Good morning, and welcome to Lowe's 2024 Annual Shareholders Meeting. Please note that the company is recording this meeting for replay, and attendees are not permitted to use any device to record the meeting. I will now turn the call over to Kate Pearlman, Vice President, Investor Relations and Treasurer.
Thank you, and good morning, everyone. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer, and Juliette Pryor, Chief Legal Officer and Corporate Secretary. I would like to begin by reminding you that today's presentation includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. Additional information about this is included in the meeting materials available on your screen. Additionally, the presentation includes certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP is available in the quarterly earnings section of our investor relations website. With that, I'll turn the meeting over to Marvin.
Thank you, Kate, and good morning, everyone. As Chairman of Lowe's Board of Directors, it's my pleasure to welcome all of you to Lowe's 2024 Annual Shareholders Meeting. This meeting is being hosted in an online-only format. To begin the meeting, I'd like to introduce the director nominees, in addition to myself, who are standing for election at today's meeting and are all present for the meeting. Mr. Raul Alvarez, Mr. David Batchelder, Mr. Scott Baxter, Ms. Sandra Cochran, Ms. Laurie Douglas, Mr. Richard Dreiling, Mr. Navdeep Gupta, Mr. Brian Rogers, Mr. Bertram Scott, Mr. Lawrence Simkins, Ms. Colleen Taylor, and Ms. Mary Beth West. I'd also like to note that Ms. Lori Landegan of the independent accounting firm of Deloitte & Touche is on the call, and she'll be available to answer your questions in the Q&A session of the meeting. And Mr.
Victor LaTessa of CT Hagberg & Associates is also joining us on the call today. Mr. Latessa has been appointed as Inspector of Elections for this meeting and will assist with the tabulation of proxies and ballots. As your proxy cards indicated, Juliette Pryor and Brandon Sink have been duly appointed as proxies for this meeting. At this time, I officially call the meeting to order. Juliette, please outline the process for today's meeting.
Thank you, Marvin. We will begin the meeting with the formal business portion. This consists of the election of the director nominees named in the proxy statement, approval on an advisory basis of the compensation of the company's named executive officers in fiscal 2023, and ratification of the appointment of independent auditors. After we complete the formal portion of the meeting, Marvin will provide a brief business update. We will then open the floor for questions and will use the time remaining to answer questions that shareholders submitted before and during the meeting. Shareholders who have logged into the web portal for the meeting using their control number may submit their questions over the portal. Please refer to the Meeting Rules of Conduct posted on the web portal for additional guidance regarding the procedures for the meeting and the question and answer session.
A replay of this annual meeting will be made available on the Investor Relations page of our website following today's meeting. Notice of the annual meeting of shareholders of Lowe's Companies, Inc. has been provided to shareholders of record as of March 25, 2024. The notice and accompanying proxy statement were mailed to shareholders beginning on April 18, 2024. As of the date of record, there were 572,192,281 shares of common stock outstanding, of which 509,822,049 shares are represented on the call today, either online or by proxy. Therefore, we have a quorum and may proceed with the formal business portion of the meeting.
The polls are now open and will close after the presentation of the last proposal. If you have already voted, it is not necessary to vote during the meeting unless you wish to change your vote. As provided in the notice of the annual meeting of shareholders, the purpose of this meeting is to address the following items of business. First, elect 13 directors to a term of one year. A description of the nominees' qualifications to serve as a director is included in the proxy statement. Second, approve, on an advisory basis, the compensation paid to the company's named executive officers in fiscal 2023. Third, to ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for fiscal 2024.
We have not received notice under our bylaws of any other items to be considered, so no other business is expected to be conducted today. Each of the three items were proposed by the company, and the board recommended voting for each of them. This concludes all matters presented for shareholder consideration at the meeting. If you have not already voted, you can do so now, following the instructions on your screen. I will now pause for a moment so anyone wishing to can submit their vote. The polls will be closing shortly. ... The polls are now closed. I have received the preliminary report from the voting inspector based on proxies received by the opening of the polls at today's meeting, and based upon the vote of shareholders. All nominees to the board of directors are elected.
The advisory vote on compensation paid to the company's named executive officers has been approved, and Deloitte & Touche is ratified as the company's independent public accountant for fiscal 2024. Please note that the final voting results will be filed with the SEC within four business days. This concludes the business portion of the meeting, and I will now turn the meeting back over to Marvin.
Thank you, Juliette. Now I'd like to take a minute and provide you with an update on our company's business performance. We delivered solid financial results in 2023, despite a steep pullback in DIY spending across the home improvement industry. Total sales of $86.4 billion were down 4.7% on a comparable basis, and we offset pressure from lower sales through rigorous expense management and our perpetual productivity improvement, or PPI initiatives. This helped us deliver an adjusted operating margin of 13.3%, a 30 basis point improvement over 2022. This led to adjusted diluted earnings per share of $13.09.
Consistent with our disciplined capital allocation strategy, we reinvested $2 billion in the business and returned $8.9 billion to our shareholders through a combination of share repurchases and dividends. I'm also pleased to announce that our board of directors approved a 5% increase in Lowe's quarterly dividend this morning from $1.10 per share to $1.15 per share. This reflects the board's confidence in the company's growth strategy, as well as its ability to execute through near-term market uncertainty while generating robust cash flows. In 2023, we continued to invest in our Total Home Strategy initiatives while we transformed and modernized our technology as we strive to create a seamless omnichannel experience for our customers.
As a reminder, our Total Home Strategy is built to enhance customer engagement and position Lowe's for market share gains through five key areas: increasing Pro penetration, accelerating our online business, expanding our installation services, driving localization, and elevating our product assortment. Now, I'd like to give you an update on some of these initiatives, starting with our Pro growth strategy. As a reminder, Lowe's target Pro customer is the small to medium-sized business owner. These customers shop more often and spend more than DIY customers. They also shop across multiple departments, all of which drive higher ticket purchases. To appeal to them, we've elevated our Pro offering over the past few years. We've improved customer service, expanded our assortment of Pro brands and products, and increased inventory levels on key Pro items.
We built on the success of our Pro loyalty program by launching powerful new digital business tools like online order quoting, order tracking, and purchase authorization, which allows a Pro to designate a crew member to make in-store purchases, all while remaining on a job site. We continue to focus on expanding our portfolio of brands with selections from companies like Bosch, DEWALT, Klein Tools, and Hubbell, brands that Pros rely on to get the job done. The Pro customers are fiercely brand loyal, so it's important that we have the right national brands and products that they need. This expanded brand offering helps us deliver positive Pro comp sales yet again in 2023, despite significant pressure from lumber deflation and softening demand in the home improvement industry.
We expect to continue to build on our momentum with Pro as we target Pro sales growth at 2x the market rate. We're also making significant strides toward creating an integrated, omnichannel shopping experience that allows customers to easily pivot from in-store to online shopping. Last year, we kicked off a multi-year effort to transform the front end of our stores. The new configuration includes a streamlined, assisted self-checkout and a dedicated pickup desk for buy online, pickup in-store orders, while allocating 3 x the space for these omnichannel transactions. We've completed over 450 remodels last year and have over 500 planned for 2024. We've also expanded our same-day delivery service nationwide.
Both Pro and DIY customers can now shop on lowes.com for tens of thousands of items that are stocked at a nearby store and then have those orders delivered the same day through our partnership with OneRail and its network of 12 million drivers. Now customers can also get the product they need delivered the same day through our partnerships with DoorDash, Instacart, and Shipt. These are great examples of how Lowe's is making home improvement shopping more accessible and convenient than ever before.... These investments and fulfillment partnerships have helped drive sales and improved our omni-channel customer service, with 2023 omni-fulfillment scores almost 25% over our 2020 results. Now, I'd like to discuss the commitments we've made to our associates, our communities, and our planet. We're making progress toward becoming the employer of choice in retail.
Since 2018, we've invested over $3.5 billion in incremental wage and share-based compensation for our frontline associates. Last year, we awarded over $350 million in discretionary and profit-sharing bonuses for these hardworking associates. We're creating opportunities for advancement and investing in development for all of these associates to help them build their careers with Lowe's. Today, more than 80% of our store leadership roles are filled by internal candidates. Lowe's plays an important role in supporting the community where we do business. We're focused on efforts to revitalize neighborhoods, improve community spaces, and respond when natural disasters strike. We do this through community engagement initiatives and partnerships with nonprofits across the country. In 2023, the Lowe's Foundation established the Gable Grants program.
This is a five-year, $50 million commitment to recruit, train, and prepare 50,000 people for skilled trade careers through grants to community and technical colleges and community-based nonprofits. When it comes to protecting our planet, Lowe's has a goal to reach net zero greenhouse gas emissions by 2050. To realize this goal, we've set ambitious interim targets, which we plan to reach by 2030. As a company, we believe that if we provide our associates with an outstanding place to work, give our customers a great place to shop, and make our communities where we live and work better, we will continue to increase shareholder value. Based on this philosophy, we are pleased that these efforts are being recognized, as Lowe's was named one of Fortune's World's Most Admired Companies for the 25th consecutive year.
Also, given our ongoing commitments to driving sustainability through our full value chain, we're also included for the fifth consecutive year on Dow Jones Sustainability North America Index. In addition, we're being recognized for our efforts to support our associates and invest in our communities through awards from several other prestigious organizations. In closing, I'd like to once again extend my appreciation to our frontline associates for their contribution to our ongoing success. Every week, I travel across the country, visiting stores and distribution centers, and I'm always struck by their passion for serving our customers and our communities. This concludes our business update portion of the meeting. I'll now open the question and answer period of the meeting.
Thank you, Marvin. We will attempt to answer as many questions as possible during our time today. If we do not get to your questions, we will post answers to unanswered questions on the Investor Relations page of our website. We also encourage you to contact Lowe's Investor Relations at investorrelations@lowes.com. If a shareholder has a question, please enter it in the Ask a Question box on the website. Also, we have received a number of similar questions. In the interest of time and to answer as many questions as possible, we will group similar questions together. Our first shareholder question is: What is Lowe's doing to prevent retail theft?
Well, first, I'd like to say that we share the concern about the increase in retail theft in the U.S. I've been working in retail for most of my adult life, and I can honestly say this is the most difficult environment I've ever seen for shrink. I'm real pleased that, unlike other retailers, Lowe's did not see an increase in shrink expense last year, and we're really pleased with that result. We have taken a multifaceted approach to managing shrink, and our shrink management process begins with outstanding customer service, and I believe that's the foundation of everything we do. We've also put in place a great asset protection team of professionals in our stores. We've leveraged world-class technology, and we've created great relationships with law enforcement around the country.
You know, this remains an ongoing issue for Lowe's and other retailers, and we believe that organized retail theft will be a problem for us for the foreseeable future, but I'm really confident that we have the correct process and strategies in place to remain best-in-class in retail.
Our next shareholder question is: Why hire jobs to third parties when local hiring is a win-win situation?
Well, for some context, Lowe's employs approximately 300,000 employees, who we call associates, and our goal is to provide a great place to work for all of those associates. As I mentioned earlier, we're really committed to becoming the employee of choice in retail. Having said that, we also have a commitment to providing competitive wages and benefits that are across the board to all of our associates. But as we look at how we serve customers, it's important that we also rely on third parties, particularly as we think about delivering products to customers' homes or to job sites. And these third parties specialize in fulfillment, and those are, in some cases, competencies that we don't have in-house.
And so we have an expectation that these third parties are going to provide excellent service to our customers and make sure that we deliver those products in the right manner. And if you compare the customer service results of our delivery process executed by our store associates versus our third-party partners, our third-party partners actually receive significantly higher scores, which tell us that our customer appreciates what they're doing, and they can see the value in leveraging them. But we'll continue to monitor this process, and we'll always make sure that we're committed to offering a high level of service to all the customers that we serve.
Our next shareholder question is: What is Lowe's doing to ensure that your associates are paid a living wage?
Well, as I mentioned in my business update, it goes without saying that our frontline associates are the greatest asset we have in this company. And at Lowe's, we've invested a lot in our associate compensations and offering competitive wages across all the markets where we operate. And I'm really pleased to say, you know, since 2018, as I mentioned earlier, we've invested over $3.5 billion in incremental wage and share-based compensation for our frontline team. I want to be really clear. This is the frontline individuals that work in our stores. We're not talking about officers or executives in our corporate facilities. We offer other valuable benefits, like quarterly profit-sharing bonuses for all the associates, an everyday 10% employee discount, and discounted stock purchase plans and a 401 match.N This is something we're committed to, and we will remain committed to it into the foreseeable future.
Our next shareholder question is: How does Lowe's invest in developing Frontline associates?
Well, I'm proud to say that I started my career in retail as an hourly associate, so in ensuring that we have good developmental processes for our frontline associates takes on a special meaning to me. And at Lowe's, I'm really proud that we're committed to investing in these development processes for our associates, and we're helping them not only to gain knowledge, but also skill that can allow them to take a job and turn it into a career. This really begins with a comprehensive onboarding process, so when we hire someone to join our company, they transition well into that role. And we also want to make sure that we allow these associates to be aware of opportunities and benefits that are available to them as a Lowe's associate.
We provide our associates with job-specific training through our Lowe's University, which is available to every associate in the company, stores, and distribution center through our internal website. It's also important that we've created over 10,000 new department supervisor positions and over 2,500 new assistant manager positions. We've done that just since 2018. Again, this is all about providing our associates with opportunities for career advancement, and we're really pleased that we've accomplished that. But it's also worth noting, and I mentioned this earlier, that more than 80% of our leadership positions in our stores are filled internally, and this is a reflection of what we did last year. And I remember when I joined the company, you know, almost six years ago, that was the opposite. We feel good about the progress we're making, and we're going to continue to stay committed to this.
Our next shareholder question is: Would Lowe's management consider providing an option for associates to be paid weekly or purchase an additional week of vacation?
Well, I would say I'll start with our associates are paid every two weeks, which is a standard practice in the retail industry, and we tend to benchmark to ensure that we're not an outlier just for the sake of being an outlier. Although our associates are currently unable to do things like purchase additional vacation, they're able to roll up to one week of unused vacation every year, which prevents them from losing that vacation. We also consider associate feedback, and we are routinely reviewing our associate benefits to confirm that our packages remain competitive and that we're doing our best to serve the needs of our associates. The commitment is we'll continue to monitor these processes. We'll continue to make any changes that will allow us to become truly the employer of choice in retail.
Our next shareholder question is: Can you cut the number of directors on the board?
Let me begin with the Nominating and Governance Committee on our board is responsible for reviewing and making recommendations about the size and the composition of our board. The committee and the full board reviews this process quite frequently to determine if the board has the skill set, the background, and the experience we need to provide effective oversight of our strategy as a company. We can look at the progress that we've made just in some of the new directors that we brought on board over the course of the past few years, and we've done that while not significantly increasing the size of the board. So we view the size of our current board as appropriate for our company, and we think that is in line with market practice.
Our next shareholder question is: if the purpose of a board is to ensure the viability of the company, how can that be accomplished when board members sit on two or three other boards?
Well, I would say one of the priorities, again, of our board and Nominating and Governance Committee is to evaluate our directors' time commitments before renominating them to confirm that these board members can, you know, devote the appropriate time to effectively serve on Lowe's board. Our corporate governance guidelines address these concerns, and we impose limits on the number of outside boards that any director may serve on. As Chairman of the board, I'd like to also note that our directors are highly engaged. They have strong attendance records, and they add incredible value to the company, to the shareholders. I personally believe that our directors' service on other boards brings added insight and experience to Lowe's board, which only makes us more effective.
Last, I think I'll add that we know this is an important topic for our shareholders, and we've provided enhanced disclosures on board processes for evaluating directors' time commitments in our proxy statement.
Our final shareholder question is: why can't I vote against a candidate? I can only vote withhold, which is not the same.
Well, under our charter, directors in uncontested elections are elected by the affirmative vote of the majority of the shares voted at the meeting, which takes into account those shares for which votes are withheld. As we discuss on page 70 of the proxy statement, withheld votes are counted as votes cast, and because the election of directors requires the affirmative vote of a majority of votes cast, they have the same effect as voting against a director nominee. So hopefully that answers your question.
Thank you for your question. That concludes our question and answer session. We appreciate your attendance and participation. This meeting is now adjourned.