Good morning. It is now 8:00 A.M., and I would like to call the meeting to order. I am Seth Goldman, Chair of the Board of Directors of Beyond Meat, Inc., and it is my privilege to welcome you to our 2024 Annual Meeting of Stockholders. Thank you for joining us. We believe that holding the annual meeting virtually helps expand access, facilitates stockholder attendance, and reduces costs and the environmental impact of our annual meeting. In accordance with Beyond Meat's amended and restated bylaws, I will be acting as chair of this meeting. This meeting is held pursuant to the company's amended and restated bylaws and the written notice sent to all stockholders of record as of March 26th, 2024.
Joining us virtually today are members of the board of directors, our Founder, President, and Chief Executive Officer, Ethan Brown, our Chief Financial Officer and Treasurer, Lubi Kutua, our Vice President, FP&A, and Investor Relations, Paul Sheppard, and several members of our senior management team. Representatives of Deloitte & Touche LLP, our independent registered public accounting firm, have also joined us and are prepared to respond to any questions. Let me also name our officials for today's meeting, each of whom is in attendance virtually today. Teri Witteman, our Chief Legal Officer and Secretary, will serve as secretary for this meeting. As stated on the proxy card, Ethan Brown and Teri Witteman will act as proxies. If you have returned your proxy card, they will vote your shares as you indicated on the proxy card. Christel Pauli from American Election Services, LLC, will serve as the Inspector of Election. Ms.
Pauli has previously taken her oath as the Inspector of Election. Upon joining the meeting, you will see that we have provided a copy of the rules and procedures of conduct for the meeting on the web portal. To conduct an orderly meeting, we ask that participants abide by these rules. As stated in the rules, there is an opportunity to submit a question online. We will conduct the business of the meeting first. Next, our founder, president, and CEO, Ethan Brown, will share some remarks regarding the business, and then we will turn to your questions with the remaining time we have. Only validated stockholders may ask questions in the designated field on the web portal. Out of consideration for others, please limit yourself to one question. Please note that no one attending via the webcast is permitted to use any audio recording device.
Thank you for your cooperation. We will now proceed with the formal business of the meeting, as described in the notice of annual meeting and the proxy statement. I'll hand it over to Teri Witteman, our Chief Legal Officer and Secretary, to review the legal documentation and presence of a quorum.
Thank you, Seth. I have the proof required by Delaware law and our amended and restated bylaws that the notice of annual meeting, the proxy statement, the proxy card, and the annual report for the fiscal year 2023, together with a letter from our Founder, President, and CEO, were mailed to stockholders commencing on April 10, 2024. The board established March 26, 2024, as the record date for entitlement to receive notice of and to vote at this meeting. As of the record date, there were 64,844,921 shares of common stock issued and outstanding. In accordance with Delaware law, the list of registered holders of our common stock was available for inspection for the requisite time period at the company's principal place of business.
Under the company's amended and restated bylaws, a quorum is present when at least one-third of the voting power of the issued and outstanding shares of capital stock of the company, entitled to vote at the meeting, is present in person or represented by proxy at the meeting. The Inspector of Election has been sworn in, and I have her oath of office. The Inspector has informed me that a quorum is present. I will now turn it back over to Seth for the items of business.
Thank you, Teri. With the confirmation that a quorum is present, we will proceed with the business of the meeting. First, we will address the items being presented to stockholders for a vote at this meeting. As described in the proxy materials, there are three proposals to be considered, and the board of directors has recommended that stockholders vote in favor of proposals 1, 2, and 3. No other matters will be considered. Following the voting, I will report the preliminary voting results from the Inspector of Election, and then the meeting will adjourn. The polls opened today, May 23, 2024, at 8 A.M. Pacific Time, for voting on all matters before the meeting. Many of you have already mailed or otherwise delivered your proxy card and therefore intend to have your shares voted by the proxies.
If you have not already voted and wish to vote, the polls will remain open until we announce closing of the polls. If you have provided your proxy card, your shares will be voted in accordance with your instructions. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the Vote Here button on the web portal and following the instructions there. Stockholders who have sent in proxies or voted via telephone, internet, or mobile device and do not want to change their vote do not need to take any further action. The first matter is the nomination of candidates for elections as directors. Pursuant to the company's certificate of incorporation and amended and restated bylaws, the company's board of directors is divided into three classes, with each class of directors being elected every three years.
At this meeting, Nandita Bakhshi, Chelsea A. Grayson, and Joseph N. Murray have been nominated as Class II directors of the company to serve until the 2027 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified. The board of directors has unanimously recommended that the stockholders vote for each of Nandita Bakhshi, Chelsea A. Grayson, and Joseph N. Murray as directors of the company to serve and hold office until the 2027 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified.... The second matter presented for a vote is the proposal to ratify the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the 2024 fiscal year.
The board of directors has unanimously recommended that the stockholders vote for the ratification of the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the 2024 fiscal year. The third and final matter presented for a vote is the proposal to approve, on an advisory basis, the compensation of the company's named executive officers. The board of directors has unanimously recommended that the stockholders vote to approve the compensation of the company's named executive officers by adopting the following resolution: Resolved, that the compensation paid to the company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby approved. We will pause for another moment to allow for any votes to be completed online.
Again, if you have provided your proxy card, your shares will be voted in accordance with your instructions. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the Vote Here button on the web portal. The polls are now closed at 8:08 A.M. Pacific Time, May 23rd, 2024, and the Inspector of Election will tabulate the votes. The next item on the agenda is the preliminary report of the Inspector of Election. Any votes cast before the polls close but not reflected in the preliminary report will be reflected in the final report of the Inspector of Election, which will be affixed to the minutes of the meeting.
The Inspector of Election will prepare the final report and certification of the Inspector of Election once all votes are tallied, and the results will be detailed in a current report on Form 8-K, which we will file with the Securities and Exchange Commission. Based on the preliminary report of the Inspector of Election, each of Nandita Bakhshi, Chelsea A. Grayson, and Joseph N. Murray are duly elected directors of the company to serve and hold office until the 2027 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified. The appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the 2024 fiscal year has been approved and ratified. The compensation of the company's named executive officers has been approved, and the proposed resolution has been adopted.
That concludes the formal business to be brought before this meeting, and the stockholders meeting is now adjourned. At this time, I would like to invite Ethan Brown, our founder, President, CEO, and member of the board of directors, to make a few remarks regarding the company and our business.
Thank you, and welcome to the Beyond Meat's 2024 Annual Meeting of Stockholders. In 2023, Beyond Meat and the plant-based meat category in general continued to face challenges. Consumer ambiguity, much of it deftly orchestrated by incumbent interests regarding the health interests - health benefits of plant-based meats, coupled with general inflationary pressures, weighed heavily on the company and category alike. Our response has been to look squarely at and harness this adversity so as to emerge a stronger business. In these opening remarks, I'll outline some of the achievements in 2023 and provide some perspective as we execute our strategic plan in 2024. Before diving in, though, I want to remind everyone that during my remarks, I may make forward-looking statements within the meaning of the federal securities laws.
These statements are based on our current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ from those described in these forward-looking statements. Please refer to our Annual Report on Form 10-K for the year ending December 31, 2023, filed with the SEC on March 1, 2024, our Quarterly Report on Form 10-Q for the quarter ended March 30, 2024, filed with the SEC on May 9, 2024, and other filings with the SEC for a detailed discussion of the risks that may cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. I may also reference certain non-GAAP financial measures. Please refer to page 17 of this presentation and to our SEC filings for a reconciliation of such non-GAAP measures to their most directly comparable GAAP measures.
For the benefit of those who may be new to our story, I'll begin with a quick refresher and briefly explain who we are as a company, what our long-term mission and objectives are, and what sets us apart from our industry peers. Beyond Meat, at its core, is an innovation engine. We use proprietary science to redefine meat, not in terms of its animal origin, but rather in the terms of its composition. More specifically, it turns out that meat is an assembly of amino acids, lipids, trace minerals, vitamins, and water, none of which are exclusive to the animal kingdom. In other words, by identifying, sourcing, and synthesizing various combinations of these core components, we build meat from its basic building blocks using only simple, plant-based ingredients.
We see our role, therefore, as one in which we continue to develop the scientific and technological understanding of plant-based proteins, where we establish the infrastructure to assemble these core components into the architecture of meat. We do this in an iterative, continuous improvement process with strict guardrails around taste, nutrition, and cost. Additionally, we are committed to furthering our product innovation without the use of genetically modified organisms or GMOs, nor any bioengineered ingredients. That at a high level is what we do at Beyond Meat, but more important is why we do it. We believe deeply in our mission to positively impact four areas of increasing global concern: human health, climate change, natural resource conservation, and animal welfare.
Simply said, the predominant method of providing protein to consumers around the world today is unsustainable, and we believe that plant-based meat, over the long term, has an important role to play in driving a more sustainable and healthy future. A peer-reviewed life cycle analysis of the in-market Beyond Burger 3.0 indicated that when compared to a typical 80/20 quarter-pound U.S. beef patty, the Beyond Burger patty requires 97% less water, 97% less land, generates 90% fewer greenhouse gases, and uses 37% less energy. We believe that a growing number of consumers are making mindful protein choices in consideration of such findings. In this context, we see our work as enabling consumers to continue enjoy the experience of delicious and satiating center of the plate protein, but doing so with plant versus animal-based meats.
Importantly, we believe the addressable market for plant-based meat is immense. Globally, the animal meat market is estimated to have a retail value of approximately $1.2 trillion, with plant-based meat representing only 1%-2% of that today. Yet as a result of its value proposition and anticipated benefits from scale, the plant-based meat category is expected to grow at double-digit pace throughout 2035, according to a September 2023 analysis by Ernst & Young. For our brand specifically, we believe we still have a long runway ahead of us, given animal protein's U.S. household penetration of roughly 98%. Our long-term strategy is to convert more of these meat-eating households into plant-based meat households. In the latter part of 2023, we anchored our activities around five key priorities intended to support our progress towards sustainable operations and a return to growth.
I'll share some of these remarks today. First, we sought to accelerate our transition to a leaner operating structure. As part of these efforts, we established a minimum of $70 million in cuts from our operating budget in 2024. We recorded approximately $95.6 million in non-cash charges in the fourth quarter of 2023, primarily relating to inventory and assets deemed to be in excess or no longer consistent with our path to profitability. Second, in U.S. retail, we put the finishing touches on a multi-year renovation of certain core platforms, including Beyond Burger and Beyond Beef. We believe this renovation further positions the brand to overcome misinformation regarding the nutritional and health profile of our products. Third, we conducted extensive pricing analysis and are now implementing pricing changes in the U.S. to support gross margin expansion. Fourth, throughout the year, we continue to see inventory management...
We continue to use inventory management to free up working capital. Fifth, we maintained our investment focus in Europe and served our strategic customers in this important market for plant-based meat. Although we made progress against the five priorities I outlined, 2023 was another challenging year for our business and for our category as a whole. We experienced a second consecutive year of net revenue declines, which in turn exerted pressure on our profitability and operating results. We believe there are many factors behind our revenue performance in 2023 and the first quarter of 2024, but one factor is the category as a whole remains soft in U.S. retail. Sales of plant-based meat remain down compared to the year ago period in both refrigerated and frozen, although the category is showing signs of improvement in recent periods.
Again, there are many drivers here, but I'll briefly note that although inflation appears to have abated somewhat in the U.S. in 2023 compared to 2022, it remains high by recent standards, and certain of our international markets also experienced macroeconomic pressures in 2023. Furthermore, we continue to operate in a climate of misinformation about the healthfulness of plant-based meat, in part propagated by incumbent industry players intended to sow doubt in the minds of consumers. Turning to 2024, a pivotal year for Beyond Meat, we are pursuing the following five priorities, many of which simply represent a transition from 2023 planning to 2024 implementation. First, we are beginning 2024 by executing within a lean operation, consistent with substantially reduced 2024 planned operating expenses and cash use.
Part and parcel of this leaner operation is our ongoing tightening of focus relating to portfolio, markets, and consumers. Second, as our product-led response to the cloud of misinformation I mentioned, we are rolling out Beyond IV in U.S. retail and view this innovation as an important and potentially transformative moment. The nutritionals are clear and compelling, with 21 grams of plant-based protein and just 2 grams of saturated fat per serving, which is 75% less than a typical 80/20 animal beef patty, and made with avocado oil, which has been identified as potentially beneficial across a range of health outcomes.
The strong advancements in nutrition have qualified the fourth generation Beyond Burger and Beyond Beef products to be recognized by the nation's leading health organizations, including the American Diabetes Association, evidence-based nutrition guidelines supports Better Choices for Life program, and being included in the collection of heart-healthy recipes certified by the American Heart Association's Heart-Check program. Additionally, the new products have received Good Housekeeping's coveted Nutritionist Approved emblem, which assesses food products based on specific nutritional criteria, as well as taste, simplicity, and transparency, and are the first plant-based meat products to be Clean Label Project certified. Third, we are nearing the completion of what has been a difficult but worthwhile consolidation of our production network. Although we undertook these changes for myriad reasons, we expect this consolidation to contribute to our margin recovery.
And given our margin recovery objectives, as well as the inclusion of certain premium ingredients in the Beyond IV platform, our pricing architecture is putting more deliberate emphasis on tiered pricing across our product lines. Fourth, we're continuing to invest in our European business and related strategic customers. In a recent trip to the U.K., I was able, within a radius of three blocks, to enjoy delicious Beyond Meat offerings at McDonald's, Pizza Hut, and Starbucks. And fifth, as we mentioned on our recent earnings call, we are pursuing certain actions to bolster our balance sheet. And with that, we will now answer questions from stockholders. We can begin with those questions we received in advance of today's meeting. We will then take stockholders' questions that have been entered today on the web portal as time permits.
Please note, we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting and submitted in accordance with the rules and procedures of conduct for the meeting will be addressed. Paul, can you now read the first question?
Thank you, Ethan. Our first question is on the subject of compensation. Why should the people that run this company get any bonuses?
Thank you, Paul. So I think it's really important to recognize the relative performance of the company with respect to the industry and what the industry itself is going through. You know, we have a lot of very talented people here who could be working elsewhere, and we continue to lead the category in so many ways, and that's because of the talent we have here. So we can't continue to go year after year without rewarding that talent. You know, as the sector continues to recover and as we continue to recover, I think you'll all be more comfortable with that. But right now, it's a question of rewarding the people who are here, fighting the battle on the front lines and doing a really nice job doing that.
Thank you. Our next question also revolves around compensation. Why do we give shares to executives and directors, pay them and allow them to purchase shares at a reduced rate, and require them to hold the shares for a specified period of time, depending on the discount?
Yeah, I think, you know, as with executive offers, the officers, the market for board members is competitive, and we believe we need to offer appropriate remuneration to secure the best advisory talent for the company at the board level. I also think that, you know, between higher cash pay and more equity-based compensation, you know, we choose the latter, to align incentives more closely between our leadership team and our shareholders.
Thank you. Our next question is on the subject of stock and business performance. Given the decline in share price, what innovations may be coming that could improve market share?
Yeah, I think it's very important to focus on what we've done with Beyond IV. You know, this is a next-generation platform that squarely addresses some of the criticism. Again, much of it that we think fomented and orchestrated by industry groups. But, you know, if you look at our environmental story, it is unassailable. And what we need to do from a health perspective is make our products unassailable. And, you know, these changes that we've made to the core of our business in terms of our portfolio, the endorsement that we've seen from the American Heart Association, American Diabetes Association, Clean Label Project, Good Housekeeping. All of these things you're seeing from nutritionists and doctors are squarely aimed at making sure that people understand the transformative health benefits that plant-based eating and Beyond Meat can have.
This innovation, which took years to accomplish, is something that we think addresses, at its core, the challenges with the sector and the business.
Thank you. Our next question is in the form of a shareholder proposal. The worst part of the sausage is the gristle. Try to produce gristle-less sausage. I think it will be a hit.
Listen, one thing you can always be very confident about with Beyond Meat is we listen to consumers. You know, we spend a ton of time listening to consumers. We're out in the market all the time. We're meeting with folks. And so this is actually, you know, I chuckle a little bit. It's actually very helpful feedback. We appreciate it, and, you know, we continue to do something called central location testing, which is we take a statistically significant number of consumers and test our products with them, and we don't launch something unless we get really good results from that. So we'll continue to do that and continue those consumers, but, you know, keep giving us your feedback.
Thank you. Our next question: I love the taste of the Beyond Burger. However, I am concerned about the canola oil used in your product. Please research the nature of how canola oil is made.
Again, love this focus on ingredients because, you know, we are an organization, rather, that you know, just wants to make sure that everything that goes into our products is very, very carefully thought out. The biggest consumers of our products are our own families, including mine, and so I wanna make sure that everything in it you know, feels great and we're proud to have. And so, on seed oils in general, there's a lot of misinformation out there. The challenge today is that there's no kind of gatekeeper for information that reaches the public through the internet. And so I think a lot can be made of things that aren't actually deleterious in any way.
But on this question, you know, if you look at the Beyond IV portfolio, there is no seed oil in it. Replaced everything with avocado oil. So I think this, this particular concern is one that we can, we can set aside.
Thank you. Next question: I am a big supporter of what you are doing. You say you are engaging on social media. I never see anything on social media about Beyond Meat. Have you tried to build relationships with food influencer types to promote the great taste of your product used in various ways?
Yes. So I think, you know, this is, this is one that'd be interesting to unpack more. We have relied for a long time on social media as a way to reach consumers and the use of influencers. And as an example, you know, some of that's not paid. As an example, I think a few days ago, you know, someone that not everybody knows, but a lot of people know, Kim Kardashian, you know, posted about us and how much she loves the taste of Beyond IV. And it tried to have a or Beyond Meat, rather, and tried to have a beef burrito over the weekend and just said, "You know what?
I just prefer Beyond Meat, whether I'm vegan or not." And so, we do play pretty substantially in the social media space and have a large group of influencers, and those are growing every day. We have a terrific post, I think, going up today from one of our favorite influencers. And so, you know, I'd be interested to see what social channels you're looking at. Some of the statistics, I think, are quite interesting. I had them send some in advance here. Total followers are 2.2 on social.
Million?
Million.
Yeah.
Yeah. Yeah, a billion would be nice. We had 29,000 mentions in the month of April. And so I think competitively, too, if you look at the peers in our category, we do, we do very well on social, but, you know, I wanna do better. I mean, I think, you know, part of this is a movement, and we need to continue to lead the movement. And so having a very distinct and, you know, prolific presence on social is extremely important to me, so I appreciate the feedback.
Thank you. Our next question: could you please comment on actions the company is taking toward advancing sustainability?
Yeah, I mean, I think first and foremost, you know, it's what we do is the most important contribution we can make towards sustainability. You know, the sheer land, energy, and water and emissions implications of our products are staggering. And the ability to switch from an agricultural and food system that is destructive to one that's additive through the approach we take cannot be underestimated. So the single most important thing we can do is create great-tasting products at a price that people can afford and get them to more and more people. Now, we also have programs internally that are more sort of formal ESG programs around energy use and things of that nature.
But the main, main thrust of Beyond Meat and sustainability is what we do and what we provide to consumers.
Thank you. Our next question: How is your business performance in China? What is the status there?
Yes, we continue to look, as I've mentioned in other calls, at that facility and at that business. And, I think as I've mentioned, we're looking more expansively at that region and some of the other parts of the region, including, you know, other areas in Southeast Asia, because we believe that could still serve an important strategic function. But as we stated last year, it's under strategic review.
Thank you. We will now take our last question. This is not a question, but a statement: I love your product, so I invested in it. I'm a regular person who is not wealthy. Please do your best to keep this company on its feet and supply the public with a tasty non-meat alternative.
You know, God bless you, and thank you for that. You know, I feel that very much, and, you know, we're here for people like you, to deliver value to you for investing in something you believe in. And we're gonna fight like crazy to do that and to return the stock to something that is something you can be really proud of. It's what we come here every day to do, and so I appreciate you sharing that. I appreciate you sharing the context around it. And again, you have people here fighting every day to make that possible.
Thank you. That will conclude our question and answer session. Thank you for your participation. And now I would like to turn the meeting back over to Ethan Brown for closing remarks.
Thanks, Paul. As I noted in my remarks, we are committed to our mission to meaningfully impact how we deliver protein to the center of the plate for consumers globally. Our newly launched brand campaign, Serve Love, came from the idea that serving the new Beyond Burgers and Beef with their impressive health accreditations to your family and friends is an act of love. These products are made with simple and clean ingredients like avocado oil and proteins from yellow peas, brown rice, red lentils, and fava beans. Each of these ingredients comes together to create something that is truly nutritious and delicious for the special people in the lives of our consumers. The positive choices we all make, no matter how small, can have a great impact on our personal health and the health of our planet.
By shifting from animal-based meat to plant-based meat, we can positively impact four growing global issues: human health, climate change, constraints on natural resources, animal welfare. As stockholders of our company, we thank you for your continued belief in our mission, continued interest and commitment to our brand. Thank you all for attending our 2024 annual meeting of stockholders.
This now concludes the meeting. Thank you for joining, and have a pleasant day.