SM Energy Company (SM) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the 2021 Annual Meeting of Stockholders for SM Energy Company. Before we get started, I'd like to go over a few items so you know how to participate in today's meeting. [Operator Instructions] You may send your questions at any time during the meeting. We will collect these for the Q&A session at the end of today's stockholder meeting, during which the Chairman of the Board, Mr. Sullivan; and the President and Chief Executive Officer, Mr. Vogel, will be available to respond. Please note, today's meeting is being recorded. And now I'd like to introduce the Chairman of SM Energy Company's Board of Directors, Mr. Bill Sullivan.

Good afternoon, ladies and gentlemen. My name is Bill Sullivan, and I'm Chairman of the Board of Directors of SM Energy Company. Since it is now just passed 3:30 p.m., I will call this annual meeting of stockholders to order. On behalf of my fellow directors and the officers of the company, it's my pleasure to welcome you to the 2021 Annual Meeting of Stockholders. I'd like to begin by saying that in light of the challenges presented by the COVID-19 pandemic, we want to extend well wishes to all of our stakeholders attending today. The schedule for the meeting is as follows: I will introduce the other members of the company's Board of Directors, the other speakers during the meeting and the representatives of the company's independent registered public accounting firm. I will then announce the proposals to be voted on at this meeting and the results of the stockholder voting. Following which, the formal meeting will be adjourned, and we will have an opportunity for a brief question-and-answer session. Any questions will be handled in the manner presented by the moderator at the beginning of this meeting and subject to the rules of conduct that have been made available and applied to this meeting. At this time, I would like to identify our Director nominees. The company's directors standing for election, in addition to myself, are Carla J. Bailo, Stephen R. Brand, Ramiro G. Peru, Julio M. Quintana, Rose M. Robeson and Herbert S. Vogel. I want to take a moment now to also recognize and thank 3 members of the Board who are stepping off the Board and not standing for reelection today: Jay Ottoson, Larry Bickle and Loren Leiker. Of course, Jay retired as Chief Executive Officer of the company late last year and is completing his final term as a member of the Board today. Larry Bickle has been a Board Member for SM Energy since 1995. And Loren Leiker has been a Board Member since 2012. Each of the 3 are not standing for reelection again this year. I want to thank all 3 of them for their commitment to the company, their impact and contribution to the company and their service, and certainly wish them well. Also present for today's virtual meeting are all of the company's senior officers. Expected to speak during the meeting are Herb Vogel, our President and Chief Executive Officer; Andrew Fiske, Deputy General Counsel and Corporate Secretary; and Charlotte Brown of Alliance Advisors, the Inspector of Elections for this meeting. Also attending today are Kyle Green and Angela Swanson of Ernst & Young LLP, the company's independent registered public accounting firm since 2013. As Chairman of this annual meeting of stockholders and in accordance with the bylaws of the company, I hereby appoint Charlotte Brown of Alliance Advisors to act as Inspector of Elections. Andrew Fiske, Deputy General Counsel and Corporate Secretary of the company, will take the minutes of the meeting. The company's Board of Directors fixed the meeting day for today, May 27, 2021, at 3:30 p.m. Mountain Time and set the record date for the meeting as of the close of business on April 1, 2021. A list of stockholders of the company as of the record date has been compiled by the company's transfer agent, Computershare Company NA. This list is available and open to examination by stockholders by contacting the Corporate Secretary. This list gives each stockholder's address and shareholdings as they appear on the company's books. According to this list, there were 114,742,304 shares of common stock outstanding on the record date, with no shares held in treasury by the company. Also available for inspection by contacting the Corporate Secretary is a copy of the notice of the Annual Stockholders' Meeting dated April 16, 2021, and the sworn affidavit of Alliance Advisors showing the proper mailing to each holder of common stock entitled to receive notice of the Annual Stockholders' Meeting, the proxy statement and the proxy card. A copy of the notice of the Annual Stockholders' Meeting and the affidavit of mailing will be filed with the minutes of this meeting. Ms. Brown has compiled a list of all the shares represented at this meeting, either in person or by proxy, and has compared this list with the transfer agent's certified list. Ms. Brown, will you please give your report?

Mr. Chairman, representation of 33.3% of the outstanding shares constitutes a quorum. We have 87.29% of the outstanding stock represented at this meeting, either in person and by proxy, so we have a quorum today.

Thank you, Ms. Brown. A quorum has been established. The minutes of the Annual Meeting of Stockholders held on May 27, 2020, are available for inspection by any stockholder by contacting the company's Corporate Secretary. I suggest that if it is agreeable, a formal reading of these minutes be waived.

Mr. Chairman, I move that formal reading of the minutes of the May 27, 2020, Annual Meeting of Stockholders be waived and that the minutes be approved.

I second the motion.

You have all heard a motion and the second. Would all in favor, please say aye. Aye.

Aye.

Aye.

Any opposed, please say no. [Voting]

The motion is carried. The next order of business is the election of directors. All Directors are elected annually and 7 Directors are to be elected to serve for the next year and until their respective successors shall have been elected and qualified. The following individuals have been nominated and have agreed to serve as Directors of the company for a 1-year term expiring at the next Annual Meeting of Stockholders in 2022 and until their respective successors shall be elected and qualified: Carla J. Bailo, Stephen R. Brand, Ramiro G. Peru, Julio M. Quintana, Rose M. Robeson, William D. Sullivan and Herbert S. Vogel. The company's stockholders were also asked to hold an advisory vote regarding the compensation of our named executive officers; to ratify the appointment by the Audit Committee of the Board of Directors of Ernst & Young LLP as the company's independent registered public accounting firm for 2021; and approve the company's 2021 employee stock purchase plan. Most of the company's stockholders have previously voted by proxy. Any stockholder that has not yet voted may do so during this meeting by using the voting links available on your screen. I'll now declare the polls open for voting on the proposals properly brought before the meeting, and I'll pause just a moment. [Voting]

Having provided adequate time for voting, I will now declare the polls closed. Ms. Brown, would you report stockholder voting results, please?

Mr. Chairman, each of the directors nominated has been elected by an affirmative vote no less than 68,104,434 shares, which is 82.10% of the shares represented at this meeting and 59.35% of the total outstanding stock entitled to vote. The appointment by the Audit Committee of the Board of Directors of Ernst & Young LLP as the company's independent registered public accounting firm for 2021 has been ratified by an affirmative vote no less than 99,420,352 shares, which is 99.27% of the shares represented at this meeting and 86.65% of the total shares outstanding stock entitled to vote. The advisory vote regarding the compensation of the company's named executive officers has been approved by an affirmative vote of no less than 79,837,115 shares, which is 96.25% of the shares represented at this meeting and 69.58% of the total outstanding stock entitled to vote. The proposal to approve an amendment of the company's 2021 employee stock purchase plan has been approved by an affirmative vote no less than 82,478,886 shares, which is 71.88% of the company's total outstanding stock. This is a preliminary report, and the final approval amounts will be filed with the SEC on the company's Form 8-K to announce the voting results.

Thank you, Ms. Brown. So I declare that all 7 of the Director nominees have been elected by our stockholders to the Board of Directors of the company for a 1-year term expiring at the annual meeting of stockholders in 2022 and until their elective -- until their respective successors shall be elected and qualified; that the appointment by the Audit Committee of the Board of Directors of Ernst & Young LLP as the company's independent registered public accounting firm for 2021 has been ratified by our stockholders; that the advisory vote regarding the compensation of the company's named executive officers has been approved by our stockholders; and that the proposal to approve the company's 2021 employee stock purchase plan has been approved by our stockholders. There being no further business, I would entertain a motion to adjourn this meeting.

Mr. Chairman, I move that the meeting be adjourned.

I second the motion.

All of those in favor, please say aye. Aye.

Aye.

Aye.

Any oppose, please say nay. [Voting]

That motion is carried, and I will hereby declare this meeting adjourned. As I previously mentioned, Mr. Vogel and I will now entertain questions from our stockholders or person serving as a proxy for a stockholder. Please reference the rules of conduct available for this meeting, and we will follow those rules. As a reminder, you can submit questions through the questions chat pane in the control panel. At this time, I'll pause to allow for submission of any questions.

We have no questions, Bill.

Okay. Thank you, Andrew. No questions relevant to the business of this meeting have been submitted. So at this time, having received no questions, we will now conclude the SM Energy Company 2021 Annual Meeting of Stockholders. Thank you all for attending today's meeting and enjoy the rest of your day. Thanks again.