Good morning, and welcome to the 2021 Applied Materials Annual Shareholders Meeting. I would like to introduce Terry Little, Chief Legal Officer and Corporate Secretary of Applied Materials. Ms. Little, please go ahead.
Good morning, everyone, and thank you for joining Applied Materials Virtual Annual Shareholders Meeting. I'm Teri Little, Chief Legal Officer and Corporate Secretary of Applied Materials. Before our Chairman of the Board makes his remarks and begins the formal business of today's meeting, Gary Dickerson, our President and CEO will make a presentation. During today's meeting, shareholders can submit questions for management or the Board of Directors by entering them in the text box at the bottom left hand corner of the page. To help us reach as many shareholders as we can, Please limit yourself to 2 questions.
Questions related to the proposals to be voted on will be addressed after all the proposals have been presented And questions not related to the proposals, but germane to the meeting will be addressed during the general Q and A session after we have concluded the formal business of the meeting. We will attempt to answer as many questions as time allows and we'll post on our investor website answers to any questions that we do not get to at today's meeting. Before we begin, I'd like to remind you that today's meeting may contain forward looking statements, which are subject to risks and uncertainties that could cause Information concerning the risks and uncertainties is contained in Applied's most recent Forms 10 ks, 10 Q and 8 ks filed with the SEC. Today's meeting may also include non GAAP financial measures. Reconciliations to GAAP measures are found in our non GAAP reconciliations, which are available on the IR page of our website at appliedmaterials.com.
And now, I'd like to turn the meeting over to Gary Dickerson. Gary?
Good morning, everyone, and thank you for joining Applied Materials' Virtual Annual Shareholders Meeting. In the past 12 months, we've been shaped by the COVID-nineteen pandemic that has affected nearly country and economy in the world. Despite the unprecedented global challenges this created, Applied Materials delivered record performance. In fiscal 2020, we grew revenues 18% and earnings 37% year over year, while generating record cash from operations. At the same time, we continue to make strategic investments In new technologies and products to address the industry's highest value problems and position Applied for sustained long term success.
In addition, we were proud to announce our new environmental, social and governance goals and initiatives that We quickly activated our business continuity teams to direct a comprehensive response across All the regions where we operate. 2 key principles guided our actions. 1st, maintaining the trust Our employees, customers, suppliers and partners. And second, focusing on driving initiatives that will allow Applied to stronger over the longer term. Many of our employees have effectively transitioned to working remotely And we've implemented strict safety protocols in our factories, labs and logistics centers to provide a healthy and Productive Workplace.
Our teams adopted new ways of working using remote collaboration tools To deliver on our commitments to our customers and keep our technology and product development on track. In keeping with the company's long held values to make a positive contribution to the communities where we live and work, Applied in Foundation took action to address immediate humanitarian needs in regions around the world. We also invested resources to combat The long term effects of the pandemic on local communities and the nonprofit sector. As the world adapts To the challenges created by COVID-nineteen and prepares for the post pandemic era, several major technology And Communications Infrastructure. The digital transformation of the economy is happening faster and driving robust semiconductor and wafer fab equipment demand.
It's also broadening the long term growth drivers of the semiconductor Industry from consumer oriented devices to non discretionary commercial investments in the Internet of Things, artificial intelligence and 5 gs Networks. The new applications and capabilities enabled by these technologies Have the potential to reshape nearly every industry throughout the world from healthcare to agriculture to transportation. Among the emerging technology inflections, AI in particular Has major implications for the electronics and semiconductor ecosystem. AI will move us to a data first world Where almost all data will be generated and consumed by machines. In order to gain Actionable insight from the massive volumes of available data, a new computing approach is needed, One that is based on customized and entirely new types of chips.
While AI has the ability to bring many benefits It also consumes an increasing amount of power. Therefore, major improvements in the performance per watt of computing solutions Is required to support the sustainable growth of this major technology inflection. At a Time when the need for semiconductor innovation has never been greater, traditional 2 d Moore's Law scaling, the main Driver of the industry's roadmap for over 50 years is slowing. As a result, the industry is increasingly Transitioning to a new playbook for delivering improvements in the performance, power, area, cost and time to market, What the industry refers to as PPAC T of Semiconductor Devices. This new PPAC T playbook Includes 5 key elements.
The use of new architectures, new structures, new materials, new ways to shrink chips And new ways to connect chips together with advanced packaging. Applied Materials is uniquely Positioned to accelerate this new playbook as we have the largest portfolio of technologies to create, Shape, modify, analyze and connect chip structures and devices. The breadth of our portfolio allows To combine technologies in innovative new ways and enable the breakthroughs in PPAC T needed to unlock the potential of AI. As an industry leader, Applied Materials has responsibility to not only Deliver technology innovations that advance our customers' roadmaps, but to do so in a sustainable manner. In fiscal 2020, we announced our new 10 year sustainability roadmap.
We've taken approach that considers our operations, how we work with customers and suppliers and how our technology can be used To advance sustainability on a global scale. We call this framework 1x, 100x, 10000x, And we've used it to set several challenging new goals and commitments. With respect to climate change, We set a goal to reduce our Scope 1 and Scope 2 carbon emissions by 50% by 2,030 And to transition to 100 percent renewable power in the United States by 2022 and globally And comprehensive training to improve diversity and inclusion within our company and in the electronics industry. As we look ahead, the advances in technology needed to accelerate AI and the digital economy create Tremendous opportunities for Applied Materials and we've aligned our strategy and investments around this vision of the future And look forward to bringing more technology innovations to market, while continuing to make a meaningful difference And the communities where we operate and to society at large in the years ahead.
Thank you, Gary. Now I would like to introduce Tom Iannotti, Chairman of the Board of Applied Materials.
Thank you, Terry, and thank you, Gary, for that presentation. Good morning to all of you. I'm Tom Iannotti, Chairman of the Board of Applied Materials. Welcome to Applied Materials Annual Meeting of Shareholders. This year, we are hosting the meeting virtually due to the public health and safety concerns of the COVID-nineteen pandemic.
We are very glad that you are able to join us online. As Gary mentioned, through this pandemic, the world has learned the Tremendous value that is delivered by electronic communication. Whole industries rapidly move to work from home. Children are learning at home and so many of us are shopping from home, not only for goods, but also for the delivery Of meals and all kinds of online services, it is clear that the world is relying on the electronics industry, Especially semiconductors and displays to play a role in finding health solutions to the pandemic, to help people stay connected And to keep the global economy running. Applied Materials winning teams are making sure that our company does our part and all while we care for our families and neighbors to keep our community safe.
Our success relies on your support as shareholders. On behalf of everyone at Applied Materials, we appreciate your confidence in the company and our future. Before we call the meeting to order, I would like to recognize the members of our Board who, like me, are up for election and they are Gary Dickerson, Ronnie Borker, Judy Brunner, Eric Chen, Art DeGeus, Andy Karsner, Adrianna Ma, Yvonne McGill and Scott McGregor. In addition to Gary and Terry, I would like to introduce Dan Dern, Chief Financial Officer and other members of senior management of Applied Materials, who are also present at this meeting. I now call the meeting to order, and I would like to ask Teri to take us through the formal business of the meeting.
Thank you.
Thank you, Tom. Good morning, everyone. Lou Larsen of Broadridge Financial Solutions has been appointed to act as Inspector of Elections. Mr. Larsen is present at this meeting.
Representatives of KPMG LLP, the company's independent registered public accounting firm, including Chris Gentle, the global lead audit partner are also present today. Mr. Larson has supervised the tabulation of proxies received and filed for the meeting. If you have already delivered a proxy, no further action is necessary, Unless you want to change the way you voted, if you already voted by proxy, but want to change your vote or if you are a Shareholder and wish to vote, you may do so by clicking the Vote Here button at the bottom right hand corner of the page and following the instructions there. The Inspector of Elections has advised me that more than a majority of the shares issued and outstanding and entitled to vote at this meeting a represented in person or by proxy.
Therefore, we have a quorum for this meeting. The polls are now open and will remain open as to the matters The next order of business is a description of each proposal to be voted on at this meeting. We will answer any questions you might have about any of the proposals after all of the proposals have been presented. The first proposal to be voted on is the election of 10 directors. The nominees for the Board are listed in the company's proxy statement and were introduced by Tom Iannotti.
The Board recommends a vote for each of the nominees. The second proposal is the approval on an advisory basis of the compensation of Applied's named executive officers as described in the company's proxy statement. The Board recommends a vote for this proposal. The 3rd proposal is the ratification of the appointment of KPMG as Applied's independent registered public accounting firm for fiscal year 2021. The Board recommends a vote for this proposal.
The 4th proposal is the approval of Applied's amended and stated employee stock incentive plan as described in the company's proxy statement. The Board recommends a vote for this proposal. The 5th proposal is the approval of Applied's omnibus employees stock purchase plan as described in the company's proxy statement. The Board recommends a vote for this proposal. The 6th proposal is a shareholder proposal regarding the adoption of an independent Chairman policy Submitted by Mr.
Kenneth Steiner. We are informed that Mr. John Chiveden, his representative, will be introducing the proposal. Operator, would you please open the phone line for Mr. Chvedden.
This is John Chibetin. Can you hear me okay?
Yes. Thank you, Mr. Chibetin. You have up to 5 minutes to include to introduce your proposal. Please begin.
Proposal 6, Independent Board Chairman. Cheryl has requested our Board of Directors amend our governing documents as necessary to require that the Chairman of Board be an independent director whenever Possible. This is an important topic because our current independent Board Chairman, Mr. Thomas Iannotti He is ready for retirement. Mr.
Iannotti has been a Director for 16 years. It is important that Applied Materials have an independent Board Chairman after Mr. Iannadi retires. Currently, when Mr. Iannotti retires, our CEO, Mr.
Gary Dickerson could be appointed to the role of Chairman and thus have 2 jobs. One benefit that a well qualified independent Board Chairman could bring to Applied Materials On a permanent basis is improvement in shareholder rights as distinguished from management lip service. For instance, in response to a near majority shareholder vote of 48% in 2018 For a shareholder right to act by written consent, management came up with a shareholder right to act by written consent in name only that is totally useless. This shows premeditated disrespect for shareholders and it occurred under Mr. Iannotti's watch.
The management written consent scheme made it necessary for 20% of our shares outstanding To petition management for simply a date on a calendar to start the written consent process. Why would any group of shareholders assume the administrative burden of signing up 20% of all shares outstanding to only A date on the calendar for management. The same 20% of shares could compel management to hold a special shareholder meeting. Hence, no shareholder group in their right mind would ever choose to try to act by written consent when it's so much more effective to call for After adopting a premeditated totally useless form of written consent, management has a goal to declare We have the best in class governance. Please vote for an independent Board Chairman after Mr.
Iannotti retires Proposal 6.
Thank you, Mr. Chevedden. The Board recommends a vote against this proposal The 7th proposal is a shareholder proposal regarding our executive compensation program and policy submitted by Doctor. Jing Zhao. Operator, would you please open the phone line for Doctor.
Zhao. Is Doctor. Zhao Present to introduce his proposal.
Hello. Can you hear me?
Yes. Hi, Doctor. Zhao. You have 5 minutes to introduce your proposal.
Thank you. Good morning. My proposal is to improve the executive compensation program and the policy To include CEO pay ratios and other factors, this is actually the same proposal I submitted to Visa this year and after this year. So there is no rationale methodology or program to decide The executive compensation, for example, Twitter's CEO pay ratio is less than 0.001 to 1 In 2018 2019, GSEPENIS allowed the CEO pay ratio 1294 to 1 In 2018, in one course leading to its bankruptcy, the CEO pay ratios of big Japanese and the European companies A much, much less than of big American companies. I submit the senior proposals to many other companies because as the nuclear physics students in China After the late stage of the Cold War, a sociology student graduate student in Japan and a political scientist in the U.
S, I have writing many articles and books on these issues. It is clear that America's Volumin's executive compensation is not sustainable for the economy, especially under the current Domestic social conflicts and the international crisis, time changing, so our executive compensation program or Policy must change too. Reducing the CEO pay ratio closer to big Japanese and European companies Should be included to the executive compensation policy or program. Please vote for proposal number 7. Thank you very much.
Thank you, Doctor. Zhao. The Board recommends a vote against this proposal for reasons stated in the company's proxy statement. Operator, would you please mute Doctor. Zhao's line?
We will now answer questions related to the proposals. Questions not related to the proposals will be addressed during the general Q and A session After we have completed the formal business of the meeting. It looks like we have a question For me, I will take this Teri Little. The question is how much did we pay auditors in 2019 2020? On Page 52 of our proxy statement, that information is present there.
The second question is what was the total CEO pay for 2020 2019? I will also take that question. And that is on Page 44 of our proxy statement. I refer you to the proxy statement for both of those questions. I don't believe we have any other questions on any of the proposals.
So that concludes the Q and A related to the proposals. In a moment, we will close the polls. If you have not yet voted, please vote by Now that everyone has had the opportunity to vote, the polls are now officially closed. I have received the preliminary voting results from the Inspector of Elections Based on the proxies received as of the opening of the polls of today's meeting, votes received during the meeting will be tabulated by the Inspector of Elections and include it in the final tally, which we will disclose in a Form 8 ks to be filed with the SEC within 4 business days from today. I will now announce the preliminary results of the voting.
With respect to proposals 1 through 5, more than a majority of the shares issued and outstanding That are present and entitled to vote on the applicable proposals have voted as follows: 4, each of the director nominees 4, the approval on an advisory basis of the compensation of Applied's named executive officers 4, the ratification of the appointment of KPMG LLP as Applied's independent registered public accounting firm for fiscal year 2021 for the approval of the amended and restated employee stock Incentive plan and 4, the approval of the Omnibus employee stock purchase plan. Accordingly, each of the director nominees has been elected to the Board And each of the proposals 2 through 5 has been approved. With respect to Proposal 6 and 7, Regarding an independent Chairman policy and an executive compensation program and policy, less than a majority of the shares issued and outstanding That are present and entitled to vote have voted for each of these proposals. Accordingly, Proposals 67 have not been approved. This concludes the formal business of the meeting.
We will now answer any other questions that may have been submitted by the shareholders. As I noted earlier, we want to give each shareholder an opportunity to ask questions, so I would ask that you limit yourself to 2 questions. Again, we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting will be addressed. We will post On our investor website, answers to any questions that we do not address at today's meeting. We have a couple of questions.
I'm going to give these to Dan Dern. Dan, the question is, have there been layoffs in the past 12 months and if so, how many?
There have been no layoffs in the past 12 months.
Another question for Dan Dern is what percentage of employees do most of their work from home and how will this change in the next 6 months?
So from a global standpoint, global workforce standpoint, we have about 30% of our employees work from home, About 70% come to the office. As we look at that disaggregated in the U. S, That would be slightly higher work from home than our global blended average. Part of what drives this profile Participation by our employees work from home versus come to the office are a couple of drivers. First, this is a company given our importance in the technology That has been designated by governments across the globe as critical infrastructure.
And the second thing is a good percentage of our employees Report to factories and laboratories and working from home precludes them from Being able to support the company in the way in which the company needs to function. So 30% from home, 70% In the office on a global blended basis.
Thank you, Dan. It looks like there's one more question for you. And the question is, can you please talk about the decision making process around capital allocations, including dividends and share repurchases in light of the company's strong results And recently rising share price.
So from a capital allocation standpoint, the company has a number of priorities. First thing we want to do is grow the business. This is both organic and inorganic growth. 2nd priority for the company is to maintain a strong and flexible balance sheet. And the 3rd aspect of our capital allocation program is to return Excess cash to shareholders.
If you look at the company's 2 decade long history, virtually all excess Cash has been returned to shareholders over that period of time. So the company has a strong history of returning excess cash to shareholders. As we think about the thought process that goes into a balanced program between dividends and share repurchase, Company takes into a number of factors into account, performance of the company, the strong margin profile and progression over time, Strong cash flow generative capabilities of the company and the substantial market opportunity we see in our core markets Given the structural growth we see over time, as well as company specific momentum against those opportunities. And so, from a decision making standpoint, there's a number of factors that are taken into account and virtually all capital Has been returned to shareholders historically, and we don't see any reason why that would change on a go forward basis.
Thank you, Dan. Since there are no further questions, the meeting is now officially adjourned. Thank you for attending today's meeting and for your continued support of Applied Materials. Have a great day.
This now concludes the meeting.