Good morning, everyone. Good morning, and welcome to Sonoco's 2024 Annual Shareholders Meeting. I'm John Haley, and I'm pleased to serve as the Chairman of the Board. I'll begin this meeting with a brief introduction of our directors. Please hold your applause until they've all been introduced. First is Steven Boyd. Thank you, Steven. Steven is Chairman of the Board of Trustees at Johnson C. Smith University in Charlotte, and throughout his career, he's held many leadership roles at various consumer products companies, most recently, Coca-Cola. Howard Coker. Howard is Sonoco's President and CEO, and he has served the company for over 39 years. Dr. Pamela Davies. Pamela is President Emerita and Professor of Strategy at Queens University of Charlotte. Teresa Drew. Teresa was Managing Partner of the Carolinas practice of Deloitte, a global accounting firm, until her retirement.
Philippe Guillemot. Philippe is Chairman and CEO of Vallourec, a world leader in premium tubular solutions for energy markets based in Meudon, France. When I'm not working with our board, I'm CEO of Gosiger Incorporated, a national provider of machine tools and factory automation systems based in Dayton, Ohio. Our Lead Independent Director is Robert Hill. Robert was most recently Executive Chairman of South State Corporation, a regional banking company based in Columbia, South Carolina. Eleni Istavridis. Eleni was Executive Vice President and Head of Investment Services for Asia at Bank of New York Mellon, a global banking company, until her retirement. Rich Kyle. Rich is President and CEO of the Timken Company, a global manufacturer of bearings, transmissions, gearboxes, motors, and lubrication systems based in North Canton, Ohio.
Blythe McGarvie. Blythe previously taught accounting at Harvard Business School's MBA program, and prior to this, she held the CFO title at several consumer products companies. Finally, Tom Whidden. Tom was an Advisory Director of Berkshire Partners, a Boston-based private equity firm, and is a retired Executive Vice President of Lowe's Companies. Thank you. Let me also recognize several of our other retired directors who are with us today. First is Charlie Coker. Charlie served on the board from 1961- 2005, including serving as chairman from 1976- 2005. Harris DeLoach. Harris served on the board from 1998- 2019, including serving as chairman from 2005 to 2013, and Executive Chairman from 2013- 2019.
James Coker. I'm not sure if James is here, but James served 44 years as a director from 1969- 2013. Jack Sanders. Jack served as CEO and Director from 2013- 2018. Jack Linville. Jack was a board member from 2004 through 2017. Paul Fulton. Paul was a board member from 1989- 2004. And finally, Caleb Fort. Caleb was a director from 2001- 2011. Please join me in giving all these current and past directors a very warm welcome. I'd also like to introduce our Corporate Secretary, John Florence, who also serves as Sonoco's General Counsel and Vice President and General Manager for Converted Paper Products in the U.S. and Canada.
Today, we have some special groups of students joining us. First, a group from Heathwood Hall Middle School in Columbia, who recently completed a stock market investing challenge. The group is comprised of the top three earning teams, and we hope this meeting proves educational for you, and we're absolutely certain that Sonoco was part of your winning portfolios. Welcome. We're also very pleased to have a Senior Communications College from Coker University here with us, so welcome to all of you. I thank you. I will now call the business meeting to order. The 2023 Annual Report, 2024 Notice of Annual Shareholders Meeting, the proxy statement, and proxy were mailed on March 15th to shareholders of record as of February 28th, 2024. Approximately 98 million shares of our common stock were outstanding and entitled to one vote each.
Now, we've appointed Elizabeth Cramer of Sonoco and Mark Zimkind of Continental Stock Transfer and Trust Company as inspectors of election to oversee the tabulation of the ballots. Will you please stand and be recognized? Thank you. Mr. Secretary, will you please advise if a quorum is present?
Mr. Chairman, I've been advised by the Inspectors of Election that we received proxies executed by more than 90% of shares outstanding entitled to vote. Therefore, a quorum is present.
Thank you, John. Now, John has the minutes of last year's meeting if anyone wishes to inspect them. At this time, however, I would ask if there is a motion to dispense with John's reading of the minutes.
Chairman, I move.
Thank you, Garrin. A second?
Mr. Chairman, second.
Ben, thank you. Today, we have four proposals or resolutions for consideration and one individual shareholder proposal. Starting with the first proposal, your board of directors recommends the election of the current 11 directors for a one-year term expiring at the next annual meeting in 2025. They include Steven Boyd, Howard Coker, Pamela Davies, Teresa Drew, Philippe Guillemot, John Haley, Robert Hill, Eleni Istavridis, Rich Kyle, Blythe McGarvie, and Tom Whidden. I've been advised by the secretary that there were no other nominations submitted. So, do I have a motion? Thank you, Tomas. And a second?
Mr. Chairman, I second the motion.
Thank you, Aditya. Our second proposal is for the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending 2024. Do I have a motion?
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Thank you, Lisa. And a second?
Thank you, Becky. The third proposal is an advisory, non-binding approval of compensation of the named executive officers as described in the proxy. Do I have a motion?
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Thank you, Courtney. And a second?
Mr. Chairman, second.
Thank you, Sherry. The fourth proposal is the approval of the 2024 Omnibus Incentive Plan. Do I have a motion?
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Thank you, Geneva. And a second? Thank you, Mary Kate. The final item is an advisory, non-binding shareholder proposal entitled Transparency in Political Spending, which is outlined in the proxy. Do any parties here wish to speak for or against the proposal?
Yes. Proposal number five, Transparency in Political Spending, sponsored by John Chevedden. Resolve and shareholder request that Sonoco Products provide a report update, and semiannually disclose on the company's, number one, policies and procedures for making payments to, A, participate or intervene in any campaign on behalf of any candidate to a public office, or, B, interference with the general public with respect to any elections or referendum. Two, monetary or non-monetary contributions and payments are used to manage the described above, including, A, identity of the recipient, as well as the amounts paid to each and the title of the person in the company responsible for the decision-making. The report shall be presented to the board of directors and posted to the company's website within 12 months from the date of the annual meeting. This proposal does not include lobbying spending.
Supporting statements. Shareholders support transparency and accountability in corporate electoral spending. This includes any activity considered intervention in political campaigns under the Internal Revenue, such as direct or indirect contributions to political candidates, political parties or organizations, and independent payments of electioneering communications on behalf of federal, state, or local candidates. A company's reputation and values, and bottom line has been adversely impacted by political spending. The risk is especially serious when given the trade associations, super PACs, 527 committees, and social welfare organizations, groups that routinely pass money to or spend on behalf of the candidates. A political cause the companies might not otherwise wish to support. The Conference Board 2020-2021 Under the Microscope in Reporting Details These Risks recommends that the process suggests in the proposal, it warrants a new era of stockholder scrutiny.
Social media and political polarizations have propelled corporate political activities and the risk that comes with it into the spotlight. Political activities can pose increasing significant risk for companies, including the perceptions that the political configurations and other forms of activities are at odds with core company values. This proposal asks Sonoco Products Company to disclose all of its electoral spending, including payments to trade association and other tax-exempt organizations, which may be used for electoral purposes and are otherwise undisclosed. Without knowing the recipients of Sonoco political dollars, shareholders cannot significantly assess whether Sonoco elections-related spending aligns or conflicts with its policy on a climate change or sustainability or other areas of concern. Thus, it will be the best practice for Sonoco Products to expand its political spending disclosure.
Thank you. The reading of the proposal is considered the official motion and second. Now for the results of the balloting. Mr. Secretary, please report on the preliminary tabulation by the inspectors on the voting of the proposals and resolutions presented at this meeting.
Mr. Chairman, the Inspectors of Election have reported that shareholders voted to elect all nominees for director, and voted by a majority to ratify the selection of PwC as the company's independent registered public accounting firm for the fiscal year 2024. The shareholders approved both the advisory resolution on executive compensation and the 2024 Omnibus Incentive Plan. Lastly, the shareholder proposal entitled Transparency in Political Spending was rejected by a substantial majority.
Thank you, John. This concludes the business portion of the meeting, and I now turn the meeting over to Howard Coker, our President and CEO, to provide an update on the state of the company. Howard, you have the floor.
Okay, well, thank you, John, and good morning to everyone. I am delighted to have all of you with us here today. For those of you here and those listening on the webcast, I'm excited to share with you an update of Sonoco's strategy as we are celebrating our 125th anniversary as a company. But as always, before I go further, let me remind you that today's presentation contains a number of forward-looking statements based on current expectations, estimates, and projections. These statements are not guarantees of future performance and are certain risks and uncertainties. Therefore, actual results may differ materially. Further information about these forward-looking statements and our use of non-GAAP financial measures is available in the investor relations section of the company's website at sonoco.com. So let me start with the key takeaways that you will hear today.
After 35 years with Sonoco, I had the great privilege of becoming President and CEO in February of 2020. Times were pretty turbulent back then, but while managing many global challenges, we set out on a transformational journey to improve the performance of the company. I provided an update on our evolution a year ago, and we continue to make great progress. We built a stronger portfolio that delivers greater value. We simplified the company and unified our global operating model, and we have improved financial results. We did all of this while remaining disciplined with capital allocation and managing risks while maintaining a strong capital structure. I'm excited to share with you today our updated plans and long-term financial targets that we believe will benefit all our stakeholders.
But first, I want to take you all the way back to 1899, when Sonoco was founded on the principle that people build businesses by doing the right things. That guiding principle remains at the heart of Sonoco today. Our culture is unique, and our global teams are grounded in the core values of teamwork, service, respect, integrity, and of course, accountability. Through my 38 years with the company, our core values have underpinned our unique culture, which is safe, caring, and inclusive. And people are at the heart of what has been a great history of innovation, global expansion, and growth, as we celebrate our 125th anniversary this year. The company was founded in 1899 in Hartsville, South Carolina, where our global headquarters remain today.
Our founders invented a unique way to make paper from the indigenous southern pine trees, and then found number of applications for this brown paper.... As many of you here know, the company's first patent in 1908 was paper cones made for yarn winding machines in the textile industry. Sonoco continued to innovate in paper technologies and invented the composite tubular containers, including Sonotubes, which were used to build shelters in wartime and are still used today in construction and other industries. The company expanded into new substrates and invented the Ultra-Seal easy-open end as a safer way to access food products. In the snacking world, Sonoco invented the SmartSeal closure to keep your cookies and other foods fresher, longer. And the innovation continues, as you'll see in some of the exciting products updates that I will share later today.
A few years ago, we introduced our EnviroSense, and just this year, launched our patent-pending sealing technology to produce GreenCan. We are over 4,000 patents strong, with about 500 of them being issued since 2020. These innovations, along with strategic decisions, have taken Sonoco from a $1 billion company in 1987 to roughly $7 billion just this last year. To further reflect on our progress and what makes Sonoco great, let's take a further look and hear from some of the great leaders of our past.
Since 1899, people have been the backbone of our company. In a 1964 speech, then CEO, Charles Westfield Coker Sr., called Sonoco's employees, Our partners in progress. There is one item that does not appear on our balance sheet, but it is one of our most valuable assets, the men and women of Sonoco. Charlie Coker felt just as strongly when he spotlighted our company's enduring strength 35 years later. It is important to remember that what we are really celebrating are the people who built the business, our employees, and their accomplishments.
Today, our cutting-edge innovations help ensure product freshness and quality while commanding attention through vibrant package graphics. We help protect major investments and everyday purchases, bringing the world together and keeping the presses rolling. Our packaging serves some of the world's best-known brands, but we recognize that our success is due to all of our team members, who we celebrate with a monument in front of our headquarters. It's about people. It's about teams. It's about people building businesses. It's about honesty. It's about integrity. It's about treating people with dignity and respect. What I wish for Sonoco is for the leadership and the team and the board to continue to follow that same pattern and deliver great value to our company and to our customers.
Our inspiring past positions us to forge a strong future. As we look forward, Sonoco remains committed to our people, the innovators who've driven our success over the last 125 years. Thank you for helping us reach this significant milestone. If Major walks in today, I think he is just going to be as pleased and fascinated by the legacy that's been carried on as much as we are that he found it.
Happy birthday, Sonoco.
Happy birthday, Sonoco.
Happy birthday, Sonoco.
Just a wonderful history over the past 125 years. Through this time, our teams have been unified in our desire to protect the environment. While we invest in our people and communities, and strive for transparency in our relationships throughout all levels of the organization, since 1995, Sonoco has had a board committee dedicated to these matters. I personally chair the company's Sustainability Council. I'm proud of our track record in these important areas, which you'll hear more about later in this presentation. Over the past 125 years, what makes a great Sonoco business? We believe there are five principles common to where our packaging adds the most value. The first two are advanced material science and high product functionality, which go hand in glove to meet the packaging demands from our customers.
We believe we have some of the best R&D engineers in the world that look at a tough problem and say, "We will figure this out." Also, we excel at managing complex process manufacturing. Given our capabilities in 33 countries, we have the ability to serve large global customers.... and we're willing to invest alongside them to serve their growing markets. Finally, we wish to participate in markets where we have the right to win and take leadership positions. In summary, we utilize our great culture and guiding principles to win by serving our customers, operating well, and innovating. Now, let's go back to 2020, when I took over the CEO role. We knew we had a lot of great assets to work with, and we set out to do more, and build on our foundation to make the company even better.
Our leadership team took stock of every business, surveyed the current and future landscape, and identified a number of priorities, and thus we began our multi-year transformational journey. With that foundation set, we began step two in our journey to focus the organization for the future. We made moves to fewer, larger businesses, and for those businesses that we knew were non-core, we immediately began making improvements, and in some cases, divestiture actions. With fewer, bigger businesses, we simplified our organization structure, we implemented self-help programs to lower cost, improve margins, and improve overall efficiencies. Within the core, we boosted our capital spending to capture greater productivity and growth that we knew existed in these businesses. We have made notable progress over the past several years.
We deemed almost 90% of our business to be core, knowing that we had opportunities to do more simplification, even within these businesses. We increased CapEx over $100 million per year over the prior 10-year period average, where our business leaders told us they could provide higher returns for productivity and growth. We invested inorganically to strengthen our core in both consumer and industrial, with the acquisitions of Skjern, RTS, and Inapel, which we just announced in December. We also created a new core platform in our metal packaging business. Sonoco's been in the metal business since the late 1950s by making closures for our rigid paper cans. Metal packaging aligns well with the common attributes of a great Sonoco business, and has been a valuable asset thus far in our portfolio.
And we did all this while refining and executing our operating strategy and self-help initiatives. Our strategy and execution over the last couple of years has driven increased profitability and higher cash flow. We ended 2023 with adjusted EBITDA of over $1 billion, and generated over $1.6 billion of cumulative operating cash flow over the past three years. These results came from the dedication and hard work of our leadership teams around the globe, and an aligned commitment to do more, to achieve better results, and we have delivered. So that brings us to where we are today. We recently reported our 2023 full year results, where we closed the year at $6.8 billion in sales, and 15.7% in adjusted EBITDA margins.
By segment, our consumer business is just over half of revenue, with industrial roughly a third, and the all other segment at 12%. By substrate in 2023, we were 57% paper, 29% resin, and 14% tinplate steel. By region, 78% of sales were in North America, and the balance in the rest of the world. 2023 was our second-best performance year in a challenging economy, only bettered by our 2022 results. As of January 1, 2024, we have continued our portfolio simplification. We're very excited to announce the combination of our flexibles business and thermoforming. We've taken 5 businesses that were run independently, and now merged them under one leader and operating structure.
The new scaled platform of $1.3 billion is focused on niche markets where we believe we have the right to win and to grow. This leaves us with four focused businesses that are part of our core as we move forward. Three are in the consumer segment: Rigid Paper Containers, our new flexibles and thermoforming packaging business, and metal packaging. And the fourth is our industrial segment, which we have aligned to now run as one single business platform. I'll just reemphasize that we intended to simplify and focus our portfolio, and we have done just that. Each is aligned to the strategic fit of the core attributes of a successful Sonoco business that I noted earlier. And the underpinning of everything we do across all these businesses is to serve our customers.
These are just a few of our great, long-standing partnerships listed here, and we are proud to serve the world's best, who believe in our ability to help them drive value. In many of our relationships, we are the sole supplier on a global basis, and our customers trust in us.... We believe our mission is to fulfill the vision of our customers and make them successful, and we've been doing that every day for over 125 years. We're in tune with what's changing with our customers, and we are responding with programs to meet their objectives. Similar to Sonoco's commitments, many of our customers have made near-term commitments and have an increasing focus on carbon reduction in the supply chain. We're helping our customers in two ways. The first is making products that are more sustainable.
We're focused on producing the most sustainable products across all substrates through comprehensive product design and thought leadership on industry recycling. The second is focusing on climate change and reducing the environmental impact across our global manufacturing footprint. Each business is aligned on sustainability objectives in support of Sonoco's corporate commitments. We have multiple programs across Sonoco globally focused on emissions reductions. These programs span from on-site power generation through solar installations, biogas programs, and LED lighting. We've signed a purchase power contract for clean energy programs equivalent to 9% of our total global energy usage. Within our plant network, we are working on the operational efficiencies across our equipment to make sure we are minimizing the environmental impact in our operations, and we are delivering on our commitments to the targets we have set forth for lower energy and water usage.
Importantly, we're delivering on our sustainability commitments and making excellent programs on protecting our environment. For our investments in our team and communities, we have a broad set of initiatives and measures to link to our people excellence programs. We continue to strive for transparency with you, our shareholders. We are proud to be positively recognized by various organizations for our continued progress in these sustainability areas. Now, I thought I'd take a moment to share some of the incredible innovation examples from Sonoco in support of our customers. The first is from Kellanova, which was a spin-off from Kellogg's not too long ago. In Europe, many food companies and retailers are working quickly to comply with European legislation requiring more recycled content in packaging.
To achieve this, Sonoco developed a patented new paper bottom sealing unit, which removes the metal end and replaces it with a paper bottom, taking our 70% paper can to 90%, which can be recycled. Pringles launched their product with the new Sonoco can earlier this year, and so it can be found on select store shelves throughout Europe. In addition to our paper cans, we made a great investment to expand our capabilities in metal cans a few years ago. And just in case you didn't already know, steel represents the single most recycled substrate, with over 75% of all steel ever produced still in use today. The barrier protection offered by our steel products is second to none, and we directly contribute to the reduction of food waste while providing the longest shelf life of any package format.
Our customers count on Sonoco's ability to collaborate and innovate to remain competitive within their served markets. No greater example of those investments exists than our partnership with Bush's, where we are co-located on premises. Our willingness to invest alongside our customer exists across all of our businesses, and these types of partnerships set us apart. Another great example is where we worked with Nestlé on their Stouffer's brand to resolve a historical issue, where black CPET trays were not being detected in today's municipal recycling centers. Through innovation at Sonoco, we removed the colorant so that the infrared technology would be able to properly identify the type of resin the package is made of, thereby improving the package's recycling rate. In doing so, we were also able to utilize 30% recycled resin and eliminate 80,000 pounds of colorant annually.
This package also recognized with a Dow Innovation Award, one of many that we have received over the past several years. The final case study is from our global paper group, where we use our URB paper in a proprietary design for a product in which consumer white goods can be stacked using our high-performance, all-paper packaging to prevent damage during storage and shipping. Today, we are the global leader in protective packaging for the North American appliance market. We're expanding our proven SonoPost technology into the European market. Plastic foams are currently the main protective packaging platform for the European appliance market. Pending EU mandates provide a growth opportunity for Sonoco, and we have already installed three manufacturing lines with room to grow. We believe that in the coming years, there will be an incremental market opportunity to use our sustainable packaging to expand and grow market share overall.
I could provide a number of additional examples where innovation and sustainability are pending tailwinds for our business.... As we focus on these trends, driving future opportunities, each fit business has a clear investment thesis in our portfolio. Our Rigid Paper Containers business is our growth engine from strong secular tailwinds of sustainability, and we'll invest to take advantage of these growth opportunities. Our new FlexTherm business is part of a steady growth market with high potential for organic growth, which can be coupled with inorganic growth opportunities in a highly fragmented market. Our metal business is stable, defensive, and steady cash flow, and optionality for inorganic growth. And our legacy industrial packaging business, which has been transformed over the last several years, is a global leader that provides steady cash flow to the company.
We are aligning our long-range plans to achieve our enterprise objectives of becoming a disciplined, growth-oriented company. Our business strategy builds on our core business portfolio strategy, and our operation model informs our execution playbook to further drive growth through business excellence, optimize costs through operational excellence, develop our talent through people excellence, and advance our sustainability initiatives. We do all this to continue to deliver results through financial excellence, by expanding revenue, profits, and margins, and of course, increasing cash flow. Through all of this, we will manage risk and continue our dividend payout to increase shareholders' returns in the future. So where are we going next from a financial perspective? We are building on our improved foundation and financial performance, and our goal is to deliver the following results in the next five years.
We are targeting adjusted EBITDA of $1.5 billion, with a high-teens EBITDA margin. We expect to generate cumulative operating cash flow of $4 billion-$5 billion over this period. We also remain committed to a competitive and growing dividend. I'm pleased to announce that today, your board approved an annual dividend increase of $0.04 per share. This will be the 99th year of dividend payments and the 41st consecutive year of dividend increases. This commitment to yield and stability is a core component of our shareholder value model. Sonoco is a great company. All the work we have done today, and all the work we will continue to do, positions us well to create more value in the future. I started our conversation this morning with our guiding principle that people build businesses.
Our directors, the Sonoco leadership team, and employees who are here today, as well as the thousands of Sonoco team members, are responsible for building this business and bringing us to where we are today. It is with confidence I can say we have the right team with the right experience to carry us into the future. I thank you for your attention and for your continued trust and support as we continue this incredible journey together. Now, I would be happy, we would be happy, to answer any questions that any of you may have.
With no questions, Mr. Chairman, I move that we adjourn the 2024 meeting of shareholders.
Thank you all for your attendance. Appreciate it.