Good morning. I'd like to call the meeting to order. I'm Ed Stack, Chairman and CEO of DICK'S Sporting Goods and Chairman of today's meeting. Representatives from Deloitte and Touche, our independent auditor here today will be glad to respond to questions during the discussion period. The company's Board of Directors and a number of our executive officers are also here today.
John Hayes, the company's General Counsel, will act as the secretary of the meeting. Upon entering the meeting, each of you were presented with an agenda for the meeting. On the reverse side of the agenda is a list of the rules of conduct of the annual meeting. To conduct an orderly meeting, we ask that participants abide by these rules. John, can you confirm that notice of this meeting was duly and properly given and a quorum is present?
Yes. The notices were mailed on May 2, 2018 in accordance with the company's bylaws. I can also confirm that the company's stock records as of April 16 have been available for at least the past 10 days and are available for inspection at this meeting. A quorum is present today. Record holders representing in the aggregate 304,701,158 votes are present at this meeting either in person or by proxy.
Thank you, John. Since the quorum is present, I declare that the annual meeting of stockholders of Dick's Sporting Goods, Inc. Duly convened. There are 3 matters to be voted on at the annual meeting as described in your proxy statement: the election of Class A directors the ratification appointment of Deloitte and Touche as the independent auditors for the current fiscal year and advisory vote to approve executive compensation. Steve West, Vice President, Investor Relations has been appointed as the Inspector of Elections for this meeting.
Will determine the validity of the proxies in the voting results, which will be calculated during the meeting. Steve, please present the Board of Directors' recommendations to the stockholders at this time. The first matter is the election of 3 Class A Directors, each for a term that expires in 2021. The Board nominees are Vincent C. Byrd, William J.
Colombo and Larry D. Stone. I move that these nominees be elected to the Board of Directors. Is there a second?
2nd.
In accordance with the company's bylaws.
We'll take comments on the proposals on the floor after all the motions and seconds have been made.
In accordance with the company's bylaws, advanced notice must be given of any stockholders' nomination. Since no such notice has been given, the nominations are closed. The next matter the ratification of the appointment of Deloitte and Touche as the company's independent registered accounting firm for fiscal 2018. I move that the appointment of Deloitte and Touche should be ratified. Is there a second?
2nd. It has been moved and seconded that the appointment of Deloitte and Touche as the company's independent public accountants for the 2018 fiscal year be ratified. Steve, please identify the 3rd proposal. The final matter is the advisory vote on executive compensation. I move that the compensation of the named executive officers as described in the proxy statement be approved.
Is there a second? Second. It's been moved and seconded that the advisory vote on executive compensation be approved. Are there any questions regarding the proposals? As there are no questions?
Yes.
I had a question on the election of directors as well. But I do have a question on the compensation. Yes.
Which ever you'd prefer.
Okay. The line is here. Okay. Thank you. Mr.
Chairman, my name is Ken Humble and I represent a Carpenters Union Pension Fund that holds shares of Dick's Sporting Goods. The Carpenters Pension Funds collectively have assets of $50,000,000,000 and they hold 179,000 shares of DICK'S Sporting Goods common stock. As the Director nominees are being elected, I would like to take this opportunity to urge the Board to consider the adoption of a majority vote standard for the election of Directors. Despite the fact the company has controlled that they control company, shareholders would benefit from having the election of every nominee and be guaranteed at the current priority vote standard. At present, the only way shareholders can express their opposition to Board nominees is to cast a so called withhold vote, which is as simple as abstain vote.
The shareholders should have the right to cast an against vote should they oppose the election of any particular nominee. I would like to ask the Board to consider this the adoption of a majority vote,
the standard for uncontested
director elections. Thank you for your consideration. I'll open my comment on that
one. Thank you.
As the compensation for the executive goes, as the advisory vote on executive compensation is taken, which we just did, I would like to ask 2 brief questions of the compensation committee. The first relates to the new CEO pay ratio and the other to the recent Tax Act. Will the experience of the preparing the CEO pay ratio or the actual CEO ratio calculated affect the committee's future work in setting executive compensation levels? And second, the recent tax act as amended the internal revenue code to eliminate the tax favored treatment of performance based compensation to senior executives, capping a tax deduction at $1,000,000 So the question will the elimination of the favored tax treatment of performance based pay prompt the committee to change the amount of compensation awards in your annual or long term performance based incentive plans? Thank you.
Thank you. So we appreciate your comments and we'll take them back to the compensation committee. Thank you. You're welcome. Sister?
Sister Valerie, Hayneman, Mercy Investment Services. First of all, I'd like to congratulate you on the rather, by now, dangerous positions that you took with respect to some sort of gun safety efforts. And I think that the explosion of support for that was a surprise to all of us. And we have to see where it's all going to go. But in light of the Sturm, Ruger shareholder resolution, 69% of the investors supported something related to gun safety, which was a big surprise to us.
Would you talk a little bit about the role of the Board of Directors in the decisions that you've been taking with respect to gun safety?
Well, we had a number of conversations with our management team and with our Board, several conversations with the Board before we went forward with the decision. And I can tell you that it was fully supported by our Board and by our management team.
Okay. Thank you.
Thank you, sister.
Yes. I was
going to do this for a question and answer, but I think it's appropriate to raise now. I'm David Almasi with the National Center For Public Policy Research. After a deranged former student murdered 17 students and staff in Parkland, Florida, liberals blamed guns instead of bullying, poor policing or inadequate mental health screenings. Dick's Sporting Goods immediately engaged in corporate virtue signaling by ending the sales of AR-fifteen's, high capacity magazines and other accessories. Dick's also no longer sells guns to people until 3 years after they're eligible for military service.
In addition, Dick's reportedly hired lobbyists to promote gun restrictions even though you're literally in the business of selling guns. Mr. Stack, you knew the risk of these political moves from the start. During the March 13 earnings call, you admitted there are just going to be some people who just don't shop with us anymore for anything. It's only been 2 weeks and we've seen a bit of difference in our hunt business.
Addressing it again during the May 30 earnings call, you reported the company is going to continue to be challenged through the balance of the year. We don't see a big change. Sales in this area are so anemic and relations with gun manufacturers such as Mossberg so poor right now that you've even indicated that Dick's might get out of the gun business entirely. Meanwhile, Sportsman's Warehouse reports that their gun sales and net sales were up 15% during the Q1. That company credits consumer backlash against companies such as Dick's as partially responsible for the success.
The company is willfully giving up money. It's damaged its reputation by lending its voice and its resources to those who want to abolish the 2nd Amendment, even while the vast majority of amendments support this of citizens support the 2nd Amendment. 30% of American adults own guns and another 11% live with someone who does. Now you've alienated them. Let's consider what an investor with a good track record for generating return on investment said when he was asked if his company would divest from certain gun manufacturers.
CNBC asked Warren Buffett about the corporations distancing themselves from the National Rifle Association and gun manufacturers and how Berkshire Hathaway would respond. Buffett replied, I don't believe in imposing my views on 370,000 employees and a 1000000 shareholders. I'm not their nanny on that. I don't think that Berkshire should say we're not going to do business with people who own guns. I think that would be ridiculous.
Buffett suggested that corporations making in the moment political decisions are subject to fickle nature of politics and are constantly reacting to events instead of standing on consistent principles. So can you tell us, your investors and management and Board, how you determine it was a sound business decision to alienate millions of current and potential customers who support the Second Amendment and the lawful use of firearms and explain why you have this right while Warren Buffett has it wrong.
So we'll get to this in the question and answer period. When we finish the meeting, I'll be happy to answer your question. Thank you. So moving on, I'll ask all stockholders who have not already done so to please turn in their proxy cards to John Hayes. Any stockholder who wants a ballot should raise his or her hand.
If you have a legal proxy, you'll be given a ballot. It's not necessary to ask for a ballot if you've already sent in your proxy. If you have previously sent a proxy, please do not execute a separate ballot unless you desire to revoke your proxy. It appears that all the stockholders wishing to vote by ballot have done so. I now declare the polls closed.
This Inspector of Election will now tally all the votes and return the results to the Secretary. Secretary has received the report of the Inspector of Elections. John, will you please give the results?
Yes. The requisite number of shares present have been voted in favor of the Board's recommendation for all three matters presented. The vote tallies for each item will be contained in a written report of the Inspector of Election and will be reported in a public announcement.
The 3 nominees have been duly elected as Class A Directors of the company, each for a term that expires in 2021. Deloitte and Touche, selection as the company's independent registered public accounting firm for the next fiscal year has been ratified and the compensation of the named executive officers have been approved. The formal business of the meeting is now adjourned. We'll now give our stockholders the opportunity to ask questions or to make comments. Please state your name and confirm that you're a stockholder or stockholder representative raising a question of making a comment.
So are there any other questions? So please forgive me. Your name again?
David Alnathy, the National Center For Public Health Research.
David, thank you for joining us today. You asked an awful lot of questions there. And to be honest, I don't I can't say that I remember every question, but I will give this in as best I can. We feel that I think your statements are absolute and absolute statements are not correct. So we did not alienate every gun owner.
We did alienate some gun owners. We had a number of people who were gun owners, myself included, who sent us notes saying that we applaud what you did and that we agree with your position and hope that you don't change And we're not going to change. We think this was in the best interest of our shareholders long term. Did we alienate some customers? Yes, we did.
We felt it was the best decision for the long term aspect of our shareholders. And you can see that from our announcement, our stock is actually up double digits. If you take a look at that we're giving away money, I really don't think we are. If you noticed that our Q2, our comp store sales were in the range of what we indicated and our profits exceeded the expectations of Wall Street. So we as a company and a board stand by our decision and we appreciate your comments and we will not just to let you know, we will not be changing our position.
Thank you.
Okay. So I know lots of people. I know that during your last earnings call, you gave anecdotal evidence. And your anecdotal evidence today is that you support the policy as a gun owner. There are lots of gun owners that I know that have a choice in stores they can go to for sporting goods and they've all said to me that they're going to look other places than Dick's.
So it's something conservatives are not necessarily people who do boycotts and have not boycotted in the past, but that's turning around. And you're going to see groups like 2nd Vote and the NRA telling people not to go to Dick's. And I think that that's going to while in the short run, you're seeing something good, In the long run, I don't know how many of those people that may have gone and bought a sleeve of tennis balls because you banned guns will be back. The hunters won't be back. The people who are strong supporters of the Second Amendment, who are members of the NRA, won't come back.
The people that we reach at the National Center won't come back. And so I beg you to reconsider that and to not be a corporate virtue signaling company, to be a company that works for the investors, works for the employees, works for the customers.
We do, do all of those things. Thank you for your comments. Okay. Any other questions or comments? With that, your sister?
I would like to make a comment simply because throwing in the second amendment sounds like good rhetoric. But if people took the time and trouble to actually read the shareholder resolutions, we're asking for consideration. We're asking for safety measures to be adopted, many of which have been proposed over the years and just kind of thrown off. And so it's rather an absurd thing to throw all of us into the same bucket. Great.
Thank you, sister. With that, we will conclude the meeting and look forward to talking to everyone again next year. Thank you.