VeriSign, Inc. (VRSN) Earnings Call Transcript & Summary

Hello, and welcome to the 2020 Annual Meeting of Stockholders of VeriSign, Inc. Please note that today's meeting is being recorded. Stockholders can submit questions or comments at any time by clicking on the Message icon at the top of the web page. It is now my pleasure to turn the meeting over to Jim Bidzos, Chairman of the Board, Executive Chairman and Chief Executive Officer of VeriSign. Mr. Bidzos, the floor is yours.

Thank you. Good morning, everyone. Welcome to VeriSign's 2020 Annual Meeting of Stockholders. Hope you're all well and staying safe and healthy. My name is Jim Bidzos, VeriSign's Chairman of the Board, Executive Chairman and Chief Executive Officer. I will serve as the Chair of today's meeting. It is now 10 a.m. and I call the meeting to order and declare that the polls are open. I would like to thank all of you for joining us today by webcast. As described in our proxy materials, we are holding a virtual annual meeting this year rather than an in-person meeting due to public health and travel concerns of our stockholders and other stakeholders related to the COVID-19 crisis and governmental protocols that have been imposed. We know many people are hurting due to the crisis and our hearts go out to everyone affected by it. As people work to address the global challenges posed by the crisis, VeriSign has taken actions to protect its people, manage its operations, support its local communities and help small businesses through its channel partners. For information on these actions, we encourage you to refer to our company blog available at verisign.com. You may vote your shares online at any time during this meeting before the polls close by clicking on the cast your vote link on the meeting center site. If you've previously voted via the internet, telephone or the return of your proxy card, you need not vote today unless you wish to change your vote. The polls will close immediately following the introduction of the proposals to be voted on at this meeting. Now at this time, I'd like to make some introductions. The other officers joining us remotely today are Todd Strubbe, President and Chief Operating Officer; George Kilguss, Executive Vice President and Chief Financial Officer; Tom Indelicarto, Executive Vice President, General Counsel and Secretary; and David Atchley, Vice President, Treasury and Investor Relations. Tom will serve as Secretary of today's meeting. In addition, we are also joined remotely today by Hugh Mohler and Risa Morrison of KPMG, the company's independent registered public accounting firm. And Cassandra Shedd of Computershare. Ms. Shedd has been appointed and duly sworn as the inspector of election for this meeting, who will receive proxies, count the votes and provide a report of voting results. Her oath as inspector of election has been submitted to our secretary and will be filed with the minutes of this meeting. Links to the agenda and the rules of conduct for this meeting are available on the meeting webcast screen. Please review these rules as they contain important information, including how this meeting may be adjourned if we experience technical issues. To conduct an orderly meeting, we ask that the participants abide by the rules of conduct. Should you desire to submit a question on any of the proposals to be voted on at this meeting, you may do so during this meeting, but before the closing of the polls. To submit a question, click on the message icon in the upper right-hand corner of the meeting center site and follow the instructions that appear on the screen. Only questions on the proposals to be voted on at this meeting that are consistent with the rules of conduct will be considered. We appreciate your cooperation with these rules. I will now turn it over to Tom to report on the mailing of notice of this meeting and other administrative matters.

Thank you, Jim. Based on the affidavit provided by Computershare, notice of this meeting was mailed on April 10, 2020, to each stockholder of record as of March 26, 2020. Therefore, this meeting is being held pursuant to proper notice. A copy of this affidavit will be filed with the minutes of the meeting. As required by our bylaws, a list of stockholders of record entitled to vote at this meeting is available for inspection by such stockholders during this meeting. Based on information provided by Computershare, a majority of the shares of VeriSign's common stock outstanding and entitled to vote are present or represented by proxy at this meeting. Therefore, we have a quorum for the transaction of business at this meeting.

Thank you, Tom. With that, I declare a quorum is present for the transaction of business, and this meeting is duly convened. I will now proceed with reviewing the matters to be voted on at this meeting. There are 4 proposals on today's agenda consisting of 3 management proposals and 1 stockholder proposal, all of which were disclosed in our proxy statement. Our secretary did not received notice of any other proposal or nomination within the deadline provided for in our bylaws, which was February 23, 2020, and therefore, no other nomination or proposal may be presented at this meeting. The first proposal is the election of our current Directors, each to serve until VeriSign's next annual meeting or until a successor has been elected and qualified or until his or her earlier resignation or removal. Our current directors, whose bios are included in our proxy statement are: myself; Ari Buchalter; Kathleen Cote; Thomas Frist III; Jamie Gorelick, Roger Moore, Louis Simpson and Timothy Tomlinson. The second proposal is to approve, on a nonbinding advisory basis, VeriSign's executive compensation as disclosed in our proxy statement. The third proposal is to ratify the selection of KPMG as our independent registered public accounting firm for 2020. I have been advised that Mr. Mohler does not have a prepared statement to make on behalf of KPMG but he is available to respond to any questions for KPMG. The fourth and last proposal is the stockholder proposal that was submitted by John Chevedden. I will now ask Mr. Chevedden to present this proposal for a period of up to 3 minutes. Operator, please open Mr. Chevedden's line.

Hello. This is John Chevedden. Can hear me okay?

Yes, we can.

Proposal 4: Adopt a mainstream shareholder right, written consent. Shareholders request that our Board of Directors take the steps necessary to prevent written consent by shareholders entitled to cast a 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 shareholders support at 13 large companies in a single year. This included 67% support 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, they have more shareholders that had access to independent proxy voting advice. It's more important to have written consent at VeriSign because under the current VeriSign right for shareholders to call a special meeting, it could take an overwhelming 75% of VeriSign shares to actually call a special shareholder meeting. If 75% of shares [ stilts ] the administrative burden of requesting a special shareholder meeting, then 1/3 of these shares could be disqualified because they were held for less than 1 continuous year. Then another 1/3 of shares could be disqualified because they fell short on meeting just one of the tedious requirements in the VeriSign bylaws. Only then will 25% of shares remain standing to request a special shareholder meeting after 75% of shares began that tedious process. 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's shareholders responded with greater support for written consent in 2019 compared to 2018. After a 45% vote, which is less than a majority vote for written consent shareholder proposal, The Bank of New York Mellon said it adopted written consent in 2019. Written consent won 44% support at Capital One Financial in 2018, and this increased to 56% support in 2019. Written consent won 44 -- 47% support at United Rentals in 2018, and this increased to 51% support in 2019. Please vote yes to adopt a mainstream shareholder right written consent, proposal 4.

Thank you, Mr. Chevedden. Operator, you may now mute Mr. Chevedden's line. With respect to Mr. Chevedden's proposal, the Board has reviewed the proposal and recommends that stockholders vote against the proposal for the reasons stated in our proxy statement. At this time, the window to submit questions on the proposal has closed. We will now check to see if any questions on the proposals were submitted in the queue. David, are there any questions in the queue?

Jim, there are no questions in the queue.

All right. Thank you, David. It is now 10:10. And seeing that there are no additional -- no other questions in the queue, I hereby declare the polls closed. I have been advised that the inspector of election has completed a preliminary tabulation of the voting results. I will now turn it over to Tom to report on the preliminary voting results. Tom?

Thank you, Jim. Based on the inspector of election's preliminary report of voting results, the stockholders have elected all nominated directors for another term; the stockholders have approved VeriSign's the executive compensation; the stockholders have ratified the selection of KPMG as our independent registered public accounting firm for 2020 and the stockholders have voted against the stockholder proposal.

Thank you, Tom. The final voting results will be publicly reported in a Form 8-K that will be filed with the SEC. Since there is no other item of business to come before today's meeting, this concludes our proceedings, and this meeting is now officially adjourned. We are grateful for your continued support of VeriSign and we hope all of you stay safe and healthy. Operator, I'll now turn the call back over to you.

This concludes the meeting. You may now disconnect.