Where Food Comes From, Inc. (WFCF) Earnings Call Transcript & Summary

Greetings, and welcome to the Where Food Comes From 2021 Annual Meeting of Shareholders. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Pfeiffer, Investor Relations. Thank you, Jay. You may begin.

Welcome to the Annual Meeting of Shareholders of Where Food Comes From. In fairness to all shareholders attending the meeting and in the interest of having a fair, informative, orderly and constructive meeting, the company has established the following rules of conduct: one, the business of the meeting will follow the order shown on the agenda in your proxy statement; two, only shareholders of record as of the close of April 5, 2021 or their proxy holders may vote during the meeting. You need not vote at this meeting if you have already voted by proxy. However, if you wish to revoke your proxy and vote again or if you have not voted, you will be given the opportunity to vote during the annual meeting. Shareholders who have appropriate questions that are germane to the business of the annual meeting may e-mail their questions to the following e-mail address, [email protected]. We will answer questions after the official business of the annual meeting subject to time constraints. The company does not intend to address any questions that are, among other things, irrelevant to the business of the company or the business of the annual meeting, related to material nonpublic information of the company, related to personal grievances, derogatory references to individuals or that are otherwise in bad taste, repetitious statements already made by another shareholder, in furtherance of the shareholder's personal or business interest or out of order or not otherwise suitable for the conduct of the annual meeting as determined by the Chairman or Corporate Secretary in his, her or their responsible, reasonable judgment. If there are matters of individual concern to a shareholder and not a general concern to all shareholders or if a question posed was not otherwise answered, such matters may be raised separately after the annual meeting by contacting Investor Relations via the website. Recording of the annual meeting is prohibited.

Good morning. I'm John Saunders, CEO and Chairman of the Board of Directors of Where Food Comes From, Inc, and it is my pleasure to welcome you to the company's Annual Shareholders Meeting. This meeting was called to be held at 2 p.m. today, and it being 2:03 p.m., I will call this meeting to order as the Chair. Joining me on the call today is Dannette Henning, our Chief Financial Officer; and Jay Pfeiffer, our Director of Investor Relations. Dannette, will you please continue the meeting?

Thank you, John. The record date for this meeting was April 5, 2021. The holders of the company's common stock at the close of business on that day were entitled to notice of this meeting and are entitled to vote on matters brought before this meeting. I have been informed that we have already received voting proxies from shareholders over the past few weeks, meaning that almost all of the votes that will be counted were already submitted before the meeting. However, if you wish to vote now or to change your prior vote, you may do so by e-mailing [email protected]. We had appointed Equiniti Trust Company as inspector of election and to provide the proxy results for this meeting. They will confirm the final number of shares represented at the meeting and will count the votes. We have a majority of the outstanding shares represented at the meeting, so I now declare a quorum present and we may proceed with the meeting. There are 3 proposals to be voted upon at this meeting. The first proposal is to elect all 7 nominees of the company to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected and qualified. The nominees are: John Saunders, Leann Saunders, Tom Heinen, Pete Lapaseotes, Jr., Adam Larson, Graeme Rein, Michael Smith. Your Board of Directors recommends a vote for each of the nominees for director. The second proposal is to ratify the appointment of Causey Demgen & Moore P.C. as independent auditors of the books and accounts of the company for the year ended December 31, 2021. Your Board of Directors recommends a vote for the ratification of the appointment of Causey Demgen & Moore P.C. as our independent registered public accounting firm for the year ended December 31, 2021. The third proposal is a shareholder proposal as further described in the proxy statement. I would like to remind our shareholders that our Board has prepared a statement of opposition to this shareholder proposal. The third proposal is an advisory vote regarding the preparation of a report on steps to enhance gender, ethnic and racial diversity proposed by Nia Impact Capital. Your Board of Directors recommends a vote against this shareholder proposal. Kristin Hull from Nia Impact Capital is on the phone today to present this proposal. Ms. Hull, I invite you to present. You will have 3 minutes.

Hello, everyone. I'm Kristin Hull, Founder and CEO of Nia Impact Capital. I formally move proposal 3. This shareholder resolution requests that Where Food Comes From take action to enhance Board diversity. Specifically, the proposal suggests 3 actions to the Board: one, include a commitment to diversity and inclusion in governance documents; two, make a commitment to include women and people of color in each candidate pool, particularly for Board and senior leadership teams; and three, disclose the gender, race and ethnic composition of the Board. The myriad benefits associated with diverse teams are well documented. They include a fuller understanding of consumer needs and preferences, the ability to recruit and retain top talent, less groupthink and fewer blind spots in governance and leadership as well as improved risk management. Diversity of perspective has also been shown to encourage more creative and innovative workplace environment, including an increasing ROI. Where Food Comes From's core business focuses on accountability, transparency and verification. Investors are looking for similar practices as they relate to diversity, equity and inclusion. We need to see the company's commitment to equity codified in organizational documents and reflected in the company's operations. Where Food Comes From has shared the current diversity of the Board and leadership team. However, it has not yet committed to the key change requested by the resolution to formally write into its governance documents a commitment to be intentional in its approach to both diversity and inclusion. In agriculture, race relations, the treatment of employees, safe and respectful workplace conditions are all complex topics. Where Food Comes From is encouraged to build expertise and to lead on these issues, just as we expect it to lead in its core business operations. It is encouraged to formalize its commitment to promoting diversity and inclusion so that all employees feel safe and supported. When a company implements meaningful equity and inclusion program, it provides comfort to investors that it is taking seriously the need to both reduce risk as well as capture the benefits of such programs. And to all stakeholders, this type of commitment shows that the company takes discrimination seriously and that it is willing to do its part in addressing this systemic issue openly. It also demonstrates the willingness to acknowledge its own imperfections honestly, and diversity of reporting provides data which allows investors and other stakeholders to assess and compare the effectiveness of its programs. We ask that Where Food Comes From begin to proactively address the need for a strategic approach to diversity, equity and inclusion at the Board level and throughout its operations. Thank you very much.

Thank you, Ms. Hull. Jay, have any questions been submitted about the proposals?

No.

So at this time, I would like to thank our shareholders for their active participation in today's meeting. We will now have a final opportunity for any of you to submit proxies in order for them to be counted. So I will pause and wait a minute. [Voting]

Okay. I now declare that the polls are closed. Based on the proxies we have previously received, I would like to announce on a preliminary basis that our shareholders have approved both proposals recommended by the Board, including the reelection of all directors and the ratification of Causey Demgen & Moore as our independent registered public accounting firm. The third proposal submitted by a shareholder was submitted by a margin of approximately 31 to 1 with 3,857,750 votes against the proposal compared to 124,808 votes in favor of and 6,963 abstentions based on preliminary results. After the final tabulation is completed, we will formally announce the results of the voting by filing a Form 8-K with the SEC within 4 business days of today. Ballots and proxies for this meeting will be filed with the company's records, and a certificate of the inspector of election will be attached to the minutes of this meeting. John?

With there being no other business to be brought before the meeting, the business of this meeting is now concluded and adjourned. Thank you all for your attendance and your input. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful evening.