AGM 2021

Jan 25, 2021

Ladies and gentlemen, thank you for standing by, and welcome to The Scotts Miracle Gro Company Annual Meeting. At this time, I would like to turn the conference over to Mr. James Hagedorn. Please go ahead. Thank you. Good morning, everyone. My name is Jim Hagedorn, Chairman and Chief Executive Officer of The Scotts Miracle Gro Company, and I'd like to thank you for joining us morning for our Annual Meeting of Shareholders. Before we launch into our agenda, I want to thank our shareholders for their continued support. As you know, we had a record result in fiscal 2020 as millions of consumers turn to gardening while dealing with the global pandemic. Our U. S. Consumer segment grew by 24%, the highest level of growth in memory and that was not aided by acquisitions. And Hawthorne Garden Company grew by 61%, again without acquisitions. The business outperformed the competition and further demonstrated its leadership in the In the indoor cultivation space that continues to benefit from the rapidly evolving authorized cannabis markets across the United States. The execution of the strategy we outlined several years ago, Project Focus, continues to drive significant value for our shareholders. Our company has never been more highly valued and the prospects as we look ahead remain bright. Our leverage ratio is at a multiyear low, Which gives us tremendous financial flexibility to invest in future growth, while also being able to return cash to shareholders. As we navigate the early months of fiscal 2021, our business is off to a strong start And is exceeding our early expectations. We know, however, that the pandemic continues to cause a great deal of uncertainty for nearly all companies, Including ours. But with that said, all of us here are extremely confident in our plan, in our team and our long term outlook. I want to take a moment to say that fiscal 2020 was the most unusual year in my 20 year tenure as the CEO of your company. In the midst of a global pandemic, the associates of this company remained calm, focused and dedicated. They knew consumers were relying on us and they delivered a phenomenal result. I've always considered it a privilege to lead Scotts Miracle Gro. That has never been more true than over the past 12 months. I want to thank my team for their work. I want to thank our Board of Directors for their support, And I want to thank each of our associates for their hard work and commitment. I also want to take a moment to acknowledge that many companies did not enjoy our Last year and have a long road to recovery ahead of them. And as we all know, we've already lost more Americans to COVID Than we did to World War II. We pray for the families of those who were lost, including the family of one of our own associates. And we send our best wishes to those companies who are trying to rebuild in the face of this tragedy. Moving on, in today's meeting, we'll tend to the business outlined in our proxy statement. When we're done with that portion of the meeting, we'll answer Our Board of Directors are also present for this virtual meeting. As a reminder, our Board of Directors is comprised of the following members: Dave Evans, Brian Finn, Adam Hampst, Steve Johnson, Tom Kelly, Kate Hagedorn Littlefield, Nancy Mistretta, Peter E. Shumlin, General John Vines and myself. This is a diverse group of professionals who play an active oversight role in providing counsel to the entire management team. Their experience vary between finance, government, strategic planning, consultant, corporate leadership, advertising, consumer marketing And the United States military. I believe our shareholders are extremely lucky to be represented by such a talented engaged group of directors. I'd also like to say the same thing about my own management team. Joining me here this morning are our President and Chief Operating Officer, Mike Lukmeier Our Senior Vice President and Interim Chief Financial Officer, Corey Miller our General Counsel and Corporate Secretary, Ivan Smith Our Global Head of Human Resources, Denise Stump and our Executive Vice President, Chief Communications Officer, Jim King. At this point, we'll move to the business of the Annual Meeting of Shareholders. Please note that the polls are currently open, So if you are a shareholder who has not yet voted or a shareholder looking to change your vote, you may do so by clicking the voting button on the web portal And following the instructions there. And now I will turn the floor over to Ivan Smith, our General Counsel and Corporate Secretary. Ivan? Thank you, Jim. I'd like to add my welcome to the Annual Meeting of Shareholders and introduce Amy Pavich, who will serve as our Inspector of Elections and Kevin Crum, Lead Client Service Partner at Deloitte and Touche LLP, our outside independent auditor. This is the formal part of the meeting Where we will address the matters that are set forth in the proxy statement sent to our shareholders. When we finish, I'll turn the podium back over to Jim for any Q and A. Only validated shareholders will be able to ask questions in the designated field on the web portal. Out of consideration for others, I ask that you please limit yourself to one question. This meeting is being recorded. However, no one attending via webcast is permitted to use any audio recording device. During the course of our discussions this morning, we may make forward looking statements regarding the company's future performance. I want to remind everyone that actual results could differ materially from what we discussed based on a variety of risk factors. We encourage investors to familiarize themselves with those risk factors, which are spelled out in detail in our Form 10 ks, which is filed with the SEC. We can now proceed with the business of our meeting. First, with regard to last year's annual meeting of shareholders, I would like for the record to reflect Minutes of that meeting have been filed with the records of the company. Next, Jim King will confirm our mailing procedures and registered shareholders. Thank you, Ivan. I would like to present the affidavit of Broadridge Financial Solutions pursuant to which Broadridge has confirmed That the notice of this meeting, the proxy statement, the form of proxy and the 2020 annual report were timely mails to shareholders of the company. Thanks, Jim. The affidavit and proxy materials are directed to be filed with the records of the company. Would also like to present a list of the registered shareholders of the company's common shares as of the close of business on November 30, 2020, The record date for this meeting. Thank you. The list of registered shareholders is directed to be filed with the records of the company. Next, I'd like to offer a final opportunity to any shareholder who has not yet voted or who wishes to change their vote to do so by clicking on the voting button on the web And do not want to change their vote, do not need to take any further action. Now that everyone has had the opportunity to vote, I now declare the polls for the annual meeting closed. Ms. Pavich, Please present your report regarding the number of common shares present at today's meeting. Mr. Smith, a minimum of 51,000,000 633,645 shares or 92.71 percent of the common shares are present In person or by proxy. Thank you, Ms. Pavich. The proxies, substitutions of proxies and ballots presented to the meeting are hereby ordered to be filed with the records of the company. According to Ms. Pavich's report, a quorum is present so that business may be properly conducted. As set forth in the proxy statement, the business of this meeting includes 3 proposals. Proposal number 1 is to elect 3 directors, each to serve For a 3 year term expiring at the Annual Meeting of Shareholders to be held in the year 2024, proposal number 2 is to conduct an advisory vote The compensation of the company's named executive officers, proposal number 3 is to ratify the audit committee's selection of Deloitte and Touche LLP As the company's independent registered public accounting firm for the fiscal year ending September 30, 2021. Proceeding to proposal number 1, I recognize Mike Lukemire, President and Chief Operating Officer, for the purpose of nominating the 3 directors. Thank you, Ivan. I hereby move that the following persons be elected as Directors of the company, Each to hold office until the annual meeting of shareholders to be held in the year 2024 and until their successors are duly elected and qualified Or until their earlier death, resignation or removal, Thomas N. Kelly, Jr, Peter E. Shumlin And John R. Bynes. Is there a second to the motion? I second the motion. As a person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Ms. Pavich, may I have your report of the vote regarding the election of the 3 directors? Mr. Smith, I report that each of the 3 nominees For election as a Director, received not less than 46,000,000,60,154 votes. I hereby declare that Thomas N. Kelly, Jr, Peter E. Shumlin and John R. Vines Have been duly elected as Directors of the company. The meeting will now proceed to consideration of proposal number 2. I recognize Mike Lukemire again for the purpose of presenting that proposal. Thank you, Ivan. I hereby move the shareholders approve On an advisory basis, the compensation of the company's named executive officers. Is there a second to that motion? I second the motion. As a person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Ms. Pavich, may I please have your report of the advisory vote regarding the compensation of the company's named executive officers? Mr. Smith, I report that not less than 46,158,561 advisory votes were received for approval of the compensation of the company's named executive officers. I hereby declare that the Shareholders have approved on an advisory basis the compensation of the company's named executive officers. The meeting will now proceed to consideration of proposal number 3. I recognize Corey Miller for the purpose of presenting that proposal. Thank you, Ivan. I hereby move that the Audit Committee's selection of Deloitte and Touche LLP as the company's independent registered public accounting firm For the fiscal year ending September 30, 2021 be ratified. Is there a second to the motion? I second the motion. As a person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Ms. Pavich, may I have your report of the vote regarding the ratification of the Audit Committee's selection of Deloitte and Tuchel, LP As the company's independent registered public accounting firm. Mr. Smith, I report that ratification of the Audit Committee's selection of Deloitte Matusch LLP, as the company's independent registered public accounting firm for the fiscal year ending September 30, 2021 received not less than 50,927,857 votes. I hereby declare that the Audit Committee's selection of Deloitte and Touche LLP as the company's independent registered public accounting firm for the fiscal year ending September 30, Thank you, Ivan. Now I'd like to open things up for shareholder questions and comments. Please note, I will attempt to answer as many questions or comments as time allows, But only questions or comments that are germane to the meeting will be addressed. Mr. Chairman, we have one question in the queue from an institutional shareholder inquiring about how we're viewing the issue of Diversity and inclusion in the workforce, noting the powerful impact that diversity can have on value creation In today's market, so can you address that please? Well, listen, we view the issue of diversity and inclusion as an important issues For a lot of reasons and are working pretty hard to Be sure that we at a minimum represent our community and if we can go even farther. So, and the issue of inclusion is another one where I'd sort of Boil it all down to the people feel respected and part of their company. So it's a big deal. My entire management team And my work with the compensation committee spends a lot of time talking about how do we Improve our diversity numbers and how do we sort of improve the respect that people feel that They're working for a company that thinks about them. And so I think it's a good question and we're on it. Thank you, Mr. Chairman. That is the only question that has been presented that is germane to this meeting. Well, I want to say to all of our shareholders, thank you very much your continued support of Scotts Miracle Gro, there being no further business to come before this meeting, the 2021 Annual Meeting The Scotts Miracle Gro Company is now adjourned. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.