Xerox Holdings Corporation (XRX) Earnings Call Transcript & Summary

Welcome to Xerox's 2023 Annual Meeting of Shareholders, which is being held in person in Norwalk, Connecticut. I am Steve Bandrowczak, CEO of Xerox Holdings Corporation, and I will chair today's meeting. Before we begin the official business of the meeting, let me introduce the other members of our Board of Directors and some key members of management who are here with us today. My fellow directors are with us today is Phil Giordano, Scott Letier; Nichelle Maynard-Elliott, Steven Miller; Maggie Hernandez; myself, Steve Bandrowczak. Also today with the following members of management, John Bruno, Chief Operating Officer and President; Xavier Heiss, Executive Vice President and Chief Financial Officer; Suzan Morno-Wade, Executive Vice President and Chief Human Resource Officer; Joanne Collins Smee, Executive Vice President and President of the Americas; Tracey Koziol, Executive Vice President of Global Offering Solutions and Product Officer; Chris Fisher, Senior Vice President and Chief Strategy Officer; Nicole Torraco, President, FITTLE. We're also joined by Flor Colon, Corporate Secretary of Xerox and from PricewaterhouseCoopers, the company's independent auditor, David Charles. Now let me turn it over to Flor Colon, who will handle the business of the meeting. Flor?

Good morning. Christopher Woods of American Election Services, LLC has been appointed to act as Inspector of Election. He has subscribed his oath of office and submitted his report as follows. There were 156,958,464 shares of common stock outstanding on March 31, 2023, the record date for this meeting. The holders of approximately 140,098,219 shares are represented at this meeting or approximately 88.9% of the outstanding shares of common stock. Accordingly, a quorum is present. During this meeting, comments may be made that contain forward-looking statements, which, by their nature, address matters that are in the future and are uncertain. Actual future financial results may be materially different. Finally, please note that today's meeting is being recorded. Shareholders who are not able to attend today's meeting will be able to listen to the recording posted on the Xerox website following the meeting. Since we have a quorum present, I now declare that the meeting is legally convened. As we go through the formal business of the meeting, only shareholders may ask questions. And we ask that any shareholder questions and remarks be limited to the specific subject matter of each proposal as it is being presented. Once the meeting is adjourned, directors and members of management will be available to take shareholder questions and comments on other matters. If you would like to speak or ask a question, please go to the closest microphone located in the aisle, then please state your name, and if appropriate, the name of the organization you are representing. As stated in the rules of order on your seat, we ask that you please limit your comments and questions to no more than 3 minutes. For those shareholders who wish to vote in person, there are ballots available. Please raise your hand if you need a ballot, and we will bring one to you. Those ballots will be collected when we have completed our discussion on the proposals. I will now present the proposals to be voted upon. Proposal 1, Election of Directors. I move for the election of each of the 8 nominees named in the proxy statement for a 1-year term as director as provided in the proxy statement for this annual meeting. Are there any questions or remarks regarding this proposal? As there are no questions or remarks regarding the proposal, we will proceed. Proposal 2, ratification of the appointment of independent registered public accounting firm. I move for the ratification of the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2023, as provided in the proxy statement for this annual meeting. Are there any questions or comments concerning this proposal? We have received no questions or comments regarding the proposal, so we will proceed. Proposal 3, approval on an advisory basis of the 2022 compensation of our named executive officers. I move for the approval on an advisory basis of the 2022 compensation of the company's named executive officers as provided in the proxy statement for this annual meeting. Are there any questions or comments concerning this proposal? We have received no questions or comments regarding this proposal, so we will proceed. Proposal 4, approval on an advisory basis of the frequency of advisory votes on the compensation of our named executive officers. I move for the approval on an advisory basis of a 1-year frequency for future advisory votes on the compensation of our named executive officers as provided in the proxy statement for this annual meeting. Are there any questions or remarks concerning this proposal? We have received no questions or remarks regarding this proposal, we will proceed. Proposal 5, approval of the amendment to the company's performance incentive plan to increase total shares. I move for the approval of the amendment to the company's performance incentive plan to increase total shares as provided in the proxy statement for this annual meeting. Are there any questions or remarks concerning this proposal? We have received no questions or remarks regarding this proposal, so we will proceed. Proposal 6, consideration of a shareholder proposal for shareholder right to ratify termination pay, if properly presented at the annual meeting. I now ask that Mr. [indiscernible], the shareholder proponents qualified representative, present Proposal 6.

Proposal 6, shareholder ratification of termination pay, sponsored by Kenneth Steiner. Shareholders request that the Board seeks shareholder approval of any senior managers new or renewed pay package that provides for the severance or termination payments with an estimated value exceeding 2.99x the sum of the executives base salary plus target short-term bonus. The Board shall retain the option to seek shareholder approval after material terms are agreed upon. This proposal is still relevant even if they are current Xerox golden parachute limits, a limit on golden parachutes is like speed limit. A speed limit does not guarantee that the speed limit will never be exceeded. Like this proposal, the rules associated with a speed limit provide consequences if the limit is exceeded. With the proposal, the consequences are a nonbinding shareholder [ per vote ] is required, if reasonable limits on golden parachutes are exceeded. Plus this nonbinding shareholder vote can be taken a shareholder meeting that is already scheduled for other matters. This proposal does not discourage equity pay or any other type of executive pay. This proposal does not limit the flexibility of the Executive Pay Committee. This proposal simply requires that executive termination pay above a certain excess amount be put to a nonbinding shareholder vote. The existing Say on Pay Vote is not a substitute for this proposal. The only way that the existing Say on Pay Vote could be a substitute would be to the -- excuse me, to divide to Say on Pay Vote into 2 parts: Part 1 for regular pay and Part 2 for termination pay. There is no indication that this will be done. This proposal is more important at Xerox, due to 3 issues of concern at Xerox. The stock price is down from 38% in 2019. Executive pay was rejected by 30% of shares in 2022. Three directors were rejected by more than 32 million shares in 2022: Scott Letier, James Nelson, Margarita Palau-Hernandez. Please vote yes, shareholder ratification of termination pay, Proposal 6.

I call for the vote on the shareholder proposal for shareholder right to ratify termination pay as provided in the proxy statement for this annual meeting. The Board has recommended a vote against this proposal for the reasons stated in the proxy statement. Are there any questions or remarks concerning this proposal? We have received no questions or remarks regarding this proposal, so we will proceed. The discussion of the proposals and resolutions is now concluded, and we will proceed to the voting. Ladies and gentlemen, the polls are now open. If there is any shareholder who would like to vote now, please stand so that we can collect your ballot and make sure your vote is counted. [Voting]

I am informed by the Inspector of Election that all the ballots are in. I now declare the polls closed. The Inspector of Election has presented his preliminary report to me, and he has determined that each proposal presented at this meeting has received at least 50% of the votes cast for approval, except for Proposal 6, regarding shareholder right to ratify termination pay, which received less than 50% of the votes cast for approval. I declare that all the directors nominated by the Board have been elected. The selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for 2023 has been ratified. The 2022 compensation of our named executive officers has been approved. The 1-year frequency of advisory votes on named executive officers compensation has been approved. The amendment to the company's performance incentive plan to increase total shares has been approved. And the shareholder proposal regarding shareholder right to ratify termination pay has not been approved. Now back to Mr. Bandrowczak to close the meeting.

There being no further business to come before the meeting, the meeting is adjourned. Thank you very much for being with us today.