right? It's not really a set of rules and regulations. And believe me, SEC is working on trying to establish some rules and regulations, but they're going to have this value standard as they have fair, just and equitable as a consideration for financial advisers today as well as all financial professionals that they can come back and hit you with if, for some reason, there's no rule that covers the situation in question. Now the problem is, it's kind of like watching a democratic debate, that they don't have the rules and regulations published, and we're supposed to be in accommodation with these rules, [ won't you ]? And it means that these rules are kind of coming along by -- on the fly. And when we were working on the fiduciary standard that was fostered by the Department of Labor, we had to make a lot of changes just to be prepared for that, only to have it crash and burn, partially because of our efforts to say, you better make sure that you're doing it the right way in the best interest to clients, because some of their rules actually didn't serve the clients' best interest at all. They forced brokers to do things that cost client more in terms of conducting the business. And there were lots of inefficiencies built into the system. So whereas if you have a value statement, you may be at risk of people defining your approach to the value statement differently than you do, which I think we'll see. The regulators have a way in our industry of actually coming in and finding you guilty of breaking rules that don't exist, which is not exactly the way I'd like to see rules made. You would think that they might be prospective rather than retroactive so that you can act in accordance with the rules. But I have no doubt that our people will act in their clients' best interest. And if they act in their clients' best interest and document it, because let me tell you about regulators, they know that it's difficult to really define these things, they don't really even quite totally understand all the businesses that we're in or all the products we offer, and so they're usually behind the 8 ball, to some degree, in terms of reacting to change. And so they will come in after the fact and find violations in retrospect. And I would tell you, in a number of times, if we had the power to debate this in advance on an equal footing with the regulator, I think we'd have a good chance to convince them to adopt some different standards than they adopt, but they choose not to do this. Now I would tell you, if you're in an industry and you want to define how you need to act in the future, the regulators and the leaders in our industry should cooperate together to write the best rules to create the best standards. And that's not the way it's done, and it's unfortunate. I pushed for that when I was chairman of the Financial Services Roundtable. Instead, we got the CMFC. We didn't get a group of industry people involved with regulators. And the reason for that is they often view themselves as enforcement agents. And this is more. This is called planning, like the strategic planning we're going to do this weekend, right? We're going to go out there and try to figure out how we need to act to run a good corporation going forward and we continue to live up to the values that we have established for ourselves. And if the United States is going to retain its preeminence in financial matters, which we do have now, we need to cooperate. But best interest, I can tell you, we'll have to work on this documentation because just like doctors trying to record all that stuff after you've gone in, a lot of them said, I can't stand this administrative nightmare, I'm going to retire. I bet a number of you have doctors like that. I don't want to see our financial advisers do that. I want them to make sure that they do this documentation going forward. But that's a challenge for us to meet, so you need to understand. And this has been very expensive. This has not been cheap at all. And it's an ongoing expense. Is it going to -- is it really going to affect our clients all that much? I don't think it's going to affect our clients very much. But I can tell you, we'll learn to live with it and solve the problem. And I'd like to thank all of you for your confidence in our firm, and really appreciate those of you who work for us, those of us who -- those of you who are our clients, and those of you that are our friends that are here in this meeting, and we look forward to continuing to serve you. Thank you very much.

So just bear with me. I feel like Susan reading that resolution. All proposals set forth in the proxy statement were approved by the shareholders. First, the 12 to the Board of Directors of the company were elected. Each of the nominees received favorable votes of at least 102,457,685 shares, representing at least 94.3% of the shares voted. Second, the proposal to approve the advisory nonbinding resolution relating to the company's executive compensation was also approved by a favorable vote of 102,691,995 shares which represented 94.5% of the shares voted. Third, the proposal to approve the amended and restated 2012 stock incentive plan was also approved by a favorable vote of 98,439,288 shares, which represented 90.6% of the shares voted. Fourth and last, the proposal to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ended September 30, 2020, was also approved by a favorable vote of 126,252,821 shares, representing 98.2% of the shares voted.

Have this on for the simulcast. And I want to share in Tom's comment as we thank you for your support, and we don't take our responsibility lightly to make sure that this is a great home for our people, our associates, our advisers and for investors as we go forward. So ladies and gentlemen, that concludes our annual shareholders' meeting. Thank you for attending. The meeting is now adjourned.