Ladies and gentlemen, shareholders, first of all, I would like to welcome you. I'm very pleased to welcome you at the Kering headquarters. I'd like to call to order the combined shareholders meeting of Kering Group. This shareholders meeting will vote on the financial statements for fiscal 2018. We're pointing as tellers with their acceptance.
Alban Gregy representing the Artemis Company Mr. Andre Guibert representing the Manon Holding Company. Along with me, they will make up the AGM's Bureau. Eric Sandrin, General Counsel of the Group, is appointed Secretary of the Shareholders' Meeting. I'm pleased to see that once again, you're attending a large number this afternoon.
I wish thank you for that. Shareholders, your presence shows how important the great importance you attach to the shareholders' meeting, which is an important time for us, a time for discussion, for information and most importantly, for decisions pertaining to our group. This also shows your deeply held attachment to our group, and I very sincerely thank you for that. Now Eric Sandrine will present to you the legal provisions and will announce the agenda for the shareholders' meeting. Ladies and gentlemen, shareholders, you're at a combined shareholders meeting after notice of this meeting, which appeared in the Gazette of official notices on 18 March 2019 and through April 2019 as well as letters which were sent out to registered shareholders in compliance with legal and regulatory provisions.
The necessary quorum to hold the shareholders' meeting has been reached. We've just been given the quorum. Therefore, this meeting can deliberate. As usual, I have available to you the various documents we've alluded to pertaining to the shareholders' meeting, I. E, the notices I mentioned as well as acknowledgment of receipt of letters sent to the statutory auditors, copy of the notice of the meeting sent to registered shareholders, The attendance sheet for this meeting as well as the proxies and voting forms that were sent in by post as well as various documents in compliance with the Code of Commerce.
These were held as per statutes made available to members So requesting such as the reference document for 2018, including the annual financial reports as well as the financial statements and consolidated financial statements as of 31 December 2018, the Board of Directors Management report, the description of the share buyback program, the Board of Directors report on corporate governance, various reports by the statutory auditors as well as the draft resolutions. Lastly, I would like to recall the following: the proxy forms and the forms to vote by mail sent to our shareholders, also included the documents provided for under existing regulations. Documents called for under Article R22583 of the Code of Commerce were sent to shareholders that made a request for these. Documents and information foreseen by the law have been posted on the company's website and made available to shareholders at the corporate head office. Lastly, documents which were sent out to you were also submitted to the employee representation council, and they made no comments.
I'd also mention, for the sake of appropriate proceedings of this children's meeting, we have the attendance of a bailiff, an official named Metre Biche, a bailiff in Paris, and these discussions will also be recorded in their entirety. The general meeting will deliberate on the following agenda under the ordinary general meeting: 1, approval of parent company financial statements for fiscal year ended December 31, 2018 2, approval of the consolidated financial statements for the fiscal year ended 31, 2018 3, appropriation of net income for 2018 and setting of the dividend 4, ratification of the appointment of Geneva Elcon as Director 5, ratification of the appointment of Financia Pinault, represented by Eloise Tempelbuoye as the Director 6, approval of the remuneration paid or awarded to Francois Henri Pinault, Chairman and Chief Executive Officer for the fiscal year ended 31 December 2018. 7, approval of the remuneration paid or awarded to Jean Francois Palleaux, Group Managing Director for the fiscal year ended December 31, 2018. 8, approval of the principles and criteria for determining, allocating and awarding the fixed variable and exceptional components of the total remuneration and benefits in kind granted to Francois Henri Pinault, Chairman and Chief Executive Officer 9, approval of the principles and criteria for determining, allocating and awarding the fixed variable exceptional components of total remuneration, Mr.
Jean Francois Parisou, Group Injector. 10, authorization to be given to the Board of Directors to purchase, retain or transfer the company's shares. Next, after that, we'll move on to the extraordinary session to vote on extraordinary general meeting items. Item 11, authorization for the Board of Directors to reduce the share capital by canceling shares purchased or that will subsequently be purchased under a stock repurchase program 12, delegation of authority to the Board of Directors to issue ordinary shares and securities with preemptive subscription rights except during an offer period. 13, delegation of authority to the Board of Directors to decide to increase the share capital by capitalizing reserves, profits or additional paid in capital except during an offer period.
14, delegation of authority to the Board of Directors to issue ordinary shares and securities by public offering other than as provided for an article L-four eleven-two without preemptive subscription rights except during an offer period. Resolution number 15, delegation of authority to the Board of Directors to issue ordinary shares and or securities carrying rights to shares in the company or carrying rights to allotment of debt securities and or securities carrying rights to shares in the company to be issued without preemptive subscription rights to qualified investors or to restricted circle investors as provided for an Article 11,414,122 of the French Monetary and Financial Code except during an offer period. Resolution 16, authorization to the Board of Directors to set the issue price of ordinary shares and or securities, giving access to the share capital under certain terms and conditions limited to 5% of the share capital per year in the context of an increase in capital by issuing shares without preemptive subscription rights. Resolution 17, delegation of authority to the Board of Directors to increase the number of ordinary shares or securities to be issued in the event of a share capital increase with or without preemptive subscription rights limited to 15% of the initial issue undertaken pursuant to the 12th, 14th and 15th resolutions, which I've just read to you.
Resolution 18, delegation of powers to the Board of Directors to issue ordinary shares and or securities giving access to the company's share capital in payment for in kind contributions granted to the company comprising shares in the company or securities, giving access to the share capital limited to 10% of the share capital except during an offer period. Resolution 19, delegation of authority to the Board of Directors to decide to increase the share capital by issuing ordinary shares or other securities, giving access to the share capital reserved for employees or former employees who are members of 1 or more employee savings plans without preemptive subscription rights. The last two resolutions, 20, amendment of the provisions of the articles association relating to shareholder notifications. Lastly, as is customary and this is an ordinary general meeting, 21 powers for formalities. As we always do, we try to organize ourselves as much time as possible for discussions.
I would suggest that the AGM not read out in its entirety the Board of Directors report. This document was not out to those of you who requested it. It, at any rate, is also contained as well as the other figures you'll be given during the meeting are contained in the 2018 reference document. This document is available to you if you would like to have it. Our agenda will be to follow Jean Francois Palleu, General Manager Group Managing Director.
First of all, we'll give you a report of the group for the year and analyze 2018 results. After that, Francois Henri Pinault, Chairman and Chief Executive Officer, will come back and explain the company's business model to you. After that, we will talk to you about 2 very important points in this group. First of all, sustainable development and secondly, governance. This presentation has been made by Mike Claude Davout, who will give you an update on our sustainable development action plans.
Afterwards, Sophie Elias, senior member of the Board of Directors, will report to you on the Board of Directors' activities and also make a presentation on compensation to the corporate officers. Lastly, Francois Henri Pinault will say a few words of conclusion. Before we report, we will hear by the statutory auditors. After that, we will begin a question and answer session. And after that, we'll vote on the resolutions.
2018 was an excellent year for Kering and all of our houses. 2018 overall was a buoyant year, though the economy became more difficult to decipher during the year. That was the overall backdrop. The environment during that year, carrying generated €2,800,000,000 additional euros in revenue versus 2017, which represents a 29% increase on a comparable basis and 26% on a reported basis. Current Kering's current operating income grew by EUR 1,300,000,000, which is an increase of 47%.
This growth is really based on a sound foundation. This is a very sound foundation footing for our future. These results are thanks to the appropriateness of our business model of a multi brand luxury group and a precise execution of our strategy in every one of our houses and throughout the group, always with a constant eye to financial discipline. Our management teams are talented. They've been in place for many years now.
I'd very much like to underscore here the contribution made by the 35,000 group employees worldwide. Together, all of us share the same ambition, which is to make Kering the most influential group in the luxury universe. To that end, we share the same company culture. 2018, therefore, will have been a year of strong value creation. Kering's share price went up substantially.
The overall equities market was down, which reflects the structural increase in our profitability. Furthermore, as shareholders in 2018, we benefited from the exceptional distribution of Puma shares and an increased dividend as well. Jean Francois Palleu now will report to you on 2018 and analyze our results. After that, I will take the floor again to talk to you about our ambitions for caring and all of our houses. Jean Francois, give the floor.
Ladies and gentlemen, good afternoon. Thank you, Francois Henri. 2018 marked the crowning achievement of Kering amongst the top luxury groups in the world. Our revenue reached almost €14,000,000,000 with a smooth distribution across geographic areas. Each area achieved a growth above 20%, In the case of North America, almost 40%.
Recurring operating income of Kering reached almost €4,000,000,000 up 47%, thanks to the strong leverage from the increase in revenue and our disciplined approach in terms of cost containment. Net income group share more than doubled over 20 17. 2018 in every respect is a remarkable year in terms of operational and financial performance. We're able to combine organic growth and profitability in an exemplary way. Group revenue delivered sustained growth throughout the year on very high basis of comparison.
Once again, we've achieved growth rates way above those of the industry. The strong increase in revenue went hand in hand with even greater growth in recurring operating income and therefore the profit margin. Net income group share stands at €3,700,000,000 of which €1,100,000,000 coming from the book disposal capital gain linked to the distribution of Puma Shares. Net income group share of continued activities excluding non recurring income reached €2,800,000,000 up 49%. Free cash flow stands close to €3,000,000,000 whereas we maintained a high level of investment at around 6% of group revenue.
We devoted a large part of this cash generation to reducing our net debt that has been halved. The debt ratio, therefore, reaches 0 point 4 times EBITDA. Lastly, we are proposing that you approve a dividend per share of €10.50 per share for 2018. That's an increase of 75% over last year. Our luxury activities in 2018 have achieved record levels.
Revenue exceeds €13,200,000,000 That's an increase of 26% on a reported basis. Our directly owned stores that account for 77% of revenue saw their revenue increase of 31% on the year. Online sales are up 71%. Growth was driven both by local and tourist customers, although we see slowing tourist spending at the end of the year, notably in Europe. Recurring operating income of Luxury activities is up 45 percent and stands at €4,200,000,000 This performance is due to an improvement in the gross margin and the very high leverage effect at Gucci, Saint Laurent, Balenciaga.
Bottega Veneta is in a repositioning phase, and we continue to invest in order to expand our growth drivers. Operating profit stands at 31.6%. That's an increase of 4 10 basis points. I will now discuss the key figures of our Luxury brands. Gucci revenue having topped the €6,000,000,000 mark in 2017 comes in at above €8,000,000,000 in 2018, up 37% on a comparable basis with very high basis of comparison.
This performance is part of a long term trend, thanks to the continued success of the creative proposition across all product categories in all regions, all customers by nationality and age, it's all the more healthy because it's on a comparable store basis. Online sales are up 70% on the year. This revenue growth is fully impacting recurring operating income, up 54% and exceeds the €3,000,000,000 mark. The operating margin is up sharply, whereas the brand continues to invest. It stands at 39 point 5% on the year, up 5.30 basis points over 2017.
That's a new profitability record. Saint Laurent experienced another year of strong growth. Revenue was up 19% on a comparable basis after 7 consecutive years of growth above 20%. The brand thereby reaches €1,700,000,000 in revenue. The powerful appeal of Saint Laurent in ready to wear continues to heighten its desirability across product categories and those of accessories in particular.
Recurring operating income is up 22 percent to reach €459,000,000 The margin's up 120 basis points, topping 26%. In 2018, Bottega Veneta reached a new stage in its repositioning with the appointment last June of Daniel Lee as Creative Director. In this context of transition, the brand saw its revenue decline by 3% on a comparable basis. Directly owned stores was adversely affected in Europe by the slowing tourist spending without it being offset in other region. Recurring operating income stands at €242,000,000 Profit margin reached 21.8 percent, down 3 20 basis points over last year.
The growth of the other houses was very sustained in 2018, revenue topping for the first time the €2,000,000,000 mark, up 32% on a comparable basis. Balenciaga and Alexander McQueen are the main drivers of this growth. Our jewelry brands deliver strong performance and the fine watchmaking also delivered their 2nd consecutive year of increase. The recurring operating income of the other houses reached €215,000,000 and more than doubled. The operating margin exceeds 10%, thanks to the size effect of Ballia and Siaga, whereas we continue significant investments at Boucheron Alexander McQueen.
I will continue with a few comments on the other items making up net income. The other non recurring income and operational expenses represent a net expense of €222,000,000 essentially asset impairments without treasury impact as well as restructuring costs. Net net financial expenses stand at €207,000,000 against €220,000,000 in 2017. Net financial cost of debt comes in at €77,000,000 down 30% over last year. This significant improvement stems primarily from the reduction in the average outstanding debt.
The tax expense is at €868,000,000 up 58%. The effective tax rate comes in at 24.7 percent, and the rate related to the recurring income stands at 24.2% as against 22 point 6% in 2017. The increase in the effective tax rate on the recurring income is due in part to the change in the country mix of our sales also to the overhaul of the operating model of the group's brands coming now to the net financial debt of the group that's just above €1,700,000,000 at the end of 2018. That's increased declined of 50% over the 2017 base restated. This deleveraging was made possible by strong cash flow generation, whereas the group continued its shareholder return policy.
It led to an increase of 30% of dividends paid out as well as the launch of a share buyback program. The net debt to EBITDA ratio stands at 0.4 times. On this page, you'll find more detailed information on our financial structure and our balance sheet. The total amount invested capital is down following the exit from Puma, but also the sound management of our working capital requirement. Operational working capital requirement stands at around 18% of revenue.
You are asked to approve an increase of 75% of the dividend in respect of 2018, bringing it to €10.50 per share, as you can see here. We attach particular attention to the increase in the dividend and to shareholder return. The payout ratio is around 50% of the recurring net income or available cash flow. This led to an average annual increase of some 23 percent over the past 5 years. Furthermore, 2018 was marked by the extraordinary distribution of Puma shares.
That's around €36 additional at the distribution date. Lastly, we put in place a share buyback program that involved some 638,000 shares. Last week, we announced Kering sales for the Q1 of 2019. The group has once again outperformed. Revenue reached €3,800,000,000 That's an increase of some 22% on a reported basis and 18% comparable.
This was achieved on very high basis of comparison in the Q1 of 20 18 2017. Total revenue of our houses is up over 17%, an excellent increase fueled by a strong increase from 19% of directly owned stores. The online stores continue to grow strongly. Whereas the increased rates are normalized on a higher basis, it's important to note that in absolute terms, the level of additional revenue generated by the group in the Q1 2019 around €680,000,000 is on a par with that achieved during the Q1 of last year. Lastly, to conclude, shown here is the Kering share price performance.
Markets continue to applaud our transformation strategy and the spectacular performance of our houses. After an increase of 84% in 2017, the Kering share price once again achieved a remarkable performance since the 1st January 2018, up 40%. At the same time, the CAC 40 benchmark index grew by 5%. In 2018 alone, Kering grew by 13%. That's the 3rd best performance of the CAC 40 index since the beginning of 2019.
The Kering share price has increased strongly, posting growth of 24% as against 18% for the CAC forty Index. I'd also like to underscore the extraordinary performance of the Kering share price over the long term. Since the 1st January 2014, the Kering share price increased by 2 72%, whereas the CAC 40 index only grew by 30%. Thank you for your attention. And back to Francois Henri.
Thank you, Jean Francois. You're already familiar with our strategy, which I outlined for you last year, so I will not repeat it. But I would like to really emphasize our long term view of luxury. We place every one of our houses within the center of a strong creative universe, a global unique universe, and that's why we can create trends and generate demand, which outpaces overall growth in our market. We say that creativity is of paramount importance.
Therefore, our houses continue to have very strong potential for organic growth. There's consistency in their expression and all points of contact with customers and as a constant narrative that they roll out over time. Their creativity is a further way of gaining loyal customers. Strength, sincerity, that's the corporate culture at Kering, and that's another essential element inherent in our economic performance. And I'll come back to those points later.
Lastly, our development model is also based on platforms that can support our growth, which we've established in recent years to support all of our houses. These platforms further strengthen our competitive advantages, and I'll also come back to these points in a few moments. But first of all, let's give an update on the potential for organic growth of our houses. We'll begin with Gucci. Let's begin by talking about products.
In terms of merchandising, it's important to realize that the proportion of permanent product lines in Gucci's revenue, about 70%, our foundation for stable performance. These are recurring products with constant renewal, and there are confirmed successes every season as well as the successes of our novelties. The major categories are also very well balanced and that's an additional guarantee for sustainability and performance. Gucci's performance is significant in all of its product categories. In addition, there are categories yet to be developed or created.
Therefore, I'm convinced that we can do much better in beauty, for instance. Furthermore, Gucci, next June, will be launching our first collection of high jewelry, enabling the brand to further bolster its high end positioning. To talk about sales effectiveness, we have substantial growth levers. For 3 years, we've seen a strong increase in traffic, which has been the main avenue for growth at Gucci. Currently, we've seen great growth in our customer base, and we've got strong potential for further improvement in terms of conversion rates and retention rates that make it possible for us to reach our ambition when it comes to revenue per square meter to go well beyond €40,000 per square meter, which we reached last year 2018.
To talk to you about our stores network, We reached around 50% stores now renovated with the new concept. We should complete this store renovation program within the next 3 years. The new concept enables us to display more products, boosting cross sell cross selling and further improving visibility of overall product offering. Furthermore, our new stores are much more inclusive, attractive, which, of course, has a positive impact on traffic and supports our performance. The size of our store network should remain stable.
Our priority now will be to improve quality in terms of space and locations. Furthermore, we'll be increasing the share of travel retail where Gucci can continue to make strong progress, thanks to conversions and openings of points of sale. Lastly, Gucci online sales, which grew substantially last year, grew to over 70%. Online sales should go beyond the €1,000,000,000 mark in the medium term. Let's talk now about our customers.
All age groups contributed to Gucci's growth. Our extra performance is, to some degree, thanks to the strong attractiveness our brand has among the millennials. This is a major asset in both the short and the medium term for Gucci. It's important to specify that this customer segment, we can say that their retention rate and average purchase are almost identical to average for the house as a whole. Now talk about Gucci's digital transformation here as well.
The brand strengthened its position of excellence in the area of its communication strategy among other areas. We can see the very impressive success of Gucci in the social networks. Gucci's communication budget in digital areas will increase further in 2019. Lastly, to talk about the internalization of the supply chain, Gucci is in line with its targets here, making it possible for us to adapt industrial tool to increased volumes, all the while reducing time to market and further increasing our quality requirements. As you see, we're highly confident in Gucci's ability to substantially outpace market growth.
Therefore, we're confirming the targets we set for ourselves in June of 2018. Same point regarding Saint Laurent. We're in a perfect position to reach the targets we set in 2017. First of all, from a point of view of products, Saint Laurent's stylistic positioning is unique and brings together the strength of its heritage and the uncompromising modernity of its creation. Its creative universe is very broad and its communication is consistent over time.
This is why the House of Saint Laurent is able to maintain a strong desirability in its most creative category, which is ready to wear. That has a driving effect on all products, enabling Sonaha to sustainably outpace market growth. We can see this in the 7 consecutive years of growth in excess of 20%. To talk about sales policy effectiveness, productivity at existing stores is already very high. There'll be further progress in the area of customer experience.
At Santa Hall, the expansion of the store network is substantial potential for further development. We haven't yet reached a level of maturity for the overall sales network. In 2018, we were ahead of our road map. This year, again, we've got an ambitious program for Saint Laurent openings. Just as is the case for Gucci, in 2018, Saint Laurent intensified its digital presence and effectiveness, increasing its visibility and impact, particularly the high impact of his very spectacular Paris fashion shows.
This year, the communication budget for digital will increase substantially. Let's talk about Bottega Veneta now. We're currently radically changing its model, turning it into a global luxury house using the strength of the very great creativity of the Ready to Wear collections. With the arrival of Danielle Lee, taking charge of artistic direction of the house, we're making a strong creative statement. The strength of his creative vision enables us to increase visibility and most importantly, desirability of the brand, which will lead to strong organic growth in all categories.
Bottega Veneta already has a very faithful customer base. The challenge for us will be to very much maintain that and all the while open up to other customer segments from a geographical point of view and also in terms of demographics. To talk about the stores, Bottega Veneta also already has a substantially developed stores network, which is a real asset for the house. Our priority will be to focus our efforts and our investments on the quality of that network in terms of size and store location. Furthermore, a new store concept will be developed this year and rolled out throughout the network.
Lastly, we've already begun large scale investments in communication, stepping up Bottega Veneto's presence in all digital media. I also mentioned the pre collection, which we presented in the showroom as of December 2018, was very well received by professionals. The collection will be arriving in our stores starting next month. Also, I'd mention the last fashion show, which was, Daniel Lee's first fashion show, was beautifully well received. All these efforts should mean that 2019 will be a beautiful year for Bottega Veneta, but we'll have to wait for the second half of the year for this to actually impact the figures.
Now I'd like to talk to you briefly about our other houses. First of all, let's talk about our fashion houses. We began we decided to step up the growth momentum at Balenciaga and Alexander McQueen to turn these into global brands as well. In 2018, Balenciaga saw exceptional development. The house this year will substantially go beyond the €1,000,000,000 dollars mark for revenue.
It's still got a great deal of potential in Oralia by developing leather goods as well as men's products and through improving store productivity. In addition, we're stepping up overall network development. There's substantial potential for growth in this area. Onto Alexander McQueen. We're investing here as well to continue and build on momentum in 2018.
Henceforth, we've already developed a new store concept, which we inaugurated last December in London, Bond Street. And of course, this will be rolled out to the entire retail network. In the medium term, we'll be more than doubling the retail network for Alexander McQueen over the next few years. To talk to you about jewelry now, we're making large scale investments at our area at Boucheron. The most remarkable example of this has been the renovation of the iconic store at the Place Vendome, the restoration of the Hotel de Noussey, which is its name.
This is a truly exceptional showcase for the collections of the magnificent house. As you can see, individually taken, there's great potential for each of these houses. And as I said in my introduction, we've been able to outpace market growth into a large degree. This is thanks to the contributions by the group and the complementarity of our brands portfolio. Gucci is the indispensable backbone, a major backbone, which is ever more robust.
All of our houses, with no exception, continue contributing to future growth. Gucci and Saint Laurent will continue to grow and generate substantial cash flow, all the while adhering to their range of expected investments. We've got many other growth drivers as well as the sales Bottega Veneta, Balenciaga, Alexander McQueen and Boucheron. I must also mention from Alato and Quilin, last year, they had a very good year and they have tremendous potential as well. I'd also like to make a special mention for Kering Eyewear.
This is a major success of our group, which also illustrates our ability to bring to the floor innovative concepts that create value. We have a proven know how when it comes to transforming and relaunching houses when that's necessary. We're applying this currently to Brioni. We're changing their business model given the new impetus in the medium term. In the area of high watchmaking, we have 2 major fine making fine watchmaking facilities, Gerald Perrigo and Ulisse Nordin.
And we can say that we very much are boosting their long term potential, and we're also adding to their manufacturing synergy for these brands, all the while maintaining their respective market positioning. Above and beyond our houses, we can talk about our group's culture, its corporate culture, which is a major and essential asset. I'm convinced that companies that are able to maintain sustainable high levels of performance are those companies that develop the strongest company culture, and that's the case at Kering. We're very proud of this. Our group's culture builds on adds to the culture of each of our houses based on a deeply held belief that a company must have a reason for existence because well beyond the economic sphere.
This is why we shoulder our social and economic responsibility and consider them to be core to our strategy. This is why we do not hesitate to act as we do through the Kering Foundation, fighting violence against women and do not hesitate to act on certain societal subjects. Our company culture is based on managerial values of boldness, steadfastness and being vigilant. Innovation is also at the core of our corporate culture. It enables us to be forward thinking to future possible upheavals to turn this into opportunities to be moved on.
Our culture makes us more agile, more innovative. We all believe this. We're proud that this is also recognized by the outside world. This was the case yet again recently because the most recent ranking by Corporate Knights ranked Kering the 2nd company, the most responsible worldwide across all industries. Kering's role, as you've understood, is many fold.
We bring together complementary brands, providing them with the resources to make good on all their potential. We detect and bring forward talent, build a federating corporate culture. Kering's role is also to build a platform for growth for all of our houses. This platform enables us to adapt to an ever changing environment. This is a plus for all of our houses that can benefit from our group in its entirety to further enhance exceptional customer experience.
The attractiveness of our brands, the desirability of our products are more indispensable than ever before, but not that's not enough. We must also add to the omnichannel service and enrich them, increase product availability and most importantly, customize our dialogue with our clients. To add to our platform for growth and increased efficiency since 2017, we've enacted very large scale transformative programs. These projects and programs have to do with our e commerce sites, our logistics infrastructures and our information systems. We're also changing several of our operating methods, for instance, to bring onboard new technology through artificial intelligence.
This is an area where we're bringing in new expertise as well. In these areas, the initial experiments have been very promising. These programs for transformation will enable us to gain a further competitive advantage and move into a new cycle of development. Our houses all have great potential for development. Our growth platform enables them to increase their efficiency, contributes to stepping of growth during times of expansion and helps them adapt quickly during less favorable times.
This model, combined with financial discipline, makes it possible to keep a sustainable a sustained level of high profitability. This is the context. We continue to adhere to a balanced policy of capital allocation. The objectives are both to do a sound trade off among the various houses in the group and also constantly endeavor to deleverage and to carry out a carefully reasoned policy of return to shareholders. As you can see, we can adapt to market conditions.
We invest appropriately with a long term view. Therefore, we would be in a good position to move on opportunities for external growth, which would create value if they were to arise, of course. As our operational strategy, our financial targets remain unchanged. Revenue growth rates substantially outpacing overall industry and further improvement in our operating margins. More than ever before, we're convinced of our strategy, our assets and our talents.
They're perfectly aligned with long term trends of all of our markets. Now of course, there are unknowns in the global environment. There are risks, political, economic and financial risks, which could have a negative impact on our performance briefly. Thanks to the complementarity of our houses, our footprint, the diversity of our customer base and the strength of an integrated group, this should enable us this year yet again to substantially outpace market growth. Now I'd like to give the floor to Marie Claire Davout, Chief Sustainability Officer.
Thank you, Francois, Henri. Good afternoon to you all. I'm delighted to be with you once again this afternoon to give you an update on our developments in terms of sustainable development, pleased to share with you the results of our group in terms of sustainable development and to report on the efforts undertaken in order to be up to our responsibilities, the expectations of our customers and consistent with the vision of our CEO, Francois Henri Pino. I'm not Greta Thunberg whose ability to rally 100 of thousands of youngsters in events is astounding, but I'm pleased to have the opportunity to convince you that as leader and pioneer in
its sector,
our group in its sustainable development approach, an issue at the heart of our strategy and commits all our houses and teams, I'll not swamp you with figures. You'll find many in our integrated report. We've decided to share with you our assessment and our key actions. What is changing around us? What are the challenges?
How is Kering going about addressing them? And how do we implement our commitment at the crossroads of the general interest, which is key to our development and the interest of the group and its shareholders that we have constantly in mind. What is changing around us? We cannot ignore this. Environmental issues are increasingly prominent in the media and the political debate as well as in the minds of the population, especially in the under 35s.
We see many major changes. The growing prominence in media and networks are 2 major issues: the need on the one hand to save the planet, that of global warming and the loss of biodiversity, hence an anxiety and stronger expression amongst the young. On the other hand, questions involving environment and health such as air quality, the impact of plant protection products and emerging organic farming. Another issue is coming to the fore that of animal well-being as evidenced by Norway's recent decision to ban animal farming for fur. The situation is urgent.
Many of our citizens' customers demand concrete progress. So how is Kering addressing these challenges rather well and even very well, I believe, as a pioneer in luxury, we must be innovative, a standard setter, irreproachable, offering the best to our customers at Kering for many years now sustainable development is viewed as a necessity both ethical and economic more than a constraint. It is addressed as a great source of innovation and creativity. Thanks to the exceptional mobilization of our houses and teams. We've continued to make progress towards the targets of 2025 that represent our strategy creating tomorrow's luxury.
Last July, Kering published its 1st integrated report, a first in the luxury world. This aims at showing transparency and predictability in a new prospect of our activities by detailing its integrated model serving global value creation, creative, financial, environmental, ethical and social value. This perseverance and commitment benefits from increased visibility and attention on the part of media with dozens of mentions in the press in 2018, over the past 12 months, as Francois Henri said, Kering was ranked 2nd most sustainable company across all sectors in the Global 100 2019 of Corporate Knights, one of the most recognized international indices published during the Davos Forum and in the textile clothing and luxury sector, Kering is in 1st place. For the 2nd consecutive year, Kering is the only luxury company to being in the Climate Change A list of the CDP ranking. Of course, these are accolades, rewards for our teams that reward our strategic decisions and our teams, but much remains to be done.
We are determined and I'm very optimistic. Optimistic because under the Francois Henri Pinault, we act day in, day out to reduce our environmental footprint, preserve the planet and its national resources with new innovative tools and exacting standards. Our environmental strategy is ambition to reduce our carbon footprint by 50% by 202540% reduction of our environmental foot footprint. We've already achieved minus 10% to date. When we speak of our environmental footprint, it's not just in our own operations, but across our supply chain.
That's why we are continuing tirelessly our work on sustainable and controlled supplies. We're proud to announce that this year Kering adopted the 1st organic cotton 100% traceable, thanks to a solution developed within our Materials Innovation Lab. This offers complete traceability of the material across the supply chain. This innovation is key because we know that by analyzing our environmental income statement, the use of organic cotton reduces by 18% our impact as compared to traditional cotton. Still in the field of responsible supply chain.
This year, we forged a partnership with the Savory Institute for Regenerative Farming. Kering is the 1st actor in the fashion sector to join the Farm to Market program of the U. S. Association. Kering continues to develop this regenerative agriculture model in its overall supply chains to reverse the trend of soil and ecosystem deterioration.
Furthermore, the standards defined by Kering that apply to all our suppliers in order to achieve our social targets are very exacting and constantly reassessed, developed in conjunction with outside experts and NGOs, they're based on the most recent scientific research as well as on the most advanced practices. A year after the placing online of caring standards regarding raw materials and manufacturing processes whose implementation continues across our supply chain. We published earlier this year a new series of additional standards for synthetic materials, silver, colored stones and silk, Standards relating to animal well-being would soon be released. In order to accelerate the use of these standards across the group, this month, we are making available to our coworkers an e learning module enabling them to better understand these standards but also to embrace them fully. I'm also optimistic because Kering places more than ever innovation at the heart of its sustainable development strategy.
Innovation irrigates all our actions. It will allow us to genuinely change the paradigm and bring our industry into the era of sustainable luxury. Innovation is involved every step of the way. Innovation, raw materials, customer relationship, service offerings to create new opportunities and develop new business models Recognize the central place of innovation in the transition to sustainable luxury requires projecting ourselves beyond the bounds of our group to identify, sustain and embrace innovation where it emerges. This conviction pushed us in September to actively take part in the 2nd edition of the Change Now Summit, an event devoted to positive innovation that brought together 500 startups and speakers from the world at large within Station F Incubator in Paris welcoming over 4,000 participants.
We strongly believe in the power of innovation. We wish to go further in our determination to identify and partner with sustainable innovation startups. Last December in Beijing, we launched the Kering Prize for Sustainable Innovation in partnership with the Global Innovation Platform, Plug and Play, already our partner in Europe, notably in Amsterdam. 3 startups will be selected by a jury of experts between now and the Fashion Week in Shanghai in October, and the winners will follow a mentorship pathway that will allow them to access the caring network plug and play, meet industry leaders and investors. Another reason for my optimism is due to the fact that we are growing in numbers moving on the road to change.
That's why we are supporting the younger generation, building bridges with other players within and beyond the fashion and luxury industry. This year, we were proud and pleased to interact with many students, HEC, Polymoda in Florence or Columbia University. They're all incredibly aware of environmental challenges. They're very exacting, very agile in a fast changing world. To reach out to them also raises awareness to solutions and what they will do as customers or co workers in our houses the luxury of tomorrow.
In 2018, we also successfully inaugurated the MOOC created with our partner, the London College of Fashion, on the theme of Luxury and Sustainable Development, mixing videos, pop cards, exercises and discussions. This MOOC is for professional students and the public at large. It promotes the most sustainable practices. In 2018, it was followed by over 70,000 people across 144 different countries. Over and above the younger generations, our strategy involves increasing cooperation and interaction to allow us firstly to capture the best ideas where they come from.
That's part of our active ties with the startups mentioned earlier. Secondly, to attract the best talents to the group that justifies our many projects and and discussions with the most prestigious schools and universities worldwide. Lastly, to disseminate certain best practices because over and above our leadership position, there's a collective interest in the whole sector moving forward. It's this latter reason that they're to make available to all in open source all the results of our analysis and our methodology so that all actors concerned can embrace them. It's with this aim in mind that we're involved in many initiatives, be they business or academic.
An example, I think it's a good example, the publication at the side of BSR and many Asian partners have a report that provides operational solutions to create responsible and sustainable luxury brands. Kering also contributed to changing things beyond the borders through a white paper with the Cambridge Institute for planetary boundaries for business, helping companies in their decision making process so that their activities promote the balance of the planet. I could cite many examples. Before concluding, I'd like to say a word about our foundation. 2018 marked its 10th anniversary, and the foundation continues to perform remarkable work by supporting and raising the awareness of NGOs, social entrepreneurs in the fight against violence to women.
The 2nd edition of the White Ribbon for Women campaign raised the awareness of Generation Z through the scourge known as cyber harassment. There was a specific hashtag, idontspeakhater. 73% of girls or women are harassed online in the world and 87% of youngsters have witnessed that. This program reached out to 500,000,000 people. This was hailed a few days ago by a prize for brand content 2019 in the Humanitarian Social Great Cause category.
In terms of prevention, the foundation goes even further, decided to recruit the youngsters in the fight against violence to women, notably young boys and men, through 2 programs launched in the United States with special attention to the, collateral victims that are children. As you'll have understood, I'm very proud to be able to salute the important work of our houses and the commitment of all our co workers as well as that of our suppliers so that our group can progress on the road to sustainable luxury. All this to preserve our planet, to create the maximum value for all, 1st and foremost, for Kering and its shareholders. The challenges remain considerable. In 2019, we'll see strong initiatives or events from Kering.
I'm thinking of the preservation of biodiversity, which is a key focus area. Several major initiatives will be launched by Kering in the coming months with internationally recognized partners that ahead of the major event, which will be Biodiversity Corp in China in 2020. Kering will play a key role at the next Copenhagen Fashion Summit. Francois Henri Pinault will open the 10th edition of this international summit devoted to sustainable fashion. Lastly, Kering will take part with other Parisian players in implementing in 2019 the Paris Good Fashion Program to promote sustainable fashion by placing at the heart of its vision and work, creativity and imagination.
Caring gives life and meaning to its slogan, Empowering Imagination, because empowering imagination is our strength to prosper and to play our role as leader of luxury in the 21st century. Once again, we're not a luxury group that does sustainable development. We are a sustainable luxury group and I believe that this adjective will soon no longer be necessary because launch and sustainability will be increasingly melded into 1. Thank you.
Thank you, Marie Claire. Your optimism is always really contagious. I'd like to now ask Sophie Liljes to come to speak to us about Kering governance. As you know, the decision made last February to yes, come up to the stage, Sophie. Decision made to set up a new position as Senior Director within the Board of Directors to ensure a balance of power after the Vice Chairman of the Board left and had served as a linchpin previously.
So Sophie Elias has been unanimously appointed by directors to fill this new position as a senior director, member of the board, and we're very pleased, of course, with that. She will be providing us with all of her expertise in the area of corporate governance, but also in the area of sustainable development. Among other things, to represent the Board of Directors amongst shareholders on questions pertaining to governance, the environment and society. So if you have the floor, thank you, Mr. Pinot.
Ladies and gentlemen, one of the main tasks for the Board of Directors is to report to the shareholders. I would especially like to thank all of you for coming to attend this annual meeting, which is a very important meeting for your governance and the overall life of your company. I would like to report to you on the operation of the Board of Directors and submit to you the compensation for the 2 company corporate officers. On these 2 subjects, proposals are going to be up for your vote today. The proposal is the result of a constructive dialogue between senior management and the community of shareholders last year.
This resulted in several recommendations pertaining to environmental points, societal points and governance points as well. Several investors call this CSR and ESG. These are submitted to the Board of Directors, and we're outlining these for you today. First of all, we would like to extend and broaden dialogue to the entire community of shareholders and not to senior management only. It's a dialogue, direct dialogue between the directors, which are board members and overall investors.
That's a question of good governance, good practice. Let's talk about your company first of all. Your directors attended in large number in 2018. They were highly committed. They met in plenary session 8 times.
The average attendance rate of attendance rate of directors was 95% of the Board of Directors meeting. In addition, there were 8 meetings of the 4 Board committees. Attendance rate on average was 100%. There was a 2 day strategy meeting as well, where we had an opportunity and great privilege to question the various brand managers, also visit production facilities and meet with employees who are at the very heart of the success of this group. This field contact is one of the major highlights for your Board of Directors, a time when we can really see operations.
I won't give you detailed description of the Board's activities in the last year. I would very much invite you to read Chapter 4 though in the reference document on this. But I would like to talk to you about the assessment of how the Board operates. This assessment was carried out by an outside firm. It's an important exercise for the Board of Directors.
It's equally important for you. This is a way for the Board to ensure the relevance of its operations. The exercise is done in 2 stages 3 stages. Firstly, the outside firm interviews each member of the Board of Directors to hear from them their comments. This enables constructive frank dialogue with them, and these are anonymous interviews.
They are quantitative questions and qualitative questions as well pertaining to the Board of Directors as such, senior management, quality of information given to us. There's a real intention to hear very specific information. After the interviews, the independent firm analyzes these interviews, compares the points made, the proposals made and compares us with the structure of the board and the way it operates and also compares it with similar companies worldwide. Thirdly, the last stage, the firm presents its conclusions to the Board of Directors in person and also provides us the report. The main conclusions of this year's assessments are as follows: 1st of all, the overall positive assessment and view that there's been progress in the way the Board operates is a true freedom of expression during Board meetings.
Every Board member is allowed to attend any committee even if they're not member of said committee. There's also a true high level of commitment of the directors. You see this evidenced by the high proportion of attendance during the last year. There's also a real trust between management and the Board of Directors, thanks to the Chairman. And during the past year and beginning of 2019, the Board has made proposals to you designed to ensure that it has the requisite skills and expertise and awareness to take into account risks, opportunities and changes in markets to make good in this mission statement, enabling your group to continue with its clear leadership and innovation in luxury.
There are 3 types of proposals. First of all, regarding the renewal of the Board next, changes in 1 committee and thirdly, appointment of a Senior Director. At least we're going to be talking about renewal of the Board of Directors with the arrival of 3 new Board members, 1 independent, 1 representing the Financier Pinault and 1 employee representative. We're proposing that you ratify co opting of 2 new Board members, replacing Laurence Boone and Patricia Barbizet by Jennifer Elkan, Independent Director and Elouise Temploiller to represent the Financier Pinault. Subject to the ratifications, Juniper Elkan will become member of the Compensation and Nominations Committee Helouise Temploiller, representing the Financier Pinault and Chairman of the Compensation Committee, member of our committee and Member of the Compensation Committee.
Also, the Works Council appointed Claire Lacasse as Director Representing Employees, replacing Sophie Boucchio, whose term in office just expired. Claire Lacasse will in turn become member of the compensation committee. You have an opportunity to meet with them in a few moments' time to hear from them in a few moments' time. The second subject has to do with revising the way the Board operates. This is a very important subject.
I'd remind you the Board of Directors has 4 committees: an audit committee, a compensation committee, a nominations committee and a sustainable development committee. Mrs. Marie Claire Davout is a member. After dialogue with investors, we decided to appoint the compensation committee as the to name it the Nominations and Governance Committee. This shows that, that committee must give impetus to the Board in the area of both governance and also to establish succession plans, which are vital.
The 3rd covenant subject has to do with outpacing a new role for an independent Board member to act as a Senior Director. As you know, Kering is a company where you have the Chairman and the Chief Executive Officer who are the same person. In this context, the Board of Directors decided to entrust me with the role as Senior Director to ensure a balance of power and independence. Specifically, my mission statement will be to coordinate with the Chairman of the Board of Directors representing the Board amongst investors on CSR and ESG points and to deal with any possible conflicts of interest. The progress under this new role will entail, among other things, being able to point put additional points on Board meeting agendas, very important.
Furthermore, it will be possible to convene meetings without the presence of executive members, an important point. This new function as Senior Director will be designed to promote the independence of the Board, which will now have a direct contact with shareholders. Shareholders, therefore, will be able to be sure that the Board of Directors carefully listens to them without any intermediary in an ongoing process of constructive dialogue. Now let's move on to talk about compensation of the corporate officers described in Chapter 4 of the reference document. You will be voting ex ante in advance regarding compensation policy for 2019 and then ex post vote or after the fact pertaining to compensation received in 2018.
To that end, I'd like to recall that there are 3 components in the compensation for the 2 group executives and these components remain unchanged. There's a fixed portion of salary. There's a variable annual portion. Its amount varies depending on whether financial targets, operational targets are met, that's 70% worth. And nonfinancial targets, I.
E. Sustainable development, talent management and governance, making up 30% of the bonus. Then there's a several year variable portion of long term compensation. Its payment depends on reaching financial and operational objectives. The amount varies depending on stock exchange performance of the carrying share in terms of absolute value and also in terms of relative value versus a basket of 7 competing companies.
Compensation to the executives is to be seen in conjunction with the long term policy. The Board feels it's important to make sure the compensation policy is based on the sustainability and good health of your company and its long term performance. This is also why the criteria are precisely the same as those that measure the financial performance and nonfinancial performance of your company. I'd also like to point out the following. No there is no severance compensation included, no noncompete and no special supplementary pension scheme included in this, which means there is no top hat pension system or no golden parachute.
In this case, compensation reflects directly the extra operational performance of the group plus its exceptional stock market performance, which you benefited from since 2014. Your ex post vote will pertain to the following points. For the Chairman and Chief Executive Officer, Mr. Pino, €1,200,000 as a fixed portion €1,900,000 as a annual variable portion and €18,800,000 resulting from a monetization of 2 compensation long term compensation plans allocated in 20 14 2015, which include the stock market uptick since 2014. On Mr.
Jean Francois Palleu, the Group Managing Director, €1,200,000 the fixed portion €1,600,000 the annual variable portion 8,600,000 resulting from the monetization of a long term compensation plan allocated in 2015. For 2019, the performance criteria having to do with long term compensation remained the same except pertaining to one very important point, they're becoming even more demanding. The performance criteria are no longer alternative, but cumulative, which means starting in 2019, the performance criteria continue to be objectives they continue to be the objective having to do with recurring operating income, operating free cash flow and current operating margin. But only growth observed for each of the three criteria will make it possible to obtain 100 percent of long term compensation. If 2 of the criteria out of the 3 are reached, the percentage is brought down to 75%.
Lastly, if one criterion, reaches the target, compensation is brought to 50% versus 100% previously. This brings me I would like to invite Genevieve Elkan, Independent Director, Member of the Appointment and Compensation Committee as well as Heloise Tom Trevoyais, representing Chairman of the Compensation Committee and member of the Audit Committee and member of the compensation committee from the representing the Financier Pino and Claire Lacasse, representing employees, a member of the Conversation Committee to introduce themselves before you give review on co opting the first two of them. Ladies and gentlemen, it was a great pleasure for me to be here to speak before you and to talk to you about the operation of the Board of Directors as well as its new governance rules and the compensation of the top executives. Thank you for your attention. Ladies and gentlemen, first of all, I would like to thank the Kering Group and Francois Henri Pinault for inviting me to present myself before you today, introduce myself.
I'm Jennifer Elkan. I'm French Italian born in England. I grew up in Brazil and in France. After studying cinema in London, I went back to live in Italy, where I've been living and working since 2009. I'm Chairman and Co Founder of Ad Marafine, an independent production company.
I'm a filmmaker and President of the Pinoteca Agnelli Museum in Turin. I believe my experience and expertise in the area of culture and creativity may well be useful to the caring board, which is a group where creativity is of paramount importance, very focused on developing art, culture and heritage. Also, my experience may well be useful having worked in a family company listed, thanks to my role as Director of the Ekso Group as well as a shareholder. Lastly, I can say that I'm Italian and also very much international. So I can possibly bring in an interesting view for a group that has such strong interest in Italy and worldwide.
Thank you.
Ladies and gentlemen, I am pleased to be with you today as Deputy Director General of Financier Pinault, key shareholder of Kering, I have the honor of being co opted in December 2018 to represent this company on the Kering Board, as you no doubt. Now Financier Pinault has always accompanied and supported Kering's growth. I joined the company early 2013. I supervised the assets portfolio of companies in various sectors and varying stages of development. I constantly study various investment opportunities aimed at growth and strengthening our asset value were on my professional background, started 17 years ago, essentially in financial positions at Rothschild and the Advent Investment Fund, but more operational positions within Casino, the international retailer.
Subject to your ratification today, as representative of Financiere Pinault, I will head the Appointments Committee, member of the Audit Committee and member of the Remuneration Committee. I assess the responsibility that behooves me today. I will invest myself fully with enthusiasm in these new duties. Thank you.
I was appointed Director Representing Employees by the Caring Works Council on 12 July 2018. I'm coming in after Sophie Bouchino. I started working with group in 2000 as Assistant in financial communication at Pinot Printem Rodut. I continued my career at Kering in several different departments. Currently, I'm managing events production at the HR department.
I'm fully aware of the achievements of this beautiful company to become what it is today, the National Luxury Group. It's an honor for me and a source of great pride to be a member of the Board of Directors at Kering. Thank you.
Thank you, Claire. Thank you, Louis. Thank you, Jean Edward. Thank you, Sophie, for that wonderful presentation. Before handing over to our statutory auditors, I'd like to address my thanks to the caring board members once again in 2018, in the 1st few months of this year And last year, in particular, I'm very much moved by our 3 new Board members.
We met frequently in order to take important decisions and then we are able to count on their valuable insights at such these meetings. My thanks, of course, also include Patricia Barbizier, who before resigning last December, brought her vital advice and unequaled her vital advice and unequaled experience to the Board for 26 years. I'd like to express my full and strong gratitude to all the men and women in this group because it's thanks to their imagination, their creativity, their spirit of innovation and expertise that we owe the spectacular performance that we presented to you today. I'd also like to express my appreciation to the caring shareholders to you, ladies and gentlemen. Every day, we strive to deserve your trust and duly rewarded.
I'm going to hand over to the statutory auditors, Madame Isabelle Alain. Thank you, Chairman, ladies and gentlemen, shareholders. In order to report on the execution of the various assignments accomplished in accordance with the law and professional standards, the statutory auditors has drawn up several reports for 2018. These reports were made available to you by the company and are to be found in the registration document filed with the in the registration document filed with the AMF on the 27th March 2019 posted on the Kering website with the exception of our special report on capital transactions that do not appear in the registration document, but in the notice of meeting that was sent to you prior to this meeting. If I may, I won't read them fully, but just provide you with a summary.
Let's begin with our report on the annual financial statements to be found on Pages 359 to 362 of the registration document that comprise
no reservation
or observation. We certify that these observation. We certify that these financial statements are accurate, give a fair presentation of the transactions of the year, the financial situation, the assets of the group. We performed our work in accordance with professional standards applicable in France. This report brings to your attention the key audit point pertaining to the risk of significant missed statements concerning the assessment of equity securities, which we believe was important for our audit.
The report also provides the answers to the risks that we brought. The report on the consolidated financial statements to be found on Pages 334, 339 of the document with no reservation. We certify that the financial statements are fair and accurate and give a fair presentation of the assets financial situation, the results of the group at the end of the year. We performed our work in accordance with applicable professional standards applicable in France. So we make a comment on the first application, the first of January 2018 of IFRS 9 Financial Instruments and IFRS 15 proceeds of ordinary activities from contracts concluded with clients.
We bring to your attention the key audit points concerning the risk of significant material misstatements, which according to us were the most important for our audited financial statements of the year as well as the responses that we brought. The key audit points numbered were 4 concerning tax risks, the goodwill for acquisition and indeterminate duration in tangible assets, stock valuation application of IFRS V following the distribution of Puma shares 16th of May 2018. You see here the first key order points concerning tax risks and in tangible assets as well as a summary of the work conducted. On the second slide, you see the final two key audit points of the consolidated financial statements regarding the inventories and the application of IFRS following the distribution of Puma shares to Kering shareholders on the 16th May. Lastly, the other reports issued pursuant to 2018, our special report on agreements and related party agreements are to be found on Page 36 3 and 364 of the document.
We've been informed of no agreement or no commitment authorized during the past year to be submitted to the approval of this meeting. The assistant agreement in respect of services performed by Artemis already approved by the meeting during previous years continued in 2018. The amount of the remuneration of Artemis under this agreement reached €5,077,000 for the year, an amount which the Kering Board noted at its meeting on the 11th February 2019. Furthermore, our other special reports to be found in the notice of meeting concerns authorizations or delegation of authority to be given to your Board in order to perform a number of transactions that are performed, summarized on the screen with the corresponding resolution number. We implemented the necessary due diligence consistent with the professional standards of statutory auditors for these assignments.
In conclusion, we have no observation to make on these transactions that are all form part of the conditions of the Code of Commerce. The report to the Board does not set out the final conditions of these transactions. We cannot form a view on them. Thank you.
Thank you, Isabelle. Now we are going to begin the question and answer session. First of all, to remind you, the questions need to pertain to today's agenda. Furthermore, to make dialogue easier, there are people in the room that will give you the microphone, enabling you to ask your question to be heard. Furthermore, to ease discussion and to make this beneficial to everyone, please do introduce yourself when you ask a question and please tell us the number of shares that you owe.
Lastly, due to the large number of items on our agenda, any number of resolutions, we will probably have a discussion for 20 or 30 minutes. Let's begin with the first question. Jean Claude Laurier, individual shareholder. I acquired my carrying shares last century. At that time, it was called eau plantains.
I'm very satisfied at my divestment. Just to give you an idea, let me tell you the gave the list of most important meetings. 24 April, 2 combined shareholder meetings, Kering and AXA. Last year, I attended the Kering shareholders meeting. This year, I was thinking I might go to the AXA shareholders meeting.
15 April then happened. The next day, you were the first to announce, sir, Chairman, €100,000,000 you'd be giving to restore Notre Dame. Sir, I think you're just you're led to this great wave of generosity, which has taken place throughout France. I came today to say to you, thank you, Mr. Chairman.
Thank you very much, sir, for that. It means a lot to me. Yes. Hello, gentlemen. Three brief questions.
What do you mean by normalized growth pace of growth for luxury company in your annual report? Could you give us a figure on that one? A second question I have. You also talk about in your report, you talked about traditions, heritage, excellence of know how and companies expertise are longer enough. Do you think it's possible currently to create a luxury brand from scratch, from nothing?
3rd and last question I would have. Growth in luxury companies has been speeding up in recent years. And of course, you'll say to me that these products are desirable and people's purchasing power is increasing. But aside from those two points, let me ask you, how would you explain this global enthusiasm for Luxury Brands? Thank you very much.
Normalized market growth for the luxury market, at Kering, we're excluding factoring out from our analysis, cosmetics. The figures Altegua gives you the only benchmark Alteguema means talking about luxury market growth, they also include cosmetics. Their growth rates are slightly lower. When we talk about normalized growth, 5% to 6% growth in our sectors, our categories. And what I was saying earlier, I would say our target, of course, is to outpace growth and go beyond these so called normalized growth rates.
That's structural growth rates in luxury markets. We tend to outpace them. And your second question, when we talk about know how, you're referring to the craftsmanship. And we talk about heritage, the history of our brands and so forth, the saying that that's no longer enough. You must realize that's the basics.
That's the prerequisites. You've got to have the craftsmanship, the know how in luxury, in our category, you've got to be about craftsmanship, you've got to have that exceptional craftsmanship and a mastery of it, but it's longer enough. It's longer enough this makes us realize we have to add a very strong creative content. It's a new vision of luxury. That's been our vision.
We realize you've got to take a creative risk. You can't have true luxury without true creativity, that's not modern luxury. Modern luxury means a luxury where you're looking for creative content that's genuine, authentic and sincere above and beyond in addition to the craftsmanship know how that's been our essence. That's modern luxury. That's what we've been implementing at Kering for 5 to 7 years now.
That's been our endeavor. You've seen the effects. Look at Gucci's repositioning very much, thanks to the creative wage overtaken, the same thing in Balenciaga. Also with the case of Bottega, that's the reason for these statements. Your third question remind
me of
your third question, please? Well, this comes in on what I was saying in the first point. Structural growth in the market very much is due do Asian markets, you know, are very buoyant. Asian markets generally already represent around almost 50% of global luxury markets, including Japan, China and all Asian markets. And this is growing constantly.
We're seeing the growth of a very large middle class, especially in China, an order of magnitude here. The urban middle class in China currently represents 54% of the Chinese population used to represent 15% in 2012. This is a middle class whose purchasing power, of course, is increasing, and they're very attracted to luxury brands and to luxury generally. You must understand fully, though, these are younger markets. The phenomenon of the millennials that we talk about is a global phenomenon, but certainly more apparent in Asian areas where younger generations are gaining access to luxury at a much earlier age than may have been the case previously.
And their approach to luxury is one that's based on a great deal of information, a high level of luxury education, much more than may have been the case in the West previously. These are young people who were looking for means of expression through luxury, which again is why we must bring in strong, sincere and genuine creativity. These are young generations who were born in the digital area. Interactivity is essential. They're also looking for a dialogue with brands.
This is why modern luxury must very much change itself in terms of creativity product creativity, yes, And also in terms of the way it communicates. The communications means and resources we use in our brands must include interactivity, particularly in the digital media, to target this generation. So the enthusiasm that young people have are boosting market growth. Now the young generations, I would also add we're also talking about young people in the West. Some of the younger generations are seeing increases in our revenues in Europe and in the United States.
We're seeing here a reallocation of their spending, which probably previously might have been more on cars or housing in the past. And now we're seeing a shift toward new technology and also luxury products. These are products to express their difference, their uniqueness, their originality. That's why there's structural growth in the luxury market.
Good afternoon. I'm an employee shareholder as part of a sustainable group, a sustainable luxury group? Isn't it not a shame that Stella McCartney has left the group? Well, I mean, we did try and keep her were very close friends. We had agreements when we created Stella McCartney together in 2,000 and 1, 5,050.
As you know, there was a possibility in our agreements for Stella at regular intervals to take over control of her company, also her name in order to develop and to chart her own course. She decided to do that. I tried to deploy my charm, but was Stella remains close to us, notably in the field of sustainable development because she was indeed still is very, very close to me on these issues. She's very much ahead of her time when we speak of sustainable development. She's a Board member of the Kering Foundation and retains that position if, economically speaking, Stella McCartney has left the group as an individual.
Her expertise remains very close to us. The back of the room, next question. Good afternoon, Roger Tran. I've got three questions for you. You give great pride of place to women.
I'd like given the very slim models that are employed by groups. What do you do with them? You're absent from the spirits sector, champagne or cognac, is that deliberate? First question, LVMH will be opening a second store on the Champs Elysees. Your absence on the Champs Elysees, is it not rather strange?
Do you plan to be able to repair the situation? On the first question, it's a key question. It's also prompted the initiative that we took every year ago, 2 years ago, Marie Claire tells me where we put in place the models, code of practice that governs all items pertaining the employment of models through agencies regarding medical certificates of under 6 months that are now mandatory for all models. We hired a number of permissions have been put in place. We dropped this cord of code of practice and we signed up with LVMH.
A number of brands have followed suit today. It's something that is operational, mandatory for all our brands today. It's a key development. And as a first, I can tell you that I'll go and make an announcement that we'll go beyond that at the Copenhagen Summit in May, but I won't say anymore because
I don't
want to ink Marie Ikhlaev's wrath. Presence on the Champs Elysees were not far. Gucci is right in the corner of the Avenue Montaigne, Grand Pointe des Champs Elysees. Avenue Montaigne devoted to luxury brands. We're finally represented at this stage.
I don't believe that to open a door on the Champs Elysees makes much sense, would actually create cannibalization with our Avenue Montaigne store. So there are no plans as yet for the group on the Champs Elysees. We are nevertheless present in the new store of the Galeries La Feije that's just opened that is a fine new concept that I encourage you to go see. Why not are we not present in spirits? We can't be everywhere.
We've already got enough on our plate. We deliberately focused on our luxury brands and our product categories. These are product categories that have significant structural growth rates internationally. We're fortunate in having a brand portfolio amongst the most significant in those categories internationally, and the growth potential you've seen in our figures for many years is significant. It wouldn't make much there wouldn't be much point in trying to move to another sector when we measure the scale of the potential that lies ahead of us.
Good afternoon. To Solange from the Association For Individual Shareholders. I'd like to thank you for welcoming us in this iconic location. Your corporate headquarters, 2 questions. Your presentation was very good and I believe really covered all the concerns shareholders might have pertaining to the future Kering and so it should be.
I have a first question though on artificial intelligence and its development in your business areas. Could you give us an initial report on what you've gotten through the startups you're working with and applying artificial intelligence to areas of creation? The second question has to do with the talent crunch. In your business. You're always on the lookout for talented people.
Could you tell us currently, are you encountering a talent crunch? How do you retain talented people? And how do you find new talent in talented people? To answer your first question on new technology and specifically artificial intelligence, as you've understood. We've changed the way Kering is organized.
That was 2 years ago now, setting up the digital and customer relations department under a very little bit covering several different areas, all e commerce, all customer relations and customer services as well as innovation. It's in that area that we've decided to bring on board very specific skills, particularly in the area of AI. We recruited data scientists, specialists in using data to further improve our customer relationships. We're in production phase now, which means we're using AI technology through algorithms. We're using this not just in customer relations to further improve the relevance of our messages and our relationship with customers.
That's the most visible portion of things best known, but we also use AI in the supply chain, specifically pertaining to scheduling and proactiveness. We're in a supply market. It's very difficult to forecast sales. Partially, you can use past data, stroke of data. We look at our production forecast and sales forecast and try to make these dovetail and fine tune these so that we can make sure everything is highly relevant.
Our first experiments in this area using algorithms based on AI are yielding very satisfactory results. We're able to measure our ability here. We can measure what algorithms would have yielded pertaining to historical data done through human beings, and we see differences and increases in efficiency. Now our eye is not at all to replace people but to support provide support. In luxury, there are many business areas that require vertical expertise, merchandising, design and creativity, retailing, the supply chain, there are many business areas where you spend a lot of time on gathering data, on lending structure to the data, and then interpreting the data.
And then last stage, the most important one that really creates value, is actually implementing data, enacting action plans that we decide on the basis of the data. Use the first three stages to take 60% to 70% of our experts' time. Thanks to artificial intelligence. We'll be able to reduce the 70% very significantly, giving a lot more time to crafting the action plans. Once you've got the knowledge and the data, how do you organize yourselves in terms of commercial operations, supply chain activities and so forth, precisely to turn the knowledge into actual value.
That's the bulk of what we're doing. And I can tell you the outlook is very encouraging here. To talk to you about talent management, yes, that's an absolute strategic priority of ours. I can tell you there's tough competition worldwide for the highly talented people. We've been prepared for this for quite some time.
We've made major efforts to establish teams in Europe, in North America and in Asia to accommodate and retain talented people. Our observation, we're pleased to say, is that we've got, to some degree, a competitive edge, thanks to our system of values in our group, thanks to our management style in our group. But we must relentlessly make efforts to attract new talented people and even more importantly, to keep them on board once they join our group. And also, I can say this is fairly cyclical. The talent cycle varies different areas of specialization.
For instance, currently, there's a real talent war in the area of technology, information security. Previously, it was a real talent war in merchandising. So we've got to be fleet footed. We've got to be able to develop hone our sales pitch, so to speak, and our competitive advantage to attract various types of talented people. We must also be able to adjust the way we operate, adjust to the new generations and we endeavor to do this every single day.
Well, if there are no further questions from the floor, let's move to the vote on the resolutions.
Which has information on the number of chairs you have and the votes you have for the voting on resolutions. I'd ask you to turn off your cell phones, if you're not off already, so that there's no disturbance to the voting system. When we vote on each resolution, you will have 15 seconds to cast your vote using the buttons on the voting devices. You press for or abstain or against. If I might remind you that since we're in a shareholders company, if you abstain, that equals a vote against the resolution.
Please do take part in the vote. Please do not leave the meeting after until we complete voting. I'd remind you, after the voting session, we will ask you to hand your voting devices back in. To make sure we don't have to read out every single resolution in their entirety. I would just go through the main points of each resolution, if you don't mind.
And possibly, if the voting system were to be defective, we would have to ask people quorum that I've just been given, the final quorum, which is very high, 88.82%. Now let's begin voting on resolutions. Resolution 1, approval of the parent company financial statements for the fiscal year ended December 31, 2018, begin voting now. No further voting. We're waiting for the display of results.
Brief display. I hope we will not have to vote through a show of hands. That's not the easiest. Resolution is carried, very strong majority. We'll wait a few moments for the system to be turned back on because if we have to vote by a show of hands, that's a time consuming process.
Could someone please inform us, tell us what the technical difficulty is? Could you please tell us what the technical problem is, so we can find out if we need to vote through a show of hands? Apparently, there's a problem with the signal. It would just take a few minutes apparently to resume. Let me just explain to you.
There's a problem with the signal between the sound room and the desk here. So it will be possible to vote as usual. It's just a little communication hiccup. It'll just take 15 seconds for us to fix this. Okay, yes.
Resolution 2, approval of the consolidated financial statements for the fiscal year ended December 31, 2018. Please vote now. Hello. No further voting. Resolution is adopted.
Resolution 3, appropriation of net income for 2018 and setting of the dividend. Please vote no. No further voting. The resolution is passed. Resolution 4, ratification of the appointment of Genevieve Elkan as Director.
Please begin voting. No further voting. The resolution is adopted. Resolution 5, ratification of the appointment of Financia Pinault represented by Mrs. Elouise Tom Plebois as a Director.
Please begin voting. No further voting. The resolution is carried. Resolution 6, approval of the remuneration paid or awarded to Francois Henri Pinault, Chairman and Chief Executive Officer, for the fiscal year ended December 31, 2018. Please begin voting.
No further voting. The resolution is adopted. Resolution 7. Resolution 7, approval of the remuneration paid or awarded to Jean Francois Palleu, Group Managing Director for the fiscal year ended December 31, 2018. Please begin voting.
No further voting. The resolution is adopted. Resolution 8, approval of the principles and criteria for determining, allocating and awarding the fixed variable and exceptional components of total remuneration and benefits in kind granted to Mr. Francois Henri Pinault, Chairman and Chief Executive Officer. Please begin voting.
No further voting. The resolution is adopted. Resolution 9. Resolution 9, approval of the principles and criteria for determining, allocating and awarding the fixed, variable and kind granted to Mr. Jean Francois Palleu, Group Managing Director.
Please begin voting. No further voting. The resolution is adopted. There are only 10 more. Resolution 10, authorization to be given to the Board of Directors to purchase, retain or transfer the company's shares.
Please begin voting.
No more voting. And resolution is adopted. 11th resolution program. Please vote. No more voting.
Our resolution is passed. 12th resolution, delegation of authority to the Board to issue ordinary shares and securities with the preemptive subscription rights for shareholders Scrutiny clue. No more voting. Resolution is passed. 13th resolution, delegation of authority to the Board to decide to increase the share capital by capitalizing reserves, profits or additional paid in capital except during an offer period?
Please vote now. No more voting. And resolution is adopted. 14th resolution, delegation of authority to the board to issue ordinary shares and securities by public offering without preemptive subscription rights, Sept during an offer period. Please vote now.
No more voting. Resolution is adopted. 15th resolution, delegation of authority to the board to issue ordinary shares and or securities carrying rights to shares in the company or carrying rights to the allotment of debt securities and or securities carrying rights to shares in the company to be issued without preemptive subscription rights to qualified investors or restricted circle of investors as provided for in articles L4,112 of the French monetary code except during an offer period. Please vote. No more voting.
And the resolution is passed. 16th resolution authorization to the Board to set the issue price of ordinary shares and or securities giving access to the share capital under certain terms and conditions limited to 5% of the share capital per year in the context of an increase in capital by issuing shares without preemptive subscription rights. Please vote. No more voting. And the resolution, we don't even have it on the screen.
Can we please have the results? Could we have those displayed on screen, please? Resolution is passed, 99.9 percent. 2017, resolution, delegation of authority to the Board to increase the number of ordinary shares or securities to be issued in the event of a share capital increase with or without preemptive subscription rights related to 15% of the initial issue undertaken pursuant to the 12th, 14th to 15th resolution. Please vote.
No more voting. Resolution is passed. 95, 2017, 18th resolution, delegation of power to the Board to issue ordinary shares and or securities giving access to the company's share capital and payment for in kind contributions granted to the company comprising shares in the company or securities giving access to the share capital limited to 10% of the share capital except during an offer period. Please vote. No more voting.
And
resolution is Resolution is passed, €9,772,000 So we come to an end, 19th resolution, delegation of authority to the Board to decide to increase the share capital by issuing ordinary shares without preemptive subscription rights of ordinary shares or other securities, giving access to the share capital for employees or former employees, members of 1 or more employee savings plans. The Board spoke out against the adoption of this resolution. Please vote. And resolution is rejected. 20th resolution amendment No more voting.
And the resolution is passed. It's the last, the 21st resolution. Powers for formalities, for this meeting, please vote. No more voting. And the resolution is passed.
Thank you, Eric. I apologize for those technical problems. Thank you for your attention, for your questions and your support. This meeting is adjourned, and I would ask you to leave the hold. Thank you.
Very good evening.