AGM 2015

Jan 29, 2015

Good morning, and welcome to the Scotts Miracle Gro Company Annual Meeting of Shareholders. I would now like to turn the conference over to Jim Hagedorn. Please go ahead. 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 this morning for our Annual Meeting of Shareholders. Before we begin, I want our shareholders to know that I'm extremely confident in the state of our business right now. We've positioned Scotts Miracle Gro for another year of solid performance and I believe we continue to take the right steps to enhance shareholder value. I'm proud of the progress we're making and I believe we have continued opportunities to improve even further. I've recorded a more comprehensive overview on my thoughts about the state of the business, which shareholders can watch on the Investor Relations portion of our website at www dotscotsmiraclegrow.com. Obviously, we're taking a different approach to this year's meeting by conducting it virtually. Let me explain why. Throughout the year, we take an extremely proactive approach talking to our investors. We have quarterly conference calls as well as an annual Investor Day, all of which are webcast and available for all to hear. Additionally, we periodically meet 1 on 1 with our largest shareholders and maintain an open line for any shareholder no matter how big or small to reach out to our Investor Relations team. We spend a lot of time, effort and money each year preparing for our Annual Shareholders Meeting. The truth is that only a few shareholders actually attend. So following last year's meeting, we said we'd take a different approach this year. And that brings us to today. I'll call our decision to conduct this meeting virtually an experiment, though we're not alone in what we're doing. There are dozens maybe even hundreds of companies that are conducting virtual shareholder meetings. Based on the feedback we receive, we'll weigh the pros and cons before deciding what to do next year. As for today, we will tend to all the business outlined in our annual proxy statement. When we're done with that portion of the meeting, we'll answer any questions that shareholders may have posted online. Our Board of Directors comprised of the following members: General John Vines, Nancy Mistretta, Michelle Rea Johnson, Kate Hagedorn Littlefield, Jim McCann, Brian Finn, Steve Johnson, Adam Hanff, Tom Kelly, Mike Porter and Alan Barry. I want to take a moment this morning to acknowledge Alan's contributions since he will be formally leaving the Board after this meeting. He joined our Board in 2,009 and has been a valuable contributor over the years. His understanding of consumer products and knowledge of the retail channels in which we operate allowed him to bring unique insights to our boardroom discussions. Alan's term has expired and he's not standing for reelection today. I know that I speak for the entire board as well as the management team in thanking Alan for everything he's done for us and to wish him health and happiness in his retirement from the Board. You heard me mention a moment ago of Michael Porter of the Harvard Business School, who's been on our Board for the past 2 years. Mike served as a strategy consultant for us and me for more than a decade. And after years of asking him to join the Board, he finally agreed to do so in 2013. Mike may have the busiest travel and professional schedule of anyone I know. As Mike and every other member of our Board can attest, being a member of a public company Board is a time consuming commitment and we probably ask for a higher level of engagement from members of our Board than most other companies. Given the complexity of his calendar, Mike and I have arrived at a mutual agreement that would have him expand his position as a consultant and resign as a Board member effective today. This is actually a good outcome for our shareholders. Mike will continue to advise the company in a variety issues ranging from our capital structure to our M and A pipeline and who better to offer that advice. Mike is widely considered one of the world's best authorities on corporate strategy and we're extremely fortunate that he'll continue to maintain our relationship with us. Let's move on. I'm joined today by the following members of my management team: Our Chief Operating Officer, Mike Luechmeyer our Chief Financial Officer, Randy Coleman our General Counsel and Corporate Secretary, Ivan Smith our Global Head of Human Resources, Denise Stump and our Senior Vice President of Corporate Affairs, Jim King. At this point, we'll move to the business of the annual meeting. So I want to turn the floor over to Ivan Smith, our General Counsel and Corporate Secretary. Ivan? Thanks, Jim. I'd like to add my welcome to the annual meeting Inspector of Elections today. And also Ray Vanderhorst, who's lead client service partner at Deloitte and Touche, our outside independent auditor. This is the formal part of our meeting where we address the matters that are set forth in the proxy statement sent to our shareholders. When we finish this, I'll turn the podium back over to Jim for 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, we're asking that no one attending via webcast use any audio recording device to record it. 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 events and results could differ materially from what we discuss 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 we file with the SEC. We can now proceed with the business of our meeting. 1st, with regard to last year's Annual Shareholders Meeting, I'd like the record to reflect that the 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 the notice of this meeting, the proxy statement, the form of proxy and the 2014 Annual Report were timely mailed to the shareholders of the company. Thanks, Jim. The affidavit and proxy materials are directed to be filed with the records of the company. I would also like to present a list of the registered shareholders of the company's common shares as of the close of business December 3, 2014, 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, we will take a brief pause to offer the 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 portal and following instructions there. Shareholders who have sent in proxies or voted via telephone or the Internet and do not want to change their vote do not need to take any further action. Mr. Marsh, can you please unmute your line and present your report regarding the number of common shares present at today's meeting? Yes, Mr. Smith. A minimum of 57,000,000 988,957 shares or 95% of the common shares are present in person or by proxy. Thank you, Mr. Marsh. The proxies, substitution of the proxies and ballots presented to the meeting are hereby ordered to be filed on the records of the company. According to Mr. Marsh's report, a quorum is present so that business may properly be conducted. As set forth in the proxy statements, the business of the meeting includes 3 proposals. Proposal number 1 is to elect each to serve for a 3 year term expiring at the Annual Shareholders Meeting to be held in the year 2018. Proposal number 2 is to conduct an advisory vote on 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, 2015. Proceeding to proposal number 1, I'd like to recognize Denise Stumpf, Executive Vice President, Global Human Resources 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 2018 and until their successors are duly elected and qualified or until their earlier death, resignation or removal. Michelle Rhee Johnson, Tom Kelly and John Vines. Is there a second to the motion? I second the motion to move the voting for the election of directors is closed. Is there a second to the motion to close the voting? I second the motion. Voting for the election of directors is hereby closed. As a person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Mr. Marsh, may I have your report of the vote regarding the election of the 3 directors? Yes, Mr. Smith. I report that each of the 3 nominees for election as a director received not less than 54,000,000 31,694 votes. Thank you. I hereby declare that Michelle Reed Johnson, Tom Kelly and John Vines have been duly elected as Directors of the company. The meeting will now proceed to consideration of proposal number 2 and I recognize Denise Stumpf for the purpose of presenting this proposal. I hereby move that shareholders approve on an advisory basis the compensation of the company's named executive officers. Is there a second to the motion? I second the motion and move the voting on Proposal 2 be closed. Is there a second to the motion to close the voting? I second the motion. Voting on proposal number 2 is hereby closed. And the person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Mr. Marsh, may I have you report the advisory vote regarding the compensation of the company's named executive officers? Mr. Schmidt, I report that not less than 54,605,604 votes were cast in favor. 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. And for that, I recognize Randy Coleman. Thank you, Ivan. I hereby move that the audit company's selection of Deloitte Touche LLP as the company's independent registered public accounting firm for the fiscal year ended September 30, 2015 be ratified. Is there a second to the motion? I second the motion and move that voting on proposal number 3 be closed. Is there a second to the motion to close the voting? I second the motion. Voting on proposal number 3 is hereby closed. As a person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Mr. Marsh, may I have your report of the vote regarding the ratification of the audit committee selection of Deloitte and Touche LLP as the company's independent registered public accounting firm? Mr. Smith, I report that ratification of the audit committee's selection of Deloitte Intouche LLP as the company's independent registered public accounting firm for the fiscal year ending September 30, 2015 received not less than 56,325,700 shares. I hereby declare that the Audit Committee's selection of Deloitte and Tushall LP as the company's independent registered public accounting firm for the fiscal years ending September 30, 2015 has been ratified. Mr. Chairman, this concludes the formal portion of our meeting. I'll turn it back to you. Thanks, Ivan. There being no further business to come before this meeting, the 2015 annual meeting of the shareholders of the Scotts Miracle Gro Company is now adjourned. Now I'd like to open things up for shareholder questions and comments. Jim, there are no questions that have been posed by shareholders on the virtual meeting. Thanks everybody and have a good day. The conference has now concluded. Thank you for attending today's presentation.