Good morning, everyone. My name is Michael Mullen. I'm the Head of Corporate Affairs for The Kraft Heinz Company. Also joining me is Rashida Lalande, our Global General Counsel, Head of CSR, Government Affairs and our Corporate Secretary. I'm Miguel Patricio, our Chief Executive Officer.
As a reminder, participation in this meeting is limited to our stockholders. After the formal business portion of the meeting, we will open the line for a fifteen minute question and answer period. We do not anticipate any technical difficulties today. However, in the event of a technicality malfunction or disruption that interferes with our ability to continue the webcast, the meeting will be adjourned, recessed or expedited as needed. The polls will open immediately and will close two minutes thereafter.
If the meeting is so adjourned or recessed, all votes received prior to the time the polls are closed will be counted. The meeting will not be reconvened and the results will be announced publicly as required. On behalf of our Board of Directors and senior management team, thank you for joining the Kraft Heinz twenty twenty Annual Meeting of Stockholders. We hope you and your families are all safe and healthy. This is our first ever virtual annual meeting due to the ongoing public health concerns related to the COVID-nineteen outbreak.
We are living through unprecedented times, and our thoughts are with those impacted in any way by this pandemic. At this time, I would like to call the meeting to order. Please note that during our remarks today, we will make forward looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties. Let me begin by welcoming our Board members who are present today, including all of our Board committee chairs.
Please be aware that they will not be answering questions during the Q and A portion of today's meeting. I would also like to welcome John Saxton, engagement partner from PricewaterhouseCoopers, who is attending today. With that, it is my pleasure to turn things over to Miguel Patrizio. Miguel?
Well, good morning, everyone. As Michael just mentioned, we are truly living in uncertain and challenging times due to the global COVID nineteen pandemic. Right now, our mission as a company has never been clearer. We have a huge responsibility to keep feeding the world. We continue to be inspired by our employees on the front lines, in our manufacturing plants, distribution centers, and on our in store sales teams.
They are working incredibly hard each day to meet the increased demand for our products and to make sure consumers have the food and nourishment they need. I could not be prouder of the work our teams are doing at this challenging moment. And I'm both humbled and honored to serve as their CEO. I consider it a real privilege to shepherd the growth of our iconic global and local brands as we lead Kraft Heinz into this new chapter. 2020 will be an important year for progress in our multi year turnaround.
We set three priorities for the year. One, to establish a strong base of sales and earnings. Two, to rebuild an underlying business momentum. And three, to continue to reduce debt while maintaining our current dividend. All three of these priorities are on track, even as we adapt to new challenges and these dynamic moment.
Our growth has accelerated and our execution has been strong in the wake of very strong consumer demand for our products and trusted brands. Our turnaround work is well underway, and we are regaining momentum as we transform our capabilities and make needed investments in the business. And we are in a strong position to continue reducing our debt as we look for opportunities to further improve our liquidity, all while maintaining our current dividend. As you know, we are finalizing our enterprise strategy, which will chart our new direction and define our strategic agenda going forward. We are establishing a new way forward for Kraft Heinz, one that will create long term sustainable value for our stockholders.
Last month, we announced the postponement of our in person Investor Day planned for early May. Given the ongoing COVID-nineteen challenge, we'll reschedule Investor Day for an appropriate time and place, ideally in September, once travel and meeting restrictions are lifted. We look forward to sharing our long term vision and priorities for the business in person with analysts, investors, and media, and will unveil more detail the new strategy plan, the paradigm shift we are employing to achieve it, and the new operating model we are putting into place. At that time, we will walk through the extensive review we have done by category, by country, and in market, and how we can adapt to and drive future consumer trends, leveraging our unique strengths and advantages. We are committed to driving profitable growth as we anticipate and build for the future.
Moving forward with speed, agility, creativity, and with our eyes always on the consumer who is at the center of everything we do. One thing one thing is crystal clear that we win when we strongly and consistently invest in our brands. They are at the long term competitive advantage for us within our industry, especially during times of uncertainty. I'm encouraged to see solid consumption trends continue in our zones and key markets around the world. We have built a world class quality organization and are operating at peak capacity.
We are in a highly dynamic environment where the only constant seems to be change. However, I still believe that global companies and brands have the power to change the world. Yes, we are a global business, but we are also global citizens who believe in helping to create a healthier and more sustainable environment for all of us. As one of the world's largest food companies and beverage companies, we take seriously our role of feeding consumers and their families, including during the COVID nineteen outbreak. We have committed to donating $12,000,000 globally to ensure people across the globe have the food they need to feed themselves and their families at this challenging time.
In The United States, we have donated $6,600,000 in cash and our own products to Feeding America, the largest hunger relief organization in The US. Around the world, in 17 countries where we do business, we have responded to the pandemic through financial or in kind donations. Many of our plants are country directly to the communities where our employees live and work. We also are supporting food banks in many countries from Indonesia and Italy to Canada, Brazil and beyond. You are aware of our Kraft Heinz micronutrient campaign, our partnership with Rise Against Hunger, and the life saving meals our employees pack for people in need in developing countries.
We also are committed to responsible practices that reach every aspect of our business, identifying several areas where we can be strong corporate citizens. We set out and measure our achievements against our environmental, social, governance criteria. For example, at our manufacturing facilities around the world, we are working to reduce greenhouse gas emissions, landfill waste, energy use, and water use. We belong to and support the roundtable on sustainable palm oil and have partnered with the Rainforest Alliance to support us in implementing our policy for of sourcing and purchasing a 100% sustainable and traceable palm oil. We recognize deforestation is an important environmental issue with possible impacts on our supply chain.
That is why we encourage sustainable farming practices among all our global suppliers. As environmental stewards, we are also working to make our packaging sustainable by making it recyclable, renewable, and compostable. I have always believed that changes bring with with it new opportunities for the transformation. Even in this rapidly changing environment, I'm very optimistic about our ability to drive profitable organic sales growth for the long term. Before I close my remarks, I want to end where I began.
Being one of the world's leading food and beverage companies is a privilege. And with that privilege comes huge responsibility, especially at an unprecedented moment like this. At Kraft Heinz, we have embraced the sense of duty, this purpose to keep feeding the world. We as a company are rising to the challenge as we meet this moment. And it's why we are here.
With that, I would like to call the meeting to order and turn things over to Rashida, who will act as secretary of the meeting. Thank you.
Thank you, Miguel. I am pleased to report that by the inspector of election that a majority of the votes entitled to be cast at this meeting are represented by proxy or here today at the meeting. And therefore we have the necessary quorum under state laws and our bylaws. Mr. Peter Fritz will act as the inspector of election at this virtual meeting.
The polls will be open after all the matters have been presented and closed when all the votes have been cast. We have five agenda items this morning. The first is the election of directors. The second is to hold an advisory vote to approve executive compensation. The third is to approve the Kraft Heinz Company 2020 Omnibus Incentive Plan.
The fourth is to ratify the selection of PricewaterhouseCoopers as our independent auditors for 2020. The fifth is to vote on stockholder proposal No. Five, if properly presented, and to transact any other business properly presented at the meeting. Because we did not receive notice in accordance with our bylaws of any additional matters to be considered, no other proposals or nominations may be introduced at this meeting. At the end of the meeting, we will open the line to general questions.
So let's begin with the first agenda item, which is the election of the 11 directors whose names and biographies appear in our proxy statement, to hold office until the twenty twenty one Annual Stockholder Meeting or until his or her successor has been duly elected and qualified. Our Board recommends a vote for each of the nominees for director. As no other persons have been nominated in accordance with the company's bylaws, the nominations are now closed. Let me now turn to the second agenda item, the advisory vote to approve the compensation of the named executive officers identified in our proxy statement. Our board recommends a vote for the advisory resolution to approve executive compensation.
The third agenda item is the approval of the Kraft Heinz Company 2020 Omnibus Incentive Plan. Our board recommends a vote for the approval of the Kraft Heinz Company 2020 Incentive Plan. The fourth agenda item is the ratification of the employment of PricewaterhouseCoopers as our independent auditors for 2020. Our Board recommends a vote for the ratification of the appointment of PricewaterhouseCoopers as Kraft Heinz Independent Auditor for 2020. We'll now move on to the stockholder proposal.
This proposal relates to the implementation of a simple majority vote requirement. The stockholder's proponents representative will present the proposal. Mr. Chevevin, please introduce yourself and the proposal and limit your remarks on the proposal to two minutes.
Operator, can we make Mr. Shibadan's line open, please? Operator, can you hear us? Operator, hi, it's Michael. Can you hear us?
We need to make Mr. Shabadan's line open, please.
I'm not seeing his line connected, sir.
Mister Shredden didn't connect for the call.
If he can press 0. No, sir. His line is not connected.
K. Why don't we Rashida, why don't we continue, and we'll see if we can reach mister Chabad and come back to this, please?
Okay. Yeah. I think it makes sense, Michael, just to make sure that with respect to this proposal, we provide the the company's position on the matter.
Yeah. Why don't you go ahead and read the company's position, and we'll see if we can get him on the line.
Perfect.
Thank you.
The company laid out a statement and we and why we believe stockholders should vote against this proposal. Let me summarize a few of the key reasons. Almost all matters that are voted upon by the company's stockholders are already determined by a majority vote of stockholders, including the election of directors and uncontested elections. The company's certificate of provides that a super majority vote of stockholders is required only for one fundamental stockholder action, to remove directors from the board without cause. If the removal is recommended by at least sixty six and two thirds percentage of the board, then the super majority requirement falls away and only the affirmative vote of the holders of a majority of the outstanding capital stock of the company entitled to vote in election of directors is needed to remove the directors in question.
This super majority voting requirement is narrowly and appropriately tailored to promote stability and protect stockholders by restricting actions by other stockholders unless those actions enjoy broad support among our stockholders and the then current Board that has been elected by our stockholders. Given that our ownership structure includes two significant stockholders, we believe that the sole supermajority provision in our certificate of incorporation is protective of stockholders and appropriate given the significant ownership stakes of the G. T. Hathaway in our company. As a reminder, we will have a general question and answer session in a few minutes.
If any stockholder would like to make a comment regarding the proposal, please submit your comment through the online portal. We will now open the polls for voting. If you have already voted, you do not need to take any further action. If or if you have already voted but would like to change your vote, please use the voting icon on your screen to submit your vote online. Now that everyone has had the opportunity to vote, I will ask our inspector of election to close the polls.
The polls are now closed. I'd like to report the preliminary results of the voting. With respect to the nominees for director, I'd like to report that all director nominees have been duly elected by the affirmative vote of at least 92% of the votes cast. The advisory vote on executive compensation has been approved on an advisory basis by the affirmative vote of approximately 78% of the votes cast. The approval of the Kraft Heinz Company 2020 Omnibus Incentive Plan has been approved by the affirmative vote of approximately 97% of the votes cast.
The appointment of PwC as Kraft Heinz Independent Auditor for 2020 has been ratified by the affirmative vote of approximately 98% of the votes cast. The stockholder proposal for implementation of a simple majority vote requirement did not receive enough votes to pass. Again, I remind you these are preliminary voting results. Final results will be available after the votes have been certified by the inspector of election. The final results will be disclosed on a Form eight ks that will be filed with the U.
Securities and Exchange Commission. All the proposals eligible for consideration by the stockholders at this annual meeting have been presented and the formal business portion of the meeting is now adjourned.
Thanks, Rashida. With that, we'd like to open up the line for questions. So if you have a question or comment, please type your question into the Ask a Question box in the online portal and click Submit. We will attempt to answer as many questions as we can in the next ten to fifteen minutes. So first question is, does the company plan to keep the dividend at its current level?
Miguel, if you could take that question, please.
Well, we just declared our first quarter dividend per share in dollar terms, and we do not anticipate a change in our dividend policy at the time. The demand of our brands, our cash flow, and our balance sheet remains very strong. And as we have done in the past, if we see material change in the business or portfolio, we'll reassess.
Thanks, Miguel. Next question question from a shareholder is, in the future, will we plan on having these mutual these meetings virtually or will we make them available virtually for shareholders? I can take that. I mean, obviously, something we will consider going forward depending on what is going on in the world, but certainly a consideration that we will be considering in the months ahead with the management team and the board of directors. We will get back to you on that question.
Next question is, we keep seeing the horror stories about employees in food plants who are falling sick. What is Kraft Heinz doing to protect factory employees during the COVID-nineteen crisis? Yes, I'll take this. Is Michael. Obviously, the employee health and safety is always number one priority for all of us.
We have put many proactive measures in place to protect our employees and to reduce the risk of COVID-nineteen exposure. Just want to outline a few of these things that we've done. We ask anyone, importantly any employee who feels sick, to stay at home. We are doing daily temperature checks for every employee before they enter any of our facilities, and we are also doing health questionnaires before they enter the facilities. We provide all of our factory employees with face masks.
In addition to the strict cleaning protocols that we already had in place, we are now disinfecting and sanitizing employee touch points every four hours in every factory around the world. Finally, all employees must follow social distancing guidelines of six feet inside our plant manufacturing facilities and in other areas. These are just some of the measures that we are taking to protect employees. Again, the health and safety of our employees will always be our number one priority. Next question is, is Kraft Heinz impacted by the recent closures of meat processing plants due to COVID-nineteen, and what are we doing to address this?
Miguel, if you could take that, please.
Sure, Michael. Well, the reality is that that we may be impacted, likely for the next month or two. This is true for our industry peers as well. The big processors serve all segments of the food industry. The nature of meat processing means that social distancing is is a challenge.
And and as a result, meat processors have been dealing with intermittent factory closures as well as high absentees causing much lower output. As as you know, The US president, invoked the the defense production act, which declares meat processing plants critical infrastructure and mandates the factories stay open. And then while the factories will be open, the output is is reduced, and and The US fresh meat supply is currently limited, especially pork, but but beef as well. Our US procurement team has responded with with urgency and and creativity to allow us to keep operating. And they continue to push to find meat for our plants so we can continue feeding America.
Thanks, Miguel. Next question is, you mentioned in your presentation the enterprise strategy. The question is when will the strategy be launched globally?
Miguel, do want take that? Yeah. I think that's for me. We have been working for for months to develop the the new strategy and transforming capabilities and making needed investments in the business. We we had been looking forward to sharing our new vision and long term growth framework with with analysts, with investors, with media this month.
It was originally for May. And and the idea was going live and in person. But but given the COVID nineteen pandemic and and ongoing public health concerns, that's absolutely not possible at this moment. So we are postponing our Investor Day until the second half of the year, ideally in September, once travel and meeting restrictions are are lifted. Given the world's current reality, we believe it's it's better for the shareholders and customers that we focus solely on getting our products from our plants to stores and well, to people's tables.
Thanks, Miguel. Next question. The company had a really strong first quarter financial results. Why hasn't the stock price gone up more? Miguel?
Well, our first quarter results reflect how strongly our employees and and our company overall has has responded to global COVID nineteen challenge. The results also reflect that this transformation work we launched last year along with our team's agility and creativity and and and with strong collaboration we've had with our retail customers. Our organic net sales was up 6.2% for Q1, which means approximately 6% to 7% growth as a result of increased consumer demand related to to pandemic. We'll we'll continue to execute with excellence across the company and delivering for our customers and and our consumers. And and we believe that if we do that, the stock price will will will take care of it will take care of of of of itself.
Thanks, Miguel. CSR question. I read about the 12,000,000 global donation that you made regarding coronavirus. What else is the company doing to help regular people during this time? Maybe ask Rashida if she could take this one.
Sure. Thank you, Michael. You know, we made the $12,000,000 in cash and in kind global donation, and we continue to examine the needs of the communities where we do business. And we're continuing to give where we think we can have the greatest impact. Many of our plants, for example, are contributing directly to the communities where our people live and work.
A few examples, you know, our plant in Garland, Texas donated more than 40,000 Lunchable meals and Capri Sun beverages to local school children. Our factory in Spain donated product to the local communities in Alfaro. We're supporting food banks in many countries, including in Brazil where we donated Heinz and Caro products to the country's food banks. In Italy, we donated Plasma brand products of baby food and as well as cash to the local community. In The Netherlands, Hanag brand hosted large the largest ever virtual dinner party supplying one of the nation's food banks with a full in The US, Oscar Mayer created a program called FrontYardCookout, which is a campaign that's donating 1,000,000 meals to Feeding America and will donate up to 1,000,000 more when consumers share Front Yards Cookout photos on Twitter through May.
In Canada, we just launched the Craft Times Project Pantry, which will donate another 1,000,000 meals to Food Banks Canada and $100,000 worth of PPE to help protect their frontline staff and volunteers. We believe that we're all in this together. These are just a few examples of what we're doing to support consumers, our customers and communities in need.
Thanks. So we got time for one more question. Final question is, does the company believe that its most recent moves to build liquidity will be enough to weather any additional unforeseen disruption from the pandemic? Miguel, if you could take that?
Yes, for sure. Well, the answer is yes. We have strong free cash flow, and our performance will strengthen the company's financial position. We now expect to generate more cash than originally expected in excess of our normal dividend payout in 2020. So free cash flow in quarter in first quarter was almost one and a half times higher than than last year with with significant increase in in quarter end receivables due to COVID nineteen related spike in demand.
So I think we are in a in a strong position to continue reducing our debt, and we continue to look for opportunities to further improve our liquidity while we maintain our current dividend.
Thanks, Miguel. So that concludes our question and answer period. I do want to recap that we do have tried to reach out to Mr. Shibadan both on phone and via e mail. I have not been able to reach him, but we'll continue to follow-up with him outside of the meeting.
So thank you for attending today's virtual meeting and for your continued support and interest in Kraft This now concludes the twenty twenty Kraft Heinz shareholder meeting. Thank you.