The Hershey Company (HSY) Earnings Call Transcript & Summary

Good morning. Welcome to The Hershey Company's 2020 Annual Meeting of Stockholders. I will now turn the call over to Chairman of the Board and CEO, Ms. Michele Buck. Ms. Buck, the floor is yours, ma'am.

Thank you. Good morning and welcome to The Hershey Company's 2020 Annual Meeting of Stockholders. Thank you for joining us today. We know our annual meeting is a special event for many of you. It's not only a time to hear about our key strategies and share your feedback, but it's also to connect with neighbors and colleagues and spend time in our wonderful town. And of course, to enjoy some delicious snacks and chocolate while you are here. Given the unprecedented pandemic that we are all facing, and federal and state guidelines requiring residents to stay at home to slow the spread of the coronavirus, we are hosting this year's meeting virtually. Our commitment to the health and well-being of our employees, stockholders and all of our key partners remains paramount through this pandemic. We thank you for your understanding and your continued support. While this is a bit of a different format, we continue to look forward to hearing your feedback and addressing your questions at the end of the meeting. We will cover as many as we can during the time we have allotted. Responses to all pertinent questions received, including any we may be unable to address today, will be posted on our website within a few days of the meeting. [Operator Instructions] Before we get started, I'd like to take a moment to share the sad news of the passing of a previous Chairman and CEO, Ken Wolfe, this past weekend. Many of you may have known Ken. He was a wonderful man, and a highly respected leader of this business and in our local community. Our condolences go out to his family. Moving on to the business of today. On the call today are members of the Board of Directors, representatives from our independent auditors, Ernst & Young, and the Inspector of Elections, American Election Services. We will now proceed with the meeting. The Inspector of Elections has indicated that a quorum is present, and this is a legally constituted stockholders' meeting. As required by Delaware law, the polls for voting are now open at 10:03 a.m. on May 12, 2020. If you sent in your proxy, voted via the Internet, phoned in your vote, or voted electronically during today's meeting, your shares will be voted as you indicated. Please submit your electronic vote if you have not yet voted and wish to do so at this time. Now turning to Slide 3. The first item of business is the election of Directors to serve until the next annual meeting. All 13 individuals identified in this year's proxy statement have been nominated by the Board for the position of Director of The Hershey Company. As indicated on Slide 4, the nominated directors are: Pamela Arway, James Brown, Victor Crawford, Charles Davis, Mary Kay Haben, James Katzman, Dianne Koken; Robert Malcolm, Anthony Palmer, Juan Perez, Wendy Schoppert, David Shedlarz, and me, Michele Buck. As stockholders, we are most fortunate to have this group of experienced and capable people to serve as Directors on The Hershey Company. Mr. Crawford and Mr. Perez has been nominated for election by the holders of the common stock voting separately. The 11 remaining nominees have been nominated by election by both the common stock and Class B common stock voting together. The Board recommends that you vote for each of the Director nominees. The second item of business, as noted on Slides 6 and 7, is the ratification of the Audit Committee's appointment of Ernst & Young LLP as the company's independent auditors for 2020. The Board recommends that stockholders vote for this proposal. Representatives from E&Y, our independent auditors, are participating on today's call. They have informed me that they do not intend to make a statement at today's meeting, but will be available to respond to any submitted audit or accounting questions during the question-and-answer period. The next item on the agenda, as noted on Slides 8 and 9, is a proposal to approve the compensation of the company's named executive officers. This item, commonly referred to as say-on-pay proposal, is required under rules adopted by the SEC in 2011 implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Consistent with the SEC rules, your vote is advisory and will not be binding. However, the outcome of the vote will be considered by the Board in future decisions affecting executive compensation as it deems appropriate. The Board recommends that stockholders vote for approval of the company's named executive officer compensation on a nonbinding advisory basis as described in the proxy statement. We will now proceed with final voting on these items of business. If you have not done so yet, please submit your electronic vote now. As a reminder, if you voted in advance via the Internet, telephone or proxy card or voted electronically at today's meeting, your shares will be voted as you indicated. [Voting]

For those of you following along, we are on Slide 10. The polls are now closed at 10:07 a.m. Actions now have been taken on all matters listed in the notice of annual meeting and proxy statements requiring stockholder action. This concludes the formal business portion of our meeting. Now on to the business review update, followed by a question-and-answer period. At the conclusion of the meeting, we will share the preliminary results of voting. Final results of voting will be available within 1 week on the company's website under the Investor Relations tab. Before we begin the review of our business, let me remind you that our presentation contains forward-looking statements as detailed on Slide 12. Please keep this in mind as we move through the business presentation, which starts on Slide 13. A lot is changing in the world right now. And there is a lot of uncertainty, but The Hershey Company has more than 125 years of experience managing through difficult times and emerging stronger. We remain focused not only on managing through this current pandemic, but also on our long-term strategies so that we are positioned well for growth and strong shareholder returns into the future. Let me now spend a couple of minutes sharing what we are doing to protect our employees and continue running our business through the COVID-19 epidemic. As noted on Slide 14, the health and safety of our Hershey team remains paramount in our decision-making and actions. As the pandemic spreads, we are monitoring the changing environment daily, and we are adapting as the situation evolves. We have put in place more stringent operating procedures and safety protocols to help ensure the well-being of our employees, their families and our communities. Currently, all of our manufacturing plants remain open, and we continue to operate our supply chain with limited disruption. Utilizing flexible scheduling to limit exposure, the majority of our sales reps remain in stores, partnering with our retailers to provide much-needed support. As you would expect, all of our corporate and commercial employees, who are able to, are working remotely. And for those on the frontlines, in both manufacturing and sales, we have awarded an incremental $30 million of incentives to recognize their contributions over the past several months. We recognized that Hershey is not only a food manufacturer, but also an important link in the broader food supply chain, particularly with farmers and other food raw material suppliers that rely on us. Our retailers and consumers are depending on us to keep making more of the products they love that are playing an even more special role in their lives now. Our employees have shown amazing dedication and resilience, and I couldn't be prouder of how they have responded. The measures we have taken are making an impact. With more than 16,000 employees around the world, we have had less than 15 test positive for COVID-19. Our ability to continue making and shipping products has enabled us to meet demand and keep the shelf stock in a time when many other companies have struggled. As you can see on Slide 16, this strong execution, combined with our portfolio of amazing brands, has resulted in sales performance significantly ahead of our competition, resulting in increased market share over the past 2 months. Supporting our communities in difficult times is an important part of our legacy. To date, The Hershey Company has committed millions of dollars in cash, product donation, technical expertise and resources to support COVID-19 response efforts around the world. Across the country, health care workers are sacrificing to care for others. To lift their spirits and offer our thanks, we have donated large shipments of Hershey products to more than 40 hospitals in communities where we operate and areas heavily impacted by the virus. On Slide 17, you can see photos of some of these donations. At home, we are collaborating closely with the Penn State Health Milton Hershey Medical Center. We have converted a local warehouse into a temporary logistics space for the expanded supply chain operations of all Penn State Health locations, while lending staff expertise from across our enterprise to collaborate on other critical projects as needed. We have also donated a variety of personal protective equipment such as masks, gloves and hand sanitizer stations and refills. We are also working with our fellow cocoa industry partners to support response efforts in cocoa communities in West Africa. Together, the major cocoa and chocolate companies have donated hundreds of millions of dollars to deliver COVID education and protection activities to farmers in these communities. And most recently, we joined forces with Land O'Lakes and Domino Sugar to provide needed ingredients, products and financial assistance to local food banks. Finally, we have invested $1 million to manufacture masks for employees and their families. We expect to begin having these masks available by the end of the month. Let's now take a look at a video that really captures the essence of all of this. For those of you that dialed in by phone, unfortunately, you will not be able to hear or see this 3-minute video. But it is also available on our website, and there is a link from the Investor page. Please stay on the line while we play the video, and we'll be back shortly. [Presentation]

As you all know, our lives have changed, and as a result, the way we shop has changed. This has resulted in fewer trips to stores and an increase in e-commerce shopping and when consumers are in stores, they are shopping differently. For our business, we have seen several impacts, as noted on Slide 20. Our e-commerce growth has doubled to 120% since the pandemic started. Consumers are buying more product to fill their candy dishes at home and to enjoy while watching movies or playing games with their families. They are baking more, both individually and as a family activity. But we've also seen some pressures with fewer trips to stores, especially convenience stores and the closure of many retail stores. We've also seen tough economic and regulatory conditions in some international markets, which has impacted confectionery sales. We are leaning in to the areas of growth, such as e-commerce and managing the risks and incremental costs so that we are well positioned for the recovery. While we are very focused on delivering today, we are also investing in ideas and capabilities to drive the business for the future. Turning to Slide 22. Now, more than ever, we appreciate what brands and products mean to people. Every day, we are invited into people's moments of business, and that is a pretty special place to be. This is what drives our long-term strategies, which have not changed. We are focused on driving our core confection business in the U.S., diversifying our product portfolio to capture incremental better-for-you snack occasions, building out our international footprint to deliver profitable growth and investing in our people, capabilities and our communities. What makes all of this possible is our remarkable people and the longstanding values by which we operate. And it is exactly these values, as expressed on Slide 23, of togetherness, integrity and a commitment to excellence and making a difference that enable us to be at our best when times are at their worst. We believe having a diverse and engaged team is critical for our success. This is a key priority for us, and we are proud of what we have accomplished, as shown on Slide 24. In addition to a highly diverse Board of Directors, executive team and workforce, our employee engagement is at 84% above the worldwide average and increasing during this pandemic, which is a testament to our employees and our leadership. We've spoken to you before about our sustainability work, and I'm proud to say that we've made some great progress over the past several years, as noted on Slide 25. We will deliver our goal of 100% certified cocoa this year. We have released a comprehensive environmental policy and a human rights policy, signed by the UN Global Compact and joined the science-based target initiative as well. As we move forward, we are focusing on the areas where we believe we can have the greatest impact. The progress we have made enables us to now expand our focus to go beyond just our facilities and employees and include the broader value chain and our key partners in our efforts. Human rights and sustainable farming will remain key priorities for us, particularly with regards to cocoa. Now turning to Slide 27. Our company vision remains the same, and that is to be an innovative snacking powerhouse. We participate in great categories, with a portfolio of amazing brands, and we are the #2 manufacturer in the U.S. snacking market. We are the #1 manufacturer in U.S. confection, with strong #1 share position in chocolate and mints, and top 3 share position in candy and gum In addition to driving our core U.S. business, we are focused on capturing incremental growth, as noted on Slide 29, both by broadening the portfolio into other snacking occasions as well as operating a profitable international business. Our long-term aspiration is for both of these growing segments to be 20% to 25% of our sales. Since our last meeting, we added another better-for-you snacking assets. One is a high-growth, high-margin nutrition bar business that delivers on the need for portable nutrition and is a great addition to our portfolio. As you'll see on Slide 30, we have a balanced 2020 plan with more brands activated than ever. Strong innovation and a continued focus on expanding our better-for-you portfolio, having multiple levers to drive the business, enables us to adapt even more quickly to changes in the environment like we've seen and to deliver sustainable growth over the long term. Our advantage capabilities, as outlined on Slide 31, are more important now than ever before. The investments we have made in multiple capabilities over the past several years from marketing, to selling, to manufacturing, to analytics, have positioned us well to respond quickly to the rapid changes we are seeing in the marketplace. We have optimized our marketing campaigns where we advertise, what we manufacture, where we sell and how we promote our products over the past several months. And importantly, while we are doing a lot to adapt to the current environment, we continue to advance key strategic projects to continue elevating our capabilities for the future. Making investments in our brands and capabilities is an important part of our business model. Sales growth gives us flexibility to both expand our margins and invest in the business, while driving strong returns for our shareholders. Now turning to Slide 33. We delivered solid financial performance in 2019, with net sales and earnings growth outpacing many of our peers, while continuing to invest in the business and deliver strong earnings per share. We believe this balanced approach is critical to achieving our long-term objectives and driving shareholder value. Our results demonstrate this, with Hershey's total shareholder return amongst the highest in the packaged food industry in both the short and the long term. As you'll see on Slide 34, this financial strength has enabled us to deliver significant cash returns for our shareholders. Our dividend has grown at an average of 9% per year since 2010. This dividend, along with our share repurchases, has returned $6 billion to shareholders over the last 10 years. Historically, our dividend has grown about in line with our earnings, and we expect this to continue going forward. Over the past 20 years, the world has changed a lot, but we have proven our ability to change with it and capitalize on the opportunities this change presents. During this time, Hershey has delivered shareholder returns double the S&P 500 average, as noted on Page 35. While some years may have more volatility than normal, like the one we are in now, we are confident in our ability to navigate these unique circumstances and continue delivering long-term shareholder value. While the current operating environment is unprecedented, from a long-term perspective and as noted on Slide 26, we are committed to our long-term sales and profitability targets of 2% to 4% net sales growth and 6% to 8% earnings per share growth. Now flipping to Slide 27. As we look ahead, we expect the environment to remain volatile as the COVID-19 pandemic and consumers' financial security both evolve. But we remain confident in the strength and resiliency of our category and brands over the long term and in our remarkable leaders and employees who are executing against our strategies, reacting to current changes and capitalizing on the opportunities this change presents. The Hershey Company has more than 125 years of experience managing through tough, fast-moving and unprecedented moments in time, 2 world wars, economic depressions and recessions and other momentous events. Each time, we plan, we took actions, we learned and adapted, and we kept our focus on making the best decisions for our employees, our partners, our stockholders, our communities and the consumers that we serve. This moment in time is no different. It calls for us all to be our best, working together with compassion and understanding to do what's best for our global society and we believe this resilience will only make us stronger in the days and years ahead. Thank you very much for your time and for your continued support of The Hershey Company. We will now proceed with the question-and-answer part of the meeting. During the question-and-answer part of the meeting, we will be addressing pre-submitted questions as well as questions submitted electronically during today's meeting, anything related to company operations and to our efforts to improve overall performance. As a reminder, it is, however, inappropriate for the Directors and officers at this, the Annual Meeting of Stockholders of The Hershey Company, to deal with questions regarding the privately-held Hershey Trust Company or Milton Hershey School, except for information already disclosed in the proxy statement or other filings with the SEC. We appreciate your understanding of this matter. Before we dive in, let me proactively address one topic that I know is top of mind for many of you, and that is, what are we doing about the gift boxes and the chocolate world discount that you normally receive when you come to Hershey? Well, given the unique circumstances this year, we have created a special gift box, including all of your quarantine favorites, and it is available to you for free. And we are offering our shareholders 20% off their online order at shop.hersheys.com and free shipping between now and June 30. For your online order, just enter the code, Enjoy 20, E-N-J-O-Y, and then 2 0, upon checkout at our website. And to receive your free gift box, please go to thehersheycompany.com/asm2020, to enter your name, address and control number by May 19. I hope you enjoy it. We are also giving our shareholders the unique opportunity to donate their free gift box to our Heroes Program, to go to the men and women working so hard to keep all of us safe right now. If you are interested in donating your free gift box, please check the Donate My Box option on the website. We hope this adds a little cheer to your households during these difficult times. Please reach out to our Investor Relations team if you need any assistance. Okay. Now on to the submitted questions. I'm joined today by Leigh Horner, who leads our corporate communications for the company. She will read your questions aloud. Leigh, will you please start with our first question.

Thanks, Michele. The first pre-submitted question is that, why do you have so many paid Board members? What is their purpose? And what do they do to earn the money?

Thank you for your question. The Board of Directors plays a critical role in helping to oversee the business activities of the company. The Board's primary oversight responsibilities include: reviewing the company's performance, strategies, in particular, and major decisions; overseeing the company's compliance with legal and regulatory requirements and also the integrity of our financial statements; overseeing the company's policies and practices for identifying, managing and mitigating key enterprise risks; overseeing management, including selection of the CEO, and also reviewing my performance as CEO; and overseeing succession planning for some of our key management roles; and finally, overseeing our executive comp programs and practices. Board size and director compensation are reviewed at least annually to ensure that they are appropriate and competitive versus the marketplace for a company of our size and scope. Currently, both our Board size and also our Directors' compensation are very much in line with our peers.

Thanks, Michele. The second pre-submitted question is, I really like the Easter eggs. However, removing the foil wrapping is difficult. It would be better to use a little tab like Kisses.

So thank you, first of all, for the feedback and also for the suggestion. We are sorry to hear about your difficulty with this packaging. We always have a goal, first and foremost, of keeping our products safe and fresh, but we also do want to have them be easy to get into so that you can enjoy them more readily. I will follow up with our packaging teams to see if there's anything we can do to make the experience better for you and our other consumers on the egg products. But thank you so much for raising this, and bringing it to our attention.

The third question, does The Hershey Company actually make chocolate anymore? I have some concerns that the quality of chocolate is on the decline?

So thank you. We take great pride in our ability to produce high-quality chocolate, it is our absolute focus to make sure that we're producing the highest quality products, and to do so at a price that's affordable for our consumers. So we always start with sourcing the highest quality raw ingredients, including cocoa, dairy, sugar and all of our other key ingredients. And also, we use the highest quality manufacturing processes to make sure that we have quality as well as safety. We do regular testing in our plants, and also with consumers, to make sure that our products taste as great as they ever have. So we'd love to hear more though. If your experience doesn't meet our expectations at any point in time, the best thing to do is to call our customer relations line and communicate the item, and also the code date of that item so that we can really investigate that particular product and make sure that there's nothing getting the way or impacting the great taste of our products. But thank you for raising that. That's a very important topic.

Our next question. Throughout the world, there are loyal employees with extraordinary talents, who are overlooked or held back by overly rigid HR policies regarding education and job performance. This means that Steve Jobs, Bill Gates, Paul Allen and Milton Hershey type employees have their innovation and creativity talent stifled. Is there a person or group within upper management that effectively provides oversight so that these special people are recognized and encouraged?

So thank you so much for this question. I must say that this topic is a particularly important and hot button topic for me. I personally believe very strongly in having a robust company culture to enable our success. And a key piece of the culture that we are building here and have built is about valuing diversity of thought and diversity of skills. For example, we know we need people who are great at executing, and that's critically important. But we also know that we need people who are creative, who think outside the box, who challenge the status quo and challenge us to be even better and bring new and different ideas. So leveraging different people with their unique talents together is what enables us to come up with the best ideas and solutions to win in the marketplace and take our business forward. So I strongly believe that, as part of my leadership mandate, that is something I'm passionate about, and my leadership team is as well. We have general guidelines for things like desired education levels in our jobs. But long ago, we abandoned some of the more strict, rigid educational requirements other than for jobs -- unique positions like attorneys, where there's specific licensing that dictates a certain educational background. We have many examples of company -- in the company of individuals rising through the ranks to Director level roles and highers, including a senior leader who has no 4-year degree. So our Head of Human Resources is accountable for our talent management system and is always looking for opportunities for us to create advantage in talent and find advantage talent in the marketplace. I would also tell you that we put a lot of work and highly prioritize our talent management system and our talent development system, which is geared towards really trying to make sure we maximize the talent across the company, much to your question. We have 7 members of our executive team, including myself, that are long-tenured employees, but who have experienced an average of 6 different developmental assignments underway to senior management. So that diversity of experience, we think, makes us richer, broader leaders, who are more appreciative of a wide range of skills and experiences in the company, and we are constantly striving to find those high-performing, high potential talent early in their careers so we can deliberately build really interesting career tracks and paths for them to give them many different experiences on the way to taking on greater areas of responsibility in the company.

The next pre-submitted question is, how is Hershey working towards global expansion going forward?

We've gone through a pretty meaningful transformation of our international business over the past several years. As I think we've shared with you over the past, at least 2 years, in our stockholder meetings, we have focused first on rightsizing our investment in international, and we've been able to deliver solid growth, while meaningfully increasing the profitability of our international business. As we go forward, we remain focused on sustainable, profitable growth. Our strategy is really a little bit different depending on the market within international. In some areas like India, we think there's tremendous opportunity to invest and launch differentiated products as the confection market and that market for consumer products is really rapidly expanding. So we can capture that category growth. In some other markets, we are more focused on optimizing our current business model and growing with the category. But we think this business is strategically important for us because it adds a lot of incrementality to our portfolio, but we will remain disciplined in our investments there as well.

The next question. How has the Hershey supply chain been impacted by COVID-19 to date? What impact do you anticipate in future quarters?

I give a lot of kudos to our entire supply chain team, everybody in the manufacturing plants, in particular, but our team has done an amazing job. We have not experienced issues getting the materials we need to continue to produce, and we're able to get all of the protective equipment that we need to keep our employees safe. In the U.S., we have had minimal disruptions. We have seen some slightly higher absenteeism, either due to illness or at-risk employees who chose to stay home, and we've implemented much more stringent operating protocols to support social distancing within the plants and increased cleaning, including deep cleans, when appropriate. In our international markets, we've had a little bit more disruption. There have been some struggles in some of those markets with employees being able to get to work, with our plants being forced to run at lower capacity due to some governmental restrictions, but overall, our plants continue to operate. We have been one of the best in the industry in our customer service levels. And overall, the impact on our sales has been minimal.

The next question. We understand that Hershey has 0 tolerance for child labor among cocoa suppliers and introduced the child labor monitoring and remediation system in 2018 to help address the problem. The most recent available data from 2018, that Hershey reported was at 8.7%, nearly 3,000 children were found to be doing inappropriate work within the cocoa community. Would you identify what efforts our company has taken over the past year and will take next year to eradicate and remediate child labor and poverty, improving the lives of cocoa farmers and workers?

We take this issue very seriously, and we do not tolerate illegal and abusive forms of child labor in our supply chain. Child labor is a really complex issue because it's impacted by the culture in sovereign cocoa growing countries and also contributing factors in those areas, including poverty and the lack of a really strong educational infrastructure. So we've been working together across many different stakeholders, including governments, civil society groups and industry, some of our competitors, to work together on this complex issue, and we have a strong commitment to improving the lives in cocoa communities. And we've taken several steps that we think have been important in making progress here. First of all, we will deliver our 100% certified cocoa goal this year, and we've committed $0.5 million towards improving sustainability and farmer livelihood in the cocoa growing communities by 2030. And that includes, providing both better nutrition, better training and also better education. We have also implemented a child labor monitoring and remediation system within our supply chain, and we will be reporting our updated results in our 2019 sustainability report. This child labor monitoring and remediation system is the leading method of detection and remediation of child labor, and it was developed by the international cocoa initiative. Over the past 2 years, we have had no instances of forced or traffic child labor. And all the instances found of children doing inappropriate child works such as using hazardous chemicals or carrying heavy loads are being helped through this remediation program. We've doubled the number of children that were monitored through this program, and we want to expand and have plans to expand further across our supply chain over the next several years. We've also published our very comprehensive environmental and human rights policy in 2019. So this is a serious issue that we will continuing -- be continuing to partner with all of our stakeholders to address. Thank you so much for that question.

Our next question. Are top management and the Board of Directors considering reducing their pay at this time? A reduction of at least 50% with the savings to be utilized for the benefit of employees should be considered.

As we go through this time, supporting our employees physically, emotionally and financially is our top priority. Since this pandemic began, we have committed $30 million in additional incentives and rewards for our frontline employees, manufacturing and retail employees who have shown just incredible, amazing dedication and resilience. While we have experienced the change, we are continuing to run our operations, and it is our goal to keep all of our employees working. We have a strong business and financial foundation to navigate the pandemic, and we think that we're positioned relatively well versus some other industries like travel and tourism, hospitality and energy, where the business, the employee and the shareholder impact has been quite significant. So as we look at executive compensation, we take into account many things as a publicly traded company. Our approach must be to be performance based, to be market competitive, to balance what is best for the business, both in the short term and the long term, and also to make sure our approach is aligned to employee and shareholder interest, and we will make sure that, that is the case. Thank you very much for your question.

Now we will begin addressing questions that have been submitted during the meeting. The first question is, Hershey is one of the leading sponsors of the human rights campaign. HRC is perhaps the nation's leading opponent of religious liberty. HRC threatens and organizes boycotts when states seek to enact laws protecting the rights of people to act according to their faith or to use bathrooms that match their DNA and privacy and safety. HRC also works to dictate corporate philanthropy away from conservative and Christian organization. At a time when our nation needs to pull together as one to overcome the COVID-19 pandemic and reopen the economy, will you reconsider your funding of this organization?

As I mentioned earlier, inclusion and diversity are incredibly important values to us here at The Hershey Company. They are important not only to our culture, but also to our business. And we have been recently recognized by DiversityInc as being a leader in many areas of diversity, including in the LGBT space. I'm really proud of our track record in supporting the LGBT community, and our employees and customers who identify with the LGBT community who continue to be very focused on making all the best decisions we believe possible to foster inclusion and diversity across the company. And I thank you very much for your question.

The next question. Will you be taking Board nominations during the annual meeting?

Under the company's bylaws, except for stockholders holding 25% of the outstanding votes entitled to be cast, a stockholder wishing to nominate a Director at this year's annual meeting must have provided written notice and supporting documentation to the company between January 22, 2020, and February 21, 2020. No nominations were submitted in accordance with our bylaws, and therefore, only those nominees set forth in the proxy statement are allowed to be considered at this meeting. Thank you.

Our next question. The Carpenters union pension funds have a collective ownership position of 97,368 shares of the company's common stock. As long-term investors, we especially appreciate the company's actions to address employee health and safety issues as well as the difficulties being experienced by customers and other important corporate stakeholders related to the COVID-19 pandemic. During these unsettled times, liquidity is an important consideration. The company has 260 million of remaining authority to repurchase shares. What will be the factors that the Board considers going forward to determine when it might be appropriate to resume share repurchases?

So we executed share buyback in the first quarter against our Board authorized program prior to the market dislocation that we saw. And the timing and the amount of that were consistent with what we've done in the past several years. Consistent with our capital allocation priorities, we will prioritize for our capital allocation, business investment and our dividend -- our dividend, excuse me, ahead of share repurchases. So business investment and dividends are the biggest priorities. Given the current situation, we will be cautious on buybacks, evaluating them against broader market conditions and also just against the heightened focus that we have on liquidity during this very difficult and unprecedented time.

Our next question. Is there any relationship between the company and The Hershey Amusement Park, such as licensing fees or marketing agreement?

The Hershey Amusement Park is owned by Hershey Entertainment and Resorts Company, which is an independent third-party, that is not affiliated with The Hershey Company. As we note in the proxy statement, we do engage in ordinary course transactions with HE&R. These transactions typically involve the sale and purchase of goods and services done so at market rates. And they are not material to us or to Hershey Entertainment and Resorts Company.

Our next question. With a CEO pay ratio of 441:1, would it be more consistent with the Hershey way to reduce that ratio, preferably by raising the compensation level of the median employee?

As we look at our compensation approach, we take many things into consideration as we look at compensation for all of our employees, and that's including our executive. As a publicly traded company, our approach must be performance based, it must be market competitive, it really needs to balance what's in the best interest of the business in the short term and also in the long term, and it needs to align to employee and shareholder interest. Thanks.

How has your productivity, both in your offices and production facilities, been impacted in terms of working from home, reduced employees on shift, et cetera?

I've been really impressed by the productivity and how all of our employees have stepped up during this incredibly difficult time and adapted to their new circumstances. So what we've tried to do as we run the company is for -- if I look at our corporate headquarters employees, make sure that we really focus on the most critical, most important priorities. We have systems in place, software programs we can use that allow us to connect on those important priorities. We've actually found that during a time like this it's accelerated a bit, the velocity and speed with which we can make decisions. So I'm really pleased with that as I look at the -- how the office folks have performed. And then as it goes to production facilities, I think our manufacturing employees have adopted wonderfully all the different procedures and safety protocols that we've needed to put in place at our plants, whether it is changing the different times that different manufacturing shifts come in so that we can reduce overlap, the installation of plexiglass to ensure distancing, markers in the plant to ensure social distancing, and we've actually seen pretty strong results relative to productivity during that time. We're very cognizant and understanding of the fact that many of our employees have a lot on their plate right now, especially those with young children, who are trying to do remote learning and also those who are caring for older family members, but very pleased with how people have stepped up.

Our next question. Would face mask be available to shareholders who are seniors?

Yes. So right now, we are working on standing up the mask production line. So we are just getting it started. We are absolutely looking to protect our employees and their families. We do anticipate that we are going to make -- be able to have enough masks to also make them available to community members. And we've actually been in contact with some senior organizations in the community about that topic as well. And we'll be sharing more on that in the upcoming weeks as some of the details are finalized, but we do anticipate that we will be able to service the community.

As the CEO of The Hershey Company, what keeps you up at night?

I would say that the biggest thing is just the rapid change that has continued to go on. Even if I look pre-COVID, how fast the world is evolving on every dimension? The implementation of technology has changed how consumers consume media. It has changed how consumers shop. So how we communicate with consumers needs to constantly evolve. I talked a bit about the different channels of shopping behavior. Certainly, e-commerce, which is growing at an even accelerated pace versus what it was, and that is a whole new shopping behavior that we need to broadly adapt to. So if I look at what's possible with technology, with analytics and data and how we can take how we operate to the next level, the changing demographics and priorities of different generations. So it's really all the different things that have -- that necessitate us to continue to evolve. I have total confidence that the company, over the past 125 years, has done a phenomenal job in evolving. But it's a rapid pace of change, and it's only been further accelerated by COVID, and so we continue to focus there.

All right. Our next question. How do you believe your seasonal business will be impacted given potential disruptions in back-to-school and Halloween?

So that's certainly one of our key areas of focus right now. We are proactively planning for Halloween. We are partnering very tightly with our retail partners, as we always do, to plan for a strong recovery. So we are closely partnering with them to talk about how we can maximize the opportunity on Halloween, and really lean in to make products available. We've gotten a lot of feedbacks from consumers, that consumers want to be able to have many products, want their kids to be able to have, at least, a little return to having -- a little bit of fun as well, so people are anxious for that. At the same time, we're trying to make smart choices to mitigate risk, in case consumer behavior does remain impacted. So for example, looking at ways that we have some seasonally dressed packaging, that we can also have more everyday packaging available, so that if less is used for Halloween, it's still very relevant for everyday purchases. We're also exploring creative ways for consumers to participate in the season, while remaining safe. So we are going to be marketing around safe ways to trick or treat, doing behaviors where you drop candy on somebody's doorstep and also dialing up our e-commerce activation since we know, at Easter, we saw increased seasonal participation online.

All right. We have time for one more question. Can you please provide the website address where shareholders can go to receive their free gift box one more time?

Absolutely, and I'll try and speak perhaps more slowly than I did before. So to receive your free gift box, shareholders should go to thehersheycompany.com/ASM2020. So let me just read that one more time, thehersheycompany.com/ASM2020, and you will enter your name, your address and control number by May 19. Shareholders can also order online at shop.hersheys.com to redeem their 20% discount between now and June 30, with the code ENJOY20, E-N-J-O-Y 20. And that is it. Thank you as always for your questions, for your interest and for your commitment to The Hershey Company. We really appreciate it. And as I mentioned earlier, we will post all of the questions and answers, including those we couldn't get to this morning, on our website by next week. Thank you, and I hope you have a great day. Oh, I'm sorry. We have a few other matters of business that I need to come back to. So we will go to the results of the stockholder vote, stockholder vote of May 12, 2020. Holders of the common stock voting separately as a class, cast at least 102,635,000 votes in favor of Mr. Crawford and Mr. Perez as nominees for Director. Holders of the common stock and Class B common stock voting together cast at least 701 million votes in favor of each of the other 11 nominees for Director, thereby electing the 13 nominees, whose names were listed in the proxy statement, as Directors for the coming year. Holders of the common stock and Class B common stock voting together ratified the appointment of Ernst & Young LLP as independent auditors for 2020. Stockholders cast at least 728,600,000 votes for the appointment; 602,500 votes against the appointment and abstained from casting at least 379,300 votes on the appointment. Holders of the common stock and Class B common stock voting together approved the named executive officer compensation on a nonbinding advisory basis. Stockholders cast at least 704 million votes for the proposal, 6,300,000 votes against the proposal and abstained from casting at least 616,700 votes on the proposal. Now this concludes our meeting. And on behalf of your Board of Directors, I want to thank you again so very much for your continued support of The Hershey Company and our mutual goal of building stockholder value over the long term. Stay safe, and thank you very much.

And we thank you also ma'am. And we thank you all again for joining The Hershey Company's Annual Meeting of Stockholders. Today's conference call has now ended. At this time, you may disconnect your lines. Thank you, and have a great day.