Hello, and welcome to the annual shareholders meeting of Costco Wholesale Corporation. This meeting is being recorded. There will be a general question and answer session after the formal meeting adjourns. Shareholders that have logged in with a control number may submit a question at any time by clicking on the Submit Question button on your screen. Some of the comments today may contain forward-looking statements. Additional information about this is included among your meeting materials available on your screen. It is now my pleasure to turn the meeting over to Hamilton James, Chairman of the Board of Directors of Costco.
Thank you, Anne, and good afternoon, everyone. I want to welcome you to the 2021 Annual Meeting of Shareholders for Costco. I'm Tony James, Chairman of the Board, and this is our first virtual stockholders meeting. Before we get started, I want to make a few other introductions. John Sullivan, our Corporate Secretary, will act as Secretary for this meeting. Deanna Nakashima, acting as Inspector of Election, will be counting ballots and reporting on the final vote. I will now introduce our terrific board of directors, all of whom are present virtually today. Sue Decker. Sue is founder and CEO of an exciting startup around engagement of college students called Raftr. Previously, she was president of Yahoo. Sue also sits on the board of Berkshire Hathaway and other noteworthy companies. Ken Denman. Ken is a leading technology executive. He was formerly CEO of Emotient, which was acquired by Apple.
Ken sits on several other corporate boards and is a trustee of the University of Washington Business School. Richard Galanti, our longstanding CFO. Richard is truly one of the best in the business, and he is a former director of the Federal Reserve Bank of San Francisco. Craig Jelinek, our fantastic CEO who needs no introduction here. We will all hear more from Craig in just a few minutes. Sally Jewell. Sally is our newest director. She was formerly CEO of The Nature Conservancy. Prior to that, she was Secretary of the Interior in the Obama administration and previously CEO of cult retailer REI. Charlie Munger, another person who needs no introduction. Charlie is Vice Chairman of Berkshire Hathaway and Warren Buffett's alter ego. Charlie is renowned for his wisdom and his acerbic wit. Jeff Raikes. Jeff is co-founder of the Raikes Foundation.
Previously, Jeff was CEO of the Bill & Melinda Gates Foundation and a senior executive at Microsoft. John Stanton, another of Seattle's leading lights. John was a pioneer of the wireless industry as CEO of Western Wireless and of T-Mobile USA. He is a director of Microsoft and managing partner of the hometown Seattle Mariners. Maggie Wilderotter, formerly CEO of Frontier Communications. Maggie was one of the few women CEOs of a Fortune 500 company. She's currently a director of several noteworthy public companies and has served as a director on a number of other boards, including many of the most prominent companies in America. Finally, our Director Emeritus, Rick Libenson. Rick was one of the creators of the warehouse club industry and has been a key advisor to the company for over 25 years. Okay, on to business.
We're gonna do the formal part of the meeting first. I hope to make that efficient and relatively brief. We will turn it over to Craig to give his presentation on the state of the company, after which we will open it up to questions. The polls are still open and will close shortly. Shareholders who held shares as of the record date for this meeting are entitled to vote. If you have already voted your shares, there is no need to vote again unless you wish to change your vote. If you would like to vote your shares or change your vote, you may do so while the polls are open by following the instructions on your screen. The record date for the meeting was the close of business on November 12, 2020.
Each shareholder of record on November 12 was mailed a Notice of Availability of Proxy Statement on or about December 10. The proxy statement was posted on our corporate website on December 10. Affidavits of mailing and posting of these materials will be attached to the minutes of this meeting. A complete list of shareholders of record entitled to vote is available for your inspection through the link on your meeting page. This list will be kept open for inspection during the entire meeting. To conduct business, we need a quorum, and a quorum for this meeting is a majority of the shares entitled to vote. The Inspector of Election has reported that we do indeed have a quorum today. I will now review the various items which were put up for shareholder votes and the preliminary results of the voting.
Preliminary vote totals for the seven individuals nominated as directors show they all have received substantially in excess of a majority of the shares voting. Accordingly, the nominees have all been reelected as directors. Preliminary vote totals for the other two proposals, the say on pay and ratification of the selection of auditors, also show both receiving substantially in excess of a majority of shares voting. These proposals both passed also. That concludes our official business. The polls are declared closed and the inspector of election will tabulate the votes. The final results will be reported in our 8-K, which will be filed shortly. As chair of the meeting, I declare the official meeting adjourned. Thank you all. I would now like to introduce our CEO and President, Craig Jelinek. Following his presentation, Craig will address questions and comments from shareholders for approximately 30 minutes.
Please remember, only shareholders are permitted to ask questions and make comments. Shareholders that have logged in with a control number may submit a question at any time by quick-clicking on the Submit Question button on your screen. Please keep your questions and comments brief because we want everyone to get a chance to get theirs in.
How does Costco expect to support COVID-19 vaccinations and appointments for shots?
Well, once we get the different approvals from the different governments to be able to get the vaccine, we will start distribution and set up our scheduling where you can go online and schedule your appointment. We're currently doing this in Alaska, in New York, parts of California. In certain states, we have not gotten much any vaccine yet to start on the vaccinations based on certain tiers that the government has established in each state and county.
Craig, can you comment on how our Shanghai location is doing and our plan for future expansion in China?
We're very pleased with Shanghai. As you know, that was our first building that we opened up in the China market. We currently have two more, Suzhou in China and Pudong, which is also in the Shanghai market. We will open Suzhou this December and Pudong December 2022. It's a long construction process over in China based on the complexity of building the buildings. We continue to look for sites in China and feel very positive about expansion in China.
Can you talk about supply chain challenges that the company faced in 2020 and how those are expected to continue in 2021?
Well, as you know, with COVID, that certainly put a damper on everything in terms of being able to shop, being able to purchase goods, in terms of distribution of goods. A lot of factories could not work at full scale because of the COVID, and they didn't have people and also social distancing. Getting goods was a big problem in 2020. Also with things like certain paper or paper products like toilet paper, towels, that was very difficult just from the demand and all these manufacturers, not only were they short of people, but they're also working at full capacity. We continue to think we're gonna see this, particularly in some of the transportation issues in non-food for part of this year.
We'd hope by the end of the calendar of 2021 that things would be back to some type of normalcy.
How are Costco employees faring during the pandemic?
Well, you know, it's been, we've certainly had our share of positives. We don't believe that that's necessarily happened in the workplace. We've paid a higher premium for people during COVID. We've allowed people 65 and over for a period of time to stay at home and be compensated. We're doing work from home for a lot of our employees in the main office. You know, it's been a difficult year, and it's been a difficult year for our employees who also have children in school and have to work at the same time. We've tried to also help navigate with our working employees that have to deal also with self education at home.
I think for the most part, we've certainly our employees have risen to the occasion and navigated through this thing, and we hope with the vaccination, we see light at the end of the tunnel. As you might have read, we've had 2 buildings where we had quite a few positives. One was in Sunnyvale, California. We don't necessarily know that that happened in the workplace, but that building came in and the health department came through and tested all of our employees. They're back to normal. We also had 1 in Union Gap, which is Yakima, Washington, where we had a very high rise of positive COVID-19. We've also completely worked through that.
The health department did give us a clean bill of health the way we were running our business, and we currently now have everybody back to work, and everybody is tested negative.
What's happening with curbside delivery at Costco?
You know, we are currently testing that in just one market. We're testing that in Albuquerque, New Mexico. You know, we've been doing it now for two weeks. One of the reasons that we decided to try it is because we got ourselves in a situation where the local government chose to cut down capacity to something like, I believe, 75 people coming in, including your employees. We're testing it there. Mixed results. The jury's out to see what if we will really do anything with that business going further.
What is Costco doing to address climate change?
Well, you know, that's very, very important to us. If you look, probably the best way to talk about that is if, I guess, if you went and looked at our recent sustainability commitment. If you go on our website, it's a goal of ours to reduce emissions. We've got a ten-point plan to get there, focusing on emissions as well as better understand the emissions of our suppliers. We are reporting it, and you'll see it online. If you go onto our website, you'll see everything that we're trying to accomplish.
How have your sales of pet items fared during the pandemic, and what do you see for the future there?
Well, you know, pet category has continued to be a growing business for us, not only with the pet category in terms of toys, in terms of pet beds, but also even the pet meds. So, you know, that's become a big category for us, particularly in the, I guess, for better choice of words, I'm gonna say, as furnishings. You know, the pet food has always been strong, but with all the other toys and things like that, beds, we see a big opportunity to continue to grow that business.
What's happening with the photo departments at Costco?
Well, you know, over the last probably five years, we've gradually closed down our photo labs. With technology and people storing things on their phones, it's become a non-profitable business for us. We've made the decision to better utilize our space in these buildings for other categories. That being said, you'll still have availability to do things online and pick up at the warehouse.
Do part-time workers at Costco receive health benefits? If so, how do they qualify?
Yes, they do allow great benefits. Anybody working over 27 hours a week are entitled to benefits at Costco. I think we have roughly 97% of our employees eligible for benefits, and I think 91% of them choose to take those benefits.
Does Costco plan to source more products from the U.S. and Canada rather than other countries such as China?
You know, we would love to continue to look for. We're always trying to find local products in every place that we do business. Now, that being said, it's much easier with the food and sundries type business than it is for non-food. To the extent that we can find non-food suppliers that can create a quality item with value, we would continue to move in that direction. Keep in mind, a lot of products that are put together in the United States are usually coming with components that come out of China, so it's a difficult situation.
What's the plan for allowing members to see online the inventory levels at their local warehouses?
You know, that's probably one of the biggest questions or frequent questions that I get asked. We need to get there. I think we're probably about a year out from being able to get that done, but that is a goal of ours to accomplish that.
Are you concerned that member usage of third-party delivery services such as Instacart and their ability to do so without a Costco membership will hurt Costco membership in the future?
Well, keep in mind, Instacart is a business. It's a third-party business. Instacart actually has a membership, so they have the ability to shop for their business. That being said, if you choose to use Instacart through them, you'll pay at least a 10%-12% higher premium to get your goods delivered. It makes more sense for the person buying through Instacart to do it through Costco and have a Costco membership.
What is Costco doing to make available more meat alternative items in its warehouses?
Well, we continue to look at grass-fed products, although that is beef. We continue to look for Impossible Beef we're selling in some of our locations. It has mixed results depending on the market, but we are continuing to look at alternatives.
What is Costco doing to address the issue of forced labor in supply chains from China and other countries?
You know, we take our code of conduct very seriously and, you know, we do many audits. Not only our suppliers make sure that they're doing audits, but we also as a company do audits. Obviously pre-COVID, we also had individuals from Costco going through these factories. We also have the ability for a whistleblower line for anybody to bring this to our attention. We address these. We take these very seriously, and we will deal with it accordingly, including, if necessary, if known to happen, we will discontinue the supplier.
What is the status of self-checkout at Costco warehouses?
Well, we're currently doing self-checkout, and I wanna say in about, I'm gonna guess it's 250 locations, and we continue to move it forward. It's something that's going to be here for a period of time until we find better technology to get people in and out of our Costcos.
Has Costco considered opening a location in Israel?
You know, that's not something that we have thought about. We have enough on our plate right now with Europe and Asia and the United States, Australia. We are venturing out to New Zealand. I wouldn't say never, but I don't see it in the near future.
What are the big challenges you see for the company in the coming year?
Well, I think, you know, we certainly still have to navigate COVID and supply chain. You know about your business, it's all about people. It's important that we keep not only our members healthy and our employees safe and healthy, and continue to work with our suppliers to make sure that we have supply of goods. I guess it's. I'll check with our host. Is that it on questions?
That's all the questions we're going to address today. Questions that were posed but not answered will be answered on our investor relations site.
Thank you for your time, and we appreciate you being shareholders. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.