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

Hello, and welcome to Verisign's 2021 Annual Meeting of Stockholders. It is now my pleasure to turn the meeting over to Jim Bidzos of Verisign. Jim, the floor is yours.

Thank you, operator. Good morning, and welcome to today's meeting. I hope all of you are well and staying safe and healthy. I am 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 10:00 a.m., and I note that the polls are open, and I now call the meeting to order. I would like to thank all of you for joining us today by webcast. As described in our proxy materials, we have made the decision to again hold this meeting as a virtual meeting rather than an in-person meeting in light of continuing concerns related to COVID-19. This has been a difficult situation for many Verisign employees, stockholders and their families. As the pandemic has continued, Verisign has continued to take actions to protect our people, manage our operations, support our communities and help small businesses. For information on these actions, we encourage you to refer to our company blog available verisign.com. You may vote your shares online at any time during this meeting before the polls close. If you've previously voted via the Internet, telephone or the return of your proxy card, you do not need to vote today unless you wish to change your vote. The polls will close following 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 Indelicarto 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. Schedd 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 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. Tom?

Thank you, Jim. Based on an affidavit provided by Computershare, notice of this meeting was mailed on April 13, 2021, to each stockholder of record as of April 1, 2021. 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 the stockholders of record entitled to vote at this meeting is available for inspection by such stockholders during the 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 receive notice of any other proposals or nomination within the deadline provided for in our bylaws, which was February 20, 2021, and therefore, no other nomination or proposal may be presented at this meeting. The first proposal in the election of -- 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 biographies and skills were included in our proxy statement are: 1, myself; #2, Ari Buchalter; #3, Kathleen Cote; #4, Thomas Frist, III; #5, Jamie Gorelick; #6, Roger Moore; #7, Lewis Simpson; and #8, 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 2021. I have been advised by Mr. Muller that KPMG does not have a prepared statement to make at this meeting, but he is available to respond to any questions for KPMG. The fourth and last proposal is a 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.

This is John Chevedden. Can you hear me okay?

Yes, we can hear you, Mr. Chevedden.

Proposal 4, shareholder right to act by written consent. Shareholders request that our Board of Directors take the necessary steps to permit written consent by the shareholders entitled to cast a minimum number of votes that would be necessary to authorize an action at a meeting in which all shareholders entitled to vote thereon were present and voting. This proposal topic won 95% support at Dover Corporation and 79% support at Xerox. This proposal also won our 43% support at the 2020 Verisign Annual Meeting. This 43% support may have represented a majority vote from the shares that have access to objective proxy voting advice. Management talks about shareholder engagement. If this shareholder engagement was genuine, it would report today whether this 43% support was majority support from the shares to have access to objective proxy voting advice. Plus the 2020 proposal did not point out that our management was apparently ignorant of the elementary fact that written consent can be structured so that all shareholders get advanced notice of a proposed action. Management promotes the fallacy that shoulder should be complacent about improving management accountability to shareholders with this proposal simply because we have an average list of standard and governance practices that a lot of other companies have had for years. Management promotes the fallacy that shareholders should be restricted to only 1 formal means to raise an issue between annual meetings, the calling of a special shareholder meeting. And management now suspiciously claims that it's more in favor of a special shareholder meeting at a time that shareholder meetings are losing their impact with the onslaught of online shareholder meetings. For instance, the Kohl's Annual Meeting last week was 9 minutes. An example of the dominance that management can now display at an online shoulder meeting is AT&T, which would not even let shareholders speak at 2 consecutive online shareholder meetings. Written consent is a super democratic process because if a shareholder does not support the written consent topic, the shareholder does not have to do anything and it accounts as against vote. This is in contrast to a shareholder meeting where shareholder support or shareholder opposition accounts for nothing unless the shareholder makes the effort to vote. The shareholders supporting written consent could only accomplish their objective if 64% of the shares that normally voted at annual meeting give approval. In resisting this proposal, management is opposed to listening to the voice of 64% of shares. Please vote yes shareholder right to act by written consent, Proposal 4.

Okay. Thank you, Mr. Chevedden. Operator, you may now mute Mr. Chevedden 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 on Page 49 of our proxy statement. At this time, the window to submit questions on the proposals 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?

Yes, Jim. The first question comes from Hank Sorensen of the Carpenter Funds. And the question is, could you or the Chair of the Compensation Committee address the rationale for the relatively short 4-year ratable vesting schedule of the time based restricted share units awarded senior executives.

Yes, I can answer that question. The 4-year vesting applies to employees. 4 years is consistent with peer company vesting schedules and the market in general.

Okay. The next question also comes from Hank Sorensen of the Carpenter Funds. Could the Chair of the Audit Committee or the representative of KPMG describe the lead audit partner rotation process and indicate who makes the decision and the selection of the new lead engagement partner? And I will have Hugh Mohler from KPMG answer this question.

Thank you, David. Yes, very briefly, I think, ultimately, the decision rests with the Audit committee through recommendations from senior financial management is essentially how the process works.

Great. And the last question, Jim, comes from the initial S. Has the method of determining incentive pay for the CEO changed in the past 12 months due to COVID or otherwise?

No. The method for determining incentive pay for the CEO has not changed in the past 12 months due to COVID or otherwise. As described in our proxy statement, the Compensation Committee did not make significant changes to its overall approach to executive compensation for 2020.

Great. Thank you, Jim and Hugh. Jim, there are no other questions applicable to the proposals before the annual meeting.

Thank you, David. It is now 10:11 and seeing that there are no additional 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 executive compensation. The stockholders have ratified the selection of KPMG as our independent registered public accounting firm for 2021. 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. There is no other item of business to come before today's meeting, so 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 it back over to you.

This concludes the meeting. You may now disconnect.