UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
SCHEDULE 14A
(Rule14a-101)
SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934
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ConAgra Foods,Conagra Brands, Inc.
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Notice of Meeting of Shareholders and Proxy Statement
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[Inside Front Cover – Intentionally Left Blank]
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August 7, 2015August10, 2018
Dear Fellow Shareholder:fellow shareholder:
I am pleased to invite you to join us for the ConAgra FoodsConagra Brands, Inc. Annual Meeting of Shareholders, which will be held on Friday, September 25, 2015, in Omaha, Nebraska,21, 2018, at 8:30 a.m. Central Daylight Time atin the Joslyn Art Museum, 2200 DodgeGrand Salon on the 11th floor of the Gwen Hotel, 521 North Rush Street Omaha, Nebraska 68102.in Chicago, Illinois.
The Annual Meeting will include a report on our business, a discussion of and voting on the matters described in the Notice of 20152018 Annual Meeting of Shareholders and Proxy Statement, and a question-and-answer session.
Thank you for your continued investment in ConAgra Foods.Conagra Brands.
Sincerely, |
Sean Connolly |
Chief Executive Officer |
Sean Connolly
Chief Executive Officer
Notice of 2015 Annual Meeting of Shareholders
Date and Time
Friday, September 25, 2015
8:30 a.m. Central Daylight Time
(Registration will begin at 7:30 a.m. CDT)
Place
The Witherspoon Concert Hall of the Joslyn Art Museum
2200 Dodge Street
Omaha, Nebraska 68102
If you attend the meeting, you must bring your ticket or confirming bank/brokerage statement as well as some form of government-issued photo identification.
Audiocast
If you cannot attend the meeting in person, you may join a live audiocast on the Internet by visiting http://investor.conagrafoods.com at 8:30 a.m. CDT, on September 25, 2015.
Whether or not you plan to join us in person, please be sure to vote your shares by proxy.
Items of Business
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Who May Vote – Record Date
Shareholders of record as of the close of business on July 30, 2015 are eligible to vote at the meeting and at any postponements or adjournments thereof.
August 7, 2015
Colleen Batcheler
Corporate Secretary
Notice of Internet Availability of Proxy Materials
We are pleased to provide access to our proxy materials via the Internet.
Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended May 31, 201527, 2018 are available athttp://investor.conagrafoods.comwww.conagrabrands.com/investor-relations/financial-reports/annual-reports..
If you receive a Notice of Internet Availability of Proxy Materials by mail, you will not receive a paper copy of these materialsour Notice of Annual Meeting, Proxy Statement and Annual Report unless you specifically request a copy. You may request a paper copy by following the instructions on the Notice of Internet Availability of Proxy Materials.
Materials. We began making our proxy materials first available on or about August 7, 2015.August10, 2018.
Notice of 2018 Annual Meeting of Shareholders
Date and Time Friday, September 21, 2018 8:30 a.m. Central Daylight Time | Location The Gwen Hotel The Grand Salon (11th Floor) 521 North Rush Street Chicago, Illinois 60611 | Who May Vote Shareholders of record as of the close of business on July 31, 2018 |
Items of Business
To elect as directors the nine nominees named in the Proxy Statement
To ratify the appointment of KPMG LLP as our independent auditor for fiscal 2019
To vote, on an advisory basis, to approve our named executive officer compensation
To transact any other business properly brought before the meeting
Colleen Batcheler |
Executive Vice President, General Counsel and Corporate Secretary |
August 10, 2018 |
Attend In-Person If you attend the meeting, you will be asked to | Attend by Audiocast If you cannot attend the meeting in person, you |
Whether or not you plan to attendin-person, please be sure to vote your shares by proxy.
Your vote is important.
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Board of Directors & Corporate Governance | ||
2 | ||
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10 | ||
Non-Employee Director Compensation | 20 | |
Audit / Finance Matters | ||
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Executive Compensation Matters | ||
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation | ||
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Outstanding Equity Awards at FiscalYear-End – Fiscal | ||
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Other Matters | ||
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Summary of the Proxy Statement Summary
We have included this summary of the Proxy Statement summary to assist as youyour review of the proposals to be acted upon. The following information is only a summary, andsummary; you should read the entire Proxy Statement before voting.
Fiscal 2018 Voting Items
Board Recommendation | Page | |||
Item #1 – Election as directors of | FOR all nominees | 2 | ||
Item #2 – Ratification of the appointment of KPMG LLP as our independent auditor for fiscal | FOR | 25 | ||
FOR | 26 |
We will also transact any other business that is properly comesbrought before the meeting.
Fiscal 2018 Highlights
Fiscal 2015 Highlights and Executive Compensation
Fiscal 2015 Highlights: Fiscal 20152018 was a successful year focused on business stabilization, profit recovery, debt repaymentfor Conagra Brands and cost savings. The company set performance goals at the start of the fiscalanother important year in each of these areas, and linked our executive compensation programs to those goals.transformation. We achieved many of our fiscal 2015 goals, but fell short on others. Our Consumer Foods segment extended its share leadership in frozen single serve meals, driving strong sales growth in faster-growing retail channels. In our Commercial Foods segment, our Lamb Weston frozen potato products business delivered a solid performance despite headwinds to exports due to a labor dispute inaccomplished the West Coast’s shipping industry, and our foodservice business drove consistent growth through solid execution with key customers. However, successes in our Consumer Foods and Commercial Foods businesses were overshadowed by significantly below-plan performance in our Private Brands business. Although our Private Brands segment launched a turnaround plan designed to improve performance over time, the segment continued to struggle and failed to meet its financial plans in both fiscal 2014 and fiscal 2015. This led to significant impairment charges during fiscal 2015, which drove total company unadjusted earnings per share to a loss. The weakness in Private Brands for the last two fiscal years was the primary driver behind the company’s lower than targeted performance for the three-year performance period ending in fiscal 2015. In June 2015, we announced our intention to divest the Private Brands business, and place our investments on other priorities within the Consumer Foods and Commercial Foods segments.
Overall, we achieved comparable fiscal 2015 earnings per share that was in line with revised commitments to shareholders, but below original expectations. We met our debt repayment goals by repaying approximately $2.1 billion since the completion of the Ralcorp acquisition in fiscal 2013. We realized over $375 million in cost savings during fiscal 2015, exceeding our goal and stemming from strong productivity and a continued focus on maximizing the effectiveness and efficiency of our selling, general and administrative expenses. We also maintained our annual dividend rate of $1.00 per share, consistent with our commitment to paying a top-tier dividend.
Our performance for the fiscal 2015 and fiscal 2013 to 2015 periods drove the payout determinations under our fiscal 2015 Management Incentive Plan and the fiscal 2013 to 2015 cycle of our Performance Share Plan:following:
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• | EPS: Earnings per share from continuing operations increased 56% in fiscal 2018, to |
During
Capital Returned to Shareholders: We paid $342 million in dividends during fiscal 2018, and repurchased approximately $967 million of our common stock. Over the last three fiscal years, we have returned nearly $3.2 billion to shareholders.
• | M&A: During the second quarter of fiscal 2018, we acquired theAngie’s® BOOMCHICKAPOP® popcorn business, and during the third quarter of fiscal 2018, we acquired theSandwich Bros. of Wisconsin business. |
Culture: Today, we have a more energized and enthusiastic team of employees who bring an externally focused, entrepreneurial spirit to their work every day.
By strengthening our foundation over the last three fiscal years, including during fiscal 2018, we readied ourselves to embark on the next phase of our evolution. On June 26, 2018, shortly after the end of fiscal 2018, we entered into a definitive agreement to acquire Pinnacle Foods Inc., makers of well-known brands such asBirds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s,Vlasic and Wish-Bone, among others. We believe that the combination of two portfolios of iconic brands – ours and Pinnacle’s - will serve as a catalyst to accelerate value creation for shareholders.
1 A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
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Director Nominees
Our director nominees are as follows. With the exception of Mr. Arora, who was first appointed to the Board in July 2018, each nominee was elected by shareholders at the 2017 annual meeting.
Name and Position | Age* |
Director Since
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Anil Arora
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57
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2018
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✓
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Audit / Finance
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Thomas K. Brown
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62
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2013
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✓
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Audit / Finance
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Stephen G. Butler
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70
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2003
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✓
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Audit / Finance (Chair) Executive Committee
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Sean M. Connolly, CEO
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52
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2015
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Executive Committee
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Joie A. Gregor
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68
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2009
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✓
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Nominating, Governance & Public Affairs (Chair) Audit / Finance Executive Committee
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Rajive Johri
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68
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2009
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✓
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Nominating, Governance & Public Affairs Human Resources
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Richard H. Lenny, Chairman
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66
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2009
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✓
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Nominating, Governance & Public Affairs Human Resources Executive Committee (Chair)
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Ruth Ann Marshall
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64
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2007
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✓
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Nominating, Governance & Public Affairs Human Resources (Chair) Executive Committee
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Craig P. Omtvedt
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68
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2016
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✓
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Audit / Finance
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* Ages as of July 31, 2018
Auditor Ratification
KPMG LLP has conducted the audits of our financial statements since fiscal 2006 and the Audit / Finance Committee of our Board has appointed the firm to conduct the fiscal 2019 audit. In the event that shareholders do not ratify the appointment, the Audit / Finance Committee will reconsider the appointment. Even if the appointment of KPMG LLP is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in Conagra Brands’ and its shareholders’ best interests.
Fiscal 2018 Executive Compensation
Our fiscal 2018 performance, period relevanttogether with the company’s results since our new strategic journey began three years ago, have created significant value for shareholders. We have repeatedly delivered on our financial commitments to compensation decisionsinvestors. Given the pay for performance philosophy of the Human Resources Committee, management has also been rewarded. As more fully described in the Proxy Statement, our named executive officers, including our Chief Executive Officer, received annual incentive payouts at levels slightly above target for fiscal 2018, driven by strong profit and net sales growth performance. In addition, the named executive officer participants in the plan each received long-term incentive payouts for the fiscal year ended 2015, the closing market price2016 through 2018 performance period at approximately 158.7% of our common stock rose from $31.56 per share on the first trading day of fiscal 2015 to $38.61 per share on the last trading day of fiscal 2015. With dividends, this represents a total return to shareholders of over 25%. On a three-year basis, the closing market price of our common stock grew from $25.26 per share on the first trading day of fiscal 2013 to $38.61 per share on the last trading day of fiscal 2015. With dividends, this represents a total return to shareholders of over 64%.target.
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The Human Resources Committee of our Board of Directors believes that these outcomesits fiscal 2018 compensation decisions appropriately reflect itspay-for-performance philosophy. This philosophy which is focused on compensating executives based on performance and aligning management’s interests with those of our shareholders. It has applied this philosophy
We thank you for your continued investment in prior years, and we have received strong shareholder support for our “say-on-pay” voting item in prior years (Item #3 in this Proxy Statement). The Human Resources Committee intends to continue focusing on compensating executives based on actual performance results and aligning management’s interests with those of our shareholders.
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ConAgra Foods,Conagra Brands, Inc.
One ConAgra Drive222 Merchandise Mart Plaza, Suite 1300
Omaha, NE 68102-5001Chicago, Illinois 60654
We are furnishing this Proxy Statement to our shareholders in connection with the solicitation by ourthe Board of Directors of proxies to be usedvoted at the 2015Conagra Brands, Inc. 2018 Annual Meeting of Shareholders, of ConAgra Foods, Inc.which we refer to as the 2018 Annual Meeting. We are first making our proxy materials first available to shareholders on or about August 7, 2015.August10, 2018.
Shareholders of record atas of the close of business on July 30, 201531, 2018 are entitled to attend and to vote at the meeting2018 Annual Meeting and at any postponements or adjournments.adjournments of the 2018 Annual Meeting. On July 30, 2015,31, 2018, there were 431,734,984391,645,253 voting shares of our common stock, par value $5.00 per share, of Conagra Brands, Inc., or Conagra Brands, issued and outstanding. Each share of common stock is entitled to one vote.vote for each director to be elected and one vote for each of the other matters to be voted on.
Your vote is very important. For this reason, theThe Board of Directors is requestingrecommends that you vote your sharessubmit a proxy card in advance of the meeting by proxy.2018 Annual Meeting to ensure that your shares are voted as you direct, even if you are unable to attend the 2018 Annual Meeting.
If you hold shares of ConAgra Foods common stock of Conagra Brands in your own name (also known(known as ownership “of record” ownership)), you can come tomay attend the meeting and vote your shares in person or you canmay vote your shares by proxy in one of the following manners:
By completing, signing, dating and returning (in the postage-paid envelope provided) the Proxy Cardproxy card enclosed with paper copies of our proxy materials;
• | By visiting the Internet atwww.proxyvote.com and following the instructions; or |
By calling 1-800-690-6903(800)690-6903 on a touch-tone telephone and following the recorded instructions.
Internet and telephone voting is available through 11:59 p.m. Eastern Time on Tuesday, September 22, 201518, 2018 for shares held in the ConAgra FoodsConagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan or the ConAgra Foods Employee Stock Purchase Plan. Internet and telephone voting is available through 11:59 p.m. Eastern Time on Thursday, September 24, 201520,2018 for all other shares.
If a broker, bank or other nominee holds your stockshares (also known as ownership in “street name” ownership)), ityour broker, bank or nominee, as applicable, will send you a voting instruction form. You may vote your shares by completing, signing, dating and returning the voting instruction form according to the instructions provided by your broker, bank or other nominee. If you wish to vote in person at the meeting, you must obtain from your broker, bank or nominee a “legallegal proxy” executed in your favor, from the broker, bank or nominee.favor.
SeePlease see “Additional Information” at the end of this Proxy Statement for more voting information.information about voting.
Voting Item #1 – Election of Directors
Voting Item #1 – Election of Directors
Identification of Director Nominees
ConAgra Foods’Our business is managed under the direction of ourthe Board of Directors.Directors, and you are being asked to vote to elect the next members of the Board. Currently, the Board consists of 12 directors whose terms expire at the 2018 Annual Meeting. Based on a recommendation of the Board’s Nominating, Governance and Public Affairs Committee, which we refer to in this Proxy Statement as the N/G/PA Committee, ourthe Board of Directors has nominated 12nine current directors, identified on the following pagesas named in this proxy statement, for election at the 20152018 Annual Meeting. TheInformation about each of the nine nominees is set forth on the pages that follow. If elected, each of the directors will hold office until the 2016Conagra Brands 2019 Annual Meeting of Shareholders, and until their successors have been elected and qualified. We have no reason to believe that any of the nominees for director will be unable to serve if elected.
NineDirector Nominees’ Skills and Qualifications
Our Board is a highly independent, well-qualified group of individuals that collectively has the experience, background and diversity to be effective in overseeing our long-term strategy. The skills and characteristics that the Board seeks in evaluating the composition of the twelve nominatedBoard overall, and which inform Board succession planning and director nomination processes, include the following:
Public company board experience | Finance/capital management expertise | |
Active or formerC-Suite executive | M&A experience | |
Market-facing experience | Technology expertise | |
International expertise | Risk management expertise |
In addition, all directors were elected by shareholders atare expected to demonstrate high standards of ethics and integrity and to commit sufficient time to effectively carry out the 2014 annual meeting. Mr. Sean Connolly, Mr. Brad Alfordduties of a director.
Our director nominees’ individual experiences, skills and Mr. Tim McLevish were appointed to our Board sincecharacteristics are highlighted in the 2014 annual meeting.
Mr. Sean Connolly, our Chief Executive Officer, has been nominated for election at the 2015 Annual Meeting. Mr. Connolly was electedfollowing matrix. This matrix is intended as a summary and is not an exhaustive list of each nominees’ contributions to the Board. Further biographical information about our director nominees is set forth on the pages that follow.
Public Company Board Experience | Active / C-Suite | Market- Facing Experience | Inter- national | Finance / Capital Manage- ment | M&A | Technology | Risk Manage- ment | |||||||||||||||||||||||||||||||||
Anil Arora | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||
Thomas K. Brown | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | |||||||||||||||||||||||||||||||||
Stephen G. Butler | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||||||
Sean M. Connolly | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | |||||||||||||||||||||||||||||||||
Joie A. Gregor | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||||||
Rajive Johri | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||
Richard H. Lenny | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||||
Ruth Ann Marshall | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | |||||||||||||||||||||||||||||||||
Craig P. Omtvedt | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ |
Voting Item #1 – Election of Directors
The Board effective April 6, 2015,also values diversity and strives to build a Board of diverse attitudes, perspectives and experiences. While diversity is viewed broadly at Conagra Brands, the date he becameBoard also measures its diversity along more traditional lines, including by examining:
Board Tenure (years served per director and the average tenure of the Board) | Director Age (individually and the average age of the Board) | Gender Mix | Race/Ethnic Diversity Mix |
The collective profile of our CEO. Mr. Connolly was recommended for consideration bydirector nominees, as of July 31, 2018, is as follows:
Independence | Tenure | Age | Female or Ethnically Diverse | |||
The Board maintains a succession planning process that enables it to regularly evaluate the N/G/PA Committee andalignment of the Board’s CEO Search Committee.
Mr. Brad Alford and Mr. Tim McLevish were appointed tomembership with the needs of Conagra Brands. Through this process, the Board effective July 17, 2015. Our appointmentadds new skills and qualifications required for membership on the Board as appropriate. The Board desires its members to collectively hold a broad range of Messrs. Alfordskills, education, experiences, and McLevish resulted from discussions betweenqualifications that can be leveraged for the benefit of the company and JANA Partners LLC. On June 18, 2015, JANA Partners reported an ownership interest in approximately 7.1%its shareholders.
For additional information on the director nomination process, please see “Roles and Responsibilities of our common stock. We subsequently engaged in discussions with JANA Partners regarding our strategic direction and Board composition. On July 8, 2015, we entered into an agreement with JANA Partners providing that we would appoint Messrs. Alford and McLevish to the Board and nominate them for election by shareholders at the 2015 Annual Meeting. JANA Partners agreed to customary standstill provisionsIts Committees – The Board’s Nominating, Governance and voting commitments. The agreement is more fully described in the company’s Current Report on Form 8-K filed on July 8, 2015 with the Securities and Exchange Commission.Public Affairs Committee – Director Nomination Process” below.
Separately, two of our current Board members, Mr. Mogens Bay and Mr. Kenneth Stinson, have not been re-nominated and are retiring as of the 2015 Annual Meeting. The Board will be reduced to 12 members effective as of the 2015 Annual Meeting. Our Board thanks Messrs. Bay and Stinson for their many years of exemplary service.
If any nominee other than Mr. Alford or Mr. McLevish becomes unavailable for election to the Board of Directors for any reason not presently known or contemplated, the proxy holders will have discretionary authority in that instance to vote the proxies for a substitute, or to reduce the size of the Board. JANA Partners retains the right to identify a successor, who is reasonably satisfactory to the company, if either Mr. Alford or Mr. McLevish becomes unavailable.
Consideration of Director Independence
The Board has determined that 11eight of our 12 Boardnine nominees for director – directors Alford,Arora, Brown, Butler, Goldstone, Gregor, Johri, Jurgensen, Lenny, Marshall McLevish and SchindlerOmtvedt – have no material relationshiprelationships with ConAgra FoodsConagra Brands and are independent within the meaning of applicable independence standards. The Board has also determined that each of Mr. BayMessrs. Alford, Dickson and Mr. StinsonGoldstone, each of whom served as a director during fiscal 2018, had no material relationships with ConAgra FoodsConagra Brands and each was independent within the meaning of applicable independence standards during fiscal 2015.standards.
In making its independence determinations, for our Board candidates, the Board applied the listing standards of the New York Stock Exchange, or NYSE, and the categorical independence standards contained in our Corporate Governance Principles. The Board considers even immaterial relationships in its decision-making process to ensure a complete view of each director’s independence. This year, the Board considered that Mr. Bay is the Chief Executive Officer of Valmont Industries, Inc. One of our subsidiaries was a customer for immaterial levels of environmental engineering services during fiscal 2015 from an affiliate of Valmont on an arms-length basis and in the ordinary course of business. Another subsidiary purchased irrigation equipment during fiscal 2015 from an affiliate of Valmont on an arms-length basis and in the ordinary course of business. In determining Mr. McLevish’s independence, the Board considered Mr. McLevish’s service as an
Voting Item #1 – Election of Directors
executive officer of Walgreens Co. during our last fiscal year (until February 2015). Walgreens is a ConAgra Foods customer, but our business relationship is conducted in the ordinary course of business on arms-length terms. As such, it did not affect Mr. McLevish’s independence under our Corporate Governance Principles or under applicable law and NYSE listing standards.
The Board also reviewed our commercial relationships with companies on whose boards ourmembers of the Board members served during fiscal 2015 (i.e.2018 (i.e., McDonald’s Corporation, Information Resources, Inc., Ford Motor Company, McDonald’s Corporation, Warburg Pincus LLC portfolio companies, Valmont Industries,Unified Grocers Inc., Illinois Tool Works Inc., Conduent Incorporated, The Chefs’ Warehouse, Inc. and Unified Grocers)3M Company). The relationships with these companies involved ConAgra Foods’Conagra Brands’ purchase or sale of products and services in the ordinary course of business on arms-lengtharm’s-length terms in amounts and under other circumstances that did not affect the relevant directors’ independence under our Corporate Governance Principles or under applicable law and NYSE listing standards.
Voting Item #1 – Election of Directors
In addition to satisfying our independence standards, each member of the Audit / Finance Committee of the Board, which we refer to as the Audit / Finance Committee, must satisfy an additional Securities and Exchange Commission, or SEC, independence requirement that provides that the member may not accept, directly or indirectly, any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than his or her director’s compensation and may not be an “affiliated person” of ConAgra Foods.Conagra Brands. Each member of the Audit / Finance Committee satisfies this additional independence requirement.
Similarly, the SEC and NYSE have adopted rules relating to the independence of members of the Human Resources Committee, orwhich we refer to as the HR Committee. These rules require consideration of the source of HR Committee membermembers’ compensation, including any consulting, advisory or other compensatory fees paid to the HR Committee member, and HR Committee member affiliation with us, any of our subsidiaries or any affiliates of our subsidiaries. Each member of the HR Committee satisfies these additional independence requirements.
Consideration of Director Nominees’ Skills and Qualifications
Our Board has a director succession planning process designed to provide for a highly independent, well-qualified Board, with the diversity, experience and background to be effective and provide strong oversight. Our Board regularly evaluates the needs of the company and adds new skills and qualifications to the Board as appropriate. The Board desires its members to collectively hold a broad range of skills, education, experiences and qualifications that can be leveraged for the benefit of the company and its shareholders.
The Board is particularly interested in maintaining a mix of skills, qualifications, backgrounds and experiences that include the following:
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Additionally, directors are expected to demonstrate high standards of ethics and integrity and commit sufficient time to effectively carry out the duties of a director. For additional information on the director nomination process, please see “Board Committees – N/G/PA Committee – Director Nomination Process” below.
Voting Item #1 – Election of Directors
A short biographyBiographical Information for each nominee follows.Director Nominees (as of July 31, 2018)
Anil Arora | Thomas “Tony” K. Brown | |||
Age: 57 Director Independent Board Committees: ◾ Audit / Finance Committee
| Age: 62 Director Since: October 15, 2013 Independent Board Committees:
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| Mr. Other public company directorships:
◾ Envestnet, Inc. since November 2015 ◾ Yodlee, Inc. (as Chairman) from March 2014 until November 2015
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| Mr. Brown served as Group Vice President, Global Purchasing with Ford Motor Company Other public company directorships: ◾ 3M Company (a global innovation company) since August 2013 ◾ Tower International, Inc. (a metal component manufacturing company) since April
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Voting Item #1 – Election of Directors
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Stephen G. Butler | Sean M. Connolly | |||
Director Since:May 16, 2003
Independent Board Committees:
◾ Executive Committee | Age: 52 Director Since: April 6, 2015 Board Committees: ◾ Executive Committee | |||
Mr. Butler Other public company directorships: ◾ Cooper Industries plc (an electrical products manufacturer) from 2002 until 2012 ◾ Ford Motor Company
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| Mr. Connolly has served as our President and Chief Executive Officer and a member of
Other public company directorships: ◾ The Hillshire Brands Company (as President and CEO) from June 2012 to August 2014
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Voting Item #1 – Election of Directors
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Age: 68
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Director Since:February 6, 2009
Independent Board Committees:
◾ Executive Committee ◾ Nominating, Governance and Public Affairs Committee (Chair) | Age: 68 Director Since: January 1, 2009 Independent Board Committees: ◾ Human Resources Committee ◾ Nominating, Governance and Public Affairs Committee | |||
Ms. Gregor ◾ From 2007 to ◾ From 2002 to 2007, Vice Chairman of Heidrick & Struggles International, Inc.
Other public company directorships: ◾ Conduent Incorporated (a business process services company) since 2016 Experiences, qualifications and skills considered inre-nominating Ms. Gregor:
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Voting Item #1 – Election of Directors
private equity portfolio experience. |
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| Mr. Johri served as President and Director of First National Bank of Omaha
Other public company directorships: ◾ Charter Communications Inc. from 2006 until 2009
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Voting Item #1 – Election of Directors
Richard H. Lenny | Ruth Ann Marshall | |||
Age:66 Director Since: March 17, 2009 Non-Executive Chairman Since:May 28, 2018 Independent Board Committees:
◾ Human Resources Committee ◾ Nominating, Governance and Public Affairs Committee | Age: 64 Director Since: May 23, 2007 Independent Board Committees: ◾ Executive Committee ◾ Human Resources Committee (Chair) ◾ Nominating, Governance and Public Affairs Committee | |||
Mr. Lenny served as Chairman, President and Chief Executive Officer of The Hershey Company (manufacturer, distributor and marketer of candy, snacks and candy-related grocery products) from 2001 to 2007. Prior to joining The Hershey Company, Mr. Lenny served as group vice president of Kraft Foods, Inc. (a packaged food company) and as President of Nabisco Biscuit Company (a packaged food company). Mr. Lenny currently serves asnon-executive Chairman of Information Resources, Inc. (a market research firm), a position he has held since 2013. He served as a senior advisor with Friedman, Fleischer & Lowe, LLC (a private equity firm) from 2014 until 2016 and as an operating partner from 2011 until 2014.
◾ Discover Financial Services (a direct banking and payment services firm) from 2009 until 2018 ◾ Illinois Tool Works Inc. (a global manufacturer of industrial products and equipment) since 2014 ◾ McDonald’s Corporation (a retail eating establishment) since 2005 Experiences, qualifications and skills considered inre-nominating Mr. Lenny: ◾Public Company Experience; FormerC-Suite Executive: Broad understanding of governance issues facing public companies from his board service to other public | ||||
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| Ms. Marshall was President of the Americas at MasterCard International, Inc. (payments industry) from October 1999 until her retirement in June 2006. At MasterCard, Ms. Marshall was responsible for building all aspects of MasterCard’s issuance and acceptance business in the United States, Canada, Latin America and the Caribbean. Prior to joining MasterCard International, Inc., Ms. Marshall served as Senior Executive Vice President of Concord EFS, Other public company directorships: ◾ Global Payments Inc.
◾ Regions Financial Corporation (a financial holding company) since 2011
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Voting Item #1 – Election of Directors
Craig P. Omtvedt | ||||||
Age:68 Director Independent Board Committees: ◾ Audit / Finance Committee
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◾ The Hillshire Brands Company from 2012 until 2014 ◾ Oshkosh Corporation (a manufacturer and marketer of Experiences, qualifications and skills considered in
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◾Finance / Capital Management Expertise; Risk Management Expertise: Deep expertise in accounting and finance, based on decades of experience in accounting and finance roles, including Chief Financial Officer, Chief Accounting Officer, and Chief Internal Auditor, at a public company. |
The Board
Voting Item #1 – Election of Directors recommends a vote “FOR” each of the listed nominees.
Corporate Governance
Governance Practices
The Board of Directors is committed to performing its responsibilities in a manner consistent with sound governance practices. It routinely reviews its processes, assesses the regulatory and legislative environment and adopts governance practices as needed that support informed, competent and independent oversight on behalf of our shareholders. Our Corporate Governance Principles provide a summary of these practices, and are available on our website athttp://investor.conagrafoods.com through the “Corporate Governance” link. Highlights of our governance practices include:
Annual Election of Directors: To promote greater accountability to shareholders, all of our directors standnine director nominees for election annually.
Majority Voting in Uncontested Director Elections: To be elected in an uncontested election, a director nominee must receive the affirmative vote of a majority of the votes cast in the election. If an incumbent nominee is not elected, he or she is required to promptly tender a resignation to the Board currently serve as members of Directors.the Board. All nominees, other than Mr. Anil Arora, were elected by shareholders at our 2017 Annual Meeting of Shareholders. The Board will act onappointed Mr. Arora as a director of Conagra Brands effective as of July 17, 2018. Mr. Arora was first introduced to the tendered resignation and publicly disclose its decision within 90 days after certificationN/G/PA Committee as a potential nominee by current director, Richard H. Lenny.
If any of the nominees becomes unavailable for election results.to the Board for any reason not presently known or contemplated, the proxy holders will have discretionary authority in that instance to vote the proxies for a substitute. The proxies cannot be voted for a greater number of persons than the nine nominees named.
Over 90% Director Independence: TheThree current Board members are not standing forre-election at the 2018 Annual Meeting. Bradley A. Alford and Thomas W. Dickson have not been nominated to stand forre-election. In accordance with our retirement policy for directors, Steven F. Goldstone has determined that 11not been nominated to stand forre-election and will retire from the Board at the 2018 Annual Meeting.
Roles and Responsibilities of our 12the Board nominees – directors Alford, Brown, Butler, Goldstone, Gregor, Johri, Jurgensen, Lenny, Marshall, McLevish, and Schindler – have no material relationship with ConAgra Foods and are independent within the meaning of our independence standards.Its Committees
Board Leadership Structure: OurStructure
The Board of Directors believes that independent Board leadership is a critical component of our governance structure. Our Corporate Governance Principles require us to have either an independent Chairman of the Board or, a lead independent director if the positions of Chairman and Chief Executive Officer are held by the same person.person, a lead independent director. Since 2005, our Chairman and Chief Executive OfficerCEO roles have been separate. With separate Chairman and Chief Executive OfficerCEO roles, our Chief Executive OfficerCEO can focus his time and energy on setting the strategic direction for the company, overseeing daily operations, engaging with external constituents, developing our leaders and promoting employee engagement at all levels of the organization. Meanwhile, our independent Chairman leads the Board in the performance of its duties by establishing agendas and ensuring appropriate meeting content, engaging with the Chief Executive OfficerCEO and senior leadership team between Board meetings on business developments and providing overall guidance to our Chief Executive OfficerCEO as to the Board’s views and perspectives, particularly on the strategic direction of the company.
Independent Board Committees
The Board has established four standing committees: the Audit / Finance Committee, the Executive Committee, the HR Committee, and the N/G/PA Committee. The Audit / Finance Committee, Charters: EachHR Committee and N/G/PA Committee operate under written charters that have been approved by the full Board; each are comprised entirely of independent directors.
Membership on each of the Audit/Board’s standing committees, as of July 31, 2018, was as follows:
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Bradley A. Alford
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Anil Arora
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Thomas K. Brown
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Stephen G. Butler
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Rajive Johri
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Richard H. Lenny
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Ruth Ann Marshall
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Craig P. Omtvedt
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Total Meetings in FY2018 | 12
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Voting Item #1 – Election of Directors
The Board’s Audit / Finance Committee
Committee Members: Anil Arora Thomas K. Brown Stephen G. Butler, Chair Joie A. Gregor Craig P. Omtvedt | Primary Responsibilities ◾ Oversee the integrity of the company’s financial statements and review annual and quarterly SEC filings and earnings releases ◾ Receive reports on critical accounting policies of the company, significant changes in the company’s selection or application of accounting principles and the company’s internal control processes ◾ Retain the independent auditor and review the qualifications, independence, and performance of the independent auditor;pre-approve audit andnon-audit services performed by the independent auditor ◾ Review the qualifications, independence and performance of the internal audit department ◾ Receive reports on the activities of management’s Enterprise Risk Management Committee and Risk Oversight Committee, as well as on the company’s processes for overseeing financial risks, including management’s assessment and control of derivative and treasury risks ◾ Review the company’s compliance with legal and regulatory requirements ◾ Review the company’s strategies and plans related to capital structure, including borrowing, liquidity, and allocation of capital |
Financial Expertise and Financial Literacy
The Board has determined that directors Butler and Omtvedt are qualified as audit committee financial experts within the meaning of SEC regulations and that directors Arora, Brown and Gregor are financially literate within the meaning of NYSE rules.
Related-Party Transactions
The Audit / Finance Committee has adopted a written policy regarding the review, approval, and ratification of related-party transactions. Under the policy, all related-party transactions must bepre-approved by the Audit / Finance Committee unless circumstances makepre-approval impracticable. In the latter case, management may enter into the transaction, but the transaction remains subject to ratification by the Audit / Finance Committee at its next regular,in-person meeting. In determining whether to approve or ratify a related-party transaction, the Audit / Finance Committee will take into account, among other factors it deems appropriate, whether the transaction is fair and reasonable to the company and the extent of the related-party’s interest in the transaction. No director is permitted to participate in any approval of a related-party transaction in which he or she is involved. On at least an annual basis, the Audit / Finance Committee reviews and assesses ongoing related-party transactions to determine whether the relationships remain appropriate. All related-party transactions are disclosed to the full Board.
Voting Item #1 – Election of Directors
The Board’s Executive Committee
Committee Members: Stephen G. Butler Sean M. Connolly Steven F. Goldstone Joie Gregor Richard H. Lenny, Chair Ruth Ann Marshall | Primary Responsibility ◾ Act on behalf of the Board between meetings as exigency requires or at the request of the full Board |
The Board’s Human Resources Committee
Committee Members: Bradley A. Alford Rajive Johri Richard H. Lenny Ruth Ann Marshall, Chair | Primary Responsibilities ◾ Review, evaluate and approve compensation plans and programs for the company’s directors, executive officers and senior employees ◾ Annually review and approve corporate goals and objectives relevant to CEO compensation and, together with the other independent directors, at least annually evaluate the CEO’s performance in light of these goals and objectives ◾ Review directly, or with the full Board, succession plans for all senior positions ◾ Review whether the company’s compensation programs for employees generally are designed in a manner that does not incent employees to take inappropriate or excessive risks and whether any compensation policies or practices are reasonably likely to have a material adverse effect on the company ◾ Retain and terminate consultants or outside advisors to support the Committee, and approve related fees and engagement terms; determine whether any conflicts of interest with such consultants or advisors exist |
Executive and Director Compensation
The HR Committee has retained authority over the determination of executive and director compensation, subject only to the further involvement of the other independent directors with respect to the approval of the overall compensation fornon-employee directors and any base salary change for the CEO. The HR Committee may delegate its responsibilities to subcommittees comprised of one or more HR Committee members or to selected members of management, subject to requirements of ourby-laws and applicable laws, regulations and the terms of shareholder-approved plans. Additional information about the HR Committee’s processes for determining executive compensation and the role of the HR Committee’s compensation consultant can be found in the “Compensation Discussion and Analysis” section of this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
The committee members set forth above served as members of the HR Committee during fiscal 2018. During fiscal 2018, none of the current or former executive officers of Conagra Brands or any of its current employees served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on the HR Committee or the Board of Conagra Brands.
Voting Item #1 – Election of Directors
Additional information about the roles and responsibilities of the HR Committee is provided in the “Compensation Discussion and Analysis” section of this Proxy Statement.
The Board’s Nominating, Governance and Public Affairs Committees is comprised entirelyCommittee
Committee Members: Thomas W. Dickson Joie A. Gregor, Chair Rajive Johri Richard H. Lenny Ruth Ann Marshall | Primary Responsibilities ◾ Identify qualified candidates for membership on the Board ◾ Propose to the Board a slate of directors for election by the shareholders at each annual meeting ◾ Propose to the Board candidates to fill vacancies on the Board ◾ Consider and make recommendations to the Board concerning the size and functions of the Board and the various Board committees ◾ Consider and make recommendations to the Board concerning corporate governance policies ◾ Assess the independence of Board members ◾ Advise management on internal and external factors and relationships affecting our image and reputation, including those related to corporate citizenship and public policy issues significant to the company |
Director Nomination Process
The N/G/PA Committee considers Board candidates suggested by Board members, management and shareholders. The N/G/PA Committee may also retain a third-party search firm to identify candidates. A shareholder recommending a prospective nominee for Board membership must notify our Corporate Secretary in writing at least 120 days before the annual meeting and include whatever supporting material the shareholder considers appropriate. The N/G/PA Committee will also consider nominations by a shareholder pursuant to the provisions of independent directorsour amended and each operates underrestated bylaws. See “Additional Information – Shareholder Proposals to be Included in our 2019 Proxy Statement” and “Additional Information – Other Shareholder Proposals to be Presented at our 2019 Annual Meeting.”
The N/G/PA Committee makes an initial determination as to whether to conduct a written charter thatfull evaluation of a director candidate once he or she has been approved by the full Board.
Regularly-Scheduled Executive Sessions: The Board of Directors meetsidentified. This initial determination is based on a regularly-scheduled basis and holds an executive session without management present at every regularly-scheduled meeting. The Board holds five regularly-scheduled meetings per year. The Chairman of the Board presides at all Board meetings, including executive sessions.
Board, Committee and Individual Self-Evaluation Process: The Board of Directors and each standing Committee evaluate Board, Committee and individual Director performance each year.
Director Attendance at Board Meetings and Annual Shareholders Meeting: During fiscal 2015, the Board met nine times (five regular meetings and four special meetings) and acted by unanimous written consent once. All members attended at least 75% of the total number of meetings that required his or her attendance. Ourwhether additional Board members are encouragednecessary or desirable. It is also based on whether, based on the information provided or otherwise available to attend the annual shareholders’ meeting. All nominees who were servingN/G/PA Committee, the prospective nominee is likely to satisfy the evaluation factors described below. If the N/G/PA Committee determines that additional consideration is warranted, it may request a third-party (e.g., a search firm) to gather additional information about the prospective director candidate. The N/G/PA Committee may also elect to interview a candidate.
The N/G/PA Committee evaluates each prospective director candidate against the standards and qualifications set forth in our Corporate Governance Principles, including, but not limited to:
Board skill needs, taking into account the Board Skills Matrix and the experience of current Board members;
the candidate’s background, including demonstrated high standards of ethics and integrity, as well as the candidate’s ability to work toward business goals with other Board members;
whether the candidate has sufficient time to effectively carry out the duties of a director;
Voting Item #1 – Election of Directors
the candidate’s ability to represent all shareholders and not a particular interest group;
the candidate’s qualifications as independent and ability to serve on various committees of the Board;
diversity, including the extent to which the candidate reflects the composition of our constituencies; and
business experience, which should reflect a broad level of experience at the timepolicy-making level.
With respect to Board diversity, the N/G/PA Committee assesses whether the Board, collectively, represents diverse views, backgrounds and experiences that will enhance the Board’s and our effectiveness. The N/G/PA Committee seeks directors who have qualities to achieve the goal of a well-rounded, diverse Board as a whole.
After completing its evaluation process, the N/G/PA Committee makes a recommendation to the full Board as to who should be nominated, and the Board determines the director nominees after considering the N/G/PA Committee’s recommendations. The evaluation process for nominees recommended by shareholders does not differ from the process set forth above.
The Board’s Role in Risk Oversight
Our senior leadership is responsible for identifying, assessing, and managing our exposure to risk. A component of this work is performed through twomanagement-led, Board-appointed committees: the Enterprise Risk Management Committee, which is chaired by our Chief Risk Officer and focuses on assessing and managing enterprise-wide risk, and the Risk Oversight Committee, which ischaired by our Chief Risk Officer and focuses on financial risk related to commodities, foreign currency, interest rate, credit, insurable risk, risk of loss and counterparty risk. The Board and its committees play an active role in overseeing management’s activities and ensuring that management’s plans are balanced from a risk/reward perspective. The Board and its committees perform this oversight through the following mechanisms.
Board Level Discussion
Each fiscal year, at least one Board meeting includes a discussion of our strategic plan and the longer-term risks and opportunities we face. At other times of the 2014 Annual Meetingyear, the Board receives reports from significant business units and functions. These presentations include a discussion of Shareholders attended that meeting.
Audit / Finance Committee Oversight
Corporate GovernanceThe Audit / Finance Committee’s charter requires it to review our processes for identifying and managing enterprise-wide risks facing Conagra Brands, including, but not limited to, financial risks (such as derivative and treasury risks) and operational risks, and to oversee our risks related to capital structure, including borrowing, liquidity, and allocation of capital. The Audit / Finance Committee also oversees our management of financial risks by, among other things, reviewing our significant accounting policies and the activities of management’s Enterprise Risk Management Committee and Risk Oversight Committee, maintaining direct oversight of our Internal Audit function, holding regular executive sessions with our Chief Financial Officer and Controller, our head of Internal Audit, and our independent auditors, and receiving regular legal and regulatory updates. Our management provides an enterprise risk management report to the Audit / Finance Committee on a semi-annual basis. The Chair of the Audit / Finance Committee reports to the full Board on its activities.
Human Resources Committee Oversight
The HR Committee reviews the company’s leadership development activities to ensure appropriate succession planning occurs and reviews the relationship between the company’s compensation programs and risk. The Chair of the HR Committee reports to the full Board on its activities.
Voting Item #1 – Election of Directors
Nominating, Governance and Public Affairs Committee Oversight
The N/G/PA Committee assists the Board in managing risks associated with Board organization, membership, and structure. It also assists management in the oversight of reputational risks and key public affairs matters. The Committee reviews the company’s policies and programs related to corporate citizenship, social responsibility, and public policy issues, such as sustainability, environmental responsibility, and philanthropic and political activities and contributions. The Chair of the N/G/PA Committee reports to the full Board on its activities.
Because issues related to risk oversight often overlap, certain issues may be addressed at both the committee and full Board level.
Our Corporate Governance Practices
Our Corporate Governance Practices
Commitment to Board Best Practices
The Board is committed to performing its responsibilities in a manner consistent with sound governance practices. It routinely reviews its processes, assesses the regulatory and legislative environment, communicates with investors, and adopts governance practices as needed that support informed, competent, and independent oversight on behalf of our shareholders. Our Corporate Governance Principles provide a summary of these practices and are available on our website at http://www.conagrabrands.com/investor-relations/corporate-governance/principles. Highlights of our corporate governance practices include the following:
Annual Election of Directors | To promote greater accountability to shareholders, our directors stand for election on an annual basis. | |
Majority Voting in Uncontested Director Elections | To be elected in an uncontested election, a director nominee must receive the affirmative vote of a majority of the votes cast in the election. If an incumbent nominee is not elected, he or she is required to promptly tender a resignation to the Board, subject to acceptance or rejection by the Board. Within 90 days of the certification of the election results, the Board will publicly disclose its decision as to whether to accept or reject the resignation. | |
Regularly- Scheduled Executive Sessions | The Board meets on a regularly-scheduled basis and holds an executive session without management present at every regularly-scheduled meeting. The Board holds five regularly-scheduled sessions per year. The Chairman of the Board presides at all Board meetings, including executive sessions. | |
Over 88% Director Independence | The Board has determined that eight of our nine nominees for directors – directors Arora, Brown, Butler, Gregor, Johri, Lenny, Marshall and Omtvedt – have no material relationship with Conagra Brands and are independent within the meaning of applicable independence standards, including the listing standards of the NYSE and the categorical standards contained in the Corporate Governance Principles. | |
Independent Board Leadership | The Board believes that independent Board leadership is a critical component of our governance structure. Since 2005, our Chairman and CEO roles have been separate. | |
Director Attendance at Board Meetings and Annual Meetings of Shareholders | During fiscal 2018, the Board met 12 times (10 regular meetings and 2 special meetings) and acted by unanimous written consent once. All members attended at least 75% of the total number of meetings that required his or her attendance. Board members are encouraged to attend the company’s annual meeting of shareholders each year. All nominees for director who were serving at the time of the 2017 Annual Meeting of Shareholders attended the 2017 Annual Meeting of Shareholders. | |
Board, Committee and Individual Evaluation Process | Each of the Board, the Audit / Finance Committee, the HR Committee and the N/G/PA Committee conducts a self-evaluation of its performance on an annual basis. In addition, individual director evaluations are conducted on an annual basis. |
Our Corporate Governance Practices
Retirement Age | No director may be nominated to a new term if he or she would be over age 72 at the time of the election. | |
Orientation and Continuing Education | We conduct an orientation program for each new director as soon as possible following the meeting at which the new director is elected. The orientation includes presentations by senior management with respect to a wide range of topics, including our strategic plans, financial reporting, governance practices, Code of Conduct, and auditing processes. Board members also periodically receive materials and briefing sessions to continue their education on subjects that assist them in the discharge of their duties. For example, during fiscal 2018 we spent additional time on discussions of cybersecurity. We also provide reimbursement of expenses associated with our independent directors’ attendance at one outside director education program each fiscal year. |
Commitment to Compensation Best Practices
Annual Advisory Vote on Named Executive Officer Compensation:Compensation
Consistent with our shareholders’ preference as indicated at our 2011the 2017 Annual Meeting of Shareholders, our shareholders are given an opportunity every year to vote, on a non-bindingan advisory basis, to approve the compensation of our named executive officers on an annual basis.officer compensation.
Stock Ownership Guidelines for Directors and Senior Leadership:Leadership
Directors and senior leaders across the company are subject to stock ownership guidelines. Allnon-employee
All non-employee directors are expected to acquire and hold shares of ConAgra Foods common stock during their tenure shares of Conagra Brands common stock with a value of at least $450,000.$500,000. Directors are expected to acquire these shares within five years following their first election to the Board. OwnershipCurrent ownership levels for ournon-employee Board members are detailed in the section of this Proxy Statement entitled “Non-Employee“Non-Employee Director Compensation – Director Stock Ownership Requirements.”
Each senior leader across the company is subject to stock ownership guidelines equal to a multiple of the leader’sthat person’s salary. Our Chief Executive Officer, Sean Connolly, hasour President and CEO, is required to own shares of our common stock having a stock ownership requirementvalue of at least six times his salary, and each of our other named executive officers haveis required to own shares of our common stock ownership requirementshaving a value of at least three or four times their salaries.his or her salary. See the section of this Proxy Statement entitled “Compensation Discussion and Analysis- – Additional Information on Compensation Practices – Committee’s Views on Executive Stock Ownership” for a summary of the shareholdingsstock ownership of oureach named executive officers.officer.
Anti-Pledging/Anti-Pledging / Hedging Policy:Policy
Our directors and executive officers, including our named executive officers, are prohibited from pledging their ConAgra Foodsshares of Conagra Brands stock or hedging their ownership of ConAgra FoodsConagra Brands stock, including by trading in publicly-traded options, puts, calls, or other derivative instruments related to ConAgra FoodsConagra Brands stock or debt.
Clawback Policy:Policy
We have a Clawback Policyclawback policy that requires excess amounts paid to any of our senior officers under our incentive compensation programs to be recovered in the event of a material restatement of our financial statements for fiscal 2013 or later fiscal years, resultingwhen such restatement results from the fraudulent, dishonest or reckless actions of the senior officer.
Our Corporate Governance Practices
Commitment to Investor Engagement
We conduct investor outreach throughout the year. Our efforts help ensure that management and the Board understand and consider the issues that matter most to our stockholders and allow us to effectively address them. Management regularly attends investor conferences and holdsone-on-one meetings and calls with investors, and also has the opportunity to directly interact with investors and analysts during our quarterly earnings conference calls.
Commitment to Investing in Our People:People
We recognize that our employees are our greatest asset, and we strive to be a talent magnet. We are committed to our employees’ safety, development, and wellness. We have engaged employees who drive a foundation of safe practices. We take pride in attracting, retaining, and developing top talent, and we offer competitive compensation and benefit packages. We also provide comprehensive learning and development programs for our employees that begin when employees join the companyimmediately upon hire and continue throughout theirour employees’ careers. We also believe in providing the tools and incentives people need to make smart decisions about their health. A few examples of our people achievements in recent years include the following:
ConAgra Foods employees volunteered more than 8,000 hours during our month of service in 2015. With more than 3,000 employees taking part, we packed over one million meals – spanning 21 different ConAgra Foods facilities. For the entire fiscal 2015, employees volunteered well over 13,000 hours in communities where we live and work.
As of May 2015, over 2,200 employees have lost a combined total of over 11,000 pounds on the “Choose to Lose with ConAgra Foods” program, an employee weight-loss program that emphasizes reduced-calorie eating and portion control, featuring products from 20 different ConAgra Foods brands.
Commitment to Sustainable Business Practices and Corporate Citizenship:Citizenship
We believe that we have an obligation to be a good steward of the environment, give back to the communities we serve, and drive economic gain for stakeholders. These commitments are ingrained in our operations and our processes and have become a part of our culture. We have established clear corporate citizenship goals, and we favor transparency with stakeholders on our corporate responsibility progress. We are proud of our focus on corporate citizenship, and we routinely discuss these matters with the Board’s N/G/PA Committee.
Corporate Governance
A few examples of our many corporate responsibility achievements in recent years include the following:
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During fiscal 2015, for the fourth consecutive year, ConAgra Foods was listedWe publish an annual Citizenship Report, which is periodically updated and is available on the Dow Jones Sustainability Index for North America, one of the world’s most recognizable sustainability indices.our website athttp://www.conagrabrands.com/our-company/corporate-social-responsibility/citizenship-reports.
OurWe sponsor an annual, internal awardsSustainable Development Awards program, which is intended to drive and reward innovative approaches to sustainability, continued to deliver environmental and bottom line benefits. Projects submitted for recognitionsustainability. During fiscal 2018, employees entered 57 projects in fiscal 2015 collectively deliveredthe program. Together, these projects reduced waste by more than $709,200 tons, optimized and improved packaging while using 1,400 fewer tons of material, conserved more than 170 million in savings while reducinggallons of water, and reduced greenhouse gas emissions by more than 11,5005,900 metric tons, reducing landfill wastetons.
Conagra Brands employees volunteered approximately 5,600 hours during our April 2018 month of service. This year, 117 volunteer projects were organized by 58,700 tons, optimizingemployees across 18 states and improving packaging while using 155countries. With nearly 2,300 employees taking part, our activities generated the equivalent of 639,169 meals for people facing food insecurity.
For more than 20 years, Conagra Brands and the Conagra Brands Foundation have been leading the fight against hunger. Through a longstanding partnership with the Feeding America network, we have provided more than 475 million pounds less material,of food and conservinginvested more than 97$46 million gallons of water.to help alleviate hunger over this time.
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Political Contributions and Lobbying Expenditure Oversight:Oversight
The N/G/PA Committee receives reports on the modest political activities of the company. Our political expenditures are limited, and we focus on matters that we believe will create or preserve shareholder value. We will begin publishingpublish a report of these activities on our website by August 31, 2015.at http://www.conagrabrands.com/investor-relations/corporate-governance/political-activity-disclosure.
Board’s Role in Risk Oversight
Our senior leadership is responsible for identifying, assessing and managing our exposure to risk. A component of this work is performed through a management-led, Board-appointed Risk Oversight Committee, chaired by our Senior Vice President and Treasurer. Our Board of Directors and its committees play an active role in overseeing management’s activities and ensuring management’s plans are balanced from a risk/reward perspective. The Board and its committees perform this oversight through the following mechanisms:
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Practices
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Because issues related to risk oversight often overlap, certain issues may be addressed at both the Committee and full Board level.
Corporate Governance Materials Available on Our Website
To learn more about our governance practices, you can review any of the following listed documents athttp://investor.conagrafoods.com through the “Corporate Governance” link:www.conagrabrands.com/investor-relations/corporate-governance:
Audit / Finance Committee Charter Political Activity Disclosure Code of Ethics for Senior Corporate Officers Procedures for bringing concerns or complaints to the attention of the Audit / Finance Committee N/G/PA Committee Charter Corporate Governance Principles HR Committee Charter Code of Conduct Procedures for communicating with the Board, ournon-management directors as a group, or the Chairman of the Board |
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From time to time these documents are updated, and we promptly post amendedthe updated documents to our website. The information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated by reference into any of our other filings with the SEC. The documents are also available in print to any shareholder who requests them from the Corporate Secretary.Secretary of Conagra Brands.
Communications with the Board
Interested parties may communicate with ourthe members of the Board, of Directors, ournon-management directors as a group, or the Chairman of the Board by writing to: ConAgra Foods
Conagra Brands Board of Directors
c/o Corporate Secretary, ConAgra Foods,Conagra Brands, Inc., Box 2000, One ConAgra Drive, Omaha, Nebraska 68102.
222 Merchandise Mart Plaza, Suite 1300
Chicago, Illinois 60654
Communications are compiled by the Corporate Secretary and forwarded to the addressee(s) on at least abi-weekly basis. The Corporate Secretary routinely filters communications that are solicitations, consumer complaints, unrelated to ConAgra FoodsConagra Brands, or ConAgra Foods’Conagra Brands’ business or determined to pose a possible security risk to the addressee.
Board CommitteesNon-Employee Director Compensation
Our Board of Directors has established various committees to assist in its responsibilities. Currently, our Board of Directors has four standing committees: the Audit / Finance Committee, the Executive Committee, the Human Resources Committee, or HR Committee, and the N/G/PA Committee. All members of the Audit / Finance Committee, HR Committee and N/G/PA Committee are independent under the applicable rules of the SEC and NYSE, as well as our independence standards.
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Compensation Discussion and Analysis
Compensation Discussion and Analysis
Introduction
Our fundamental objective is to create sustainable, profitable growth and long-term value for our shareholders. As shareholders themselves, our named executive officers are keenly focused on achieving this objective. To support this objective, we design our executive compensation program to promote attainment of our annual and long-term business goals. The HR Committee, which we refer to as the Committee throughout this Compensation Discussion and Analysis section, is responsible for approving the components of our executive compensation program, approving the financial targets that must be achieved to earn awards under the program, and authorizing payouts upon achievement of those targets.
This Compensation Discussion and Analysis section describes and analyzes our executive compensation program and its connection to our business performance. The focus of the analysis is on the company’s executive officers listed in the Summary Compensation Table of this Proxy Statement, who we refer to as the “named executive officers.”
For fiscal 2015, which began on May 26, 2014 and ended on May 31, 2015, our named executive officers are:
Sean Connolly, our President and Chief Executive Officer since April 6, 2015
John Gehring, our Executive Vice President and Chief Financial Officer
Colleen Batcheler, our Executive Vice President, General Counsel and Corporate Secretary
Tom McGough, our President, Consumer Foods
Our named executive officers for fiscal 2015 also include three former executives:
Gary Rodkin, our former President and Chief Executive Officer, who retired on May 31, 2015
Al Bolles, our former Executive Vice President, Chief Technical and Operations Officer, who ceased to be an executive officer and employee on August 1, 2015
Paul Maass, former President of our Private Brands and Commercial Foods businesses, who ceased to be an executive officer on May 5, 2015 and departed the company on July 31, 2015
Executive Summary
Chief Executive Officer Change: Mr. Sean Connolly became our Chief Executive Officer on April 6, 2015. Mr. Connolly was hired to succeed Mr. Gary Rodkin, who retired on May 31, 2015 after nearly 10 years of service. Mr. Connolly’s appointment followed Mr. Rodkin’s announcement, in August 2014, of his intention to retire. Aspects of this Compensation Discussion & Analysis focus solely on Mr. Rodkin, since he participated in the company’s full executive compensation program throughout fiscal 2015. Mr. Connolly entered into an employment agreement with the company in connection with his hiring. The terms of that agreement are described under “Agreements with Named Executive Officers – Mr. Connolly’s Employment Agreement” below.
Fiscal 2015 Goals: Fiscal 2015 was a year focused on business stabilization, profit recovery, debt repayment and cost savings. The company set performance goals at the start of the fiscal year in each of these areas, and linked our executive compensation programs to those goals.
Compensation Discussion and Analysis
Specifically, we sought to deliver the following levels of performance:
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Operating cash flow of approximately $1.6 billion to $1.7 billion.
Repayment of approximately $1 billion of debt.
Cost savings from productivity and selling, general and administrative expense reductions in the range of $350 million for the year.
Continuation of the $1.00 per share annual dividend.
Based on these financial goals, the Committee approved the following incentive programs and performance measures for performance periods beginning in fiscal 2015:
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Our annual incentive plan is referred to as the MIP, for Management Incentive Plan. The long-term incentive plan consists of the performance share plan, or PSP, and the Stock Option program.
The Committee set performance goals for the fiscal 2015 MIP at levels that were expected to return target awards if the company met comparable EPS and net sales goals consistent with those shared with shareholders at the start of fiscal 2015. The three-year goals for the fiscal 2015 to 2017 cycle of our PSP were also set at levels linked to our expected growth rates for the three-year period. Lower levels of financial performance were expected to result in below-target payouts. Similarly, above-target awards could be earned by exceeding the company’s financial goals.
1 Fiscal 2014 unadjusted diluted earnings per share from continuing operations was $0.37. A reconciliation for Regulation G purposes is included inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
Fiscal 2015 Performance: We achieved many of our fiscal 2015 goals, but fell short on others. Specifically, the company delivered the following results:
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We generated nearly $1.5 billion in cash flows from operations during the year, just slightly below our expectations of $1.6 billion to $1.7 billion.
We achieved our debt repayment goals. We repaid $1.1 billion of debt during fiscal 2015, resulting in cumulative debt reduction of approximately $2.1 billion since the completion of the Ralcorp acquisition in fiscal 2013.
We realized over $375 million in cost savings during fiscal 2015, exceeding our goal and stemming from strong productivity and a continued focus on maximizing the effectiveness and efficiency of our selling, general and administrative expenses.
We maintained our annual dividend rate of $1.00 per share, consistent with our commitment to paying a top-tier dividend.
These accomplishments supported ongoing investment in our business segments, which delivered mixed results:
Bright spots in our Consumer Foods segment included extending our share leadership in frozen single serve meals, driving strong sales growth in faster-growing retail channels and investing in the fundamentals on key brands through improved packaging graphics and effective promotion strategies.
In our Commercial Foods segment, our Lamb Weston frozen potato products business delivered a solid performance despite headwinds to exports due to a labor dispute on the West Coast in the shipping industry. And, our foodservice business drove consistent growth through solid execution with key customers.
Although our Private Brands segment launched a turnaround plan designed to improve performance over time, the segment struggled during the year. The business failed to meet its financial plans in both fiscal 2014 and fiscal 2015. The Private Brands performance challenges led to significant impairment charges during fiscal 2015. These impairment charges drove total company unadjusted EPS to a loss. In addition, the weakness in Private Brands for the last two fiscal years was the primary driver behind the company’s lower than targeted performance for the three-year performance period ending in fiscal 2015. In June 2015, we announced our intention to divest the Private Brands business, and place our investments on other priorities within the Consumer Foods and Commercial Foods segments.
During the performance period relevant to compensation decisions contained in this Compensation Discussion and Analysis, the closing market price of our common stock rose from $31.56 per share on the first trading day of fiscal 2015 to $38.61 per share on the last trading day of fiscal 2015. With dividends, this represents a total return to shareholders of over 25%.
On a three-year basis, the closing market price of our common stock grew from $25.26 per share on the first trading day of fiscal 2013 to $38.61 per share on the last trading day of fiscal 2015. With dividends, this represents a total return to shareholders of over 64%.
2 Fiscal 2015 unadjusted diluted earnings per share from continuing operations was $(1.46). A reconciliation for Regulation G purposes is included inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
Fiscal 2015 Compensation Decisions: Our performance for the fiscal 2015 and fiscal 2013 to 2015 periods drove the payout determinations under our fiscal 2015 MIP and the fiscal 2013 to 2015 cycle of our PSP:
Under our fiscal 2015 MIP, we did not meet the threshold fiscal 2015 unadjusted EPS requirement for the named executive officers to receive a payout. As noted above, significant impairment charges were a key driver of a loss per share on an unadjusted basis. Therefore, no payouts were funded or authorized to be paid out to our named executive officers under this program. Mr. Connolly was not a participant in this program.
Under the fiscal 2013 to 2015 cycle of the PSP, the company achieved a combination of cash flow return on operations and average net sales growth at a level above threshold but below target. A payout equal to 66% of target was authorized for each named executive officer. Mr. Connolly was not a participant in this program.
While other named executive officers did not receive annual base salary increases during fiscal 2015, Mr. McGough received a salary increase in September 2014. The Committee’s approval of this adjustment was based on Mr. McGough’s continued progress in his role, internal equity and market considerations.
In determining attainment of the underlying performance goals for the fiscal 2013 to 2015 cycle of the PSP, the Committee considered the impact of several events that it believes were not indicative of the comparable operating performance of the company’s businesses. Some of these items created benefits for the company, while some of them created incremental expense or lost sales. The impact of these items was removed from the company’s results for purposes of determining plan payouts. More information can be found below under “Use of Adjustments in Compensation Decisions.”
The Committee believes that these actions appropriately reflect its pay-for-performance philosophy. This philosophy is focused on compensating executives based on performance and aligning management’s interests with those of our shareholders.
Objectives of Our Compensation Program
Our executive compensation program is designed to encourage and reward behavior that promotes attainment of annual and long-term goals and sustainable growth in shareholder value. The Committee believes that the program must accomplish five objectives:
The Committee’s design of the compensation program with multiple objectives in mind helps mitigate the risk that employees will take unnecessary and excessive risks that threaten the long-term health and viability of the company.
Compensation Discussion and Analysis
With the assistance of Finance, Human Resources and Legal department personnel, and Frederic W. Cook & Co., Inc., the Committee’s independent compensation consultant, the Committee undertook a risk review of our fiscal 2015 compensation programs for all employees.
Based on the review, we believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the long-term. We believe our compensation policies and practices are balanced and aligned with creating shareholder value, and do not create risks that are reasonably likely to have a material adverse effect on the company.
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Compensation Discussion and Analysis
Design and Approval of Our Fiscal 2015 Program
The Committee considered a variety of factors when approving the executive compensation program and setting pay for fiscal 2015. In this process, the Committee was benefited by the advice and counsel of its independent compensation consultant, Frederic W. Cook & Co., Inc.
The input of our shareholders is significant in this process. The Committee’s policy is to present a “say-on-pay” vote to our shareholders annually. Shareholder support has been strong in each of the years since say-on-pay voting was required under SEC rules, suggesting to the Committee that a significant change to the overall design of the program for fiscal 2015 was not warranted.
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Taking into account the level of shareholder support on the company’s 2014 say-on-pay vote, which the Committee considered at its first meeting following our 2014 Annual Meeting, the Committee determined to maintain the existing structure of the executive officer compensation program for fiscal 2015.
Additionally, the Committee and management have continued to monitor voting policy changes adopted by institutional shareholders and their advisors, and the company expects that the Committee will continue to take those voting policies into account when it considers future changes to the executive compensation program.
The Committee also considered the following company and participant focused matters:
Company matters:
Company performance in prior years, and expectations for the future
The general business environment in which compensation decisions were being made
The anticipated degree of difficulty inherent in the targeted incentive performance metrics
The level of risk-taking the program would reward
Practices and developments in compensation design and governance
Participant-focused matters:
Individual pay histories and performance
The potential complexity of each program, preferring programs that were transparent to participants and shareholders and easily administered
External and internal pay comparisons
External Pay Comparisons. Although the Committee uses internal and external pay comparison data as a market check on its compensation decisions, the Committee recognizes that over-reliance on external comparisons can be of concern, and the Committee is mindful of the value and limitations of comparative data. The Committee’s first step in using external data for fiscal 2015 was the identification of an appropriate peer group. Prior to the start of fiscal 2015, Frederic W. Cook & Co., Inc. prepared a list of potential peer companies (with an emphasis on food and beverage companies) based on the following criteria:
Operations: companies similar in size, operational scope and industry (competitors for business)
Investors: companies with which ConAgra Foods competes for investor capital (similar performance characteristics, growth orientation, business cycles, volatility and access to capital)
Talent: companies with which ConAgra Foods competes for executive talent
Compensation Discussion and Analysis
At the Committee’s direction, the consultant recommended companies with annual revenues in the range of between one-third to three times our own. If a larger or smaller company was a fit against the screening criteria, the consultant was permitted to include it. The Committee also asked the consultant to ensure that the peer group would be large enough to withstand unanticipated changes in our, or an included company’s, structure or compensation programs.
Ultimately, the Committee approved the following peer group for fiscal 2015:
With the exception of The H.J. Heinz Company, which was removed from the peer group in fiscal 2015 because it was acquired and ceased to be a publicly-traded company in June 2013, this same peer group was used for fiscal 2014. At the time of approval, the median revenue of the peer group listed above was similar to ours; all of the companies fell within the desired range of approximately one-third to three times our annual revenue, with the exception of PepsiCo. Although PepsiCo had revenues three times larger than ours, the Committee determined to keep it in the peer group due to its status as a direct competitor for business and executive talent. The Committee used data from this peer group, together with general industry data, as a market check on its fiscal 2015 compensation decisions. As noted above, this was just one of many factors that played a role in compensation decisions.
The Committee does not mandate target ranges for our named executive officers’ salaries, annual incentive opportunities, long-term incentive opportunities, and total direct compensation levels as compared to the peer group. The Committee will continue to use peer data mindfully, as one of many tools for assessing the market competitiveness and appropriateness of executive pay opportunities.
Management’s Role in the Design and Approval of our Programs. Our former Chief Executive Officer, Mr. Rodkin, who served for most of fiscal 2015, played a role in several key areas of the design of our fiscal 2015 executive compensation program. Mr. Connolly, our Chief Executive Officer since April 6, 2015, played a role in the determination of certain incentive compensation payouts, after financial results were complete:
Compensation Discussion and Analysis
Key Elements of our Fiscal 2015 Executive Compensation Program
The fiscal 2015 compensation of our named executive officers consisted of the following key components:
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The Committee believes that using a mix of compensation types (salary, benefits, cash incentives, and equity-based incentives) and performance periods (one-year and three-year periods) promotes behavior consistent with our long-term strategic plan and minimizes the likelihood of executives having significant motivation to pursue risky and unsustainable results.
Opportunity Mix. By design, targeted incentive compensation for the named executive officers for fiscal 2015 was a significant percentage of the total compensation opportunity. The Committee’s general policy is to provide the greatest percentage of the incentive opportunity in the form of long-term compensation payable in shares of our common stock. The Committee believes the emphasis on stock-based compensation is the best method of aligning management interests with those of our shareholders.
The charts below show the total compensation opportunity (calculated using salary, targeted fiscal 2015 MIP award and targeted long-term incentive value) for Mr. Rodkin (as he was the Chief Executive Officer at the time fiscal 2015 compensation decisions were made) and our other named executive officers. For Mr. Rodkin, targeted incentive compensation for fiscal 2015 was 86% of his total compensation opportunity. Our current Chief Executive Officer, Mr. Connolly, who joined late in fiscal 2015, has not been included in the charts below.
Compensation Discussion and Analysis
Named Executive Officer Considerations. The Committee, and in the case of Mr. Rodkin, the independent directors, specifically considered the following when setting fiscal 2015 compensation opportunities for each of our named executive officers who were serving with us at the start of fiscal 2015. Actual business performance over the three year performance period of the PSP was the key determinant of payouts for these individuals under the fiscal 2013 to 2015 cycle of the PSP. As noted previously, no payments were made to the named executive officers under the fiscal 2015 MIP due to the company’s failure to meet the program’s unadjusted EPS threshold.
Current Named Executive Officers:
Mr. John Gehring. Mr. Gehring has served as our Executive Vice President and Chief Financial Officer since 2009. Since he joined ConAgra Foods in 2002, Mr. Gehring has held roles with increasing responsibilities within our Finance organization, including responsibilities over key areas such as Accounting, Treasury, Risk, Investor Relations, Information Technology, Enterprise Business Services and Aviation. The Committee considered the broad scope of his responsibilities, his tenure, internal equity and external market data in setting his compensation opportunities for both fiscal 2015 and fiscal 2016.
Ms. Colleen Batcheler. Ms. Batcheler has served as our Executive Vice President, General Counsel and Corporate Secretary since September 2009 and as Senior Vice President, General Counsel and Corporate Secretary since February 2008. After joining ConAgra Foods in June 2006, she quickly progressed through leadership roles within the Legal organization, assuming responsibility for the company’s Government Affairs function during fiscal 2010. When setting Ms. Batcheler’s compensation opportunities for both fiscal 2015 and fiscal 2016, the Committee considered Ms. Batcheler’s growth in her role, demonstrated results as an advisor to the organization on legal matters, internal equity and external market data.
Mr. Tom McGough. Mr. McGough has served as our President, Consumer Foods since May 2013, when he assumed responsibility for our Consumer Foods segment, our largest operating segment. He joined the company in 2007 as Vice President, Marketing, was named President, Specialty Foods, in August 2010 and in July 2011 was promoted to President, Grocery Products within the Consumer Foods segment. The Committee considered Mr. McGough’s quick progression in his role, potential for further growth in the role, market data and internal pay equity in setting his compensation opportunities for both fiscal 2015 and fiscal 2016.
Former Executive Officers:
Mr. Gary Rodkin. Mr. Rodkin served as our Chief Executive Officer and a member of our Board of Directors from October 2005 until April 2015, shortly before his retirement. The Committee believes that within the company, our Chief Executive Officer should have the highest ratio of incentive pay to salary and largest aggregate compensation opportunity due to his level of responsibility and business experience. External market data supports this conclusion. For fiscal 2015, consistent with this belief, the independent directors set Mr. Rodkin’s compensation opportunities at a level higher than the comparable opportunities for the other named executive officers. The Committee took into account Mr. Rodkin’s accountability for the performance of the entire organization in determining his compensation opportunities for fiscal 2015.
Mr. Al Bolles,Ph.D. Mr. Bolles served as our Executive Vice President, Chief Technical and Operations Officer from March 2014 until August 2015. He joined the company in 2006 as Executive Vice President, Research, Quality & Innovation. During fiscal 2014, he assumed responsibility for our supply chain function, while continuing to lead the company’s research, quality and innovation teams. The Committee considered Mr. Bolles’ broad responsibilities, market data and internal pay equity in setting his compensation opportunities and determining actual incentive payouts for fiscal 2015.
Mr. Paul Maass. Mr. Maass served as our President of Private Brands and Commercial Foods from May 2013 until April 14, 2015, when he informed the company of his intent to depart from the company in the summer of 2015. He immediately ceased to oversee the Private Brands business unit, but remained responsible for the company’s Commercial
Compensation Discussion and Analysis
Foods operating segment until May 5, 2015, at which time he ceased to be an executive officer of the company. The Committee considered Mr. Maass’ tenure and growth in a senior leadership role, internal equity, and external market data in setting his compensation opportunities for fiscal 2015.
Below is a more detailed analysis of each element of the fiscal 2015 compensation program for our named executive officers, as well as actual fiscal 2015 payouts under the programs, as applicable.
Salaries. We pay salaries to our named executive officers to provide them with a base level of fixed income for services rendered. On average, 23% of the total compensation opportunity for fiscal 2015 for each named executive officer other than the Chief Executive Officer was provided in the form of base salary. For Mr. Rodkin, our Chief Executive Officer for most of fiscal 2015, 14% of his total compensation opportunity was provided in the form of base salary. For information on Mr. Connolly’s base salary, see “Agreements with Named Executive Officers – Mr. Connolly’s Employment Agreement” below.
During July 2015, the Committee increased base salaries of several named executive officers: Mr. Gehring to $650,000, Mr. McGough to $650,000 and Ms. Batcheler to $525,000. These increases were made after the Committee considered the factors further described above in “Named Executive Officer Considerations – Current Named Executive Officers” and with the input of Mr. Connolly.
Incentive Programs. Consistent with its overall compensation objectives, the Committee aligned management compensation with company performance through a mix of annual and long-term incentive opportunities for fiscal 2015. Opportunities under these programs combined to represent approximately 77% of the compensation opportunity for each named executive officer, other than the Chief Executive Officer. For Mr. Rodkin, targeted incentive compensation for fiscal 2015 was 86% of his total compensation opportunity.
Financial targets disclosed in this section are done so in the limited context of these incentive plans and they are not statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
Management Incentive Plan
The fiscal 2015 MIP provided a cash incentive opportunity to approximately 5,000 employees, including the named executive officers, with the exception of Mr. Connolly. Mr. Connolly became our Chief Executive Officer during the fourth quarter of fiscal 2015, and was not eligible for an award under the fiscal 2015 MIP.
Our fiscal 2015 MIP utilizes an overarching unadjusted EPS performance goal and a framework that allows awards to potentially qualify as tax deductible under Section 162(m) of the Internal Revenue Code. Refer to our discussion below under “Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design. The Committee designed the plan so that the method in which we delivered actual financial results during fiscal 2015 would be taken into consideration, in addition to individual performance and extraordinary corporate events.
Overarching EPS Performance Goal. At the start of fiscal 2015, the Committee approved an overarching unadjusted EPS goal under the fiscal 2015 MIP of $0.10. This goal was required to be met before any payouts could be made under the plan. In the event that the overarching EPS goal was met, the Committee would then exercise negative discretion to potentially reduce, but not increase, authorized payouts. This negative discretion was to be guided by performance against the underlying financial goals described in the next paragraph.
Underlying Pre-Established Financial Goals. At the start of fiscal 2015, the Committee approved comparable EPS and net sales goals as the underlying metrics for the fiscal 2015 MIP (each to be adjusted, as appropriate, for unusual items). The Committee developed performance goals for threshold, target and maximum incentive opportunities.
Compensation Discussion and Analysis
The named executive officers participating in the plan were eligible to earn a payout equal to:
75% of their approved target incentive if the company achieved the target level of performance in comparable EPS; and
25% of their approved target incentive if the company achieved the target level of performance in net sales.
The underlying comparable EPS and net sales goals for the fiscal 2015 MIP applicable to the eligible named executive officers were:
(Net Sales $ in millions) | EPS (weighted at 75%) | Net Sales (weighted at 25%) | ||
Threshold: | $2.26 | $15,670 | ||
Target: | $2.34 | $16,323 | ||
Maximum: | $2.58 | $16,976 |
The Committee also set corresponding target compensation opportunities under the plan for each eligible named executive officer, measured as a percentage of base salary.
The following table shows the ranges of authorized payments (expressed as a percentage of base salary for fiscal 2015) for the eligible named executive officers upon achievement of the threshold, target and maximum comparable EPS and net sales goals approved for the fiscal 2015 MIP. If threshold EPS and threshold net sales were not met, no payments would be made under the fiscal 2015 MIP. No portion of the incentive was guaranteed. Higher levels of financial performance were designed to result in payouts of up to 200% of targeted amounts. Interpolation is used between result levels to determine payouts.
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Application of the Metrics to Determine Payouts. The overarching unadjusted EPS performance goal of $0.10 was required to be met before the underlying comparable EPS and net sales metrics would be considered for payout to the eligible named executive officers. The company did not achieve the threshold fiscal 2015 unadjusted EPS requirement for the named executive officers. Therefore, no fiscal 2015 payouts were funded or authorized to be paid to our named executive officers.
Compensation Discussion and Analysis
Long-Term Incentive Plan
The long-term incentive plan for senior officers has historically included an annual award of performance shares that are settled in shares of common stock based on results over a three-year performance period and an annual award of stock options. The performance shares reward the achievement over the three-year performance period of metrics likely to have a significant impact on enterprise value. The program also rewards stock price appreciation directly through the granting of stock options. The ultimate value of earned performance shares, which are paid in stock, is also impacted directly by stock price.
The number of stock options and targeted performance shares granted during fiscal 2015 for the named executive officers other than Mr. Connolly were determined using a value-based approach. Grant sizes were determined by dividing the dollar value of the targeted opportunity by the average of the closing market price of our common stock for the 30 trading days as of 10 trading days prior to, and not including, the date of grant. The Committee then used a six-to-one ratio in determining stock option grant sizes as compared to performance shares. The Committee uses this approach to deliver what it views as an equal mix of stock options and performance shares to participants. Mr. Connolly received a grant of performance shares for the fiscal 2015 to fiscal 2017 cycle of the PSP in April 2015, and the value-based approach described above was used. However, he received a sign-on option grant in lieu of stock options under this program.
The Committee firmly believes in aligning our senior officers’ interests with those of our shareholders. The significant extent to which equity is included in both the executive pay program overall and this program in particular evidences this belief. We describe each component of the plan below.
Stock Options. The use of stock options directly aligns the interests of the named executive officers with those of our shareholders. Except with respect to Mr. Connolly’s sign-on grant, all options granted for fiscal 2015 have an exercise price equal to the closing market price of our common stock on the date of grant, a ten-year term, and vest 40% on the first anniversary of the grant date, generally subject to the executive’s continued employment with the company. The remaining portion of the award vests in equal installments of 30% on the second and third anniversaries of the grant date, generally subject to the executive’s continued employment.
Mr. Connolly was hired on March 3, 2015 and appointed as President and Chief Executive Officer on April 6, 2015. He was not awarded a grant of stock options under the long term incentive plan. However, to align Mr. Connolly’s interests with shareholders and employ a compensation element in use with other named executives, he was provided a sign-on option grant. Mr. Connolly was granted 600,000 stock options on April 1, 2015, with an exercise price equal to the closing market price of our common stock on the grant date. Mr. Connolly’s options vest in one-third amounts on each of the first, second and third anniversaries of the date of grant.
The number of options granted to each named executive officer during fiscal 2015 is set forth below.
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Compensation Discussion and Analysis
The Committee specifically considered the factors discussed above under the heading “Named Executive Officer Considerations” when determining grant sizes by individual. All grants were made on July 14, 2014 with an exercise price of $30.89 per share, with the exception of Mr. Connolly’s grant that was made on April 1, 2015 with an exercise price of $36.86 per share.
The grant date fair value of the stock options awarded to our named executive officers is included in the “Option Awards” column of the Summary Compensation Table – Fiscal 2015.
Performance Shares. Performance shares generally represent an opportunity to earn a defined number of shares of our common stock if we achieve pre-set, three-year performance goals. Similar to our fiscal 2015 MIP, our performance share cycles utilize an overarching earnings per share performance goal and a framework that allows performance share awards to potentially qualify as tax deductible under Section 162(m) of the Internal Revenue Code. However, the PSP permitted the earnings per share target to be adjusted. Refer to our discussion below under “Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
In general, performance shares that have not been paid at the time of a participant’s termination of employment are forfeited. An exception allows for pro-rata payouts in the event of death, disability or retirement. The Committee has also retained the discretion to provide for payouts on termination when it finds it appropriate and in the best interest of the company. To date, however, the Committee has not used this discretion. Both this exception and discretion are subject to satisfaction of the performance goals. Dividend equivalents are paid on the portion of performance shares actually earned, and are paid at the regular dividend rate in shares of our stock.
For the three performance share cycles in effect during fiscal 2015, the targeted number of performance shares granted to our named executive officers is as follows:
Named Executive Officer | Targeted Performance Shares for Fiscal 2015 to 2017 Cycle | Targeted Performance Shares for Fiscal 2014 to 2016 Cycle | Targeted Performance Shares for Fiscal 2013 to 2015 Cycle | |||
Mr. Connolly | 60,162(1) | - | - | |||
Mr. Gehring | 25,547 | 21,882 | 32,000 | |||
Ms. Batcheler | 25,547 | 21,882 | 24,000 | |||
Mr. McGough | 25,547 | 21,882 | 12,000 | |||
Former Executive Officers | ||||||
Mr. Rodkin | 87, 819(2) | 75,219(2) | 100,000 | |||
Mr. Bolles | 25,547(3) | 16,412(3) | 24,000 | |||
Mr. Maass | 25,547(3) | 21,882(3) | 32,000 |
The grant date fair value of the performance shares granted for the fiscal 2015 to 2017 cycle is based on the probable outcome of the performance conditions, and is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2015.
The Committee specifically considered the factors discussed above under the heading “Named Executive Officer Considerations” when determining grant sizes by individual.
Compensation Discussion and Analysis
Design of Fiscal 2013 to 2015 Cycle. The actual number of shares of common stock earned for the fiscal 2013 to 2015 performance share cycle was determined following fiscal 2015 based on the company’s performance against goals based on our three-year average cash flow return on operations, which we refer to as CRO, and three-year average net sales growth. The Committee selected these financial metrics at the start of fiscal 2013 because it believed these metrics have a positive impact on shareholder value.
These metrics were calculated as follows:
Primary Metric Based on CRO. The primary metric for the fiscal 2013 to 2015 cycle, CRO, was calculated by dividing operating cash flow by average invested capital as follows:
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The operating results used in calculating CRO were designed to be adjusted for items impacting comparability of results.
Achievement of a threshold level of three-year average CRO for fiscal years 2013 to 2015 was designed to result in a payout equal to 25% of each participant’s approved target opportunity. Achievement of targeted performance would result in a payout equal to 100% of the opportunity. The maximum number of shares that could have been earned under the primary metric of CRO for this cycle was 200% of the targeted number of performance shares.
The actual CRO targets for the fiscal 2013 to 2015 cycle are detailed here.
Threshold 3-Year Average CRO (25% payout)
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12.0% | 15.1% | 16.4% |
Secondary Metric – Net Sales Growth. If CRO of 13.3% or greater was achieved in the fiscal 2013 to 2015 cycle, an additional payout was designed to be made based on a secondary metric of three-year average net sales growth. The additional payout under this secondary metric was designed to provide up to 20 additional points of payout if average net sales growth of 6% or more was achieved for the cycle. Average net sales growth below 2% during the cycle was designed not to be rewarded. As a result of the two-metric structure, high levels of financial performance were designed to result in payouts up to a total of 220% of targeted shares under this cycle.
Awards Earned for Fiscal 2013 to 2015 Cycle. At the end of fiscal 2015, the fiscal 2013 to 2015 cycle of the long-term program concluded. To incent management to make decisions that have positive long-term impacts, even at the expense of shorter term results, and to prevent unusual gains and losses from having too great of an impact on plan payouts, the Committee retained discretion to exclude items impacting comparability from company-wide results in the metrics applicable to the fiscal 2013 to 2015 cycle of the PSP. The specific adjustments approved by the Committee and applicable to the cycle are detailed below under “Use of Adjustments in Compensation Decisions.”
Compensation Discussion and Analysis
After taking into account reported results and the approved adjustments, the company achieved three-year average CRO of 13.68% and three-year average net sales growth of 6.2%. According to the pre-established goals, this performance level equated to a payout of 66% of the targeted performance share awards. The Committee did not exercise additional discretion to increase or decrease final payouts.
The table below lists the number of shares of common stock that were issued to the named executive officers following fiscal 2015 for the fiscal 2013 to 2015 cycle of the PSP. Mr. Connolly did not participate in the cycle. The noted amounts include dividend equivalents on earned shares, which were paid in additional shares.
Named Executive Officer | Target Performance Shares Granted for Fiscal 2013 to 2015 Cycle | Actual Performance Shares Earned for Fiscal 2013 to 2015 Cycle | ||
Mr. Gehring | 32,000 | 23,153 | ||
Ms. Batcheler | 24,000 | 17,365 | ||
Mr. McGough | 12,000 | 8,683 | ||
Former Executive Officers | ||||
Mr. Rodkin | 100,000 | 72,354 | ||
Mr. Bolles | 24,000 | 17,365 | ||
Mr. Maass | 32,000 | 23,153 |
Design of Fiscal 2014 to 2016 and Fiscal 2015 to 2017 Cycles. For the fiscal 2014 to 2016 and fiscal 2015 to 2017 cycles of the PSP, the Committee approved a change to the performance metrics. The actual number of shares of common stock earned for these cycles will be determined based on the company’s performance against goals based on our three-year average EBITDA Return on Capital, and three-year average net sales growth. The Committee made the change following a review with management and its compensation consultant of financial metrics that would drive strong alignment between participant incentives and shareholder returns and provide the proper balance of earnings and returns.
These metrics are calculated as follows:
Primary Metric Based on EBITDA Return on Capital. The primary metric for each of the fiscal 2014 to 2016 and 2015 to 2017 cycles is calculated by dividing EBITDA by average invested capital as follows:
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The operating results may be adjusted for items impacting comparability of results.
Achievement of a threshold level of three-year average EBITDA Return on Capital for each of the fiscal 2014 to 2016 and fiscal 2015 to 2017 cycles results in a payout equal to 25% of each participant’s approved target opportunity. Target performance results in a payout equal to 100% of the opportunity. The maximum number of shares that can be earned under the primary metric of EBITDA Return on Capital for the cycle is 200% of the targeted number of performance shares.
Plan Cycle | Threshold 3-Year Average EBITDA Return on Capital (25% payout) | Target 3-Year Average EBITDA Return on Capital (100% payout) | Maximum 3-Year Average EBITDA Return on Capital (200% payout) | |||
Fiscal 2014 to 2016 | 14.6% | 17.9% | 19.9% | |||
Fiscal 2015 to 2017 | 14.2% | 17.5% | 19.5% |
Compensation Discussion and Analysis
Secondary Metric – Net Sales Growth. If EBITDA Return on Capital of 15.9% or greater is achieved in the fiscal 2014 to 2016 cycle, and if EBITDA Return on Capital of 15.5% or greater is achieved for the fiscal 2015 to 2017 cycle, an additional payout may be earned based on the secondary metric of three-year average net sales growth. The additional payout under this secondary metric can be up to a maximum of 20% of target, if average net sales growth of 7% or more is achieved for the fiscal 2014 to 2016 cycle and average net sales growth of 4.5% or more is achieved for the fiscal 2015 to 2017 cycle. Average net sales growth below 2.5% for the fiscal 2014 to 2016 cycle and below 1.5% for the fiscal 2015 to 2017 cycle would not be rewarded.
As a result of the two-metric structure, high levels of financial performance can result in payouts up to a total of 220% of targeted shares under each of these cycles. At the time the target levels of performance were set for these cycles, the Committee believed them to appropriately balance the interests of shareholders and participants.
The fiscal 2014 to 2016 and fiscal 2015 to 2017 cycles of the PSP are ongoing and thus no payouts have yet been earned.
Other Fiscal 2015 Compensation. The additional material elements of our compensation program for the named executive officers during fiscal 2015 were as follows:
Discretionary Bonus or Equity Grant. The Committee may choose to approve a sign-on or discretionary bonus or equity grant for a senior officer if it deems it necessary as a recruitment tool or to recognize extraordinary performance. Discretionary cash bonuses are included in the “Bonus” column of the Summary Compensation Table – Fiscal 2015 and the grant date fair value of a sign-on or discretionary equity award is included in either the “Stock Awards” or “Option Awards” column of the table, as appropriate. In connection with Mr. Connolly’s hiring, the Committee awarded him a sign-on grant of 600,000 stock options (as previously described above) and a grant of 46,057 restricted stock units. No other sign-on or discretionary cash or equity bonuses were made to the named executive officers during fiscal 2015.
Benefit Programs. We offer a package of core employee benefits to our employees, including our named executive officers. With respect to health and welfare benefits, we offer health, dental and vision coverage, and life and disability insurance. The company and employee participants share in the cost of these programs. We also offer a matching-gifts program through our ConAgra Foods Foundation. To maximize community impact, the ConAgra Foods Foundation will match, dollar for dollar, donations employees make to eligible organizations, up to $1,000 in a calendar year. Donations made by the Foundation on behalf of a named executive officer are included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2015.
With respect to retirement benefits, we maintain qualified 401(k) retirement plans (with a company match on employee contributions) and qualified pension plans. The named executive officers are entitled to participate in these plans on the same terms as other employees, except that the qualified pension plans were closed to new participants in 2013, and Mr. Connolly is not eligible to participate in the pension plans.
Some of the named executive officers and other employees at various levels of the organization participate in a non-qualified pension plan, non-qualified 401(k) plan and/or voluntary deferred compensation plan. The non-qualified pension, non-qualified 401(k) and voluntary deferred compensation plans permit us to pay retirement benefits in amounts that exceed the limitations imposed by the Internal Revenue Code under our qualified plans. With respect to the non-qualified pension plan, the employment agreement entered into with Mr. Rodkin upon his hiring in 2005 provided that, as long as he remained employed until age 60, years of service for purposes of calculating benefits would be credited at a
Compensation Discussion and Analysis
three-for-one rate until he achieved service credit of thirty years. Mr. Rodkin’s agreement also provided that the annual earnings amount to be used in the pension benefit formula under the non-qualified pension plan would be no less than $3.0 million. Benefits payable to Mr. Rodkin under the non-qualified pension plan are subject to offset for benefits paid or payable to him under supplemental pension plans his prior employer maintained for his benefit. The Committee has not offered additional years of credited service under the pension plan to other named executive officers.
Our voluntary deferred compensation plan allows the named executive officers, as well as a broader group of approximately 900 employees, to defer receipt of up to 50% of their base salary and 90% of their annual cash incentive compensation. The program permits executives to save for retirement in a tax-efficient way at minimal administrative cost to the company. Executives who participate in the program are not entitled to above-market (as defined by the SEC) or guaranteed rates of return on their deferred funds.
We include contributions made by the company to the named executive officers’ 401(k) plan, non-qualified 401(k) plan and voluntary deferred compensation accounts in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2015. We provide a complete description of these retirement programs under the headings “Pension Benefits – Fiscal 2015” and “Non-Qualified Deferred Compensation – Fiscal 2015” below.
Perquisites. The Committee’s philosophy on perquisites for senior officers has been consistently communicated over the years. Members of senior management are not eligible for indirect pay except in limited circumstances. In particular, each of the named executive officers was entitled to participate in an executive physical program during fiscal 2015 and the company covered the cost of the physical. As an alternative to participation in the executive physical program, each of the named executive officers was entitled to elect participation in a medical access program, with the cost of the program imputed to the executive as taxable income. The incremental cost to the company of providing these benefits is included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2015.
The Committee has determined it appropriate to cover Mr. Connolly by our security policy. Mr. Rodkin was also covered by our security policy prior to his retirement. As a result, Mr. Connolly is, and prior to his retirement Mr. Rodkin was, required to take corporate aircraft for all business and personal air transportation. To offset a portion of the incremental cost to the company of their personal use of corporate aircraft, we entered into aircraft time share agreements with each of Mr. Rodkin and Mr. Connolly. Mr. Rodkin’s aircraft time share agreement was terminated on May 31, 2015 in connection with his retirement. Under the agreements, Mr. Connolly is and Mr. Rodkin was responsible for reimbursing us, in cash, amounts to help offset a portion of our incremental costs of personal flights, consisting of the cost of fuel and incidentals such as landing and parking fees, airport taxes and catering costs for such flights. We do not charge for the fixed costs that would be incurred in any event to operate company aircraft (for example, aircraft purchase costs, maintenance, insurance and flight crew salaries). A copy of the ConAgra Foods, Inc. Aircraft Use Policy is available upon request by a shareholder to the Corporate Secretary at One ConAgra Drive, Omaha, NE 68102.
Change of Control / Severance Benefits. We have agreements with our named executive officers that are designed to promote stability and continuity of senior management in the event of a change of control. The Committee routinely evaluates participation in this program and its benefit levels to ensure their reasonableness.
Following a review of market practices in July 2011, the Committee adopted a policy that any future change in control benefits will be structured without any excise tax gross-up protection. Since that time, individuals promoted or hired into positions that, in the Committee’s view, are appropriate for change of control program participation, have not been entitled to any excise tax gross-up protection. Although the Committee continues to believe in the importance of maintaining a change of control program, it believes that offering excise tax gross-ups to new participants is inappropriate relative to best executive pay practices. We provide a complete description of the amounts potentially payable to our named executive officers under these agreements under the heading “Potential Payments Upon Termination or Change of Control.”
We have also adopted a broad severance plan applicable to most salaried employees, including the named executive officers. In some circumstances, as part of negotiations during the hiring or recruiting process, we have supplemented this plan with specific severance arrangements.
Compensation Discussion and Analysis
Agreements with Named Executive Officers
Mr. Connolly’s Employment Agreement. We entered into an employment agreement with Mr. Connolly on February 12, 2015. The agreement expires on August 1, 2018. The agreement generally describes Mr. Connolly’s duties and responsibilities as Chief Executive Officer, and, for its term, provides for a minimum base salary of $1,100,000 and customary vacation in accordance with the company’s policies. The agreement subjects Mr. Connolly to our stock ownership guidelines and a one-year post-employment non-competition restriction. It also requires Mr. Connolly to execute our standard confidentiality and non-solicitation agreement. The employment agreement outlines Mr. Connolly’s participation in our incentive compensation programs during its term. Regarding the annual incentive program, the agreement provides for Mr. Connolly’s participation beginning with fiscal 2016. At a minimum, his target opportunity under the annual incentive plan must be 150% of base salary. With respect to long-term incentives, commencing with fiscal 2016, Mr. Connolly is entitled, each year during the term of the agreement, to receive a targeted long-term award opportunity with a value of at least $6,250,000 for any ensuing three-year performance period. For the 2015 to 2017 performance cycle, the employment agreement entitled Mr. Connolly to an award under the PSP with a grant date value of $2,090,000, which award is described above.
The employment agreement provides for certain other benefits, including indemnification, reimbursement for professional fees incurred in negotiating and preparing the employment agreement and a one-time cash payment of $65,000 to cover Mr. Connolly’s expenses in establishing a residence in Omaha, Nebraska. The agreement also entitles Mr. Connolly to use corporate aircraft, as further described above and under “Summary Compensation Table – Fiscal 2015” below.
The employment agreement provides for severance, termination and change of control benefits further described below under the heading “Potential Payments Upon Termination or Change of Control.”
The agreement also entitles Mr. Connolly to participate in benefit plans and programs that are made available to senior executives generally. For information about the terms of Mr. Connolly’s participation in our retirement plans and deferred compensation plans, see “Non-Qualified Deferred Compensation – Fiscal 2015” below.
Mr. Rodkin’s Employment Agreement. We were a party to an employment agreement with Mr. Rodkin, which was terminated on May 31, 2015 in connection with his retirement. Mr. Rodkin’s employment agreement generally described his duties and responsibilities, provided for a minimum base salary and vacation, and subjected Mr. Rodkin to our stock ownership guidelines and to customary confidentiality and one-year non-competition and non-solicitation restrictions. The agreement also provided for indemnification, participation in our annual incentive program at a minimum target opportunity of 200% of base salary, and participation in our long-term incentive programs, our employee and executive pension and deferred compensation plans, our 401(k) plan and our welfare benefit plans and programs. We entered into a Letter Agreement with Mr. Rodkin, effective March 3, 2015, which detailed his employment relationship during the period between Mr. Connolly’s hiring and May 31, 2015.
Mr. Maass’ Transition and Separation Agreement. We entered into a Transition and Separation Agreement, effective May 4, 2015, with Mr. Maass in connection with his departure from the company. The Transition and Separation Agreement subjects Mr. Maass to confidentiality requirements, one-year non-competition and non-solicitation of customer restrictions, and an 18-month non-solicitation of employees restriction. In consideration for these commitments from Mr. Maass, we have agreed to pay him an aggregate of $1.4 million in installments at each of the six, nine and twelve month anniversaries of his separation; these amounts will be forfeited if Mr. Maass is in breach of certain aspects of the agreement. The agreement provides Mr. Maass with eligibility to receive a bi-weekly, taxable payment to offset the premium cost to elect COBRA coverage until July 31, 2016, provided he maintains COBRA coverage during that time. The agreement also entitles him to outplacement services as selected and provided by the company.
Compensation Discussion and Analysis
Use of Adjustments in Compensation Decisions
To incent management to make decisions that have positive long-term impacts, even at the expense of shorter term results, and to prevent one-time gains and losses from having too great of an impact on incentive payouts, the Committee retained discretion to exclude items impacting comparability from GAAP, generally accepted accounting principles, results in the fiscal 2013 to 2015 cycle of the PSP. The metrics for the fiscal 2013 to 2015 cycle of the PSP were EPS (as an initial metric), CRO and net sales growth.
With respect to earnings-related measures, the Committee approved adjustments that were generally consistent with the adjustments presented to investors in our discussions of comparable earnings results, as well as adjustments related to unanticipated losses associated with foreign exchange translation and a labor dispute in the shipping industry on the West Coast, which materially impacted exports. The goal is to pay incentives based on the underlying business trends and results that our investors are using to measure management performance.
Committee’s Views on Executive Stock Ownership
The Committee has adopted stock ownership guidelines applicable to approximately 180 of our senior employees. These guidelines, which are represented as a percentage of salary, increase with greater responsibility within the company. The Committee has adopted these guidelines because it believes that management stock ownership promotes alignment with shareholder interests. The named executive officers are expected to reach their respective ownership requirement within a reasonable period of time after appointment. Shares personally acquired by the executive through open market purchases or through our 401(k) plan or employee stock purchase plan, as well as restricted stock units and shares acquired upon the deferral of earned bonuses are counted toward the ownership requirement. Neither unexercised stock options nor unearned performance shares are counted. The following table reflects ownership as of July 30, 2015 for our continuing executives. Messrs. Rodkin, Bolles and Maass have been intentionally omitted given their respective retirement and departures from the company.
Named Executive Officer | Stock Ownership Guideline (% of Salary) | Actual Ownership (% of Salary) (1) | ||
Mr. Connolly | 600% | 152% | ||
Mr. Gehring | 400% | 1,338% | ||
Ms. Batcheler | 400% | 1,224% | ||
Mr. McGough | 400% | 540% |
Committee’s Practices Regarding the Timing of Equity Grants
We do not backdate stock options or grant equity retroactively. We do not coordinate grants of equity with disclosures of positive or negative information. All equity awards are granted with an exercise price (if applicable) equal to the closing price of our common stock on the NYSE on the date of grant. The vast majority of our stock option grants for a fiscal year are made in July, at a regular Committee meeting.
In most instances, when management proposes an off-cycle award or sign-on grant for a non-executive officer, the Committee considers approval of the grant at a regularly scheduled Committee meeting. In the event management proposes a sign-on grant for a senior officer and a grant-related decision is necessary between regularly scheduled Committee meetings, the Committee may hold a special meeting to consider the grant. If approved, the grant date will be the first trading day of the month on or following the officer’s date of hire. The Committee did not delegate any authority to approve equity grants to senior officers in fiscal 2015.
Compensation Discussion and Analysis
Additional Information on the Committee’s Compensation Consultant
The Committee engages Frederic W. Cook & Co., Inc. directly to assist it in obtaining and reviewing information relevant to compensation decisions. The independence and performance of the consultant are of the utmost importance to the Committee. Committee policy prevents management from directly engaging the consultant without the prior approval of the Committee’s Chair. Given the focused scope of Frederic W. Cook & Co., Inc.’s services, no management-generated fees are expected with this firm. For fiscal 2015, Frederic W. Cook & Co., Inc. did not provide any additional services to us or our affiliates. The Committee reviews the types of services provided by the consultant and all fees paid for those services on a regular basis, and conducts a formal evaluation of the consultant annually. The Committee has assessed the independence of Frederic W. Cook & Co., Inc., as required under NYSE listing rules. The Committee has also considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to Frederic W. Cook & Co., Inc. during fiscal 2015. Based on this review, the Committee did not identify any conflict of interest raised by the work performed by Frederic W. Cook & Co, Inc.
Tax and Accounting Implications of the Committee’s Compensation Decisions
U.S. federal income tax law prohibits the company from taking a tax deduction for certain compensation paid in excess of $1 million to the company’s chief executive officer or any of the company’s three other most highly compensated executive officers, other than the chief financial officer, who are employed as of the end of the year. This limitation does not apply to qualified performance-based compensation under federal tax law. Generally, this is compensation paid only if performance meets pre-established, objective goals based on performance metrics approved by our shareholders. The Committee’s general intent is to structure our executive compensation programs so that payments may be able to qualify as fully tax deductible. However, while the Committee believes it is in the best interests of the company and its shareholders to have the ability to grant “qualified performance-based compensation” under Section 162(m) of the Code, it may decide from time to time to grant compensation that will not qualify as “qualified performance-based compensation” for purposes of Section 162(m) of the Code. Moreover, even if the Committee intends to grant compensation that qualifies as “qualified performance-based compensation” for purposes of Section 162(m) of the Code, the company cannot guarantee that such compensation ultimately will be deductible by it.
For fiscal 2015, all annual incentive and performance share awards to covered employees were subject to, and made in accordance with, performance-based compensation arrangements that were intended to qualify as tax deductible. In order to achieve this potential result, the Committee approved a framework in which (1) maximum awards under these incentive programs would be authorized upon attainment of EPS of: $0.10 for the fiscal 2015 MIP; $0.50 for the performance period for the fiscal 2013 to 2015 cycle of the PSP; $0.50 per year of the performance period for the fiscal 2014 to 2016 cycle of the PSP; and $0.10 per year of the performance period for the fiscal 2015 to 2017 cycle of the PSP; and (2) negative discretion would be applied by the Committee to decrease authorized awards based upon the program frameworks described above (that is, based on comparable EPS and net sales results for the fiscal 2015 MIP; and CRO and EBITDA return on capital, as well as net sales growth results, as applicable, for the outstanding cycles of the PSP). The Committee intends to continue using this type of approach to potentially preserve the tax deductibility of its compensation arrangements in the future. However, the Committee does retain the discretion to make payments or grants of equity that are not fully deductible (for example, a portion of Mr. Connolly’s salary) when, in its judgment, those payments or grants are needed to achieve its overall compensation objectives.
Human Resources Committee Report
Human Resources Committee Report
The Human Resources Committee has reviewed and discussed the above section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Committee recommended to the Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference in the company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2015.
ConAgra Foods, Inc. Human Resources Committee
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Executive Compensation
Summary Compensation Table – Fiscal 2015
The table below presents compensation information for individuals who served as our Chief Executive Officer and Chief Financial Officer during fiscal 2015 (including Mr. Rodkin, who retired effective May 31, 2015), for each of the other three most highly-compensated individuals who were serving as executive officers at the end of fiscal 2015, and for Mr. Maass, who was no longer serving as an executive officer at the end of fiscal 2015 due to his announced departure from the company. Mr. Bolles served as our Executive Vice President and Chief Technical and Operations Officer until his departure from the company on August 1, 2015. None of Mr. Bolles, Mr. Connolly or Mr. McGough was a named executive officer in fiscal 2013 or fiscal 2014 and information about their compensation for those fiscal years is not included.
The amounts in the following Summary Compensation Table for each of Mr. Rodkin and Mr. Connolly are based in part on their respective employment agreements. Mr. Rodkin’s employment agreement was terminated on May 31, 2015 in connection with his retirement. For more information about the material terms of the employment agreements with Mr. Rodkin and Mr. Connolly and our change of control agreements with each of our named executive officers, see “Agreements with Named Executive Officers “ in the Compensation Discussion and Analysis above and “Potential Payments Upon Termination or Change of Control” below.
For more information about our named executive officers’ mix of base salary and annual incentive compensation to their total compensation, see the discussion under “Key Elements of our Fiscal 2015 Executive Compensation Program” in the Compensation Discussion and Analysis above.
Name and Principal Position (1) | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compen- ($)(4) | Change in Pension Value and Non- Deferred Compensation Earnings ($)(5) | All Other Compen- ($)(6) | Total ($) | |||||||||||||||||||||||||||
Sean Connolly | 2015 | 249,615 | - | 3,915,232 | 2,304,000 | - | - | 171,728 | 6,640,575 | |||||||||||||||||||||||||||
CEO and | ||||||||||||||||||||||||||||||||||||
President | ||||||||||||||||||||||||||||||||||||
John Gehring | 2015 | 600,000 | - | 789,147 | 502,775 | - | 306,119 | 36,198 | 2,234,239 | |||||||||||||||||||||||||||
EVP and Chief | 2014 | 589,904 | - | 766,964 | 657,667 | 147,476 | 220,461 | 38,302 | 2,420,774 | |||||||||||||||||||||||||||
Financial Officer | 2013 | 521,635 | - | 947,286 | 468,800 | 610,750 | 200,278 | 37,693 | 2,786,442 | |||||||||||||||||||||||||||
Colleen Batcheler | 2015 | 500,000 | - | 789,147 | 502,775 | - | 31,785 | 41,249 | 1,864,956 | |||||||||||||||||||||||||||
EVP, General Counsel and | 2014 | 494,615 | - | 766,964 | 657,667 | 98,923 | 20,679 | 72,843 | 2,111,691 | |||||||||||||||||||||||||||
Corporate Secretary | 2013 | 456,635 | - | 749,366 | 351,600 | 433,340 | 29,204 | 13,629 | 2,033,774 | |||||||||||||||||||||||||||
Tom McGough | 2015 | 524,039 | - | 789,147 | 502,775 | - | 45,107 | 59,968 | 1,921,036 | |||||||||||||||||||||||||||
President, | ||||||||||||||||||||||||||||||||||||
Consumer Foods | ||||||||||||||||||||||||||||||||||||
Executive Compensation
Name and Principal Position (1) | Fiscal Year | Salary ($) | Bonus ($) | Stock ($)(2) | Option ($)(3) | Non-Equity Plan | Change in ($)(5) | All Other ($)(6) | Total ($) | |||||||||||||||||||||||||||
Former Executive Officers |
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Gary Rodkin | 2015 | 1,100,000 | - | 2,712,729 | 1,728,284 | - | 2,712,270 | 251,324 | 8,504,607 | |||||||||||||||||||||||||||
Retired CEO and | 2014 | 1,100,000 | - | 2,636,426 | 2,239,324 | 550,000 | 2,346,063 | 259,121 | 9,130,934 | |||||||||||||||||||||||||||
President | 2013 | 1,086,538 | - | 2,474,000 | 1,465,000 | 2,486,000 | 3,058,770 | 141,477 | 10,711,785 | |||||||||||||||||||||||||||
Al Bolles | 2015 | 475,000 | - | 789,147 | 502,775 | - | 59,616 | 50,333 | 1,876,871 | |||||||||||||||||||||||||||
Former EVP and Chief | ||||||||||||||||||||||||||||||||||||
Technical and | ||||||||||||||||||||||||||||||||||||
Operations Officer | ||||||||||||||||||||||||||||||||||||
Paul Maass | 2015 | 600,000 | - | 789,147 | 502,775 | - | 144,318 | 56,047 | 2,092,287 | |||||||||||||||||||||||||||
Former President | 2014 | 600,000 | - | 766,964 | 657,667 | 150,000 | 55,318 | 94,668 | 2,324,617 | |||||||||||||||||||||||||||
Private Brands and | 2013 | 523,173 | - | 1,334,080 | 468,800 | 616,570 | 122,978 | 18,043 | 3,083,644 | |||||||||||||||||||||||||||
Commercial Foods | ||||||||||||||||||||||||||||||||||||
Executive Compensation
Named Executive Officer | Perquisites and Personal Benefits (a) | |||||||||||||||||||||||||||
(Column 1) Personal $ | (Column 2) Executive $ | (Column 3) Matching $ | (Column 4) Relocation Reimbursement $ | (Column 5) $ | (Column 6) Company $ (d) | (Column 7) Group $ | ||||||||||||||||||||||
Mr. Connolly | 46,062 | - | - | 105,000 | (c) | - | 20,181 | (b | ) | |||||||||||||||||||
Mr. Gehring | (b | ) | (b | ) | - | - | 20,786 | (b | ) | |||||||||||||||||||
Ms. Batcheler | - | (b | ) | (b | ) | - | 36,877 | (b | ) | |||||||||||||||||||
Mr. McGough | - | (b | ) | - | (b | ) | 38,573 | (b | ) | |||||||||||||||||||
Former Executive Officers | ||||||||||||||||||||||||||||
Mr. Rodkin | 187,946 | (b | ) | - | - | 48,581 | (b | ) | ||||||||||||||||||||
Mr. Bolles | (b | ) | - | - | - | 37,644 | (b | ) | ||||||||||||||||||||
Mr. Maass | - | (b | ) | (b | ) | - | 50,864 | (b | ) |
Executive Compensation
Grants of Plan-Based Awards – Fiscal 2015
The following table presents information about grants of plan-based awards (equity and non-equity) during fiscal 2015 to the named executive officers. All equity-based grants were made under the shareholder-approved ConAgra Foods 2009 Stock Plan (prior to October 2014) or the shareholder approved ConAgra Foods 2014 Stock Plan (on or after October 2014).
Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other (#) | Exercise ($/Sh) | Grant Date ($) (4) | |||||||||||||||||||||||||||||||||||||
Thres- ($) | Target ($) | Maximum ($) | Thres- (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||
Mr. | 4/1/2015 | 15,041 | 60,162 | 132,356 | 2,217,571 | |||||||||||||||||||||||||||||||||||||||
Connolly | 4/1/2015 | 46,057 | (3) | 1,697,661 | ||||||||||||||||||||||||||||||||||||||||
4/1/2015 | 600,000 | 36.86 | 2,304,000 | |||||||||||||||||||||||||||||||||||||||||
Mr. | 7/14/2014 | - | 600,000 | 1,200,000 | N/A | |||||||||||||||||||||||||||||||||||||||
Gehring | 7/14/2014 | 6,387 | 25,547 | 56,203 | 789,147 | |||||||||||||||||||||||||||||||||||||||
7/14/2014 | 153,285 | 30.89 | 502,775 | |||||||||||||||||||||||||||||||||||||||||
Ms. | 7/14/2014 | - | 400,000 | 800,000 | N/A | |||||||||||||||||||||||||||||||||||||||
Batcheler | 7/14/2014 | 6,387 | 25,547 | 56,203 | 789,147 | |||||||||||||||||||||||||||||||||||||||
7/14/2014 | 153,285 | 30.89 | 502,775 | |||||||||||||||||||||||||||||||||||||||||
Mr. | 7/14/2014 | - | 524,039 | 1,048,077 | N/A | |||||||||||||||||||||||||||||||||||||||
McGough | 7/14/2014 | 6,387 | 25,547 | 56,203 | 789,147 | |||||||||||||||||||||||||||||||||||||||
7/14/2014 | 153,285 | 30.89 | 502,775 | |||||||||||||||||||||||||||||||||||||||||
Former Executive Officers |
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Mr. | 7/14/2014 | - | 2,200,000 | 4,400,000 | N/A | |||||||||||||||||||||||||||||||||||||||
Rodkin | 7/14/2014 | 21,955 | 87,819 | 193,202 | 2,712,729 | |||||||||||||||||||||||||||||||||||||||
7/14/2014 | 526,916 | 30.89 | 1,728,284 | |||||||||||||||||||||||||||||||||||||||||
Mr. | 7/14/2014 | - | 380,000 | 760,000 | N/A | |||||||||||||||||||||||||||||||||||||||
Bolles | 7/14/2014 | 6,387 | 25,547 | 56,203 | 789,147 | |||||||||||||||||||||||||||||||||||||||
7/14/2014 | 153,285 | 30.89 | 502,775 | |||||||||||||||||||||||||||||||||||||||||
Mr. | 7/14/2014 | - | 600,000 | 1,200,000 | N/A | |||||||||||||||||||||||||||||||||||||||
Maass | 7/14/2014 | 6,387 | 25,547 | 56,203 | 789,147 | |||||||||||||||||||||||||||||||||||||||
7/14/2014 | 153,285 | 30.89 | 502,775 |
Executive Compensation
Outstanding Equity Awards at Fiscal Year-End – Fiscal 2015
The following table lists all stock options, performance shares and restricted stock unit (RSU) awards outstanding as of May 31, 2015 for the named executive officers.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option ($) | Option Expiration Date | Number Vested (#) | Market Value That Have ($)(5) | Equity Incentive (#) (6) | Equity Incentive Plan ($) (5) | ||||||||||||||||||||||||
Mr. | 600,000 | 36.86 | 3/31/2025 | |||||||||||||||||||||||||||||
Connolly | 46,057 | (2) | 1,778,261 | |||||||||||||||||||||||||||||
132,356 | 5,110,281 | |||||||||||||||||||||||||||||||
Mr. | 160,000 | 26.15 | 7/10/2018 | |||||||||||||||||||||||||||||
Gehring | 112,000 | 48,000 | 24.74 | 7/15/2022 | ||||||||||||||||||||||||||||
55,853 | 83,779 | 36.89 | 7/14/2023 | |||||||||||||||||||||||||||||
153,285 | 30.89 | 7/13/2024 | ||||||||||||||||||||||||||||||
48,140 | 1,858,701 | |||||||||||||||||||||||||||||||
56,203 | 2,170,013 | |||||||||||||||||||||||||||||||
Ms. | - | 36,000 | 24.74 | 7/15/2022 | ||||||||||||||||||||||||||||
Batcheler | 55,853 | 83,779 | 36.89 | 7/14/2023 | ||||||||||||||||||||||||||||
- | 153,285 | 30.89 | 7/13/2024 | |||||||||||||||||||||||||||||
48,140 | 1,858,701 | |||||||||||||||||||||||||||||||
56,203 | 2,170,013 | |||||||||||||||||||||||||||||||
Mr. | 60,000 | - | 26.15 | 7/10/2018 | ||||||||||||||||||||||||||||
McGough | 42,000 | 18,000 | 24.74 | 7/15/2022 | ||||||||||||||||||||||||||||
55,853 | 83,779 | 36.89 | 7/14/2023 | |||||||||||||||||||||||||||||
- | 153,285 | 30.89 | 7/13/2024 | |||||||||||||||||||||||||||||
48,140 | 1,858,701 | |||||||||||||||||||||||||||||||
56,203 | 2,170,013 | |||||||||||||||||||||||||||||||
Former Executive Officers |
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Mr. | 1,000,000 | - | 22.83 | 8/30/2015 | ||||||||||||||||||||||||||||
Rodkin | 480,000 | - | 22.72 | 5/25/2016 | ||||||||||||||||||||||||||||
500,000 | - | 21.26 | 7/15/2015 | |||||||||||||||||||||||||||||
500,000 | - | 19.05 | 7/14/2016 | |||||||||||||||||||||||||||||
500,000 | - | 23.93 | 7/24/2017 | |||||||||||||||||||||||||||||
500,000 | - | 26.15 | 7/10/2018 | |||||||||||||||||||||||||||||
500,000 | - | 24.74 | 7/15/2022 | |||||||||||||||||||||||||||||
478,488 | - | 36.76 | 7/15/2023 | |||||||||||||||||||||||||||||
526,916 | - | 30.89 | 7/13/2024 | |||||||||||||||||||||||||||||
165,482 | (6) | 6,389,252 | ||||||||||||||||||||||||||||||
193,202 | (6) | 7,459,521 | ||||||||||||||||||||||||||||||
Executive Compensation
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option ($) | Option Expiration Date | Number Vested | Market Value That Have ($)(5) | Equity Incentive (#) (6) | Equity Incentive Plan ($) (5) | ||||||||||||||||||||||||
Mr. | 120,000 | - | 26.15 | 7/10/2018 | ||||||||||||||||||||||||||||
Bolles | 84,000 | 36,000 | 24.74 | 7/15/2022 | ||||||||||||||||||||||||||||
41,890 | 62,834 | 36.89 | 7/14/2023 | |||||||||||||||||||||||||||||
- | 153,285 | 30.89 | 7/13/2024 | |||||||||||||||||||||||||||||
10,000 | (3) | 386,100 | ||||||||||||||||||||||||||||||
36,106 | (6) | 1,394,068 | ||||||||||||||||||||||||||||||
56,203 | (6) | 2,170,013 | ||||||||||||||||||||||||||||||
Mr. | - | 48,000 | 24.74 | 7/15/2022 | ||||||||||||||||||||||||||||
Maass | 55,853 | 83,779 | 36.89 | 7/14/2023 | ||||||||||||||||||||||||||||
- | 153,285 | 30.89 | 7/13/2024 | |||||||||||||||||||||||||||||
15,000 | (4) | 579,150 | ||||||||||||||||||||||||||||||
48,140 | (6) | 1,858,701 | ||||||||||||||||||||||||||||||
56,203 | (6) | 2,170,013 | ||||||||||||||||||||||||||||||
Unexercisable at FYE | Vesting Schedule | Unexercisable at FYE | Vesting Schedule | |||||||||||||||||||||||||
# of Shares | Vesting Date | # of Shares | Vesting Date | |||||||||||||||||||||||||
Connolly | 600,000 | 200,000 | 4/1/16 | Batcheler | 36,000 | 36,000 | 7/16/15 | |||||||||||||||||||||
200,000 | 4/1/17 | 83,779 | 41,890 | 7/15/15 | ||||||||||||||||||||||||
200,000 | 4/1/18 | 41,889 | 7/15/16 | |||||||||||||||||||||||||
Gehring | 48,000 | 48,000 | 7/16/15 | 153,285 | 61,314 | 7/14/15 | ||||||||||||||||||||||
83,779 | 41,890 | 7/15/15 | 45,985 | 7/14/16 | ||||||||||||||||||||||||
41,889 | 7/15/16 | 45,986 | 7/14/17 | |||||||||||||||||||||||||
153,285 | 61,314 | 7/14/15 | McGough | 18,000 | 18,000 | 7/16/15 | ||||||||||||||||||||||
45,985 | 7/14/16 | 83,779 | 41,890 | 7/15/15 | ||||||||||||||||||||||||
45,986 | 7/14/17 | 41,889 | 7/15/16 | |||||||||||||||||||||||||
153,285 | 61,314 | 7/14/15 | ||||||||||||||||||||||||||
45,985 | 7/14/16 | |||||||||||||||||||||||||||
45,986 | 7/14/17 | |||||||||||||||||||||||||||
Former Executive Officers |
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Bolles | 36,000 | 36,000 | 7/16/15 | Maass | 48,000 | 48,000 | 7/16/15 | |||||||||||||||||||||
62,834 | 31,417 | 7/15/15 | 83,779 | 41,890 | 7/15/15 | |||||||||||||||||||||||
31,417 | 7/15/16 | 41,889 | 7/15/16 | |||||||||||||||||||||||||
153,285 | 61,314 | 7/14/15 | 153,285 | 61,314 | 7/14/15 | |||||||||||||||||||||||
45,985 | 7/14/16 | 45,985 | 7/14/16 | |||||||||||||||||||||||||
45,986 | 7/14/17 | 45,986 | 7/14/17 |
Executive Compensation
Option Exercises and Stock Vested – Fiscal 2015
The following table summarizes the option awards exercised during fiscal 2015 for each of the named executive officers and the performance shares that were earned and paid out for the fiscal 2013 to 2015 cycle of the PSP. Mr. Connolly was hired on March 3, 2015 and was appointed as President and Chief Executive Officer on April 6, 2015. Accordingly, he did not participate in the fiscal 2013 to 2015 cycle of the PSP.
The performance period for the fiscal 2013 to 2015 cycle of the PSP ended on May 31, 2015. The column entitled “Stock Awards” below includes shares earned under that cycle for cumulative three-year performance.
Option Awards | Stock Awards | |||||||||||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on ($) | Number of Shares (#) (1) | Value Realized on ($) | |||||||||||||||
Mr. Connolly | - | - | - | - | ||||||||||||||
Mr. Gehring | 320,000 | 4,761,872 | 23,153 | 893,937 | ||||||||||||||
Ms. Batcheler | 324,000 | 3,650,122 | 17,365 | 670,463 | ||||||||||||||
Mr. McGough | 52,500 | 704,231 | 8,683 | 335,251 | ||||||||||||||
Former Executive Officers | ||||||||||||||||||
Mr. Rodkin | 300,000 | 1,311,350 | 72,354 | 2,793,588 | ||||||||||||||
Mr. Bolles | 340,000 | 4,383,331 | 17,365 | 670,463 | ||||||||||||||
Mr. Maass | 392,000 | 4,616,768 | 23,153 | 893,937 |
Executive Compensation
Pension Benefits – Fiscal 2015
ConAgra Foods maintains anon-contributory defined benefit pension plan for all eligible employees, which we refer to as the Qualified Pension. Employees eligible to participate in the Qualified Pension are salaried employees, including the named executive officers, hired prior to August 1, 2013. The Qualified Pension was closed to new participants who joined the company on or after August 1, 2013. As a result, Mr. Connolly is not eligible to participate.
Employees hired before June 1, 2004 were given a one-time opportunity during 2004 to choose between (A) the benefit formulas in the Qualified Pension and qualified 401(k) plan at that time and (B) effective October 1, 2004, a new Qualified Pension formula plus an enhanced company match in our qualified 401(k) plan. Employees hired on or after June 1, 2004 were automatically enrolled in option (B) effective upon their date of hire. With respect to the named executive officers, Ms. Batcheler, Mr. Bolles and Mr. McGough joined the company after June 1, 2004 and were automatically enrolled in option (B). Messrs. Gehring and Maass were employed prior to June 1, 2004 and were enrolled in option (A). Although Mr. Rodkin was enrolled in option (B) for purposes of the Qualified Plan (due to commencement of employment after June 1, 2004), his employment agreement entitled him to a total pension benefit equal to the option (A) calculation. Any difference between the option (A) and (B) pension benefits would be provided to him through the Non-Qualified Pension (described below).
Under both option (A) and option (B), the pension benefit formula is determined by adding three components:
A multiple of Average Monthly Earnings (up to the integration level) multiplied by years of credited service (up to 35 years of credited service). This multiple is 1.0% for option (A) and 0.9% for option (B).
A multiple of Average Monthly Earnings (over the integration level) multiplied by years of credited service (up to 35 years of credited service). This multiple is 1.44% for option (A) and 1.3% for option (B).
A multiple of Average Monthly Earnings multiplied by years of credited service over 35 years. This multiple is 1.0% for option (A) and 0.9% for option (B).
“Average Monthly Earnings” is the monthly average of the executive’s annual compensation from the company for the highest five consecutive years of the final ten years of his or her service. Only salary and annual incentive payments (reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table – Fiscal 2015) are considered for the named executive officers in computing Average Monthly Earnings. The integration level is calculated by the Internal Revenue Service, or IRS, by averaging the last 35 years of Social Security taxable wages, up to and including the year in which the executive’s employment ends.
Participants are vested in the pension benefit once they have five years of vesting service with the company. Pension benefits become payable for option (A) participants at the normal retirement age of 65, or age 60 if the participant has 25 or more years of service. Normal retirement age for option (B) participants is 65. Under either option, the Qualified Plan defines early retirement as age 55 with 10 years of service. There is no difference in the benefit formula upon an early retirement and there is no payment election option that would impact the amount of annual benefits any of the named executive officers would receive.
Certain named executive officers participate in a supplemental retirement plan (which we refer to in the table below as the Non-Qualified Pension). To the extent that a participant’s benefit under the Qualified Pension exceeds the limit on the maximum annual benefit payable under the Employee Retirement Income Security Act of 1974 or such participant’s Average Monthly Earnings exceeds the limit under the Internal Revenue Code on the maximum amount of compensation that can be taken into account under the Qualified Pension, payments are made under the Non-Qualified Pension. The retirement age and benefit formulas are the same as those used for the Qualified Plan except as described in the following paragraphs.
Executive Compensation
Generally, a participant’s benefit under the Non-Qualified Pension is payable in installments beginning in January following the participant’s separation from service or disability, but the participant may also elect to receive the payment as a lump sum and elect a specified year in which payment will be made or commence, or elect to receive his or her benefit in the form of annuity payments. Elections regarding the time and form of payment are intended to comply with Section 409A of the Internal Revenue Code and certain payments to executives meeting the definition of a “specified employee” under Section 409A of the Internal Revenue Code will be delayed for six months after the date of the separation from service.
We entered into an employment agreement with Mr. Rodkin when he was hired in 2005, which entitled him to participate in the Non-Qualified Pension with years of service, for purposes of calculating benefits under the plan, credited at a three-for-one rate (as long as he remained employed until age 60) until he obtained service credit of thirty years. The agreement entitled Mr. Rodkin to annual pensionable earnings for use in calculating his benefit of no less than $3 million. Benefits payable to Mr. Rodkin under the Non-Qualified Pension are subject to offset for benefits paid or payable to him under supplemental pension plans his prior employer maintained for his benefit. The Committee has not offered additional years of credited service under the pension plan to other named executive officers.
Pension Benefits – Fiscal 2015
The Present Value of Accumulated Benefit reported in the table below represents the accumulated benefit obligation for benefits earned to date, based on age, service and earnings through the plan’s measurement date of May 31, 2015.
Plan Name (1) | Number of Years Credited Service (#) (2) | Present Value of Accumulated Benefit | ||||||||
Mr. Connolly (5) | Qualified Pension | - | - | |||||||
Non-Qualified Pension | - | - | ||||||||
Mr. Gehring | Qualified Pension | 13.4 | 396,317 | |||||||
Non-Qualified Pension | 13.4 | 1,176,290 | ||||||||
Ms. Batcheler | Qualified Pension | 8.9 | 149,899 | |||||||
Non-Qualified Pension | - | - | ||||||||
Mr. McGough | Qualified Pension | 8.3 | 192,148 | |||||||
Non-Qualified Pension | - | - | ||||||||
Former Executive Officers | ||||||||||
Mr. Rodkin | Qualified Pension | 9.8 | 368,661 | |||||||
Non-Qualified Pension | 29.3 | 16,988,895 | ||||||||
Mr. Bolles | Qualified Pension | 9.2 | 281,431 | |||||||
Non-Qualified Pension | - | - | ||||||||
Mr. Maass (6) | Qualified Pension | 27.0 | 904,651 | |||||||
Non-Qualified Pension | 27.0 | 114,660 |
Executive Compensation
Non-Qualified Deferred Compensation – Fiscal 2015
The table following this summary of our non-qualified deferred compensation plans shows the non-qualified deferred compensation activity for each named executive officer during fiscal 2015. The amounts shown include amounts deferred under the non-qualified 401(k) plan, which we refer to as the Non-Qualified ConAgra Retirement Income Savings Plan, or Non-Qualified CRISP, and voluntary deferred compensation plan, which we refer to as the Voluntary Deferred Comp plan. We refer to our qualified 401(k) plan as the ConAgra Retirement Income Savings Plan, or Qualified CRISP. The amounts shown for the Non-Qualified CRISP include company contributions during fiscal 2015.
The Non-Qualified CRISP is a benefit provided to certain of the named executive officers and other eligible executives. Messrs. Rodkin and Gehring are the only named executive officers that participate in the Non-Qualified CRISP. The program supplements our Qualified CRISP, which is available to a broad base of salaried and hourly employees. Under our Qualified CRISP, for employees enrolled in option (A) under the Qualified Pension, the company will match the first 50% of the first 6% of salary and bonus the employee contributes to the Qualified CRISP. For employees enrolled in option (B) under the Qualified Plan, the company will match 66 2/3% of the first 6% of salary and bonus the employee contributes to the plan. However, the Internal Revenue Code limits the annual before-tax contributions that an individual can make to a qualified retirement plan. If a named executive officer reached this maximum, he or she would lose the ability to receive the full extent of the available company match. The Non-Qualified CRISP is used to enable the company to provide this population with the company match. Under the plan, the company makes a contribution equal to 3% of the named executive officer’s eligible earnings less the maximum employer contribution the named executive officer could have received from the Qualified CRISP.
The company contribution to the Non-Qualified CRISP is made annually on or about December 31st and a participant must be employed on that date to receive the contribution. The value of each account is automatically linked to the value of our common stock. Account values are updated daily based on the closing market price of our common stock on the NYSE on such day.
Generally, an executive’s account balance under the Non-Qualified CRISP is payable in cash in a lump sum in January following the executive’s separation from service, but executives meeting certain qualifications may also elect to receive payment in the form of installments. Executives may also elect to receive payment within 90 days following the earlier of separation from service or either the occurrence of a change of control or 18 months following the occurrence of a change of control. Elections regarding the time and form of payment are intended to comply with Section 409A of the Internal Revenue Code, and certain payments to executives meeting the definition of “specified employee” under Section 409A will be delayed for six months after the date of the separation from service.
Our Voluntary Deferred Comp Plan also allows certain domestic management-level employees whose salary is $125,000 or more per year to defer receipt of 5% to 50% of their salary and up to 90% of their annual incentive payment. The investment alternatives for deferred amounts are an interest bearing account, a ConAgra Foods stock account, or other investment options mirrored from our Qualified CRISP. The stock account includes a dividend reinvestment feature that converts dividends into additional shares. Amounts deferred into the stock account, together with earnings and dividends thereon, are ultimately distributed in shares of ConAgra Foods common stock. Amounts deferred into the interest bearing account or the accounts mirroring the Qualified CRISP funds are ultimately distributed in cash. An election to participate in the plan must be timely filed with the company in accordance with IRS requirements.
Executive Compensation
Our Voluntary Deferred Comp Plan also provides non-qualified matching contribution retirement benefits to those employees not receiving such benefits, including the named executive officers who do not participate in the Non-Qualified CRISP (Mr. Connolly, Ms. Batcheler and Mr. McGough, and until their separations from the company, Mr. Bolles and Mr. Maass). The Voluntary Deferred Comp Plan provides for company matching contributions and company non-elective contributions to the Voluntary Deferred Comp Plan for eligible participants for amounts of salary and bonus that are above IRS limits.
Starting at the end of calendar year 2014, the company began to credit, and at the end of each calendar year, will credit, an eligible participant’s account in the Voluntary Deferred Comp Plan with (1) a matching contribution equal to a dollar for dollar match, limited to 6% of compensation earned by the participant and paid by the company in excess of the IRS limit and (2) a non-elective contribution equal to 3% of an eligible participant’s compensation in excess of the IRS limit. Eligible participants will be allowed to defer no more than 50% of their base salary and no more than 90% of their annual incentive payment that exceeds the IRS limit. Matching contributions and non-elective contributions will be credited on or about December 31st of each year if the eligible participant earns in excess of the IRS limit, and if the participant is actively employed at the end of the calendar year.
The Voluntary Deferred Comp Plan also provides that, unless the company determines otherwise with respect to a participant, the interest of each participant in his or her matching contributions and non-elective contributions will be 100% vested.
Because Mr. Gehring is currently, and Mr. Rodkin was previously, participating in other non-qualified contribution retirement plans, and because the Voluntary Deferred Comp Plan was designed to provide non-qualified contribution retirement benefits to those who were not already receiving such benefits, these named executive officers are not eligible for company matching contributions under the Voluntary Deferred Comp Plan.
With respect to distributions from the Voluntary Deferred Comp Plan, an individual who departs from the company who was neither retirement nor early retirement eligible (generally, age 55 and 10 years of service) under the Qualified Pension, is required to take distributions of certain amounts earned and vested prior to 2005, or grandfathered amounts, in a lump sum payment in the quarter end following the individual’s separation from service. An executive who retires or who retires after meeting the early retirement provisions of the Qualified Pension will receive his or her grandfathered amounts in annual installments.
In general, all Voluntary Deferred Comp amounts other than the grandfathered amounts, which we refer to as the other amounts, will be distributed in cash in a lump sum and/or ConAgra Foods stock in January following the individual’s separation from service.
Participants may also elect to receive the other amounts at certain other times, including within 90 days following the earlier of separation from service or either the occurrence of a change of control or 18 months following the occurrence of a change of control. Elections regarding the time and form of payment are intended to comply with Section 409A of the Internal Revenue Code, and certain payments to executives meeting the definition of a “specified employee” under Section 409A will be delayed for six months after the date of the separation from service. Executives may make hardship withdrawals from the Voluntary Deferred Comp Plan under certain circumstances, but no hardship withdrawals were requested by executives during fiscal 2015.
Executive Compensation
Non-Qualified Deferred Compensation – Fiscal 2015
Plan (1) | Executive ($) (2) | Registrant Contributions in Last FY ($)(3) | Aggregate ($)(4) | Aggregate Withdrawals/ Distributions in Last FY ($) | Aggregate ($)(5) | |||||||||||||||||
Mr. Connolly | Non-Qualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp | - | - | - | - | - | |||||||||||||||||
Mr. Gehring | Non-Qualified CRISP | - | 14,113 | 47,763 | - | 273,470 | ||||||||||||||||
Voluntary Def Comp | 150,000 | - | 196,862 | - | 2,315,171 | |||||||||||||||||
Ms. Batcheler | Non-Qualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp | 12,000 | 26,477 | 4,506 | 43,624 | 64,260 | |||||||||||||||||
Mr. McGough | Non-Qualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp | 81,385 | 28,765 | 17,495 | - | 260,668 | |||||||||||||||||
Former Executive Officers |
| |||||||||||||||||||||
Mr. Rodkin | Non-Qualified CRISP | - | 38,181 | 196,436 | 1,110,591 | |||||||||||||||||
Voluntary Def Comp | - | - | 1,631,657 | 7,959,982 | ||||||||||||||||||
Mr. Bolles | Non-Qualified CRISP | - | - | - | - | |||||||||||||||||
Voluntary Def Comp | 12,900 | 27,244 | 7,469 | 112,890 | ||||||||||||||||||
Mr. Maass | Non-Qualified CRISP | - | - | �� | - | - | ||||||||||||||||
Voluntary Def Comp | 20,400 | 43,064 | 11,613 | 169,772 |
Executive Compensation
Potential Payments Upon Termination or Change of Control
Our named executive officers’ employment may be terminated under several possible scenarios. In some of these scenarios, our plans, agreements and arrangements would provide severance benefits in varying amounts to the executive. Further, our plans, agreements and arrangements would provide for certain benefits (or for acceleration of benefits) upon a change of control. Severance and other benefits that are payable upon a termination of employment or upon a change of control are described below.
The tables following the narrative discussion summarize amounts payable upon termination or a change of control under varying circumstances, assuming that the change of control occurred on or that the executive’s employment terminated on the last business day of fiscal 2015 – May 29, 2015. Other key assumptions used in compiling the tables are set forth immediately preceding them. In the event of an actual triggering event under any of the plans, agreements and arrangements discussed in this section, all benefits would be paid to the executive in accordance with, and at times permitted by, Section 409A of the Internal Revenue Code.
Due to Mr. Rodkin’s retirement on May 31, 2015 and Mr. Maass’ ceasing to be an executive officer prior to the end of fiscal 2015, pursuant to SEC disclosure guidance, payment and benefit information is provided in this section regarding only their actual departure scenarios.
Severance Pay Plan
We maintain a severance pay plan that provides severance guidelines for all salaried employees. Any benefits payable under the program are at the sole and absolute discretion of ConAgra Foods and for any particular employee, the company may elect to provide severance as suggested by the plan, or provide greater or lesser benefits. Ms. Batcheler and Messrs. Bolles, Gehring and McGough are potentially covered by the plan. Until Mr. Connolly’s employment agreement with the company expires on August 1, 2018, Mr. Connolly’s severance benefits would be paid in accordance with his agreements with the company, as further described below, and not the severance pay plan. After such date, the severance pay plan would apply.
Due to Mr. Rodkin’s retirement on May 31, 2015 and Mr. Maass’ departure on July 31, 2015, they are no longer entitled to benefits under the severance pay plan.
Under the severance pay plan, the severance guideline for individuals above a certain pay grade, including our named executive officers’ pay grade, is 52 weeks of salary continuation, plus one additional week of salary continuation for each year of continuous service prior to separation. The guidelines also provide that upon the former employee finding new employment, the company will provide him or her with a lump sum payment equal to 50% of the severance pay remaining. The other 50% would be forfeited.
If a named executive officer is entitled to receive a severance payment under a change of control agreement (described below), we are not required to make payments to him or her under the severance pay plan.
Agreement with Mr. Connolly
We are a party to an employment agreement with Mr. Connolly that addresses such matters as his salary, participation in our annual and long-term incentive plans and participation in health and welfare benefit plans and other benefit programs and arrangements. The agreement also addresses Mr. Connolly’s severance benefits and right to participate in the company’s change of control benefit program.
Executive Compensation
A summary of Mr. Connolly’s severance benefits are described below. On August 1, 2018, Mr. Connolly’s employment agreement terminates, and his severance benefits become governed by the programs and plans in place at the company at that time.
We have excluded retirement as a hypothetical scenario in the table below because Mr. Connolly is not eligible for retirement (age 65) or early retirement (age 55 and 10 years of service) in the near future.
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In addition to the above, upon any of the hypothetical termination scenarios described above, Mr. Connolly would be paid amounts under our Voluntary Deferred Comp Plan, if any (not including retirement benefits), based on his advance elections and would be eligible for health and welfare benefits in accordance with applicable plan provisions.
Mr. Connolly’s agreement provides that all cash payments are generally payable in a lump sum the sixty-first day following termination of employment, unless otherwise provided in an applicable plan. Payments under the annual incentive plan and the long-term incentive plan are payable following the end of the fiscal year or other performance period at the same time such payments are made to the other senior executive officers. If Mr. Connolly is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code at the time of his separation, certain payments would be delayed for six months after the date of the separation from service.
Executive Compensation
The company currently maintains a separate change of control program, discussed below. Mr. Connolly’s agreement provides him the right to participate in our change of control program as modified from time to time. Either party to the employment agreement may terminate the agreement at any time. Mr. Connolly has agreed to non-competition restrictions extending one year after termination and to our standard confidentiality and two-year non-solicitation agreements with the company.
Annual Management Incentive Plan (the “MIP”)
The following terms of the MIP govern the impact of specific separation events not covered by an individual agreement:
Involuntary termination due to position elimination: If a participant’s position is eliminated during the fourth quarter of the fiscal year (for business reasons not related to performance), he or she would remain eligible for award consideration. The amount of any earned award would be pro-rated for the number of days the individual was eligible to participate in the plan during the fiscal year. If a participant’s position is eliminated prior to the fourth quarter of the fiscal year, he or she will not be eligible to receive any portion of the award.
Termination due to retirement: If a participant retires (as defined in the Qualified Pension Plan) during the fiscal year, the participant will be eligible for a pro-rated award based on the number of days the individual was eligible to participate during the fiscal year.
Termination due to death: Any incentive payment for which a participant would have been eligible would be pro-rated to the date of death and paid to his or her estate.
Except as might otherwise be required by law, in the absence of one of the foregoing events (or a specific agreement with the company), a participant would forfeit his or her fiscal 2015 MIP award if he or she failed to be an active employee in good standing at the end of the fiscal year. Any pro-rated award is based on actual performance for the fiscal year and is payable after the end of such fiscal year when payments are made to other participants.
The change of control agreements, described below, govern the payment of annual incentive awards in the event of a change of control.
Long-Term Incentive Plan – Performance Shares
The following terms of the PSP govern the impact of a separation from the company on the performance shares granted under the fiscal 2013 to 2015, fiscal 2014 to 2016, and fiscal 2015 to 2017 cycles of the PSP:
Termination for any reason other than death, disability or retirement: The participant forfeits all performance shares granted that have not been paid at the date of termination, whether the shares are earned as of that date or not. The Committee has the discretion to pay out some or all of the forfeited performance shares if they would have been earned based on performance and if it deems the action appropriate and in the best interests of the company.
Termination due to disability or retirement: The participant will receive a pro rata share of the performance shares that would have been earned for the full performance period, prorated based upon the full number of fiscal years completed during the performance period as of the participant’s termination date and will be distributed to the participant at the same time they are distributed to other participants who remain employed by the company.
Termination due to death: A payout would be made at targeted levels for outstanding performance shares, in each case pro-rated to reflect the number of full fiscal years in the performance period during which the employee was employed (for example, upon a June 15, 2015 death, a participant would have been eligible for a payout at actual performance for the fiscal 2013 to 2015 award, since the performance period ended prior to the death, and the participant would have been eligible for a payout at targeted levels for two-thirds of the total fiscal 2014 to 2016 award and one-third of the total fiscal 2015 to 2017 award).
Upon a change of control, the Board or Committee may exercise its discretion to pay a participant all or a portion of the outstanding performance shares. Change of control under this program has the same definition as in the change of control agreements described below.
Executive Compensation
Long-Term Incentive Plan – Stock Options
The following terms generally govern the impact of a separation from the company on outstanding stock options:
Termination for any reason other than death, disability, early retirement or retirement: The participant forfeits all options unvested at the date of termination and would have 90 days to exercise vested options. Options granted under the 2014 Stock Plan are eligible for pro-rata vesting, if a termination due to job elimination, divestiture, or reduction in force occurs more than one year from the date of grant.
Termination due to disability or early retirement: All vested options are exercisable for three years after termination (but not beyond the end of the seven-year or ten-year term of such options). The participant forfeits all other options that have not vested at the date of termination. Options granted under the 2014 Stock Plan are eligible for pro-rata vesting, if the termination occurs more than one year from the date of grant.
Termination due to death: All unvested options would automatically vest and remain exercisable for three years following termination (but not beyond the end of the seven-year or ten-year term of such options).
Termination due to normal retirement: All unvested options would automatically vest and remain exercisable for three years following termination (but not beyond the end of the seven-year or ten-year term of such options).
Each of the agreements evidencing outstanding awards of stock options that were entered into prior to October 2014 provide that the vesting of the award will accelerate upon a change of control. Award agreements entered into after October 2014 provide for double-trigger vesting, which means they generally require both a change of control event and a qualifying termination of employment to trigger vesting.
The treatment of Mr. Connolly’s equity awards upon a termination without “Cause” or a resignation for “Good Reason” is further governed by his agreement with the company.
Retirement Benefits
Our Qualified Pension, Non-Qualified Pension, Non-Qualified CRISP and Voluntary Deferred Comp plans contain provisions relating to the termination of the participant’s employment. These payments are described more fully in the disclosure provided in connection with the “Pension Benefits—Fiscal 2015” and “Non-Qualified Deferred Compensation—Fiscal 2015” sections of this proxy statement.
Change of Control Program
The change of control program for senior executives is designed to encourage management to continue performing its responsibilities in the event of a pending or potential change of control. During fiscal 2015, this program covered each of the named executive officers.
Generally, a change of control under these agreements occurs if one of the following events occurs:
Individuals who constitute the Board, which, for these purposes, we refer to as the Incumbent Board, cease for any reason to constitute at least a majority of the Board. Anyone who becomes a director and whose election, or nomination for election, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board is considered a member of the Incumbent Board.
Consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were our shareholders immediately prior to the transaction do not, immediately thereafter, own more than fifty percent of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company.
A liquidation or dissolution of the company or the sale of all or substantially all of the company’s assets.
Executive Compensation
The agreements provide that upon a change of control, the company may (at the sole and absolute discretion of the Board or Committee) pay each executive all or a pro-rated portion of the executive’s short and/or long-term incentive for the year in which the change of control occurs. The terms of the company’s stock plan and award agreements govern the treatment of equity awards upon a change of control.
With respect to severance, the change of control agreements are double-trigger arrangements, requiring both a change of control event and a qualifying termination of employment to trigger benefits. A qualifying termination event occurs if, within three years after a change of control, (1) the executive’s employment is involuntarily terminated without “cause” or (2) the executive terminates his or her employment for “good reason.”
Executives entitled to severance benefits under a change of control agreement forfeit any severance compensation and benefits under our severance pay plan guidelines and receive the following (subject to execution of a release of claims in favor of the company):
A lump sum cash payment equal to a multiple of the executive’s base salary and annual bonus (calculated using the executive’s highest annual bonus for the three fiscal years preceding the change of control or the executive’s target bonus percentage as of the date the change of control agreement is executed, whichever is greater). The multiples range from one to three (three for each named executive officer, except Mr. McGough, for which the multiple is two)
Continuation for three years (for agreements in place prior to July 2011) or two years (for agreements in place after July 2011) of medical, dental, disability, basic and supplemental life insurance to the extent such benefits remain in effect for other executives, with premiums paid by the executive at the rate required of other executive employees (or, for medical and dental benefits, the COBRA rate). ConAgra Foods must pay the executive a single lump sum payment equal to an amount to offset taxes plus the executive’s estimated cost to participate in the medical and dental plans
Benefits under our Non-Qualified Pension commensurate with the executive’s age and years of service, including an extra three years of service. A lump sum equivalent to all benefits accrued for the executive will be placed in a segregated trust (that remains subject to the claims of our creditors) within 60 days following the termination of employment
A supplemental benefit under our Non-Qualified CRISP plan equal to three times (for agreements in place prior to July 2011) or one times (for agreements in place after July 2011) the maximum company contribution that the executive could have received under the Qualified CRISP and Non-Qualified CRISP in the year in which the change of control occurs
Outplacement assistance not exceeding $30,000.
Generally, a termination for “cause” under the agreement requires (1) the willful failure by the executive to substantially perform his or her duties, (2) the willful engaging by the executive in conduct that is demonstrably and materially injurious to the company or (3) the executive’s conviction of a felony or misdemeanor that impairs his or her ability substantially to perform duties for the company. A right of the executive to terminate with “good reason” following a change of control is generally triggered by (1) any failure of the company to comply with and satisfy the terms of the change of control agreement, (2) a significant involuntary reduction of the authority, duties or responsibilities held by the executive immediately prior to the change of control, (3) any involuntary removal of the executive from an officer position held by the executive immediately prior to the change of control, except in connection with promotions, (4) any involuntary reduction in the aggregate compensation level of the executive, (5) requiring the executive to become based at a new location or (6) requiring the executive to undertake substantially greater amounts of business travel. Certain payments to a “specified employee” within the meaning of Section 409A of the Internal Revenue Code will be delayed for six months after the date of the separation from service.
Executive Compensation
For agreements in place prior to July 2011, the agreements also entitle each executive to an additional payment, if necessary, to make the executive whole as a result of any excise and related taxes imposed by the Internal Revenue Code on any change of control benefits received. If the safe harbor amount at which the excise tax is imposed is not exceeded by more than 10%, the benefits will instead be reduced to avoid the excise tax.
Following a review of market practices in July 2011, the Committee adopted a policy that any future change of control benefits should be structured without any excise tax gross-up protection. Mr. Connolly’s agreement does not contain an excise tax gross-up. Although the Committee continues to believe in the importance of maintaining a change of control program, it believes that offering excise tax gross-ups in the future is inappropriate relative to best executive pay practices.
Each change of control agreement terminates, in the absence of a change of control, when the executive’s employment as a full-time employee of the company is terminated or the executive enters into a written separation agreement with the company. In addition, we may unilaterally terminate each agreement prior to a change of control following six months prior written notice to the executive. Mr. Rodkin and Mr. Maass’ change of control agreements were terminated upon their entry into letter agreements with the company with respect to their departures.
Summary of Possible Benefits
The first table below summarizes estimated incremental amounts payable upon termination under various hypothetical scenarios.
A second table summarizes estimated incremental amounts payable upon a hypothetical change of control and upon termination following a change of control.
We have not included amounts payable regardless of the occurrence of the relevant triggering event. For example, we excluded accumulated balances in retirement plans when a terminating event would do nothing more than create a right to a payment of the balance. We also excluded death benefits where the executive paid the premium.
The data in the tables assumes the following:
each triggering event occurred on May 29, 2015 (the last trading day of fiscal 2015) and the per share price of our common stock was $38.61 (the closing price of our stock on the NYSE on May 29, 2015)
with respect to salary continuation, if an executive did not have a right to salary continuation under a stand-alone agreement with the company, the severance pay plan guidelines applied
with respect to the annual incentive plan, awards were earned at target levels and where the Committee had discretionary authority to award a payout, except in the cases of involuntary termination with cause and voluntary termination without good reason, it exercised that authority (including in the change of control scenario)
with respect to the annual incentive plan, in the case of an involuntary termination not for cause without a change of control, the termination was due to a position elimination in the fiscal 2015 fourth quarter
with respect to performance shares, awards were earned at target levels (these amounts also include a cash value of dividend equivalents on the number of shares assumed to have been earned)
with respect to performance shares in the change of control scenario, the Committee exercised its discretionary authority to award a pro-rata payout and did so at target levels
Non-Qualified Pension amounts reflect the present value of benefits applicable in a scenario, less the present value of accrued benefits to which the executive was entitled under the plan at May 29, 2015
in the disability scenarios, the disabling event lasted one year into the future.
Executive Compensation
On April 14, 2015, Mr. Maass informed the company of his intent to depart from the company, which he did on July 31, 2015. Mr. Maass ceased to be an executive officer on May 5, 2015. Mr. Maass remained eligible for a payment under the fiscal 2013 to 2015 cycle of the PSP, and in July 2015, he received 23,153 shares under the fiscal 2013 to 2015 cycle of the PSP (including dividend equivalents on the shares earned). Mr. Maass forfeited other outstanding performance share grants under outstanding cycles of the PSP. Mr. Maass remains eligible to exercise all of his options vested as of July 31, 2015 through the earlier of their expiration or 90 days. Mr. Maass is omitted from the following tables. For a description of benefits actually paid to him following his departure from the company, see the section headed “Compensation Discussion and Analysis – Mr. Maass’ Transition and Separation Agreement.”
Mr. Rodkin is also omitted from the following tables due to his retirement from the company in May 2015.
We have excluded retirement as a hypothetical scenario in the table below because none of the named executive officers are eligible for either early retirement (age 55 and 10 years of service) or normal retirement (age 65) treatment.
Involuntary w/ Cause or Voluntary w/o Good Reason $ | Involuntary w/o Cause or Voluntary w/ Good Reason $ | Death or Disability $ (1) | ||||||||||||
Sean Connolly | ||||||||||||||
Salary Continuation | - | 2,200,000 | - | |||||||||||
Annual Incentive Plan | - | 3,300,000 | - | |||||||||||
Performance Shares | - | - | - | |||||||||||
Accelerated Stock Options | - | 1,050,000 | 1,050,000 | |||||||||||
Accelerated Restricted Stock Units | - | 1,778,261 | 1,778,261 | |||||||||||
Benefits Continuation | - | 13,797 | - | |||||||||||
Death Benefits | - | - | 1,000,000 | |||||||||||
Disability Benefits | - | - | 625,000 | |||||||||||
Outplacement | - | 30,000 | - | |||||||||||
Total | - | 8,372,058 | 4,453,261 | |||||||||||
|
|
|
|
|
| |||||||||
John Gehring | ||||||||||||||
Salary Continuation | - | 750,000 | - | |||||||||||
Annual Incentive Plan | - | 600,000 | 600,000 | |||||||||||
Performance Shares | - | - | 2,286,034 | |||||||||||
Accelerated Stock Options | - | - | 1,993,220 | |||||||||||
Benefits Continuation | - | 17,246 | - | |||||||||||
Death Benefits | - | - | 1,000,000 | |||||||||||
Disability Benefits | - | - | 375,000 | |||||||||||
Outplacement | - | 30,000 | - | |||||||||||
Total | - | 1,397,246 | 6,254,254 | |||||||||||
|
|
|
|
|
| |||||||||
Colleen Batcheler | ||||||||||||||
Salary Continuation | - | 576,923 | - | |||||||||||
Annual Incentive Plan | - | 400,000 | 400,000 | |||||||||||
Performance Shares | - | - | 1,947,424 | |||||||||||
Accelerated Stock Options | - | - | 1,826,780 | |||||||||||
Benefits Continuation | - | 15,919 | - | |||||||||||
Death Benefits | - | - | 1,000,000 | |||||||||||
Disability Benefits | - | - | 325,000 | |||||||||||
Outplacement | - | 30,000 | - | |||||||||||
Total | - | 1,022,842 | 5,499,204 | |||||||||||
|
|
|
|
|
| |||||||||
Executive Compensation
Involuntary w/ Cause or Voluntary w/o Good Reason $ | Involuntary w/o Cause or Voluntary w/ Good Reason $ | Death or Disability $ (1) | ||||||||||||
Al Bolles | ||||||||||||||
Salary Continuation | - | 557,212 | - | |||||||||||
Annual Incentive Plan | - | 380,000 | 380,000 | |||||||||||
Performance Shares | - | - | 1,799,084 | |||||||||||
Accelerated Stock Options | - | - | 1,790,755 | |||||||||||
Accelerated Restricted Stock Units | - | - | 386,100 | |||||||||||
Benefits Continuation | - | 11,400 | - | |||||||||||
Death Benefits | - | - | 950,000 | |||||||||||
Disability Benefits | - | - | 312,500 | |||||||||||
Outplacement | - | 30,000 | ||||||||||||
Total | - | 978,612 | 5,618,439 | |||||||||||
|
|
|
|
|
| |||||||||
Tom McGough | ||||||||||||||
Salary Continuation | - | 634,615 | - | |||||||||||
Annual Incentive Plan | - | 550,000 | 550,000 | |||||||||||
Performance Shares | - | - | 1,439,471 | |||||||||||
Accelerated Stock Options | - | - | 1,577,120 | |||||||||||
Non-Qualified Pension | - | - | - | |||||||||||
Benefits Continuation | - | 15,919 | - | |||||||||||
Death Benefits | - | - | 1,000,000 | |||||||||||
Disability Benefits | - | - | 350,000 | |||||||||||
Outplacement | - | 30,000 | - | |||||||||||
Total | - | 1,230,534 | 4,916,591 | |||||||||||
|
|
|
|
|
| |||||||||
1. Amounts shown as benefits from the annual incentive plan and performance shares are payable in the event of death or disability. Amounts shown as benefits from accelerated stock options, accelerated restricted stock units and death benefits are paid only in the event of death and are not liabilities of the company. Payouts for death benefits will be made by the insurance company that holds the policy. Amounts shown as disability benefits are payable only in the event of disability. All amounts are totaled for illustrative purposes only.
|
|
Executive Compensation
In the table that follows, if, following a change of control, any of Ms. Batcheler or Messrs. Gehring, Bolles or McGough was terminated for “Cause” or voluntarily terminated employment without “Good Reason,” the individual would not receive any benefits incremental to those shown in the “No Termination” column. Mr. Connolly would be entitled to salary continuation through the end of the month of the event.
Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||||
Sean Connolly | ||||||||
Salary Continuation | - | 3,300,000 | ||||||
Annual Incentive Plan | - | 4,950,000 | ||||||
Performance Shares | - | - | ||||||
Accelerated Stock Options | - | 1,050,000 | ||||||
Accelerated Restricted Stock Units | - | 1,778,261 | ||||||
Non-Qualified CRISP | - | 22,465 | ||||||
Benefits Continuation | - | 50,961 | ||||||
Death/Disability Benefit | - | 8,892 | ||||||
Outplacement | - | 30,000 | ||||||
Total | - | 11,190,579 | ||||||
|
|
|
| |||||
John Gehring | ||||||||
Salary Continuation | - | 1,800,000 | ||||||
Annual Incentive Plan | 600,000 | 2,432,250 | ||||||
Performance Shares | 2,286,034 | 2,286,034 | ||||||
Accelerated Stock Options | 1,993,220 | 1,993,200 | ||||||
Non-Qualified CRISP | - | 66,759 | ||||||
Non-Qualified Pension | - | 620,781 | ||||||
Benefits Continuation | - | 50,961 | ||||||
Death/Disability Benefit | - | 8,892 | ||||||
Outplacement | - | 30,000 | ||||||
Total | 4,879,254 | 9,288,897 | ||||||
|
|
|
| |||||
Colleen Batcheler | ||||||||
Salary Continuation | - | 1,500,000 | ||||||
Annual Incentive Plan | 400,000 | 1,700,020 | ||||||
Performance Shares | 1,947,424 | 1,947,424 | ||||||
Accelerated Stock Options | 1,826,780 | 1,826,780 | ||||||
Non-Qualified CRISP | - | 122,709 | ||||||
Benefits Continuation | - | 50,205 | ||||||
Death/Disability Benefit | - | 8,892 | ||||||
Outplacement | - | 30,000 | ||||||
Total | 4,174,204 | 7,186,030 | ||||||
|
|
|
|
Executive Compensation
Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||||
Al Bolles | ||||||||
Salary Continuation | - | 1,425,000 | ||||||
Annual Incentive Plan | 380,000 | 1,668,200 | ||||||
Performance Shares | 1,799,084 | 1,799,084 | ||||||
Accelerated Stock Options | 1,790,755 | 1,790,755 | ||||||
Accelerated Restricted Stock Units | 386,100 | 386,100 | ||||||
Non-Qualified CRISP | - | 114,900 | ||||||
Benefits Continuation | - | 33,972 | ||||||
Death/Disability Benefit | - | 8,646 | ||||||
Outplacement | - | 30,000 | ||||||
Total | 4,355,939 | 7,256,657 | ||||||
|
|
|
| |||||
Tom McGough | ||||||||
Salary Continuation | - | 1,100,000 | ||||||
Annual Incentive Plan | 550,000 | 1,650,000 | ||||||
Performance Shares | 1,439,471 | 1,439,471 | ||||||
Accelerated Stock Options | 1,577,120 | 1,577,120 | ||||||
Non-Qualified CRISP | - | 39,858 | ||||||
Benefits Continuation | - | 33,974 | ||||||
Death/Disability Benefit | - | 5,870 | ||||||
Outplacement | - | 30,000 | ||||||
Total | 3,566,591 | 5,876,293 | ||||||
|
|
|
| |||||
Non-Employee Director Compensation
Non-Employee Director Compensation
We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on ourthe Board. On an annual basis, the HR Committee recommends thenon-employee director compensation program to the full Board of Directors.for approval. In setting director compensation, the HR Committee receives input from Frederic W.FW Cook, & Co., Inc., its independent compensation consultant. It also considersconsultant, on factors including the time commitment and skill level required to serve on the Board, as well as market practices. In addition, our Board. The HR Committee recommendsshareholder-approved Conagra Brands, Inc. 2014 Stock Plan places limits on the equity awards that may be awarded tonon-employee directors in any fiscal year.
A summary ofnon-employee director compensation program to the full Board for approval.fiscal 2018 is set forth below.
Non-Employee Director Compensation – Other than the Chairman
The following table summarizes the compensation programsprogram for ournon-employee directors other than the Chairman that was in effect during fiscal 2015:2018:
Annual Cash Retainer: | $100,000 per year (1) | |
Annual Committee Chair | $ | |
Meeting Fees: | None, unless the director’s attendance is required at more than a total of 24 meeting attended and at which a director’s attendance was required in excess of 24 | |
Equity Compensation: | A grant of restricted stock units, or RSUs, with a value equal to
| |
(1) | Directors who join the Board or who are elected as the Chair of a Committee after the start of a fiscal quarter receive a prorated retainer for that quarter based on the number of days served. |
(2) | Excludes the Executive Committee. No retainer is paid for service to this Committee. |
(3) | Directors who join the Board after the start of a fiscal year receive a prorated grant for that year based on the number of months served. |
The compensation program described above reflects the following Board-approved increases over fiscal 2017, which were approved after a review of company and market practice: (1) a $10,000 increase in the annual cash retainer; (2) a $10,000 increase in equity compensation (RSU) value; and (3) a $5,000 increase to each Committee Chair retainer.
The number of restricted stock unitsRSUs granted to eachnon-employee director other than the Chairman was determined by dividing $140,000$150,000 by the average closing price of our common stock on the NYSE for the thirty trading days prior to the grant date of May 27, 2014 (the first trading day of fiscal 2015).30, 2017. The restricted stock unitsRSUs vested one year from the date of grant and were subject to continued service during the entire term.term of the RSUs. Vesting iswould have been accelerated in the event of death or permanent disability. If the director iswas no longer serving one year from the date of grant, vesting iswas prorated 25% for each fiscal quarter during which the director was serving on the first dayserved for any amount of the fiscal quarter.time. Dividend equivalents were paid on the restricted stock unitsRSUs at the regular dividend rate in shares of our common stock.
Non-Employee Director Compensation
Non-employee directors other than the Chairman who join the Board or who are elected to a Chairmanship after the start of the planfiscal year are entitled to receive a pro-ratedprorated retainer based(based on the actual number of days of service, andservice).Non-employee directors other than the Chairman who join the Board after the start of the fiscal year are also entitled to receive a pro-rated restricted stock unitprorated RSU grant based(based on the number of months remaining in the fiscal year.year at that time).
Non-Employee Director Compensation of the Non-Employee– Chairman
In lieu of the elements described above, the Chairman’s paycompensation for service during fiscal 2015 was2018 consisted of a grant of restricted stock unitsRSUs with a value equal to $400,000,$425,000, with the number of restricted stock unitsRSUs determined by dividing $400,000$425,000 by the average closing price of our common stock on the NYSE for the thirty trading days prior to the grant date of May 27, 2014 (the first trading day of30, 2017. This reflects a Board-approved $25,000 increase over fiscal 2015).2017’s amount. The material terms of the restricted stock unitsRSUs were identical to those described above fornon-employee directors other than the Chairman.
OtherNon-Employee Director Compensation
Director Stock Ownership Requirements
The Board has adopted stock ownership requirements for the non-employee directors. All non-employee directors, including the Chairman, are expected to acquire and hold shares of ConAgra Foods common stock during their tenure with a value of at least $450,000. All directors must acquire this ownership level within five years following their first election to the Board. Shares personally acquired by the non-employee directors through open market purchases, as well as restricted stock units, and shares acquired upon the deferral of fees are counted toward the ownership requirement. Unexercised stock options are not counted.
The following table reflects non-employee director ownership as of July 30, 2015. Mr. Alford and Mr. McLevish joined the Board effective July 17, 2015.
Director | Stock Ownership Guideline |
| Actual Ownership (1) |
| ||
Mr. Alford | $450,000 | $1,063,537 | ||||
Mr. Bay | $450,000 | $3,498,988 | ||||
Mr. Brown | $450,000 | $401,301 | ||||
Mr. Butler | $450,000 | $2,818,698 | ||||
Mr. Goldstone | $450,000 | $3,951,220 | ||||
Ms. Gregor | $450,000 | $1,680,183 | ||||
Mr. Johri | $450,000 | $1,287,201 | ||||
Mr. Jurgensen | $450,000 | $3,978,900 | ||||
Mr. Lenny | $450,000 | $1,224,406 | ||||
Ms. Marshall | $450,000 | $2,114,150 | ||||
Mr. McLevish | $450,000 | $100,879 | ||||
Mr. Schindler | $450,000 | $1,373,912 | ||||
Mr. Stinson | $450,000 | $3,822,841 | ||||
1. Based on the average daily price of our common stock on the NYSE for the 12 months ended July 30, 2015 ($36.3267). |
|
Other Non-Employee Director Compensation Programs
In addition to the cash payments and equity awards described above, all non-employee directors were entitled to participate in the following programs during fiscal 2015:2018:
Medical plan access forwas available to directors who were enrolled in the plan by December 22, 2014, with the cost of the premium borne entirely by the director. Directors who were not enrolled by that date arewere not eligible to participate.participate;
A matching gifts program under which ConAgra Foods matcheswas available to allnon-employee directors; Conagra Brands matched up to $10,000 of a director’s charitable donations per fiscal year.year; and
A non-qualifiednonqualified deferred compensation plan through which was available to allnon-employee directors. This plan providednon-employee directors canthe ability to defer receipt of their cash or stock compensation. This program doesdid not provide above-market or preferential earnings (as defined by SEC rules).
For directors elected to the Board prior to 2003, the Directors’ Charitable Award Program (which was discontinued in 2003). Participating directors nominate one or moretax-exempt organizations to which ConAgra Foods will contribute an aggregate of $1 million in four equal annual installments following the death of the director. ConAgra Foods maintains insurance on the lives of participating directors to fund the program.
Non-Employee Director Compensation
Director Compensation Table – Fiscal 20152018
Mr. Alford and Mr. McLevishArora joined the Board effective July 17, 2015,2018, after the end of fiscal 2015. Neither received2018. He did not receive any director compensation from us for fiscal 2015.2018.
Name |
| Fees Earned or Paid in Cash ($) |
|
| Stock Awards ($)(1) |
|
| All Other Compensation ($)(2) |
|
| Total ($) |
| Fees Earned or Paid in Cash ($)(1)
| Stock Awards ($)(2)
| All Other Compensation ($)(3)
| Total ($)
| ||||||||||||||||||||
Mogens C. Bay | 105,000 | 142,651 | 10,000 | 257,651 | ||||||||||||||||||||||||||||||||
Bradley A. Alford
|
| 100,000
|
|
| 149,650
|
| 7,000
|
| 256,650
|
| ||||||||||||||||||||||||||
Thomas K. Brown | 90,000 | 142,651 | 10,000 | 242,651 |
| 100,000
|
|
| 149,650
|
| -
|
| 249,650
|
| ||||||||||||||||||||||
Stephen G. Butler | 105,000 | 142,651 | 10,000 | 257,651 |
| 120,000
|
|
| 149,650
|
| 10,000
|
| 279,650
|
| ||||||||||||||||||||||
Steven F. Goldstone. | - | 407,566 | 5,000 | 412,566 | ||||||||||||||||||||||||||||||||
Thomas W. Dickson
|
| 100,000
|
|
| 149,650
|
| -
|
| 249,650
|
| ||||||||||||||||||||||||||
Steven F. Goldstone
|
| -
|
|
| 424,067
|
| 10,000
|
| 434,067
|
| ||||||||||||||||||||||||||
Joie A. Gregor | 103,500 | 142,651 | 10,000 | 256,151 |
| 104,500
|
|
| 149,650
|
| 10,000
|
| 264,150
|
| ||||||||||||||||||||||
Rajive Johri | 90,000 | 142,651 | 9,900 | 242,551 |
| 100,000
|
|
| 149,650
|
| 10,000
|
| 259,650
|
| ||||||||||||||||||||||
W.G. Jurgensen | 90,000 | 142,651 | - | 232,651 | ||||||||||||||||||||||||||||||||
Richard H. Lenny | 105,000 | 142,651 | 5,000 | 252,651 |
| 120,000
|
|
| 149,650
|
| 10,000
|
| 279,650
|
| ||||||||||||||||||||||
Ruth Ann Marshall | 90,000 | 142,651 | 7,750 | 240,401 |
| 120,000
|
|
| 149,650
|
| 10,000
|
| 279,650
|
| ||||||||||||||||||||||
Andrew J. Schindler | 105,000 | 142,651 | - | 247,651 | ||||||||||||||||||||||||||||||||
Kenneth E. Stinson | 114,000 | 142,651 | 10,000 | 266,651 | ||||||||||||||||||||||||||||||||
Craig P. Omtvedt
|
| 100,000
|
|
| 149,650
|
| 10,000
|
| 259,650
|
|
(1) | Amounts include annual cash retainer of $100,000 for directors who served for the full fiscal year. Amounts also include an additional annual committee chair retainer ($5,000 per quarter) for each of Mr. Butler, Mr. Lenny, and Ms. Marshall for their |
Non-Employee Director Compensation
service during fiscal 2018. For directors who attended more than a total of 24 Board and committee meetings during fiscal year 2018, amounts include an additional $1,500 per meeting paid for each Board or committee meeting attended in excess of the 24th meeting. |
(2) | This column reflects the grant date fair value (computed in accordance with Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718) of the stock awards made tonon-employee directors during fiscal |
Name | Outstanding Stock Awards Held at FYE (#) | Outstanding Stock Options Held at FYE (#) | Outstanding Stock Awards Held at FYE (#) (a)
| Outstanding Stock Options Held at FYE (#)
| ||||||||
Mogens C. Bay | 4,520 | - | ||||||||||
Bradley A. Alford |
| 3,956
|
|
| -
|
| ||||||
Thomas K. Brown | 4,520 | - |
| 3,956
|
|
| -
|
| ||||
Stephen G. Butler | 4,520 | 51,000 |
| 3,956
|
|
| 20,153
|
| ||||
Thomas W. Dickson |
| 3,956
|
|
| -
|
| ||||||
Steven F. Goldstone | 12,914 | 473,850 |
| 11,210
|
|
| 409,881
|
| ||||
Joie A. Gregor | 4,520 | - |
| 3,956
|
|
| -
|
| ||||
Rajive Johri | 4,520 | 21,750 |
| 3,956
|
|
| -
|
| ||||
W.G. Jurgensen | 4,520 | 51,000 | ||||||||||
Richard H. Lenny | 4,520 | 20,250 |
| 3,956
|
|
| 27,206
|
| ||||
Ruth Ann Marshall | 4,520 | 33,000 |
| 3,956
|
|
| 26,199
|
| ||||
Andrew J. Schindler | 4,520 | 33,000 | ||||||||||
Kenneth E. Stinson | 4,520 | 51,000 | ||||||||||
Craig P. Omtvedt
|
| 3,956
|
|
| -
|
|
(a) For Mr. Goldstone, includes 201 dividend equivalents accrued on RSUs. For all othernon-employee directors, includes 71 dividend equivalents accrued on RSUs.
(3) | The amount reported reflects the amount paid to a designated charitable organization on the director’s behalf under the matching gifts program described above. |
Information on Stock Ownership
Information onDirector Stock Ownership
Voting Securities of Directors, Officers and Greater Than 5% Owners Requirements
The table below shows the shares of ConAgra Foods common stock beneficially owned as of July 30, 2015 by (1) owners of more than 5% of our outstanding common stock, (2) our current directors, (3) our “named executive officers” for purposes of this Proxy Statement, and (4) all current directors and executive officers as a group.
As discussed in this Proxy Statement, our directors and executive officers are committed to owning stock in ConAgra Foods. Both groups haveBoard has adopted stock ownership requirements that preclude them from selling any ConAgra Foods common stock infor itsnon-employee directors. Allnon-employee directors, including the market (other thanChairman, are expected to cover the cost of the exercise priceacquire and in the case of executive officers, minimum statutory tax withholding) until they have enough shares to meet and maintain their stock ownership guidelines pre- and post-sale.
To better show the financial stake of our directors and executive officers in the company, we have included a “Share Units” column in the table. The column, which is not required under SEC rules, shows deferred shares owned by non-employee directors through the ConAgra Foods, Inc. Directors’ Deferred Compensation Plan and deferred shares owned by executive officers through the ConAgra Foods, Inc. Voluntary Deferred Compensation Plan. Although these shares will ultimately be settled inhold shares of common stock of Conagra Brands during their tenure with a value of at least $500,000. All directors must acquire this ownership level within five years following their first election to the Board. Shares personally acquired by thenon-employee directors through open market purchases or RSUs, and shares acquired upon the deferral of fees, are counted toward the ownership requirement. Unexercised stock options are not counted. Prior to meeting the guideline,non-employee directors agree not to sell any shares of common stock of Conagra until they currently have no voting rights, nor will they be settled within 60 daysreached the guideline. The following table reflects ownership, as of July 30, 2015.31, 2018, ofnon-employee directors who were serving as of the end of fiscal 2018. Mr. Arora joined the Board effective July 17, 2018, after the end of fiscal 2018 and is therefore excluded from the table below.
Name
| Number of Shares Owned (6)
| Right to Acquire
| Percent of Class
| Share Units
| ||||||||||||
BlackRock, Inc. (1) | 23,272,720 | - | 5.4% | N/A | ||||||||||||
State Street Corporation (2) | 23,555,685 | - | 5.5% | N/A | ||||||||||||
The Vanguard Group (3) | 33,944,942 | - | 7.96% | N/A | ||||||||||||
JANA Partners LLC (4) | 11,537,414 | 19,032,000 | 7.2% | N/A | ||||||||||||
Bradley A. Alford | 26,500 | 1,389 | (8) | * | - | |||||||||||
Thomas K. Brown | 7,336 | 1,856 | (8) | * | - | |||||||||||
Stephen G. Butler | 44,905 | (7) | 43,856 | (8) | * | 28,977 | ||||||||||
Sean Connolly | - | - | * | - | ||||||||||||
Steven F. Goldstone | 23,600 | 470,151 | (8) | * | 74,567 | |||||||||||
Joie A. Gregor | 22,216 | 1,856 | (8) | * | 20,325 | |||||||||||
Rajive Johri | - | 23,606 | (8) | * | 31,723 | |||||||||||
W.G. Jurgensen | 74,108 | 43,856 | (8) | * | 31,712 | |||||||||||
Richard H. Lenny | 14,571 | 22,106 | (8) | * | 15,218 | |||||||||||
Ruth Ann Marshall | 4,761 | 34,856 | (8) | * | 49,712 | |||||||||||
Timothy R. McLevish | - | 1,389 | (8) | * | - | |||||||||||
Andrew J. Schindler | 1,800 | 34,856 | (8) | * | 32,310 | |||||||||||
John Gehring | 199,569 | (7) | 479,057 | (9) | * | - | ||||||||||
Colleen Batcheler | 137,007 | 195,057 | (9) | * | - | |||||||||||
Tom McGough | 56,741 | (7) | 279,057 | (9) | * | - | ||||||||||
Gary Rodkin | 765,622 | 3,685,404 | (9) | 1.0% | 207,514 | |||||||||||
Al Bolles | 57,774 | 374,621 | (9) | * | - | |||||||||||
Paul Maass | 6,006 | - | * | - | ||||||||||||
All Directors and Current Executive Officers as a Group (19 people)(5) | 791,804 | 2,044,960 | (9) | * | 300,200 |
Director
| Stock Ownership Guideline
| Actual Ownership (1)
| ||
Mr. Alford(2)
| $500,000
| $1,892,443
| ||
Mr. Brown(2)
| $500,000
| $859,895
| ||
Mr. Butler
| $500,000
| $4,583,037
| ||
Mr. Dickson(2)
| $500,000
| $514,454
| ||
Mr. Goldstone
| $500,000
| $13,438,629
| ||
Ms. Gregor
| $500,000
| $2,143,235
| ||
Mr. Johri
| $500,000
| $2,320,077
| ||
Mr. Lenny
| $500,000
| $2,199,959
| ||
Ms. Marshall
| $500,000
| $3,471,134
| ||
Mr. Omtvedt(2) | $500,000 | $363,686 | ||
Based on the closing price of our common stock |
Joined the |
Information on Stock Ownership
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and persons who own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and changes in beneficial ownership of our common stock. Directors, executive officers and greater than 10% owners are required to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of copies of these reports furnished to us or written representations that no other reports were required, we believe that during fiscal 2015, all required reports were filed on a timely basis.
Audit / Finance Committee Report
Audit / Finance Committee Report
The Audit / Finance Committee assists the Board of Directors in fulfilling its oversight responsibilities by reviewing (1) the integrity of the financial statements of the company, (2) the qualifications, independence and performance of the company’s independent auditor and internal audit department, (3) compliance by the company with legal and regulatory requirements, and (4) the company’s financing strategies and capital structure. The Audit / Finance Committee acts under a written charter, adopted by the Board, a copy of which is available on our website.
Management is responsible for the company’s financial reporting process and internal controls. The independent auditor is responsible for performing an independent audit of the company’s consolidated financial statements, issuing an opinion on the conformity of those audited financial statements with generally accepted accounting principles and assessing the effectiveness of the company’s internal control over financial reporting. The Audit / Finance Committee oversees the company’s financial reporting process and internal controls on behalf of the Board.
The Audit / Finance Committee has sole authority to appoint, retain, compensate, oversee and terminate the independent auditor. The Audit / Finance Committee reviews the company’s annual audited financial statements, quarterly financial statements and other filings with the SEC. The Audit / Finance Committee reviews reports on various matters, including: (1) critical accounting policies of the company; (2) material written communications between the independent auditor and management; (3) the independent auditor’s internal quality-control procedures; (4) significant changes in the company’s selection or application of accounting principles; and (5) the effect of regulatory and accounting initiatives on the financial statements of the company. The Audit / Finance Committee also has the authority to conduct investigations within the scope of its responsibilities and to retain legal, accounting and other advisors to assist the Audit / Finance Committee in its functions.
During the last fiscal year, the Audit / Finance Committee met and held discussions with representatives of ConAgra FoodsConagra Brands’ management, its internal audit staff, and KPMG LLP, Conagra Brands’ independent auditor. Representatives of financial management, the internal audit staff, and the independent auditor have unrestricted access to the Audit / Finance Committee and periodically meet privately with the Audit / Finance Committee. The Audit / Finance Committee reviewed and discussed with ConAgra Foodsthe company’s management and KPMG LLP the audited financial statements contained in the company’s Annual Report on Form10-K for the fiscal year ended May 31, 2015.27, 2018.
The Audit / Finance Committee also discussed with the independent auditor the matters required to be discussed by the auditor with the Audit / Finance Committee under applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee, as well as by SEC regulations. The Audit / Finance Committee also reviewed and discussed with KPMG LLP its independence and, as part of that review, received the written disclosures required by applicable professional and regulatory standards relating to KPMG’s independence from ConAgra Foods,Conagra Brands, including those of the Public Company Accounting Oversight Board. The Audit / Finance Committee also considered whether the provision ofnon-audit services provided by KPMG LLP to the company during fiscal 20152018 was compatible with the auditor’s independence.
Based on these reviews and discussions and the report of the independent auditor, the Audit / Finance Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the company’s Annual Report on Form10-K for the fiscal year ended May 31, 201527, 2018 for filing with the Securities and Exchange Commission.SEC.
Conagra Brands, Inc. Audit / Finance Committee
Stephen G. Butler, Chair | Thomas K. Brown | |
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for Fiscal 2016
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for FY2019 |
The Audit / Finance Committee has sole authority to appoint, retain, compensate, oversee and terminate the independent auditor. In addition, the Committee evaluates and ensures the rotation of the Appointmentlead audit partner at the independent auditor and will, if it deems it advisable, consider the rotation of Independent Auditor for Fiscal 2016the audit firm.
The Audit / Finance Committee has appointed KPMG LLP, an independent registered public accounting firm, as our independent auditor for fiscal 20162019 to conduct the audit of our financial statements. KPMG LLP has conducted the audits of our financial statements since fiscal 2006. The Audit / Finance Committee and the Board of Directors request that the shareholders ratify this appointment.
Representatives from KPMG LLP are expected to be present at the annual meeting.2018 Annual Meeting. The representatives will have the opportunity to make a statement and will be available to respond to appropriate questions. In the event thethat shareholders do not ratify the appointment, the Audit / Finance Committee will reconsider the appointment. Even if the appointed auditorappointment of KPMG LLP is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in the company’sConagra Brands’ and its shareholders’ best interests.
Fees billed by KPMG LLP for services provided for fiscal years 20152018 and 20142017 were as follows:
Fiscal 2015 | Fiscal 2014 | Fiscal 2018 | Fiscal 2017 | |||||||||||||||||||||
Audit Fees | $5,877,000 | $7,026,000 | $ | 4,953,000 | $ | 7,061,000 | ||||||||||||||||||
Audit-Related Fees | 268,000 | 227,000 | 84,000 | 60,000 | ||||||||||||||||||||
Tax Fees | 150,000 | 207,000 | 19,000 | 95,000 | ||||||||||||||||||||
All Other Fees | - | 6,000 | — | — | ||||||||||||||||||||
|
| |||||||||||||||||||||||
Total Fees | $6,295,000 | $7,466,000 | $ | 5,056,000 | $ | 7,216,000 |
• | Audit Fees. Audit fees consist of the audits of our annual financial statements, the |
• | Audit-Related Fees |
• | Tax Fees |
|
The Audit / Finance Committeepre-approves all audit andnon-audit services performed by the independent auditor. The Audit / Finance Committee will periodically grant a generalpre-approval of categories of audit andnon-audit services. Any other services must be specifically approved by the Audit / Finance Committee, and any proposed services exceedingpre-approved cost levels must be specificallypre-approved by the Audit / Finance Committee. In periods between Audit / Finance Committee meetings, the Chairman of the Audit / Finance Committee has thebeen delegated authority from the Committee topre-approve additional services, and his services; any suchpre-approvals are thensubsequently communicated to the full Audit / Finance Committee at its next meeting.
The Audit / Finance Committee approved 100% of the services performed by KPMG relating to audit fees, audit-related fees, tax feesLLP that were billed as Audit Fees, Audit-Related Fees, Tax Fees and all other feesAll Other Fees during fiscal years 20152018 and 2014.2017.
The Board of Directors recommends a vote “FOR” the Ratification of the Appointment of KPMG LLP as Independent Auditor for Fiscal 2016.
The Board of Directors recommends a vote “FOR” the ratification of the appointment of KPMG LLP as our independent auditor for fiscal 2019. |
Voting Item #3: Approval, on an Advisory ApprovalBasis, of Our Named Executive Officer Compensation
Consistent with our shareholders’ preference as indicated at our 20112017 Annual Meeting of Shareholders, we give our shareholders are given an opportunity to vote, on a non-bindingan advisory basis, to approve the compensation of our named executive officers on an annual basis. The 2015basis pursuant to Section 14A of the Exchange Act. This vote is not intended to address any specific item of our compensation program, but rather to address our overall approach to the compensation of our named executive officersofficer compensation as we have described in the “Compensation Discussion and Analysis” and tabular“Executive Compensation” sections of this Proxy Statement, beginning on page 17.pages 28 and 52, respectively. Our executive compensation program rewardsis designed to reward performance, supportssupport our business strategies, discouragesdiscourage excessive risk-taking, makesmake us competitive with other corporations for top talent, and alignsalign the interests of our executives’ interestsexecutive officers with the long-term interests of our shareholders.
At each of our last three annual meetings – 2014, 2013 and 2012 –our shareholders have approved the compensation ofSince we began seeking a shareholder vote on our named executive officers.officer compensation, shareholders have exhibited strong support of our executive compensation program. In fact, in each of thesethe past three fiscal years, we have received over 89% of shares cast were voted in favor of approving such compensation.95% approval on this voting item.
Our Compensation Discussion and Analysis describes in detail the components of our executive compensation program and the process by which ourthe Board makes executive compensation decisions. Highlights of our program include the following:
Consistent with ourpay-for-performance philosophy, the majority of our named executive officers’ targeted fiscal 20152018 compensation was tied to company performance. For our Chief Executive Officer,CEO, incentive compensation represented 86%88% of his total compensation opportunity. For our other named executive officers, incentive compensation represented 77%78% of their total opportunity. With mixed performance in our business segments in
Our fiscal 2015, our2018 Annual Incentive Plan funded and paid out slightly above target for each named executive officers did not receive a payout underofficer, due to our earnings and net sales growth performance during fiscal 2015 MIP2018 and received a payoutthe individual contributions of 66% underour executives.
The fiscal 2016 to 2018 cycle of the long-term PSP incentive.performance share plan concluded this year with payouts at above-target levels for each named executive officer who participated in the plan, due to our strong financial performance over the last three fiscal years.
Multiple performance metrics are utilized in our plans and programs to discourage excessive risk-taking by removing the incentive torisk-taking. Our program’s design does not encourage excessive focus on a single performance goal to the detriment of others.other measures of success.
Substantial stock ownership requirements ensure that our senior executives maintain a significant stake in our long-term success.
Our clawback policy allows recovery of certain incentive compensation payments from executives in the event of a material restatement of our financial statements resulting from their fraudulent, dishonest, or reckless actions.
We design our compensation programs to motivate our executives to win during tough economic times and to achieve our fundamental and overriding objective—objective – to create sustainable, profitable growth for our shareholders.
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation
While this vote is advisory and not binding on our company, the Board and its HR Committee value the opinions of our shareholders and expect to consider the outcome of the vote, along with other relevant factors, when considering named executive officer compensation in the future. We expect to hold our next advisory vote at our 20162019 Annual Meeting.
We are asking our shareholders to once again indicate their support for the compensation of our named executive officersofficer compensation as described in this Proxy Statement. Accordingly, we are asking our shareholders to vote to approve the following resolution:
“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this Proxy Statement, is hereby APPROVED.”
The Board of Directors recommends a vote “FOR” the resolution approving |
Compensation Discussion and Analysis
Compensation Discussion and Analysis
Introduction
At Conagra Brands, our fundamental objectives are to create sustainable, profitable growth and long-term value for our shareholders. Management sets our annual and long-term business goals to support attainment of these objectives. The Board of Directors recommendsBoard’s HR Committee (in this section, the Committee), designs and oversees our executive compensation program to promote their attainment.
This Compensation Discussion and Analysis describes and analyzes our executive compensation program. Specifically, we describe and analyze the program’s application to the executive officers listed in the Summary Compensation Table; these are our “named executive officers.” For fiscal 2018, or FY18, which began on May 29, 2017 and ended on May 27, 2018, our named executive officers were:
Name | Title | |||
Sean M. Connolly | Chief Executive Officer and President | |||
David S. Marberger | Executive Vice President and Chief Financial Officer | |||
Colleen R. Batcheler | Executive Vice President, General Counsel and Corporate Secretary | |||
Thomas M. McGough | President, Operating Segments | |||
Darren C. Serrao | Executive Vice President and Chief Growth Officer |
We have provided a vote “FOR” the Resolution Approving the Compensationsummary of our Named fiscal 2018 executive compensation program and fiscal 2018 performance in the “Executive Summary” below. For more complete information on the program and the Committee’s processes related to the program, we encourage you to read this entire Compensation Discussion and Analysis.
Executive Officers.Summary
Since fiscal 2016, we have been implementing a strategic plan focused on transforming Conagra Brands into a pure-play, branded food company and on establishing a solid platform for our company’s future growth. Our work to date has included significant portfolio reshaping. We have soldnon-core businesses and successfully executed thespin-off of Lamb Weston into an independent public company. Simultaneously, we have addedon-trend brands to our portfolio through a series of modernizing acquisitions. We have also invested within Conagra, building leading innovation capabilities and completely overhauling our culture.
Additional Information
Maintaining the improving trends in our net sales growth rate, including through the new innovation that was just starting to hit the marketplace;
Continuing to focus on executional excellence;
Continuing to expand margins; and
Further reshaping our portfolio through disciplined M&A activity.
With these considerations in mind, the Committee, during the summer of 2017, approved the fiscal 2018 executive compensation program for our named executive officers.
Compensation Discussion and Analysis
Elements of Fiscal 2018 Executive Compensation
The elements of our fiscal 2018 executive compensation program were as follows:
Base Salary and Benefits | ||
A fixed compensation program with salaries reviewed annually and adjusted as appropriate (as further described below). Benefit packages that are market competitive and generally broad-based in the company. | ||
Annual Incentive Awards | ||
A cash-based annual incentive program based on a single year of performance results. Performance measures are aligned to our annual operating plan. Payouts in fiscal 2018 could range from 0 to 220% of target. | ||
FY18 Annual Incentive Plan Performance Measures • Diluted earnings per share from continuing operations, adjusted for items impacting comparability (adjusted EPS); • Earnings before interest and taxes, adjusted for items impacting comparability (EBIT); and • Net sales growth, adjusted for items impacting comparability. | ||
Long-Term Incentive Awards | ||
Stock-based incentive program based on multi-year results or service. |
Performance Shares • Opportunity to earn shares of our common stock if we achievepre-set performance goals over a three-year period. • Performance measures for awards granted in fiscal 2018 are adjusted EPS and EPS CAGR (as defined below). • Performance measures for awards vesting in fiscal 2018 were adjusted EPS, EBITDA Return on Capital (as defined below), and EPS CAGR. • Payouts can range from 0 to 200% of target. | Restricted Stock Units • Opportunity to earn shares of our common stock if the employee generally remains with Conagra over the full three-year vesting period of the award. • Rewards stock price appreciation and tenure. |
Fiscal 2018 Results
Fiscal 2018 was a successful year for Conagra Brands and another important year in our transformation. We accomplished the following:
• | Revenues: During fiscal 2018, our net sales grew 1.4%, with organic net sales nearly flat.2 These results were near the high end of our guidance range to investors. Our net sales performance was supported by our introduction of a full line of new product innovation. We also remained focused on our “value over volume” |
2 A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
strategy and rationalizedlow-value products and inefficient trade programs. We made the strategic decision during the year to shift some of our brand investments from advertising and promotion to retailer marketing. The accounting treatment of retailer investments is an offset to gross sales, while A&P investments are accounted for below gross margin. As a result, our net sales, versus our original plan, were impacted by this decision. However, we believe our FY18 choices to drive brand saliency, enhanced distribution, and consumer trial are appropriate for the long term. |
• | Operating Margin: Despite higher-than-expected input cost inflation during the year, we delivered fiscal 2018 operating margin of 13.0% and adjusted operating margin of 16.1%,3 in line with our investor commitments. |
• | EPS: EPS from continuing operations increased 56% in fiscal 2018, to $1.95, and adjusted EPS grew to $2.11,3 a more than 20% improvement. These results were above the high end of our guidance range, even after adjusting for the unplanned benefit of the Tax Cuts and Jobs Act, which became law during fiscal 2018. |
Capital Returned to Shareholders: We paid $342 million in dividends during fiscal 2018, and repurchased approximately $967 million of our common stock. Over the last three fiscal years, we have returned nearly $3.2 billion to shareholders.
• | M&A: During the second quarter of fiscal 2018, we acquired theAngie’s® BOOMCHICKAPOP® popcorn business, and during the third quarter of fiscal 2018, we acquired theSandwich Bros. of Wisconsin business. |
Culture: Today, we have a more energized and enthusiastic team of employees who bring an externally focused, entrepreneurial spirit to their work every day.
By strengthening our foundation over the last three fiscal years, we readied ourselves to embark on the next phase of our evolution. On June 26, 2018, shortly after the end of fiscal 2018, we entered into a definitive agreement to acquire Pinnacle Foods Inc., makers of well-known brands such asBirds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic and Wish-Bone, among others. We believe that the combination of two portfolios of iconic brands – ours and Pinnacle’s – will serve as a catalyst to accelerate value creation for shareholders.
Fiscal 2018 Pay Outcomes Summarized
Our fiscal 2018 performance, together with our results since our new strategic journey began three years ago, have created significant value for shareholders. The company has repeatedly delivered on its financial commitments to investors. Given the Committee’s pay for performance philosophy, management has also been rewarded. As more fully described in this Compensation Discussion and Analysis, our named executive officers, including our Chief Executive Officer, received annual incentive payouts at levels slightly above target for fiscal 2018, driven by strong profit and net sales growth performance. In addition, the named executive officer participants each received long-term incentive payouts under the fiscal year 2016 through fiscal year 2018 cycle of the performance share plan at approximately 158.7% of target.
In determining attainment of the underlying performance goals for our incentive programs, the Committee considered the impact of items that it believes were not indicative of the comparable operating performance of our businesses. Some of these items created financial benefits, and some of them created incremental expense or lost sales. The impact of these items was removed from our results for purposes of determining plan payouts. A particularly notable category of adjustment, for fiscal 2018 and performance shares outstanding during fiscal 2018, was tax expense, in light of the Tax Cuts and Jobs Act’s effectiveness during our third fiscal quarter. More information can be found below under “Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions.”
The Committee believes that its fiscal 2018 compensation decisions appropriately reflect itspay-for-performance philosophy. This philosophy is focused on compensating executives based on performance and aligning management’s interests with those of our shareholders.
3 A reconciliation of this non-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
Objectives of Our Compensation Program; Mitigating Risk
Our executive compensation program is designed to encourage and reward behavior that promotes attainment of our annual and long-term goals and that leads to sustainable growth in shareholder value. The Committee strives to accomplish the following as it develops the program:
Align compensation programs, policies and practices to our company’s vision, mission and values;
Be market competitive, but emphasize variable compensation to differentiate our program from that of peers;
Determine pay mix based on executive position;
Provide a compensation structure that groups positions based on impact to the company;
Afford opportunities and flexibility in pay positioning to ensure fair and equitable compensation and room for growth; and
Recognize and differentiate based on individual, team and company performance.
The Committee’s design of the compensation program with multiple objectives in mind helps mitigate the risk that employees will take unnecessary and excessive risks that threaten the long-term health and viability of our company. With the assistance of Human Resources and Legal department personnel, the Committee undertook a risk review of our fiscal 2018 compensation programs for all employees. Based on the review, we believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the long-term, based in part on the following features of the programs:
What We Do | What We Don’t Do | |
✓ Focus employees on both short- and long-term goals.
✓ Consider a mix of financial andnon-financial goals to prevent over-emphasis on any single metric. ✓ Allow for some subjective evaluation in the determination of incentive payouts, to ensure linkage between payouts and the “quality” of performance. ✓ Employ a greater portion of variable pay (i.e., incentives) at more senior levels of the organization. ✓ Require stock ownership for more than 80 of our most senior employees. ✓ Generally require a “double-trigger” for accelerated vesting to occur in equity awards in connection with a change of control. ✓ Provide for the clawback of amounts paid to any of our most senior officers in certain circumstances. ✓ Use a range of strong processes and controls, including Committee oversight, in our compensation practices. ✓ Committee engages an independent compensation consultant; consultant performs no other work for our company. ✓ Pay incentive compensation only after our financial results are complete and the Committee has certified our performance results. | × No director or executive officer may pledge or hedge their ownership of company stock. × No excessive perquisites are provided to executives. × No backdating orre-pricing of options may occur without shareholder approval. × Since fiscal 2012, no change in control agreements have been executed with excise tax“gross-up” protection. × No additional years of credited service are provided to named executive officers in pension programs. × No compensation programs that encourage unreasonable risk taking will be implemented. |
Compensation Discussion and Analysis
We believe our compensation policies and practices are balanced and aligned with creating shareholder value and do not create risks that are reasonably likely to have a material adverse effect on our company.
Design and Approval of Our Fiscal 2018 Program
The Committee is charged with designing and approving our executive compensation program and setting compensation opportunities for our named executive officers and certain other senior leaders. The Committee uses a variety of inputs to make these decisions, including the results of our annual“say-on-pay” vote, the advice of the Committee’s independent compensation consultant, company and participant-focused considerations, the input of our Chief Executive Officer, and the unique circumstances of each named executive officer. We address each of these inputs here.
Annual Say on Pay Vote
In designing the executive compensation program for fiscal 2018, the Committee looked to our shareholders. The Committee’s policy is to present a“say-on-pay” vote to our shareholders annually. In September 2017, we received over 95% approval in oursay-on-pay vote, leading the Committee to the conclusion that material changes in compensation design, solely due to the outcome of thesay-on-pay vote, were not warranted for fiscal 2018.
Independent Consultant and Market Data
The Committee also leveraged the advice and counsel of its independent compensation consultant, FW Cook, in setting fiscal 2018 compensation. The consultant assists the Committee in monitoring policy positions of institutional shareholders and their advisors, emerging market practices in compensation design and philosophy, and policy developments relevant to the Committee’s work. The Committee’s consultant also provides internal and external pay comparison data. The Committee uses this data as a market check on its compensation decisions and does not mandate target ranges for our named executive officers’ salaries, annual incentive opportunities, long-term incentive opportunities, or total direct compensation levels as compared to the peer group. The Committee recognizes that over-reliance on external comparisons can be of concern; therefore, the Committee uses external comparisons as only one point of reference and is mindful of the value and limitations of comparative data.
The Committee’s first step in using external data for fiscal 2018 was the identification of an appropriate peer group. FW Cook initially prepared a list of potential peer companies (with an emphasis on food and beverage companies) based on the following criteria:
• | Operations: Companies similar in size and operational scope (industry and scale); |
• | Investors: Companies with which we compete for investor capital (similar performance characteristics, growth orientation, access to capital and business cycles); and |
• | Talent: Companies with which we compete for executive talent (labor market and demographics). |
Compensation Discussion and Analysis
We completed thespin-off of our Lamb Weston business in November 2016, about six months prior to the start of fiscal 2018. As a result, the Committee asked FW Cook tore-examine our peer group to ensure continued alignment with the company’s size post-spin. FW Cook identified potential peers with annual revenues within an approximate range of betweenone-third to three times our own on a post-spin basis. Ultimately, FW Cook’s recommendation resulted in multiple changes to our peer group for fiscal 2018. The Committee approved the following peer group of 17 companies for purposes of assessing fiscal 2018 compensation competitiveness:
Campbell Soup Company | General Mills, Inc. | Mattel, Inc. | ||
Church & Dwight Co., Inc. | The Hershey Company | Mead Johnson Nutrition Company | ||
The Clorox Company | Hormel Foods Corporation | Mondelez International, Inc. | ||
Colgate-Palmolive Company | The J. M. Smucker Company | Newell Brands Inc. | ||
Dr. Pepper Snapple Group, Inc. | Kellogg Company | Pinnacle Foods Inc. | ||
The Estée Lauder Companies Inc. | Kimberly-Clark Corporation |
The companies removed from our fiscal 2018 peer group were PepsiCo, Inc., Altria Group, Inc., The Coca-Cola Company, Dean Foods Company, The Kraft Heinz Company, and Tyson Foods, Inc. For fiscal 2018, Church & Dwight Co., Inc., The Estée Lauder Companies Inc., The J. M. Smucker Company, Mattel, Inc., Mead Johnson Nutrition Company, Newell Brands Inc., and Pinnacle Foods Inc. were added.
Company and Participant Focused Matters
The Committee also generally considered the following company and participant focused matters in making fiscal 2018 compensation decisions:
Company-Focused Matters | • Company performance in prior years and expectations for the future; • The anticipated degree of difficulty inherent in the targeted incentive performance goals; • The level of risk-taking the program would reward; • The general business environment; and • Practices and developments in compensation design and governance. | |
Participant- Focused Matters | • Individual performance history; • The anticipated degree of difficulty inherent in individual goals; • Internal pay equity; and • The potential complexity of each program, preferring programs that are transparent to participants and shareholders and easily administered. |
The Chief Executive Officer’s Views
Mr. Connolly, our Chief Executive Officer and President, played a role in several key areas of the design of our fiscal 2018 executive compensation program.
• | Selecting Performance Metrics and Targeted Performance Levels. An important part of designing incentive compensation programs is the selection of plan metrics and performance targets. To help ensure that the |
Compensation Discussion and Analysis
Committee’spay-for-performance goals are achieved, selected metrics must be tied to shareholder value creation. In addition, performance targets must be set at levels that balance investor expectations against achievability, without incenting undue risk taking. The Committee sought Mr. Connolly’s input on these matters for fiscal 2018. Mr. Connolly provided the Committee his views on the appropriate company goals for use in our annual and long-term incentive plans. Mr. Connolly provided input based on his understanding of investor expectations and our operating plans and financial goals. The Committee had sole authority to approve the program metrics and targets, but found Mr. Connolly’s input valuable. |
• | Assessing Company Performance. Financial performance is at the core of our incentive programs. However, the Committee retains the discretion to modify payouts based on the manner in which business results are delivered. At the end of fiscal 2018, Mr. Connolly offered the Committee his views of the quality of our performance against expectations. |
• | Assessing Individual Performance. With respect to individual performance, which also informed fiscal 2018 compensation decisions, the Committee relied on Mr. Connolly’s regular performance evaluations of the senior leadership team. Mr. Connolly shared information on the named executive officers’ impact on strategic initiatives and organizational goals, as well as their leadership behaviors. |
Individual Named Executive Officer Considerations
The Committee, and, in the case of our Chief Executive Officer, the independent directors, considered the following when setting fiscal 2018 compensation. No named executive officer played a direct role in his or her own compensation determination for fiscal 2018.
• | Mr. Sean Connolly. Mr. Connolly has served as our Chief Executive Officer and a member of the Board since April 2015. The Committee believes that within our company, Mr. Connolly should have the largest aggregate compensation opportunity due to his level of responsibility and business experience. The Committee also believes Mr. Connolly should have the greatest proportion ofat-risk compensation. External market data supports this conclusion. For fiscal 2018, consistent with this belief, the independent directors set Mr. Connolly’s compensation opportunities at a level higher than the comparable opportunities for the other named executive officers. The Committee considered Mr. Connolly’s accountability for the performance of the entire organization as well as his employment agreement. |
• | Mr. David S. Marberger. Mr. Marberger has served as our Executive Vice President and Chief Financial Officer since August 2016. As Chief Financial Officer, Mr. Marberger is our Principal Financial Officer, leads all Finance functions for the company, heads our Investor Relations department and has accountability for the Information Technology function. The Committee considered the broad scope of Mr. Marberger’s responsibilities, his previous experience as a Chief Financial Officer, hisin-depth knowledge of the food industry, internal pay equity, and external market datain setting his compensation for fiscal 2018. |
• | Ms. Colleen R. Batcheler. Ms. Batcheler has served as our Executive Vice President, General Counsel and Corporate Secretary since September 2009 and as Senior Vice President, General Counsel and Corporate Secretary since February 2008. She joined the company in 2006. When setting Ms. Batcheler’s compensation for fiscal 2018, the Committee considered Ms. Batcheler’s demonstrated results as an advisor to the organization on legal, governance, and policy matters over multiple years, the significant initiatives facing the company during fiscal 2018, internal pay equity, and external market data. |
• | Mr. Thomas M. McGough. Mr. McGough has served as the President of our operating segments since May 2013. He joined the company in 2007 as Vice President, Marketing, and progressed through our branded food organization quickly, being named President Specialty Foods, in August 2010 and then President, Grocery Products in July 2011. The Committee considered the scope of Mr. McGough’s responsibilities, the challenging |
Compensation Discussion and Analysis
marketplace dynamics facing the branded food business, internal pay equity, and market data in setting his compensation for fiscal 2018. |
• | Mr. Darren C. Serrao. Mr. Serrao has served as our Executive Vice President and Chief Growth Officer since August 2015. As head of our Growth Center of Excellence, Mr. Serrao leads efforts to bring together insights, innovation, research and development, and marketing teams to improve connectivity and boostspeed-to-market. In setting Mr. Serrao’s compensation for fiscal 2018, the Committee considered his broad responsibility in the organization and the importance of innovation in our strategic plan. The Committee also considered internal pay equity and market data. |
Below is a more detailed analysis of each element of the fiscal 2018 compensation program for our named executive officers, as well as actual fiscal 2018 payouts under the programs.
Our Fiscal 2018 Executive Compensation Program
The fiscal 2018 compensation of our named executive officers consisted of the following key components:
Fixed Compensation: | Base Salary, Health and Welfare Benefits, Retirement Benefits | |
Incentive Compensation: | Fiscal 2018 Annual Incentive Plan (cash settled plan) | |
Long-term Incentive Plan (stock settled plan) |
The Committee believes that using a mix of compensation types (salary, benefits, cash incentives and equity-based incentives) and a mix of performance periods (single year and multi-year) promotes behavior consistent with our long-term strategic plan and minimizes the likelihood of executives having significant motivation to pursue risky and unsustainable results.
By design, targeted incentive compensation for the named executive officers for fiscal 2018 was a significant percentage of the total compensation opportunity. The Committee’s general policy is to provide the greatest percentage of the incentive opportunity in the form of long-term compensation payable in shares of our common stock. The Committee believes that the emphasis on stock-based compensation is the best method of aligning management interests with those of our shareholders.
The charts below show the total compensation opportunity (calculated using base salary rate, targeted FY18 Annual Incentive Plan award, and targeted long-term incentive value) for Mr. Connolly and for our other named executive officers as a group.
FY18 CEO Compensation Mix (at Target) | FY18 Named Executive Officers (excluding CEO) Compensation Mix (Average, at Target) | |
Compensation Discussion and Analysis
Base Salaries
We pay salaries to our named executive officers to provide them with a base level of fixed income for services rendered. On average, 22% of the total fiscal 2018 compensation opportunity for each named executive officer, other than the Chief Executive Officer, was provided in the form of base salary. For Mr. Connolly, our Chief Executive Officer, 12% of his total compensation opportunity was provided in the form of base salary. For more information on Mr. Connolly’s base salary, see “Agreements with Named Executive Officers — Agreement with Mr. Connolly” below.
A summary of the salaries of our named executive officers is set forth below.
Name
|
Fiscal 2018 Base Salary Rate ($)
|
Increase from Fiscal 2017 (%)
|
Percent of Target Total
| |||||||||||
Mr. Connolly
|
$1,150,000
|
4.5%
|
12%
| |||||||||||
Mr. Marberger
|
$650,000
|
12.1%
|
23%
| |||||||||||
Ms. Batcheler
|
$540,750
|
-
|
20%
| |||||||||||
Mr. McGough
|
$669,500
|
-
|
23%
| |||||||||||
Mr. Serrao
|
$505,000
|
11.8%
|
23%
|
In fiscal 2018, the Board approved a base salary increase for Mr. Connolly from $1,100,000 to $1,150,000, and the Committee approved a base salary increase for Mr. Marberger from $580,000 to $650,000and for Mr. Serrao from $451,681 to $505,000. Please see the section above entitled “Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” for discussion of the factors the Committee considered when determining the salaries of each of the named executive officers.
Incentive Programs
Consistent with its overall compensation objectives, the Committee aligned management compensation with company performance through a mix of annual and long-term incentive opportunities for fiscal 2018. Opportunities under these programs combined to represent approximately 88% of Mr. Connolly’s compensation opportunity for fiscal 2018. For each named executive officer other than the Chief Executive Officer, targeted incentive compensation for fiscal 2018 was approximately 78% of the total compensation opportunity.
We provide details of our incentive programs below. Financial targets disclosed in these discussions are done so in the limited context of our incentive plans; they are not statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
Annual Incentive Plan
The FY18 Annual Incentive Plan, or FY18 AIP, provided a cash incentive opportunity to approximately 3,500 employees, including our named executive officers. We have regularly provided an annual incentive opportunity to a broad group of employees, to reinforce an ownership mentality across our company. However, in fiscal 2018, we expanded eligibility for the AIP, adding more than 1,500 people to the program, further increasing the connection between pay and performance within Conagra Brands.
For our named executive officers, our AIP has historically used a framework that positioned awards to potentially qualify as tax deductible “performance-based compensation” under Section 162(m) of the Internal Revenue Code, which
Compensation Discussion and Analysis
we refer to as the Code. This framework, discussed more in the following paragraphs, uses an overarching performance goal and underlying performance goals. Because the “performance-based compensation” exemption under Section 162(m) of the Code has been repealed (subject to limited transition relief), effective for taxable years beginning after December 31, 2017, we expect to discontinue this framework in fiscal 2019 and beyond. Please refer to our discussion under “Additional Information on Compensation Practices – Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
Overarching EPS Performance Goal. At the start of fiscal 2018, the Committee approved an overarching goal under the FY18 AIP of adjusted EPS of $0.10. This goal, applicable only to a small group of senior officers, including the named executive officers, was required to be achieved before any payouts under the FY18 AIP could be made to the officers. The FY18 AIP further provided that if the overarching adjusted EPS goal was achieved, the Committee could exercise negative discretion to potentially reduce, but not increase, authorized payouts. This negative discretion was to be guided by performance against the underlying financial goals described in the next paragraph.
UnderlyingPre-Established Financial Goals. At the start of fiscal 2018, the Committee approved fiscal 2018 EBIT as the primary funding metric for the FY18 AIP (subject to adjustment, as appropriate, for items impacting comparability of results). The Committee also approved a net sales growth “kicker” in the plan (also subject to adjustment). Assuming the overarching adjusted EPS goal was met, the named executive officers participating in the plan were eligible to earn a payout from 0% to 220% of their respective target amounts, calculated as follows:
Primary Metric – EBIT. The Committee developed EBIT goals to align with threshold, target and maximum incentive opportunities. Our EBIT performance would result in a pool that could fund payouts in the range from 0% to 200% of target.
Threshold EBIT | Target EBIT | Maximum EBIT | ||||||
$1,117.8 million | $1,315.0 million | $1,512.3 million | ||||||
Achievement at this level would result in a payout equal to 25% of the targeted opportunity; achievement below this level would result in a 0% payout | Achievement at this level would result in a payout equal to 100% of the targeted opportunity | Achievement at or above this level would result in a payout equal to 200% of the targeted opportunity |
Net Sales Growth “Kicker”. For the FY18 AIP, the Committee included a net sales growth “kicker” to reinforce the importance of continued improvement in the company’s net sales growth trend. Under this “kicker,” management could earn an incremental incentive by delivering net sales growth above its operating plans. Specifically, 10 points of incentive funding would be added to the pool upon attainment of fiscal 2018 net sales growth that resulted in total net sales of $7.85 billion. 10 more points of incentive funding would be added to the pool upon attainment of fiscal 2018 net sales of $7.9 billion. The kicker was designed as a “stair-step” feature, and omitted any interpolation for performance between these levels. The maximum incremental funding from the kicker was 20 points.
The inclusion of the kicker meant that total payouts under the FY18 AIP could reach 220% of target. The Committee designed the kicker as a stretch goal, with a high degree of difficulty to achieve.
Individual Compensation Opportunities. In addition to setting the financial goals for the FY18 AIP, the Committee set corresponding target compensation opportunities for each named executive officer, measured as a percentage of his or her base salary for fiscal 2018. The following table shows the ranges of authorized payments (expressed as a percentage of base salary) for the named executive officers upon achievement of the EBIT and net sales growth goals approved for the
Compensation Discussion and Analysis
FY18 AIP. If the overarching adjusted EPS goal was not met, no payments would be made. No portion of the incentive was guaranteed.
Named Executive Officer | Threshold AIP Award | Target AIP Award | Maximum AIP Award | |||||||||||
Mr. Connolly | 37.5% of salary | 150% of salary | 330% of salary | |||||||||||
Mr. Marberger | 22.5% of salary | 90% of salary | 198% of salary | |||||||||||
Ms. Batcheler | 25% of salary | 100% of salary | 220% of salary | |||||||||||
Mr. McGough | 25% of salary | 100% of salary | 220% of salary | |||||||||||
Mr. Serrao | 22.5% of salary | 90% of salary | 198% of salary |
For fiscal 2018, both Mr. Marberger’s and Mr. Serrao’s target AIP award was increased from 80% of base salary to 90% of base salary. The targets for the remaining named executive officers remained unchanged from fiscal 2017. Please see the section above entitled “Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” for discussion of the factors the Committee considered when determining the target AIP awards of each of the named executive officers.
Fiscal 2018 Results. As discussed above, we overdelivered on our adjusted earnings goals in fiscal 2018. The company’s results led to slightly above-targetperformance under the FY18 AIP. More specifically, for FY18 AIP purposes, the Committee determined that we achieved fiscal 2018 adjusted EPS above $0.10 and fiscal 2018 EBIT of $1,357.9 million. In addition, the company achieved adjusted net sales growth results at a level that permitted an incremental 10 points of incentive funding. Formulaically, these results warranted a payout equal to 117% of target.
Metric | FY18 Target | FY18 AIP Results | Funding Level | |||||||||
Adjusted EPS | ³ $0.10 threshold for any payout | $2.11 | Achieved | |||||||||
EBIT (as adjusted) | $1,315.0 million | $1,357.9 million | 107%of Target | |||||||||
Net Sales (as adjusted) | $7,850.0 million (10 points) | $7,862.9 million | Additional 10points | |||||||||
$7,900.0 million (20 points) |
To incent management to make decisions that have positive long-term impacts, even at the expense of shorter-term results, and to prevent unusual gains and losses from having too great of an impact on plan payouts in any year, the Committee retained discretion in the FY18 AIP to exclude items impacting comparability from company-wide results and adjust actual results for specific items that occurred during the fiscal year. The use of adjustments approved by the Committee and applicable to the fiscal 2018 adjusted EPS, EBIT and net sales growth metrics is described below under “Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions.”
Once the performance metrics review was complete, the Committee considered the manner in which management executed the operating plan during the year to determine the overall payout level. Reflecting on the many operational and strategic accomplishments from the year, the Committee determined the financial performance results for fiscal 2018, prior to the assessment of individual performance, warranted a payout level for all AIP participants equal to 113% of target.
Compensation Discussion and Analysis
Determination of Individual Named Executive Officer Awards. The Committee’s final step was to determine each named executive officer’s individual payout under the FY18 AIP. This process involved an assessment of each executive’s individual performance. The Committee considered the factors set forth above under the heading “Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” when determining named executive officer payouts under the FY18 AIP, including the application of those factors during fiscal 2018. Mr. Connolly’s input on the individual contribution of these leaders, and his recommendations on program payouts, also assisted the Committee in approving specific AIP payouts. The full Board’s performance evaluation of Mr. Connolly was used in determining his payout. The Committee believes that the AIP awards paid to the named executive officers for fiscal 2018 are consistent with the level of accomplishment by the company and each named executive officer during the year.
Named Executive Officer | Target Opportunity | Actual AIP Payout | Actual Payout as | |||
Mr. Connolly | $1,713,462 | $2,250,000 | 131.3% | |||
Mr. Marberger | $575,308 | $715,107 | 124.3% | |||
Ms. Batcheler | $540,750 | $672,152 | 124.3% | |||
Mr. McGough | $669,500 | $832,189 | 124.3% | |||
Mr. Serrao | $447,117 | $581,029 | 130.0% |
Long-Term Incentive Plan
The Committee firmly believes in aligning the interests of our senior leaders with those of our shareholders. The significant extent to which equity is included in our named executive officers’ compensation opportunity evidences this belief.
For fiscal 2018, the long-term incentive program was intended to:
provide variable, competitive compensation based on long-term company performance;
incent and reward leaders who have the greatest ability to drive long-term company success; and
reward participants for desired results that align with shareholder value creation.
The fiscal 2018 program for the named executive officers included two elements: an award of performance shares that are settled in shares of common stock, and an award of service-based restricted stock units (RSUs).
The actual number of targeted performance shares and RSUs granted to each named executive officer under the long-term incentive plan for fiscal 2018 was determined using a value-based approach. Each named executive officer was provided a total targeted grant value, based on the considerations set forth above in the section entitled “Design and Approval of our Fiscal 2018 Program – Individual Named Executive Officer Considerations.” 75% of the total targeted value was delivered as performance shares, and 25% of the total targeted value was delivered as RSUs. Performance share and RSU grant sizes were determined by dividing the dollar value of the targeted opportunity by the average of the closing market price of our common stock for the 10 trading days prior to the grant date.
Prior to fiscal 2018, the long-term incentive program also included grants of stock options, with weighting among instruments of 50% performance shares, 25% RSUs and 25% stock options. During fiscal 2017, the Committee undertook a comprehensive review of the total rewards program and determined to eliminate stock options at all levels of the
Compensation Discussion and Analysis
organization.The Committee’s decision took into consideration the relatively slow growth in the consumer packaged goods industry, dilution impacts of stock options, market practice, and perceived value to participants. With the elimination of stock options from its program, the Committee broadened participation in the performance share plan, to ensure that a sizable portion of each participant’s long-term incentive remained fully performance based. Beginning in fiscal 2018, 25 additional leaders throughout the company were added to the performance share program.
Each element of the long-term incentive plan used in fiscal 2018 is discussed more fully below.
Long-Term Incentive Plan – Restricted Stock Units
RSUs generally represent the right to receive a defined number of shares of our common stock after completing a period of service established at the grant date. RSUs encourage long-term commitment to the company.
In general, all RSUs granted in fiscal 2018 vest in full on the third anniversary of the date of grant, subject to the executive’s continued employment with us. Awards granted in fiscal 2018 are not entitled to dividend equivalents.
The number of RSUs granted to each named executive officer pursuant to the fiscal 2018 long-term incentive program is set forth below.
Named Executive Officer | RSUs Granted During Fiscal 2018 | |
Mr. Connolly | 50,376 | |
Mr. Marberger | 11,903 | |
Ms. Batcheler | 11,903 | |
Mr. McGough | 11,903 | |
Mr. Serrao | 8,928 |
The Committee considered the factors set forth above under the heading “Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” when determining grant sizes by individual. Grants to the named executive officers other than Mr. Connolly were made on July 19, 2017. Mr. Connolly’s RSUs were granted on July 20, 2017.The grant date fair value of the RSUs awarded to our named executive officers is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2018.
Long-Term Incentive Plan – Performance Shares
Performance shares generally represent an opportunity to earn a defined number of shares of our common stock if we achievepre-set performance goals over time. The three-year nature of each performance share grant means that in any year, a named executive officer can have up to three outstanding performance share plan, or PSP, cycles outstanding. In fiscal 2018, for example, named executive officers could have been participants in our fiscal 2016 to 2018 PSP, our fiscal 2017 to 2019 PSP and our fiscal 2018 to 2020 PSP.
The targeted number of performance shares granted to our named executive officers in fiscal 2018, together with the performance share grants made under the comparable program in fiscal 2017 and fiscal 2016, are set forth below.
Named Executive Officer | Targeted Performance | Targeted Performance | Targeted Performance | |||
Mr. Connolly | 151,128 | 88,665 | 94,372 | |||
Mr. Marberger (2) | 35,710 | 22,698 | - | |||
Ms. Batcheler | 35,710 | 22,698 | 24,159 | |||
Mr. McGough | 35,710 | 22,698 | 24,159 | |||
Mr. Serrao | 26,783 | 17,023 | 18,119 |
Compensation Discussion and Analysis
(1) | The number of performance shares noted here reflects an equitable adjustment made to the original award in connection with thespin-off of Lamb Weston into an independent public company on November 9, 2016. For information about equitable adjustments made to equity awards in connection with the spin-off, please see our 2017 proxy statement. |
(2) | Mr. Marberger did not participate in the fiscal 2016 to 2018 cycle due to the timing of his hiring after the program’s start. |
The level at which our named executive officers will earn the awards subject to these grants is dependent on the company’s performance over time against two sets of goals: an overarching adjusted EPS goal and underlying performance goals.
Overarching EPS Performance Goal.Similar to the FY18 AIP, the PSP utilizes an overarching adjusted EPS performance goal for our most senior executive participants. The PSP’s framework was intended to allow performance share awards to potentially qualify as tax deductible under Section 162(m) of the Code. However, as described above, the “performance-based compensation” exemption under Section 162(m) has been repealed, effective for taxable years beginning after December 31, 2017, unless certain transition relief is available. Please refer to our discussion under “Additional Information on Compensation Practices – Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
The overarching adjusted EPS goal applicable to the named executive officers in each PSP cycle outstanding during fiscal 2018 was as follows:
Fiscal 2016 to 2018 cycle | Adjusted EPS of $0.10 in each of fiscal years 2016, 2017, and 2018 | |
Fiscal 2017 to 2019 cycle | Adjusted EPS of $0.10 in each of fiscal years 2017, 2018, and 2019 | |
Fiscal 2018 to 2020 cycle | Adjusted EPS of $0.10 in each of fiscal years 2018, 2019, and 2020 |
As with the FY18 AIP, the adjusted EPS goal must be met before any payout can be made to a named executive officer under the PSP. If the overarching adjusted EPS goal is met, the Committee can exercise negative discretion to potentially reduce, but not increase, authorized payouts. This negative discretion is guided by performance against underlying financial goals approved by the Committee.
UnderlyingPre-Established Performance Goals.Shortly after the start of each performance period in a cycle of the PSP, the Committee approves underlying performance goals aligned with threshold, target, and maximum incentive opportunities. If the overarching adjusted EPS goal for the cycle is ultimately met, the named executive officers participating in the cycle are eligible to earn a payout, in shares of common stock, of between 0% and 200% of their respective targeted award. Dividend equivalents are paid on the portion of the performance shares actually earned; dividend equivalents are paid at the regular dividend rate in shares of our common stock.
The balance of this section of the Compensation Discussion and Analysis describes each cycle of our PSP outstanding during fiscal 2018 including, immediately below, the Committee’s philosophy on goal setting for each of these cycles.
Goal Setting During Times of Significant Change.As discussed earlier in this Proxy Statement, the last three years at Conagra Brands have been transformational. In August 2015, when the Committee was considering the goals for the fiscal 2016 to 2018 cycle of the performance share program, Mr. Connolly was only four months into his tenure as our CEO. Portfolio, cost, and cultural overhauls at the company had just commenced. In addition, strategic alternatives were being launched for a major business unit, Private Brands. As a result, multi-year performance objectives were challenging to set. With such significant change underway, the Committee made the decision to deviate from its preferred approach to goal setting for the PSP. Typically, shortly after the start of each three-year performance period, the Committee approves a three-year goal for the cycle. However, given the change being led by Mr. Connolly as fiscal 2016 began, the Committee
Compensation Discussion and Analysis
adopted aphased-in approach to goal setting for the program, to ensure that financial objectives during this period of change were ultimately relevant and transparent.
Although the Committee expected to return to three-year goal setting for the fiscal 2017 to 2019 cycle of the program, thespin-off of Lamb Weston into an independent public company was pending at the start of fiscal 2017. The Committee therefore determined that it was appropriate to continue using a staged goal-setting approach for the PSP.
In fiscal 2018, the Committee returned to a three-year performance goal in the PSP.
In summary, the Committee has approached the performance share programs beginning in fiscal years 2016, 2017 and 2018 as follows:
FY16 | FY17 | FY18 | FY19 | FY20 | ||||||
FY16-18 PSP Cycle | 1 year goal | 1 year goal | 1 year goal | |||||||
FY17-19 PSP Cycle | 1 year goal | 2 year goal | ||||||||
FY18-20 PSP Cycle | 3 year goal |
In fiscal years 2016 and 2017, the Committee adopted EBITDA Return on Capital as the relevant performance metric. This metric is calculated as follows:
EBITDA | = | Earnings before interest and taxes + Depreciation and amortization expense | ||
Average Invested Capital | Interest bearing debt + Equity (13 period average) |
In fiscal year 2018, the Committee shifted the goals to a rate of compound annual growth in diluted earnings per share, as adjusted for items impacting comparability (EPS CAGR) to simplify the program for participant understanding and acknowledge the importance of capital allocation decisions in the company’s strategic plan. The Committee adopted aone-year EPS CAGR goal covering fiscal year 2018 for the fiscal 2016 to 2018 cycle, atwo-year EPS CAGR goal covering fiscal years 2018 and 2019 for the fiscal 2017 to 2019 cycle, and a three-year goal EPS CAGR goal in the fiscal 2018 to 2020 cycle.
Although the Committee returned to a three-year performance goal in the fiscal 2018 to 2020 cycle, a further development added complexity to the PSP – the Tax Cuts and Jobs Act, or TCJA, becoming law. As noted, the Committee implemented an EPS CAGR goal in fiscal 2018. At the time of this implementation, the company’s planned annual tax rate was approximately 33 to 34%. Following the passage of the TCJA, the company’s annualized planned tax rate decreased to approximately 23 to 24%. If the Committee did not take action, the TCJA would artificially inflate the company’s EPS growth rate when measuring performance for outstanding PSP cycles. In addition, the company decided to use a portion of its TCJA-driven cash savings to make an unplanned, significant contribution to its frozen, defined benefit pension plan. With a more fully funded and frozen plan, the trust was able to begin shifting its investment approach for the related trust assets to lower return asset classes. Due to the accounting treatment of pension plan asset returns, the company’s EPS will now be lower than planned.
Compensation Discussion and Analysis
After considering the impact of the TCJA and related pension actions on the company’s EPS CAGR goals in the fiscal 2017 to 2019 and fiscal 2018 to 2020 cycles of the PSP, and the Committee’s overarching desire to achieve simplicity, transparency and understandability in its compensation programs, it decided to amend the EPS CAGR goals for these two cycles. In July 2018, the Committee adopted the following changes:
Cycle
|
Original EPS CAGR at
|
Amended EPS CAGR
| ||||||
Fiscal 2018 to 2019
|
9.3%
|
13.2%
| ||||||
Fiscal 2018 to 2020 | 9.5% | 12.4% |
In the following pages, we further detail the performance metrics, goals and current company performance under each of these cycles.
FY16 to FY18 Cycle of the Performance Share Plan
The performance metrics and goals adopted for the fiscal 2016 to 2018 cycle of the PSP were EBITDA Return on Capital (for fiscal years 2016 and 2017) and EPS CAGR (for fiscal year 2018). The specific plan targets are as set forth here:
Fiscal 2016 to 2018 Cycle
| ||||||||
Performance Period | Goal | Performance for | Performance for Target (1) | Performance for | ||||
Fiscal 2016 (1/3 of Total Grant) | Average EBITDA Return on Capital | 20.2% (3) | 22.8% | 25.1% | ||||
Fiscal 2017 (1/3 of Total Grant) | Average EBITDA Return on Capital | 17.9% (3) | 20.5% | 22.8% | ||||
Fiscal 2018 (1/3 of Total Grant) | Adjusted Diluted EPS CAGR | 0.6% (4) | 8.6% | 16.7% |
(1) | Results in a payout equal to 100% of the targeted opportunity for the related tranche |
(2) | At or above results in a payout equal to 200% of the targeted opportunity for the related tranche |
(3) | At or below results in no payout for the related tranche |
(4) | Below results in no payout for the related tranche; achievement at this level results in payout equal to 25% of the targeted opportunity for the related tranche |
Compensation Discussion and Analysis
PSP Awards Earned for the FY16 to FY18 Cycle
At the conclusion of both fiscal year 2016 and fiscal year 2017, the Committee assessed our performance against the goals set forth in the plan. At the conclusion of fiscal 2018, the Committee assessed our performance against the fiscal 2018 goal and certified results overall. The company’s performance exceeded target in each year of the program. Ultimately, our strong financial performance over the last three years resulted in a funding level equal to 158.7% of the targeted PSP awards. It is generally the Committee’s practice to pay performance share awards at a level equal to the funded amount, without applying further discretion. For more information about the Committee’s assessment of our performance versus program goals, see “Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions” below.
Performance Period | Adjusted EPS Goal | Performance Metric | Plan Results
| Payout Earned
| Total Cycle Payout
| |||||||||||||||
FY16 (1) | Achieved | Average EBITDA Return on Capital | 25.1% | 200% | 158.7%
| |||||||||||||||
FY17 (2) | Achieved |
Average EBITDA Return on Capital | 21.4% | 122.8% | ||||||||||||||||
FY18 | Achieved |
Adjusted Diluted EPS CAGR
| 13.8% | 153.4% |
(1) | The FY16 EBITDA Return on Capital goal related to the company’s portfolio of businesses prior to thespin-off of Lamb Weston. As reported in our 2016 proxy statement, we achieved EBITDA Return on Capital of 25.1% for fiscal 2016, resulting in this tranche being notionally earned at 200% of target. For more information regarding the portion of theFY16-18 PSP award notionally earned in fiscal 2016, see our 2016 proxy statement. |
(2) | The FY17 EBITDA Return on Capital goal relates solely to the company’s portfolio of business after thespin-off of Lamb Weston. As reported in our 2017 proxy statement, we achieved EBITDA Return on Capital of 21.4% for fiscal 2017, resulting in this tranche being notionally earned at 122.8% of target. For more information regarding the portion of theFY16-18 PSP award notionally earned in fiscal 2017, see our 2017 proxy statement. |
The table below lists the number of shares of common stock that were issued to the named executive officers following fiscal 2018 for the fiscal 2016 to 2018 cycle of the PSP. Mr. Marberger did not participate in the cycle due to the timing of his hiring after the program’s start. The noted amounts include dividend equivalents on earned shares, which were paid in additional shares.
Named Executive Officer | Targeted Performance Shares Granted for Fiscal 2016 to 2018 Cycle (1) | Actual Performance 2016 to 2018 Cycle | Actual as % of Target (without Equivalents) | Actual as % of Target (with Equivalents) | ||||||||||
Mr. Connolly
| 94,372
| 159,556
| 158.7%
| 169.1%
| ||||||||||
Ms. Batcheler
| 24,159
| 40,845
| 158.7%
| 169.1%
| ||||||||||
Mr. McGough
| 24,159
| 40,845
| 158.7%
| 169.1%
| ||||||||||
Mr. Serrao
|
18,119
|
30,634
|
158.7%
|
169.1%
| ||||||||||
(1) | The number of target performance shares noted here reflects an equitable adjustment made to the original award in connection with thespin-off of Lamb Weston on November 9, 2016. For information about equitable adjustments made to equity awards in connection with the spin-off, please see our 2017 proxy statement. |
Compensation Discussion and Analysis
Unvested Cycles of the Performance Share Plan: FY17 to FY19 Cycle
The performance measures and goals adopted for the fiscal 2017 to 2019 cycle of the PSP were based on EBITDA Return on Capital (for fiscal year 2017) and EPS CAGR (fiscal years 2018 to 2019). The plan will conclude at the end of fiscal 2019, and pay out, to the extent earned, in shares of common stock in summer 2019. The specific plan targets (as adjusted for the TCJA, as discussed above) are as set forth here:
Fiscal 2017 to 2019 Cycle
| ||||||||
Performance Period | Goal | Performance for | Performance for | Performance for | ||||
Fiscal 2017 (1) (1/3 of Total Grant) | Average EBITDA Return on Capital | 17.9% (4) | 20.5% | 22.8% | ||||
Fiscal 2018 to 2019 (2/3 of Total Grant)
| Adjusted Diluted EPS CAGR, as amended
| 8.0% (5) | 13.2% | 18.2% |
(1) | The FY17 EBITDA Return on Capital goal relates solely to the company’s portfolio of businesses after thespin-off of Lamb Weston. As reported in our 2017 proxy statement, we achieved EBITDA Return on Capital of 21.4% for fiscal 2017, resulting in this tranche being notionally earned at 122.8% of target. For more information regarding the portion of the FY17 to FY19 PSP award notionally earned in fiscal 2017, see our 2017 proxy statement. |
(2) | Results in a payout equal to 100% of the targeted opportunity for the related tranche |
(3) | At or above results in a payout equal to 200% of the targeted opportunity for the related tranche |
(4) | At or below results in no payout for the related tranche |
(5) | Below results in no payout for the related tranche; achievement at this level results in payout equal to 25% of the targeted opportunity for the related tranche |
Unvested Cycles of the Performance Share Plan: FY18 to FY20 Cycle
The performance measure and goals adopted for the fiscal 2018 to 2020 cycle of the PSP were based on EPS CAGR. The plan will conclude at the end of fiscal 2020, and pay out, to the extent earned, in shares of common stock in summer 2020. The specific plan targets (as amended for the TCJA, as discussed above) are as set forth here:
Fiscal 2018 to 2020 Cycle
| ||||||
Performance Period | Threshold Adjusted Diluted EPS CAGR, as amended (1) | Target Adjusted Diluted EPS CAGR, as amended (2) | Maximum Adjusted Diluted EPS CAGR, as amended (3) | |||
Fiscal 2018 to 2020 (100% of Total Grant) | 8.8% | 12.4% | 15.8% |
(1) | Below results in no payout for the related tranche; achievement at this level results in payout equal to 25% of the targeted opportunity |
(2) | Results in a payout equal to 100% of the targeted opportunity |
(3) | At or above results in a payout equal to 200% of the targeted opportunity |
The grant date fair value of all performance shares granted under the fiscal 2018 to 2020 cycle, based on the probable outcome of the performance conditions for such period, is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2018.
Compensation Discussion and Analysis
Other Fiscal 2018 Compensation
The additional material elements of our compensation program for the named executive officers during fiscal 2018 were as follows:
Benefit Programs
We offer a package of core employee benefits to our employees, including our named executive officers. With respect to health and welfare benefits, we offer health, dental, and vision coverage and life and disability insurance. The company and employee participants share in the cost of these programs. We also offer a matching-gifts program through our Conagra Brands Foundation. To maximize community impact, the Conagra Brands Foundation offers matching gift opportunities to all employees, including the named executive officers. Donations made by the Foundation on behalf of a named executive officer are included in the “All Other Compensation” column of the Summary Compensation Table –Fiscal 2018.
With respect to retirement benefits, we maintain a qualified 401(k) retirement plan (with a company match on employee contributions) and the named executive officers are entitled to participate in this plan on the same terms as other employees. Ms. Batcheler and Mr. McGough also participate in a qualified pension plan that was closed to new participants in 2013 and frozen effective December 31, 2017.
Some of the named executive officers and other employees at various levels of the organization participate in a voluntary deferred compensation plan. The voluntary deferred compensation plan enables us to pay retirement benefits in amounts that exceed the limitations imposed by the Code under our qualified plans. The plan allows the named executive officers, as well as a broader group of approximately 400 employees, to defer receipt of up to 50% of their base salary, up to 90% of their annual cash incentive compensation, or up to 90% of their base compensation plus annual incentive in excess of $275,000. The program permits executives to save for retirement in atax-efficient way at minimal administrative cost to the company. Executives who participate in the program are not entitled to above-market (as defined by the SEC) or guaranteed rates of return on their deferred funds.
We include contributions made by the company to the named executive officers’ 401(k) plan and voluntary deferred compensation accounts in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2018. We provide a complete description of these retirement programs under the headings “Pension Benefits – Fiscal 2018” and “Nonqualified Deferred Compensation – Fiscal 2018” below.
Security Policy
The Committee has determined that it is appropriate to cover Mr. Connolly by our security policy. As a result, Mr. Connolly is required to take corporate aircraft for all business and personal air transportation. To offset a portion of the incremental cost to the company of his personal use of corporate aircraft, we entered into an aircraft time share agreement with Mr. Connolly. Under the agreement, Mr. Connolly is responsible for reimbursing us, in cash, certain amounts to help offset a portion of our incremental costs of personal flights, consisting of the cost of fuel and incidentals such as landing and parking fees, airport taxes and catering costs for such flights. We do not charge for the fixed costs that would be incurred in any event to operate company aircraft (for example, aircraft purchase costs, maintenance, insurance and flight crew salaries). Mr. Connolly’s reimbursement obligation to the company begins once the incremental cost of his personal flights exceeds $150,000 in a fiscal year. The incremental cost to us of providing these benefits in fiscal 2018, if any, is included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2018.
A copy of the Conagra Brands, Inc. Aircraft Use Policy is available to any shareholder who requests it from the Corporate Secretary at 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
Compensation Discussion and Analysis
Agreements with Named Executive Officers
Agreement with Mr. Connolly
We entered into an employment agreement with Mr. Connolly in February 2015 as a part of his hiring as our Chief Executive Officer. The agreement expired on August 1, 2018. The agreement generally described Mr. Connolly’s duties and responsibilities as CEO, and, for its term, provided for a minimum base salary of $1.1 million and a customary vacation allowance. The employment agreement also outlined Mr. Connolly’s participation in our incentive compensation programs during its term. Regarding the annual incentive program, the agreement provided that Mr. Connolly’s target opportunity would be at least 150% of his base salary. With respect to long-term incentives, commencing with fiscal 2016, Mr. Connolly was entitled, each year during the term of the agreement, to receive a targeted long-term award opportunity with a value of at least $6.25 million for any ensuing three-year performance period.
The agreement subjected Mr. Connolly to our stock ownership guidelines and aone-year post-employmentnon-competition restriction. It also required Mr. Connolly to execute our standard confidentiality andnon-solicitation agreement.
The employment agreement also provided Mr. Connolly with certain other benefits, including indemnification. The agreement entitled Mr. Connolly to use corporate aircraft, as further described above and under “Executive Compensation — Summary Compensation Table – Fiscal 2018” below.
The employment agreement provided for severance, termination and change of control benefits further described below under the heading “Executive Compensation — Potential Payments Upon Termination or Change of Control.”
The agreement also entitled Mr. Connolly to participate in benefit plans and programs that are made available to senior executives generally. For information about the terms of Mr. Connolly’s participation in our retirement plans and deferred compensation plans, see “Executive Compensation — Nonqualified Deferred Compensation – Fiscal 2018” below.
Given Mr. Connolly’s strong, results-oriented leadership during the first three years of his tenure, and the Board’s desire to retain Mr. Connolly as Conagra Brands’ CEO for the foreseeable future, on August 2, 2018, after the end of fiscal 2018, we entered into a new letter agreement with Mr. Connolly. The agreement includes terms that are materially consistent with those described above. The key features of the new letter agreement that differ from the expired employment agreement are as follows: (1) no set expiration date; (2) a minimum base salary of $1.2 million; (3) a minimum targeted long-term award opportunity with a value equal to at least $7.5 million for any ensuing three-year performance period; (4) eligibility for payment of monthly COBRA premiums for up to 24 months following a termination without cause or for good reason; and (5) modified retirement treatment with respect to Mr. Connolly’s equity awards (specifically, a reduction in age requirements coupled with continued vesting, rather than immediate vesting). Under the new letter agreement, we also agreed to pay Mr. Connolly for professional fees incurred in the negotiation and preparation of the new letter agreement (and related documents). Mr. Connolly’s new agreement will be described in greater detail in next year’s proxy statement.
Change of Control / Severance Benefits
We have agreements with our named executive officers that are designed to promote stability and continuity of senior management in the event of a change of control. The Committee routinely evaluates participation in this program and its benefit levels to ensure their reasonableness. Since fiscal 2012, individuals promoted or hired into positions that, in the Committee’s view, are appropriate for change of control program participation have not been entitled to any excise taxgross-up protection. Although the Committee continues to believe in the importance of maintaining a change of control
Compensation Discussion and Analysis
program, it believes that offering excise taxgross-ups to new participants is inappropriate relative to best executive pay practices. We provide a complete description of the amounts potentially payable to our named executive officers under these agreements under the heading “Executive Compensation — Potential Payments Upon Termination or Change of Control.”
We have also adopted a broad severance plan applicable to most salaried employees, including the named executive officers. In some circumstances, as part of negotiations during the hiring or recruiting process, we have supplemented this plan with specific severance arrangements.
Additional Information on Compensation Practices
Committee’s Views on Executive Stock Ownership
The Committee has adopted stock ownership guidelines applicable to approximately 80 of our senior employees, including our named executive officers. These guidelines, which are represented as a percentage of salary, increase with level of responsibility within the company. The Committee has adopted these guidelines because it believes that management stock ownership promotes alignment with shareholder interests. The named executive officers are expected to reach their respective ownership requirement within a reasonable period of time after appointment. Shares personally acquired by the executive through open market purchases or through our employee benefit plans (for example, our employee stock purchase plan), as well as restricted stock, RSUs and shares acquired upon the deferral of earned bonuses, are counted toward the ownership requirement. Neither unexercised stock options nor unearned performance shares are counted. If a named executive officer’s ownership position is below the applicable ownership requirement, the named executive officer is required to hold 75% of the net sharesreceived from equity compensation awards.
The following table reflects ownership as of July 31, 2018 for our continuing named executive officers.
Named Executive Officer | Stock Ownership Guideline | Actual Ownership | ||
Mr. Connolly
| 600%
| 1,189%
| ||
Mr. Marberger
| 400%
| 263%
| ||
Ms. Batcheler
| 400%
| 1,425%
| ||
Mr. McGough
| 400%
| 1,022%
| ||
Mr. Serrao
| 300%
| 478%
|
(1) | Based on the closing price of our common stock on the NYSE on July 31, 2018 ($36.71) and the salaries of the named executive officers in effect as of fiscal year end. |
Use of Adjustments in Compensation Decisions
Our goal is to pay incentives based on the same underlying business trends and results that our investors are using to measure company performance. To incent management to make decisions that have positive long-term impacts, even at the expense of shorter term results, and to preventone-time gains and losses from having too great of an impact on incentive payouts, the Committee designed its programs to exclude certain items impacting comparability from results in the fiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP. The overarching metric for the fiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP was adjusted EPS. The underlying metrics for the fiscal 2018 AIP were fiscal 2018 EBIT and net sales growth. The underlying metrics for the fiscal 2016 to 2018 cycle of the PSP were EBITDA Return on Capital and EPS CAGR.
In both the fiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP, the Committee approved adjustments that are generally consistent with the adjustments presented to investors in our discussions of comparable earnings results
Compensation Discussion and Analysis
including, in the fiscal 2016 to 2018 cycle of the PSP, an adjustment to eliminate the impact of the TCJA on our adjusted EPS. In addition, in the fiscal 2018 AIP, the Committee approved an approximately $14 million adjustment to net sales results in light of management’s decision to shift brand investments from advertising and promotion expense to retailer marketing investments, as discussed above. On an unadjusted basis, the company’s fiscal 2018 net sales were approximately $1.1 million below the level otherwise required to earn the net sales “kicker.”
Committee’s Practices Regarding the Timing of Equity Grants
We do not backdate stock options or grant equity retroactively. We do not coordinate grants of equity with disclosures of positive or negative information. Most equity is granted in the ordinary course at an annual Committee meeting each July.
As discussed above, the Committee decided to eliminate the granting of stock options from its executive compensation program in fiscal 2018 and forward. However, historically, stock options have been granted with an exercise price equal to the closing market price of our common stock on the NYSE on the date of grant. And, if a stock option grant was made other than during the routine July Committee meeting, the company would require that the grant be made on the first trading day of the month on or following the grantee’s date of hire.
Additional Information on the Committee’s Compensation Consultant
The Committee engaged FW Cook directly to assist it in obtaining and reviewing information relevant to its compensation decisions. The independence and performance of FW Cook are of the utmost importance to the Committee. As a result, Committee policy prevents management from directly engaging the consultant without the prior approval of the Committee’s Chair. For fiscal 2018, FW Cook did not provide any additional services to us or our affiliates. In addition, the Committee reviews the types of services provided by the consultant and all fees paid for those services on a regular basis and conducts a formal evaluation of the consultant on an annual basis. The Committee assessed the independence of FW Cook, as required under NYSE listing rules. The Committee has also considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to FW Cook during fiscal 2018. Based on this review, the Committee did not identify any conflict of interest raised by the work performed by FW Cook.
Tax and Accounting Implications of the Committee’s Compensation Decisions
U.S. federal income tax law prohibits us from taking a tax deduction for certain compensation paid in excess of $1 million to certain executive officers (and, beginning in 2018, certain former executive officers). Historically, compensation that qualified as “performance-based compensation” under Section 162(m) of the Code could be excluded from this $1 million limit. This exception was repealed with the TCJA, effective for taxable years beginning after December 31, 2017, unless certain transition relief is available. The Committee’s general intent prior to implementation of the TCJA was to structure our executive compensation programs so that payments could qualify as “performance-based compensation.” However, the Committee may have decided from time to time to grant compensation that would not (or could not) be able to qualify as “performance-based compensation” if appropriate to achieve the objectives of the compensation program.
With the repeal of the “performance-based compensation” provisions of Section 162(m) of the Code, compensation granted by the Committee may, more frequently, benon-deductible. The Committee believes that the tax deduction limitation should not be permitted to compromise its ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes, and it is possible that awards intended to qualify as “performance-based compensation” may
Compensation Discussion and Analysis
not so qualify. Moreover, even if the Committee intended to grant compensation that qualifies as “qualified performance-based compensation” for purposes of Section 162(m) of the Code, the company cannot guarantee that such compensation ultimately will be deductible.
For fiscal 2018, all annual incentive and performance share awards to covered employees were subject to, and made in accordance with, performance-based compensation arrangements that were then intended to qualify as tax deductible. To that end, the Committee approved a framework in which (1) maximum awards under these incentive programs would be authorized upon attainment of adjusted EPS of: $0.10 for the fiscal 2018 AIP; $0.10 per year for the performance period for the fiscal 2016 to 2018 cycle of the PSP; $0.10 per year for the performance period for the fiscal 2017 to 2019 cycle of the PSP; and $0.10 per year for the performance period for the fiscal 2018 to 2020 cycle of the PSP; and (2) negative discretion would be applied by the Committee to decrease authorized awards based upon the program frameworks described above.
Compensation Committee Report
The Human Resources Committee has reviewed and discussed the above section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference in the company’s Annual Report onForm 10-K for the fiscal year ended May 27, 2018.
Conagra Brands, Inc. Human Resources Committee
Bradley A. Alford | Rajive Johri | |
Richard H. Lenny | Ruth Ann Marshall |
Executive Compensation
Summary Compensation Table – Fiscal 2018
The table below presents compensation information for individuals who served as our Chief Executive Officer and Chief Financial Officer during fiscal 2018 and for each of the other three most highly-compensated individuals who were serving as executive officers at the end of fiscal 2018. Mr. Marberger was not a named executive officer in fiscal 2016; as such, information about his compensation for fiscal 2016 is omitted. Mr. Serrao was not a named executive officer in fiscal 2017 or 2016; as such, information about his compensation for fiscal years 2017 and 2016 is similarly omitted.
The amounts in the following Summary Compensation Table for Mr. Connolly are based in part on his employment agreement. For more information about the material terms of the employment agreement with Mr. Connolly and the change of control agreements we have entered into with each of our named executive officers, see “Compensation Discussion and Analysis — Agreements with Named Executive Officers” above and “Potential Payments Upon Termination or Change of Control” below.
For more information about our named executive officers’ mix of base salary and annual incentive compensation to their total compensation, see the discussion under “Compensation Discussion and Analysis — Elements of Fiscal 2018 Executive Compensation” above.
Please note that all share amounts and (if applicable) exercise prices included in the tables in this “Executive Compensation” section for awards granted prior to November 9, 2016 reflect the equitable adjustments to the company’s outstanding equity awards that were made in connection with the spin-off of Lamb Weston. For additional information about such equitable adjustments, please see “Compensation Discussion and Analysis – Special Note on the Treatment of Equity Awards in the Spinoff” in our 2017 proxy statement.
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Plan | Change in qualified | All Other Compen- sation ($) (4) | Total ($) | |||||||||||||||||||||||||||
Sean Connolly
|
|
2018
|
|
|
1,142,308
|
|
|
-
|
|
|
6,676,835
|
|
|
-
|
|
|
2,250,000
|
|
|
-
|
|
|
404,128
|
|
|
10,473,271
|
| |||||||||
CEO and President
|
|
2017
|
|
|
1,100,000
|
|
|
-
|
|
|
4,628,385
|
|
|
1,246,952
|
|
|
2,314,950
|
|
|
-
|
|
|
477,990
|
|
|
9,768,277
|
| |||||||||
|
2016
|
|
|
1,100,000
|
|
|
-
|
|
|
4,396,589
|
|
|
1,032,499
|
|
|
3,258,750
|
|
|
-
|
|
|
157,972
|
|
|
9,945,810
|
| ||||||||||
David Marberger
|
|
2018
|
|
|
639,231
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
715,107
|
|
|
-
|
|
|
91,029
|
|
|
3,027,429
|
| |||||||||
Chief Financial Officer
|
|
2017
|
|
|
423,846
|
|
|
200,000
|
|
|
1,631,211
|
|
|
299,447
|
|
|
471,588
|
|
|
-
|
|
|
22,754
|
|
|
3,048,846
|
| |||||||||
Colleen Batcheler
|
|
2018
|
|
|
540,750
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
672,152
|
|
|
10,449
|
|
|
109,850
|
|
|
2,915,263
|
| |||||||||
General Counsel
|
|
2017
|
|
|
538,630
|
|
|
-
|
|
|
1,184,861
|
|
|
319,214
|
|
|
749,126
|
|
|
25,118
|
|
|
267,098
|
|
|
3,084,047
|
| |||||||||
|
2016
|
|
|
521,635
|
|
|
-
|
|
|
2,895,365
|
|
|
264,335
|
|
|
989,019
|
|
|
39,296
|
|
|
97,807
|
|
|
4,807,457
|
| ||||||||||
Tom McGough
|
|
2018
|
|
|
669,500
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
832,189
|
|
|
15,987
|
|
|
137,007
|
|
|
3,236,745
|
| |||||||||
President,
|
|
2017
|
|
|
666,875
|
|
|
-
|
|
|
1,184,861
|
|
|
319,214
|
|
|
878,675
|
|
|
35,360
|
|
|
150,550
|
|
|
3,235,535
|
| |||||||||
Operating Segments
|
|
2016
|
|
|
636,538
|
|
|
-
|
|
|
2,895,365
|
|
|
264,335
|
|
|
1,156,589
|
|
|
48,895
|
|
|
57,867
|
|
|
5,059,589
|
| |||||||||
Darren Serrao
|
|
2018
|
|
|
496,797
|
|
|
-
|
|
|
1,186,587
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-
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581,029
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-
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84,580
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2,348,993
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Chief Growth Officer
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1. | Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for the stock awards granted during the reported fiscal years. For the performance shares awarded in fiscal 2018 (the fiscal 2018 to fiscal 2020 cycle of the PSP), the amounts |
Executive Compensation
reported are based on the probable outcome of the relevant performance conditions as of the grant date. Assuming the highest level of performance is achieved for the performance shares awarded in fiscal 2018, the grant date fair value of these awards would have been: Mr. Connolly, $10,201,140; Mr. Marberger, $2,417,567; Ms. Batcheler, $2,417,567; Mr. McGough, $2,417,567; and Mr. Serrao, $1,813,209. |
2. | For fiscal 2018, reflects awards earned under the fiscal 2018 AIP. A description of the fiscal 2018 AIP is included in the Compensation Discussion and Analysis. |
3. | The measurement date for pension value for fiscal 2018 was May 27, 2018. We do not offer above-market (as defined by SEC rules) or preferential earnings rates in our deferred compensation plans. For fiscal 2018, the entire amount reflects the aggregate change in the actuarial present value of pension amounts rather than nonqualified deferred compensation earnings. |
4. | The components of fiscal 2018 “All Other Compensation” include the following: |
Perquisites and Personal Benefits (a) | ||||||
Named Executive Officer | (Column 1) $ | (Column 2) $ | (Column 3) $ (c) | |||
Mr. Connolly | 106,841 | - | 297,287 | |||
Mr. Marberger | - | (b) | 85,029 | |||
Ms. Batcheler | - | (b) | 108,350 | |||
Mr. McGough | - | (b) | 135,507 | |||
Mr. Serrao | - | (b) | 78,080 |
(a) | All amounts shown are valued at the incremental cost to us of providing the benefit. For Column 1, also includes the incremental cost of repositioning flights associated with personal use by the named executive officer. With respect to Mr. Connolly’s use of company aircraft (Column 1), Mr. Connolly is a party to an aircraft time share agreement with us. Under this agreement, Mr. Connolly reimburses us in cash for a portion of our incremental costs of personal flights (in other words, the cost of fuel and incidentals, such as landing and parking fees, airport taxes and catering costs for such flights). We do not charge Mr. Connolly for the fixed costs that would be incurred in any event to operate the company aircraft (for example, aircraft purchase costs, maintenance, insurance and flight crew salaries). Because the incremental cost of such flights did not exceed $150,000 in fiscal 2018, Mr. Connolly was not required to make any payments under the time share agreement. |
(b) | For Columns 1 and 2, inclusive, a (b) notation in lieu of a dollar amount indicates that the named executive officer received the benefit but at an incremental cost to us of less than $25,000. |
(c) | Reflects the qualified CRISP contributions by us. In addition, reflects thenon-elective contribution made to each eligible participant’s account in the Voluntary Deferred Comp Plan (as further described below). See the discussion under “Nonqualified Deferred Compensation – Fiscal 2018.” |
Executive Compensation
Grants of Plan-Based Awards – Fiscal 2018
The following table presents information about grants of plan-based awards (equity andnon-equity) during fiscal 2018 to the named executive officers. All equity-based grants were made under the shareholder approved Conagra Brands, Inc. 2014 Stock Plan, which we refer to as the 2014 Stock Plan.
Name | Grant Date |
Estimated Possible Payouts |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) (3) | |||||||||||||||||
Committee Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||
Mr. | - | - | 1,713,462 | 3,769,616 | - | - | - | - | - | |||||||||||||
Connolly | 7/20/2017 | 7/19/2017 | - | - | - | - | 151,128 | 302,256 | - | 5,100,570 | ||||||||||||
7/20/2017 | 7/19/2017 | - | - | - | - | - | - | 50,376 | 1,576,265 | |||||||||||||
Mr. | - | - | 575,308 | 1,265,678 | - | - | - | - | - | |||||||||||||
Marberger | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | ||||||||||||
7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | |||||||||||||
Ms. | - | - | 540,750 | 1,189,650 | - | - | - | - | - | |||||||||||||
Batcheler | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | ||||||||||||
7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | |||||||||||||
Mr. | - | - | 669,500 | 1,472,900 | - | - | - | - | - | |||||||||||||
McGough | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | ||||||||||||
7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | |||||||||||||
Mr. | - | - | 447,117 | 983,657 | - | - | - | - | - | |||||||||||||
Serrao | 7/19/2017 | 7/19/2017 | - | - | - | - | 26,783 | 53,566 | - | 906,605 | ||||||||||||
7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 8,928 | 279,982 |
1. | Amounts reflect grants made under the fiscal 2018 AIP discussed in our Compensation Discussion and Analysis. Actual payouts earned under the program for fiscal 2018 for all named executive officers can be found in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table – Fiscal 2018. |
2. | Amounts reflect the performance shares granted to our named executive officers under our long-term incentive program for the fiscal 2018 to 2020 cycle. All awards under the fiscal 2018 to 2020 cycle, including any above-target payouts, will be earned based on our performance during the three-fiscal-year period ending May 31, 2020. Further information about these grants can be found in the section headed “Compensation Discussion and Analysis – Long-Term Incentive Plan.” Final payouts are subject to full negative discretion by the Committee. |
3. | The grant date fair value of performance shares granted under our long-term incentive program for the fiscal 2018 to 2020 performance cycle are based on the probable outcome of the relevant performance conditions as of the grant date (computed in accordance with FASB ASC Topic 718). These amounts are included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2018. |
Executive Compensation
Outstanding Equity Awards at FiscalYear-End – Fiscal 2018
The following table lists all stock options, performance shares and RSU awards outstanding as of May 27, 2018 for the named executive officers.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Stock That Have | Equity Incentive (#) (6) | Equity Incentive Plan or Payout Value of Unearned Shares, Units or ($) (5) | |||||||||||||||||||||||||||||||
Mr. | 4/1/2015 | 806,150 | - | 27.44 | 3/31/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
Connolly | 8/28/2015 | 188,740 | 94,371 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
7/11/2016 | 91,103 | 182,206 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 47,185 | 1,765,191 | - | - | ||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 45,551 | 1,704,063 | - | - | ||||||||||||||||||||||||||||||||
7/20/2017 | - | - | - | - | 50,376 | 1,884,566 | - | - | ||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 184,669 | 6,908,467 | ||||||||||||||||||||||||||||||||
7/20/2017 | - | - | - | - | - | - | 309,517 | 11,579,031 | ||||||||||||||||||||||||||||||||
Mr. | 9/1/2016 | 23,082 | 46,166 | 34.26 | 8/31/2026 | - | - | - | - | |||||||||||||||||||||||||||||||
Marberger | 9/1/2016 | - | - | - | - | 11,541 | 431,749 | - | - | |||||||||||||||||||||||||||||||
9/1/2016 | - | - | - | - | 7,144 | (3) | 267,257 | - | - | |||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | ||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||
Ms. | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | |||||||||||||||||||||||||||||||
Batcheler | 8/28/2015 | 48,320 | 24,160 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
7/11/2016 | 23,321 | 46,644 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||
7/17/2015 | - | - | - | - | 53,508 | 2,001,734 | - | - | ||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 12,080 | 451,913 | - | - | ||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 11,660 | 436,201 | - | - | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | ||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||
Mr. | 7/16/2012 | 80,615 | - | 18.42 | 7/15/2022 | - | - | - | - | |||||||||||||||||||||||||||||||
McGough | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | |||||||||||||||||||||||||||||||
7/14/2014 | 205,951 | - | 23.00 | 7/13/2024 | - | - | - | - | ||||||||||||||||||||||||||||||||
8/28/2015 | 48,320 | 24,160 | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||
7/11/2016 | 23,321 | 46,644 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||
7/17/2015 | - | - | - | - | 53,508 | 2,001,734 | - | - | ||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 12,080 | 451,913 | - | - | ||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 11,660 | 436,201 | - | - | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | ||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||
Mr. | 8/28/2015 | 36,238 | 18,120 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
Serrao | 7/11/2016 | 17,490 | 34,982 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 9,059 | 338,897 | - | - | ||||||||||||||||||||||||||||||||
9/1/2015 | - | - | - | - | 4,346 | (4) | 162,584 | - | - | |||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 8,745 | 327,150 | - | - | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 8,928 | 333,996 | - | - | ||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 35,455 | 1,326,372 | ||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 54,853 | 2,052,051 |
Executive Compensation
1. | All options were granted with an exercise price equal to the closing market price of our common stock on the NYSE on the date of grant. The vesting schedule for options that were outstanding but that could not be exercised at fiscalyear-end for the named executive officers is as follows: |
Unexercisable at FYE | Vesting Schedule | Unexercisable at FYE | Vesting Schedule | |||||||||||||||||
# of Shares | Vesting Date | # of Shares | Vesting Date | |||||||||||||||||
Mr. Connolly | 94,371 | 94,371 | 8/28/18 | Mr. McGough | 24,160 | 24,160 | 8/28/18 | |||||||||||||
182,206 | 91,103 | 7/11/18 | 46,644 | 23,322 | 7/11/18 | |||||||||||||||
91,103 | 7/11/19 | 23,322 | 7/11/19 | |||||||||||||||||
Mr. Marberger | 46,166 | 23,083 | 9/1/18 | Mr. Serrao | 18,120 | 18,120 | 8/28/18 | |||||||||||||
23,083 | 9/1/19 | 34,982 | 17,491 | 7/11/18 | ||||||||||||||||
17,491 | 7/11/19 | |||||||||||||||||||
Ms. Batcheler | 24,160 | 24,160 | 8/28/18 | |||||||||||||||||
46,644 | 23,322 | 7/11/18 | ||||||||||||||||||
23,322 | 7/11/19 |
2. | Unless otherwise indicated, RSUs generally vest in full on the third anniversary of the grant date. |
3. | Represents asign-on grant of RSUs awarded to Mr. Marberger on September 1, 2016 pursuant to the terms of his offer letter. These RSUs generally vest in two equal installments on each of the first two anniversaries of the grant date. |
4. | Represents a grant of RSUs awarded to Mr. Serrao on September 1, 2015. These RSUs generally vest in three substantially equal installments on each of the first three anniversaries of the grant date. |
5. | The market value of unvested or unearned RSUs and unearned shares is calculated using $37.41 per share, which was the closing market price of our common stock on the NYSE on the last trading day of fiscal 2018. |
6. | Reflects, on separate lines, as of May 27, 2018, the maximum number of shares that could be earned under the fiscal 2017 to 2019 cycle of the PSP, and the maximum number of shares that could be earned under the fiscal 2018 to 2020 cycle of the PSP, plus accrued dividend equivalents. The performance shares are not earned unless we achieve the performance targets specified in the plan. Shares earned under the fiscal 2017 to 2019 cycle, plus dividend equivalents, will be distributed, if earned, following fiscal 2019, and shares earned under the fiscal 2018 to 2020 cycle, plus dividend equivalents, will be distributed, if earned, following fiscal 2020. |
Option Exercises and Stock Vested – Fiscal 2018
The following table summarizes the RSUs vested and the option awards exercised during fiscal 2018 for each of the named executive officers as well as the performance shares that were earned by and paid out to the named executive officers for the fiscal 2016 to 2018 cycle of the PSP.
Option Awards | Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($) | ||||||||||||||||
Mr. Connolly | - | - | 225,939(2) | 8,417,195 | ||||||||||||||||
Mr. Marberger | - | - | 7,143(3) | 234,862 | ||||||||||||||||
Ms. Batcheler | 254,320 | 3,477,847 | 40,845 | 1,528,011 | ||||||||||||||||
Mr. McGough | - | - | 40,845 | 1,528,011 | ||||||||||||||||
Mr. Serrao | - | - | 34,980(4) | 1,288,914 |
1. | Pursuant to the terms of the PSP, dividend equivalents on earned shares, paid in additional shares of common stock, were also distributed to the named executive officers. The shares distributed to the named executive officers through this dividend equivalent feature (and included in this table) were: 9,787 shares for Mr. Connolly; 2,505 shares for Ms. Batcheler; 2,505 shares for Mr. McGough; and 1,879 shares for Mr. Serrao. |
Executive Compensation
2. | The number of shares noted here includes 4,502 additional shares of common stock from dividend equivalents provided as part of asign-on RSU grant awarded to Mr. Connolly on April 1, 2015. |
3. | The number of shares noted here is comprised solely of the portion of asign-on RSU grant awarded to Mr. Marberger on September 1, 2016 that vested during fiscal 2018. |
4. | The number of shares noted here includes 4,346 shares underlying RSUs awarded as part of asign-on grant to Mr. Serrao on September 1, 2015. |
Pension Benefits – Fiscal 2018
Conagra Brands has historically maintained anon-contributory defined benefit pension plan for eligible employees, which we refer to as the Qualified Pension. The Qualified Pension was closed to new participants who joined the company on or after August 1, 2013. As a result, Messrs. Connolly, Marberger and Serrao are not eligible to participate. Of the named executive officers, only Ms. Batcheler and Mr. McGough participate.
In the Qualified Pension, the pension benefit formula for the named executive officer participants is determined by adding two components:
A multiple – 0.9% — of Average Monthly Earnings (up to the integration level) multiplied by years of credited service (up to 35 years of credited service).
A multiple – 1.3% — of Average Monthly Earnings (over the integration level) multiplied by years of credited service (up to 35 years of credited service).
“Average Monthly Earnings” is the monthly average of the executive’s annual compensation from the company, up to the IRS limit, for the highest five consecutive years of the final ten years of his or her service. Only salary and annual incentive payments (reported in the“Non-Equity Incentive Plan Compensation” column of the summary compensation table year to year) are considered for the named executive officers in computing Average Monthly Earnings. The integration level is calculated by the IRS by averaging the last 35 years of Social Security taxable wages, up to and including the year in which the executive’s employment ends.
Participants are vested in the pension benefit once they have five years of vesting service with the company; each of Ms. Batcheler and Mr. McGough are vested. Pension benefits become payable at age 65 for normal retirement, or at age 55 with 10 years of service for early retirement. There is no difference in the benefit formula upon an early retirement, and there is no payment election option that would impact the amount of annual benefits any of the named executive officers would receive. The Qualified Pension was frozen effective December 31, 2017. Credited service and Average Monthly Earnings were frozen as of such date.
Name | Plan Name (1) | Number of Years Credited Service (#) (2) | Present Value of Accumulated Benefit ($) (3) | |||
Mr. Connolly (4) | Qualified Pension | - | - | |||
Mr. Marberger (4) | Qualified Pension | - | - | |||
Ms. Batcheler | Qualified Pension | 11.5 | 224,762 | |||
Mr. McGough | Qualified Pension | 10.9 | 292,390 | |||
Mr. Serrao (4) | Qualified Pension | - | - |
1. | Qualified Pension refers to the Conagra Brands, Inc. Pension Plan for Salaried Employees. |
2. | The number of years of credited service set forth above is calculated as of May 27, 2018, which is the pension plan measurement date used for financial statement reporting purposes. The number of years of credited service set forth above is less than the actual years of service of each of Ms. Batcheler and Mr. McGough due to the freezing of the Qualified Pension effective December 31, 2017. Actual years of service are as follows: 11.9 years for Ms. Batcheler and 11.3 years for Mr. McGough. |
3. | The valuation methodology and all material assumptions applied in quantifying the present value of the accumulated benefit are presented in footnote 14 to the financial statements included in our Annual Report on Form10-K for the fiscal year ended May 27, 2018. |
4. | Messrs. Connolly, Marberger and Serrao are not eligible to participate in the Qualified Pension. |
Executive Compensation
Nonqualified Deferred Compensation – Fiscal 2018
The table following this summary shows the nonqualified deferred compensation activity for each named executive officer during fiscal 2018. The amounts shown include amounts deferred under the Conagra Brands Retirement Income Savings Plan, or Qualified CRISP, which is our qualified 401(k) plan, and the Conagra Brands, Inc. Voluntary Deferred Compensation Plan, as amended and restated, or Voluntary Deferred Comp Plan.
Under our Qualified CRISP, which is a broad-based plan for employees, the company will match 100% of the first 6% of salary and bonus the employee contributes to the plan, and make an additional contribution of 3% of salary and annual incentive. This formula was in effect for all of fiscal 2018 for Mr. Connolly, Mr. Marberger and Mr. Serrao. For Ms. Batcheler and Mr. McGough, who participated in the Qualified Pension during fiscal 2018 until it was frozen on December 31, 2017, this formula went into effect on January 1, 2018. Previously, the company matched only 66 2⁄3% of the first 6% of salary and bonus contributed to the plan. Participants are provided a wide-array of investment alternatives for their account balances.
Our Voluntary Deferred Comp Plan allows certain domestic management-level employees whose salary is $125,000 or more per year to defer receipt of 5% to 50% of their salary, up to 90% of their annual incentive payment, or up to 90% of their salary plus annual incentive payment in excess of $275,000. The investment alternatives for deferred amounts mirror those available under our Qualified CRISP. An election to participate in the plan must be timely filed with the company in accordance with IRS requirements.
Our Voluntary Deferred Comp Plan also provides nonqualified matching contribution benefits. The plan provides for company matching contributions and companynon-elective contributions for eligible participants associated with amounts of eligible compensation above IRS limits. The matching contribution is a dollar for dollar match, limited to 6% of eligible compensation earned by the participant and paid by the company in excess of the IRS limit. Eligible participants are allowed to defer no more than 50% of their base salary and no more than 90% of their annual incentive payment that exceeds the IRS limit. Thenon-elective contribution is equal to 3% of an eligible participant’s eligible compensation in excess of the IRS limit. Matching contributions andnon-elective contributions are credited on or about December 31st of each year if the eligible participant earns in excess of the IRS limit and the participant is actively employed at the end of the calendar year.
The Voluntary Deferred Comp Plan also provides that, unless the company determines otherwise with respect to a participant, the interest of each participant in his or her matching contributions andnon-elective contributions will be 100% vested.
With respect to distributions from the Voluntary Deferred Comp Plan, in general, amounts will be distributed in cash in a lump sum in January following the individual’s separation from service. Participants may also elect to receive their balances at certain other times, including in the January of the calendar year specified by the participant or 18 months following the occurrence of a change of control. Elections regarding the time and form of payment are intended to comply with Section 409A of the Code, and certain payments to executives meeting the definition of a “specified employee” under Section 409A will be delayed for six months after the date of the separation from service. Executives may make hardship withdrawals from the Voluntary Deferred Comp Plan under certain circumstances, but no hardship withdrawals were requested by executives during fiscal 2018.
Name | Plan (1) | Executive Contributions in Last FY ($)(2) | Registrant Contributions in Last FY ($)(3) | Aggregate ($)(4) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(5) | ||||||||||||||||
Mr. Connolly | Voluntary Def Comp Plan | 187,039 | 278,422 | 67,654 | - | 1,402,740 | ||||||||||||||||
Mr. Marberger | Voluntary Def Comp Plan | 421,477 | 71,529 | 11,307 | - | 762,625 | ||||||||||||||||
Ms. Batcheler | Voluntary Def Comp Plan | 56,574 | 89,632 | 23,886 | (154,292) | 305,206 | ||||||||||||||||
Mr. McGough | Voluntary Def Comp Plan | 148,798 | 112,332 | 98,440 | (11,182) | 1,076,621 | ||||||||||||||||
Mr. Serrao | Voluntary Def Comp Plan | 47,681 | 60,599 | 13,335 | - | 255,109 |
Executive Compensation
1. | Voluntary Def Comp Plan refers to the Conagra Brands, Inc. Amended and Restated Voluntary Deferred Compensation Plan, as amended. |
2. | The amounts reported are included in the “Salary” column of the Summary Compensation Table – Fiscal 2018. |
3. | The amounts reported are included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2018. These amounts, together with our match on executive contributions to the Qualified CRISP, are disclosed in the column labeled “Company Contribution to Defined Contribution Plans” in the table included as footnote 4to the Summary Compensation Table – Fiscal 2018. |
4. | Our Voluntary Def Comp Plan does not offer above market earnings (as defined by SEC rules). As a result, none of these earnings are included in the Summary Compensation Table – Fiscal 2018. |
5. | The following amounts from this column were reported in Summary Compensation Tables for prior fiscal years: Mr. Connolly, $815,343; Mr. Marberger, $258,102; Ms. Batcheler, $342,709; Mr. McGough, $625,466; and Mr. Serrao, $0. These amounts reflect contributions only and do not include accumulated earnings or losses. The amount in this column includes the amount reflected in the “Executive Contributions in Last FY” column. |
Potential Payments Upon Termination or Change of Control
Our named executive officers’ employment may be terminated under several possible scenarios. In some of these scenarios, our plans, agreements and arrangements would provide severance benefits in varying amounts to the executive. Further, our plans, agreements and arrangements would provide for certain benefits (or for acceleration of certain benefits) upon a change of control. Severance and other benefits that are payable upon a termination of employment or upon a change of control are described below.
The tables following the narrative discussion summarize amounts payable upon termination or a change of control under varying circumstances, assuming that the change of control occurred on, or that the executive’s employment terminated on, May 25, 2018, the last business day of fiscal 2018. Other key assumptions used in compiling the tables are set forth immediately preceding each table. In the event of an actual triggering event under any of the plans, agreements and arrangements discussed in this section, all benefits would be paid to the executive in accordance with, and at times permitted by, Section 409A of the Code.
Severance Pay Plan. We maintain a severance pay plan that provides severance guidelines for all salaried employees. Any benefits payable under the program are at the sole and absolute discretion of Conagra Brands; for any particular employee, we may elect to provide severance as suggested by the plan or to provide benefits equal to, greater than or less than those provided in the guidelines. Ms. Batcheler and Messrs. Marberger, McGough, and Serrao are potentially covered by the plan. Until Mr. Connolly’s employment agreement with us expired on August 1, 2018, Mr. Connolly’s severance benefits were to be paid in accordance with that agreement, as further described below, rather than the severance pay plan. On August 2, 2018, we entered into a new letter agreement with Mr. Connolly that, among other things, addresses his severance benefits from and after August 2, 2018. For information regarding the new letter agreement with Mr. Connolly, see “Compensation Discussion and Analysis — Agreements with Named Executive Officers” above.
Under the severance pay plan, the severance guideline for individuals above a certain pay grade, including that of our named executive officers, is 52 weeks of salary continuation, plus one additional week of salary continuation for each year of continuous service prior to separation. The guidelines also provide that upon notice that the former employee has obtained new employment, we will provide him or her with a lump sum payment equal to 50% of the severance pay remaining; the other 50% would be forfeited. In addition, the guidelines provide for the provision during this period of the same type and level of health plan coverage that was in effect immediately prior to the executive officer’s termination of employment, up to a maximum of 18 months.
If a named executive officer is entitled to receive a severance payment under a change of control agreement (described below), we are not required to make payments to him or her under the severance pay plan.
Agreement with Mr. Connolly. As of May 25, 2018, we were party to an employment agreement with Mr. Connolly that addressed matters such as his salary, participation in our annual and long-term incentive plans and participation in
Executive Compensation
health and welfare benefit plans and other benefit programs and arrangements. The agreement also addressed Mr. Connolly’s severance benefits and right to participate in our change of control benefit program. For information regarding the new letter agreement with Mr. Connolly, see “Compensation Discussion and Analysis — Agreements with Named Executive Officers” above.
A summary of Mr. Connolly’s severance benefits is provided below. Generally, any payments made under the employment agreement upon disability or as a result of a termination without cause or for good reason (other than certain benefits required by law) would be conditioned on Mr. Connolly first signing a release agreement in a form approved by us.
We have excluded retirement as a hypothetical scenario in the table below because Mr. Connolly would not have been eligible for retirement at any time during fiscal 2018.
Involuntary Termination | Involuntary Termination without Cause or Voluntary Reason | Voluntary Termination | Death or | |||||
Salary | Paid through month of termination | Paid through month of termination, also paid a lump sum equal to 2 times annual salary | Paid through month of termination | Paid through month of event | ||||
Annual Incentive Plan | Not eligible for payment | Paid no less than prorated award for year of termination based on actual results, plus a lump sum equal to 2 times target for year of termination | Not eligible for payment | Paid no less than a prorated award for the year of event based on actual results | ||||
PSP Awards | In all scenarios, paid in accordance with plan provisions | |||||||
Stock Options | Options terminate Unexercised options | Sign-on options fully vest and remain exercisable for 3 years (or until earlier expiration date) Unvested options awarded under the fiscal 2016 to 2018 long-term incentive plan vest and become exercisable on a prorated basis Vested options remain exercisable for 90 days (or until earlier expiration date) Other unvested options are forfeited | Vested options remain exercisable for 90 days (or until earlier expiration date) Unvested options are forfeited | Options fully vest and remain exercisable for 3 years after event (or until earlier expiration date) (for death) Options vest on a prorated basis (for disability) | ||||
RSUs | RSUs are forfeited | Sign-on RSUs fully vest Unvested RSUs are forfeited | Unvested RSUs are forfeited | Unvested RSUs fully vest (for death) Unvested RSUs vest on a prorated basis (for disability) |
Executive Compensation
In addition, upon any of the hypothetical termination scenarios described above, Mr. Connolly would be paid his balance under our Voluntary Deferred Comp Plan based on his advance elections, and would be eligible for health and welfare benefits in accordance with applicable plan provisions.
Mr. Connolly’s agreement provides that all cash payments are generally payable in a lump sum thesixty-first day following termination of employment, unless otherwise provided in an applicable plan. Payments under the annual incentive plan and thelong-term incentive plan are payable following the end of the fiscal year or other performance period at the same time such payments are made to the other senior executive officers. If Mr. Connolly is a “specified employee” within the meaning of Section 409A of the Code at the time of his separation, certain payments would be delayed for six months after the date of the separation from service.
We currently maintain a separate change of control program, as discussed below. Mr. Connolly’s agreement provides him the right to participate in our change of control program as modified from time to time.
Either party to Mr. Connolly’s employment agreement could terminate the agreement at any time. Mr. Connolly has agreed tonon-competition restrictions extending one year after termination and to our standard confidentiality andtwo-yearnon-solicitation agreements.
Annual Incentive Plan (the “AIP”). The following terms of the AIP govern the impact of specific separation events not covered by an individual agreement:
• | Involuntary termination due to position elimination: If a participant’s position is involuntarily eliminated such that the employee is eligible for severance, he or she would be eligible for a prorated award based on the number of days the individual was eligible to participate in the plan and actual performance. |
• | Termination due to retirement: If a participant retires after reaching age 65, or after reaching age 55 with at least 10 years of service, or after reaching age 60 with at least 5 years of service, during the fiscal year, the participant will be eligible for a prorated incentive award based on the number of days the individual was eligible to participate in the plan and actual performance. |
• | Termination due to death: Any incentive payment for which a participant would have been eligible would be prorated based on the number of days the individual was eligible to participate in the plan to the date of the participant’s death, and paid to his or her estate. |
Except as might otherwise be required by law, in the absence of one of the foregoing events (or a specific agreement with us), a participant would forfeit his or her AIP award if he or she failed to be an active employee at the end of the fiscal year. Any prorated award is based on actual performance for the fiscal year and is payable after the end of such fiscal year when payments are made to other participants.
The change of control agreements, described below, govern the payment of annual incentive awards in the event of a change of control.
Long-Term Incentive Plan – Performance Shares. The following terms of the PSP would have governed the impact of a May 25, 2018 separation from us on the performance shares granted under the fiscal 2016 to 2018, fiscal 2017 to 2019 and fiscal 2018 to 2020 cycles of the PSP:
• | Termination for any reason other than death, disability, retirement or certain involuntary terminations: The participant forfeits all performance shares granted that have not been paid at the date of termination, whether or not the shares are earned as of such date. The Committee has the discretion to pay out some or all of the forfeited performance shares if (i) they would have been earned based on performance and (ii) the Committee deems such a payout appropriate and in our best interests. Such performance shares will be distributed to the participant at the same time they are distributed to other participants who remain employed. |
Executive Compensation
• | Termination due to disability or retirement: |
o | For performance shares granted prior to July 19, 2017: The participant will receive a pro rata share of the performance shares that would have been earned for the full performance period, prorated based upon the full number of fiscal years completed during the performance period as of the participant’s termination date if such performance shares have been earned based on performance. Such performance shares will be distributed to the participant at the same time they are distributed to other participants who remain employed. |
o | For performance shares granted on or after July 19, 2017: On termination due to disability, the participant will receive a pro rata share of the performance shares that would have been earned for the full performance period at the “target” level, prorated based upon days of service as of the participant’s termination date. On termination due to normal retirement or early retirement (as each term is defined in the PSP), such participant’s awards will vest based on actual performance for the full performance period (but, in the case of early retirement, the award will be prorated based on days of service during the performance period). |
• | Termination due to death: |
o | For performance shares granted prior to July 19, 2017: The participant will receive a pro rata share of the targeted performance shares based on the number of full fiscal years in the performance period during which the employee was employed. For example, upon a June 15, 2017 death, a participant would have been eligible for a payout at actual performance for the fiscal 2015 to 2017 award, since the performance period ended prior to the death, and the participant would have been eligible for a payout at targeted levels fortwo-thirds of the total fiscal 2016 to 2018 award andone-third of the total fiscal 2017 to 2019 award. |
o | For performance shares granted on or after July 19, 2017: The performance shares will vest in full at the target level. |
• | Involuntary Termination: For performance shares granted on or after July 19, 2017, if a participant experiences an involuntary termination of employment that results in severance, such participant’s awards will vest based on actual performance for the full performance period, prorated based on days of service completed during the performance period. |
In the event of a change of control (as defined in the PSP), the earned portion of a participant’s award will be determined as of the change of control, using a share valuation methodology further described in the PSP and based on the greater of target performance and actual performance through the end of our fiscal period that ends immediately prior to the change of control (the “Change of Control Value”). If no replacement award meeting the requirements set forth in the PSP is provided, a participant will vest in a cash payment equal to the Change of Control Value. If a qualifying replacement award is provided, it will generally take the form of a time-based, stock-settled award with a value equal to the Change of Control Value and will generally vest, subject to continued employment, at the end of the performance period applicable to the original performance share award. Following a change of control, a replacement award will also vest in full if the participant dies or, within two years of the change of control, becomes retirement eligible (only for awards granted prior to July 19, 2017) or terminates employment due to normal or early retirement (only for awards granted on or after July 19, 2017), is terminated without cause (as defined in the PSP) or resigns for good reason (as defined in the PSP), or is terminated due to disability.
Long-Term Incentive Plan – Stock Options. The following terms generally govern the impact of a separation from us on outstanding stock options:
• | Termination for any reason other than death, disability, early retirement or retirement: The participant forfeits all options unvested at the date of termination and would have 90 days to exercise vested options. Options |
Executive Compensation
granted under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to job elimination, divestiture, or reduction in force occurs at least one year from the date of grant. |
• | Termination due to disability or early retirement: All vested options are exercisable for three years after termination (but not beyond the end of the seven-year orten-year term of such options). The participant forfeits all other options that have not vested at the date of termination. Options granted under the 2014 Stock Plan are eligible for pro rata vesting if the termination occurs at least one year from the date of grant. |
• | Termination due to death: All unvested options would automatically become vested and exercisable, and such options would remain exercisable for three years following the participant’s death (but not beyond the end of the seven-year orten-year term of such options). |
• | Termination due to normal retirement: All unvested options would automatically become vested and exercisable. Such options would remain exercisable for three years following termination (but not beyond the end of the seven-year orten-year term of such options). |
Each of the agreements evidencing outstanding awards of stock options that were entered into prior to October 2014 provide that the vesting of the award will accelerate upon a change of control. Award agreements entered into after October 2014 provide for double-trigger vesting, requiring both a change of control event and a qualifying termination of employment (or a failure of the surviving entity to provide a replacement award) to trigger vesting.
Long-Term Incentive Plan – RSUs. The following terms generally govern the impact of a separation from us on outstanding RSUs:
• | Termination for any reason other than death, disability, early retirement or retirement: The participant forfeits all RSUs unvested at the date of termination. RSUs granted under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to job elimination, divestiture or reduction in force occurs at least one year after the date of grant (or, for RSUs granted in fiscal 2018, at any time prior to vesting). Retention RSUs granted in fiscal 2016 will vest fully if a termination occurs due to a position elimination or reduction in force. Mr. Marberger’ssign-on RSUs will vest fully if his employment is terminated without cause. |
• | Termination due to disability or early retirement: RSUs granted under the 2014 Stock Plan are eligible for pro rata vesting if the termination occurs at least one year from the date of grant (or, for RSUs granted in fiscal 2018, at any time prior to vesting). |
• | Termination due to death: All unvested RSUs would automatically vest. |
• | Termination due to normal retirement: All unvested RSUs would automatically vest if the retirement occurs at least one year from the date of grant (or, for RSUs granted in fiscal 2018, at any time prior to vesting). |
Each of the agreements evidencing outstanding awards of RSUs provide for double-trigger vesting, requiring both a change of control event and a qualifying termination of employment (or a failure of the surviving company to provide a replacement award) to trigger vesting.
The treatment of Mr. Connolly’s equity awards upon a termination without “Cause” or a resignation for “Good Reason” is further governed by his agreement with us.
Retirement Benefits. Each of our Qualified Pension and Voluntary Deferred Comp Plan contains provisions relating to the termination of the participant’s employment. These payments are described more fully in the disclosure provided in connection with the “Pension Benefits – Fiscal 2018” and “Nonqualified Deferred Compensation – Fiscal 2018” sections of this proxy statement.
Change of Control Program. The change of control program for senior executives is designed to encourage management to continue performing its responsibilities in the event of a pending or potential change of control. During fiscal 2018, this program covered each of the named executive officers.
Executive Compensation
Generally, a change of control under these agreements occurs if one of the following events occurs:
Individuals who constitute the Board, which, for these purposes, we refer to as the Incumbent Board, cease for any reason to constitute at least a majority of the Board. Anyone who becomes a director and whose election, or nomination for election, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board is considered a member of the Incumbent Board.
Consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were our shareholders immediately prior to the transaction do not, immediately thereafter, own more than fifty percent of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company.
A liquidation or dissolution of Conagra Brands or the sale of all or substantially all of our assets.
The agreements provide that upon a change of control, we may (at the sole and absolute discretion of the Board or Committee) pay each executive all or a prorated portion of the executive’s short and/or long-term incentive for the year in which the change of control occurs. The terms of our stock plan and award agreements govern the treatment of equity awards upon a change of control. With respect to severance, the change of control agreements are double-trigger arrangements, requiring both a change of control event and a qualifying termination of employment to trigger benefits. A qualifying termination event occurs if, within three years after a change of control, (1) the executive’s employment is involuntarily terminated without “cause” or (2) the executive terminates his or her employment for “good reason.”
Executives entitled to severance benefits under a change of control agreement forfeit any severance compensation and benefits under our severance pay plan guidelines and receive the following (subject to execution of a release of claims in favor of us):
a lump sum cash payment equal to a multiple of the executive’s base salary and annual bonus (calculated using the executive’s highest annual bonus for the three fiscal years preceding the change of control or the executive’s target bonus percentage as of the date the change of control agreement is executed, whichever is greater). The multiples range from two to three (three for Mr. Connolly and Ms. Batcheler and two for Messrs. Marberger, McGough, and Serrao).
continuation for three years (for agreements in place prior to July 2011) or two years (for agreements in place after July 2011) of medical, dental, disability, basic and supplemental life insurance to the extent such benefits remain in effect for other executives, with premiums paid by the executive at the rate required of other executive employees (or, for medical and dental benefits, the COBRA rate). Conagra Brands must pay the executive a single lump sum payment equal to an amount to offset taxes (for agreements in place prior to July 2011) plus the executive’s estimated cost to participate in the medical and dental plans.
a supplemental benefit under our Voluntary Deferred Comp Plan equal to three times (for agreements in place prior to July 2011) or one time (for agreements in place after July 2011) the maximum company contribution that the executive could have received under the Qualified CRISP and Voluntary Deferred Comp Plan in the year in which the change of control occurs.
outplacement assistance not exceeding $30,000.
Generally, a termination for “cause” under the agreement requires (as further described in the change of control agreements) (1) the willful and continued failure by the executive to substantially perform his or her duties, (2) the willful engaging by the executive in conduct that is demonstrably and materially injurious to us or (3) the executive’s conviction of a felony or misdemeanor that impairs his or her ability substantially to perform duties for us. A right of the executive to terminate with “good reason” following a change of control is generally triggered by (1) any failure of Conagra Brands to comply with and satisfy the terms of the change of control agreement, (2) a significant involuntary reduction of the authority, duties or responsibilities held by the executive immediately prior to the change of control, (3) any involuntary
Executive Compensation
removal of the executive from an officer position held by the executive immediately prior to the change of control, except in connection with promotions, (4) any involuntary reduction in the aggregate compensation level of the executive, (5) requiring the executive to become based at a new location or (6) requiring the executive to undertake substantially greater amounts of business travel. Certain payments to a “specified employee” within the meaning of Section 409A of the Code will be delayed for six months after the date of the separation from service.
For agreements in place prior to July 2011, the agreements also entitle each executive to an additional payment, if necessary, to make the executive whole as a result of any excise and related taxes imposed by the Code on any change of control benefits received. If the safe harbor amount at which the excise tax is imposed is not exceeded by more than 10%, the benefits will instead be reduced to avoid the excise tax.
Following a review of market practices in July 2011, the Committee adopted a policy that any future change of control benefits should be structured without any excise taxgross-up protection. Mr. Connolly’s, Mr. McGough’s, Mr. Marberger’s and Mr. Serrao’s agreements do not contain an excise taxgross-ups. Although the Committee continues to believe in the importance of maintaining a change of control program, it believes that offering excise taxgross-ups in the future is inappropriate relative to best executive pay practices.
Each change of control agreement terminates, in the absence of a change of control, when the executive’s employment as our full-time employee is terminated or the executive enters into a written separation agreement with us. In addition, we may unilaterally terminate each agreement prior to a change of control following six months prior written notice to the executive.
Summary of Possible Benefits. In the disclosure below, the first table summarizes estimated incremental amounts payable upon termination under various hypothetical scenarios. A second table summarizes estimated incremental amounts payable upon a hypothetical change of control and upon termination following a change of control.
We have not included amounts payable regardless of the occurrence of the relevant triggering event. For example, we excluded accumulated balances in retirement plans when a terminating event would do nothing more than create a right to a payment of the balance. We also excluded death benefits where the executive would pay the premium.
The data in the tables assumes the following:
each triggering event occurred on May 25, 2018 (the last trading day of fiscal 2018), and the per share price of our common stock was $37.41 (the closing price of our stock on the NYSE on May 25, 2018);
with respect to salary continuation, if an executive did not have a right to salary continuation under a stand-alone agreement with us, the severance pay plan guidelines applied;
with respect to the AIP, awards were earned at target levels, and where the Committee had discretionary authority to award a payout, except in the cases of involuntary termination with cause and voluntary termination without good reason, it exercised that authority (including in the change of control scenario);
with respect to the AIP and equity awards, in the case of an involuntary termination not for cause without a change of control, the termination was due to a position elimination on the last business day of fiscal 2018;
with respect to performance shares, awards were earned at target levels (these amounts also include a cash value of dividend equivalents on the number of shares assumed to have been earned);
with respect to equity awards in the change of control scenario, a replacement award was provided;
with respect to performance shares in the change of control scenario, the Committee exercised any applicable discretionary authority to award a pro rata payout and did so at target levels; and
in the disability scenarios, the disabling event lasted one year into the future.
Executive Compensation
We have excluded retirement as a hypothetical scenario for the named executive officers in the table below because none of the named executive officers were eligible for either early retirement (age 55 and 10 years of service) or normal retirement (age 65 or, for RSUs granted in fiscal 2018, age 60 with five years of service) treatment as of May 25, 2018.
Involuntary w/ $
| Involuntary w/o $
| Death $
| Disability $
| |||||||||||||||||
Mr. Connolly
| ||||||||||||||||||||
Lump Sum Severance
|
|
-
|
|
|
5,750,000
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
1,725,000
|
|
|
1,725,000
|
|
|
1,725,000
|
| ||||||||
Performance Shares
|
|
-
|
|
|
2,013,394
|
|
|
11,899,223
|
|
|
8,126,699
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
570,422
|
|
|
890,785
|
|
|
570,422
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
3,206,411
|
|
|
5,353,820
|
|
|
3,206,411
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
14,257
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
650,000
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
13,284,684
|
|
|
20,868,828
|
|
|
14,278,532
|
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mr. Marberger
| ||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
662,500
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
585,000
|
|
|
585,000
|
|
|
585,000
|
| ||||||||
Performance Shares
|
|
-
|
|
|
475,731
|
|
|
1,969,188
|
|
|
1,077,857
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
52,992
|
|
|
145,423
|
|
|
52,992
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
642,030
|
|
|
1,144,297
|
|
|
569,530
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
13,739
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
400,000
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
2,437,192
|
|
|
4,843,908
|
|
|
2,685,379
|
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Ms. Batcheler
| ||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
655,139
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
540,750
|
|
|
540,750
|
|
|
540,750
|
| ||||||||
Performance Shares
|
|
-
|
|
|
475,731
|
|
|
2,932,009
|
|
|
2,040,678
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
146,036
|
|
|
228,046
|
|
|
146,036
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
2,812,521
|
|
|
3,335,139
|
|
|
2,715,704
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
16,331
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
345,375
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
4,651,708
|
|
|
8,035,944
|
|
|
5,788,543
|
| ||||||||
|
|
|
|
|
|
|
|
Executive Compensation
Involuntary w/ $
| Involuntary w/o $
| Death $
| Disability $
| |||||||||||||||||
Mr. McGough
| ||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
811,125
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
669,500
|
|
|
669,500
|
|
|
669,500
|
| ||||||||
Performance Shares
|
|
-
|
|
|
475,731
|
|
|
2,932,009
|
|
|
2,040,678
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
146,036
|
|
|
228,046
|
|
|
146,036
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
2,812,521
|
|
|
3,335,139
|
|
|
2,715,704
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
16,331
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
409,750
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
4,936,444
|
|
|
8,164,694
|
|
|
5,981,668
|
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mr. Serrao
| ||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
524,423
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
454,500
|
|
|
454,500
|
|
|
454,500
|
| ||||||||
Performance Shares
|
|
-
|
|
|
356,817
|
|
|
2,199,035
|
|
|
1,530,543
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
109,523
|
|
|
171,033
|
|
|
109,523
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
726,540
|
|
|
1,162,628
|
|
|
726,540
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
13,998
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
327,500
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total | - | 2,191,001 | 4,987,196 | 3,148,606 | ||||||||||||||||
|
|
|
|
|
|
|
|
Executive Compensation
In the table that follows, if, following a change of control, any of Ms. Batcheler or Messrs. Marberger, McGough or Serrao was terminated for “Cause” or voluntarily terminated employment without “Good Reason,” the individual would not receive any benefits incremental to those shown in the “No Termination” column. Mr. Connolly would be entitled to salary continuation through the end of the month of the event.
Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||||||
Mr. Connolly | ||||||||||
Lump Sum Salary | - | 3,450,000 | ||||||||
Annual Incentive Plan | 1,725,000 | 9,776,250 | ||||||||
Performance Shares | - | 13,329,557 | ||||||||
Accelerated Stock Options | - | 890,785 | ||||||||
Accelerated Restricted Stock Units | - | 5,353,820 | ||||||||
Voluntary Deferred Compensation Plan | - | 305,308 | ||||||||
Benefits Continuation | - | 35,150 | ||||||||
Death/Disability Benefit | - | 6,084 | ||||||||
Outplacement | - | 30,000 | ||||||||
Total | 1,725,000 | 33,176,954 | ||||||||
|
|
|
| |||||||
Mr. Marberger | ||||||||||
Lump Sum Salary | - | 1,300,000 | ||||||||
Annual Incentive Plan | 585,000 | 1,170,000 | ||||||||
Performance Shares | - | 2,330,419 | ||||||||
Accelerated Stock Options | - | 145,423 | ||||||||
Accelerated Restricted Stock Units | - | 1,144,297 | ||||||||
Voluntary Deferred Compensation Plan | - | 121,890 | ||||||||
Benefits Continuation | - | 35,150 | ||||||||
Death/Disability Benefit | - | 6,084 | ||||||||
Outplacement | - | 30,000 | ||||||||
Total | 585,000 | 6,283,263 | ||||||||
|
|
|
| |||||||
Ms. Batcheler | ||||||||||
Lump Sum Salary | - | 1,622,250 | ||||||||
Annual Incentive Plan | 540,750 | 2,967,057 | ||||||||
Performance Shares | - | 3,293,240 | ||||||||
Accelerated Stock Options | - | 228,046 | ||||||||
Accelerated Restricted Stock Units | - | 3,335,139 | ||||||||
Voluntary Deferred Compensation Plan | - | 327,484 | ||||||||
Benefits Continuation | - | 51,996 | ||||||||
Death/Disability Benefit | - | 9,126 | ||||||||
Outplacement | - | 30,000 | ||||||||
Total | 540,750 | 11,864,338 | ||||||||
|
|
|
|
Executive Compensation
Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||
Mr. McGough | ||||||
Lump Sum Salary | - | 1,339,000 | ||||
Annual Incentive Plan | 669,500 | 2,313,178 | ||||
Performance Shares | - | 3,293,240 | ||||
Accelerated Stock Options | - | 228,046 | ||||
Accelerated Restricted Stock Units | - | 3,335,139 | ||||
Voluntary Deferred Compensation Plan | - | 135,152 | ||||
Benefits Continuation | - | 35,150 | ||||
Death/Disability Benefit | - | 6,084 | ||||
Outplacement | - | 30,000 | ||||
Total | 669,500 | 10,714,989 | ||||
|
| |||||
Mr. Serrao | ||||||
Lump Sum Salary | - | 1,010,000 | ||||
Annual Incentive Plan | 454,500 | 966,473 | ||||
Performance Shares | - | 2,469,920 | ||||
Accelerated Stock Options | - | 171,033 | ||||
Accelerated Restricted Stock Units | - | 1,162,628 | ||||
Voluntary Deferred Compensation Plan | - | 97,004 | ||||
Benefits Continuation | - | 35,150 | ||||
Death/Disability Benefit | - | 6,084 | ||||
Outplacement | - | 30,000 | ||||
Total | 454,500 | 5,948,292 | ||||
|
| |||||
CEO Pay Ratio
For fiscal 2018, the ratio of the annual total compensation of Mr. Connolly, our CEO (referred to as CEO Compensation), to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries other than Mr. Connolly (referred to as Median Annual Compensation), was 290 to 1. For purposes of this pay ratio disclosure, CEO Compensation was determined to be $10,473,271, which represents the total compensation reported for Mr. Connolly under the “Summary Compensation Table – Fiscal 2018.” Median Annual Compensation for the identified median employee was determined to be $36,143.
Basis of Analysis
To identify the median employee, we examined our total employee population as of March 9, 2018 (the Determination Date). We included all U.S. andnon-U.S. full-time, part-time, seasonal and temporary employees of Conagra and our consolidated subsidiaries. We excluded independent contractors and “leased” workers. Our analysis identified 12,891 individuals.
To determine Median Annual Compensation, we generally reviewed compensation for the period beginning on March 10, 2017 and ending on the Determination Date. However, for 487 of our employees (including our employees in Mexico and employees employed by one of our joint ventures), we measured compensation for the full months of March 2017 through February 2018, due to different payroll schedules applicable to these employees. As permitted by applicable SECrules, we excluded from the compensation measurement under the “de minimis” exemption the compensation of 519 individuals (all of the individuals in each of Colombia (one individual), Italy (53 individuals), India (458 individuals), Panama (five individuals) and the Philippines (two individuals)).
We measured Median Annual Compensation by totaling, for each employee other than Mr. Connolly, base earnings (salary, hourly wages and overtime, as applicable) and annual cash incentives paid during the measurement period. We did not use any statistical sampling orcost-of-living adjustments for purposes of this pay ratio disclosure. A portion of our employee workforce (full-time and part-time) worked for less than the full fiscal year (due to start dates, disability status or similar factors). In determining the Median Annual Compensation, we generally annualized the total compensation for such individuals other than seasonal employees (but avoided creating full-time equivalencies) based on reasonable assumptions and estimates relating to our employee compensation program.
Due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this pay ratio disclosure is a reasonable estimate.
Information on Stock Ownership
Information on Stock Ownership
Voting Securities of Directors, Officers and Greater Than 5% Owners
The table below shows the shares of Conagra Brands common stock beneficially owned as of July 31, 2018 by (1) beneficial owners of more than 5% of our outstanding common stock, (2) our current directors, (3) our named executive officers, and (4) all current directors and executive officers as a group.
As discussed elsewhere in this Proxy Statement, our directors and executive officers are committed to owning stock in Conagra Brands. Both groups have stock ownership requirements that preclude them from selling any Conagra Brands common stock in the market (other than to cover the cost of the exercise price and, in the case of executive officers, minimum statutory tax withholding) until they have enough shares to meet and maintain their stock ownership guidelinespre- and post-sale.
To better show the financial stake of our directors in the company, we have included a “Share Units” column in the table. The column, which is not required under SEC rules, shows share units earned by thenon-employee directors and deferred through the Conagra Brands, Inc. Directors’ Deferred Compensation Plan. Although these share units will ultimately be settled in shares of common stock, they currently have no voting rights and will not be settled within 60 days of July 31, 2018. None of our executive officers has any share units deferred.
Name | Number of Shares Owned (1) | Right to Acquire (2) | Percent of Class (3) | Share Units | ||||
The Vanguard Group (4)
|
46,272,871
|
-
|
11.81%
|
N/A
| ||||
BlackRock, Inc. (5)
|
27,823,099
|
-
|
7.10%
|
N/A
| ||||
Bradley A. Alford
|
26,500
|
2,020
|
*
|
21,012
| ||||
Anil Arora
|
-
|
-
|
*
|
-
| ||||
Thomas K. Brown
|
19,385
|
2,020
|
*
|
-
| ||||
Stephen G. Butler
|
75,695(6)
|
2,020
|
*
|
65,263
| ||||
Sean Connolly
|
1,354,237
|
141,556
|
*
|
N/A
| ||||
Thomas W. Dickson
|
-
|
2,020
|
*
|
9,975
| ||||
Steven F. Goldstone
|
448,998
|
2,020
|
*
|
146,133
| ||||
Joie A. Gregor
|
37,775
|
2,020
|
*
|
16,569
| ||||
Rajive Johri
|
4,270
|
2,020
|
*
|
54,891
| ||||
Richard H. Lenny
|
53,826
|
5,722
|
*
|
21,864
| ||||
Ruth Ann Marshall
|
23,288
|
2,020
|
*
|
87,382
| ||||
Craig P. Omtvedt
|
5,868
|
2,020
|
*
|
-
| ||||
David S. Marberger
|
27,917
|
30,227
|
*
|
N/A
| ||||
Colleen Batcheler
|
445,715
|
36,240
|
*
|
N/A
| ||||
Thomas M. McGough
|
708,677(6)
|
36,240
|
*
|
N/A
|
Information on Stock Ownership
Name | Number of Shares Owned (1) | Right to Acquire (2) | Percent of Class (3) | Share Units | ||||
Darren C. Serrao
|
97,601
|
31,525
|
*
|
N/A
| ||||
All Directors and Current Executive Officers as a Group (19 people)
| 3,611,882
| 331,046
| *
| 423,089
|
* | Represents less than 1% of common stock outstanding. |
1. | For executive officers and directors, reflects shares that have been acquired through one or more of the following: (a) open market purchases, (b) vesting or exercise of share-based awards, and (c) crediting to defined contribution plan accounts. |
2. | Reflects shares that the individual has the right to acquire within 60 days of July 31, 2018 through the exercise of stock options or the vesting of RSUs. The “All Directors and Current Executive Officers as a Group” calculation includes 31,360 options or RSUs for current executive officers not individually named in this table. |
3. | Based on 391,645,253 shares of common stock of Conagra Brands issued and outstanding as of July 31, 2018. |
4. | Based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2018, which Schedule 13G/A specifies that The Vanguard Group has sole voting power with respect to 574,640 shares, shared voting power with respect to 110,304 shares, sole dispositive power with respect to 45,603,431 shares and shared dispositive power with respect to 669,440 shares. The Vanguard Group’s address is listed on the Schedule 13G/A as: 100 Vanguard Blvd., Malvern, PA 19355. |
5. | Based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 29, 2018, which Schedule 13G/A specifies that BlackRock, Inc. has sole voting power with respect to 23,830,463 shares and sole dispositive power with respect to 27,823,099 shares. BlackRock’s address is listed on the Schedule 13G/A as: 55 East 52nd Street, New York, NY 10055. |
6. | For Mr. Butler, includes 6,000 shares held in a trust for the benefit of his spouse, who resides with him. For Mr. McGough, includes 400 shares held by his spouse, who resides with him. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers, and persons who own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and changes in beneficial ownership of our common stock. Directors, executive officers, and greater than 10% owners are required to furnish us with copies of all reports they file on Section 16(a) forms. Based solely on a review of copies of these reports furnished to us or written representations that no other reports were required, we believe that during fiscal 2018 all required reports were filed on a timely basis.
Additional Information
Information Aboutabout the 20152018 Annual Meeting
Revoking a Proxy.
You can revoke your proxy at any time before your shares are voted if you (1) are the record owner of your shares and submit a written revocation to our Corporate Secretary at or before the meeting2018 Annual Meeting (mail to: ConAgra Foods,Conagra Brands, Inc., Attn: Corporate Secretary, One ConAgra Drive, Omaha, Nebraska 68102)222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654), (2) submit a timely later-dated proxy (or voting instruction card if you hold shares through a broker, bank or nominee), or (3) provide timely subsequent Internet or telephone voting instructions. You may also attend the meeting in person2018 Annual Meeting and vote in person, subject to the legal proxy requirement noted on page 1 for street name owners.
ConAgra FoodsConagra Brands Employee Stock Purchase Plan and TreeHouse Private Brands Retirement Income Savings Plan and ConAgra Foods Employee Stock Purchase Plan.
If you hold shares in the ConAgra FoodsConagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan or the ConAgra Foods Employee Stock Purchase Plan, your voting instruction card covers the shares credited to your respective plan account. The plan’s respective trustee for the Conagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan, as applicable, must receive your voting instructions by 11:59 p.m. Eastern Time on Tuesday, September 22, 2015.18, 2018. If the respective plan trustee does not receive your instructions by that date,time, the respective trustee will vote the shares held by the ConAgra FoodsConagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan or ConAgra Foods Employee Stock Purchase Plan, as applicable, in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received.
Proxy Solicitation.
We have engaged MacKenzie Partners, Inc.Innisfree M&A Incorporated as our proxy solicitor for the annual meeting2018 Annual Meeting at an estimated cost of approximately $60,000 plus$12,000plus disbursements. Our directors, officers, and other employees may also solicit proxies in the ordinary course of their employment. ConAgra FoodsConagra Brands will bear the cost of the solicitation, including the cost of reimbursing brokerage houses and other custodians for their expenses in sending proxy materials to you.
Quorum.
A majority of the shares of common stock outstanding on the record date must be present in person or by proxy at the meeting to constitute a quorum. The inspectors of election intend to treat properly executed proxies marked “abstain” as “present” for purposes of determining whether a quorum has been achieved. The inspectors will also treat proxies held in “street name” by brokers where the broker indicates that it does not have authority to vote on one or more of the proposals coming before the meeting (“brokernon-votes”) as “present” for purposes of determining whether a quorum has been achieved.
Vote Requirements and Manner of Voting Proxies.
If a quorum is present:
We will hold an election of directors.Each outstanding share of common stock of Conagra Brands is entitled to cast one vote for each director seat. In an uncontested election, a director will be elected if he or she receives the affirmative vote of a majority of the votes cast in the election. An incumbent director nominee who does not receive the affirmative vote of a majority of the votes cast in the election is required promptly to tender his or her resignation to the Board, and the resignation will be accepted or rejected by the Board as more fully described in the “Our Corporate Governance Practices” section of this Proxy Statement. Abstentions and brokernon-votes are not treated as votes cast and, therefore, will not affect the outcome of the election of directors.
We will vote on ratification of the appointment of the independent auditor for fiscal 2019.The appointment of the independent auditor for fiscal 2019 will be ratified if approved by a majority of the votes cast.
Additional Information
|
|
We will vote, on an advisory basis, to approve our named executive officer compensation.The advisory resolution to approve our named executive officer compensation, as described in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, will be considered adopted if approved by a majority of the votes cast. Abstentions and brokerAdditional Informationnon-votes are not treated as votes cast and, therefore, will not affect the outcome of the votes on this matter.
|
The shares represented by all valid proxies received by Internet, by telephone or by mail and not properly revoked will be voted in the manner specified. Where specific choices are not indicated, the shares represented by all valid proxies received will be voted: “For”“FOR” the election of all of the director nominees for director named in this Proxy Statement; “For”“FOR” the ratification of the appointment of our independent auditor for fiscal 2016;2019; and “For”“FOR” the resolution to approve the compensation of the company’sour named executive officers.officer compensation. If any matter not described above is properly presented at the meeting, the proxy gives authority to the persons named on the Proxy Cardproxy card to vote as recommended by the Board of Directors on such other matters.
Multiple Shareholders Sharing an Address
We are allowed to deliver a single Notice of Internet Availability of Proxy Materials, Annual Report, and Proxy Statement to a household at which two or more shareholders reside when we believe those shareholders are members of the same family. We believe this rule benefits everyone. It eliminates duplicate mailings that shareholders living at the same address receive, and it reduces our printing and mailing costs. You will continue to receive individual proxy cards for each registered account. If you receive a single set of proxy materials but prefer to receive separate copies for each registered account in your household, please contact our agent, Broadridge, at: 1-800-542-1061,by telephone at (866)540-7095 or in writing at:at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Broadridge will remove you from the householding program within 30 days after it receives your request, followingat which point you will begin receiving an individual copy of the materialproxy materials for each registered account. You can also contact Broadridge at the phonetelephone number or address above if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
Shareholder Proposals to be Included in our 20162019 Proxy Statement
To be considered for inclusion in next year’s Proxy Statement, shareholder proposals must be received at our principal executive offices no later than the close of business on April 9, 2016. Address12, 2019.Address proposals to the Corporate Secretary, ConAgra Foods,Conagra Brands, Inc., One ConAgra Drive, Omaha, Nebraska 68102.222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
Other Shareholder Proposals to be Presented at our 20162019 Annual Meeting
OurOur bylaws requireby-laws provide that any shareholder proposal that is not submitted for inclusion in next year’s Proxy Statement, but is instead sought to be presented directly at the 20162019 Annual Meeting but not submitted for inclusion in the Proxy Statement for the 2019 Annual Meeting must be received at our principal executive office not less than 90 nor more than 120 days prior to the first anniversary of the 20152018 Annual Meeting. If the date of the 20152019 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date, then the notice must be received not later than the 90th90th day prior to the meeting day or the tenth day following public announcement of the meeting date. Our bylawsby-laws also specify the information that must accompany the notice.
Our Proxy CardThe proxy card for the 2016 annual meeting2019 Annual Meeting will give discretionary authority with respect to all shareholder proposals properly brought before the 20162019 Annual Meeting that are not included in the 2016Proxy Statement for the 2019 Annual Meeting Proxy Statement.Meeting. Address proposals to the Corporate Secretary, ConAgra Foods,Conagra Brands, Inc., One ConAgra Drive, Omaha, Nebraska 68102.222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
***
Appendix A
Appendix A – Reconciliation of GAAP andNon-GAAP Information
This Proxy Statement contains certainnon-GAAP financial measures, including organic net sales, adjusted diluted earnings per share from continuing operations and adjusted operating margin. Management considers GAAP financial measures as well asnon-GAAP financial measures in its evaluation of the company’s financial statements and believes thesenon-GAAP measures provide useful supplemental information to assess the company’s operating performance and financial position. These measures should be viewed in addition to, and not in lieu of, the company’s diluted earnings per share, operating performance, and financial measures as calculated in accordance with GAAP. Please see our Annual Report onForm 10-K for the fiscal year ended May 27, 2018 for a reporting of our financial results in accordance with GAAP.
The following information is provided to reconcile thenon-GAAP financial measures disclosed in this Proxy Statement to their most directly comparable GAAP measures.
Organic Net Sales
FY18 | FY17 | % Change | ||||||||||
Net Sales | $ | 7,938.3 | $ | 7,826.9 | 1.4 | % | ||||||
Impact of foreign exchange | (27.9) | — | ||||||||||
Net sales from acquired businesses | (169.1) | — | ||||||||||
Net sales from divested businesses | — | (71.1) | ||||||||||
Organic Net Sales | $ | 7,741.3 | $ | 7,755.8 | (0.2 | )% | ||||||
Appendix A
Adjusted Operating Margin & Adjusted Diluted EPS from Continuing Operations Reconciliation for Regulation G Purposes
Total FY15 Diluted EPS from continuing operations | $ | (1.46 | ) | |
Items impacting comparability: | ||||
Net expense related to intangible asset impairment charges, | 3.40 | |||
Net expense related to restructuring and integration costs | 0.15 | |||
Net expense related to unallocated mark-to-market impact of derivatives | 0.07 | |||
Net expense related to extinguishment of debt | 0.04 | |||
Net expense related to year-end re-measurement of pensions | 0.01 | |||
Net benefit related to historical legal matters | (0.01 | ) | ||
Net benefit related to unusual tax matters | (0.03 | ) | ||
Rounding | 0.01 | |||
Diluted EPS adjusted for items impacting comparability | $ | 2.18 | ||
Total FY14 Diluted EPS from continuing operations | $ | 0.37 | ||
Items impacting comparability: | ||||
Net expense related to intangible asset impairment charges | 1.46 | |||
Net expense related to restructuring, transaction, and integration costs | 0.23 | |||
Net expense related to settlement of interest rate derivatives | 0.08 | |||
Net expense related to impairment costs, net of gain on sale of non-operating asset, | 0.03 | |||
Net expense related to year-end re-measurement of pensions and early retirement of debt | 0.01 | |||
Net benefit related to historical legal, insurance, and environmental matters | (0.02 | ) | ||
Net benefit related to unallocated mark-to-market impact of derivatives | (0.05 | ) | ||
Net benefit related to unusual tax matters | (0.16 | ) | ||
Diluted EPS from continuing operations, adjusted for items impacting comparability | $ | 1.95 | ||
Net EPS contribution previously within continuing operations and Subsequently reclassified to discontinued operations: | ||||
From milling operations | 0.32 | |||
Net expense related to transaction costs | 0.02 | |||
From other divested businesses | 0.01 | |||
Net benefit related to sale of flour mills | (0.13 | ) | ||
Diluted EPS adjusted for items impacting comparability | $ | 2.17 |
FY18 | Operating profit | Diluted EPS from continuing operations | ||||||
Reported
|
$
|
1,033.5
|
|
$
|
1.95
|
| ||
% of Net Sales
|
|
13.0%
|
| |||||
Restructuring plans
|
|
38.0
|
|
|
0.07
|
| ||
Acquisitions and divestitures
|
|
15.7
|
|
|
0.03
|
| ||
Corporate hedging losses (gains)
|
|
(6.2)
|
|
|
(0.01)
|
| ||
Pension settlement and valuation adjustment
|
|
5.4
|
|
|
0.01
|
| ||
Intangible impairment charges
|
|
4.8
|
|
|
0.01
|
| ||
Early exit of an unfavorable lease contract by purchasing the building
|
|
34.9
|
|
|
0.06
|
| ||
Gain on substantial liquidation of an international joint venture
|
|
—
|
|
|
(0.01)
|
| ||
Legal matters
|
|
151.0
|
|
|
0.28
|
| ||
Wesson valuation allowance adjustment
|
|
—
|
|
|
0.19
|
| ||
Tax reform adjustments
|
|
—
|
|
|
(0.57)
|
| ||
Unusual tax items
|
|
—
|
|
|
0.10
|
| ||
Adjusted
|
$
|
1,277.1
|
|
$
|
2.11
|
| ||
% of Net Sales (Margin)
|
|
16.1%
|
| |||||
Year-over-year change – reported
|
|
56.0%
|
| |||||
Year-over-year change – adjusted
|
|
21.3%
|
| |||||
FY17
| ||||||||
Reported
|
$
|
925.0
|
|
$
|
1.25
|
| ||
% of Net Sales
|
|
11.8%
|
| |||||
Gain on sale of Spicetec and J.M. Swank businesses
|
|
(197.4)
|
|
|
(0.16)
|
| ||
Restructuring plans
|
|
63.6
|
|
|
0.09
|
| ||
Acquisitions and divestitures
|
|
31.4
|
|
|
0.05
|
| ||
Corporate hedging losses (gains)
|
|
5.1
|
|
|
0.01
|
| ||
Goodwill and intangible impairment charges
|
|
304.2
|
|
|
0.59
|
| ||
Early extinguishment of debt
|
|
93.3
|
|
|
0.14
|
| ||
Salaried pension plan lump sum settlement
|
|
13.8
|
|
|
0.02
|
| ||
Legal matters
|
|
(5.7)
|
|
|
(0.01)
|
| ||
Tax adjustment of valuation allowance
|
|
—
|
|
|
(0.21)
|
| ||
Unusual tax items
|
|
—
|
|
|
(0.03)
|
| ||
Income from discontinued operations, net of noncontrolling interests
|
|
—
|
|
|
—
|
| ||
Adjusted
|
$
|
1,233.3
|
|
$
|
1.74
|
| ||
% of Net Sales (Margin) | 15.8% | |||||||
| VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this 2. Go to the Website www.proxyvote.com. 3. Follow the instructions.
VOTE BY PHONE - 1-800-690-6903 | |
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this | ||
2. | ||
3. Return Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you vote by Phone or Internet, please do not mail this Voting Instruction Card. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E50132-P12300 | ||
| KEEP THIS PORTION FOR YOUR RECORDS | |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — |
DETACH AND RETURN THIS PORTION ONLY | ||||||||
THIS |
CONAGRA BRANDS, INC.
| For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following nominees for director: | ||||||||||||||||||||||||||||||||||||||||
1. |
Election of directors |
☐ |
☐ |
☐ |
| |||||||||||||||||||||||||||||||||||
01) | Anil Arora | 06) | Rajive Johri | |||||||||||||||||||||||||||||||||||||
02) | Thomas K. Brown | 07) | Richard H. Lenny | |||||||||||||||||||||||||||||||||||||
03) | Stephen G. Butler | 08) | Ruth Ann Marshall | |||||||||||||||||||||||||||||||||||||
04) | Sean M. Connolly | 09) | Craig P. Omtvedt | |||||||||||||||||||||||||||||||||||||
05) | Joie A. Gregor | |||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
2. | Ratification of the appointment of independent auditor for fiscal 2019 | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
3. | Advisory approval of the Company’s named executive officer compensation | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this proxy card. | ||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ADMISSION TICKET
ConAgra Foods 2015Conagra Brands, Inc. 2018 Annual Stockholders’ Meeting of Shareholders
Friday, September 25, 201521, 2018
8:30 a.m. CTCDT
Witherspoon Concert HallThe Gwen Hotel, Floor 11
Joslyn Art MuseumThe Grand Salon Room
2200 Dodge521 North Rush Street
Omaha, Nebraska 68102Chicago, Illinois 60611
You must present this admission ticket, along with someone form of government-issued photo identification such(such as a valid driver’s license or passport,passport), in order to gain admittance to the Annual Meeting of Shareholders on September 25, 2015 Annual Stockholders’ Meeting.21, 2018. This ticket is not transferable and admits only the stockholder(s)shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
M95344-P68281E50133-P12300
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PROXY - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Proxy is Solicited by the Board of Directors for the
September 21, 2018 Annual Meeting of Shareholders.
The undersigned appoints each of Sean M. Connolly and Richard H. Lenny as proxies, with full power of substitution, to vote all shares of common stock of Conagra Brands, Inc. that the undersigned would be entitled to vote at the Annual Meeting of Shareholders and any adjournment or postponements thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS PROXY. IF YOU SIGN AND RETURN YOUR PROXY BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE PROXIES WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1,FOR ITEMS 2 AND 3, AND AS RECOMMENDED BY THE BOARD OF DIRECTORS UPON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF SHAREHOLDERS.
If you wish to vote by mailing this proxy card, please mark the boxes accordingly, indicate the date, sign your name exactly as it appears on this card, and return it in the enclosed envelope. When signing as attorney, executor, administrator, trustee, guardian, or officer of a corporation, please give your full title as such. Information on telephonic and Internet voting is on the reverse side of this proxy card.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet vote authorizes the named proxies to vote these shares in the same manner as if you marked, signed, and returned your proxy card. Telephone and Internet voting are available until 11:59 p.m. (ET) on September 20, 2018.
Continued and to be signed on reverse side
| VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this 2. Go to the Website www.proxyvote.com. 3. Follow the instructions.
VOTE BY PHONE - 1-800-690-6903 | |
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this | ||
2. | ||
3. Return Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you vote by Phone or Internet, please do not mail this |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E50134-P12300 | ||
| KEEP THIS PORTION FOR YOUR RECORDS | |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — |
DETACH AND RETURN THIS PORTION ONLY | ||||||||
THIS |
CONAGRA BRANDS, INC.
| For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following: |
☐ |
☐ |
☐ | |||||||||||||||||||||||||||||||||||||
1. |
Election of directors. |
| ||||||||||||||||||||||||||||||||||||||
01) | Anil Arora | 06) | Rajive Johri | |||||||||||||||||||||||||||||||||||||
02) | Thomas K. Brown | 07) | Richard H. Lenny | |||||||||||||||||||||||||||||||||||||
03) | Stephen G. Butler | 08) | Ruth Ann Marshall | |||||||||||||||||||||||||||||||||||||
04) | Sean M. Connolly | 09) | Craig P. Omtvedt | |||||||||||||||||||||||||||||||||||||
05) | Joie A. Gregor | |||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
2. | Ratification of the appointment of independent auditor for fiscal 2019 | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
3. | Advisory approval of the Company’s named executive officer compensation | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this voting instruction card. | ||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ADMISSION TICKET
ConAgra Foods 2015Conagra Brands, Inc. 2018 Annual Stockholders’ Meeting of Shareholders
Friday, September 25, 201521, 2018
8:30 a.m. CTCDT
Witherspoon Concert HallThe Gwen Hotel, Floor 11
Joslyn Art MuseumThe Grand Salon Room
2200 Dodge521 North Rush Street
Omaha, Nebraska 68102Chicago, Illinois 60611
You must present this admission ticket, along with someone form of government-issued photo identification such(such as a valid driver’s license or passport,passport), in order to gain admittance to the Annual Meeting of Shareholders on September 25, 2015 Annual Stockholders’ Meeting.21, 2018. This ticket is not transferable and admits only the stockholder(s)shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
M95346-P68281E50135-P12300
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VOTING INSTRUCTION CARD - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Voting Instruction Card is Solicited by the Board of Directors for the
September 21, 2018 Annual Meeting of Shareholders.
As a participant in the Conagra Brands Employee Stock Purchase Plan (the "ESPP"), I hereby direct Computershare, as Trustee, to vote all shares of common stock I hold in this plan account in accordance with the instructions set forth on the reverse side.
THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN YOUR INSTRUCTION CARD BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE TRUSTEE WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1 ANDFOR ITEMS 2 AND 3.
If you wish to vote using this voting instruction card, please mark the boxes accordingly, sign your name exactly as it appears on this card, indicate the date, and return this card in the enclosed envelope. If you are a current or former employee of Conagra Brands, Inc. and have an interest in the ESPP, your proportionate interest as of July 31, 2018 is shown on this voting instruction card and the instructions you provide will determine how the Trustee will vote. If you do not vote, the Trustee will vote the shares in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received, unless contrary to applicable law.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet voting instruction authorizes Computershare to vote these shares in the same manner as if you marked, signed, and returned this voting instruction card. Whether you vote by mail, telephone, or via the Internet, your vote must be returned by 11:59 p.m. (ET) on September 18, 2018.
Continued and to be signed on reverse side
| VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this voting instruction card. 2. Go to the Website www.proxyvote.com. 3. Follow the instructions.
VOTE BY PHONE - 1-800-690-6903 | |
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this voting instruction card. | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this voting instruction card. | ||
2. | ||
3. Return Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you vote by Phone or Internet, please do not mail this Voting Instruction Card. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY |
THIS VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
All
|
| For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||||||||
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The Board of Directors recommends a vote FOR the following nominees for director: | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||
06) Rajive Johri | ||||||||||||||||||||||||||||||||||||||||||
07) Richard H. Lenny | ||||||||||||||||||||||||||||||||||||||||||
03) Stephen G. Butler | 08) Ruth Ann Marshall | |||||||||||||||||||||||||||||||||||||||||
04) Sean M. Connolly | 09) Craig P. Omtvedt | |||||||||||||||||||||||||||||||||||||||||
05) Joie A. Gregor | ||||||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | ||||||||||||||||||||||||||||||||||||||||||
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| For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||
2. Ratification of the appointment of independent auditor for fiscal 2019 | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||
3. Advisory approval of the Company’s named executive officer compensation | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||
NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this voting instruction card. | ||||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting. |
|
| ||||||||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ADMISSION TICKET
ConAgra Foods 2015Conagra Brands, Inc. 2018 Annual Stockholders’ Meeting of Shareholders
Friday, September 25, 201521, 2018
8:30 a.m. CTCDT
Witherspoon Concert HallThe Gwen Hotel, Floor 11
Joslyn Art MuseumThe Grand Salon Room
2200 Dodge521 North Rush Street
Omaha, Nebraska 68102Chicago, Illinois 60611
You must present this admission ticket, along with someone form of government-issued photo identification such(such as a valid driver’s license or passport,passport), in order to gain admittance to the Annual Meeting of Shareholders on September 25, 2015 Annual Stockholders’ Meeting.21, 2018. This ticket is not transferable and admits only the stockholder(s)shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
M95348-P68281E50137-P12300
VOTING INSTRUCTION CARD - CONAGRA BRANDS, INC. Please vote and sign on reverse side. This Voting Instruction Card is Solicited by the Board of Directors for the September 21, 2018 Annual Meeting of Shareholders. As a participant in the TreeHouse Private Brands Retirement Income Savings Plan, I hereby direct T. Rowe Price, as Trustee, to vote all shares held in this plan account as I instruct in the instructions listed below. THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN YOUR INSTRUCTION CARD BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE TRUSTEE WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1 ANDFOR ITEMS 2 AND 3. If you wish to vote using this voting instruction card, please mark the boxes accordingly, sign your name exactly as it appears on this card, indicate the date and return the card in the enclosed envelope. If you are a current or former employee ofConagra Brands, Inc. and have an interest in TreeHouse Private Brands Retirement Income Savings Plan, your proportionate interest as of July 31, 2018 is shown on this voting instruction card and the instructions you provide on this card will determine how the Trustee will vote. If you do not vote, the Trustee will vote the shares in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received, unless contrary to applicable law. You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet voting instruction authorizes T. Rowe Price to vote these shares in the same manner as if you marked, signed, and returned this voting instruction card. Whether you vote by mail, telephone or via the Internet, your vote must be returned by 11:59 p.m. (ET) on September 18, 2018. Continued and to be signed on reverse side
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