Travel + Leisure Co. (TNL) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Wyndham Destinations, Inc. Annual Meeting. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Jim Savina. Sir, please go ahead.

Thank you. Good afternoon. My name is Jim Savina. I am the General Counsel, Chief Ethics and Compliance Officer and Corporate Secretary of Wyndham Destinations, Inc. Welcome to our 2020 Annual Meeting of Shareholders, and thank you for joining us here today. We have already supplied each shareholder with access to a copy of the proxy statement and annual report on Form 10-K. Copies of these documents are also available to any shareholder via the web portal. Before we begin the formal portion of the meeting, let me please call your attention to the agenda and rules of conduct set forth on the web portal. We plan to conduct the meeting according to the agenda and ask that you please abide by the rules of conduct. After we complete the formal business portion of the meeting, our President and Chief Executive Officer, Michael Brown, will make a few remarks, and then there will be a general question-and-answer period for questions relating to the corporation's business. Only validated shareholders may ask questions in the designated field on the web portal. Out of consideration for others, please limit yourself to 2 questions. Please note that this meeting is being recorded. However, no one attending via the webcast is permitted to use any audio recording device. And now to begin the formal portion of the meeting, I am pleased to introduce Steve Holmes, Chairman of Wyndham Destinations, Inc. Steve?

Good afternoon, and thank you for taking the time to join us today. In accordance with the Notice of the Meeting, I would like to call this meeting to order. First, I'd like to introduce the following individuals attending today's meeting, in addition to Jim Savina, who was just speaking: Michael Brown, President and Chief Executive Officer; and Michael Hug, Executive Vice President and Chief Financial Officer. I would also like to recognize our fabulous Board of Directors attending today's meeting: Louise Brady, James Buckman, George Herrera, Denny Marie Post, Ron Rickles and Michael Wargotz. On behalf of the shareholders, I want to thank our directors for their significant dedication and commitment to the corporation and its shareholders. I would also like to recognize other members of the senior executive management team present today as well as the representatives from our independent registered public accounting firm present today. We have Noah Brodsky, our Chief Brand Officer; Olivier Chavy, President of RCI Exchanges; Brad Dettmer, Chief Information Officer; Kim Marshall, Chief Human Resource Officer; Jeff Myers, Chief Sales and Marketing Officer for Wyndham Vacation Clubs; Geoff Richards, Chief Operating Officer of Wyndham Vacation Clubs; Barry Robinson, President and Managing Director, International Operations, Wyndham Vacation Clubs; and from Deloitte & Touche LLP, John Zamora and Phil Nix. At this point, I will call upon the Corporate Secretary to give his report. Jim?

Thank you, Mr. Chairman. In order to conduct the formal business of the meeting, it is necessary to establish that Notice of the Meeting was duly and properly mailed and that a quorum is present. To this end, the corporation has appointed [ Beth Vanderbeck ] as inspector of election for this meeting. [ Ms. Vanderbeck ] is with us today and has previously signed an oath to execute the duties of inspector of election with strict impartiality and according to the best of her ability. Now for the establishment of meeting requirements. With respect to the notice requirement, I have in my possession a list of shareholders of common stock of Wyndham Destinations, Inc. as of March 20, 2020, the record date for this meeting; and an affidavit of Broadridge Financial Services, the corporation's proxy tabulator, affirming that the mailing of the notice, of Internet availability of proxy materials, to all shareholders of common stock of Wyndham Destinations, Inc., entitled to vote at this meeting. Each of these documents will be filed with the records of this meeting, and the list of shareholders is available for inspection on the web portal. With respect to establishment of a quorum, the inspector of election has reported that there were 85,134,818 shares of common stock outstanding at the record date and that holders of about 73,495,309 shares, which equals 86.32% of that total common stock entitled to vote, are represented at this meeting. Based on that report, I hereby recognize the presence of a quorum for purposes of proceeding with the business of the meeting. Please note that your designated proxies are different this afternoon and that you do not need to vote via the web portal if you previously sent your proxy or voted. Any shareholders who have not voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following those instructions. Please remember that only holders of shares of common stock held as of March 20, 2020, may vote at this meeting. Thank you for cooperation. And with that, I will pass it back over to our Chairman to conduct the formal business of the meeting. Steve?

I'm sorry. Thanks, Jim. As stated in the proxy statement for this meeting, there are 3 items on the agenda to be voted on today. Please note that we will give shareholders an opportunity to comment on the proposals themselves after all proposals have been presented. Proposal #1 is the election of 8 directors to serve until the 2021 Annual Meeting of Shareholders of the corporation until their successors are duly elected and qualified. The following directors have been nominated by the Board of Directors: myself, Louise Brady, Michael Brown, James Buckman, George Herrera, Denny Marie Post, Ronald L. Rickles and Michael Wargotz. Proposal #2 is the approval of nonbinding advisory resolution to approve executive compensation. And proposal #3 is the ratification of the appointment of Deloitte & Touche LLP to serve as Wyndham Destination, Inc.'s independent registered public accounting firm for the year ended December 31, 2020. The Board of Directors recommends a vote for proposals 1, 2 and 3. Before I open the floor for discussion of the proposals, please note that general shareholders' questions will be answered after completion of the business of the meeting, so please wait until then to comment unless you are discussing these proposals. The floor is now open for discussion on these proposals. If you have a comment or question on these proposals, please submit your comment or question through the web portal. We received one question that pertains to these proposals, and it pertains to Proposal #1. And it comes from the carpenter union, where they say: "The carpenter union pension fund has combined assets of $70 billion with a collective ownership position of 344,516 shares of the company's common stock. As long-term investors, we appreciate the company's aggressive actions to address employee and guest safety issues and the challenges being experienced by first responders related to the COVID-19 pandemic. As the pandemic continues to impact markets, we suggest the Board reconsider the sunsetting of the classified Board structure to help protect the long-term strategic perspective that will be critically important. While early, does the Board anticipate any necessary governance reforms in the near term to better equip it to meet the considerable challenges ahead? Thank you." Now that question is somewhat generic, but it does relate to the vote we just took on -- the vote that we are taking on the 8 directors. And the answer to that is, we appreciate your support and your long-term investment in our company. We also appreciate your commentary around how we've responded to the pandemic. And we are constantly looking at governance. We have a very active governance committee chaired by George Herrera that looks at all aspects of necessary governance and governance changes. So I have nothing to report now, but I do appreciate your thought and concern and your support for the company. Okay. Are there any other questions? Okay. I don't think there are any that relate to those motions, so we'll go to opening the polls for voting. Any shareholder who hasn't yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in proxies or voted via telephone or Internet or do not want to change their vote do not need to take any further action. [Voting]

Now that everyone has had the opportunity to vote, I declare the polls for the 2020 Annual Meeting of Shareholders closed. That concludes the matters to be voted upon. I will now ask the Corporate Secretary to report on the preliminary results of voting.

Thank you. For Proposal #1, the election of directors, each nominee received votes representing at least 95.72% of the shares present at the meeting, so each of the nominees is declared duly elected. For Proposal #2, the approval of nonbinding advisory resolution to approve our executive compensation program, 94.34% of the shares present at the meeting were cast in favor of the proposal, so that proposal is also declared approved. Finally, for Proposal #3, ratification of Deloitte & Touche as the corporation's independent registered public accounting firm for the year ending December 31, 2020, 96.14% of the shares present at the meeting were cast in favor of ratification, so that proposal is declared approved. With the conclusion of the official business, this meeting is now adjourned. Our President and Chief Executive Officer, Michael Brown, will now provide a few remarks followed by a brief question-and-answer session. Mike?

Well, thank you, everyone, for attending today. Just last week, we held our first quarter earnings call and shared our results year-to-date and our plan going forward. Although our plan was clearly laid out on that call and in our release, I want to reiterate my confidence in our business model, its resiliency founded in the strength of leisure travel and its recurring revenue streams and the strength of our balance sheet and overall liquidity. As those common elements were discussed last week, I would like to dedicate my comments to our customer and associate focus. 2 years ago, when we became a public company, we laid out our strategic pillars. The first of these pillars was customer obsession. It's centered around increasing our owners' and members' satisfaction and utilization of their ownership. It also guided our investment in our business that would keep up with the rapidly changing and evolving consumer demands, especially on the digital and data front. We made significant progress on all fronts in 2019, but the urgency and importance around the customer obsession pillar has never been more important than it is now in the midst of COVID-19. While the economy has virtually stopped, we have used this time to accelerate our initiatives to make booking our owners' and members' vacation a priority. The on-site resort experience has been elevated, and ongoing service of your ownership and membership experiences are being elevated. The ability to focus all of our energy on these efforts during the downturn has been a found silver lining in the midst of this turmoil. I am confident our 880,000 owners and nearly 4 million members will see the benefits of our efforts as we move through 2020. Our Wyndham Vacation Clubs and RCI business are hard at work and will be ready as countries and states begin to reopen. I also want to thank our associates. While COVID-19 has noticeably impacted travel and tourism in our business, our associates have demonstrated that true hospitality spirit, whether it has been rebooking thousands of reservations, completing significant resort renovations that are difficult during high occupancy periods, developing new product offerings for rollout or simply that our call center agents are available to answer questions, our associates around the globe have been there and been there in an enthusiastic way. In a very short time, our associates moved to a work-from-home model seamlessly. While our associates kept our business working, what I've been most proud of is how they have used this time to give back to our communities. Daily, I have the honor of seeing our associates give back, whether it be in community food donations, providing rooms for first responders or providing supplies to local hospitals, our team's commitment to be good citizens of their communities has shown through. Thank you, once again, to our associates and to each of you as shareholders. With that, I would like to open the floor for general questions from shareholders. If you have a question, please submit your question through the web portal. Please note, we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. Any questions that we do not get to will be addressed on our company website. We'll pause for questions.

Okay, Mike. I see there is another question, which I will address to you, even though it says Mr. Chairman. The recent dramatic growth in the size of passive mutual funds, corporate ownership interest in -- I'm sorry, let me start that again. The recent dramatic growth in the size of passive mutual funds, corporate ownership interest in U.S. corporations raises important public policy and corporate governance issues. Currently, BlackRock and Vanguard each hold in excess of 9% of the company's outstanding shares. Does the Board see the growing ownership concentration a positive or negative development as regards long-term corporate planning and performance? Thank you. I'll give that one to you, Mike.

Thanks. It's a great question, especially with the increasing relevance of passive investment. BlackRock and Vanguard are both great investment houses, and we very much appreciate their participation in our stock. I'd take the moment to note that, on an annual basis, we have a program where we have an outreach to our top shareholders, our largest shareholders, to get feedback on our performance and corporate compensation. We do that survey annually and have taken their comments on board, as you've recently seen in both Glass Lewis' and ISS' reports. So very pleased with their involvement and pleased with their general approach around ESG and view it as an overall positive, their participation in Wyndham Destinations.

Okay. Thanks, Mike. And I believe that is all the questions that we have. So I will turn the call back over to you to close it up, Mike.

Well, as you pointed out, Steve, that appears to be all the questions that we have at the moment. I'd like to thank each of you for attending Wyndham Destination, Inc.'s 2020 Annual Meeting.

Ladies and gentlemen, thank you for participating. This does conclude the program, and you may all disconnect. Everyone, have a great day.