Good afternoon. On behalf of the board of directors of Stryker, I would like to welcome you to the 38th annual meeting of shareholders. I am Kevin Lobo, I have the honor to serve as chairman and CEO of Stryker. Also participating in this meeting is Dean Bergy, vice president and corporate secretary. Before starting the formal business, please join me in welcoming John Brown, our chairman emeritus, who led the company for over three decades, helping Stryker to be the Fortune 300 company that it is today. John is accompanied by his wife, Rosemary Brown. John, please stand, let's give him a big round of applause. I am also very pleased to see a number of Stryker leadership alumni in the room today, as well as many of their families participating. Let's all acknowledge them with a big round of applause.
Now we'll turn to our forward-looking statement. You're also reminded that our meeting today may include forward-looking information. These factors are included in the most recent Form 10-K and are covered by the statement that you see before you. That I can officially call the meeting to order, I'll ask Dean to establish that this meeting has been duly called and that a quorum is present.
Thank you, Kevin, good afternoon. With me, I have an affidavit related to the mailing of the notice of the meeting and proxy materials on March 20, 2017, to all shareholders of record as of March 6, 2017, the record date fixed by the board of directors. I have a certified list of the shareholders of record of the company as of March 6, 2017, which is available for inspection by any shareholder during and immediately following the meeting. The minutes of the 2016 annual meeting of shareholders, which also are available for inspection by any shareholder. Irene Corbe, vice president, internal audit, and Sean Etheridge, legal counsel, have been appointed to serve as inspectors of election.
Based on the proxies received, the inspectors have reported to me that a majority of the 373,069,477 shares of common stock entitled to vote are represented at the meeting, either in person or by proxy. A quorum of common stock is therefore present, the meeting may proceed.
Thank you, Dean. On the basis of the secretary's report, this meeting is duly constituted, and we are ready to transact business. First, I would like to introduce the individuals who serve as directors of the corporation. They are all present and seated in the front of the room. In the photo, from left to right: Allan Golston is president, U.S. Program for the Bill & Melinda Gates Foundation. He is lead independent director and chairs our audit committee. Srikant Datar is the Arthur Lowes Dickinson Professor of Accounting at the Graduate School of Business Administration at Harvard University. Ronda Stryker serves on the boards of Greenleaf Trust, Spelman College, and Kalamazoo College. She is the granddaughter of Dr. Homer Stryker, the founder of the company, and the daughter of Lee Stryker, a former president of the company.
Howard Cox is a partner of Greylock and its affiliated venture capital partnerships. He is our longest-serving director. Andy Silvernail is Chairman and CEO of IDEX Corporation. Louise Francesconi is former president of Raytheon Missile Systems. She chairs our governance and nominating committee. Roch Doliveux is former CEO and chairman of the executive committee of UCB, a global biopharmaceutical company. He chairs our compensation committee. Let's please acknowledge our board of directors with a round of applause. Now I'll turn to the Stryker leadership team. I am proud and honored to have the opportunity to introduce the Stryker leadership team. Before I show the full picture, I would like to highlight one leadership change which occurred at the beginning of 2017. Graham McLean was appointed president of Asia Pacific at the beginning of the year.
He was most recently president of Japan and has held leadership roles in many functions during his Stryker career. We look forward to his contributions to our leadership team. Please welcome Graham with a round of applause. Now turning to the full leadership team, which you see pictured in our annual review. Starting in the back row and reading from left to right: Glenn Boehnlein is our CFO and is responsible for the company's financial operations. He's a CPA with broad experience in finance and accounting. David Floyd leads our Orthopaedics group. He has vast experience in the Orthopaedics industry. Tim Scannell has led many businesses at Stryker and is leading our MedSurg and Neurotechnology group. Mike Hutchinson is our general counsel. He has broad legal experience both inside and outside the company. Katie Fink is our Chief Human Resources Officer.
She brings knowledge gained from a variety of human resources roles, both at Stryker and at other large multinational companies. Bijoy Sagar is our Chief Information Officer and is modernizing our IT systems across the company. Katherine Owen is responsible for investor relations and business development. She was formerly a Wall Street analyst. Lonny Carpenter oversees our global quality and business operations, Europe and Canada business operations. He has a long title. Lonny is also leading our cost transformation effort. Yin Becker is responsible for public affairs and communications. She brings many years of experience in med tech. As you can see, we have a talented and experienced leadership team, which is driven to fulfill our mission. Let's please acknowledge them with a round of applause. Next, I would like to acknowledge our other corporate officers.
Dean H. Bergy, corporate secretary, William Berry, controller, Jeanne Blondia, treasurer, Irene B. Corbe, internal audit, William Jellison, regulatory affairs and quality assurance, David Ferguson, tax, Bronwen Taylor, compliance and risk management. Let's please give them a round of applause. Next is a list of our presidents, our division presidents for both our businesses and regions. They are the ones responsible for leading the day-to-day operations of the company. I would like to ask those that are present, and we have three of them here with us today, to please stand. Bradley Paddock, who leads our spine business, Spencer Stiles, who leads our instruments business, and Andy Pierce, who leads our endoscopy business. Let's please give them a round of applause. Also joining us today are Richard Witzel, partner of Skadden, Arps, Slate, Meagher & Flom, our corporate counsel, and William Miller, partner of Ernst & Young, our independent accounting firm.
We will now vote on the eight proposals that are included in the proxy statement. Our corporate bylaws do not require motions and seconds. The polls are now officially open for voting on these proposals. Any shareholder of record who is present may vote by ballot, and if you have previously granted a proxy, your vote by ballot will automatically revoke your proxy. If anyone wishes to vote by ballot, please raise your hand, and one of the inspectors will deliver a ballot to you. Your ballots will be collected after the proposals have been presented. If any shareholder in the room has a completed proxy in hand, it will be collected at that time. If anyone during this voting period would like to speak or raise a question, please move to a microphone located in the aisle.
Any comment should relate to the specific proposal being voted on. An opportunity to ask general questions will be provided later in the meeting. The first proposal is the election of eight directors. The nominees for election as directors are Howard E. Cox Jr., Srikant M. Datar, Roch Doliveux, Louise L. Francesconi, Allan C. Golston, Kevin A. Lobo, Andrew K. Silvernail, and Ronda E. Stryker. There have been no other nominations during the designated nominating period, and in accordance with our bylaws, the nominations are now closed. The second proposal to come before the meeting is ratification of the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for 2017. Under SEC rules, the responsibility for appointment and oversight of the company's auditors resides with the audit committee. Today, we continue our practice of asking shareholders to ratify this appointment.
The third proposal to come before the meeting is the approval of the company's 2011 Long-Term Incentive Plan as amended and restated. This approval will increase the number of shares available for issuance pursuant to awards made under the plan and will also extend the duration of the plan from December 31, 2018 to April 30th, 2027. The fourth proposal to come before the meeting is the approval of the company's 2011 Performance Incentive Award Plan as amended and restated. This approval will increase the number of shares of common stock that may be issued under the plan and will also extend the term to permit awards to be made with respect to performance for any year through 2024. The fifth proposal to come before the meeting is the approval of the company's 2008 Employee Stock Purchase Plan as amended and restated.
This approval will increase the number of shares that may be issued under the plan and will also permit new purchase periods to be designated through May 1st of 2027. The sixth proposal to come before the meeting is the re-approval of the material terms of the performance goals under the company's Executive Bonus Plan. This approval will preserve the company's ability to take a federal tax deduction for certain compensation awards. One of the requirements for deductibility is shareholder approval every five years of the material terms of the performance goals, which last occurred five years ago.
The seventh proposal to come before the meeting is Say on Pay, an advisory vote to approve the compensation of the company's named executive officers as disclosed in detail in the proxy statement under the Compensation Discussion and Analysis and Executive Compensation. The eighth proposal to come before the meeting is Say on Frequency, an advisory vote on the frequency of future Say on Pay votes. The Say on Frequency vote must be held every six years. We have conducted an annual Say on Pay vote since the requirement first came into effect in 2011 and have recommended that we continue this practice. All of the proposals on the agenda are now before the meeting and the polls are open. Please complete your ballot and return it to the inspectors. Proxies will also be collected at this time. Do you have any votes? Okay.
The voting has ended, the polls are now closed. The inspectors will complete the vote count, we will announce the results later in the meeting. While that is taking place, Kevin will share a view of Stryker's performance and future outlook.
Thank you, Dean. I'll now give you all a business update of Stryker's performance, both for 2016 and a little bit of an outlook in the first quarter of 2017. I'd like to start all of my presentations with Stryker's mission and values. We launched these three years ago. This appears in the office of every single building in Stryker around the world. It really is what binds and unifies the corporation. The mission is why we come to work every day, you can see the customer is a pretty big part of the mission. Then our values, John established these very early at the beginning of Stryker. These values, which we've now written down on paper, of integrity, accountability, people, and performance. This is the result for 2016. As you can see, $11.3 billion of sales, and we're pursuing global market leadership in each of our segments.
We've been very acquisitive over the past four or five years, and all the acquisitions have strengthened each of these pieces of the pie and made them bigger and stronger. Our goal is to be leaders in every category where we play. This chart shows the culture of growth since Stryker became a public company in 1979. For the first time in our history, we crossed both the $10 billion mark and the $11 billion mark. Truly impressive performance. We've grown sales every single year for 37 straight years, a compound annual growth rate of 18% over that period of time. Here's the stock price performance for 2016. You can see that we had a terrific year last year, where we performed almost 29% growth in our stock price versus the S&P at 9.5%. That has continued into this year.
Year to date, we are up double-digit growth, versus 2016, with the S&P in sort of a mid-single digit growth rate. We continue to outpace the S&P, and this would be true if you look at a one-year, three-year, five-year mark. We continue to outperform very well. We continue to grow at the high end of med tech. This chart shows our organic growth. If you exclude acquisitions and exclude foreign currency effects, how is Stryker growing and how are we growing versus our peer companies? You can see we outgrow the market every single year, and our growth has increased each of the past three years from 5.8% to 6.1% to 6.4% for full year 2016. We're also delivering leveraged earnings.
You can see in 2014, our earnings were very similar to our sales growth, but in the last two years, we've delivered very consistent, strong leverage in our P&L and drove strong earnings performance of 8.2% in 2015 and 13.3% in 2016. This is our ongoing commitment, is to grow our earnings faster than our revenues. For Q1, we had a terrific start to 2017 with 8.2% organic sales growth. We did have the benefit of one extra selling day in the quarter. That accounts for roughly 1%. Let's say we did about 7% organic sales growth. That's clearly at the high end of med tech and was very well received by the investment community when we had our earnings call. The earnings was also very impressive. We came in at 19.4% growth in earnings for the first quarter.
We also announced that we had repurchased $230 million of shares in the first quarter. You may recall that after we did the two large acquisitions in medical last year, we had suspended our share repurchase program. The impact of the share repurchases in the first quarter is to effectively offset dilution over the course of this year. At the end of last year, we established some long-term goals. These are multi-year goals for the company. One is to continue doing what we have been doing for the past five years, which is growing our sales at the high end of med tech. We committed to driving operating income leverage and expansion in our margins. Thirty to 50 basis points of annual operating income improvement over each of the next five years. And we set a floor for our EPS growth of at least 9% each and every year.
For 2017, this is the guidance that we laid out at the beginning of the year of 5.5%-6.5% organic sales growth, as well as $6.35-$6.45 of adjusted net earnings per diluted share. Those were our full-year goals. You can see the Q2 goals at the top of the page. At the end of Q1, when we announced our earnings, we left our full-year outlook intact. Obviously, with a very strong performance, we feel increasingly confident of being able to deliver on our full-year commitments. Looking at our three business segments, a few comments on each one. We really have terrific momentum at Stryker right now across all three segments. Starting with Orthopaedics, the Mako total knee launch was in the first quarter of this year, the full launch of the Mako total knee. That's Mako robotic-assisted knee procedures.
It's probably the biggest launch in our company's history. It was at the AAOS meeting in San Diego, a fantastic launch, very well received by our customers, and we expect continued very strong performance. As you've seen, our knee business has been performing very well, and we expect that to continue with robotic-assisted surgery. Within MedSurg, we've had terrific growth that grew double digits in the first quarter, our MedSurg segment, and great innovation across all of our divisions with instruments launching their System 8 power tool, the next generation of power tools, early this quarter. Sage and Physio, the two big medical acquisitions we did, will start to roll into our organic growth in the second quarter of this year.
Neurotechnology and Spine has been our fastest-growing segment, if you look over the past couple of years, really driven by neurovascular and these treatments for stroke, especially ischemic stroke, which are basically clots in the brain that you can pull out with a stent retriever. You can see the other businesses listed there that are contributing to very strong growth. In each category, very strong growth, above-market growth, and very good new product pipelines across the company. Very good momentum as we exited 2016, as we've started 2017. We do expect 2017 to be another strong year for Stryker. Just to remind everybody about our core strategies. Business unit specialization is a key component of Stryker. Decentralized business units with dedicated sales, marketing, R&D, and business development.
That is at the core of this company, staying very close to your customer, being able to innovate very quickly and launch new products, and also identify acquisitions, which is listed second. We are going to continue to be a very active acquirer as we have been over the past five years. International growth remains a very significant opportunity, and I'll touch on that in a minute. Lastly, focused on cost and driving out unnecessary costs that don't impact our customers directly. Turning to international growth, we've had fantastic success within Europe and Canada in changing our operating model where the divisions have direct responsibility for those two regions. Europe, since 2015, has been growing faster than Stryker's average as soon as we implemented this model, and that is really the first time that we can remember Europe having that kind of effect on overall Stryker results.
Canada rolled into the model last year in 2016, had really terrific results as soon as we started integrating Canada into this model. Emerging markets for Stryker are still a very small portion of our overall results at around 6%-7% of total sales, but still a very significant long-term opportunity. As you know, we had some challenges in China with destocking over the past almost 2 years. That finally reached its bottom towards the end of last year, and it returned to growth, China did in the first quarter, sorry, the fourth quarter of 2016 as well as the first quarter of 2017. I think the worst is behind us, but we still have a long way to go to rebuild our China business. We are also launching mid-tier products. Mid-tier means lower-priced products to access a different part of the market.
Historically, Stryker has only sold in the premium segment of these markets, now we've launched a lower-priced bed offering, a lower-priced power tool, and we really believe this is going to drive tremendous results. In the emerging markets, the mid-tier segment over the next 10 years will become larger than the premium segment. It's really important to have products that can meet this offering. We also had historically bought the Trauson business in China, which has spine and trauma products for the lower-priced segment of the market. We're also going to be a lot more focused as we look in emerging markets, really picking our countries and picking our products, and really being more focused about both to drive growth. Cost transformation for growth. I've talked about this a lot over the past year. We're really in full swing across all of these different initiatives.
It's a multi-year opportunity that will really significantly contribute to our ability to drive operating leverage. Capital deployment. If you look here, this chart shows you the last 3 years, and you can see that mergers and acquisitions has consumed more than 50% of our cash. We like that. Our first priority for cash allocation is for mergers and acquisitions. That's what we like to do. This is a very typical picture. You can see dividends have also increased significantly, compound annual growth of 15% since 2012. Share repurchases are obviously a little bit smaller, given that we did some larger acquisitions and had to suspend our share repurchases last year. This is a very typical 3-year view. If you look at any 3-year view of Stryker, you would expect more than 50% of the cash to be allocated to acquisitions.
Here's an example of the acquisition level, and it's not all our deals, but our larger deals. You can see we've been very busy the past few years, and I expect that level of activity to continue going forward. We continue to look for acquisitions. We continue to have a very strong balance sheet, which gives us the capacity to do more deals. If you notice on this slide, there are 2 different colors. One is blue, core business, and one is green, adjacencies. You'll notice most of the acquisitions listed here are in blue. That is very typical. We like to buy products and technologies and integrate them directly into our businesses and occasionally step to the left or right of one of our businesses and acquire an adjacency that accesses new growth for the company.
That is a very typical picture that you should expect to see going forward. Most of our deals core and an occasional deal in an adjacent market. We think about acquisitions sort of like external R&D. We spend significantly on internal R&D at about 6.5% of sales, but we supplement that with external R&D through acquisitions. Stryker is a great place to work. You can see here a smattering of the accolades that we receive. Some of these are through submissions, and some of these are not even through submissions, they're just accolades that we receive in general. I'll just point on the most recent one on the top right, is 2017 People Magazine Companies That Care, which was quite a nice recognition that we received. It's the first time they've published such a list, and we appeared at number 45 on that list.
For a company like Stryker that's not quite as well-known, it was very pleasing for me to tell my mother that we were in People Magazine as a company that cares. In summary, we have a talented and experienced leadership team. I would hold up our leadership team against any in the industry any day, and this is the reason why we're driving the kind of performance we're driving. Our strong sales growth will continue. As you saw in the first quarter, terrific start to the year. We expect that to continue. We're very focused on innovation and acquisitions. We will continue to globalize Stryker through focus and alignment. We will continue to deliver leveraged earnings. As you've seen, the last two years have been terrific. We expect that to continue going forward. We will effectively deploy capital to enhance shareholder return.
With that, I'll invite Dean up on stage. Thank you.
Thanks, Kevin. I will announce the voting results here. I'm advised by the Inspectors of Election that each of the persons nominated for Director in Proposal 1 received at least 277,912,560 votes in favor of his or her election, and therefore each has been duly elected a director of the company. I'm also advised by the Inspectors of Election that shares representing a majority of the total votes cast on Proposal 2 were voted for ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm for 2017. I therefore declare that the appointment of Ernst & Young LLP for 2017 has been ratified. I am also advised by the Inspectors of Election that a majority of the total votes cast on Proposal 3 were voted in favor of that proposal.
I declare that the 2011 Long-Term Incentive Plan, as amended and restated, has been duly approved by the shareholders. I am also advised by the Inspectors of Election that a majority of the total votes cast on Proposal Four were voted in favor of that proposal. I declare that the 2011 Performance Incentive Award Plan, as amended and restated, has been duly approved by the shareholders. I'm also advised by the Inspectors of Election that a majority of the total votes cast on Proposal Five were voted in favor of that proposal. I declare that the 2008 Employee Stock Purchase Plan, as amended and restated, has been duly approved by the shareholders.
I'm also advised by the Inspectors of Election that a majority of the total shares cast on Proposal Six, reapproval of the material terms of the performance goals under the Executive Bonus Plan, were voted in favor of that proposal. I'm also advised by the Inspectors of Election that shares representing 97% of the total votes cast on Proposal Seven were voted in favor of the advisory vote on the resolution relating to companies named executive officer compensation. I'm also advised by the Inspectors of Election that a majority of the total shares cast on Proposal Eight, the advisory vote on the frequency of future advisory votes on executive compensation, were voted in favor of the one-year advisory vote alternative. The final results of the meeting will be filed on Form 8-K with the SEC shortly. The business portion of the meeting is now adjourned. Kevin.
Now we'll turn to Q&A. Any shareholder who would like to ask a question, please proceed to a microphone located in the main aisles. If you need a microphone and cannot get to the aisles, please raise your hand and we will bring one to you. Before you ask your question, please state your full name and if you are affiliated with an organization. We ask that the audience grant speakers the courtesy of concluding their remarks without introduction. Are there any questions?
Good afternoon. My name is Nick Tua. One question. First of all, I notice that our international sales are now about 27% of sales. What I'm wondering is how much of the assets, or I guess it's under cash and equivalents, are held overseas and would be subject to a tollgate tax?
Great question. About 80% of our cash is trapped overseas.
Eighty?
About 80%. It's part of our tax strategy. We're not unique in that. I'm sure you've read about the tech companies like Apple and Google that have a lot of their cash outside the United States. We certainly are looking forward to tax reform getting passed by the new administration, one of the elements of tax reform that will get passed will be the ability to bring back the cash that's trapped outside the United States. Today, we end up borrowing. To pay the first quarter dividend, as an example, we will borrow money to pay the dividend, because it's paid out of U.S. cash. We're able to manage it, but we look forward to tax reform as one of the elements that will help us be on an even footing with companies that have inverted their structures or with foreign-based corporations that we compete with.
Thanks.
Thank you. Are there other questions? With that, I would want to thank everybody for attending, thank you for your continued support of Stryker.