NIKE, Inc. Annual Shareholder Meeting Transcript September 21, 2017

Transcription

1 NIKE, Inc. Annual Shareholder Meeting Transcript September 21, 2017 This transcript is provided by NIKE, Inc. only for reference purposes. Information presented was current only as of the date of the conference call, and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in this transcript, and disclaims any obligation to do so. PRESENTATION Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Okay, good morning, everybody. Will the meeting please come to order? I want to welcome you all to Nike's 37th annual shareholder meeting. I'd like to introduce you to the board of directors, starting with Tim Cook right here, the CEO of Apple. Next to Tim is John Donahoe, CEO of ServiceNow. Then we have John Connors, a partner at Ignition Partners Venture Capital Firm and former CFO of Microsoft. Next to John is Michelle Peluso, Chief Marketing Officer at IBM. Next to Michelle is Hall of Fame basketball coach John Thompson. Yeah. Next we have, in the second row, Johnathon Rodgers, former President and CEO of TV One and former President of Discovery Networks. Next to Johnathon is Beth Comstock, the vice chair of GE. Next to Beth is Alan Graf, the current CFO of FedEx. Then next to Alan is Dr. John Lechleiter, the former CEO and chairman of the board of Eli Lilly. Finally, next to Dr. Lechleiter is Dr. Phyllis Wise, the current CEO of Colorado Longitudinal Study. I want to add quickly that this is Phyllis's final board meeting with Nike, and I'd like to thank her profusely for her outstanding contribution and insights over the past seven years, including her role as chairperson of Nike's Corporate Responsibility and Sustainability Committee. Phyllis, you will be greatly missed. We'll miss you. I should also note that one director, Travis Knight, who is the son of our founder Phil Knight and CEO of Laika, is unable to be here today due to an unavoidable scheduling conflict. I note the presence of our outside auditors, Steve Barr, Rob Giddings, and Trevor Tiak. They are from Price Waterhouse Coopers and have been Nike's outside independent auditors for many years. Finally, I'll mention that Lisa Porter from Computer Share is also here and will serve as the inspector of elections. The agenda for the meeting will be first to consider the six matters to be voted on by the shareholders, second to hear a report on the state of the business, and finally the officers will answer questions from the shareholders. As part of registering to attend the meeting this morning, you should have received a card

2 on which you could write your questions. Those cards should have been collected as you entered the meeting. If your card has not been collected, please raise your hand so an usher can collect it now. Okay. We will answer as many questions as time permits. Where more than one question is submitted about a particular subject matter, we will consolidate those questions and answer them together. The results of the balloting will be announced shortly after voting. I have been advised by Ann Miller, our Corporate Secretary, that the notices of the meeting were duly and properly given, being mailed in accordance with the bylaws on August 4, 2017, and that quorum of class A and class B common stock separately, as well as class A and class B common stock together, are present today. Since a quorum is present, I declare this annual meeting of the shareholder of Nike, Inc. duly convened. We will dispense with the reading of the minutes of the last annual meeting and proceed to the matters to be voted on. There are six matters to be voted on at this annual meeting, each of which is described in your proxy statement. Number one, the election of directors. Two, an advisory vote to approve executive compensation. Three, an advisory vote on the frequency of future advisory votes on executive compensation. Four, approval of the long-term incentive plan as amended. Five, a shareholder proposal regarding political contributions disclosure. Six, ratification of the appointment of Price Waterhouse Coopers as Nike's independent auditors for the current fiscal year. I'd like to ask the secretary to present the board of directors' recommendations to the shareholders at this time. Ann Miller, NIKE, Inc., Corporate Secretary: Thank you, Mark. The first matter we will vote on is the election of directors. The board's nominees for election by the class A shares are: Beth J. Comstock, John G. Connors, Timothy D. Cook, John J. Donahoe, Travis A. Knight, Mark G. Parker, Johnathon A. Rodgers, John R. Thompson Jr. The board's nominees for election by the class B shares are: Alan B. Graf Jr., John C. Lechleiter, Michelle A. Peluso. I move that these nominees be elected to the board of directors. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Is there a second? Unidentified Speaker: Second. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So moved. Ann Miller, NIKE, Inc., Corporate Secretary: The company has not received notice of any other nominations, as required by the bylaws. Therefore, the nominations are closed. The second matter to be voted on is an advisory vote on executive compensation. I move that the compensation of the named executive officers, as described in the proxy statement, be approved.

3 Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Is there a second? Unidentified Speaker: Second. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So moved. Ann Miller, NIKE, Inc., Corporate Secretary: The third matter to be voted on is an advisory vote on the frequency of future advisory votes on executive compensation. I move that the frequency of future advisory votes on executive compensation occur every year be approved. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Is there a second? Unidentified Speaker: Second. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So moved. Ann Miller, NIKE, Inc., Corporate Secretary: The fourth matter to be voted on is the approval of the longterm incentive plan, as amended. I move that the long-term incentive plan, as amended, be approved. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Is there a second? Unidentified Speaker: Second. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So moved. Ann Miller, NIKE, Inc., Corporate Secretary: The fifth matter to be voted on is a shareholder proposal regarding political contributions disclosure. Is the proponent or its representative here to present the proposal? Brian Rumbley: I am. Good morning. My name is Brian Rumbley and I stand on behalf of Investor Voice, first to thank the company for the discussion we've had in the past year, and second to move proposal for number five, which asks for improved disclosure of political spending. Nike is behind the mainstream, as evidenced by its rank on the CPA Zicklin Index, which places it only 221st among the S&P 500. With a

4 score of 55.7 out of 100, lower than last year's, Nike lags behind its Northwest peers, Costco, Boeing, and Microsoft, whose scores range from 71 to an impressive 95. Hundreds of S&P 500 companies practice political spending disclosure, including many that adopted policies following a shareholder dialogue like this one. Nike admits to being afraid the disclosure could cause competitive disadvantage. However, there's no evidence that harm has befallen any of the hundreds of companies that maintain these policies. As pleased as Investor Voice has been to discuss matters with Ann Miller, Nike's new Corporate Secretary, and her team, we remain baffled as to why, for instance, Nike would not add consolidated disclosure of information that is already fully public. No chance of a competitive disadvantage there. In fact, we offered to withdraw this proposal in return for that one simple improvement, but the company declined. Leading companies disclose payments they make to trade associations and so-called social welfare organizations, which have become the dark money conduits by which funds are laundered into the political process. Nike makes no such disclosures. Nike's reporting language is confusing, and its practices generate loopholes so large that the polices are deemed ineffective and lacking transparency. In contrast, appropriate disclosure of the type that proposal five requests would, one, prevent supporting activities that could harm Nike's reputation and brand value, two, allow the board greater oversight and protection and improve shareholders' ability to evaluate risk, three, improve Nike's low score and place it in a higher rank, which is the only place a world leading company should aspire to be. Therefore, please cast your vote for this mainstream good governance proposal. Thank you very much. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Is there a second? Unidentified Speaker: Second. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So moved. Ann Miller, NIKE, Inc., Corporate Secretary: The final matter to be voted on is shareholder ratification of the appointment of Price Waterhouse Coopers as the company's independent registered public accounting firm for fiscal I move that the selection of Price Waterhouse Coopers be ratified. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Is there a second? Unidentified Speaker: Second. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So moved. Does anyone need a ballot? Any shareholder who wants a ballot should raise his or her hand, and the ushers will provide a ballot. It's not necessary to ask for a ballot if you've already sent in your proxy. If you have previously sent

5 in a proxy, please do not execute a separate ballot unless you mark your ballot to show that a proxy was previously submitted and that you desire to revoke your proxy. There are separate ballots for class A and class B shareholders. Okay. I now declare the polls closed. The inspector of elections will now tally all votes on the measures and return the results to the secretary. While the votes are tallied, I'd like to share and review our performance in fiscal year As you know, our mission is to bring inspiration and innovation to athletes, and we're equally committed to delivering sustained value to our shareholders over the long term. In fiscal '17, we managed our business through a dynamic environment, while at the same time we initiated big changes to set to stage for the future. It was a year for making aggressive moves, all with the goal of igniting the next phase of accelerated growth for Nike. Let's take a look at the numbers for the year. Nike, Inc. revenues grew 6% to $34.4 billion on a reported basis. On a currency neutral basis, Nike, Inc. revenues grew 8%. Earnings per share rose 16% to $2.51, and we delivered ROIC of nearly 35%. As the world's leader in sport, we know there's never been a more exciting time to be in our business, and we're catalyzing our next wave of long-term growth while being clear-eyed about today's rapidly changing landscape. Mobile and social platforms are connecting people beyond traditional boundaries of language and culture. Meanwhile, demographics are shifting, headlined by urbanization and rising middle class across Asia. Climate change is threatening communities, tightening precious resources, and demanding new ways to offset costs. Just as our world is changing, so are consumers. In this more connected world, their expectations and behaviors are evolving. More consumers are passionate about leading active lifestyles. That's great news. They expect a faster cadence of innovation in both performance and in sportswear. Empowered by digital, they want service with speed and a more personal touch from brands. As a result, consumers are driving a reinvention of the economics of brick and mortar retail. This landscape is complex, but it plays to Nike's strengths. We know that external forces do not control our destiny. Ultimately, we do. That's why over the past year we've reimagined our entire business, from design to manufacturing to merchandising and marketing, to serve every consumer more completely. Rather than watching global shifts from the sideline, we have an ambitious plan to help shape them. This June we unveiled the Consumer Direct Offense, a new company formation that allows us to serve consumers faster and more personally at scale. It accelerates our greatest growth opportunities and places decision making closer to the consumer. The Consumer Direct Offense puts out triple double strategy into practice, meaning it transforms three core areas of our business: in the innovation we create, in the supply chain that delivers it, and in the marketplace where we connect with consumers. Powered by this framework, our entire team is sprinting toward three milestones: two times innovation, two times speed, and two times direct.

6 Our vision for the future starts with what we're best known for, and that's our product. We're doubling our cadence and impactive innovation in both performance and in sportswear. We're accelerating the time it takes for a new platform to reach the market. At the same time, we're focusing on scale, delivering innovation across multiple sports and styles. This year we delivered a cushioning revolution with three new, distinct performance platforms. It kicked off at our Breaking Two, which you saw on the opening video, our moon shot attempt to smash one of the greatest barriers in sport, the world's first sub-two-hour marathon. With 20 million people watching live, we unveiled the ground breaking Vaporfly 4%. It features a proprietary carbon fiber plate and the new ZoomX foam, our lightest and most responsive yet. We followed it up by launching a product that was 30 years in the making, the Air VaporMax. Created with new capabilities in Flyknit and advanced manufacturing, the VaporMax fulfills our dream of walking on nothing but air. The final part of our cushioning revolution, for now, is Nike React, which will be our most versatile cushioning platform yet. It premiered this summer in our new React Hyperdunk and the Jordan Super.Fly, and it promises to make an impact across multiple categories. Taken together, all this represents how we're pushing the frontiers of technology. As you saw earlier this year, we gave you the HyperAdapt 1.0, and that represents our first venture into adaptive performance. Incredibly exciting, products that actually move with the body. We're doubling down on digital knitting to create apparel that's more personal and powerful, like the Flyknit bra, revolutionary, state of the art. To us, Two X Innovation isn't just about releasing something new. It's about making the world's best products even better, because ultimately, we are focused on amplifying the human body and channeling the strength of the human spirit. By fueling massive leaps in our design, prototyping, and manufacturing process, we're delivering the future of sport faster. We're doing all of this for one big reason. The consumer demands it. We're seeing a growing appetite for a constant flow of fresh product, superior service, and real time delivery. That's why we're not just revolutionizing what we make for athletes, but how we get it to them. With our streamlined Nike Direct organization, we're unlocking new avenues to give consumers exclusive access to the best of Nike. As part of our Consumer Direct Offense, we're strengthening direct connections with consumers through digital, membership, personalization, and brand experiences. This comprehensive approach allows Nike to serve athletes in every phase of their life, from the gym onto the court and into the street. But above all, it's about igniting long-term global growth. After all, today just over one-third of our business falls within our broad definition of direct, but it actually drove 70% of our growth in fiscal '17. From strengthening member benefits to creating branded retail environments, Nike Direct reflects one of our biggest opportunities. Bringing our brand closer to the consumer drives growth. Nike Direct starts with our investment in digital, which are propelling our rapid e-commerce growth. Nike.com has expanded to over 45 countries, with our most coveted products selling out quickly on our SNKRS app. Our new digital studios in New York and Shanghai are activating the future of sneaker culture

7 and commerce, and we're accelerating the global expansion of our NIKE+ ecosystem of apps. The results prove this vision, with members on our apps spending nearly triple what others spend on Nike.com. At the same time, we're extending innovation to strategic wholesale partners and exploring opportunities with new commerce partners. In Paris, the Jordan brand's first European store, called Jordan Bastille, is a partnership with Foot Locker. With Nordstrom, a premier destination for women, we're combining digital and physical experiences with a dedicated Nike page on the Nordstrom's app. Over the past five years with Zalando in Europe, we've had great success growing our business through an elevated presentation and service. In China, we have a premium experience on one of the world's largest platforms, Tmall, where Nike is the biggest sports brand, reaching an incredible 500 million users. But above all, our focus on personalized service and seamless commerce comes to life in Nike retail environments. Open this year, our Soho and Miami stores are immersive experiences, offering customization bars, one-to-one personal shopping service, and digital trial zones that bring the game to you. In China, where the sports economy is expected to reach $850 billion by 2025, we're capitalizing on our leading brand position. In Beijing, we opened our largest basketball-focused store in China, as well as two new Jordan brand stores in Chengdu and Taipei. Deepening our relationship with consumers is really just the start. To exceed their rising expectations, we're doubling our speed throughout our supply chain from product insight to consumer delivery. Led by our new Express Lane initiative, we will cut our average product creation cycle dramatically. Allowing us to respond to consumer demand in real time, our Express Lane teams create, update, and fulfill rapidly, offering new products, materials, and colors that drive sell-through. But more than any technology, speed starts at the sketch pad. Across our company, we're editing out the noise and amplifying what resonates most with our consumers. Our product teams are reaching their existing growth goals with 25% less product, while offering more distinct choices. Our brand teams are matching our best products with athletes and stories that create the biggest impact, because today, trends go global in an instant, and by creating space to go after the biggest wins, we make waves in the most influential hubs of sport and style. It all adds up to doubling our speed, our commitment to a more personal brand, increased efficiency, and quicker delivery around the globe. This year we didn't just reinvent how we work. We reaffirmed what drives us. At Nike, we believe in the power of sport to break down barriers, to drive innovation, and to inspire the world to overcome differences and bring people together. That's why over the past year our brand made statements that rippled across the world. We proudly stood up for our values through our Equality Campaign. Using the power of support to promote fairness and justice in every community, Equality has been a catalyst for conversation and change. It continued into the summer with our 2017 Be True collection, our brand's expression of our commitment to the LGBTQ community. We're continuing to partner with local communities to expand access to sport, helping to get more than 14 million kids moving globally.

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9 We reaffirmed our commitment to curb the dangerous effects of climate change. We'll do everything we can to maintain an environment where all athletes can train, live, and thrive. This year we made significant progress in our goal to reach 100% renewable energy in all Nike-owned or operated facilities across the world by We will also to accelerate low-impact materials innovation for sustainability, both within our company and in partnership with others. From the start, our mission has been to serve the athlete, helping them push the limits of their potential. That's grounded in our belief that challenges are more than moments to overcome. They're opportunities for reinvention. When I look out over the next year, we have a lot to be excited about. With our new NBA partnership, we'll bring fans even closer to the court side. At the World Cup, we'll unveil our top boot and apparel innovation and connect it to the passionate national pride in key cities. We'll continue to ignite growth in sportswear by uniting style and performance. We'll expand Flyknit's impact with precision engineered apparel. And we'll deliver innovations to consumers faster and more personally. It's as important as ever for Nike to stay true to our culture, to attack the impossible and leverage our competitive advantages. This is how we will win now and create the future of sport. Before I close, I want to tell you about a moment this year that reminded me of what makes Nike special. You saw a little bi of this in the opening video. This past May I traveled to Monza, Italy to witness Breaking Two, one of the most ambitious moon shots ever. Supported by our incredible team of designers, scientists, engineers, physiologists, and others, three bold athletes took on an unprecedented challenge of running the first sub-two-hour marathon. It was a moment I'll never forget because I had the privilege of standing on the track as history was rewritten. Eliud Kipchoge made a statement heard around the world, running the course in two hours and 25 seconds. No human being has ever run 26.2 miles that fast. For billions of athletes, it represented historic progress toward a goal that once was unthinkable. Just before stepping onto the track, Eliud turned and said something that stuck with me. He said, "I don't have a chance to make history. I have a choice." We're in the same position as a company. We choose to push the limits of human potential, and while we understand our vision is nearly impossible to achieve, that's precisely what drives us. At Nike, the unprecedented is just something we haven't accomplished yet. Like Eliud, we will fearlessly sprint into our future with the confidence that we are pioneering new ways to elevate athletes everywhere. With that, I'd now like to invite Trevor Edwards, President of the Nike brand, Andy Campion, Executive Vice President and Chief Financial Officer, and then Hannah Jones, our Chief Sustainability

10 Officer and Vice President of the Innovation Accelerator to all join me on stage so we can answer some of the questions from the cards that you've handed in. QUESTION AND ANSWER SECTION Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: So All right. First of all, thank you for your questions. Let me start with, "Why was now the right time to announce the Consumer Direct Offense, and why did it require a reduction in force?" Well, as I mentioned in my remarks... I'll take this one in case you were wondering. The consumer is moving faster than ever before, and their expectations are rising by the day. That means we have to move with the consumer, in fact, try to move ahead of the consumer. That's exactly what the restructuring against the Consumer Direct Offense is all about. I'm really excited about getting the organization more obsessed with the consumer, closer to the consumer, so we can serve and also ignite this next phase of growth. I will say that this was a particularly difficult time, a challenging time for all of us. When we have to make decisions within the organization, we also had to make decisions to let some of our teammates go, and that's an incredibly challenging part of what we do. When we looked at the priorities and the need to shift to folks the business on the things that really were gonna drive us forward and grow, we had to make those decisions. At the same time I would say... And we don't take those lightly. Believe me, this is incredibly challenging. But I'm excited and energized at the same time because I think it puts us in a position as a business, as a company, as an organization, to drive growth, to get closer to the consumer, and really push the potential of the company in this next phase. We're largely through this restructuring, so focused on moving forward and creating some great, great work over this next fiscal year. Thank you for that question. Question number two, "What will be new and different with the launch of the NBA partnership?" That's a good question. I was just there on Friday, but so was Trevor Edwards. Trevor, you want to? Trevor Edwards, President, NIKE Brand: Absolutely. One of the amazing things is that basketball is the next truly global sport. We're super excited to be working with the NBA in partnership to really grow the sport around the world. That's both from a performance perspective, a lifestyle perspective, but also from a cultural connection perspective. That gives us some really things to be excited about. There are two things that, for me, were extremely amazing. One, first of all, was that we have the most incredible uniforms that we're actually bringing on the court. They're super lightweight. They're actually 20% lighter than uniforms before, and our athletes were really

11 demanding that. Obviously, having the swoosh on that is something that's really exciting for us. The second part is something really new, which was what we call the Nike Connect. Because these are not just jerseys. They're something more than that. For consumers, what we've been able to do is connect technology to the jerseys. That allows our consumers to get an opportunity to have a direct connection with the athletes that they love. The idea that is suddenly you are part, you are a member of the brand, you're a member of a certain experience that you can have with your athlete, is super important. They get exclusive content. They get great personal services. They even get to shop in some really exclusive ways because they show their passion for their particular team. I'm truly excited that this really brings just sort of a new way of connecting with our consumers, and it really speaks to this idea of how we bring our brand closer to consumers. That is really a step to the future, and it s what Mark talked about. That's part of our Consumer Direct Offense. We have a lot more exciting things to come as the season comes up, but I couldn't be more excited about the launch, and it was really fun to see. You saw that image in the back, which was the unveil. I can tell you it was really amazing to see. We're super excited. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: I was there. That was very exciting and just the start of, I think, a lot of great things between this Nike-NBA partnership. Next question, "Does Nike's management consider the impact of its conservative and libertarian employees when it consistently takes liberal public policy positions? If so, why don't their opinions seem to matter?" Okay. Well, first of all, we value the opinions of all of our employees. Our values are very clear when it comes to diversity and inclusion, clear and consistent, and feel it's important for us to have that voice. The policies that we stand for are aligned with our values as a company when it regards diversity, inclusion, and sustainability, and I'm proud of the positions that we've taken in that respect. The next question I have is, "Nike reiterated its support for the Paris Climate Agreement recently. In practical terms, what are you doing to battle climate change?" Hannah? Hannah Jones, Vice President, Chief Sustainability Officer: Andy? Andy Campion, Executive Vice President & Chief Financial Officer, NIKE, Inc.: Nope. [inaudible] beyond that one. Hannah Jones, Vice President, Chief Sustainability Officer: You know, we have long followed and tracked the science around climate change and the potential scenarios that could play out and the way in which climate change could impact our consumer, because the athlete has to have clean air to be able to

12 practice sport. But it's also about how it can impact the materials that go into our products and our supply chain. So we've been active on a number of different fronts. We lead with innovation. We believe that the job of any business leader is to anticipate the future and to allow the company to be resilient and to grow within whatever that future scenario is. We've been innovating relentlessly to bring to market products that marry sustainability with performance. This week we launched Flyleather, which is a new engineered leather which isn't just better as a performance leather. It's 40% lighter and five times sturdier, but it also cuts the carbon footprint by 80%. That's the kind of winwin we like bringing into the market. We've also been investing heavily in renewable energy based on a public target that we set, and it's good for business and Andy likes it as well, so it shows you the win-win on building yourself into the future. We will continue to advocate at a global level for policies that enable business to thrive into that future, and we look forward to being part of a low-carbon growth economy. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: We feel very strong that our commitment to sustainability is also the right thing for our business, and those two things don't have to be at odds at all. In fact, that's where we're focused on our innovation, is to bring those two things together. Next question, "What are the financial implications of the Consumer Direct Offense?" Financial implications, okay. I think that's Andy Campion, our CFO's. Andy Campion, Executive Vice President & Chief Financial Officer, NIKE, Inc.: I think that one's me. First of all, broadly across everyone at Nike, we're extremely excited about the Consumer Direct Offense, and that has to do with what it's all about, which is better serving consumers continuing increasingly over time. That's really what fuels us. That's the ultimate goal. The result of that goal are strong financial results. The Consumer Direct Offense from a financial perspective, I would say are really twofold. One, we believe that it will reignite Nike's growth and drive the next horizon of long-term growth over the future at Nike. Secondly, it's driving an increasingly focused and accelerated investment agenda. First I'll touch on growth. Two X Innovation, that is about giving consumers more of what we all know they really want. We all know it because we're all consumers. We all see, for example, Kipchoge run at unprecedented times, and we know we want that shoe. Regardless of whether we could ever accomplish that ourselves, we want new, fresh, innovative products. Two X Innovation is about bringing more of that at an increased cadence to consumers, and that ultimately results in growth. Two X Speed is about capturing that strong demand. We create more real time than we have over the past. The closer we can get to that moment in the heat of the moment, the more opportunity we know there is from a growth perspective with

13 consumers. Two X Direct, we know that there's a tremendous opportunity now to leverage digital to create incredibly compelling experiences for consumer at retail and online. This is about bringing the Nike brand, our products, and the service and expertise that only the Nike brand can provide, all together in experiences that we know consumers love. As Mark touched on in his opening remarks, we continue to see growth when we connect more directly with consumers at retail outpace undifferentiated multi-brand wholesale. To that point, the Consumer Direct Offense is already fueling incredibly strong momentum internationally, and again, we believe it's the key to reigniting strong growth in the US marketplace. From an investment perspective, I'll take one example, Two X Direct. In order to deliver on our goals from a Two X Direct perspective, we know that we need to have world class digital capabilities, and so we're accelerating our investment in capabilities ranging from data and analytics to machine learning and to other tools that'll enable personalization. When you have such a concise, three-pronged strategy, it actually enables everyone to the far reaches of the company to really focus their investment, resources, and management attention on what we think will fuel that next horizon of growth. In short, again, why we're most excited about it is, our goal's always been to better serve consumers. We know that when we create value for consumers, that translates into incredibly strong financial results and long-term profitable, sustainable growth. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Thank you, Andy. One more question here. "Can you explain the agreement Nike reached with Georgetown and the Workers' Rights Consortium?" Hannah? Hannah Jones, Vice President, Chief Sustainability Officer: Absolutely. We've been working hard over the summer with Georgetown and with the WRC, the Workers' Rights Consortium, and I'm pleased to say that we've come to an agreement together, formalizing a protocol for how the WRC plays a role within this overall ecosystem of changing supply chains and improving worker rights. Georgetown has been a fantastic partner to us. We've worked with them for 35 years, and we're delighted to continue in that partnership with them and to work with the WRC. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Okay, thank you. I think we have results for the ballot? Ann Miller, NIKE, Inc., Corporate Secretary: Yes, Mark. I'd like to report the preliminary results of the voting. The final results will be disclosed on a Form 8-K that will be filed with the SEC. With respect to proposal one, the eleven nominees have been duly elected as directors of this company for the ensuring

14 year. With respect to proposal two, the compensation of the named executive officers has been approved. With respect to proposal three, it has been approved that the frequency of future advisory votes will occur every year. With respect to proposal four, the long-term incentive plan, as amended, has been approved. With respect to proposal five, the shareholder proposal did not pass. And finally, with respect to proposal six, Price Waterhouse Coopers' selection as the independent registered public accounting firm for the current fiscal year has been ratified. Thank you, Mark. Mark Parker, Chairman, Chief Executive Officer and President, NIKE, Inc.: Thank you, Ann. Since we have not received notice of any other business to come before the meeting, the meeting is now adjourned. Shareholders who would like a brief tour of the Nike World Campus can join the tour as you exit the meeting room right outside here after the closing video. I want to thank you for your support, engagement, and thank you for coming today.