The Procter & Gamble Company (PG) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Virtual P&G Annual Shareholders' Meeting. In order to handle our business expeditiously and provide time for shareholder questions, we've established a few simple rules about the conduct of the meeting. A copy of the agenda and guidelines for the conduct of the meeting are available on the welcome screen. We ask that you cooperate in following these guidelines. In fairness to all shareholders, we intend to enforce these rules. Shareholders of record and proxyholders who provide their valid control number will be able to ask questions during the meeting, either by calling the telephone number on your screen or by typing and submitting the question using the Ask-a-Question box in the lower left portion of your screen. Questions pertinent to meeting matters will be answered during the meeting as time allows. If we receive substantially similar written questions, we may group such questions together and provide a single response to avoid repetition. If we are unable to respond to a shareholder's properly submitted question due to time constraints, we will respond directly to that shareholder using the contact information provided. Please be aware that the presentation today will contain references to some non-GAAP financial measures. The required reconciliations to GAAP numbers can be found on the company's website at www.pginvestor.com. The remarks and responses here today may also contain statements about our future business prospects. For a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements, please see the company's most recent 10-K, 10-Q and 8-K reports, which are also available on the company's website. Please join us now for the singing of our national anthem. [Presentation]

Thank you, Trina. Trina Madry is a P&G employee on our communications team. Good morning, ladies and gentlemen. I'm David Taylor, Chairman of the Board, President and Chief Executive Officer of the Procter & Gamble Company. I'd like to welcome everyone to P&G's 2021 Annual Meeting of Shareholders. We appreciate you joining us at our virtual annual meeting. The safety of our employees and shareholders is paramount. This is the best format to help ensure everyone's safety. In fact, while several of us are in the building together today, we are seated in multiple rooms and following health and safety protocols. We would do our best to make this meeting as helpful and informative as possible for you. This meeting is now called to order. Notice of the meeting was sent to each shareholder of record, and a quorum is present online or by proxy. Now I'd like to start with introductions. Joining me and presenting today are Andre Schulten, our Chief Financial Officer; Debbie Majoras, our Chief Legal Officer and Secretary; and Jon Moeller, currently our Vice Chairman and a Director, and effective November 1, President and Chief Executive Officer of the company. The other members of our Board of Directors and our director nominees are also on the line today, and I'll introduce them individually. Marc Allen, Chief Strategy Officer and Senior Vice President of Strategy and Corporate Development at The Boeing Company. Frank Blake, former Chairman of the Board and Chief Executive Officer of The Home Depot, Inc. Frank is retiring from P&G's Board today after 7 years of distinguished service. Angela Braly, former Chair of the Board, President and Chief Executive Officer of WellPoint, Inc., now known as Anthem. Angela is the Chair of our Governance and Public Responsibility Committee. Amy Chang, Former Executive Vice President and Executive Advisor at Cisco Systems, Inc. and Founder and former Chief Executive Officer of Accompany Inc. Joe Jimenez, Co-Founder and Managing Director of Aditum Bio and the former Chief Executive Officer of Novartis AG. Joe is the Chair of the Innovation and Technology Committee, and effective at the conclusion of today's meeting, if re-elected to the Board, will be our Lead Director. Christopher Kempczinski. Chris is our newest director nominee. He is the President and Chief Executive Officer of McDonald's Corporation. We believe that Chris' significant experience in the consumer and retail space including as a leader in both the consumer packaged food and dynamic quick service restaurant industries will enable him to bring valuable strategy, marketing and brand-building perspective to the Board. We are very glad that Chris has agreed to join the Board pending shareholder approval. Debra Lee, Chair of Leading Women Defined Foundation and former Chairman and Chief Executive Officer of BET Networks. Terry Lundgren, operating partner of Long-Term Private Capital and the former Executive Chairman, Chairman of the Board and Chief Executive Officer of Macy's, Inc. Terry is the Chair of the Compensation and Leadership Development Committee. Christine McCarthy. Christine is the Senior Executive Vice President and Chief Financial Officer of The Walt Disney Co. Jim McNerney, Senior Advisor at Clayton Dubilier & Rice LLC and former Chairman of the Board, President and Chief Executive Officer of The Boeing Company. Jim is currently our Lead Director and has served in that role since 2007. He is retiring from P&G's Board today after 18 years of distinguished service. Nelson Peltz, Chief Executive Officer and Founding Partner of Trian Fund Management LP. Nelson is retiring from P&G's Board today after 3 years of distinguished service. Meg Whitman, former Chief Executive Officer of Quibi and former President and Chief Executive Officer of Hewlett Packard Enterprise. Pat Woertz, former Chairman of the Board and Chief Executive Officer of Archer Daniels Midland Company. Pat is the Chair of our Audit Committee. Because Frank, Jim and Nelson are each retiring from P&G's board today, we want to take this opportunity to recognize each of them for their dedicated service and commitment to P&G and its shareholders. We will miss their valuable insights and perspectives, and we wish each of them the very best. We also have a number of other senior officers on the line with us today. Also joining us are Joe Ucuzoglu and Christopher Cooper of Deloitte & Touche. Mr. Ucuzoglu is the Chief Executive Officer of Deloitte and a senior advisory partner on the P&G account. Mr. Cooper is the lead Partner responsible for all services provided to P&G, and he directly supervised the audit of the company's fiscal 2021 financial statements. Mr. Ucuzoglu and Mr. Cooper are present in the event there are questions that are more appropriately answered by the auditors. As Chair, I have appointed Peter Descovich of Broadridge Financial Solutions as Inspector of Election for this meeting. He will supervise the voting. Finally, we have John Chevalier, Senior Vice President of Investor Relations. John will assist me today by reading the questions that you submit to the online system. I now declare the polls are open. The polls will close after all of the proposals have been presented. We will proceed first with the election of Directors. All Directors elected at this meeting will hold office for a 1-year term until the 2022 Annual Meeting of Shareholders and until their successors are elected. In order to be elected, a Director must receive more for votes than against. If you would like to vote your shares now, please follow the directions on the screen in the "vote here section" at the bottom of your screen. If you've already voted, there's no need to take any action now unless you want to change your vote. And I ask Debbie Majoras to place the nomination to 12 nominees. Debbie?

The Board of Directors acting upon the recommendation of the Governance and Public Responsibility Committee nominates the following 12 individuals for election as Directors to hold office until the annual meeting in 2022 and until their successors are elected: Marc Allen, Angela Braly, Amy Chang, Joe Jimenez, Chris Kempczinski, Debra Lee, Terry Lundgren, Christine McCarthy, Jon Moeller, David Taylor, Meg Whitman, Pat Woertz.

All of the nominees, except Mr. Kempczinski, are currently members of the Board of Directors. We are grateful to have such skilled and experienced nominees. Collectively, our Director nominees have led global businesses and finance organizations, have founded startups, have successfully navigated shifting media and retail landscapes, have guided strategic transformations and have held significant governance roles. And they've worked in industries as varied aerospace, health care, retail, entertainment, agriculture, information and networking technology and of course, consumer packaged goods. We're also pleased that 50% of our nominees are women and that 1/3 identify as ethnically or racially diverse. We can take up to 3 questions or comments on any single biggest -- business item. John, do we have any questions related to the election of Directors?

Yes, David, we have one question. The question is, how has the Board implemented the shareholder resolution from last year?

Thank you very much. We responded to the shareholders' request, and we published our forestry practices report in March 2021, detailing how we've accelerated our commitments to protect forests, increase the transparency of our forest sourcing and further strengthen the accountability of suppliers. We received a later shareholder request and published a forestry practices report supplement to address those questions as well. All of this information is available on our ESG investor portal, where we openly share the details of our practices, our policies and our actions. Thank you. Any other questions?

No other questions.

Thank you. The Board recommends a vote for each of these nominees. We believe that each of them is highly qualified and well suited to help serve our company and shareholders. We'll now proceed with the Board proposals. The first proposal is to ratify the appointment of Deloitte & Touche as the independent registered public accounting firm. This proposal appears on Page 79 of the proxy statement. Although the Board of Directors is not required to submit this matter to the shareholders, we believe it is important that you have a say in the appointment of independent public accounting firm. John, were any questions or comments submitted on this item?

David, there are no questions on this item.

Thank you. The Board of Directors recommends a vote for this resolution. The Board believes that the retention of Deloitte & Touche as the company's independent external auditor is in the best interest of the company and its shareholders. Next, we have the Board proposal for an advisory vote on executive compensation, otherwise known as Say on Pay. This proposal appears on Page 80 of the proxy statement. John, are there any comments or questions?

David, there are no comments or questions on this item.

Thank you. We designed our executive compensation programs to motivate our leadership team to win even during tough economic times and to achieve our fundamental objective, which is to create value for our shareholders. Accordingly, the Board of Directors recommends a vote for this resolution. This concludes the review and discussion of the Board proposals. We have one shareholder proposal this year. This proposal was submitted by James McRitchie and Myra K. Young, and it requests that the company include nonmanagement employees on the Director nominee candidate list. Is there a representative on the line to present this proposal?

Yes. This is Jim McRitchie. Thank you very much. Our proposal request the initial candidate pool for new Director nominees include current or past P&G nonmanagement employees who potentially add an employee perspective to the Board. Management says P&G employees already have significant influence. They fill out an annual survey and can raise issues at company meetings, but that amounts to a little more than a suggestion box. P&G's largest shareholders are Vanguard and BlackRock. But our employees own more shares than the third largest institutional investors. How does their voice compare? Do employees really have a direct line of communication with the Board? We offered to withdraw our proposal if the Board agreed to any of a number of options to empower employees and report results to shareholders. One very minimal option was appointing a member of the Board to be in liaison with workers. That option and others were flatly rejected. Directors averaged almost 1/3 of $1 million for a part-time job that requires attendance at 3 Board meetings. Keep in mind that P&G directors can serve on 3 Boards, so $1 million for a part-time job. People that fly company aircraft and earn $1 million for a part-time job live in a rarefied bubble. Meg Whitman's net worth, for example, exceeds $108 million. Mr. Lundgren's net worth was estimated at $95 million, that was back in 2017. Sure, I've seen this kind of wealth in the movies. Current or past P&G workers would bring a more down-to-earth perspective, and we need both types of perspective. We need the expertise of our current Board members, but also the perspective of employees. Directors who are or have been nonmanagement P&G employees are more likely to share values with typical customers and typical shareholders. For example, P&G placed dead last with regard to sustainability on paper products. But hey, Directors who are swimming in money are less likely to suffer from climate change than the rest of us. They can move to higher ground, build fireproof mansions or retreat to New Zealand. Let's get a Director who doesn't live in a bubble. Vote to increase the diversity of Directors -- Director nominees. Vote for proposal #4. Thank you very much.

Thank you. We believe our current Director candidate selection process is sound and serves the best interest of our company and shareholders. In considering candidates, the Board continually reviews the company's area of focus and opportunity and seeks out highly qualified individuals whose skills and experiences complement and enhance the Board's ability to provide strategic oversight and counsel in these areas. We are proud of this robust assessment and selection process, which has resulted in a diverse set of active, capable and diligent Board members. In addition, our employees have a wide variety of channels to communicate with senior leadership and the Board of Directors. And we ensure that through our annual employee survey that our senior leaders and our Board of Directors are aware of any issues of particular concern to our employees. The proposal to alter our Director nomination process is not in the best interest of our shareholders or our company. Accordingly, the Board of Directors recommends a vote against this resolution. John, are there any questions or comments on this proposal?

David, there are no questions on this resolution.

Very good. Thank you. This concludes the review and discussion of shareholder proposal. I now declare the polls closed. Before we get to the report on the business, I'd like to announce that the Board of Directors has declared P&G's quarterly dividend. The dividend of $0.8689 per share will be payable on or after November 15, 2021, to common stock shareholders of record at the close of business on October 22, 2021, and to preferred stock shareholders of record at the start of business on October 22, 2021. P&G has been paying a dividend for 131 consecutive years, ever since the company was incorporated in 1890, and we've increased the dividend for 65 consecutive years. We're committed to returning cash to you, our shareholders. I'm getting handed the results of the election here, the voting results. I'm advised by the Inspector of Election, first, that each of our 12 nominees listed in the proxy statement has received more for votes than against with each nominee receiving more than 90% support, and accordingly, each has been elected to a 1-year term expiring at the annual meeting in 2022 and until their successors are elected. Congratulations, Directors. Next, that the Board proposal to ratify the appointment of the independent registered public accounting firm has been adopted with at least 94% votes cast in favor. Next, that the Board proposal for an advisory vote on executive compensation has been adopted with at least 91% votes cast in favor. And then last, that the shareholder proposal requesting the inclusion of nonmanagement employees on Director nominee candidate list was not approved with approximately 7% votes cast in favor. Certified totals and percentages will be available later from the secretary. That concludes the business items on our agenda. May I have a motion to adjourn?

Move to adjourn.

Thank you. I now adjourn the meeting, and we will move to the report on the business and the question-and-answer session. [Operator Instructions] But before we get to Q&A, because we could not have our meeting in person this year, I've recorded the report on the business and we'll play that. In fiscal year 2021, P&G people again delivered strong results across the top line, bottom line and cash. These results and our momentum reflect the underlying strength of our integrated strategy and our organization. Fiscal year 2021 was another very strong year, following 2 years of strong results in fiscal '19 and fiscal '20. Organic sales grew more than 6%. Core earnings per share were up 11%. Currency-neutral core earnings per share were also up 11%, and adjusted free cash flow productivity was 107%. Growth was broad-based with each of our 10 product categories growing or holding organic sales. We again delivered strong results in our 2 largest and most profitable markets. Organic sales were up 8% in the U.S. and 12% in Greater China for the fiscal year. Focus markets grew 7% for the year. Enterprise markets grew 5% despite significant market growth impacts from the pandemic. E-commerce sales were up 35% for the year to more than $10 billion in sales, representing 14% of total company sales. P&G's global aggregate market share increased 50 basis points, and 32 of our top 50 country category combinations held or grew share for the year. We returned $19 billion of value to shareowners through $8 billion in dividends and $11 billion in share repurchase. In April, we announced a 10% increase in our dividend, the 65th consecutive annual dividend increase and the 131st consecutive year in which P&G has paid a dividend. To sum up, P&G people have operated with excellent discipline in a challenging and volatile environment. And we exceeded each of our going-in target for the year across organic sales growth, core EPS growth, free cash flow productivity and cash return to shareowners. While we're pleased with these results and the overall strength of our business, the external environment continues to be volatile and difficult to predict. Our eyes are wide open to the many challenges we face. Increased social unrest and economic distress in many parts of the world are putting pressure on local GDP growth. The pandemic continues to create risk for consumers, retail partners and supply chains and costs have increased significantly. We will offset a portion of these higher costs with price increases. While the near term will be challenging, we're stepping forward, not back, focused on our integrated strategy and our immediate priorities to grow through the difficulties we're facing. As we've shared before, we are focused on delivering balanced growth, top line, bottom line, cash. This remains our objective. As we manage through the pandemic, we'll continue to focus on 3 priorities. First is ensuring the health and safety of our P&G colleagues around the world. Second, maximizing the availability of products we produce to help people and their families with their cleaning, health and hygiene needs. Third, supporting the communities, relief agencies and the people who are on the front lines of this global pandemic. Importantly, these priorities are completely congruent with our long-term strategic choices. Our integrated strategy was delivering strong results before the crisis. It is serving us well during the pandemic. And we believe that will continue to serve us well after the crisis to a portfolio of daily-use categories where performance drives brand choice; superiority across product, package, brand communication, retail execution and value; productivity in all areas of cost and cash; constructive disruption in all facets of our operations and; a more agile, accountable and empowered organization. These are not independent choices. They reinforce and build on each other, and when executed well, lead to balanced top line and bottom line growth and value creation. Our strategy starts with a strong, focused portfolio, positioned to win with consumers made up of daily-use products where performance plays a significant role in brand choice. In each of these performance-driven categories, we continue to work to increase the superiority of our offerings. We are raising the bar on all aspects of superiority, product, package, brand communication, retail execution and value. Superior offerings delivered with superior execution drive market growth. Leading category growth with superior offerings mathematically builds market share and builds business for our retail partners. For example, Tide and Ariel are innovating to extend their superior cleaning performance advantages, while encouraging consumers to reduce their carbon footprint. Ariel's new campaign, every degree makes a difference, advocates lower washing temperatures. Up to 60% of laundry's carbon footprint comes from heating the water in the washing machine. Lowering the wash temperature is the single most important thing we can all do to reduce the environmental impact of laundry. To achieve our goals, we continue to innovate to ensure superior performance in cold water and utilize superior communication to educate the consumers on the benefits. Let's take a look at the commercial. [Presentation]

Superior product and packaging innovation, superior brand communication. Globally, Fabric Care share was up over 1 point for the fiscal year. Superiority is enabling strong results in our China Hair Care business. China Hair Care delivered double-digit top and bottom line growth for the first time in a decade last fiscal year. A great example of superiority is the Pantene brand in its launch of hydration balms. This product is a single unit dose intensive treatment for hair, providing 48 hours of hydration. This innovation has driven strong growth in the higher-value conditioner and treatment segment in China, which is now well over 1/3 of the Pantene China business. Shifting to our oral care business, superior performance is driving market growth. Oral-B iO power brush offers an irresistible consumer brushing experience. It improves brushing efficacy and compliance with position-sensing technology. The value of this superior performance is evident to the consumers even with a premium price, driving market growth in the power brush category. P&G's global value share in the brush segment was up 2.5 points last fiscal. In the U.S., we recently launched the next breakthrough in teeth whitening. Crest Whitening Emulsions create a micro-thin layer of concentrated peroxide droplets enabling consumers to move beyond occasion-based whitening to a product that can be used up to 4 times per day with no rinsing or brushing needed. This innovation has achieved 14% value share, contributing towards over 20% organic sales growth last year for P&G's U.S. whitening business. More importantly, it contributed nearly half of the U.S. whitening category growth. Superiority is an opportunity that never ends. The bar is constantly being raised by us and our competition. We're continuously making investments to strengthen the long-term health and competitiveness of our brands, extend our margin of advantage and quality of execution and improve the options for consumers around the world. Extending our levels of superiority, creating the financial flexibility to manage to increase external volatility and an ongoing need to drive balanced top and bottom line growth requires productivity up and down the income statement and across the balance sheet. Over the last 10 years, we've fully embedded a productivity mindset into our operations and activity system. It is part of our DNA now as integral to our culture as innovation. Productivity work never ends and will remain a significant part of our focus. The pandemic has only accelerated disruption in what is already a rapidly changing world. We found that the best way to deal with disruption is not just to accept it, but to lead it in a way that creates positive outcomes. We use the term constructive disruption because it implies a bias for positive action, changing in a meaningful way that leads to competitive advantage and creates value for retailers, investors, employees and consumers alike. The constructive disruption we're leading in all areas of the value chain is critical to succeed in the dynamic world we live in today and tomorrow. Our organization structure yields a more empowered, agile and accountable organization with little overlap or redundancy, flowing to new demands, seamlessly supporting each other to deliver against our priorities around the world. This design is working well, especially during the pandemic as people are closer to the consumers and customers they serve. P&G's ability to do well is connected to our commitment to doing good. And our ability to do good is strengthened by our growth. It's a virtuous cycle. And as a company, we're committed to be a force for good and a force for growth in everything we do. We have referred to our efforts in environmental, social and governance, ESG, as citizenship. And we've built it into how we do business every day. Environmental sustainability is embedded in how P&G does business for decades. A few weeks ago, we announced our ambition to reach net zero greenhouse gas emissions across our operations and supply chain by 2040. Our plan to reach net zero will prioritize cutting most of our emissions across our operations and supply chain from raw material to retailer, which we'll look to achieve by accelerating our use of renewable energy, advancing low-carbon technologies to decarbonize our supply chain and increasing the transportation efficiency of our finished products. To measure improvement, we've updated our investing 2030 goals to pace our progress toward net zero. They include: first, reducing emissions across our global operations by 50%; next, reducing emissions across our supply chain by 40%; then purchasing 100% renewable electricity. We've already accelerated our global use to 97% and increasing transportation efficiency of outbound finished products by 50%. Our new climate transition action plan outlines our comprehensive efforts to accelerate climate action throughout our value chain. Our community impact work supports people and communities through unexpected challenges. We continue to provide COVID-19 relief around the world through donations of products, cash and personal protective equipment. And we've also responded to support those in need because of natural disasters like fires, floods, typhoons, hurricanes and other emergencies. In addition, our Children's Safe Drinking Water program continues to provide clean drinking water to those who lack access reaching 18 billion liters of clean water provided since the program began. Our quality inclusion efforts are guided by our aspiration to help create a world where equality and inclusion are achievable for all inside and outside of P&G. We have strengthened our diversity at all levels of our company, including our Board of Directors. We've also used our voice externally to address inequality. For example, we introduced Widen The Screen, a broad platform that enables and advocates for increased inclusion of black creators across the advertising, film and television industries. This is one example of how we're stepping up for a variety of underrepresented groups. Ethics and corporate responsibility, good governance is the foundation for everything we do at P&G, including our citizenship work. From long experience, we know that building and sustaining a robust business depends on maintaining strong ethical, compliance and quality standards. And for more than 180 years, we've been guided by our purpose, values and principles. We continue to put significant effort against our citizenship priorities so that P&G can be a force for good and a force for growth in the world. P&G's organization is well prepared for the future. This includes a diverse group of senior leaders with significant depth and experience across our business and operations with the right mix of skills and capabilities needed to drive the company forward. I'm proud to share that on July 29, P&G's Board of Directors unanimously elected Jon Moeller, Vice Chair and Chief Operating Officer, to succeed me as President and Chief Executive Officer effective November 1, 2021. Jon has been an integral part of P&G's leadership team for well over 2 decades, helping develop the strategies that we're executing with excellence to drive P&G's growth today. Jon is fully committed to P&G and P&G people. He is an outstanding leader, trusted confidant and valued partner to me and many across the company. And I have benefited tremendously from his foresight, his focus and his friendship in my time as CEO. In addition, Shailesh Jejurikar has been elected Chief Operating Officer. Shailesh Jejurikar was the Chief Executive Officer of the company's Fabric and Home Care sector, P&G's largest business unit, which has consistently delivered industry-leading results. I will transition to the role of Executive Chairman and support Jon and our terrific executive team as they continue to build on the strong momentum we have established through an integrated strategy that has been executed with excellence by P&G people everywhere. Our goal is clear, sustained excellence. Our work over the past several years has given us a strong foundation, but the opportunity ahead of us is even greater. That must be your mindset. Learn from the past, create the winning future, focus on creating value. We're clear about the near-term challenges ahead, but we see the possibilities because collectively, with the diversity of talent we have and the inclusive culture we're working hard to create, we can do almost anything once we set our minds to it. We have established strong momentum through an integrated strategy that is being executed with excellence by P&G people everywhere; a winning portfolio; superiority across product, package, communication, retail execution and value; productivity in everything we do; leading constructive disruption; and a more agile, accountable and empowered organization. These strategic choices are working well, and we have a long runway ahead to keep driving them. We'll manage what is likely to be a volatile and near term, consistent with this strategy and against the immediate priorities of ensuring employee health and safety, maximizing availability of our products and helping society overcome the COVID-19 challenges that still exist in many parts of the world. I believe we're well positioned to grow through and beyond the pandemic, led by a team of committed, dedicated people who want to win with consumers for our shareowners and stakeholders and for each other. I look forward to supporting Jon, P&G's lead team and P&G people everywhere as they continue to raise the bar and winning to deliver sustained excellence. I want to thank our shareholders for your support over my time as CEO. It's been an honor of lifetime and I look forward to continue to serve all of you as Executive Chairman. Thank you.

It is now time for questions or comments on other matters related to the company's business that have not already been discussed. [Operator Instructions] We'll try to get through as many questions as possible in this 30-minute period. Out of respect for everyone who would like to ask a question, according to the rules established for the conduct of this meeting, each shareholder is allowed 2 minutes. There will be a limit of 3 speakers on any 1 subject. John, can you give us the first question, please?

Yes, David. The first question is, what percentage of annual sales does P&G generate from outside the U.S.? And specifically, what percentage is from China?

Very good. Thank you. Today, we generate a little over 56% of our sales outside the U.S. and China is about 10% of those and is a fast-growing market. But thank you. Next question?

The next question, David, is -- received a couple of questions on the company's supply chain and ongoing disruptions. What delays are you facing? And what other headwinds do you face? How do you see the economy improving for your products?

We, just like virtually everybody else to read about in any media, are experiencing many of the challenges, whether it's COVID lockdowns in some countries that are affecting some of our suppliers or ocean freight challenges. Many of you have seen and heard the media reports of the many ships that are docked outside major ports here in the U.S. and around the world. All those hit us, plus there's many other headwinds in the supply area, including commodity cost increases and many others. Collectively, in our last earnings, we mentioned that it was in the area of $1.9 billion of upcharges. So these are very significant. What we've worked very hard to do and we will continue to do to ensure we can serve consumers is have a very agile and resilient supply chain. P&G people continue to do amazing work across the world to keep all of our plants up and running, always complying with local regulation and laws, but doing everything they can to ensure they first keep everybody safe and secondly, serve consumers with the cleaning, health and hygiene products they need even more so during the pandemic, and we'll continue to do so. We've worked on business continuity plans to make sure that we have plans in case a supply chain or a plant is disruptive. That's been worked out through our system. Each of our business units are doing an excellent job looking at all their suppliers, and in many cases, the supplier suppliers, understanding vulnerabilities in the supply chain and trying to develop the most agile capabilities, resilient supply chains they can. To date, as you've seen through our most recent announced period, P&G continues to do well. We're growing share in the marketplace, continue to grow on the top and bottom line. But it is a huge challenge. It's one that we've taken very seriously. And at least for now, we expect the headwinds will continue for a considerable period of time. Again, I can't reinforce as much as I could. I want to just thank the P&G people that have just stepped up in amazing ways across the world to meet this challenge. Thank you. Next question, John.

Yes, David, the next question is, I'm satisfied with the stock price and dividend. However, I was wondering if the stock price shouldn't be higher considering that the paper product plants are operating 24/7 and P&G paper products are absent from store shelves. One analyst stated that the fair value of the stock should be $191.64. That's approximately $50 more than the current price. That analyst states that the stock is undervalued by 26%. Would you care to comment?

Well, certainly, we want for all our shareowners to see P&G continue to do well. What we focus on though is what's in our control. What we can address is just as I mentioned before, some of the supply chain challenges to make sure we're supplying our products. We can work on ensuring that we improve the profitability of our products, which we're doing. So availability, supply and making sure we do a wonderful job or an excellent job generate -- turning the profit into cash that can be returned to shareowners. When our sales growth and our profit growth and our cash generation is strong, over time, generally, that gets rewarded in the marketplace. So we work on what we can control and ultimately, the investors in the market would determine the value of the stock. And the progress we're making, I feel very good about the future for our company. John, next question.

Yes, David, the next question is coming from the phone. Caller, please go ahead when your line is unmuted. Having trouble getting through. The caller apparently is not online yet. We'll move to the next question. We've received several questions on the company's forestry efforts, including from descendants of the company's founders, which asks the company, what the company is doing to stop deforestation and old-growth forests in Canada and Southeast Asia, how the company and Board are responding to the 2020 shareholder proposal in deforestation and how the company is shifting to more sustainable materials for its paper products.

Yes. And I do want to respond to that because I understand this is a high interest area to many. Responsible sourcing is essential for our business and more importantly, for the environment and the people that depend on it. You can have confidence P&G has worked very hard to accelerate our efforts and now as industry-leading transparency and accountability on forestry practices. Over the last year, we've accelerated our progress and made a set of industry-leading commitments that will further help protect, grow and restore forests globally. They respect and protect indigenous people's rights. They account for the wildlife they call the forest homes, and they align to the highest level of certification available. In fact, for every tree we use, at least one is regrown. Despite reports to the contrary, we are taking meaningful and industry-leading action. Today, 100% of P&G products are made with 100% third-party-certified pulp. We achieved 70% Forest Stewardship Council, FSC, certification in 2021 for wood pulp, the most trusted certification leading our industry. We're on track to achieve 75% next year, 3 years ahead of schedule. P&G has achieved 100% roundtable for sustainable palm oil, RSPO, you may see it referenced as, certification of palm, palm kernel oil and derivatives in our brands a year ahead of schedule. We have strengthened accountability for our suppliers through comprehensive action, including rigorous monitoring and reporting that holds ourselves and our suppliers accountable. We reduce, terminate or suspend our business where our standards are not met. And just taking each one individually, on palm, we use satellite mapping to track potential deforestation and support independent RSPO surveillance audits. Taking pulp, we ensure 4 evaluations, 2 deskside audits, and an initial independent forestry certification audit of every supplier every year. We see sustainability as an opportunity for innovation. Our packaging innovation is seeking to achieve 100% recycled fiber in our fiber-based family care packaging. On formulation innovation, we've committed to $20 million investments to accelerate research in alternative fibers and FSC-certified fast-growing forest fibers. Our supply chain innovation uncovers every opportunity to improve our footprint. We're working with external experts to strengthen these efforts and find disruptive solutions, including recycled fiber and premium tissue products. But however, one of the things I do want to point -- this is one of the misnomers here, including recycled fiber and premium tissue products, it's currently not a viable option. It's not being done to any significant extent today in our industry. There isn't enough recycled fiber available to produce what is needed at the quality consumers demand for the size of consumer toilet paper market. Products with recycled fiber deliver a substandard consumer use experience and lead to consumers using more products. We do embrace recycled content where it can be used effectively. In fact, today, our cores inside our tissue rolls and our fiber-based packaging use 95% of recycled fiber, and we're on our way to 100% in this regard. Recycled products make up today in the at-home part of the tissue market, less than 1% of the market, which is a reflection of the consumer acceptance. And just to repeat that, today, recycled fiber products in the at-home tissue market, which is what P&G competes in, makes up less than 1% of the market. Consumers consistently are voting against that. Instead, they're voting to buy products that have better performance. But we recognize the importance of things like the boreal forest, which is why 100% of the pulp we source is certified by leading third-party certification systems that ensure that forests are responsibly managed. 100% of our suppliers adhere to a broad set of sustainable forest management practices, including measures that protect biodiversity, endangered species and respect the rights of indigenous peoples. The Canadian government owns over 90% of the forest land in Canada. And today, less than 0.5%, less than 1% of Canadian forests are harvested and replanted annually for all industries, including lumber. And beyond the requirements of the independent forestry certification plans, Canada has rigorous forestry policies. They mandate that these forests be harvested responsibly without any deforestation. And just a couple of other comments just because palm oil has come up many times as well. Palm oil is the world's most widely used vegetable oil. It has the advantage of being 100% natural and renewable. P&G purchases an extremely small amount of the total global palm production. Toda, it's less than 1%. But we take our responsibilities on palm extremely seriously. We engage with key associations actively, are focused on enterprise line accountability from our suppliers and are working toward 100% RSPO certified palm usage. And beyond forestry, we remain committed to a broad set of sustainability activities that provide critical climate leadership, including our recently shared ambition to achieve net zero emissions by 2040, purchasing 100% renewable energy electricity by 2030 and continued investments in natural climate solutions. And for those that want more information, we routinely publish updates on our website, in our ESG investor portal and invite you there to see the facts. These are areas we deeply care about. We have listened to the many folks that have expressed concerns and my hope is that summary of some of the activities helps address many of the questions that have come in. So thank you for that. John, other questions.

Yes, the next question is we've received a few questions on Angela Braly's experience and qualifications to Chair P&G's Governance and Public Responsibility Committee, including whether her position on the Board of Exxon Mobil presents a conflict of interest. How will she work to mitigate the risks the company faces in its pulp and palm oil supply chains?

First, we're very proud of our diverse set of active, capable and diligent Board Members, including Angela Braly. What I can assure you is that the Board and the Governance and Public Responsibility Committee remain actively engaged in our efforts on sustainability, including the strategies for accelerating our progress. I just mentioned just a number of things that we're doing. Both Mrs. Braly and the full committee regularly review the progress we're making, expect us to continue to accelerate. Both Mrs. Braly and the full committee have been involved for many years in this area. And it's just I expressed, we're making strong progress. We're very committed to operating sustainably at P&G because it's the right thing to do, and it's an opportunity to make P&G stronger. And I was pleased, as I just reported, that Mrs. Braly received over 90% support on the vote that just came in. Thank you. Next question?

The next question comes from the phone lines. Please go ahead.

Mr. Chair, Board members and shareholders. I am Jane C. Garcia, proud resident of the City of Detroit and Vice Chair of LA SED here in Detroit and Chair of SER National Jobs for Progress. I want to tell you what -- this has been an extremely challenging past 18 months. 2020, 2021 has truly tested our patience, compassion and resilience. I would like to applaud P&G for the outstanding work being done globally during these unprecedented times. I would like to especially thank you for your commitment to Puerto Rico during this past year. You not only brought supplies, you provided hope to so many desperate families and individuals. As Chair of the largest Latino National Employment Agency, SER National Jobs for Progress, I know the importance of diversity and inclusion and I also applaud P&G for embracing and applying these principles throughout the organization, and it is very well reflected in the Board members. Together, we can prevail. Thank you.

Well, thank you very much for those kind comments. And I would just reiterate, we're extremely committed to diversity at P&G because we believe it makes us better as a company. We believe the differences that we bring make us stronger. We can learn from each other and better serve the consumers around the world. So thank you so much. John, we have next question, please.

Yes, David, the next question is, are you promoting work from home for all your employees as opposed to being in the office, 100% of the time? Related to this, can people be employees of the Cincinnati offices, but live on the East or West Coast?

We have certainly embraced additional flexibility and we'll continue to do so. I think the pandemic has presented both the need and an opportunity to learn in this area. We've had several principles in play, and we'll continue to follow those. One, we need to make sure we can do the work. Secondly, we want to make sure we can ensure their safety and the safety of the workplace. We want to make sure we're serving consumers, but we also want to meet employee needs whenever we can, and we found many, many opportunities throughout the pandemic to do all of those. And our plan is to take the learning that we have both here in the U.S. and around the world on the flexible work to find out how we can continue to be more productive and meet employee needs. And we'll continue to do that. It's been a very important part of the success we've had is supporting our employees. Our employees have supported the company in just incredible ways as I referred to earlier, and it -- certainly we're quite motivated to continue to build appropriate employee flexibility into our approach. Thank you. John, next question.

The next question is, is P&G counting Scope 3 emissions from land use and deforestation in its net zero targets? If so, what is P&G doing to require suppliers to disclose and reduce these emissions?

P&G includes the greenhouse gas emissions from our operations and from our suppliers to our operations and the transportation out to the final place of sale. That is all included in our 2040 aspiration that we've expressed. We continue and will continue to work with our supply base to reduce their greenhouse gases because it's part of the aspiration we set. It's to ensure that our supply chain enables us to reach this very aspirational goal. What I can say is that the work we've done with suppliers, I'm very encouraged. They've embraced just as well as we have this very aspirational goal and understand this is strictly important for climate. So yes, we're working those. It is included, and we're all working hard for the 2040 aspiration. Next question, John?

Yes, David. The next question is, what is P&G's position on vaccinations during this pandemic?

We've been very clear about this throughout the pandemic. The health and well-being of P&G employees and providing a safe work environment has remained the company's top priority from the very beginning of the pandemic. And in line with the anticipated directive from the U.S. government and consistent with our approach to safety throughout the pandemic, P&G will require all U.S.-based employees to be 1 of 3 options, 3 options. One is to provide proof of COVID vaccination, which we certainly encourage. Second, have a company-approved exemption in place. Or third, to be tested for COVID weekly. Respect and trust are cornerstones of P&G's values and we respect the diverse range of employee perspectives. That's why we're providing these 3 options as part of a comprehensive program to help keep our workforce safe, to do our part in the pandemic. We expect the implementation of this policy to start likely in the November-December window as availability of testing becomes more widespread. John, next question?

Next question is, our stock has been over $140 per share for a while. Is there any desire to have a stock split to allow more affordable stock price for individual investors?

This is a question that comes up frequently. Andre, I'm going to let our CFO take this one.

Sure. Thanks, David. Good afternoon. Look, in the past, companies would do a stock split to ensure that the share price was acceptable for individual investors. But the world has changed in that regard. Today, it's not uncommon for consumer stocks to be well above $100 per share. Fewer companies split their stocks today than 10 or 20 years ago. So while this is something that we regularly look at, the cost value equation is very different than it's been in the past.

Thank you, Andre. John, next question.

Yes, David, the next question is employees of African-American ancestry remain underrepresented on the global leadership level, representing only 6% of this group. There's been no improvement since 2015. What steps is the company taking to address this issue?

Actually, this is a very important priority as is the broader area of ensuring that we have a diverse board, leadership team, total leadership organization and workforce. We've been working that. Our aspiration is 50-50 gender and 40% -- gender equality and 40% U.S. multicultural representation. We have annual reporting on our progress on p&g.com (sic) [ pg.com ] to drive progress and accelerate progress, which we have made progress in our top 200 managers. To drive progress, we've set individual business unit by business unit targets. We focused development of talent ensuring that we're advancing both women and African-American talent, and we continue to improve our culture to allow everyone to contribute. Today, we have a record number of African-American leaders at our most 4, 3 senior levels, which gives me confidence. So we have made meaningful progress, but we look over every 5-year period and it's up substantially from 5 years ago, and we continually work this. But I will certainly say more work needs to be done. We're working, as I said, to have a Board, a senior leadership team and a total management workforce that's more reflective of the consumers we serve. And I'm very pleased that we're 50-50 on our Board, men, women and with 1/3 multicultural. We're working to get similar objectives in the leadership team and throughout our company. We remain very committed to this because we believe it's in the best interest of our company and will help us to continue to serve shareholders and consumers better in the future. But thank you. Next question?

Yes, David. The next question -- there are 2 questions have come in related to plastics. First, Mr. Taylor, will you still be the head of the committee for recycling materials and environmental concerns once you've left your service to P&G? I presume this refers the Alliance to End Plastic Waste. And the second question is, what is being done to reduce plastic packaging that is littering and destroying our environment?

Let me take the first one. Today, I chair the Alliance to End Plastic Waste, which is a group of about 60 different companies and organizations around the world that are committed to eliminating plastic waste in the environment. P&G has been very involved from the very beginning, and I've chaired since the beginning of this organization. I will not continue to serve as chair. And certainly, as I leave the CEO role, P&G will continue to be involved, but we've elected another individual to start January 1, 2022, as the Chair of the organization. Our commitment though to eliminating plastic waste and reducing virgin plastic is very strong. We know we need to do more in this area, and we're working to have long-term solutions. By 2030, we aim to have 100% recyclable or reusable packaging, reduce our use of virgin petroleum plastic by 50% and to find solutions that keep recyclable plastics out of landfills and oceans, and that's something the alliance is working on as well. We're making changes now in bringing long-term solutions, going beyond our supply chain to invest in recycling facilities, developing new technologies and things that collect plastic waste. Our brands, our suppliers and our partners are all working on solutions in this area, and we remain very committed. Thank you. John, next question?

Yes. The next question is, are you working to develop more available versions of liquid Ivory soap to avoid bar soap?

More versions of it? We have many forms available, both liquid and bar, and it's available broadly to consumers today. So I'm not sure exactly what the individual is looking for here. But yes, we very much believe. In fact, we remain and we will always remain actively listening to consumers and making sure that we're meeting their needs. Today, the form that is growing the fastest is the liquid form. But we still have some consumers that prefer bar and therefore, we make those available in many markets as well. But thank you, and we will always listen to consumers. Next question?

Yes, next question is, what is the role of automation, AI and robotics in the company?

Automation, virtually the whole digital ecosystem is incredibly important. As we work to grow our capabilities, and this is true across all elements of our business, whether it's manufacturing, whether it's marketing, whether it's media purchasing, whether it's working to make sure we're reaching the right consumer when he or she is interested and available for the message in a very respectful way, we are investing in and we will continue to make progress. There's so much disruption going on in the area. We're working to constructively disrupt that. And it's been one of the biggest challenges that we and all companies have faced. I am very pleased with the progress that we're making. It's impacting the speed to market of innovation with many of the models we have. We have now the ability to do things like virtual test markets to learn what consumers think. The timing's been reduced. So P&G's embraced leveraging the digital ecosystem throughout the entire part of our business in order to better serve consumers. It's important for both the innovation side and the productivity side. Next question?

Yes, David, to conclude. We've received a number of comments from current and former employees and common shareholders, thanking you for your many years of service and distinguished leadership of the company as CEO for the past 6 years. P&G shareholders extend their thanks to you. With that, there are no further questions or comments.

Of course, I thank those that have sent well wishes. I can tell you, it's been truly honor of a lifetime to have the opportunity to work with the people that I have worked with for the last 6 years and really for the last 41 years. My career at P&G has been one where I have been constantly challenged. I've had the opportunity to work with outstanding people in every business, every market that I've worked, and I want to express my thanks and appreciation to all my P&G colleagues for all your support, for your friendship. And now we'll, on my new role as Executive Chairman, effective 11/1, continue to support the board in every way I can, continue to support Jon and the leadership team and all P&G employees. I deeply believe P&G is a force for good and a force for growth, and we'll work hard to live up to that very high aspiration. I also want to thank and express my appreciation to all of our shareholders and to everybody that is listening today. We appreciate your confidence and support. I want to thank many of you that have been long-term shareholders of P&G. Thank you very much. This concludes the meeting today.