eBay Inc. (NASDAQ:EBAY) Shareholder Meeting 2019 Conference Call May 30, 2019 11:00 AM ET
Company Participants
Tom Tierney - Chairman of the Board of Directors, Acting Chairman of Annual Meeting
Devin Wenig - President and CEO
Matt Murphy - Board Member
Fred Andersen - Board Member
Tony Bates - Board Member
Diana Farrell - Board Member
Logan Green - Board Member
Bonnie Hammer - Board Member
Katie Mitic - Board Member
Paul Pressler - Board Member
Bob Swan - Board Member
Perry Traquina - Board Member
Scott Schenkel - Senior Vice President of Finance and Chief Financial Officer
Marie Huber - Senior Vice President of Legal Affairs, General Counsel and Secretary
Kris Yetto - Senior VP, Chief People Officer
Steve Wymer - Senior VP, Chief Communications Officer
Tom Tierney
Good morning, everyone. Welcome to the 2019 Annual Meeting of the Stockholders of eBay Incorporated. I'm Tom Tierney, Chairman of the Board of Directors of eBay. And I will be acting as Chairman of this Annual Meeting.
Before I call the Annual Meeting to order, I'd like to introduce you to the Members of the Board of Directors and the management team for with us in here today. Devin Wenig, President and CEO is with us. Matt Murphy, Board Member with us. And joining us by telephone are following Board Members; Freddie Andersen, Tony Bates, Diana Farrell, Logan Green, Bonnie Hammer, Katie Mitic, Paul Pressler, Bob Swan and Perry Traquina.
In addition to Devin Wenig, the members of the management team with company here today are Scott Schenkel -- Scott, where's Scott -- Senior Vice President of Finance and Chief Financial Officer; Marie Huber, our Senior Vice President of Legal Affairs, General Counsel and Secretary; Kris Yetto, our Senior VP, Chief People Officer; and Steve Wymer, our Senior VP, Chief Communications Officer.
I'd also like to introduce [Chris Stephens] and [Stella Sue] of PricewaterhouseCoopers LLP, the company's independent auditor, who are available to respond to appropriate questions. The annual meeting will now officially come to order. We will proceed with the formal business of the annual meeting as set forth in our notice of the annual meeting and proxy statements. After the annual meeting is adjourned, Devin will make some remarks regarding the company and answer any questions.
A copy of the rules of conduct for this annual meeting was placed on the seat of each attendees' chair. To conduct an orderly annual meeting, we require that participants comply with the rules of conduct. If you'd like additional copies of the rules of conduct, please inquire at checking table. I'm sure most of you can't wait for more copies.
Marie, please report on the mailing of the notice of the annual meeting and list of stockholders.
Marie Huber
I have at this annual meeting a complete list of the stockholders of record of the company's common stock on April 5, 2019, the record date of this annual meeting. I also have an affidavit from Broadridge Financial Solutions certifying that beginning on April 19, 2019, the notice of annual meeting of stockholders and with respect to only to those who requested delivery of proxy materials by the mail, the proxy statement was deposited in the U.S. mail to stockholders of record as of the close of business on April 5, 2019.
Tom Tierney
Thank you. At this time, I'd like to introduce [Trish Hodson] of Broadridge Financial Services Inc., Trish, there you are. Thank you. Trish has been appointed to act as the Inspector of Election at this annual meeting. Trish has taken and subscribed for customary oath of office to execute her duties with strict impartiality. We will file this out with the records of this annual meeting.
As the Inspector of Election, Trish's function is to decide upon the qualification of voters, except their votes and when balloting on all matters is completed to tally the final votes.
Marie, please report on existence of a quorum.
Marie Huber
I've been informed by the Inspector of Election that proxies have been received for 758,790,546 of the 874,816,660 shares of common stock outstanding on the record date of April 5, 2019, which represents approximately 87% of the total number of outstanding shares. I hereby declare a quorum present and this annual meeting is ready for official business as set forth in the notice of annual meeting of stockholders.
Tom Tierney
I now hereby declare this annual meeting to be duly constituted for the transaction of all business. Are there any additional proxies to be submitted to the Inspector of Election at this time? All right, thank you.
We will now proceed with the formal business of this annual meeting. There are four management proposals and one stockholder proposal if properly presented, to be considered by the stockholders at this annual meeting.
Marie, please report on the opening of the polls.
Marie Huber
The time is now 8.05 a.m. Pacific on May 30, 2019. And the polls are now open for voting on all matters to be presented at this annual meeting. The polls will be closed to voting after we go through the matters to be voted upon.
Tom Tierney
The first item of business today is the election of 15 directors to serve until our 2020, or 2020 annual meeting of stockholders and until their successors are duly elected and qualified. The 15 director nominees are; Freddie Anderson, Anthony Bates, Adriane Brown, Jesse Cohn, Diana Farrell, Logan Green, Bonnie Hammer, Katie Mitic, Matthew Murphy, Pierre Omidyar, Paul Pressler, Robert Swan, Thomas Tierney, Perry Traquina and Devin Wenig. Is there any discussion?
The second item of business today is the advisory vote to approve named executive officer compensation. Is there any discussion? The third item of business today is the ratification of the appointment of PricewaterhouseCoopers LLP as the independent auditors of the company for the fiscal year ending December 31, 2019. Is there any discussion?
The fourth item of business today is the consideration of a management proposal to amend special meeting provision in the company's charter and bylaws. Is there any discussion? The fifth item of business today is the consideration of a stockholder proposal requesting that the board require an independent chair.
The stockholder proposal supporting statements are included in the proxy statement. This proposal was submitted by one of our stockholders, John Chevedden, who has authorized Jing Zhao to serve as his representative to present the proposal. Mr. Zhao, would you like to make your statement now. You have a limit of four minutes. Thank you.
Unidentified Company Representative
Thank you very much. Good morning fellow shareholders. The proposal number five is for independent Board Chairman sponsored by John Chevedden. Shareholders request at the Board of Directors adopt a policy to require of the Chairman of the Board be an independent member of the Board whenever possible.
This proposal topic, while 50% passed, support on five major U.S. companies in 2013, including 73% support at Netflix. These five major roles would have been still higher if more shareholders had access to independent proxy voting advice. Shareholder proposals such as this have taken a leadership role to improve the corporate governance laws of eBay. For instance, after eBay received shareholder proposals, eBay then adopted better practice, such as the elimination of a burden on shareholders to obtain far more than majority votes to approve certain covenants improvements and adopted limited right for shareholders to call for special shareholder meeting.
The votes reported for this proposal will be understated, because eBay has put its hand on the scale and distributed advertisement against this shareholder proposal the external company expenses. So please vote number five independent board Chairman. Thank you very much.
Tom Tierney
Thank you very much. Is there any discussions? All right, that was the final proposal for this annual meeting. The secretary will now describe the voting procedures.
Marie Huber
Voting is by proxy or written ballot. Each share of common stock is entitled to one vote. You do not need to vote in person if you’ve already submitted your signed proxy, or if you have submitted your signed proxy at this annual meeting. Is there anyone present, whether or not you previously submitted a proxy who now wants to vote in person? The time is now 8.10 a.m. Pacific Time and the polls are now closed for voting.
Tom Tierney
May we have the results of the voting?
Marie Huber
The preliminary report of the Inspector of Election covering the proposals presented at this annual meeting is as follows: The proposal to elect each of Fred Anderson, Anthony Bates, Adriane Brown, Jesse Cohn, Diana Farrell, Bonnie Hammer, Kathleen Mitic, Matt Murphy, Logan Green, Pierre Omidyar, Paul Pressler, Robert Swan, Thomas Tierney, Perry Traquina and Devin Wenig as Directors of the company has been approved with each nominee receiving affirmative votes of more than 96% of the votes cast.
The advisory vote to approve names executive of the compensation has been approved with approximately 90% of the votes present in person or by proxy, and entitled to vote been in favor of such proposal. The ratification of the appointment of PricewaterhouseCoopers as independent auditors of the company for the fiscal year ending December 31, 2019 has been approved with approximately 97% of the votes present in person or by proxy entitled to vote in the proposal voting in favor of such ratification.
The management proposal to amend special meeting provisions in the company’s charter and bylaws has been approved with approximately 99% of the votes present in person or by proxy, and entitled to vote been in favor of such proposal. The stockholder proposal requesting that the board require an independent chair has not been approved with approximately 23% of the votes present in person or by proxy and entitled to vote being in favor of such proposal.
The final votes will be published in the current report on Form 8-K that we expect to file with the SEC within four business days of this annual meeting.
Tom Tierney
The formal business portion of the annual meeting is now concluded. At this time, Devin will make some remarks regarding the company’s business. These remarks may include forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed. More information about potential factors that could affect the company’s business and financial results is included in the company’s SEC filings, including the company’s annual report on Form 10-K and its quarterly reports on Form 10-Q. The annual meeting is now adjourned, thank you.
Devin Wenig
Thank you, Tom. Thank you, Marie. And thank you to our shareholders who are here. I see a couple of familiar faces in the crowd. I know there're some people that have been here year-after-year, and we appreciate your support. So I'll make a couple of remarks about the company, and then I'm happy to answer any questions.
So let me start by just reiterating forward statements disclosure in the proxy, and you heard it from Tom. I want to start with our purpose. This is something we talk about frequently in the company. Last week, we had close to a 1,000 of our top leadership together to talk about the company, and its direction, and its future. And I always start with the purpose of the company. The purpose is the reason we exist. The purpose is what would be missing if eBay wasn't present in the world. And we think that this is one of the most powerful engines of economic democracy that the world has ever created.
We think the purpose of the business is to enable small business, is to enable participation in the economy for so many that otherwise had not been able to. We empower people and we create economic opportunity. It was the founding principle of this business when Pierre created it, and it still lives and thrives today. And it's highly motivational for the employees of the company. It's more than just a statement of what we do. It's a statement of who we are.
Our priorities that we've been discussing both internally and externally for the last couple of years can be summarized very simply. We want to offer our consumers the best choice. eBay has always been one of the most magical marketplaces in the world, where almost anything that's ever been bought and sold in the world can be found. We want to offer the most relevance. Having vast inventory isn't helpful if consumers can find it, and if consumers can't appreciate it. So relevance is extremely important for both our consumers and for our sellers.
And that leads to a powerful selling platform. Sellers want velocity. Sellers want protection. Sellers want a place that they feel comfortable selling. And there's never been more inventory on eBay's marketplace than there is today. So this is something in the sense of these three strategic priorities that we've been pursuing through a number of really important initiatives, to breathe life into the inventory, to breathe life into the relevance of the platform and to keep striving to be the most powerful selling platform for the millions of sellers that rely on eBay around the world.
Some of our highlights from the last year are significant changes to the buyer experience; improvements to the homepage; improvements to conversion; improvements to things like the way we use machine learning and artificial intelligence; to drive that relevance for our consumers; significant changes to the seller experience; improvements to the tools and data that we provide to sellers, so that they can make better informed choices about how to sell their inventory more effectively on our marketplace. Geographic expansion, it was a really exciting year where we’re reentered markets like Japan and we’ve seen really great growth in one of the world’s largest e-commerce markets there.
And finally payments, a year ago we spoke about the fact that this is something that we felt we wanted to do in order to drive a better buyer and seller experience, and to achieve economics for our shareholders. 2018 was the year we started it, and we kicked it off and we’re off to a great start. And now, I guess we’re about six months into it and we couldn’t be happier with where we are. And we think our customers feel the same way.
Our three year momentum has been significant. Our ecosystem is strong. We last year had 95 billion of what we call GMV, that's sales on the platform. So this is one of the world’s largest e-commerce businesses when I talk about it being an enormous engine of economic democracy that’s where it shows up in the financial numbers. 95 billion on behalf of sellers on our market place around the world. And we’ve been able to grow the customer base quite substantially, and add 10 million new buyers to the platform just in the last several years.
So we work very hard on growing what we call the fly wheel. The fly wheel is inventory, more sellers selling on the platform, more buyers buying from the platform. That creates the economic fly wheel that I discussed previously.
Financial highlights for us were, as I mentioned, 95 billion of GMV, 10.7 billion of revenue just less than 180 million buyers. Remember this was the close of 2018. In Q1, we reported another 4% growth for that number. So now we’ve checked over 180 million active buyers on the platform. And we’ve been very aggressive about returning capital to our shareholders in order to help them with their returns and reward our long term investors. So these are the highlights of the year. Obviously, we’ve had one quarter since then. We’re pleased with the way 2019 has begun.
StubHub had -- here are their core metrics; revenue of 10%, GMV of 5%, revenue of 5% -- sorry, classifieds revenue growth of 10%, StubHub revenue growth of 5%, eBay revenue growth of 6%; so just a couple of additional metrics when you click down one level and look at it by platform level.
When I look at what’s ahead, we have a very exciting 2019 plan and beyond. We've spoken a lot about the use of data to help build the relevance of the market place. We have some really exciting enhancements to the way consumers browse, the way consumers discover inventory, the way we use machine learning to surface relevant inventories for the 180 million consumers who actively shop on our platform.
We’re very focused on retail standards. So what that really means is consumers want their package cheaply, they want it quick and they want confidence that they’re going to get it, and they can return it if something goes wrong. And we’ve been making a lot of strides to guarantee delivery, to shrink delivery times and delivery cost, and to give consumers confidence when they shop in our market place.
This is a year we’re very focused on improving the data and tools that our sellers have at their disposal. It’s really important to us that sellers have world class tools. And one of the most powerful aspects of our market place is the data that resides in it. So we know what’s selling, we know what consumers want. We know when an item becomes in demand. And giving that data to the sellers on the marketplace allows them to make informed choices about inventory and about pricing that inventory.
So sellers can expect us to provide more data, more analytics to put the power in their hands. And at the same time, sellers want protection in the marketplace. We've taken some steps already to provide enhanced protection to the sellers that utilize our marketplace. And sellers can expect there'll be more to say as the year progresses, as we try to give them better and better protection when they sell on the eBay platform.
I mentioned managed payments. This will be a year in which our hope is that we will take the U.S. payments intermediation from what we're allowed to do under our operating agreement with PayPal, which is 5% until July. And beyond July, we'll move that 5% progressively up towards 10%. And as we announced in Q1, it's a year we also hope to launch our payments initiative in a second market, which is Germany.
And finally, we have a very robust first-party advertising business. First-party advertising business means sellers can choose to buy first-party ads, in a sense, trade-off a bit of margin for a bit of velocity. This is a program which has been very rapidly growing. And what I'm really pleased about is that the seller satisfaction with the programs is amongst the highest that I've ever seen for a new program that eBay has launched.
So these are the core initiatives that are in our marketplace that we tend to speak more about this year. This is what all of us are focused on. And I think it's going to be a very exciting year. We're really pleased with the way the year is started. We're pleased with our plan. And we're pleased that we've been able to continue to grow the customer base, which has been a very big priority of mine, in particular.
This concludes the formal remarks, my formal presentation.
Question-and-Answer Session
End of Q&A
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