Morning, and welcome to the 98th annual meeting of General Mills shareholders. I'm Jeff Harmening, Chairman and Chief Executive Officer of the company. It's 8:30 AM. We have a quorum, all official papers are on file, and the inspector of elections has been appointed, so I'll call this meeting to order. Before I get to the business update, I would like to take a few minutes to introduce some of the people who are attending the meeting. Here with me today is Karen Wilson Thissen, our General Counsel and Corporate Secretary, Jano Cabrera, our Chief Communications Officer, and other members of our senior leadership team. Also with us today are our board members who are standing for election. Joan Bottarini, Executive Vice President and Chief Financial Officer of Hyatt Hotels Corporation. Benno Dorer, former Chairman and Chief Executive Officer of The Clorox Company.
Maria Henry, former Chief Financial Officer of Kimberly-Clark Corporation. Jo Ann Jenkins, former Chief Executive Officer of AARP. Elizabeth Lempres, former Senior Partner of McKinsey & Company. Dana McNabb, Chief Operating Officer of General Mills. John Morikis, former Chairman and Chief Executive Officer of The Sherwin-Williams Company. Diane Neal, former Chief Executive Officer of Sur La Table.
Maria Sastre, former President and Chief Operating Officer of Signature Flight Support Corporation. Eric Sprunk, former Chief Operating Officer of Nike, Jorge Uribe, former Global Productivity and Transformation Officer of The Procter & Gamble Company, and I am also a member of the board. At this time, I would also like to recognize Stephen W. Sanger for his service to the board. Steve is not standing for re-election to the board at this meeting. Let me introduce Ian Wildenborg and Laura Collins, who are attending the meeting virtually and representing our independent auditor, KPMG.
Finally, our Inspector of Elections for today's meeting is Broadridge Financial Solutions. Now let's turn to our business update. Please note that our remarks this morning will include forward-looking statements that are based on management's current views and assumptions. There are many factors that could cause our future results to be different than our current estimates. You can refer to our SEC filings on the General Mills investor relations website for a reconciliation of the non-GAAP measures discussed in today's business update. I'll start off with three messages I hope you take away from today's meeting. First, we finished fiscal 2026 on a positive note, delivering fourth quarter results that met our expectations while continuing to strengthen our foundation to position General Mills for long-term success. This included significant improvement in volume, growth in household penetration, and a step-up in innovation.
Second, while our results in fiscal 2026 were challenged due to slower category growth and a more difficult consumer backdrop, we made important progress in many areas. I'll share more about that in a moment. Third, as we look ahead, we are focused on making fiscal 2027 a better year for General Mills. We'll do that by driving a step change in how our brands show up for consumers with a sharper focus on product, packaging, and brand communications to strengthen our top-line trajectory and generate strong shareholder returns over the long term. At General Mills, our purpose is to make food the world loves, and our Accelerate strategy remains centered on choices we've made about where to prioritize our resources to drive top-tier shareholder returns.
Those choices, where we play and how we win, continue to guide us toward long-term value creation through consistent sales growth, margin expansion, cash conversion, and cash returned to shareholders. Through this strategy, we've reshaped our portfolio, enhanced our capabilities, and evolved our organization to stay competitive in an ever-changing environment. Today, we are sharpening that work through a stronger focus on making our brands more remarkable for consumers. That focus has already helped improve our volume trends, expand household penetration, and position us to restore sustainable, profitable growth. Fiscal 2026 was a challenging year, with a more pressured consumer backdrop, slower category growth, and a higher cost of volume that weighed on our performance.
At the same time, we made progress in several important areas, including improving share performance across North America retail, North America pet, and North America food service, as well as delivering strong sales and operating profit growth in international. We took bold action by investing to improve value for our consumers, reducing everyday prices on roughly 2/3 of our North America retail portfolio. We also continue to reshape our portfolio by completing the divestiture of our U.S. yogurt business and announcing the divestitures of our Brazil business, which recently closed, and our mainland China Häagen-Dazs Shops business. These transactions sharpen our focus on categories and geographies where we have the strongest long-term opportunities to drive profitable growth. We delivered industry-leading levels of holistic margin management, or HMM, cost savings in fiscal 2026, and we launched a transformation initiative that will help us fit our capabilities and structure to accelerate growth.
Between our HMM program, this transformation initiative, and other cost savings, we expect to generate approximately $3 billion in total cost savings between fiscal 2027 and fiscal 2030. Looking forward, we believe fiscal 2027 will be a better year for General Mills. The operating environment remains dynamic, and consumers are still value-conscious. But with our price investment work largely behind us, we are focused on improving our organic sales growth by making our brands even more remarkable in the eyes of consumers while still delivering strong cost savings, cash generation, and capital discipline. We've set three priorities for fiscal 2027. First, to strengthen our organic sales growth by delivering more remarkable experiences for consumers. Second, to create fuel for growth by continuing to deliver industry-leading HMM savings while also advancing our transformation work through business process simplification, efficiency, and supply chain redesign.
Third, to maintain disciplined capital allocation by generating strong cash flow and using it to reinvest in the business, sustain our attractive dividend, and pay down debt. Our remarkable experiences framework will play a central role in how we accelerate our growth in fiscal 2027. Using this framework, we assess our brands across five dimensions, product, packaging, brand communication, omni-channel execution, and value, to identify where we are winning versus competition and where we have opportunities to improve. One particular area of focus for us this year is making sure the benefits we bring to consumers matter more and resonate more clearly. While value remains important, we know that sustainable, profitable growth comes from combining all elements of the framework together. That's why our fiscal 2027 plans are centered on innovation and renovation to elevate the benefits that matter most to today's consumers.
From better-for-you attributes like protein and fiber, to bold flavors and indulgence, to more humanized pet food offerings. You can see that in new items like Honey Nut Cheerios protein cereal, improved Häagen-Dazs Belgian chocolate ice cream, Annie's Fiber Pals fruit snacks, and Blue Buffalo Love Made Fresh dog food. We will bring this to life through stronger packaging, brand communications, and more compelling in-store and online activation behind our biggest brands. We reported our first quarter fiscal 2027 results one week ago, and I am pleased to say that we are off to an encouraging start, delivering improved top-line performance with stronger product innovation and renovation. Looking ahead, we will continue to work to strengthen our organic sales and drive best-in-class efficiency, which will be critical to deliver our plan in fiscal 2027 and accelerate earnings growth in fiscal 2028 and beyond.
Our job in fiscal 2027 is clear: translate the stronger foundation we built in fiscal 2026 into better sales performance, stronger earnings growth, and durable value creation. Grounded in our remarkable experiences framework and supported by rigorous cost and capital discipline, we are confident in our plans. With our iconic brands, industry-leading capabilities, and a talented and committed team, we are well-positioned to make fiscal 2027 a better year for General Mills and to deliver profitable growth and strong shareholder returns over the long term. I would now like to turn to the proposals that are being voted on at this meeting. For shareholders, if you have not voted or would like to change your vote on any of the proposals, please make sure to do so now on the virtual meeting portal.
I am now going to transition to Karen Wilson Thissen, our General Counsel and Corporate Secretary, who will introduce the management proposals being voted on at this meeting.
Thanks, Jeff. We are presenting five management proposals for a vote at this meeting. The proposals are: one, the election of the 12 directors named in the proxy statement; two, an advisory vote on executive compensation; three, the ratification of KPMG as our independent auditor; four, approval of an amendment to our certificate of incorporation to provide for exculpation of certain officers as permitted by Delaware law; and five, approval of an amendment to our certificate of incorporation to include a federal forum provision for claims brought under the Securities Act. These five proposals are recommended by our board of directors for shareholder approval. Full details on each of these items are provided in the proxy statement. We also have three shareholder proposals to be voted on at the meeting.
I will now ask a representative for each of the shareholder proposals to present their shareholder proposal for a vote at the meeting. First, I will call on Matt Prescott to present the Blank Check Preferred Stock proposal on behalf of The Accountability Board. Will the operator please unmute Mr. Prescott's line so he can present the shareholder proposal? Mr. Prescott, please proceed.
Thanks so much, and I am happy to keep this pretty quick for the sake of everybody's time today. We think the proposal is self-explanatory and speaks for itself and would just refer folks to the proxy statement for any questions about it. The only two things I really want to add are, one, that both Institutional Shareholder Services and Glass Lewis are both recommending a vote in favor of the proposal and that the proposal has passed at many other companies recently. In fact, just this week, it passed at, last week it passed at Conagra Brands with 62% of the vote, roughly. The second thing is I just want to thank the board for their consideration of the proposal. I know obviously we didn't end up seeing eye to eye on it, but we appreciate the consideration nonetheless. Thank you.
Thanks for the statement, Mr. Prescott. The board strongly believes that this proposal is not in the best interest of the company or its shareholders. General Mills' certificate of incorporation authorizes 5 million shares of cumulative preference stock, with the board authorized to set the terms of each series. No shares of this stock are currently outstanding, and the company has never used this authority for anti-takeover purposes. The proponent has identified no instance of misuse and no actual harm to shareholders arising from this authority at General Mills. Put simply, this proposal seeks to solve a problem that doesn't exist at this company. Beyond being unnecessary, the proposal would impose real costs on General Mills and its shareholders. The restriction would introduce significant ambiguity into our ability to manage the company's capital structure and pursue strategic transactions.
In a competitive environment where approximately 93% of S&P 500 companies retain this same authority, restricting General Mills' flexibility would place us at a meaningful disadvantage relative to virtually every comparable public company. Finally, the board believes the appropriate safeguards are already firmly in place. Our directors stand for election annually by majority vote. Shareholders have the right to call a special meeting and to nominate directors through proxy access. These protections, together with the board's fiduciary duties, applicable legal safeguards, and our active shareholder engagement program, provide shareholders with direct, meaningful tools to hold the board accountable about categorically eliminating an instrument. Without categorically eliminating an instrument, the board may need to protect the interests of all shareholders. For these reasons, the board has unanimously recommended a vote against this proposal.
I will now call on Jessica Weaver to present the human rights proposal on behalf of the state of Connecticut. Will the operator please unmute Ms. Weaver's line so she can present the shareholder proposal? Ms. Weaver, you can proceed.
Thank you. Good morning, all. My name is Jessica Weaver, Deputy Director of Corporate Governance and Sustainable Investments at the Connecticut Retirement Plans and Trust Funds. I am here to present proposal number 7, which asks General Mills to provide a report assessing the effectiveness of its existing human rights policies and due diligence processes. It is a reasonable request that could be fulfilled at a reasonable cost without disclosing proprietary information and while leaving implementation entirely to management. The issue is financially relevant. Agricultural ingredients represent General Mills' largest variable manufacturing cost, and the company itself acknowledges that significant supply chain problems can adversely affect its reputation, operations, and financial results. General Mills also identifies forced labor and child labor as the most salient human rights risks and recognizes sugarcane as a higher-risk commodity. The question today is not whether General Mills has policies, audits, or programs. It does.
The company reports hundreds of supplier audits, corrective action plans, and ongoing assessments of its human rights approach, and those efforts are welcome. However, investors still lack a clear understanding of whether these activities are actually reducing the company's exposure to its most significant risks. For example, shareholders cannot determine whether significant incidents involve forced labor or child labor, whether remediation is preventing recurrence, or whether affected workers are receiving remedy, or how the most serious risks are trending over time. The company also acknowledges challenges in gaining visibility beyond tier 1 suppliers, yet current disclosures do not explain how effectiveness is evaluated where visibility is limited.
The disclosure gap is especially important because General Mills has identified sugarcane as a higher-risk ingredient, while public reporting and U.S. Department of Labor have documented serious labor risks in Maharashtra, India, where General Mills operates manufacturing facilities and there is increasing demand for local raw materials. The proposal does not ask the company to solve systemic labor challenges. It simply asks General Mills how its own due diligence efforts are working in areas where known risks may intersect with its supply chain. Importantly, many peer companies already provide more outcome-oriented information on human rights due diligence, remediation, and program effectiveness. Proposal 7 would help align General Mills' reporting with evolving investor expectations and peer practice. As long-term shareholders, we need more than information about activities. We need information about results. Proposal 7 provides a practical, flexible way to improve transparency around a material business risk while preserving management's discretion.
For these reasons, we respectfully urge shareholders to vote for proposal 7. Thank you for your time.
Thank you for the statement, Ms. Weaver. The board strongly believes that this proposal is not in the best interest of the company or its shareholders because it asks for a report that would largely duplicate what we already publish. Through our Global Responsibility Report and our Slavery and Human Trafficking Statement, General Mills discloses comprehensive, outcome-based information on our human rights program, which is grounded in the UN Guiding Principles on Business and Human Rights and supported by the board and executive-level oversight through the Public Responsibility Committee and the Global Impact Governance Committee.
We also want to be clear that the specific supply chain concerns raised in this proposal are concerns we take seriously and are actively addressing. The labor conditions in India's sugar-producing regions are structural, industry-wide challenges, and General Mills is working directly with Proforest and impacted communities to improve visibility and outcomes beyond tier 1 suppliers.
For these reasons, the board has unanimously recommended a vote against this proposal. I will now call on Kaylyn Bixby to present the pesticide reduction proposal on behalf of As You Sow. Will the operator please unmute Ms. Bixby's line so she can present the shareholder proposal? Ms. Bixby, you can proceed.
Good morning, members of the board. My name is Kaylyn Bixby, and I lead the Environmental Health Program and Regenerative Agriculture Initiative at As You Sow. Thank you so much for the opportunity to present proposal number 8 on the proxy. This proposal asks General Mills to disclose the success of its regenerative agriculture program, a program it has invested millions of USD in, by reporting its outcomes across its supply chain, including, but not limited to, pesticide reduction. Pesticide use degrades soil health, the cornerstone of natural capital. The failure to regenerate healthy soils by reducing pesticide use may cause significant harm to farm and supply chain resilience. Soil degradation can also increase commodity prices, raising long-term viability concerns for our company.
Pesticides additionally cause long-term health impacts to farm workers and agricultural communities, including cancer, birth defects, cognitive impairment, and the acute pesticide poisoning of 25 million farm workers annually. Similarly, biodiversity, pollinator health, and air and water quality all suffer as a result of pesticide use. Despite claims about the benefits of its regenerative agriculture program, our company does not disclose its success, if any, in reducing pesticide use on farms within its supply chain. Reporting pesticide reduction data from pilot projects proves insufficient in providing shareholders with the information they need to assess the company's progress in reducing reputational, regulatory, and financial risks. Additionally, failing to apply regenerative practices within General Mills' supply chain restricts its ability to increase resiliency, the leading financial benefit of regenerative agriculture.
Meanwhile, General Mills' competitors, Lamb Weston, PepsiCo, Danone, and Ferrero, are all publicly reporting the number and/or amount of pesticides used or avoided to demonstrate their success of their regenerative agriculture program. Farmers are already required by law to track and report restricted-use pesticides, and most farmers keep extensive records on pesticide use to ensure application efficiency. Therefore, collecting pesticide use data from regenerative suppliers would add little to no additional cost and complexity to General Mills' regenerative program. As a leading food manufacturer, General Mills has the ability to engage with its suppliers and collect and disclose pesticide data to demonstrate the success of its regenerative agriculture program. We look to the company to live up to its commitment by providing investors with the information they need to reduce risk and make informed investment decisions. We urge a yes vote on this resolution. Thank you.
Thank you for the statement, Ms. Bixby. The board strongly believes that this proposal is not in the best interest of the company or its shareholders. Requiring farmers to track pesticide use would add cost and complexity with no benefits to the farmer, which would jeopardize continued progress in the company's strong and successful regenerative agriculture programs. Our regenerative agriculture goals include far more than just reducing pesticides. Adding requirements for pesticide tracking and reduction would negatively impact the overall benefits of the overall regenerative agriculture program. Finally, we already provide significant disclosures on our regenerative agriculture and pesticide reduction initiatives.
Given the success of the company's sustainability initiatives and the breadth of its existing disclosures, the board believes that the company is already addressing the concerns in the shareholder proposal, and that specific tracking and disclosure of pesticides used in our regenerative agriculture programs is unnecessary and not an effective use of the company's or a farmer's resources or time. For these reasons, the board has unanimously recommended a vote against this proposal. With the summary of this year's shareholder proposals completed, we can now transition to sharing preliminary vote totals. As a reminder, these totals represent shareholder votes received prior to today's meeting. I'm pleased to announce that preliminary voting results suggest that more than the required number of shares have been voted in favor of the five management proposals.
The election of the 12 directors named in the proxy statement and advisory vote on executive compensation, the ratification of KPMG as our independent auditor, the approval of an amendment to our certificate of incorporation to provide for exculpation of certain officers as permitted by Delaware law, and finally, the approval of an amendment to our certificate of incorporation to include a federal forum provision for claims brought under the Securities Act. The preliminary voting results also suggest that the shareholder proposals relating to human rights and pesticide reduction disclosures have failed to gain a majority of shareholder support, and that the shareholder proposal relating to blank check preferred stock has received more than a majority shareholder support.
As a reminder, the vote totals, which will include votes received prior to the adjournment of today's meeting, will be reported on a Form 8-K filed with the SEC within the next four business days. We will make that Form 8-K available on our company website.
Thank you, Karen. That concludes the formal business portion of this meeting. Before beginning our question and answer session, we will now officially close the polls and adjourn the meeting. I will now turn it over to Jano Cabrera, our Chief Communications Officer, for the question and answer portion of this meeting.
To give as many people as possible the opportunity to ask questions, the meeting portal was open 10 days before our meeting. If you now have a question, again, that was not previously submitted, we encourage you to do so by following the instructions on your screen. We limit questions to two per shareholder, and we will only respond to one question per topic. Please keep your questions brief so we can cover as many subjects as possible. Now for the first question. "Jeff, I am interested in hearing more about the $3 billion cost savings initiative you recently announced. Can you please explain how that will be accomplished and any specific actions you are taking to accomplish this initiative?
Yeah, sure, Jano. General Mills views productivity as one of our core strengths. We have industry-leading levels of productivity, and we call that holistic margin management or HMM, and it's really become part of our culture over the last 15 years and remains a core capability for General Mills. We are now complementing our HMM work with an enterprise transformation initiative. The two combined, we expect to generate about $750 million of cost savings, including HMM and transformation and other savings actions in fiscal 2027, and then $3 billion by fiscal 2030. That's a meaningful increase in ambition because the need is meaningful. We are working to offset inflation, fund reinvestment for growth, and protect long-term earnings power at the same time. HMM will be the key source of the first $2 billion in cost savings.
Recently, we have accelerated our HMM delivery by leveraging more digital tools within our supply chain. For example, AI-driven demand forecasting, manufacturing optimization, and logistics scheduling. We expect our transformation initiative to deliver the other $1 billion of our $3 billion goal. The majority of that is expected to come from supply chain, where we have an opportunity to better fit our supply chain for future growth. That means optimizing our capacity utilization, rethinking our network, and ensuring we are set up for the future, including faster innovation, packaging flexibility, and e-commerce.
Thank you. Thank you. The next question is, how do you compete against private label and small brands, which seem to be gaining market share more recently?
Whether it's private label or small brands or other big brands, our goal is to always compete effectively. The key to that, especially in today's environment where we already talked about consumers being pressured, is really making sure that our offerings are remarkable in every way. We view remarkability, we have a remarkable experience framework, and we view it across five dimensions, including product and packaging, communication, omni-channel presence, and value. Over the last year, for example, we adjusted the pricing on about two-thirds of our portfolio in North America Retail to get under price cliffs and get in with certain gaps to address the value gap we had. By doing so, really stunted the share growth and private label. We are just lapping all that work now. We are really pleased with how that's gone.
The key for us as we move forward is to really improve the remarkability along the rest of the elements of that framework. We were increasing our new product innovation by about 50% over the last couple of years. Our communications has gotten better and better. We grew Lucky Charms in the first quarter, for example, and Reese's Puffs, as well as Cinnamon Toast Crunch. Then as we look to this baking season, making sure that we have more new product innovation, and we are really excited about the direction we are going. We have momentum from the first quarter of the year, and we are looking to continue that into the second quarter of the year. We improved our market share position in most of our top categories in North America Retail, the same with food service and international.
We like the direction we are going, and we remain committed to being competitive in the marketplace.
A related question, specifically on innovation. When was the last time management evaluated developing new products such as jam or jelly?
Yeah. I mentioned innovation just a minute ago, and it certainly is important to General Mills. We are increasing the pace of our innovation using AI and technology. As I said, over the past couple of years, roughly a 50% increase in our new product innovation. So we are really proud of how that is working. Specific to your question on jellies and jams, what comes to mind immediately is we just recently launched a Nature Valley peanut butter and jelly bar, and it is really tasty and I would encourage you to try it.
Sounds great. Last one. We also received a question on regenerative agriculture and General Mills prioritizing our business purposes and farmers in our supply chain. Care to comment broadly ?
Yeah. First, thanks for the question, I really appreciate the positive feedback. General Mills has really good relationships with its farmers, we really need that as part of our risk management process. We are really proud of what we have done with regenerative agriculture. I would like to go on and on, but we only have so much time today. I think what I would instead do is refer you to the Global Responsibility Report, you can read there the many ways that we are partnering with farmers to increase resiliency and productivity at General Mills.
With that, we will now formally close the question and answer session. If you submitted a question that was not answered, responses to those questions will be posted on our investor relations website by the end of this week. I would like to thank you for participating in today's meeting and for being a shareholder of General Mills. We look forward to next year's annual meeting.
This does conclude today's conference. We thank you for your participation.