Hello, welcome to the Caterpillar Incorporated Annual Meeting of Shareholders. Please note that today's meeting is being recorded. During the meeting, there will be a question and answer session. You can submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to Jim Umpleby, Chairman and Chief Executive Officer. Mr. Umpleby, the floor is yours.
Well, good morning. It's now 8:00 A.M., and I'm informed that a quorum of shareholders is present. It is my pleasure to officially call the annual meeting of Caterpillar shareholders to order. Thank you for attending our meeting this morning. This meeting is entirely virtual due to the COVID-19 pandemic. The vast majority of shares have been voted in advance. Those of you who intend to vote today, please vote your shares virtually during this meeting. I will now introduce Caterpillar's directors and officers who have joined us this morning. Kelly Ayotte is a former U.S. Senator and Attorney General for New Hampshire. During her time in the Senate, she served on the Senate Commerce, Science, and Transportation Committee and the Senate Budget Committee. Dave Calhoun is the President and Chief Executive Officer of the Boeing Company.
He is also Presiding Director of Caterpillar Board of Directors and Chairman of our Public Policy and Governance Committee. Dan Dickinson is a Managing Partner of HCI Equity Partners, a private equity firm that invests in growth-oriented industrial companies. Dan is Chairman of Audit Committee. Juan Gallardo is the Chairman and former CEO of Organización Cultiba. Bill Osborn is the former Chairman and CEO of The Northern Trust Company. W. Reed-Klages is the former Chairman and CEO of Sempra Energy. Ed Rust is the retired Chairman and CEO of State Farm. Susan Schwab is a former United States Trade Representative and is a Professor at the University of Maryland School of Public Policy. Miles White is the current Executive Chairman and retired CEO of Abbott Laboratories. He serves as the Chairman of our Compensation and Human Resources Committee. Ray Wilkins is the former CEO of Diversified Businesses for AT&T.
This distinguished dedicated group of directors provides extraordinary insight for our management team. I thank them for their service and counsel. Next, I will introduce our executive office. Billy Ainsworth, Group President of Energy and Transportation. Bob De Lange, Group President of Services, Distribution and Digital. Denise Johnson, Group President of Resource Industries. Ramin Younessi, Group President of Construction Industries. Andrew Bonfield, Chief Financial Officer. Suzette Long, Chief Legal Officer, General Counsel, and Corporate Secretary. Cheryl Johnson, Chief Human Resources Officer. It is a privilege to work with this talented and seasoned group of executives. PricewaterhouseCoopers is our independent registered public accounting firm. Kyle Muransky, who leads the Caterpillar account, is also in attendance. I'll now ask Jennifer Schott, our Deputy General Counsel and Assistant Secretary, to conduct the official business of the meeting.
Thank you, Jim, and welcome again to our annual shareholder meeting. The polls are now open. If you already voted by proxy, you do not need to vote again today unless you want to change your vote. I will go through the voting for each proposal, and those of you who are voting virtually during this meeting can vote as we review the proposals. Proposal one is the election of directors. The Board of Directors' nominees included in our proxy statement are listed on the ballot, and there have been no other nominations made. The board recommends a vote for our nominees. The next item is proposal two, ratification of the action of the audit committee of the board in appointing PricewaterhouseCoopers as the company's independent registered public accounting firm for 2020. The board recommends a vote for this proposal.
The next matter is proposal three, an advisory vote on executive compensation. The board recommends a vote for this proposal. The next matter is proposal four, a shareholder proposal requesting the company provide a report of lobbying activities. I recognize Kevin Thomas to speak to the proposal. Mr. Thomas, you will have three minutes to present your proposal. Operator, can you please open Mr. Thomas' line?
Thank you. Can you hear me?
Yes, we can.
My name is Kevin Thomas. I'm the CEO of SHARE, I'm representing the Fonds de solidarité FTQ, which filed the resolution. Government policy may have to do with action or lack of action on a lot of things like an existential question of climate change, which we know is going to have a massive impact on our company's business and our business environment in the near to long term. It could have to do with decisions about reopening our economy or directing recovery funding. Whether and how our company lobbies on these major issues matters. As a company, Caterpillar has established processes for oversight of its own lobbying. Yes, it discloses political campaign contributions.
We filed this resolution about lobbying activity disclosure, not as a campaign contribution disclosure, because our company, like so many others, is party to a huge amount of lobbying activity by the trade associations and nonprofit organizations of which it is a member and to which it contributes funds. The disclosure and review of that lobbying activity and the shareholder funds dedicated to it are not as well disclosed. We don't have disclosure of state-level lobbying activity or international lobbying activity, all of which makes it difficult for us as shareholders to accurately evaluate the company's approach to lobbying overall. That can be a problem.
I know, for example, this shareholder proposal in your ballot mentions concerns of media reports that the company is a member of the American Legislative Exchange Council, an organization with a controversial history of promoting things like the Stand Your Ground law, which helped exacerbate racial tensions in Florida with the murder of Trayvon Martin several years back. Yet, in private conversations with management, we learned that CAT's no longer part of that organization, which is great, but shouldn't that information be something we learn from the company's own regular and standardized disclosure? That's exactly why a vote for this resolution is warranted. In the interest of time, it's three minutes, I will not read the whole text of the resolution, but I will, on behalf of the fund Solidarity, move the resolution as contained in the proxy circular as ballot item number four. Thanks.
Thank you, Mr. Thomas. Operator, please close Mr. Thomas' line. For the reasons stated in the proxy statement, the board recommends a vote against this proposal. The next matter is proposal five, a shareholder proposal requesting the company adopt a policy requiring an independent board chairman. I recognize John Chevedden to speak to the proposal. Mr. Chevedden, you will have three minutes to present your proposal. Operator, can you please open Mr. Chevedden's line?
Hello, this is John Chevedden. Can you hear me okay?
Yes, we can.
I don't hear the meeting leader say that he could hear me.
Mr. Chevedden, I can hear you. Thank you.
Good. Okay, proposal five, independent board chairman. Shows request that our board of directors adopt a policy and amend our governing documents as necessary to require that the chairman of the board be an independent member of the board whenever possible. Although it would be better to have an immediate transition to an independent board chairman, the board would have the discretion to phase in this policy for the next chief executive officer transition. An independent board chairman would have more time to make proper arrangements for the annual meeting. The format today makes it very difficult for shareholders to merely submit a question to the annual meeting. A key legal requirement of an annual shareholder meeting is shareholder participation. Apparently, shareholders cannot even listen to this meeting unless they make special arrangements in advance.
Boeing is an example of a company changing course and naming an independent board chairman in October 2019. Boeing did not wait for the next CEO succession. Boeing named David Calhoun, the current Caterpillar Presiding Director, as Boeing CEO in December 2019. Mr. Calhoun may have too much on his plate to serve any longer as the Caterpillar Presiding Director, given the current Boeing 737 MAX crisis and the severe impact the pandemic is having on Boeing. Mr. Calhoun is in a position to be compromised. If Mr. Calhoun needs the support of Caterpillar Director Susan Schwab due to her position as a Boeing Director, he could agree to follow Ms. Schwab's lead on an important issue at Caterpillar, even if he thought that Ms. Schwab was on the wrong side of that issue at Caterpillar.
Mr. Calhoun's continued role as Caterpillar presiding Director could be taken as acknowledgment that the presiding director is not much of a role, and hence the greater need for an independent board chairman at Caterpillar. The former Boeing CEO, Dennis Muilenburg, is now gone from the Caterpillar board. This proposal topic won 52% support at the 2020 Boeing annual meeting. This proposal topic also won 42% support at the 2016 Caterpillar annual meeting. This 42% support would have been higher if more shareholders had access to independent proxy voting advice. It is ironic that the board wants flexibility on the topic of this proposal but does not want to give shareholders flexibility. For instance, the board opposed giving shareholders the flexibility of allowing more than 20 shareholders to initiate shareholder proxy access. Please vote yes, independent board chairman, proposal five.
Thank you, Mr. Chevedden. Operator, please close Mr. Chevedden's line. For the reasons stated in the proxy statement, the board recommends a vote against this proposal. The next matter is proposal six, a shareholder proposal allowing shareholders to take action by written consent. I recognize James McRitchie to speak to the proposal. Mr. McRitchie, you will have three minutes to present your proposal. Operator, can you please open Mr. McRitchie's line?
Good morning. Thanks for your attention and for allowing us to practice social distancing during the COVID-19 pandemic. Although the process our company used to allow voting and questions during the meeting is far too difficult to navigate. I hope all of you and your loved ones are making it through these trying times and that our company will soon be back to moving the Earth. My name is James McRitchie of Corporate Governance, corpgov.net. I'm here to introduce an exciting good governance proposal submitted by my wife, Myra Young, to increase the credibility and shareholder value of Caterpillar. Many boards and investors assume a false equivalency between the rights of written consent and special meetings. However, with the right of written consent, any shareholder can seek to solicit written consents on a proposal.
You don't need to own 18 million shares of company stock. The two-step process required by a special meeting can take more time and expense than the one-step process of soliciting written consents. This is especially true at Caterpillar, which allows only investors with 25%, that's 18 million shares, to call a special meeting. Our three largest shareholders, Vanguard, BlackRock, and State Street, combined own more than 13 million shares, but that's still far short of the required 18 million. Additionally, they are largely passive owners, so they're very unlikely to initiate a special meeting. At many companies, shareholders owning 10% are allowed to call a special meeting. Caterpillar requires 25%, not 10%, having the right to decide issues by written consent could be crucial in an emergency. The COVID-19 pandemic is helping us all realize that emergencies can and do happen. Let's be prepared.
Similar proposals won more than 50% of the vote recently at Stanley Black & Decker, Berry Global Group, Flowserve, JetBlue, United Rentals, Capital One, Cigna, Applied Materials, and Nuance. Help Caterpillar prepare for an uncertain future. Please vote for proposal number six, written consent. Thank you for your attention, and please stay safe.
Thank you, Mr. McRitchie. Operator, please close Mr. McRitchie's line. For the reasons stated in the proxy statement, the board recommends a vote against this proposal. That concludes the business portion of the 2020 annual meeting of shareholders. Please complete your virtual votes so that the results may be tabulated by our official inspector of election. The polls are now closed. As Jim mentioned earlier, the vast majority of our shareholders have voted in advance. Our inspector of election has tabulated those votes, and I will now provide the preliminary voting results for the information for those present at this meeting. The final voting results, including the shares voted during today's meeting, will be filed on a Form 8-K with the Securities and Exchange Commission. Proposal one, election of directors, passed with an average vote of 97% for the proposal.
Proposal two, ratification of auditors, passed with a vote of 95% for the proposal. Proposal three, approval of executive compensation, passed with a vote of 93% for the proposal. Proposal four, a shareholder proposal requesting a report of lobbying activities, failed with a vote of 34% for the proposal. Proposal five, a shareholder proposal to adopt a policy requiring an independent Chairman, failed with a vote of 30% for the proposal. Proposal six, a shareholder proposal allowing for shareholder action by written consent, failed with a vote of 44% for the proposal. The business of the annual meeting has been concluded. The meeting is now adjourned. I will now invite Jim Umpleby, our Chairman and CEO, to provide a business update. Jim?
Thank you, Jen, thanks again to all of you for joining us today in Caterpillar's 2020 Annual Shareholders Meeting. Before I begin, I'd like to acknowledge the anger and frustration that is being expressed across the United States in the aftermath of several tragic deaths, including George Floyd's. We grieve for Mr. Floyd and his family. It is important that business leaders use this opportunity to listen and work to understand the experiences and perspectives of those who have suffered the destructive effects of racism. As Caterpillar employees, our Values in Action require each of us to respect all people and their opinions, experiences, and backgrounds. As we prepared this year's annual meeting proxy statement, COVID-19 became a global pandemic, presenting new challenges around the world. During this difficult time, our thoughts are with those affected by COVID-19.
We extend our deepest sympathies to those who have lost a loved one during the pandemic. We thank those individuals in healthcare, as well as the first responders helping fight the pandemic on the front line. I'd also like to thank Caterpillar's global workforce. We recently celebrated 95 years of operation at Caterpillar. For nearly a century, we have faced and overcome many challenges. As in the past, our employees are rising to the occasion. I appreciate their commitment to support our customers while keeping our facilities and coworkers safe. As the COVID-19 pandemic spread around the world, many governments classified Caterpillar's operations as essential activity for support of critical infrastructure. Working with our dealers, Caterpillar is delivering products and services that enable our customers to provide critical infrastructure essential to support society during the pandemic.
Customers use our products to provide prime and standby power for hospitals, grocery stores, and data centers, to transport food and critical supplies in trucks, ships, and locomotives, to maintain clean water and sewer systems, and to mine commodities and extract fuels necessary to satisfy global energy demand. While we are serving these important needs, Caterpillar remains dedicated to the safety, health, and well-being of our employees. Caterpillar team achieved our best safety performance on record in 2019, and we are leveraging our strong safety culture during the pandemic. Employees who can work from home are doing so. In our facilities that remain open, Caterpillar is implementing safeguards to protect our team members in accordance with regulatory requirements and guidance from health authorities. We've also introduced a number of enhanced employee benefits to help them deal with the pandemic.
Since Caterpillar was founded, our world-class global dealer network has provided us with a competitive advantage. During this pandemic, our 165 dealers and their employees around the world continue to support our customers as they maintain critical infrastructure. In addition to the direct efforts of our employees, the Caterpillar Foundation has also committed $10 million to support COVID-19 response activities being taken by organizations around the world. Caterpillar's financial position is strong, and we are confident in our ability to continue serving our global customers. We continue to invest in growing services and expanded offerings, which, along with operational excellence, are the key elements of our strategy for profitable growth, which we introduced in 2017. The execution of our strategy during the last three years positions us well to weather the storm created by COVID-19, including disciplined management of structural costs.
In response to the pandemic, we've taken actions to improve our already strong financial position and increase liquidity. Our strategy is supported by our Values in Action, integrity, excellence, teamwork, commitment, and sustainability. I'll briefly describe the three elements of our strategy. Operational excellence includes safety, quality, lean operations, and a competitive and flexible cost structure. We are striving for perfection in safety and quality in a continuous, never-ending journey. The same is also true for lean. We are committed to continuing our lean manufacturing journey by synchronizing across our value chains, reducing lead times, optimizing working capital, and increasing availability. We're also firmly committed to maintaining a competitive and flexible cost structure.
The next element of our strategy is expanded offerings, which is based on having the right products and solutions to meet a wide variety of customer needs at the right value proposition for our customers, Caterpillar, and our dealers. During 2019, we introduced a number of new products to help ensure our customers are more successful using Caterpillar products than they would be with the competition. The third component of our strategy is services, which includes all the ways we help our customers succeed after they buy a piece of equipment. Services create value for Caterpillar, our dealers, and most importantly, our customers. Services increase customer value by minimizing downtime, maximizing product availability, improving efficiency, and asset utilization. We continue to invest to grow services, including expanding our digital capabilities. At the end of 2019, we achieved our goal of connecting 1 million machines and engines.
Our global team of more than 100,000 men and women achieved several key accomplishments in 2019 by executing our strategy, including $53.8 billion in sales and revenues, operating profit margin of 15.4%, well within the target ranges we set out at our Investor Day last May, $6.2 billion returned to shareholders through dividends and share repurchases, increasing the quarterly dividend by 20% to $4.12 per share annually, a strong balance sheet ending the year with $8.3 billion in enterprise cash. In summary, Caterpillar is well positioned to deal with the challenges presented by COVID-19 while continuing to invest in our strategy based on operational excellence, expanded offerings, and services. Our goal is to emerge from the pandemic as an even stronger company, better positioned to serve our customers and profitably grow our company.
I'd like to once again express my appreciation to our global team for enabling our customers to provide the critical infrastructure essential to fight the global pandemic. Thank you again for joining us today, and on behalf of our outstanding global team, thank you for your continued support of Caterpillar.
As noted in our proxy, shareholders had the opportunity to submit questions before and during the meeting. We will now address those questions. Jim, the first question we have from a shareholder is, how is the COVID-19 pandemic impacting Caterpillar's business?
Well, thank you, Jenny. I made a couple of comments in my prepared remarks. As COVID-19 spread around the world, many governments classified Caterpillar's operations as essential activity for support of critical infrastructure. I can't imagine fighting this pandemic without reliable power, without reliable clean water, sewers, being able to transport food and medicines, and trucks having the fuel to do that. We have continued to operate. Our dealers around the world, 165 of them, and their employees continue to support our customers as, again, they maintain that critical infrastructure. We've taken a number of cases again, a number of actions to ensure that we keep our employees as safe as possible, and we are very committed to continue to do that.
Again, we've continued to operate our business, we've continued to support our customers, and again, we will emerge from this pandemic as a stronger company.
Thank you, Jim. The next question. How will the increasing trade tensions between the U.S. and China affect Caterpillar?
Caterpillar, we're proud of our 45-year legacy of serving our customers in China. The pandemic, of course, hit in China first. Started to subside there. Our factories and our workers in China are back up and operating. Sales have begun to recover from the lows in February. We continue to focus on our customers, again, making them successful. We are hopeful that leaders in China and the U.S. continue working together on the phase I agreement on trade. Caterpillar has long been a proponent of free and fair trade.
Thank you, Jim. Next question, is Caterpillar continuing to invest in R&D?
Yes. Our ongoing investment in R&D is essential to the long-term health of our company. During the three-year period between 2017 and 2019, we invested about $5.4 billion in R&D. We continue to invest. We're investing to develop new products. We're investing to expand services. We're investing in our digital capabilities. Again, it's something that we will continue to do.
Okay. Next question. Are you worried about your ability to build products because of problems with suppliers?
Yeah. Many of our suppliers around the world are dealing with their own challenges, whether it's government restrictions or issues of their own supply chains. However, we have been able to continue to support our customers and our dealers. Our supply chain teams continue to execute business continuity plans to minimize disruptions, and I'm confident in our ability to continue to support our customers.
Okay. Thank you, Jim. Next question, are you concerned about the financial viability of our dealers?
As we always do, we work closely with our dealers to monitor their financial strength. Our dealers around the world were impacted at different times as the pandemic spread around the world. Again, we are very confident in our ability of our dealers to continue to support our customers.
Okay. Jim, we have one last question that's been submitted by our shareholders. Do you anticipate a national infrastructure bill being passed in the U.S., and how would that impact Caterpillar?
Well, I think most observers would agree that in the United States, we are not investing enough between the federal government and the states to support our infrastructure. At a time when the government is spending significant amounts of money to stimulate the economy, I can't think of a better way to stimulate the economy than spending money on infrastructure, which we know we need to spend money anyway. We're hopeful that there'll be bipartisan support for that. I will note that the federal highway bill that funds the U.S. transportation infrastructure system expires in September. We do believe that infrastructure investment should be part of a federal economic recovery program. Okay. With that, is that our last question?
That's our last question.
All right. With that, I will conclude our meeting. Thanks again for joining us today. I'm pleased that our shareholder participation at today's meeting is actually greater than our physical meeting last year. Again, thank you for your ongoing investment in and support of Caterpillar as we continue to execute our enterprise strategy for long-term profitable growth and shareholder value. Thank you.
This concludes the meeting. You may now disconnect.