Colgate-Palmolive Co. - Shareholder/Analyst Call
Colgate-Palmolive Co. (CL)
May 11, 2012 10:00 am ET
Executives
Ian M. Cook - Chairman, Chief Executive Officer and President
John T. Cahill - Independent Director, Chairman of Audit Committee and Member of Personnel & Organization Committee
Richard Jay Kogan - Presiding Director, Chairman of Personnel & Organization Committee, Member of Audit Committee and Member of Finance Committee
Ian M. Cook
Ladies and gentlemen, will the meeting please come to order? I am Ian Cook, Chairman, President and Chief Executive Officer of your company. The Board of Directors joins me and the offices of your company in welcoming you to our 2012 Annual Stockholders' Meeting. First, I would like to introduce the other executives who are with me today on the stage. On my immediate left is Andy Henry, Chief Legal Officer and Secretary; next to Andy is Bina Thompson, Senior Vice President, Investor Relations; and Dennis Hickey, our Chief Financial Officer.
As we welcome you here today, I would remind you that all 38,000 Colgate people around the world strive to meet the needs of families around the world, whether it's caring for their home, teaching healthy habits for future generations, looking after the family pet, are all promoting oral health. It's all about families. And on the front cover of this year's annual report, you see a family. This is a real family. These are not actors. And they are from Mexico. And when you think about families and with Mother's Day coming on Sunday, I thought it would be appropriate to wish all of the mothers in the room today a very Happy Mother's Day.
Now Mother's Day is about the relationship between moms, families and particularly their kids. So we thought you might like to hear what Colgate kids think about their moms. So when Colgate moms and dads brought their kids to work at Colgate on the national Take Your Child to Work Day, we asked them, "What is it that makes your mom so special? And why do you love her?" Let's here what they had to say.
[Presentation]
Ian M. Cook
Now, this next group try to list all of the things that made their moms special together. Let's see.
[Presentation]
Ian M. Cook
It may not surprise you that those 3 children are kids of a Colgate attorney. And we have one last video.
[Presentation]
Ian M. Cook
So well said. Now, let's turn back to the formal items of the meeting today. Today, we will begin with several formal items. After we have addressed those matters, I will review the progress of the business and our plans for the future. We have set aside time later in the meeting for a more general discussion of the company. I would appreciate your delaying until then any questions or comments that are not related to the formal items of business.
At this time, we would like to collect any proxies. If you have a proxy, please raise your hand so that an officer may collect it. The Secretary informs me that each stockholder of record on March 12 this year, the record date for the meeting, has been given proper notice of the meeting and that a quorum is present. Affidavits of mailing of this notice, the proxy materials and the annual report will be filed with the records of the meeting. A complete list of stockholders as of the record date is available here during the meeting for examination by any stockholder. And this list has also been available at the company's headquarters since April 23 of this year. The reading of the minutes of the last annual meeting is now in order.
Unknown Attendee
I move that the reading of the minutes be waved.
Unknown Attendee
I second the motion.
Ian M. Cook
You have heard the motion made and seconded that we dispense with the reading of the minutes of the last meeting. All those in favor, say aye.
[Voting]
Any opposed?
Motion carried.
There are 4 items of business on the agenda that require voting by our stockholders. Ballots are available from the ushers for each item. If you've already voted by proxy, you do not need to vote again by ballot. After each item of business has been presented, the ushers will collect any ballots. The votes will be tallied by Mr. Peter Deskovich and Mr. Matthew Chisholm Sole [ph], the independent inspectors of the election, who are assisted by Ms. Lorna Rowe [ph]. They join us from Broadridge Financial Solutions, our proxy administrator. All proxies, ballots and vote tabulations that identify stockholders are kept confidential in accordance with company policy.
During the meeting, I will report the preliminary voting results of each item of business. The final vote count for each item should be available following the meeting from the inspectors of election.
The election of Directors is now in order. The Board of Directors has nominated as Directors the persons who are designated in the proxy statement. Ms. Leanne Tre [ph] will make the nomination on behalf of the Board of Directors.
Unknown Attendee
On behalf of the Board of Directors, I nominate the persons who are designated in the proxy statement, namely: Ian Cook, Nikesh Arora, John T. Cahill, Helene D. Gayle, Ellen M. Hancock, Joseph Jimenez, Richard Jay Kogan, Delano E. Lewis, J. Pedro Reinhard and Stephen I. Sadove.
Unknown Attendee
I second the nomination.
Ian M. Cook
It is now my pleasure to introduce the nominees. Please rise as your name is called and remain standing until everyone has been introduced. Please hold your applause until the entire group is introduced. Mr. Nikesh Arora, Senior Vice President and Chief Business Officer of Google, Inc.; Mr. John T. Cahill, Executive Chairman, Kraft Foods North America and former Chairman and Chief Executive Officer of the Pepsi Bottling Group; Dr. Helene Gayle, President and Chief Executive Officer of Care USA; Mrs. Ellen M. Hancock, former President of Jazz Technologies and former Chairman and Chief Executive Officer of Exodus Communications; Mr. Joseph Jimenez, Chief Executive Officer of Novartis AG; Mr. Richard Jay Kogan, Principal of the KOGAN Group LLC and former Chairman, President and Chief Executive Officer of Schering-Plough Corporation; Mr. Delano E. Lewis, former Senior Fellow of International and Board of Programs, New Mexico State University and former U.S. Ambassador to South Africa; Mr. J. Pedro Reinhard, former Executive Vice President and Chief Financial Officer of the Dow Chemical Company; Mr. Stephen I. Sadove, Chairman and Chief Executive Officer of Saks Incorporated.
Our company is indeed fortunate to have these outstanding individuals serve as Directors, giving their time, energy and talent to provide advice, guidance and leadership that is so vital to our continuing success.
At this juncture, it would be remiss me not to recognize and have you give appreciation to 2 gentlemen, the 2 prior Chairmen and CEOs of this company, who have over 100 years of dedicated commitment, and their guidance and wisdom has propelled the company to be what it is today and set the platform for the future, I mean, of course, Reuben Mark and Keith Crane, if you would stand and take a round of applause, please.
Mr. Henry, would you please tell us whether there has been other nominations?
Unknown Attendee
Mr. Chairman, there had been no other nominations pursuant to the bylaw procedures.
Ian M. Cook
Thank you. Is there any discussion of the nominations? Anyone wishing to speak on this topic should go to one of the microphones on the main floor of the ballroom.
If there is no discussion, I ask the ushers to collect any ballots.
And now, may I have the report of the inspectors of election?
I am pleased to announce that all of the nominees have been elected Directors of the company until the next Annual Meeting and until their successors are chosen and qualified.
The next order of business is the ratification of the selection of the independent registered public accounting firm. The audit committee, which consists entirely of independent Directors have selected PricewaterhouseCoopers as the company's independent registered public accounting firm for 2012. The stockholders are being asked to ratify this election. Mr. Cahill, who is Chair of the Audit Committee, will make the motion on behalf of the audit committee.
John T. Cahill
Mr. Chairman, on behalf of the Audit Committee, I move that the selection of PricewaterhouseCoopers LLC -- LLP rather, as the independent registered public accounting firm of the company for the year 2012 be ratified.
Unknown Attendee
I second the motion.
Ian M. Cook
We have with us John Maxwell and Michael Nelson of PricewaterhouseCoopers. Mr. Maxwell is the global engagement leader and Mr. Nelson is the senior manager on the Colgate account. Would you please stand?
Is there any discussion on the motion?
If there is no discussion, I, again, would ask the ushers to collect any ballots.
And now, may I please have the report of the inspectors of election?
I am pleased to announce that the selection of PricewaterhouseCoopers as the company's independent registered public accounting firm for 2012 has been ratified.
The next item of business is the advisory vote on executive compensation. The company is providing stockholders with a nonbinding advisory vote on the compensation of the company's executive officers named in the summary compensation table in the company's proxy statement. The key principle underlying the personnel and organization committees' compensation philosophy is Pay per Performance. And in 2011, 70% to 90% of total compensation paid to Colgate's named officers was performance-based, with incentive awards payouts varying based on business performance, or in the case of stock options, the performance of the company's stock. This direct link between incentive payments and achievement of business goals and shareholder value has helped drive the company's strong and consistent performance year after year. The stockholders are being asked to indicate their nonbinding approval of the compensation of the company's executive officers named in the summary compensation table in the company's proxy statement as that compensation is disclosed in the proxy statement.
Mr. Kogan, who is Chair of the Personnel and Organization Committee, will make the motion on behalf of the committee.
Richard Jay Kogan
Mr. Chairman, on behalf of the Personnel and Organization Committee, I move for the adoption of the following resolution. [indiscernible] that the stockholders of Colgate-Palmolive Co., approve the compensation of the company's executive officers named in the summary of compensation table as disclosed in the proxy statement for the 2012 Annual Meeting of Stockholders of Colgate-Palmolive Co. pursuant to the compensation disclosure rules of the Securities and Exchange Commission.
Unknown Attendee
I second the motion.
Ian M. Cook
Is there any discussion on the proposal?
If there is no discussion, I declare the voting closed on this item and ask the ushers to collect any ballots.
And now, may I please have the report of the inspectors of election?
I wish to announce that on the basis of the preliminary results, the proposal has received the majority of the votes cast and the compensation of the company's executive officers named in the summary compensation table of the proxy statement is approved.
The next item of business is a stockholder proposal by John Chevedden, who is represented today by Mr. Kenneth Steiner. Mr. Steiner, we appreciate your attendance at so many of Colgate's Annual Meetings. Mr. Steiner.
Unknown Attendee
Thank you very much, Mr. Chairman. The proposal is on Page 64 of the proxy statement, and did ask for an independent Board Chairman. Resolve: Shareholders request that our Board of Directors adopt the policy, that whenever possible, the Chairman of the Board of Directors should be an independent Director by the standard of the New York Stock Exchange. That first, he would not have previously served as an executive officer of the company. This policy should be implemented so as not to violate any contractual obligations in effect when the resolution is adopted. The policy should also specify how to select a new independent Chairman if the current Chairman chooses to be independent between annual shareholder meetings. The proponent believes that when a CEO serves as a Board Chairman, the arrangement may hinder our Board's ability to monitor the CEO's performance. Rather than read the entire statement, I'll simply make a few remarks.
The proponent believes as a matter of best practices in corporate governance that the Chairman of the Board should have as his sole duty the representation of shareholders and not of management. This would ensure the Chairman's complete independence and his ability to act accordingly in various circumstances. A CEO who is also the Chairman has an inherent conflict of interest since he is engaged in oversight of himself. While the proponent believes in the quality of the performance of the current CEO and this resolution is not a negative commentary on the current CEO, but simply a matter of difference of opinion with regard to the formation of the Board and principles of corporate governance. But the proponent believes that as a matter of principle that this company and others, that the best standard for shareholders and the one that offers the greatest protection and scrutiny now and in the future is the separation of the 2 roles. Therefore, the proponent urges the shareholders to vote for the resolution for an independent Board Chairman. Thank you.
Ian M. Cook
Thank you, Mr. Steiner, and thank you for your continued interest in Colgate's corporate governance.
The Board of Directors has recommended a vote against this proposal for the following reasons. The Board believes it would not be in the best interest of stockholders for the company's bylaws to require that an independent Director serve as Chairman. The Board is committed to the highest standards of corporate governance, especially Board independence and accountability. For example, 9 out of Colgate's 10 Directors are independent. The Audit, Nominating and Corporate Governance and Personnel and Organization Committees of the Board consists solely of independent Directors. This means that oversight of critical issues such as the integrity of the company's financial statements, executive compensation, Board evaluation and the selection of Directors is entrusted to independent Directors. The independent Directors meet regularly in executive sessions without me present. The Board has an independent lead Director with clearly defined responsibilities to ensure proper checks and balances. These duties, include presiding at all meetings of the Board where I am not present, including the executive sessions of independent Directors already mentioned; establishing agendas for these executive sessions, serving as a liaison between the independent Directors and me; and reviewing and approving meeting schedules to pause proposed Board meeting agendas and information to be sent to the Board, and all Directors are elected each year by majority vote. Stockholders are best served if the Board retains flexibility to decide what leadership structure works best for the company, based on the facts and circumstances existing from time to time. The Board believes that the current leadership structure works well for Colgate at this time.
For these reasons, as discussed more fully in the proxy statement, the Board has recommended a vote against this proposal. Is there any discussion?
If there is no discussion, I declare the voting closed on this item and ask the ushers to collect any ballots.
And now, may I please have the report of the inspectors of election?
I wish to announce that on the basis of the preliminary results, the proposal did not receive the necessary majority and therefore has not been approved. We share the proponent's commitment to group corporate governance. Be assured that we continue to review the most effective ways of governing the company in the stockholders' best interest.
That ends the formal business of the meeting. And now, I would like to review the progress of the company.
My remarks this morning may, of course, include forward-looking statements, and various factors might cause actual results to differ materially from these statements. And you can find a discussion of these factors in our annual report on Form 10-K, which is available on the Colgate website. So to 2011 results.
2011, I think as everybody knows, was a very challenging year with global economic weakness in many parts of the world, steep increases in raw material costs and of course, continued global competition, especially in the emerging markets. And despite that, your company continued to make good financial progress in 2011.
Over the last 20 years, our sales have grown at a compounded 5% rate and we are now approaching $17 billion in global sales. Our gross margin, although facing headwinds in 2011, over an extended period of time, has made terrific progress and allowed the funding and investment behind the innovation and the brand that drive the top line growth of the company. And our operating profit over that 20-year period has grown at a compounded 9.5% consistently year after year.
And if you distill it all into the productivity of our investments, the after-tax return on capital, you can see that Colgate meaningfully outperforms both our proxy peer group of companies and the S&P 500.
Our market shares are strong and growing. Our worldwide toothpaste share is now broken through 45% and we hold 45.2% of the global toothbrush share. And you can see that in relation to our principal international competitors.
And on manual toothbrushes, we continue to widen the gap of global share leadership against our nearest competitor, now approaching 33% of sales. The recommendation levels we get from professionals is also building and helping to make that share growth happen. Today, again, on a worldwide basis, nearly 1 in 2 dentists recommend a Colgate toothpaste to their patients.
And importantly, for all of us, shareholder value is increasing, whether you take the long view or the shorter-term view. You can see here the performance of total return of your company over the last 20 years compared with our peer group and compared with the S&P 500. You can see here the growth over 15 years, Colgate versus the peer group and the S&P 500. 10 years, basically neck and neck with the peer group and ahead of the S&P 500. And over the last 5 years, through some of the most turbulent economic conditions our world has seen, Colgate consistently outperformed our peer group and the negative performance of the S&P 500. And if you look at 2011, the calendar year, again, Colgate's performance outpaced the peer group and the S&P 500. And if we look at the period since the last time we were together in this room, that performance has been maintained.
I learned an interesting word from our lawyers the other week, which was, "Yeah." Legally approved statement now at Colgate. Now looking forward and how we go about driving the growth and that consistent performance.
We do it by focusing on the strategic initiatives that we have been deploying around the world for the last 7 years. These are well known by all Colgate executives around the world and all of our initiatives are relying behind these: Engaging to build our brands, innovating to grow the company, the effectiveness and efficiency that generates the funds for growth, and of course, developing the leadership talent to make all this a reality year in and year out. We deployed these strategies in the over 220 countries where people buy Colgate products.
Let's talk first about engaging to build our brands. The who in terms of who we engage with, obviously, it's our consumers, it's our consumers when they shop, it's the professional that recommend our products to those consumers and it's the retail customers through whom we reach our ultimate consumers. And the how of it is the quality of our innovation and product, the technology and benefits that we bring to our consumers. The way we deliver them in packaging that's easy to use and distinctive on the shelf. The way we reach them with our communications, whether it's digital, television advertising around the world. And increasingly these days, with the technology available to us, the way we engage with them when they're shopping in the store day in and day out.
So let's talk a little bit about the who, the consumers that we engage with at Colgate around the world. In India, one of our high-growth emerging markets, for the last 10 years, in an independent survey run by the Financial Times of India, Colgate has ranked in the top 3 most trusted brands of any product in India. For 5 of the 8 years, it has been the #1 brand of any product category in India. And indeed, that was the case in 2011, Colgate was the most trusted single brand in India. And that is done with these products, different variants, smaller sizes that have the right price to allow the consumers in the remote rural areas to buy our products. And indeed, in the 10, you can see on the right there, a powder product for people who have not yet moved to toothpaste but apply the powder to their finger to clean their teeth. And the combination of that trust and the diverse array of products that we offer, has seen our market share in India now increase to 52%. And indeed, the most recent share in India was 53%.
We engage with our consumers in high-growth countries like Brazil, 200-plus million people in Brazil. And these are among the most involved health-conscious oral care consumers in the world. And they use our Colgate Total product because it fights the plaque and gingivitis that they are concerned about. And that product, along with the other offerings we have in Brazil, has seen our market share continue to grow there. We now have nearly 72% of the toothpaste market share in Brazil. Applause.
Now let's talk a little bit about the profession. I showed you that 1 in 2 statistic on toothpaste. We engage with dentists around the world. And increasingly, we're engaging using new digital tools, which I will attempt to show you with the next section. This is done with an iPad and it allows you to set the challenge to show a demonstration live that leads to the benefit that the product brings and allows the person who is using the iPad to demonstrate the technology, bring the technology together and show how the product works to the practicing professionals. And we know from the data that we have the recommendation level for people, for dentists who are educated using this kind of technology, are significantly higher than the traditional paper method used historically. So technology is helping us convey the benefits of our product. And this is seen here in the U.S. where you can see nearly 40% of dentists in the U.S. recommend Colgate product.
And our market share continues in a very close contest here in the United States to outpace our principal competitor. Now veterinarians, we do the same kind of program and we have extraordinarily high recommendation levels with that, particularly here in the United States.
But we also have a program that we run with our Hill's organization, which donates food to over 1,000 animal shelters in the U.S. And on our Hill's business, we have for a few years one program called Food, Shelter and Love [ph]. And that program, over that time period, has helped 6 million pets, who were left in the shelter, find a new home. And I'll show you the advertising that we used to bring people into this program.
[Presentation]
Ian M. Cook
And then with customers. And that is both the basics of getting our product to the retail outlets where all of our consumers shop in China. We reach over 2 million small stores in India. We reach over 4 million stores. We do it with a variety of products that are tailored to the Chinese palate and the Chinese consumer. And the combination has seen our market share in China grow to almost 35% so far this year. And you can see our 2 principal competitors on a down trend. In fact, the blue line dropped below 20% market share the last period. But who's looking?
And we engage with our customers to serve the community together in order to reach them as shoppers. We provide oral health education for over 10 million kids in the U.S. each year, and we do that in partnership with many of our major retailers.
So that's how we engage to build our brands. Then there's the innovation that drives the growth of our businesses. And that's all about innovative new products and innovative ways of communicating to and engaging people in a very fast-paced [indiscernible] world. And we construct that communication in partnership with long-time single-agency providers. This is the WPP network of agencies that we use around the world. We have 4 of the leaders of their agencies with us today along with some other Y&R and WPP executives. And I'd like them to stand and take a round of applause from this audience. Thank you very much.
And here in the United States, we have a long-standing relationship with the UniWorld Group represented here today by Byron Lewis, Chairman Emeritus; and the new CEO of that agency, Monique Wilson. I wonder if you would stand and take a round of applause.
Now innovation for growth starts with the product and starts with the technology. And the example here I would like to show is the unique formulation with the same whitening ingredient that is in the whitening strips in our Colgate Optic White toothpaste, which really, in a performance-based way, made toothpaste a fashion accessory. Let's see the advertising.
[Presentation]
Ian M. Cook
So that product is being expanded around the world in 2012. And we are also continuing to build our superior sensitivity technology, which provides instant and long-lasting relief from sensitivity. We continue to innovate in the toothbrush category with this particular configuration, which actually is more difficult to do than the words would suggest here. And I'll let you read the words in case I trip over them by reading them myself. But this is a terrific piece of technology on toothbrushes.
And here, we have a line of Colgate mouthwash products in the international markets, which kills nearly all germs and provides 12-hour protection without alcohol in the formula. And we use, I think, some pretty intrusive advertising to convey this product. Let's take a look.
[Presentation]
Ian M. Cook
There are some ads that don't need words, obviously conveying the idea of continuing protection after one usage compared to other people who had to keep using the product. And we convey the same idea at the store level so the shopper sees the same idea that they saw on their television screen.
And with our newly acquired business, we have a great stream of innovation that, that organization had developed that we are now able to take into our Sanex geographies and beyond. This is only one of them, Sanex Zero, which obviously makes an ingredient-based claim. So a strong stream of innovation. And I could go on and show you many more examples. But sometimes, an external voice is a good voice to hear on a topic and what more beautiful voice could we hear than Jim Cramer, I'll leave it to him.
[Presentation]
Ian M. Cook
I agree with him. And then our third strategic initiative, the idea of effectiveness and efficiency. It sees long-standing programs in our company that generates the savings that allow for growth and consistent increases in profitability.
Just one idea. This efficient production of a special offer pack in Brazil saves $5 million in that country alone. We have, over a long period of time, been working to simplify our portfolio of offerings without taking away from consumer choice. And we've managed in this North and South American example to reduce the number of different bottles we use to deliver our cleaning products. We've had the same focus on the number of unique formulations that we use to sell our products. And of course, that simplification allows you ways of finding saving and bringing substantial savings to our company, allowing for the investment in growth approaching $700 million in 2011.
And finally, leading to win. As a company, we have been focused for many, many years on a culture that is driven by a set of values that start with caring, that go to global teamwork and continuous improvement. And we work very hard with unique training programs and experiential assignments for our executives to help Colgate people perform at their very, very best.
And of course, fulfilling our commitment to the communities in which we live and communities that we serve. And our sustainability strategy related to community has always been broader than simply the environment. It has always encompassed people, Colgate people and those outside Colgate, their performance that allows you to be consistent in all areas, and of course, the planet. And as we have chartered the next 5 years of our sustainability program, we have picked 5 specific measurable areas of focus that we have specific programs behind, too, in the area of people, promoting healthier lives and contributing to the communities where we live and work; performance, delivering products that delight our consumers while respecting the planet; making every drop of water count; and reducing our impact on climate and the environment.
And in terms of contributing to communities, in China, for example, after the earthquake in Sichuan, we worked with the local authorities to put in place over 40 new dental clinics in the most badly affected areas. And since then, over 0.5 million people have already received treatment in those clinics. Or in Greece, we've put in very high traffic flow downtown parts of Athens, these package recycling centers for Colgate products and beyond.
And of course, very importantly and something that we always celebrate and recognize at this meeting, the contributions from Colgate people around the world expressed in our, You Can Make a Difference, Award winner's program. A program that actually celebrated its 26th year today. And the program is built around recognizing outstanding work from around the world that is nominated by peers of the people sitting here today. Awards are made in every one of our global operations, 3 awards within the year. And this year, 115 annual awards in each of our global operations. And of that 115, we celebrate today 8 winning teams and 30 Colgate executives with our 2011 Winners of the You Can Make a Difference Program. Let's see what they did.
[Presentation]
Ian M. Cook
At this time, I'd like to ask all of the global winners to stand and receive our warm thanks, all of us who care about Colgate and take pride in the accomplishments that have made the company so successful. If you will, please stand.
And with this -- stay standing, please. And with the spouses and guests of these winners, also please rise to receive applause for your support. Terrific.
And now, we'd like to give you an opportunity to ask questions you may have about the company. If you'd like to ask a question, please approach one of the microphones on the main floor of the ballroom. If you're not seated on the ballroom floor, there will be plenty of time for you to reach the microphone but no jumping. And we have representatives from Colgate's Consumer Affairs Group outside the ballroom and they can answer any questions you may have about our products or their availability. Please limit your questions to one so that more folks get a chance to ask a question. And I would, of course, be happy to take follow-up questions after everyone has had an opportunity to ask theirs. In order not to disrupt the meeting, gift bags will be distributed at the conclusion of the Q&A session. And don't worry, there are enough bags for everyone. So number one.
Question-and-Answer Session
Unknown Executive
Mr. Cook, this is Mr. DiMarco [ph] from Brooklyn, New York.
Unknown Shareholder
My name is Luis DiMarco, I'm a shareholder. Your presentation is pretty spectacular. I know a lot of people who are pretty happy about what you had to say. But I have more of a statement than a question. This morning, I arrived at the meeting with my proxy statement and greeted by the people at your counter, they stated to me that I needed to fill out a piece of paper, all right, in order to get a ticket. I've used proxy statements for many meetings. Johnson & Johnson has about 6,000 people that show up to their Annual Meeting every year. I've never been asked to fill out a piece of paper, which to me is a waste, especially when you talk about environment. I know the people from Green would probably be quite upset with the cutting down of trees that print those papers and the stubs. I've been to many meetings, in many different parts of the United States, never have been given tickets to get a gift bag. And had to woke up -- I don't know why people can't use their proxy statements accepted by some sort of a stamp on it. And at the end, when they go, give it to them and have it received. I think it would save a lot of money on the printing of the ticket and the printing of the paper, which I don't know what you do with as far as name and address, when I'm already a stockholder, okay, and this has -- if you pull that information on it, it even says how many shares I have. That's statement #1. Statement #2 is when I eat my breakfast, like so many people in the morning or have something to eat, I usually have juice. There is none. Now I'm going to hit an even more sensitive thing for everybody here, I've never been to a place before that serves bagels without cream cheese. Thank you very much.
Ian M. Cook
Well, my overall reaction is I'm pleased you like the presentation. That was, I think, the most important thing. But as I said earlier, one of our 3 values is continuous improvement, so we take your comments on the chin. We apologize for the inconvenience. And please come back next year and see what you see. So thank you for the input. Number 5.
Unknown Executive
Mr. Cook, I have Mr. Joey Campbell from North Brunswick, New Jersey.
Ian M. Cook
Oh, wow.
Unknown Attendee
My name is Joey Campbell and this is my sister, Emily. My grandfather works for Colgate in Piscataway, New Jersey for 34 years. We are in a Colgate family. We are Colgate kids. We have one problem. We used to pour [indiscernible]. It is hard to open and hard to measure the amount we need. We keep spilling it. Can you please come up with a better way to measure it and pour it for us? Thank you.
Ian M. Cook
Well, thank you so much for the question. Brave of you to stand up in a room of this with your sister and give us the feedback. It will be taken care of. We thank you very, very much. We thank everything your dad did for our company and please come back again next year. Thank you very much. Number 4.
Unknown Executive
Mr. Cook, I have Stewart Marcus [ph] from Brooklyn, New York.
Unknown Shareholder
I saw a commercial on TV about a dog with false teeth and they were advocating a dental product for animals. Then I was in [indiscernible] and they also have literature about dental care for dogs and cats. My question is does Colgate have any products in that area or have they looked at that area?
Ian M. Cook
Very good question. Thank you, as always, for your question Mr. Marcus. Now the answer is yes, we do have products. We don't do dentures or physical prosthetics for dogs. We tried the toothpaste but the dogs have trouble holding the brush. So -- but we have certain of our diets in our Hill's products do indeed provide cleaning from tartar control and keep the dog's teeth clean and less susceptible to disease and, of course, their breath fresh. So we have several diets that operate in the oral care area. So thanks for the question. Number 2.
Unknown Executive
Mr. Cook, this is Mr. Alex Lehman [ph] from.
Briarcliff, New York.
Unknown Shareholder
I'd like to ask you a question about Colgate India, which I know to be a publicly traded company on the Mumbai Exchange. And I see Colgate India has a permanent positive contribution to building your brand in that country. I assume it would help grow the number of people interested or knowledgeable about dental care. And finally, I think that this approach led Indian investors and investors outside of India to participate in the growth of value of this company and in the growth of that huge country. So I was wondering if you would talk a little bit about the pros and cons of being listed and traded in India, and whether that could be a direction that you might pursue sometime in the future for other countries -- other emerging countries?
Ian M. Cook
Yes, the situation in India is somewhat unique to India and the constraints that were put on multinational companies operating in India if you go back in history. So the current structure we have in India was unique to that particular circumstance in all of the other emerging markets in which we do business, we have standalone Colgate operations that are run and owned by Colgate. Now I guess the question looking forward, even though the India stock exchange has relatively high PE multiples compared to, for example, the more open markets here, in the United States, maybe at some time in the future, there would be a consideration to take a greater ownership position in India. But I don't think we would go the other way in our other emerging markets we would say with the fully owned position that we have. So thank you very much. Number 2.
Unknown Executive
Mr. Cook, this is Dr. Willy Sy [ph] from Manhattan, New York.
Unknown Shareholder
Good morning, Mr. Cook. Very fine presentation. My question is rather generic. Of the thousands of employees that Colgate has around the world, how many live in the United States? Or what percentage of the employees are local? And has Colgate been hiring any new employees globally?
Ian M. Cook
Yes, the answer is we do hire here in the United States, which is a good growth business for us. We have in fact built a new facility in Morristown, Tennessee to make our Colgate Toothpaste, Colgate Total Toothpaste, here in the United States. And indeed, the Morristown facility we have in New Jersey. By the way, we call all of our facilities Moorestown so there's no confusion. But we supply underarm products made in the United States globally. And we probably have approaching 15%, 20% of our employees here in the United States, which is consistent with the scale of the business relative to our international business. So we are hiring. We are investing. And we have a good representation of employees here. Thank you. Number 3.
Unknown Executive
Yes, Mr. Cook. This is Dr. Holly Lacenel [ph] from Long Beach, New York.
Unknown Shareholder
Yes. Hello, Mr. Cook. The question I have is that when I go into policies and I see people looking at the toothbrushes, of course, I send them to the Colgate products, I like the way it's produced. My question is, as a dentist, I recommend the soft nylon bristles. Why is it that this medium hard bristle toothbrushes that will actually cause erosion and abrasion and more dental problems to the patients as opposed to just labeling them as soft nylon bristles and telling the patients that this is what this dentist recommend?
Ian M. Cook
Well, first of all, thank you for directing people to the right part of the store. Secondly, you are correct. Soft bristles are much more recommended by dental professionals. Here in the U.S., we have medium bristles, soft and indeed we have extra soft bristles. We don't have the hard bristles here in the U.S. But we have maintained the democracy and have not taken the step of only providing soft bristles because, frankly, some consumers like the medium bristles. So I think between your communication and our communication, hopefully over time, we will convince them to move to the soft bristles, that we stayed away from the hard bristles. Thank you.
Unknown Shareholder
That's a very good but these patients are aware that medium will cause abrasion, you might be having to put a disclaimer on it stating that it can cause these defects.
Ian M. Cook
In our research, the medium bristles are okay for people. Frankly, a lot of it has to do with the way people brush. Some people are more or less aggressive brushers.
Unknown Shareholder
Very true. So I'm looking forward to the ultra thin -- the slim line now.
Ian M. Cook
Yes, that's a great brush. We'll send you one. We'll definitely send you one. Thank you. I guess we'll take number 4.
Unknown Executive
Mr. Cook, this is Jim Crisafulli [ph] from Flushing, New York.
Unknown Shareholder
Hi, Mr. Cook. Again, congratulations on wonderful performance. We've had Colgate for years and we're very happy with it. But as part of your growth plans, has any thought been given to expanding, and I know it's a new arena, but into the pharmaceutical arena since there is a close relationship between oral disease and systemic disease or in the dermatologic arena, with dermatology drugs, as a possible next growth area because it's great that you're gaining market share with toothbrushes. But how much more are you going to get?
Ian M. Cook
Well, on the market share, we have a global strategy and policy in place that says, when we get to 105, we're going to stop. So that's the first part of the strategy. I think to your point, we are very -- we have been very focused on the 4 categories in which we do business, which you all know well. But within that and take oral care to the half of your question, we are very focused but quite broad in oral care. So when you look at the technology, for example, we have in that superior sensitive toothpaste, that is superior patented technology, that doesn't quite take you into the pharmaceutical area. So I think the way our strategy is built today, you're more likely to see us be innovative with technology but still in the consumer space rather than necessarily move into the pharmaceutical area. But you could see us more broad in oral care. So that's the way we're thinking about it.
Unknown Shareholder
Okay, because you could capitalize on the trust that the public has in the company.
Ian M. Cook
And you're right. And particularly, the trust they have in the name Colgate in oral care, which is why, again, we would want to step into areas that are superior but areas that we understand and master so we don't do anything that could potentially damage that trust. Thank you. Number 5?
Unknown Executive
Mr. Cook, I have Mr. Joe Pernicola [ph] from Brooklyn, New York.
Unknown Shareholder
Hi, Mr. Cook. Nice to see you again. I consider coming to these meetings, Annual Meetings, every year as kin to Christmas in May . I just want to comment about my fellow shareholders in Brooklyn who mentioned that there was no cream cheese. It depends at which time you get yours. I had cream cheese in my bagels. Mr. Cook, I have a question, have you been approached yet to appear on the show, Undercover Boss? And the reason I asked is because I want to see what you will look like in disguise.
Ian M. Cook
The answer is no, I haven't been approached. I'm not your -- or maybe it would be easy to disguise me. I'm not sure. The accent might give me away as not being from Brooklyn. I guess that would be the...
Unknown Shareholder
Yes, but you're all over the world so you can -- we can get you somewhere. Would you consider it?
Ian M. Cook
No, frankly not. I think the way you should think about Colgate is the people you saw today and you've been seeing for the last 26 years with your cream cheese because these are the people that made Colgate and its those people I go and see. And I think I see enough of them every year that they probably wouldn't have a hard time seeing who I was. So I'd rather spend my time with them rather than on TV.
Unknown Shareholder
All right, for the real question now. We have what, 223 countries, was it?
Ian M. Cook
More or less.
Unknown Shareholder
Do you plan on adding more to that list this year?
Ian M. Cook
The -- well, space is on the horizon, but we haven't added it to the list. So the answer is, yes. Interestingly, Myanmar for example, we are among the first companies in the United States to get a license from the U.S. government to commence sales in the newly opening market of Myanmar. So you can rest assure that we are very attentive to the new markets in the world that could be an opportunity to create new lifetime Colgate toothpaste users and maybe you'll see 224 on the slide next year. Thank you.
Unknown Executive
Mr. Cook, this is Linda Cooper [ph] from Brooklyn, New York.
Unknown Shareholder
Good morning. I just want roll over my dividend without a fee. That's all I want.
Ian M. Cook
Yes, the way that works, our fee as you know, the market is split about 50-50, slightly over with companies that charge a fee. We do charge a fee. Our fee is the lowest and also, there is a nominal transfer charge. But it is the lowest of the folks that do charge a fee. So I apologize. But you will have to pay a fee but it is a very modest fee. And I think given the performance of the shareholder return, hopefully, you will overall be happy. Number 3.
Unknown Executive
Mr. Cook, this is Mr. Kent Patteson [ph] from Glen Rock, New Jersey.
Unknown Shareholder
Coca Cola just split, and I wonder if there's any consideration in the stock price of Colgate-Palmolive has that under consideration?
Ian M. Cook
They split into 2 companies or...
Unknown Shareholder
I don't know. the stocks split.
Ian M. Cook
Oh, the stock split.
Unknown Shareholder
I'd like to do that, so now I'm disqualified.
Ian M. Cook
The -- well, as you know, actually, it's a shame Mr. Luckovich [ph] is not here this year. He would tell you that two $5 notes is the same as a $10 note. Obviously, this is something that our company looks at from time to time. It doesn't, as you know, change the intrinsic value of the company. And I hope that people in this room, along with the management of the company, have been very happy with the progress of the stock. Yes or no? So at and when we do or do not decide to split the stock, you'll be among the first 1 million people to know.
Unknown Shareholder
Okay. Because my consideration is since we're such a global company and we have such a massive appeal like Coca Cola an international company, to make the stock more affordable and to garner more interest, that's where I'm upcoming, not the performance. That's the criteria that I'm thinking.
Ian M. Cook
I understand. And of course, you well know, that over the years, when we have split the stock, that has been precisely the reason, and if we'll need to do that again in the future, it would remain the reason. Thank you very much. Number 6.
Unknown Executive
Mr. Cook, this is Jerome Leavy [ph], from Passaic, New Jersey.
Unknown Shareholder
My question is dealing with the situation in Europe? With Europe seems they're falling apart, for example, England and Germany are solid countries, but the rest of them, most of the big nations like Spain and Portugal and Greece, how is that expected from both a political standpoint, number one? And what will happen to the euro? It looks like it's about to disintegrate, number two? How does that affect the company?
Ian M. Cook
Well, I'll just pop over there and fix it. First of all, as we think about building our business, over time, we're in countries forever. And situations like this have happened over the years. I could show the return of our company over a 20-year period suffering oil shocks and many, many other things. And given that we have such a balanced company with over 52% of our sales now coming from the emerging markets, we are very well balanced to deal with a slowdown in Europe, which is definitely what we have.
Unknown Shareholder
But what happens if Greece leaves the euro and come back to the drachma, and the same token the French back to their old currency?
Ian M. Cook
Yes, the reality is the so-called PIGS countries as we call them, the -- Portugal, Italy, Greece, Spain, in terms of our business, they are a very modest part of our global business, less than 3% in totality. Interestingly, our business, our categories in the larger of those markets has actually been growing and we have very strong brand positions in the country. If the Greeks were to go back to the drachma, we have a plan for that, too. The economy would clearly slow for a number of years, as had been the case in the past with some of the Latin American economies, but then they come back. So within our overall global tapestry, we believe we have the structure in our company and the capabilities to manage whatever the world throws at us, including Greece. We are staying in Europe for the future of our company. Thank you.
Unknown Executive
Mr. Cook, I have Mr. Levonne Margucian [ph] in from New York, New York.
Unknown Shareholder
First of all, I'd like to indicate my appreciation of the company's management in registering an outstanding operating record over the years. I'm a very happy shareholder for over 4 decades and I'm amazed at the dividend yield on my original investment even adjusted for inflation. So thank you very much to begin with. I've got a 2-part question.
Ian M. Cook
I knew this is coming.
Unknown Shareholder
There were price decreases in North America and Europe of about 3%. Does this indicate sales losses to private label, et cetera, and more competitive environment that prevents price increases and how is the company addressing that?
Ian M. Cook
Well, you saw that one of the winning programs for our You Can Make a Difference Award recognizing some of the technologies we use to intelligently take our pricing up. From a global point of view, as you would have seen in our results last year and indeed strengthening in the first quarter of this year, we managed to balance, we think, very well, a 3.5% increase in global pricing while at the same time generating nearly 4.5% growth in global volume. So that demonstrates the ability to take price and maintain volume on a global basis, point #1. Point #2, our U.S. business, which went back on to a much more innovation-led part, the second half of 2011, have seen positive pricing for the last 2 quarters because it is now innovation led. And one of the things we know about innovation is that people will pay for value if that value is delivered by the product. And in the case of Optic White for example, it is very much delivered. So the U.S. is back in positive territory. And the U.S. and Europe was partly comparison with prior year, but the pricing environment is tough in Europe generally, driven largely by the retailers, not by private label. And I would say on our business, from a private-label point of view, one of the reasons we're in the categories we're in is that if you think about toothpaste, if you think about personal care products or pet nutrition products, you're giving them to your families or your pets, you put a trust in those brands and the private label penetration is far lower in those businesses than it might be in some more commodity businesses. So I think our portfolio is well structured. And I think we are globally getting pricing and volume. And I think even in the tougher developed markets, we're back to positive price in the U.S. and we're moving in that direction in Europe. So thank you.
Unknown Shareholder
Thank you. There's a second part. Could you clearly discuss Sanex operation and how that's being melded into the company's marketing and its prospects outside of Europe?
Ian M. Cook
Yes. We were delighted to make the Sanex at position. We believe that it was one of the leading brands in that Sara Lee portfolio that was put up for sale. It has 6 principle supermarkets today in Europe. It has an array of terrific innovations that their team kept building. One example of which, I showed. And we have clear opportunity to expand Sanex beyond the markets in which it sits, even in Europe. We have a clear opportunity to expand Sanex into new categories adjacent to the 2 principal categories that they are in. And we have the opportunity to transfer Sanex ideas and technology to Colgate businesses even if we don't do it under the Sanex name. All 3 of those, we will be doing. Obviously, for competitive reasons, I'm not going to tell you where or when but we will. Thank you. Okay, I'll take 3.
Unknown Executive
Mr. Cook, this is Mrs. Jean Patzen [ph] from Glen Rock, New Jersey.
Unknown Shareholder
Good morning. I find exists a delightful and very informative meeting. I'm really enjoyed it. I have 2 questions. I don't know if I was seeing things but I think you were -- I don't know if it was Brazil or in India where you have toothpaste that's called Salt, S-A-L-T? Or was I seeing things?
Ian M. Cook
You weren't seeing things. You're seeing very well, actually. It was India where there is a common local practice to put Salt on gums and therefore, we translated that into a toothpaste. So you did see it.
Unknown Shareholder
That's very interesting because I recently had gum surgery and I was told to rinse with warm saltwater. And I'm wondering why something like that might not be imported here or used here or recommended by periodontal specialists?
Ian M. Cook
Here, frankly, the principal product recommended by experts in the area of gingivitis is Colgate Total, which has both the approval of the FDA and the American Dental Association for gum condition. So that's the preferred choice here in the United States.
Unknown Shareholder
Okay. Now my second question is have you sort of marketing a small travel-sized toothbrush with a little cap, soft bristles, without the Spongebob cap on it?
Ian M. Cook
What's wrong with SpongeBob?
Unknown Shareholder
It's kind of embarrassing.
Ian M. Cook
I think, we do do that.
Unknown Shareholder
But I have not seen though. Frankly, I do a lot of my shopping at CVS because it's the closest store to me. I'd like to walk there but I've not seen it.
Ian M. Cook
Well, first of all, we'll make sure you'll get one without SpongeBob, given your embarrassment, but I actually do think we sell it more broadly. But you'll get a non-SpongeBob. I think the last question over number 4.
Unknown Executive
Mr. Cook, Mrs. This is Mrs. Kathy LeVota McMann [ph] from Nantucket [ph], New York.
Unknown Shareholder
Good morning, Mr. Cook. This is the first opportunity I've had to attend one of these meetings. However, we had been a shareholder apparently of Colgate for years. You may recognize my father's name George T. LeVota, he was Director of Programming and Head of Media for Colgate for many years. He would be very proud of everything that's going on right now. This is a very family-oriented meeting and that's how he raised us knowing Colgate was a family-oriented business. I think he would be extremely proud at the progress that's being made. He has his grandson here with me and his great-grandchildren are also all shareholders of Colgate. Unfortunately, at 90, he passed away 2 years ago. But I do know when Colgate hit 100, he picks up your attorney's hair and said, "Yay." Thank you very much.
Ian M. Cook
Great. What a way to end a meeting. Just the way we rehearsed it. So is there a motion to adjourn?
Unknown Attendee
I move that we adjourn.
Unknown Attendee
I second the motion.
Ian M. Cook
All those in favor, say aye.
[Voting]
Opposed?
Thank you.
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