Pearson plc (PSON) Earnings Call Transcript & Summary

Good morning, everyone. On behalf of the Pearson Board, I would like to welcome all of those online and in the room to our Annual General Meeting. For those of you present in the room, I would ask that you place your phones on silent mode, please. I should do the same. And there's a quorum present, and we can start the meeting. I'm Omid Kordestani, the Chair of Pearson. As you know, the way we have conducted our meetings has changed in recent years. Once again, we are holding a physical and virtual meeting. Holding the AGM as a hybrid meeting enables a broader cross-section of shareholders to participate. We remain committed to fostering this kind of shareholder engagement. We're also very happy to welcome you to a new venue inside Pearson's London offices at 80 Strand. I hope you get a sense of the innovative and modern environment that inspires our work every day. Please take a moment to familiarize yourself, if you haven't done so already, with the health and safety information you were given at registration. Shareholders joining us virtually through the Lumi platform will be able to participate in the meeting by watching us live on the webcast. They also will be able to vote on the resolutions and ask their questions. When we get to the formal part of the meeting, there will be an opportunity for all shareholders present in the room and online to ask questions. Shareholders on the Lumi platform can submit questions at any point using the message platform at the top of the screen. We will endeavor to answer -- to address any unanswered questions on our website as soon as possible after the AGM. Joining me today are Chief Executive Andy Bird; and Chief Financial Officer Sally Johnson. Where's Tim? Tim Score, our Deputy Chair and Senior Independent Director; Sherry Coutu, Chair of our Remuneration Committee; Linda Lorimer, Chair of our Reputation & Responsibility Committee; Graeme Pitkethly, Chair of our Audit Committee. Where is he? There he is. Along with our Non-Executive Directors, Esther Lee, Annette Thomas and Lincoln Wallen. I also want to take this opportunity to recognize Linda Lorimer. I'm going to really miss you, Linda. Linda steps down today after serving nearly 10 years on the Board. We'll miss her greatly. She has been an amazing force, I call her fierce, throughout her tenure, most recently as Chair of our Reputation & Responsibility Committee. I want to personally thank you, Linda, and wish you the best in your future endeavors. Thank you. I'm delighted to be hosting my first Annual General Meeting as Chair of Pearson. It's a privilege to join Pearson at this exciting and transformational time. I'm drawn to this fantastic company because of the important role Pearson plays in improving society through lifelong learning. We have a clear purpose to add life to a lifetime of learning. As we fulfill that purpose, we have the opportunity to educate the world. This is tremendous potential -- there is tremendous potential to capitalize on this while being a company that acts responsibly and sets the right tone. This is especially true when you consider the huge potential of digital learning. And as the workplace becomes the center of many people's learning journey, it's also exciting to see Pearson deliver on enterprise learning in new ways. 2022 has been a year of strong strategic and operational development for Pearson. Thank you, Andy, for your leadership. We have made considerable progress in executing our lifelong learning strategy. We continue to create a digital ecosystem fit for the future of learning with the consumer at its heart. We're reshaping our portfolio. We're adding important capabilities. And we are increasing our interconnectivity between divisions in a way Pearson has not been able to do before. Today, Pearson is more focused and more efficient, driven by better execution. We're led by an exceptional executive team. The Board and I have confidence that we are well positioned to grow profitably and deliver long-term success. I'm also confident this will create value for our stakeholders. Now on to our financial performance. For a second consecutive year, our financial performance was ahead of expectations. We delivered a strong performance in 2022 with sales increasing on an underlying basis by 5% and our adjusted operating profit increasing by 11%. This resulted in our adjusted operating profit increasing to GBP 456 million under the great stewardship of our CFO. Thank you. We have also retained a strong balance sheet and liquidity position that will enable us to continue to invest in our comprehensive growth strategy. As a result of the strong performance in 2022, the Board recommends a 5% increase in the full year dividend to 21.5p. This reflects excellent progress across the group, driven by our strategic initiatives. I'm also pleased to report that our strong momentum has continued into the current year. We issued our Q1 trading update this morning with underlying sales growth of 6%, excluding OPM and strategic review businesses, and 2% growth in aggregate. Our performance across divisions is in line with or ahead of our expectations. And we remain on plan to achieve our 2023 guidance. Additionally, we announced our intention to commence a buyback to repurchase GBP 300 million of shares in the second half of this year, 2023. Our confidence in the future is underpinned by our strong financial performance, our ongoing innovation and the increasing interconnectivity of our business. This is combined with the accelerating demand for digital solutions and our growing consumer focus. Pearson is significantly increasing our ability to serve more people across a lifetime of learning. And now I'll hand it over to Andy to tell you more about our key achievements and our future plans. Thank you, Andy.

Thank you. Thank you, Omid. And good morning, everyone, here in person and online. I'd like to start by expressing my gratitude to Omid and to our Board on our strategy and also to our management team over the past year. I'd also like to echo Omid's comments thanking Linda for all her service to Pearson. I've certainly appreciated Linda's guidance and wise counsel as I took the reins here at Pearson. Thank you. You're going to be sorely missed, Linda. And so on behalf of all the employees at the company, I wish you really, really well. But I know you're not going to [Technical Difficulty] As you've just heard, we've made significant strategic and operational progress over the last year, which has strengthened our foundation for a growth of sustainable -- for a future of sustainable growth. Today, along with our Q1 trading update, we announced the appointment of Tony Prentice as our new Chief Product Officer, who brings 25 years of consumer-led product experience. Appointments like that, today's trading update and the 2022 financial results reinforce the momentum that we've been building. We've been delivering on our lifetime of learning strategy and evolving our overall proposition to increase our focus on higher growth areas of the company. In 2022, we added new capabilities and new market opportunities through the acquisitions of Mondly and Credly. The recent acquisition of PDRI opens the important U.S. federal government market for our Pearson VUE business. And just last month, we completed the strategic review of our Online Program Management business, resulting in an agreement to sell that business, further focusing our portfolio. Additionally, in 2022, we saw significant growth in Pearson+ paid subscriptions. And we launched Pearson+ Channels with original and curated video content to help students learn the most challenging subjects. We also launched our Workforce Skills talent investment platform. And recently, we received Canadian government approval for our Pearson Test of English, opening a significant new market for that business. As we do all of this, we're growing our universe of consumer relationships. Last year, our products and services impacted the lives of approximately 160 million consumers globally. These are just some of the ways that we're moving Pearson forward. From a divisional standpoint, English Language Learning is growing strongly and bringing millions of direct-to-consumer relationships into the company through the Pearson Test of English and Mondly. Our Higher Education business is undergoing strategic organizational changes. And we're investing in products like Pearson+, along with MyLab and Mastering, to return that division to top line growth. Pearson+ continues to grow. For calendar 2022, our first full year in market, we saw 600,000 paid subscriptions and 4.8 million registered users, so very strong performance. In Workforce Skills, the launch of our talent investment platform represents a significant step forward in the division's strategy and is capitalizing on the increased demand for re-skilling and up-skilling within the workplace, a market of significant size. We remain confident in the long-term performance of Virtual Learning division. And we plan to invest in career and technical curriculum to drive growth. Finally, Assessment & Qualifications continues to be a source of stability and strength for Pearson. We're excited to expand the scope of Pearson VUE's offering with the PDRI acquisition. And the division will continue to play a central role in our lifetime learning strategy. So as you can see, we're executing at pace. This work is forming the foundations of a digital ecosystem that will serve learners across their lifetime. Our priorities in 2023 will focus on moving us closer to this goal. Specifically, I've identified three priorities for this year: firstly, drive sustainable and profitable revenue growth; secondly, delight our consumers and become obsessed with meeting their expectations; and thirdly, focus on execution across all of the businesses. We're at a unique moment where we can begin to combine our capabilities to benefit the vast number of individuals and organizations. And as we move into 2023 and beyond, you'll see us push further into a business model that connects the 160 million users we reach each year into one connected Pearson platform. As we deepen relationships with consumers, they'll be able to move with ease between our products as their learning needs evolve. That creates lifetime value for each of them, for Pearson and for you, our shareholders. And with that, I'll hand it back to Omid for Q&A. Thank you.

So before I ask you to vote on the resolutions, we would be pleased to answer your questions on the business or any of the resolutions. We have encouraged participants to pre-submit questions. However, having received none, we'll begin with questions in the room. Any person in the room wishing to ask a question should raise their hand, and one of our stewards will pass you a microphone. After we finish with the questions in the room, we'll then take questions from our online attendees. For those of you attending the meeting via Lumi, please submit your question. We have the Lumi platform, where there are instructions on how to do so. Please say your name before asking your question. If you have -- if you are a proxy or a corporate representative, please state whom you present. I'll now take questions in the room. Please, sir, go ahead? The gentleman in the brown -- oh, waiting for the microphone. Thank you.

John Farmer, Chairman, diversified shareholder, and for some decades of Pearson plc. I have a string of questions, Chairman, which, for clarity, perhaps you would answer one-by-one. The first is fairly discrete. I called, as in past years, earlier this week to collect an annual report. It took an amazing time to get one. Someone in pink from reception actually came upstairs seemingly and came back empty-handed. And eventually, one arrived by someone, presumably a staff member, who was in an overcoat and on her way out. Is this the way to deal with shareholders? Because I strongly suggest not.

First of all, I hear you're a legendary shareholder. So thank you for coming and making the time here, and nice to meet you. We should do better. No, I think we will endeavor to always do better and make them more easily available.

And then I have a number of constructive points about the annual report. As I mentioned, I'm a diversified shareholder, and I read a lot of valuable reports. Yours is quite among the worst I've encountered recently. It's near illegible. And I have excellent eyesight attested by a fellow yachtsman, who said I was the best -- I had the best eyesight of anyone he sailed with.

I'm jealous, I want to have that.

The print is tiny and the color is wispy gray. Chairman, shareholders are entitled to read the report at speed without having to squint. And you have produced 227 pages of near illegibility. Will you please, in the future, do better and print in black and white with a larger typeface so that we can actually read and find what we want?

Absolutely. We have our great team here from Corporate Secretary to our CFO, so everybody is hearing the feedback. Thank you.

Also on the annual report, Chairman, I would protest against the colors. There are diagrams on such -- or these sort of backgrounds on such as Page 8, diagrams on Pages 12, 13 and 16 and 21, which are so illegible and tiny that they're near worthless. For goodness' sake, Chairman, if you purport to be a FTSE 100 professional company, get your act together and produce something legible for your shareholders.

We'd love to have all your feedback on that. If you want to send us an e-mail or provide a list to us, we'll definitely...

Well, that's what I'm here for, Chairman, to tell you.

Thank you.

As I am here at the AGM, I have some comments on this. You should know, Chairman, that 9:30 in the morning is not acceptable as an AGM time. Private shareholders seek 11 as Pearson, in fairness, has had in the past so that they can get here using a Freedom parcel bus pass. You have a derisory attendance this morning, which reflects the hour we're at. And no objection to you using your own premises. But it's much tinier than the Queen Elizabeth II Conference Centre that you used to use. And I refer you to the U.K. Corporate Governance Code last edition but one, which was the last explicit on this subject, which said that the Board should use the AGM to communicate with investors and to encourage their participation. That is not served by holding the AGM at the crack of dawn and prefacing it with, as I've touched on, an annual report so illegible that I gave up reading it.

Well, we try to do everything possible to make it accessible, the AGM, from a hybrid format, telephone, website and then live attendance. But we'll take your input.

Chairman, I have no objection to hybrid.

Yes.

And I don't think any reasonable person would have. But the time of the meeting is ridiculous.

Is a problem for you. We'll take your feedback.

And as we're here, I can't see half the Board. You should have them on a platform or a dais.

We're totally available also to greet you afterwards.

I have not found in your annual report any clear statement of strategy. That's maybe because I couldn't cope with the illegibility.

We'll make sure it's as clear.

But this company has floundered for years. At a recent AGM, a fellow shareholder used the phrase, the glory days of Marjorie Scardino, the previous Chief Executive. This company has gone downhill since then. And what is your strategy? You used to sell books. You've foolishly, in my view, sold off Penguin. There was a great flurry of activity supposedly recently over textbooks for United States students. It then emerged that, that strategy was flawed because the United States students couldn't afford the textbooks, so they're borrowing them secondhand from the year before. So what are you doing?

Yes. Well, I'd like to just point you to the results. We delivered a shareholder return of 50% in 2022, second best-performing FTSE stock last year. And again, we're not going to just live by that. We are really focused on our strategy of lifelong learning. And as the world is changing, and we learned a lot through the COVID period and how students are adapting and corporations are adapting to learning, so we have a strategy to pursue all of those areas systematically and hopefully deliver as good a performance as we did last year and better.

Well, could you or someone tell us concisely what the strategy is? Because frankly, the Chief Executive's presentation was, to my mind, extremely low on strategy and higher on detail.

Well, I mean, we have a very clear strategy. In fact, Andy has done a marvelous job of having a very succinct strategy. I'll have him speak to it.

Yes. As Omid referred to, the world, particularly post pandemic, has changed at a rapid pace and the way learners learn has changed. And where they learn has changed and how they learn has changed. And we have seen a dramatic shift in all of those three aspects. And uniquely, Pearson is positioned to capitalize on all of those changes at all the key stages of an individual's learning experience. Learning now goes way beyond formal education. It goes way beyond university. It goes into up-skilling and re-skilling as employers around the world grasp with the impact of technology on their workforce. We've seen an increase in certifications beyond formal educational certification. And our Pearson VUE business, someone somewhere in the world is receiving a certificate via Pearson VUE every 1.6 seconds, to give you a sense of the scale of the certification explosion globally around the world. You will have seen part of that certification is we own the Pearson Test of English certification, which is part of the process if you were going to emigrate to Australia, now to Canada, to come to study here in the United Kingdom or in the United States and is an integral part of helping individuals as they go on their learning journey. And uniquely, the company has progressed from the analog world of pure institution and the textbook that you read. We still produce physical textbooks. But increasingly, that world has now moved to become more digital, more nonlinear. The way people learn, how they learn is becoming very, very different. You see people who are learning whilst they're at work. And so this combination of working, we see with our BTEC and apprenticeships, how that's important in terms of the up-skilling and re-skilling. And so we, as a company, have a strategy to be relevant to individuals at key moments in their life as they go through this learning journey. And we are focused on delivering impact to those -- we impacted -- positively impacted over 160 million individuals' lives around the world last year through the products and the services that we provide. A portion of those were in what we would call traditional education. Increasingly, we're seeing that move into other aspects, as I referred to. I hope that gives you a bit of a sense of where we're going.

Thank you. It certainly elaborates, although I remain cautious and not fully convinced. I'd like to -- before I go on to the effects of your presumed strategy on financial performance, can I mention just one thing, which was mentioned in the opening address, which is GBP 300 million spent on share repurchases? There is, as you may know, considerable skepticism among particularly private shareholders over the efficacy of repurchasing shares. The theoretical justification is understood. But too often, it seems to be subsumed by other factors and not work. And the money spent would arguably be better spent on delivery -- on developing the business. So would you comment on that discrete point before I go on?

Sure. I'm happy to speak on that if you -- I think the key here is about balance. We take Sally and her team, we take the financial responsibility and care about how we use our capital very, very seriously. And there is a balance between the ongoing expense of running the business, investing organically within the business to grow in research and development to launch new products. Pearson+ is a very good example of that, which was self-funded internally from the profits that came out of operating the business. We use some of our capital then to make key acquisitions, like last year with Credly and Mondly, that fit into that overall strategy. So we can use proceeds to make acquisitions to improve the capabilities of the company. We can then redistribute excess capital returns back to shareholders in two primary forms. The first is the dividend, and we announced that today. And the other is through a share buyback, which allows a reduction in the overall pool of shares in the market. And also, by the way, indicates our confidence in the future performance of the company. So these areas, we take very, very seriously. We're very thoughtful as an entire Board. This is a topic that is discussed very regularly. And you can be assured that we are striking the right balance between investing for growth, which is very, very important, making sure that we run the company efficiently. So we increased our margins last year by taking expense out of the company because of the efficiency in terms of the way that the company is run. And then by looking at what we can do to best serve shareholders so that you get the returns that Omid referred to in terms of our performance last year.

All right, thank you. But we currently heard fellow shareholders at AGMs saying, "I can't bank a share buyback." And I agree. It's useful only if it drives up share price. And as I said earlier, all too often, that seems not to. And we even have share purchases sometimes when the share price has gone down, which makes nonsense of it all, so...

Thankfully, in our case, our share price has gone up. So we intend to maintain that.

Yes, well, I'll come on to your vaunted financial performance. Annual report Page 213 has a 5-year summary. Sales in 2018 of GBP 4.2 billion have gone down to GBP 3.8 billion in the last year. Concurrently, profits in 2018 of GBP 546 million has come down to GBP 456 million. So you're not doing well.

Well, what you would have to factor into in those numbers is the disposals that we have made as part of the strategic review to reshape and make sure that this company is fit for growth in the future. And that's why I would urge you to look at the underlying growth, both of sales, as we've just announced for our Q1, and most importantly, profit. Those are the metrics that really matter when they move forward the company. And what we're doing is looking at those assets, we constantly review the assets across the company and decide those that remain relevant, it's good management of an enterprise. And so the top line numbers that you referred to reflect some of those disposals that have taken revenue, in some cases, not profitable revenue, out of the system to be replaced by higher-growth, profitable parts of the company. And that's why I would ask you to look at the performance of the company from a revenue and a profit perspective both for full year 2022, 5% growth, 11% in terms of profit and what we just announced for Q1.

No one has volunteered the quarter 1 statement. And I don't -- haven't seen any outside. Maybe I'll be able to scavenge one later. As to the last 5 years, the failure is in figures I've quoted. Maybe you've disposed of entities, but your profit has actually gone down by, in fairly round figures, GBP 100 million. What good is that?

Well, as I said, it's -- you've got to look at the macro picture and look at the...

Well, I'm doing -- I want to...

I'm just merely the CEO. The Chairman, I'm sure, would be happy to come back and answer that question.

I'm not suggesting you'll be promoted either.

I would just refer you, Mr. Farmer, to look at the underlying performance. And that is the key measure. And that is the measure that we and the market is focused on.

Well, that, too, I have done. On Page 108 of the annual report is a total shareholder return graph, which is what most matters to shareholders, the combination of share price increase, if any, and as you touched on earlier, dividend. Yours is, over 10 years, a pathetic 80%. That is not impressive.

Well, I take your words and understand your comment. I would refer you to the performance of the company certainly under my tenure. And I think if you look at that shareholder return, we referred to the fact that we were the second best-performing stock on the FTSE last year. If you look over the period of -- since I've been Chief Executive, the increase in total shareholder return, not, just as you say, the share price, I would also remind you that during the pandemic, we maintained our dividend when many other companies didn't. We also didn't furlough any of our employees during the pandemic. So we take all of these matters very seriously. I take your comments very seriously. My job and the job of my management team and the Board is to ensure that we act as good custodians for people such as yourselves, who we really value, who invest your hard-earned money into our company.

Well, yes, Chairman, I can acknowledge that you may not have been here as long as I have been a shareholder.

That's true.

But we are in the generality of companies at AGMs often urged to take a long-term view, which is what I am doing. 1 year's result does not make a summer to maltreat a phrase. And I would round off my comments, Chairman, by saying I think this Board is grossly underperforming. The Board as a continuing entity is grossly underperforming. Your results are a shambles. Your strategy is unclear. You can't even produce illegible annual report. And you can't even hold an AGM at a civilized time. So will you please get your house in order for the future, starting from next year?

We take all of those points. And we'll reflect on them accordingly. Thank you very much for your questions.

What is your name, sir?

Nick Steiner, private shareholder. I've got comments and then a couple of questions. Firstly, the comment about a 9:30 start. People, to attend this, you have to travel in the rush hour sardine territory. And also, it's the most costliest time for people to travel. The cheap day returns and so forth are much later. So I would sort of reinforce the point about the 11:00, which is what you used to do. And I think you'll find the numbers who actually get here today are lower than what you've had in the past. That's the way it seems to be from a quick look. Second comment, this is an education company. And normally at an AGM, you have a screen behind the presenter. And I, today, was sort of -- I can't really read those. So I'm doing this all the time. So where did this sort of idea come from? Because it's not really working for me, that you should be showing your skills at an AGM and getting information across. And while the presentation was good, it was more verbal and nothing sort of showing up on the screen. So now to the question. Firstly, 160 million global users, what's the country spread on that? How are you doing in China and India, great places of population? What's happening in Africa? So all this seems to be lacking. It may be buried somewhere in the report, but I've missed that. So apologies for that. Then coming to your strategy. And I understand the digital approach and so on and so forth. And very often, that's people sitting in front of screens. So where in this strategy is the interpersonal touch, which we are having today? And it is an enormous improvement on the sort of online looking-at. So where in the strategy do you include the interpersonal skills, which are being lost? Because if we go on to the tube train, everyone sits down, brings out their phone. You're losing that sort of thing in the social world. And then of course, learning is also about the practical skills. So you need to teach them how to use equipment like saws and planes. But then you need to get them to actually do it practically. So where are those three links?

Thank you for your question. First, on the format and the venue and timing, appreciate all the comments, and we'll take that into consideration. As far as our products and services and their evolution, we are trying to be responsive to those large number of customers that we have touch points with, offering them everything from certifications and different types of businesses, like practical businesses, like you mentioned, all the way to people studying computer science and preferring to do their work online or in a hybrid fashion. As far as the distribution of the numbers though, I'm happy to have you speak to that -- or Sally, if you like to speak to that?

Mr. Steiner, Sally Johnson. So I just had a quick look in the annual report. On Page 150, we have our geographical breakdown. To be fair, that's for revenue. But the 160 million users we have would match that revenue split. Around about 70% of our revenues are in the U.S., about 10% in the U.K. Some of the places that you mentioned absolutely are places that have opportunity. Sometimes from a regulatory point of view, they can be challenging to operate in as well. And of course, as a management team, as a Board, we need to balance those things. But thank you for your comments. Do you want to pick up on the strategy point, Andy?

On the -- I think I have to use this. All right, stand. I'd do either. Your point on interpersonal skills is very, very valid. And I'd answer it actually -- and It's something that I think about a lot. And one of the things is actually with our own employees, we have 21,000 employees around the world. We're very geographically dispersed in terms of our own employee base. And as we all encountered during the pandemic, it's a very different experience regardless of what you're doing if you are remote and can, in many instances, can be very, very lonely. And that's why the office you see here, we used the opportunity during the pandemic to actually reconfigure the office to really promote community, creativity and connectivity to drive culture within our own company. And I'm pleased to report that we are now -- we have so much demand for people wanting to come back into the office that we're looking at what -- how we can further reconfigure. So that's one point from internally as a company. Secondly, whilst we are investing and the world is using a lot of digital devices, often they are done within a physical environment. It is not everything is remote. It's about embracing digital technology in many, many different forms to make sure that we provide the most relevant learning and effective learning experience to learners wherever they are geographically and wherever they are in terms of their age and their learning development. Interestingly, with Pearson+ as an example, so with Pearson+ now, a couple of interesting points to pick up on something that was referred to earlier. Pearson+, you can get your textbook for $9.99 a month. So we dramatically reduced the cost and accessibility and access for students in terms of in higher education, colleges, universities in the United States at a much more affordable price. We think that's very important. We've increased a great deal of functionality into that product. And an interesting point, 38% of the users don't read, they listen. 38% of the students are listening to their textbooks. It's another way -- you may be familiar with the whole world of podcasts and the use of audio. So thinking about how you use media to engage and inform and educate students of all ages is what we're focused on. And that may take the form of a video, it may take the form of a text, it may take the form of graphics, it may take the form of audio. And what we're doing when we refer to sort of our digital-first strategy is how we bring all of those together to create really compelling products. So I think that's important. And then finally, the -- your very good point on social interpersonal skills and practical skills is something that we're focused on as well. We launched within Pearson+, a series of channels that I referred to, which, by the way, have been used, to your geographical question, in over 170 countries around the world. And we started with channels that were linked around pure educational subjects. So there is a channel that follows the curriculum for biology or chemistry or physics. And we actually have 18 of those channels today. Highly -- it's where we provide mainly video support to help students if you're stuck somewhere, "I just don't understand that concept." Then there is a video that helps you understand and explains that. And then you can test yourself to see whether or not that concept has now resonated with you, gives you confidence as you go on your learning journey and has proven to be very, very successful. More recently, we've added another suite of channels, all about soft skills and life skills, everything from understanding AI, which everyone seems to be talking about and what does that actually mean, to thinking about how do I write a good e-mail to go get a job, what are some of the key important life learnings that particularly young individuals need to understand and comprehend as they enter into sort of adulthood and transition out of formal education into work. And then finally, I mentioned earlier, very proud in terms of -- I think apprenticeships, the role of our BTEC certifications is very, very important as we're able to bring real life skills and training to individuals who want to follow that learning path. So I hope those areas answer your questions.

Thank you, Andy. So as you can see, great command of the business. Other questions?

Could we perhaps hear from the Remuneration Committee Chairman on the seemingly extravagant remuneration of the Board for negligible return? Could we perhaps hear from the Remuneration Committee Chairman on the ostensible extravagant remuneration of the Board for negligible return? Annual report Page 101 seems to suggest that executive directors are being paid a total of GBP 11 billion, is it? And along the line, we have -- have I got that wrong?

I think maybe it's Tesla's annual report.

And then we have a gamut of nonexecutives who are presumably on the gravy train as well. And harking back to my earlier point about the report legibility, the very next -- or 2 pages on from 101 is the example of, from Page 104, your disastrous contrast. We have gray on more gray. Seriously, Chairman.

I love your feedback on the formatting. We'll definitely take that into...

And when we get to the remuneration report graph, the supposed performance, could you please do what other companies have long been doing, and that is quantify the inflections, so we don't have to squint at some access to infer what...

I noticed my colleague, Graeme, is taking copious notes here. Thank you. But let me -- before I hand it over to my colleague, Ms. Sherry Coutu, our Chair of our Remuneration Committee, REMCO, let me call it, since I can't pronounce that word, but let me just highlight that we're in a global battle for talent. It's -- as much as...

[indiscernible], Chairman.

Please. We -- and if you look at -- as I mentioned, as you look at the performance of the company, we've already quoted those stats, how wonderful they were last year. But the other $1 billion number, close to $1 billion is what we return to shareholders. If you add up all the dividends and share buyback over the -- it adds up to about $950 million that we have returned over the past 2 years, so -- but on the specifics, our very wonderful Chair of REMCO is here. Do you want to...

Thank you. Can you hear me all right from where you are?

I think they will prefer if you stand up.

Right. Thank you. So you were referring to the non-exec directors in the first part of your question.

Well, the [indiscernible] remuneration of the Board. You seem to be paying yourselves a fortune and negligible returns to shareholders.

Thank you. So I think what we do is when we're setting remuneration, both for non-execs and the execs, is we look at paying for performance and aligning our pay with what the market is across the world, bearing in mind that you're -- this is a complex company. It deals with and it helps people learn, 160 million of them across 170 countries. That takes a certain skill set. And it's well benchmarked in a number of different places. If we look at our Chair, his fee is that at the same fee as the previous Chair. And that has remained unchanged since 2011.

It's really good.

Sorry?

I said it's really good.

Well, I think it's important to bear in mind.

It's all going to purchasing shares in the company, so supporting my belief in the company's future.

So -- and that goes -- and all of the non-exec directors also purchase shares in the company or forgo fees and purchase shares in the company on an ongoing basis. And so our interests are entirely aligned with your interests. I look at the TSR in terms of the long-term performance, and I think it's on Page 97, the long-term performance, looking at how we've delivered. We've also changed the comparator from the FTSE 100 -- from only the FTSE 100 to the FTSE 100 and also the S&P. And that's to reflect that the talent that we need in order to deliver this strategy, which we believe in, is we compare the right things. The fees is paying for performance. The fact that we take our fees in shares means we won't gain if also our shareholders don't gain. So I think the alignment is really important to take into consideration. We do benchmark. And we also look at, in order to attract people to come to deliver the strategy, what are they being paid in their home market or wherever they happen to be, bearing in mind, 70% of our revenues are not in the U.K., only 10% are in the U.K. And most of our employees and most of our directors are also in -- from U.S. markets. Those skill sets, which are needed for modern platform businesses like ours that can allow people to learn by video or by -- and acquire the employability skills that are needed, those skill sets are very rare because the war for talent is quite extreme. So in order to attract those people and retain them, we need to make sure that we pay them. And we're -- we don't have a history of overpaying on incentives. And we look really, really carefully at what is required. And we take this absolutely seriously. We have spent the last 6 months in consultation with many, many shareholders as we've come up with a recommendation, which we will shortly vote on, around what is a policy that will allow us to continue to achieve this strategy for the next 3 years. And that was a lot of conversations. There were changes from the previous policy. And it moved us slightly more towards the U.S. context, where we find most of the skills reside that we need in order to get this strategy, which will be -- which will continue the good performance that was referred to earlier in the next 3 years.

Thank you. No big surprises in what we've seen [indiscernible] from other companies. But you prompt two specific [indiscernible]. First, the Page 97, total shareholder return graph you referred to, it's only 1 year. As I said earlier, 1 year does not make a summer. And summers would be considerably longer than that.

Sorry, could -- so the 10-year return graph is on Page 108.

Yes, I know. But you referred to Page 97, I think.

Sorry, I should have referred to the one on 108 because that outlines the 10 years.

Earlier in my questioning and said it was a pathetic 80% over 10 years. See, even you are squinting at it because you haven't quantified the inflection or very well the answers.

I don't know if I want to look at my learned financial colleagues.

Well, the 10-year chart on Page 108 is a comparison with the FTSE All-Share Index and shows clear and consistent outperformance relative to the FTSE. So I don't think your Board would agree that the total shareholder return has been -- as the chart clearly shows.

The FTSE All-Share hasn't been increased at all.

Correct.

And Pearson has increased a great deal more than that. That's the point of that chart.

I think you also referred to consultations with shareholders. There is somewhere in the annual report of such a suggestion on -- a section on who you've consulted with. And the bit on -- I'm sorry, I did note it, but I haven't got the page at hand. The bit on shareholders doesn't even mention private shareholders. It's clearly institutional. You've been holding scores of meetings with them. And the private shareholders could go hang, except in fact -- except it seems for an AGM, which you're holding at 09:30 in the morning.

We have had conversations with all shareholders. And we value the input of -- your guidance in all ways. We have personally met with representatives of significantly more than 50% of our shareholders in the last 6 months as we put together this policy in order to be guided about what is important to you to make sure that our interests are aligned. Meeting with 50% -- more than 50% of your shareholders is an indication of how much we take your guidance into consideration.

By number, 50% by number?

Not 50% by number but by shareholding.

Institutional shareholders are the majority of the shares. But we are people.

I understand you're people. And I'm a private investor as well in my other -- in some of the other hats that I wear. And I believe it is absolutely important. And I'm very happy to talk to you and any other shareholder at any time. We all are. We are here to serve. We believe in what we're doing. And we think that what we're doing is absolutely in everybody's interest, very much, including individual shareholders.

Thank you. As they say in court, no further questions.

Thank you, Sherry. Other questions from the room? Okay. If there are no more questions in the room, I'll now hand over to Jo Russell, our Senior Vice President and Head of Investor Relations, who help with the virtual Q&A.

Thanks, Omid. We have two questions and one request from Mr. Castle. So the request is it was difficult for Mr. Castle to make it to the AGM today because of the time. So please could we consider reverting to a more acceptable time? First question is the annual dividend amount is only just back to where it was when he acquired his shares in 2000. In the intervening period, it has been up to 50p. The dividend pay is well supported by earnings. Could we see a faster increase in the dividend next year?

The questions on the time and the format of the meeting is well noted. And then I'll have Sally address the dividends.

I'll stand up so that people in the room can see me, meanwhile Mr. Castle is online. So our dividend policy is to have a progressive and sustainable dividend. We've increased the dividend by 5% this year. We've got a decent dividend cover. And we intend to do that in the future as well.

Second question from Mr. Castle is what is happening with textbooks? Is there a return to physical teaching post pandemic? And how is the company planning for this?

I'll have Andy address that.

Yes, we've seen the majority of -- as you experienced in the U.K., the majority of schools and colleges and universities we have returned to physical. And in some instances, there is a hybrid approach between physical and remote, depending on location. We have seen, regardless of that, a continuing decline in print as a format. I think, as I referred to earlier, the world has moved on where you are able to learn through many different media. And the textbook is just one of those forms of media. And we have reflected our offerings to be relevant, as I say, to the needs of students and learners around the world.

Thank you, Andy. So no more questions?

No more questions online.

Thank you. Since there are no more questions, I'll move now to the formal part of the meeting. The notice of the meeting was published on 24 March and copies are also available here today. Unless anyone objects, I'll take the notice of the meeting as read. For the voting procedure today, I'm calling for a poll on the resolutions as this meeting is being held partly by means of electronic facility. On a poll, every member, whether an individual or a corporation, present in person by means of electronic facility or by proxy is entitled to one vote for every ordinary share they hold. If you would like to vote for or against the resolutions or would like to abstain from voting, you must either fill in the poll card you received when you registered in person or click on the voting button on the Lumi platform and follow the instructions on the screen. I'll ask you to complete that in a moment. If you submitted your vote before the meeting, you do not need to complete a poll card or vote via the Lumi platform now. However, if you wish to change your vote or if the person you appointed as your proxy is not present in person or via the Lumi platform, you're able to vote again now. If you're attending as a proxy, you should vote now. If you're entitled to vote but do not have a poll card, please raise your hand and a steward will provide you with a card. A separate poll card should be used for each separate holding. So if you're representing more than one holding, please ask for additional cards as necessary. And I'll formally propose that each of the resolutions as set out in the notice of meeting is put to the meeting. There are 20 resolutions to be voted on, of which 1 through 16 are ordinary resolutions and 17 through 20 are special resolutions. With your permission, I'll take each resolution as read. Shortly, you'll see the results of all proxy votes that were received ahead of the meeting. These will be displayed on our presentation slides. As a reminder, the Board unanimously recommends that you vote in favor of resolutions 1 through 20 as the directors have done in respect of their own beneficial holdings. Please, would you now complete your poll card or vote via the Lumi platform? In order to complete your poll card, please enter your full name in block capitals. You should cast your votes on each separate resolution by putting a cross in one of the boxes marked for, against or vote withheld. If you're not voting your total holding in Pearson shares, please also write down the number of shares you wish to vote. Please sign your poll card and hand it to the member of the Registrar's team as you leave the room. To vote via the Lumi platform, the resolutions and voting choices should now appear on your screen. To vote on all resolutions displayed, select the vote all option. Alternatively, simply click on the for, against or withheld option for each resolution. To change your vote, reselect your choice. To cancel your vote, select the cancel option. Once you have selected your vote, it will change color and a message confirming your vote will appear. You'll be able to vote while the poll remains open. The poll will close in 10 minutes. The final results of the voting will be announced to the markets and posted on the Pearson website as soon as possible following the conclusion of this meeting. That concludes the business of the Annual General Meeting. Thank you very much for attending today, especially for those of you who have to commute. And we'll take that into consideration. And I declare the meeting closed. Thank you.