Edward W. Barnholt
Good morning. I'm Ned Barnholt, one of the members of the Board of Directors at eBay. Pierre Omidyar, eBay's founder and Chairman, regrets that he cannot be in person today at today's meeting, but he'll be joining us by telephone. I'll be acting as Chairman of the meeting.
I'm happy to welcome all of you to our 2013 Annual Stockholders meeting. Before I call the meeting to order, I'd like to introduce you to the members of the Board and the business team who are with us today. The other member of the Board who's with us today is John Donahoe, our President and Chief Executive Officer. We also have on the telephone besides Pierre, Fred Anderson, Marc Andreessen, Scott Cook, Bill Ford, Katie Mitic, David Moffett, Dick Schlosberg and Tom Tierney. In addition to John Donahoe, the other executive members of the company that are here today are Mark Carges, our Chief Technology Officer, Senior Vice President, Global Products Marketplaces; Mike Jacobson, Senior Vice President, Legal Affairs, General Counsel and Secretary; David Marcus, President, PayPal; Bob Swan, Senior Vice President, Finance and Chief Financial Officer; Devin Wenig, President, eBay Marketplaces. We also have on the telephone, Chris Saridakis, President, GSI. I'd like to also introduce Julie Shelondorf [ph] of PricewaterhouseCoopers LLP, the company's independent auditor, who is available to respond to appropriate questions. The meeting will now officially come to order.
We will proceed with the formal business of the meeting as set forth in the notice of the Annual Meeting and proxy statement. After the formal part of the meeting, John will make some remarks regarding the company's recent business activities and address questions. Upon entering the meeting, each of you was presented with the rules of conduct of the meeting. To conduct an orderly meeting, we ask the participants to abide by these rules. Mike, please report on the mailing of the notice of the meeting and the list of stockholders.
Michael R. Jacobson
I have at this meeting a complete list of the shareholders of record of the company's capital stock on March 13, 2013, the record date for this meeting. I also have an affidavit certifying that beginning on March 22, 2013, the notice of Annual Meeting of Stockholders of the company and proxy statement was deposited in the United States mail to all stockholders of record as of the close of business on March 13, 2013.
Edward W. Barnholt
At this time, I'd like to introduce Sarah McDaniel of Broadridge Financial solutions, Inc. I'm appointing Ms. McDaniel to act as the Inspector of Election at today's meeting. Ms. McDaniel has taken and subscribed the customary oath of office to execute her duties with strict impartiality. We will file this oath with the records of this meeting. As the Inspector of Election, Ms. McDaniel's function is to decide upon the qualifications of voters, accept their votes and when balloting on all matters is completed, to tally the final votes. Mike, please report on the existence of a quorum.
Michael R. Jacobson
I've been informed by the Inspector of Election that proxies have been received for 1,097,647,557 of the 1,295,177,652 shares of common stock outstanding on the record date, which represents approximately 85% of the total number of outstanding shares. This constitutes a quorum for the meeting today, and we may now carry out the official business of the meeting.
Edward W. Barnholt
I hereby declare the meeting to be duly constituted for the transaction of all business. Are there any additional proxies to be submitted to the Inspector of Election at this time?
We will now proceed with the formal part of this meeting. There are 5 proposals to be considered by the stockholders at this meeting. Mike, please report on the opening of the polls.
Michael R. Jacobson
The time is now 8:08 a.m. Pacific Time on April 18, and the polls are now open for voting on all matters that are to be presented at the meeting. The polls will be closed on voting after we go through the matters to be voted upon.
Edward W. Barnholt
The first item on -- the first item of business today is the election of 3 directors to serve until our 2015 Annual Meeting of Stockholders and until their successors are duly elected and qualified. The 3 nominees for directors of the company are: David Moffett, Dick Schlosberg and Tom Tierney. Is there any discussion?
The second item of business today is the approval on an advisory basis of the compensation of our named executive officers. Is there any discussion?
The third item of business today is a stockholder proposal regarding corporate lobbying disclosure. The stockholder proposal and its supporting statement are included in the proxy statement. This proposal was submitted by one of our stockholders. The missionary of oblates of Mary Immaculate, which has authorized Will Lana [ph] to serve as its representative to present the proposal. Is Mr. Lana here? Do you wish to make a statement? I guess Mr. Lana's not here. The board recommends a vote against this proposals for the reasons set forth in the proxy statement.
The fourth item of business today is a stockholder proposal regarding privacy and data security. The stockholder proposal and its supporting statement are included in the proxy statement. This proposal was submitted by Trillium Asset Management on behalf of the Park Foundation, Margot Chill and Eileen and Paul LaFord [ph]. The Benedine Sisters of Mount Saint Scholastica is a co-presenter. Will Lana is the authorized representative of these groups and will present the proposal. Is Mr. Lana here? No Mr. Lana. So again, the board recommends a vote against this proposal for the reasons set forth in the proxy statement.
The fifth item of business today is the ratification of the appointment of PricewaterhouseCoopers LLP as the independent auditors of the company for the fiscal year ending December 31, 2013. Is there any discussion on this?
That was the final proposal for today's meeting. The Secretary will now describe the voting procedures.
Michael R. Jacobson
The voting is by proxy and written ballot. Each share of common stock is entitled to one vote. You do not need to vote in person if you've already submitted your signed proxy or if you have submitted your signed proxy at this meeting. Is there anyone present, whether or not you have previously submitted a proxy who wants to vote in person?
Okay. After you've completed your ballot, could you please give it to the Inspector of Election and register your name with her? Thank you.
The time is now 8:11 a.m. Pacific Time, and the polls are now closed for voting.
Edward W. Barnholt
May we have the results of the voting?
Michael R. Jacobson
The preliminary report of the Inspector of Election covering proposals presented at this meeting is as follows: The proposal to elect David Moffett, Dick Schlosberg and Tom Tierney as directors of the company has been approved with each nominee receiving affirmative votes of more than 97% of the votes cast. The proposal to approve on an advisory basis, the compensation of our named executive officers has been approved, with approximately 60% of the votes presented in person or by proxy and entitled to vote being in favor of such proposal.
The proposal to approve corporate lobbying disclosure has been rejected, with approximately 24% of the votes present in person or by proxy and entitled to vote being in favor of such proposal.
The proposal to approve privacy and data security has been rejected with approximately 5% of the votes present and in person or by proxy and entitled to vote being in favor of such proposal.
The ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors of the company for the fiscal year ended December 31, 2013, has been approved, with approximately 98% of the vote present in person or by proxy, and entitled to vote on the proposal voting in favor of such ratification.
The final voting result will be published in our Form 10-Q that we expect to file with the Securities and Exchange Commission within 4 business days of this meeting.
Edward W. Barnholt
This concludes the formal part of our meeting. After adjournment, John will make some remarks regarding the company's business.
These remarks may include forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed. More information about potential factors that could affect the company's business and financial results is included in the company's SEC filings, including the company's annual report on Form 10-K and the company's quarterly reports on Form 10-Q. Following his remarks, John will be happy to answer any questions you have from stockholders. Thank you. This meeting is adjourned. John?
John J. Donahoe
So good morning, everyone. Thank you for those who were able to join us. Can I just ask how many of you that are shareholders are also eBay community members of one form or another? And I'll ask our employees as well. So particular welcome to all of you. We, as a company, we're here and inspired by our community of users. And that is why we get up every morning. We spend some time over the last year updating and renewing our shared purpose and commitments and behaviors that really deepen that sense of inspiration we get to help build the world's greatest marketplace and help a world of connected commerce. So thank you for coming out this morning.
What I'm going to do is go through real briefly some materials we've been through in this actually very room 3 weeks ago, with our analysts and investors that give a little picture of how we see the future of commerce and how we're positioning your company to ensure that we're helping to drive that future, enable that future and be a leading innovator in that future. And it starts with one of the most fundamental changes that have happened in business, I'd say, in the last 20 to 25 years, which is the blurring of the lines between 2 enormous markets. What used to be called eCommerce or online, and what used to be called retail or offline. And simply put, mobile devices are blurring those lines. And I would have stood here in last year's Annual Meeting, in the year before and maybe even the year before and said, these lines are blurring. Well, I'll you, these lines are getting obliterated as I stand here today. And there is no doubt that increasingly because of consumers, there is increasingly one retail, one commerce market. And the very cause and the center of that is all of us, its consumers. Increasingly, mobile device, smartphones, becoming the mission control device in our lives. We use it to figure out where we're going, we use it to figure out how we're going to get there, we use it when we're there. We use it to figure out what we want to do. And this device is having a profound shift on the markets in which we participate, commerce and payments. And perhaps the most important message we see based on the 120 million active users in eBay and the 115 million active users in the eBay Marketplace is consumers are in charge more than at any time in history. Consumers increasingly are expecting to be able to get what they want, when they want it and how they want it. If a consumer wants to start shopping during an Annual Meeting, you can start shopping while no one's looking on your mobile phone down underneath. If you want to start shopping, waiting in line at a coffee shop, if you want to start shopping at work or you want to just start shopping at home sitting on the sofa, watching a TV show. Consumers are starting to shop when and where and how they want it. And what we see is as they continue that shopping experience, sometimes consumers just say, "All right, I'm going to buy it right now." Other times they say, "Oh, that's really neat. I like what I see. I want to go into a physical store and try it on or take a look." Other times, consumers are saying, "You know what, I want to buy it but I need it tonight, before I go home." So they may use eBay now to get it delivered to them. The important point is for the last 50 years, retailers have been in charge, because retailers said, You got to come to my physical space and then you can shop. And now what's happening, is consumers have taken control. They're telling the retailers, you have to come to me, on my terms and the way I want it. And technology is enabling that. The Internet and mobile technology is ways to access the Internet 7 days a week, 24 hours a day. Now I would have sat here 2 years ago and said, "retailers are scared. Retailers are scared that they're getting disrupted. Retailers were concerned that all that was going to happen is we were all going to walk into stores, consumer walk into stores, find the product we want, find the best price online and just have it shipped home. And yes, price transparency is something that's a reality. But a significant change we've seen, particularly in the last 12 months is the leading retailers are innovating. The leading retailers are fighting back, and the way they're fighting back is by innovating. The leading retailers are increasingly going to where the consumer is. They are understanding they need to reach consumers online, on mobile devices, as well as in the store. And they need to provide a seamless shopping experience. A retailer might call that a multi-channel or omnichannel shopping experience. A consumer calls that shopping. And so what we're seeing is a new retail interface, a world where increasingly, consumers are going to access the Internet on multiple different screens: Smartphone, tablet, laptop, TV. You'll see in the next 6 months, retail stores, some of them putting touchscreens on their store windows so that when they're closed at night, consumers can come and shop. So consumers are going to have -- be able to access the web wherever they want in their home, at work or out shopping and retailers are increasingly able to reach those consumers, whenever and wherever they want. And what does that mean? That means a retail or commerce revolution, that means a new retail interface. And what's great is it's providing the best of online and the best of offline. They're now coming together powerfully.
The best of online, selection. You get a wider selection online. You get the efficiency that allows you to get the lowest price and you get the convenience of being online.
What's the best of offline? An engaging shopping experience. Being able to touch and feel and have a social experience going to the mall with your friends and family. This new commerce environment that we see combines the best of both. And it's that world that we see that is driving a larger addressable market for our company. If I had sat here 3 years ago, I said we're going to participate in the eCommerce market, which is now a trillion dollar market, by the way. When we first started talking about it, it was a $5 billion -- $500 billion market. It's now a trillion dollar market. But that's no longer -- our company's longer confined to that market because of the way consumers are behaving through mobile and otherwise. We view our addressable market today to be the $10 trillion commerce market. And we're positioning our company to aggressively capitalize on the changes I've been talking about and lead in this new commerce environment. And as you know, we do that through 3 strong core businesses: The eBay Marketplaces, PayPal and GSI. And then over the last 2 years, we've made a number of acquisitions to help bring capabilities and teams and business models into our portfolio to help deliver for merchants and for consumers.
If I had to say, what is eBay Inc.'s strategy in one sentence? We enable commerce. And we do that by helping to build consumer experiences and applications to give consumers what they want, when they want it, how they want it. And we do that very importantly, by partnering with merchants of all sizes, large, medium and small, all over the world, partnering with those merchants to help them compete in this fast changing environment, and we will never compete with them. So that's how we're trying to capitalize. That's what our company is driving toward. Now as we look forward, we see 4 battlegrounds where a lot of this new opportunity is going to evolve: mobile, local, global and data. And data could be called engagement, it could be called social, it could be called a lot of different things. Rest assured that our company is investing heavily in each of these areas, investing so that we're the innovation leader, investing so that we build great consumer experiences, investing so that we're the best partner for merchants as this profound change happens in the world of commerce and payments.
I said this earlier, I'll say it again. One of the key differentiations in our company is from the moment Pierre started eBay, when he said I'm going to partner with sellers in a marketplace. I'm not going to compete with the sellers, I'm going to partner with sellers and enable them to compete with each other for consumers. That principle is as live today as it ever has been. We are a partner, not a competitor.
And so in this enabling global commerce environment, one of the ways we're going to measure our success is how much total commerce does our company, eBay, Inc., enable? Last year, that was 3 -- $175 billion of volume, and we're setting a goal for ourselves that by 2015, we want to enable $300 billion of commerce volume through eBay, PayPal, GSI and all the collective capabilities we have as a company. That's one of the ways we'll measure our success.
Now I just want to share a few of the key messages that we gave to our investors 3 weeks ago at our Analyst Day. I said, there's 3 things that I hope you take away about our overall company, eBay, Inc. One, I've talked about it, an expanded addressable market. Two, we believe we're very well positioned to capitalize and lead in this tremendous change that's taking place. And three, we invested early, we invested heavily in mobile, we are the clear mobile leaders today, and we will continue to invest in mobile innovation and our capacity to innovate in the mobile environment has never been higher. So that's eBay, Inc.
Here's the messages that Devin shared about the eBay Marketplaces. The eBay Marketplaces turnaround is strong and we have a strong sustainable core business. Devin outlined some exciting growth opportunities around local, around global, around data that we believe there's additional upside in eBay Marketplaces business. And then Devin and Mark Hargis and the eBay Marketplaces product and technology team, demonstrated that the pace of innovation is accelerating in the eBay Marketplaces. It's a very exciting time in that business and we're very proud of what's been accomplished and very proud of Devin and that team and what they're doing.
David Marcus stood up and talked about PayPal, and talked about PayPal having unmatched advantages. There's a lot of innovation going on in mobile payments today, and there will be a lot of innovation, a lot of startups and a lot of other people are interested because they see the change. But PayPal has some unique advantages in terms of our risk management, in terms of an end-to-end closed-loop network, in terms of the capacity and ability to reach 120 million active users. There's still significant growth left in PayPal's core business, core being online and mobile, we're the leader in online, the leader in mobile, significant growth as that rolls out across the world. And then PayPal as well, David and Hill Ferguson and Don Kingsborough and Gary Marino talked about the enormous opportunity for PayPal as PayPal gets extended in the off-line world, gets extended in the local world to help retailers compete in this omnichannel environment.
Exciting time at PayPal. And David and his team have brought a renewed sense of innovation and speed and driving a real consumer focus.
Chris Saridakis, who is on the phone today, stood up and talked about GSI and a few key takeaways from GSI. GSI has provided our company outstanding brand and retailer insight, how the brands and retailers are thinking about these changes and how we can help engage with them to make that transition from being scared to innovating, from seeing what's happening as a threat, to understanding it as an opportunity. And GSI's product line helps those retailers and brands meet the needs they have to compete in this new world. And so GSI's focus is helping those brands and retailers win. And in fact, GSI's customers consistently grow faster than the market. And we had 2 great examples of the CEO of Dick's Sporting Goods and the CEO of Kate Spade, or the company that owns Kate Spade, Fifth & Pacific, talking at our Investor Day via video about how they're driving innovation using GSI and eBay Inc's. capabilities to reach their customers, wherever their customers are and reach them in a way that engages their customers to build more loyal relationships. And so our company continues to evolve. It's a very dynamic market. You have our commitment that we're going to continue to evolve, whether through acquisitions, whether through new products. Our guiding posts are how consumers are behaving and what merchants need to do to win in this new commerce environment.
Let me just shift gears for a moment and put a few numbers around some of the words that I just used, and these are some of the financials that Bob Swan stood up and gave at our Investor Day.
Just reiterating. Our portfolio believes -- we believe our portfolio positions us to capitalize on the opportunities to lead and win. And our company is more diversified than it's ever been, whether you look at it by business unit or format or by geography. We are a truly global business. Over half of our business is outside the U.S. today, and that global business and the opportunity and the brick and emerging markets has never been greater. We have a strong cash position, $11.5 billion. We generate strong cash flow. We're very disciplined in how we use our cash. Bob and his team allow a very disciplined approach to acquisitions, to reinvesting in our business and then returning cash to shareholders where appropriate. One of the nice things we have, and this actually matters in the Internet today, is we have proven monetization models.
We have businesses, core businesses that monetize when things happen, that is, when our merchants sell things, that's when we get paid. We have very aligned incentives. And we are almost unique in that we monetize the same on mobile as we do online on the web. A lot of other people don't have that benefit. We do. That's what enables us to embrace mobile wholeheartedly and not worry about cannibalization. Everything we do is committed to helping consumers, and our proven business models that have existing take rates allow us to do that. And while meeting consumer needs, we're also building and growing our business. And this just shows what we think our take rate will do over the next 3 years as we go from $175 billion of enabled commerce to $300 billion. Our take rate will continue to be strong. It will come down slightly because the PayPal take rate is a little lower than the marketplace and PayPal is growing a little faster. But we have a good business and a good business model that's good for our customers and that's good for our shareholders.
And so these are just a summary of our 2012 results. I know many of you are aware of them, with $14 billion in revenue, $2.36 in earnings. You see some of the backup statistics by business unit. We have a strong platform going in from 2012 into 2013, and here's the guidance we gave for 2013. We gave it to investors in January, we affirmed it yesterday in our analyst or our earnings call, Q1 earnings call. We expect to do between $16 billion and $16.5 billion in revenue, and roughly $2.70 to $2.75 in earnings per share. We believe we have strong, healthy businesses that generate mid-teens growth in both the top line and bottom line.
And 3 weeks ago at our Investor Day, we do what we've done every 2 years or so, and we've done it since I've become CEO. We stood up and we said, here's where we think we're going in 3 years and here are some rough goals that you, our investors, can expect. These are the goals we set for ourselves. In many cases, aspirational bold goals for where we want to be in 2015. I talked about our strategies. But here's how these translate to numbers. We want our company to be a company that's $21.5 billion to $23.5 billion of revenue, that's 14% to 17% roughly. We want to generate EPS growth at somewhere between 15% and 19% growth. And free cash flow over that period we expect to be greater than $11 billion.
So that is a function of this leadership team coming together and saying what are some bold goals, we can set for ourselves 3 years out. We've set them and now you can rest assure that we get up every day trying to execute against those. I just want to close with something that I feel strongly, and I speak for every member of our management team. We're proud. We're proud of what we've accomplished over the last 3 to 5 years. We're proud for our customers and we're proud for our employees and we're proud for you, our shareholders. But I want you to understand that we're not satisfied. We all joined this company because of the early sense of purpose and vision Pierre Omidyar created when he founded eBay. Pierre founded eBay to make a difference in the world, to help change the world, by enabling hundreds of millions of people to have a better life because of our global technology platforms, enable consumers to have more selection and lower prices, enable merchants of all sizes to make their living. That strong sense of purpose and mission is as live today in our company as it's ever been before. That's the reason many of us get up in each and every day to help realize that purpose and mission, to help drive the future of innovation and commerce that I talked about earlier and get up and help deliver the results and numbers that I talked about. So rest assured, we get up every day, motivated, paranoid and inspired to work hard to deliver for our customers, our employees and our shareholders.
So thank you very much for sitting through that. I think I'll now have time to take a few questions
John J. Donahoe
Okay. Well, I'll tell you what. If there's no questions, the informal session, maybe Mike, we can close you, and then we can close the formal meeting. And then if any of you have individual questions, our management team will stay around for a few minutes and feel free to come up and ask any of us questions. Thanks again for being here, and we'll look forward to -- we're going to get back to work to help deliver a very strong next year for you. Thank you.
Edward W. Barnholt
Ladies and gentlemen, that concludes our webcast for the today. Thank you for tuning in.
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