Good afternoon. Welcome to the Costco 2026 Annual Meeting of Shareholders. I would now like to turn the conference over to Tony James. Please go ahead.
Good afternoon, everyone, and thank you for joining us at the Costco 2026 Annual Meeting. I'm Tony James, Chairman of the Board. Before we get started, I want to make a few other introductions. John Sullivan, our Corporate Secretary, will act as Secretary for this meeting. Soleil Luke will act as Inspector of Election and will be counting the ballots and reporting the final vote. I will now introduce the members of our terrific Board of Directors, as well as a new nominee, all of whom are present on this webcast today. Sue Decker, founder of her own startup, Rafter, and formerly President of Yahoo. Ken Denman, a partner in Sway Ventures and formerly CEO of Emotient, which was acquired by Apple. Helena Foulkes, former CEO of Hudson's Bay Company and a longstanding senior executive at CVS Health Corporation, including President of CVS Pharmacy.
Sally Jewell, former Secretary of the Interior under President Obama and previously CEO of boutique retailer REI. Jeff Raikes, founder of the Raikes Foundation, previously CEO of the Bill and Melinda Gates Foundation and a former senior executive at Microsoft. John Stanton, a pioneer of the wireless industry in America and Chairman of the hometown Seattle Mariners. Maggie Wilderotter, Chairman of DocuSign and formerly CEO of Frontier Communications. And finally, Ron Vachris, our terrific President and CEO, from whom you will hear more later. I'm also very excited to present our new nominee, Gina Raimondo, for election to the Board. Gina is one of the most respected leaders in America. She is a Distinguished Fellow at the Council on Foreign Relations and served from 2021 to 2025 as Secretary of Commerce under President Biden, leading America's interactions with China and responsible for the implementation of the CHIPS Act.
Previously, she served as Governor of the State of Rhode Island. She started her career in venture capital investing. As our company expands around the world, Gina will bring us unparalleled expertise in global relations and international business. Okay, on to the business of the meeting. We're going to do the formal part of the meeting first. I hope to make that efficient and relatively brief. We'll then turn it over to Ron to give his presentation on the state of the company and open it up to your questions. The polls are open and will close approximately 30 seconds after the last item is presented. Only shareholders who held shares as of the record date for this meeting are entitled to vote. If you've already voted your shares, there is no need to vote again unless you wish to change your vote.
If you'd like to vote your shares or change your vote, you may do so at any time while the polls are open by following the instructions on your screen. I would encourage you to vote soon, however. The record date for the meeting was the close of business, November 7th, sorry, 2025. Each shareholder of record on November 7th was mailed a notice of meeting and a proxy statement, or a notice of the availability of proxy statement, on or about December 4th. The proxy statement was posted on our website on that date. Affidavits of the mailing and the 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 throughout the meeting on the link on your meeting page.
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 four items put to shareholder votes and the preliminary results of the voting. We will close the polls very shortly, so please vote now if you've not already done so. Item one is the election of directors. All the current board members have been renominated to serve again until the 2027 Annual Meeting and until their successors are elected and qualified. Additionally, our new nominee, Gina Raimondo, stands for election at the meeting today, also to serve until the 2027 Annual Meeting until her successor is elected and qualified. I have reviewed the nominees and each of their backgrounds in my introductory remarks. On to the votes.
The votes show that the nominees have all been reelected with between 94% and 99% of the vote. Item two is ratifying the selection of KPMG as our auditor. This item also passed with over 95% of the shares voting. Item three is an advisory vote to approve the compensation of the company's executive officers. This item also passed with 88% of the shares voting. The last item is a proposal by a shareholder requesting Costco to report on the financial risks and costs of its climate commitments. We will now play prerecorded statements by the shareholder proposing this resolution and a prerecorded response by me explaining why we believe this proposal is not in the company's best interest. We respectfully request that you vote against this proposal, which is very similar to the one that shareholders decisively rejected in 2024.
My name is Stefan Padfield, and I am here on behalf of the National Center for Public Policy Research, the proponent of Proposal 4. If Costco tracked the ROI of its sustainability commitments, it would have been easy for Costco to simply affirm that, and we would have gladly withdrawn this proposal. Yet Costco cannot even bring itself to say the phrase "return on investment" in its opposition statement. Instead, Costco wants to talk about achieving a just transition. I taught business law for over 15 years, and I can tell you that I have never seen a fiduciary duty to achieve a just transition. The duty to maximize shareholder value, however, is ubiquitous, and Costco may be attempting to achieve a just transition at the expense of shareholders because, as of December 19th, Costco has apparently underperformed the S&P 500 by 36 percentage points over the past 12 months.
There is also some interesting accounting in Costco's opposition statement, wherein it asserts that it relies upon its suppliers to meet certain reduction targets and that the relevant costs are incurred by suppliers and are generally not investments required by the company itself. This sounds a bit like Enron accounting, with Costco likely cutting itself off from the most cost-effective suppliers, but then claiming those opportunity costs would not be relevant to a report on financial risks associated with the company's climate commitments. Finally, Costco spends roughly a paragraph on corporate platitudes related to the importance of sustainability, but then adds that the company's incremental spending in this area has been immaterial. That may be a case study for greenwashing.
Of course, this proposal will likely get little support because we are who we are, and the proxy voting industrial complex is what it is, but I ask the board nonetheless to take seriously the red flags we are identifying on behalf of shareholders.
This is Tony James, Chairman of the Board of Directors, speaking in opposition to the shareholder proposal. As we indicated in the proxy statement, we believe the preparation of the report requested by the proposal is unnecessary, would not provide any meaningful insight, and would be a waste of corporate resources. We adopted our climate action plan in 2020. Many of you will recall that we were criticized at the time for not embracing the net-zero targets that many others adopted. We took an approach that was more measured and practical, that preserved our member shopping experience, and that maintained our profitability, which has proven to be a positive and sustainable approach. Meanwhile, many others have been forced to modify their overly ambitious plans. Our climate action plan has not impaired our profitability. Our pre-tax profit grew from $5.4 billion in fiscal 2020 to over $10.8 billion in fiscal 2025.
Much of what we must spend anyway to keep our business running also reduces emissions. For example, due to the unavailability of public power for some of our facilities, we've had to invest in on-site solar generation. We believe that our plan has been widely embraced by members, employees, and shareholders, enhancing the company's brand and strengthening our customer franchise. Any return on investment analysis would fail to capture these intangible benefits and would therefore not be useful. Though achieving emissions reductions while the company is currently targeting record warehouse growth is challenging, the board and our management are committed to balancing emissions reductions with the growth of the business in a responsible way. We ask that you vote against the shareholder proposal. Thank you for your support.
We will now pause for any additional votes. Okay. The preliminary vote counts show that the shareholder proposal failed to pass again by an overwhelming majority, with more than 98% of the shares voting against this proposal. The official business is now over. The polls are declared closed, and the Inspector of Election will tabulate the final votes, and the results will be reported in our Form 8-K, which will be filed shortly. As Chair of the meeting, I now declare the official meeting adjourned. Thank you. Next up is a presentation by our CEO, Ron Vachris, on the year's highlights. After his presentation, Ron will address comments and questions from shareholders. Please keep your questions and comments brief because we want everyone to get a chance to get theirs in. Others who have questions are free to address them in writing to the Corporate Secretary.
Thank you all very much for joining us and for investing with us. Over to you, Ron.
We will now move to the questions and answers portion of the meeting.
Ron, has the company considered installing additional EV charging stations in its parking facilities?
Yes. I think globally we put in over 20 locations this year with EV charging, and we continue to monitor the needs of our members as we will add these in the future as needed. Ron, this is a question about our employees. The individual proposes transitioning from our current model of bilateral performance reviews to our current model of reviews to bilateral performance reviews. I feel like we've got a very good review system in place. We do have an open door at Costco where every employee has the ability to seek out any part of leadership they want, all the way up to myself.
This is also inclusive of things like the Costco Connects that we have, where our employees get to meet with our managers. We've got a very solid EthicsP oint program where our employees can anonymously reach out to leadership about any questions or problems they have. And we also have a biannual employee survey that's done that is also anonymous, and employees can put in their feedback. That employee survey is reviewed all the way up to the company, and then we also recap that for our board of directors. So I'm very open to looking at the future, but I feel we have good ways to stay connected with our employees today.
Ron, what happened to the My Pillow product?
MyPillow was a vendor that we were doing business with maybe some four or five years ago, and this is a function of our members making a decision on what products they want. The sales had declined to a point where they no longer deserved a position in the warehouse, and this is a common occurrence at Costco. We rotate through items quite frequently based on the needs and the demands of our members.
In its opposition statement to proposal four, the shareholder proposal, Costco asserts that some of its climate initiatives are not voluntary and are instead the result of business imperatives. Are the company's Scope 3 reduction targets for suppliers the result of business imperatives or voluntary company initiatives?
At this current time, there are not business imperatives related to Scope 3. Business imperatives are all related to Scope 1 and 2.
I can't speak for the future on how that may happen and what could happen in the future with Scope 3 , but at this time, it is not related to imperatives.
Is there any consideration for a stock split? Do you anticipate a special dividend this year?
Both stock splits and special dividends are on a regular occurrence of discussion with our board of directors. I have nothing to report at this time, but I can tell you that it's being reviewed with the board, and we look at it regularly.
Ron, will the company commit to removing Roundup products from its warehouses?
We do carry Roundup in our warehouses based on the demands of our members. Members feel that they like that product, and it works very effectively for them, so we do plan on continuing to sell that.
I will tell you, though, we have reformulated the Roundup of the past and removed the glyphosate that was in that product. So I think that we've done a very nice job of keeping an effective product that our members need on the floor, but taking out the most concerning chemicals out of that product.
What are Costco's newest offerings to address the customer's desires for healthier products?
Clean Ingredient Index is something that our buyers are really focused on, and I spoke about that when I was talking about Kirkland Signature and how we build those items. But I can assure you that as we look through fresh foods, all of our food and sundries departments, Clean Ingredient Index, keeping the ingredients as limited as possible and as healthy as we can, is a top focus for our buyers on everything we do.
Are we going to continue pursuing more locations in Delaware after the county voted against rezoning the land we had planned to put a warehouse in Rehoboth?
Yes. We were very disappointed in the decision of Rehoboth Beach, based on the fact that we've heard from many of the residents that they want a Costco in their community. So we are not happy with that decision, but we will not give up. We're going to continue to pursue a location there because we feel it's a great market for Costco, and we're also listening to the needs of the residents there that want a Costco in that community.
Ron, any chance you will return to in-person version of the shareholder meeting?
There is no plans at this time. We found this meeting to be quite effective. It reduces a lot of cost. It's good on our carbon footprint.
At this time, we're going to stay with a virtual meeting.
Is Costco asking its suppliers to reduce upfront confinement times for pregnant sows from four to six weeks down to 10 days?
As far as the specifics of the days, I can't speak to that right now. I know that I've closely monitored that we've made some very good progress in the last two years, and we are committed to continuing to improve this process into the future as well. Great progress has been made. We've partnered with our suppliers, and we're going to continue to make progress into the future.
Will Costco have self-checkout features in their stores?
Yes. We have had self-checkout for more than 10 years in our warehouses.
I'm very excited about the new technology that's being delivered that is enhancing the self-checkout and enhancing the entire overall checkout process at Costco as well. So self-checkout is in place, and we see great things coming to make that even a better experience for our members.
What are the company's plans for entering new markets?
When you look at the 30 locations that we will open up this next year, and it comes from a subset of infills, meaning going into a market where we're currently established and relieving pressure from a Costco. We have got new markets is about a third of those locations, and then our international expansion is there as well. So we feel that we have a great opportunity. We're nowhere near saturation both in North America and around the world.
We will continue to see us going into new markets here for many years into the future.
Could you elaborate on how the tariffs have impacted certain products, and what is the status of the lawsuit against the federal government?
Well, to describe what's happened to certain products would be quite an extensive discussion. In generalities, it really is based on the product code and the country of origin and what time that product was imported into the country to really determine what tariff was applied to that. That would be a separate conversation of great depth. But as far as the lawsuit goes, along with over 1,000 other companies, we've sought relief in court simply to preserve our right to seek a refund on tariffs we paid in the event the Supreme Court strikes down the tariffs.
If that happens, there will still be a lot of uncertainty around when and to what extent refunds or tariffs are paid and will be available, so the tariffs are a continuous moving evolution, and we're really going to have to wait for the Supreme Court decision to see where we go for in the future.
Can you update on the progress of the company opening freestanding gas stations?
Yes. We have about four of these freestanding gas stations in the process right now, and the thought process behind there is that these are adjacent or within a very short area of an existing Costco warehouse where we may not have put a gas station in there because of confined parking, or it is a building that we can move the gas station a block down the road, add parking to the warehouse, and expand the gas station as well.
So we have got a few of these in process. We'll see how they're going to work out in the near future, and then we'll determine how much more of this we're going to do going forward.
When will the company open a store in Wyoming?
We have looked at Wyoming for some time. The biggest challenge we have is population density in any city. We are open in Timnath, Colorado, which is just south of Cheyenne, Wyoming, and we serve the Cheyenne market very well there. So we have not found a location in Wyoming that could support a Costco itself.
Ron, how do you plan to maintain the company's corporate culture when new executives, particularly in IT, are overwhelmingly outside hires?
Well, I would have to say that overwhelmingly is not correct. We have had some outside hires for our IT area and has been very beneficial.
But I can assure you from Javier, our leadership of IT is wholly focused on teaching the culture to these technical expertise individuals. So we need to bring in the talent to move our digital progression along as a company, and it's my job on the other executives to enhance and teach them the culture of the company so they'll be a great executive into the future.
Will food court prices increase in the foreseeable future?
Well, there's one item that I know is not going to go up, that's for sure. Not under my watch, at least. But I hope not. Our buyers are vigilant on keeping every cost down that we can. It's a great asset to the members to have great quality food at their food court after enjoying a Costco visit.
So at this time, there's no plans in the future to raise any prices in the food court.
Ron, are there any plans to expand into South America or India?
There are no plans that I could speak of at the time to go into either one of these areas. With that being said, that's all the time we have had for questions and answers. For relevant questions that could not be answered due to the time constraints, we'll provide prompt responses on the Investor Relations section of our website with similar questions grouped together and responded to collectively. I want to thank everybody for your attendance, and this concludes our meeting.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.