UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ¨ | | Preliminary Proxy Statement |
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| ¨ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| x | | Definitive Proxy Statement |
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| ¨ | | Definitive Additional Materials |
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| ¨ | | Soliciting Material Pursuant to §240.14a-12 |
DARDEN RESTAURANTS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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August 7, 201710, 2020
Dear Shareholders:
On behalf of your Board of Directors, it is our pleasure to invite you to attend the 20172020 Annual Meeting of Shareholders of Darden Restaurants, Inc. We will hold the Annual Meeting on Thursday,Wednesday, September 21, 2017,23, 2020, at 10:00 a.m., Eastern Time, online via the internet at Rosen Shingle Creek, 9939 Universal Blvd., Orlando, Florida 32819.www.virtualshareholdermeeting.com/DRI2020. All holders of our outstanding common shares as of the close of business on July 25, 2017,29, 2020, are entitled to vote at the meeting.
We will furnish proxy materials to shareholders via the Internet, which allows us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting.
The notice of meeting and Proxy Statement contain details about the business to be conducted at the Annual Meeting. Please read these documents carefully. We will set aside time atprovide an opportunity during the meeting for discussion of each item of business and provide you with the opportunitywe anticipate responding to ask questions.shareholder questions submitted in advance as described in this Proxy Statement. If you will need special assistance atduring the meeting because of a disability, please contact Matthew R. Broad, Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary, Darden Restaurants, Inc., 1000 Darden Center Drive, Orlando, Florida 32837, phone (407) 245-4043.
Whether or not you plan to attend, it is important that your shares be represented and voted at the meeting. Please refer to the proxy card or Notice of Availability of Proxy Materials for more information on how to vote your shares at the meeting.
Your vote is important. Thank you for your support.
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| | | Sincerely, |
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| | | Charles M. Sonsteby |
| | | Chairman of the Board of Directors |
DARDEN RESTAURANTS, INC.
1000 Darden Center Drive
Orlando, Florida 32837
_________________________
NOTICE OF
20172020 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 21, 201723, 2020
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| Time: | | 10:00 a.m., Eastern Time, on Thursday,Wednesday, September 21, 201723, 2020 |
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| Place: | | Rosen Shingle Creek, 9939 Universal Blvd., Orlando, Florida 32819Online, via the internet at www.virtualshareholdermeeting.com/DRI2020 |
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| Items of Business: | | 1. To elect a full Board of eight directors from the named director nominees to serve until the next annual meeting of shareholders and until their successors are elected and qualified;
2. To obtain advisory approval of the Company’s executive compensation;
3. To hold an advisory vote on the frequency of future advisory votes on the Company’s executive compensation;
4. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 27, 2018;
5. To vote on a shareholder proposal described in the accompanying Proxy Statement, if properly presented at the meeting;30, 2021; and
6.4. To transact such other business, if any, as may properly come before the meeting and any adjournment.
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| Who Can Vote: | | You can vote atduring the Annual Meeting and any adjournment if you were a holder of record of our common stock at the close of business on July 25, 2017.29, 2020. |
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| Website: | | Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on September 21, 2017:23, 2020: The accompanying Proxy Statement and our 20172020 Annual Report on Form 10-K are available at www.darden.com.www.darden.com. In addition, you may access these materials at www.proxyvote.com.www.proxyvote.com. On August 7, 201710, 2020, we mailed a Notice of Internet Availability of Proxy Materials to certain shareholders, containing instructions for voting online and for requesting a paper copy of the Proxy Statement and 20172020 Annual Report on Form 10-K. |
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| Date of Mailing: | | This Notice of the Annual Meeting of Shareholders and the Proxy Statement are first being distributed or otherwise furnished to shareholders on or about August 7, 2017.10, 2020. |
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| | | By Order of the Board of Directors |
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| | | Matthew R. Broad |
| | | Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary |
DARDEN RESTAURANTS, INC.
PROXY STATEMENT
TABLE OF CONTENTS
DARDEN RESTAURANTS, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 21, 201723, 2020
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The Board of Directors (the Board) of Darden Restaurants, Inc. (Darden, the Company, we, us or our) is soliciting your proxy for use at the Annual Meeting of Shareholders to be held on September 21, 2017.23, 2020. This Proxy Statement summarizes information concerning the matters to be presented at the meeting and related information that will help you make an informed vote at the meeting. This Proxy Statement and the proxy card are first being distributed or otherwise furnished to shareholders on or about August 7, 2017.10, 2020. Capitalized terms used in this Proxy Statement that are not otherwise defined are defined in Appendix A to this document.
PROXY STATEMENT SUMMARY
This summary highlights certain information discussed in more detail in this Proxy Statement.
20172020 Annual Meeting of Shareholders
Thursday,Wednesday, September 21, 2017,23, 2020, 10:00 a.m., E.T.
Rosen Shingle Creek, 9939 Universal Blvd., Orlando, Florida 32819Online, via the internet at www.virtualshareholdermeeting.com/DRI2020.
Matters Presented for Vote at the Meeting
The matters to be voted upon at this meeting, along with the Board’s recommendation, are set forth below.
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| Proposals | | Required Approval | | Board Recommendation | | Page Reference |
1. Election of Eight Directors from the Following Nominees: - M. Shân Atkins - James P. Fogarty - Cynthia T. Jamison - Eugene I. Lee, Jr. - Nana Mensah - William S. Simon - Charles M. Sonsteby - Timothy J. Wilmott | | Majority of Votes Cast | | For Each Nominee | | p. 89 |
| 2. Advisory Approval of the Company’s Executive Compensation | Majority of Votes Cast | For | p. 11 |
3. Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation | Majority of Votes Cast | One Year | For | | p. 1214 |
4.3. Ratification of Appointment of the Company’s Independent Registered Public Accounting Firm for the Fiscal Year Ending May 30, 2021 | | Majority of Votes Cast | | For | | p. 12 |
5. Shareholder Proposal Requesting that the Company Adopt a Policy to Phase Out Routine Use of Antibiotics in the Meat and Poultry Supply Chain | Majority of Votes Cast | Against | p. 1315 |
Fiscal 2017 Performance Highlights2020 Was Dramatically Impacted by the COVID-19 Pandemic
In March 2020, the COVID-19 outbreak was declared a national public health emergency resulting in a significant reduction in guest traffic at our restaurants due to changes in consumer behavior as public health officials encouraged social distancing and state and local governments mandated restrictions including suspension of dine-in operations, reduced restaurant seating capacity, table spacing requirements, bar closures and additional physical barriers. Through the first three quarters of fiscal 2020, our financial results were strong as sales from continuing operations for the first nine months of fiscal 2020 were $6.54 billion, an increase of 4.1 percent over the prior year period. The Company deliveredCOVID-19 pandemic negatively impacted this strong performance, and for most of the fourth quarter of fiscal 2020, we operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. Our sales for the fourth quarter of fiscal 2017, as evidenced by these results, both2020 declined 43.0 percent from the fourth quarter of whichfiscal 2019. As we continue to navigate through the pandemic, we have taken significant steps to adapt our business to allow us to continue to serve as performance metrics under the Company’s compensation plans. (See pp. 29-30 for details on these measuresguests, support our team members and related compensation results.)
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Adjusted Diluted Earnings Per Share for fiscal 2017(1)
| Darden Same-Restaurant Sales Growth(2)
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$4.02 | 1.8% (from FY 2016) |
(1) See p. 30 for a definition of Adjusted Diluted Earnings Per Share
(2) Same-Restaurant Sales does not include Cheddar’s Scratch Kitchensecure our liquidity position to provide financial flexibility, including:
Additional fiscal 2017 performance highlights:
Completed acquisition of Cheddar’s Restaurant Holding Corp., operating as Cheddar’s Scratch Kitchen, in April 2017;
Modifying our business operations in order to continue serving guests at our restaurants as safely and effectively as possible, including, initially transitioning all restaurant locations to a To Go only or To Go and delivery model;
One-Year ReturnReducing or eliminating fixed costs in our restaurants and restaurant support center as well as eliminating or delaying most nonessential capital spending;
Furloughing a substantial number of hourly restaurant employees as a result of the closure of our dining rooms and reduction in sales;
Protecting our team members’ safety and wellbeing, including sourcing additional sanitation supplies and personal protective equipment, implementing paid sick leave for all hourly restaurant team members, providing a $75.0 million emergency pay program and covering $4.1 million of health and welfare insurance premiums for furloughed team members;
Suspending the quarterly cash dividend, with the intention of reviewing our dividend policy as developments warrant;
Fully drawing on Invested Capital (ROIC)our $750.0 million Revolving Credit Agreement, which was subsequently repaid in May 2020;
Securing a $270.0 million term loan;
Raising $505.1 million in net proceeds from a follow-on equity offering, with over $5 million invested by members of 15.6%;our Board of Directors, our CEO and other members of the senior management team;
Suspending our share repurchase activity; and
Returned approximately $510 millionImplementing a careful, phased reopening of our dining rooms where permitted by local regulations.
In late April 2020, state and local governments began to shareholdersallow us to open dining rooms at limited capacities, along with other operating restrictions, and as of July 24, 2020, 89.0 percent of our restaurants were able to open their dining rooms to some extent. While increasing our in-restaurant dining capacity is subject to the ordinances in dividendsthe jurisdictions where we operate, we are focused on increasing capacity where possible, continuing to provide a safe environment for our team members and share repurchases.guests, and maintaining many of the efficiencies established over these past few months. For most of the fourth quarter of fiscal 2020, our cash flows from operations were negative, but by the end of the quarter, with the increasing dining room capacity, we were back to near break-even cash flow levels. Although we expect our restaurants’ dining room capacity to increase as public health conditions improve and restrictions are eased, it is possible additional outbreaks could require us to reduce our capacity or further suspend our in-restaurant dining operations.
Corporate Governance Highlights
Our Board seeks to maintain the highest standards of corporate governance and ethical business conduct, including the following highlights:
Independent Chairman of the Board, and seven of our eight nominees for the Board are independent;
All directors are elected annually and majority vote standard for uncontested elections;
All Board committees are composed of only independent directors;
The Board and committees conduct annual self-assessments;
Board met in executive session at each of theirits quarterly meetings during fiscal 2017;2020;
Enacted proxy access in fiscal 2015;
Directors and executive officers are subject to robust stock ownership requirements;
10 percent of shareholders can call a special meeting; and
No supermajority voting requirements.
In June 2020, we amended our Bylaws to permit the Company to hold shareholder meetings in a virtual-only format and to make other minor changes, primarily to incorporate certain changes to the Florida Business Corporation Act that became effective in January 2020.
Executive Compensation Highlights
Fiscal 2017 was the second full year implementing our new executive compensation strategy and programs. Our 2017fiscal 2020 compensation programs were designed to create a strong alignment between pay and performance for our executives. Highlights of our executive compensation programs include:
At the Company’s 20162019 Annual Meeting, approximately 96.995.5 percent of the votes cast were in favor of the advisory vote to approve executive compensation; and
Over 8487 percent of our CEO’s and 7072 percent of other Named Executive Officers’ target total direct compensation for fiscal 2020 is tied to performance.
We have included a detailed Executive Summary in our Compensation Discussion and Analysis section on p. 2527 in this Proxy Statement.
CORPORATE GOVERNANCE AND BOARD ADMINISTRATION
Our Board is Committed to the Highest Standards of Corporate Governance and Ethical Business Conduct
Corporate governance guidelines, policies and practices are the foundation for the effective and ethical governance of all public companies. Our Board is committed to the highest standards of corporate governance and ethical business conduct, providing accurate information with transparency and complying fully with the laws and regulations applicable to our business. The Company’s corporate governance structure is designed to ensure that the Company’s policies and practices are aligned with shareholder interests and corporate governance best practices. Executive management supports the Board’s commitment to be transparent through shareholder outreach efforts. We offer our shareholders an opportunity to engage in dialogue with us about aspects of our corporate governance and discuss any areas of concern. Our corporate governance practices are governed by our Articles of Incorporation, Bylaws, Corporate Governance Guidelines, Board committee charters, Shareholder Communication Procedures, CodeCodes of Business Conduct and Ethics and Insider Trading Policy. You can access these documents at www.darden.com under Investor Relations — Corporate Governance to learn more about the framework for our corporate governance practices. Copies are also available in print, free of charge, to any shareholdersshareholder upon written request addressed to our Corporate Secretary.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines that specifically address the Company’s key governance practices and policies. The Nominating and Governance Committee of the Board oversees governance issues and recommends changes to the Company’s governance guidelines, policies and practices as appropriate. Our Corporate Governance Guidelines cover many important topics, including:
Director responsibilities;
Director qualification standards;
Director independence;
Director access to senior management and independent advisors;
Director compensation;
Director orientation and continuing education;
CodeCodes of Business Conduct and Ethics;
Risk oversight;
Related party transactions;
Approval of CEO and senior management succession plans;
Annual compensation review of CEO and senior management;executive officers;
An annual evaluation in executive session of the CEO by the independent directors, led by the Chairman of the Compensation Committee; and
An annual performance evaluation of the Board and each of the Board committees, and an even more in-depth performance evaluation of the Board led by an outside consultant no less often than every two years.
The Corporate Governance Guidelines also include policies on certain specific subjects, including those that:
Require meetings at least four times annually of the non-employeeindependent directors in executive session without our CEO or other members of management present;
Require a letter of resignation from directors upon a significant change in their personal circumstances, including a change in or termination of their principal job responsibilities;
•Limit the number of other boards that directors may serve on;
Provide that no member of the Audit Committee may serve on the audit committee of more than three public companies, including the Company’s;Company; and
Provide a mandatory retirement age for directors.
Director Independence
Our Corporate Governance Guidelines require that at least two-thirds of the Board be independent directors, as defined under the rules (the NYSE Rules) of the New York Stock Exchange (NYSE). The NYSE Rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act), include the additional requirements that members of the Audit Committee may not accept directly or indirectly any consulting, advisory or other compensatory fee from the Company other than their director compensation and may not be affiliated with the Company or its subsidiaries. The NYSE Rules and Rule 10C-1 under the Exchange Act provide that when determining the independence of members of the Compensation Committee, the Board must consider all factors specifically relevant to determining whether a director has a relationship to the Company which is material to the director’s ability to be independent from management in connection with Compensation Committee duties, including, but not limited to, consideration of the sources of compensation of Compensation Committee members, including any consulting, advisory or other compensatory fees paid by the Company, and whether any Compensation Committee member is affiliated with the Company or any of its subsidiaries or affiliates. Compliance by Audit Committee members and Compensation Committee members with these requirements is separately assessed by the Board.
The Board has reviewed, considered and discussed each current director’s relationships, both direct and indirect, with the Company in order to determine whether such director meets the independence requirements of the applicable sections of the NYSE Rules (there are no nominees for election as directors at the Annual Meeting who are not current directors). The Board has affirmatively determined that, other than Mr. Lee, who is employed by the Company, seven of the eight current directorsnominees (Mses. Atkins and Jamison and Messrs. Blum, Fogarty, Mensah, Simon, Sonsteby and Sonsteby)Wilmott) have no direct or indirect material relationship with us (other than their service as directors) and qualify as independent under the NYSE Rules. The Board has also affirmatively determined that each member of the Audit Committee and the Compensation Committee meets the applicable requirements of the NYSE Rules and the Exchange Act.
In making independence determinations, the Board considers that in the ordinary course of business, transactions may occur between the Company, including its subsidiaries, and entities with which some of our directors are or have been affiliated. The Board has concluded that any such transactions were immaterial in fiscal 2017.2020.
Related Party Transactions
The Company’s Corporate Governance Guidelines include a policy pertaining to related party transactions in which Interested Transactions with a Related Party, as those terms are defined below, are prohibited without prior approval of the Board. The Board will review the material facts of the proposed transaction and will either approve or disapprove of the transaction. In making its determination, the Board considers whether the Interested Transaction is consistent with the best interests of the Company and its shareholders and whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, as well as the extent of the Related Party’s interest in the transaction. A director may not participate in any discussion or approval of an Interested Transaction for which he or she is a Related Party, except to provide all material information as requested. Only those directors that meet the requirements for designation as a “qualified director” under the Florida Business Corporation Act will participate in the approval of an Interested Transaction. If an Interested Transaction will be ongoing, the Board may establish guidelines for the Company’s management to follow in its dealings with the Related Party.
An “Interested Transaction” as defined in the policy is any transaction, arrangement or relationship (or series of similar transactions, arrangements or relationships) in which (i) the amount involved exceeds $120,000 in any calendarfiscal year, (ii) the Company is a participant, and (iii) any Related Party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity), but does not include any salary or compensation paid by the Company to a director or for the employment of an executive officer that is required to be reported in the Company’s proxy statement.statement (or that would have been so reported if the executive officer was a “named executive officer” as that term is defined in the rules of the Securities and Exchange Commission).
A “Related Party” as defined in the policy is any (i) person who is or was since the beginning of the last fiscal year an executive officer, director or nominee for election as a director of the Company, (ii) beneficial owner of more than five percent of the Company’s common stock, or (iii) immediate family member of any of the foregoing.
An “immediate family member” as defined in the policy is any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the person in question and any person (other than a tenant or employee) sharing the household of the person in question.
On April 23, 2020, the Company completed a public underwritten offering of 9,000,000 shares of the Company’s common stock. The executive officers and directors listed in the table below each purchased more than $120,000 in purchase price of the Company’s shares from the underwriters at the same price as the public, $58.50 per share. Certain other directors and executive officers also purchased shares in the offering in amounts less than $120,000. The pricing and certain other terms of the offering were approved by an Equity Pricing Committee created by the Board of Directors for the offering and comprised of only disinterested directors who did not have or intend to have a financial interest in the offering and were determined to be qualified directors by the Board of Directors.
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| Name | Relationship to Issuer | Approximate Dollar Value |
| Todd A. Burrowes | President, LongHorn Steakhouse | $150,000 |
| Ricardo Cardenas | Senior Vice President, Chief Financial Officer | $175,000 |
| James P. Fogarty | Director | $250,000 |
| David C. George | Executive Vice President and Chief Operating Officer | $250,000 |
| Cynthia T. Jamison | Director | $200,000 |
| Eugene I. Lee, Jr. | President and Chief Executive Officer and Director | $1,500,000 |
| Charles M. Sonsteby | Director and Chairman of the Board | $750,000 |
| Timothy J. Wilmott | Director | $1,000,000 |
There are no other Interested Transactions or other related party transactions or relationships required to be reported in this Proxy Statement under Item 404 of the SEC’s Regulation S-K.
Director Election Governance Practices
We do not have a “classified board” or other system where directors’ terms are staggered; instead our full Board is elected annually. The Company’s Bylaws provide that in an uncontested election, each director will be elected by a majority of the votes cast; provided that, if the election is contested, the directors will be elected by a plurality of the votes cast. In an uncontested election, if a nominee for director who is a director at the time of election does not receive the vote of at least the majority of the votes cast at any meeting for the election of directors at which a quorum is present, the director will promptly tender his or her resignation to the Board and remain a director until the Board appoints an individual to fill the office held by such director.
The Nominating and Governance Committee will recommend to the Board whether to accept or reject the tendered resignation or whether other action should be taken. The Board is required to act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, and publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision and the rationale within 90 days from the date of certification of the election results. If a director’s resignation is not accepted by the Board, such director will continue to serve until his or her successor is duly elected, or his or her earlier resignation or removal. If a director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill the vacancy or decrease the size of the Board. To be eligible to be a nominee for election or reelection as a director of the Company, a person must deliver to our Corporate Secretary a written agreement that he or she will abide by these requirements.
Under our Bylaws, the Board will consist of not less than three nor more than fifteen members as determined from time to time by resolution of the Board. The size ofCurrently, the Board is currentlyconsists of eight members.members, all of whom have agreed to stand for reelection at the 2020 Annual Meeting.
Board Leadership Structure
The Company’s Corporate Governance Guidelines provide that the positions of Chairman of the Board and CEO be held by separate persons and that the position of Chairman be held by an independent director. The Board believes that separating the roles of Chairman and CEO allows for better alignment of corporate governance with shareholder interests and aids in the Board’s oversight of management and the Board’s ability to carry out its roles and responsibilities on behalf of the shareholders. The Board also believes that the separation of the roles of Chairman and CEO allows the CEO to focus more of his time and energy on operating and managing the Company and leverages the Chairman’s experience. Charles M. (Chuck) Sonsteby has served as Chairman since April 2016. As Chairman, Mr. Sonsteby, along with the other independent non-employee directors, brings experience, oversight and expertise from outside the Company and industry, while our CEO, Mr. Lee, brings companyCompany and industry-specific experience and expertise.
In the event theThe Chairman is not independent, the independent directors will designate one independent director to serve as the Lead Director until an independent Chairman is appointed. The Lead Director, if any, will presidepresides at all meetings of the Board, at which the non-independent Chairman of the Board is not present, including the Board’s executive sessions of independent directors, and serve as liaison between a non-independent Chairman of the Board and the independent directors. The independent Chairman or, if the Chairman is not independent, the Lead Director will approveapproves Board meeting agendas, including approving meeting schedules to assure that there is sufficient time for discussion of all agenda items, and other information sent to the Board, adviseadvises the committee chairs with respect to agendas and information needs relating to committee meetings, and performperforms other duties as the Board may from time to time delegate to assist the Board in fulfilling its responsibilities. The Lead Director, if any, will serve for a term as the Board determines but not less than one year. The independent directors may meet without management present at any other times as determined by the independent Chairman, or Lead Director, as applicable.
Succession Planning
The Board is actively engaged and involved in talent management. The Board reviews the Company’s people strategy in support of its business strategy at least annually. This includes a detailed discussion of the Company’s leadership bench and succession plans with a focus on key positions at the senior leadership level. Annually, the CEO provides the Board with an assessment of senior executives and their potential to succeed him, and an assessment of persons considered successors to senior executives. The Nominating and Governance Committee also recommends policies regarding succession in the event of an emergency impacting the CEO or the planned retirement of the CEO. Strong potential leaders are given exposure and visibility to Board members through formal presentations and informal events. More broadly, the Board is regularly updated on key talent indicators for the overall workforce, including diversity, recruiting and development programs.
Director Education
To foster our value of always learning – always teaching, the Corporate Governance Guidelines encourage director education. TheUpon initial election to the Board of Directors, the Company’s management conducts an orientation program of materials and briefing sessions to educate new directors about the Company’s business and other topics to assist them in carrying out their duties. Directors may also attend a variety of external continuing education programs of their own selection at the Company’s expense. In addition, the Board receives regular updates from management and external experts regarding new developments in corporate governance.governance, legal developments or other appropriate topics from time to time.
Board Role in Oversight of Risk Management
The ultimate responsibility for risk oversight rests with the Board. The Board assesses major risks facing the Company and reviews options for their mitigation. Each Committee of the Board reviews the policies and practices developed and implemented by management to assess and manage risks relevant to the Committee’s responsibilities, and reports to the Board about its discussions.
The Audit Committee, among other responsibilities, oversees the Company’s financial reporting processes and internal controls, including the process for assessing risk of fraudulent financial reporting and significant financial risk exposures, and the steps management has taken to monitor and report those exposures. In addition to its other duties, the Audit Committee oversees the Company’s policies and procedures regarding compliance with applicable laws and regulations and the Company’s CodeCodes of Business Conduct and Ethics. The Audit Committee also oversees the Company’s enterprise risk management (ERM) process and the comprehensive assessment of key financial, operational and regulatory risks identified by management.management, including cybersecurity and data protection risks. The Audit Committee discusses ERM with the full Board, which is ultimately responsible for oversight of this process.
The Compensation Committee (i) provides oversight of the risks associated with the Committee responsibilities in its charter; (ii) reviews ourThe Company’s incentive and other compensation arrangements to confirm that compensation does not encourage unnecessary or excessive risk taking and reviews and discusses, at least annually, the relationship between risk
management policies and practices, corporate strategy and executive compensation; and (iii) discusses with the Company’s management the results of its review and any disclosures required by Item 402(s) of Regulation S-K relating to the Company’s compensation risk management.
The Finance Committee oversees the Company’s major financial risk exposures and management’s monitoring, mitigation activities and policies in connection with financial risk, including: capital structure; investment portfolio, including employee benefit plan investments; financing arrangements, credit and liquidity; proposed major transactions, such as mergers, acquisitions, reorganizations and divestitures; share repurchase programs; hedging or use of derivatives; commodity risk management; cash investment; liquidity management; short-term borrowing programs; interest rate risk; foreign exchange risk; off balance sheet arrangements, if any; proposed material financially-related amendments to the Company’s indentures, bank borrowings and other instruments; and reputational risk to the extent such risk arises from the topics under discussion. The Finance Committee also reviews for adequacy the insurance coverage on the Company’s assets.
The Nominating and Governance Committee oversees risks related to the Company’s corporate governance; director succession planning; political and charitable contributions; insider trading; and reputational risk to the extent such risk arises from the topics under discussion.
Compliance and Ethics Office and Codes of Business Conduct and Ethics
Our Compliance and Ethics Office (Compliance Office), with the support of our management and Board, aims to ensure that all of our employees, business partners, franchisees and suppliers adhere to high ethical business standards, and is under the direction of our Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary. At the core of the Compliance Office is our Code of Business Conduct and Ethics that applies to all Company employees (Employee Code of Conduct). It addresses many topicsWe also have a Code of Ethics for CEO and Senior Financial Officers (CEO and Senior Financial Officer Code of Ethics) that highlights specific responsibilities of our CEO and senior financial officers. We also haveofficers, and a Code of Business Conduct and Ethics for the membersMembers of ourthe Board of Directors.Directors (the Board Code of Conduct, and together with the Employee Code of Conduct and the CEO and Senior Financial Officer Code of Ethics, our Codes of Business Conduct and Ethics). A major objective of the Compliance Office
is to educate and raise awareness of our Employee Code of Conduct, applicable regulations, and related policies. Our Employee CodeCodes of Business Conduct isand Ethics are posted on our website at www.darden.com under Investor Relations — Corporate Governance. We require all of our officers, director leveldirector-level employees, and certain other employees to complete an annual training course and certification regarding compliance with the Employee Code of Conduct and other Company policies. Any amendment to, or waiver of, the Codes of Business Conduct and Ethics as they relate to a member of the Board of Directors, the CEO, the Chief Financial Officer, any senior financial officer or any executive officer listed in the “Stock Ownership of Management” table on p. 25 will be disclosed promptly by posting such amendment or waiver on our website at www.darden.com under Investor Relations — Corporate Governance.
We promote ethical behavior by encouraging our employees to talk to supervisors or other personnel when in doubt about the best course of action in a particular situation. To encourage employees to raise questions and report possible violations of laws or our Employee CodeCodes of Business Conduct and Ethics, we will not allow retaliation for reports made in good faith. We also provide a confidential hotline to allow employees to confidentially, anonymously report concerns regarding questionable accounting behavior. We are also committed to promoting compliance and ethical behavior by the third parties with whom we conduct business, and have implemented Codes of Business Conduct that are acknowledged by our international franchisees and certain suppliers.
PROPOSALS TO BE VOTED ON
PROPOSAL 1 — ELECTION OF EIGHT DIRECTORS FROM THE NAMED
DIRECTOR NOMINEES
Our Board of Directors currently has eight members, and each director stands for election every year. Following a successful year for the Company in fiscal 2017, the Board of Directors is not recommending any changes to the Board of Directors’ size or composition at the 2017 Annual Meeting of Shareholders.
The Nominating and Governance Committee believes that an eight member Board of Directors is currently appropriate for Darden. In keeping with good governance practices, the Board will continue to seek a diversity of talent and experience to draw upon and to ensure its ability to appropriately staff committees of the Board. The Board also will continue to self-evaluate and to consider various matters as to its size. As appropriate, the Board may determine to increase or decrease its size, including in order to accommodate the availability of an outstanding candidate.
The following eight directorsdirector nominees are standing for election at this year 2020 Annual Meeting of Shareholdersto hold office until the 20182021 Annual Meeting of Shareholders or until their successors are elected and qualified. All were nominated at the recommendation of our Nominating and Governance Committee and all have previously served on the Board. Each of the director nominees has consented to being named in this Proxy Statement and to serve as a director if elected. If a director nominee is not able to serve, proxies may be voted for a substitute nominated by the Board. However, we do not expect this to occur.
Your Board recommends that you vote FOR each of the nominees to the Board.
Board Nominees
The following information is as of the date of this Proxy Statement. Included is information provided by each director,nominee, such as his or her age, all positions currently held, principal occupation and business experience for the past five years, and the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years. In addition to the specific information presented below regarding the experience, qualifications, attributes and skills that led our Board to the conclusion that the nominee should serve as a director, we also believe that each of our director nominees has a reputation for integrity, honesty and adherence to high ethical standards. Darden’s mission is to be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. This mission is supported by our core values of integrity and fairness, respect and caring, diversity, always learning – always teaching, being “of service,” teamwork and excellence. As noted in our Corporate Governance Guidelines, our directors should reflect these core values, possess the highest personal and professional ethics, and be committed to representing the long-term interests of our shareholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment.
MARGARET SHÂN ATKINS
Director since 2014.
Ms. M. Shân Atkins, age 60, is a retired consumer and retail executive. She was most recently Co-Founder and Managing Director of Chetrum Capital LLC, a private investment firm, a position she held from 2001 through 2017. Prior to founding Chetrum, she spent most of her executive career in the consumer/retail sector, including various positions with Sears, Roebuck & Co., a major North American retailer where she was promoted to Executive Vice President in 1999 and fourteen years with Bain & Company, an international management consultancy, where she was a leader in the global consumer and retail practice. She began her career as a public accountant at what is now PricewaterhouseCoopers LLP, a major accounting firm, and holds designations as a Chartered Professional Accountant and Chartered Accountant (Ontario) and as a Certified Public Accountant (Illinois). Ms. Atkins currently serves on the board of directors of SpartanNash Company, a national grocery wholesaler/retailer and distributor of food products to the worldwide U.S. military commissary system, SunOpta, Inc., a North American manufacturer of natural and organic food products, and LSC Communications, a leading provider of long and short-run printing services to the book, catalog and magazine publishing industries. She previously served on the boards of directors of The Pep Boys - Manny, Moe & Jack, an operator of automotive parts and service stores from 2004 to 2015, Tim Hortons, a leading North American quick-serve restaurant chain from 2007 to 2014, Shoppers Drug Mart Corporation, a Canadian drugstore chain from 2005 to 2012, and Chapters, Inc., a Canadian bookstore chain from 1999 to 2001.
The Nominating and Governance Committee concluded that Ms. Atkins is qualified and should serve, in part, because of her retail industry, operations, strategic planning and financial expertise, and public-company director experience.
BRADLEY D. BLUM
Director since 2014.
Mr. Blum, age 63, has served as CEO for several major brands and companies in the restaurant industry. Since September 2005, Mr. Blum has served as Founder and CEO of BLUM Enterprises, LLC, a restaurant company focused on restaurant strategy, concept development, and investing. Mr. Blum served on the Supervisory Board of AmRest Holdings SE, a publicly traded global fast-food and casual dining operator with six different restaurant brands, from July 2013 through September 2015. In May 2012, Mr. Blum co-founded FIVE TO SEVEN, a transatlantic partnership, whose mission is to provide Good Food for the Planet™. In January 2012, Mr. Blum became board director, strategic partner and investor at LEON Restaurants, an international restaurant group offering seasonal, naturally fast food. Prior to that, Mr. Blum served as CEO of Romano’s Macaroni Grill, an Italian casual dining restaurant chain, from December 2008 through July 2010. Mr. Blum served as CEO of the global fast food enterprise Burger King Corporation from December 2002 through July 2004. Mr. Blum served as President of the Company’s Olive Garden brand from December 1994 through March 2002, after which he served as Vice Chairman of the Company through December 2002. While at the Company, Mr. Blum served on our Board of Directors from September 1997 through December 2002. Mr. Blum helped launch Cereal Partners Worldwide, a 50/50 global joint venture between Nestlé and General Mills focused on breakfast cereals, serving from 1990 through 1994 as Senior Vice President of Marketing and having operating responsibilities for various countries in Western Europe. Prior to that, Mr. Blum progressed through various marketing and brand management executive positions in the U.S. from 1978 through 1990 for General Mills, Inc., an American multinational manufacturer and marketer of branded consumer goods.
The Nominating and Governance Committee concluded that Mr. Blum is qualified and should serve, in part, because of his extensive executive leadership experience in the restaurant industry and his operating, branding and turnaround expertise, including his success and familiarity with our Company during his previous tenure on the Board.
JAMES P. FOGARTY
Director since 2014.
Mr. Fogarty, age 49, was the CEO and a director of Orchard Brands, a multi-channel marketer of apparel and home products, from November 2011 until its sale in July 2015, at which time he became a Senior Advisor to Bluestem Group Inc., the acquirer of Orchard Brands, through October 2015. Prior to that, Mr. Fogarty was a private investor from November 2010 to November 2011. From April 2009 until November 2010, Mr. Fogarty was President, CEO and director of Charming Shoppes, Inc., a multi-brand, specialty apparel retailer. Other prior executive positions held by Mr. Fogarty include Managing Director of Alvarez & Marsal, an independent global professional services firm, from August 1994 until April 2009, President and COO of Lehman Brothers Holdings (subsequent to its Chapter 11 bankruptcy filing) from September 2008 until April 2009, President and CEO of American Italian Pasta Company, the largest producer of dry pasta in North America from September 2005 through February 2008, CFO of Levi Strauss & Co., a brand-name apparel company from 2003 until 2005, and from December 2001 through September 2003, he served as Senior Vice President and CFO and for a period as a director of The Warnaco Group, a global apparel maker. Mr. Fogarty has also served as Chairman of the Board of Depomed Inc., a specialty pharmaceutical company, since October 2016. From October 2011 through September 2015, Mr. Fogarty served as a director of Regis Corporation, which owns, operates and franchises hair and retail product salons.
The Nominating and Governance Committee concluded that Mr. Fogarty is qualified and should serve, in part, because of his operational and turnaround experience, and his significant executive officer and director experience at a variety of public and private companies.
CYNTHIA T. JAMISON
Director since 2014.
Ms. Jamison, age 57, was the CFO of AquaSpy, Inc., a soil moisture monitoring irrigation company, from 2009 to 2012, when she retired. From 1999 to 2009, she was a partner with Tatum, LLC, an executive services firm focused exclusively on providing CFO support to public and private companies. Prior to joining Tatum, she served as CFO of Chart House Enterprises (later AM-CH, Inc.), a publicly traded restaurant company, from May 1998 until March 1999 and previously held various CFO or COO positions at Allied Domecq Retailing USA, a spirits, wine and quick-service restaurant operator, Kraft General Foods, a food and beverage company, and Arthur Andersen LLP, a major accounting firm. Since 2002, Ms. Jamison has served as a member of the board of directors for Tractor Supply Company, an operator of retail farm and ranch stores, where she currently serves as Non-Executive Chairman. Ms. Jamison has also served as a director of Office Depot, Inc., a global supplier of office products and services, since August 2013, and Big Lots, Inc., a discount retailer, since May 2015. Ms. Jamison’s experience includes her past |
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| MARGARET SHÂN ATKINS |
| Career: Ms. Atkins is a retired consumer and retail executive. She was most recently Co-Founder and Managing Director of Chetrum Capital LLC, a private investment firm, a position she held from 2001 through 2017. Prior to founding Chetrum, she spent most of her executive career in the consumer/retail sector, including various positions with Sears, Roebuck & Co., a major North American retailer where she was promoted to Executive Vice President in 1999, and fourteen years with Bain & Company, an international management consultancy, where she was a leader in the global consumer and retail practice. She began her career as a public accountant at what is now PricewaterhouseCoopers LLP, a major accounting firm, and holds designations as a Chartered Professional Accountant and Chartered Accountant (Ontario) and as a Certified Public Accountant (Illinois). |
Age 63 Independent Director Director since 2014 | Current Public Directorships: Ÿ SpartanNash Company, a national grocery wholesaler/retailer and distributor of food products to the worldwide U.S. military commissary system, since 2003 Ÿ LSC Communications, Inc., a leading provider of long and short-run printing services to the book, catalog and magazine publishing industries, since 2016 Ÿ Aurora Cannabis, Inc., one of the world’s largest and leading cannabis companies, since 2019 |
Darden Committees: Audit Nominating and Governance | Prior Public Board Service Within the Past Five Years: Ÿ The Pep Boys - Manny, Moe & Jack, an operator of automotive parts and service stores, from 2004 to 2015 Ÿ SunOpta, Inc., a North American manufacturer of natural and organic food products, from 2014 to 2019 |
| Qualifications: The Nominating and Governance Committee concluded that Ms. Atkins is qualified and should serve, in part, because of her retail industry, operations, strategic planning and financial expertise, and public-company director experience. |
service as a director of several other companies including: B&G Foods, Inc., a manufacturer of high quality, shelf-stable food and household products,Horizon Organic Holdings, an organic dairy producer and marketer, Cellu Tissue, Inc., a paper products producer, and Caribe Media, a communications company in the Dominican Republic. |
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| JAMES P. FOGARTY |
| Career: Mr. Fogarty has been the CEO at FULLBEAUTY Brands, Inc., a privately-held branded multi-channel retailer focused on fashion apparel and home goods for plus-sized women and men, since June 2019. Previously, he was the CEO and a director of Orchard Brands, a multi-channel marketer of apparel and home products, from 2011 until its sale in 2015, at which time he became a Senior Advisor to Bluestem Group Inc., the acquirer of Orchard Brands, through 2015. Prior to that, Mr. Fogarty was a private investor from 2010 to 2011. From 2009 until 2010, Mr. Fogarty was President, CEO and director of Charming Shoppes, Inc., a multi-brand, specialty apparel retailer. Other prior executive positions held by Mr. Fogarty include Managing Director of Alvarez & Marsal, an independent global professional services firm, from 1994 until 2009, President and COO of Lehman Brothers Holdings (subsequent to its Chapter 11 bankruptcy filing) from 2008 until 2009, President and CEO of American Italian Pasta Company, the largest producer of dry pasta in North America, from 2005 through 2008, CFO of Levi Strauss & Co., a brand-name apparel company, from 2003 until 2005, and from 2001 through 2003, he served as Senior Vice President and CFO and for a period as a director of The Warnaco Group, a global apparel maker. |
Age 52 Independent Director Director since 2014 | Current Public Directorships: None |
Darden Committees: Compensation (Chairperson) Finance | Prior Public Board Service Within the Past Five Years: Ÿ Regis Corporation, owner and franchisor of hair and retail product salons, from 2011 to 2015 Ÿ Assertio Therapeutics, Inc. (formerly known as Depomed Inc.), a specialty pharmaceutical company, Chairman of the Board from 2016 to 2020 through its merger with Zyla Life Sciences |
| Qualifications: The Nominating and Governance Committee concluded that Mr. Fogarty is qualified and should serve, in part, because of his operational and turnaround experience, and his significant executive officer and director experience at a variety of public and private companies. |
The Nominating and Governance Committee concluded that Ms. Jamison is qualified and should serve, in part, because of her status as a financial expert and experienced audit committee member and chair, senior management, leadership, financial and strategic planning, corporate governance and public company executive compensation experience.
EUGENE I. (GENE) LEE, JR. |
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| CYNTHIA T. JAMISON |
| Career: Ms. Jamison is a retired turnaround CFO. She most recently served as CFO of AquaSpy, Inc. from 2010 to 2013. Prior to AquaSpy she held six other CFO and/or COO roles in both public and private companies as a Partner with Tatum, LLC, an executive services firm focusing exclusively on providing interim CFO Services to public and private equity companies. She also led the CFO Practice at Tatum for four years where she had responsibility for over 300 CFO Partners and sat on the firm’s Operating Committee. Prior to joining Tatum, she served as CFO of Chart House Enterprises, a publicly traded restaurant company, from 1998-1999 and previously held various executive positions at Allied Domecq Retailing USA, Kraft General Foods, and Arthur Andersen. She holds the designation of Certified Public Accountant (Illinois); in addition, she is an NACD Fellow and a frequent faculty member at NACD Master Classes. |
Age 60 Independent Director Director since 2015.
Mr. Lee, age 56, has been our President and CEO since February 2015. Prior to that, Mr. Lee served as President and Interim CEO since October 2014 and as President and COO of the Company from September 2013 to October 2014. He served as President, Specialty Restaurant Group from our acquisition of RARE in October 2007 to September 2013. Prior to the acquisition, he served as RARE’s President and COO from January 2001 to October 2007. From January 1999 until January 2001, he served as RARE’s Executive Vice President and COO. Since November 2015, Mr. Lee has served as a director of Advance Auto Parts, Inc., a leading automotive aftermarket parts provider in North America.
The Nominating and Governance Committee concluded that Mr. Lee is qualified and should serve, in part, because of his extensive senior management and leadership experience with our Company.
NANA MENSAH
Director since 2016.
Mr. Mensah, age 65, has been the Chairman and Chief Executive Officer of 'XPORTS, Inc., a privately held company that exports food packaging and food processing equipment to distributors and wholesalers outside of the United States, since January 2005, and previously served as Chief Executive Officer during 2003 and from 2000 through 2002. He has extensive experience as a restaurant operations executive including serving as the Chief Operating Officer of Church's Chicken, a division of AFC Enterprises, Inc. and one of the world's largest quick-service restaurant chains, from August 2003 to December 2004, and as President and Chief Operating Officer of Long John Silver's Restaurants, Inc., the world's largest chain of seafood quick-service restaurants, from 1997 until it was sold in October 1999. Additionally, Mr. Mensah has served as President, U.S. Tax Services of H&R Block Inc., a tax, mortgage and financial services company, from January 2003 until March 2003. Since 2004, Mr. Mensah has served on the board of directors of Reynolds American, Inc. (RAI), the parent company of R.J. Reynolds Tobacco Company, the second-largest U.S. tobacco company, and of other companies that manufacture or sell tobacco, smokeless tobacco, nicotine replacement therapy and digital vapor products. Mr. Mensah served on the board of directors of R.J. Reynolds Tobacco Holdings, Inc., a wholly owned subsidiary of RAI and formerly a publicly traded company, referred to as RJR, from June 1999 to July 2004.
The Nominating and Governance Committee concluded that Mr. Mensah is qualified and should serve, in part, because of his extensive experience in the restaurant industry, including operating, turnaround, international and mergers and acquisitions and his experience as a public company director.
WILLIAM S. SIMON
Director since 2014.
Mr. Simon, age 57, served as Executive Vice President of Wal-Mart Stores, Inc., a global retailer, and as President and CEO, Walmart U.S., the largest division of Wal-Mart Stores, Inc., which consists of retail department stores, from July 2010 to August 2014. Previously, he served as Executive Vice President and COO of Walmart U.S. from March 2007 to June 2010 and Executive Vice President of Professional Services and New Business Development from March 2006 to March 2007. Prior to joining Walmart, Mr. Simon held senior executive positions at Brinker International, Inc., a casual dining restaurant company, Diageo North America, Inc., a multinational alcoholic beverages company, and Cadbury Schweppes plc, a multinational confectionery company. Mr. Simon also served as Secretary of the Florida Department of Management Services and served 25 years in the U.S. Navy and Naval Reserves. Mr. Simon previously served on Darden’s Board of Directors from 2012 until 2014 and rejoined the Board of Directors in October 2014. He was elected to the board of directors for Agrium, Inc., an agricultural products manufacturer and retailer, in February 2016. Mr. Simon was elected to the board of directors for Chico’s FAS, an apparel retailer, in July 2016.
| Current Public Directorships: Ÿ Tractor Supply Company (Non-Executive Chairman),an operator of retail farm and ranch stores, director since 2002 Ÿ Office Depot, Inc., a global supplier of office products and services, since 2013 Ÿ Big Lots, Inc., a discount retailer, since 2015 |
Darden Committees: Audit (Chairperson) Compensation Finance | Prior Public Board Service Within the Past Five Years: Ÿ B&G Foods, Inc., a manufacturer of high quality, shelf-stable food and household products, from 2004 to 2015 |
| Qualifications: The Nominating and Governance Committee concluded that Ms. Jamison is qualified and should serve, in part, because of her status as a financial expert and experienced audit committee member and chair, as well as her senior management, leadership, financial and strategic planning, corporate governance and public company executive compensation experience. |
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| EUGENE I. LEE, JR. |
| Career: Mr. Lee has served as the Company’s President and CEO since 2015. Prior to that, Mr. Lee served as President and Interim CEO since October 2014, and as President and COO of the Company from September 2013 to October 2014. He served as President, Specialty Restaurant Group from our acquisition of RARE from 2007 to 2013. Prior to the acquisition, he served as RARE’s President and COO from 2001 to 2007. From 1999 until 2001, he served as RARE’s Executive Vice President and COO. |
Age 59 President and Chief Executive Officer
Director since 2015 | Current Public Directorships: Ÿ Advance Auto Parts, Inc. (independent Chair of the Board), a leading automotive aftermarket parts provider in North America, director since 2015 |
Darden Committees: None | Prior Public Board Service Within the Past Five Years: None |
| Qualifications: The Nominating and Governance Committee concluded that Mr. Lee is qualified and should serve, in part, because of his extensive senior management and leadership experience with our Company. |
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| NANA MENSAH |
| Career: Mr. Mensah has been the Chairman and Chief Executive Officer of 'XPORTS, Inc., a privately held company that exports food packaging and food processing equipment to distributors and wholesalers outside of the United States, since 2005, and previously served as Chief Executive Officer during 2003 and from 2000 through 2002. He has extensive experience as a restaurant operations executive including serving as the Chief Operating Officer of Church’s Chicken, a division of AFC Enterprises, Inc. and one of the world’s largest quick-service restaurant chains, from 2003 to 2004, and as President and Chief Operating Officer of Long John Silver’s Restaurants, Inc., the world’s largest chain of seafood quick-service restaurants, from 1997 until it was sold in 1999. Additionally, Mr. Mensah has served as President, U.S. Tax Services of H&R Block Inc., a tax, mortgage and financial services company, from January 2003 until March 2003. |
Age 68 Independent Director Director since 2016 | Current Public Directorships: None |
Darden Committees: Compensation Finance (Chairperson) | Prior Public Board Service Within the Past Five Years: Ÿ Reynolds American, Inc., the parent company of R.J. Reynolds Tobacco Company, the second-largest U.S. tobacco company, and of other companies that manufacture or sell tobacco, smokeless tobacco, nicotine replacement therapy and digital vapor products, from 2004 to 2017 |
| Qualifications: The Nominating and Governance Committee concluded that Mr. Mensah is qualified and should serve, in part, because of his extensive experience in the restaurant industry, including operating, turnaround, international and mergers and acquisitions and his experience as a public company director. |
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| WILLIAM S. SIMON |
| Career: Mr. Simon has been Senior Advisor to KKR & Co., an investment firm, since 2014, and President of WSS Venture Holdings, LLC, a consulting and investment company, since 2014. Mr. Simon is the former Executive Vice President of Wal-Mart Stores, Inc., a global retailer, and former President and CEO of Walmart U.S., the largest division of Wal-Mart Stores, Inc., which consists of retail department stores, from 2010 to 2014. Mr. Simon also served as Executive Vice President and COO of Walmart U.S. from 2007 to 2010 and Executive Vice President of Professional Services and New Business Development from 2006 to 2007. Prior to joining Walmart, Mr. Simon held senior executive positions at Brinker International, Inc., a casual dining restaurant company, Diageo North America, Inc., a multinational alcoholic beverages company, and Cadbury Schweppes plc, a multinational confectionery company. Mr. Simon also served as Secretary of the Florida Department of Management Services and served 25 years in the U.S. Navy and Naval Reserves. |
Age 60 Independent Director Director since 2014; previously served from 2012 until 2014 and rejoined in October 2014 | Current Public Directorships: Ÿ Chico’s FAS, Inc., an apparel retailer, since 2016 Ÿ GameStop Corp., a global video game retailer, since 2020 |
Darden Committees: Audit Nominating and Governance (Chairperson) | Prior Public Board Service Within the Past Five Years: Ÿ Agrium, Inc., an agricultural products manufacturer and retailer (now Nutrien, Ltd.), from 2016 to 2017 Ÿ Anixter International, Inc., a global distributor of communication and security products, electrical wire and cable, from 2019 to 2020 |
| Qualifications: The Nominating and Governance Committee concluded that Mr. Simon is qualified and should serve, in part, because of his senior level executive experience in large, complex, retailing and global brand management companies and his extensive experience in retail operations, food service and restaurants, as well as consumer packaged goods. |
CHARLES M. (CHUCK) SONSTEBYDirector since 2014.
Mr. Sonsteby, age 63, is currently Chairman of our Board. He was elected the Vice Chairman of The Michaels Companies, Inc., the largest arts and crafts specialty retailer in North America and parent company of Michaels Stores, Inc., in June 2016. He had served as CFO and Chief Administrative Officer of that company and its predecessor from October 2010 to August 2016. Prior to that, Mr. Sonsteby served as the CFO and Executive Vice President of Brinker International, Inc., a casual dining restaurant company, from May 2001 to October 2010. He joined Brinker in 1990 as Director of the Tax, Treasury and Risk Management departments and thereafter served in various capacities, including as Senior Vice President of Finance from 1997 to 2001 and as Vice President and Treasurer from 1994 to 1997. Mr. Sonsteby was elected to the board of directors of Valvoline, Inc., a producer and distributor of industrial and automotive lubricants and automotive chemicals, in September 2016. Mr. Sonsteby previously served on the board of directors of Zale Corporation, a specialty retailer of diamond and other jewelry products in North America, from November 2006 to February 2011. |
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| CHARLES M. SONSTEBY |
| Career: Mr. Sonsteby is the retired Vice Chairman of The Michaels Companies, Inc., the largest arts and crafts specialty retailer in North America and parent company of Michaels Stores, Inc., a role he held from June 2016 until his retirement in October 2017. He had served as CFO and Chief Administrative Officer of that company and its predecessor from 2010 to 2016. Prior to that, Mr. Sonsteby served as the CFO and Executive Vice President of Brinker International, Inc., a casual dining restaurant company, from 2001 to 2010. He joined Brinker in 1990 as Director of the Tax, Treasury and Risk Management departments and thereafter served in various capacities, including as Senior Vice President of Finance from 1997 to 2001 and as Vice President and Treasurer from 1994 to 1997. |
Age 66 Independent Director Chairman of the Board
Director since 2014 | Current Public Directorships: Ÿ Valvoline, Inc., a producer and distributor of industrial and automotive lubricants and automotive chemicals, since 2016 |
Darden Committees: None | Prior Public Board Service Within the Past Five Years: None |
| Qualifications: The Nominating and Governance Committee concluded that Mr. Sonsteby is qualified and should serve, in part, because of his restaurant operations and executive leadership experience with several major brands, and his experience as a public company director. |
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| TIMOTHY J. WILMOTT |
| Career: Mr. Wilmott is the retired Chief Executive Officer of Penn National Gaming, Inc., an operator or owner of gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment, a role he held from 2013 until his retirement in December 2019. Prior to that, Mr. Wilmott served as President and Chief Operating Officer from 2008 to 2013. Prior to joining Penn National Gaming, Mr. Wilmott served as Chief Operating Officer of Harrah’s Entertainment, Inc. (now Caesars Entertainment, Inc.) from 2003 through 2007 and Division President, Eastern Division from 1997 to 2003. Prior to that, Mr. Wilmott held various management positions at Harrah’s properties from 1988 through 1997. |
Age 62 Independent Director Director since 2018 | Current Public Directorships: None
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Darden Committees: Compensation Nominating and Governance | Prior Public Board Service Within the Past Five Years: Ÿ Penn National Gaming, Inc., from 2014 to 2019 |
| Qualifications: The Nominating and Governance Committee concluded that Mr. Wilmott is qualified and should serve, in part, because of his entertainment business operations and executive leadership experience, and his experience as a public company director. |
PROPOSAL 2 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION
In accordance with SEC rules, the Board asks shareholders for advisory approval of the Company’s executive compensation on an annual basis. Accordingly, we are asking our shareholders to provide an advisory, nonbinding vote to approve the compensation awarded to our NEOs, as we have described it in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, beginning on pp. 2527 and 36,42, respectively.
As described in detail in the “Compensation Discussion and Analysis” section beginning on p. 25,27, the Compensation Committee oversees the executive compensation program and compensation awarded, adopting changes to the program and awarding compensation as appropriate to reflect Darden’s circumstances and to promote the main objectives of the program. These objectives include: to help us attract, motivate, reward and retain superior leaders who are capable of creating sustained value for our shareholders, and to promote a performance-based culture that is intended to align the interests of our executives with those of our shareholders.
We are asking our shareholders to indicate their support for our NEO compensation. We believe that the information we have provided in this Proxy Statement demonstrates that our executive compensation program was designed appropriately and is working to ensure that management’s interests are aligned with our shareholders’ interests to support long-term value creation.
You may vote for or against the following resolution, or you may abstain. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and procedures described in this Proxy Statement.
Resolved, that the compensation awarded to Darden’s NEOs for fiscal 2017,2020, as disclosed in this Proxy Statement pursuant to SEC rules, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion, is hereby APPROVED.
While this vote is advisory and not binding on our Company, the Board and the Compensation Committee expect to consider the outcome of the vote, along with other relevant factors, when considering future executive compensation decisions.
Your Board recommends that you vote FOR approval of the foregoing resolution.
PROPOSAL 3 — ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
In addition to providing our shareholders with the opportunity to cast an advisory vote on executive compensation, we are also seeking an advisory, nonbinding vote on how frequently future advisory votes on executive compensation should be presented to shareholders, as required by SEC rules.
You may vote to hold the advisory vote held every one year (i.e. annually), two years or three years, or you may abstain. While this vote is advisory and not binding on our Company, the Board expects to take into account the outcome of the vote, along with other relevant factors, when considering future advisory votes on executive compensation.
After careful consideration and dialogue with our shareholders, the Board has determined that holding an advisory vote on executive compensation every year continues to be the most appropriate policy for the Company at this time, and recommends that shareholders vote for future advisory votes on executive compensation to occur every year. Shareholders currently provide annual say-on-pay advisory votes. Further, an annual say-on-pay vote is consistent with certain other existing practices where we evaluate or respond to internal dynamics, the competitive market, governance requirements and best practices, and investor preferences, such as:
Our practice of electing all directors annually;
Our practice of annually providing shareholders the opportunity to ratify the Audit Committee’s selection of independent auditors;
Our disclosure of executive compensation matters annually as required in our Proxy Statement, even though executive compensation programs are designed to promote a long-term connection between pay and performance; and
Certain other executive compensation policies and practices.
Your Board of Directors recommends that you vote for advisory votes on executive compensation to be held every ONE YEAR (i.e. annually).
PROPOSAL 43 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board is responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm. The Audit Committee has appointed KPMG LLP (KPMG) as our independent registered public accounting firm for the fiscal year ending May 27, 2018.30, 2021. KPMG has served as our independent registered public accounting firm continuously since 1995.1996.
The Audit Committee annually reviews KPMG’s qualifications, performance, independence and fees in making its decision whether to engage KPMG. The focus of the process is to select and retain the most qualified firm to perform the annual audit. During the review and selection process, the Audit Committee considers a number of factors, including:
Recent and historical KPMG audit performance;
The relevant experience, expertise and capabilities of KPMG and our specific audit engagement team in relation to the nature and complexity of our business;
A review of KPMG’s independence and internal quality controls;
Any legal or regulatory proceedings that raise concerns about KPMG ’sKPMG’s qualifications or ability to continue to serve as our independent auditor, including reports, findings and recommendations of the Public Company Accounting Oversight Board (PCAOB);
The appropriateness of KPMG’s fees for audit and non-audit services; and
The length of time that KPMG has served as our independent auditor, the benefits of maintaining a long-term relationship and controls and policies for ensuring that KPMG remains independent.
In order to assure continuing auditor independence, in conjunction with the assessment above and the mandated rotation of the audit firm’s lead engagement partner, the Audit Committee and its chairperson are directly involved when the selection of a new lead engagement partner is required. In addition, the Audit Committee is responsible for the audit fee negotiations with KPMG.
Based on its annual review, the Audit Committee and the Board believe that the continued retention of KPMG to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders.
Shareholder approval of this appointment is not required, but the Board is submitting the selection of KPMG for ratification in order to obtain the views of our shareholders. If the appointment is not ratified, the Audit Committee will reconsider its selection. Even if the appointment is ratified, the Audit Committee, which is solely responsible for appointing and terminating our independent registered public accounting firm, may in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. Representatives of KPMG are expected to be presentin attendance online at the Annual Meeting and will be given an opportunity to make a statement and to respond to appropriate questions by shareholders.
Your Board recommends that you vote FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 27, 2018.30, 2021.
PROPOSAL 5 — SHAREHOLDER PROPOSAL REQUESTING THAT THE COMPANY ADOPT A POLICY TO PHASE OUT ROUTINE USE OF ANTIBIOTICS IN THE MEAT AND POULTRY SUPPLY CHAIN
Green Century Equity Fund, 114 State Street, Suite 200, Boston, MA 01209, beneficial owner of 2,575 of our common shares as of April 13, 2017, has notified us that it intends to present the following proposal for consideration at the Annual Meeting. In accordance with federal securities regulations, we have included the text of the proposal and supporting statement exactly as submitted by the proponent. We are not responsible for the content of the proposal or the supporting statement or any inaccuracies they may contain.
Shareholder Proposal and Supporting Statement
Whereas: The World Health Organization and the Centers for Disease Control and Prevention have reported that antibiotic resistance is a global public health crisis that threatens to overturn many of the medical advances made over the last century. Antibiotic resistance causes 2 million illnesses and 23,000 deaths annually in the U.S., costing the economy $35 billion.
A major contributor to antibiotic resistance is the misuse and overuse of antibiotics in meat and poultry production. Roughly 70 percent of medically important antibiotics in the U.S. are sold for use in livestock. Rather than being used only to treat sick animals, these drugs are often deployed in routine uses - to promote faster growth and prevent disease in crowded, unsanitary farm conditions.
Companies exposed to the routine use of medically important antibiotics through their meat supply chains, and whose policies lag behind peers', may face a number of business risks including reputational damage, loss of market share, and regulatory risk.
Darden Restaurants has publicly committed to phasing out the use of medically important antibiotics for growth promotion by December 2016, citing support of FDA guidelines. However, experts have concluded that these guidelines are not sufficient to address the antibiotic resistance crisis and will have limited impact on total agricultural antibiotic use, as they allow for the continued routine use of antibiotics for disease prevention.
In contrast to Darden, major restaurant brands and producers have taken actions that surpass FDA guidelines. Panera Bread and Chipotle Mexican Grill prohibit most antibiotic use in all livestock supply chains, and McDonald's has successfully phased out all medically important antibiotics from its U.S. chicken supply chain. Perdue Farms, Tyson Foods, Subway, and Chick-fil-A have committed to eliminate all antibiotics in chicken. Wendy’s, KFC, Taco Bell, Starbucks, and Jack in the Box have committed to phasing out routine uses, including disease prevention, of medically important antibiotics in chicken.
In April 2016 and March 2017, a group of investors representing over $2 trillion in assets called on Darden to set timelines to expand its current policy to prohibit all routine uses of medically important antibiotics in its global meat and poultry supply chains.
Consumer preferences are rapidly changing to favor meat raised without antibiotics, potentially presenting growth opportunities for leaders and risking market share for laggards. From 2011 to 2015, sales of antibiotic-free meat grew 28.7 percent while conventional meat grew only 4.6 percent.
Increasing regulatory action may also create new constraints to which companies must adapt. In 2015, California passed a bill restricting routine antibiotic use, including disease prevention, in farm animals. Similar bills have been introduced in other states as well.
Resolved: Shareholders request that Darden Restaurants adopt an enterprise-wide policy to phase out routine uses, including disease prevention, of medically important antibiotics in meat and poultry sources, and report to shareholders at reasonable cost and omitting proprietary information the potential timetables and measures for implementing such a policy.
Board of Directors’ Response
The Board recommends a vote AGAINST this proposal. The Board has carefully considered the proposal and believes that the policy requested by the proposal is unnecessary because:
Darden has a publicly available position on antibiotic use that reflects the need to balance animal well-being, food safety, supply chain security and broader health concerns;
In March 2016, we adopted Food Principles that address the Company’s commitment to the safety and sustainability of our supply chain, which were developed after extensive collaboration between our Company, its suppliers and other stakeholders; and
We believe that adopting the policy requested by the shareholder proponent would not provide tangible benefits to shareholders or our restaurant guests and could put us at a competitive disadvantage by creating the possibility of supply shortages for our key protein menu items or increased costs for our guests.
Darden Position on Antibiotic Use and Our Food Principles
Our ingredients are carefully sourced from suppliers who share Darden’s commitment to maintaining best-in-class food safety, quality, sustainability and ethical business conduct.
Antibiotic use in animals is a complex subject and we acknowledge that our guests want to understand more about where our ingredients come from and how they are produced. Darden continues to study the issue and believes that discussions regarding antibiotic use must reflect a variety of considerations, including an understanding that responsible use of antibiotics is one way farmers keep animals healthy and enhance food safety. The Company consulted extensively with its internal subject matter experts, suppliers and other stakeholders to develop the Darden Food Principles to demonstrate the Company’s commitment to providing our guests with great food that is safely and sustainably sourced. The full text of the Food Principles are posted on the Darden corporate website at https://www.darden.com/citizenship/plate/food-principles.
The very first commitment Darden made under the Food Principles was a commitment to, by December 2016, phase out use of antibiotics for growth promotion in farm animals and require that all of our land-based protein suppliers will only use shared-class antibiotics (i.e. those used for both humans and animals) to treat, prevent and control animal illness under the supervision of a veterinarian. As of January 1, 2017, our suppliers are prohibited by law from using antibiotics important to human medicine for growth promotion of farm animals and we continue to monitor their compliance with this and the other commitments under the Food Principles.
Darden takes animal well-being very seriously. We have a responsibility to ensure that animals are treated with respect and care in the process of providing the nutritious food that is served in our restaurants. Our approach to animal well-being and auditing our suppliers is to ultimately ensure the ‘Five Freedoms’ of care throughout the life of farm animals. This guidance on humane animal treatment directs our practices as well as our selection of, and relationship with, sourcing partners.
In addition to the Food Principles, Darden maintains our Supplier Code of Conduct, which outlines our expectations for our suppliers in areas such as ethical business practices; human rights and labor laws; environmental, health and safety practices; and legal compliance.
We continue to engage with our suppliers on our Food Principles and commitments to our guests, and have reviewed these important values with them. As we make progress in these important areas, we will continue to share updates around antibiotic usage, partially-hydrogenated oils, and animal welfare, including cage-free eggs and gestation crate-free housing systems.
Adopting the Requested Policy Would Not Benefit Shareholders and May Put Us at a Competitive Disadvantage
We have carefully crafted these principles for food sourcing to ensure that we can maintain best-in-class food safety, quality, sustainability and animal well-being. The proposal asks the Company to focus on one small segment of one criteria — certain types of antibiotic use — when sourcing our meat products, without taking into consideration the effect that focusing on that criteria would have on the ability of the Company to continue to maintain best-in-class status in the other areas.
After reviewing the facts and considering (a) the discussions held with stakeholders when we developed our Food Principles, (b) food safety guidelines and (c) laws and regulations, we do not believe that adopting the requested policy would benefit shareholders or our guests. Disrupting the balance of interests inherent in our best-in-class objectives as requested by this proposal would create risk to the safety and stability of our supply chain and increase costs for our protein products, thereby raising prices we must charge our guests and expending Company resources while providing no tangible benefit to shareholders.
We intend to provide periodic updates to stakeholders as we move forward with the implementation of the Food Principles and when we achieve the related commitments. We will continue to provide these updates to the public through ongoing reporting that we post to our website at https://www.darden.com/citizenship/plate/food-principles. We do not believe that a special report to shareholders is necessary or an efficient use of Company resources.
Accordingly, your Board recommends that you vote AGAINST this proposal.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
Meetings. At the 20162019 Annual Meeting, the following seveneight directors were elected to the Company’s Board of Directors: Margaret Shân Atkins, Bradley D. Blum, James P. Fogarty, Cynthia T. Jamison, Eugene I. Lee, Jr., Nana Mensah, William S. Simon, and Charles M. Sonsteby. Nana Mensah was elected to the Company’s Board of Directors in November 2016.Sonsteby and Timothy J. Wilmott.
During the fiscal year ended May 28, 2017,31, 2020, the Board met fivesix times. For the period of his or her Board service in fiscal 2017,2020, each incumbent director attended at least 75 percent of the aggregate of the total number of meetings of the Board and the standing committees on which the director served.
Communications with Board. We believe that communication between the Board, shareholders and other interested parties is an important part of our corporate governance process. To this end, the Board has adopted Shareholder Communication Procedures that are available at www.darden.com under Investor Relations — Corporate Governance. In general, shareholders and other interested parties may send communications to the attention of the Board, any individual director or the non-employee directors as a group, through the Independent Chairman of the Board. Communications may be sent in writing or via email to: Charles M. Sonsteby, Chairman of the Board, Darden Restaurants, Inc., c/o Matthew R. Broad, Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary, 1000 Darden Center Drive, Orlando, Florida 32837, email:chairman@darden.comchairman@darden.com..
The Corporate Secretary will act as agent for the Independent Chairman in facilitating direct communications to the Board. The Corporate Secretary will review, sort and summarize the communications. The Corporate Secretary will not, however, “filter out” any direct communications from being presented to the Independent Chairman without instruction from the Independent Chairman, and in such event, any communication that has been filtered out will be made available to any non-employee director who asks to review it. The Corporate Secretary will not make independent decisions with regard to what communications are forwarded to the Independent Chairman. The Corporate Secretary will send a reply to the sender of each communication acknowledging receipt of the communication.
Identifying and Evaluating Director Nominees. Our Nominating and Governance Committee has adopted a Director Nomination Protocol that, together with our Bylaws, describes in detail the process we use to fill vacancies and add new members to the Board. The Protocol is available at www.darden.com under Investor Relations — Corporate Governance, as Appendix A to the Nominating and Governance Committee charter.
Under the Director Nomination Protocol, in general, while there are no specific minimum qualifications for nominees, any candidate for service on the Board should possess the highest personal and professional ethics and be committed to representing the long-term interests of our shareholders. Director candidates should be committed to our core values (integrity and fairness, respect and caring, diversity, always learning – always teaching, being “of service,” teamwork and excellence) and possesshave an inquisitive and objective perspective, practical wisdom, mature judgment and a wide range of experience in the business world. We also will consider the candidate’s independence under applicable NYSE listing standards and our Corporate Governance Guidelines. In identifying and evaluating nominees for the Board, the Board assesses the background of each candidate in a number of different ways including a wide variety of qualifications, attributes and other factors and recognizes that diverse viewpoints and experiences enhance the Board’s effectiveness. When reviewing and making initial recommendations on new candidates, the Nominating and Governance Committee considers how each prospective member’s unique background, expertise and experience will contribute to the Board’s overall perspective and ability to govern. In identifying or selecting nominees for the Board, the Company’s Corporate Governance Guidelines and the Director Nomination Protocol provide that the Company seeks Board members who will bring to the Board a deep and wide range of experience in the business world and who have diverse problem-solving talents. We seek people who have demonstrated high achievement in business or another field, so as to enable them to provide strategic support and guidance for the Company. The Company strives to maintain a Board that reflects the gender, ethnic, racial and other diversity of our work force and restaurant guests, and also fosters diversity of thought. Recruiting, hiring and nurturing the careers of women and minorities and increasing the diversity of our suppliers are top priorities, and the Company also intends to maintain the diversity of its Board.
The Nominating and Governance Committee will identify potential candidates to recommend to the full Board and a search firm may be engaged to identify additional candidates and assist with initial screening. The Nominating and Governance Committee and the Chairman of the Board will perform the initial screening and review the credentials of all candidates to identify candidates that they feel are best qualified to serve. The Chairman of the Nominating and Governance Committee, working with the Chairman of the Board, will obtain background and reference information, as appropriate, for the candidates under consideration. The Nominating and Governance Committee will review all available information concerning the candidates’ qualifications and,
in conjunction with the Chairman of the Board, will identify the candidate(s) they feel are best qualified to serve on the Company’s Board. The Chairman of the Nominating and Governance Committee, the CEO, and the Chairman of the Board (or the Chairman of the Board’s delegate from the Board) will meet with the leading candidates to further assess their qualifications and fitness, and to determine their interest in joining the Board. Following the meeting, the Board member participants and the Chairman of the Board will make a recommendation concerning the candidate to the Nominating and Governance Committee, which will consider whether to recommend the candidate to the full Board for election.
Director Candidates Recommended by Shareholders. The Nominating and Governance Committee will consider candidates recommended by shareholders. The procedures that shareholders should use to nominate directors are provided in our Bylaws. There are no differences in the manner of evaluation if the nominee is recommended by a shareholder.
Director Attendance at Annual Meeting of Shareholders. Our Corporate Governance Guidelines provide that directors are expected to attend all scheduled Board and committee meetings and the annual meeting of shareholders. Each of the directors standing for reelection this year who werewas then in office attended the 20162019 Annual Meeting.
Board Committees and Their Functions
General. Our Board has four standing committees that operate under charters adopted by the Board: Audit, Compensation, Finance, and Nominating and Governance. Each charter is available at www.darden.com under Investor Relations — Corporate Governance. Copies are available in print free of charge to any shareholder upon written request addressed to our Corporate Secretary. Each member of every committee is an independent director as defined in our Corporate Governance Guidelines, the NYSE listing standards and the Exchange Act requirements. All Board committees have the authority to retain outside advisors. Unless otherwise required by applicable laws, regulations or listing standards, all major decisions are considered by the Board as a whole.
Audit Committee. Our Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee consists of three members: Ms. Jamison as the Chair and Ms. Atkins and Mr. BlumSimon as members.
The Board has determined that Mses. Atkins and Jamison and Mr. BlumSimon are each an “audit committee financial expert” as such term is defined by SEC rules, and therefore possess financial management expertise as required of at least one Audit Committee member by the NYSE listing standards. In addition, the Board has determined that all members of the Audit Committee are financially literate under the NYSE listing standards. The Audit Committee met eight times during fiscal 20172020 and has sole responsibility for appointing and terminating our independent registered public accounting firm. The Audit Committee’s primary purpose is to assist the Board in its oversight responsibilities to shareholders, specifically with respect to:
The integrity of our financial statements;statements and our internal controls over financial reporting;
The qualifications and independence of our independent registered public accounting firm and internal auditing function;
The provision of a channel of communication among the Board, the independent auditor, internal audit function, management and other concerned individuals;
The assistance to the Board in meeting its fiduciary duties to shareholders and the Company;
The performance of our internal audit function and independent registered public accounting firm; and
The risks associated with the foregoing.
Some of the Audit Committee’s specific responsibilities include the following:
Review and discuss the Company’s unaudited quarterly and audited annual financial statements with management and the independent auditor prior to filing the Company’s Quarterly Reports on Form 10-Q or Annual Report on Form 10-K, respectively;
Review with management and the independent auditor the Company’s quarterly and year-end financial results prior to the public release of earnings;
•Directly appoint, retain, compensate, oversee, evaluate and terminate the Company’s independent auditor;
Pre-approve all non-audit services to be performed by the independent auditor, in accordance with the policy regarding such pre-approval adopted by the Audit Committee;
•At least annually consider the independence of the independent auditor;
Oversee the Company’s enterprise risk management process and review and evaluate the policies and practices developed and implemented by management with respect to risk assessment and risk management; and
Establish procedures for receipt, retention and treatment of complaints received by the Company on accounting, internal controls over financial reporting or auditing matters, as well as for confidential, anonymous submissions by Company employees of concerns regarding accounting or auditing matters.
Another purpose of our Audit Committee is to furnish the report required by the SEC’s proxy rules that appears below in this Proxy Statement under the heading “Audit Committee Report.”
Compensation Committee. The Compensation Committee consists of threefour members: Mr. Fogarty as the Chair, and Ms. Jamison and Mr.Messrs. Mensah and Wilmott as members.
The Compensation Committee met sevensix times during fiscal 2017.2020. The primary responsibilities of our Compensation Committee include the following:
Annually review and approve corporate goals and objectives relevant to the CEO’s compensation, evaluate the CEO’s performance in light of those goals and objectives, and make recommendations to the other independent directors who will, together with the Compensation Committee, determine and approve the CEO’s compensation based on this evaluation (the CEO may not be present during any Compensation Committee deliberations or voting with respect to his compensation);
Make recommendations to the other independent directors who will, together with the Compensation Committee, review and approve the compensation for employee directors other than the CEO;
Periodically, as and when appropriate, recommend to the other independent directors who will, together with the Compensation Committee, review and approve the following as they affect the CEO and other employee directors: (a) any employment agreements and severance arrangements; (b) any change in control agreements and change in control provisions affecting any elements of compensation and benefits; and (c) any special or supplemental compensation and benefits, including supplemental retirement benefits and the perquisites provided during and after employment under a “plan” as defined under Item 402(a)(6)(ii) of the SEC’s Regulation S-K;
Review and approve the compensation of and compensation policy for the executive officers and such other employees of the Company and its subsidiaries as directed by the Board, other than the CEO and other employee directors, including but not limited to: (a) the annual base salary level, (b) the annual cash bonus incentive opportunity level under the applicable annual incentive bonus plan, and (c) the long-term incentive opportunity level under the applicable long-term incentive plan for each executive officer (other than the CEO and other employee directors);
Periodically, as and when appropriate, review and approve the following as they affect the executive officers other than the CEO and other employee directors: (a) any employment agreements and severance arrangements; (b) any change in control agreements and change in control provisions affecting any elements of compensation and benefits; and (c) any special or supplemental compensation and benefits, including supplemental retirement benefits and the perquisites provided during and after employment under a “plan” as defined under Item 402(a)(6)(ii) of the SEC’s Regulation S-K;
Annually review and approve the objective performance measures and the performance targets for executive officers participating in the Company’s annual incentive bonus plans and long-term incentive plans and certify the performance results under such measures and targets;
Determine, amend and monitor compliance with the stock ownership guidelines applicable to executive officers and take actions to address any violation of the stock ownership guidelines;
Review and discuss with management the Compensation Discussion and Analysis required to be included in our Proxy Statement and Annual Report on Form 10-K and, based on such review and discussion, make a recommendation to the Board that the Compensation Discussion and Analysis be so included;
Prepare a Compensation Committee Report for inclusion in our Proxy Statement and/or annual Form 10-K;
Monitor the Company’s compliance with the requirements under the Sarbanes-Oxley Act of 2002 relating to the participation of directors and officers in the Company’s compensation and employee benefit plans or programs;
Oversee the Company’s compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and the frequency of such votes, and any applicable requirements under NYSE rules that shareholders approve equity compensation plans;
Provide recommendations to the Board of Directors on compensation-related proposals to be considered at the Company’s annual meeting, including the frequency of advisory votes on executive compensation;
Review and consider the results of any advisory vote on executive compensation and otherwise oversee the Company’s engagement with shareholders on the subject of executive compensation;
Review and make recommendations to the Board with respect to adopting, amending and overseeing the policies and practices related to the Company’s recoupment, or the forfeiture by employees, of incentive compensation;
Establish, terminate, amend or modify Company’s employee benefit plans or programs; and
Provide oversight of the risks associated with the foregoing.
The Compensation Committee may delegate its powerpowers under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan, as amended (the 2015 Plan), to one or more directors, including a director who is also a senior executive officer of Darden, except that the Compensation Committee may not delegate its powers under the 2015 Plan with regard to our executive officers or directors who are subject to Section 16 of the Exchange Act, or in such a manner as would cause the Plan to not comply with the requirements of Section 162(m) of the Internal Revenue Code. Under its charter, the Compensation Committee may delegate any of its administrative responsibilities under our compensation and benefit plans, subject to the applicable rules of the SEC, NYSE and the Internal Revenue Code, to any other person or persons, to the extent permitted by law.
See “Compensation Discussion and Analysis — Process for Determining Fiscal 20172020 Executive Compensation — Independent Consultant” for information with regard to the role of consultant in the Compensation Committee’s decision making process.
Finance Committee. The Finance Committee consists of three members: Mr. SonstebyMensah as the Chair and Messers.Ms. Jamison and Mr. Fogarty and Mensah as members.
The Finance Committee met sixtwo times during fiscal 2017.2020. The primary responsibilities of our Finance Committee are to:
Review financial policies and performance objectives developed by management pertaining to cash flow, capital spending and finance requirements; cash and debt balances, other key credit metrics, and credit ratings; dividend policy; investment criteria, including capital investment hurdle rates; and financial risk management strategies, including hedging and the use of derivatives;
Review significant changes to our capital structure, financial arrangements, capital spending and acquisition and disposition plans and making recommendations as needed to the Board regarding the financial structure, financial condition and financial strategy of the Company including the timing and maturity of debt, terms and interest rates of individual issues; common stock sales, repurchases or splits and any changes in dividends; proposed mergers, acquisitions, divestitures, joint ventures and strategic investments; any material diversification of the Company’s business; and authorization for any material prepayment, redemption or repurchase of debt for the purpose of satisfying sinking fund obligations;
Review the Company’s proposed annual consolidated budget included in its business plan, recommending such budget to the full Board for approval, and periodically reviewing the Company’s performance against such budget as reasonably required or requested by the Board;
Review material banking relationships and lines of credit;
Review the adequacy of the insurance coverage on the Company’s assets;
Review, to the extent material, the financial impact to the Company of existing and proposed compensation and employee benefit programs; and
Review periodic reports onPeriodically assess the effectiveness of the Company’s overall real estate strategy, including significant leasing arrangements, potential impairment issuesinvestor relations program and review of new restaurant strategies and format changes.its interaction with the research analyst community.
Nominating and Governance Committee. The Nominating and Governance Committee consists of three members: Mr. Simon as the Chair and Ms. Atkins and Mr. BlumWilmott as members.
The Nominating and Governance Committee met five times during fiscal 2017.2020. The primary responsibilities of the Nominating and Governance Committee are to:
Identify individuals qualified to become Board members, consistent with criteria approved by the Board, and select, or recommend that the Board select, the director nominees for the next annual meeting of shareholders, or in the case of a vacancy on the Board, recommend an individual to fill such vacancy;
Review and recommend to the Board the appropriate organizational and board leadership structure;
Review the adequacy of our corporate governance principles on a regular basis;
Develop and recommend to the Board a set of corporate governance guidelines applicable to the Company;
Review the Company’s stock ownership guidelines for non-employee directors, recommend to the Board revisions to such guidelines as it deems desirable or appropriate, and monitor compliance with such guidelines;
Oversee the Board’s self-evaluation process, and provide the Board advice regarding Board succession;
Recommend to the Board the membership for each Board committee and any changes to the Board’s committee structure as it deems advisable;
Review the Company’s compliance with SEC and NYSE rules and other applicable legal or regulatory requirements pertaining to corporate governance; and
Provide oversight of the risks associated with the foregoing.
Among the Nominating and Governance Committee’s other specific duties, it also is responsible for:
Reviewing resignations tendered by a director if, in an uncontested election, the director does not receive the vote of at least a majority of the votes cast at any meeting for the election of directors, and recommending to the Board whether to accept or reject the tendered resignation, or whether other action should be taken;
Reviewing and assessing the Company’s environmental and social responsibility policies, goals and programs and making recommendations to management based on such review and assessment; and
Making recommendations to the other independent directors who will, together with the Nominating and Governance Committee, determine and approve the compensation for the non-employee independent directors.
The Nominating and Governance Committee has adopted a Director Nomination Protocol that, together with our Bylaws, describes the process by which we intend to fill vacancies and add new members to the Board. The Protocol is described in more detail above under the subheading “Board of Directors — Identifying and Evaluating Director Nominees.” The Nominating and
Governance Committee also considers questions of possible conflicts of interest involving our directors and our senior executive officers and recommends to the Board those directors determined to satisfy the requirements for “independence” as set forth in our Corporate Governance Guidelines and the NYSE listing standards.
DIRECTOR COMPENSATION
Compensation of Non-Employee Directors
The terms of the Director Compensation Program apply to all directors who are elected to the Board and are not employees of the Company or any of its subsidiaries. Directors who also are our employees do not receive additional compensation for serving on the Board. Shares for equity awards pursuant to the Director Compensation Program are drawn from our shareholder-approved equity compensation plan in effect at the time and pursuant to which we are authorized to grant shares of our common stock and share-based awards to directors. Currently, grants of common stock and share-based awards to directors are made from the 2015 Plan. All of our non-employee directors have been determined by yourthe Board to be independent under applicable NYSE listings standards and our Corporate Governance Guidelines.
Our Nominating and Governance Committee periodically reviews our Director Compensation Program and recommends any changes to the Board for approval. The Nominating and Governance Committee acts with the assistance of Pearl Meyer and Partners, the Board’s independent compensation consultant. Pearl Meyer and Partners provides market data on director compensation programs at comparable companies, including companies in the peer groups described in the “Compensation Discussion and Analysis.”
Current Director Compensation Program
Our current Director Compensation Program, which has been in effect since September 2015,2019, is as follows:
An annual cash retainer of $75,000;
An annual cash retainer for the Chairman of the Board of $30,000;
An annual cash retainer for the Chairs of the Audit, Compensation, Finance and Nominating and Governance Committees of $30,000, $20,000, $15,000 and $15,000, respectively;
set forth below.
An annual cash retainer for the members of the Audit, Compensation, Finance and Nominating and Governance Committees of $15,000, $10,000, $7,500 and $7,500, respectively; and
An annual equity grant, which will be paid 100% in the form of restricted stock units (RSUs) and will have a fair market value of $120,000 |
| |
| Directors receive the following compensation amounts in accordance with each of the roles in which they serve on the Board: |
| All directors: | An annual cash retainer of $85,000. |
| An annual equity grant, which will be paid 100 percent in the form of restricted stock units (RSUs) and will have a fair market value of $150,000 at the date of grant. |
| Committee Chairs: | An annual cash retainer of: |
| Audit | $30,000 |
| Compensation | $20,000 |
| Nominating and Governance | $20,000 |
| Finance | $15,000 |
| Committee Members: | An annual cash retainer of: |
| Audit | $15,000 |
| Compensation | $10,000 |
| Nominating and Governance | $10,000 |
| Finance | $7,500 |
| Chairman of the Board: | An annual cash retainer of $50,000. |
| An annual equity grant, which will be paid 100 percent in the form of RSUs and will have a fair market value of $50,000 at the date of grant. |
The annual cash retainers are due and paid quarterly, in arrears, unless the director elects to defer the payment. Directors may elect to receive, in lieu of their cash compensation, immediately vested RSUs of equal value to the foregone cash fees. If the director chooses to defer payment by receiving RSUs, he or she will receive dividend equivalents on such RSUs. In support of the Company’s response to the COVID-19 pandemic, the Board approved a 50% reduction in the cash compensation payable to directors under the Company’s Director Compensation Program, effective April 13, 2020 through May 31, 2020.
For the annual equity grant delivered in RSUs, the number of RSUs received equals the award value divided by the fair market value of our common stock on the date of grant. The RSUs vest on the earlier of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of shareholders. A director may elect to defer receipt of these RSUs until completion of Board service. Directors receive dividend equivalents on the RSUs to the extent the RSUs vest. The annual cash retainers and equity grants are pro-rated for directors who serve only a portion of the fiscal year.
Each of our directors is required to own the Company’s common shares with a value of at least five times the annual Board cash retainer, with a mandatory hold on all shares until the ownership guideline is achieved. However, the directors may sell enough shares to pay taxes in connection with their awards, even if the ownership guideline has not yet been achieved. As of May 28, 2017,31, 2020, all of the directors were in compliance with the stock ownership guidelines.
The Company reimburses directors for travel to Board meetings and related expenses, and for costs incurred in connection with attending continuing education programs. In addition, the Company provides a dining benefit to our directors because we believe it is important for our directors to experience dining in our restaurants in order to better perform their duties to our Company.
Fiscal 20172020 Compensation of Non-Employee Directors
The table below sets forth, for each person who served as a non-employee director during fiscal 2017,2020, the amount of fees earned or paid in cash, the number of stock awards granted and all other compensation for his or her service in fiscal 2017.2020. Fees earned that were paid in the form of RSUs are detailed in the notes to the table.
| | | Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation ($) | | All Other Compensation ($)(3) | | Total ($) | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation ($) | | All Other Compensation ($)(3) | | Total ($) |
| M. Shân Atkins | | 97,500 |
| | 119,987 |
| | — |
| | — |
| | — |
| | — |
| | 217,487 |
| | 102,342 |
| | 150,013 |
| | — |
| | — |
| | — |
| | — |
| | 252,355 |
|
| Jean M. Birch | | 30,749 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 30,749 |
| |
| Bradley D. Blum | | 97,500 |
| | 119,987 |
| | — |
| | — |
| | — |
| | — |
| | 217,487 |
| |
| James P. Fogarty | | 102,500 |
| | 119,987 |
| | — |
| | — |
| | — |
| | — |
| | 222,487 |
| | 105,469 |
| | 150,013 |
| | — |
| | — |
| | — |
| | — |
| | 255,482 |
|
| Cynthia T. Jamison | | 115,000 |
| | 119,987 |
| | — |
| | — |
| | — |
| | — |
| | 234,987 |
| | 121,870 |
| | 150,013 |
| | — |
| | — |
| | — |
| | — |
| | 271,883 |
|
| Nana Mensah | | 47,170 |
| | 99,991 |
| | — |
| | — |
| | — |
| | — |
| | 147,161 |
| | 100,776 |
| | 150,013 |
| | — |
| | — |
| | — |
| | — |
| | 250,789 |
|
| Lionel L. Nowell III | | 33,516 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 33,516 |
| |
| William S. Simon | | 92,514 |
| | 119,987 |
| | — |
| | — |
| | — |
| | — |
| | 212,501 |
| | 110,934 |
| | 150,013 |
| | — |
| | — |
| | — |
| | — |
| | 260,947 |
|
| Charles M. Sonsteby | | 122,514 |
| | 119,987 |
| | — |
| | — |
| | — |
| | — |
| | 242,501 |
| | 131,260 |
| | 199,975 |
| | — |
| | — |
| | — |
| | — |
| | 331,235 |
|
| Alan N. Stillman | | 27,651 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 27,651 |
| |
| Timothy J. Wilmott | | | 97,655 |
| | 150,013 |
| | — |
| | — |
| | — |
| | — |
| | 247,668 |
|
| |
(1) | Includes all fees earned, including annual Board retainer, Board and committee chair retainers and committee member retainers. |
The annual retainers were payable pro rata at the end of each fiscal quarter and the amounts shown may have been delivered as cash or restricted stock units.RSUs. The restricted stock unitsRSUs granted in lieu of cash fees are immediately vested, however the settlement of the restricted stock unitsRSUs may be deferred. Amounts received as restricted stock unitsRSUs in lieu of cash fees were as follows: Mr. Mensah, 581212 units with a market value of $47,030;$25,552; Mr. Nowell, 408Wilmott, 911 units with a market value of $24,966; Mr.
Sonsteby, 802 units with a market value of $63,346.$97,416. The number of units delivered is based on the amount of compensation earned divided by the closing price for our common stock on the NYSE on the grant date.
| |
(2) | Amounts in this column represent the grant date fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Compensation — Stock Compensation (ASC Topic 718) for fiscal 2017.2020. The stock award is delivered in restricted stock unitsRSUs which vest on the earlier of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of shareholders. Mses. Atkins and Jamison and Messrs. Blum, Fogarty, Simon andExcept for Mr. Sonsteby, all other directors received an annual restricted stock unitRSU award of 1,9791,180 units on September 29, 201618, 2019 with a fair market value of $119,987$150,013 based on the closing price of our common stock ($60.63)127.13) on the NYSE on September 29, 2016.18, 2019. As Chairman, Mr. MensahSonsteby received a pro rata restricted stock unitan annual RSU award of 1,3791,573 units on his election to the board on November 14, 2016September 18, 2019 with a fair market value of $99,991$199,975 based on the closing price of our common stock ($72.51)127.13) on the NYSE on November 14, 2016.September 18, 2019. Except for Messrs. Blum, FogartyMensah and Simon, all other directors chose to defer theirthe settlement date for issuance of stock award.under these RSUs. |
The aggregate number of shares subject to outstanding stock-based awards as of May 28, 201731, 2020 for each director is provided in the table below:
| | | | | Outstanding Awards | | Outstanding Awards |
| Name | | Stock Options | Restricted Stock Units | | Stock Options | Restricted Stock Units |
| M. Shân Atkins | | 3,123 | 4,328 | | 3,123 | 8,176 |
| Bradley D. Blum | | 3,123 | 1,979 | |
| James P. Fogarty | | 3,123 | 7,921 | | 3,123 | 6,303 |
| Cynthia T. Jamison | | 3,123 | 6,250 | | 3,123 | 10,098 |
| Nana Mensah | | — | 1,960 | | — | 6,958 |
| William S. Simon | | 2,418 | 1,979 | | — | 1,180 |
| Charles M. Sonsteby | | 3,123 | 8,646 | | 3,123 | 11,639 |
| Timothy J. Wilmott | | | — | 3,807 |
| |
(3) | The Company provides a dining benefit to our directors to experience dining in our restaurants. This benefit does not appear in the Director Compensation Table because the value did not meet the minimum disclosure requirements established by the SEC. |
STOCK OWNERSHIP OF MANAGEMENT
This table shows the beneficial ownership of our common shares as of May 28, 201731, 2020 by our directors, director nominees, executive officers named in the Summary Compensation Table, and all of our directors and executive officers as a group. Under applicable SEC rules, the definition of beneficial ownership for purposes of this table includes shares over which a person has sole or shared voting power, or sole or shared power to invest or dispose of the shares, whether or not a person has any economic interest in the shares, and also includes shares for which the person has the right to acquire beneficial ownership within 60 days of May 28, 2017.31, 2020. Except as otherwise indicated, a person has sole voting and investment power with respect to the common shares beneficially owned by that person.
|
| | | | | |
Name of Beneficial Owner | | Amount and
Nature of
Beneficial
Ownership
of Common
Shares(1)
| | Common
Shares
Beneficially
Owned as
Percent of
Common
Shares
Outstanding(2)
|
M. Shân Atkins | | 7,754 |
| | * |
Bradley D. Blum | | 9,631 |
| | * |
Matthew R. Broad | | — |
| | * |
Todd A. Burrowes | | 3,421 |
| | * |
Ricardo Cardenas | | 57,653 |
| | * |
James P. Fogarty | | 16,955 |
| | * |
David C. George | | 272,705 |
| | * |
Cynthia T. Jamison | | 7,814 |
| | * |
Sarah H. King | | — |
| | * |
Eugene I. Lee, Jr. | | 385,413 |
| | * |
John W. Madonna | | 1,873 |
| | * |
Nana Mensah | | 581 |
| | * |
William S. Simon | | 10,687 |
| | * |
Charles M. Sonsteby | | 15,790 |
| | * |
All directors and executive officers as a group (14 persons) | | 790,278 |
| | * |
|
| | | | | |
| Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership of Common Shares(1) | | Common Shares Beneficially Owned as Percent of Common Shares Outstanding(2) |
| M. Shân Atkins | | 13,233 |
| | * |
| Todd A. Burrowes | | 87,320 |
| | * |
| Ricardo Cardenas | | 184,336 |
| | * |
| James P. Fogarty | | 25,875 |
| | * |
| David C. George | | 175,125 |
| | * |
| Cynthia T. Jamison | | 15,879 |
| | * |
| Daniel J. Kiernan | | 65,766 |
| | * |
| Eugene I. Lee, Jr. | | 497,768 |
| | * |
| Nana Mensah | | 5,778 |
| | * |
| William S. Simon | | 11,351 |
| | * |
| Charles M. Sonsteby | | 35,431 |
| | * |
| Timothy J. Wilmott | | 19,721 |
| | * |
| All directors and executive officers as a group (18 persons) | | 1,324,138 |
| | 1.0% |
| |
(1) | Includes common shares subject to stock options exercisable within 60 days of May 28, 2017,31, 2020, as follows: Ms. Atkins, 3,123; Mr. Blum, 3,123;Burrowes, 19,290; Mr. Cardenas, 48,390; Mr. Fogarty, 3,123;32,812; Mr. George, 238,468; Ms. Jamison, 3,123;32,812; Mr. Kiernan, 8,104; Mr. Lee, 280,800; Mr. Simon, 2,418; Mr. Sonsteby, 3,123;100,288; and all directors and executive officers as a group, 585,691243,901 shares. |
Includes restricted stock units whichRSUs awarded to directors that will settle in stock awarded to directors whichand that are vested or will vest within 60 days of May 28, 2017,31, 2020, as follows: Ms. Atkins, 2,349;6,996; Mr. Fogarty, 5,942;5,123; Ms. Jamison, 4,271;8,918; Mr. Mensah, 5815,778; Mr. Sonsteby, 10,066; and Mr. Sonsteby, 6,667.Wilmott, 2,627.
| |
(2) | For any individual or group, the percentages are calculated by dividing (a) the number of shares beneficially owned by that individual or group, which includes shares underlying options exercisable within 60 days and restricted stock unitsRSUs settled in stock described in footnote 1 above, by (b) the sum of (i) the number of shares outstanding on May 28, 2017,31, 2020, plus (ii) the number of shares underlying options exercisable within 60 days and restricted stock unitsRSUs described in footnote 1 above held by just that individual or group. |
Employee, Officer and Director Hedging
Under the terms of the Company’s Insider Trading Policy, no officer, employee or member of the Board of Directors of the Company should engage in short-term or speculative transactions in the Company’s securities. Short sales and transactions in publicly traded puts, calls or other derivative securities based on the Company’s securities are prohibited for all employees, officers, and members of the Board of Directors. Insiders, including the Company’s Board of Directors, executive officers and certain other employees designated by the General Counsel from time to time, are also prohibited from all other hedging transactions and are prohibited from pledging Company securities or holding such securities in a margin account. The full terms of the Company’s Insider Trading Policy are available on our website at www.darden.com.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS
This table shows all shareholders that we know to beneficially own more than five percent of our outstanding common shares as of May 28, 2017.31, 2020. As indicated in the footnotes, we have based this information on reports filed by these shareholders with us and with the SEC.
|
| | |
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2) |
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 13,723,79614,285,689(3)
| 10.94%11.00% |
BlackRock, Inc. 40 East 52nd Street New York, NY 10022 | 10,849,30013,819,967(4)
| 8.65%10.64% |
| |
(1) | “Beneficial ownership” is defined under the SEC rules to mean more than ownership in the usual sense. Under applicable rules, you beneficially own our common shares not only if you hold them directly, but also if you indirectly (such as through a relationship, a position as a director or trustee, or a contract or understanding) have or share the power to vote, sell or acquire them within 60 days. |
| |
(2) | The figure reported is a percentage of the total of 125,418,175129,893,801 common shares outstanding on May 28, 2017, excluding treasury shares.31, 2020. |
| |
(3) | Based on a Schedule 13G/A filed February 9, 2017,10, 2020, as of December 31, 2016,2019, The Vanguard Group, Inc. beneficially owned an aggregate of 13,723,79614,285,689 shares, and had sole power to vote 193,727188,361 shares, shared voting power to vote 30,71646,240 shares, sole dispositive power over 13,506,32814,061,283 shares, and shared dispositive power over 217,468224,406 shares. |
| |
(4) | Based on a Schedule 13G/A13G filed January 23, 2017,February 3, 2020, as of December 31, 2016,2019, BlackRock, Inc. beneficially owned an aggregate of 10,849,30013,819,967 shares, and had sole power to vote 9,867,08612,102,552 shares and sole dispositive power over 10,849,30013,819,967 shares. |
COMPENSATION DISCUSSION AND ANALYSIS
Executive SummaryIntroduction
The Compensation Committee believes that our success depends in large measure on our ability to attract and retain highly qualified officers who are motivated to put forth maximum effort on our behalf andserve with purpose on behalf of our Company, our team members and our shareholders. We have a strong link between payThe COVID-19 pandemic changed many things about our business during fiscal 2020, but this belief holds firm. Until the COVID-19 pandemic significantly affected our business and performance: our compensation programs are designedindustry, our teams were well on the way to alignsuccess during the performance objectivesfirst three quarters of our executives with the interests of shareholders.
The strategy continues to work: the Company’s fiscal 2017 performance was strong,2020, as demonstrated by the financial results described below. This
Through the first three quarters of fiscal 2020, the Company performed very well against the key performance measures and pre-determined targets established by the Compensation Committee and Board at the beginning of the fiscal year, as follows:
| |
| • | Steady same restaurant sales growth through the first three quarters of the year, including blended Darden same-restaurant sales growth of 1.8%, outperforming the industry benchmark by 240 basis points1; and |
| |
| • | Strong earnings results through the first three quarters of the fiscal year, including adjusted EPS of $4.402 and adjusted EPS growth of 8.4%. |
Our Response to COVID-19 Challenges
The COVID-19 pandemic put an almost immediate halt to this strong performance, wasand for most of the fourth quarter of fiscal 2020, we operated with all of our dining rooms closed and served our guests in a To Go only or To Go and delivery format. In order to reduce costs and conserve cash, we immediately began to furlough team members, instituted significant salary reductions for executives and other key employees, and the Board approved a 50% reduction in the cash compensation payable to non-employee directors under the Company’s Director Compensation Program. Despite these cost-saving actions, as a result of the focusedpandemic, our full-year financial results fell short of our pre-determined targets under our annual incentive plan measures.
However, during the fourth quarter of fiscal 2020, our management and team members demonstrated the remarkable strength of our operational systems, thoroughness of our business planning, resilience of our balance sheet and adaptability of our people. As soon as the spread of COVID-19 began in the United States, our management team and our Board quickly implemented our pandemic response plan and carried out a strategic leadershipresponse to COVID-19. Some of the Boardsignificant steps taken by management during our fiscal fourth quarter to address the impacts of the pandemic as well as to position us to quickly ramp up our operations when permitted included:
protecting our team members’ safety and wellbeing, including the implementation of paid sick leave for all hourly restaurant team members, a $75 million Emergency Pay program and covering $4.1 million of health and welfare insurance premiums for team members furloughed as a result of the significant reduction in our operations;
modifying our business operations in order to continue serving guests at our restaurants as safely and effectively as possible, including, initially transitioning all restaurant locations to a To Go only model, then subsequently implementing a careful, phased reopening of our dining rooms where permitted by local regulations; and
preserving and strengthening the Company’s liquidity and financial position, including obtaining a new $270 million term loan, raising approximately $505.1 million in net proceeds from a public offering of our common equity and controlling and significantly reducing operational costs.
Additionally, throughout the fourth quarter of fiscal 2020, the Company provided four interim sales reports in order to provide shareholders with additional real-time data to evaluate and understand the impact of the COVID-19 pandemic on the Company’s sales results and to demonstrate the management’s extraordinary steps to continue to serve guests, including growing To Go sales during the closure of our dining rooms. As our dining rooms began to reopen during May 2020 and the executive leadership team. Our “Back-to-Basics” operating philosophy remainedCompany’s sales grew, these additional sales reports provided valuable updates to our shareholders and the foundationCompany’s common stock price steadily recovered following the initial decrease during the early weeks of the COVID-19 pandemic.
1 Industry benchmark as measured by KNAPP-TRACKTM, excluding Olive Garden and LongHorn.
2 A reconciliation of adjusted to reported diluted net earnings per share is located on p. 34.
Summary of Compensation Outcomes for Fiscal 2020 and Plans for Fiscal 2021
Throughout the fourth quarter of fiscal 2020, the Board held several special meetings with management to discuss the extensive impacts of COVID-19 on our fiscal 2017 strategic objectives: continuing to leverage our competitive advantages that we see as keys to unlocking sales growthbusiness and expanding margins. Because there were no material changesthe management’s responses to the pandemic discussed above. The Compensation Committee, in consultation with management and the independent compensation consultant, considered several alternatives with respect to the pandemic’s impact on the Company’s annual and long-term incentive plans for fiscal 2020 and 2021.
The Compensation Committee (and the full Board with respect to the CEO) determined that given the extensive impacts of the COVID-19 pandemic on our business strategyand the fact that the pandemic did not begin to impact the business until several weeks into the Company’s fiscal fourth quarter, it would be appropriate to take a holistic view of pay and performance expectations heading intofor fiscal 2017,2020 and evaluate financial performance results for the annual incentive plan for the first three quarters of fiscal 2020. Accordingly, the Compensation Committee did not make any material changes(and the full Board with respect to the executive compensation programs for fiscal 2017.CEO) made the following determinations:
Summary of Fiscal 2017 Performance2020 AIP payouts for named executive officers were determined based on actual financial results against goals through the first three quarters only, with no additional positive or negative discretionary adjustment based on either (a) their significant efforts and Pay Resultsoperational results during the fourth quarter or (b) financial performance during the fourth quarter.
Darden made significant progressFiscal 2018-2020 PSU payouts remained unadjusted, which resulted in fiscal 2017a capped payout at 100% of target, as we continuedopposed to implementthe higher earned percentage of 127% of target that could have been earned as a clear, long-term strategic vision introducedresult of the Company’s strong actual relative TSR performance over the performance period. The cap applied because absolute TSR was negative over the performance period, which was also true for many companies in fiscal 2015 to strengthen Darden’s position as the premier full-service restaurant company. Performance for fiscal 2017 was strong: both sales and profitability improved over fiscal 2016 results. In addition, the Company completed the acquisition of Cheddar’s Scratch Kitchen, adding a value leader with strong growth potential to Darden’s portfolio of differentiated brands. The Company returned approximately $510 million in total cash to shareholders with approximately $280 million in dividends and $230 million in share repurchases during fiscal 2017.peer group.
AtOverall, the endCompensation Committee and the full Board believe these pay outcomes appropriately align pay and long-term performance while also balancing the performance and retention objectives of the compensation program, by neither (a) penalizing participants for the unforeseen and unprecedented financial impact of COVID-19 on financial results in the fiscal 2017,2020 fourth quarter nor (b) rewarding participants for the Companyextraordinary efforts and results achieved during the fiscal 2020 fourth quarter, especially in light of the following financial results, each related to performance measures under existing annual or long-term awards:additional factors:
Consolidated Total RevenueOur named executive officers received reduced base salaries for at least half of $7.17 billion;
Consolidated Adjusted EPS of $4.02;
Consolidated Same Restaurant Sales growth of 1.8%;
Consolidated Adjusted Free Cash Flow of $611 million;the fiscal fourth quarter; and
Total Shareholder Return (TSR)The value of executive officers’ outstanding options, equity awards and Company stock holdings have all declined in value and we have not altered the terms of any outstanding options or awards (other than for 2017 of 34%,Mr. George in connection with three year and five year TSR of 120% and 123% respectively.his Retirement Agreement described below).
These strongWith respect to fiscal 2021 named executive officer compensation planning, the Compensation Committee (and the full Board with respect to the CEO) made the following determinations:
Base salaries were restored to their pre-reduction levels effective June 1, 2020;
No increases in base salary were approved;
No increases in target annual incentive opportunity were granted; and
No increases in target long-term incentive grant value were granted.
For fiscal 2021, in light of the continued uncertainty surrounding the timing of and conditions under which our restaurants will be able to more fully re-open, the Compensation Committee (and the Board with respect to the CEO) intend that the fiscal 2021 annual incentive plan will be based on financial results for the second half of fiscal 2021, with non-financial results during the first half of fiscal 2021 used as a potential modifier to the second half financial results. Financial performance results, after adjustments approvedmeasures, targets and other performance criteria to be used in the fiscal 2021 annual incentive plan will be determined by the Compensation Committee at a later date due to the unique circumstances of the COVID-19 pandemic and the limited visibility into the future business and public health conditions. Further, the Compensation Committee determined that a “One Company Approach” would best facilitate company-wide recovery and as describeda result, all performance metrics will be based on Darden company-wide performance. This methodology will result in any payouts under the fiscal 2021 annual incentive plan continuing to be based on financial results against pre-determined goals, but with (a) those measures and targets to be set at a later date once there is more visibility into
performance expectations and (b) the Compensation Committee and Board maintaining the ability to modify payouts based on an assessment of management’s performance in the “Performancefirst half of fiscal 2021, with a focus on positioning the Company for success in the second half of the fiscal year and Pay Results for Fiscal 2017” section below, yielded strong executive compensation results for fiscal 2017, as evidenced byin the following incentive compensation highlights:
Annual incentives tied to fiscal 2017 corporate performance metrics were earned at 122% of target;
Performance stock units tied to fiscal 2015-2017 performance were earned at 123% of target (representing a blended three-year performance plus a TSR multiplier, as follows: 113% in fiscal 2015, 106% in fiscal 2016, 116% in fiscal 2017, and a 10% TSR multiplier); and
Stock options granted in July 2016 have accrued in-the-money value commensurate with the increase in Darden’s stock price, but remain unvested (50% vest three years from grant date and 50% vest four years from grant date).long-term.
The Compensation Committee believes that these financial results and pay outcomes are indicative of a sound strategy excellent execution, and a strong linkage between pay and performance.performance, while also considering continued retention and engagement of our leadership team in an industry that has received the brunt of the impact of the pandemic. The Committee also believes that the following demonstrates the Company’scontinues their commitment to sound overall governance of executive compensation:
compensation by practicing the following:
|
| | |
| What we do: | | What we don’t do: |
| • Fully independent Compensation Committee | | • No guaranteed bonuses |
| • Independent executive compensation consultant | | • No excise tax gross ups |
| • Majority of our target pay opportunity for our NEOs is in the form of “at risk” incentives | | • No option repricing |
| • Annual incentives have multiple performance measures and capped payouts to mitigate risk | | • No dividends paid on unvested long-term incentives until vesting |
| • Long-term incentives granted in multiple award types to achieve multiple objectives | | • No hedging, pledging or short sales of Company securities by officers or directors |
| • Clawback policy to allow us to recover incentive compensation in the event of a financial restatement due to fraud | | • No excessive severanceperks or company aircraft |
| • Robust executive officer and outside director stock ownership requirements with mandatory holding requirements | | • No excessive perks or company aircraftautomatic single-trigger change in control payments |
| • Minimum three-year vesting period on annual equity awards | | • No automatic single-trigger change in control payments |
| • Annual shareholder engagement process | | |
Overview
This compensation discussion and analysis provides information about our fiscal 20172020 compensation program for our fiscal 20172020 named executive officers (NEOs).
Our NEOs for fiscal 20172020 were the following five individuals, all of whom serve as executive officers of the Company as of the date of this Proxy Statement.Statement, except for Mr. George who retired effective August 2, 2020.
|
| | |
| Name | | Position with Company at Fiscal 20172020 Year-End |
| Eugene I. Lee, Jr. | | President and Chief Executive Officer |
| Ricardo Cardenas | | Senior Vice President, Chief Financial Officer |
| David C. George | | President, Olive Garden and Executive Vice President Darden Restaurantsand Chief Operating Officer |
| Todd A. Burrowes | | President, LongHorn Steakhouse |
Matthew R. BroadDaniel J. Kiernan | | Senior Vice President, General Counsel, Chief Compliance Officer and Corporate SecretaryOlive Garden |
Process Forfor Determining Fiscal 20172020 Executive Compensation
The Compensation Committee and Board are responsible for the Company’s executive compensation program. With respect to fiscal 20172020 executive compensation, the Compensation Committee was primarily responsible for (a) the design of the executive compensation program; (b) approving goals, evaluating results and determining payouts underwith respect to the Company’s fiscal 20172020 annual incentives; and (c) approving long-term incentive payoutsperformance results under outstanding performance stock units that were earnedbased upon performance over the three yearthree-year period ending with fiscal 2017. Throughout fiscal 2016, shareholders provided2020. Management also periodically solicits shareholder feedback through engagement meetings that the Compensation Committee consideredconsiders when developing the fiscal 2017compensation programs.
Independent Consultant
Pearl Meyer and Partners (Pearl Meyer) has served as the independent consultant to the Compensation Committee since fiscal 2015. In selecting Pearl Meyer, the Committee considered the independence factors prescribed by the SEC and the NYSE, and concluded that Pearl Meyer was independent and that its work did not raise any conflict of interest. In its role as independent consultant, Pearl Meyer reports to, and is directed by, the Compensation Committee. The primary services provided by the consultant are expected to include assisting with peer group review, periodic competitive market studies, periodic review and advice regarding variable pay program designs and executive compensation policies, updates on emerging practices and trends, and attendance at Compensation Committee meetings.
Compensation Peer Group
The Compensation Committee periodically reviews the pay levels and practices of peer companies in order to assess the competitive positioning of Darden’s pay levels and plan designs.
With respect to the compensation program for fiscal 2017,2020, Pearl Meyer recommended, and the Committee approved, the following executive compensation peer group:
|
| |
The Wendy’s Company
Dunkin’FY 2020 Peer Group
| |
| |
| Aramark Corporation | Hilton Worldwide Holdings, Inc. |
| AutoZone, Inc. | L Brands, GroupDineEquity, Inc.
|
| Bloomin’ Brands, Inc. | Nordstrom, Inc. |
| Brinker International, Inc. Panera Bread Company
Bloomin Brands,
| O’Reilly Automotive, Inc. |
Chipotle Mexican Grill,Grille, Inc.Buffalo Wild Wings,
| Restaurant Brands International, Inc. Cracker Barrel Old Country Store, Inc.
The Cheesecake Factory, Inc.
|
Texas Roadhouse, Inc.
The Gap, Inc.
Nordstrom, Inc.
L Brands, Inc.
AutoZone, Inc.
Dick’s Sporting Goods, Inc. | Ross Stores, Inc. |
| Domino’s Pizza, Inc. | Royal Caribbean Cruises, Ltd. |
| Foot Locker Retail, Inc. | Tractor Supply Company Wyndham Worldwide Corporation
William-Sonoma,
|
| The Gap, Inc. Starwood Hotels and Resorts
| Yum! Brands, Inc. |
This peer group of 2018 companies consists of primarily companies in the restaurant retail and hospitalityretail industries with financial characteristics within a tight range of the Company’s own characteristics. Our peer group reflectsreflected a median market capitalization of $5.6$11.6 billion, corporate revenue of $8.4 billion and system-wide revenue of $5.0$11.3 billion, botheach as of November 2016.2019.
The peer group extends beyond restaurant operators because there are a limited number of restaurant operators of comparable size to Darden and because the Company competes for talent with, and has some business model similarities to, companies in the retail and broader hospitality industries.
DuringThe Compensation Committee took into account pay practices at the fiscal 2017, recognizing the growth of the Company both through performance2020 Peer Group when setting compensation levels and the acquisition of Cheddar’s Scratch Kitchen,granting incentive awards during fiscal 2020.
In December 2019, the Compensation Committee reviewed the peer group forand the Company’s performance at the time relative to the fiscal 2018 compensation programs,2020 Peer Group, and upon the recommendation of Pearl Meyer, madedecided not to make any changes to the following changes:
|
| |
Changes for 2018: | 2018 Peer Group |
| |
Deleted: | The Gap, Inc. |
DineEquity, Inc. | Nordstrom, Inc. |
Buffalo Wild Wings, Inc. | Aramark Corporation |
Texas RoadHouse, Inc. | L Brands, Inc. |
Starwood Hotels & Resorts | AutoZone, Inc. |
Wyndham Worldwide Corporation | Dunkin’ Brands Group |
| The Wendy’s Company |
Added: | O’Reilly Automotive, Inc. |
Aramark Corporation | Dick’s Sporting Goods, Inc. |
O’Reilly Automotive, Inc. | Foot Locker Retail, Inc. |
Foot Locker Retail, Inc. | Tractor Supply Company |
| Williams-Sonoma, Inc. |
| Panera Bread Company |
| Bloomin’ Brands, Inc. |
| Brinker International, Inc. |
| Chipotle Mexican Grill, Inc. |
| Cracker Barrel Old Country Store, Inc. |
| The Cheesecake Factory, Inc. |
The changes resulted in a peer group comprised of 50% restaurant and 50% retail companies. Our new peer group reflects a median market capitalization of $7.7 billion and system-wide revenue of $7.7 billion, both as of November 2016.
for fiscal 2021 compensation programs.
Executive Compensation Philosophy and Strategy
Darden’s executive talent and Total Rewards philosophy continues to be focused on attracting, motivating and rewarding well-qualified executives for achieving business results and demonstrating leadership behaviors that drive our business. We are committed to a pay for performance culture that includes high standards of ethical behavior and corporate governance and we structure compensation programs with the following principles in mind:
Compensation Design Supports Our Business Strategy and Is Aligned with Shareholders’ Interests– We have designed our Total Rewards Program,program, and our incentive plans in particular, to meet our primary goal of aligning with shareholders; specifically, to drive strong and sustainable sales and earnings growth balanced with prudent capital management to maximize total shareholder return.
IncentiveMajority of Compensation Is Aligned with Performance – Total direct compensation (salary, annual incentives and long-term incentives) for our NEOs is structured so that more than two-thirds of the total value at target is attributable to Company performance.
The target pay opportunities approved by the Compensation Committee reflect this pay for performance with 84%87 percent of our CEO'sCEO’s and 70%73 percent of the other Named Executive Officers’named executive officers’ target total direct compensation tied to performance:
Fiscal 20172020 CEO and Other NEO Total Direct Compensation Mix at Target (1)
|
| |
84%87% Performance-Based | 70%73% Performance-Based |
(1)Based on salary and incentive targets in place at fiscal 20172020 year end.end, after restoration of the temporary salary cuts.
(2) Reflects the average of the NEOs as of the end of fiscal 2017,2020, other than the CEO.
Executive Compensation Program Elements
Our Total Rewards program for NEOs is comprised of base salary, annual incentives, long-term incentives, modest perquisites and retirement savings plans. Our NEOs also are eligible to participate in the health and benefits available to our U.S. salaried employees.
Base Salary
We provide competitive base salaries to our NEOs in recognition of their job responsibilities. In addition to external competitive market data (what our peer companies pay for similar positions), we consider individual work experience, leadership, knowledge and internal parity among those performing like jobs when setting salary levels. Annual salary increases are primarily driven by individual performance while also considering the relative position of the individual’s salary to market data.
During fiscal 2020, in response to the COVID-19 pandemic, we temporarily reduced the salaries of all of our salaried employees, including the NEOs. Mr. Lee’s salary reductions were effective from March 23, 2020 through the end of fiscal 2020 and the rest of our NEOs’ salaries were reduced beginning April 13, 2020 through the end of fiscal 2020.
|
| | |
| Named Executive Officer | Salary Reduction (%) | Unreduced Base Salary |
| Eugene I. Lee, Jr. | 99%* | $1,000,000 |
| Ricardo Cardenas | 50% | $725,000 |
| David C. George | 50% | $775,000 |
| Todd A. Burrowes | 50% | $640,000 |
| Daniel J. Kiernan | 50% | $650,000 |
* Mr. Lee’s salary was reduced to equal $14,750 annually, roughly the amount necessary to cover Mr. Lee’s required contributions to his employment benefits and related payroll taxes.
Annual Incentives
WeAs discussed above, we provided annual cash incentive opportunities to our NEOs under the 2015 Plan for fiscal year 2017. The terms2020. At the beginning of the fiscal 2017 annual awards required that the Company have positive consolidated earnings from continuing operations for the fiscal year in order for awards to be made for that year. In addition to that condition,2020, the Compensation Committee hasestablished the discretion to establish the elementsmeasures and targets used to determine individual annual incentive awards, if any, to be made, subject to certain limitations. Under the terms of the 20172015 Plan. As a result of the impacts of the COVID-19 pandemic on the fourth quarter of fiscal 2020, neither the Company nor any of the business units met the thresholds established to earn annual awards,incentives. As discussed above, due to the strong financial performance during the first three quarters of fiscal 2020 and the significant actions taken by management during the fourth quarter of fiscal 2020, the Compensation Committee establisheddetermined that modification to the maximum award payableperformance measures used to an individual NEO underdetermine the 2015 Plan forannual incentives awarded to the plan year may not exceed ten million dollars.participants, including the named executive officers, was appropriate. Under the annual incentive plan design, “Target Bonus Opportunity” is determined by multiplying Base Salary Earnings by the Target AIP%. The bonusannual incentive amounts actually paidawarded for fiscal 20172020 to our NEOs were based solely on the Target Bonus Opportunity multiplied by the Company or Business Unitbusiness unit performance rating, per the following formula approved by the Compensation Committee:
|
| | | | |
| Base Salary Earnings | x | Target Bonus OpportunityAIP% | x | CompanyCompany/Business Unit Performance Rating |
Company Performance Rating
The metrics whichCompany maintains a rigorous annual business planning and long-term strategic planning process that we consider to be one of our key competitive advantages. The core financial objective of these plans is to achieve long-term total shareholder returns for our shareholders of 10 to 15 percent, as reflected in our long-term value creation framework. The Company’s management creates the annual business plan in consultation with the Board and reports on progress with respect to the plan throughout the year. The annual business plan includes specific measurable goals for all of the key measures that the Company and the Board believes are necessary in order to achieve that long-term objective and the Compensation Committee sets performance measures under the annual and long-term incentive plans based upon the goals set out in these business plans.
The annual performance measures that comprise the companyCompany or business unit performance ratings for each of our NEOs vary depending uponare aligned with the NEO’s rolesales and responsibilities. Companyearnings growth measures that we describe to investors in our long-term value creation framework. The Compensation Committee adopted same-restaurant sales growth as one of our annual performance ratingsmeasures in fiscal 2015, after extensive shareholder engagement on the compensation program design. Same-restaurant sales growth is a year-over-year comparison of each period’s sales volumes for restaurants open at least 16 months. Same-restaurant sales growth is a key one-year indicator of performance in our industry (and does not take into account the sales from new restaurants opened or acquired during the fiscal year). The Company’s long-term value creation framework includes an annual target, over time, for same-restaurant sales growth of 1 to 3 percent. Our second and more heavily weighted annual performance measures are Adjusted Diluted Net Earnings Per Share (Adjusted EPS) or Business Unit Adjusted Operating Income. Earnings per share growth is one of the main components of total shareholder return, the ultimate objective of our long-term value creation framework.
The performance rating for each NEO is based solely on Darden results for NEOs other than business unit presidents,Mr. Burrowes and Mr. Kiernan, whose Company performance ratings are based on business unit results (80 percent) and Darden results (20 percent). Company performance measures and weighting for fiscal 20172020 were:
|
| |
| Performance Measure | Weighting |
CorporateDarden | |
| Adjusted EPS | 70 percent70% |
| Same-Restaurant Sales Growth | 30 percent30% |
| Business Unit | |
Adjusted Business Unit Adjusted Operating Income | 70 percent70% |
| Business Unit Same-Restaurant Sales Growth | 30 percent30% |
The Compensation Committee establishedestablishes threshold, target and maximum performance goals for each measure each year, with potential payouts ranging from 0 to 200%200 percent of each participant’s target bonus opportunity. The Compensation Committee sets these goals after reviewing the Company’s business plan for the fiscal year. For the same-restaurant sales growth measure, the annual target for a given fiscal year varies based on a variety of factors that impact the business plan, including macroeconomic forces, consumer and industry trends, competitive forces, the Company’s strategic initiatives and other factors, and may be higher
or lower than either the target or the actual result for the prior fiscal year. For the Adjusted EPS and business unit Adjusted Operating Income measures, the Compensation Committee sets targets that reflect the Company’s business plan. After considering the Company’s business plan and relevant factors, the Compensation Committee set the following annual incentive award targets for fiscal 2020:
|
| | |
| Performance Measure | Weight | Target |
| Darden | | |
| Same-Restaurant Sales Growth | 30% | 2.0% |
| Adjusted EPS | 70% | $6.36 |
| Olive Garden | | |
| Same-Restaurant Sales Growth | 30% | 2.1% |
| Adjusted Operating Income ($ in millions) | 70% | $622.4 |
| LongHorn | | |
| Same-Restaurant Sales Growth | 30% | 2.1% |
| Adjusted Operating Income ($ in millions) | 70% | $195.0 |
Performance and Pay Results for Fiscal 20172020
TheDue to the impacts of COVID-19, the Company and each of the business units failed to meet their performance targets and thresholds under our annual incentive plan. As discussed above, while the resulting payout would have been 0% of target for each of our NEOs, the Compensation Committee certifiedand the Board assessed the Company’s financial performance through the third quarter of the fiscal year, prior to the COVID-19 impact, as well as the significant actions management took to navigate the unprecedented pandemic during the fourth quarter.
Based on its evaluation of these items and all other considerations discussed above, the Compensation Committee determined that it was appropriate to calculate payouts under the fiscal 2020 annual incentive plan based on actual financial results through the first three quarters of the fiscal year rather than through the full fiscal year. Accordingly, the Compensation Committee made the following Companydeterminations:
For the Same-Restaurant Sales Growth measures, the Compensation Committee evaluated and determined the results through the first three quarters of fiscal 2020 against the full year fiscal 2020 targets set in June 2019; and
For the Adjusted EPS and Business Unit Adjusted Operating Income performance measures, the Compensation Committee approved performance targets for the period through the first three quarters of fiscal 2020 that were consistent with the business plan targets approved by the Board in June 2019, and then evaluated and determined the results for the first three quarters of fiscal 2017:
|
| | | | |
| Performance Measure | Weight | Target | Actual | Total Payout (As % of Target) |
| Darden | | | | 122% |
| SRS | 30% | 2.0% | 1.8% | |
| Adjusted EPS | 70% | $3.88 | $4.01 | |
| | | | | |
| Olive Garden | | | | 115% |
| SRS | 30% | 1.9% | 2.6% | |
| Adjusted OI ($ in millions) | 70% | $482.4 | $484.7 | |
| | | | | |
| LongHorn | | | | 100% |
| SRS | 30% | 1.9% | 1.2% | |
| Adjusted OI ($ in millions) | 70% | $135.1 | $137.6 | |
| | | | | |
Adjusted EPSFurther, the Compensation Committee determined that base salary earnings for purposes ofparticipants under the annual incentive was derivedplan for fiscal 2020 would be calculated as actual base salary earnings adjusted to restore salary amounts that would have been paid if the Company had not implemented the temporary salary reductions implemented in response to the COVID-19 pandemic. The Target AIP% remained unchanged from the publicly reported diluted net EPS, adjusted for annual incentive calculation purposespercentages approved by the Compensation Committee (and the Board with respect to exclude the impactCEO) at the beginning of special items and to exclude certain impacts of Cheddar’s Scratch Kitchen’s result of operations.fiscal 2020.
On this basis, the Compensation Committee (and the Board with respect to the CEO) certified the following performance results and the related Company Ratings as follows:
|
| |
Diluted Net EPS from Continuing Operations | $3.83 |
One-Time Acquisition/Integration Costs | $0.09 |
Non-Cash Pension Accounting Charges | $0.10 |
Adjusted Diluted Net EPS from Continuing Operations | $4.02 |
Impact of Cheddar’s Scratch Kitchen Results of Operations and Interest Expense | -$0.01 |
Adjusted EPS for Annual Incentives | $4.01 |
|
| | | |
| Performance Measure | Target | Results | Total Payout (% of Target) |
| Darden | | | 94% |
| Q3 YTD Same-Restaurant Sales Growth | 2% | 1.8% | |
| Q3 YTD Adjusted EPS | $4.43 | $4.40 | |
| Olive Garden | | | 84% |
| Q3 YTD Same-Restaurant Sales Growth | 2.1% | 1.9% | |
| Q3 YTD Adjusted Operating Income ($ in millions) | $445.7 | $438.2 | |
| LongHorn | | | 141% |
| Q3 YTD Same-Restaurant Sales Growth | 2.1% | 4.4% | |
| Q3 YTD Adjusted Operating Income ($ in millions) | $134.1 | $136.7 | |
Adjusted operating income (Adjusted OI) for a business unit,For fiscal 2020, for purposes of the annual incentive, Adjusted EPS through the first three quarters was adjusted from reported diluted net EPS to exclude the items set forth in the table below.
|
| | | | | |
| | Q3 2020 YTD | | Q3 2019 YTD |
| Reported Diluted Net EPS from Continuing Operations | $3.48 | | $4.06 |
| % Change vs Prior Year | (14.3 | )% | | |
| Adjustments: | | | |
| Pension settlement charge | $0.90 | | — |
|
| International structure simplification | $0.02 | | — |
|
| Adjusted Diluted Net EPS from Continuing Operations (Adjusted EPS) | $4.40 | | $4.06 |
| % Change vs Prior Year | 8.4 | % | | |
For fiscal 2020, adjusted operating income for a business unit was derived from that brand’s component of reported operating income, adjusted to exclude the impact of special items. There were no such adjustments in fiscal 2017.income.
The final individual annual incentive awards determined by the Compensation Committee (and the Board with respect to the CEO) are set forth below.
| | | Named Executive Officer | Target % of Salary | Business Weighting | Total Payout (As % of Target) | Actual Award(1) | Target % of Salary | Business Weighting | Total Payout (% of Target) | Actual Award(1) |
| Eugene I. Lee, Jr. | 125% | Darden 100% | 122% | $1,525,000 | 200% | Darden 100% | 94% | $1,916,154 |
| Ricardo Cardenas | 80% | Darden 100% | 122% | $546,560 | 100% | Darden 100% | 94% | $690,538 |
| David C. George | 100% | Olive Garden 80% / Darden 20% | 115% / 122% | $727,500 | 100% | Darden 100% | 94% | $738,442 |
| Todd A. Burrowes | 80% | LongHorn 80% / Darden 20% | 100% / 122% | $447,528 | 85% | LongHorn 80% / Darden 20% | 141%/94% | $723,863 |
| Matthew R. Broad | 65% | Darden 100% | 122% | $373,375 | |
(1)Based on company/business unit payout %. | |
| Daniel J. Kiernan | | 85% | Olive Garden 80% / Darden 20% | 84%/94% | $471,635 |
(1) Based on Company/business unit payout percentage. | | (1) Based on Company/business unit payout percentage. |
Annual Incentive Design for Fiscal 2021
For fiscal 2021, in light of the continued uncertainty surrounding the timing of and conditions under which our restaurants will be able to more fully re-open, the Compensation Committee (and the Board with respect to the CEO) determined that there would be no change to the target bonus opportunity for the named executive officers under the annual incentive plan. The Compensation Committee intends for the fiscal 2021 annual incentive plan to be based on financial results for the second half of fiscal 2021, with non-financial results during the first half of fiscal 2021 used as a potential modifier to the second half financial results. Financial performance measures, targets and other performance criteria to be used in the fiscal 2021 annual incentive plan will be determined by the Compensation Committee at a later date due to the unique circumstances of the COVID-19 pandemic and the limited visibility into the future business and public health conditions. Further, the Compensation Committee determined
that a “One Company” approach would best facilitate company-wide recovery and as a result, all performance metrics will be based on Darden company-wide performance. This methodology will result in any payouts under the fiscal 2021 annual incentive plan continuing to be based on financial results against pre-determined goals, but with (a) those measures and targets to be set at a later date once there is more visibility into performance expectations and (b) the Compensation Committee and Board maintaining the ability to modify payouts based on an assessment of management’s performance in the first half of fiscal 2021, with a focus on positioning the Company for success in the second half of the fiscal year and in the long-term.
Long-Term Incentives
The purpose of the long-term incentive program is to motivate and reward achievement of our long-term objectives of winning financially and creating long-term value for our shareholders. The long-term awards made in July 20162019 for the fiscal 20172020 grants were made under the 2015 Plan.
For fiscal 2017,2020, continued emphasis was placed on the long-term incentive plan design linked pay and performance with an emphasis onlinkage by granting half of the total LTI grant value in performance stock units (PSUs) (with 2/3 PSUs and 1/3 stock options).tied to relative TSR. The fiscal 2017 long-term incentive program provided 1/3remaining half of the grant value inwas equally split between stock options 1/3and restricted stock units. The Committee changed the PSU relative TSR peer group from publicly traded restaurant companies to the companies in performance-based stock units tiedthe S&P 500 Consumer Discretionary Index due to ROIC,the fact that (a) we compete for investors across a broader peer set and 1/3(b) the publicly traded restaurant group size has diminished over time. This Compensation Committee is not recommending any changes to the peer group, despite the fact that restaurant companies might be disproportionately impacted by COVID-19.
Performance Stock Units - Relative TSR (1/2 of the grant valuevalue):
Share denominated units;
Vest 50 percent on the third anniversary of the grant date, and 50 percent on the fourth anniversary of the grant date;
0 - 150 percent payout opportunity based upon relative TSR as compared to the companies in performance-based stock units tied to relative TSR.the S&P 500 Consumer Discretionary Index at the time of the grant; the companies in our comparison group are listed below; and
Settled in stock.
Stock Options (1/34 of the grant value):
Granted with an exercise price equal to the closing stock price on the grant date;
Vest 50%50 percent on the third anniversary of the grant date and 50%50 percent on the fourth anniversary of the grant date; and
Maximum term of 10 years.
PerformanceRestricted Stock Units - ROIC (1/34 of the grant value):
Share denominated units;
Vest 50%100 percent on the third anniversary of the grant date,date; and 50% on the fourth anniversary of the grant date; the portion that vests on the third anniversary of the grant date requires a mandatory one year holding period;
Settled in stock based upon achievement to planned ROIC over the three year performance period; andstock.
0 - 150% payout opportunity.
Performance Stock Units - Relative TSR (1/3The group of the grant value):
Share denominated units;
Vest 50% on the third anniversary of the grant date, and 50% on the fourth anniversary of the grant date; the portion that vests on the third anniversary of the grant date requires a mandatory one year holding period;
Settled in stock based uponcompanies used to measure our relative TSR as compared to publicly-traded restaurant companies overfor the three year performance period; the companies in our comparison group are listed below; and
0 - 150% payout opportunity.fiscal 2020 grants is set forth below:
|
| | |
Ark Restaurants Corp.Advance Auto Parts, Inc. | Ignite Restaurant Group,Genuine Parts Company | Nordstrom, Inc. |
BJ's Restaurants,Amazon.com, Inc. | Jack in the BoxH&R Block, Inc. | Norwegian Cruise Line Holdings Ltd. |
| Aptiv PLC | Hanesbrands Inc. | O’Reilly Automotive, Inc. |
Bloomin'AutoZone, Inc. | Harley-Davidson, Inc. | PulteGroup, Inc. |
| Best Buy Co., Inc. | Hasbro, Inc. | PVH Corp. |
| Booking Holdings Inc. | Hilton Worldwide Holdings Inc. | Ralph Lauren Corporation Class A |
| BorgWarner Inc. | Home Depot, Inc. | Ross Stores, Inc. |
| Capri Holdings Limited | Kohl’s Corporation | Royal Caribbean Cruises Ltd. |
| CarMax, Inc. | L Brands, Inc. | Jamba, Inc.Starbucks Corporation |
Bob Evans Farms,Carnival Corporation | Leggett & Platt, Incorporated | Tapestry, Inc. | Kona Grill Inc. |
Bravo Brio Restaurant Group, Inc. | Krispy Kreme Doughnuts, Inc. |
Brinker International, Inc. | Luby's, Inc. |
Buffalo Wild Wings Inc. | McDonald's Corp. |
Carrols Restaurant Group, Inc. | Nathan's Famous Inc. |
Chanticleer Holdings, Inc. | Noodles & Company |
| Chipotle Mexican Grill, Inc. | Panera BreadLennar Corporation Class A | Target Corporation |
| D.R. Horton, Inc. | LKQ Corporation | Tiffany & Co. |
| Dollar General Corporation | Lowe’s Companies, Inc. | TJX Companies Inc. |
| Dollar Tree, Inc. | Macy’s Inc. | Tractor Supply Company |
Chuy's Holdings,eBay Inc. | Papa John'sMarriott International, Inc. Class A | Ulta Beauty, Inc. |
CosiExpedia Group, Inc. | Popeyes Louisiana Kitchen,Mattel, Inc. | Under Armour, Inc. Class A |
Cracker Barrel Old Country Store,Foot Locker, Inc. | PotbellyMcDonald’s Corporation | V.F. Corporation |
Del Frisco's Restaurant Group, Inc.Ford Motor Company | RAVE Restaurant Group, Inc. |
Denny's CorporationMGM Resorts International | Red Robin Gourmet Burgers Inc. |
DineEquity, Inc. | Ruby Tuesday, Inc. |
Diversified Restaurant Holdings, Inc. | Ruth's Hospitality Group Inc. |
Domino's Pizza, Inc. | Sonic Corp. |
Dunkin' Brands Group, Inc. | StarbucksWhirlpool Corporation |
Famous Dave's of AmericaGap, Inc. | Texas Roadhouse,Mohawk Industries, Inc. | Wynn Resorts, Limited |
Fiesta Restaurant Group, Inc.Garmin Ltd. | The Cheesecake Factory Incorporated |
Flanigan's Enterprises Inc. | The Wendy's Company |
Good Times RestaurantsNewell Brands Inc. | Yum! Brands, Inc. |
| General Motors Company | NIKE, Inc. Class B | |
This group of companies differs from our peer group generally used for setting compensation as it evaluates our stock price performance from an investor’s perspective against other consumer discretionary companies.
Fiscal 2020 Annual Grants
The Compensation Committee approved grants to the following NEOs, effective July 27, 201624, 2019 in accordance with the plan design, as detailed below:
| | | Named Executive Officer | Target Grant Value | Awarded Grant Value | Number of Options(1) | Number of PSUs(2) (ROIC) | Number of PSUs(2) (TSR) | Target Grant Value | Number of Options(1) | Number of Restricted Stock Units(2) | Target Number of PSUs(2) |
| Eugene I. Lee, Jr | $4,000,000 | 123,852 | 19,915 | $ | 5,000,000 |
| 63,636 |
| 10,494 |
| 20,987 |
|
| Ricardo Cardenas | $1,000,000 | $1,500,000 | 46,444 | 7,468 | $ | 1,500,000 |
| 19,091 |
| 3,148 |
| 6,296 |
|
| David C. George | $1,000,000 | $1,500,000 | 46,444 | 7,468 | $ | 1,500,000 |
| 19,091 |
| 3,148 |
| 6,296 |
|
| Todd A. Burrowes | $800,000 | 24,770 | 3,983 | $ | 1,000,000 |
| 12,727 |
| 2,099 |
| 4,197 |
|
| Matthew R. Broad | $600,000 | 18,578 | 2,987 | |
| Daniel J. Kiernan | | $ | 900,000 |
| 11,455 |
| 1,889 |
| 3,778 |
|
(1)Number of options based on the Black-Scholes valuation on the first day of the fiscal year and the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made. | (1)Number of options based on the Black-Scholes valuation on the first day of the fiscal year and the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made. | (1) Number of options based on the Black-Scholes valuation on the first day of the fiscal year and the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made. |
(2)Number of PSUs based on the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made. | |
(2) Number of Restricted Stock Units and PSUs based on the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made. | | (2) Number of Restricted Stock Units and PSUs based on the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made. |
Performance Results and Payouts forfrom Prior Long-Term Incentive Plan Grants
Fiscal 20172020 was the final year of the three-year period for PSUs that were granted at the beginning of fiscal 20152018 for the performance period covering fiscal 2015-2017.2018-2020 (the 2018 grants). For thosethe 2018 grants, awarded under the prior long-term plan design andmade under our the 20022015 Plan, the PSUs are settled in cashstock, and the number of shares earned are based upon the results of a three-year performance period. The earned PSUs vest in two tranches: 50 percent of the earned PSUs vested on July 26, 2020 and the remaining earned PSUs will vest on July 26, 2021. Payout of the PSUs is based on three-year relative total shareholder return (TSR).
The Compensation Committee certified that the Company’s three-year TSR performance ranked at the 64th percentile relative to a set of publicly-traded restaurant companies established in June 2018. Prior to the pandemic, at the end of the third quarter of fiscal 2020, the Company was tracking to above 75th percentile performance, which would have resulted in a three-yearpayout of 150%. While the final level of performance period based on free cash flow and total sales; subject to a 10% adjustment based on Darden’s relative TSR over the three-year period compared to the S&P 500 (multiplied by 110% if in the top quartile and by 90% if in the bottom quartile). The TSR is calculated using an average closing price over the first and last fiscal months offor the three year period would have resulted in a payout of 127%, the Company’s three year TSR performance was negative. The applicable award agreement provides that if TSR for the Company is negative, the final earned percentage is capped at 100%. The Committee determined that no adjustments should be made to minimize volatility.the resulting payout. See footnote 3 to the “Outstanding Equity Awards at Fiscal Year-End” table on p. 47 for the number of earned PSUs for each NEO.
|
| |
| Measure and Targets | |
Darden Relative TSR Percentile Rank(1) | Earned Percentage |
>75th | 150% |
75th | 150% |
50th | 100% |
33rd | 50% |
<33rd | 0% |
|
| | | |
| Results | Target Percentile | Percentile Result | Earned Percentage(1) |
| FY 2018-20 | 50 | 64 | 100% |
| |
(1) | Straight line interpolation between 33rd and 75th percentiles, capped at 100% due to negative TSR over the performance period. |
CEO Special Award Performance Results and Vesting
On June 22, 2017, the Board approved a special additional equity grant to Mr. Lee under the Company’s 2015 Plan. Effective June 29, 2017, Mr. Lee received a grant of 81,735 PSUs (Special PSUs) with an aggregate grant date value of $7,500,000. The termsfirst installment of this award, 26.7% vested on May 31, 2020, 33.3% will vest on May 30, 2021 and the remaining 40% will vest on May 29, 2022. The Special PSUs pay out based upon achieving certain three-year, four-year and five-year adjusted EBITDA targets. The results and payout at 100% of target for the first installment of the plan required thataward were certified by the Company have positiveCompensation Committee on June 23, 2020 as set forth in the following table (dollars in millions).
|
| | | | | |
| 2020 Adjusted EBITDA | 2019 Adjusted EBITDA | 2018 Adjusted EBITDA | Three-Year Adjusted EBITDA | Three-Year Adjusted EBITDA Target | Earned Shares |
| $793.9 | $1,183.8 | $1,099.3 | $3,077.0 | exceeds $1,000.0 | 21,823 |
Adjusted EBITDA means, with respect to a fiscal year, the Company’s consolidated earnings before interest, taxes, depreciation, and/or amortization, excluding the effects of non-core, non-operating, or non-recurring items, acquisitions and divestitures and changes in accounting principles, in each case as disclosed in the Company’s financial statements. A reconciliation of adjusted EBITDA to earnings (loss) from continuing operations for the year in which the grant was made in order for any payouts under these PSUs. The plan also limited the award payout for multi-year awards to the aggregate consolidated earnings from continuing operations and saleseach of the Company during the performance period, excluding years in which the Company had no positive earnings.
The Compensation Committee certified the performance results for fiscal 2017, representing the final year of the fiscal 2015-2017 performance cycle (fiscal 2015 and 2016 results were previously approved by the Committee):
|
| | | | | |
| ($ in millions) | Weight | Target | Result(1) | Rating | Vesting Percentage |
| Total Revenue | 50% | $7,120 | $7,107 | | 91% |
| Free Cash Flow | 50% | $580 | $611 | | 142% |
| Weighted Average | | | | 1.50 | 116% |
(1)Results adjusted from reported results for incentive calculation purposes. | |
The Compensation Committee also certified that Darden’s three-year total shareholder return for the period ending in May 2017 was above the top quartile of the S&P 500; and therefore a 10% adjustment was made to the three year average percent of target earned for the 2015-2017 period.
Based on the Compensation Committee’s certification of results for fiscal 2015, 2016 and 2017, the Compensation Committee approved a payout equal to 123% of target, representing the average of the threeapplicable fiscal years as summarized byis set forth in the following table:
|
| | | | |
| | FY2015 | FY2016 | FY2017 | 3 Year Average |
| Percent of Target Earned | 113% | 106% | 116% | 112% |
| TSR Multiplier | | | | 10% |
| Final Percent of Target | | | | 123% |
The following is the PSU payout for each NEO for the PSUs that were granted for the performance cycle beginning fiscal 2015 and that vested on July 30, 2017 unless otherwise noted.
|
| | | | | |
| Named Executive Officer | Target Grant Value | Target PSUs | Actual PSUs | Stock Price on Vesting Date(1) | Actual Payment |
| Eugene I. Lee, Jr | $566,667 | 12,926 | 15,899 | $83.85 | $1,433,501 |
| Ricardo Cardenas | $415,000 | 9,401 | 11,564 | $83.85 | $1,038,455 |
| David C. George | $383,333 | 8,744 | 10,755 | $83.85 | $969,705 |
| Todd A. Burrowes | | | | | |
| Matthew R. Broad | | | | | |
(1)Represents appreciation of over $40 per share over the three-year period. |
table.
|
| | | | | | | | | | | | | | | | |
| | | Fiscal Year | | Three-Year |
| (in millions) | | 2020 |
| | 2019 |
| | 2018 |
| | Total |
| Earnings (loss) from continuing operations | | $ | (49.2 | ) | | $ | 718.6 |
| | $ | 603.8 |
| |
|
|
| Interest, net | | 57.3 |
| | 50.2 |
| | 161.1 |
| | |
| Income tax expense (benefit) | | (111.8 | ) | | 63.7 |
| | 1.9 |
| | |
| Depreciation and amortization | | 355.9 |
| | 336.7 |
| | 313.1 |
| | |
| EBITDA | | 252.2 |
| | 1,169.2 |
| | 1,079.9 |
| | |
| Adjustments | | | | | | | | |
| Goodwill impairment | | 169.2 |
| | — |
| | — |
| | |
| Trademark impairment | | 145.0 |
| | — |
| | — |
| | |
| Restaurant-level impairments | | 47.0 |
| | 14.6 |
| | — |
| | |
| Other asset impairments | | 28.8 |
| | — |
| | — |
| | |
| Pension settlement charge | | 145.5 |
| | — |
| | — |
| | |
| International entity liquidation | | 6.2 |
| | — |
| | — |
| | |
| Cheddar’s integration expenses | | — |
| | — |
| | 19.4 |
| | |
| Adjusted EBITDA | | $ | 793.9 |
| | $ | 1,183.8 |
| | $ | 1,099.3 |
| | $ | 3,077.0 |
|
Chief Operating Officer Retirement Agreement
On June 24, 2020, the Company entered into a Separation Agreement and General Release (the Retirement Agreement) with Mr. George providing for Mr. George’s retirement from the Company effective August 2, 2020. Pursuant to the Retirement Agreement, in addition to the retirement benefits offered to all eligible retirees of the Company of comparable age and years of service, Mr. George will receive (i) 78 weekly payments of $14,903.85, the amount of his current weekly salary (the Severance Payments), beginning on the effective date of his retirement, (ii) a lump sum payment of $1,296,635, payable on or about August 6, 2021, which is equal to the amount of his expected fiscal 2021 bonus at target and his expected fiscal 2022 bonus at target for the portion of that fiscal year during which he is receiving the Severance Payments, and (iii) 78 weekly payments of $199.58 as a medical benefits subsidy, beginning on the effective date of his retirement. In addition, the Agreement provides for (a) the accelerated vesting and settlement of 3,402 unvested restricted stock units currently held by Mr. George, which are in addition to the unvested restricted stock units held by Mr. George that vest and settle upon his retirement in accordance with their existing terms, (b) the accelerated vesting of 25,787 unvested stock options currently held by Mr. George, which are in addition to the unvested stock options held by Mr. George that vest upon his retirement in accordance with their existing terms, and (c) the continued vesting and settlement of 8,582 unvested performance stock units currently held by Mr. George in accordance with their original vesting and settlement provisions as though he remained an active employee, with the number of shares to be delivered upon settlement equal to the number of earned shares based on the Company’s performance against applicable performance goals, and which are in addition to the unvested performance stock units held by Mr. George that continue to vest and settle after his retirement in accordance with their existing terms. Mr. George will be able to exercise all outstanding stock options held by him until their respective original expiration dates. Mr. George would have become eligible to receive the foregoing treatment of his outstanding equity awards had he retired in the ordinary course upon attaining age 65 in December 2020. Under the terms of the Retirement Agreement, Mr. George also agrees to certain release, confidentiality, non-solicitation, non-competition and non-disparagement provisions.
NEO Total Compensation Changes for Fiscal 2020
During the annual review process, the Compensation Committee (and the Board with respect to the CEO) reviews each NEO’s total direct compensation and evaluates each NEO’s individual performance, Company and business unit performance, peer group benchmarking data and other relevant information. In June 2019, for fiscal 2020, the Compensation Committee (and the Board with respect to the CEO) approved the base salary, annual incentive target bonus opportunity amount and/or long-term incentive program Target Grant Amount of each of our NEOs effective for fiscal 2020, which included increases to certain amounts to better align the total compensation of each of our NEOs with comparable positions within our peer group, reward individual performance, or to reflect tenure in position, retention priority for key positions and/or changes in responsibilities. Base salaries are reflected in the table on p. 31, annual incentive target bonus opportunity amounts are reflected in the table on p. 34 and the long-term Target Grant Values are reflected in the table under the heading “Fiscal 2020 Annual Grants,” above.
Other Programs, Policies, and Practices
Perquisites
We provide limited perquisites to our NEOs that we believe are appropriate to enable business continuity and minimize work distractions. During fiscal 2017,2020, these benefits included an allowance toward a company car, limited reimbursement for financial planning assistance, unsubsidized group liability insurance and an annual executive physical.physical program.
Other Benefits
Our NEOs receive the same employee benefits provided to other salaried U.S. employees, but are not eligible to actively participate in Darden’s qualified retirement plans.savings plan (the Darden Savings Plan). Instead, our NEOs participate in the non-qualified FlexComp Plan. The FlexComp Plan allows participants (approximately 800) towe defer receipt of up to 25 percent of their base salaries and up to 100 percent of their annual incentive compensation. We make contributions into theamounts under our FlexComp Plan for our NEOs in place of benefitsparticipation under our qualified retirement and savings plans.the Darden Savings Plan. See the discussion under the heading “Non-Qualified Deferred Compensation” on page 48 for further details regarding the terms of participation under the FlexComp Plan.
Stock Ownership Guidelines
In keeping with our objective of aligning our executives’ interests with our shareholders’ interests, we require our executives to hold equity in the Company equal in value to a designated multiple of their salaries. Under the Company’s stock ownership policy, the Chief Executive Officer must hold 100%100 percent and any other officer must hold 50%50 percent of any net after tax shares issued to them until they achieve the required stock ownership level. The required ownership values vary based on the executive’s level of responsibility as follows:
|
| |
| Named Executive Officer | Required Ownership as a Multiple of Base Salary |
| Eugene I. Lee, Jr | 6x |
| Ricardo Cardenas | 4x |
| David C. George | 4x |
| Todd A. Burrowes | 4x |
Matthew R. BroadDaniel J. Kiernan | 2x4x |
The Compensation Committee monitors compliance with the ownership guidelines. AllWhile Company stock price declines during fiscal 2020 decreased the value of each NEO’s stock holdings, each of the NEOs wereremained in compliance with the ownership guidelines as of May 28, 2017.31, 2020.
Policy on Granting Equity Awards
Our equity awards policy provides that incentive equity grants to employees, including stock option grants, are made once per year and are effective on the last Wednesday in fiscal July. The Company may also grant equity awards for special purposes such as retention, recognition or promotion and such special awards are made effective on any date determined by the Compensation Committee, the Board or authorized individual approving the award. The grant date for equity awards is never a date prior to approval. The exercise price of stock options may not be less than the fair market value of our common stock on the date of the grant as measured by the closing sales price of our common stock on the NYSE.
Recoupment and Forfeiture of Compensation
We have adopted a clawback policy which provides that an executive officer is required to repay performance-based rewardsawards to the Company if he or she knowingly participates in a fraud that requires the Company to restate its financial statements. Performance-based rewardsawards include annual incentive awards and PSU awards under our 2015 Plan.
Employment Agreements
We do not currently have employment agreements in place with any of our named executive officers.
Change in Control Agreements
All of our executive officers are parties to Change in Control Agreements for Executive Officers that reflect current market practices and governance best practices. The Change in Control Agreements provide for severance benefits (between 1.5 and 2.0 times base salary and target bonus) in the event of a termination of employment within 24 months of a change in control of the Company. Please see the discussion under the heading “Potential Payments Upon Termination or Change in Control” on page 50 for further discussion of the Change in Control Agreements.
Compliance with Section 162(m) of the Internal Revenue CodeTax and Accounting Considerations
In designing our compensation programs, we take into account the various tax, accounting and disclosure rules. The Compensation Committee also reviews and considers the deductibility of executive compensation under section 162(m) of the Internal Revenue Code. The Tax Act repealed the performance-based exemption from Section 162(m)’s deduction limit for taxable years beginning after December 31, 2017, subject to certain transition rules that “grandfathered” certain awards and arrangements that were in effect prior to November 2, 2017, and expanded the population of executives to which the deduction limit applies. The Committee generally seeks to preserve tax deductions for executive compensation.compensation where available. Nonetheless, the Committee has awarded compensation that is not fully tax deductible when it believes such grants are in the best interests of the Company and our shareholders and reserves the right to do so in the future. We anticipate that a significant portion of our incentive awards for fiscal 2020 will not be deductible when paid due to the repeal of the performance-based compensation exemption. There is no guarantee that compensation payable pursuant to any of the Company’s compensation programs initially granted before fiscal 2020 will ultimately be deductible by the Company.
Agreement with Mr. Lee
The Company entered into an agreement with Mr. Lee dated August 13, 2007 in connection with the acquisition of RARE on October 1, 2007. The agreement extinguished most of Mr. Lee’s rights under his previous employment agreement with RARE, including the change in control provisions, but continued other provisions and confirmed the terms of his employment with Darden.
Most of the terms of the agreement have been superseded by other employment arrangements with the Company. The remaining operative provisions of the agreement continue the non-competition, non-solicitation, and non-hire of employees and confidentiality covenants of the RARE agreement during Mr. Lee’s employment with Darden and for specified periods thereafter. Specifically, Mr. Lee is subject to a non-solicitation of employees covenant, a non-hire of employees covenant and a confidentiality covenant during his employment with Darden and for 24 months thereafter; and a non-competition covenant during his employment with Darden and for 18 months thereafter.
Shareholder Engagement and Results of Say on Pay Advisory Vote
At the 20162019 Annual Meeting of Shareholders, approximately 96.995.5 percent of the votes cast were in favor of the advisory vote to approve executive compensation. We believe that these vote results, together with feedback received during the Company’s ongoing shareholder engagement, reflect that shareholders are pleased with the structure of the Company’s compensation programs put into place by the Compensation Committee for fiscal 2017.2020. The Compensation Committee is not recommending any changes to the Company’s compensation programsannual incentive program and has frozen NEO salaries and annual and long-term award percentages for fiscal 20182021 as adiscussed above, including under Annual Incentive Plan Design for Fiscal 2021. The changes were not the result of theseshareholder engagement or those vote results, however the Compensation Committee continuously evaluates plan design and considers adjustments to the Company’s compensation programs based on market and other considerations.results. The Compensation Committee and Board are committed to serving Darden’s shareholders, and plan to continue regular dialogue with shareholders as we move forward.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors reviewed and discussed the Compensation Discussion and Analysis with Darden’s management. Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended May 28, 2017.31, 2020.
Respectfully submitted,
The Compensation Committee
James P. Fogarty, Committee Chair
Cynthia T. Jamison
Nana Mensah
Timothy J. Wilmott
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Fogarty as the Chair and Ms. Jamison and Mr.Messrs. Mensah and Wilmott as members. In addition to the current members, Ms. Birch and Mr. Nowell also served on the Compensation Committee during a portion of fiscal 2017. During fiscal 2017,2020, all members of the Compensation Committee were independent directors, and no member was an employee or former employee of the Company. In addition, none of the Company’s executive officers served on the board of directors or compensation committee (or other committee serving an equivalent function) of another entity whose executive officer served on the Company’s Board of Directors or Compensation Committee.
ASSESSMENT OF RISK OF COMPENSATION PROGRAMS
We believe that our compensation programs for executives and other employees are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incentincentivize executives or other employees to take unnecessary or excessive risks. Specifically, we believe that the following features of our compensation programs (discussed in more detail in the Compensation Discussion and Analysis section above) help manage or mitigate risk:
The Company has allocated compensation among base salary and short-short-term and long-term compensation target opportunities for executives in such a way as to not encourage excessive risk taking. Incentive compensation is not overly weighted toward short-term incentives. In addition, both short-term and long-term incentives are subject to maximum payment amounts;
The mix of equity award instruments used under our long-term incentive program (a) includes full value awards; and (b) rewards different performance measures (currently, total shareholder return for stock options and return on invested capital growth as well as total shareholder return relative to publicly traded restaurant companies for PSUs);
Our annual and long-term compensation plans are reviewed by the Compensation Committee and any risks embedded in those plans are discussed and evaluated for appropriateness. Our incentive opportunities are designed to drive strong, sustainable growth and shareholder return;
The multi-year vesting of our equity awards aligns incentive compensation with shareholders’ interests by rewarding long-term stock appreciation rather than short-term performance;
Our performance criteria and objectives balance performance and sustainability of performance by setting a variety of goals, including same restaurantsame-restaurant sales growth and earnings per share growth, return on invested capital;growth;
Our Stock Ownership Guidelines encourage a focus on long-term growth in shareholder value; and
Our policies regarding recoupment and forfeiture of compensation discourage excessive or inappropriate risk taking.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the total compensation paid or earned by each of the NEOs for the fiscal years ended May 28, 2017,31, 2020, May 29, 201626, 2019, and May 31, 2015.27, 2018.
| | | | | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non-Qualified Deferred Compensation Earnings | All Other Compensation | | | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) (4) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | |
| Name and Principal Position | Year | ($)(1) | ($)(2) | ($)(3) | ($) | ($)(4) | ($)(5) | ($)Total | Year | ($)Total |
| Eugene I. Lee, Jr. | 2017 | 1,000,000 |
| — | 2,391,994 |
| 1,124,576 |
| 1,525,000 |
| — | 320,206 |
| 6,361,776 |
| 2020 | 829,760 |
| 1,916,154 | 3,914,767 |
| 1,268,902 |
| — | — | 759,124 |
| 8,688,707 |
|
| President and | 2016 | 953,750 |
| — | 2,231,443 |
| 1,006,702 |
| 1,610,498 |
| — | 338,661 |
| 6,141,054 |
| 2019 | 1,000,000 |
| — | 4,393,249 |
| 1,482,042 |
| 3,200,000 |
| — | 635,287 |
| 10,710,578 |
|
| Chief Executive Officer | 2015 | 891,462 |
| — | 935,887 |
| 948,484 |
| 1,251,785 |
| — | 241,296 |
| 4,268,914 |
| 2018 | 1,000,000 |
| — | 11,192,404 |
| 1,122,487 |
| 2,025,000 |
| — | 430,260 |
| 15,770,151 |
|
| | | | | | | |
|
| | | | | | |
|
|
| Ricardo Cardenas | 2017 | 560,000 |
| — | 896,981 |
| 421,712 |
| 546,560 |
| — | 132,592 |
| 2,557,845 |
| 2020 | 685,817 |
| 690,538 | 1,174,393 |
| 380,675 |
| — | — | 272,942 |
| 3,204,365 |
|
| Senior Vice President and | 2016 | 474,539 |
| — | 359,917 |
| 162,371 |
| 530,046 |
| — | 144,690 |
| 1,671,563 |
| 2019 | 687,019 |
| — | 1,142,285 |
| 385,328 |
| 989,307 |
| — | 222,794 |
| 3,426,733 |
|
| Chief Financial Officer | | | | | | |
|
| 2018 | 613,750 |
| — | 923,122 |
| 280,618 |
| 745,707 |
| — | 219,200 |
| 2,782,397 |
|
| | | | | | | | | | | | | |
| David C. George | 2017 | 625,000 |
| — | 1,897,014 |
| 421,712 |
| 727,500 |
| — | 188,821 |
| 3,860,047 |
| 2020 | 733,413 |
| 738,442 | 1,174,393 |
| 380,675 |
| — | — | 417,046 |
| 3,443,969 |
|
| President, Olive Garden and Executive | 2016 | 576,539 |
| — | 719,833 |
| 324,743 |
| 851,061 |
| — | 216,651 |
| 2,688,827 |
| |
| Vice President, Darden Restaurants | 2015 | 558,296 |
| — | 345,598 |
| 641,617 |
| 683,690 |
| — | 157,240 |
| 2,386,441 |
| |
| Executive Vice President and | | 2019 | 745,673 |
| — | 1,317,961 |
| 444,617 |
| 1,193,077 |
| — | 289,070 |
| 3,990,398 |
|
| Chief Operating Officer | | 2018 | 695,673 |
| — | 923,122 |
| 280,618 |
| 950,289 |
| — | 256,700 |
| 3,106,402 |
|
| | | | | | | |
|
| | | | | | |
|
|
| Todd A. Burrowes | 2017 | 535,833 |
| — | 478,402 |
| 224,912 |
| 447,528 |
| — | 102,107 |
| 1,788,782 |
| 2020 | 604,038 |
| 723,863 | 782,929 |
| 253,776 |
| — | — | 355,021 |
| 2,719,627 |
|
| President, LongHorn Steakhouse | 2016 | 442,211 |
| — | 1,388,417 |
| 259,781 |
| 604,238 |
| — | 125,483 |
| 2,820,130 |
| 2019 | 601,346 |
| — | 878,717 |
| 296,405 |
| 813,741 |
| — | 210,646 |
| 2,800,855 |
|
| | | | | | | | 2018 | 556,210 |
| — | 664,644 |
| 202,055 |
| 706,331 |
| — | 147,647 |
| 2,276,887 |
|
| Matthew R. Broad | 2017 | 470,838 |
| — | 358,772 |
| 168,688 |
| 373,375 |
| — | 83,678 |
| 1,455,351 |
| |
| Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary | | | | | | | |
| | | | | | | | |
| Daniel J. Kiernan | | 2020 | 601,442 |
| 471,635 | 704,710 |
| 228,413 |
| — | — | 159,363 |
| 2,165,563 |
|
| President, Olive Garden | | 2019 | 541,346 |
| — | 615,035 |
| 207,481 |
| 743,810 |
| — | 172,797 |
| 2,280,469 |
|
| | | | | | | | |
|
|
| |
(1) | Amounts reflect the actual base salary earned by the NEO in fiscal 2017,2020, fiscal 20162019 and fiscal 2015,2018, including any deferred amounts reported in the Non-Qualified Deferred Compensation Table. Our 2017 and 2016 fiscal years had 52 weeks while 2015 was a 53 week fiscal year. |
| |
(2) | Amounts reflect the actual cash incentive awarded to the NEO for fiscal 2020. The Compensation Committee approved modifications to the performance goals for fiscal 2020 annual incentives in response to the impacts of the COVID-19 pandemic on the Company as discussed further in the Compensation Discussion and Analysis, above. The Company made variableannual incentive payments for fiscal 2017, fiscal 2016,2019 and fiscal 20152018 based on achieving performance metricsmeasures that were established under the Company’s MIP for fiscal years 2016 and 2015 and the Company’s 2015 Plan for fiscal 2017. ThesePlan. Those annual incentive payments are reported in the “Non-Equity Incentive Plan Compensation” column of this table. |
| |
(3) | Amounts in these columns represent the grant date fair value of awards computed in accordance with ASC Topic 718 for each of fiscal 2017,2020, fiscal 20162019 and fiscal 2015.2018. The assumptions used in calculating these amounts in accordance with ASC Topic 718 are included in Note 1 (under the heading Stock-Based Compensation) to the Company’s audited financial statements included in the Company’s 20172020 Annual Report on Form 10-K. The PSUsPSU awards granted represent two separate awards, the first vestingto all NEOs in fiscal 2020 vest based on relative TSR,Relative TSR. After a three-year performance period, the second based on ROIC.The PSUs granted in fiscal 2017 will2020 are eligible to vest 50%50 percent on the third anniversary of the grant date after the three year performance period, and 50%50 percent on the fourth anniversary of the grant date. The portion that vests on the third anniversary of the grant date requires a mandatory one year holding period. The grant value of PSUs is shown at target payout. Actual awards may range from 0 percent to 150 percent of the targeted incentive. The grant value of PSUs is shown at target payout. For fiscal 2017,2020, the following amounts represent the grant date fair value of PSU awards assuming achievement of maximum (150%)(150 percent) payout: Mr. Lee—$3,587,991;Lee — $3,916,489; Mr. Cardenas—$1,345,472;Cardenas — $1,174,928; Mr. George—$1,345,472;George — $1,174,928; Mr. Burrowes—$717,603;Burrowes — $783,223; Mr. Broad—$538,158.Kiernan — $705,031. For fiscal 2016,2019, the following amounts represent the grant date fair value of PSU awards assuming achievement of maximum (150%)(150 percent) payout: Mr. Lee—$3,347,165;Lee — $4,497,741; Mr. Cardenas—$539,875;Cardenas — $1,169,399; Mr. George—$1,079,750;George — $1,349,253 Mr. Burrowes—$863,881.Burrowes — $899,617; Mr. Kiernan — $629,663. For fiscal 2015,2018, the following amounts represent the grant date fair value of PSU awards assuming achievement of maximum (165%)(150 percent) payout: Mr. Lee—$842,950;Lee — $3,759,602; Mr. George—$570,237.Cardenas — $939,869; Mr. George — $939,869; Mr. Burrowes — $676,777. These PSUs are described more fully under the heading “Compensation Discussion and Analysis — Fiscal 2017 |
fully under the heading “Compensation Discussion and Analysis — Fiscal 2020 Executive Compensation Program Elements — Long-Term Incentives.”
| |
(4) | Amounts reflect the actual cash incentive award earned by the NEO for fiscal 2019 and fiscal 2018, including any deferred amounts reported in the Non-Qualified Deferred Compensation Table. |
| |
(5) | Amounts deferred into the FlexComp Plan do not receive above market or preferential earnings, but rather receive notional rates of return that match the returns on the investment options available under the Darden Savings Plan as described under the subheading “Non-Qualified Deferred Compensation.” |
| |
(5)(6)
| All Other Compensation for fiscal 20172020 consists of the following amounts: |
|
| | | | | | | |
| | | Perks and Other Personal Benefits | Company Contributions to Defined Contribution Plans | Insurance Premiums | Dividends or Earnings on Stock or Option Awards | Other | Totals |
| |
| | ($)(a) | ($)(b) | ($)(c) | ($)(d) | ($) | ($) |
| | Eugene I. Lee, Jr. | 30,937 | 207,808 | 10,036 | 71,425 | — | 320,206 |
| | Ricardo Cardenas | 25,253 | 91,070 | 5,258 | 11,011 | — | 132,592 |
| | David C. George | 20,168 | 111,311 | 13,961 | 43,381 | — | 188,821 |
| | Todd A. Burrowes | 13,180 | 80,931 | 7,996 | — | — | 102,107 |
| | Matthew R. Broad | 20,353 | 53,321 | 10,004 | — | — | 83,678 |
|
| | | | | | | | | | | | | |
| | | Perks and Other Personal Benefits ($)(a) | Company Contributions to Defined Contribution Plans ($)(b) | Insurance Premiums ($)(c) | Dividends or Earnings on Stock or Option Awards ($)(d) | Other ($) | Totals ($) |
| |
| |
| | Eugene I. Lee, Jr. | 31,937 |
| 236,149 |
| 10,390 |
| 480,648 |
| — |
| 759,124 |
|
| | Ricardo Cardenas | 18,614 |
| 118,367 |
| 6,844 |
| 129,117 |
| — |
| 272,942 |
|
| | David C. George | 21,972 |
| 126,580 |
| 18,927 |
| 249,567 |
| — |
| 417,046 |
|
| | Todd A. Burrowes | 20,633 |
| 114,200 |
| 10,357 |
| 209,831 |
| — |
| 355,021 |
|
| | Daniel J. Kiernan | 16,840 |
| 92,285 |
| 10,390 |
| 39,848 |
| — |
| 159,363 |
|
| |
(a) | Includes the aggregate incremental costs to the Company for personal use of a Company car or a limited car allowance, a retirement discount on the price to purchase a company car, an annual executive physical program, a reimbursement for financial counseling services, and a discount on the purchase of Company gift cards.cards, and gifts received at Company events. None of these perquisites had a value exceeding the greater of $25,000 or 10 percent of total perquisites for an NEO. |
| |
(b) | Amounts in this column represent Company contributions made in August 20172020 for fiscal 20172020 Company performance under the FlexComp Plan, our non-qualified deferred compensation plan. Company contributions are made under the provisions of the FlexComp Plan and are deferred in accordance with participants’executives’ elections pursuant to the terms of the FlexComp Plan. Salary or bonus deferred by an NEO into the FlexComp Plan is reported in the “Salary” column or the “Non-Equity Incentive Plan Compensation” column. |
| |
(c) | Represents the cost to the Company for providing life insurance and long-term disability insurance. |
| |
(d) | Since May 31, 2009, ourOur NEOs havedo not receivedreceive dividends or dividend equivalents on unvested restricted stock, unvested restricted stock units or unvested PSUs, but rather accrue them for payment when the restricted stock, restricted stock units or PSUs are earned and vested and only on the number of shares of stock or units which actually vest. This amount reflects the value of the dividends paid in stock with respect to the PSUs that vested on July 27, 2019 for each of the executives. |
Grants of Plan-Based Awards for Fiscal 20172020
The following table sets forth certain information with respect to equity and non-equity plan-based awards granted during fiscal 20172020 under the 2015 Plan to each of the NEOs.
| | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | Exercise or Base Price of Option Awards($/Sh) (6) | Grant Date Fair Value of Stock and Option Awards ($) (7) | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | Exercise or Base Price of Option Awards($/Sh) (6) | Grant Date Fair Value of Stock and Option Awards ($) (7) |
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Future Payouts Under Equity Incentive Plan Awards (3) |
| Name | Grant Date | Approval Date (1) | Threshold($) | Target ($) | Maximum($) | Threshold(#) | Target (#) | Maximum(#) | Grant Date | Approval Date (1) | Threshold($) | Target ($) | Maximum($) | Threshold(#) | Target (#) | Maximum(#) |
| Eugene I. Lee, Jr. | — | | — | 1,250,000 | 2,500,000 | | | — | | — | 1,956,924 |
| 3,913,847 |
| | | | | | |
| | 7/27/2016 | 6/29/2016 | | 123,852 | 59.68 | 1,124,576 |
| 7/24/2019 | 6/19/2019 | | | | | | 63,636 |
| 124.24 | 1,268,902 |
|
| | 7/27/2016 | 6/29/2016 | | — | 19,915 | 29,873 | | 1,152,682 |
| 7/24/2019 | 6/19/2019 | | | | | 10,494 | | | 1,303,775 |
|
| | 7/27/2016 | 6/29/2016 | | — | 19,915 | 29,873 | | 1,239,312 |
| 7/24/2019 | 6/19/2019 | | | — | 20,987 |
| 31,481 |
| | | | 2,610,993 |
|
| | | | | | | | | | | |
| Ricardo Cardenas | — | | — | 448,000 | 896,000 | | | — | | — | 705,230 |
| 1,410,460 |
| | | | | | |
| | 7/27/2016 | 6/28/2016 | | 46,444 | 59.68 | 421,712 |
| 7/24/2019 | 6/18/2019 | | | | | | 19,091 |
| 124.24 | 380,675 |
|
| | 7/27/2016 | 6/28/2016 | | — | 7,468 | 11,202 | | 432,248 |
| 7/24/2019 | 6/18/2019 | | | | | 3,148 | | | 391,108 |
|
| | 7/27/2016 | 6/28/2016 | | — | 7,468 | 11,202 | | 464,734 |
| 7/24/2019 | 6/18/2019 | | | — | 6,296 |
| 9,444 |
| | | | 783,285 |
|
| | | | | | | | | | | |
| David C. George | — | | — | 625,000 | 1,250,000 | | | — | | — | 754,153 | 1,508,307 | | | | | | |
| | 7/27/2016 | 6/28/2016 | | 46,444 | 59.68 | 421,712 |
| 7/24/2019 | 6/18/2019 | | | | | | 19,091 |
| 124.24 | 380,675 |
|
| | 7/27/2016 | 6/28/2016 | | 14,937 | | 1,000,032 |
| 7/24/2019 | 6/18/2019 | | | | | 3,148 | | | 391,108 |
|
| | 7/27/2016 | 6/28/2016 | | — | 7,468 | 11,202 | | 432,248 |
| 7/24/2019 | 6/18/2019 | | | — | 6,296 |
| 9,444 |
| | | | 783,285 |
|
| | 7/27/2016 | 6/28/2016 | | — | 7,468 | 11,202 | | 464,734 |
| | | | | | | | |
| | | | |
| Todd A. Burrowes | — | | — | 428,666 | 857,332 | | | — | | — | 550,048 |
| 1,100,095 |
| | | | | | |
| | 7/27/2016 | 6/28/2016 | | 24,770 | 59.68 | 224,912 |
| 7/24/2019 | 6/18/2019 | | | | | | 12,727 |
| 124.24 | 253,776 |
|
| | 7/27/2016 | 6/28/2016 | | — | 3,983 | 5,975 | | 230,538 |
| 7/24/2019 | 6/18/2019 | | | | | 2,099 | | | 260,780 |
|
| | 7/27/2016 | 6/28/2016 | | — | 3,983 | 5,975 | | 247,864 |
| 7/24/2019 | 6/18/2019 | | | — | 4,197 |
| 6,296 |
| | | | 522,149 |
|
| | | | | | | | | | | |
| Matthew R. Broad | — | | — | 306,045 | 612,090 | | | |
| Daniel J. Kiernan | | — | | — | 486,991 |
| 973,982 |
| | | | | | |
| | 7/27/2016 | 6/28/2016 | | 18,578 | 59.68 | 168,688 |
| 7/24/2019 | 6/18/2019 | | | | | | 11,455 |
| 124.24 | 228,413 |
|
| | 7/27/2016 | 6/28/2016 | | — | 2,987 | 4,481 | | 172,889 |
| 7/24/2019 | 6/18/2019 | | | | | 1,889 | | | 234,689 |
|
| | 7/27/2016 | 6/28/2016 | | — | 2,987 | 4,481 | | 185,883 |
| 7/24/2019 | 6/18/2019 | | | — | 3,778 |
| 5,667 |
| | | | 470,021 |
|
| |
(1) | The column sets forth the date on which the Committee took action to grant the reported awards. The grants made to Mr. Lee were recommended by the Committee and approved by the independent members of the Board and the grants made to the other NEOs were approved by the Committee. |
| |
(2) | The amounts in these columns represent the potential annual cash incentive that may be earned under the 2015 Plan by each NEO. The annual ranges are calculated with the actual salary earned during the fiscal year.year, including the impacts of the salary reductions that were implemented during the fourth quarter of fiscal 2020. Where the NEO’s target bonus opportunity increases during the fiscal year (for example, in the event of a promotion), the target bonus opportunity is based on a proration using the target bonus opportunity in effect for each portion of the fiscal year, and such proration is used in the actual bonus award calculation. Actual payouts to the NEOs based on fiscal 20172020 performance are reported under the “Non-Equity Incentive Plan Compensation”“Bonus” column in the Summary Compensation Table. |
| |
(3) | The NEOs received grants of PSUs under the 2015 Plan. The PSUsPSU awards granted represent two separate awards,to the first award vestsNEOs are earned based on relative TSR, the second award vests based on ROIC.Relative TSR. After a three yearthree-year performance period, the PSUs granted in fiscal 2017 will2020 are eligible to vest 50%50 percent on the third anniversary of the grant date, and 50%50 percent on the fourth anniversary of the grant date. The portion that vests on the third anniversary of the grant date requires a mandatory one year holding period.Actual awards may range from 0 percent to 150 percent of the targeted incentive. These PSUs are described more fully under the heading “Compensation Discussion and Analysis — Fiscal 20172020 Executive Compensation Program Elements — Long-Term Incentives.” |
| |
(4) | Mr. GeorgeThe NEOs received a grantgrants of restricted stock units under the 2015 Plan. The grant to Mr. George vests on the third anniversary of the grant date. |
| |
(5) | The NEOs received grants of non-qualified stock options under the 2015 Plan. These non-qualified stock options vest 50%50 percent on each of the third and fourth anniversaries of the grant date. |
| |
(6) | All stock options are granted with an exercise price equal to the fair market value of our common stock on the date of grant. Fair market value under the 2015 Plan has been determined by the Committee to be the closing price of the common stock on the NYSE as reported in the consolidated transaction reporting system on the grant date or, if such exchange is not open for trading on such date, on the most recent preceding date when such exchange is open for trading. |
| |
(7) | Assumptions used in the calculation of these amounts are included in Note 1 to the Company’s audited financial statements included in the Company’s 20172020 Annual Report on Form 10-K. |
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the total outstanding equity awards as of May 28, 201731, 2020 for each of the NEOs.
| | | | | Option Awards (1) | | Stock Awards | | Option Awards (1) | | Stock Awards |
| | | | | | | | | | | | | Restricted Stock | | PSU Awards | | | | | | | | | | | | Restricted Stock | | PSU Awards |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock Held That Have Not Vested (#)(2) | | Market Value of Shares or Units of Stock Held That Have Not Vested ($)(2) | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock Held That Have Not Vested (#)(2) | | Market Value of Shares or Units of Stock Held That Have Not Vested ($)(2) | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) |
| Eugene I. Lee, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 7/28/2010 | | 32,676 |
| | — |
| | 37.83 |
| | 7/28/2020 | | | | | | | | | |
| | | 7/27/2011 | | 60,449 |
| | — |
| | 45.54 |
| | 7/27/2021 | | | | | | | | | |
| | | 7/25/2012 | | 59,783 |
| | — |
| | 43.58 |
| | 7/25/2022 | | | | | | | | | |
| | | 7/24/2013 | | 30,486 |
| | 30,487 |
| | 42.99 |
| | 7/24/2023 | | | | | | | | | |
| | | 9/25/2013 | | 15,344 |
| | 15,344 |
| | 40.87 |
| | 9/25/2023 | | | | | | | | | | 7/29/2015 | | 78,957 |
| | — |
| | 65.02 |
| | 7/29/2025 | | | | | | | | |
| | | 7/23/2014 | | — |
| | 103,152 |
| | 39.53 |
| | 7/23/2024 | | | | | | | | | | 7/27/2016 | | 61,926 |
| | 61,926 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | |
| | | 7/29/2015 | | — |
| | 78,957 |
| | 65.02 |
| | 7/29/2025 | | | | | | | | | | 7/26/2017 | | — |
| | 76,725 |
| | 85.83 |
| | 7/26/2027 | | | | | | | | |
| | | 7/27/2016 | | — |
| | 123,852 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | | | 7/25/2018 | | — |
| | 78,916 |
| | 107.05 |
| | 7/25/2028 | | | | | | | | |
| | | | | | | | | — |
| | — |
| | 86,868 |
| | 7,640,041 |
| | 7/24/2019 | | — |
| | 63,636 |
| | 124.24 |
| | 7/24/2029 | | 37,341 |
| | 2,870,029 |
| | 186,291 |
| | 14,318,326 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ricardo Cardenas | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 7/27/2011 | | 10,783 |
| | — |
| | 45.54 |
| | 7/27/2021 | | | | | | | | | | 7/23/2014 | | 19,416 |
| | — |
| | 39.53 |
| | 7/23/2024 | | | | | | | | |
| | | 7/25/2012 | | 10,666 |
| | — |
| | 43.58 |
| | 7/25/2022 | | | | | | | | | | 11/17/2014 | | 55,608 |
| | — |
| | 49.25 |
| | 11/17/2024 | | | | | | | | |
| | | 7/24/2013 | | 9,324 |
| | 4,804 |
| | 42.99 |
| | 7/24/2023 | | | | | | | | | | 7/29/2015 | | 12,735 |
| | — |
| | 65.02 |
| | 7/29/2025 | | | | | | | | |
| | | 7/23/2014 | | 6,406 |
| | 13,010 |
| | 39.53 |
| | 7/23/2024 | | | | | | | | | | 7/27/2016 | | 23,222 |
| | 23,222 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | |
| | | 11/17/2014 | | — |
| | 55,608 |
| | 49.25 |
| | 11/17/2024 | | | | | | | | | | 7/26/2017 | | — |
| | 19,181 |
| | 85.83 |
| | 7/26/2027 | | | | | | | | |
| | | 7/29/2015 | | — |
| | 12,735 |
| | 65.02 |
| | 7/29/2025 | | | | | | | | | | 7/25/2018 | | — |
| | 20,518 |
| | 107.05 |
| | 7/25/2028 | | | | | | | | |
| | | 7/27/2016 | | — |
| | 46,444 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | | | 7/24/2019 | | — |
| | 19,091 |
| | 124.24 |
| | 7/24/2029 | | 9,991 |
| | 767,908 |
| | 31,182 |
| | 2,396,649 |
|
| | | | | | | | | — |
| | — |
| | 29,839 |
| | 2,624,340 |
| | | | | | | | | | | | | | |
| David C. George | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 7/28/2010 | | 37,100 |
| | — |
| | 37.83 |
| | 7/28/2020 | | | | | | | | | | 1/30/2013 | | 11,515 |
| | — |
| | 41.40 |
| | 1/30/2023 | | | | | | | | |
| | | 7/27/2011 | | 47,309 |
| | — |
| | 45.54 |
| | 7/27/2021 | | | | | | | | | | 7/29/2015 | | 25,470 |
| | — |
| | 65.02 |
| | 7/29/2025 | | | | | | | | |
| | | 7/25/2012 | | 51,984 |
| | — |
| | 43.58 |
| | 7/25/2022 | | | | | | | | | | 7/27/2016 | | 23,222 |
| | 23,222 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | |
| | | 1/30/2013 | | 11,515 |
| | — |
| | 41.40 |
| | 1/30/2023 | | | | | | | | | | 7/26/2017 | | — |
| | 19,181 |
| | 85.83 |
| | 7/26/2027 | | | | | | | | |
| | | 7/24/2013 | | 27,835 |
| | 27,836 |
| | 42.99 |
| | 7/24/2023 | | | | | | | | | | 7/25/2018 | | — |
| | 23,675 |
| | 107.05 |
| | 7/25/2028 | | | | | | | | |
| | | 7/23/2014 | | — |
| | 69,779 |
| | 39.53 |
| | 7/23/2024 | | | | | | | | | | 7/24/2019 | | — |
| | 19,091 |
| | 124.24 |
| | 7/24/2029 | | 10,512 |
| | 807,952 |
| | 31,291 |
| | 2,405,026 |
|
| | | 7/29/2015 | | — |
| | 25,470 |
| | 65.02 |
| | 7/29/2025 | | | | | | | | | | | | | | | | | | | | | | |
| | | 7/27/2016 | | — |
| | 46,444 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | | |
| | | | | | | | | 14,937 |
| | 1,313,709 |
| | 34,684 |
| | 3,050,458 |
| |
| | | | | | | | | | | | | | | | |
| Todd A. Burrowes | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 7/29/2015 | | — |
| | 20,375 |
| | 65.02 |
| | 7/29/2025 | | | | | | | | | | 7/29/2015 | | 20,375 |
| | — |
| | 65.02 |
| | 7/29/2025 | | | | | | | | |
| | | 7/27/2016 | | — |
| | 24,770 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | | | 7/27/2016 | | 12,385 |
| | 12,385 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | |
| | | | | | | | | 12,433 |
| | 1,093,482 |
| | 16,770 |
| | 1,474,922 |
| | 7/26/2017 | | — |
| | 13,811 |
| | 85.83 |
| | 7/26/2027 | | | | | | | | |
| | | | | | | | | | | | | | | | | 7/25/2018 | | — |
| | 15,783 |
| | 107.05 |
| | 7/25/2028 | | | | | | | | |
| Matthew R. Broad | | | | | | | | | | | | | | | |
| | | | 7/24/2019 | | — |
| | 12,727 |
| | 124.24 |
| | 7/24/2029 | | 7,192 |
| | 552,777 |
| | 19,464 |
| | 1,496,003 |
|
| | | | | | | | | | | | | | | | |
| Daniel J. Kiernan | | | | | | | | | | | | | | | |
| | | 10/13/2015 | | — |
| | 12,516 |
| | 59.01 |
| | 10/13/2025 | | | | | | | | | | 7/25/2012 | | 4,198 |
| | — |
| | 43.58 |
| | 7/25/2022 | | | | | | | | |
| | | 7/27/2016 | | — |
| | 18,578 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | | | 7/24/2013 | | 18,790 |
| | — |
| | 42.99 |
| | 7/24/2023 | | | | | | | | |
| | | | | | | | | — |
| | — |
| | 11,382 |
| | 1,001,047 |
| | 7/23/2014 | | 16,139 |
| | — |
| | 39.53 |
| | 7/23/2024 | | | | | | | | |
| | | | 7/29/2015 | | 4,457 |
| | — |
| | 65.02 |
| | 7/29/2025 | | | | | | | | |
| | | | 7/27/2016 | | 5,418 |
| | 5,419 |
| | 59.68 |
| | 7/27/2026 | | | | | | | | |
| | | | 7/26/2017 | | — |
| | 5,371 |
| | 85.83 |
| | 7/26/2027 | | | | | | | | |
| | | | 7/25/2018 | | — |
| | 11,048 |
| | 107.05 |
| | 7/25/2028 | | | | | | | | |
| | | | 7/24/2019 | | — |
| | 11,455 |
| | 124.24 |
| | 7/24/2029 | | 6,917 |
| | 531,641 |
| | 11,759 |
| | 903,797 |
|
| |
(1) | All option awards are non-qualified stock options that expire ten years from the date of grant. Except where noted, the vesting schedule for the non-qualified stock options granted to NEOs is 50%50 percent on the third and fourth anniversaries of the grant date. For Mr.Messrs. Cardenas and Kiernan, the non-qualified stock option grants made prior to November 17, 2014 vested in thirds on the second, third and fourth anniversaries of the grant date. |
| |
(2) | The units reflected in this column represent awards of RSUs granted to Messrs. Burrowes and George. For Mr. Burrowes, 12,443 RSUs willthe NEOs which fully vest on July 28, 2019. For Mr. George, 14,937 RSUs will vest on July 27, 2019.the third anniversary of the grant dates of each such award. The market value of the RSUsoutstanding stock awards is based on a per share (or unit) value of $87.95,$76.86, the closing market price of our common shares on the NYSE on May 26, 2017,29, 2020, the last trading day before the end of our fiscal year on May 28, 2017.31, 2020. |
| |
(3) | All units reflected in this column represent PSU awards granted during fiscal 2017, 2018, 2019 and 2020. With respect to Mr. Lee, this column also includes the special CEO PSU award granted to Mr. Lee in fiscal 2015, 20162018, 21,823 units of which vested on May 31, 2020 and 2017.were delivered on July 31, 2020, as described in more detail in the Compensation Discussion and Analysis section above. The terms of the PSU awards are more fully described in footnote 4 ofthe Compensation Discussion and Analysis and the Grants of Plan-Based Awards tables of the Proxy Statement for Fiscal 2017 table. The market value of outstanding stock awards is based on a per share (or unit) value of $87.95, the closing market price of our common shares on the NYSE on May 26, 2017, the last trading day before the end of our fiscal year in which they are granted. The Compensation Committee certified the performance results with respect to the annual PSU awards granted in fiscal 2018 on May 28, 2017.June 23, 2020. Under this certification the PSUs earned with respect to the fiscal 2018 annual awards to each of the named executive officers were as follows: |
|
| | | | | | | |
| Name | Type of PSU Award | Number of PSUs on Grant Date | Earned Percentage | Number of Earned PSUs |
| Eugene I. Lee, Jr. | FY18-20 TSR | 27,637 |
| 100 | % | 27,637 |
|
| Ricardo Cardenas | FY18-20 TSR | 6,909 |
| 100 | % | 6,909 |
|
| David C. George | FY18-20 TSR | 6,909 |
| 100 | % | 6,909 |
|
| Todd A. Burrowes | FY18-20 TSR | 4,975 |
| 100 | % | 4,975 |
|
| Daniel J. Kiernan | FY18-20 TSR | 1,935 |
| 100 | % | 1,935 |
|
Option Exercises and Stock Vested for Fiscal 20172020
The following table summarizes the number of option awards exercised and restricted stock units and restrictedperformance stock units that vested during fiscal 20172020 for each of the NEOs.
| | | | | Option Awards | | Stock Awards | | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($)(2) | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#)(2) | | Value Realized on Vesting ($)(3) |
| Eugene I. Lee, Jr. | | 98,124 |
| | 5,149,539 |
| | — |
| | — |
| | — |
| | — |
| | 57,312 |
| | 7,219,046 |
|
| Ricardo Cardenas | | — |
| | — |
| | — |
| | — |
| | 14,128 |
| | 1,155,247 |
| | 16,039 |
| | 2,020,220 |
|
| David C. George | | 84,283 |
| | 4,544,709 |
| | — |
| | — |
| | 69,779 |
| | 5,753,976 |
| | 34,784 |
| | 4,381,400 |
|
| Todd A. Burrowes | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 24,212 |
| | 3,049,695 |
|
| Matthew R. Broad | | — |
| | — |
| | — |
| | — |
| |
| Daniel J. Kiernan | | | 14,229 |
| | 1,105,226 |
| | 5,673 |
| | 714,627 |
|
| |
(1) | The value realized equals the difference between the exercise price and the closing market price of our common stock on the NYSE on the date of exercise, multiplied by the number of shares acquired on exercise. |
| |
(2) | The Number of Shares Acquired for each executive represents the number of PSUs (TSR) and PSUs (ROIC) that vested for each executive on July 29, 2019. The terms of these PSUs are described in the Compensation Discussion and Analysis and the Grants of Plan-Based Awards tables of the Proxy Statement for the fiscal year in which they were granted. |
| |
(3) | The value realized equals the closing market price of our common stock on the NYSE on the vesting date multiplied by the number of shares acquired on vesting. |
Non-Qualified Deferred Compensation
We maintain the FlexComp Plan, a non-qualified deferred compensation plan, for our executive officers, other members of management and certain highly compensated employees who are not eligible to participate in the Darden Savings Plan.
The FlexComp Plan permits participating executive officers to defer receipt of up to 25 percent of their base salaries and up to 100 percent of their annual incentive compensation. Amounts deferred under the FlexComp Plan are payable in cash on the date or dates selected by the participant in accordance with the terms of the FlexComp Plan or on such other dates specified in the FlexComp Plan. Deferred amounts are credited with notional rates of return based on the performance of several investment alternatives (which mirror the returns credited inon the investment alternatives available under the Darden Savings Plan, the Company’s qualified 401(k) savings plan), as selected by the participant.
We also make certain contributions to executive officers’ accounts under the FlexComp Plan which are designed to provide benefits in lieu of qualified retirement plans. Company contributions are made annually. For all NEOs, the annual contribution is 4 percent of the executive’s eligible annual earnings. In addition, a second Company contribution ranges from 1.5 percent to 7.2 percent of the executive’s eligible annual earnings based on Company performance. The contributions are automatically deferred in accordance with the participants’ elections and the terms of the FlexComp Plan.
Participants may elect to haveBoth participant deferrals and Company contributions under the contributionsFlexComp Plan are credited with notional rates of return based on several investment alternatives, which mirror the returns credited inon the investment alternatives under the Darden Savings Plan. Except for the Darden Company Stock Fund, investment selections may be changed daily. The FlexComp Plan does not have a guaranteed rate of return or guaranteed retirement benefit. The table below shows the funds available under the Darden Savings Plan and their ratenotional rates of return for the twelve months ended May 31, 2017,2020, the reportable fund performance period that most closely matched our fiscal year, as reported by the administratorrecordkeeper of the Darden Savings Plan.
Deferred amounts under the FlexComp Plan are generally paid following separation from employment and are normally madeunless the participant elected an earlier in-service distribution date at the time of the deferral. Participants may elect to be paid in the form of a single sum cash payment. Participants may also elect to be paid in the form ofpayment, or 5-year or 10-year annual installment payments. The form of payment depends upon the participant’s deferral election and the participant’s retirement eligibility at separation from employment.
| | | Name of Fund | | Rate of Return | | Name of Fund | | Rate of Return | | Rate of Return | | Name of Fund | | Rate of
Return |
| American Funds Europacific Growth R6 | | 15.14% | | Vanguard Instl Target Retirement 2030 Fd | | 12.25% | |
| Columbia Trust Stable Government 1-0 | | 1.18% | | Vanguard Instl Target Retirement 2035 Fd | | 13.45% | | 1.91 | % | | Vanguard Instl Target Retirement 2035 Fd | | 6.81 | % |
| Darden Company Stock Fund | | 39.62% | | Vanguard Instl Target Retirement 2040 Fd | | 14.66% | | (33.12 | )% | | Vanguard Instl Target Retirement 2040 Fd | | 6.48 | % |
| Darden ESOP Stock Fund | | 40.91% | | Vanguard Instl Target Retirement 2045 Fd | | 15.01% | |
| DFA US Small Cap I | | 22.42% | | Vanguard Instl Target Retirement 2050 Fd | | 15.01% | | (7.27 | )% | | Vanguard Instl Target Retirement 2045 Fd | | 6.10 | % |
| TS&W International Large Cap Equity CL | | | (4.34 | )% | | Vanguard Instl Target Retirement 2050 Fd | | 6.11 | % |
| Vanguard Extended Market Index Inst | | 21.82% | | Vanguard Instl Target Retirement 2055 Fd | | 15.05% | | 3.88 | % | | Vanguard Instl Target Retirement 2055 Fd | | 6.13 | % |
| Vanguard Institutional Index I | | 17.88% | | Vanguard Instl Target Retirement 2060 Fd | | 15.06% | |
| Vanguard Instl Target Retirement 2010 Fd | | 5.87% | | Vanguard Instl Target Retirement Inc Fd | | 5.76% | |
| Vanguard Institutional Index Instl Pl | | | 12.84 | % | | Vanguard Instl Target Retirement 2060 Fd | | 6.20 | % |
| Vanguard Instl Target Retirement 2015 Fd | | 8.06% | | Vanguard Total Bond Market Index I | | 0.82% | | 7.27 | % | | Vanguard Instl Target Retirement 2065 Fd | | 6.01 | % |
| Vanguard Instl Target Retirement 2020 Fd | | 9.76% | | Vanguard Total Intl Stock Index Admiral | | 13.71% | | 7.26 | % | | Vanguard Instl Target Retirement Inc Fd | | 7.19 | % |
| Vanguard Instl Target Retirement 2025 Fd | | 11.07% | | | 7.25 | % | | Vanguard Total Bond Market Index I | | 9.47 | % |
| Vanguard Instl Target Retirement 2030 Fd | | | 7.03 | % | | Vanguard Total Intl Stock Index Inst | | (2.64 | )% |
The following table provides additional information concerning the FlexComp Plan account for each NEO, including the contributions by Darden to the FlexComp Plan during fiscal 20172020 and the aggregate FlexComp balance as of the endMay 31, 2020.
| | | Name | | Executive Contributions in Last FY ($)(1) | | Company Contributions in Last FY ($) (2) | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at end of FY 2017 ($) | | Executive Contributions in Last FY ($)(1) | | Company Contributions in Last FY ($) (2) | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at End of FY 2020 ($)(3) |
| Eugene I. Lee, Jr. | | — | | 253,861 | | 295,123 | | — | | 2,012,235 | | 800,000 | | 421,614 | | 232,979 | | — | | 4,714,418 |
| Ricardo Cardenas | | — | | 99,454 | | 72,407 | | — | | 642,668 | | — | | 168,277 | | 52,998 | | — | | 1,170,827 |
| David C. George | | 221,409 | | 141,332 | | 16,087 | | — | | 1,908,622 | | — | | 194,620 | | 240,930 | | — | | 2,777,437 |
| Todd A. Burrowes | | — | | 103,808 | | (3,391) | | — | | 100,417 | | 11,660 | | 142,052 | | 20,581 | | — | | 473,427 |
| Matthew R. Broad | | 30,789 | | — | | 10,762 | | — | | 41,551 | |
| Daniel J. Kiernan | | | 85,841 | | 129,009 | | 46,486 | | — | | 2,338,219 |
| |
(1) | Reflects the deferred Salary or Bonus amounts for each of the NEOs during fiscal 2020 which isare reported as compensation to such NEO in the Summary Compensation Table.Table and which are deferred in accordance with participants’ elections pursuant to the terms of the FlexComp Plan. |
| |
(2) | Reflects the Company’s annual contribution to the FlexComp Plan made in August 20162019 during fiscal 20172020 for the account of the NEOs. The Company contributions made in August 20172020 during fiscal 20182021 are not reported in this table. |
| |
(3) | A portion of the balances reported for each of Mr. Lee and Mr. George were contributed to the RARE Hospitality International, Inc. Deferred Compensation Plan (the RARE Deferred Compensation Plan) prior to July 1, 2008, when they began participating in the FlexComp Plan. The RARE Deferred Compensation Plan is a non-qualified deferred compensation plan. It is closed to new employee deferrals and Company contributions and is administered in conjunction with the FlexComp Plan. |
Pension Benefits
No benefits have accrued under the Retirement Income Plan for Darden Restaurants, Inc. (RIP) since December 31, 2014. In April 2018, our Benefit Plans Committee approved the termination of the RIP effective as of September 30, 2018. Pursuant to an agreement entered into on November 19, 2019, the RIP’s remaining assets and liabilities were transferred to a third-party annuity provider (and, in certain cases, the Pension Benefit Guaranty Corporation). Mr. Lee and Mr. Kiernan each had accumulated benefits under the RIP. The forms of payment options available to Mr. Lee and Mr. Kiernan included Joint and Survivor 50 percent, Joint and Survivor 75 percent, Joint and Survivor 100 percent, Ten Year Certain and lump sum. Mr. Lee and Mr. Kiernan are both eligible to commence benefits immediately following termination of employment. Mr. Lee is eligible for a single life annuity payable monthly at age 65 in the amount of $386.29/month. Benefits may commence at an earlier date (subject to actuarial reduction) and/or in a different form (on an actuarially equivalent basis). Mr. Kiernan elected a lump-sum payout and he received a payment of $16,434.03 in November 2019 in full satisfaction of his accumulated benefits. The Company does not maintain any other qualified defined benefit plans following the RIP’s termination.
Potential Payments Upon Termination or Change in Control
The Company has entered into Change in Control Agreements (CIC Agreements) with Messrs. Lee,Burrowes, Cardenas, George, Burrowes,Kiernan, and Broad.Lee. The Company’s typical practice is not to enter into employment agreements with the NEOs. The following summarizes the potential payments to be made to NEOs upon termination of their employment or a change in control of the Company.Company, except for Mr. George’s retirement. As discussed in more detail in the Compensation Discussion and Analysis section, above, on June 24, 2020, after the end of fiscal 2020, Mr. George entered into a Retirement Agreement with the Company providing for the terms and conditions of Mr. George’s retirement from the Company effective August 2, 2020 and his benefits under that Agreement supersede the following descriptions.
Payments Made Upon Any Termination of Employment. Regardless of the manner in which an NEO’s employment terminates, the NEO is entitled to receive amounts earned during the NEO’s term of employment. Such amounts include:
Accrued but unpaid base salary through the date of termination;
Unreimbursed employment-related expenses and other benefits owed to the NEO under the Company’s employee benefit plans or policies;
Accrued but unpaid vacation;
The NEO’s FlexComp account balance;
The NEO’s Darden Savings Plan account, if applicable; and
The NEO’s benefit under the qualified retirement plan (the RIP), if applicable.
These payments made upon termination do not differ from payments made upon termination to all employees. In addition, the NEO will continue to be able to exercise any vested stock options for a period of three months following termination of employment, or for a longer period if the NEO is eligible for early or normal retirement or in certain other situations described below.
Payments Made Upon Early Retirement. In the event of the early retirement of an NEO who has reached age 55 with ten or more years of service, in addition to the items identified under the heading “Payments Made Upon Any Termination of Employment”:
The NEO will be entitled to receive prorated vesting of each option grant, and be allowed to exercise such option for the lesser of five years or the remainder of the original term;
The NEO will be entitled to receive prorated vesting of each outstanding RSU grant, based on the number of months of service completed out of the total number of months in the original RSU vesting period;
The NEO will continue to vest in a prorated share of grants of PSUs based on Company performance for the remainder of the applicable PSU performance period;
The NEO will be entitled to receive a prorated bonus for the portion of the fiscal year served; and
The NEO, if eligible, will receive a Company contribution in a health reimbursement account to be used to reimburse eligible medical expenses, if applicable.
Payments Made Upon Normal Retirement. In the event of the retirement of an NEO who has reached age 65 with five or more years of service, in addition to the items identified under the heading “Payments Made Upon Any Termination of Employment”:
The NEO will vest in all outstanding stock options with continued exercisability for the remainder of the original term;
The NEO will vest in all outstanding RSUs;
The NEO will continue to vest in grants of PSUs based on Company performance for the remainder of the original PSU performance period;
The NEO will be entitled to receive a prorated bonus for the portion of the fiscal year served;
The NEO, if eligible, will receive a Company contribution in a health reimbursement account to be used to reimburse eligible medical expenses, if applicable; and
The NEO will be entitled to receive a distribution of any balance held under the Darden Savings Plan, if applicable.
Payments Made Upon Disability. The Company pays for long-term disability coverage for the NEOs and the amount paid for the insurance is included in the “All Other Compensation” column in the Summary Compensation Table. In the event of disability, the NEO will receive the items identified under the heading “Payments Made Upon Any Termination of Employment” above. In addition, the NEO is entitled to the following benefits, which are also available to employees with disability coverage:
The NEO will vest in all outstanding stock options and be allowed to exercise such stock options for the remainder of the original term;
The NEO will vest in all outstanding RSUs;
The NEO will vest in all outstanding PSUs on a pro rata basis based on Company performance for the remainder of the original PSU performance period;
The NEO will be entitled to receive a prorated bonus for the portion of the fiscal year served;
Up to 90 days of salary continuation;
Up to two-thirds of eligible pay with a maximum annual benefit of $180,000 payable to age 65 starting on the 91st day of disability; and
Continued eligibility for group medical, life, and dependent life coverage for 52 weeks.
Payments Made Upon Death. The Company pays for life insurance coverage for the NEOs and the amount paid for the insurance is included in the “All Other Compensation” column in the Summary Compensation Table. The life insurance benefit
for the NEOs is equal to four times salary and bonus, with a maximum amount of coverage of $1,500,000. For accidental death, the benefit is twice the amount of the regular coverage with a maximum amount of coverage of $3,000,000. An additional $500,000 may be paid if death occurs while traveling on business. These benefits would be paid from term life insurance policies maintained by the Company. In the event of death, the beneficiary or estate of the NEO (as applicable) will receive the items identified under the heading above entitled “Payments Made Upon Any Termination of Employment,” except that the NEO would be fully vested in any employer contributions under the Darden Savings Plan upon death and death benefits may not be payable under the RIP.
Stock options, restricted stock, restricted stock units and PSUs will vest in full and stock options will be exercisable for the remainder of the original term.
Payments Made Upon Involuntary Termination Without Cause. In general, the Company may, but is not obligated to, provide separation pay and benefits to its employees in the event the employee is involuntarily terminated without cause or resignation.cause. If provided, the separation pay and benefits available are generally contingent upon the Company receiving a general release of claims from the employee. In addition to the items identified under the heading above entitled “Payments Made Upon Any Termination of Employment,” such benefits to an executive officer may include severance payments of up to 12 months’ base salary and up to 12 times the monthly value of the Company’s contribution to health insurance benefits, among other benefits as the Company may determine to be appropriate under the specific circumstances.
If the executive’s age plus his or her years of service equals or exceeds 70 and the executive is involuntarily terminated without cause, accelerated vesting will be applied to a pro rata portion of the outstanding stock options and PSUs. Stock options will be exercisable for the lesser of five years or the remainder of the original term.
Alternative Normal Retirement Treatment for Mr. Lee’s Equity Awards Granted Starting in Fiscal 2020. Beginning with equity awards granted to Mr. Lee for fiscal 2020, new forms of CEO award agreements govern the terms of those awards. The terms and conditions of the CEO award agreements relating to the alternative treatment of outstanding awards upon retirement are as follows:
“Normal Retirement” is defined in the CEO award agreements as retirement after attaining age 60, completing ten years of service and providing at least six months advance notice of termination.
The CEO Option Agreement provides that upon a Normal Retirement, unvested portions of the option award do not automatically vest, but continue to vest along the original vesting schedule so long as there is compliance with post-termination restrictive covenants.
Similarly, the CEO RSU Agreement provides that upon a Normal Retirement, unvested portions of the restricted stock unit award do not automatically vest, but continue to vest along the original vesting schedule so long as there is compliance with post-termination restrictive covenants.
Payments Made Upon a Change in Control. The Company has entered into CIC Agreements with Messrs. Lee,Burrowes, Cardenas, George, Burrowes,Kiernan, and Broad.Lee. The CIC Agreements provide for, contingent upon the NEO executing a release of claims against the Company and complying with the non-competition, non-solicitation, confidentially and other restrictive covenants, severance payments equal to one and one half times the sum of the NEO’s base salary and target annual bonus for Messrs. Burrowes, Cardenas, George and Kiernan, and equal to two times the sum of Mr. Lee’s base salary and target annual bonus in the case of Mr. Lee. In addition, the CIC Agreements provide for payments of an amount equal to 18 times the monthly COBRA charge in effect on the date of termination for the Company-provided group health plan coverage in effect for the NEO on the date of termination for each of Messrs. Burrowes, Cardenas, George and Kienan and 24 times the monthy charge for Mr. Lee, less the monthly active employee charge for such coverage on the date of termination, if the NEO is terminated without cause or voluntarily terminates employment with good reason within two years of a change in control. IfThe severance (including accelerated vesting of equity) associated with a change in control as estimated in the severance payments the NEO would otherwisetable below may be entitled to receive would require the payment of excise taxes, then the amount of severance payments is reduced to avoid the point that it eliminates by a margin of $1,000 any liability for such“golden parachute” 20 percent excise tax under federal law. The NEO may receive his full severance payment only if the net amount payable to NEO, after taking into account all taxes unless(including the severance payments provided under the agreement (with the NEO bearing all responsibility for taxes) provides a net payment to the NEO that is at20 percent excise tax), would be least 10 percent higher than the net reduced amount.after-tax amount that would otherwise be payable by limiting severance to avoid the 20 percent excise tax. The CIC Agreement provides for an initial term ending on December 31 of the year the agreement is first in effect, and extended on December 31 of each year for a period of one year, unless prior notice is given by the Company that the agreement will not be extended.
Under the CIC Agreement, “Change in Control” means:
Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) (a Person) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30%30 percent or more of either (x) the then-outstanding shares of common stock of the Company (the Outstanding Company Common Stock) or (y) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities);
Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or securities of another entity by the Company or any of its subsidiaries (each, a Business Combination), in each case unless, following such Business Combination, (x) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50%50 percent of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (y) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or
such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30%30 percent or more of, respectively, the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that such ownership existed prior to the Business Combination, and (z) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
•Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
Under the CIC Agreement, “Cause” means:
An act or acts of fraud or misappropriation on the NEO’s part which result in or are intended to result in the NEO’s personal enrichment at the expense of the Company and which constitute a criminal offense under State or Federal laws;
The NEO’s continued failure to substantially perform the NEO’s duties with the Company (other than any such failure resulting from the NEO’s incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the NEO;
The NEO’s willful engagement in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise; or
The NEO’s conviction of, or entering into a plea of either guilty or nolo contendere to, any felony, including, but not limited to, a felony involving moral turpitude, embezzlement, theft or similar act that occurred during or in the course of the NEO’s employment with the Company.
Under the CIC Agreement, “Good Reason” means, without the express written consent of the NEO:
The assignment to the NEO of any duties inconsistent in any substantial respect with the NEO’s position, authority or responsibilities as in effect during the 90-day period immediately preceding the change in control or any other substantial adverse change in such position (including titles), authority or responsibilities;
A material reduction in the NEO’s base salary, target annual bonus opportunity, long-term incentive opportunity or aggregate employee benefits as in effect immediately prior to the change in control; or
•Any failure by the Company to obtain the assumption and agreement to perform by a successor.
The table below reflects the amount of compensation payable to each of the NEOs (i) under the CIC Agreement, as applicable to each individual NEO, in the event of such NEO’s involuntary not-for-cause termination of employment or resignation with good reason following a change in control and (ii) pursuant to the Company’s general practices, in the event of termination of such NEO’s employment upon voluntary termination, involuntary not-for-cause termination, involuntary for-cause termination and termination by death of the NEO. The amounts shown assume that such termination or change in control was effective as of May 28, 201731, 2020 and are estimates of the amounts that would be paid out to the NEO upon their termination. The actual amounts to be paid out can only be determined at the time of such NEO’s separation from the Company. Except for the fiscal 20172020 Annual Incentive and FlexComp Plan awards, the tables do not reflect earned amounts identified under the heading “Payments Made Upon Any Termination of Employment.” Items such as the Darden Savings Plan or FlexComp Plan account balances are identified under the Non-Qualified Deferred Compensation Table.
|
| | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination ($) | | Involuntary Not For Cause Termination (1) (2) ($) | | Involuntary For Cause Termination ($) | | Involuntary Not For Cause Termination or Resignation For Good Reason (Change in Control) (1) ($) | | Death ($) | | Disability ($) | |
| Benefits and Payments Upon Termination | | | | | | | |
| Eugene I. Lee, Jr. | | | | | | | | | | | | |
| FY17 Annual Incentive (3) | 1,525,000 |
| | 1,525,000 |
| | 1,525,000 |
| | 1,525,000 |
| | 1,525,000 |
| | 1,525,000 |
| |
| FY17 FlexComp (Retirement Contribution)(4) | 207,808 |
| | 207,808 |
| | 207,808 |
| | 207,808 |
| | 207,808 |
| | 207,808 |
| |
| Cash Severance Benefit (5) | — |
| | 1,000,000 |
| | — |
| | 4,500,000 |
| | — |
| | 1,799,973 |
| (6) |
| Accelerated Vesting of Stock-based Awards(8) | 11,648,972 |
| (7) | 11,648,972 |
|
| — |
| | 20,307,097 |
| | 20,307,097 |
| | 16,082,477 |
| |
| Miscellaneous Benefits (9) | 166,041 |
| | 174,880 |
| | 166,041 |
| | 184,373 |
| | 1,500,000 |
| (10) | 234,817 |
| |
| Ricardo Cardenas | | | | | | | | | | | | |
| FY17 Annual Incentive (3) | 546,560 |
| | 546,560 |
| | 546,560 |
| | 546,560 |
| | 546,560 |
| | 546,560 |
| |
| FY17 FlexComp (Retirement Contribution)(4) | 91,070 |
| | 91,070 |
| | 91,070 |
| | 91,070 |
| | 91,070 |
| | 91,070 |
| |
| Cash Severance Benefit (5) | — |
| | 560,000 |
| | — |
| | 1,512,000 |
| | — |
| | 2,918,411 |
| (6) |
| Accelerated Vesting of Stock-based Awards(8) | — |
| | 4,152,487 |
| | — |
| | 7,322,917 |
| | 7,322,917 |
| | 6,021,657 |
| |
| Miscellaneous Benefits (9) | 95,482 |
| | 104,321 |
| | 95,482 |
| | 109,231 |
| | 1,500,000 |
| (10) | 131,529 |
| |
| David C. George | | | | | | | | | | | | |
| FY17 Annual Incentive (3) | 727,500 |
| | 727,500 |
| | 727,500 |
| | 727,500 |
| | 727,500 |
| | 727,500 |
| |
| FY17 FlexComp (Retirement Contribution)(4) | 111,311 |
| | 111,311 |
| | 111,311 |
| | 111,311 |
| | 111,311 |
| | 111,311 |
| |
| Cash Severance Benefit (5) | — |
| | 625,000 |
| | — |
| | 1,875,000 |
| | — |
| | 1,056,250 |
| (6) |
| Accelerated Vesting of Stock-based Awards(8) | 6,260,933 |
| (7) | 7,599,736 |
| | — |
| | 11,032,281 |
| | 11,032,281 |
| | 9,504,050 |
| |
| Miscellaneous Benefits (9) | 12,713 |
| | 21,552 |
| | 12,713 |
| | 26,332 |
| | 1,500,000 |
| (10) | 63,000 |
| |
| Todd A. Burrowes | | | | | | | | | | | | |
| FY17 Annual Incentive (3) | 447,528 |
| | 447,528 |
| | 447,528 |
| | 447,528 |
| | 447,528 |
| | 447,528 |
| |
| FY17 FlexComp (Retirement Contribution)(4) | 80,931 |
| | 80,931 |
| | 80,931 |
| | 80,931 |
| | 80,931 |
| | 80,931 |
| |
| Cash Severance Benefit (5) | — |
| | 538,100 |
| | — |
| | 1,452,870 |
| | — |
| | 1,928,607 |
| (6) |
| Accelerated Vesting of Stock-based Awards(8) | — |
| | — |
| | — |
| | 3,828,418 |
| | 3,211,005 |
| | 2,294,974 |
| |
| Miscellaneous Benefits (9) | 2,640 |
| | 5,685 |
| | 2,640 |
| | 7,368 |
| | 1,500,000 |
| (10) | 37,763 |
| |
| Matthew R. Broad | | | | | | | | | | | | |
| FY17 Annual Incentive (3) | 373,375 |
| | 373,375 |
| | 373,375 |
| | 373,375 |
| | 373,375 |
| | 373,375 |
| |
| FY17 FlexComp (Retirement Contribution)(4) | 53,321 |
| | 53,321 |
| | 53,321 |
| | 53,321 |
| | 53,321 |
| | 53,321 |
| |
| Cash Severance Benefit (5) | — |
| | 475,200 |
| | — |
| | 1,176,120 |
| | — |
| | 1,441,430 |
| (6) |
| Accelerated Vesting of Stock-based Awards(8) | — |
| | — |
| | — |
| | 5,392,490 |
| | 5,392,490 |
| | 1,246,489 |
| |
| Miscellaneous Benefits (9) | 2,730 |
| | 11,569 |
| | 2,730 |
| | 16,349 |
| | 1,500,000 |
| (10) | 34,695 |
| |
|
| | | | | | | | | | | | | | | | | | | | |
| | Voluntary Termination ($) | | Involuntary Not For Cause Termination (1) ($) | | Involuntary For Cause Termination ($) | | Involuntary Not For Cause Termination or Resignation For Good Reason (Change in Control) (2) ($) | | Death ($) | | Disability ($) | |
| Benefits and Payments Upon Termination | | | | | | | |
| Eugene I. Lee, Jr. | | | | | | | | | | | | |
| FY20 Annual Incentive (3) | 1,916,154 |
| | 1,916,154 |
| | 1,916,154 |
| | 1,916,154 |
| | 1,916,154 |
| | 1,916,154 |
| |
| FY20 FlexComp (Retirement Contribution) (4) | 236,149 |
| | 236,149 |
| | 236,149 |
| | 236,149 |
| | 236,149 |
| | 236,149 |
| |
| Cash Severance Benefit (5) | — |
| | 1,000,000 |
| | — |
| | 6,000,000 |
| | — |
| | 1,258,000 |
| (6) |
| Accelerated Vesting of Stock-based Awards (7) | 10,806,001 |
| (8) | 14,178,189 |
|
| 1,855,391 |
| | 19,771,860 |
| | 19,771,860 |
| | 15,297,376 |
| |
| Miscellaneous Benefits (9) | 162,845 |
| | 176,682 |
| | 162,845 |
| | 191,279 |
| | 1,500,000 |
| (10) | 245,525 |
| |
| Ricardo Cardenas | | | | | | | | | | | | |
| FY20 Annual Incentive (3) | 690,538 |
| | 690,538 |
| | 690,538 |
| | 690,538 |
| | 690,538 |
| | 690,538 |
| |
| FY20 FlexComp (Retirement Contribution) (4) | 118,367 |
| | 118,367 |
| | 118,367 |
| | 118,367 |
| | 118,367 |
| | 118,367 |
| |
| Cash Severance Benefit (5) | — |
| | 725,000 |
| | — |
| | 2,175,000 |
| | — |
| | 2,417,688 |
| (6) |
| ��Accelerated Vesting of Stock-based Awards (7) | — |
| | 2,724,734 |
| | — |
| | 3,818,098 |
| | 3,818,098 |
| | 3,044,012 |
| |
| Miscellaneous Benefits (9) | 119,604 |
| | 132,283 |
| | 119,604 |
| | 140,930 |
| | 1,500,000 |
| (10) | 165,394 |
| |
| David C. George | | | | | | | | | | | | |
| FY20 Annual Incentive (3) | 738,442 |
| | 738,442 |
| | 738,442 |
| | 738,442 |
| | 738,442 |
| | 738,442 |
| |
| FY20 FlexComp (Retirement Contribution) (4) | 126,580 |
| | 126,580 |
| | 126,580 |
| | 126,580 |
| | 126,580 |
| | 126,580 |
| |
| Cash Severance Benefit (5) | — |
| | 775,000 |
| | — |
| | 2,325,000 |
| | — |
| | 1,093,750 |
| (6) |
| Accelerated Vesting of Stock-based Awards (7) | 2,718,750 |
| (8) | 2,718,750 |
| | — |
| | 3,864,939 |
| | 3,864,939 |
| | 3,054,591 |
| |
| Miscellaneous Benefits (9) | 12,999 |
| | 22,508 |
| | 12,999 |
| | 28,934 |
| | 1,500,000 |
| (10) | 74,135 |
| |
| Todd A. Burrowes | | | | | | | | | | | | |
| FY20 Annual Incentive (3) | 723,863 |
| | 723,863 |
| | 723,863 |
| | 723,863 |
| | 723,863 |
| | 723,863 |
| |
| FY20 FlexComp (Retirement Contribution) (4) | 114,200 |
| | 114,200 |
| | 114,200 |
| | 114,200 |
| | 114,200 |
| | 114,200 |
| |
| Cash Severance Benefit (5) | — |
| | 640,000 |
| | — |
| | 1,776,000 |
| | — |
| | 1,412,110 |
| (6) |
| Accelerated Vesting of Stock-based Awards (7) | 1,655,183 |
| (8) | 1,655,183 |
| | — |
| | 2,417,007 |
| | 2,417,007 |
| | 1,877,742 |
| |
| Miscellaneous Benefits (9) | 13,682 |
| | 17,893 |
| | 13,682 |
| | 20,716 |
| | 1,500,000 |
| (10) | 62,074 |
| |
| Daniel J. Kiernan | | | | | | | | | | | | |
| FY20 Annual Incentive (3) | 471,635 |
| | 471,635 |
| | 471,635 |
| | 471,635 |
| | 471,635 |
| | 471,635 |
| |
| FY20 FlexComp (Retirement Contribution) (4) | 92,285 |
| | 92,285 |
| | 92,285 |
| | 92,285 |
| | 92,285 |
| | 92,285 |
| |
| Cash Severance Benefit (5) | — |
| | 650,000 |
| | — |
| | 1,803,750 |
| | — |
| | 1,134,500 |
| (6) |
| Accelerated Vesting of Stock-based Awards (7) | 993,302 |
| (8) | 993,302 |
| | — |
| | 1,624,742 |
| | 1,624,742 |
| | 1,224,130 |
| |
| Miscellaneous Benefits (9) | 127,573 |
| | 134,705 |
| | 127,573 |
| | 139,569 |
| | 1,500,000 |
| (10) | 172,611 |
| |
| |
(1) | Involuntary not for cause termination includes termination of the NEO’s employment by the Company for any reason other than his or her violation of Company policy. |
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(2) | Amounts shown are subject to reduction if payments of benefits would result in excise tax liabilities under IRC Section 4999, and would result in the NEO being better off on an after-tax basis. |
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(2)
| Involuntary not for cause termination includes termination of the NEO’s employment by the Company for any reason other than his or her violation of Company policy. |
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(3) | Reflects the executive’s actual earned annual cash incentive, which is also included in the Summary Compensation Table. |
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(4) | Reflects the annual FlexComp Plan award for fiscal 20172020 paid in August 2017,2020, which is also included in the Summary Compensation Table. |
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(5) | For Mr. Lee, the Change in Control scenario reflects two times the sum of his base salary plus target bonus. For Messrs. Burrowes, Cardenas, George, Burrowes and Broad,Kiernan, the Change in Control scenario reflects one and one half times the sum of the NEOs base salary plus target bonus. For all NEOs, the Involuntary Not For Cause Termination scenario reflects 52 weeks of base salary, the value they wouldmay receive under our severance practice.guidelines. |
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(6) | Severance benefits under the disability termination scenario reflect the estimated value of expected benefits payable by the Company through our short-term disability policy and by our third-party long-term insurance providers. Assumes continued payment by the Company of an NEO’s base salary for 90 days. After that initial period until |
reaching age 65, an NEO would be entitled to receive $180,000 of annual disability benefits through the Company’s insured long-term disability program.
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(7) | This value is calculated based on the closing market price of $76.86 of our common stock on the NYSE on May 29, 2020, the last trading day before the end of the fiscal year on May 31, 2020. For stock options, this value equals the difference between the closing market price of $76.86 of our common stock on the NYSE on May 29, 2020, and the exercise price, multiplied by the number of option shares subject to accelerated vesting upon termination. Performance Stock Unit payouts are estimated assuming 100 percent performance results. The amounts include accumulated cash and stock dividends on the outstanding Restricted Stock Units and Performance Stock Units, respectively. |
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(8) | This amount represents the value of awards that would receive continued and accelerated prorated vesting when a NEO qualifies for early retirement (age 55 plus ten years of service) as of May 28, 2017. |
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(8)
| This value is calculated based on the closing market price of $87.95 of our common stock on the NYSE on May 26, 2017, the last trading day before the end of the fiscal year on May 28, 2017. For stock options, this value equals the difference between the closing market price of $87.95 of our common stock on the NYSE on May 26, 2017, and the exercise price, multiplied by the number of option shares subject to accelerated vesting upon termination. Performance Stock Unit payouts are estimated assuming 100% performance results. The amounts include accumulated cash dividends on the outstanding Restricted Stock Units and Performance Stock Units.31, 2020. |
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(9) | Miscellaneous benefits include the value of health and life insurance benefits, post-retiree medical benefits (if applicable), FlexComp Plan benefits, and miscellaneous perquisites such as discount on the purchase of their company car. |
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(10) | The maximum life insurance benefit for normal death is $1,500,000; for accidental death, the maximum is $3,000,000; and an additional $500,000 may be paid if death is attributable to death while traveling on business. These benefits would be paid from term life insurance policies. |
The Company is party to trust agreements to provide for payments under our non-qualified deferred compensation plans, including our Compensation Plan for Non-Employee Directors, the 2015 Plan and the FlexComp Plan. Full funding is required upon a change in control of Darden. In addition, stock options, restricted stock, restricted stock units and PSUs issued under our stock plans are subject to accelerated vesting in the event of a termination not for cause or for good reason following a change in control, as defined in those plans or related award agreements.
Equity Compensation Plan Information
The following table gives information about shares of our common stock issuable as of May 28, 201731, 2020 under the 2015 Plan, 2002 Plan, the RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan (the RARE Plan) and our Employee Stock Purchase Plan.
| | | | | (a) | | (b) | | (c) | | | (a) | | (b) | | (c) | |
| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | | Weighted-average exercise price of outstanding options (2) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) | | Weighted-average exercise price of outstanding options (2) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Equity compensation plans approved by security holders (3) | | 4,411,061 |
| | $46.15 | | 7,646,567 |
| (4) | | 3,449,368 |
| | $71.85 | | 5,837,269 |
| (4) |
Equity compensation plans not approved by security holders (5) | | 127,225 |
| | $35.44 | | 0 |
| | | 5,693 |
| | $37.83 | | 0 |
| |
| Total | | 4,538,286 |
| | $45.81 | | 7,646,567 |
| | | 3,455,061 |
| | $71.77 | | 5,837,269 |
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(1) | Includes stock options exercisable for common shares and deferred compensation obligations and unvested restricted stock units that may be paid out in common shares. |
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(2) | Relates solely to stock options exercisable for common shares. |
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(3) | Consists of the 2015 Plan, 2002 Plan and our Employee Stock Purchase Plan. The 2002 Plan has a “fungible share pool” approach to account for authorized shares. With respect to stock options and SARs, the number of shares available for awards is reduced by one share for each share covered by such award or to which the award relates. With respect to awards granted after September 15, 2006, other than stock options and SARs, the number of shares available for awards is reduced by two shares for each share covered by such award or to which such award relates. Awards that do not entitle the holder to receive or purchase shares and awards that are settled in cash are not counted against the aggregate number of shares available for awards under the 2002 Plan. |
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(4) | Includes up to 6,658,4104,985,849 shares of common stock that may be issued under awards under the 2015 Plan, and up to 988,157851,420 shares of common stock that may be issued under our Employee Stock Purchase Plan. No new awards may be made under the 2002 Plan. |
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(5) | Consists of the RARE Plan, which is further described below. |
RARE Plan. We acquired RARE on October 1, 2007. The RARE Plan has not been approved by our shareholders, but was approved by the shareholders of RARE on May 8, 2007. No new awards may be granted under the RARE Plan after May 10, 2014, but the plan shall remain in effect as long as any awards under the plan are outstanding. The RARE Plan is administered by the Compensation Committee. The RARE Plan provided for the issuance of common stock in connection with awards of non-qualified stock options, incentive stock options, restricted stock and restricted stock units. Persons eligible to receive awards under the RARE Plan were any employee, officer, director, consultant or advisor of the Company who, as of September 30, 2007, was an employee, officer, director, consultant or advisor to RARE or its subsidiaries or affiliates. The RARE Plan is designed to meet the requirements of Section 162(m) of the Code regarding the deductibility of executive compensation. The RARE Plan provides that the exercise price of stock options shall be determined by the Compensation Committee, but shall not be less than the fair market value of a share of common stock as of the grant date. The Compensation Committee further amended the RARE Plan on June 19, 2008, to provide a “fungible share pool” approach to manage authorized shares under the RARE Plan. The RARE Plan did not provide for “net share counting,” so that shares that are used to pay the exercise price of a stock option or are withheld upon exercise of a stock option to satisfy tax withholding requirements were not be added to the number of shares available for granting awards under the RARE Plan.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our median compensated employee and the annual total compensation of Mr. Lee, our President and Chief Executive Officer.
For the fiscal year ending May 31, 2020, our last completed fiscal year:
The annual total compensation of the median compensated of all employees of the Company (other than our CEO) was $16,137.
The annual total compensation of our CEO, as reported in the Summary Compensation Table included on p. 42 of this Proxy Statement, was $8,688,707.
As a result, for fiscal 2020, the ratio of the annual total compensation of Mr. Lee, our CEO, to the annual total compensation of the median compensated of all employees was 538 to 1. Neither the Compensation Committee nor management of the Company uses the pay ratio measure in making compensation decisions.
Due to the variable nature of part time restaurant team member schedules, work hours and tenures from one year to the next, we believe it is most appropriate to identify a new median employee for each fiscal year.
To identify the median compensated employee and to determine the annual total compensation of the median employee, we used the following methodology, which is substantially the same methodology we used in fiscal 2019, with clarifications added below for treatment of employees on furlough during fiscal 2020:
We prepared a listing of all of the Company’s employees as of February 24, 2020, three months prior to our fiscal year end, resulting in a list of approximately 189,000 employees after certain permitted exclusions. As permitted by the de minimis exception under applicable SEC rules, we excluded all of our non-United States based employees, as they represented less than 5 percent of our total workforce. We excluded approximately 1,000 employees located in Canada and one employee located in Malaysia. The remaining employees were all based in the United States. We also excluded new hires who had not yet received their first paycheck. As a result of the COVID-19 pandemic’s impact on our operations, including the temporary closure of all of our dining rooms beginning in March 2020, we placed many restaurant and corporate team members on furlough for portions of the fourth quarter of fiscal 2020. At the highest point during that quarter, approximately150,000 team members were on furlough. We included these furloughed team members as employees for purposes of the calculations.
We organized the resulting list by a consistently applied compensation measure (the Compensation Measure). The Compensation Measure that we used was comprised of all items of compensation, both cash and non-cash paid to our employees during the fiscal year, as represented in our corporate payroll system, excluding items such as Flex Comp awards, performance stock unit awards, restricted stock awards and certain other similar or related items that are not widely distributed to all employees. We annualized the compensation of employees who were hired during fiscal 2020. We did not annualize the compensation of our furloughed employees for the period of their furlough. We included amounts paid under our emergency pay program for the furloughed team members as compensation. We then determined the median amount from this list and the related employee is our “median employee.” The median employee determined for fiscal 2020 is a part time team member at one of our restaurants. Our median employee for fiscal 2020 was on furlough for a portion of the fourth fiscal quarter and received compensation from our emergency pay program.
After identifying the median employee, we calculated annual total compensation for this employee using the same methodology we use for calculating the total compensation of our named executive officers as set forth in the Summary Compensation Table.
AUDIT COMMITTEE REPORT
The Audit Committee. Our Audit Committee consists of three directors, each of whom is an independent director under our Corporate Governance Guidelines and as required by the NYSE listing standards and SEC regulations for audit committee membership. The Audit Committee acts under a written charter adopted by the Board, which sets forth its responsibilities and
duties, as well as requirements for the Audit Committee’s composition and meetings. The Audit Committee appoints our independent registered public accounting firm and is primarily responsible for:
The integrity of our financial statements;
Our compliance with legal and regulatory requirements;
The qualifications and independence of our internal audit function and independent registered public accounting firm; and
The performance of our internal audit function and independent registered public accounting firm.
Management is responsible for our internal controls, for the financial reporting process, and for providing a report assessing the effectiveness of our internal control over financial reporting. Our independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and an independent audit of our internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes.
Audit Committee Report. The Audit Committee has reviewed and discussed the audited consolidated financial statements with our management and discussed with KPMG LLP, our independent registered public accounting firm, the matters required to be discussed by the statement on Auditing Standard No. 16,1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.
The Audit Committee has received the written disclosures and the letter from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the Audit Committee concerning independence, and has discussed with KMPGKPMG LLP its independence.
Based upon the reviews and discussions with management and KPMG LLP described above, the Audit Committee recommended to the Board of Directors that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended May 28, 201731, 2020 for filing with the SEC.
This report has been furnished by the members of the Audit Committee:
Cynthia T. Jamison, Chair
Margaret Shân Atkins
Bradley D. Blum
William S. Simon
Independent Registered Public Accounting Firm Fees and ServicesINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
Fees
The following table sets forth the aggregate fees billed or estimated to be billed to us by KPMG LLP for fiscal 20172020 and fiscal 2016:2019:
| | | | | Fiscal 2017 | | Fiscal 2016 | | Fiscal 2020 | | Fiscal 2019 |
| Audit Fees | | $ | 2,280,000 |
| | $ | 3,600,000 |
| | $ | 2,428,500 |
| | $ | 2,185,500 |
|
| Audit-Related Fees | | 163,000 |
| | 153,000 |
| | 180,500 |
| | 172,500 |
|
| Tax Fees | | 1,350,200 |
| | 2,345,000 |
| | 1,355,000 |
| | 1,177,000 |
|
| All Other Fees | | 3,300 |
| | 3,300 |
| | 3,560 |
| | 3,560 |
|
| Total Fees | | $ | 3,796,500 |
| | $ | 6,101,300 |
| | $ | 3,967,560 |
| | $ | 3,538,560 |
|
Audit Fees consisted of fees paid to KPMG LLP for the audit of our annual consolidated financial statements included in the Annual Report on Form 10-K, review of our interim consolidated financial statements included in our Quarterly Reports on Form 10-Q, and services normally provided by our accountants in connection with statutory and regulatory filings or engagements. Fiscal 20172020 audit fees were lowerhigher than the prior year primarily reflecting additional services performed in connectiondue to audit fees associated with the spinoff of certain real estate assets into Four Corners Property Trust, Inc. (the FCPT Transaction) in fiscal 2016.equity offering and registration statement comfort letters, as well as COVID-19 environment impacts.
Audit-Related Fees consisted of fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit Fees. The services provided consisted of audits of our employee benefit plans, the Darden Restaurants, Inc. Foundation and Darden Dimes, Inc.
Tax Fees in fiscal 2017 consisted of fees for tax compliance of $1,350,200, and in fiscal 2016 consisted of fees for tax compliance of $1,095,000 and tax consulting services of $1,250,000.services. Fiscal 20172020 tax fees were lowerhigher than the prior year primarily reflectingdue to additional services related to growth in required filings as new restaurants are opened as well as compliance with new federal and state tax consulting performed in connection with the FCPT transaction in fiscal 2016.laws.
All Other Fees consisted of fees other than the services reported above. The services provided in fiscal 20172020 and in fiscal 20162019 consisted of a subscription to an accounting research website.
Pre-Approval Policy
Pursuant to our policy on Pre-Approval of Audit and Non-Audit Services, we discourage the retention of our independent registered public accounting firm for non-audit services. We will not retain our independent registered public accounting firm for non-audit work unless:
In the opinion of senior management, the independent registered public accounting firm possesses unique knowledge or technical expertise that is superior to that of other potential providers;
The approvals of the Chair of the Audit Committee and the CFO are obtained prior to the retention; and
The retention will not affect the status of the independent registered public accounting firm as “independent accountants” under the applicable rules of the SEC, Independence Standards BoardPCAOB and NYSE.
In addition, all non-audit services of more than $250,000 in a fiscal quarter must be pre-approved by the full Audit Committee.
The details regarding any engagement of the independent registered public accounting firm for non-audit services are provided promptly to the full Audit Committee. During fiscal 20172020 and fiscal 2016,2019, all of the services provided by KPMG LLP for the services described above related to Audit-Related Fees, Tax Fees, and All Other Fees were pre-approved using the above procedures and none were provided pursuant to any waiver of the pre-approval requirement.
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
Why did I receive a one-page Notice in the mail regarding the Availability of Proxy Materials instead of printed proxy materials?
In accordance with rules adopted by the SEC, instead of mailing a printed copy of our proxy materials to our shareholders, we have elected to furnish such materials to our shareholders by providing access to these documents over the Internet. Accordingly, on August 7, 2017,10, 2020, we sent a Notice of Availability of Proxy Materials to our shareholders of record and beneficial owners. You have the ability to access the proxy materials on a website referred to in such Notice or request to receive a printed set of the proxy materials free of charge.
Who is entitled to vote?
Record holders of our common shares at the close of business on July 25, 201729, 2020 are entitled to one vote for each common share they own. On July 25, 2017, 125,351,34029, 2020, 130,080,617 shares of common stock were outstanding and eligible to vote. The shares held in our treasury are not considered outstanding and will not be voted or considered present at the meeting. There is no cumulative voting.
How do I vote?
Before the meeting, if you are a shareholder of record, you may vote your shares in one of the following three ways:
By Internet, by going to the website shown on your proxy card or Notice of Availability of Proxy Materials and following the instructions for Internet voting set forth on such proxy card or Notice;
If you reside in the United States or Canada, by telephone at the number shown on your proxy card and following the instructions on such proxy card; or
If you received or requested printed copies of the proxy materials by mail, by completing, signing, dating and returning the proxy card.
Shareholders are invitedof record and beneficial owners will be able to attendvote their shares electronically during the Annual Meeting. However, even if you plan to participate in the Annual Meeting andonline, we recommend that you vote by proxy so that your votes will be counted if you later decide not to participate in person at the Annual Meeting. If you are a beneficial owner of shares, you must obtain a legal proxy from the broker, bank or other holder of record of your shares to be entitled to vote those shares in person at the meeting.
Telephone and Internet voting facilities for shareholders of record will close at 11:59 p.m. E.T. on September 20, 2017.22, 2020.
Please use only one of the three ways to vote. Please follow the directions on your proxy card or Notice of Availability of Proxy Materials carefully. The Florida Business Corporation Act provides that a shareholder may appoint a proxy by electronic transmission, so we believe that the Internet or telephone voting procedures available to shareholders are valid and consistent with the requirements of applicable law.
If you return your signed proxy card or use Internet or telephone voting before the Annual Meeting, we will vote your shares as you direct. You have two choices for each director nominee — FOR or WITHHOLD —, four choices for the advisory vote on frequency of future advisory votes on compensation — ONE YEAR, TWO YEARS, THREE YEARS or ABSTAIN — and three choices for each other matter to be voted upon — FOR, AGAINST or ABSTAIN.
If you are a shareholder of record and do not specify on your returned proxy card or through the Internet or telephone prompts how you want to vote your shares, we will vote them FOR the election of each of the eight director nominees set forth in this Proxy Statement, FOR advisory approval of our executive compensation for ONE YEAR for the frequency of future advisory votes on executive compensation,and FOR the ratification of KPMG LLP as our independent registered public accounting firm for fiscal 2018, and AGAINST the shareholder proposal requesting that the Company adopt a policy to phase out routine use of antibiotics in the meat and poultry supply chain.2021.
What is a “broker non-vote,” and will my shares held in street name be voted if I do not provide my proxy?
If your shares are held in a brokerage account in your bank or broker’s name (street name), the proxy materials or Notice of Availability of Proxy Materials were forwarded to you by your bank or broker, who is considered the shareholder of record for purposes of voting at the Annual Meeting. If you received a proxy card, those shares held in street name were not included in the total number of shares listed as owned by you on the proxy card. As a beneficial owner, you have the right to direct your bank or broker on how to vote the shares held in your account. You should follow the voting instructions provided by your bank or broker. You may complete and mail a voting instruction card to your bank or broker or, if your bank or broker allows, submit voting instructions by telephone or the Internet.
A “broker non-vote” generally occurs when you fail to provide your broker with voting instructions and the broker does not have the discretionary authority to vote your shares on a particular proposal because the proposal is not a routine matter under the NYSE rules applicable to its member brokers. Broker non-votes are not counted as votes cast on a proposal, but the shares represented at the meeting by an executed proxy to which such non-votes relate are counted as present for the limited purpose of determining a quorum at the Annual Meeting. The proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 20182021 is considered a routine matter under current applicable rules, assuming that no shareholder contest arises as to this matter. As such, your brokerage firm will have the discretionary authority to vote shares on this matter for which you do not provide voting instructions. The election of directors and all other proposals to be voted on at the Annual Meeting including the shareholder proposal, are not considered to be routine matters.
BallotsElectronic voting will be distributedpossible during the meeting tofor anyone who wants to vote in person.during the meeting. If you hold your shares in street name, you must request a legal proxy from your bank or broker to vote in person atduring the meeting.
How do you recommend that I vote on these items?
The Board recommends that you vote FOR the election of each of the eight director nominees set forth in this Proxy Statement, FOR advisory approval of our executive compensation, for ONE YEAR for the frequency of future advisory votes on executive compensation,and FOR the ratification of KPMG LLP as our independent registered public accounting firm for fiscal 2018, and AGAINST the shareholder proposal requesting that the Company adopt a policy to phase out routine use of antibiotics in the meat and poultry supply chain.2021.
What if I change my mind after I vote?
You may change your vote or revoke your proxy at any time before the polls close at the meeting by:
Signing another proxy card with a later date and returning it to us prior to the meeting;
Voting again by Internet or telephone prior to the meeting as described on the proxy card; or
Voting again in person atelectronically during the meeting.
You also may revoke your proxy prior to the meeting without submitting a new vote by sending a written notice to our Corporate Secretary that you are withdrawing your vote.
What shares are included on my proxy card?
If you received a proxy card by mail, your proxy card includes shares held in your own name and shares held in any Darden plan, including the Employee Stock Purchase Plan. You may vote these shares by Internet, telephone or mail, all as described on the proxy card and Notice of Availability of Proxy Materials.
How do I vote if I participate in the Darden Savings Plan?
If you hold shares in the Darden Savings Plan, which includes shares held in the Darden Stock Fund in the 401(k) plan, the Employee Stock Ownership Plan and after-tax accounts, these shares have been added to your other holdings on your proxy card if you received a proxy card by mail. You may direct the trustee how to vote your Darden Savings Plan shares by submitting your proxy vote for those shares, along with the rest of your shares, by Internet, telephone or mail, as described on the proxy card or Notice of Availability of Proxy Materials. If you do not submit timely voting instructions to the trustee on how to vote your shares, your Darden Savings Plan shares will be voted by the trustee in the same proportion that it votes shares in other Darden Savings Plan accounts for which it did receive timely voting instructions.
What does it mean if I received more than one proxy card or Notice of Availability of Proxy Materials?
If you received more than one proxy card or Notice of Availability of Proxy Materials, it means you have multiple accounts with your brokers and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker or our transfer agent to consolidate as many accounts as possible under the same name and address. You may contact our transfer agent, Wells Fargo, National Association,EQ Shareowner Services, toll free at (877) 602-7596.
Who may attendparticipate in the Annual Meeting?
The Annual Meeting is open to all holders of our common shares. To attend the meeting, you will need to register upon arrival. We will verify your name on our shareholders list and ask you to produce valid photo identification. If your shares are held in street name by your broker or bank, you must bring your most recent brokerage account statement or other evidence of your share ownership. If we cannot verify that you own Darden shares, it is possible that you may not be admitted to the meeting. |
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| How to participate in the Annual Meeting online: | 1. Visit www.virtualshareholdermeeting.com/DRI2020; and 2. Enter the 16-digit control number included on your Notice Regarding the Availability of Proxy Materials (“Notice”), on your proxy card (if you received a printed copy of the proxy materials), or on the instructions that accompanied your proxy materials. You may begin to log into the meeting platform beginning at 9:45 a.m. Eastern Time on September 23, 2020. The meeting will begin promptly at 10:00 a.m. Eastern Time. |
How to participate in the Annual Meeting without a 16-digit control number: | Visit www.virtualshareholdermeeting.com/DRI2020and register as a guest. You will not be able to vote your shares or ask questions. |
For help with technical difficulties: | Call (800) 586-1548 (U.S.) or (303) 562-9288 (international) for assistance. |
| Additional questions: | Email Investor Relations at investor@darden.comor call (407) 245-5959. |
May shareholders askWill the Company respond to shareholder questions atduring the Annual Meeting?
We currently anticipate takingresponding to questions from shareholders although wesubmitted in advance of the meeting. We may impose certain procedural requirements such as limitingcombining repetitive or follow-upsimilar questions. You may submit your questions in writing only up to 11:59 p.m. on September 22, 2020 at www.proxyvote.com, using your control number or requiring questions to be submitted in writing.the QR barcode on your proxy card.
How many shares must be present to hold the Annual Meeting?
A majority of our outstanding common shares as of the record date must be present in personby participating through the internet or by proxy at the meeting. This is called a quorum. Your shares are counted as present at the meeting if you are presentparticipating as a shareholder and vote in person atelectronically during the meeting or if you have properly returned a proxy by Internet, telephone or mail. Abstentions and “broker non-votes” also will be counted for purposes of establishing a quorum, as explained above under the question “How do I vote?”.
How many votes are required to approve each proposal?
Proposal 1: In an uncontested election, the eight director nominees shall be elected by a majority of the votes cast. This means that the number of votes cast “FOR” a director’s election exceeds the number of votes cast “WITHHOLD” relating to that director’s election as described under the caption “PROPOSAL 1 — ELECTION OF EIGHT DIRECTORS FROM THE NAMED DIRECTOR NOMINEES.” Failing to vote for all or some of the director nominees will have no effect on the election of directors. Broker non-votes will also have no effect on this proposal. However, under our Bylaws, if a director nominee in an uncontested election does not receive at least a majority of the votes cast for the election of directors at any meeting at which a quorum is present, the director must promptly tender his or her resignation to the Board and remain a director until the Board appoints an individual to fill the office held by such director, as more particularly described under the heading “Corporate Governance and Board Administration — Director Election Governance Practices.”
Proposal 2: This advisory vote as described under the caption “PROPOSAL 2 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION” is non-binding but the Board and the Compensation Committee will give careful consideration to the results of voting on this proposal. The approval of the advisory resolution on executive compensation requires, under Florida law, the majority of the votes cast to be voted “FOR” the proposal. Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” the proposal.
Proposal 3: This advisory vote as described under the caption “PROPOSAL 3 — ADVISORY APPROVAL ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION” is non-binding but the Board and the Compensation Committee will give careful consideration to the results of voting on this proposal. The recommended outcome of the advisory resolution on frequency of future advisory votes on executive compensation will be, under Florida law, the option
with the greatest number of votes cast in favor. Abstentions and broker non-votes will not be counted as votes for any of the options in this proposal.
Proposal 4:3: The ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending May 27, 201830, 2021 described under the caption “PROPOSAL 43 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM” requires, under Florida law, the majority of the votes cast to be voted “FOR” the proposal. Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” the proposal.
Proposal 5: The ratification of the shareholder proposal described under the caption “PROPOSAL 5 — SHAREHOLDER PROPOSAL REQUESTING THAT THE COMPANY ADOPT A POLICY TO PHASE OUT ROUTINE USE OF ANTIBIOTICS IN THE MEAT AND POULTRY SUPPLY CHAIN”requires, under Florida law, the majority of the votes cast to be voted “FOR” the proposal. Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” the proposal.
How will voting on “any other business” be conducted?
We have not received proper notice of, and are not aware of, any business to be transacted at the Annual Meeting other than the proposals described in this Proxy Statement. If any other business is properly presented at the Annual Meeting, the proxies received will be voted on such matter in accordance with the discretion of the proxy holders.
Where do I find the voting results of the meeting?
We will include the voting results in a Current Report on Form 8-K, which we will file within four business days after the date our 20172020 Annual Meeting of Shareholders ends.
How do I submit a shareholder proposal, nominate directors or recommend director nominees, or submit other business for next year’s annual meeting?
If you wish to submit a proposal for inclusion in our Proxy Statement for our 20182021 Annual Meeting, the proposal must comply with applicable requirements or conditions established by the SEC, including Rule 14a-8 under the Exchange Act, and must be received by our Corporate Secretary at our principal office no later than the close of business on Wednesday,Monday, April 11, 2018.12, 2021. Please address your proposal to: Matthew R. Broad, Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary, Darden Restaurants, Inc., 1000 Darden Center Drive, Orlando, Florida 32837.
Under our Bylaws (which are subject to amendment at any time), if you wish to nominate a director at our 20182021 Annual Meeting and such nomination will not be included in the proxy statement for that meeting, or you wish to bring other business before the shareholders at our 20182021 Annual Meeting, you must:
Notify our Corporate Secretary in writing on or before Wednesday, May 24, 2018;26, 2021; and
Include in your notice the specific information required by our Bylaws and otherwise comply with the requirements of our Bylaws and applicable law.
Our Bylaws also provide a proxy access right to permit a shareholder, or a group of not more than 10 shareholders, owning continuously for at least 3 years shares of our Company representing an aggregate of at least 3%3 percent of the voting power entitled to vote in the election of directors, to nominate and include in our proxy materials director nominees constituting up to 25%25 percent of the number of the directors in office, provided that the shareholder(s) and the nominee(s) satisfy the requirements in our Bylaws. If you wish to exercise your proxy access right to nominate a director(s), you must:
Notify our Corporate Secretary in writing on or before Monday, April 24, 2018;26, 2021; and
Include in your notice the specific information required by our Bylaws and otherwise comply with the requirements of our Bylaws and applicable law.
If you would like a copy of our Bylaws, we will send you one without charge on request. A copy of our Bylaws also is available at www.darden.com.www.darden.com.
If you wish to recommend a nominee for director, you should comply with the procedures provided in our Director Nomination Protocol available at www.darden.com as Appendix A to our Nominating and Governance Committee charter and
discussed under the heading “Meetings of the Board of Directors and Its Committees — Board of Directors — Director Candidates Recommended by Shareholders”Shareholders” above.
OTHER BUSINESS
As of the date of this Proxy Statement, your Board knows of no other matters to be brought before the 20172020 Annual Meeting other than those discussed in this Proxy Statement. If any other matters requiring a vote of the shareholders are properly
brought before the Annual Meeting, the persons appointed as proxyholders under the proxies solicited by the Board will vote such proxies in accordance with their best judgment, to the extent permitted under applicable law.
SOLICITATION OF PROXIES
We pay the costs of proxy solicitation, including the costs for mailing the Notice of Availability of Proxy Materials and preparing this Proxy Statement. We have engaged Okapi Partners (Okapi) to assist us in soliciting proxies from our shareholders for a fee of approximately $12,600,$12,500 plus reimbursement of out-of-pocket expenses. In addition to Okapi, our directors, officers and regular employees may, without additional compensation, solicit proxies personally or by telephone or other electronic communications. We will reimburse banks, brokers and other custodians, nominees and fiduciaries for their costs of sending the proxy materials to our beneficial owners.
HOUSEHOLDING OF MATERIALS FOR ANNUAL MEETING OF SHAREHOLDERS
SEC rules allow us to deliver a single copy of proxy statements, annual reports, prospectuses and information statements or Notice of Availability of Proxy Materials to any address shared by two or more of our shareholders. This method of delivery is called “householding” and can significantly reduce our printing and mailing costs and reduce the volume of mail you receive. Accordingly, we are delivering only one Notice of Availability of Proxy Materials or (if paper copies are requested) one Proxy Statement and 20172020 Annual Report on Form 10-K to multiple shareholders sharing an address, unless we received instructions to the contrary from one of more of the shareholders. If you would like to receive more than one copy of the Notice of Availability of Proxy Materials or Proxy Statement and our 20172020 Annual Report on Form 10-K, we will promptly send you additional copies upon written or oral request directed to Broadridge Financial Services at toll free (800) 579-1639, or at www.proxyvote.com.www.proxyvote.com. The same phone number and website address may be used to notify us that you prefer to receive your own copy of proxy and other materials in the future or to request future delivery of a single copy of proxy or other materials. If your shares are held in street name, you may request information about householding from your bank or broker.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10 percent of our common shares to file with the SEC and NYSE reports of ownership and changes in ownership of our common shares. Directors, executive officers and greater than 10 percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on a review of the copies of these reports furnished to us since the beginning of fiscal 20172020 and written representations that no other reports were required, all other Section 16(a) filing requirements applicable to our directors and executive officers were timely satisfied during fiscal 2017.2020 except as described below.
Due to an administrative oversight, Richard L. Renninger failed to timely file two Form 4’s, one relating to the earning and the other relating to the payout of two tranches of Performance Stock Units on June 18, 2019 and July 27, 2019. The transactions were reported on a Form 4 dated June 3, 2020, promptly after the oversight was discovered.
AVAILABILITY OF ANNUAL REPORT TO SHAREHOLDERS
SEC rules require us to provide an Annual Report to shareholders who receive this Proxy Statement. We will also provide copies of the Annual Report to brokers, dealers, banks, voting trustees and their nominees for the benefit of their beneficial owners of record. For fiscal 2017,2020, the Company is fulfilling this requirement by delivering the Company’s Annual Report on Form 10-K. You may obtain without charge the Company’s 20172020 Annual Report on Form 10-K or any other corporate governance documents referred to in this Proxy Statement by writing to the Corporate Secretary of the Company at 1000 Darden Center Drive, Orlando, Florida 32837. These also are available on the SEC’s website at www.sec.gov or on the Company’s website at www.darden.com.www.darden.com.
The Annual Report on Form 10-K is not to be regarded as soliciting material, and our management does not intend to ask, suggest or solicit any action from the shareholders with respect to the Annual Report on Form 10-K.
The information provided on the Company’s website is referenced in this Proxy Statement for information purposes only. The information on the Company’s website shall not be deemed to be a part of or incorporated by reference into this Proxy Statement or any other filings we make with the SEC.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on September 21, 2017:23, 2020: The Proxy Statement and our 20172020 Annual Report on Form 10-K are available without charge to
shareholders upon written or oral request directed to Okapi Partners by calling (212) 297-0720, toll-free by calling (877) 869-0171 or by email at info@okapipartners.com.info@okapipartners.com.
YOUR VOTE IS IMPORTANT!
Please vote by telephone or the Internet or promptly mark, sign, date and return your proxy card if you received a proxy card by mail.
BY ORDER OF THE
BOARD OF DIRECTORS
Matthew R. Broad
Senior Vice President, General Counsel,
Chief Compliance Officer and Corporate Secretary
August 7, 201710, 2020
Appendix A — Glossary of Terms
2002 Plan. The Darden Restaurants, Inc. 2002 Stock Incentive Plan, as amended, which provides for the grant of stock options, SARs, restricted stock, restricted stock units, performance awards and other stock and stock-based awards to employees, officers, consultants, advisors and non-employee directors.
2015 Plan. The Darden Restaurants, Inc. 2015 Omnibus Incentive Plan adopted by the Board in July 2015 and approved by shareholders at the 2015 Annual Meeting.
Annual Meeting. The 20172020 Annual Meeting of Shareholders to be held on September 21, 2017.23, 2020.
CEO. Our Chief Executive Officer.
CFO. Our Chief Financial Officer.
COO. Our Chief Operating Officer, a position which has now been eliminated.Officer.
Compensation Committee or Committee (when used in the Compensation Discussion and Analysis or Executive Compensation sections). The Compensation Committee of your Board of Directors.
Company. Darden Restaurants, Inc.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Executive Officers. The most senior executives of the Company designated as our “executive officers” in our most recent Form 10-K and other securities filings.
MIP. The Management and Professional Incentive Plan, which was our annual cash incentive plan through fiscal 2016.
NEO. Named Executive Officer. Our officers who are named in the Summary Compensation Table, as required by SEC rules.
NYSE. The New York Stock Exchange.
PCAOB. Public Company Accounting Oversight Board.
PSUs. Performance Stock Units granted under our 2002 Plan or 2015 Plan.
RARE. RARE Hospitality International, Inc.
S&P 500. A value weighted index of the prices of the common stock of 500 large companies, whose stock trades on either the NYSE or the NASDAQ.
SARs. Stock appreciation rights.
SEC. Securities and Exchange Commission.
