Ladies and gentlemen, please welcome Chairman and CEO, Frank Blake.
Good morning. Good morning. Thank you all for coming to the 2013 annual shareholders meeting. Before we start the meeting, I'd like to make a few introductions. First, it's my pleasure to introduce our Board of Directors. I think you may have had a chance to meet some of them earlier this morning. They are Duane Ackerman, Ari Bousbib, Greg Brenneman, Frank Brown, Al Carey, Armando Codina, Karen Katen, Mark Vadon, and our Lead Director, Bonnie Hill. The members of our senior leadership team are also here, and I'd like them just to stand. Thank you all. Finally, I'd like to recognize Dave Middendorf and Larry Bradley of KPMG, the company's independent auditor. We'll begin today's meeting with the formal business portion. This consists of the election of directors named in the proxy statement, ratification of auditors, and consideration of the company and shareholder proposals.
I'll provide a brief business overview. Then open the floor for questions. I now officially call the 2013 annual meeting of the shareholders of The Home Depot to order. Teresa Wynn Roseborough, our General Counsel and Corporate Secretary, is serving as secretary of the meeting, and Broadridge Investor Communication Solutions is our inspector of elections. As of March 25th, 2013, which is the record date for the meeting, there were approximately 1.4 billion shares of the company's common stock entitled to vote. A majority of these shares is needed for a quorum. The majority are represented here today. We have a quorum. If you haven't voted yet and would like to vote today, please raise your hand now so we can give you a ballot. We'll collect your ballots after all the proposals have been presented.
If you voted already, you don't have to vote again. I now declare the polls open for voting. Raise your hand if you need a ballot. All right. The first item of business is the election of directors, which is item one on your ballot. The Board has nominated the individuals named in the proxy statement to serve for a one-year term through the 2014 annual meeting. Your Board recommends that you vote for each of these directors. We'll now move on to the next proposal. The next item is the ratification of the appointment of KPMG as the independent auditors of the company for fiscal 2013, item two on your ballot. Your Board recommends that you vote for this proposal. We'll now move on to the next proposal.
The next item is the advisory vote on executive compensation, also known as Say on Pay, which is item 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. We will now move on to the next proposal. The next item four on your ballot, is approval of the material terms of officer performance goals under the company's management incentive plan. Your board recommends that you vote for this proposal. We will move on to the next proposal. The next item is approval of the company's Amended and Restated 2005 Omnibus Stock Incentive Plan, item five on your ballot. Your board recommends that you vote for this proposal. We will now move on to the shareholder proposals.
The next item, consideration of the shareholder proposal regarding employment diversity reports, is item six on your ballot. I will ask Ms. Lynn Conley, a representative of Benedictine Sisters, and the other proponents to please step to the microphone and present the proposal.
Good morning, Mr. Chair, members of the board, and shareholders who are gathered today. I am Lynn Conley, here today representing the Benedictine Sisters from Boerne, Texas. I also represent several members of the Interfaith Center on Corporate Responsibility, who are shareholders and co-filers to this proposal. These groups are long-term shareholders of The Home Depot. Proposal number 6 on the ballot seeks a board review of our company's policies regarding disclosure of equal employment opportunity data, known as EEO-1 data, and public reporting of diversity issues to shareholders. The full text of the proposal can be found on page 28 of the proxy statement. Equal employment opportunity is an investment concern. When allegations of discrimination in the workplace burden shareholders with costly litigation and add risk to a company's brand, there is an impact to shareholder value. We contend descriptions do not go far enough to mitigate potential risks.
We mentioned in the resolution that The Home Depot has paid out more than $100 million to settle discrimination lawsuits over the past 16 years. We appreciate that The Home Depot has published a diversity and inclusion report in March 2013. It did not give a chart identifying employees by gender and race in each of the EEOC-defined categories. This resolution, which has been filed over the past several years, focuses on the importance of measurement and disclosure of diversity issues to its shareholders. To manage diversity, companies have to be able to measure it. That is why we have asked the EEO-1 data, which offers investors a measurement tool. An EEO report is submitted annually by The Home Depot to the Equal Employment Opportunity Commission. Providing data to shareholders would not pose an added financial burden. The company actually did provide the information for one year and then stopped.
In the absence of meaningful disclosure, investors cannot fully assess potential risks The Home Depot faces, nor, for that matter, identify successful diversity efforts. Moreover, while other brand name companies have advanced transparency measures in place, we feel that The Home Depot has lagged. IBM, Intel, Merck, and Coca-Cola, to name a few, have been disclosing EEO for at least the past 5 years. We feel this is a bottom-line issue affecting competitiveness and market share. We ask The Home Depot to report diversity disclosure to all shareholders. We met with the corporate secretary and others to offer a way forward for 2014. We hope they will take us up on the ideas we gave. Thank you for your time. We ask you to vote in favor of shareholder proposal number 6.
Thank you, Ms. Conley. Your board recommends that you vote against this proposal. We'll now move forward to the next proposal. The next item 7 on your ballot, is consideration of the shareholder proposal regarding a stormwater management policy. I'll ask Lynn Conley, a representative of David Brooks, to please step to the microphone and present the proposal.
Hi again. Good morning. My name is still Lynn Conley.
Yeah.
I'm speaking on behalf of Mr. David Brooks regarding his shareholder proposal listed as item number 7 on today's agenda. Mr. Brooks was unable to attend today's meeting, but he wishes his best to the board and management and his fellow shareholders. This is the second year that Mr. Brooks has made this proposal. Last year, as you may recall, Mr. Brooks asked all of you the simple question, "Why am I here?" This year, he is repeating the same question as to why is it taking The Home Depot so long to realize that without a defined policy, as he is proposing, for keeping all lawn and garden products from exposure to precipitation, that The Home Depot will continue to lose profitability, spend unnecessary money on hazardous waste disposal, and cause continued environmental degradation to 2,248 streams and rivers across the U.S.
The Brooks shareholder proposal, titled "No Rain, No Runoff," simply asks The Home Depot to not store soluble garden products where they are exposed to rain and snow. Garden products contain nutrients, pesticides, herbicides, fungicides, and other chemicals. When these products are stored outside and bags rip and tear, which they do, and get rained on, these products leak out in concentrated form into our streams and rivers as contaminated stormwater. The United States Environmental Protection Agency and state environmental agencies identify contaminated stormwater as a significant environmental concern, especially in the handling of garden products containing pesticides, herbicides, and fungicides. The Brooks shareholder proposal offers a simple preventive measure that will greatly enhance corporate profitability and minimize environmental degradation, since once a bag of fertilizer is broken and it gets rained on, it must be disposed of as hazardous waste.
The Home Depot has already paid fines in other states for failure to comply with more stringent stormwater controls in Connecticut and for improper hazardous waste disposal in the state of California. This proposal will help to prevent future regulatory penalties, which means larger profits for The Home Depot and its shareholders. Management at The Home Depot has refused to disclose how much money The Home Depot is spending each year for the disposal of hazardous waste, Mr. Brooks' belief is that the majority of hazardous waste generated is coming directly from these damaged and saturated bags of lawn and garden products. These costs would be eliminated if the Brooks proposal was adopted.
Implementation of the Brooks proposal will reduce the high cost of hazardous waste handling and disposal, minimize harm to the environment by reducing contaminated runoff, increase corporate profitability, a contaminated bag means no sale and then a high cost to dispose of it, plus possible fines, and improve The Home Depot's environmental performance. In other words, the Brooks shareholder proposal will be a win-win-win for The Home Depot, the environment, and the investors. How could anyone not support it? Incidentally, two years ago, Mr. Brooks made the same proposal at Lowe's Companies, and after some detailed discussions, Lowe's Companies have chosen to voluntarily implement this improved stormwater management policy at all of its 1,745 stores nationwide. This implementation started in January of this year in California and New York, and it is now having a full rollout across the country.
Mr. Brooks believes that Lowe's Companies determined that its implementation of the Brooks proposal will benefit its corporate performance and profitability, he believes that the same conclusion will be true for The Home Depot. Mr. Brooks was recently told by The Home Depot management that some form of action was made to address this issue. It sounds like management agrees with the Brooks proposal. Apparently, the stores may have been told not to place fertilizers where they can get rained on. Here's the problem. Without a defined policy and some checks and balances, implementation will not be guaranteed. A recent random tour of The Home Depot store locations in New Jersey by Mr. Brooks showed that these products continue to be stored outside, exposed to rain. Apparently, someone at the store level did not get the memo.
That sad reality continues to reinforce the sound reasoning in the Brooks proposal, that is that management must thoroughly institutionalize this No Rain, No Runoff policy in order for it to actually begin to work. For example, The Home Depot does not simply recommend that its employees watch their health and safety. No, it has established careful measures that are written and defined, and then it commits supervisory resources to ensure that all its employees adhere to policies that will protect their health and safety. In the same way, in order for the Brooks proposal to work, management must also commit resources so that all employees know what the policy is and how it should be properly implemented.
Mr. Brooks is hopeful that between today and next year, that management will work to create a defined policy which will realistically implement the simple requirements of the Brooks proposal, so that The Home Depot can reduce its hazardous waste generation, increase its profitability, and minimize its pollution footprint to America's streams and rivers. It is for the preceding reasons that Mr. Brooks asks all shareholders to vote yes on proposal number 7. If you would like any additional information, please go to Mr. Brooks website at norainnorunoff.org. Thank you for your time and willingness to consider making this important improvement to the corporate and environmental performance of The Home Depot.
Thank you, Ms. Conley. Your board recommends that you vote against this proposal. We'll now move on to the preliminary voting results. If you've requested a ballot, please mark your vote and sign it where indicated. When you've finished, please raise your hand and one of our volunteers will collect your ballot. Are all ballots collected? Nope, not quite yet. All right. All ballots collected. All right. The ballots have been collected, and the polls are now closed. I'd now like to review the preliminary results of today's voting. 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. Approximately 93% of the votes cast have voted in favor of the compensation of the company's named executive officers.
Approximately 75% of the votes cast have voted in favor of the company's proposal to approve the material terms of officer performance goals under the Management Incentive Plan. Approximately 95% of the votes cast have voted in favor of the company's proposal to approve the Stock Incentive Plan. Approximately 26% of the votes cast have voted in favor of the shareholder proposal regarding employment diversity reports, and approximately 4% of the votes cast have voted in favor of the shareholder proposal regarding a stormwater management policy. 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 2013 has been ratified. A majority of votes cast approved our executive compensation. The company's proposal regarding the Management Incentive Plan and Stock Incentive Plan have been approved.
None of the shareholder proposals has been approved. Please note 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. This concludes our formal business, and I declare the meeting adjourned. We'll now move to an overview of our business, and at the end of our business overview, open it up to any questions that you may have. I start with this reminder that these are forward-looking statements, and if you can read the small type, you'll understand the caution with which you should judge these forward-looking statements. We've shown a version of this chart at our annual meeting for the last several years.
It shows private fixed residential investment, PFRI, which includes new home building, remodel activity, and other housing-related spend as a % of GDP. The positive news this year is that even though PFRI as a % of GDP continues to be near its 60-year low, it is showing signs of a recovery. Prior to 2010, our results correlated fairly well with this metric. We decoupled from PFRI starting in 2010, and recently, GDP, U.S. GDP, has been a better indicator of our growth. As you may remember, U.S. GDP grew at 2.2% in 2012. The recovery of the housing market is, though, obviously important to us, and we think can add to our growth going forward. Moving to our financial results, in fiscal 2012, a 53-week year, sales finished up 6.2%, and we had our third consecutive year of positive comps.
Total company comp sales were up 4.6%, and comps for our U.S. stores were positive 4.9%. We saw growth in ticket and transaction, and our net earnings increased 16.8%, and EPS, earnings per share, increased 21.5% to $3. Your company continues to generate strong cash flow. We generated $7.5 billion in cash in fiscal 2012. We spent $1.3 billion on capital improvements. We returned $1.7 billion to shareholders through dividends and repurchased $4 billion in shares, leaving $2.5 billion in cash. Along with delivering better-than-expected financial results in fiscal 2012, we announced a 34% increase in our quarterly dividend. We are targeting a dividend payout ratio of 50%, and as you can see, our yield is well above the S&P retail average. The market rewarded your company's performance.
In fiscal 2012, Home Depot shares appreciated approximately 50% and outperformed the Dow Jones Industrial Average by approximately 39% and the S&P 500 by approximately 35%. The focus of our business over the past several years and our strategic framework is what we call the three-legged stool. Borrowing from Jim Collins' book, "Good to Great," we start with what we're passionate about, customer service. What we want to be the best in the world at, product authority for home improvement. Finally, what drives our economic engine, disciplined capital allocation, and productivity and efficiency. The element that ties this together is represented on this chart as interconnected retail. We believe that over the next decade, the winners in retail will be those who deliver a best-in-class interconnected retail experience, giving our customers a seamless experience online and in our stores.
For customer service, we've created a clear, concise, and simple operational plan, which we have maintained for the past four years. We talk about the big three, customer service, in-stock, and store environment. We have retrained all of our store associates on customer service and the initiative we launched in 2009 called Customers First. We have simplified our in-stock processes and continue to focus on the basics of store cleanliness and presentation. We're very proud that both external and internal surveys of our customer service continue to improve. Driving product authority through continued development of tools, capabilities, and analytics remains a strategic priority. First, we approach product categories with an understanding that they each fill a different need and role in the portfolio of products we offer. Second, we've been on a long-term path to develop a world-class supply chain to drive productivity and efficiency.
Third, our customers are looking for innovative products that make projects simpler to do and create value. As the customer experience transforms, we must offer customers the ability to shop anywhere, anytime, in any way they want. Our initiatives have shown good growth, and in FY 2012, we saw over 650 million visits to our online properties. We launched Buy Online Ship to Store in 2012 and believe this functionality, along with Buy Online Return in Store and Buy Online Pickup in Store, are the fundamental building blocks of our interconnected retail strategy. We opened 2 new 80,000 sq ft call centers to support our growing online business. Moving to our shareholder return principles, we are committed to returning capital to our shareholders in the form of dividends and share repurchases. Our share repurchase principle is to use excess cash to repurchase shares.
From a return on capital's perspective, our goal is to maintain a high return on capital, benchmarking all uses of excess liquidity against value created for shareholders through repurchases. On the international front, in Canada, The Home Depot is the number 1 home improvement retailer. We positively comped for the year and continue to show improved performance. In Mexico, The Home Depot is the number 1 home improvement retailer. Ricardo Saldivar and his team have produced positive comps for 38 quarters in a row. We also opened our 100th store in Mexico in FY 2012, a significant milestone in the growth of our business there. Now let's turn to our 2013 outlook. We continue to see strength in the core of our store, and for the year, we project sales growth of approximately 2.8%. Please remember that we are comparing a 52-week year in 2013 against a 53-week year in 2012.
We expect our comp sales to be up approximately 4% in 2013, and for the year, we are planning to open 9 stores, with 7 of those store openings in Mexico. We expect diluted earnings per share to increase approximately 17% to $3.52, including $6.5 billion in share repurchases. Our overall strategy has not changed. We will continue to invest in customer service, product authority, and interconnected retail with an overall focus on a disciplined capital allocation strategy, creating value for our shareholders. In closing, I just want to briefly discuss the culture of our company. The power of The Home Depot starts with the power of a values-based business. We believe that if we take care of our associates and take care of our customers, the rest will take care of itself.
Since this coming weekend is Memorial Day weekend, I thought I'd like to highlight in closing some of our activities in 2012 that were directed to the benefit of our country's veterans. We repaired and rehabbed over 4,000 homes for veterans. We provided cash grants of approximately $25 million to hundreds of nonprofits, specifically serving veterans. In 2011, we pledged $30 million to help our country's veterans over three years. We actually hit that target in 2012 and pledged another $50 million on behalf of our veterans. It is our way of saying thank you and giving back to our community. Thank you very much. If you have any questions, you can proceed to the microphones. Please identify yourself with your question. Thank you. Yes, sir.
Good morning. I'm David Ridenour, representing the National Center for Public Policy Research, which is a conservative free market think tank and a company shareholder. Home Depot is a member of the Retail Industry Leaders Association, one of the country's largest Washington, D.C.-based trade associations. RILA has launched a massive market and labor distorting campaign dubbed Sustainability. Under this so-called Sustainability campaign, it is currently pressuring its members to make capital expenditures that often have limited prospects for reasonable return. RILA also advocates that its members lobby for changes in local building codes and infrastructure that will increase the cost of buildings and result in significant restrictions on property use. Finally, RILA is advocating top-down Sustainability standards that go beyond its own members, affecting the entire supply chain, despite the likelihood that these standards will increase suppliers' costs and in turn, the cost of the goods that they sell.
As a shareholder, our concern is that this push for so-called sustainability will harm Home Depot shareholders, suppliers, and customers as they will bear the associated costs. My organization, the National Center for Public Policy Research, conducted a national poll on these issues in January. Results indicated that 52% of consumers, given a choice, aren't willing to spend a single penny more for their products for a sustainability label, and 56% believe it is unfair to ask the public to pay more so retailers can operate under these standards. We are also concerned that this sustainability effort will add an additional layer of regulation on the retail industry. You know as well as anybody else that it's already a heavily regulated industry by federal, state, and local governments. The economy has been stagnant for nearly five years, and in the last quarter, it actually shrank again.
Measures that expand growth and sales are good for Home Depot and the nation. Those that don't are not. Where does management stand on the question of its trade association imposing sustainability standards on its members, including Home Depot? Does management support the idea of RILA imposing such standards, or is it opposing mandatory sustainability standards and standing up for the right of each retailer to make its own decisions regarding the best way to lawfully and ethically satisfy the needs of its customers and shareholders?
Thank you very much. Thank you for the comment and the concern. What I would say to all of our shareholders, if you look at the last chart I showed in concluding my business overview, we start with the principle that it is very important for us to be a values-based business. One of our values is making sure that we operate as an appropriate citizen in the communities where we're located. What we have found as a business is that very often, sustainability is one of those issues where both the shareholders gain through our improved performance, as well as our communities and our society gains as we provide a better way of doing business. We are committed to that. We'll continue to be committed to that.
I don't think, in terms of the division that you're suggesting between shareholder interest and sustainability, that is one we're very conscious of avoiding. We're very conscious of knitting those together. Thank you for your concerns.
If I can ask a very quick follow-up.
Please.
The specific question was with regard to operating within an association such as this. Obviously, the company has an interest in treading lightly on the environment. Nobody wants to do any harm to the environment. I am just saying that when you are dealing with an association, and they are taking the lead on this, you are necessarily giving over power to them. My view, and probably a lot of shareholders would be as well, is that we would better trust your judgment than the CEO of Walmart or Best Buy.
Well, I'm sure their judgments are good as well. What I would say is we are obviously always very careful with what we do with our associations in Washington, including the Retail Industry Leaders Association, RILA, and make sure that when we are participating in their efforts, we are participating appropriately for our shareholders.
Thank you very much.
Yeah. Thank you. Any other
Good morning, shareholders, and good morning, Frank. Thank you for the veterans that you are supporting, which I am one also.
While we know each other because you've been here in prior meetings, you might want to identify yourself.
Yes, I was going to do that right now.
Okay.
I'm Gary Patton. I'm a 21-year employee with Home Depot out of Greenville, South Carolina. I appreciate the last question that was asked. I wanted to ask you something specific also. I'm having a hard time figuring it out completely. How is the implementation of the Affordable Care Act, which should be fully implemented in January, I believe, of next year-
Yes
affecting us employees here with the Home Depot and our deductions and our medical coverage and all of that? Can you foresee or share with me in layman's terms how that might be affecting us?
Thank you, Gary, and I will. This is a very broad answer, but what I would say is, first off, it is a very complex law, and we've been spending a lot of time as a management team and also with our Board going through some of the implications of it. There's been a lot written about how some companies might decide not to provide health insurance for their associates and instead choose to pay a penalty. Your company will not do that. We think it is critical as part of our values that we continue to provide our associates health care as we can under the act, and we will do that.
Could I ask one follow-up, please?
Yeah.
Coincidentally, this morning on Fox, they were talking about that and said there was discussion about a lot of companies just giving the bare minimum to avoid the penalty of not giving anything, like you just mentioned. Could we be assured of quality service? One thing I've always been able to brag about The Home Depot, that we have good coverage. I've been told we have some of the best eye insurance, some of the best medical insurance in the industry. I'm proud of that. I'm glad to say that I participate in that with The Home Depot. Can we still preserve the same high level of coverage?
Gary, yes. I would say, and I don't know enough to be able to respond specifically to eye coverage or particular elements of the coverage. As I commented before, and as you know, our view is if we take care of our associates and take care of our customers, everything takes care of itself, everything else.
Okay.
We will continue to take care of our associates. There'll be changes. The law will create some changes. They'll create some changes in the way coverage works, but we will be guided by wanting to provide to our associates strong coverage.
Thank you very much.
Thanks, Gary. Yes, ma'am.
You ready for me?
My name is Tene James. 9 years ago, came to The Home Depot, worked my way up through The Home Depot. My statement here today is to speak to diversity and employment practices. Unfortunately, 9 months ago, I was terminated by The Home Depot unfairly, as it was. My concern here today is about people with disabilities. I am a dialysis patient. Was not always treated fairly in the store that I came out of. As a shareholder, it was important for me to ask the question: what practices are you going to put in place to help people out in the stores that are not being fairly treated? I would have dialysis appointments, and my store manager wouldn't schedule me coverage to go do those treatments. Since my termination, I have been taken off the transplant list.
I'm still going, my issue here is your practice says that you take care of your associates, but that is not always the case. My concern is that even though there are processes in place, they do not get acknowledged and presented well in the stores. I would like to know if there's going to be some processes going forward to help people like myself.
Well, first off, I obviously don't know the specifics of your situation, what I would suggest is we have our HR team here this morning, they'll follow up with you to make sure that you feel like you're being fairly treated. Thank you.
Hi.
Yes, sir.
I'm Wellington Lee. I want to know from you and also your management team, what have you learned from your entry into and your exit or reduced exposure in China?
Thank you very much, sir. What he's referencing is over the past year, in 2012, we had a large store format presence in China, and we closed down those large stores. I would say the dominant lesson learned is always the customer decides. I put that on myself. We weren't as focused initially on the development of our business model in China on the Chinese consumer. We weren't as focused and knowledgeable as we should have been.
Okay.
Thank you.
Thank you.
Good morning.
Good morning.
About 9 or 10 years ago, we were introduced to the idea that The Home Depot would start selling major appliances in its stores. I'm just wondering, in the next five years, are we going to see any new items in The Home Depot? What are you guys thinking about right now?
Thank you, sir. Thank you for the question. I don't know if you want to identify yourself. Yeah.
I'm sorry if I didn't.
Yeah.
My name's Ken Kaplan. I'm from Seminole, Florida.
Thank you very much. Thanks for being here. It is a constant source of work with our merchants and store operations team to be identifying new products and new product categories to develop in our store and now online. I won't go through the whole list with you, but I could tell you that a great deal of the growth your company has had over the past several years has been expanding into new categories. A good example is a few years ago, if you walked into a The Home Depot store, you might be hard-pressed to know that we sold cleaning products. Now, when you go into a The Home Depot store, hopefully you'll see that immediately, that we have a major presence in cleaning products and a growing presence in cleaning products. That's just one example, but thank you very much for the question, sir.
Yes, I'm Lee Beers. I've been in this county since 1957, and I've watched The Home Depot grow up, and it's been pretty exciting to watch it. I have a question about Mr. Brooks' request. I don't understand why y'all keep pushing back against him. It only makes good business sense. Why do you always, if a shareholder makes a proposal, you recommend a vote against it? They can't all be bad.
Thank you very much. They aren't all bad, what you'd be interested to know is, you've seen over the years the number of proposals go down, and that's because very frequently the shareholders come to us in advance and say, "This is what we're thinking of," and we say, "That's a good idea." We do it, and there's no need to have a proposal. It tends to be that the shareholder proposals select to those where there's some disagreement with management. We listen to our shareholders, and our shareholders are a great source of new ideas.
Specifically, with Mr. Brooks' suggestion, the issue for us operationally is what Mr. Brooks would do is take a particular element of our environmental management plan for the store and provide a particular focus on that element, and we think it is better looking at that specific activity that he's concerned about, but put it in the context of a larger environmental management program. It's really the mode for addressing the problem that is one of the differences with Mr. Brooks. Thank you. Are there any other questions or comments? Yes, sir. Okay, well, no, I think it's best to go on the microphone. Thank you. Yes, ma'am, we'll start with you. Microphone.
Hi, my name is Shani Granay, one of your shareholders, and I used to work with The Home Depot about 20 years ago. Anyway, not concerned about the employment. I'm just concerned about the service and the product. One time, we bought this water heater, okay? It cost us about $140. We were not told about someone will install and it come out. After that, it come out a bill about over $600. I said, "My God," you see. "What is the cost of my water heater? It cost me $600." They said that because of the labor. The labor should not cost that much. It's not that hard to install our new water heater. That's another thing.
I wish one of your representative tell us that this how much it's going to cost for the labor, and this how much it cost for the item, so we'll be prepared how much we can pay. Also, one time we bought also garden stuff like chainsaw or something. On the mail, we were given a 10% discount, but it did not specify what item that we can get the 10%. I expect that because it did not specify what item, so I assumed that when we bought this item, we'll be given a 10%. Not only that, when we order the item, it's not available at the time, they said it will be a special order, so we did that. We got the bill right away in a matter of two weeks, and then I refused to pay it.
After two weeks later, I got another bill with the finance charge interest on that. I said, "You know what? I'm going to the main office and complain about it." I told them, "We haven't gotten the item yet. Why am I billed for the item that we have not received?" All I want you guys is to improve your, what you call it, billing system.
Thank you very much for your comment, and we'll have someone from our team here address with you after the meeting and take care of your concerns. Thank you.
Thank you.
Yeah. Yes, sir.
Good morning. A question. What is the stock selling at now? What's the latest quote? Do you know?
I don't know. As we were exiting yesterday, I think the stock was slightly over $79.
Okay. I'd like to comment and compliment you. Five years ago, the low was 17 and change. It's now 76 and change. At what point do you anticipate, if it keeps going, that you think you might split the stock?
Well, thank you very much. I don't know if you want to identify yourself.
Well, I work for the CIA.
Oh.
I can't give my name.
All right. The CIA always asks those tough questions. Thank you very much for the question. Your company, we do not have an intent to split our stock. Thank you very much for the question. Are there any other questions? Yes, sir.
I'm Jack Edwards, a longtime Home Depot stockholder since the 1980s. I was in a Home Depot store yesterday, the Doraville store, which is one of our flagship stores. I was so impressed by their service there. Walking inside the door, I was greeted immediately by a district manager. I'm sorry, I forgot his name. My two hours in the store, I had several employees come up to me, without my asking, and volunteer to help me, see if I had any questions. It was most impressive. This is just the opposite of the way it was some years ago. Services in that store has improved tremendously.
A question I have is, several years ago when you became CEO, the HD Supply business was disposed of within a very short time, within months, except for a certain, I think, minority interest we still hold in that business. At the time, I was wondering if that was a harsh and too quick decision. In hindsight, what's your comments on, was that a good move or not?
First off, thank you very much for your comments about the service in the stores. That's hugely important to us. Obviously, it is really what drives everything in our company. Both at the time and looking back on HD Supply, my comment would be, it is very difficult for any organization to be excellent at one thing. It is extraordinarily difficult for an organization to be good in two lines of businesses. From my perspective, it was better for The Home Depot, and the board's perspective, better for The Home Depot to be focused on being excellent in our retail operation. That was the case in 2007. I think that is still the case in 2013.
Thank you.
Thank you.
Good morning. My name is Gloria Krasnewsky, I'm a shareholder with The Home Depot. My question this morning is the company doing anything to buy more American-made products and let the customer decide if they want to buy American-made, which might be more costly than the imported items?
Yes. Thank you very much. We frequently do that. You'll see that in our stores. We will frequently call out that products are made in America, and give our customers the choice. Thank you. Gary, yes, sir.
May I ask one more question?
Absolutely.
Unrelated to my previous remarks.
Yes.
We get many more compliments than we do negative, many more positive things since you became a board than we do the negative ones. Thank you. You're obviously doing a very good job, and the employees thank you for that, too.
You're doing the job, Gary. I'm just up at the mic.
Thank you.
Yeah.
You're setting the tone, like leadership. We expect it to be set for us down here at the bottom. Anyway, we still have a hard time with getting enough employees on the floor at different times, and we have a lot more compliments during the Power Hour when we have the greeters and people are focused more on the customer, one-on-one, face-to-face attention. At other times, it would just be nice to see like the old days when we had more employees on the floor. Can you explain what we might be doing, if anything, to keep improving that?
Yes. It's a great comment. For those of you who aren't familiar with how our business works, the interesting thing about our business model is we are very much generated by sales. The more sales and transactions in a store, the more hours the store generates. One of the positive things about the recovery for us as the business returns is we can return more hours to the floor of the store, and then through the efforts of Marvin Ellison and his team, we hopefully simplify our operational processes so more of those hours can also be focused on the customer. Thanks, Gary. More sales generates more hours, and that's the positive aspect of our business.
Good morning, Mr. Chairman. My name is Tim Lewis. I live in the Orlando area. Original investor in The Home Depot.
Thank you.
I want to thank you for that.
Thank you.
I thought it might be interesting to you that one of the major television stations in metropolitan Orlando, I believe it was WFTV, did a quote, undercover survey of five different retail outlets in our area. They were The Home Depot, Walmart, Target, Publix, and Lowe's. They're unannounced, five different stores for each one of them, and they recorded the amount of time that it took for an associate to approach the individual in the store to ask if they needed help. No matter what metric they used, whether you threw out the best time and then the last time and took the meantime, Home Depot won every category.
Yes.
Congratulations.
Thank you. Thank you for raising that. I actually saw that video. We're very proud. We're very proud of our performance of our stores.
Good morning. My name is Dr. Albert Ballow. I'm a dentist in the area, but I've always admired the company. My father's been employed with Home Depot, and I got stock early, and someone had shared that with me in college that I needed to start investing. This is a very great opportunity just to be here. My statement is more of a comment. I'm just excited to be a part of such a phenomenal movement. As an entrepreneur, I don't know, I would love to hook up with a member of the management team that might be able to just give me some golden nuggets, just as a private practice dentist.
I'm just excited to be here, and I want to tribute you guys and give you [inaudible] for doing such a phenomenal job with a great company, and I'm so glad that someone told me early in life to start investing, and you guys were that company.
Thank you very much for that comment. We do have our management team here, and I'm sure they'd be thrilled to talk with you. I'm very excited that we have one of our youngest shareholders, if he's still here, who somebody was describing. Oh, he's at the mic. That's such a perfect, you're following that so perfectly. Thank you very much.
All right.
Thank you.
Thank you, sir.
Yep.
My name is Everett. I was just wondering if The Home Depot is going to get new models of the things that they sell.
Everett, first off, thank you for investing your money in The Home Depot, and I hope you'll be up at the microphone a couple of decades from now explaining what a great decision that was. I will assure you that we spend a great deal of time, all the time, thinking about innovative new products and new models to be putting in the store. Thank you very much. Yes, sir.
Good morning. My name is Gary Samaha. My wife and I have been The Home Depot stockholders for a number of years. Not quite as many years as we should have been, but we are glad to be stockholders. I have two questions. One is, what is the status of efforts by labor unions to organize employees of The Home Depot around the country and elsewhere? What efforts is management making to preclude the need for employees to join unions?
Thank you very much for the comment, Gary. We spend a great deal of time, as you could probably tell from some of the other questions here, focused on taking care of our associates. We are very proud. I'll give you one small interesting fact. We are very proud of the fact we have a program called Success Sharing, which is a bonus program for our hourly associates. In 2012, 100% of our stores in the U.S. participated in Success Sharing, and we paid out almost $200 million in bonuses to our hourly associates through Success Sharing. That compares to an amount that would have been $25 million in 2006.
We are very focused in making sure that our associates know how much they are appreciated, how important they are to the success of this company, and that there would never be a need to contact the union because, in fact, the union's not going to do anything for them. Thank you.
In terms of the status of efforts by labor organizations to unionize Home Depot employees, what's the latest with that?
I would say, on a constant basis, there's small activity in different areas, but there isn't I think we are recognized by our associates, recognized by those outside the company as a company that does a great job taking care of its associates, so it isn't a major issue with us.
Thank you.
Thank you.
Good morning, Mr. Blake. My name is Kevin Davis.
Oh, thank you.
I was just wondering if there were any efforts being conducted by The Home Depot currently to address the tragedy that happened in Moore, Oklahoma, recently. If there were any concerted efforts to ensure. I'm sure there are. I just wonder if there were anything.
No, yes, sir. Thank you for raising that. We're doing a number of things as a company and our associates. We have a store in Moore, Oklahoma. The store is open 24 hours a day. If you saw news segments, I would say we are the dominant place helping first responders in Moore, Oklahoma. Our store associates, as always, respond in moments of crisis and are doing an amazing job there. For the company, our foundation has donated $1 million to help in the disaster relief. This is something that unfortunately we are very used to doing, is responding to disasters. We take that very seriously as part of the culture of our business to be there when people are most in need. Thank you.
Thank you.
Good morning, sir.
Yes, sir.
My name is Robert Chandler, and I've been a stockholder for Home Depot since 1984. I saw the young man come back here, and I thought I ought to relate a little story. I have seven grandchildren. My oldest grandchild, at Christmastime and birthday, he would be sitting in the floor at one or two years old and had so many toys he didn't know what they were. In a week or two, most of them were broken or missing. I started giving each of my grandchildren $100 in Home Depot stock on birthdays and Christmas. Later, I raised that, but not a lot. I raised it to $200. The oldest grandchild, when he got ready to buy his first house, he paid his down payment with his Home Depot stock.
That's great. What a great story. What a great story.
The next granddaughter, when she graduated from college, she bought her a new car. The others continue to call me, "Granddad, how much do I have?
I think Everett's thinking about his boat as you talk.
I have another question. I have a question that might be too much information for most of you, but my hearing aid battery went dead, and I couldn't hear what you said. I've been tracking The Home Depot stock for many years, and I was just sure that you guys were going to split since you were buying back up the stock, and the dividend raised, and the stock value was trading over 81 yesterday, and that's where they used to split frequently. Did you say you were not going to split?
Your hearing was accurate. No, we are not going to split. I would just comment that obviously, mathematically, no value is added in the split. As we've seen, companies like Apple and others have shown that that's not necessary for creation of shareholder value.
Well, it wouldn't increase the value unless the stock went up.
The stock hopefully will go up either way. Yeah.
I have another question.
Yes, sir.
There's about three different stores. Honestly, I don't remember which one it was that I was in. They had taken down the big signs in the aisle as you enter the store.
Yeah
that said tools, hardware
Yeah
so and so. They put them on the aisle itself and smaller, like your Home Depot sign up there. I can't figure out why that was, because you could walk in and look all the way down each way and tell what aisle you want to go to. You can't do that now. I mentioned to some of the employees, they said, "We wish they were put back up. It saves our customers from having to chase us down and find out where our item is located.
Well, thank you for the feedback. Actually, we experiment a great deal on our signage and different looks of our stores, to try to constantly improve. I suspect that that was one of those experiments in that store.
Well, like I said, you could stand in the front aisle and see every one of those signs.
Right.
When they put it on the end of the aisle, you had to walk closer to the aisle to see it because it was being blocked.
Thank you. It's great to get your feedback. Thank you.
Thank you.
Thank you very much. Thank you. Yes, sir.
I am Frank Bradford. I'm a shareholder as well, probably not to the extent of a lot of people here. My story would be that in 1992, my mother gave me $1,000. I had a 13-year-old daughter. I put the $1,000 into Home Depot, 20 shares. Today, it's 117, worth about probably $8,000, $9,000. I compliment you also. I refer to myself as a poor man's Warren Buffett. Warren Buffett, very light. Home Depot has served me well, being a buy and holder. I remember when it was the 17.
Well, thank you for staying with us, Mr. Bradford. Appreciate it.
I'll be around. My daughter might eventually get some of what I have, but I ain't giving it up yet.
Thank you very much.
Thank you.
Thank you for your comments. Any other questions? All right. Well, thank you all very much. Thank you for taking your time