Welcome to the annual Gap Inc. Meeting of Shareholders. Please welcome the Gap Inc. Chairman, Bob Fisher.
Good morning. Welcome to our 39th annual meeting of shareholders. First, I'm pleased to introduce our board of directors. Domenico De Sole. Bill Fisher. Tracy Gardner. Bella Goren. Bob Martin, who chairs our Compensation and Management Development Committee. Jorge Montoya. Art Peck, our CEO. Mayo Shattuck, the chair of Audit and Finance, and Katherine Tsang. I also want to acknowledge Padma Warrior, who is here with us today. While she's not standing for re-election, we want to thank Padma for her contributions, many contributions, to our board over the past two and a half years. Padma, thanks very much, and we wish you the best of luck in your new venture. We're sorry to see you go. Finally, I'm pleased that our co-founder, Doris Fisher, could be here today as well.
I'll spend a few minutes talking about our transformation, then I'll hand it over to Julie Gruber and Art Peck. Let me start by discussing the rapid change across the retail industry, driven by evolving technology and consumer behaviors. As a board, we are very engaged in how the industry is changing, and we remain committed to accelerating our transformation and winning in this next era of retail under Art's leadership. Over the past year, Art has built a strong management team comprised of top talent in the business. Together, they're focused on the right strategies that will enable the business to deliver into the future. Art will speak about this in a few moments. In 2015, the management team focused their energy on building the right product capabilities to help us more consistently deliver for our customers.
Now we're scaling those capabilities across the enterprise while continuing to innovate our shopping experience centered around the customer. Additionally, management is taking action to accelerate opportunities to leverage our size to increase efficiency. At the same time, we remain committed to growing sales in our global brands, anchoring and regaining market share in our largest market, North America, and continued growth in China. We recognize our transformation won't happen overnight, but our board and management team is clear on where we need to take the business, and we remain confident in Art's ability to lead this journey, performing more consistently going forward and fueling long-term growth. In closing, our brands are among the strongest in the world. We are confident in our financial foundation and our opportunity to grow globally.
As we take steps to sharpen our focus on areas where we have the greatest opportunity for growth, we are confident in Gap Inc.'s ability to transform and win. Now I'm pleased to introduce Julie Gruber, Global General Counsel, Corporate Secretary, and Chief Compliance Officer. Thank you very much.
Thank you, Bob. We're calling the Gap Inc. shareholders meeting to order. Good morning and welcome to everyone. I'd like to ask everyone to please turn off your cell phones and other electronic devices at this time. Today's meeting is being webcast, and the webcast will be recorded and available on gapinc.com. Those participating by webcast will be in listen-only mode. For those participating here in person, the rules of this meeting are on the bottom of the distributed agenda. We are holding this meeting pursuant to notice mailed to all our shareholders of record as of March 21, 2016. As Bob said, after the formal portion of the meeting, we'll hear from Art, and then we'll answer questions. Please note there is a two-minute time limit for anyone addressing this meeting. Adam Scott of Deloitte & Touche is here in person from our independent registered public accounting firm.
He is also available to respond to shareholder questions as appropriate. Please note that only shareholders may ask questions at this meeting. We will now vote on the four proposals outlined in the proxy materials. The four items on the agenda are, one, the election as directors of the 10 nominees named in our proxy statement. Two, the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm. Three, an advisory vote on the overall compensation of the company's named executive officers. Four, approval of the amendment and restatement of the company's 2011 Long-Term Incentive Plan. We have received an affidavit of mailing of notice of the annual meeting of shareholders of Gap Inc. from Broadridge Financial Solutions. This states that notice of the meeting has been mailed as required and as outlined in our bylaws.
The affidavit will be filed with the minutes of this meeting. Andrew Wilcox, on behalf of Broadridge Financial Solutions, is here and acting as the Inspector of Elections. Andrew's over here Andrew tells me that a count of the shares represented by proxy shows that we do have a quorum to conduct business at this meeting. Before we vote on the four proposals, are there any shareholders who would like to vote in person, by ballot, or would like to turn in or change their proxy? If so, please raise your hand and we will assist you. I see no hands, we will now proceed with the four items of business before this meeting. The first proposal is the election of directors of the 10 nominees named in our proxy.
The second proposal is the selection of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year ending January 28, 2017. The third proposal is the advisory vote on the overall compensation of the company's named executive officers. The fourth proposal is the approval of the amendment and restatement of the company's 2011 Long-Term Incentive Plan. The polls for these four proposals are now open. Again, if you would like to vote by ballot, please raise your hand and we can provide you with a ballot. If you've already turned in a proxy card or voted electronically, you do not need to vote by ballot unless you wish to change your vote. The polls for each proposal before this meeting are now closed. Andrew, can you provide me with a preliminary report? The 10 nominees for director listed in the proxy statement have been elected.
The selection of Deloitte & Touche as the company's independent registered public accounting firm has been ratified. The advisory vote on the overall compensation of the company's named executive officers has been approved, and the amendment and restatement of the Gap Inc. 2011 Long-Term Incentive Plan has been approved. The final report of the Inspector of Elections will be filed with the minutes of the meeting, and the vote results will be filed on a Form 8-K. This concludes the formal portion of our meeting. The annual shareholders' meeting is now adjourned. In a few moments, we will hear from Art Peck. Before I hand the meeting over to Art to say a few words, I want to address a few administrative matters. The information shared today may contain forward-looking statements. There are important factors that could cause our actual results to differ from these forward-looking statements.
Information regarding factors that could cause results to differ can be found in our annual report on Form 10-K for the fiscal year ended January 30th, 2016, which is available on gapinc.com. As a reminder for shareholders who are attending in person, questions will be answered at the end of Art's presentation. I'd now like to welcome to the podium our CEO, Art Peck.
Thank you, Julie. That was brilliant. Thank you, Bob, and good morning. Yesterday, I was walking the two and a half blocks from BART down in Embarcadero to the building. I'm about three-quarters of a block in and I hear, "Are you Art?" Three-quarters of my instinct is to say, "No," and keep walking. I acknowledged that I was, and it was a young woman who had just joined the company three weeks ago-ish. 30 years old. My natural inclination is to talk to her, find out what she does, but to also ask her, of course, "Why did you join the company?" Which I do whenever I meet employees in our stores or someone who's new.
She looked at me like I was dim-witted, and said, "Because I love these brands." At the core of what we are as a company is brands that are beloved by our customers. No way are we satisfied with the performance right now of our business, but we have an amazing asset across the portfolio of brands that we have, and an asset that I have a high degree of confidence in going forward. She's here today. She's committed. She's actually on our purchasing team, and I ask her, "What are you excited about when you come to work?" She says, "I'm excited about making this company great again." It's that passion that lives in 165,000 people around the world that is also the core asset that we have. That passion of those employees through our brands is unbeatable.
Two words on my mind right now. Two words, and Bob used at least one of them, if not both. One is acceleration. When I spoke to you a year ago after just assuming these responsibilities, I talked about change. Not just the imperative for change, the need for change, but the opportunity for change. We started last year, as Bob referenced, focused on rebuilding our product capabilities. Why product? At our core, we win one T-shirt and one pair of jeans at a time. One T-shirt and one pair of jeans at a time. We win because of the emotional connection we build between the products we have in our stores and the joy that people get from wearing those products. What those products say about them as an individual, how they express themselves, the confidence they have in themselves.
If we don't win at product, we won't win. The world around us today is one that is a place of accelerating change for retail. Even if you look at the first quarter, at the volatility of traffic. There's a myriad of excuses being talked about by the pundits today of what's going on in retail, whether it's the weather, always the weather card, an election year, this, that, and the other thing. What is undeniable is an accelerating pace of change around how customers are engaging brands, how customers are shopping, where they go for information, how they look to explain their affiliation with brands. When I say acceleration is one of my words, it's accelerating the change that we began to take on many months ago, and accelerating change on a broader front. Yes, it's product.
Pivoting the company's product capabilities to a modern, advantaged place. It's also digital. The bulk of our traffic today, and if you're a retailer out there, this applies to all of you, is on mobile today. That is a radical change from where the world was even a year or two years ago. If we don't engage our customers where they are, they will engage someone else at the end of the day. Product, digital, mobile, logistics, supply chain. The world is changing, and we're accelerating the change in this company in order to my second word, distort. Distort our energy towards the places that we can win. Bob mentioned scale. I truly believe, and we're seeing this today, that the world of specialty apparel retailing will reward scale on a global basis in a way that historically hasn't. We are structurally advantaged to exploit that.
It is not something we have fully exploited, and we are moving aggressively as we speak to make sure that we are taking advantage of that opportunity. Distort our energy towards places that we know we can win, whether that's our brands, our channels, or our geographies. We saw the active trend happen eight, 10 years ago. We bought Athleta, and then we put Athleta's active product in our brands. Today, we are one of the largest active apparel companies on the planet. That's an example of distortion, and distortion towards one of the most important apparel trends that has happened in the last decade. If you fast-forward on active, by the year 2020, even if the growth rate starts to diminish, active apparel will be a third of the global apparel market. A third of the global apparel market. Distortion, that's my other word.
Acceleration of change across a broad front, and distortion of our energy, our investment, and our talent towards the places that we can win. At the same time, this is a company that has much good going on. If you look at our stores, even in what has been for the industry, a Q1 of disappointing traffic in places and almost unexplainable traffic patterns that the industry is seeing. We have stores that are positive comping, many of them. We have products that are driving significant sales. We have customers connecting with our products. There is much good going on today, but not enough and not consistently enough to drive the results that we know we can achieve. There's good in how this company does business, which is a critical piece. Glenn used to talk about what we do and how we do it.
I had the opportunity, maybe a month or plus ago, to accept an award on behalf of the company by the Catalyst Group. This was an award that for the first time was given to one company only and one country. Prime Minister Trudeau was there as well to accept the award on behalf of the gender diversity and ethnic diversity efforts that he's effecting in Canadian politics. It was me sharing the stage with him, which was an honor. But for us, it was accepting really an acknowledgement of the culture that I think started, I'm sure, with Don and Doris, where it wasn't about gender diversity, ethnic diversity, religious diversity, sexual preference. It was about finding the best talent on the planet to deliver results. It was an honor to accept that. There's effort underway elsewhere.
We are one of the world's largest cotton consumers. Cotton is one of the world's largest water-consuming crops, and water is an issue globally today. We're beginning to put our shoulder against how do we think about water usage in cotton. No cotton is recycled today. Is there a recycling opportunity in cotton? There's a combination of our great brands, the products that we produce, our capabilities, with the foundation of amazing values that this company sits on that makes me extremely bullish about the future in front of this company. Change is an imperative right now. Change is an opportunity. Change is the place where you create advantage. That is the work that we're doing right now by distorting our energy towards places to win and accelerating the change on many fronts. I want to thank the board for your partnership.
I want to thank you, Doris Fisher, for being present every day, physically present many times, and generous with your criticism. Sometimes a little stingy with your praise, but I appreciate both of those. Keeps us honest every day. I want to thank my team for the work that they are doing. They're really doing probably two and a half jobs right now. Driving a business, but also driving significant change underneath the covers. Most importantly, I want to thank the 165,000 employees in this company around the world that are at the rock face of our customers every day. The energy, the spirit, and the passion you bring is amazing. Thank you, and Julie Gruber, back to you.
Thank you, Art Peck. We're going to open up the meeting to questions. Are there any questions? There's a microphone here.
I'll break the ice here. You mentioned the digital revolution, and we all know how significant that has been and will continue to be. Can you tell us what you're doing to drive your online sales and couple with those millennials, or whatever they're called today, that are really forcing this whole transition on us?
Thank you. I can tell you many things. Do I have a two-minute time limit as well? The pivot, it's digital, really, because I would've said five years ago, e-commerce. E-commerce sounds almost quaint today in terms of what's going on from a consumer standpoint. If I just think about the broad range of what we're doing, it is many things. First of all, fundamentally, it is about engaging the consumer here. We see the millennial consumers today not just using this device, but oftentimes this is their primary, if not exclusive, form of engagement. They are not just opening emails, going through looking at an app, but they're actually conducting their life and their commerce on this device. We have aggressive efforts underway to meet our customers where they are. There's a phrase that's easy to say, harder to do, called digital-first.
Some of digital-first is thinking about things specifically like make sure you're shooting your marketing assets so that they effectively render on this real estate and present an immersive, holistic, emotional brand experience. With all due respect to my leaders in the room, I think Athleta is doing an incredible job every day of presenting the face of that brand beyond simply the commerce experience as it's rendered on this device. There are other elements as well that are really important to us. We've talked for some time now about making sure that our inventory is available omni-channel, another buzzword in the industry. What that means, in its simplest form, is that our supply of products is able to be frictionlessly matched with where demand is.
Whether demand is here, in a store, or you're in a store and there isn't a unit and it's pulled out of someplace else. The more we can make sure that wherever demand materializes and wherever our inventory is, the better we will be, obviously, in providing an exceptional customer experience. I would say the third piece, which is really critical for us, is how do we pivot our marketing voice to the channels that our customer is engaged on. Her single largest apparel influence today isn't an unnamed magazine that I won't call out that starts with a V. It's Pinterest. To be present where she is, present in the social conversation, present in the conversation that is taking place about our brands, oftentimes digitally, that's a critical element. It's a broad front of things.
It's also about making sure that we have an easy, effective, frictionless e-comm experience, if I go back to that word. The last thing that is on my mind today, without previewing anything, is are we truly where our customer is as they have continued to evolve in their shopping patterns? Places of the world like China, as an example, we have a strong, almost dominant presence on Tmall as a third-party site, which aggregates many vendors together. Again, without previewing anything, I think we need to be not encumbered by the past and make sure that we are going to where our customer is and meeting them there every single day. I can talk for 2 hours about this.
We're in a world, again, where the customer is moving very fast, and we are running very hard to make sure that we're meeting them where they are. Thank you for the question.
Are there any other questions?
Okay, thank you. With regards to capital allocation, over the last 4 years, you've spent about $4.3 billion buying back the stock at a price double what it is today. I can assure you that an institutional shareholder or portfolio manager or analyst who made that purchase would be at risk of losing their job. I'm curious if the board can comment on having now spent at double today's price. To go a bit further, over the last 16 or 17 years, I think you've spent roughly $15 billion buying back stock. That's double today's stock market value. The value of the company has tracked downward pretty closely. Each dollar spent to buy back a share has been a dollar reduction in market value. What's the justification to continue buying back if you can't time these prices?
If this company is declining on a dollar-for-dollar basis, why not pay more in a dividend? Alternatively, find something productive to reinvest in the company.
Great. Thank you for the question. It's a really good point. We have a principle about returning excess cash to shareholders, and we have held true to that principle for a very long time. To your first point, our first call of cash is absolutely to invest in our business to the degree we believe we will get appropriate returns for our shareholders. Every year we've averaged capital spend between $half a billion, took it up to $750 million last year. We definitely are focused on investing in our business for growth. Above and beyond that, we think it's important to give cash back to our shareholders. We go to the dividend for sure, because it's a really important component of distributing our excess cash back, and we've been pretty consistent about increasing our dividends.
Our dividend per share has gone from $0.32, actually $0.02 when I started at the company 14 years ago, all the way to $0.94 per share. There's a very strong commitment to giving that more assured piece of cash back to our shareholders every year. With regard to our share repurchase program, if you zoom out and look at it over the long run, you are correct in your facts that we've spent about $15.5 billion over the last decade or so, repurchasing shares at an average price of $22 per share. We actually believe that that's a pretty good value for our shareholders. As recently as last January, our stock was trading at $45, in that range. From that perspective of history, to have bought back that many shares at $22, we think is a pretty good value.
Now, against today's more depressed stock price, we're not happy with that, but we very much view today's stock price as an aberration, and clearly per Art's remarks and Bob's remarks, we're very focused on getting back on track and getting that stock price back up. When judged in hindsight after we get out of this trough, we think we will be judged fairly on having repurchased that much on behalf of our shareholders at that average price of $22. Thank you. Are there any other questions?
I'll try again. Just to keep the flow going. I'd like to return a little bit to the online experience and ask a more specific question. You mentioned the third-party engagement abroad. Have you thought of, or is it even feasible to engage Amazon in marketing our products?
Again, despite Julie's comment on forward-looking statements, I want to make sure that I'm careful here. To not be considering Amazon and others would be, in my view, delusional, and around the customer's behavior. What I would say is that we are always considering all of the opportunities beyond our traditional mix of channels and stores, and looking at all of those, and Amazon is certainly one, and there are others out there as well. I believe the statistic this year is that Amazon will account for one-third of all e-commerce in the U.S., and you've probably read the articles that say that Amazon will, by 2017, be the largest apparel retailer in the U.S. To not therefore recognize that that is part of how customers behave, I think 41 million Americans are Amazon Prime members.
To not acknowledge that and be thinking about what does that mean to our strategy would be to have our head in the sand, and we do not have our head in the sand.
Are there any other questions?
Okay. I'm much more of a financial-oriented person and not fashion-oriented at all. I can tell you the products that I have a passion for tend to be made in the United States, and I view things that can be bought online, imported from Asia, as very commodity-like. Gap historically, I still own sweaters from my college days that were produced in the United States for Gap that I hang on to because I associate positively with them. I almost couldn't care less about a product that has been come in from Asia and I bought out of necessity.
As you go to try and differentiate yourself, is there a way to move backwards? I'm sure you are all more brand oriented than I am, there are companies who are building positive rapport with their clients by producing in the United States or taking a green tack or doing something to differentiate themselves other than just flashy websites and low cost from Asia.
Let me take this one on. It's really something that's close to me, and I'm glad you opened the aperture on the question right at the end around.
Can you just identify the shareholder as well?
Sure. Sorry.
Just make sure it's a shareholder as well.
You'd like him to identify himself for me? Okay. Yeah. Sorry.
I'm Art Peck. I'm Paul Schwarzbach. I live here in San Francisco. I'm a shareholder myself. My wife is a shareholder myself, and I manage money for a number of high wealth, high net individuals.
Thanks, Paul, for the question. Let me tease apart, because you did open the aperture at the end around other aspects of brand differentiation, not just the Made in America piece. Let me take that on first. It is something that we continue to look at. The simple reality today for a company our size is that the scale of domestic garment production, apparel production in the United States is such that it's not a meaningful percentage right now. We have looked across our brands and done various programs where we have produced some things. Oftentimes, it will consume an entire vendor. We've also looked to see is there a way, as some other companies have done, to encourage the growth of domestic production that is efficient and effective and at scale. Something we look at continuously. Some of our customers quite honestly care about it.
Many customers don't at the end of the day, but it's certainly on our mind. It's on our mind, not just because of the brand differentiation, but with North America as our largest market, sourcing capacity that is proximate to this market and therefore fast. All things equal, with the responsive product capabilities we're building, that is a good thing. It's American. It is also in this area as well, Caribbean Basin, et cetera, where proximate sourcing is an asset, we believe. On the second aspect, which is the broader range of differentiation opportunities, one of the things that I'm passionate about, and Andi as an example, who runs Banana Republic, will testify to this, is making sure that the voice of how we do business shows up in our brands.
We have incredible progress to our P.A.C.E. program and made a commitment earlier this year to bring 1 million women by 2020 through the P.A.C.E. program. That is something that customers value that is not showing up in the way it has. Environmental initiatives that we have. We've made immense progress on energy, and we were just talking about this in one of the committee meetings, energy usage, et cetera. This year, having talked about this for years, I was tired of talking and I simply said, "We are going to have these things show up because they matter to our consumers." We're now in the process of building this into our brand voice across the entire portfolio.
Again, at its core, and I appreciate your fashion sensitivity or lack thereof or sensibility, but at its core, if we don't have products that customers emotionally connect with, that she puts on and feels cute, that he feels is great about him, that are wonderful on the kids, we won't win. I believe we should be pulling more aggressively every element of differentiation in our brand and our brand voices. This is part of it for sure. Julie?
Are there any other questions? Seeing no further questions, on behalf of management and the board of directors, thank you all for coming today. The meeting is now concluded.