Well, welcome to the 2024 Annual Meeting of Shareholders. My name's Todd Vasos, I'm the CEO, and the board of directors has appointed me the chairman of this meeting, which I now call to order. Let me first begin with introductions. My fellow board members and executive officers are in attendance today in the meeting. Our board members are Michael Calbert, our Chairman of the Board, Warren Bryant, Ana Chadwick, Patricia Fili-Krushel, Timothy McGuire, David Rowland, Debra Sandler, and Ralph Santana. Our executive officers in attendance today is Kelly Dilts, our Executive Vice President and Chief Financial Officer, Steve Deckard, our Executive Vice President of Store Operations and Development, Kathleen Reardon, our Executive Vice President and Chief People Officer, Emily Taylor, our Executive Vice President and Chief Merchandising Officer, Rhonda Taylor, Executive Vice President and General Counsel, and Carman Wenkoff, Vice President and Chief Information Officer, Rod West, our Executive Vice President of Global Supply Chain, and Anita Elliott, Senior Vice President and Chief Accounting Officer. I'd like to thank our board of directors and executive officers for their continued dedication, teamwork, and leadership here at Dollar General. Finally, Josh Trusley is in attendance today on behalf of Ernst & Young, our independent registered public accounting firm, and Ken Frank is here in attendance on behalf of Broadridge, our Inspector of Elections. I'll now turn the meeting over to Christine, our Corporate Secretary, to review the meeting announcements. Christine?
Good morning. We are holding today's meeting pursuant to the notice provided to shareholders beginning on April 5, 2024. Please note that this meeting is being recorded. Shareholders of record at the close of business on March 20, 2024, or their duly appointed proxy holders, may vote on the items of business at this meeting. For your convenience, additional copies of the meeting agenda and rules of conduct, along with the 2023 annual report and the 2024 proxy materials, are available in the back of the room as well as on proxyvote.com. In addition, a copy of the shareholders list as of the record date is available for inspection by shareholders of record or their confirmed agents or attorneys. Our board has appointed Broadridge to serve as the Inspector of Election. Broadridge has informed us that there are present today in person or by proxy, the holders of not less than the majority of the shares issued and outstanding as of the record date. Having a quorum, the polls are now open for shareholders who have not already voted or who want to change or revoke their vote. To do so, please see Mr. Frank before the polls close at the end of discussion on the last voting item. We'll begin the meeting with a presentation of the voting items, followed by up to 15 minutes to address any written questions about the proposals that were submitted before or during the meeting in accordance with the rules of conduct. Mr. Vasos will present the management proposals, and the shareholder proponent's designated representative will have 3 minutes to present the shareholder proposal. The polls will then close, and we'll adjourn the meeting, followed by a brief business update. After the business update, we'll take up to 15 minutes to answer general questions that were submitted before or during the meeting in accordance with the rules of conduct. Only shareholders of record or their duly appointed proxy holders may submit questions at the meeting. Each shareholder may submit up to two questions per voting item and up to two questions during the general Q&A session. Please submit questions, whether regarding voting items or for the general Q&A session, before the polls close to Kevin Walker, our Vice President of Investor Relations. I'll now turn the meeting back to Mr. Vasos to introduce the items of business.
Thank you, Christine. There are three management proposals and one shareholder proposal being voted on today, as described in the meeting notice and in the proxy material. The first item is the election of the nine directors listed in the proxy statement to hold office until the next annual meeting and until their successors are duly elected and/or qualified. Our board recommends that you vote for these directors. The second item of business is the advisory vote to approve the resolution regarding the compensation of Dollar General's named executive officers, as disclosed in the proxy statement. Our board recommends that you vote for this proposal. The third item of business is the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2024. Our board recommends that you vote for this proposal. The fourth item of business is a shareholder proposal to expand the clawback policy for unearned executive pay. This proposal is being presented by a representative of Mr. John Chevedden. Would the proponent please stand, and we'll bring you a microphone to present your proposal?
Proposal four, improve clawback policy for unearned executive pay, sponsored by John Chevedden. Shareholders ask the board of directors to amend the company policy on recoupment of incentive pay to apply to each named executive officer, and to state that conduct or negligence, not merely misconduct, shall trigger mandatory application of that policy. Also, the board shall report to shareholders in each annual meeting proxy the results of any deliberations regarding the policy, including the board's reasons for not applying the policy after specific deliberations conclude about whether or not to cancel or seek recoupment of unearned compensation paid, granted or awarded to named executive officers under this policy. There shall at least be the full web address of the complete clawback policy in each annual meeting proxy. This is a stronger clawback policy than the policy Dollar General recently accepted, adopted. Wells Fargo offers a prime example of the need for a strong policy. After 2016 congressional hearings, Wells Fargo agreed to pay $185 million to resolve claims of fraudulent sales practices. The Wells Fargo Board of Directors then moved to claw back $136 million from two top executives. Wells Fargo, unfortunately, concluded that the CEO had only turned a blind eye to the practice of opening fraudulent accounts and that there would be no recoupment in spite of Wells Fargo paying a $185 million penalty. The Ohio nuclear bribery scandal is another example of the need for a strong clawback policy. Speaker of the House of Representatives, Max, Matt Borges, and three others were accused in July 2020 of accepting $60 million in bribes from the utility FirstEnergy in exchange for $1.3 billion worth of benefits in the form of Ohio House Bill 6. In what FirstEnergy stock price plummeted, in July 2021, the U.S. Attorney for the Southern District of Ohio announced that FirstEnergy would be fined $230 million for its part in the scandal. Please vote yes. Improve clawback policy for unearned executive pay, proposal number four.
Thank you. Our board recommends that shareholders vote against this proposal, which is item four on the ballot. No other business was submitted pursuant to our bylaws for consideration at this meeting. Before we address any questions about the voting items, let me remind shareholders of record that their proxy, and their proxy holders, that this is the final opportunity to submit or change your vote, as the polls will close immediately following this discussion. And this is also the final opportunity to submit questions about the voting items or the general Q&A session that will follow my business report. Christine, have we had any questions submitted?
No, there have been no questions regarding the voting items.
Since no questions have been submitted, relating to the voting items, we will continue to the preliminary voting results. The polls are now closed. Following the announcement of the preliminary voting results, the business of the meeting is adjourned. Christine, will you please announce the preliminary voting results?
Based on the preliminary report of the Inspector of Election, each of the 9 nominees standing for election has received a majority of the votes cast in favor of hers, his or her election. The compensation of Dollar General's named executive officers has been approved on an advisory basis. The appointment of Ernst & Young as the company's independent registered public accounting firm for fiscal 2024 has been ratified, and the shareholder proposal, listed as item four on the ballot, has not been approved. The final certified voting results will be reported on a Form 8-K. Before we turn to the business report, we would like to caution you that today's comments may contain forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act. Forward-looking statements can be identified because they are not limited to historical matters and regard our strategy, plans, intentions, expectations, or beliefs about future occurrences or results, including but not limited to, statements regarding our future potential key operating priorities and initiatives, opportunities, strategies, and business, as well as planned investments. Actual results might differ materially from those projected in the forward-looking statements as a result of a variety of important factors, including but not limited to, those described in the Risk Factors section of our Form 10-K, filed with the SEC on March 25, 2024, and other factors that may be discussed today. We caution against undue reliance on these forward-looking statements, which speak only as of today's date. The company disclaims any obligation to publicly update or revise these statements, except as may be required by law.
Thank you, Christine, and thank you all for being here today. I'm excited and honored to address you today at our 2024 Annual Meeting of Shareholders. As we embark on our 85th year, our long-standing mission of serving others remains at the center of everything we do at Dollar General. In 2023, we helped our customers navigate a challenging macro environment and provided them with the products they need and want at great values in convenient, friendly, and easy-to-shop stores. I'm proud of the resilience of the Dollar General team. We have made a concerted effort across all levels of the organization to optimize the business for the current retail environment, while staying true to the fundamentals that have been foundational to our success over the past 85 years. Through it all, we remain focused on keeping the customer at the center of everything we do. During fiscal 2023, we completed more than 3,000 real estate projects, and today we operate more than 20,000 stores nationwide, allowing us to reach more customers in more communities than ever before. As the largest retailer in the U.S. by store count, we continue to serve our customers and communities with the unique value and convenience proposition, helping them save time and money every day. As we seek to further strengthen our business and continue on a path of sustainable, profitable growth while keeping our customers at the center of everything we do, we remain committed to our four key operating priorities. Our first operating priority is driving profitable sales growth. We have a robust portfolio of sales-driving and margin-enhancing initiatives, including DG Fresh, which facilitates self-distribution of fresh and-... frozen and refrigerated items in our stores, and our Non-Consumable Initiative, which enhances the treasure hunt opportunity for our customers at tremendous values. These initiatives are providing our customers with even more value and convenience, and strengthening the foundation for future growth. Our second operating priority is capturing growth opportunities. Our proven high return, low risk real estate model has served us well for many years, and coupled with our ongoing format innovation, continues to be a core strength of the business. Our larger formats are the current primary focus of our new store rollout as we provide more products that our customers want and need, while also driving greater sales productivity. These larger store formats enable us to bring enhanced product offerings, such as our fresh produce initiative, which we know is important to our customers, especially in rural communities. Our digital initiative complements our unique and expansive brick-and-mortar footprint as we seek to deploy and leverage technology to further enhance the convenience proposition for our customers, while also offering a more personalized shopping experience. Our third operating priority is enhancing our position as a low-cost operator. Our, excuse me, our established Save-to-Serve approach continues to drive efficiencies and deliver savings as we seek to help our business simplify, while staying focused on our customers. Our cost control mindset is pervasive across the organization and is fundamental to our ability to serve our customers with value and convenience every day. Our fourth operating priority is investing in our diverse teams through development, empowerment, and inclusion. We continue to focus on attracting, developing, and retaining talented employees. We have made significant investments in wages, benefits, and training opportunities, which we believe are resonating with our team as we drive improvements across the organization and position our associates for our future success. Importantly, we continue to prioritize direct engagement with our teams, which allows us to enhance our position as an employer of choice. Ultimately, we believe that the opportunity to build a long-term career with a growing retailer is our most important currency to attract and retain talent. To advance our four key operating priorities, in the near term, we have implemented a refreshed approach to getting back to the basics, which focuses on the following three key areas to drive operational excellence, better serve our customers, and create long-term shareholder value. To better inform these efforts, the leadership team has spent a significant amount of time over the last couple of months directly engaging with our associates throughout the organization, including listening sessions in stores, distribution centers, and our store support center. We also hosted more than 400 field leaders in Nashville in February, and then several of us spent time on the road with more than 1,000 additional leaders across the country. These sessions allowed us to follow up on the feedback we've received, share our action plans and commitments, and align our expectations with the teams across the organization. We continue to prioritize this direct engagement with our associates and value the actionable feedback we gain to continue enhancing the way we support our teams and serve our customers, all while strengthening the sense of pride and purpose we all share here at Dollar General. First, in our stores. In 2023, we made a significant labor investment in our stores with the goal of driving improved execution in important areas such as store standards, inventory management, and in-stock levels. Additionally, to facilitate a positive customer experience, we deployed labor to ensure a stronger presence at the front checkout. Finally, we are also taking actions aimed at reducing turnover at the store manager position, which we believe will benefit the employees and customer experience. Next, in our supply chain. In 2023, we made significant progress in addressing distribution center capability constraints, while also reducing the number of outside storage facilities. We also made meaningful progress toward a goal of optimizing inventory levels and improving operational efficiencies and productivity throughout our supply chain. These actions have driven improved service levels and on-time deliveries for our stores and the customers we serve. And finally, in our merchandising, as always, we remain focused on offering great value on the products our customers want and need. Thanks to a dynamic actions that we took as a team in 2023, Dollar General continues to be positioned well in both everyday pricing and price gaps relative to our peers and other classes of trade. We have taken measures to provide even greater value for our customers by highlighting private brands and other opportunities for savings, while also maximizing the effectiveness of promotional activities designed to drive traffic and share growth. Now, let me share with you some of the financial highlights for fiscal 2023, including net sales of $38.7 billion, a same-store sales increase of 0.2%, operating profit of $2.4 billion.... net income of $1.7 billion, diluted earnings per share of $7.55, and cash flow from operations of $2.4 billion. We also invested $1.7 billion in capital expenditures to grow and improve our operations. In fiscal 2023, we opened 987 new stores. We also remodeled 2,007 stores and relocated 129 stores, for a total of 3,123 real estate projects. We are operating a total of 31 distribution centers at the end of fiscal 2023 to support our ongoing growth. In 2024, we expect the majority of our new stores to be in one of our larger formats as we look to continue to not only expand the number of communities we serve, but also the ways in which we are able to serve them. We are very proud of our growth in 2023 and excited about the growth opportunities ahead of us in 2024 and beyond. Our greatest strength at Dollar General is our people, and we are committed to providing opportunities for their growth and development while fostering an inclusive and an enriching culture. We continue to make investments to enhance the employee experience across the organization. We created more than 14,000 new jobs in 2023, and at the end of the year, we had approximately 185,000 talented and dedicated Dollar General employees in our stores, DCs, fleet, and store support centers, helping to serve customers in their communities across the United States. In 2023, we continued to invest in our employees' education and development, which resulted in our employees completing more than 5.5 million training courses. Within retail operations, more than 70% of store associates at or above the lead sales associate position were internally placed. As evidenced by our high internal promotion rates, our focus on providing development opportunities to continue to grow our internal bench and prepare employees for the next level. We are grateful for the entire Dollar General team, whose tireless commitments to our mission, our customers, and each other make our growth a reality and bring our mission to life each and every day. Dollar General's, Dollar General's culture remains firmly rooted in our mission of serving others. We are deeply connected to the communities that we call home, and we continue to be intentional about investing in these communities to nourish the mind, body, and the planet. During 2023, Dollar General and our foundations donated more than $27 million to charitable causes, with a primary focus on uplifting and empowering individuals of all ages through literacy and basic education. Since its inception in 1993, the Dollar General Literacy Foundation has awarded more than $239 million in grants to nonprofit organizations, and more than 20 million individuals have received assistance. I encourage everyone to take a look at our Serving Others report, available on our website if you'd like more detail on how we are prioritizing serving our employees, customers, and communities. We are excited about these efforts and are proud to partner with these various organizations and foundations to extend hope and opportunity to individuals throughout these communities. In closing, I want to once again express my sincere appreciation for the hard work of the entire Dollar General team. With clarity and purpose and a well-defined path to execution, we have laid the groundwork for continued meaningful operational performance improvements in 2024. As our teams continue to execute our strategy, we believe Dollar General is poised to capture tremendous growth opportunities ahead, and we look forward to continuing to deliver enhanced value for our customers, employees, and create long-term value for our shareholders. Thank you for your investment in Dollar General, and we appreciate your continued support. At this time, I will answer any questions that were submitted in compliance with the rules of conduct for the meeting. Christine, have any questions been submitted?
Yes, we have, it looks like six questions, and the first question pertains to product quality. Dollar General's diversity and inclusion materials and its public statements commit the company to understanding and celebrating that our differences make a difference. What measures are Dollar General taking to inform customers who don't speak English about chemical hazard information, for example, California Prop 65 notices?
Dollar General is committed to selling safe, effective, and affordable products that meet or exceed the company's quality and performance standards, as well as legal and regulatory requirements, including the communication of such.
The second question is from the Campaign for Healthier Solutions. Is the lack of communication between Dollar General and the Campaign for Healthier Solutions an indication that you've deprioritized your commitments to chemical safety? Are you willing to recommit to ongoing communication with the Campaign for Healthier Solutions on a quarterly basis?
I'll first say, not at all. But we appreciate the ongoing positive dialogue with the Campaign for Healthier Solutions, and their partners, as well as their perspectives on the goals. As I mentioned earlier, Dollar General is committed to selling safe, effective, and affordable products that meet or exceed the company's standards, as well as all legal and regulatory requirements. We have several measures in place, including our product safety testing program, to provide assurance that the company's private label and direct import products either meet or exceed applicable safety standards.
The next two questions pertain to our chemicals policy. Dollar General committed to removing 19 chemicals from private brand formulated products in its home cleaning, beauty, and personal care, and from its private brands formulated cleaning products in hardware and automotive departments by January 2024. How close is Dollar General to fulfilling this commitment? When and how will progress toward this commitment or completion of it be announced to customers and stakeholders? In addition, the second question: Dollar General stocks thousands of products that are not DG private brands. What steps is Dollar General taking to encourage vendors to reduce or eliminate their use of DG's restricted chemicals, or beyond that list, in non-private brand products sold to Dollar General?
Dollar General is committed to selling safe, effective, and affordable products that meet or exceed the company's quality and performance standards, as well as legal and regulatory requirements. Nonetheless, we expanded our restricted substance list in 2022, more than doubling the number of chemicals from 8 to 19 by the end of fiscal 2023. We met our goal of eliminating the first 8 intentionally added chemicals from certain of our private brand products, formulated products, by the end of 2022. We are working with vendors and are on track to reduce or eliminate the remaining chemicals from these products.
The fourth question pertains to phthalates. We urge you to immediately add PFAS and phthalates to your RSL. Are you willing to move forward with this to keep up with your competitors, and by when?
Compliance with federal, state, and local laws forms the baseline expectation for all of our products. Currently, the company's Restricted Substance List applies to 19 intentionally added chemicals in our formulated private label items and does not specifically ban all phthalates or PFAS, excuse me, except as required by law, and does not specifically take into account programs such as the EPA's Safer Choice Program. We work continuously to identify areas where we can enhance and expand these efforts, as we did in 2022 with the expansion of our RSL from 8 to 19 chemicals.
The next question pertains to BPS and BPA in receipts. Are you willing to commit to following the lead of certain of your competitors and work with suppliers to procure bisphenol-free receipts and train workers in the interim on harms of bisphenol A and S, and prevent worker and consumer exposure to these chemicals? What is your timeline for accomplishing this for the safety of your clients?
We take employee and customer safety very seriously here at Dollar General. Our receipts do contain BPS, which is, was a replacement for BPA when Europe and some U.S. states banned BPA. BPS helps with imaging and stability of the receipts. We continue to innovate on ways to further enhance our checkout experience, including possibilities like contactless opportunities and options, which provide customers with the digital receipt when possible.
The final question pertains to the Double Up Food Bucks program. Double Up Food Bucks is a SNAP incentive program that offers shoppers extra money when they use their SNAP dollars to purchase certain kinds of food, often local fruits and vegetables. Making this program available at your stores would offer significantly more purchasing power to your customers, many of whom rely on public assistance and have limited money for food and other essentials. What is the status of enrolling Dollar General's Albuquerque, New Mexico, stores in the Double Up Food Bucks program?
We'll look at all opportunities for us to enhance the ability for our customers to save money each and every day. So we'll definitely take a look at that and ensure that if the program is available to Dollar General and its consumers, that we will take a look and see if we can't get enrolled as quickly as possible there. Thank you for that question.
That's all the questions.
All right. Thank you, Christine. So thank you for, for all the attendance today. And again, thank you for your investment in Dollar General. Thank you.