Ladies and gentlemen, please welcome Craig Menear, Carol Tomé, and Teresa Wynn Roseborough.
Good morning, and welcome to the 2015 annual shareholders meeting. We thank you for taking the time to be here with us today. Before we get started, I'd like to take a moment and thank my predecessor, Frank Blake. Through Frank's leadership as Chairman and CEO, he positioned our company to achieve the kind of success that we saw in 2014 and establish a strong future for us going forward. First, it's my pleasure to introduce our board of directors. I hope you all had a chance to meet them in the lobby earlier before the session started. First, Mr. Duane Ackerman, Ari Bousbib, Frank Brown, Al Carey, Armando Codina, Helena Foulkes, Wayne Hewett, Karen Katen, and our Lead Director, Greg Brenneman.
Unfortunately, today, one of our directors, Mark Vadon, could not be with us due to illness. I'd also, at this moment, like to recognize Duane Ackerman, who is retiring from our board today. Duane has been a member of our board since 2007. He has chaired our audit committee for the past four years. Duane, again, I would personally like to thank you for all you've done for The Home Depot shareholders, for The Home Depot associates, and personally for me during this transition, the guidance and counsel that you have given. Thank you so very much. Next, I'd like to introduce two members of our senior team with me on stage here today. First, Carol Tomé, our Chief Financial Officer and Executive Vice President of Corporate Services, and Teresa Wynn Roseborough, our Executive Vice President, General Counsel, and Corporate Secretary.
With us today, we also have our members of our senior leadership team, and I'd ask that they stand now, please. Finally, I would like to recognize Hector Mojena and Mr. Milford McGuirt of KPMG, the company's independent auditors. Thank you for being here. Today, we'll begin the meeting with our formal business session. This consists of the election of our directors named in the proxy statement, ratification of our auditors, and consideration of the company's and shareholders' proposals. After that, Carol and I will provide a brief business overview, and then we will open the floor for questions. Now I officially call the 2015 Home Depot Annual Meeting of Shareholders to order. Teresa is serving as our secretary of the meeting, and Broadridge Investor Communication Solutions is our inspector of elections.
As of March 23rd, 2015, which is the record date for this meeting, there will be approximately 1.3 billion shares of the company's common stock entitled to vote. A majority of these shares is needed for a quorum, over 86% of these shares are represented today. Therefore, we have a quorum. If you haven't voted yet and would like to vote today, please raise your hand so that we can give you a ballot, then we will collect all the ballots after the proposals have been presented. If your vote has already been cast, there's no need for you to vote again today. So now I declare the polls open for voting. All right. I think we still have this gentleman over here that needs I believe everybody has their ballots.
The first item of business is the election of our directors, which is item number one on your ballot. The board has nominated the individuals named in the proxy statement to serve for a one-year term through the 2016 annual meeting. Your board recommends that you vote for each of these directors. We'll move to the next proposal. The next item is the ratification of the appointment of KPMG as the independent auditors of the company for fiscal 2015, item number two on your ballot. Your board recommends that you vote for this proposal. We'll now move to the next vote. The next item is the advisory vote on executive compensation, also known as Say on Pay, which is item number three on your ballot. Specifically, you are being asked to approve the compensation of the company's named executive officers as disclosed in the proxy statement for this meeting.
Your board recommends that you vote for this proposal. The next item for consideration is the shareholder proposal regarding the independent chairman of the board, which is item number four on your ballot. Will Mr. Brady Quirk-Garvan, a representative of John Chevedden, please step to the microphone and present the proposal?
Good morning, thank you for having us.
Good morning.
The shareholders request the chairman of our board of directors shall be an independent director who is not a current or former employee of the company, whose only non-trivial professional or financial connection to the company or its CEO is the directorship. This policy should be implemented so as not to violate existing agreements and should allow for departure under extraordinary circumstances, such as the unexpected resignation of the chair. The proponent of this proposal has been a continuous company shareholder since 1998. When our CEO is the board chairman, this arrangement can hinder our board's ability to monitor our CEO's performance. Many companies have an independent chairman. An independent chairman is the prevailing practice in the U.K. and many international markets. This proposal topic won over 50% of support at five major companies in 2013, including 73% support at Netflix.
The policy for the Council of Institutional Investors, whose members invest over $3 trillion, states the board should be chaired by an independent director. A 2012 report called The Cost of a Combined Chair CEO found companies with an independent chair provide investors with a five-year shareholder return nearly 28% higher than those headed by a combined chair CEO. The study also found corporations with a combined chair CEO are 86% more likely to register as negatively aggressive in their accounting and governance risk models. Please vote to enhance shareholder value and vote yes on proposal 4.
Thank you. Your board does recommend that you vote against the proposal.
Mr. Chairman, my name is John Evans. What I want to do is just ask a question. Has there been any situation where we've ever supported a stockholder's resolution?
Yes, sir. As a matter of fact, there were a number of proposals that came in for the proxy season this year.
Working with those groups, we actually made changes, and then they removed their request from the proxy.
In other words, if they submit the resolutions to you all, you decide which ones that need to go on the program that you all are against?
Actually, the only ones that go on the program are those that we have a final disagreement on.
In other words, there are resolutions that never come here that you support that.
That's correct, sir.
put forth by the shareholders.
Yes, sir. That is correct.
Thank you.
Thank you. Now we'll move on to the next proposal. The next item is a consideration of the shareholder's proposal requiring a special shareholder's meeting, item number five. I ask Mr. Brady Quirk-Garvan, the representative, Ms. Myra Young, to please step forward to the microphone and present the proposal.
Morning. Thank you again. The shareholders ask our board to take the necessary steps to amend our bylaws and each appropriate governing document to give shareholders in the aggregate of 10% of our outstanding common stock the power to call a special shareholder meeting. This proposal does not impact our board's current power to call a special meeting. Delaware law allows 10% of shareholders to call a special meeting, and many companies have already adopted this 10% threshold. Special meetings allow shareholders to vote on important matters, such as electing new directors, that can arise between annual meetings. Shareowner input on the timing of a shareowner meeting is especially important when events unfold quickly and issues may become moot by the next annual meeting. This proposal topic won more than 70% of support at Edwards Lifesciences and SunEdison in 2013.
Vanguard has sent letters to 350 of its portfolio companies asking them to consider providing the right for shareholders to call a special meeting. This proposal is more important to The Home Depot shareholders due to the restrictions on The Home Depot shareholder rights to act by written consent. Shareholders acting by written consent could save The Home Depot the cost of a meeting and still bring important matters to the attention of management and shareholders. Once again, I ask you to please vote to enhance shareholder value and vote yes on proposal five.
Thank you, sir. Your board recommends that you vote against this proposal. Now we'll move on to the preliminary voting results.
If you've requested a ballot, please mark your vote and sign it where indicated. When you finish, raise your hand and one of our volunteers will collect your ballot.
Collected all the Oh, we still have one here. Okay. I believe all the ballots have now been collected, the polls are now closed. Now I'd ask Teresa if she would please review the preliminary results.
Thank you, Craig. The preliminary voting results for the company proposals are as follows. All of the director nominees named in the proxy statement have been elected by a majority of the votes cast. Approximately 99% of the votes cast have voted in favor of the ratification of the appointment of KPMG, and approximately 98% of the votes cast have voted in favor of the compensation of the company's named executive officers. With regard to the shareholder proposals, approximately 18% of the votes cast have voted in favor of the shareholder proposal regarding an independent chairman of the board, and approximately 41% of the votes cast have voted in favor of the shareholder proposal regarding special shareholder elections. Based on the preliminary vote count, all of the nominees for the board of directors have been elected.
The appointment of KPMG as the company's independent auditors for fiscal 2015 has been ratified, and a majority of the votes cast approved our executive compensation. Neither of the shareholder proposals has been approved. Please note that the ballots collected at this meeting will be verified and tabulated by our Inspector of Elections, and final results of the vote will be available in a Form 8-K, which we'll file next week.
Thank you, Teresa. This does conclude our formal business session, and I declare the meeting adjourned. Now we'll move on to an overview of our business, after which we will take questions that you may have. Now I'd ask Carol to come up and please do a financial overview of the company.
Thank you, Craig, and good morning, everyone. This is my 20th The Home Depot shareholders meeting, and I'm honored to be here. I'm not going to read this, but please be advised that there will be forward-looking statements in this presentation. Fiscal 2014 was a great year for The Home Depot. Our company, your company, grew by 5.5% or $4.4 billion, and we reported sales of $83.2 billion, the highest retail sales in our company history. We also achieved the highest net earnings in our company history with an increase of 17.8% over last year, taking our net earnings to $6.3 billion. Finally, our diluted earnings per share increased 25.3% to $4.71. Your company continues to generate strong cash flow. We generated approximately $8.6 billion in cash in fiscal 2014, and we issued $2.3 billion of incremental debt, taking advantage of the low interest rate environment.
We spent $1.6 billion on capital improvements and acquisitions. We returned $2.5 billion to shareholders through dividends. We repurchased $7 billion of our outstanding shares. Let's take a look at fiscal 2015 and our outlook for the year. We continue to believe that the growth in the U.S. home improvement market will rest on two drivers: GDP growth and housing. The good news is that we continue to see moderate GDP growth in the United States. Most housing data points to continued recovery in the housing market. We just reported our first quarter results. Our sales grew by 6.1%. Our earnings per share grew by 21%, so we're off to a good start. For fiscal 2015, we expect our total sales to grow by approximately 4.8% on a currency-neutral basis. 10% of our sales are outside of the United States.
With a stronger U.S. dollar, we do face some currency pressure. If the U.S. dollar remains at current foreign exchange rates, we would expect our fiscal 2015 sales growth to be 4.2%. For the year, we're planning to open 6 stores, 5 of those stores in Mexico and 1 store in Canada. Fiscal 2015 diluted earnings per share to be approximately $5.24. As you will hear from Craig, our strategy has not changed. In 2015, as we go forward, we will continue to invest in customer service, product authority, and interconnected retail under an umbrella of disciplined capital allocation, creating value for you, our shareholders. Part of creating value is paying a dividend. We target a 50%, which means as our earnings grow, so will our dividend.
In February, our board announced a 26% increase in the quarterly dividend to $0.59 or an annual dividend of $2.36. This is our 6th increase in the dividend in as many years. We believe there will be more to come. With that, let me turn it back over to Craig.
Thank you, Carol. I'd like to take a moment and share with you the strategy that we've been operating under to help deliver these type of results. It starts with what I believe is the greatest gift that Bernie and Arthur gave us as a company, and that is our culture and our values. These are 2 very important foundational symbols of our culture, the inverted pyramid and our values wheel. We strive as an organization to live up to the inverted pyramid every single day, where our customers are at the top. Our associates who are helping our customers are the most important parts of our business. The values are our guiding principle. They're behind the decisions that we make every single day.
We do believe that the culture and the value of The Home Depot truly is what sets us apart as a company. We believe that it gives us a competitive advantage in the marketplace. Bernie once said, "If you take care of your associates, they will take care of the customer, and everything else will take care of itself." Those words ring true today. We have over 370,000 associates living our values every day. Our associates are key to meeting the needs of our customers. We will continue to invest in our associates. A core philosophy of ours is to pay above market wage rates. We'll continue to employ this strategy going forward. We constantly look at the wage rates on a market-by-market basis and make adjustments as we see necessary.
We are also the only major retailer in the country to grant stock to our assistant store managers. Through our Success Sharing program, which is our profit-sharing program for our hourly associates, we have paid out almost $200 million in fiscal 2014 and almost $900 million over the past five years. Two of our core values are taking care of our associates and building strong relationships. The Homer Fund, our nonprofit charity supporting our associates, exemplifies these values. Through both associate and company matching contributions, The Homer Fund has donated more than $110 million to over 90,000 associates in times of crisis. Excellent customer service is the first value on our value wheel as you work your way around it. Customer service extends beyond taking care of our customers in the aisle, and it actually extends into the communities that we operate in.
We're focused on building relationships and being great neighbors in the lives and the communities of our customers. We believe that's part of our job every single day. In 2014, Team Depot, our associate-led volunteer force, completed more than 1,200 projects to improve veteran homes and housing facilities across all 50 states, with over 26,000 associates volunteering their time. Over the past four years, we have invested over $80 million Depot Foundation to support the housing needs of veterans. As you can see, giving back is one of the core values at The Home Depot. Let me shift to our strategy for a moment and talk a little bit about what changes going forward. You all have seen this chart before. It represents our strategic framework and our vision of our three-legged stool.
What we do here is try to address the three core questions. What are we most passionate about? It is customer service. What do we absolutely want to be best in the world at? It's product authority for home improvement. What drives our economic engine is a disciplined capital allocation process. The core strategy of our company doesn't change. The reason it doesn't change is that it's rooted in what our customers and our shareholders expect from us. However, as the retail landscape is continuing to evolve and becoming more interconnected, so our framework actually needs to evolve to be able to continue to address customer expectations going forward. Moving forward, we're investing in our business to meet these changing needs of our customers. The requirements for excellent customer service in an interconnected retail environment is changing.
We will need to change how we actually staff our stores and how we allocate our labor to be able to address customer orders that are now picked up in our stores but are ordered on our website. Within product authority, we have been and will continue to invest in capabilities to assort our stores to the local customer needs. We also have an enormous opportunity to drive value through looking from supplier all the way through customer, including aftercare for the customer when they purchase. We think there is enormous value to be driven by looking at this as an end-to-end value chain process.
Under Frank's leadership, we made a hard pivot in terms of moving from square footage growth being our economic engine to a disciplined capital allocation as the driver of our business, and we will continue to invest to maintain the growth in our business. We're investing to connect our digital properties to our stores and vice versa. This is important to allow our customers to choose how they want to engage with The Home Depot. We're also investing to drive efficiency within our business through technology and automation so that we can ensure great value for our customers. After meeting the needs of the business, we will return cash to our shareholders in the form of dividends and share repurchase. We intend to increase our dividends each year, and we target a 50% payout ratio.
As you heard from Carol, in the past February, we actually increased our dividend for the sixth time in as many years. After we pay out dividends, and we then intend to use our excess cash to repurchase shares. Now, let me dive just a little bit deeper into interconnected retail. If you asked me three years ago what keeps me up at night, my answer would have been keeping up with the pace of change as a result of interconnected retail environment that is evolving. Today, while pace of change is still very much top of mind, I'm actually more excited about the opportunities it presents for our company more so than the risks that it presents. Change isn't natural. It isn't natural for an organization or for individuals. It is something we must do.
Today, customers want to shop across multiple channels, they want to shop via buy online, pick up in store, buy online, ship to store, and buy online, deliver from store. While we had over 1.4 billion transactions in 2014, we also had 1.2 billion visits to our website. Our sales online grew over 36% in 2014. Interestingly enough, almost 40% of all the orders that were created online were actually picked up in one of our stores. Many of these items were big and bulky items where we can actually leverage our assets and our supply chain capabilities to deliver great value for our customers. At the same time, approximately 10% of our online orders originated within one of our stores. Our associates are exposing the extended aisle that we have in our digital asset to our customers when they are in store.
We will continue to invest to create a seamless customer experience across all channels. I'm excited about the opportunities that that presents going forward. On our international business, we performed well in 2014. In Canada, The Home Depot is the number 1 home improvement retailer, and we have had 14 consecutive quarters of positive comp growth in our Canadian business. Our Canadian team opened their first rapid deployment center and broke ground on a second planned facility during 2014. These distribution facilities will help us optimize inventory flow to our stores in Canada. In Mexico, The Home Depot is also the number 1 home improvement retailer. Our Mexican team has recorded 46 quarters in a row of positive comp growth. We have 111 stores in Mexico, and in 2014, we also launched our Mexican e-commerce site to complement our store experience there as well.
Lastly, in fiscal 2014, The Home Depot stock price appreciated 39%, we outperformed the Dow Jones Industrial Average for the seventh consecutive year. I thank you very much for attending this meeting. At this time, I'd be now happy to take questions that you may have. If you have a question, if you would please step to one of the two microphones.
Mr. Chairman, I represent the Cobb NAACP , I've certainly been well pleased with the diversity program that they have. As you all have, we hope that it will continue in the future. What we find that people who are sensitive to our needs are the ones that do the best job in this company. I'm really saying to you, as we move forward, let's make sure that we keep this in mind, the board elections and the employees who work in the area. Because if they're not sensitive, we lose, we certainly can't afford to lose. Our plight is tough as it is, we appreciate companies like The Home Depot who have supported us, we do our share of supporting The Home Depot out in the community.
In fact, every opportunity that we have, this is a book where we send out to our members and distribute it in our community for every function that we have saying thanks to those who support us, we want you to support them. The Home Depot is a great company. I've been in this area about 50 years, I know about it, we really appreciate the attention that you give to the diversity program. We will work with you in any way we can to keep that program viable and useful and beneficial to us and others. Thank you.
Thank you. Thank you very much for your comments, and we appreciate the support. It's something that is very important to our business overall. Thank you. Yes, sir.
I was wondering if you could tell us what the company's strategy is concerning the hiring of veterans.
Yes. Do you mind sharing your name with us, sir?
Gene Wallace.
Mr. Wallace, thank you. Matter of fact, Mr. Wallace, we actually have a very strong program in place to hire veterans. It's an area that we look for to be able to fill out our employment needs. The company, in total, is very committed to veteran cause. Thank you.
Good morning, Mr. Chairman, congratulations on your first meeting. My name is Charles Miller, I've been a longtime shareholder in The Home Depot, I've seen the growth of this company over these years and the satisfaction that most rational shareholders should feel about the positivity of this experience. However, I think I would like to draw the attention of the shareholders and to the board and yourself regarding the part-time workers that are employed at The Home Depot. For the last number of years, one of the exemplars in the retail industry, that is Costco, is rated the number one employer in the country. I would like to see The Home Depot rise above Costco in this particular effort. One of the metrics that one measures Costco by is what they pay their employees on a part-time basis.
As represented by you this morning in your presentation, treating your employees is a core value after your customers. With that in mind, I would like particular attention paid then to the hourly rate paid to part-time workers. I know you mentioned this morning that you pay in excess of what is required. I would like The Home Depot to pay a minimum of $15 per hour to their part-time employees. I think that with that in mind, you would expect greater productivity from those employees, and it would result in greater profitability to the shareholders. It's the positive and mutually beneficial relationship between part-time employee satisfaction and shareholder satisfaction. I would like the board to seriously consider this request. Thank you.
Thank you very much for your comments. Appreciate it. We are very focused on making sure that we do take care of our associates, I appreciate your input very much. Thank you. Yes, sir.
My name is Bernie Goldstein and I'm a longtime shareholder, and my question is, what are your and the board's thoughts on splitting the stock?
That's a question that we actually get quite frequently. I wouldn't look for us to split the stock. As a matter of fact, over the past 10 or 12 years, we have actually spent about $54 billion buying our stock back and have done that at an average price of about $44 a share, which means it's a great way to return back to the shareholders. The interesting thing is how the markets have evolved and the way that you can purchase stock today. You can buy fractions today versus having to buy in 100-lot shares the way it used to be when I first started buying stock. We don't really see the economic value of splitting the stock because you'd also be splitting dividend and so on. Thank you for it.
My name's Celeste Wallace. We live in Lawrenceville. You ever considered starting this at 11:00 instead of 9:00?
Appreciate the input. We'll take that into consideration.
Coca-Cola made that change.
Okay. Thank you very much. Okay. At this point in time, it doesn't look like there are any further comments or questions. I thank you all very much for your attendance here today and your participation. We look forward to seeing you next year. Thank you.