Workday, Inc. (WDAY) Earnings Call Transcript & Summary

Welcome to Workday's 2021 Annual Stockholders Meeting. This meeting is being presented live and is being recorded for future playback. With that, I will hand it over to Aneel Bhusri, Workday's Co-Founder, Co-Chief Executive Officer and Chairman of the Board of Directors.

Good morning, and thank you for joining us today for Workday's Annual Stockholders Meeting. It is 9:05 a.m., and the meeting will now come to order. My name is Aneel Bhusri, and I will be presiding as the Chairman over this meeting. Today's virtual meeting is a live audio webcast allowing for participation by Workday, our stockholders and other interested parties regardless of their location. In addition to listening to the meeting online, stockholders can also submit questions and vote their shares online via the annual meeting portal before the polls close. Stockholders who would like to ask a question may do so by typing and submitting the question online where indicated in the annual meeting portal. Stockholders who would like to vote can do so on the portal as well where indicated for voting. As a reminder, only stockholders as of the record date of April 12, 2021, may submit a question or vote via the annual meeting portal. The polls are currently open and will remain open through the general question-and-answer session of our meeting. I would now like to introduce our directors and other members of Workday management who are present on today's call. The directors on the call are Ann-Marie Campbell, Dave Duffield and Lee Styslinger, who, along with myself, are the 4 nominees for Class III directors, whom we will be voting on at today's meeting; Michael Bush; Christa Davies; Lynne Doughtie; Carl Eschenbach; Chano Fernandez, who is also our Co-CEO; Michael McNamara; George Still; and Jerry Yang. Also present on today's call are Juliana Capata, Workday's Deputy General Counsel and Assistant Secretary, who'll be acting as our inspector of elections and tabulating the voting results; Justin Furby, our Vice President of Investor Relations, will moderate our question-and-answer sessions; and Robynne Sisco, our President and CFO. In addition, Alex Bender has joined us from Ernst & Young LLP, Workday's independent auditors, and will be available to address stockholder questions as well. This morning, our program will proceed as follows: First, I will commence the official business portion of the 2021 Annual Meeting, including reviewing the proxy proposals before our stockholders that were set forth in our notice of annual meeting and proxy statement dated April 26, 2021. During this time, we'll address any questions or comments that relate to the formal business at hand. Following that, I will open the meeting to a general question-and-answer session. Lastly, Juliana will report on the results of the proxy proposals. At this time, I'll turn it over to Juliana to review our Q&A guidelines. Juliana?

Thank you, Aneel. A few matters of protocol will help our Q&A process run smoothly. First, as Aneel mentioned, only stockholders or their legal representatives may ask a question or make a comment. Second, questions addressed during the official business portion of the meeting should be relevant to the proposals being voted on. Third, the meeting Chairman may rule as out of order stockholder proposals that did not meet the advanced notice provisions of Workday's bylaws or proposals that are inappropriate for stockholder action. Fourth, out of consideration for others, please limit yourself to 2 questions or comments. And finally, questions will be answered at the discussion of the meeting Chairman based on determinations of relevancy or appropriateness and as time permits. Back to you, Aneel.

We will now proceed to the official business portion of this meeting. Juliana, would you please report on the notice of the meeting and the quorum determination?

The Board fixed the close of business on April 12, 2021, as the record date for this meeting. We have received an affidavit from Broadridge Financial Solutions, certifying that beginning on or about April 26, 2021, each stockholder of record and each identifiable beneficial owner as of the record date was mailed the official notice of this meeting together with the proxy card and Workday's 2021 annual report and proxy statement or instructions about how to access these materials online. On the record date, a total of 185,818,770 shares of Class A common stock representing 1 vote per share and a total of 58,121,673 shares of Class B common stock representing 10 votes per share were outstanding. The holders of not less than 226,644,479 shares of common stock are present at today's meeting in person or by proxy. Approximately 97.39% of the voting power of the outstanding shares is present at the meeting. Accordingly, a quorum is present. Aneel?

Thank you, Juliana. On the basis of the inspector's report, the meeting is duly convened. As a reminder, the polls are open and stockholders may vote their shares online anytime during this meeting before the polls close, which will be following our general question-and-answer session. The first matter being voted upon is the election of 4 Class III directors to the Board of Directors. I, Ann-Marie Campbell, Dave Duffield and Lee Styslinger have been nominated as Class III directors to serve for a 3-year term expiring at the 2024 Annual Meeting of Stockholders and until our successors are duly elected and qualified. No other nominations for directors received from stockholders within the period required by Workday's bylaws. Therefore, the nominations are closed. The second order of business is the ratification of Workday's independent auditors. The Board of Directors has appointed Ernst & Young LLP as Workday's independent auditors for the fiscal year ending January 31, 2022, and our stockholders have been asked to ratify their appointment. The third order of business is the advisory nonbinding stockholder vote to approve the compensation awarded to our named executive officers in the last fiscal year as described in the proxy statement, including the compensation discussion and analysis section, compensation tables and narrative disclosures. The fourth and final order of business is the advisory nonbinding stockholder vote to approve the frequency of future advisory votes concerning our named executive officers' compensation and specifically where the vote should occur every 1, 2 or 3 years. We will now pause for a brief moment to determine whether any questions related to the proxy proposals at hand have been submitted via the annual meeting portal. Justin, do we have any questions related to the proposals?

We have not received any questions relating to the proposals. As we have no questions related to the proposals, I'll turn it back to you, Aneel.

Thanks, Justin. As a reminder, it is not necessary to vote online if you have already sent in a completed proxy card or voted online or by telephone, unless you wish to change your vote. Stockholders who would like to vote now may do so online by submitting your vote where indicated in the annual meeting portal. The polls will remain open during our general Q&A session, which we will turn to next. Justin? [Voting]

Thank you, Aneel. Before we get started, we want to emphasize that this question-and-answer session may include forward-looking statements about our business, operations, results and other matters. These forward-looking statements are subject to risks, uncertainties, assumptions and changes in circumstances that could cause actual events or results to differ materially from those in the forward-looking statements. We encourage you to read our periodic reports and filings with the SEC for a discussion of these potential risks, uncertainties and potential changes in circumstances, including, without limitation, those mentioned in Workday's quarterly report on Form 10-Q for the fiscal quarter ended April 30, 2021, under the heading Risk Factors and in our most recent annual and current reports. As a reminder, we'll follow the rules of order for this Q&A session that Juliana reviewed earlier. We will now pause for a brief moment to determine whether any questions have been submitted via the annual meeting portal.

Okay. We do have one question, which I'm going to direct to Aneel. The question is, what do you see as your greatest challenge to meet the company goals over the next 3 to 5 years?

I would say the greatest challenge is continuing to attract and hire the best people in a very challenging job market, and those people will drive our results like they have in the past. So I would consider that our biggest challenge. I would add a second challenge or something we're very focused on is the secured nature of our systems.

Excellent. I see no further questions at this time. Therefore, our question-and-answer session is concluded. I will now turn it back over to Aneel to continue with the business agenda for the meeting.

Thanks, Justin. It is now 9:13 a.m., and the polls are now closed. The next item on the agenda is the preliminary report of the inspector of elections. Any votes collected before the polls closed but not reflected in the preliminary report will be reflected in the final report of the inspector. Juliana, please present your preliminary report.

Thank you, Aneel. I have determined that Aneel Bhusri, Ann-Marie Campbell, David Duffield and Lee Styslinger each have received in excess of 97% of the votes cast for election as Class III directors. Further, I have determined that more than 99% of the votes present in person or represented by proxy were cast in favor of the ratification of the appointment of Ernst & Young. In addition, I have determined that more than 95% of the votes present in person or represented by proxy were cast in favor of the advisory vote to approve the compensation paid to Workday's named executive officers. Lastly, regarding the frequency of future advisory votes concerning the compensation of our named executive officers, I have determined the option of 1 year received the highest number of votes, which was over 99% of the votes present in person or represented by proxy. Back to you, Aneel.

Thank you, Juliana. Based upon Juliana's preliminary report as inspector of elections, I declare that Ann-Marie Campbell, David Duffield, Lee Styslinger and myself are elected as Class III directors to serve for a 3-year term expiring at the 2024 Annual Meeting of Stockholders or until a successor is duly elected and qualified. I further declare that the appointment of Ernst & Young LLP as Workday's independent registered public accounting firm for the fiscal year ending January 31, 2022, was ratified. I also declare that the compensation paid to Workday's named executive officers in the last fiscal year is approved on an advisory basis. Lastly, I declare that 1 year is approved on an advisory basis as the frequency of future advisory votes concerning the compensation of our named executive officers. This concludes Workday's 2021 Annual Meeting of Stockholders. Thank you for your participation in our annual meeting.

Thank you for attending Workday's 2021 Annual Meeting. You may now disconnect.