the kroger co.\'s ceo hosts annual shareholder meeting (transcript)

by:Yucai     2020-01-12
Kroger Co. (NYSE:KR)
Annual shareholders\' meeting at 11: 00 a. m. on June 27, 2013Dillon -
Chairman, Chief Executive Officer and member of the acting committee.
Rodney McMullen
President, Chief Operating Officer and DirectorHenderson -
Vice President of pension investment and strategy
Good morning DillonSo, if you want to start looking for a seat you can continue with coffee and cookies and we want to keep this relaxing so I will get you a seat before we start.
Because the cookies are delicious, I really want to buy some coffee and biscuits.
As a matter of fact, someone is happy to bring me here.
I appreciate it.
Okay, let\'s get started.
Good morning. welcome to Kroger.
Annual General Meeting of Shareholders
I am Dave Dillon, chairman and chief executive of the board.
Thank you for joining us today. So let\'s start.
As a top priority, I appointed Dennis Hackett, vice president of corporate audit, as an election inspector.
Dennis, do you have a report?
Can we turn on his microphone?
Mr. Dennis Hackett.
Let\'s start, chairman.
We find that on April 30, 2013, the date of record of this meeting, the par value of each issued and outstanding common stock is $1, with a total of 520,063,320 shares, and the shares have the right to vote on each matter, at this meeting, it was properly submitted to shareholders for voting. at 11: 00, 447,306,833 ordinary shares were personally represented by the agent. m.
There was a quorum in June 27, 2013. David B.
Dillon Dennis, thank you, I have announced that the quorum is already there, and this meeting is legal and ready to go through the business.
Before we start the formal agenda, though, I am honored to introduce you to the board of directors.
Please stand up and keep each of the board members introduced.
After all the introductions, I will invite the audience to recognize your important contribution to Kroger.
First of all, Reuben Anderson, a senior partner in Jackson, Mississippi office, Phelps dunba, New Orleans law firm;
Following this meeting, Robert Byer, Bob Byer, chairman of investment company chaparral and new chief director of Kroger.
Bob, he started as the chief director, and we appreciate that.
Susan Cross, former president and chief operating officer of Avon products;
John ramachia, former chairman of Tellme Networks and former president and CEO of Cincinnati Bell.
John is the longest at present.
Director of Service
He has been a director since 1990 and will retire from the board in December, so I would like to point this out in particular.
He is an extraordinary asset to our organization and has helped us for many years, so we are grateful, John;
David Lewis, director of Lewis and Mundy;
Your President and COO in Kroger, Rodney McMullen;
Jorge Montoya, former president of P & G\'s global snack and beverage division and former president of P & G Latin America;
Clyde Moore, chairman and CEO of the first service network; Dr.
Susan Phillips, honorary professor and former Dean of finance at George Washington University Business School;
Steven Rogel, former chairman and CEO of Weyerhaeuser;
Special adviser, Jim Lund, former deputy chairman of Morgan Stanley;
Ron sagant, Chairman and CEO of Staples, I forgot my button, but it was easy;
Former chairman and president and CEO of Burlington Resources, Bobby Shasha.
Bobby, as he is now, has served as our former director, and of course, especially for me, he has done a very good job.
He is very helpful to me.
So thank you to the board and join me in thanking them for their excellent service to this company. Thank you.
Now, I want to recognize the officers of The Kroger Company, and I invite each of you to stand up and continue to stand as I call your name.
After the introduction, I will invite the audience to recognize your service.
First, Katie Barclay, senior vice president of human resources;
Robert Clark, vice president, non-groupPerishables.
This is Robert\'s first meeting as a senior official.
He joined us in February from our Fred Meyer division and was promoted to this role;
Senior Vice Presidents Geoff Covert and Jeff provide guidance and guidance to 5 retail departments;
Mike Donnelly, senior vice president of sales;
Kevin Doherty, vice president and chief supply chain officer of the group;
Paul Hedman, executive vice president, secretary-general and general counsel;
Chris Hjelm, senior vice president and chief information officer;
Lynn Marmer, vice president of corporate affairs of the group;
Rodney McMullen, president, chief operating officer and board member;
Senior Vice President of Marnette Perry, strategic planning and action.
Marnette also provides guidance and guidance to our Food 4 Less and Jay C departments;
Mike Schlotman, senior vice president and chief financial officer;
Erin Sharp, vice president of Kroger manufacturing group.
This is Irene\'s first meeting as a senior official.
In fact, the board elected her to this position this morning, and she replaced Calvin Kaufman and Calvin, and I also hope that you will stand up.
Calvin has--
Has just been appointed president of the new division of the city of Illinois, who will be in this role next week;
Senior Vice Presidents Pete Williams and Pete provide guidance and guidance to 6 retail divisions and are actually on leave this week and come back earlier to our board meeting.
We appreciate it, Pete.
I would also like to thank Mike Ellis, who can\'t be here today as senior vice president, who provides guidance and guidance to seven retail divisions.
I would also like to ask Scott Henderson, vice president of pension investment and strategy, who--
He used to be our Treasurer, and actually his new role is important for many of you.
Todd welfare, Vice President and Treasurer
He was elected treasurer by the board this morning;
Beth Van Oflen, vice president and chief financial officer;
And our chief diversity officer, Reuben Shaver.
Continue to stand, and there are several others.
Sukanya Madlinger, president of the Cincinnati division, can\'t be here today, but I \'d like to introduce two of her vice presidents: Scott Hendricks and Richard Thompson.
Please stand up if you are here, if you wish.
So now please join me in recognizing the leadership role played by the entire team on behalf of our customers and colleagues.
I will not ask these people to stand up now, or I may, I will see.
But I find it actually difficult to thank people after they retire, but it is also appropriate.
Usually we pick 2 or 3 at this meeting and identify them.
It\'s important for me to make sure they understand and understand the real impact these people have on the organization.
I really want to recognize John Hackett.
He\'s not here today, but John Hackett is our longest.
President of Service Division
In 1990, John ramachia joined the board of directors and became president of the department.
I think after 50 years of service he will retire this week
Plus years of service to Kroger.
And Bob modd, president of our Central Department, who has served for 42 years.
But when I saw the list of some key retirees in the past year, I decided to read the whole damn list to you.
So I\'m going to finish this soon because I want to make sure you recognize the important talents that we have in the past, and imagine that we have filled these jobs with these talents. people have trained the same good people, maybe even better.
So Jim Hodge retired last year after 42 years as our vice president of real estate;
Bill pratton, vice president of operations in the Delta 39 years later;
After 43 years, Reggie Griffin, vice president of product sales;
Tom Smith, vice president of corporate taxation, after the age of 13;
Bill Dankworth, Dank has worked at Kroger for 34 years as vice president of grocery sales;
I know Rich Manka will definitely be here today and he is the vice president and pension investment officer who has served 31 years;
After the age of 43, Ted salossi, vice president of loyalty, has not really retired yet, but will soon appear;
Evan Anthony, the same thing, for 31 years, the vice president of marketing and advertising will come soon;
Helas Hamilton, vice president of sales, Atlanta, 43 years;
Jin Ting Frey, president of Turkish Hill dairy company, for 33 years.
What I have to comment on is that the kuntin family is the founder of the Turkish hillminett market and the Turkish Hill dairy products.
When we bought the surgery, his father and uncle retired, and Quentin stayed, running a team of dairy Masters.
He actually taught us a lot about marketing our own branded products.
Our company is better because of their service, so I really want everyone to give them warm applause.
At least in the absence of mention, I can\'t introduce those who are currently retired, and I \'ve seen in the audience Lyall Effingham and Bill Sinkula.
I\'m not sure if I see anyone else but they are in the center.
We\'re glad you\'re here. Thank you.
In the end, you can only stand me, because this is my chance.
We have a point. -
I have personal privileges.
I would like to take a moment to confirm that our youngest shareholders are actually our youngest shareholders.
My grandson is in town: Lily ·[ph]Hank, Brooks [ph]
Lucy, Teddy and Ben.
So why not if you guys want to stand up and wave?
Stand up and wave to everyone, yes, yes. Hi, Brooks. Hi, Lucy. Hi, Hank. Hi, Lilly. Hi, Teddy. Hi, Ben.
Okay, so they\'re really here.
We\'re having a family party this weekend, and I said, you \'d better come to the meeting if you\'re coming.
What we think is really better than sitting on our show and meeting for an hour.
Well, if you want to know, yes, we did promise them ice cream later.
But more importantly, I have a theory that if my grandson is here, you will understate me in the Q & A session.
If they succeed this year, they will come back every year.
This is the plan.
Thank you for coming, and I thank them for coming.
That\'s great.
Let me now introduce Sue mcpatlin, an independent auditor at cage.
Please stand, Sue. Where are you?
Sue is here. Good.
Sue and Mike Schlotman and Paul Heldman will help me answer questions about the 2012 annual report.
Let\'s start the formal agenda.
Most of you will be online in the annual report, but some of you have real hard copies.
If I can get it out of my notebook, I have one here for you.
This is a hard copy of the annual report, which contains a letter from the chair of today\'s meeting, complete financial information, a certificate of auditor and agency material.
If you would like to ask a question about the annual report, like the annual report, please go to the nearest microphone and confirm your identity.
But at this time, we want to limit the problem here.
We will invite general questions, comments later, and we will discuss the shareholder proposal here later.
So according to the usual rules of conduct in Kroger, everyone will be limited to 3 minutes and I want to see if there is any problem with the annual report. Anyone?
I\'m looking in the mirror--
Lights from here.
OK, not seeing, we will ask for this document to be submitted in the minutes of the meeting, and we will continue to discuss the next item, which is the election of directors.
All directors will be elected for a term of office until the annual meeting of 2014 or whose successor will be elected and eligible.
Did I hear anything? Bruce?
Unknown participants
Mr. Chairman, I propose to nominate the list of directors candidates as set out in the proxy material until the annual meeting in 2014. David B. DillonGood. Thank you.
Is there another second?
Unknown participants
Chairman, I\'m the second nominee. David B.
Thank you, Dillon Scott.
Do shareholders present wish to vote instead of voting by proxy?
If that\'s the case, Janet is in the back, and if you raise your hand, she will make sure to distribute the votes.
I don\'t look like it at all, Janet, but be careful. Okay. Thank you.
When we wait for the report-
Starting with the election of directors, it will take us only a few minutes to review 2012 and our business performance.
So please note that today\'s presentation will include
Find statements as described in this slide.
I\'m not going to read it to you.
The Kroger team had another great year in 2012, not to mention the first quarter we just finished. Our well-
The established customer 1st strategy continues to drive growth in Kroger\'s performance and market share while overcoming the challenges of uncertain economy and fragile customer confidence.
I will talk about a few highlights this year.
You can find more details in the annual report.
We reported the year. over-
Annual sales grew to 7. 1%.
Total sales were $96.
8 billion, including an additional week for fiscal 2012.
Last year, at this meeting, we celebrated sales exceeding $90 billion and we are getting closer to the next $100 billion milestone due to our continued growth.
Supermarket sales without fuel also grew strongly. 5% in 2012.
Thanks to the hard work of our staff, we have now achieved industry-leading 5 same sales growth for 38 consecutive quarters.
This is a great achievement.
In 2012, we exceeded our expectations even after raising our guidance many times throughout the year.
Our net profit is $2.
77 per share after dilution.
This is up 16% from the previous year.
Our dividend has increased by 30% so overall our return-
We paid another $1.
In 2012, 5 billion was paid to shareholders through dividends and share buybacks.
Driven by this outstanding performance in 2012, Kroger provided shareholders with a total return of 18% on a comparable basis.
It is clear that our customer 1st strategy serves shareholders and customers.
Looking ahead, we have identified opportunities to accelerate Kroger\'s growth.
At last fall\'s investor meeting, we announced the company\'s new growth strategy, which will build on our strong momentum and bring higher returns to shareholders.
We are confident that this strategy will be resilient and sustainable in the long run.
There are several sections of our growth plan and I will give a brief overview.
We have a new long now.
The long-term earnings per share growth target is 8% to 11%, not 6% to 8% of our previous target.
Our long-term growth
The growth rate of long-term earnings, combined with our dividend increase, will create a strong total shareholder return and we are still committed to reviewing our dividend every year.
We also invest and develop our business by increasing capital expenditure.
We will target these increased investments in several ways: first, increase market share in the communities we currently operate;
The second is to open up new markets.
These two exciting opportunities, I know you are curious about when and where we take these steps and we are just making our plans.
While I can\'t share more details with you right now, we will be sharing more details with our colleagues and investors in the coming months.
So our other targeted areas of growth are not a big problem. and-
In digital space, for example.
Most of you may have one. -
Well, maybe not the Jayhawk on top, but the phone in your pocket, like me, and the picture of your grandson.
I don\'t need to take it out today because they are here.
But the digital world is an exciting opportunity.
Today, nearly half of Americans are using smartphones, and the number is the fastest growing channel to connect with customers, which is no longer a secret.
So we are expanding our leadership in personalisation through innovations such as our mobile apps.
I would like to know how many of you have mobile app, Kroger app on your phone.
Please raise your hand if you are using the mobile app.
In fact, many of you have it, which is great.
Now, not only can customers add digital coupons directly to loyalty cards, but today, you can sort them based on your shopping situation and their relevance to you.
In fact, so far, more than 0. 5 billion digital coupons have been downloaded through our mobile app and kroger. com.
Our digital team is adding valuable updates and features to the Kroger mobile app at the speed of sprinter, about every 6 weeks.
As many of you have already done, we encourage you to join in.
Our focus on our customers will continue to be the cornerstone of everything we do and guide our technological innovation.
In the past 130 s, serving customers has been a pillar of our culture. That\'s right.
2013 is 130 anniversary of the founding of Kroger.
It\'s in Cincinnati, Barney Kroger\'s first store on Pearl Street, however, our two banners have been open for longer.
The Ralphs division is already operating on 140, and Jay C Foods celebrated their 150 anniversary this year.
Our success is a human story.
People who are proud to work for our company, people who are encouraged, every time they visit one of our stores, make the life of every customer better, dedicated to understanding and meeting the growing people
That\'s why many of us are grocery owners.
Of course, many things have changed in the past 130, but one thing remains the same is that Kroger is committed to serving our community.
As the leading food retailer in the US, we work with organizations that provide food to hungry neighbors.
Last year alone, we contributed 400 of our food and money. -
Not 400, this comes in a minute, 4 million meals a week, or a total of 0. 2 billion meals a year, with more than 80 food banks nationwide.
We also support an organization that has helped our army and their families for more than 70 years, USO.
In 2012, our customers, colleagues and suppliers raised $3 together.
3 million of USO, the largest single contribution in the organization\'s history.
This is a video message from USO President Sloan Gibson. [Presentation]David B.
As more soldiers came home, we joined the 100,000 Jobs Mission, thus expanding our commitment to the service staff.
This is the company\'s commitment to collectively employ 100,000 veterans by 2020.
We are particularly proud that more than 17,000 veterans have joined Kroger since the 2009 s.
We look forward to welcoming more people.
These are good examples of the important role we play in the community we call home.
In 2012, we have just completed the accounting summary of the total investment of the community.
This includes our cash, food donations from our company, the Kroger Foundation, customers, partners and supplier partners.
I am pleased to announce that in 2012, all of us jointly invested $0. 25 billion to support the communities in which our customers and colleagues live and work. Wow.
This concludes the annual Business Review.
I am now back on our formal agenda.
We are ready for the director of elections report. Dennis?
Mr. Dennis Hackett.
Mr. Chairman, we find that the nominator of the board has been officially elected as a director of Kroger.
More than 96% of the votes voted in favor. David B.
Thank you, Dennis.
I therefore declare that all directors are elected to serve before the annual general meeting of shareholders in 2014.
Agenda Item 2.
The next item is an advisory resolution approving the remuneration of the executive officer designated by Kroger.
Did I hear anything? Kathy [ph]?
Unknown participants
Chair, I propose that shareholders approve the remuneration of our executives. David B.
Dillon, is there any time? John?
Unknown participants supported the motion. David B. DillonOkay. Thank you.
Dennis, is there a report on this proposal?
Mr. Dennis Hackett.
Mr. Chairman, we find that the holders of ordinary shares have passed a resolution approving the remuneration of the company\'s designated executives, and that the majority of the shares have voted to pass that resolution. David B.
Thank you, Dillon.
I declare the approval of the advisory resolution.
The next project, item 3, is the resolution approving the choice of PricewaterhouseCoopers as corporate auditor in 2013.
Did I hear anything? Lisa [ph]?
In 2013, unknown participants offered to approve PricewaterhouseCoopers as corporate auditors. David B.
Thank you, Dillon.
Is there another second?
Unknown participants supported the motion. David B.
Thank you, Dillon Scott.
Dennis, is there a report on this proposal?
Mr. Dennis Hackett.
Mr. Chairman, we found that the holders of common stock approved the resolution approving the selection of PricewaterhouseCoopers as auditors of the company in 2013, who voted in favor of the majority vote adopted. David B.
Thank you, Dillon.
So I announced that the choice of PricewaterhouseCoopers has been approved.
I will take a moment to comment, and I usually do not comment on the choice to approve the auditor.
Every 5 years you have to rotate partners and next year we will rotate Sue who was introduced to our accountant earlier.
She and her entire team did traffic work.
I think they provide a good service to all shareholders and make a good job of ensuring that our books are fairly stated.
Thank you, Sue. thank you for the whole team.
We initially received 4 shareholder proposals and I will start with that.
They are delegates here to advise on the publication of a report to review the risks of labor in the supply chain, namely Item 4.
So we need to recognize that person first.
Okay, do you want to keep posting your comments?
Good morning, sir.
Board members and other shareholders Dylan.
My name is Tom McCaney. I represent St. here.
Francis of Philadelphia and three other religious investors responsible for the society, as well as all members of the inter-religious corporate responsibility center.
I hereby move item 4 for the submission of a report on human rights risks throughout the world-
Supply chain of our company
As stated in Kroger\'s supplier standards, our code of conduct follows the U. S.
Labor regulations and Fair Labor Standards Act.
Inadequate compliance with the law is not enough.
Agriculture in Florida has been plaguing generations.
Despite these cases of poor wages and exploitative working conditions in the United States, including modern slaveryS.
Laws and regulations.
Kroger should follow the principles of the International Labor Organization, which add additional protection and rights to workers, recognizing that government laws and corporate efforts alone are not sufficient to address the prevailing problems.
Immokalee workers Fair Food Program coalition, through which farm workers, growers and corporate food buyers successfully ensure the human rights of tomato workers and improve the conditions under which they work, this is a major example of the ILO principles of action.
11 leading restaurants, food services and supermarket companies that have been working on fair food programs agree to strict code of conduct, cooperative complaint resolution systems, health and safety programs and workers involvedto-
Process of worker education.
The Fair Food Program was listed in a recommendation report to the President in April 2013 as one of the most successful and innovative projects in the world today, designed to reveal and prevent modern slavery.
We urge Kroger to join the Fair Food Program to address real human rights risks in our supply chain and to ensure that independent monitoring is carried out through the Fair Food Standards Commission, leading to the highest levels of accountability and real change.
Kroger made a lot of money. -has a well-
Win a reputation for treating employees fairly.
Farm workers in our supply chain should be treated the same way.
We ask all shareholders to support this resolution and ask our board of directors and management team to prioritize the human rights and dignity of all our employees. Thank you. David B.
Thank you, Dillon.
Is there still time for that motion?
There\'s an unknown audience. David B.
Dillon. Okay, one second here.
I just wanted to add some observations.
We actually shared many of the goals you described, so I don\'t think you\'ll see too much disagreement around us on some of the issues you\'re trying to describe our hopes for the world.
Although at Kroger, we believe that our code of conduct reflects our values of security and respect in a very meaningful way.
We have established a tough attitude with suppliers who fail to comply with our code of conduct and we will not do business with them.
We conduct a Vendor Audit of social responsibility, especially in the Immokalee area where we are--
We have found no evidence of any violation of our code of conduct.
We also sent a team of our own auditors and compliance professionals to the region to investigate working conditions and meet with suppliers.
So with that in mind, I will ask Dennis to submit a report on this resolution.
Mr. Dennis Hackett.
Chair, we find that the holders of ordinary shares voted 293,951,989 per cent on the resolution, urging the board to issue a report assessing human rights risks across the supply chain and 47,999,340 per cent on the resolution, most of the people who voted against the resolution were voted down. David B.
Thank you, Dennis.
So I declare that this proposal has failed.
Item 5, is there a representative here to propose a shareholder proposal 5, that is, through the shares of the independent board of directors. Yes?
Good morning.
I am here on behalf of the International Brotherhood of Electrical Workers, and our proposal urges the board to adopt the policy of the chair as an independent director.
It is the responsibility of the board to protect the long-term interests of shareholders
Gain long-term benefits by providing independent oversight of management.
The chair\'s position is critical to shaping the work of the board by setting the agenda, priorities and procedures.
In our view, it is unlikely that the board will have strict independent oversight of management, just like our company, the chairman of the board is the CEO.
We believe that having a chairman of the board independent of the company and its management is a governance practice that will promote greater accountability of management to shareholders and lead to a more objective assessment of management.
The chief independent director is different from the independent chairman.
According to the Milstein Corporate Governance and Performance Center of Yale School of Management, independent shares control conflicts of interest, promote risk supervision, manage the relationship between the board of directors and the CEO, as a channel for regular communication with shareholders, is the logical next step in the development of an independent board of directors.
Some institutional investors believe that a strong target board leader can exercise the necessary oversight of management.
Therefore, the global responsible corporate governance principles of the California Public Employee Retirement System suggest that the board of directors of the company should normally be chaired by an independent director.
The institutional investor council agreed.
We believe that independent directors who serve as chairman can help ensure the operation of an effective board of directors.
We urge you to vote in favor of our proposal. Thank you. David B.
This proposal has been made.
Is there a second proposal? Okay. Thank you.
A second.
I just want to add a comment that I think our point is that sometimes the separation between the chairman and the CEO is helpful and sometimes it\'s better to combine them.
We believe that it really should be based on the situation at the time, which suggests that it should be a board decision, as it is today.
Dennis, can you give us your report?
Mr. Dennis Hackett.
Chair, we find that the holders of common stock cast 322,254,119 votes on the resolution to urge the board of directors to adopt the policy of the chairman of the board as an independent director and cast 88,216,243 votes on the resolution.
As the resolution was rejected, most of the people who voted against it. David B.
Thank you, Dennis.
The proposal was therefore rejected.
Is there a representative here to make their proposal on item 6 on expanding producer responsibility? Over here. Thank you.
Good morning. David B.
Good morning.
Unknown participant I am here to represent the applicant for item 6 in the proxy statement when you sow seeds.
The proposal requires the company to report the feasibility of being responsible for its position through a policy
Consumer goods are packaged through a policy called extended producer responsibility.
The EPR is a policy to shift responsibility for collection and recycling from consumers and taxpayers to producers.
In many other countries, Grocery merchants and consumer goods companies are already responsible for financing the recycling of these consumer goods packaging.
The recycling rate of EPR projects in Austria, Belgium and Germany is much higher than that of voluntary recycling projects in the United States. S.
We think it\'s time for the company to pay a fair share of recycled packaging.
Major brands like coca
Coca-Cola and Nestle have approved the EPR of the US packaging policyS.
National Packaging
The recovery rate is about 48%.
Plastics are quickly becoming the preferred material for packaging, but only about 12% of the material is recycled.
1/4 of our population still cannot get roadside recycling.
More than 40 billion kilometers from [aluminum tank]indiscernible]
The United States continues to dump beverage container materials into landfill sites every year. S.
According to Alcoa, the material is enough to make 25,000 jets.
We calculate the market value of plastic glass, paper and aluminum landfill sites today for more than $11. 4 billion.
It\'s a bad thing to throw away these materials.
We appreciate the progress made by the company in reducing the use of plastic bags and increasing reusable shopping bags.
However, our advice is about something different, not what happens on the coast, but about the consumer packaging of the advice on taking responsibility.
This is about who will pay for the collection and recycling of packaging once the consumer runs out of packaging.
In addition to collecting plastic bags, the company\'s statement and our position do not cite any achievements or provide any information about the post-
Consumer packaging.
Producers like Kroger, who sell their own private label products and control packaging design decisions, are therefore able to minimize the overall impact of product packaging and internal costs on the environment.
The company\'s statement leads us to believe that it is only taking a position on the pending legislation.
Its meaning is far more than that.
The company needs to make policies and be responsible for the position.
Consumer Packaging and provide evidence to actively and thoughtfully participate in the ongoing public policy debate on how to increase recycling and packaging.
As the largest AmericanS.
The company is responsible for putting a lot of groceries and packaged goods into business.
Please send a message to management by supporting our proposal.
This will show that our company needs to have a comprehensive strategy to deal with the consumer packaging waste it generates, most of which are not being recovered yet.
Thank you for your attention. David B.
Thank you for your proposal.
Is there a second proposal? [Voting]David B.
DillonI will add a second one to the podium here, so we may consider this issue appropriately.
For the reasons we have described in the agent, I will not review these again.
We propose to vote against this.
Dennis, do you have a report?
Mr. Dennis Hackett.
Chair, we find that the holders of common stock cast 306,477,702 votes on the resolution, asking the board to issue a report assessing the feasibility of adopting policies related to the post-house branding
Consumer product packaging and 43,821,543 votes in support of the resolution, which, as rejected, was voted against by the majority. David B.
Thank you, Dennis.
So I declare that this proposal has failed.
The sponsor withdrew the proposal of the shareholders regarding the adoption of Project 7 of the sustainable palm oil policy.
Some organizations have raised concerns about palm oil, which could lead to deforestation around the world if it is purchased irresponsibly.
We recently publicly committed to purchasing 100% of palm oil from certified sustainable sources by the end of 2015.
In the coming years, we will disclose in our annual sustainability report progress towards this goal.
This year\'s report was published yesterday and can be found on our website at kroger. com.
This concludes the formal part of today\'s agenda.
I ask you to answer the general question now.
I can ask the appropriate questions to some of the officials in the audience.
In addition to my grandson, I would also like to bring up my other secret weapon to have Rodney McMullen join me as our President and COO to help answer a few questions.
Therefore, according to Kroger\'s usual rules of conduct, each speaker\'s speaking time is limited to 3 minutes.
Please go to the nearest microphone and confirm your identity if you have a problem.
Here\'s the first question. Question-and-
Lucas Benitez [Spanish]
Because my English is not very good, I will do it in Spanish. [Spanish]
My name is Lucas Benitez, Immokalee Workers Union from Florida. [Spanish]
This is an international organization of farmers.
The long history of abuse in this area. [Spanish]
We have come to this meeting in the past 4 years. Spanish]
Ask Kroger how it is reasonable to refuse to meet higher moral standards in the United States. S. -
Tomato supply chain. [Spanish]
When 11 other major corporate buyers such as McDonald\'s and the metro are already involved in our Fair Food Program. [Spanish]
Kroger\'s empty reference to himself
The monitoring of its supply chain is in sharp contrast to the Fair Food Program ,[Spanish]
A mature solution for decades of agricultural labor use, such as sexual harassment and modern Laborday slavery. [Spanish]
The Fair Food Program has been praised by United Nations human rights experts for its \"independent and strong and important mechanisms. \" [Spanish]
And was praised by the White House for its unique effect in preventing forced labor. [Spanish]
If Kroger claims to be committed to safeguarding the rights of those who make their profits possible ,[Spanish]
Why didn\'t you listen to thousands of Kroger customers calling for Kroger to participate in the Fair Food Program through letters, protests and parades? [Spanish]Mr.
Dillon, why doesn\'t Kroger join this existing solution to solve the abuse problem in this field? David B. Dillon[Spanish]
So I appreciate your willingness to explain his words to me, which is very helpful.
We welcome you here.
We thank you for the questions you have raised to us today, and we thank you for the questions you have raised over the past year.
We believe that it is more important to establish a strong working relationship with suppliers and find this more important than embarrassment, in fact, it is difficult to make business arrangements, we have to negotiate with our suppliers and labor groups working with these suppliers.
So, I think, we\'re trying to take it from this is a very responsible way that we can assure ourselves that these issues are being dealt with in an appropriate way and in line with our code of conduct, we think it is important to choose this way and not to participate in labor discussions between suppliers and your team.
Nevertheless, we respect your right to come here, and we respect your voice about the cause and the issues you have raised, so thank you for coming here.
Any other questions? Yes.
Unknown attendees just do the translation, but I would like to ask a question now. David B.
Of course, that\'s fine.
My name is Elena Stein, a representative of inter-religious activities, a network of thousands of people of faith across the country who have been calling on Kroger to uphold the rights of farmers in the supply chain.
So in response to your comment just now, I would like to make it clear that joining the Fair Food Program does not mean doing business with labor groups.
More importantly, in response to your comment that Kroger contains its own code of conduct and has conducted an investigation in the tomato field, which is actually not possible for Kroger to conduct a fair investigation, conduct transparent and rigorous investigations into potential human rights violations in tomato fields, Florida.
But with the participation of the Fair Food Program, this is the third
This is what the party\'s supervisory and investigative bodies do.
In the past two seasons alone, the agency\'s Fair Food Standards Committee has handled more than 250 complaints from participating farm workers and managed 24-
The hourly complaint line, investigate the complaint, sort out the facts, and solve the complaint.
It\'s impossible for Kroger to do all this for tomato workers.
If Kroger continues to stick to the idea that he can monitor the supply chain, more people will suffer.
Workers will be subject to abuse as violations will be uninvestigated and will not proceed as they have in the past.
Growers seeking to do the right thing will not be rewarded for their investment in improving conditions, and consumers will continue to sell abused food from sexual harassment to slavery in the past.
When approving established projects like the Fair Food Program, exist and Kroger claim to be committed to a real investigation into the supply chain, why not join the Fair Food Program? David B.
Thank you for your comments.
We really appreciate it.
I don\'t agree with your assumptions and conclusions, but I have already described them, so thank you for being here.
We have the next question.
My name is Helga Schwab [ph]
I am very happy to be here last year and enjoy it very much.
First of all, thank you very much for giving us all the opportunity to come to this beautiful facility.
In addition, I would like to thank you and the board for the great results.
I do have a problem, though. David B. DillonSure.
According to The Daily Economic News, you have achieved great results. However, they are talking about debt --to-
The shareholding ratio of shareholders is 146%, which seems to be quite high.
Can you tell us a little bit about this? How are you going to achieve this? David B. DillonSure.
I \'d love.
What we found in our industry 20 years ago, because we are a predictable cash flow industry, this kind of business can take more debt, it is easy to take more debt, more than we believed before.
By doing so, we actually give shareholders a better return because the cost of debt is lower than the cost of equity.
Therefore, we have been very intentionally considering the amount of debt we bear and the relationship between debt, and usually we will consider more from the perspective of cash flow generated by the enterprise.
We study the ratio of this relationship, and we also study our credit ratings for various institutions.
As you know, we are at the investment level and, in fact, we are one notch above the bottom of the investment level.
We think it gives us the best combination to get into the capital market and a good rate.
So we\'re actually-from a debt-to-
Equity or debt-to-
The location of EBITDA, we are in the position we want, in the last quarter we just released, may even be a bit conservative.
But I appreciate you bringing this up and making sure we have looked at it very carefully and continue to do so, so thank you.
There\'s a problem back here.
Don\'t people know of eyes
First, I think--
I\'m Ruth Lavina. ph]
I\'m from Cincinnati, I\'m from the town here.
This is the first time I have attended the shareholders\' meeting. David B.
First of all, I would like to congratulate Kroger on his contribution to the charitable organizations of USO and other large non-profit organizations.
You are very generous in this regard.
What you lack is your non-profit contribution.
In Cincinnati, there are some very small non-profit organizations that are barely profitable from this year. to-year.
Kroger was very ungenerous to those people.
I just wanted to ask you to think about your hometown of Cincinnati, as well as other small non-profit organizations across the country who have done a lot of work among the poor-
For poor and vulnerable groups across the country, you can consider being a little more generous to them at their request. David B.
Deloni thanked you for your statement, which we did take very seriously.
We looked at our charity donation activities from several perspectives.
First, we are very concerned about certain things that customers say are very important to them.
So there, it becomes very important to provide food to hungry people, and the army becomes very important, as do many women\'s issues.
In fact, we are proud to support many organizations for a smaller amount, not just one or two large organizations.
To add some additional coverage, we are fairly focused in most departments on contributing to the United Road movement, which has a process to look at all--
Many non-profit organizations across the community support them.
I will invite--
Lynn may be. -
Lynn Marmer, if you go back somewhere--
Okay, come back here.
If you may meet after the meeting, I would like to let us know about your team and make sure we are aware of this to make sure we don\'t ignore something.
So I thank you very much for your review.
Here\'s a question.
Unknown Cagney. ph]
Individual investors.
I note that in the previous report of the general meeting of shareholders, there was a slide showing that out of the 41 major segment markets they were involved in, the Kroger food chain with 30 markets numbered 1 or 2.
This means 3 markets, they are either marginal participants or secondary participants, and if so, what is the strategy to increase the presence of these markets?
Also, that means there\'s--
Just like some small markets that Kroger is involved in.
Is there a percentage of Kroger in this regard?
Then there was a comment. . . David B.
Deloni will call a friend and ask Rodney to answer the question. W.
First of all, thank you for your question.
One of the slides we focused on growth that Dave talked about was fill-in market.
One example we talked about recently is Fort Wayne, Indiana.
If you return to our market share 5 years ago, it will be one of the markets with very low market share, and we may be 4 participants in that market.
This market is a market where we can make acquisitions.
We built several stores, market stores from scratch.
We have transformed almost all of their stores in that market.
Today, this market-
We have more than double our market share there five years ago.
This is an example of our success in this area and gives us comfort in developing our growth plan, additional paddingin markets.
You can rest assured that every market, we have a strategy, we are more active in filling this issue, in increasing the share of the capital we allocate with us, we haven\'t discussed these issues specifically, and we won\'t discuss them until after the fact happens, because we assume that our competitors will react to this for the second time we discuss it.
Their response to the arrears was much better than for obvious reasons.
So the small market is like this.
I think these are not necessarily the Kroger store, but some smaller subsidiaries of Kroger or. . . W.
This is true for the entire company.
If you look like Fort Wayne, that\'s the Kroger shop.
In some places it will be a Kroger market and elsewhere it will be one of our banners.
Unknown participants
Then I will make a comment, and then if they can answer that question, just like every general meeting, when there is a shareholder proposal and the results of the shareholder proposal are announced to the shareholders, 2 or 3 shares always seem to have a majority vote--whereas --
No actual numbers.
Again, today, the same thing is that 2 of the 7 proposals have just issued a majority statement, and the numbers and percentages of other proposals are hard to analyze for sure, these numbers are available to individuals presenting these results.
I think shareholders should have those numbers so they know exactly how these things happen. David B.
In fact, we agree with that.
I think I have to check. -
I\'m looking at Dennis and Paul. -
But I believe it has been submitted.
I\'m not sure if it\'s in Q or K.
So when we submit 10-
K. actually until next spring. -
Or in Q? 8-K? Okay. We file an 8-K --
When is it filed?
OK, so in 4 days there will be a public file on the SEC website called 8-
K, it\'s more like an information document we made, and we give the actual numbers.
The reason we didn\'t give the numbers for the early group was, actually, because we had cut off the contact before we came to the meeting, but there were still some people coming in.
I really don\'t know why we added numbers to others, but I\'m sure they will eventually be similar because once we \'ve done the actual final numbers, some changes may be released.
But you raised a good question, either we should ---
I \'ve been to some annual meetings and they don\'t give numbers at all and I prefer to have more numbers instead of less, so I think you made a good point.
Of course, I should have some raw figures, especially if they already know that they are the majority who voted for or opposed this proposal, it should be able to spread to shareholders today. David B.
Dillon, yes. that\'s--
You made a good point.
Dennis, it looks like you want to comment on this.
There are all the numbers that Dennis harkerty does have.
So if you or someone else wants them, come and see me and I\'ll be in the back.
We shouldn\'t have come to you in the back. David B.
Dillonness, you\'re good.
We will discuss this issue again next year. That\'s a --
I appreciate that you made a very good point. Thank you.
Is there any more questions, it seems that there is another one here.
Thank you, President Dillon.
My name is Mike Telford, I am from near Des Moines, Iowa and I am here today on behalf of the National Pig farmers of the National Pork Producers Council, which is also a shareholder.
We would like to thank the staff, management and board of directors of Kroger for their continued efforts to support our family of pork producers through your strong marketing efforts, and you have done a great job.
For many years, our organization has been working with your company to promote pork products.
Today, we want to thank the gorilla of Kroger. -
With our gorilla like steak promotion, this is by in-
The materials in the store are known as features in the new name of educating shoppers about pork, with New York ribs, ribeye ribs, etc, and we know that this will undoubtedly drive a lot of sales of Kroger pork, this is also significant for our family of pork producers.
In particular, we would like to thank Alison podesh, director of meat and seafood;
Tom sagant, senior coordinator of commodity procurement;
Mark Danks, manager of pork and poultry categories;
Keith Dailey, corporate communications;
And Suzanne Lindsay, the sustainable development of the enterprise.
They all did a great job and we have been communicating with them and we thank them for their continued cooperation and support.
I just want to let all the shareholders here know that pig farmers families in this country have made a lot of progress in animal care and production practices.
Like Kroger, they are committed to continuous improvement.
I hope everyone will join me in thanking Kroger\'s staff, management for their continued marketing efforts and outstanding results. David B.
Dillon, we appreciate the comments.
Thank you very much, Mike.
I don\'t know. -
Okay, thank you.
I don\'t know if you would like to add anything to our promotion, which is actually excellent. W.
Rodney McMullenYes, thank you for your comments.
Very exciting.
Obviously, the opportunities are huge, and we continue to grow our business together and create jobs in the heart. David B.
DillonIt is another example of our attempt to work with suppliers ---
Let them improve and let us improve at the same time.
Here\'s a question.
Josh BalkMy\'s name is Josh Balk and I am a member of the American Humane Society.
We are the largest animal protection organization in the United States.
I am here today to thank Kroger for his excellent work on animal abuse.
Animal abuse is a problem that resonates with many consumers across the country.
I think there are dogs and cats in many of us. maybe there are dogs and cats on the stage.
I saw you nod here.
We hear about dogs and cats, we also care about farm animals, you guys do a lot of work on improving the welfare of farm animals throughout the supply chain.
Kroger was one of the first companies to announce a partnership with pork suppliers to remove from the pregnancy crate.
These cages are too small for pigs to turn around all their lives.
You are one of the leaders.
You should get so much applause for this, because almost every major player in the industry has followed you after you announced it.
I think that\'s why Kroger is leading in the field of social responsibility.
You are leaders. you are not just followers.
You should win such a big round of applause to improve the lives of millions of animals, including pigs in their supply chain.
Thank you very much, Kroger. David B.
DillonSo thank you for being here and I realize that we don\'t always agree, but we have agreed on a lot of goals and I really appreciate that you are here today. Thanks.
There\'s a problem here.
Unknown local investor in vodholera, living in northern Kentucky, I am very, very pleased with the increase in dividends and I am a very satisfied shareholder.
I am shopping at Bellevue Kroger and I would like to thank you for the renovation there and it is very enjoyable now.
It\'s just good news to bring that renovated shop.
However, I did not hear any questions about the turnaround time for photography.
If you go in at 1: 00 on Monday, you don\'t get it in two weeks.
I was wondering if it would be possible to speed it up as if I were to go to the Newport Kroger hotel I could get it in a day.
The turnaround time is 1 to 2 days on local targets and others, and I was wondering if this could improve? David B.
DillonSo I\'m going to call a friend who might want to call a friend in the department.
I mean, that\'s your call. . . W.
Rodney McMullenYes, I\'ll call my friends.
I don\'t know--
Scott or Richard ·[ph]
If you want to answer this question? Scott M. HendersonYes. David B.
DillonYes, Scott will go. Scott M. HendersonYes.
Thank you for your question, thank you for your review of our store, we are very proud of the Bellevue team and the facilities we end up with more customers.
Now, the photography business is one of the businesses we focus on throughout the department and through the company very seriously.
We would be happy to take your feedback and go back and see if we can improve as our theory is that if we are going to do business we need to consistently provide the best customer service in all stores, we would love to have a look.
Thank you for your feedback, I would be happy to talk to your father afterwards so I can get your name and phone number so I can answer your question. Thank you. David B.
Dillon and Scott, I agree with her on both points.
The Bellevue store is a great one.
I was shopping there just two weeks ago.
Two weeks is too long. let\'s see what we can do. Scott M.
Heendersoni will agree. David B.
Thank you, Dillon.
Any other questions?
Is that right here? Yes.
I would like to congratulate you on the excellent work you have done, you and the board of directors and everyone who manages this company.
Okay, I was bragging at my Kroger store last year.
I may be a little emotional and forgive me, but there are a lot of good people working in Kroger at the Marimont store.
I am a shareholder and a loyal customer of Kroger. David B.
This is a great shop.
Unknown shareholders. yes.
Manager, he does continue to do a good job, Emmanuel [ph]
But I would like to meet Ron Stewart, who runs the meat department, who is doing a great job.
If you ask him a question, he will tell you how to prepare the food-
Sorry to bother.
He is very nice when you ask him how to deal with seafood or meat.
[Robert Woody ·[ph]
He is an outstanding person who is always happy and cheerful.
Another guy who works at the bistro is Amy, let\'s take a look, Mahler [ph].
She did a good job.
Like a young lady, don\'t get rid of this girl.
No matter where you put her, if it\'s dipping sauce and chocolate, working in a bistro, or making hot dogs or burgers outside, I go there every weekend to buy hamburgers and hot dogs.
I represent them, the store--
Sorry, yes--
She is such a lovely person, I sit in front of the shop and draw pictures when I eat hamburgers.
Another very nice person is Patti Gillen [ph].
She works in a pharmacy and is an excellent employee.
I watched her interact with other customers.
She knows your name.
Every time she saw me, she said, \"Hi sir. Zachelow [ph]
How are you?
I\'ll say, \"Okay, Patty, how are you doing ? \"
\"She does this with all the customers, she is a technician, no matter where I see her in the store, she is a very good woman, she is always polite to me, I just wanted to thank her.
And another one, Joyce Radcliffe. ph].
She is one of the ladies who do the checkout and she is a very nice lady who now happens to be my friend because I have been there all the time.
Sometimes on weekends, people joke, \"Do you work here ? \"
\"Because I always do. . . David B.
DillonI will ask you the same question.
It\'s too late.
Unknown shareholders. yes.
I know, but I made a shirt here that says \"I love krogge\" and sometimes I go shopping with my wife and people say, \"where is this? Where is that?
\"So I pointed this out to them.
Because you did re-lay the aisles and I think it was very good how you put things in certain places so people don\'t go on and have to run around and look for everything, you did a good job of transferring all the goods.
But people still ask me, so when they ask me, I say, \"Yes, madam.
On this aisle you will find the soup or you will find the water.
\"So I\'m like a volunteer at Kroger, they don\'t even know. David B.
Dillon is amazing. Thank you.
Before I did, I wanted to add one more thing. -
The meeting is over.
I would like to talk to someone about a small issue that has nothing to do with internal Kroger or employees, but with external clients.
If I can speak to someone, I want to do it privately if you let me do it. W.
Rodney mcmurennis.
I \'d love.
And, Richard, if you can come over too.
Unknown shareholders.
I do love krogge, I have feelings too, and I love the people in that store too.
I\'m close to everyone.
But as a shareholder, it\'s not just getting dividends and owning stocks, I see--
I care about people.
Like I said last year, they are like my family because I love them.
They take care of me and I am proud to be a shareholder of this company.
I just want to tell you, sir. Dillon. David B.
Thank you, Dillon.
Before the meeting, I and the unknown shareholders will shake hands with you.
This is a big stimulus for me. David B. DillonMe, too.
Very excited.
Can I have a look with you?
I \'ve been trying to call you Matt Dillon over the years in a gunshot rain because you\'re the guy and you\'re the person in charge of the company, but I \'ve always wanted to call youDylan. David B.
I will tell you that my great-grandfather\'s name is Matt. True story. True story.
He\'s not Marshall. W.
Rodney mcmulen, that\'s funny.
I don\'t know who the shareholders are, but you are the person in charge. that\'s what I want to say. David B.
Thank you. thank you.
I know Rodney has written down some names and he will be sure they get the proper thanks so thank you.
I would like to thank all of you who joined us in person or online today, but I would like to thank in particular all of the Kroger retirees who were with us this morning, it\'s always a pleasure to have you with us.
I would like to thank everyone who helped us organize today\'s meeting.
The list is too long to read, but thanks to each and every one of you, you did a great job.
Like I am here, you are welcome to enjoy special 130 anniversary cookies.
Please don\'t leave without you taking a pack of coupons.
These are simple products of truth.
We have one last thing.
We want to end the friendly behavior of one of our customers with a short video-
Very suitable after our last speaker. -
One of the clients of the Cincinnati division, assistant Raquel Gonzalez--
I think who\'s here for a while, and I\'ll introduce her--
At store 811 Dayton, let\'s take a look. [Presentation]David B.
DillonI loves the story because it reminds us very well that we are reaching out to people\'s lives every day.
Raquel is with us today and I want you to stand up and be recognized, Raquel--
She\'s back somewhere, we\'re gone, right here.
Please stand up.
Thank you, Raquel.
I just want to add a little bit of personal information.
There are many reasons why we do this business, but I think the main motivation of most of us is, of course, the way we come into contact with this country.
Raquel, that story, that example, is a good example of why I like the industry, and we thank it very much, thank you.
Thanks to all of you, our colleagues and shareholders, for everything you have done to make such a story possible.
We are very excited about what Kroger is facing this year and beyond.
We look forward to sharing our success with you.
Thank you again for joining us today.
Ladies and gentlemen, the meeting is adjourned. Thank you.
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