The Mosaic Company (MOS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to The Mosaic Company's 2020 Annual Meeting of Stockholders. This meeting is being held virtually. If you are a stockholder and entered your 16-digit control number when joining the virtual meeting, you are able to ask questions using the Ask a Question box that appears on your computer screen. Your Chair for today's meeting is Mr. Greg Ebel. Mr. Ebel, you may begin.

Thank you very much. Good morning, ladies and gentlemen. I'm Greg Ebel, Chair of the Board of Directors of The Mosaic Company, and I'll be chairing today's meeting. It is my pleasure to take part in this 2020 Annual Meeting of Stockholders of The Mosaic Company and to extend a special welcome to our stockholders who are joining us via the web in our virtual stockholder meeting. We appreciate your support and interest in Mosaic and are pleased you are able to be with us today. The annual meeting is now called to order. The polls are open and will remain open until the conclusion of the remarks from Joc O'Rourke, Mosaic's President and Chief Executive Officer, later in this meeting. Joining me today are Mr. O'Rourke; and Mr. Mark Isaacson, Mosaic's Senior Vice President, General Counsel and Corporate Secretary, who will serve as secretary of this annual meeting. In addition, I would like to take this opportunity to introduce Mosaic's Board of Directors who are also attending today's annual meeting: Cheryl Beebe, retired former Executive Vice and Chief Financial Officer of Ingredion; Oscar Bernardes, Managing Director, Yguapora Consultoria e Empreendimentos; Nancy Cooper, retired former Executive Vice President and Chief Financial Officer of CA, Inc.; Timothy Gitzel, President and Chief Executive Officer of Cameco Corporation; Denise Johnson, Group President, Resources Industry Group, Caterpillar, Inc.; Emery Koenig, retired former Vice Chairman, Chief Risk Officer and member of the corporate leadership team of Cargill Inc.; William Monahan, retired former Chair of the Board, President and Chief Executive Officer of Imation Corp. Mr. Monahan is not standing for reelection and I will speak to that a little later in the meeting. And of course, James 'Joc' O'Rourke, Mosaic's President and Chief Executive Officer; David Seaton, former Chair and Chief Executive Officer of Fluor Corporation; Steve Seibert, Principal of The Seibert Law Firm in St. Petersburg, Florida; Luciano Siani Pires, Chief Financial Officer of Vale S.A.; and Kelvin Westbrook, President and Chief Executive Officer of KRW Advisors, LLC. As Chair, I know how dedicated our Board is, and I'd like to express my appreciation to all of our directors for their years of service to Mosaic. I'm also pleased to introduce Gretchen Watkins, President of Shell Oil Company and Executive Vice President, Global Shales, who is a nominee for election as a director for The Mosaic Company. I'd now like to turn the microphone over to Mr. Joc O'Rourke to introduce his senior leadership team.

Thank you, Greg. It is my pleasure to introduce Mosaic's senior leadership team, who are all with us here at today's annual meeting. Clint Freeland, Senior Vice President and Chief Financial Officer; Bruce Bodine, Senior Vice President, North America; Mark Isaacson, Senior Vice President, General Counsel and Corporate Secretary; Chris Lewis, Senior Vice President, Human Resources; Rick McLellan, Senior Vice President, Commercial; Ben Pratt, Senior Vice President, Government and Public Affairs; Walter Precourt, Senior Vice President, Strategy and Growth; Corrine Ricard, Senior Vice President, Mosaic Fertilizantes; and Karen Swager, Senior Vice President, Supply Chain.

Thank you, Joc. We now turn to the formal proceeding of today's meetings, which are governed by Delaware law and our bylaws. Mark, would you please report to us the number of stockholders present in person or by proxy at this meeting?

Thank you, Greg. The appropriate notice of this meeting and proxy materials were first mailed on April 8, 2020, to stockholders of record of Mosaic's common stock on March 24, 2020. A list of stockholders eligible to vote has been available for inspection since March 31, 2020. As of the record date, there were 379,020,281 shares of our common stock outstanding and entitled to vote. Over 83% of Mosaic's common stock is represented today in person or by proxy, and accordingly, a quorum is present. In addition, the necessary affidavit of mailing and the oath of the inspector of election have been filed.

Thank you, Mark. Now I'd like to briefly review the proposals before the meeting today. If you are a stockholder and entered your 16-digit control number when joining the virtual meeting, please submit any questions you have regarding their proposals as they are presented using the Ask a Question box that appears on your computer screen. The first proposal is the election of directors. Ms. Beebe, Mr. Bernardes, Ms. Cooper, Mr. Gitzel, Ms. Johnson, Mr. Koenig, Mr. O'Rourke, Mr. Seaton, Mr. Siani Pires, Mr. Seibert and Ms. Watkins, Mr. Westbrook and myself have been nominated for a 1-year term, ending on the date of the Annual Meeting of Stockholders to be held in 2021. All 13 of these nominations were recommended by the Board of Directors. The second proposal is the ratification of the appointment of KPMG LLP as The Mosaic Company's independent registered public accounting firm for the year ending December 31, 2020, as recommended by the Board of Directors. Bob Slappey and Mike Kopesky of KPMG are present with us today and will be available to answer questions during the question-and-answer section at the end of the meeting. The third proposal is a nonbinding say-on-pay advisory vote on compensation paid to our named executive officers as disclosed in the proxy statement for this meeting. The Board of Directors has recommended that stockholders approve, on an advisory basis, the compensation of Mosaic's named executive officers, as described in the compensation discussion and analysis section, the compensation tables and the related narrative disclosures in the proxy statement for this annual meeting. The fourth and final proposal is consideration of a stockholder proposal, if properly presented at this meeting. The stockholder proposal regarding adoption of a written consent right was submitted by Mr. Kenneth Steiner. I understand that [ Ms. Cam Franklin ] is on the line with us today and will speak on behalf of Mr. Steiner. [ Ms. Franklin ] will have 3 minutes to present the proposal. Operator, please open the line for [ Ms. Franklin ].

[ Ms. Franklin ], please proceed.

Good morning. Proposal 4, adopt a mainstream shareholder right, written consent sponsored by Kenneth Steiner. Shareholders request that the Board of Directors take the steps necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 large companies in a single year. This included 67% at both Allstate and Sprint. This proposal topic also won 63% support at Cigna in 2019. This proposal topic would have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice. The right for shareholders to act by written consent is gaining acceptance as a more important right than the right to call a special meeting. This also seems to be the conclusion of the Intel Corporation shareholder vote at the 2019 Intel Annual Meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However, Intel shareholders responded with greater support for written consent in 2019 compared to 2018. After a 45% vote, less than the majority vote, for a written consent shareholder proposal, the Bank of New York Mellon Corporation said it adopted written consent in 2019. Taking action by written consent is a means shareholders can use to raise important matters outside the normal annual meeting cycle, like the election of a new director. Now is a good time to make the corporate governance of Mosaic Company more competitive since the price of stock has fallen sharply from the price of $50 in 2015. Please vote yes, adopt a mainstream shareholder right written consent, proposal #4. Thank you very much.

Thank you very much, [ Ms. Franklin ]. The Board of Directors recommends a vote against this stockholder proposal for the reasons set forth in our opposition statement included in our proxy. We have now reviewed the 4 proposals before the meeting. Most of you have returned proxies authorizing the persons named on the proxy card to vote on your behalf. But if you wish to now revoke that proxy or if you wish to vote and did not return your proxy card, please cast your votes electronically if you wish to do so. [Voting]

Before Joc takes the podium to provide a recap of Mosaic's key milestones in 2019 as well as the future outlook for both Mosaic and the crop nutrient industry, I need to take a moment to say that the statements made during our meeting today will contain forward-looking statements about, among other things, future financial and operating results. These are based upon management's beliefs and expectations as of today and are subject to significant uncertainties. Mosaic's actual results may differ materially from those projected. Additionally -- and additional information concerning factors that could cause actual results to differ materially from those shared today is included in our reports filed with the SEC. Joc?

Thank you, Greg. Before I begin, I would like to express my hope that all of you and your families are safe and healthy. The COVID-19 pandemic is an extraordinary global challenge and its human impacts, both direct and indirect, continue to increase every day. I will come back to the virus and how we are addressing it at Mosaic. I will briefly review the 2019 Mosaic and first quarter 2020 performance. I will focus my comments on the current environment and our outlook, so let's move to presentation. We entered 2019 expecting a strong spring in North America and generally good business conditions throughout the year. Instead, North American farmers faced the wettest spring in at least 50 years. With fertilizer inventories running high, [indiscernible] The business in South America is performing extremely well, and we're on track to achieving an additional $200 million of improvements over the next 5 years. We're actively evaluating potential additions to our product portfolio. We're continually enhancing the efficiency of our corporate functions. Currently, we are working to create a global shared service function. Our asset optimization continues, and we continue to manage capital effectively. We've built a cushion of over $1 billion in cash so that we can deal with potential issues during the pandemic. And we continue to operate responsibly. We have recently invested $1.5 million in the communities where we live and work to help with food and medical supply relief for COVID-19. Responsible operation requires broad commitments and we are meeting ours. For example, in total, we invested over $12 million in our communities each year. We're reclaiming mine land in Florida efficiently. We're increasing crop yields through growing sales of our MicroEssentials product. We're helping to educate retailers and farmers on the proper use of our product, and most importantly, we are delivering record safety performance. Our first priority is returning each of our people home safely every day. And on that, we have made tremendous progress. To conclude, Mosaic is in an excellent position to perform well across market cycles and to fulfill our critical mission of helping the world grow the food it needs. Now I will turn the meeting back over to Greg.

Thanks very much, Joc. Before I turn to the reporting results, I'd like to express our appreciation to Bill Monahan for his years of service on the Mosaic Board of Directors. Bill joined our Board in October 2004 and served as the Chairman of our Compensation Committee from the time the company was organized in October 2004 through December 2018 and has been an excellent board colleague over his many years of service. Bill, we certainly appreciate your experience, contributions and friendship over these years. Your endless dedication to the company and this industry has been of great value to the company and to our Board. And on behalf of the Board and the company, I wish you well in your future endeavors. You will be greatly missed. I turn now to the announcement of the voting results. The polls have closed and the votes on the 4 proposals have been tabulated. Mark, as secretary of this meeting, will you please report the results?

Mr. Chair, I have been informed by the inspector of election that with respect to proposal #1, each of the Board nominees has received over 93% of the total votes cast in favor of his or her election to the Board. With respect to proposal #2, ratification of KPMG as Mosaic's independent registered public accounting firm has been adopted by more than 98% of the total shares voted. With respect to proposal #3, the advisory vote on executive compensation, the compensation of Mosaic's named executive officers, as described in Mosaic's proxy statement for this meeting, has been approved by more than 88% of the total shares voted. And proposal 4, the stockholder proposal regarding adoption of a written consent right has received the support of approximately 36% of the votes cast and therefore did not receive enough votes to pass.

Thanks, Mark. Based on the results, I'm pleased to declare that each of the director nominees has been elected to the Board for a 1-year term. The appointment of KPMG as our independent registered public accounting firm for the year ending December 31, 2020, has been ratified. The advisory vote on the executive compensation has been approved. And the stockholder proposal regarding adoption of a written consent right has failed to pass. The final results will be recorded in the minutes of this meeting, and the final tabulation will also appear in our Form 8-K to be filed later this week or early next week. That concludes the formal business for today, and I thank you for your participation in the voting process. At this time, Joc and I would be pleased to respond to any questions from stockholders. If you have questions or comments, are a stockholder and entered your 16-digit control number when joining the virtual meeting, please submit your question online in the Ask a Question box that appears on your computer screen. Are there any questions at this time?

There are no questions at this time.

Thank you. Seeing that there are no questions to be answered, this does conclude Mosaic's 2020 Annual Meeting of Stockholders. Before we adjourn, I want to express my appreciation to all of you for your continued support and for joining us for today's annual meeting. I'd also like to thank Mosaic's dedicated employees and directors, all of whom have stepped up to ensure the continued safe and continuous operation of your company during these challenging COVID-19 times. Is there a motion to adjourn?

So moved.

Is there a second?

Second.

Thank you. This meeting is now adjourned. Thank you very much. Have a great day and stay safe.

Thank you for participating. You may disconnect at this time.