Welcome to the annual meeting for Ecolab Inc. Our host for today's call is Christophe Beck, Chairman, President, and CEO. I will now turn the call over to your host. Mr. Beck, you may begin.
Good morning, everyone, and welcome to Ecolab's Annual Meeting of Stockholders. I'm Christophe Beck, Ecolab's Chairman, President, and Chief Executive Officer. It's now 9:30 A.M. Central Time. I note that the polls are open, and I now call the meeting to order. Joining me today is Jandeen Boone, our Executive Vice President, General Counsel, and Corporate Secretary, who will be conducting the formal portion of the meeting. In addition, we are joined by Dave MacLennan, our Lead Director, Philip Maher of PricewaterhouseCoopers, the company's independent registered public accounting firm, and Youhao Dong, our Deputy General Counsel of Securities and Assistant Secretary. Links to the agenda and the procedures for this meeting are available on this virtual meeting platform. Please review these procedures as they contain important information, including how this meeting may be adjourned if we experience technical issues to conduct an orderly meeting.
We ask that participants abide by these procedures. Following the formal portion of the meeting, I will speak to you about Ecolab's business. After that, we'll have a short general question- and- answer session. Let me start by extending a special welcome to any former Ecolab associates and retirees listening to the broadcast. We are pleased that you are part of our audience today. I would like also to welcome our corporate officers who are attending this virtual meeting. The hard work and commitment from you and your teams is the reason for our continued success. Now I introduce the 13 Directors standing for re-election today and who are also in attendance at this virtual meeting. Judson Althoff, Chief Commercial Officer of Microsoft's commercial business, Director of Ecolab since 2024. Shari Ballard, Chief Executive Officer of Minnesota United, Director of Ecolab since 2018.
Michel Doukeris, Chief Executive Officer of Anheuser-Busch InBev, Director of Ecolab since 2025. Eric Green, Chairman, President, Chief Executive Officer of West Pharmaceutical Services, and Director of Ecolab since 2022. Marion Gross, former Executive Vice President and Global Chief Supply Chain Officer of McDonald's Corporation, Director of Ecolab since 2025. Michael Larson, Chief Investment Officer to Bill Gates and Business Manager of Cascade Investment, Director of Ecolab since 2012. Dave MacLennan, former Executive Chairman and former Chief Executive Officer of Cargill, Director of Ecolab since 2015 and our Lead Independent Director since 2023. Tracy McKibben, Founder and Chief Executive Officer of MAC Energy Advisors, Director of Ecolab since 2015. Lionel Nowell , Lead Director of Bank of America and former Senior Vice President and Treasurer of PepsiCo, Director of Ecolab since 2018.
Zan Vautrinot, President of Kilovolt Consulting and retired Major General of the United States Air Force, Director of Ecolab since 2014. Julie Whalen, former Executive Vice President and Chief Financial Officer of Expedia Group, Director of Ecolab since 2025. John Zillmer, Chief Executive Officer and Director of Aramark, Director of Ecolab since 2006. I'm the final nominee standing for re-election. Before we move on to our next agenda item, I'd like to take a moment to acknowledge a Director who is not standing for re-election, Vicki Holt. Vicki joined our board in 2009 and has since served three years on the Finance Committee, six years on the Safety, Health, and Environment Committee, eight years on the Governance Committee, and 17 years on the Audit Committee, including three years as Vice Chair and seven years as Chair.
Vicki has been a valued colleague and trusted advisor, consistently offering independent perspectives and her deep financial expertise and global leadership experiences. On behalf of my fellow board members, we thank Vicki for her distinguished service and wish her the very best. I now turn the meeting over to Jandeen Boone, our Executive Vice President, General Counsel, and Corporate Secretary.
Thank you, Christophe, and good morning, everyone. Before we proceed with the formal portion of the meeting, I will cover the mechanics of our virtual meeting. If you'd like to submit a question during the meeting, you may do so on the webcast screen. We will answer questions on the matters to be voted on during the formal portion of the meeting. There will also be a general Q&A period immediately following the remarks of our Chairman, President, and CEO, Christophe Beck. Note that only validated stockholders as of the record date for today's meeting will be able to ask questions on the web portal. Additionally, if you have not already voted your shares, you may do so on the webcast screen. The polls will remain open until the conclusion of the Q&A period on the matters to be voted on.
We will now conduct the formal portion of our meeting. We have received an affidavit signed by Broadridge Financial Solutions that notice of this meeting, along with related proxy and annual report materials, was mailed or made available on March 23, 2026 to Ecolab stockholders of record as of the close of business on March 10, 2026, our record date. Accordingly, notice of this meeting was timely given to the holders of our common stock. With more than a majority of the issued and outstanding shares presented in person or by proxy, a quorum is present for the conducting of business. There are four items properly brought before the stockholders today. The first item is to elect 13 nominees to the board of directors for a one-year term ending at the 2027 annual meeting. The board recommends a vote for each of these nominees.
The second item is to approve, on an advisory basis, the compensation of the company's named executive officers disclosed in the proxy statement. The board recommends a vote for this proposal. The third item is to ratify the appointment of PwC as the company's independent registered public accounting firm for the current year ending December 31, 2026. The board recommends a vote for this proposal. The fourth item is a stockholder proposal regarding an independent board chair policy. Operator, please open our line for Mr. John Chevedden to introduce himself and to present this proposal. Mr. Chevedden, the procedures for today's meeting allot three minutes for your presentation.
Hello, this is John Chevedden. Proposal four: Independent Board Chairman. Shareholders request the Board of Directors adopt an enduring policy, amend the governing documents, including the corporate governance guidelines, in order that two separate people hold the office of Chairman and the office of CEO as soon as possible. The Chairman of the Board shall be an Independent Director. An Independent Lead Director shall not be a substitute for an Independent Board Chairman. Board shall have the discretion to select the interim Chairman of the Board, who's not an Independent Director, to serve while the board is required to seek an Independent Chairman of the Board on an accelerated basis. Independent Board Chairman at all times improves corporate governance by bringing impartiality, objective oversight, and external expertise to board decisions, mitigating conflicts of interest, enhancing transparency, and boosting shareholder confidence.
This detached perspective allows the chairman to focus on shareholder interest, strengthen management accountability, and provide for critical checks and balances, ultimately contributing to long-term sustainability and profitability. Independent Board Chairman could help Ecolab deal with a relative plateau in its stock price. The Ecolab stock price was at $238 in 2021 and only at $265 now in spite of a robust stock market. Please vote yes, Independent Board Chairman, proposal four.
Thank you, Mr. Chevedden. The board recommends a vote against this proposal for the reasons set forth in the company's proxy statement. I will now open the floor for stockholder questions on the matters to be voted on. There will be a general Q&A period immediately following the remarks of our Chairman, President, and CEO, Mr. Beck. As a reminder, you may submit questions on the webcast screen. Up to one minute will be allocated to read each question. I now invite Youhao Dong, our Assistant Secretary, to read out questions submitted by our stockholders on the matters to be voted on.
There are no such questions submitted.
If there are no further questions, we will resume the formal portion of the meeting. The polls are now closed, and I will report the preliminary voting results based on the proxies already received. The 13 director nominees were elected. The proposals to approve the compensation of the company's named executive officers disclosed in the proxy statement and to ratify the appointment of auditors were approved. Finally, the proposal regarding an independent board chair policy was not approved. The final vote results will be reported to the SEC on a Form 8-K, a copy of which will be made available on Ecolab's website. This concludes the formal portion of our meeting.
Before turning the meeting over to Mr. Beck, let me note that remarks made during the following presentation by Mr. Beck concerning future expectations, plans, and prospects for Ecolab constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those predicted by these forward-looking statements. Information concerning factors that could cause actual results to differ include those factors discussed in the company's annual report on Form 10-K, found under item 1-A, risk factors. I now turn the meeting back to Mr. Beck to adjourn the formal portion of the meeting and to offer comments on the businesses.
Thank you so much, Jandeen. I now declare the formal business portion of the meeting adjourned. We'll now transition to the business review, followed by the Q&A session. It's always a pleasure to recap highlights of our prior year and share updates on our continued growth story. The theme this year is winning in a complex world. I chose it for a simple reason. The world is moving fast, expectations are rising. Managing complexity well is becoming a true competitive advantage. We see this as a world of opportunities, a world where we can win big by doing what's right the right way. Customers need partner who can help them perform through uncertainty. We've always been here for our customers for more than a century. We will never, ever let them down.
At Ecolab, we win by doing what we've always done, protecting what's vital by protecting people from infections, protecting natural resources for the generations to come, and by protecting business performance in any environment. That focus is what carried us through 2025 and into 2026. Today, I'll briefly share where we've been, where we are, and where we're headed, and why I remain confident in our ability to deliver high performance in almost any environment. 2025 was another record year for Ecolab. We delivered record sales, record adjusted earnings per share, record operating income margins, and record free cash flow, all while continuing to invest in innovation, digital capabilities, and our team. We finished the year with strong momentum. We delivered 13% adjusted EPS growth, driven by strengthening underlying sales and continued margin expansion.
For the full year, organic operating income margin reached 18%, up 150 basis points versus last year, and we remain confident in our path to expand well beyond 20% over time. This performance reflects the incredible team we have at Ecolab, delivering value for our customers no matter the environment. Growth and impact go together at Ecolab. We protect people from infections, we protect natural resources, and we protect businesses by improving operational performance. Working side by side with our customers, we delivered measurable results in 2025. We conserved the annual drinking water needs of more than 849 million people, equivalent to 245 billion gal of water. We safeguarded 7.7 million people from pollution-induced illnesses by avoiding emitting 4.7 million metric tons of greenhouse gas emissions.
We protected 1.7 billion people from foodborne illnesses and infections. We realized $12.9 billion in cumulative value by our customers. This is delivering our purpose year- after- year. When you do that, it builds trust. That trust shows up in how we are recognized. In 2025, Ecolab was again named the number one company in our industry on Fortune's World's Most Admired Companies list. We earned top-tier ratings from CDP. We were recognized among the world's most ethical companies for the 20th year in a row, one of only six companies, and named one of the best employers globally. These recognitions are never the goal. They are proof that doing the right thing the right way delivers results. I'm proud of our team and how they show up every single day. The world has once again become a bit more complicated.
We've seen tariffs, geopolitics, wars, you name it. We experienced it in 2025 and now in 2026. Some see these as challenges. We see them as opportunities. What sets us apart is our commitment to taking care of each other and being there for our customers in times like these. Our priority is to serve them exceptionally well in good like in less good times. We will never, ever let them down. I believe no company is better positioned to lead and win in this environment than Ecolab. We have 48,000 associates serving customers in more than 170 countries and 40 industries. We manage water at millions of customer locations. We help protect 1/3 of the world's food production and a quarter of the power that's generated.
We protected 1.7 billion people from infections, and by 2030, we aim to help protect 2 billion people, along with providing enough drinking water for 1 billion people. Our promise is to deliver incremental value to customers and help them achieve best-in-class outcomes. We combine on-site expertise, global know-how, and digital intelligence to deliver best-in-class performance at the lowest total cost. That combination, expertise, technology, and service at scale, is hard to replicate, and it's what customers rely on when performance matters most. That foundation allows us to keep growing even as the world gets more complex. This slide makes a simple point. Through our technologies and services, we consistently deliver significant value to our customers. We get to share in a portion of this value through price, what we call value price, and we've gotten very good at doing this over the last five years.
Because of this model, we are able to consistently price ahead of commodity cost inflation. That discipline matters, especially in environments like the one we are in today. I know oil prices and supply are top of mind for most. They're not for me. We've proven this model through much tougher cycles. In 2022, commodities cost were up 50%, and our margins per cycle went further up. Today, commodities cost are expected to be up about 9%. Importantly, our pricing is also rapidly accelerating. As we look ahead, we have good line of sight to pricing strengthening to the 5%-6% range in the second half of the year.
This level of pricing offsets inflationary costs as we exit the second quarter and puts us in a position where gross margins stabilize in the second half of the year and further strengthens long term. I feel very good about the year and how we manage in complex environments. I feel even better about where we're going next. That confidence comes from where we're investing and where we're winning. Our growth engines, Pest Intelligence, Life Sciences, Global High Tech, Ecolab Digital, are growing faster than the rest of the portfolio and carry attractive margin profiles. They address markets with long-term demand. They're central to our strategy going forward. These businesses are meaningful and a growing part of Ecolab. They're exactly where we're heading next. AI sits at the center of our growth strategy, both externally and internally.
Externally, AI is driving demand for best-in-class performance and AI infrastructure. Internally, AI is helping us scale our high-performance model much faster through Ecolab Digital and One Ecolab. What's important in this, AI is simplifying the exact challenges Ecolab was built to solve. Scarcest resources, higher performance expectations, and zero tolerance for downtime. Best-in-class is our promise to customers. With millions of customer locations, we know what best-in-class looks like in the real world. AI helps turn that vision, that visibility into action, improving reliability, safety, and resource efficiency at scale. AI infrastructure is mission-critical infrastructure. It has to operate continuously at extreme intensity with zero tolerance for downtime, and it is increasingly constrained by water, energy, and heat. That's exactly where Ecolab's water technology and service expertise make the difference.
Ecolab Digital makes best-in-class scalable, converting data into insights and action so performance improves in real time, not after the fact. One Ecolab is how we deliver it across an entire enterprise, bringing our expertise, digital intelligence, and service together to help customers perform consistently everywhere they operate. Put together, this is a system that's really hard to replicate. It's why AI accelerates our purpose and our growth. Focusing on Global High Tech, AI demand is reshaping digital infrastructure. Global AI compute power is expected to roughly double over the next three to four years. Industry plans call for about 50 GW of incremental compute demand. The power equivalent of roughly 50 nuclear plants, driving the build-out of nearly 70 new fabs and 1,000 data centers. That represents a $10 billion opportunity for Global High Tech alone. It's growing fast.
This is why AI is central to our growth strategy, large visible demand, a platform that spans fabs and data centers, and a model that scales with strong margins. As the world's water company, we're best positioned to serve Global High Tech because water sits at every critical step of AI. You need ultra-pure water to produce chips. You need water to generate the electricity that powers those chips, and you need water to cool those chips in data centers. In microelectronics, Ovivo enables us to deliver ultra-pure water and circular water programs, allowing customers to produce more chips with much less water. In data centers, we seek to combine Ecolab's water treatment, chemistry, cooling liquids, and 3D TRASAR our monitoring with CoolIT Systems' direct-to-chip liquid cooling.
Once we complete the CoolIT Systems acquisition, we'll be able to support more computing with less cooling through a single integrated site-to-chip model. Our momentum in AI was also recognized on Fortune's AIQ ranking, which identifies companies best prepared to lead in the age of AI. Ecolab's number nine position reflects how we apply advanced analytics and AI technologies that help customers operate more efficiently, drive growth, and conserve water and energy. We helping shape the future of AI by combining deep technical expertise with purposeful innovation. When you step back, the reason for our confidence becomes even more clear. We operate in large and growing market with significant runway, both within our existing customers and across white spaces. Our long-term objectives remain unchanged. Consistent sales growth, continued margin expansion, strong earnings growth.
By selling more to existing customers, we could multiply the size of the company by 3x. This is not about one year. It's about disciplined execution and compounding progress over time. At Ecolab, we build the future by delivering every single day, every single quarter. In Q2, we've introduced the energy surcharge, and we stabilize gross margin as we exit the quarter. In Q3 and in Q4, underlying performance will reach the upper end of our range without CoolIT Systems. As we look into the future, including CoolIT Systems and Ovivo and the roll-off of the Nalco acquisition, we expect our 12%-15% EPS growth trajectory to only strengthen. To wrap up, we had a very strong year. A very strong start of the year with good momentum driven by record new business. That's exactly where we want to be in a complicated world.
Our new engines are doing extremely well. High Tech and Life Sciences are driving growth in very attractive ways, with high margins and limited exposure to energy costs. I have full confidence in our team's ability to accelerate pricing to offset commodity cost inflation and quickly stabilize our gross margin. That's why I feel good about 2026, both at the top line and the bottom line. When I look ahead, I feel even better about 2027 as our platform continues to strengthen. When I talk about winning in a complex world, I mean this. We have the portfolio, the capabilities, and the team to help customers perform and to keep compounding growth. At this time, I'd like to thank you for all your investment and trust in Ecolab.
Let's move now to the question- and- answer section. I welcome questions submitted by stockholders online and invite Youhao Dong, our Deputy General Counsel, to read the questions submitted.
We have one question asking the company to comment on analysts' lowering their price target on Ecolab, citing shifting views and in some cases, lower- than- expected growth in late 2025 and early 2026.
Thank you, Youhao. Well, this is the traditional question. I've addressed some of it during my remarks. Obviously, fully understand the questions are related to inflation, driven by what's happening in the Middle East and our ability to manage that with a good value price. As I mentioned on the earnings call, this is important. This is something that we will and are addressing. This is not my top priority because I'm fully trusting the team to address that the right way for our customers and for our shareholders. This is something that we've done in the past. We've done it very successfully by making sure that our customers get more value ultimately than what they pay to us.
It's a net positive for customers and our shareholders. This is something that we will do once again in 2026 and even much quicker because that's going to be done mostly in the 2nd quarter. The 1st quarter of the year started with an acceleration of the top line, which is really good. Q2 will be this transition quarter, as I just mentioned. The 2nd half of the year should be stronger than what we had expected, which leads ultimately to keeping the early guidance we had for 2026, even though the environment has changed completely, leading us in 2027 in a year that will most probably be even better. That's all the questions we have?
Yes.
Okay. I want to thank you all for the opportunity to answer your questions, and I thank you again for your investment in Ecolab. I'd like to close now by reinforcing that Ecolab has been a purpose-driven, growth-focused company for more than 100 years. It's an honor to represent the 48,000-strong Ecolab team and all that they do for our customers. I am proud of our legacy. I like where we are, and I'm excited about where we're going. I'm confident that the best of Ecolab is ahead. Thank you. That's all the time we have for today. A webcast replay of this meeting will be available on Ecolab's website approximately 24 hours from now. Thank you again. You may now disconnect from the meeting.
This now concludes the meeting. Thank you for joining and have a pleasant day.