SPAR Group, Inc. (SGRP) Earnings Call Transcript & Summary

Welcome to the Special Shareholders meeting of SPAR Group Inc. For opening remarks and introductions, I will turn today's call over to Jim Segreto, Chief Financial Officer for SPAR Group, Inc. The floor is yours, Mr. Segreto.

Thank you, Didi. Good afternoon, and welcome to the 2020 Special Meeting of the Stockholders of SPAR Group, Inc. I'm James Segreto, Chief Financial Officer, Secretary and Treasurer of the Corporation. At the direction of the Corporation's Board of Directors, I will act as the Chairman of the meeting. If any shareholder present have not voted or wish to change their votes, please do so at your earliest as we will be closing the polls shortly. I would like to introduce the other officers and directors of the corporation who are present at this virtual meeting. Christiaan Olivier, Chief Executive Officer, President and Director; Art Drogue, Chairman and Director, Member of the Governance, Audit and Compensation Committees and is the Chairman of the Special Committee -- of the Audit Committee; William Bartels, Vice Chairman and Director; Eric McCarthy, Director and Chairman of the Governance Committee; Art Baer, Director and Chairman of the Audit Committee; Jeffrey Mayer, Director and Chairman of the Compensation Committee; Peter Brown, Director; Panos Lazaretos, Director; Robert Brown, Director. Also with us today are Kori Belzer, Chief Operating Officer; Gerry Marrone, Chief Revenue Officer; Steve Adolph, President of International; and Husam Mufti, Chief Technology Officer; Lawrence Swift, General Counsel of Corporation; and David Mossberg, President of Three Part Advisors, the company's Investor Relation firm. Later there will be time available to address any questions provided prior to this meeting. And again, if any shareholder present have not voted or wish to change their votes, please do so at this time. As we bring the meeting to order, I would like to point out that some of the statements and responses that you are about to hear may be forward-looking in nature and, as a result, are covered under the Private Securities Litigation Reform Act of 1995. These statements and responses involve degree of risk and uncertainty which must be taken into account in assessing the information you hear today together with additional forward-looking statements, risk factors and other risks, cautions and information contained in the annual report on Form 10-K filed with the SEC on April 14. I would like to conduct the formal portion of the meeting to consider the matters described in the proxy statement sent to you on or about April 3, 2020. The Board of Directors has elected Kori Belzer to be Secretary of the meeting and record the minutes. Before considering the business to be taken at the meeting, I would now like Kori to report on the formal steps taken in connection with the meeting. Kori?

Thank you, Jim. The Board of Directors has adopted resolutions providing that this meeting be held today, fixing the close of business on February 24, 2020, as the record date for the determination of the stock stockholders entitled to notice of and to vote at this meeting and directing that Mr. Segreto act as Chairman, that I act as Secretary and that Mr. Swift act as inspector of election for this meeting. I hereby present to the meeting a certified list of stockholders of the corporation entitled to notice of and to vote at the meeting, which list was compiled by Computershare, the corporation's transfer agent. This list shows that as of the record date, there were outstanding 21,102,335 shares of common stock. Each share of common stock entitles the holder thereof to 1 vote on the matters to be voted on at the meeting. I also present to the meeting affidavit signed by William Valentin of Computershare, to which there is attached, among other things, a notice of annual meeting of stockholders. The affidavit states that the notice of meeting was mailed on or about April 3, 2020, to each holder of common stock of record as of the close of business on the record date of February 24, 2020. Before I close the voting poll, if there are any stockholders on this call who have not filed their proxies by mail or online before this meeting, please do so now by accessing online voting at www.envisionreports.com\sgrp. If there are any stockholders on this call who have filed their proxies and now desire to change their vote, please do so now by accessing online voting at, again, www.envisionreports.com\sgrp. I'd now like to transfer the call back to Jim.

Thank you, Kori. The Board of Directors has directed that Lawrence Swift, General Counsel for the corporation, to act as the inspector of elections for this meeting and conduct any vote of ballot that may be taken at the meeting. The Secretary has delivered to the inspector of election, the list of stockholders of the corporation entitled to vote at the meeting. Will the inspector of elections please canvas the meeting and determine the number of shares of common stock that are present in person or by proxy at this meeting and entitled to vote, Larry?

[ Mark ], can you please confirm the number of shares?

There are 16,757,353 shares of common stock currently represented by...

I'm sorry, 16,753,000?

757,353.

Okay. Thank you. The certificate and report indicates that 21,102,335 shares of common stock are outstanding, at least 10,551,168 shares must be represented at the meeting in person or by proxy, which constitutes more than 50% of the total issued and outstanding. The 16 million is well in excess of that number. Therefore, a quorum is present at the meeting.

Thank you, Larry.

Now I will pass the call back to Jim.

Here you go. Thank you, Larry. The first item on the revised agenda is Proposal #4, a vote on the stockholder proposed Amendment #2 to SGRP's current bylaws that would require the Board to have a majority of independent directors as newly defined in the proposed amendment as requested by Mr. Robert Brown and related parties.

Mr. Chairman, this is Steve Adolph. As an officer and stockholder of record of the corporation and at the request of a majority of the Board of Directors and the Governance committee, I move to reject and vote against Amendment #2 to the corporation's bylaws.

Mr. Chairman, my name is [ Mark Patelino ], and as a stockholder of record of the corporation, I second the motion to reject and vote against Amendment #2 to the corporation's bylaw.

The next item on the agenda is the Proposal #5 to authorize on an advisory basis to grant authority to the Board to increase the size of the Board without further stockholder action if the Board deems reasonably necessary for a majority of Board independence as recommended by a majority of the Board of Directors and its Governance Committee.

Mr. Chairman, this is Steve Adolph, again. And as an officer and stockholder of record of the corporation and at the request of a majority of the Board of Directors and the Governance Committee, I move for approval and vote for on an advisory basis of the proposal to authorize the Board to expand its size.

I second the motion.

The third item on the agenda, Proposal #6 is the ratification and approval of the 2020 stock compensation plan as recommended by the Board of Directors and its Compensation Committee.

Mr. Chairman, as an officer and stockholder of record of the corporation, and at the request of a majority of the Board of Directors and the Governance Committee, I move for approval and vote for the 2020 stock compensation plan.

I second the motion.

The fourth and last item on the agenda is Proposal #7 to vote on the stockholder proposal to increase the Board size by 1 additional director if no vacancy then exists on the Board and to elect James R. Brown Sr. as a Director of SGRP to serve until the next annual meeting of the stockholders and until his successor is elected and qualified, as requested by Mr. Robert Brown and related parties.

Mr. Chairman, as an officer and stockholder of record of the corporation, and at the request of a majority of the Board of Directors and the Governance committee, I move to reject and vote against the proposal to increase the size of the Board by 1 additional Director if no vacancy then exists on the Board and to elect James R. Brown Sr. as a Director of SGRP to serve until the next annual meeting of Stockholders and until his successor is elected and qualified.

I second the motion.

There being no further formal business to come before the meeting, I now call for votes on the proposals under consideration. Again, those present in the meeting that still need to vote or wish to change their votes, needs to do so within the next 3 minutes. We'll go silent for a few minutes to accommodate the voting, and I'll come back. [Voting]

Hello, everyone. I declare the polls closed. [ Mark ], will you please collect the ballots and tally the votes and provide them to the inspector, and we'll wait another minute or so until that happens. Thank you. Mr. Swift, as the inspector of elections, have you completed the tally of the ballot?

Just about. We have the raw numbers, and I can proceed with them by class, as you like. Someone will have to add up the individual numbers for the totals. But for Proposition #4, is that where we would like to begin?

Yes, please.

We have 8,881,631 for. We have 329,235 against. We have 4,682,309 extensions, but this will not be counted. And non votes, we have 2,935,178, which will be counted against.

Larry?

Yes.

Excuse me.

The extensions also will be counted against pending further clarification. Go ahead.

The first 3 items are not valid. Even though individuals may have voted, you should go to Proposal #4 with the Amendment #2.

I don't have -- which is the second box?

Third box -- fourth box down.

Fourth box down. Amendment #2. 4...

Proposal #4 that is valid. Thank you.

Right. This is 13,332,695 for; 550,883 against; 9,597 abstain; and 2,935,178 non votes, which would also be added into the against, and so it passes.

As a majority of the votes cast and entitled to vote on this proposal were for approval of Amendment #2 to the corporation's bylaws, this proposal was approved.

All right. The next category is the proposed size of the Board that is giving the Board the authority to increase the Board if NASDAQ requires it. For that proposal 1,219,087 against the NASDAQ proposal, 15,591,974 abstain; 172,920 non votes.

As a majority of the votes cast and entitled to vote on this proposal were against providing authorization to the Board to expand its size under such circumstances, this proposal was not approved.

For the 2020 stock compensation plan: for 314,459; against 13,503,255; abstain 75,461; and non votes 2,935,178, both of which will be included in against.

As the majority of votes cast and entitled to vote on this proposal were against approval of the 2020 stock compensation plan, that plan was not approved.

And the final proposal, which was the increase in the Board size of 1 and the election of James Brown as a Director to the SPAR Board: for 8,209,539; against 5,663,363; abstain 20,453; and non votes, 209 -- rather 2,935,178, the last of which will be included in against.

As a majority of the cast and entitled to vote on this proposal were against the increase in the size of the Board by 1 additional Director and to elect Robert -- James R. Brown Sr. as a Director of SGRP, this proposal was not approved. There is no other business to be brought before the special meeting. I would now like to address questions presented before the meeting. Dave Mossberg, will you manage this process for us, please?

Jim, I'm showing no questions at this time. So I'll turn the call back to you.

Thank you. There being no other business recommended for this meeting by the corporation's Board of Directors and applicable committees, I will now entertain a motion to adjourn the meeting.

I move to adjourn the meeting.

I second the motion.

The motion duly made and seconded, the meeting is adjourned. I would like to thank you all for attending the 2020 Special Meeting of Stockholders of SPAR Group, Inc., and I look forward to your being present at the 2020 Annual Meeting on May 13, again, in a virtual format. Good day. Thank you.

Thank you, Mr. Segreto. Today's webcast has concluded. You may disconnect at this time.