Good morning, everyone. On behalf of our Board of Directors and executive leadership team, I would like to welcome you to the Kraft Heinz Company's twenty twenty one Annual Meeting of Stockholders and call the meeting officially to order. Joining me today are Miguel Patrizio, our Chief Executive Officer, who will act as the Chair of the meeting and Rashida Lalande, our General Global General Counsel, Head of the ESG and Government Affairs and Corporate Secretary, who will act as the secretary of the meeting. I would also like to welcome our Board members to present today, including our Chairman, Vice Chairman and Lead Director. Additionally, Peter Fritz has been appointed as Inspector of Election and is in attendance at today's meeting.
Finally, John Saxton from PricewaterhouseCoopers, our independent auditor, is attending today and will be available to answer questions regarding the company's financial statements during the question and answer period at the end of the meeting. Before we begin, a few notes and reminders. We have designated the format of this virtual meeting to provide our stockholders with the same rights and opportunities to participate as they normally would have at an in person meeting. An agenda and rules of procedure for today's meeting are available on the meeting's web page through which you are assessing this meeting by clicking on the materials button at the bottom of your screen. The rules and procedure provide important information regarding the conduct of the meeting, participation and voting, questions and comments, technical difficulties, and procedures in the event of a disruption of the meeting, among other things.
Please be aware that our Board members will not be answering questions during the Q and A portion of today's meeting. During our remarks today, we will make some forward looking statements, which are based on how we see things today. Forward looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from those predicted. You should consider our statements made today, together with the cautionary statements and other information included in our 2020 annual report, our first quarter ten Q and our subsequent filings with the U. S.
Securities and Exchange Commission. With that, it is my pleasure to turn things over to our Chief Executive Officer, Miguel Petruzzio. Miguel?
Well, good morning, everyone. Before I begin my remarks, I want to acknowledge the retirement of two of our Board members, Paulo Lemon and George Zogby, and to thank them for their many valuable contributions to the Kraft Heinz Board of Directors over the past several years. We are all grateful for their service. Well, what a difference a year makes. When I spoke to you last year, during my second annual stockholders meeting as CEO of Kraft Heinz, the world was in a much different place.
And so was Kraft Heinz. But one thing has not changed. Our company's commitment to and responsibility for help world. Over the past year, our frontline employees in our factories, distribution centers and in sales have worked around the clock to meet the demand for our products around the world. I could not be prouder of our people to every challenge with creativity, with passion, with ownership and agility.
Their unwavering dedication made our company's incredible 2020 results possible, enabling us to meet high consumer demand for our products. Their hard work helped turn around our performance, setting us up for sustained growth and success in 2021. To be sure, 2020 was a year of transition, of transformation. When we began the year, none of us knew in a century pandemic was on the horizon. Kraft Heinz was in the early stages of a multiyear turnaround.
And despite the very real changes of COVID-nineteen presented, we as a company made rapid progress and have continued to enjoy strong results through the first quarters of this year. During last year's annual meeting, I told you that we set three priorities for 2021, to establish a strong base of sales and earnings two, to rebuild underlying business and three, to continue to reduce debt while maintaining our current dividend. I'm pleased and proud to say that we achieved all three of these priorities. To be sure, 2020 was an exceptional year for the company. And we feel well and well prepared to adapt evolving challenges as they arise, recognizing that we still are in a dynamic and ever changing moment.
As you know, last September, we introduced our enterprise strategy, which charted our new direction and set us on a course for the growth that we are experienced now. Our transformation was driven by our new operation model, one that is simple, but powerful. We have combined our industry leading scale with unmatched agility. At the heart of everything we do, we continue to see strong demand of our products across the globe and have increased investment in our iconic and local brands, reallocating them behind high growth opportunities. We have transitioned from managing our more than 55 individual categories to six consumer driven product platforms based on how consumers live and eat today.
As a company, we set our multiyear transformation plan last year and exceeded our plans for 2020. We are increasingly confident that we will again exceed our plan for 2021. We started the New Year with our new operating model fully in place and with real momentum across our brands and business. And the strong built last year and actions we are taking to improve our business through a child portfolio management should further fuel our growth going forward. As part of a major step in our transformation, in February, we announced an agreement to sell our Nuts business, Pormel Foods.
And last September, we announced the divestiture of our Natural Cheese business. Taken together, these two divestitures will improve our mix and growth trajectory. Across the board, we will continue to leverage our tremendous scale by invest our capabilities and overall agility. And our people are the key to our incredible turnaround. As part of our company's transformation, we needed to excite and inspire all of our people with a new vision.
One that would inspire us forward with the passion, speed and agility that we need. This vision is to sustainable grow by delighting more consumers globally. Our purpose, let's make life delicious reflects the positive impact we at Kraft Heinz want to have on the world. We also redefined our values, six beliefs that make clear our shared company culture. Each value starts with the word we, a commitment our people make to each other and to consumers around the world.
I have and will always believe that global companies and brands like ours have the power to change the world, have the responsibility and duty to be part of the solution. That is where our new approach to environmental social governance comes in. When we announced our new strategy during our Investor Day last September, we reinforced that ESG is a key part of our overall company strategy. ESG adds value to our company and connects us with consumers, with our customers and suppliers. And it connects us to the communities where we live all and work.
And we have taken a cross functional approach to ESG and are working to integrate it across our entire business, our value chain as we work to deliver our commitments by the year 2025. Our efforts line up under three broad pillars: environmental stewardship, responsible sourcing and healthy living and community support. We are focused on being more transparent, sharing clear metrics with our stockholders and our stakeholders about the progress we are making against our ESG commitments and the work we still need to do. We have created internal goals linked to target achievement to performance evaluations. For leaders from the top down, including for me as CEO, We are leveraging our scale and agility to share best practices and knowledge across the company.
We are doing the same thing with our global suppliers. It all is continuous improvement, always working to do better and be better than yesterday. This also is true when it comes to our company value, demand diversity. Over the past year, we have taken many action steps to bring these to life and to advance equality, both inside our company and in the larger community. For example, in 2020, we created a Global Inclusion Council to hold ourselves accountable for results when it comes to diversity.
I'm very pleased that two of our Board members on this council to underscore the serious commitment we are making to our diversity inclusion and belonging goals. We created We Lead Accelerated Program for 35 employees of color to help them develop skills they need for future roles in the company. We trained our leaders on how to fight unconscious bias. As part of our commitment to help fight systemic racism after the killing of George Floyd last year, we donated $1,000,000 to food programs and social justice organization serving African Americans. And in The U.
S, we made Juneteenth a day of service where our people volunteered in black communities, especially affected by the pandemic and historic inequality. We, as a company, are committed to doing the hard work to bring with demand diversity to life within our and in the global communities where we live and work. We at Kraft Heinz take our responsibility to feed people very seriously. And it's the corner story of everything we do. The fight against global hunger is to our employees' hearts.
Our Kraft Heinz micronutrition campaign produces and donates powders with essential vitamins and minerals. Working with Rise Against Hunger and several other nonprofit partners, we have provided more than seven forty million meals to people in need all over the world since 2016. And we are doubling down our commitment to eradicate food insecurity. Through the Heinz the Kraft Heinz Company Foundation, we have already on track towards our goal of providing 1,500,000,000 meals to people in need by 2025. In fact, we provided three thirty six million meals in 2019 and 'twenty.
That is approximately 22% of our goal. During the early days of COVID-nineteen pandemic, we committed to giving $12,000,000 in cash and product donations globally, all to make sure people have the food they needed during these unprecedented times. Since then, we have continued making financial and in kind donations to local communities and food banks around the world. In total, last year, our company provided more than $35,000,000 in combined financial and product donations to address COVID relief, food insecurity and social justice causes. Kraft Heinz is on a continuing journey of transformation.
Pure brands bring new opportunities. And in order to thrive, we must stay agile, able to meet and adapt to challenge as they come. I'm incredibly optimistic about our ability continue driving profitability on organic sales growth for the long term. In the foundation, we have built and are excited about our path forward. Our 2020 performance highlights the power and potential of our company when bringing together our scale and agility.
Let me say on a personal note, leading global company is a privilege and a tremendous responsibility. Along with each of our approximately 38,000 employees, my executive leadership team and I are committed to making life delicious for consumers around the world and to doing this to you, our stockholders. With that, I would like to turn things over to our Global General Counsel and Secretary for today's meeting, Rashida Lalande, for the formal business of the meeting. Thank you.
Thank you, Miguel. I have an affidavit of mailing from Broadridge Financial Solutions certifying that notice of this meeting was duly given to stockholders of record as of the close of business on 03/08/2021, the record date. This affidavit will be included in the minutes of the meeting. I am also pleased to report that I have been informed by the inspector of election that 1,069,187,303 shares common stock or approximately 87% of the shares entitled to vote at this meeting are represented by proxy or in attendance. We have the necessary quorum under state law and our bylaws, and I declare this meeting duly convened for purposes of transacting such business as may properly come before it.
The polls are now open for voting. If you have already voted, you do not need to take any further action. If you have not voted 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. We have three items of business for today's meeting, the election of directors, an advisory vote to approve executive compensation, and a vote to ratify the selection of our independent auditors for 2021. 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.
The first proposal to be voted on is the election of 11 directors to hold office until the twenty twenty two annual stockholder meeting or until his or her successor has been duly elected and qualified. The nominees whose names and biographies appear in our proxy statement are Gregory e Abel, Alexander Behring, John t Cahill, Joao m Castroneves, Lori Dickerson Fouche, Timothy Kenesee, Elio Leone Seti, Susan Mulder, Miguel Patricio, John c Pope, and Alexandra Van Damme. 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. The second proposal to be voted on is the advisory vote to approve the compensation of our named executive officers as identified in our proxy statement.
Our board recommends a vote for the advisory resolution to approve executive compensation. The third proposal to be voted on is the ratification of the appointment of PricewaterhouseCoopers as our independent auditors for 2021. Our board recommends a vote for the ratification of the appointment of PwC as Kraft Heinz's independent auditor for 2021. I see that there have been some questions, relating to the items of the business. Sorry.
Actually, there are there are no questions that, relate to, the business for the meeting. And, therefore, since we have not received any questions, we will, turn to the closing the polls. Now that everyone has had an opportunity to vote, I will ask our inspector of election to close the polls. The polls are now closed. The inspector of election will now count the votes.
I have the preliminary vote from the inspector of election, and I'd now like to report the preliminary voting results. With respect to proposal one, the election of directors, each of the director nominees has been duly elected by the affirmative vote of more than 89% of the votes cast. With respect to proposal number two, the advisory vote on the company's executive compensation, the the proposal has been approved by the affirmative vote of approximately 84% of the votes cast. And finally, with respect to proposal three, the appointment of PwC as Kraft Heinz's independent auditor for 2021. The appointment has been ratified by the affirmative vote of approximately 98% of the votes cast.
Final results will be available after the votes have been certified by the inspector of election and reported on a current report on form eight k that we will file with the US Securities and Exchange Commission within four business days. There being no further business for the twenty twenty one annual meeting of stockholders, the business portion of the meeting is now adjourned. I will now turn it back over to Michael Mullen for a brief general question and answer period.
Thank you, Rashida. We will now begin our general question and answer period. We will attempt to answer as many questions at this time as time allows, but only questions that are germane to the meeting and in accordance with the rules of procedure will be addressed. So first question that we have is, does the company plan to keep the dividend at its current level? Miguel, could you take this, please?
Miguel, you may be on mute.
Can you hear me? Yes. Me now. About that. No, we just announced dividends, I believe on April 29.
So we just announced and so that that's the answer for that question, Michael.
Second question is, what is going on with Heinz and the global ketchup shortage? This is one of your flagship brands. Why aren't you able to keep up with demand? And what are you doing to address this? Miguel, I'll ask you to take this one also.
Sure. Well, this is a good question. We've been facing a pretty big demand on ketchup in U. S. And just to put it in perspective, last year, we had 27% increase in consumption of ketchup through grocery.
E, we attended all the demand and we could even attend more. However, this year, the consumption of ketchup in U. S. Is changing in terms of mix. It's not that we don't have capacity for ketchup, we can produce as much ketchup, but there was a big shift in demand for those small pouches that you always find in, as an example, in food service, in fast food chains.
And that is because now food service is increasing since the pandemic is fading out, is finishing. And so restaurants are opening, but consumers do not want anymore at this moment to have bottles of ketchup in restaurants. Because of concerns about bottle, they prefer to have pouches. So the consumption of pouches increased dramatically. Now couldn't we see this before?
Yes, we could. And that's exactly what we did. So in July, we thought exactly that this could happen when it was over. And for that reason, we invested in new capacity for pouches. But this takes time to buy new lines, to install the new lines.
And I'm pleased to say that now in July, we're going to have these lines, these new lines already working and we'll have a 25% capacity of these pouches of ketchup. So that will be you know, we are not going to have a shortage anymore. That's it, Michael.
Thank you, Miguel. So next question is a long question from a representative from People of the Ethical Treatment of Animals. I'm going to paraphrase the question just to keep it short and direct for you. The question really is, is, you know, what what would the would the company consider moving exclusively its Oscar Mayer hot dog brand to vegan hot dogs? So moving from our current hot dogs or beef hot dogs to all vegan hot dogs going forward.
Look, it's as a global company, it's our aim to offer consumers a variety of relevant choices. And we know that consumer preferences are continuously evolving, making decisions based on health, wellness and environmental values. When it comes to vegan products, we are very, very proud to say that our brand Heinz has been provider of for a long for more than one hundred years. It's one of the biggest producers of, you know, of vegetables or products derived from vegetables in the world. And we also produce seeds of tomatoes.
Sell about 40% of all seeds of tomatoes in the world. And we buy 30% of all navy beans in the world. So and we buy cucumbers. So we are we are we produce many, many different products coming from agriculture in the world. We we in Europe a veggie burger made out of beans that we are just launching and hummus from Heinz.
And, you know, this a lot larger portfolio vision of taking a cleaner, greener, and more delicious approach to innovation and renovation. We also launched the vegan mayo in Europe. We take animal welfare seriously and we've made responsible sourcing commitments around procuring 100% cage free eggs globally by 2025 and twenty percent gestation stall free pork globally by 2024. And I like the idea that this person is addressing of having a, you know, align plant based products under Oscar Mayer. And we are you're going to check that with our consumers if they like that idea as well.
So thank you for the question.
Thanks, Miguel. Next question is, would the company consider virtual access to future in person meetings for those shareholders unable to attend? So I can take this question. I think it's a good suggestion. Let us take that one offline as we consider the planning for the shareholder meeting next year, and we'll provide more information on that when we get to the proxy next year.
Thank you for that question. The next question is from let me see, sorry. It's about shareholder capital shareholder and stakeholder capitalism. It says as a long term pension fund investor, the Carpenter Funds appreciate the sentiments embodied in the stakeholder capitalism perspective but feel that the execution could be complicated. Could you discuss the Board's perspective on the concept of stakeholder capitalism and what principles the Board would use to balance the interest of the varied stakeholders as it develops and implements the company's long term business strategy?
Rashida, do wanna start with this one?
Sure, Michael. I think, Miguel actually touched on this during his remarks earlier today. You know, he talked about how, you know, ESG, a lot of ESG really does line up well with, stakeholder capitalism. But that, you know, when he thinks about ESG, it really adds value to our company through the connections that it allows us to make with our employer, employees, our customers, our suppliers, and our communities. So when we develop our overall business strategy, we do so to deliver the long term value to our stake to our stockholders.
And we think that the design of our ESG goals and, the long you know, aligns with that, long term value of delivering that we are trying to deliver to our stockholders. So we think that our ESG strategy, our investments, and our goals are consistent with that strategy. I think hopefully that answers the question.
Thanks, Rashida. Next question, I'll ask Miguel to address this one. With commodity prices increasing at an alarming rate, what is Kraft Heinz doing to stay ahead of increasing costs?
Well, that is a big concern for the food industry at this moment. We've made many things. The first one was hedging last year when the situation. So we have a part of our cost of raw materials hedged. The second thing is work on efficiencies.
We made a commitment, a public commitment a year ago or one years point find $2,000,000,000 of efficiencies in our business, 2,000,000,000 gross savings. Last year, we delivered our commitment of $400,000,000 And this is our intention to achieve other $400,000,000 of efficiency savings or of gross savings. And that will mitigate part of this inflation in cost as well. Although we are concerned and working every day to risk of commodities of the inflation that is going on, we think we can manage this increase in costs.
Thanks, Miguel. Next question, it says, women are over 50% of The U. S. Population and do more than half of the buying in The U. S.
And in many other countries. The board has only two female members or 22%. Kraft Heinz is a consumer products company. Research shown that companies with a more diverse boards have better long term results. Given the thousands of qualified women in areas of accounting, advertising, marketing, etcetera, why hasn't, this clearing inequality been eliminated?
What are you doing to improve the situation? Rashida, do you wanna start with this one?
Thank you, Michael. You know, the nominating and corporate governance committee of the board regularly engages in routine pipeline discussions. The board and that committee believe that the diverse that diversity offers a significant benefit to the board and to Kraft Heinz and considers diversity when looking at, talent and the members of the board, and will continue to do so going forward. We think that, we're excited about the, addition of Lori Dickerson Fouche to the board. And we note that this year, 36% of the directors, identify as racially or ethnically diverse.
And as you pointed out, you know, 20% is gender diverse. This is something that's important to us, the company, and we'll continue to to look at it as we, we continue to when we have opportunities to refresh the board.
Thanks, Rashida. Next question. Will management commit to not coercing our employees into getting the COVID vaccine? So the current company policy is that we strongly encourage our employees, to get the vaccine, but I'll hand that over to Rashida if she's I think she wants to add to that.
I nothing more than you said, Michael. At this point, the company's policy is that we are, encouraging employees, to get the vaccine and providing opportunities where we can to support and facilitate getting the vaccine.
Okay. Great. Next question. On page 66 under proposal three about the auditors, you state that PwC has been your auditor since 2015 and Heinz auditor prior to the Kraft merger since 1979. They also do other work for the firm.
While they know your firm, there are other firms who know your firm and their competitors as well. It seems the only time that an auditor changes is when demand by the government, you know, due to some action. To avoid this groupthink and to get a new fresh pair of eyes looking at the firm, shouldn't there be a tenure of ten years for an independent auditor? Rashida, do wanna take this?
On an annual basis, the audit committee evaluates the independent auditors qualifications, performance, and independence. As part of this evaluation, the audit committee considers whether the independent auditing firm should be rotated. At this time, the audit committee and the board believe that the continued retention of PwC is in the best interest of the company and its stockholders.
Thanks, Rashida. So the final question that we have today is, as you begin each day, what are the dashboard metrics that are most important to you? And what concerns you the most? Miguel, can you take this?
Yes. Well, we say that our vision is to sustainably grow to delight consumers around the world. This is this statement has a lot of things that we can measure. So to sustainable grow, instead, we have to grow both top line and bottom line. Sustainable also means that we have today to build a more sustainable world.
And ESG goals are also can also be translated into KPIs. To delight consumers, that means that we are a consumer we put our consumers first and is our obligation to understand what the needs of consumers are and to create that will make life delicious. And around the world, our commitment to grow our business, not only in North America, but throughout the world, we are a global company. What are the things that that what are our biggest concern? Our biggest concern as well especially this year that passed, it was a very important year for us.
The company understood all of us the responsibility, the duty that we have to feed consumers around For even in the peaks of the pandemic around the world, we kept our factories all open and our employees were very motivated to help feeding the world. They never felt so important. And although it was a very or has been a very tough period in life, there was a big motivation from all of us to keep feeding the world. And that's our biggest motivation.
Thanks, Miguel. There's actually one more question I would like to see if we could take that just came in. So question regarding compensation. It says today's public company executive compensation plans are largely formulaic peer related plans with simplistic annual say on pay voting, reinforcing plan homogeneity. Would you or the Chair of the compensation committee speak to whether Kraft Heinz might be better served by an executive compensation plan tailored specifically to the company's particular circumstances and its unique long term strategic business plan?
Thank you.
Hi, Michael. I'll take that. We look at our executive compensation plan, we design it to support our long term strategy. We do it so that we can align our executive interests with our our stockholders. Over the past few years, the company has been in a transformation and our compensation program has reflected that.
You know, it was initially structured to provide stability and allow for recruit recruiting and retention. And as the company continues with its transformation into 2021, we've made additional changes to our compensation program, including increasing the percentage of performance shares, extending vesting periods of three years, and adding a relative TSR or total stockholder return element, which were responsive to some investor feedback that we had received. We're committed to continuously evaluating and refining our program and taking into consideration feedback that we get from our stockholders.
Thanks, Rashida. Actually, two additional questions came in. So let's take them and then we can wrap up. So final two questions. First one is, how does the company plan on increasing its organic sales and profits?
Miguel, do you want to take that?
Well, it's a long question, but I will try to summarize. First, try to simplify and reorganize. We especially in The United States, it's a very complex business because we produce many categories, about 55 categories. And what we did was grouping these categories by what we call consumer needs and create a strategy with different consumer needs that we call consumer platforms. These platforms, some have bigger chance to grow than others or and we redeployed our investments behind the growth platforms.
And so to focus on where we have higher possibilities of growth. So that is one. So we redefine the strategy and redefine the organization. The second one, I would say, is to accelerate growth in underdeveloped countries and economies. We have today operations in 40 countries, but North America represents 80 of our net turnover.
And we see around the world. And I'm very glad to say that this is already happening. We just showed our results of first quarter. And in emerging countries or emerging economies, we grew 16% net turnover. And it's our intention to continue growing in emerging economies.
So overall, we also want to improve our capacity of innovating and bringing better innovation and more meaningful innovation to accelerate the growth both on top line and bottom line.
Thanks, Miguel. So final question, again, to what you've just discussed. It says The U. S. And Canada make up more than three quarters of our business.
How do you plan on increasing global sales?
Yes. So I just touched that point. We need we are having, as I said, very good momentum and that was not in the case necessarily in the past. This is a big change in results that we are having in Latin America, in Asia and in Eastern Europe. And this is happening because we are committed, we are putting more resource, investing more in our brands, in our business, in capacity.
And we believe that this is a big opportunity for growth for our company for the future.
Thanks, Miguel. So that concludes our general Q and A session and today's meeting. If you submitted a question that we were unable to answer during today's meeting, you can send it also to us at irkraft Heinzcompany dot com. Thank you for attending and for your continued support and interest in Kraft Heinz.
The twenty twenty one Annual Meeting of Stockholders of the Kraft Heinz Company has now come to an end. Thank you for attending. You may now disconnect.