Good afternoon, and welcome to our Annual Meeting of Stockholders. I am Jill Sutton, Chief Legal Officer, General Counsel and Corporate Secretary of United Natural Foods. In accordance with the company's bylaws, I will be serving as Secretary of the meeting. In the interest of having an orderly and constructive meeting today, please review the meeting guidelines and rules of conduct posted on the online meeting portal. I would now like to introduce Steven Spinner, Chair of the Board of Directors and Chief Executive Officer of UNFI.
In accordance with the company's bylaws, Steve will serve as chairperson of the meeting. Steve?
Thank you, Jill. Good afternoon. It's my pleasure to welcome you to our Annual Meeting of Stockholders. We are pleased that you could join us today. The meeting is now called to order.
I'd like to begin by introducing the other current members of the company's board of directors in attendance for this online meeting. I will ask that each director acknowledge their presence as I call his or her name. Eric Arts? Here, Steve.
Ann Bates? Good afternoon.
Denise Clark?
Good afternoon.
Daphne Dufresne. Good afternoon. Michael Funk. Good afternoon. James mule Mulebauer.
Good afternoon. Peter Roy. Well, we know Peter's on. Jack Stall.
Good afternoon. K.
Peter might be having some technical difference difficulties, but we know he's actually on the call. Hi. Okay. Great. Thank you, Peter.
Jim Heffernan is also on the call. Pursuant to our retirement policy, Jim is not standing for reelection. I wanna thank Jim for his dedicated service and significant contributions that he has made to our company over the last twenty years. Thank you very much, Jim. In addition, the following officers of the company are present and will also be available to answer questions.
John Howard, Chief Financial Officer. Good afternoon. Jill Sutton, Chief Legal Officer, General Counsel and Corporate Secretary, who is serving as Secretary of the meeting.
Hi there.
Eric Dorne, Chief Operating Officer. Good afternoon. And Chris Testa, President.
Good afternoon.
Also with us today are representatives of our auditors, KPMG LLP, Eric Turner, Tony Gaughan and Susie St. George. Good afternoon. Thank you. I will now ask Jill Sutton, the Secretary of the meeting to review the business to be brought before the meeting today.
Jill?
Thanks, Steve. All stockholders of record as of the close of business on the record date, which was 11/16/2020, are invited to attend this meeting. Following the business portion of the meeting, we will be answering questions submitted through the online meeting portal, which enables our stockholders to have access to our Board of Directors, management team and representatives from KPMG. If you would like to ask a question, please submit your question to the Ask a Question text box on the online meeting portal and click Submit. Please limit yourself to one question.
A webcast replay of the annual meeting will be posted online for a period of one year at www.virtualshareholdermeeting.com unify2021. Jody Havarnin, Deputy General Counsel, Securities and Board Governance and Assistant Secretary, has been appointed to serve as Inspector of Elections for the meeting, and she has taken the required oath of office. After the voting polls are closed, we will adjourn the official business portion of the meeting and answer any questions from stockholders. After the question and answer session, we will announce the preliminary voting results. This meeting was called to vote on the following proposals.
Proposal number one, to elect nine nominees as directors to serve until the next Annual Meeting of Stockholders. Proposal number two, to ratify the selection of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending 07/31/2021. Proposal number three, to approve on an advisory basis our executive compensation. Proposal number four, to approve an amendment to the 2020 equity incentive plan. Since no director nominations or other stockholder proposals were filed in advance of this meeting in accordance with the requirements of the company's bylaws, the business of this meeting is limited to the four proposals I just described.
The polls for the matters upon which the stockholders may vote at this meeting are now open and will remain open until the business items on the agenda are concluded or until the announcement that the polls are closed. If you've already voted by mail, telephone, or the Internet, you do not need to take any further action. Stockholders of record who have not previously voted or who wish to change their earlier vote may vote now by clicking the Vote Here button on the online meeting portal and following the instructions on the window that will open. You must be logged in under your 16 digit control number to vote in this manner. That number can be found on the notice of proxy availability that the company sent to you on or about 11/25/2020.
If you do vote now, please understand any prior vote cast by you will be automatically revoked and overwritten. We will announce the preliminary results of the voting on the proposals being presented for stockholders' approval near the end of the meeting following the presentation and question and answer session. The company has received an affidavit from the company's proxy mailing agent, Broadridge Solutions, certifying that beginning on 11/25/2020, the Notice of Annual Meeting of Stockholders was sent, and the proxy statement, proxy card, and annual report to stockholders was made available to all holders of record of common stock as of the close of business on 11/16/2020. This affidavit will be incorporated into the minutes of this meeting. Additionally, the list of stockholders of record as of the close of business on 11/16/2020, who are entitled to vote at this meeting, showing their respective addresses and the number of shares held by each has been available for examination of the company's headquarters in Providence, Rhode Island during the period of the last ten days and is available at this meeting for inspection by the stockholders.
The Inspector of Elections has previously received the list of stockholders entitled to vote at this meeting. The company has been informed by Broadridge as tabulator of the votes that as of this afternoon, proxies representing more than 83% of the 56,047,636 shares of the company's outstanding common stock eligible to vote as of the record date have in fact been received. Therefore, I confirm that we have a sufficient number of shares represented at this meeting and declare a quorum is present. We have the four items on our agenda today that were previously described. Each of these four proposals is explained in detail in our proxy statement that was made available to stockholders of record.
Shortly after I present these matters, the polls will be closed. So if you've not already done so, please vote now. As a reminder, if you have already voted, you do not need to vote again in the online meeting portal. The first matter to be voted on by the stockholders is the election of Eric Arts, Antory Bates, Denise Clark, Daphne Dufresne, Michael Funk, James Muehlbauer, Peter Roy, Steven Spinner and Jack Stahl each as directors to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified. The Board unanimously recommends that the stockholders vote for the election of each of the director nominees.
The second matter to be voted on by the stockholders is the ratification of the selection of KPMG LLP as the independent registered public accounting firm of the company for the fiscal year ending 07/31/2021. The Board unanimously recommends that the stockholders vote for ratification of the selection of KPMG as our independent registered public accounting firm for fiscal twenty twenty one. The third item of business to come before the meeting is an advisory nonbinding vote on the following resolution regarding executive compensation. Resolve that the compensation paid to the company's named executive officers as disclosed pursuant to Item four zero two of Regulation S K, including the compensation discussion analysis, compensation tables and narrative discussion is hereby approved. This proposal is commonly referred to as a say on pay resolution.
The Board unanimously recommends that stockholders vote for the advisory approval of our executive compensation. The final matter to be voted on by the stockholders is the approval of an amendment to the company's 2020 equity incentive plan. The sole purpose of this amendment is to increase the number of shares available for issuance under the plan. The Board unanimously recommends that stockholders vote for the amendment to the 2020 equity incentive plan. Let me pause now and ask the company's associates that are monitoring questions for the online meeting portal if there are any questions related to the substance of these proposals that have been submitted at this time.
It may take a moment while we compile any questions. Okay. We do have one question related generally to say on pay, so we will take that question at this time. Can the Board explain its reasoning behind Mr. Spinner's eight point five million dollars payout in connection with voluntarily retiring?
Given that these payouts are typically frowned upon by investors and are rare, exceedingly rare, it was simply the case that the Board was out negotiated, out of touch with pay norms, or somehow too close to Mr. Spinner to be objective. Please explain. I'd now like Jack Stahl, who's the Chairman of our Compensation Committee, to field that question. Mr.
Stahl?
Thank you, Jill. Going back to early twenty twenty, our CEO Steve Spinner did indicate that he was ready to retire. I should point out this was happening at the same time as our chief operating officer had indicated his attention to retire. Mister Spinner was retirement eligible, which meant that his equity would have accelerated under his existing employment agreement that had been entered into in 02/2018, And he would have been entitled to equity payments contained in this agreement. And a severance component which which was included in our arrangement with mister Spinner was benchmarked against compensation peer groups to make sure that it was reasonable.
At that time, it was determined that it was in the company's best interest, particularly given our COO's retirement, that we absolutely needed to have continuity in our leadership team. And that was a real priority for the company. And so mister Spinner's leadership became that much more important during that period. And we wanted to avoid having both a potential CEO and COO transition at the same time that we were right in the middle of executing the operational improvements related to our merger all happening in a very challenging macroeconomic environment.
So
had the board not secured the continued service of mister Spinner from, say February of twenty twenty through mid twenty twenty one, it's likely that those two departures would have occurred right in the middle of COVID nineteen, which certainly looking backwards makes it even more important that we put the agreement in place that we did. And I must say like all of our compensation decisions we get outside counsel from compensation experts that have a broad reach on the marketplace and understands norms and competitive benchmarks. And so we believed at the time it was the right thing to do and that has certainly been reinforced looking backwards. We're absolutely glad that we have had Steve's leadership during this particularly challenging period of time. Thank you very much.
Thank you, Mr. Stahl. That is the only question related to the proposals. We will take further questions at the end of the meeting. As provided by the majority vote standard in our bylaws, each nominee for director will be elected as a director if the number of shares voted for the director exceed the number of shares voted against the director.
Each of Proposal two, three, and four will be approved if those proposals receive the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and voting on the proposal. As a reminder, if you previously voted, you do not need to vote again. If you wish to vote online, please do so now as the polls are about to close. Okay. This concludes the official business on the agenda for this meeting.
The polls are now closed as of 04:18 Eastern Time. The votes will now be tabulated, and I will announce the preliminary results of the voting at the end of the meeting. There being no further business to come before the meeting, the formal business portion of the meeting is hereby adjourned. Steve Spinner will now make a few comments, and then we will conduct the question and answer portion of the meeting. Steve?
Thank you, Jill. Let me make a few comments on 2020, which was truly a monumental year for the world, for our country and for UNFI. From an operations perspective, the fiscal year began largely as we expected it would. However, as everyone knows, life as we know it changed dramatically last March as the COVID nineteen pandemic began to spread. Almost overnight, demand began to spike To meet this unprecedented shift towards food being consumed at home, our supply chain teams worked tirelessly working around the clock seven days a week.
Our merchandising and procurement teams had the foresight to increase purchases of items they anticipated could and ultimately would be in high demand. And our field teams worked closely with our customers to help get them as much product as possible as well as much of the personal protective equipment and store signage they needed to keep their stores running. I am especially proud that we held true to the core values and deeply rooted culture that governs our behavior, making the health and safety of our associates, our customers, and our communities our top priority. We immediately implemented heightened sanitation and other protective procedures tailored to our operations. We put in place drop and go protocols for drivers arriving at retail stores.
We were one of the first companies to adopt $2 per hour in hero pay. We quickly moved to a remote work environment for office functions. We donated more than $1,000,000 to philanthropic organizations to help those impacted by COVID nineteen. And we've donated millions of pounds of food and essential items to food banks across the country. We spent close to $60,000,000 keeping our associates safe and rewarding them for the truly heroic work they were doing.
It was their efforts that helped us finish the year strong with results that exceeded our original expectations. And it's their efforts that have propelled us into the new fiscal year where we continue to play a vital role in Feeding America. From a leadership perspective, we filled several key roles with talented and experienced executives who I know will drive our business forward. Yesterday, I was extremely proud to release our 2020 ESG report, which not only highlights the substantial progress we made in 2020 including the creation of a CEO led executive steering committee and completion of a full materiality assessment but also outlines our ambitious 02/1930 goals which will accelerate positive and critical change over the next decade. We are excited about what we have done and where we are headed.
If you have not already done so, I encourage you to review our report and our 02/1930 vision at betterforall.unfi.com. Looking forward, we expect to grow our business again in fiscal twenty twenty one and I believe the longer term outlook for UNFI has never been better. Let me close by thanking you for your continued support. We will now turn to the question and answer portion of the meeting. Members of management in attendance, Mr.
Roy, our Lead Independent Director, other directors as may be applicable and the representatives from KPMG LLP who are present with us today will answer questions submitted through the online meeting portal that were not addressed in connection with the proposals. If you would like to ask a question through our online portal, please submit your question in the ask a question text box on the online portal and click submit. Let me ask the company's associates who are monitoring questions for their virtual meeting if there are any additional questions that have been submitted at this time.
Hi, Steve. We do have a few questions, so we will take them in turn. The first question is, with COVID, have you had any major supply issues in purchasing products to distribute to your customers? Thank you in advance.
Okay. Sure. I'll take that one. Yes. As you might imagine, when COVID first ramped up back around March, April, and May, we did suffer from a high degree of product outages.
Those outages are the obvious ones, toilet paper cleaning supplies, sanitizing wipes. And that ultimately found its way into canned soups, baking supplies, and other products. Those out of stocks have stabilized, however, not to the level that they were pre COVID. However, we're making progress. And the good news is that our retailers have enough products in each one of those categories to satisfy ongoing consumer demand.
We feel pretty confident that we're seeing sequential improvement in our overall fill rates and the access to product and that as we get through the summer months that will become less of an issue or a factor. Jill, are there any additional questions? Yes,
there are. This question relates to the pandemic and our essential workers. Given the growing interest of shareholders and human capital management, particularly concerning the pandemic and essential workers, can the board describe retention, welfare, and safety considerations it's giving to UNFI workers, specifically regarding hazard pay? Who on the board has responsibility to oversee the company's workplace practices concerning the COVID-nineteen pandemic? How are they provided with relevant data?
There's a second very similar question regarding the growing interest of investors in human capital management around the pandemic. Describe the retention, welfare, safety considerations given to workers and specifically the issue of hazard pay. Mr. Spinner, I could take that as co executive lead of risk and safety with Eric Dorn and then ask the board to supplement my response.
Thank you. Thank you, Jill.
Okay. So at the commencement of the pandemic, UNFI made the decision to put the priority of risk and safety relative to our associates at the forefront of everything that we did. We immediately adopted comprehensive safety protocols tailored to our operations, everything from enhanced sanitization to issues of quarantine, contact tracing, social distancing. And we continued to evolve those safety practices as the pandemic evolved and as we learned more, following very carefully and sometimes exceeding the recommendations of the CDC in this regard. We have since adopted comprehensive mask wearing, temperature checks, symptom checks, and additional safety protocols at our DCs.
We almost eliminated visitors coming to our DCs very early in the process. We adopted protocols for our drivers in terms of drop and go for our sales teams that were interacting in our retail customer locations and other comprehensive protocols. We were also one of the first companies to adopt the $2 state of emergency hazard pay, And we continued that pay through a couple of extensions during those times when volumes had spiked and there was additional pressure at our DCs. So from a safety perspective, putting our associates at the forefront of everything we had done at that time and making that a priority was absolutely a commitment of UNFI and the board. From a board level perspective, a question regarding who has oversight, the entire board had responsibility for oversight of our COVID response.
There were many, many meetings, both formal and informal, and updates provided consistently throughout the pandemic. And of course, as the pandemic has intensified over the recent months, these meetings have continued and the updates have continued. So the Board's oversight has been quite robust throughout the entire process. Eric, Mr. Doran, would you like to supplement that response before I turn it over to Peter Roy on our Board?
No, Jill. I think you captured the very essence of everything we've done throughout. So I would turn it over to Peter at this point.
Thank you, Eric. I want to assure all of our shareholders that are on the call that this has been a major priority for the Board. We have continued on a very regular cadence to get updates and have lengthy discussions on not only how to protect our associates, but how COVID was impacting all aspects of our business throughout the pandemic, and we continue to do so. As Steve mentioned, we've spent over $60,000,000 to date on COVID safety and we'll continue to make whatever investments are necessary to see the business through this pandemic. And I can assure you this will continue to be a major priority for the Board.
Thank you, Jill.
Jill, are any additional questions?
Mr. Spinner, we have one final question. Will you grant Amazon stock warrants? So
we've had a long relationship with Whole Foods and our current contract goes out to 2025, which is five years from now. We work hard with Whole Foods every day to make sure that we're providing the highest level of service that we can. And as we negotiate the next extension, which we're in the process of doing, we'll consider everything. And the idea today is the same as the idea that was in place five years ago and that is to make sure that we put the company in a position to succeed over the long haul and puts forth a contract that's fair and equitable to both. As far as specifically to warrants, I mean, that's just not something I can comment on.
Jill, are there any other questions?
There are no further questions.
Thank you, Jill. That concludes our Q and A session. I'll now ask Jill Sutton to provide the preliminary voting results. Jill?
Thank you, Steve. The Inspector of Elections has informed me that the results have been preliminarily tabulated. We have received the preliminary report of Broadridge as Tabulator of the Votes and Ms. Havarnand as Inspector of Elections. According to the preliminary results, a quorum is and has been attended at this annual meeting for all purposes.
Each of the nominees for director received more votes for the director's election than against his or her election. Accordingly, subject to the final tabulation of votes, those persons nominated for director are duly elected as directors of the company to hold office until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified. In addition, each of proposals two, three, and four has been approved by the stockholders. Accordingly, again, subject to final tabulation of votes, I declare that these proposals have been approved. The results of the voting will be incorporated into the minutes of the meeting.
We will formally announce the final results of the vote in a Form eight ks that the company will file with the SEC within four business days. That's my Okay. Thanks, Steve.
Thank you, Jill. Ladies and gentlemen, thank you very much for attending this year's Annual Meeting of Stockholders and for your continued interest and support in United Natural Foods. Have a great day. This now concludes the meeting. Thank you for joining, and have a pleasant day.