AGM 2016

Jan 28, 2016

Morning, everyone. My name is Jim Hagenorn, Chairman, President and Chief Executive Officer of The Scotts Miracle Gro Company. And I'd like to thank you for joining us this morning at our Annual Meeting of Shareholders. Before we begin, I'd like to briefly touch on the state of our business. Bottom line, I feel extremely confident with where we are 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. Next week, we'll announce our Q1 results, which will continue to reflect a high level of consumer and retailer support for our brands. In fact, we've already communicated to Wall Street last month that consumer purchases of our products were up in the mid teens during the quarter. So we're off to a great start. More broadly speaking, our entire management team shared a comprehensive review of our business and our strategic plan in December during an Analyst Day meeting in New York. Through an effort we're calling project focus, we're increasing our emphasis on our North Scotts Lawn Service into a joint venture with TruGreen, giving us a 30% stake in that combined company. We also said we'd be announcing an investment in the live goods category and that we would pursue strategic options for our European business. We also said we'll continue to make strategic investments in the hydroponic gardening category. The response to that message continues to be extremely positive. Shareholders listening today who want more details about project focus can listen to all three hours of our New York presentation by visiting our Investor Relations website, investor. Scotts.com. 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 any questions the shareholders have asked online. If you do have a question, please post it over the next several minutes. I'm glad that our Board members are participating in this virtual meeting. As a reminder, our Board of Directors is comprised of the following members: Brian Finn, Adam Hanft, Michelle Rea Johnson, Steve Johnson, Tom Kelly, Kate Hagedorn Littlefield, Jim McCann, Nancy Mistretta, General John Bynes and myself. This is a diverse group of professionals whose experiences vary between finance, strategic planning, education, consulting, advertising, consumer marketing and the United States military. I believe that our shareholders are extremely lucky to be represented by such a talented and engaged group of directors. I'd also say the same thing about my own management team. Joining me here are 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 our Head of Special Operations, Mike Coover and our Head 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 who has not yet voted or a shareholder who is 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 Michael Barbera from IBS Associates, who will serve as our Inspector of Elections and Ray Vanderhorst, our Lead Client Service Partner at Deloitte and 2 Shell LP, our outside independent auditor. This is the formal part of the meeting where we'll address matters that are set forth in our proxy statement sent to our shareholders. When we 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 discussion 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 former proxy and the 2015 annual report were timely mailed to the shareholders of the company. Thanks, Jim. The affidavit and product 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, 2015, the record date for this meeting. Operator, please open the line for Michael Barbera from IBS Associates. Thanks, Jim. 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 his 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 on the Internet and do not want to change their vote do not need to take any further action at this time. Mr. Barbera, please present your report regarding the number of common shares present at today's meeting. Mr. Smith, a minimum of 58,273,167 or 94.7 percent of the common shares are present in person or by proxy. Thank you, Mr. Barbera. 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. Barbera's report, a quorum is present so the business may properly be conducted. As set forth in the proxy statement, the business of the meeting includes 3 proposals. Proposal number 1 is to elect 3 directors, each to serve for a 3 year term expiring at the Annual Shareholders Meeting to be held in the year 2019. Proposal number 2 is to conduct an advisory vote on the compensation of the company's named executive officers. And proposal number 3 is to ratify 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, 2016. Proceeding to proposal number 1, I'd like to recognize Denise Stump, 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 2019 and until their successors are duly elected and qualified or until their earlier death, resignation or removal. Adam Hanft, Stephen Johnson and Catherine Hagedorn Littlefield. Is there a second to the motion? I second the motion and move that voting for the election 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 shareholders. Mr. Barbera, 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 director received not less than 49,035,551 votes. I hereby declare that Adam Hanft, Stephen L. Johnson and Katherine Hagedorn Littlefield have been duly elected as directors of the company. The meeting will now proceed with consideration of proposal number 2. Again, I recognize Denise Stumpf for the purpose of presenting this 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 the 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. Barbera, may I have your report on the advisory vote regarding the compensation of the company's named executive officers? Mr. Smith, I report that not less than 54,800 1,772 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. And for that, I recognize Randy Coleman for presenting the 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, 20 16 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 for 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. Barbera, may I have your report on the vote regarding the ratification of the audit committee's collection of Deloitte and Tuchel LP 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, 2016 received not less than 56,801,036 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, 2016 has been ratified. Mr. Chairman, this concludes the formal business portion of our meeting. You're ready, Kamina? Yes. Okay. Thank you, Ivan. Now I'd like to open things up for shareholder questions and comments. Please note, I'll attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. Mr. Chairman, there have been no questions posed by shareholders today. Well, thank you guys very much for your continued support of Scotts Miracle Gro. There being no further business to come before this meeting, the 2016 Annual Meeting of the Shareholders of Scotts Miracle Gro Company is now adjourned. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.