Good morning. The webcast is being recorded. At this time, I'd like to turn the webcast over to PPT Industries.
Good morning. The 2021 Annual Meeting of Shareholders of PPG Industries Incorporated is now called to order. I am Michael McGarry, Chairman of the Board and Chief Executive Officer. As you know, we are holding this Annual Meeting of Shareholders is a virtual meeting due to the public health impact of the COVID-nineteen pandemic. On behalf of PPG Associates Worldwide and the Board of Directors, I welcome the shareholders of PPG to our 138th Annual Meeting.
I would like to begin this morning by introducing the PPG Board of Directors who are under attendance via electronic means. There are 6 current directors who are standing for election at this meeting. Stephen Davis, former Chairman and Chief Executive Officer of Bob Evans Farms Incorporated Michael Lamach, Chairman and Chief Executive Officer of Trane Technologies Plc Michael Nalley, Chief Executive Officer of Generate Biomedicines Incorporated and CEO Partner of Flagship Pioneering Guillermo Novo, Chairman and Chief Executive Officer of Ashland Global Holdings Inc. Martin Rickenhagen, Retired Chairman, President and Chief Executive Officer, AGCO Corporation and Catherine Smith, Chief Financial and Administrative Officer of Bright Health Group Incorporated. In addition to me, the existing PPG directors whose terms are continuing are Stephen Angell, Chief Executive Officer of Linde Plc John Faraci, Executive Chairman of Carrier Global Corporation Hugh Grant, retired Chairman of the Board and Chief Executive Officer of Monsanto Company Melanie Healy, former Group President, North America of the Procter and Gamble Company Gary Heminger, Retired Chairman and Chief Executive Officer of Marathon Petroleum Corporation Kathleen Ligocki, former Chief Executive Officer of Agility Fuel Solutions LLC.
Also with me for this meeting are Ann Fouts, Senior Vice President and General Counsel Vince Morales, Senior Vice President and Chief Financial Officer And Dan Fayock, Assistant General Counsel and Secretary of the company. Many members of PPG's operating committee and management team are also in For this virtual meeting via electronic means. An agenda for the meeting was posted on PPG's Investor Relations website And also being showed on the slide presentation. I would also like to call your attention to our disclaimer of forward looking statements Included on the agenda and in the slides. Please note that later in the agenda, there will be an opportunity for questions from shareholders to be answered.
If you registered for the meeting using your control number, you should now submit your questions through the Internet portal and we'll try to answer your questions during the time allotted later in the meeting. Mr. Fayock will now report on certain official business matters.
Mr. Chairman, the notice of this meeting was made available On a timely basis, commencing March 4, 2021, to all shareholders of record as of the close of business on February 19, 2021. I'm pleased to report that a quorum is present with approximately 86% of the issued and outstanding common stock being represented at the meeting by proxy. In addition to the stock represented by shareholders attending this meeting through virtual means, Mr. Chairman and shareholders of PPG, This year, we again took advantage of the Securities and Exchange Commission rules that permitted us to post our proxy materials on the Internet.
As part of this e proxy process, Shareholders received a notice informing them that the proxy materials were available on the Internet. Hard copies of materials were provided upon request. Voting was made available online and by telephone again this year.
Thank you, Mr. Fayock. Before the meeting, the Board of Directors appointed 3 judges of to act on the matters that come before the meeting. The judges of election are in attendance and have signed the oath of office. They are John Bruno, who will act as Chairman Greg Gordon and Mary Anne Benczuk.
The proxies received from the shareholders have been inspected and counted by Corporate Election Services, an independent proxy inspection and tabulation firm. A representative of the firm is in attendance and has certified the results of the proxy vote. We will now proceed with matters to come before this meeting. The first item is the election of certain directors to serve in a class whose term expires in 2024. Nominations are in order.
Mr. Chairman, I nominate the following service directors, each to serve a term of 3 years and until their successors shall have been duly elected and qualified until their earlier retirement or resignation. Stephen Davis, Michael Lamach, Michael Nelly, Guillermo Novo, Martin Rickenhagen and Catherine Smith. Further, no written notice was received by the company that any other nomination would be made at this meeting Pursuant to the nomination procedures provided for the company's bioscience.
Thank you. Because no other nominations are in order, the nominations are closed. The second matter to come before the meeting is a proposal to approve the compensation of the company's named executive officers on an advisory basis. The 3rd matter to come before the meeting is a proposal to amend the company's articles of incorporation to provide for the annual election of directors. The 4th matter to come before the meeting is a proposal to amend the company's articles of incorporation and bylaws to replace the super majority voting requirements.
The 5th matter to come before the meeting is a proposal to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered Public Accounting Firm for 2021. Mr.
Chairman, I move that each of these proposals be submitted to the shareholders for a vote.
Is there a second?
A second.
Thank you. These proposals will be voted on by the shareholders. The Board of Directors has recommended that the shareholders vote for each of these proposals. The final matter to come before the meeting is a Shareholder proposal to adopt a policy requiring an independent Board Chairman submitted by the Congregation of the Sisters of St. Joseph of Peace To be presented by Sister Susan Franquoi.
Operator, please unmute the line of Sister Franquoi.
Can you hear me?
Yes.
Okay. Yes. Good morning to all PPG shareholders, Board members and employees. My name is Sister Susan Franquois, Treasurer and Assistant Congregation Leader of the Congregation of the Sisters of St. Joseph of Peace.
We have appreciated the opportunity to engage with PPG on human rights practices and disclosure. Our hope in filing the shareholder proposal on adopting an independent Board Chair policy is to encourage uptake of corporate governance best practices. We believe this may strengthen Board oversight of human rights risks in PPG's direct operations and supply chain. Stronger human rights governance in the form of an independent Board Chair would not only align with trends in corporate governance, but also benefit the Company and its investors by reducing legal, financial and reputational risks associated with PPG's human rights and environmental impacts. The proposal states, resolved.
Shareholders request the Board of Directors to adopt as policy and amend the bylaws as necessary To require that whenever possible, the Chair of the Board of Directors be an independent member of the Board. This policy would phase in for the next CEO transition. If the Board determines that a chair who was independent when selected is no longer independent, within a reasonable period it shall select a new chair who satisfies the Compliance with this policy can be waived if no independent director is available and willing to serve as Chair, Whereas the role of the Board of Directors is to provide independent oversight and management of the CEO, Michael McGarry has served as PPG's CEO since 2015 and the Chairman since 2016. Charles Bunch previously served in both roles from 2,005 to 2015. S and P 500 Companies are increasingly separating the rules, which strengthens corporate governance by enabling independent oversight and reducing conflicts of interest.
Investors would like to see the Board oversight of how PPG manages its actual and potential adverse human rights impacts, which includes severe risks of child labor In PPG's Mica supply chain, which have grown with the COVID-nineteen pandemic, additional risks of child labor, forced Labor and hazardous working conditions in the extended supply chains for raw materials, worker health and safety risks associated with exposure to harmful chemicals, Labor right risks raised in the consumer boycott of PPG's web based contracting service and community impacts of environmental pollution and water incidents. I encourage all PPG shareholders to vote for proposal 6, shareholder proposal for an independent Board Chairman. Thank you.
Mr. Chairman, I move that this proposal be submitted to the shareholders for a vote.
Is there a second? Second. Thank you. The proposal will be voted on by the shareholders. The Board of Directors has recommended that shareholders vote against this proposal.
The polls are now open. For shareholders who are in attendance virtually, if you have already voted online by phone or by mail, And you are registered for the meeting using a control number. You may now vote by clicking on the link on the meeting website following the instructions and submitting your vote. While shareholders have the opportunity to vote, I would like to highlight a few key 2020 achievements and discuss our strategy to drive shareholder value in the near and long term. You may follow the slides electronically on the Internet portal.
For all of us, last year presented significant challenges and many sacrifices. Despite these challenges, I'm extremely proud of how our 47,000 employees around the world came together as one PPG. The character of our employees has never shown brighter than it has during these times of adversity. Our people have shown great resiliency in continuing to serve our customers, Our communities and drive a common purpose to protect and beautify the world. Throughout the pandemic, the word protect Has taken on even greater significance.
We have focused on keeping our people safe and healthy by implementing enhanced safety processes and procedures around the world. As we look at our 2020 safety performance, our injury and illness rate dropped by 23% compared to the prior year. I want to thank the PPG team for looking out for one another as we manage through the pandemic. Of course, our ultimate goal is always 0 injuries, we continue to make this a top focus. Now I'll take a few minutes to review our business highlights from 2020.
Thanks to our employees and customers. PPG delivered solid performance in 2020 and continue to strengthen our position as a global leader in the paints, Coatings and Specialty Materials market despite the many challenges from the pandemic and its impact on economies around the world. PPG achieved net sales totaling $13,800,000,000 in 2020 and we generated more than $2,100,000,000 of cash from operations, Which is a record. The company also achieved adjusted earnings per diluted share from continuing operations of $5.70 As we look back on 2020, it's clear that the resiliency of our coatings model has shown brightly once again. Our past learnings, Speed of execution and strong business portfolio resulted in swift recovery of operating margins and record adjusted earnings per share in the second half 2020, up nearly 20% compared to the prior year.
I encourage you to read about our 2020 performance results And highlights in our recently launched 2020 digital annual report, which can be found at ppg.com. In addition, we maintain our legacy returning cash to shareholders in 2020 with about $500,000,000 returned through dividends. We are proud to have delivered an annual per share dividend increase for the 49th consecutive year with a 6% increase in September. Strategically, we continue to strengthen and optimize our portfolio with the announcement of 6 acquisitions since January 2020, Including Ticarilla, a well known supplier of decorative paints and coatings producing product in the Nordic countries. We expect to complete this acquisition in the Q2 and look forward to welcoming the Ticarilla employees into the PPG family.
Dennis Flint, a global leader in pavement markings and traffic safety solutions. Vorbog, a global manufacturer of coating for the automotive Industrial Applications, which we expect to close in the Q2 Versaflex, a manufacturer specializing in polyuria, Epoxy and Polyurethane Coatings ICR, a producer of automotive and light industrial paints and coatings and Alpha Coatings Technologies, Which manufactures powder coatings for light industrial applications and heat sensitive substrates. These acquisitions further broaden PPG's geographic footprint, technology reach and will provide even more options for our customers. In addition, We continue to invest in research and development and advance the commercialization of our new products and technologies. Our goal is to generate 25% of our total sales from new innovative products that are less than 4 years old.
This commitment helps assure that we are well positioned to drive further And future organic growth across our businesses. This includes advancing our mobility and digital initiatives, which will pay significant dividends in the years ahead. We launched new thermal gap fillers and passive fire protection coatings for the inside of battery casings for electric vehicles, Delivering initial wins in the automotive market beyond our traditional products. As we look at our own operations, The company continued to perform well in 2020, achieving about $115,000,000 in cost savings. We drove an additional interim cost savings of about $300,000,000 During the year to mitigate the adverse demand impacts from the pandemic, we expect to retain at least $80,000,000 of these cost savings in 2021.
We remain focused on aggressively managing all our elements within our control as we monitor and respond to changing market conditions. We also continue to have excellent financial flexibility with cash and short term investments of about $1,900,000,000 at year end. In 2020, we also continue to strengthen our environmental performance. This included reducing our greenhouse gas emissions by 24% And lowering our waste disposal intensity by 34% from the 2017 baseline. We also increased the role that Sustainable products play in our portfolio in 2020.
35% of our total sales came from sustainably advantaged products and processes, which is a 5% increase from 2019. Our goal remains 40% by 2025 And to realize this goal, we are leveraging the best practices and product development from each of our businesses. I am proud of our continued sustainability progress And I encourage you to learn more by viewing our latest all digital sustainability report, which we published today at ppg.com. We've also provided significant additional information around our ESG progress and initiatives in our proxy statement. When confronted by the extraordinary challenges facing our communities in 2020, we took decisive action to utilize invested $13,000,000 in 2020, supporting COVID-nineteen relief, education, community sustainability and important areas such as social justice 2020 PPG and the PPG Foundation also made commitment to invest $20,000,000 by 2025 To address systemic racism and advance racial equality in the U.
S. By funding educational pathways for black communities and people of color. This is part of an overall effort at PPG to strengthen our diversity, equity and inclusion commitments with actions inside and outside of the company. Finally, after a brief pause due to the pandemic, we safely restarted our award winning Colorful Communities program in the Q3 Of 2020 with painting projects in several communities around the world. Through these efforts, PPG continued to deliver on our purpose to protect Beautify the world and we look forward to completing even more projects in 2021 as restrictions ease around the world.
After the stock market closes today, we will be announcing our Q1 2021 results followed by our quarterly earnings call tomorrow Morning with Andlins who cover our company. I want to thank all our global employees who continued throughout the quarter to manage through the pandemic, Serve our customers and support our communities in need. It is clear that the pandemic continues to present many challenges I could not be more proud of how our employees have remained focused on looking out for one another and our customers. As we look ahead, we're excited about our opportunities for growth, including from the acquisitions we've announced and the recovery of important businesses such as Automotive Refinish and Aerospace. We'll continue to monitor and respond to changing market conditions, and we remain focused on delivering above market earnings per share and cash flow growth, While strategically pursuing organic and inorganic growth opportunities.
I strongly believe that we are well positioned for the future. I see many opportunities for growth and for PPG to participate in the economic recovery. We plan to leverage our learnings from the COVID-nineteen pandemic related evolving market trends, utilizing digital tools and customer behaviors to accelerate top line growth and win in the marketplace. We will increase the speed of our decision making, improve productivity using technology and data in new ways and accelerate the scope and scale of our innovation. And we're committed to sustaining this speed in ways that will inspire and engage our employees.
This next leg of our journey will focus Further leveraging customer relationship tools and processes to strengthen the value we provide to customers, leveraging digital solutions to enhance the customer experience And adopting new ways of working to drive innovation, growth and productivity. Our leaders have made significant progress developing these strategies In these areas to strengthen our capabilities as we further accelerate in 2021. As the economic environment continues to stabilize, we'll have opportunities to create additional value Fully utilize our scale and global footprint for the benefit of our shareholders, customers and employees. I'm confident that our team will deliver by focus On cash generation, margin management and earnings growth. In addition, as we continue to focus on growth, we are committed to continuing to reward our shareholders.
To that end, I'm pleased to announce that today our Board of Directors authorized a per share dividend of $0.54 Finally, I remain hopeful for a brighter 2021 for all our stakeholders. And I want to thank you for your continued interest Investment in PPG. Despite the challenges in front of us during these unprecedented times, our employees are focused on delivering results the PPG way. They make it happen and work hard to do better today than yesterday every day. We at PPG hope you and your loved ones remain safe And healthy and we look forward to continuing to fulfill our purpose to protect and beautify the world.
The shareholders have now voted. Accordingly, I declare that the polls are closed. We will now have a report from the judges of elections on this year's voting matters. Mr. Bruno, please.
Mr.
Chairman, on behalf of the judges of election, I present our preliminary voting results showing that The following have been elected directors, each having received the majority of the votes cast: Stephen Davis, Michael Lamach, Michael Nally, Guillermo Novo, Martin Brickenhagen and Catherine Smith. The proposal to approve the compensation of company's named executive officers on an advisory basis has been approved with 91% of the shares present in person or by proxy voting For the proposal, the proposal to amend the company's articles of incorporation to provide for the annual election of directors has not been approved, While 78.5 percent of the shares of the company's outstanding common stock voted for the proposal, the affirmative vote At least 80% of the shares of the company's outstanding common stock was required by our articles of incorporation for this matter to be approved. The proposal to amend the company's articles of incorporation and bylaws to replace the super majority voting requirements have not been approved, While 78% of the shares of the company's outstanding
common stock voted for the proposal, the affirmative vote of at least 80% of the shares of
the company's outstanding common stock was was required by our articles of incorporation and bylaws for this matter to be approved. The proposal to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for 2021 has been approved with 99% The shares present and person or by proxy voting for the proposal. The shareholder proposal to adopt a policy requiring an independent Board Chairman Has not been approved with 32% of the shares present in person or by proxy having voted for the proposal. The final voting results will be filed with the Securities and Exchange Commission within 4 days.
Because there are no other formal business scheduled to come before the meeting, the meeting will now be adjourned. After adjournment, I will lead the May I have a motion to adjourn?
Mr. Chairman, I
move that this meeting be adjourned.
Is there a second? I second the motion. All those in favor, say aye. Aye. Any opposed?
The meeting now stands adjourned. I will now lead the question and answer session based on the questions submitted by shareholders through the virtual meeting website. We'll try to answer as many questions as possible, but we may not have time to get to all of them. So that we may respond to as many
The first question comes from Michael Ruggieri and the question is, are you at liberty to disclose the percentage of Ticarilla shares that have been tendered at this point?
Mr. Morales?
It's not traditional to do that during the process. We will tabulate the shares after the tender offer is closed And provide the results at that point.
Thank you.
The second question comes from Kevin Reilly. The question is, What was learned about the company over the past crazy year that will be maintained going forward?
Okay. Kevin, thank you very much for your question. I think the First thing that we learned is the agility of the company to respond quickly. And the second thing is the ability of our employees to run the company like they own it. When you start up and have to shut down over 100 plants in very short order and make decisions quickly, we found that our Employees were able to do that around the world.
We were also able to quickly transition best practices. As you know, we have a plan in Wuhan where the virus Started. So our learnings in Wuhan were quickly shared with the teams across China, across all the teams in Europe And then to the U. S. And Latin America.
So that was one. And the other one is we built on the ability of what we learned during the global financial crisis We operate at a much higher level, so the performance of the company was outstanding. The second half of the year, we had record adjusted earnings By more than 20%. And obviously, we finished with a record high stock price at the end of the year. So I think overall, I could not be more pleased with the performance of the team.
I think they did an absolutely outstanding job.
Okay. The next question comes from the Sisters of St. Dominic of Caldwell. And the question is, in response to the shareholder proposal on the independent Board Chair, Which addresses concerns about human rights risk management. Has the Board taken steps to increase oversight of human rights matters?
Well, the Board currently has strong oversight of the company, the management team and the executive leaders. So that's the first thing I want to make sure Everybody understands. The second thing is we have a number of committees that are focused on this. So we have a T and E Committee or Technology and Environmental We also have the compensation committee that reviews the performance of the executive team. And we have a number of ESG initiatives that are underway that are published in our sustainability report as well as in our proxy.
And what I would encourage all shareholders to do is get up to date on what we're doing in that and those would be 2 great documents to spend your time reviewing.
The next question second question from Kevin Reilly. The question is why is elimination of super majority and overlapping directors good for stakeholders, not just Shareholders.
So Ms. Fouts, I'm going to ask you as our Chief Legal Officer to answer that one.
So I think One of the issues that comes up with super majority and overlapping directors is the opportunity to refresh. Let's start with directors first. Refresh your Board On some regular basis, making sure that you're getting different perspectives and different views. While we believe we have a tremendously strong Board With a lot of different diversity and talent, elimination of the staggered board would allow us to refresh that more frequently.
Great. Thank you very much.
And the last question we have at this point is from Wesley Whitehead, I'm sorry. And the question is, will management commit to not coercing our employees into getting the COVID vaccine?
Let me address that one. First of all, we are not mandating anybody take the vaccine except for The executive leadership team that will be interacting with our Board directors. No one else will be mandated to have the vaccine. We do think it is a prudent thing to do. We are encouraging our employees to doing that.
We recently held our own COVID testing or a shot at our Monroeville, Pennsylvania facility in which we were able to Give out vaccines, so that worked out very well, but we will not mandate it.
Those are all the questions that we have at this point, Mr. Chairman.
Okay. Thank you very much. At this point in time, the meeting stands adjourned. I want to conclude the meeting. You very much for attending.
And most importantly, thank you for your continued interest in and support of PPG. Operator, you may now close the line.