2016 REI Annual Members’ Meeting, Part 1

2016 REI Annual Members’ Meeting, Part 1


I want to welcome everybody this evening to our members are employees I know we have a lot of nonprofits here tonight appreciate your what you doing you being
here but housekeeping recording the meeting there will be a chance to ask
questions to get to the end we built in lots of time for that and just do a
couple reductions real quick and like the board of directors to stand up and
let’s acknowledge them senior leadership team to stand up if
you would catwalk curfew continued standing over here medical and I had a serious
look on my face as she goes one of these things smile he did work the special occasion
for us tonight catherine has had an amazing service with the cop shares his
story on the board how many years were you on the board
eight years and then she made the mistake of actually come to work and
join the senior leadership team and she’s just been incredible counselor and
adviser to me and I know the entire team at 2 aboard and counters retiree and
we’ve been celebrating that for a couple of days so when I think you for your
service has been so much appreciated depart from the script my team loves it
when I did is catherine is just such a passionate advocate for the Kolob and
when i join the co-op two and half years ago she made her personal project and
the idea I read the laws from 1800 so you know where is founded in England and
you know we just had these nice there are conversations but she she won she
won my heart over and today I am also thankful and I think have a much deeper
and more profound appreciation of what it means to be a cop and it wasn’t meant
to be talked out tonight but if you’ll notice that the logo at the top of the
slide here we went back and pull one of our heritage logos and the one really
has cooperated encouraging the phone ok everybody’s phone is going off to his
logo that really incorporate the cooperative and got an incredibly
positive response that so it’s very exciting pleased to announce I think when you
think about what it means to have a healthy carp it really is about a
community of people that are passionate about life lived outside so pleased to
announce this year we’ve got over 6 million members that have really
participated in an active member the coop as last year setting a new record
for us provocative if we start the annual
meeting this time something a little different but the idea out there about
what kind of what is the ability of a passionate community in this instance
the coop to power really big ideas being ideas matter this is a picture of myself
one of our board members and one of the guys on the team in Yosemite and we were
there this is one of those years that’s really the ID power big ideas so
self-evident we’re celebrating the 100 year anniversary of our national park
system a hundred years ago a small group of men and women had the
idea in the passion for said inside public lands for future generations we
all benefit from that it’s it’s an enormous way it was such a privilege to
be in this park we’re actually there to watch nature bridge it’s a nonprofit in
a did the noble mission of taking eighth graders if there’s anything harder than
a third I know what it is taking eighth graders and induce them to the outdoors
and walked away from that day watching a group of eighth-graders especially
eighth-grade guys they’re so scary and I watched the power of I watched them
experience nation away that relate touch their soul we called it a call to spider
cave which I wasn’t real thrilled about that we crawled into this dark all over
you couldn’t see you really had to trust the eighth grader in front of you that
she would get out so I had to learn little faith as well but the power of
big ideas in a transformative effect of them is really amazing we had the
billionaire I do something special to get our leaders and convene people and
great conversations in as I was we celebrate the National Park System
thinking about what about the next hundred years we’ve got together eight
thought leaders and I want to share this video of little bit of that conversation fifty years we’re gonna have something
on the order of nine billion people to kind of meet the needs require two and a
half times more stuff than the world is producing today forty percent of worlds
already used to make food and natural resources so that this really
challenging problem with there might be a quarter of the world that we have
decisions to make about how we gonna meet the needs of people and make sure
that nature doesn’t become a complete minorities over access and there’s a theory that by
connecting with the outdoors people are going to become conservationists but we
have to be barriers to get people out there I think that tension between urban
and rural or man-made and natural is is really healthy one and I think that
they’re amazing opportunities to to bring nature into cities and even into
into buildings create these kind of urban trail network
some cities are working on being able to breathe air like this to be able to get
from point A to point B in the city not having to rely on a car not having to
rely on it and that’s transit would be an amazing experience the relationship that I have today with
a product is physical I think there’s there’s no doubt that companies that
make our equipment there’s no doubt the companies that make a parent there’s no
doubt the companies that make anything in industry over the next century Ron from having physical aspects to
having digital having biological how do I experience adventure of the outdoors
and the endorse a challenger body when you think about moving into the future
and all the technology we create how we’re going to make sure that we’re
creating this community with everyone so that all the dialogue discussion of
being head and then we understand all of our interest in it what do you think
that some of the questions we should all be asking more about technology is to
control and who benefits from the technology and so few people ask that
you know not in its just not in the context of building businesses and I
think that there’s an opportunity for small entrance to make a big impact for
you have to do that with others I found it very invigorating very
thought-provoking pushes me to a different space pushes you to create a
venue like this and try to learn from and understand what it means and I think
the best for-profit companies understand that the next generation has to be more
than just money what the researchers shine is that the
human habitat has always and should always include nature that’s like from
cradle to grave actually what we are experiencing is the
lack of how we should live not how do we get it in small doses you should not
notice nature it’s like water or air it’s part of your life is working on big enough worth it then
let’s work together leaders have a responsibility to clear the 6 million
members as a Cardmember I guess what I would be asking for is I want to get
more vocal stand up on a number of things and represent me know me well
enough to represent me on issues that really matter I want re I so hope to be
serious about changing the things that are wrong and I want them to be
intentional about creating the hope that there is another hundred years and
systematic in achieving that conversation I’m so fortunate to have
the partnership and support of an amazing board which will it represents
our members as we interact with them and I would like to reduce our Chairman of
the Board shall scott is with our current board of the chair very eyes
board for 11 years and she’s been the vice chair of the board she’s been the
chair of nama governance committee and Executive Committee his senior adviser
to Bill and Melinda Gates Foundation has served as the CEO of group health
cooperative a little bit about our election and then
finally end with a couple of personal reflections after 11 years on the Board
I was elected to the Board when I was 5 years old so that would help explain
some of that is obviously a privilege to be the chair of the board Reiz board who
you met this evening as a group of highly qualified thoughtful guy who’s
driven business humans who cares so deeply about the coop and care so deeply
about our our environment and nature they provide guidance to REI into our
leadership in we represent the long-term interests of our members remember we’re
not a shareholder organization we’re accountable to only one body in that is
to your members and our board takes it actually incredibly seriously and i
would tell you that there’s not a meeting that does not go by where we
don’t talk about the membership so we take it quite seriously and if we don’t
Catherine will kill us so that’s the other thing that we can worry about our
directors are independent of course you left us but we also are no are not
allowed to be employers employees at the coop and we cannot have any business
relationship in assorted self-dealing associated with with with the co-op we
cannot serve more than 12 years on average we serve about nine and we think
that period of time helps to ensure some continuity but also turnover rate we’ll
talk a little bit about that later our CEO jerry is a voting member of our
board we think thats quite important that he gets to the Union I’ll is just a
red visor but as an accountable person to you our membership and then
ultimately we care a lot about the kinds of talent and skills that that you elect
to the board diverse backgrounds diverse experiences
diverse contexts someone’s life and we work very very hard to do that we
care in terms of our work on your behalf it’s a pretty typical board right cares about this this strategy of the
organization it is the holder of the values of the organization it worries a
lot about performance budgets evaluating in reviewing and partnering with our CEO
and figuring out how best to distribute our profits at the end of future so it’s
a great group and every year you let members to the board and I would say
this year is no exception so let me talk a little bit for 2016 we had four
members of our board up for re-election and I’m happy to announce that all four
nominees were re-elected to three-year terms and let me assure a bit about each
one of them just a second you know I will also last year we were
really disappointed we really failed ourselves we were not happy with the
level of turnout we had and we went back to the drawing board from yesterday so I
and thanks to the good people of the co-op in the nominating governing
Nominating and Governance Committee sure by John Hamlin we’re pleased to announce
that this year’s vote is four times greater than last year and I think we
can even do better than that so let me tell you a little about the 44
members 1st John Hamlin john john is a former chair of the board he’s been on
the Board for nine years and served as currently is our share of our nominating
committee he has worked in technology and investor and the guy is a crazy
outdoors guy backpacking skier Mountaineers i close triathlete most of
all john is just an incredible either so we’re lucky to have him on the board
next person Steve Hooper steve has been on the Board for the last three years
and currently chairs services are vice chair of the board and he has served as
the CEO of AT&T Wireless also led to a disk next link and he loves introducing
people to the outdoors and particularly he loves the STP and never compete
against Steve Hooper on a bike the next person is cantana bird has been a board member for
the last four years serves on our audit and Finance Committee compensation
committee he has extraordinary executive experience in customer facing businesses
retail services technology and he loves kayaking paddle boarding all things
water particularly in his beloved Florida and then last but not least is
Tony Trousdale tony has been a board member for the last three years and
serves as chair of our comp committee and he is head again incredible set of experiences a retail
executive and enjoys and introducing princeton mountain trails through his
weekly hiking group in Telluride and I will tell you he’s always prepared with
this 10 essentials in his first aid kit so let’s congratulate her for trustees the passion of what happens and and i
would tell you is honored as I am to be the chair of REI and everything else I
will tell you in its roots in its fundamentals I’m so that kid in 1971 who
went to the store for the first time in the world’s ugliest blue backpack and I
went outdoors and I and I and it was a grew up here in Seattle but I will tell
you that experience of going out going on a trail getting dirty with my friends
and and just being in nature was profound and I know each and every one
of you has that same experience right that’s what it’s all about because it’s
not just the outdoors is cool politically correct is that it changes
us and makes us better so did have that experience and have a business that is
about that experience about allowing us to show up in great ways in the outdoors
it’s a very special place a place for us to protect to challenge and to help it
through its its its next its next generations as it moves forward you know
when we think about are are are quadruple bottom line I
guess we care a lot about our members about our employees obviously about our
business but you saw just earlier just now about our society and if we can be a
convener in all of this diatribe and in in in noise if we can think about a
quadruple bottom line we think about our members our employees our business but
ultimately our society then we have really met the promise of our founders
so many years ago and I think 44 aboard for I know first senior team I think
every single person in this room let’s keep on doing it was just too damn
important let me just take a pause here and in a second I’m going to introduce
are rockstars new CFO her name is a rock star Tracy and tracey is recently joined
us from National Geographic before yes what’s your far but I get to do many wonderful things
but one of the things I get to do as housekeeping and we are membership
organization and this is actually an official membership meeting so we need
to approve the minutes of last year’s meeting and at the table shake and I
believe there were those miss at the meeting and i’d like to ask if there is
a motion to approve a second outstanding all those in favor say aye those opposed
I think we have the eyes they bring tracie up to the podium please join the
co-op as an employee the coop grows profitably so we can invest back into
and better advocate for the outdoors 2015 was a year of sustainable growth we
had a record number of employees join the co-op over one million to bring us
to our total of 69 that Jerry mention that’s an encouraging number is growing
our membership is a powerful way we invite people into the outdoor community
we reported record annual revenues of two point four billion dollars in 2015 a
9.3 percent increase from 2.2 billion in 2014 that is with a shift of 52 weeks in 2014
to 53 weeks in 2015 if we would do that comparison 52 weeks to 52 weeks that
would be nearly 11 percent growth year-over-year are comparable store
sales which include direct-to-consumer sales were up 7% and digital sales up
nearly 23% given the dynamic state of retail that’s a very healthy number for
growth and Cheryl said though it’s not just about the financials in 2015 more than
72% of Aria’s profits from 2015 went back to members employees and our
nonprofit partners that’s a big investment in our community and I’d like
to share a few more details of those with you members share in the coop success
through a 10% dividend and our credit card rebates in 2015 we shared a record
one hundred and eighty-five million dollars with more than 6 million members
their annual dividends and credit card rebates we give back to our employees as
well employees received seventy million
dollars through our summit incentive plan in which all employees are eligible
as well as our retirement and our profit sharing plan these programs are unusual
in the retail industry and underline the fact that our employees are the heart of
the business and a direct connection to our members and the community we also
invested in more than 1,000 outdoor places more than eight and a half
million dollars went back to these organizations including large grants for
the National Park Centennial and to increase women’s leadership and the
outdoor industry both of which are priorities for the coop 2015 was a
strong year and our first quarter of 2016 was encouraging as well we saw
strong sales and many people connecting with us in our stores and online all of
this fuels what we’re here to do and I’d like to hand it off to Jerry to talk
some about the amazing progress that we’ve made

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