AGM 2017

Jan 27, 2017

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 our shareholders. As we have for our previous 2 years, we're doing away with the pomp and circumstance of an in person meeting. Outside shareholders rarely attended in the past, so I don't think we've lost anything by taking this approach. Before we launch into our agenda, I want to thank our shareholders for their continued support and remind you that we have an open door policy and welcome your input and your questions. At any point, feel free to reach out to us and we'll do everything we can to answer your questions or explain our business. Speaking of our business, I want to touch briefly on what we're doing. As shareholders know, our stock has been trading at near record levels as we continue to successfully execute the strategic plan we shared with all of you 13 months ago, a plan we call project focus. That plan is what led us to last year to contribute Scott's Lawn Service to a joint venture with TruGreen. Today, we own a 30% stake in the number one player in do it for me lawn care. That plan is also why we acquired a 25% stake in Bonnie Plants, the number one player in the Edible Gardening segment of the live goods industry. It is also why we made 2 more acquisitions last year in the hydroponic industry, giving us a leadership role in this rapidly evolving and fast growing industry. As we take these steps to reconfigure our business, our core U. S. Consumer business continues to perform extremely well. In fact, our core business was the driving force behind the record earnings that Scotts Miracle Gro achieved last year, a level of earnings we expect to exceed again this year. So I want to thank our shareholders for their support of our plan and of our management team. I also want to take a moment to thank our Board of Directors, which continues to give us the support and bandwidth necessary to execute project focus. Moving on, today's meeting will be brief. We will tend to the business outlined in our proxy statement. When we're done with that portion of the meeting, we'll answer questions the shareholders have asked online. If you have a question, please post it over the next several minutes. Our Board members are also present for this virtual meeting. As a reminder, our Board of Directors is comprised of the following members: Brian Finn, Adam Hanff, Michelle Reed Johnson, Steve Johnson, Tom Kelly, Kate Hagedorn Littlefield, Jim McCann, Nancy Mistretta, 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 experiences vary between finance, strategic planning, education, consulting, advertising, consumer marketing and the United States military. I believe it's military. I believe our shareholders are extremely lucky to be represented by such a talented and 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 Lukemire our Chief Financial Officer, Randy Coleman our General Counsel and Corporate Secretary, Ivan Smith our Global Head of Human Resources, Denise Stump our Vice President of Strategic Planning, Mike Hoover and our Senior Vice President of Corporate Affairs, Jim King. At this point, we'll move to the business of the annual meeting. Please note that the polls are currently open. So if you are a shareholder and have 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. I will now 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 and introduce Bill Marsh from IBS Associates, who will serve as our Inspector of Elections and Ray Vanderhorst, Lead Client Service Partner at Deloitte and Touche LLP, our outside independent auditor. This is the formal part of our meeting where we'll address matters that are set forth in the proxy statement sent to our shareholders. When we've finished, 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, but 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 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 that the notice of this meeting, the proxy statement, the form of proxy and the 2016 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 1, 2016, the record date of this meeting. Operator, at this time, will you please open the line for Bill Marsh of IBS Associates? 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 portal and following the 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 actions. I'll now pause for 15 or 20 seconds to allow that. Report regarding the number of common shares present at today's meeting. Thank you, Mr. Smith. Mr. Smith, a minimum of 56,618,000 and 63 shares or 94.3% of the common shares are present in person or by proxy. Thank you, Mr. Marsh. The proxies, substitution of proxies and ballots presented to the meeting are hereby ordered to be filed with 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 statement, the business of this meeting includes 4 proposals. Proposal number 1 is to elect 4 directors, each to serve for a 3 year term expiring at the Annual Shareholders Meeting to be held in the year 2020. Proposal number 2 is to conduct an advisory vote on the compensation of the company's named executive officers. Proposal number 3 is to approve an amendment and restatement of the the Scotts Miracle Gro Company long term incentive plan to, among other things, increase the maximum number of common shares available for grants to participants. And proposal number 4 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, 2017. Proceeding to proposal number 1, I'd like to recognize Denise Stumpf, Executive Vice President, Global Human Resources, for the purpose of nominating 4 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 2020 and until their successors are duly elected and qualified or until their earlier death, resignation or removal. James Hagedorn, Brian D. Finn, James F. McCann and Nancy G. Mistretta. Is there a second to the motion? I second the motion and move that voting for the election of directors be 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 the shareholders. Mr. Marsh, may I have your report of the vote regarding the election of the 4 directors? Mr. Smith, 300 and 359,137 votes. I hereby declare that James Hagedorn, Brian D. Finn, James S. McCann and Nancy G. Mistretta have been duly elected as Directors of the company. The meeting will now proceed to consideration of proposal number 2. I recognize Denise Stumpf for the purpose of presenting that proposal. Thank you, Ivan. 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 that voting on proposal number 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. 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 advisory vote regarding the compensation of the company's named 816,072 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 Denise Sump for the purpose of presenting that proposal. I hereby move that shareholders approve an amendment and restatement of The Scotts Miracle Gro Company long term incentive plan to, among other things, increase the maximum number of common shares available for grant to participants. 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 amendment and restatement of Scotts Miracle Gro Company's long term incentive plan? Mr. Smith, I report that not less than 50,857,278 advisory votes were received for approval of the amendment and restatement of The Scotts Miracle Gro Company's long term incentive plan. I hereby declare that the shareholders have approved the amendment and restatement of The Scotts Miracle Gro Company's long term incentive plan. The meeting will now proceed to consideration of proposal number 4. I recognize Randy Coleman 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, 2017, be ratified. Is there a second to the motion? I second the motion and move that voting on Proposal Number 4 be closed. Is there a second to the motion to close the voting? I second the motion. Second the motion. Voting on Proposal 4 is hereby closed. As a person appointed as an official proxy, I report that I have voted in accordance with the proxy's receipt from shareholders. Mr. Marsh, may I have your report of the vote regarding the ratification of the Audit Committee's selection of Deloitte and Touche LLP as the company's independent registered public accounting firm? Mr. Smith, I report that the ratification of the audit committee selection of Deloitte and Touche LLP as the company's independent registered public accounting firm for the fiscal year ending September 30, 2017 received not less than 55,548,000 849 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, 2017 has been ratified. Mr. Chairman, this concludes the formal business portion of our meeting. Thanks, Ivan. I guess Deloitte got the highest vote. Congratulations. Jim, are there any questions? Mr. Chairman, at this time, there are no questions. So we've got no questions. And what I'd like to just say to our shareholders is thank them very much for their continued support of the company and there being no further business to come before this meeting. The 2017 annual meeting of shareholders of the Scotts Miracle Gro Company is now adjourned.