Afternoon. On behalf of the Board of Directors of Stryker, I would like to welcome you to the 37th Annual Meeting of Shareholders. I am Kevin Lobo, and I have the honor to serve as Chairman and CEO of Stryker. Also participating in this meeting is Dean Berge, Vice President, Corporate Secretary. Before starting the formal business, I'd like to introduce our special guests who are seated in the front row.
First, and with great admiration, join me in welcoming John Brown, our Chairman Emeritus. I know John doesn't need any big introduction here in Kalamazoo, but you all know that he led the company for over 3 decades, helping building Stryker into the Fortune 300 company that it is today. Accompany go ahead. We can never cheer enough for John. Accompanying John are his wife, Rosemary and daughter, Sarah and Janine.
Also joining us today is John Stryker. John is the Founder and President of the Arcus Foundation. He was a founding Board member of the Ol Pageta Wildlife Conservancy, Save the Chimps Florida and Greenleaf Trust. John serves on the boards of Kalamazoo College and Friends of Highline in New York City and is a registered architect in the state of Michigan. John and Rhonda Stryker, a member of our Board of Directors, who will be formally introduced to you shortly, are grandchildren of Doctor.
Homer Streicher, the Founder of the company and children of Lee Streicher, a former President of the company. Please extend John a warm welcome. Finally, we have a number of former Stryker executives in the audience, whom I'm happy to see are still shareholders. I would ask that they please stand to be recognized. Come on, Sai, I saw you here somewhere.
Please stand. There we
go.
You're also reminded that our meeting today may include forward looking information. These factors are included in the most recent Form 10 ks and are covered by the statement you see on the screen as well as printed on the agenda. So 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, and good afternoon. With me, I have an affidavit from the proxy solicitor related to the mailing of the notice of the meeting and proxy materials on March 16, 2016 to all shareholders of record on March 1, 2016, 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 1, 2016, which is available for inspection by any shareholder during and immediately following the meeting and the minutes of the 2015 Annual Meeting of Shareholders, which are also available for inspection by any shareholder. Brian Capone, Assistant Controller 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 373,191,800 16 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 and 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, Roc D'Aliveu is former CEO and Chairman Executive Committee of UCB, a global biopharmaceutical company.
Luigi Francesconi is former President of Raytheon Missile Systems. She chairs our governance and nominating committee. Alan Gholston is President, U. S. Program for the Bill and Melinda Gates Foundation.
He chairs our Audit Committee. I am serving as Chairman and CEO of Stryker. Bill Parfit is Executive Chairman of Invikro. He is the Lead Independent Director and chairs our compensation committee. Rhonda Stryker is Vice Chair and the Director of Greenleaf Trust, Vice Chair of Spelman College and a trustee Kalamazoo College.
Andy Silvernail is Chairman and CEO of IDEX Corporation. Howard Cox is a partner of Greylock it's affiliated venture capital partnerships. He is our longest serving director. Srikanth Attar is the Arthur Lowes Dickinson Professor of Accounting at the Graduate School of Business Administration at Harvard University. Let's please acknowledge our Board of Directors with a round of applause.
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 2 leadership changes since the end of 2015. The first is Steve Benzkoder, who was appointed VP of ERP Business Transformation at the beginning of 2016. He was most recently Vice President of Human Resources and has held leadership roles in many functions during his Stryker career. Katie Fink was named VP of Human Resources, replacing Steve.
Katie has been with Stryker since 2013 and was most recently Head of HR for our Med Surg and Neurotechnology Group. Prior to joining Stryker, she enjoyed strong success in numerous HR roles at other large multinational companies. We look forward to her contributions to our leadership team. Bill Jellison retired on April 1 this year. Bill made many contributions to the success of Stryker during his tenure.
Our new CFO is Glen Bainline. Glenn was most recently the group CFO for our MedSurg and Neurotechnology Group and has been with Stryker for 13 years. Glenn is a certified public accountant and prior to Stryker was a partner at Arthur Andersen. He has had a distinguished career and I am counting on his strategic and operational leadership. Please welcome Katie and Glen with a round of applause.
Turning to the full leadership team, starting in the back row and reading from left to right. David Floyd leads our orthopedics group. He has vast experience in the orthopedics industry. Tim Scannell has led many businesses at Stryker and is currently leading our med surg and neurotechnology group. David and Tim have both assumed additional responsibility for commercial businesses outside the U.
S. As we restructured our organization to further strengthen our global business connections. As mentioned, Bill Jelison recently retired from his role as CFO. Bjoy Sagar is our Chief Information Officer and is modernizing our systems across the company. Catherine Owen is responsible for Investor Relations and Business Development.
She was formerly a Wall Street analyst. Lonnie Carpenter has held many leadership roles at Stryker. He currently oversees our global quality and operations group as well as our Europe and Canada business operations, and is leading our cost transformation efforts. Katie Fink, as mentioned earlier, is now leading Human Resources. Mike Hutchinson is our General Counsel.
He has broad legal experience inside and outside the company. Ian Becker is responsible for public affairs and communication. She brings many years of experience in medtech. 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 corporate officers: Dean Berge, Corporate Secretary Bill Barry, Controller Gene Blondia, Treasurer Irene Corby, Internal Audit David Ferguson, Tax Bronwyn Taylor, Compliance and Risk Management. Please give them a round of applause. Our division presidents are the leaders responsible for the day to day operation of our businesses. I would like to ask those who are present today to please stand. With us today, Brad Paddock, Andy Pierce, Spencer Stiles and Brian White.
Let's please give them a round of applause. Also joining us today are Rich Witzel, partner of Skadden, Arp, Slate, Maher and Flam, our Corporate Counsel and Bill Miller, partner of Ernst and Young, our independent accounting firm.
We will now vote on the 4 proposals that are included in the proxy and reflected on the agenda. Our corporate bylaws do not require motions and seconds, so 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 be automatic 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.
Also 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 comments should relate to the specific proposal being voted on? Any hands for balance? Okay.
If not, we'll proceed to the proposals. The first proposal is the election of 9 directors constituting the entire Board of Directors. The nominees for election as directors are Howard E. Cox, Jr, Shrikant M. Ditrar, Rak Delavo, Louise L.
Francesconi, Alan C. Golston, Kevin A. Lobo, William U. Parfit, Andrew K. Silvernail and Rhonda E.
Stryker. As 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 and Young LLP as the company's independent registered public accounting firm for 2016. Under SEC rules, the responsibility for appointment and oversight of the company's auditors resides with the audit committee. However, today we continue our practice of asking shareholders to ratify this appointment.
The 3rd 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 reapprove the material terms of performance goals for awards under the plan that are intended to qualify as performance based compensation under internal revenue code rules, which approval is required every 5 years. This approval will also establish limits on the compensation that can be paid to our Board of Directors. The 4th proposal to come before the meeting is an advisory vote to approve named executive officer compensation. The philosophy in setting executive compensation is discussed in detail in the proxy statement under compensation discussion and analysis which begins on Page 9.
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. Since there are no ballots, I assume we'll get none of those, but proxies will also be collected at this time. So is there anybody that has a proxy to turn in? Okay.
The voting has ended and the polls are now closed. The inspectors will complete the vote count and we will announce the results later in the meeting. While that is taking place, Kevin will share a review of Stryker's performance and future outlook.
Thank you, Dean. I'd like to start the business update with our mission and values. We launched these 2 years ago, and I'm absolutely delighted to see how well they've taken hold in the company. Every facility that I visit around the world, you see the mission and values prominently displayed. Our mission is together with our customers, we are driven to make health care better and our four values of integrity, accountability, people and performance.
We finished 2015 with almost $10,000,000,000 in annual revenue, and you can see we have a broad group of businesses that make us a leader in orthopedics, med surg and neurotechnology in spine. We have a great history of performance related to sales growth. Since Stryker went public in 1979, we've enjoyed 36 consecutive years of sales growth, which is truly remarkable performance, a compound annual growth rate of 18% since 1979. We've also done well with our stock price. If you look over the past 3 years, Stryker stock has improved 70% versus the S and P, which is up 43%.
Importantly, this trend is continuing into 2016. So year to date in 2016, our stock is up 18% versus the S and P. Versus the S and P, which is up 2% year to date. This chart shows our organic growth, which is our growth excluding acquisitions and foreign currency over the past 3 years. And you can see that our organic growth has outpaced the average of medtech in each of the 3 years.
Our growth was 5.1%, 5.8%, 6.1%. On average, we have outpaced the average of medtech by 2 50 basis points over the 3 year period. Now before I talk about 2016 guidance, I just want to remind everybody about 2015. So for the full year in 2015, we grew our organic sales 6.1% and we delivered $5.12 of adjusted EPS. Last week, we announced our Q1 results for 2016 and they were very strong results, with growth of 6.1% And the strength of that result and the momentum that we feel over the course of the year was so good that we felt necessary to increase our guidance.
We raised our guidance for both sales and adjusted EPS. And so the new guidance is what you see on the slide before you, which is full year sales in the range of 5.5% to 6.5% and adjusted EPS in the range of 5 point 6 5 a share to $5.80 a share. This shows adjusted EPS growth of 10% to 13%, demonstrating strong earnings leverage. These are the key elements of our success. It starts with business unit specialization, which includes dedicated focus on product innovation, continued focus on globalization, a robust cost transformation program and continued acquisitions for growth.
Looking deeper at product innovation, we have a significant commitment to R and D. Our R and D investment over the past 3 years on a compound annual growth rate has increased 10%, so very significant increase in our spending in R and D. The result of that is healthy and diverse product pipelines across the company. And I've only listed a few examples here on the slide. Spine Sports Medicine, Trauma and Extremities have launched a steady stream of new products over the past few years, and we're seeing that with much higher sales growth.
Endoscopy division launched a very exciting new camera at the end of last year, and that's obviously starting to have great impact in 2016. This camera enables safer surgery. We also have approval for our total knee with Mako, so robotic assisted total knee, and we are in limited launch this year ahead of our full launch in 2017. So in addition to these individual products that are being launched by divisions, we're also leveraging common platforms across the company and collaborating across our R and D organizations. And I just have a few examples on this slide.
The first being 3 d printing or also known as additive manufacturing. So our reconstructive division, the hip and knee division, developed this tremendous capability and competence and has launched a series of products. But they went to our spine division who had a need in this space for an interbody device and they helped them launch this product. And so we have a new 3 d printed spine interbody device that we launched at the beginning of this year, which has terrific response from the surgeon community, something the spine division would have taken years to do on their own. So that's the kind of collaboration that's occurring at Stryker.
Another example is a bone database, which the Trauma and Extremities division developed on their own, and they use that to design plates that fit perfectly with the anatomy. They shared that bone database with their hip and knee division. And so some of our more recent launches out of the hip and knee division have used the bone database and have fantastic results of fitting patient anatomy. And then lastly, many of our products involve software user interfaces and electronics. We are now sharing that capability and sharing best practices across the company.
So this collaboration in R and D is an extra engine of success that we're seeing, an extra engine of growth for the future of Stryker. We have many R and D people in the room, and you can see that they're very encouraged by the collaboration and research and development. International growth is still a very significant opportunity for Stryker. Today, we have over 70% of our sales in the United States. So we have significant scope for improvement in emerging markets.
They're single digit percent of sales. We have a long way to go still to grow in emerging markets. Right now is not a fantastic time in emerging markets. If you look at the economies in China, Brazil, Russia and Turkey, those economies are having challenges. So the macroeconomic pressures are meaningful, but longer term, these are very important markets and we need to win in these markets, and they are a focus of our attention.
Europe had a fantastic year in 2015, and we expect that to continue in 2016 as we moved into the transatlantic operating model. To see Europe growing at the same rate as the overall striker is something we had not seen before, and we are very excited about the potential for the future as Europe still today represents a very small percentage of our overall sales. And then lastly, I would say we're trying to increase more and more the connection of the regions with our product divisions. And we've made a number of structural changes to our business to facilitate that connectivity. And we believe that will increase the response of products to the market needs around the world and will drive higher international growth.
Cost transformation for growth is a very robust program. You can see the list of the initiatives that we have underway. This is a multiyear program, and we have Lonnie Carpenter sitting in the front who's leading this. We're very excited about what this can do. This has the potential to deliver very significant savings, which we plan to reinvest for growth and also those savings will help ensure that we deliver leveraged earnings consistently every single year.
Our capital deployment philosophy has not changed to Stryker for a long time. Our first priority is M and A to drive growth 2nd priority, the dividend and third, share repurchases. In the pie chart, you can see what happened over the last 3 years, and you can see that more than half of our capital allocation was devoted to M and A, to acquisitions. You should expect a similar picture if you look over the next 3 years as M and A still remains our most important priority, our most important use of our cash. Digging a little deeper into acquisitions, you can see that we've had a very busy start to 2016 with 2 adjacencies, Sage and Physio Control International and 2 core business acquisitions, Synergetics and the VCF business that we acquired from Vecton Dickinson.
On this next slide, you can see a picture of the products that came along with these acquisitions. And as you look at these pictures, these absolutely look like Stryker products, don't they? So this slide shows you just a list of all the accolades that we receive as a great place to work. Stryker truly is a great place to work. I'm not going to go through all of these, but I would like to highlight the bottom left one, which is Fortune 100 Best.
We've been on the Fortune 100 Best list for the last 6 years and we were ranked number 21 in 2016. And what's remarkable about that achievement is if you look at large manufacturing publicly traded companies, there are very few on the entire list And most of the companies ahead of us on the list are either privately held companies or tech companies like Google. So we're in rarefied air. It's really something that we're proud of, and we continue to strive to be a great place to work for our employees all around the world. So to summarize, we're driving strong organic sales growth.
You saw that with our guidance. You saw that with our performance from last year. We're focused on innovation and acquisitions. We are enhancing our global presence. We still have work to do internationally, but we're very excited about the prospects.
Europe is giving us tremendous encouragement because our success in year 1 of the transatlantic model was fantastic, and we plan to continue that around the world. We're delivering leverage earnings gains, and you saw that with our raised guidance in earnings, and we're effectively deploying capital to enhance shareholder returns. So with that, I will now call Dean back up to stage.
Thanks, Kevin. I'm going to report the voting results. I am advised by the inspectors of election that each of the persons nominated for Director and Proposal 1 received at least 281,409,818 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 and Young LLP as independent registered public accounting firm for 2016. I therefore declare that the appointment of Ernst and Young LLP for 2016 has been ratified.
I'm also advised by the inspectors of election, the 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 shares representing 96% of the total votes cast on proposal for were voted in favor of the advisory vote on the resolution related to the company's named executive officer compensation. The final results of the meeting will be filed on Form 8 ks with the SEC shortly and the business portion of the meeting is now adjourned. I'll turn it back over to Kevin.
Okay. Thank you, Gene. Any shareholder 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 an aisle, please raise your hand and someone will bring you a microphone. 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 interruption. We may stop discussions that are irrelevant to the company's business, derogatory or not in good taste, repetitious or related to personal grievances. Please raise the lights. Any questions from the audience? There's a question here.
Can you please go to the microphone so everyone can hear the question?
You said that only like 1% or very small percentages from around the country. If you look at GE, they did a thing on TV, they showed that they asked, are you still an American made company when you have 60% of your revenues from Central America? We need to figure out where those hotspots are out there so that when you make that $1,000,000 investment, you get 10 times or 100 times back on your investment. Or like when you do advertisement, like the cigarette companies, what they're doing, they can't do advertisement on TV. Maybe they're doing NASCAR.
So they'll pay $100,000 to do the advertising on NASCAR. And I don't watch NASCAR, but let's say there's 50 advertisers for NASCAR for the shows, then that might be $1,000,000 each one, that'd be $50,000,000 Well, if we pay $100,000 to promote the car, it's being shown 50 times, that's $50,000 worth of advertisement and we only put out 100,000 dollars We've made a boatload of money on our money and we leveraged those dollars and we can do that across the board and make the Striker name out there and then it shows we're supporting all these companies and that's how high soap is making a boatload of money. Yeah.
So advertising that. So I don't know
if that leverage how that works.
Yeah. Thank you. Thank you for the question. And what I would tell you is we are striving very hard to build the Stryker brand around the world. Advertising is something that in the healthcare world, there are a lot of limits.
There are many countries around the world where you are not allowed to advertise directly to patients. So that's one constraint that we have that other industries don't have. But I can assure you that we are planning to make good on our investments. I would tell you in Europe, one of the reasons we focused on Europe is these products were already approved. We've already made the investment in these products.
So getting more sales and marketing people on the ground has definitely driven growth. And globalization isn't easy. I'll be honest with you. A company like GE, they've been at it for 20, 30 years and there's been many articles written about how many difficulties they've had, how much money they've lost over time. So we intend to be very significant outside the U.
S, but these things take time. They don't always go in a straight line, But we are very encouraged certainly by the success we've had in Europe, and that's given us the strength of our conviction to continue to expand around the world. So thank you for your question. Are there any other questions? There's one in the back.
I see a hand. Either a stretch or a question. I believe it's a question.
My name is Pat Glass. I'm retired. I just wondered if are you going to do a stock split anytime soon, please?
So certainly, stock splits have been a big part of Stryker's history. Certainly, back if you look in the 1980s, I would tell you that right now, stock splits are much less common. Just in general, many of our peers have stock prices like ours that are over $100 and 40% of the S and P stock prices are north of $75 So they're just much less commonplace today. Are there any other questions? So listen, thank you very much for attending the meeting and thank you for your continued support of Stryker.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may all disconnect. Everyone, have a wonderful day.