Voya Financial, Inc. (VOYA) Earnings Call Transcript & Summary

Good morning, and welcome to Voya Financial 2021 Annual Meeting of Shareholders. I would now like to turn the meeting over to Rod Martin, Chairman and CEO. Please go ahead.

Good morning. Welcome to the 2021 Voya Financial Annual Meeting of Stockholders. It's 11:00 a.m. Eastern Time on Thursday, May 27, 2021, and I now call the meeting to order. I'm Rod Martin, Chairman and Chief Executive Officer of Voya Financial. On behalf of our directors, officers and employees, I thank you for attending our 2021 annual meeting. Following the official items of business, I'll provide a brief presentation and then take any questions. Now I'll ask Rachel Reid, our Corporate Secretary, to begin the formal business of the meeting. Rachel?

Thank you, Rod, and good morning, everyone. We are happy to have with us members of our Board of Directors. We also have in attendance members of our Executive Committee and representatives from our auditor, Ernst & Young. Also attending is Tracy Oats, the inspector of elections. Ms. Oats has filed with me her oath as inspector and has provided me with her duly executed certificate of quorum. With that, we will now begin the official business for this annual meeting. As indicated in our proxy statement, we are here today to consider the following items: one, the election of 9 directors to our Board of Directors for 1-year terms; two, an advisory vote on the approval of executive compensation; and three, a vote to ratify the appointment of Ernst & Young as the company's auditors for 2021. The vote will now be taken on the foregoing 3 matters. We will pause to allow shareholders to vote. [Voting]

The polls for voting on all matters are hereby closed. I have the report from Ms. Oats on the votes cast. As to the election of directors, each director nominee has received the vote of a majority of the votes cast and has been elected. As to the second matter, shareholders have approved on an advisory basis the compensation of the company's named executive officers. And as to the third and final matter, shareholders have ratified the appointment of Ernst & Young as the company's auditor for 2021. Before our Chairman and CEO, Rod Martin, provides a business update and takes your questions, I would like to remind everyone that statements made today which are not historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current expectations or beliefs. We call to your attention the fact that the company's actual results could differ from these statements. The company has filed with the SEC reports that list some of the factors that may cause results to differ materially from these statements. We assume no duty to update these forward-looking statements. Please also note that we will be discussing certain non-GAAP financial metrics. In particular, we refer to adjusted operating earnings, which is a non-GAAP financial metric. For a reconciliation of this metric to the most comparable GAAP measure, please refer to our most recent investor supplement available on our Investor Relations website. With that, I will turn it back to our Chairman and CEO, Rod Martin.

Thank you, Rachel. As noted on Slide 2, I'll be talking about some non-GAAP measures and forward-looking information. Moving to Slide 3. As the world continues to confront the many challenges related to COVID-19, the safety of our employees, their families and our customers has remained our top priority. And I'm extremely proud of our 6,000 employees and the dedication and commitment that they have shown for our customers. We continue to successfully operate with more than 95% of our employees working remotely. We have seen great versatility and adaptability among our people during the past year. And we're proud of how our employees have served our customers during this challenging time. We're now looking at how we can reimagine the way we work while best supporting our customers, employees and communities. Last year, we were the first major retirement plan provider to waive fees in response to the CARES Act. And now we're working with clients to help their employees get their retirement savings back on track. We also provided extended grace periods and flexible premium options for covered employees that were furloughed, temporarily laid off, placed on a leave of absence or faced a reduction in pay or hours due to COVID-19. We helped implement a COVID-19 Relief Planning Assistant to provide educational resources that assist in creating a personalized short-term financial plan for participants who were financially impacted by COVID-19. We also continue to support our broader communities, including giving our employees time to volunteer in their communities to make a difference at the local level. For example, we have maintained Voya's employee benefit that provides 40 hours of paid time off for volunteer work. I continue to be inspired about how our people are supporting each other, our customers and our communities in new and innovative ways. Moving to Slide 4. We've made significant strategic progress during the past year. Our actions to simplify our business include the sale of our Individual Life and legacy annuity business, which we completed in January. The completion of this transaction further solidifies our focus on serving the workplace and institutional clients. Earlier this year, we also entered into a definitive agreement with Cetera Financial to sell the independent financial planning channel of Voya Financial Advisors. This transaction will result in more than $300 million of deployable capital upon closing in the second or third quarter of this year. And earlier this month, we entered into an agreement to purchase Benefit Strategies, a leading third-party administrator of health savings and spending accounts. This acquisition supports Voya's future growth plans and will accelerate our expansion in the health savings and spending accounts market. Turning to Slide 5. As a result of the transactions that I mentioned, Voya is now a simpler company with a specific and clear strategy centered on health, wealth and investment solutions. And Voya has tremendous opportunities to grow. Our businesses give us both scale and the insight to help employers and their employees manage a variety of health and wealth needs. We are seeing an increasing demand for what we offer. The pandemic has led to individuals becoming more focused on their health and wealth needs, and as a result, employees are increasingly looking to their employer for support. We believe Voya is well positioned to meet this demand, which will enable us to provide even greater value for all of our stakeholders. Despite the economic and health challenges, we delivered both top and bottom line growth last year. Most recently, our results for the first quarter of 2021 demonstrate that we continue to operate from a position of strength, and we're targeting 8% to 12% EPS growth in 2021. At the same time, our balance sheet and capital position remain strong. We've continued to demonstrate being good stewards of shareholder capital. Specifically, we've returned $7 billion of capital to shareholders through both share buyback and dividends since our IPO. And as of March 31, we had $1.6 billion of excess capital. With a brand that's most recognized for retirement, Voya continues to stand out for its strong products and solutions as well as its ability to do even more in support of the financial needs of our customers. Moving to Slide 6. We believe that how we've achieved these results has been just as important as what we have done. Our efforts are broadly being recognized externally. For example, earlier this year, we again were named one of the World's Most Ethical Companies by the Ethisphere Institute. This is the eighth consecutive year that we've earned this distinction. We were named as one of Barron's 100 Most Sustainable Companies, ranking fifth overall and #1 in financial services for the third consecutive year. Voya was named as a Best Place to Work for Disability Inclusion on the Disability Equality Index and named to the Bloomberg Gender-Equality Index. In short, we continue to hear from our clients that our culture and the way we do business distinguishes Voya from its competitors and is helping us win new business. Moving to Slide 7. In addition to our talented employees and management team, Voya has a distinguished and diverse Board of Directors. During the past year, we welcomed both Aylwin Lewis and Yvette Butler as new independent directors. Aylwin and Yvette bring unique experience and backgrounds to our Board. Along with our other directors, they provide valuable counsel that helps ensure Voya is thinking proactively and broadly about the opportunities and challenges before us. I also want to acknowledge 2 of our former directors. Last month, Lynne Biggar stepped down from our Board. Lynne served on our Board since 2014 and has provided valuable contributions to Voya's success. And on a personal note, I'm very grateful for her guidance and her perspective. I also want to recognize the many contributions made by Barry Griswell, who passed away last year. From Voya's initial public offering in 2013, Barry was there with us, providing invaluable guidance and challenging us with his more than 4 decades of experience. Barry was a passionate proponent of our commitment to diversity inclusion, and I'm very grateful for the lasting impact that he made on Voya. Turning to Slide 8. Voya has achieved significant success over the past few years for our customers, our employees and our shareholders. The purposeful decisions that we've made as a company have enabled us to navigate this unprecedented time in a position of strength. We've demonstrated our ability to achieve EPS growth. We've delivered organic growth across our businesses, and we continue to demonstrate the responsible stewardship of capital that has been a hallmark of Voya as a public company. With our clear focus on the workplace and institutions, Voya is well positioned for continued growth and success. We're excited about the opportunities before us, and we look forward to continuing to update you during the year and at an Investor Day later this year. With that, I will turn it back to Rachel, so we can take any questions that you may have.

Thank you, Rod. At this time, we will be happy to answer any questions. We will now pause to see if there are any questions. We do have 2 questions from Gerald Matthews with the United Brotherhood of Carpenters. I'll read both questions, then turn it over to Rod Martin to answer them. The first question is a company's executive compensation plan should be designed primarily to drive the successful execution of the Board's long-term strategic business plan. Today's public company executive compensation plans are largely formulaic. Would Rod or the Chair of the Compensation Committee speak to whether Voya might be better served by an executive compensation plan tailored specifically to the company's particular circumstances and its unique long-term strategic business plan?

Good morning, Mr. Matthews. Rod Martin speaking, and I'm happy to speak to that. For 2020, annual incentive awards are primarily built around the 3 factors: adjusted operating earnings, adjusted operating return on allocated capital and strategic indicators. And this is viewed both on a 1-year basis and a 3-year basis. And it is our view that this is very much incorporating and including the long-term interest of shareholders in support of Voya's long-term objectives. I think when we look at the record of what we've accomplished, it's highly reinforcing of that principle.

Thank you, Rod. The second question is on the topic of shareholder capitalism and ESG performance factors. Could you discuss the Board's perspective on the concept of shareholder capitalism and what principles the Board uses to balance the interest of varied stakeholders as it develops and implements the company's long-term business strategy?

We've been one of the leading companies recognized by Barron's, by way of example, over the last 3 years in balancing broadly the ESG principles. In fact, we've been the highest ranked financial services company for those last 3 years, and currently, we're ranked fifth in their overall list. The Board and management is -- strongly embraced the principle of this, have incorporated that in our thinking and active discussions. And we recognize that the bar continues to be raised, and it's Voya's objective to continue to respond to that. Our interest, in our view, is completely aligned with shareholders' long-term interest in growing the company based on the principles we've already discussed. Thank you.

As there are no further questions, on behalf of Voya Financial, I would like to thank you for participating in our annual meeting, and the meeting is hereby adjourned.

The annual meeting has now concluded. Thank you for participating.