Page 44| 2016 Proxy Statement | | EXECUTIVE COMPENSATION The following tables provide information on the compensation of our NEOs for our 2019 fiscal year. Our NEOs include the two individuals who served as our CEO during any part of 2019, the individual who served as CFO during 2019 and our three other most highly compensated officers who were serving as executive officers at the end of 2019. 2019 Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(3)(4) | | | Option Awards ($)(5) | | | Non-Equity Incentive Plan Compensation ($)(6) | | | All Other Compensation ($)(7) | | | Total ($) | | Daniel Schwartz(1) | | | 2019 | | | | 418,462 | | | | — | | | | 1,556,266 | | | | — | | | | — | | | | 1,691,371 | | | | 3,666,100 | | Former CEO | | | 2018 | | | | 800,000 | | | | — | | | | 16,339,473 | | | | — | | | | 1,556,309 | | | | 87,094 | | | | 18,782,877 | | | | | 2017 | | | | 800,000 | | | | — | | | | 1,491,518 | | | | — | | | | 1,729,475 | | | | 131,273 | | | | 4,152,266 | | | | | | | | | | | José Cil(1) | | | 2019 | | | | 776,923 | | | | — | | | | 18,736,254 | | | | — | | | | 1,139,221 | | | | 59,342 | | | | 20,711,741 | | CEO and Former | | | 2018 | | | | 600,000 | | | | — | | | | 13,785,645 | | | | — | | | | 930,056 | | | | 14,556 | | | | 15,330,257 | | President, Burger King | | | 2017 | | | | 600,000 | | | | — | | | | 927,352 | | | | — | | | | 928,856 | | | | 13,216 | | | | 2,469,424 | | | | | | | | | | | Matthew Dunnigan | | | 2019 | | | | 464,615 | | | | — | | | | 6,895,875 | | | | — | | | | 489,755 | | | | 23,319 | | | | 7,873,564 | | CFO | | | 2018 | | | | 387,884 | | | | — | | | | 113,783 | | | | 1,092,000 | | | | 420,894 | | | | 5,338 | | | | 2,019,900 | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Joshua Kobza | | | 2019 | | | | 644,231 | | | | — | | | | 15,430,767 | | | | — | | | | 958,568 | | | | 60,016 | | | | 17,093,581 | | COO | | | 2018 | | | | 600,000 | | | | — | | | | 999,967 | | | | — | | | | 862,070 | | | | 8,203 | | | | 2,470,240 | | | | | 2017 | | | | 600,000 | | | | — | | | | 1,117,333 | | | | 2,554,000 | | | | 1,000,000 | | | | 31,358 | | | | 5,302,691 | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | Alexandre Macedo(2) | | | 2019 | | | | 602,114 | | | | — | | | | 8,893,736 | | | | — | | | | — | | | | 268,869 | | | | 9,764,719 | | Former President, | | | 2018 | | | | 592,010 | | | | 494,114 | | | | 12,187,954 | | | | — | | | | 555,886 | | | | 546,097 | | | | 14,376,061 | | Tim Hortons | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jill Granat | | | 2019 | | | | 540,385 | | | | — | | | | 3,791,242 | | | | — | | | | 495,431 | | | | 67,192 | | | | 4,894,250 | | General Counsel | | | 2018 | | | | 500,000 | | | | — | | | | 569,673 | | | | — | | | | 553,779 | | | | 51,535 | | | | 1,674,987 | | | | | 2017 | | | | 500,000 | | | | — | | | | 649,991 | | | | 638,500 | | | | 569,697 | | | | 46,764 | | | | 2,404,952 | |
Restaurant Brands International
(1) | Mr. Schwartz was our Chief Executive Officer until January 22, 2019. On January 23, 2019, he was appointed to the new position of Executive Chairman for a transition period which ended June 30, 2019, and Mr. Cil assumed the role of Chief Executive Officer. Mr. Schwartz’s compensation as a director is not included herein but described under “Director Compensation.” |
(2) |
Executive Compensation
EXECUTIVE COMPENSATION
The following tables provide informationUnless otherwise stated, amounts paid to Mr. Macedo in Canadian dollars were converted to U.S. dollars based on the compensation of the NEOs for our 2015 fiscal year. Our NEOs include our CEO, our CFO and our three other most highly compensated officers who were servingexchange rate published in Bloomberg on December 31, 2019, as executive officers at the end of 2015.follows: 1 U.S. dollars = 1.29904 Canadian dollars. Mr. Macedo’s employment with RBI terminated in March 2020.
2015 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Year | | | Salary ($) | | | Bonus ($) | | | Option Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Total ($) | | Daniel Schwartz | | | 2015 | | | | 823,077 | (1) | | | — | | | | 4,253,084 | | | | 1,950,000 | | | | 140,402 | | | | 7,166,563 | | Chief Executive Officer | | | 2014 | | | | 700,000 | | | | — | | | | 3,551,351 | | | | 1,750,000 | | | | 11,208 | | | | 6,012,559 | | | | | 2013 | | | | 600,000 | | | | — | | | | 2,858,587 | | | | 1,300,000 | | | | 12,200 | | | | 4,770,787 | | | | | | | | | | Joshua Kobza | | | 2015 | | | | 510,385 | (1) | | | — | | | | 3,428,749 | | | | 900,000 | | | | 107,101 | | | | 4,946,235 | | Chief Financial Officer | | | 2014 | | | | 379,615 | | | | 109,668 | | | | 2,387,545 | | | | 640,332 | | | | 2,197 | | | | 3,519,357 | | | | | 2013 | | | | 294,615 | | | | — | | | | 1,050,058 | | | | 450,000 | | | | 1,038 | | | | 1,795,711 | | | | | | | | | | José Cil | | | 2015 | | | | 615,385 | (1) | | | — | | | | 2,070,919 | | | | 1,200,000 | | | | 94,997 | | | | 3,981,301 | | President, Burger King | | | 2014 | | | | 500,000 | | | | — | | | | 1,711,128 | | | | 760,000 | | | | 904,231 | | | | 3,875,359 | | | | | 2013 | | | | 500,000 | | | | — | | | | 982,236 | | | | 800,000 | | | | 554,664 | | | | 2,836,900 | | | | | | | | | | Elias Diaz Sesé | | | 2015 | | | | 541,822 | (2) | | | — | | | | 1,967,105 | | | | 1,340,160 | | | | 3,449,655 | | | | 7,298,742 | | President, Tim Hortons | | | 2014 | | | | 391,278 | | | | — | | | | 1,595,777 | | | | 566,778 | | | | 285,583 | | | | 2,839,416 | | | | | | | | | | Heitor Gonçalves | | | 2015 | | | | 514,615 | (1) | | | — | | | | 1,353,312 | | | | 1,000,000 | | | | 340,743 | | | | 3,208,670 | | Chief Information & Performance Officer and Chief People Officer | | | 2014 | | | | 440,000 | | | | — | | | | 873,220 | | | | 685,000 | | | | 12,179 | | | | 2,010,399 | | | | 2013 | | | | 433,846 | | | | — | | | | 680,611 | | | | 570,000 | | | | 12,200 | | | | 1,696,657 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Except with respect to Mr. Diaz Sesé, salary amounts shown for calendar year 2015 include one extra pay period. Increases in salary for 2015 were effective as of January 9, 2015. |
(2) | Mr. Diaz Sesé served as President, Tim Hortons for all of 2015, but was employed by our Singapore subsidiary for part of the year. As a result, this amount represents amounts paid to Mr. Diaz Sesé in both Singapore and Canadian dollars which, for purposes of the 2015 Summary Compensation Table, were converted to U.S. dollars based on the exchange rates published in Bloomberg on December 31, 2015, as follows: 1 Canadian dollar = 0.72265 U.S. dollars; and 1 Singapore dollar = 0.70497 U.S. dollars. Canadian sourced salary was a total of $237,166 U.S. dollars, and Singapore sourced salary was a total of $304,656 U.S. dollars. |
(3) | Amounts shown in this column include the aggregate grant date fair value of (i) Bonus Matching Options granted in calendar year 2015, 2014 and 2013 under the Bonus Swap Program, and (ii) discretionary option awards granted to the NEOs in the respective year. Under the Bonus Swap Program for RBI and BKW, RBI’s predecessor, the Bonus Matching Options for the NEOs were calculated by (1) multiplying an NEO’s gross bonus by the Swap Election Percentage of 50%, (2) multiplying this amount by four (or, in the case of Bonus Matching Options granted in 2013, by two), and (3) dividing the total by the fair market value on the date of grant. All BKW option awards granted prior to the closing of the Transactions were converted into options to purchase the same number of common shares from RBI on the same terms and conditions set forth in the award agreements for the underlying BKW options, including with respect to vesting and exercise price. Our named executive officers have not actually received this compensation nor do these amounts reflect the actual value that will be recognized by the named executive officer. Instead the amounts reflect the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718. For additional information on the valuation assumptions regarding the option awards, refer to Note 18 to our audited consolidated financial statements for the year ended December 31, 2015, which are included in our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. |
(4) | The amounts reported in this column reflect compensation earned for 2015 performance under our Annual Bonus Program. We make payments under this program in the first quarter of the calendar year following the calendar year in which the bonus was earned after finalization of our audited financial statements. As discussed above under “Compensation Discussion and Analysis – Bonus Swap Program”, in February 2016 each of our NEOs elected to forego 50% of their calculated net non-equity incentive compensation (the maximum permitted pursuant to the program) to purchase RBI common shares. The amounts of 2015 non-equity incentive compensation foregone and used to purchase RBI common shares in February 2016 were as follows: Mr. Schwartz – $584,983; Mr. Kobza – $270,000; Mr. Cil – $360,000; Mr. Diaz Sesé – $401,996; and Mr. Gonçalves – $300,000. The non-equity incentive compensation paid to Mr. Diaz Sesé was paid in Canadian dollars and converted to U.S. dollars based on the exchange rate for a Canadian dollar set forth in footnote 2 above. |
(5) | Details of the amounts set forth in this column related to 2015 are included in the All Other Compensation Table. |
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Executive Compensation
2015 All Other Compensation Table
The following table contains a breakdown of the compensation and benefits included under All Other Compensation in the Summary Compensation Table for 2015.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Year | | Company Contribution to Retirement and 401(k) Plans | | Tax Equalization | | Relocation(4) | | Other(5) | | Total | Daniel Schwartz | | | | 2015 | | | | $ | 10,791 | (1) | | | $ | 127,964 | (2) | | | $ | — | | | | $ | 1,647 | | | | $ | 140,402 | | Joshua Kobza | | | | 2015 | | | | $ | 8,778 | (1) | | | $ | 97,278 | (2) | | | $ | — | | | | $ | 1,045 | | | | $ | 107,101 | | José Cil | | | | 2015 | | | | $ | 10,791 | (1) | | | $ | — | | | | $ | 81,372 | | | | $ | 2,834 | | | | $ | 94,997 | | Elias Diaz Sesé | | | | 2015 | | | | $ | 12,570 | | | | $ | 3,383,304 | (3) | | | $ | 52,165 | | | | $ | 1,616 | | | | $ | 3,449,655 | | Heitor Gonçalves | | | | 2015 | | | | $ | 10,915 | (1) | | | $ | 75,956 | (2) | | | $ | 250,000 | | | | $ | 3,872 | | | | $ | 340,743 | |
(1) | These amounts include true-ups related to Company Contributions for 2015 as follows: Mr. Schwartz – $191; Mr. Kobza – $8,778; Mr. Cil – $191; and Mr. Gonçalves – $315. The balance of the amounts listed represents the company match to the retirement plan of each NEO. |
(2) | Messrs. Schwartz, Kobza and Gonçalves received these amounts to tax equalize their compensation to the U.S. pursuant to their respective employment agreements. The tax equalization attributable to their base salary for 2015 is as follows: Mr. Schwartz – $10,245; Mr. Kobza – $8,442; and Mr. Gonçalves – $6,783; and the tax equalization attributable to their non-equity incentive compensation for 2015 is as follows: Mr. Schwartz – $117,719; Mr. Kobza – $88,836; and Mr. Gonçalves – $69,173. Tax equalization represents the aggregate incremental cost to RBI of providing a tax equalization benefit to Messrs. Schwartz, Kobza and Gonçalves in connection with their service in Canada. |
(3) | These amounts includes (i) $104,740 to tax equalize Mr. Diaz Sesé’s base salary to the U.S; (ii) $325,814 to tax equalize his non-equity incentive compensation to the U.S.; and (iii) $2,370,200 to tax equalize certain stock options granted to Mr. Diaz Sesé while employed by our Singapore subsidiary to the U.S., plus a tax gross up of $592,550 paid to the Singapore tax authorities on behalf of Mr. Diaz Sesé due to the deemed exercise of these stock options upon his exit from Singapore and Canada. Tax equalization represents the aggregate incremental cost to RBI of providing a tax equalization benefit to Mr. Diaz Sesé in connection with his service in Singapore. Certain amounts were paid in local currency and in each case the amount reported reflects the exchange rate for a Singapore dollar or a Canadian dollar set forth in footnote 2 of the 2015 Summary Compensation Table. |
(4) | In March 2015, Mr. Gonçalves received a relocation payment of $250,000 to assist with the costs associated with his incremental living expenses in Canada relating to his new job responsibilities there. In connection with Mr. Cil’s move from Switzerland to the U.S., Mr. Cil received (i) $16,744 in tax preparation services and (ii) $14,706 in international health insurance (CIGNA) for Mr. Cil and his family. In addition, RBI paid $49,775 to a third party on Mr. Cil’s behalf to move him and his household from Switzerland to the U.S., comprised of $29,795 in moving expenses and the balance in miscellaneous expenses. Mr. Diaz Sesé received (i) $8,146 in tax preparation services; (ii) $24,887 in international health insurance (CIGNA) for Mr. Diaz Sesé and his family; and (iii) $19,132 to reimburse Mr. Diaz Sesé for costs incurred in connection with his move from Singapore to Canada. Certain amounts were paid in local currency and in each case the amount reported reflects the exchange rate for a Singapore dollar set forth in footnote 2 of the 2015 Summary Compensation Table. |
(5) | Includes the cost of premiums for the Executive Life Insurance Program for each executive except Mr. Diaz Sesé, who received $1,210 in executive medical coverage and $406 for life insurance. |
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Executive Compensation
2015 Grants of Plan-Based Awards Table
The following table provides information about cash (non-equity) and equity compensation awarded to our named executive officers in 2015 including: (1) the range of possible cash payouts under our 2015 Annual Bonus Program, (2) the grant date of equity awards; (3) the number and exercise price of stock option grants (including Bonus Matching Options awarded in March 2015 in connection with the 2014 Annual Bonus Program and discretionary options awarded during 2015); and (4) the grant date fair value of Bonus Matching Restricted Share Units (“Bonus Matching RSUs”) granted in calendar years 2019, 2018, and 2017 under the option grants calculatedBonus Swap Program to the NEOs for 2018, 2017, and 2016 and computed in accordance with FASB ASC Topic 718. TheUnder the Bonus Swap Program for such years, the Bonus Matching OptionsRSUs for the participating NEOs were calculated by (1) multiplying an NEO’s gross bonus by the Swap Election Percentage of 50%, (2) multiplying this amount by two, and (3) dividing the total by the closing price of an RBI common share on the trading day preceding the grant date. Our NEOs have not actually received this compensation nor do these amounts reflect the actual value that will be recognized by the NEO. For additional information on the valuation assumptions regarding the stock awards, refer to Note 15 to our audited consolidated financial statements for the year ended December 31, 2019, which are included in our Annual Report on Form10-K for the year ended December 31, 2019 filed with the SEC.
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(4) | For Messrs. Cil, Dunnigan, Kobza, and Macedo and Ms. Granat, $17,806,250, $6,475,000, $14,568,750, $8,093,750 and $3,237,500, respectively, of this amount represents the aggregate grant date fair value of PBRSUs granted in calendar year 2019. The aggregate grant date fair value of the PBRSUs was computed based on the probable outcome of the performance target as of the grant date and 100% achievement of the performance target. The value of the PBRSUs at the grant date assuming the highest level of performance achieved (earned at 120% of target) would be $21,367,500, $7,770,000, $17,482,500, $9,712,500 and $3,885,000 for Messrs. Cil, Dunnigan, Kobza, and Macedo and Ms. Granat, respectively. Dividend equivalents are accrued (in the form of additional units) on the PBRSUs during the vesting period and are subject to the same performance and other conditions as the underlying PBRSUs. The dividend equivalents are converted to shares if and after the underlying PBRSUs vest. Actual amounts will be based on the RBI share price on the settlement date. Due to the termination of his employment in March 2020, Mr. Macedo has forfeited this award. |
| | | Restaurant Brands International | | 2020 Proxy Statement | Page 43 |
Executive Compensation (5) | For additional information on the valuation assumptions regarding the option awards, refer to Note 15 to our audited consolidated financial statements for the year ended December 31, 2019, which are included in our Annual Report on Form10-K for the year ended December 31, 2019 filed with the SEC. |
(6) | The amounts reported in this column reflect compensation earned for 2019 performance under our Annual Bonus Program. We make payments under this program in the first quarter of the calendar year following the calendar year in which the bonus was earned after finalization of our audited financial statements. As discussed above under “Compensation Discussion and Analysis – Bonus Swap Program”, in greater detailFebruary 2020, each of the NEOs other than Mr. Macedo elected to forgo 50% of their calculated netnon-equity incentive compensation (the maximum permitted pursuant to the program) to purchase RBI common shares. Mr. Schwartz was not eligible to participate in the 2019 Bonus Swap Program since he was not eligible to receive an annual bonus in 2019. As Mr. Macedo did not receive a bonus and his employment terminated on March 13, 2020, he did not to participate in the 2019 Bonus Swap Program. The amounts of 2019non-equity compensation forgone and used to purchase RBI common shares in February 2020 were as follows: Mr. Cil—$341,762; Mr. Dunnigan—$146,877; Mr. Kobza—$287,520; and Ms. Granat—$148,601. |
(7) | Details of the amounts set forth in this column related to 2019 are included in the 2019 All Other Compensation Table. |
2019 All Other Compensation Table The following table contains a breakdown of the compensation and benefits included under All Other Compensation in the 2019 Summary Compensation Table. | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Year | | Company Contribution to Retirement and 401(k) Plans ($) | | Tax Equalization ($)(2) | | Other ($)(4) | | Total ($) | Daniel Schwartz | | | | 2019 | | | | | 8,000 | (1) | | | | 1,682,358 | | | | | 1,014 | | | | | 1,691,371 | | José Cil | | | | 2019 | | | | | 11,200 | (1) | | | | 44,306 | | | | | 3,836 | | | | | 59,342 | | Matthew Dunnigan | | | | 2019 | | | | | — | | | | | 22,135 | | | | | 1,184 | | | | | 23,319 | | Joshua Kobza | | | | 2019 | | | | | 11,200 | | | | | 46,102 | | | | | 2,714 | | | | | 60,016 | | Alexandre Macedo | | | | 2019 | | | | | 25,024 | (1) | | | | 203,736 | (3) | | | | 40,108 | | | | | 268,869 | | Jill Granat | | | | 2019 | | | | | 11,200 | (1) | | | | 52,089 | (2) | | | | 3,903 | | | | | 67,192 | |
(1) | These amounts represent the Company’s match to the retirement plan of each respective NEO. With respect to Mr. Macedo, this amount includes the Company match pursuant to the US and Canadian retirement plans. |
(2) | Pursuant to theTri-Party Employment Agreements with Messrs. Schwartz, Cil, Dunnigan, Kobza, and Granat, we tax equalize each executive’s compensation to the U.S. See discussion ofTri-Party Employment Agreements in the CD&A section above. Amounts above reflect gross payments made to the Canadian tax authorities and are not net of refunds received by RBI with respect to prior year over withheld payments for Mr. Macedo of $27,358, Mr. Kobza of $4,357 and Ms. Granat of $14,847. The tax equalization for Mr. Schwartz includes $1.6 million related to equity awards that converted to restricted stock awards and performance stock awards during 2019 in connection with Mr. Schwartz’s transition from an executive role to anon-management director. |
(3) | Pursuant to the expatriate benefits provided to Mr. Macedo, we have agreed to tax equalize his Canadian compensation to U.S. income tax rates. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Estimated Possible Payouts Under Non- Equity Incentive Plan Awards(3) | | | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards | | | Threshold $(1)(2) | | | Target $(1)(2) | | | Maximum $(1)(2) | | | Grant Date | | | Approval Date | | | | | Daniel Schwartz | | $ | 832,000 | | | $ | 1,600,000 | | | $ | 2,035,200 | | | | 3/6/2015 | | | | 1/29/2015 | | | | 41,410 | | | $ | 42.26 | | | $ | 423,210 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | �� | | 41,410 | | | $ | 42.26 | | | $ | 423,210 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 333,333 | | | $ | 42.26 | | | $ | 3,406,663 | | Joshua Kobza | | $ | 390,000 | | | $ | 750,000 | | | $ | 954,000 | | | | 3/6/2015 | | | | 1/29/2015 | | | | 17,747 | | | $ | 42.26 | | | $ | 181,374 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 17,747 | | | $ | 42.26 | | | $ | 181,374 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 300,000 | | | $ | 42.26 | | | $ | 3,066,000 | | José Cil | | $ | 561,600 | | | $ | 1,080,000 | | | $ | 1,373,760 | | | | 3/6/2015 | | | | 1/29/2015 | | | | 17,984 | | | $ | 42.26 | | | $ | 183,796 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 17,983 | | | $ | 42.26 | | | $ | 183,786 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 166,667 | | | $ | 42.26 | | | $ | 1,703,337 | | Elias Diaz Sesé | | $ | 561,600 | | | $ | 1,080,000 | | | $ | 1,373,760 | | | | 3/6/2015 | | | | 1/29/2015 | | | | 12,905 | | | $ | 42.26 | | | $ | 131,889 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 12,904 | | | $ | 42.26 | | | $ | 131,879 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 166,667 | | | $ | 42.26 | | | $ | 1,703,337 | | Heitor Gonçalves | | $ | 390,000 | | | $ | 750,000 | | | $ | 954,000 | | | | 3/6/2015 | | | | 1/29/2015 | | | | 16,209 | | | $ | 42.26 | | | $ | 165,656 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 16,209 | | | $ | 42.26 | | | $ | 165,656 | | | | | | | | | | | | | | | | | 3/6/2015 | | | | 1/29/2015 | | | | 100,000 | | | $ | 42.26 | | | $ | 1,022,000 | |
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(4) | Includes the cost of premiums for the Executive Life Insurance Program for each NEO, and the imputed value of tax preparation costs of $500 for each NEO other than Mr. Cil. For Mr. Macedo this includes $11,345 for the executive health plan and $26,424 for relocation reimbursement. (1) | Amounts shown in these columns were calculated using each NEO’s base salary as of September 30, 2015 (Mr. Schwartz - $800,000; Mr. Kobza - $500,000; Mr. Cil - $600,000; Mr. Diaz Sesé - $600,000; and Mr. Gonçalves - $500,000). |
(2) | Threshold amounts reflect amounts payable under our 2015 Annual Bonus Program assuming that the Business Achievement was 80%, Individual Achievement was 50% and Global Multiplier was -20% (or 80%). Target amounts assume that the Business Achievement was 100%, Individual Achievement was 100% and Global Multiplier was 100%. Maximum amounts assume that the Business Achievement was 112%, Individual Achievement was 100% and Global Multiplier was +20 (or 120%). Amounts do not take into consideration the percentage that the bonus could be negatively adjusted under the Free Cash Flow Adjustment (up to 30%) or the impact of CEO or Compensation Committee discretion. A full discussion of our 2015 Annual Bonus Program is included in the CD&A above. |
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Executive Compensation 2019 Grants of Plan-Based Awards Table The following table provides information about cash(non-equity) and equity compensation awarded to our NEOs in 2019, including: (1) the range of possible cash payouts under our 2019 Annual Bonus Program; (2) the grant date and approval date of equity awards; (3) the number of Bonus Matching RSUs awarded in February 2020 in connection with the 2019 Annual Bonus Program; (4) the number and exercise price of discretionary options awarded during 2019; and (5) the grant date fair value of the Bonus Matching RSUs and PBRSUs awarded during 2019 as described above in Notes 4 and 5 to the 2019 Summary Compensation Table, respectively. The Bonus Matching RSUs are discussed in greater detail in the CD&A above. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Grant Date | | | Approval Date | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | | | Grant Date Fair Value of Stock and Option Awards ($) | | | Threshold ($)(1)(2) | | | Target ($)(1)(2) | | | Maximum ($)(1)(2) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | Daniel Schwartz | | | | | | | | | | | | | | | 02/22/19 | | | | 01/22/19 | | | | | | | | | | | | | | | | 24,035 | | | | 1,556,266 | | | | | | | | | | | | | José Cil | | | 600,000 | | | | 2,400,000 | | | | 4,140,000 | | | | 02/22/19 | | | | 01/22/19 | | | | | | | | | | | | | | | | 14,363 | | | | 930,004 | | | | | | | | | | | | | | | | | 02/22/19 | | | | 01/22/19 | | | | 247,500 | | | | 275,000 | | | | 330,000 | | | | | | | | 17,806,250 | (4) | | | | | | | | | | | | Matthew Dunnigan | | | 180,000 | | | | 720,000 | | | | 1,242,000 | | | | 02/22/19 | | | | 01/22/19 | | | | | | | | | | | | | | | | 6,500 | | | | 420,875 | | | | | | | | | | | | | | | | | 02/22/19 | | | | 01/22/19 | | | | 90,000 | | | | 100,000 | | | | 120,000 | | | | | | | | 6,475,000 | (4) | | | | | | | | | | | | Joshua Kobza | | | 406,250 | | | | 1,625,000 | | | | 2,803,125 | | | | 02/22/19 | | | | 01/22/19 | | | | | | | | | | | | | | | | 13,313 | | | | 862,017 | | | | | | | | | | | | | | | | | 02/22/19 | | | | 01/22/19 | | | | 202,500 | | | | 225,000 | | | | 270,000 | | | | | | | | 14,568,750 | (4) | | | | | | | | | | | | Alexandre Macedo | | | 375,000 | | | | 1,500,000 | | | | 2,587,500 | | | | 02/22/19 | | | | 01/22/19 | | | | | | | | | | | | | | | | 12,355 | | | | 799,986 | | | | | | | | | | | | | | | | | 02/22/19 | | | | 01/22/19 | | | | 112,500 | | | | 125,000 | | | | 150,000 | | | | | | | | 8,093,750 | (4) | | | | | | | | | | | | Jill Granat | | | 206,250 | | | | 825,000 | | | | 1,423,125 | | | | 02/22/19 | | | | 01/22/19 | | | | | | | | | | | | | | | | 8,552 | | | | 553,742 | | | | | | | | | | | | | | | | | 02/22/19 | | | | 01/22/19 | | | | 45,000 | | | | 50,000 | | | | 60,000 | | | | | | | | 3,237,500 | (4) |
(1) | Amounts shown in these columns were calculated using each NEO’s base salary as of September 30, 2019 (Mr. Cil—$800,000; Mr. Dunnigan—$480,000; Mr. Kobza—$650,000; Mr. Macedo—$600,000; and Ms. Granat—$550,000). |
(2) | Threshold amounts reflect amounts payable under our 2019 Annual Bonus Program assuming that Business Achievement was 50%, Individual Achievement was 50% and Global Multiplier was-50 (or 50%). Target amounts assume that the Business Achievement was 100%, Individual Achievement was 100% and Global Multiplier was 100%. Maximum amounts assume that the Business Achievement was 172.5%, Individual Achievement was 100% and Global Multiplier was +50 (or 150%). Amounts do not take into consideration the percentage that the bonus could be negatively adjusted under the Free Cash Flow Adjustment (up to 30%) or the impact of CEO or Compensation Committee discretion. A full discussion of our 2019 Annual Bonus Program is included in the CD&A above. |
(3) | ExecutiveThe threshold, target and maximum amounts reflect the maximum number of shares awarded assuming that 90%, 100% and 120% of the performance target is achieved.
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(4) | See Note 4 to the 2019 Summary Compensation 2015 Table and Note 9 to the 2019 Outstanding Equity Awards at FiscalYear-End Table for more information.
| | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | | Option Expiration Date | Daniel Schwartz | | | | 02/03/11(1) | | | | | 848,420 | | | | | 0 | | | | $ | 3.54 | | | | | 02/02/21 | | | | | | 02/21/12(2) | | | | | 0 | | | | | 211,658 | | | | $ | 3.54 | | | | | 02/20/22 | | | | | | 03/01/12(3) | | | | | 0 | | | | | 503,074 | | | | $ | 3.97 | | | | | 02/28/22 | | | | | | 03/01/13(4) | | | | | 0 | | | | | 46,575 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/01/13(5) | | | | | 0 | | | | | 500,000 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/07/14(6) | | | | | 0 | | | | | 95,307 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/07/14(7) | | | | | 0 | | | | | 400,000 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/06/15(8) | | | | | 0 | | | | | 82,820 | | | | $ | 42.26 | | | | | 03/05/25 | | | | | | 03/06/15(9) | | | | | 0 | | | | | 333,333 | | | | $ | 42.26 | | | | | 03/05/25 | | Joshua Kobza | | | | 03/01/13(4) | | | | | 0 | | | | | 776 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/01/13(5) | | | | | 0 | | | | | 200,000 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/07/14(6) | | | | | 0 | | | | | 32,991 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/07/14(7) | | | | | 0 | | | | | 300,000 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/06/15(8) | | | | | 0 | | | | | 35,494 | | | | $ | 42.26 | | | | | 03/05/25 | | | | | | 03/06/15(9) | | | | | 0 | | | | | 300,000 | | | | $ | 42.26 | | | | | 03/05/25 | | José Cil | | | | 02/03/11(1) | | | | | 678,735 | | | | | 0 | | | | $ | 3.54 | | | | | 02/02/21 | | | | | | 02/21/12(2) | | | | | 0 | | | | | 253,988 | | | | $ | 3.54 | | | | | 02/20/22 | | | | | | 03/01/12(3) | | | | | 0 | | | | | 213,806 | | | | $ | 3.97 | | | | | 02/28/22 | | | | | | 03/01/13(4) | | | | | 0 | | | | | 37,808 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/01/13(5) | | | | | 0 | | | | | 150,000 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/07/14(6) | | | | | 0 | | | | | 58,651 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/07/14(7) | | | | | 0 | | | | | 180,000 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/06/15(8) | | | | | 0 | | | | | 35,967 | | | | $ | 42.26 | | | | | 03/05/25 | | | | | | 03/06/15(9) | | | | | 0 | | | | | 166,667 | | | | $ | 42.26 | | | | | 03/05/25 | | Elias Diaz Sesé | | | | 02/03/11(1) | | | | | 106,050 | | | | | 0 | | | | $ | 3.54 | | | | | 02/02/21 | | | | | | 08/01/11(1) | | | | | 42,420 | | | | | 0 | | | | $ | 3.54 | | | | | 07/31/21 | | | | | | 02/21/12(2) | | | | | 0 | | | | | 68,214 | | | | $ | 3.54 | | | | | 02/20/22 | | | | | | 03/01/12(3) | | | | | 0 | | | | | 452,765 | | | | $ | 3.97 | | | | | 02/28/22 | | | | | | 03/01/13(4) | | | | | 0 | | | | | 32,401 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/01/13(5) | | | | | 0 | | | | | 250,000 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/07/14(6) | | | | | 0 | | | | | 42,563 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/07/14(7) | | | | | 0 | | | | | 180,000 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/06/15(8) | | | | | 0 | | | | | 25,809 | | | | $ | 42.26 | | | | | 03/05/25 | | | | | | 03/06/15(9) | | | | | 0 | | | | | 166,667 | | | | $ | 42.26 | | | | | 03/05/25 | | Heitor Gonçalves | | | | 02/03/11(1) | | | | | 530,260 | | | | | 0 | | | | $ | 3.54 | | | | | 02/02/21 | | | | | | 02/21/12(2) | | | | | 0 | | | | | 177,791 | | | | $ | 3.54 | | | | | 02/20/22 | | | | | | 03/01/13(4) | | | | | 0 | | | | | 30,136 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/01/13(5) | | | | | 0 | | | | | 100,000 | | | | $ | 18.25 | | | | | 02/28/23 | | | | | | 03/07/14(6) | | | | | 0 | | | | | 41,788 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/07/14(7) | | | | | 0 | | | | | 80,000 | | | | $ | 27.28 | | | | | 03/06/24 | | | | | | 03/06/15(8) | | | | | 0 | | | | | 32,418 | | | | $ | 42.26 | | | | | 03/05/25 | | | | | | 03/06/15(9) | | | | | 0 | | | | | 100,000 | | | | $ | 42.26 | | | | | 03/05/25 | |
(1) | These stock options vested on October 19, 2015. |
(2) | Reflects Bonus Matching Options issued on February 21, 2012 in connection with the 2011 Bonus Swap Program. These stock options cliff vest on December 31, 2016 and are subject to proportionate forfeiture if any of the Investment Shares in connection with which they were issued are sold prior to the vesting date of the related options. |
(3) | Reflects discretionary stock options granted to the executive. These stock options cliff vest on March 1, 2017. |
(4) | Reflects Bonus Matching Options issued on March 1, 2013 in connection with the 2012 Bonus Swap Program. These stock options cliff vest on December 31, 2017 and are subject to proportionate forfeiture if any of the Investment Shares in connection with which they were issued are sold prior to the vesting date of the related options. |
(5) | Reflects discretionary stock options granted to the executive. These stock options cliff vest on March 1, 2018. |
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| | | Restaurant Brands International | | 2020 Proxy Statement | Page 45 |
Executive Compensation (6) | Reflects Bonus Matching Options issued on March 7, 2014 in connection with the 2013 Bonus Swap Program. These stock options cliff vest on December 31, 2018. Of these Bonus Matching Options, 50% are subject to proportionate forfeiture if any of the Investment Shares in connection with which they were issued are sold, and the remaining options will be forfeited 100% if any of the Investment Shares in connection with which they were issued are sold prior to the vesting date of the related options. |
(7) | Reflects discretionary stock options granted to the executive. These stock options cliff vest on March 7, 2019. |
(8) | Reflects Bonus Matching Options issued on March 6, 2015 in connection with the 2014 Bonus Swap Program. These stock options cliff vest on December 31, 2019. Of these Bonus Matching Options, 50% are subject to proportionate forfeiture if any of the Investment Shares in connection with which they were issued are sold, and the remaining options will be forfeited 100% if any of the Investment Shares in connection with which they were issued are sold prior to the vesting date of the related options. |
(9) | Reflects discretionary stock options granted to the executive. These stock options cliff vest on March 6, 2020. |
2019 Outstanding Equity Awards at FiscalYear-End Table | | | Page 49| 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grant Date | | | Option Awards | | | Stock Awards | | Named Executive Officer | | Securities Unexercised Options Exercisable (#) | | | Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have Not Vested (#)(16) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(17) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units Or Other Rights That Have not Vested (#)(16) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units Or Other Rights that Have Not Vested ($)(17) | | Daniel | | | 03/06/15 | (3) | | | 82,820 | | | | | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | Schwartz | | | 03/06/15 | (4) | | | — | | | | 333,333 | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (5) | | | — | | | | 250,000 | | | | 33.67 | | | | 02/25/26 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (6) | | | — | | | | — | | | | — | | | | — | | | | 61,882 | | | | 3,946,196 | | | | — | | | | — | | | | | 02/24/17 | (7) | | | — | | | | — | | | | — | | | | — | | | | 28,278 | | | | 1,803,313 | | | | — | | | | — | | | | | 02/23/18 | (8) | | | — | | | | — | | | | — | | | | — | | | | 30,774 | | | | 1,962,446 | | | | — | | | | — | | | | | 02/23/18 | (9) | | | — | | | | — | | | | — | | | | — | | | | 262,544 | | | | 16,742,435 | | | | — | | | | — | | | | | 02/22/19 | (13) | | | — | | | | — | | | | — | | | | — | | | | 24,219 | | | | 1,544,423 | | | | — | | | | — | | | | | 12/29/19 | (15) | | | — | | | | — | | | | — | | | | — | | | | 1,549 | | | | 98,780 | | | | — | | | | — | | | | | | | | | | | | José Cil | | | 03/06/15 | (3) | | | 35,967 | | | | — | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 03/06/15 | (4) | | | — | | | | 166,667 | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (5) | | | — | | | | 125,000 | | | | 33.67 | | | | 02/25/26 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (9) | | | — | | | | — | | | | — | | | | — | | | | 38,626 | | | | 2,463,194 | | | | — | | | | — | | | | | 02/24/17 | (7) | | | — | | | | — | | | | — | | | | — | | | | 17,834 | | | | 1,137,262 | | | | — | | | | — | | | | | 02/23/18 | (8) | | | — | | | | — | | | | — | | | | — | | | | 16,764 | | | | 1,069,056 | | | | — | | | | — | | | | | 02/23/18 | (9) | | | — | | | | — | | | | — | | | | — | | | | 234,346 | | | | 14,944,267 | | | | — | | | | — | | | | | 02/22/19 | (13) | | | — | | | | — | | | | — | | | | — | | | | 14,680 | | | | 936,139 | | | | — | | | | — | | | | | 02/22/19 | (14) | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | 281,068 | | | | 17,923,717 | | | | | | | | | | | | Matthew | | | 03/06/15 | (4) | | | — | | | | 30,000 | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | Dunnigan | | | 02/26/16 | (5) | | | — | | | | — | | | | — | | | | — | | | | 4,981 | | | | 317,644 | | | | — | | | | — | | | | | 02/26/16 | (9) | | | — | | | | — | | | | — | | | | — | | | | 65,672 | | | | 4,187,904 | | | | — | | | | — | | | | | 02/24/17 | (10) | | | — | | | | 40,000 | | | | 55.55 | | | | 02/23/27 | | | | — | | | | — | | | | — | | | | — | | | | | 02/24/17 | (7) | | | — | | | | — | | | | — | | | | — | | | | 2,770 | | | | 176,646 | | | | — | | | | — | | | | | 05/05/17 | (11) | | | — | | | | 40,000 | | | | 56.92 | | | | 05/04/27 | | | | — | | | | — | | | | — | | | | — | | | | | 02/23/18 | (8) | | | | | | | — | | | | — | | | | — | | | | 2,054 | | | | 130,958 | | | | — | | | | — | | | | | 02/23/18 | (8) | | | — | | | | 100,000 | | | | 58.44 | | | | 02/22/28 | | | | — | | | | — | | | | — | | | | — | | | | | 02/22/19 | (13) | | | | | | | — | | | | — | | | | — | | | | 6,643 | | | | 423,652 | | | | — | | | | — | | | | | 02/22/19 | (14) | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 102,207 | | | | 6,517,715 | | | | | | | | | | | | Joshua | | | 03/06/15 | (3) | | | 35,494 | | | | — | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | Kobza | | | 03/06/15 | (4) | | | — | | | | 300,000 | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (5) | | | — | | | | — | | | | — | | | | — | | | | 28,970 | | | | 1,847,395 | | | | — | | | | — | | | | | 02/26/16 | (9) | | | — | | | | — | | | | — | | | | — | | | | 383,087 | | | | 24,429,411 | | | | — | | | | — | | | | | 02/24/17 | (7) | | | — | | | | — | | | | — | | | | — | | | | 21,487 | | | | 1,370,246 | | | | — | | | | — | | | | | 05/05/17 | (11) | | | | | | | 200,000 | | | | 56.92 | | | | 5/4/2027 | | | | | | | | | | | | — | | | | — | | | | | 02/23/18 | (8) | | | — | | | | — | | | | — | | | | — | | | | 18,048 | | | | 1,150,914 | | | | — | | | | — | | | | | 02/22/19 | (13) | | | | | | | — | | | | — | | | | — | | | | 13,607 | | | | 867,703 | | | | — | | | | — | | | | | 02/22/19 | (14) | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 229,965 | | | | 14,664,860 | | | | | | | | | | | | Alexandre | | | 03/06/15 | (3) | | | 33,128 | | | | | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | Macedo | | | 03/06/15 | (4) | | | — | | | | 100,000 | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (5) | | | — | | | | 100,000 | | | | 33.67 | | | | 02/25/26 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (6) | | | — | | | | — | | | | — | | | | — | | | | 30,579 | | | | 1,950,029 | | | | — | | | | — | | | | | 02/24/17 | (7) | | | — | | | | — | | | | — | | | | — | | | | 11,757 | | | | 749,773 | | | | — | | | | — | | | | | 02/23/18 | (8) | | | — | | | | — | | | | — | | | | — | | | | 9,023 | | | | 575,423 | | | | — | | | | — | | | | | 02/22/19 | (13) | | | — | | | | — | | | | — | | | | — | | | | 12,628 | | | | 805,264 | | | | — | | | | — | | | | | 02/22/19 | (14) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 127,758 | | | | 8,147,144 | |
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Executive Compensation
2015 Potential Payments Upon Termination or ChangeRestaurant Brands International
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Executive Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grant Date | | | Option Awards | | | Stock Awards | | Named Executive Officer | | Securities Unexercised Options Exercisable (#) | | | Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have Not Vested (#)(16) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(17) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units Or Other Rights That Have not Vested (#)(16) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units Or Other Rights that Have Not Vested ($)(17) | | | | | | | | | | | | Jill | | | 03/07/14 | (1) | | | 15,945 | | | | — | | | | 27.28 | | | | 03/06/24 | | | | — | | | | — | | | | — | | | | — | | Granat | | | 03/07/14 | (2) | | | 40,000 | | | | — | | | | 27.28 | | | | 03/06/24 | | | | — | | | | — | | | | — | | | | — | | | | | 03/06/15 | (3) | | | 13,665 | | | | — | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 03/06/15 | (4) | | | — | | | | 66,667 | | | | 42.26 | | | | 03/05/25 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (5) | | | — | | | | 70,000 | | | | 33.67 | | | | 02/25/26 | | | | — | | | | — | | | | — | | | | — | | | | | 02/26/16 | (6) | | | — | | | | — | | | | — | | | | — | | | | 19,313 | | | | 1,231,597 | | | | — | | | | — | | | | | 02/24/17 | (7) | | | — | | | | — | | | | — | | | | — | | | | 12,500 | | | | 797,119 | | | | — | | | | — | | | | | 05/05/17 | (11) | | | — | | | | 50,000 | | | | 59.92 | | | | 05/04/27 | | | | — | | | | — | | | | — | | | | — | | | | | 02/23/18 | (8) | | | — | | | | — | | | | — | | | | — | | | | 10,282 | | | | 655,666 | | | | — | | | | — | | | | | 02/22/19 | (13) | | | — | | | | — | | | | — | | | | — | | | | 8,741 | | | | 557,395 | | | | — | | | | — | | | | | 02/22/19 | (14) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 51,103 | | | | 3,258,858 | |
(1) | Reflects Bonus Matching Options issued on March 7, 2014 in Control Table The table below sets forthconnection with the potential payments that would be due to our named executive officers if they had been terminated2013 Bonus Swap Program. These stock options cliff vested on December 31, 2015. We do not provide for any specific payments upon2018.
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(2) | Reflects discretionary stock options granted to the occurrenceexecutive. |
(3) | Reflects Bonus Matching Options issued on March 6, 2015 in connection with the 2014 Bonus Swap Program. |
(4) | Reflects discretionary stock options granted to the executive. These stock options cliff vest on March 6, 2020. |
(5) | Reflects discretionary stock options granted to the executive. These stock options cliff vest on February 26, 2021. |
(6) | Reflects Bonus Matching RSUs issued on February 26, 2016 in connection with the 2015 Bonus Swap Program. All of onlythese Bonus Matching RSUs will be forfeited if more than 50% of the Investment Shares in connection with which they were issued are sold. If 50% or less of the Investment Shares are sold, 50% of the Bonus Matching RSUs and a changeproportional amount of the remaining Bonus Matching RSUs will be forfeited. The Bonus Matching RSUs cliff vest on December 31, 2020. |
(7) | Reflects Bonus Matching RSUs issued on February 24, 2017 in control.connection with the 2016 Bonus Swap Program. All of these Bonus Matching RSUs will be forfeited if more than 50% of the Investment Shares in connection with which they were issued are sold. If 50% or less of the Investment Shares are sold, 50% of the Bonus Matching RSUs and a proportional amount of the remaining Bonus Matching RSUs will be forfeited. The Bonus Matching RSUs cliff vest on December 31, 2021. |
(8) | Reflects Bonus Matching RSUs issued on February 23, 2018 in connection with the 2017 Bonus Swap Program. All of these Bonus Matching RSUs will be forfeited if more than 50% of the Investment Shares in connection with which they were issued are sold. If 50% or less of the Investment Shares are sold, 50% of the Bonus Matching RSUs and a proportional amount of the remaining Bonus Matching RSUs will be forfeited. The Bonus Matching RSUs cliff vest on December 31, 2022. |
(9) | The shares reported in this row represent shares issuable under the PBRSU award granted (i) on February 23, 2018 to Messrs. Schwartz, Cil Kobza and Gonçalves Macedo and (ii) on February 26, 2016 to Messrs. Dunnigan and Kobza. The amountsPBRSUs granted in 2018 to Messrs. Schwartz, Cil and Macedo will cliff vest on February 23, 2023 and the PBRSUs granted in 2016 to Messrs. Dunnigan and Kobza and Gonçalves would have been entitledwill cliff vest on February 26, 2021. The PBRSUs represented the right to receive upon terminationa variable number of employmentshares based on RBI’s actual performance during the three-year performance period from 2016-2018. In January 2019, the Compensation Committee determined RBI’s achievement was 101% of the performance goal for the PBRSUs. If the service (including service on the Board of Directors of RBI) of Messrs. Schwartz, Cil and Macedo is terminated (except due to death or disability) prior to February 23, 2021, the executive will forfeit the entire award. |
(10) | Reflects discretionary stock options granted to the executive. These stock options will cliff vest on February 24, 2022. |
(11) | Reflects discretionary stock options granted to the executive. These stock options will cliff vest on May 5, 2022. |
(12) | Reflects discretionary stock options granted to the executive. These stock options will cliff vest on February 23, 2023. |
(13) | Reflects Bonus Matching RSUs issued on February 22, 2019 in connection with the 2018 Bonus Swap Program. All of these Bonus Matching RSUs will be forfeited if more than 50% of the Investment Shares in connection with which they were issued are sold. If 50% or less of the Investment Shares are sold, 50% of the Bonus Matching RSUs and a proportional amount of the remaining Bonus Matching RSUs will be forfeited. The Bonus Matching RSUs cliff vest on December 31, 2015 due2023. |
(14) | The shares reported in this row represent shares issuable under the PBRSU award granted on February 22, 2019 that cliff vest on February 22, 2024. |
(15) | Reflects RSUs issued and immediately vested on December 29, 2019 pursuant to (1) deathMr. Schwartz’s election to receive hisnon-management director fees for the period from July 1 to December 31, 2019 as RSUs. See “Director Compensation” for more information. |
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Executive Compensation (16) | Includes dividend equivalents on (i) unvested RSUs and (ii) on unvested PBRSUs. Dividend equivalents are accrued (in the form of additional units) on the RSUs and PBRSUs during the vesting period. The dividend equivalents are converted to shares if and when the underlying RSUs or disability, (2) without cause or (3) without cause after a Change in Control would have been governed by:PBRSUs vest. › | | the terms of their respective employment agreement, which is described earlier under the heading “Compensation Discussion and Analysis – Employment Agreements with Messrs. Schwartz, Kobza and Gonçalves”; |
(17) | › | | the Burger King Corporation Severance Pay Plan (the “BK Severance Plan”); |
› | | the 2015 Annual Bonus Program; and |
› | | the terms of their respective outstanding equity grants under our 2011 Omnibus Incentive Plan (the “2011 Omnibus Plan”), Amended and Restated 2012 Omnibus Incentive Plan (the “2012 Omnibus Plan”) and 2014 Omnibus Plan. |
NoneAmounts reflect the market value of the employment agreements with our NEOs permitRSUs or PBRSUs based on the employee to terminate for good reason.
Mr. Cil
As we did not haveclosing price of an employment agreement in place with Mr. Cil as of December 31, 2015, the amounts Mr. Cil would have been entitled to receive upon termination of employmentRBI common share on December 31, 2015 due to any2019 of these circumstances would be governed by:$63.77, multiplied by the number of RSUs or PBRSUs.
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2019 Option Exercises Table | | | | | | | | | | | | | Option Awards | Named Executive Officer | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise Date ($)(1) | Daniel Schwartz | | | | 1,041,882 | | | | | 46,808,810 | | José Cil | | | | 426,459 | | | | | 21,030,835 | | Matthew Dunnigan | | | | — | | | | | — | | Joshua Kobza | | | | 533,767 | | | | | 25,904,100 | | Alexandre Macedo | | | | 345,763 | | | | | 14,496,073 | | Jill Granat | | | | 62,328 | | | | | 2,763,000 | |
›(1) | | the 2015 Annual Bonus Program; and |
The value realized on exercise of options is calculated by multiplying the number of shares exercised times the difference between the fair market value of a common share at the time of exercise and the exercise price of the options. Potential Payments Upon Termination or Change in Control Table The table below sets forth the potential payments that would be due to our named executive officers if they had been terminated on December 31, 2019. We do not provide for any specific payments upon the occurrence of only a change in control. Messrs. Cil, Dunnigan and Kobza and Ms. Granat The amounts Messrs. Cil, Dunnigan, and Kobza and Ms. Granat would have been entitled to receive upon termination of employment on December 31, 2019 due to (1) death or disability, (2) without cause or (3) without cause after a Change in Control would have been governed by: › | the terms of their respective outstanding equity grants under the 2011 Omnibus Plan, the 2012 Omnibus Plan and the 2014 Omnibus Plan. |
Mr. Diaz Sesé
As we did not have an employment agreement in place with Mr. Diaz Sesé as of December 31, 2015,agreements, which are described earlier under the amounts Mr. Diaz Sesé would have been entitled to receive upon termination of employment on December 31, 2015 due to any of these circumstances would be governed by:heading “Compensation Discussion and Analysis – Employment Agreements”;
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› | › | | notice and severance entitlements under applicable Canadian law; |
› | | the 2015 Annual Bonus Program; and |
› | | the terms of his respective outstanding equity grants under the 2011 Omnibus Plan, the 2012 Omnibus Plan and the 2014 Omnibus Plan. |
Programs
BKthe Restaurant Brands International Inc. U.S. Severance Pay Plan. Pursuant to (the “RBI Severance Plan”);
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› | the BK Severance2019 Annual Bonus Program; and |
› | the terms of their respective outstanding equity grants under our 2011 Omnibus Incentive Plan adopted on July 30, 2013, eligible employees whose employment is involuntarily terminated due to reductions in staff, position elimination, facility closing, closure of a business unit or organizational changes or restructuring are entitled to two weeks of severance for every year worked, with a two-week minimum(the “2011 Omnibus Plan”), Amended and capped at five months for employees at the level of vice presidentRestated 2012 Omnibus Incentive Plan (the “2012 Omnibus Plan”) and above. In addition, employees are entitled to receive continued group medical, dental and vision coverage at the active employee rate for the longer of three months or the employee’s severance pay period, subject to certain conditions. The employee’s right to receive these benefits is subject to his or her execution of a general release of claims in favor of BKC and entry into other separation documents. The BK Severance Pay Plan does not apply to TDL or RBI employees in Canada.2014 Omnibus Plan. |
None of the employment agreements with our NEOs permit the employee to terminate for good reason. Mr. Schwartz As of December 31, 2019, Mr. Schwartz was no longer an executive officer. In connection with his transition from Chief Executive Officer to Executive Chairman to anon-employee director, Mr. Schwartz received $52,216 from an inactive retirement plan and the Board approved the conversion of the unvested restricted stock units and performance based restricted stock units previously granted to Mr. Schwartz to an equal number of restricted shares with the same terms and conditions that continue to vest as a result of his continued service on our Board. | | | Page 48| 2020 Proxy Statement | | Restaurant Brands International |
Executive Compensation | | | Page 50| 2016 Proxy Statement | | Restaurant Brands International
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Executive Compensation
Equity Award Agreements.
Bonus Matching Options – Pursuant to the award agreements governing the issuances of our Bonus Matching Options, if the employee’s employment is terminated prior to the vesting date, (i) “Without Cause” or (ii) by reason of the employee’s Retirement or Disability (each as defined in the Award Agreement), the Matching Options shall be deemed to have vested 20% on each December 31 following the grant date. If the employment is terminated by reason of the employee’s death, then (A) with respect to the 2011, 2012 and 2013 Bonus Matching Options, the employee’s beneficiary shall be vested in a number of common shares as if the common shares subject to the option vested 20% on each December 31 following the grant date and (B) with respect to the 2014 Bonus Matching Options granted in 2015 the employee’s beneficiary shall be vested in the number of common shares as if the common shares subject to the option vested 20% on December 31, 2015, 40% on December 31, 2016 and 100% on December 31, 2017.
Mr. Macedo Mr. Macedo’s employment with RBI terminated on March 14, 2020. Pursuant to a separation agreement dated December 27, 2019, the Company agreed to pay Mr. Macedo the gross amount of $103,846 as salary continuation for a period of nine weeks after his termination date. Mr. Macedo will also continue to receive continued health benefits for one year, a payment of approximately $26,000 in connection with his relocation from Canada to Florida and continued tax equalization and tax preparation services for the 2019 and 2020 tax years. Programs RBI Severance Pay Plan. – Pursuant to the RBI Severance Plan adopted on October 21, 2016 and updated on November 1, 2016, eligible employees whose employment is involuntarily terminated due to reductions in staff, position elimination, facility closing, closure of a business unit or organizational changes or restructuring are entitled to two weeks of severance for every year worked, with an eight-week minimum and capped at eight months for employees at the level of vice president and above. In addition, employees are entitled to receive continued group medical, dental and vision coverage at the active employee rate for the longer of three months or the employee’s severance pay period, subject to certain conditions. The employee’s right to receive these benefits is subject to his or her execution of a general release of claims in favor of his or her employer and entry into other separation documents. Equity Award Agreements Bonus Matching Restricted Share Units – Pursuant to the award agreements governing the issuances of our 2018 Bonus Matching RSUs granted in 2019, if the employee’s employment is terminated prior to December 31, 2019 for any reason other than death or disability, all of the Bonus Matching RSUs will be forfeited. If the employee’s employment is terminated on or after (i) December 31, 2017 in the case of the 2015 Bonus Matching RSUs granted in 2016, (ii) December 31, 2018 in the case of the 2016 Bonus Matching RSUs granted in 2017, (iii) December 31, 2019 in the case of the 2017 Bonus Matching RSUs granted in 2018 or (iv) December 31, 2020 in the case of the 2018 Bonus Matching RSUs granted in 2019 (but in each case, prior to the vesting date), (1) “Without Cause” or (2) by reason of the employee’s Retirement (each as defined in the award agreement), the Bonus Matching RSUs shall be deemed to have been vested 40% on the second anniversary of the grant date, 60% on the third anniversary of the grant date, 80% on the fourth anniversary of the grant date and 100% on the fifth anniversary of the grant date. If the employee’s employment is terminated by reason of the employee’s Disability (as defined in the award agreement), the Bonus Matching RSUs shall be deemed to have been vested 20% on each December 31 following the grant date. If the employee’s employment is terminated by reason of the employee’s death, the Bonus Matching RSUs shall be deemed to have been vested 20% on the first anniversary of the grant date, 40% on the second anniversary of the grant date and 100% on the third anniversary of the grant date. Discretionary Stock Options – Pursuant to the award agreements governing the issuances of discretionary stock options if an employee is terminated prior to the vesting date, (i) “Without Cause” or (ii) by reason of the employee’s Retirement or Disability (each as defined in the award agreement), the employee (or such other person who is entitled to exercise the option) shall be vested in the number of common shares as if the common shares subject to the option vested 20% on each of the first through fifth anniversaries of the grant date. If the employment is terminated by reason of the employee’s death, then the employee’s beneficiary shall be vested in the number of common shares as if the common shares subject to the option vested 20% on the first anniversary of the grant date, 40% on the second anniversary of the grant date and 100% on the third anniversary of the grant date. In any such event, the employee, or his or her beneficiary, may exercise the option to the extent vested on the date of termination of service for a period of (1) 90 days, in the case of termination Without Cause or (2) one year, in the case of termination due to death, Retirement or Disability. Performance Based Restricted Share Units – Pursuant to the 2016 PBRSU award agreements with Messrs. Dunnigan and Kobza, if the executive’s employment is terminated on or after February 26, 2019 (but prior to the vesting date), (i) “Without Cause” or (ii) by reason of the employee’s Retirement (each as defined in the award agreement), the PBRSUs shall be deemed to have been vested 30% on February 26, 2019, 40% on February 26, | | | Restaurant Brands International | | 2020 Proxy Statement | Page 49 |
Executive Compensation 2020 and 100% on February 26, 2021. If his employment is terminated by reason of his Disability (as defined in the Award Agreement), the PBRSUs shall be deemed to have been vested 20% on each of the first through fifth anniversaries of the grant date. If his employment is terminated by reason of his death, the PBRSUs shall be deemed to have been vested 20% on February 26, 2017, 40% on February 26, 2018 and 100% on February 26, 2019. Pursuant to the 2018 PBRSU award agreements with Mr. Cil, if the executive’s employment is terminated for any reason (other than death or disability) prior to February 23, 2021, he will forfeit the entire award. If his employment is terminated on or after February 23, 2021 (but prior to the vesting date), (i) “Without Cause”, or (ii) by reason of the employee’s Retirement (each as defined in the award agreement), the PBRSUs shall be deemed to have been vested 50% on February 23, 2021 and 100% on February 23, 2023. If his employment is terminated by reason of his disability, the PBRSUs shall be deemed vested 20% on each of the first through fifth anniversary of the grant date. If his employment is terminated by reason of death, the PBRSUs shall be deemed to have been vested 20% on February 23, 2019, 40% on February 23, 2020 and 100% on February 23, 2021. Pursuant to the 2019 PBRSU award agreements with each of the continuing NEOs, if the executive’s employment is terminated for any reason (other than death or disability) prior to February 23, 2022, he or she will forfeit the entire award. If his or her employment is terminated on or after February 23, 2022 (but prior to the vesting date), (i) “Without Cause”, or (ii) by reason of the employee’s Retirement (each as defined in the award agreement), the PBRSUs shall be deemed to have been vested 50% on February 23, 2022 and 100% on February 23, 2024. If his or her employment is terminated by reason of his or her disability, the PBRSUs shall be deemed vested 20% on each of the first through fifth anniversary of the grant date. If his or her employment is terminated by reason of death, the PBRSUs shall be deemed to have been vested 20% on February 23, 2020, 40% on February 23, 2021 and 100% on February 23, 2022. | | | | | | | | | | | | | | | | | | | | | Executive Name | | Death ($) | | Disability ($) | | Termination without Cause ($) | | Termination without Cause After Change in Control ($) | José Cil | | | | | | | | | | | | | | | | | | | | | Salary | | | | — | | | | | — | | | | | 533,333 | (1) | | | | 533,333 | (1) | Bonus | | | | 1,139,221 | (2) | | | | 1,139,221 | (2) | | | | 1,139,221 | (2) | | | | 1,139,221 | (2) | Option Valuation | | | | 7,347,507 | (3) | | | | 5,125,506 | (4) | | | | 5,125,506 | (4) | | | | 7,347,507 | (5) | Stock Units | | | | 7,204,160 | (6) | | | | 6,256,616 | (6) | | | | 3,080,535 | (7) | | | | 38,473,637 | (9) | Value of Benefits Continuation | | | | — | | | | | — | | | | | 13,200 | (1) | | | | 13,200 | (1) | Total | | | | 15,690,888 | | | | | 12,521,343 | | | | | 9,891,795 | | | | | 47,506,899 | | Matthew Dunnigan | | | | | | | | | | | | | | | | | | | | | Salary | | | | — | | | | | — | | | | | 92,308 | (1) | | | | 92,308 | (1) | Bonus | | | | 489,755 | (2) | | | | 489,755 | (2) | | | | 489,755 | (2) | | | | 489,755 | (2) | Option Valuation | | | | 993,020 | (3) | | | | 863,960 | (4) | | | | 863,960 | (4) | | | | 1,781,100 | (5) | Stock Units | | | | 4,819,308 | (6)(8) | | | | 3,009,959 | (6)(8) | | | | 1,668,857 | (7) | | | | 11,754,519 | (9) | Value of Benefits Continuation | | | | — | | | | | — | | | | | 4,906 | (1) | | | | 4,906 | (1) | Total | | | | 6,302,082 | | | | | 4,363,674 | | | | | 3,119,785 | | | | | 14,122,588 | | Joshua Kobza | | | | | | | | | | | | | | | | | | | | | Salary | | | | — | | | | | — | | | | | 175,000 | (1) | | | | 175,000 | (1) | Bonus | | | | 958,568 | (2)�� | | | | 958,568 | (2) | | | | 958,568 | (2) | | | | 958,568 | (2) | Option Valuation | | | | 7,001,000 | (3) | | | | 5,710,400 | (4) | | | | 5,710,400 | (4) | | | | 7,823,000 | (5) | Stock Units | | | | 28,280,989 | (6)(8) | | | | 17,591,635 | (6)(8) | | | | 10,089,262 | (7) | | | | 44,330,560 | (9) | Value of Benefits Continuation | | | | — | | | | | — | | | | | 3,643 | (1) | | | | 3,643 | (1) | Total | | | | 36,240,557 | | | | | 24,260,603 | | | | | 16,936,873 | | | | | 53,290,771 | | Jill Granat | | | | | | | | | | | | | | | | | | | | | Salary | | | | — | | | | | — | | | | | 366,667 | (1) | | | | 366,667 | (1) | Bonus | | | | 495,431 | (2) | | | | 495,431 | )(2) | | | | 495,431 | (2) | | | | 495,431 | (2) | Option Valuation | | | | 3,678,007 | (3) | | | | 2,548,406 | (4) | | | | 2,548,406 | (4) | | | | 3,883,507 | (5) | Stock Units | | | | 2,402,461 | (6) | | | | 1,837,294 | (6) | | | | 1,725,815 | (7) | | | | 6,500,635 | (9) | Value of Benefits Continuation | | | | — | | | | | — | | | | | 2,871 | (1) | | | | 2,871 | (1) | Total | | | | 6,575,900 | | | | | 4,881,131 | | | | | 5,139,190 | | | | | 11,249,111 | |
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Executive Compensation (1) | Because the employment agreements with our NEOs provide that severance will be determined under the provisions of the policies relating to termination of employment applicable to employees at the executive’s grade level as in effect at the time of termination, these amounts are determined under the RBI Severance Plan. The severance payment for Mr. Cil is 8 months of base pay, the severance payment for Mr. Dunnigan is 10 weeks of base pay, the severance payment for Mr. Kobza is 14 weeks of base pay, and the severance payment for Ms. Granat is 8 months of base pay. |
(2) | Based upon amounts actually paid under the 2019 Annual Bonus Program. In addition, pursuant to their employment agreements and our policy, we will make appropriate tax equalization payments on thesenon-equity incentive compensation amounts to the appropriate authority on behalf of Messrs. Schwartz, Dunnigan and Kobza. These amounts are not included in the amounts shown. |
(3) | In the case of termination for death, options granted in 2015 and thereafter will vest 20%, 40% and 100% on the first, second and third anniversaries of the grant date, respectively, as set forth in the applicable award agreements. Amounts reflect the intrinsic value of shares underlying options that would vest, calculated as the difference between $63.77, the closing price of a common share as reported on the NYSE on December 31, 2019, and the exercise price of the options. |
(4) | In the case of termination Without Cause or (2) one year,for Disability, options will vest in five equal installments as set forth in the caseapplicable award agreements. Amounts reflect the intrinsic value of termination due to death, Retirement or Disability. Discretionary Stock Options – Pursuant toshares underlying options that would vest, calculated as the award agreements governingdifference between $63.77, the issuancesclosing price of a common share as reported on the NYSE on December 31, 2019, and the exercise price of the discretionary stock options granted in 2012, 2013 and 2014 if an employee is terminated prior to the vesting date, (i) “Without Cause” or (ii) by reason of the employee’s Retirement or Disability (each as defined in the Award Agreement), the employee (or such other person who is entitled to exercise the option) shall be vested in the number of common shares as if the common shares subject to the option vested 20% on each of the first through fifth anniversaries of the grant date. If the employment is terminated by reason of the employee’s death, then (A) with respect to discretionary stock options granted in 2012, 2013 and 2014, the employee’s beneficiary shall be vested in a number of common shares as if the common shares subject to the option vested 20% on each of the first through fifth anniversaries of the grant date, and (B) with respect to discretionary stock options granted in 2015 the employee’s beneficiary shall be vested in the number of common shares as if the common shares subject to the option vested 20% on March 6, 2016, 40% on March 6, 2017 and 100% on March 6, 2018. options.
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(5) | In any such event, the employee, or his or her beneficiary, may exercise the option to the extent vested on the date of termination of service for a period of (1) 90 days, in the case of termination Without Cause or (2) one year,within twelve months after a Change in Control (as defined in the 2011 Omnibus Plan, 2012 Omnibus Plan and 2014 Omnibus Plan, as applicable), all outstanding options would vest. Amounts reflect the intrinsic value of shares underlying options that would vest, calculated as the difference between $63.77, the closing price of a common share as reported on the NYSE on December 31, 2019, and the exercise price of the options. |
(6) | In the case of termination due tofor death, Retirement or Disability. | | | Page 51| 2016 Proxy Statement | | Restaurant Brands International
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Executive Compensation
| | | | | | | | | | | | | Executive Name | | Death and Disability ($) | | | Termination without Cause ($) | | | Termination without Cause After Change in Control ($) | | Daniel Schwartz | | | | | | | | | | | | | Salary | | | — | | | $ | 153,846 | (1) | | $ | 153,846 | (1) | Bonus | | $ | 1,950,000 | (2) | | $ | 1,950,000 | (2) | | $ | 1,950,000 | (2) | Option Valuation | | $ | 50,045,440 | (4) | | $ | 50,045,440 | (4) | | $ | 68,087,222 | (5) | Value of Benefits Continuation | | | — | | | $ | 2,756 | (1) | | $ | 2,756 | (1) | | | | | | | | | | | | | | Total | | $ | 51,995,440 | | | $ | 52,152,042 | | | $ | 70,193,824 | | | | | | | | | | | | | | | Joshua Kobza | | | | | | | | | | | | | Salary | | | — | | | $ | 57,692 | (1) | | $ | 57,692 | (1) | Bonus | | $ | 900,000 | (2) | | $ | 900,000 | (2) | | $ | 900,000 | (2) | Option Valuation | | $ | 2,275,502 | (4) | | $ | 2,275,502 | (4) | | $ | 7,193,379 | (5) | Value of Benefits Continuation | | | — | | | $ | 559 | (1) | | $ | 559 | (1) | | | | | | | | | | | | | | Total | | $ | 3,175,502 | | | $ | 3,233,753 | | | $ | 8,151,630 | | | | | | | | | | | | | | | José Cil | | | | | | | | | | | | | Salary | | | — | | | $ | 230,769 | (1) | | $ | 230,769 | (1) | Bonus | | $ | 1,200,000 | (2) | | $ | 1,200,000 | (2) | | $ | 1,200,000 | (2) | Option Valuation | | $ | 36,289,521 | (4) | | $ | 36,289,521 | (4) | | $ | 44,678,287 | (5) | Value of Benefits Continuation | | | — | | | $ | 5,969 | (1) | | $ | 5,969 | (1) | | | | | | | | | | | | | | Total | | $ | 37,489,521 | | | $ | 37,726,259 | | | $ | 46,115,025 | | | | | | | | | | | | | | | Elias Diaz Sesé | | | | | | | | | | | | | Salary | | | — | | | | — | (3) | | | — | (3) | Bonus | | $ | 1,340,160 | (2) | | $ | 1,340,160 | (2) | | $ | 1,340,160 | (2) | Option Valuation | | $ | 18,754,521 | (4) | | $ | 18,754,521 | (4) | | $ | 30,086,194 | (5) | Value of Benefits Continuation | | | — | | | | — | (5) | | | — | (5) | | | | | | | | | | | | | | Total | | $ | 20,094,681 | | | $ | 20,094,681 | | | $ | 31,426,354 | | Heitor Gonçalves | | | | | | | | | | | | | Salary | | | — | | | $ | 96,154 | (1) | | $ | 96,154 | (1) | Bonus | | $ | 1,000,000 | (2) | | $ | 1,000,000 | (2) | | $ | 1,000,000 | (2) | Option Valuation | | $ | 24,183,364 | (4) | | $ | 24,183,364 | (4) | | $ | 27,660,807 | (5) | Value of Benefits Continuation | | | — | | | $ | 3,184 | (1) | | $ | 3,184 | (1) | | | | | | | | | | | | | | Total | | $ | 25,183,364 | | | $ | 25,282,702 | | | $ | 28,760,145 | | | | | | | | | | | | | | |
(1) | Because the employment agreements with Messrs. Schwartz, Kobza and Gonçalves provide that severance will be determined under the provisions of the policies relating to termination of employment applicable to employees at the executive’s grade level as in effect at the time of termination and because Mr. Cil does not have an employment agreement, these amounts are determined under the BK Severance Plan. The severance payment for Messrs. Schwartz and Gonçalves is ten weeks of base pay, the severance payment for Mr. Kobza is six weeks of base pay, and the severance payment for Mr. Cil is five months of base pay. |
(2) | Based upon amounts actually paid under the 2015 Annual Bonus Program. In addition, pursuant to their employment agreements and our policy, we will make appropriate tax equalization payments on these non-equity incentive compensation amounts to the appropriate authority on behalf of Messrs. Schwartz, Kobza, Diaz Sesé, and Gonçalves. These amounts are not included in the amounts shown. |
(3) | Upon termination without cause, Mr. Diaz Sesé would be entitled to his minimum statutory entitlements. In addition, in accordance with his common law entitlements under applicable law, Mr. Diaz Sesé may be entitled to receive an award of reasonable notice or pay in lieu of such notice. The determination of appropriate length of “reasonable notice” under applicable law is a case-by-case analysis that takes into account a number of relevant factors, and as a result, these entitlements, which may be material, cannot be quantified with any specificity. |
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Executive Compensation
(4) | In the case of termination Without Cause, options will vest in five equal installments as set forth in the applicable award agreements. Amounts reflect the intrinsic value of shares underlying options that would vest, calculated as the difference between $37.36, the closing price of a common share as reported on the NYSE on December 31, 2015, and the exercise price of the options. |
(5) | In the case of termination Without Cause within twelve months after a Change in Control (as defined in the 2011 Omnibus Plan, 2012 Omnibus Plan and 2014 Omnibus Plan, as applicable), all outstanding options would vest. Amounts reflect the intrinsic value of shares underlying options that would vest, calculated as the difference between $37.36, the closing price of a common share as reported on the NYSE on December 31, 2015, and the exercise price of the options. |
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Proposal 2
PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by SEC rules, we are asking shareholders to approve,Bonus Matching RSUs will vest 20%, 40% and 100% on a non-binding advisory basis, the 2015 compensation to our named executive officers as described in the “Executive Compensation” section of this proxy statement beginning on page 45. Under the TSX rules this non-binding advisory approvalfirst, second and third anniversary of the 2015 compensation provided to named executive officers is optional. At the 2015 Meeting of Shareholders, our shareholders approved, on an advisory basis, the compensation of our named executive officers.
Shareholders are urged to read the Compensation Discussion and Analysis (“CD&A”) sectiongrant, respectively, as well as the 2015 Summary Compensation Table and related compensation tables and narratives. We believe that compensation is an important tool to further our long-term goal of creating shareholder value. As such, our compensation philosophy is based on pay-for-performance and meritocratic principles, which incorporate our achievement of specific financial goals as well as achievement by employees of individual performance goals. As discussed in detail in the CD&A, our compensation programs are designed to support our business initiatives by:
› | | rewarding superior financial and operational performance; |
› | | placing a significant portion of compensation at risk if performance goals are not achieved; |
› | | aligning the interests of the CEO and the CEO Direct Reports with those of our shareholders; and |
› | | enabling us to attract, retain and motivate top talent. |
The Board of Directors is asking shareholders to cast a non-binding, advisory vote indicating their approval of that compensation by voting FOR the following resolution:
“RESOLVED, that the shareholders of Restaurant Brands International Inc. APPROVE, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth in the applicable award agreements. In the case of termination for Disability, Bonus Matching RSUs will vest in five equal installments as set forth in the applicable award agreements. Amounts reflect the fair market value of $63.77 per share, which is the closing price of a common share as reported on the NYSE on December 31, 2019.
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(7) | In the case of termination Without Cause, Bonus Matching RSUs will vest 40%, 60%, 80% and 100% on the second, third, fourth and fifth anniversary of the grant, respectively, as set forth in the applicable award agreements. Amounts reflect the fair market value of $63.77 per share, which is the closing price of a common share as reported on the NYSE on December 31, 2019. |
(8) | In the case of termination by reason of his Disability, the PBRSUs granted to Messrs. Dunnigan and Kobza will vest in five equal installments as set forth in the applicable award agreement. In the case of termination by reason of death, the PBRSUs granted to Messrs. Dunnigan and Kobza will vest 20%, 40% and 100% on the first, second and third anniversary of the grant, respectively, as set forth in the applicable award agreement. In the case of either termination for death or disability, Messrs. Dunnigan and Kobza would receive a maximum of 65,672 shares and 383,086 shares (including the related dividend equivalent rights), respectively, based on target performance. Amounts reflect the fair market value of $63.77 per share, which is the closing price of a common share as reported on the NYSE on December 31, 2019. |
(9) | In the case of termination Without Cause within twelve months after a Change in Control (as defined in the 2014 Omnibus Plan), all outstanding Bonus Matching RSUs and PBRSUs would vest. In the case of the PBRSUs granted in 2018 to Mr. Cil, the earned amount (including dividend equivalents) of 234,346 shares would vest. In the case of the PBRSUs granted in 2019, the target amount (including dividend equivalents) would vest, which equaled 281,068 shares for Mr. Cil, 102,207 shares for Mr. Dunnigan, 229,964 shares for Mr. Kobza and 51,103 shares for Ms. Granat. Amounts reflect the fair market value of $63.77 per share, which is the closing price of a common share as reported on the NYSE on December 31, 2019. |
| | | Restaurant Brands International Inc.’s 2016 Meeting proxy statement.” | | 2020 Proxy Statement | Page 51 |
CEO Pay Ratio CEO PAY RATIO As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the median annual total compensation of our employees (excluding our CEO) and the annual total compensation of our CEO, Mr. Cil. As of December 31, 2019, our employee population consisted of approximately 6,300 individuals working in locations around the world, including full-time and part-time employees. As permitted by applicable SEC rules, we have elected to use the same median employee identified for purposes of the 2018 pay ratio disclosed in the “CEO Pay Ratio” section of our proxy statement for the 2019 annual meeting of stockholders filed with the SEC on April 30, 2019. There has been no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. To identify the median employee based on our employee population as of December 31, 2018, we calculated the amount of annual total cash compensation paid to all of our employees (other than our CEO). We calculated annual cash compensation using a reasonable estimate of the hours worked during 2018 for hourly employees and the actual salary paid for our salaried employees. We annualized pay for those who commenced work during 2018. We did not make anycost-of-living or other adjustments in identifying the median employee. For 2019, we calculated the 2019 total annual compensation of the median employee in accordance with the requirements of the executive compensation rules for the Summary Compensation Table (Item 402(c)(2)(x) of RegulationS-K). Under this calculation, the median employee’s annual total compensation was $21,295. Utilizing the same executive compensation rules, and based on the amount reported in the “Total” Column of our 2019 Summary Compensation Table in the Executive Compensation section above for our CEO with his base salary annualized as if he became CEO on January 1, 2019, the annual total compensation of our CEO would have been $20,734,818 (including $17,806,250 arising from a performance based restricted stock unit award). The resulting ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 974 to 1. This ratio represents a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. This pay ratio disclosure is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, to apply certain exclusions and to make reasonable estimates that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable with the pay ratio that we have reported. | | | Page 52| 2020 Proxy Statement | | Restaurant Brands International |
Proposal 2 PROPOSAL 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION As required by SEC rules, we are asking shareholders to approve, on anon-binding advisory basis, the 2019 compensation to our named executive officers as described in the “Executive Compensation” section of this proxy statement beginning on page 32. Under the TSX rules, thisnon-binding advisory approval of the 2019 compensation provided to named executive officers is optional. At the 2019 annual general meeting of shareholders, our shareholders approved, on an advisory basis, the compensation of our named executive officers. Shareholders are urged to read the CD&A section as well as the 2019 Summary Compensation Table and related compensation tables and narratives. We believe that compensation is an important tool to further our long-term goal of creating shareholder value. As such, our compensation philosophy is based onpay-for-performance and meritocratic principles, which incorporate our achievement of specific financial goals as well as achievement by employees of individual performance goals. As discussed in detail in the CD&A, our compensation programs are designed to support our business initiatives by: › | rewarding superior financial and operational performance; |
› | placing a non-binding advisory vote. Our Board will considersignificant portion of compensation at risk if performance goals are not achieved; |
› | aligning the interests of the CEO and the CEO Direct Reports with those of our executive compensationshareholders; and |
› | enabling us to have been approved if the proposal receives more votes cast “For” than “Against”. While this vote is advisoryattract, retain and motivate top talent. |
The Board is asking shareholders to cast anon-binding, advisory vote indicating their approval of that compensation by voting FOR the following resolution: “RESOLVED, that the shareholders of Restaurant Brands International Inc. APPROVE, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth in Restaurant Brands International Inc.’s Management Information Circular and Proxy Statement for the 2020 Annual General Meeting of Shareholders.” This is anon-binding advisory vote. Our Board will consider our executive compensation to have been approved if the proposal receives more votes cast “For” than “Against”. While this vote is advisory andnon-binding, our Board of Directors and Compensation Committee will review the voting results and consider shareholder concerns in their continuing evaluation of our compensation program. Recommendation of the Board of Directors The Board of Directors recommends a vote “FOR” adoption of the resolution approving the compensation of our named executive officers. | | | Page 54| 2016 Proxy Statement | | Restaurant Brands International
| | | Restaurant Brands International | | 2020 Proxy Statement | Page 53 |
Proposal 3 PROPOSAL 3 – APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee of the Board of Directors is directly responsible for the appointment, negotiating and setting the compensation, retention and oversight of RBI’s independent registered public accounting firm. To execute this responsibility, the Audit Committee annually reviews KPMG’s qualifications, performance, independence and fees in making its decision whether to engage KPMG. The focus of the process is to select and retain the most qualified firm to perform the annual audit. During the review and selection process, the Audit Committee considers a number of factors, including: › | PROPOSAL 3 – APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTSRecent and historical audit performance, including the results of a management survey concerning KPMG’s service;
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› | The relevant experience, expertise and capabilities of KPMG and the audit engagement team in relation to the nature and complexity of our business; |
› | The Audit CommitteeA review of the Board of Directors is directly responsible for the appointment, negotiatingfirm’s independence and setting the compensation, retentioninternal quality controls;
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› | Any legal or regulatory proceedings that raise concerns about KPMG’s qualifications or ability to continue to serve as our independent auditor, including reports, findings and oversight of RBI’s independent registered public accounting firm. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluationrecommendations of the independent registered public accounting firm’s qualifications, performance and independence and whether the independent registered public accounting firm should be rotated.Public Company Accounting Oversight Board (“PCAOB”); |
› | The Audit Committee has selected,appropriateness of KPMG’s fees for audit and the Board has ratified the selectionnon-audit services; and |
› | The length of KPMG to audit our consolidated financial statements and to serve until the close of the 2017 Annual Meeting of Shareholders. KPMG served as the independent auditors of BKW from 2012 until December 12, 2014 and provided to BKW other audit-related and non-audit services. Since December 12, 2014,time that KPMG has served as our independent auditors and has provided other audit-related and non-audit services to us as shown below. In accordance with SEC rules and KPMG policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to RBI. For lead and concurring review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of RBI’s lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and with management. The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm, is in the best interestbenefits of RBImaintaining a long-term relationship and our shareholders,controls and we are asking our shareholders to vote on a proposal to appointpolicies for ensuring that KPMG as our independent auditors to serve until the close of the 2017 Annual Meeting of Shareholders.remains independent.
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The Audit Committee has selected, and the Board has ratified the selection of, KPMG to audit our 2020 consolidated financial statements and to serve until the close of the 2021 Annual Meeting. KPMG served as the independent auditors of BKW and its predecessors from 1989 until December 12, 2014 and provided to BKW other audit-related andnon-audit services. Since December 12, 2014, KPMG has served as our independent registered public accounting firm and has provided other audit-related andnon-audit services to us as shown below. In accordance with SEC rules and KPMG policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to RBI. For lead audit and audit quality control reviewing partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of RBI’s lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and with management. The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of RBI and our shareholders, and we are asking our shareholders to vote on a proposal to appoint KPMG as our independent auditors to serve until the close of the 2021 Annual Meeting. We expect one or more representatives of KPMG to be present at the Meeting. The representatives will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions from shareholders. | | | Page 54| 2020 Proxy Statement | | Restaurant Brands International |
Proposal 3 The following table presents fees for professional services rendered by KPMG for the audit of our annual consolidated financial statements and the audit of RBI’s internal control over financial reporting (“ICOFR”) for 2019 and 2018. In addition, the table presents fees billed for audit-related services, tax services (which includes tax compliance and tax consulting services) and all other services rendered by KPMG to RBI for 2019 and 2018. | | | | | | | | | | | 2019 | | | 2018 | | | | ($ in thousands) | | | ($ in thousands) | | Audit fees(1) | | $ | 6,226 | | | $ | 5,838 | | Audit-related fees(2) | | | 224 | | | | 211 | | Tax fees | | | | | | | | | Tax compliance fees(3) | | | 4,822 | | | | 4,728 | | Tax consulting fees(4) | | | 12,762 | | | | 14,880 | | | | | | | | | | | Total tax fees | | $ | 17,584 | | | $ | 19,608 | | All other fees(5) | | | — | | | | — | | | | | | | | | | | Total fees | | $ | 24,034 | | | $ | 25,657 | | | | | | | | | | |
(1) | Audit fees primarily consist of fees for the audit of our annualthe consolidated financial statements, ICOFR and the review of the interim condensed quarterly consolidated financial statements. This category also includes fees for 2015statutory audits required by the tax authorities of various countries and accounting consultations, as well as for the auditpreparation and review of RBIdocuments relating to our debt offerings in 2019, including the preparation of comfort letters. |
(2) | Audit-related fees are primarily the fees for financial statement audits of marketing funds and BKW’s financial statementsaccounting consultations related to the evaluation of certain transactions. |
(3) | Tax compliance fees primarily consist of fees for 2014. In addition, the table presents fees billed for audit-related services, tax services (which includes tax compliance services. |
(4) | Tax consulting fees primarily consist of fees for tax planning and tax consulting services)advice, including for the activities described above, and all other services rendered by KPMG to RBI for 2015, to BKW from January 1 to December 12, 2014 and to RBI from December 12 to December 31, 2014. In 2014, we incurred significant tax consultingincludes approximately $12.5 million in fees in connection with the Transactions that closed on December 12, 2014. In 2015, we implemented a seriesTax Cuts and Jobs Act of post-closing transactions that resulted2017 (the “Tax Act”) in changes to our legal2019 and capital structure. In$14.9 million in fees in connection with these transactions, we incurred significant one-time tax consultingthe acquisition of Popeyes and the Tax Act in 2018. |
(5) | All other fees which we do not expect to recur during 2016. Of the tax consultingare fees incurred in 2015 and 2014, $6,530,000 and $8,175,000, respectively, were for services relating to these transactions.other than those in the above categories. | | | | | | | | | | | 2015 | | | 2014 | | | | Services to RBI ($ in thousands) | | | Services to RBI and BKW ($ in thousands) | | Audit fees(1) | | $ | 7,377 | | | $ | 4,306 | | Audit-related fees(2) | | | 695 | | | | 567 | | Tax fees | | | | | | | | | Tax compliance fees(3) | | | 981 | | | | — | | Tax consulting fees(4) | | | 8,508 | | | | 8,175 | | | | | | | | | | | Total tax fees | | $ | 9,489 | | | $ | 8,175 | | All other fees(5) | | | — | | | | 2,822 | | | | | | | | | | | Total fees | | $ | 17,561 | | | $ | 15,870 | | | | | | | | | | |
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Proposal 3
(1) | Audit fees primarily consist of fees for the audit of the consolidated financial statements and the review of the interim condensed quarterly consolidated financial statements. This category also includes fees for statutory audits required by the tax authorities of various countries and accounting consultations. |
(2) | Audit-related fees are primarily the fees for financial statement audits of marketing funds and accounting consultations related to the evaluation of certain transactions. This category included $433,000 of fees for 2015 associated with consents to our registration statements and prospectuses and review of our pro forma financial statements in connection with a secondary equity offering. |
(3) | Tax compliance fees primarily consist of fees for tax compliance services. |
(4) | Tax consulting fees primarily consist of fees for tax planning and advice, including for the activities described above. |
(5) | All other fees are fees for services other than those in the above categories. |
BKW adopted a written charter, pursuant to which its audit committee was required to pre-approve all audit services and permitted non-audit services to be performed by its independent registered public accounting firm. Consistent with the policies and procedures of its written charter, BKW’s audit committee approved all of the services rendered by KPMG during fiscal year 2014, which services ended on December 12, 2014.
Pursuant to our written charter, our Audit Committee pre-approves all audit services and permitted non-audit services to be performed by our independent registered public accounting firm. Consistent with the policies and procedures of our written charter, our Audit Committee approved all of the services rendered by KPMG from December 12, 2014 until December 31, 2015. The Audit Committee has adopted a
KPMG has been RBI’s tax consultant since its formation and organization in Canada. At the time of the Audit Committee’s approval of KPMG’s provision of tax consulting services, the Audit Committee balanced the amount of fees for such work with its belief that KPMG was in the best position to quickly and efficiently advise RBI following the passage of the Tax Act, which resulted in significant changes in United States taxation of US and foreign operations, earnings and intercompany transaction. During 2019, the tax consulting work continued to address the effects of the Tax Act. Following discussions with large shareholders, we began to explore alternative providers for tax consulting services. By the end of 2019, we determined to transition most of our tax advisory work away from KPMG. We expect the proportion of KPMG’s tax consulting fees to audit fees will decrease substantially beginning in 2020. Pursuant to our written charter, our Audit Committeepre-approves all audit services and permittednon-audit services to be performed by our independent registered public accounting firm. Consistent with the policies and procedures of our written charter, our Audit Committee approved all of the services rendered in 2018 and 2019. The Audit Committee has adopted apre-approval policy under which the Audit Committee delegated to its chairman the authority to approve services of up to $500,000 per engagement, subject to approval and ratification by the full Audit Committee at its next scheduled meeting. | | | Page 56| 2016 Proxy Statement | | | Restaurant Brands International | | Restaurant Brands International
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Proposal 3
2020 Proxy Statement AUDIT COMMITTEE REPORT| Page 55 The Audit Committee oversees the accounting and financial reporting processes of RBI on behalf of the Board of Directors. Management has primary responsibility for RBI’s financial statements, financial reporting process and internal controls over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of RBI’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and evaluating the effectiveness of internal controls and issuing reports thereon. The Audit Committee’s responsibility is to select the independent auditors and monitor and oversee the accounting and financial reporting processes of RBI, including RBI’s internal controls over financial reporting, and the audits of the financial statements of RBI.
During the course of 2015 and the first quarter of 2016, the Audit Committee regularly met and held discussions with management and KPMG, the independent registered public accounting firm. In the discussions related to RBI’s audited consolidated financial statements for fiscal 2015, management represented to the Audit Committee that such consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee reviewed and discussed with management and KPMG the audited consolidated financial statements, management’s annual report on internal control over financial reporting and the results of KPMG’s testing and the evaluation of RBI’s internal control over financial reporting.
In fulfilling its responsibilities, the Audit Committee discussed with KPMG those matters required to be discussed by the independent auditors with the Audit Committee under Public Company Accounting Oversight Board Auditing Standard No. 16 (Communications with Audit Committees), as modified or supplemented. In addition, the Audit Committee received from the independent auditors the written disclosures and the letter from KPMG required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with KPMG the firm’s independence. In connection with this discussion, the Audit Committee also considered whether the provision of specific non-audit services by the independent auditor is compatible with maintaining its independence and believes that the services provided by KPMG for 2015 were compatible with, and did not impair, its independence.
Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our annual report on Form 10-K for fiscal year 2015 for filing with the SEC.
This report has been furnished by the members of the Audit Committee:
Paul J. Fribourg, Chair
Martin E. Franklin
Thomas V. Milroy
Alan Parker
April 19, 2016
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings, including this proxy statement, in whole or in part, the Audit Committee Report and the Compensation Committee Report above shall not be incorporated by reference into this proxy statement.
Recommendation of the Board of Directors
The Board of Directors recommends a vote “FOR” the appointment of KPMG as our independent registered public accountants to serve until the close of the 2017 Annual Meeting of Shareholders.
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Proposal 3 | | | Page 57|AUDIT COMMITTEE REPORT The Audit Committee oversees the accounting and financial reporting processes of RBI on behalf of the Board. Management has primary responsibility for RBI’s consolidated financial statements, financial reporting process and internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of RBI’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and evaluating the effectiveness of internal controls and issuing reports thereon. The Audit Committee’s responsibility is to select the independent auditors (subject to approval of the full Board) and monitor and oversee the accounting and financial reporting processes of RBI, including RBI’s internal control over financial reporting, and the audits of the consolidated financial statements of RBI. During the course of 2019 and the first quarter of 2020, the Audit Committee regularly met and held discussions with management and KPMG, the independent registered public accounting firm. In the discussions related to RBI’s audited consolidated financial statements for fiscal 2019, management represented to the Audit Committee that such consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee reviewed and discussed with management and KPMG the audited consolidated financial statements, management’s annual report on internal control over financial reporting and the results of KPMG’s testing and the evaluation of RBI’s internal control over financial reporting. In fulfilling its responsibilities, the Audit Committee discussed with KPMG those matters required to be discussed by the independent auditors with the Audit Committee under Public Company Accounting Oversight Board Auditing Standard No. 1301 (Communications with Audit Committees), as modified or supplemented. In addition, the Audit Committee received from the independent auditors the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with KPMG the firm’s independence. In connection with this discussion, the Audit Committee also considered whether the provision of specificnon-audit services by the independent auditor is compatible with maintaining its independence and believes that the services provided by KPMG for 2019 were compatible with, and did not impair, its independence. Based on these reviews and discussions, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in our annual report on Form10-K for fiscal year 2019 for filing with the SEC and on SEDAR and www.sedar.com. This report has been furnished by the members of the Audit Committee: Ali Hedayat, Chair Paul Fribourg Golnar Khosrowshahi April 27, 2020 Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings, including this proxy statement, in whole or in part, the Audit Committee Report and the Compensation Committee Report above shall not be incorporated by reference into this proxy statement. Recommendation of the Board The Board recommends a vote “FOR” the appointment of KPMG as our independent registered public accounting firm to serve until the close of the 2021 Annual Meeting. 2016 Proxy Statement | | Restaurant Brands International
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Proposal 4
PROPOSAL 4 – AMENDMENTS TO THE 2014 OMNIBUS INCENTIVE PLAN THAT WOULD PERMIT COMMON SHARES NOT USED TO SETTLE AWARDS UNDER PRIOR PLANS TO BE USED UNDER THE 2014 OMNIBUS INCENTIVE PLAN
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Attracting, retaining and motivating specialized talent is critical to achieving our strategic and operating goals, including our goal to increase shareholder value. Equity-based and performance-based compensation issued pursuant to our 2014 Omnibus Plan are key components of our compensation package. We believe that the ability to grant these types of awards allows us to remain competitive in the marketplace and enables us to link executive compensation to performance as well as attract, retain and motivate high-caliber talent dedicated to our long-term growth and success.
Amendments to the 2014 Omnibus Plan
At the Meeting, shareholders will be asked to approve and ratify amendments to our 2014 Omnibus Plan. According to the current terms of the 2014 Omnibus Plan, a maximum of 15 million common shares are available for issuance under the 2014 Omnibus Plan. The proposed amendments would allow the maximum number of common shares to be increased to 15 million plus any common shares that are not used to settle awards issued under the Prior Plans (as defined below).
Such common share increases would not apply with respect to options that are cancelled as a result of the exercise of a related tandem SAR that was issued pursuant to a Tim Hortons Legacy Plan (as defined below).
There are currently 18,769,078 common shares subject to awards issued under the Prior Plans. If none of these awards was settled with shares or through the exercise of a related tandem SAR, then a total of 33,769,078 common shares would be available for issuance under the 2014 Omnibus Plan.
Given that any adjustments pursuant to the proposed amendment will be on a share-for-share basis, when viewed holistically, the total number of shares issuable in aggregate under the 2014 Omnibus Plan and the Prior Plans would not be affected by such adjustments.
The proposed amendments also clarify the authority of the Compensation Committee to provide dividend equivalent rights for purposes of performance awards granted under the 2014 Omnibus Plan.
The full text of the 2014 Omnibus Plan as proposed to be amended and restated is included as Appendix B to this proxy statement. A description of the 2014 Omnibus Plan may be found below under the heading “– Summary of the 2014 Omnibus Incentive Plan.” A description of the Prior Plans is included as Appendix D to this proxy statement.
We are seeking shareholder approval and ratification of the amendments to the 2014 Omnibus Plan in order to comply with NYSE and TSX rules requiring shareholder approval of amendments to equity compensation plans. The amendment and restatement of the 2014 Omnibus Plan has been accepted for filing by the TSX subject to approval at the Meeting as contemplated herein. The amended 2014 Omnibus Plan will become effective only at the time of approval of the resolution at the Meeting.
The Board of Directors is asking shareholders to cast a vote indicating their approval of the amendments to the 2014 Omnibus Plan by voting FOR the following resolution:
“RESOLVED, that (i) the Restaurant Brands International Inc. 2014 Omnibus Incentive Plan as set forth in Appendix B to the management information and proxy statement of Restaurant Brands International Inc. dated
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April 29, 2016 be approved and ratified, and (ii) any one director or officer of the Corporation be and is hereby authorized to do such things and to sign, execute and deliver all documents that such directors and officers may, in his or her discretion, determine to be necessary in order to give full effect to the intent and purpose of this resolution.”
Summary of the 2014 Omnibus Plan
The following is a summary of the 2014 Omnibus Plan, as amended.
The purpose of the 2014 Omnibus Plan
The purpose of the 2014 Omnibus Plan is to attract, retain and reward those employees, directors and other individuals who are expected to contribute significantly to our success, to incentivize such individuals to perform at the highest level, to strengthen the mutuality of interests between such individuals and our shareholders and, in general, to further the best interests of RBI and our shareholders.
Types of awards
The 2014 Omnibus Plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance awards, other stock-based awards, cash-based awards and equity interests.
Plan administration
The 2014 Omnibus Plan is administered by the Compensation Committee of the Board (the “Committee”) or such other committee the Board designates to administer the plan. Subject to the terms of the 2014 Omnibus Plan and applicable law, and the rules of the TSX, the Committee (or its delegate) has the power and authority to, among other things, designate participants and determine the types of awards to be granted, number of shares to be covered and the terms and conditions of those awards. It also has the authority to interpret and administer the 2014 Omnibus Plan and any instrument or agreement relating to the 2014 Omnibus Plan and to make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the 2014 Omnibus Plan. RBI does not provide financial assistance to facilitate the purchase of common shares or the exercise of stock options.
Shares available for awards
With respect to stock appreciation rights settled in shares, upon settlement, only the number of shares delivered to a participant will count against the aggregate and individual share limitations. If any option, stock appreciation right or other stock-based awards granted under the 2014 Omnibus Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares underlying any unexercised award will again be available for the purpose of awards under the 2014 Omnibus Plan. If any shares of restricted stock, performance awards or other stock-based awards denominated in shares awarded under the 2014 Omnibus Plan to a participant are forfeited for any reason, the number of forfeited shares of restricted stock, performance awards or other stock-based awards denominated in shares will again be available for purposes of awards under the 2014 Omnibus Plan. If the amendments to the 2014 Omnibus Plan are approved, then any common shares that are not used to settle awards issued under Prior Plans will become available for purposes of awards under the 2014 Omnibus Plan.
To the extent required by Section 162(m) for awards under the 2014 Omnibus Plan to qualify as “performance-based compensation,” the following individual participant limitations will apply:
| (i) | The maximum number of shares subject to any award for which the grant of such award is subject to the attainment of performance goals will be 2,000,000 shares per type of award provided that the maximum number of shares for all types of awards granted to any participant is 2,000,000 shares during any fiscal year. If a stock appreciation right is granted in tandem with an option, it will apply against the participant’s individual share limitations for both stock appreciation rights and options; |
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Proposal 4 PROPOSAL 4 – SHAREHOLDER PROPOSAL TO REPORT TO SHAREHOLDERS ON RBI’S MINIMUM REQUIREMENTS AND STANDARDS RELATED TO WORKFORCE PRACTICES | (ii) | There are no annual individual share limitations applicable to awards for which the grant, vesting or payment is not subject to the attainment of performance goals; |
| (iii) | The maximum number of shares subject to any performance award which may granted under the 2014 Omnibus Plan to any participant in any fiscal year is 2,000,000 shares; and |
| (iv) | The maximum value of a cash payment made under a performance award which may be granted to any participant in any fiscal year is $10,000,000. |
Eligible participants
Any director, employee or consultant of RBI, its subsidiaries or any of its affiliates is eligible to participate in the 2014 Omnibus Plan. As of the date of this proxy statement, there are approximately 1,281 employees of RBI, its subsidiaries and affiliates and 10 non-employee directors of RBI who are eligible to participate in the 2014 Omnibus Plan. However, only eligible employees of RBI and its subsidiaries are eligible to be granted incentive stock options under the 2014 Omnibus Plan. Eligibility for the grant of awards and actual participation in the 2014 Omnibus Plan is determined by the Committee in its sole discretion.
Description of Awards
Options
Subject to the provisions of the 2014 Omnibus Plan, the Committee is permitted to grant stock options under the 2014 Omnibus Plan. The exercise price per share and terms of each option will be determined by the Committee; provided, however, that the exercise price will not be less than the fair market value of a share on the date that the option is granted. Under the 2014 Omnibus Plan, the fair market value of a share is equal to the last sales price of a common share reported on the TSX (for Canadian participants) or the NYSE (for all participants who are not Canadian participants) on the trading day immediately prior to the grant date. An option will be exercisable only in accordance with the terms and conditions established by the Committee in the award agreement. The Committee fixes the vesting terms it deems appropriate when granting options. In addition, the Committee may, in its discretion, provide that an option may become vested and exercisable in whole or in part, in installments, cumulative or otherwise, for any period of time specified by the Committee and reflected in an award agreement. Under our current form of option award agreement, an optionee has 90 days to exercise his or her vested options after termination of employment without cause, and one year to exercise after retirement, death or disability. Any unvested options will be forfeited upon termination of employment for any reason. The maximum term of an option is ten years. The Committee will fix the term of each option, not to exceed ten years.
For Canadian participants, if the term of an option would otherwise expire during or within 10 business days of the expiration of a blackout period, the term of the option will be extended to the close of business of the tenth business day following the expiration of the blackout period.
Stock appreciation rights
Subject to the provisions of the Omnibus Plan, the Committee is permitted to grant stock appreciation rights (“SARs”) under the 2014 Omnibus Plan. SARs may be granted to participants either alone (“freestanding”) or in addition to other awards granted under the 2014 Omnibus Plan (“tandem”). Except under certain circumstances described in the 2014 Omnibus Plan, a freestanding SAR will not have a term of greater than ten years. In the case of any tandem SAR related to an option, the SAR will not be exercisable until the related option is exercisable and will terminate, and no longer be exercisable, upon the termination or exercise of the related option. Unless it is a substitute award, a freestanding SAR will not have a grant price less than the fair market value of the share on the date of grant.
Restricted stock and restricted stock units
Subject to the provisions of the 2014 Omnibus Plan, the Committee is permitted to grant awards of restricted stock and RSUs under the 2014 Omnibus Plan. Shares of restricted stock and RSUs will be subject
RBI has been advised that a shareholder, the name and shareholdings of which will be furnished promptly to any shareholder upon written or oral request to our Corporate Secretary at our executive offices, intends to submit the following proposal at the Meeting: Supporting Statement: In 2019, the same proposal, filed by the Atkinson Foundation, received a majority vote of independent shareholders. In spite of clearly demonstrated shareholder concern regarding decent work practices in the company’s franchisee operations, the company has not yet provided any of the information requested in the proposal or made any commitment to address these issues. There is broad consensus that good human capital management is important to the bottom line, especially in customer-facing service industries where an employee’s conduct and efficiency are critical to the customer experience. A large body of empirical studies shows that skillful management of human capital is associated with better corporate performance including lower employee turnover, higher productivity and innovation, and better risk mitigation. The widely-publicized response by some Canadian Tim Hortons’ franchisees to Ontario’s minimum wage increase in January 2018 (e.g., clawing back of other employee benefits), as well as related conflicts with Tim Hortons’ franchisee operators over the past few years, and reports from Burger King and Tim Hortons’ employees ofon-call shift scheduling and unpaid overtime, suggest that workforce management questions are contributing to reputation problems for the Tim Hortons’ brand which may affect sales. Restaurant Brands International has noted that decisions by certain franchisees to cut employee benefits, “… do not reflect the values of our brand, the views of our company or the views of the overwhelming majority of . . . restaurant owners” and that “... we are committed to helping them work through these changes.” We are requesting a report on that process. Within a franchise operating model, the success and reputation of Restaurant Brands International’s business depends on a highly-engaged customer-facing workforce and strong franchisor-franchisee relationships. While franchisees have a direct employment relationship and related responsibilities for the workforce, RBI is responsible for providing both standards and expectations of human capital management, and the collaboration required to uphold strong workplace standards including supportive training, development, and appropriate financial arrangements. Establishing minimum requirements and standards for RBI branded operations and franchisees to ensure decent work, and supporting franchisee capacity to provide decent work, would help RBI to ensure that its direct and franchisee workforce is protected. Ultimately, these steps would also help to ensure that the conditions are in place to deliver high levels of customer service and productivity across all RBI operations. RESOLVED: That the board of directors report to shareholders, at reasonable cost and omitting proprietary information, on actions the company is taking to ensure decent work practices are upheld in the company’s franchisee operations, including: | | | Page 60| 2016 Proxy Statement | | RBI’s minimum requirements and standards related to workforce practices (including wages and benefits, working hours and breaks, health and safety, shift scheduling and training) for corporate offices, branded operations and franchisees; Restaurant Brands International
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restrictions that the Committee may impose, including any limitation on the right to vote a share of restricted stock or the right to receive any dividend or dividend equivalent. If deemed necessary, the Committee may require that, as a condition of any grant of restricted stock, the participant will deliver a signed stock power or other instruments of assignment, which would permit transfer to RBI of all or a portion of the shares subject to the RSU in the event that the award is forfeited.
Deferred stock
Under the 2014 Omnibus Plan, the Committee is permitted to grant deferred stock to participants, subject to the conditions that deferred stock will be settled upon expiration of the deferral period specified for an award by the Committee. In addition, deferred stock will be subject to any restrictions on transferability, risk of forfeiture and other restrictions that the Committee may impose and, the Committee, in its discretion, may award dividend equivalents with respect to awards of deferred stock.
Performance awards
The Committee may grant a performance award to a participant payable upon the attainment of specific performance goals. The Committee may grant performance awards that are intended to qualify as “performance-based compensation” under Section 162(m), as well as performance awards that are not intended to qualify. If the performance award is payable in shares of restricted stock, then the shares will be transferable to the participant only upon attainment of the relevant performance goal.
Other awards
The Committee is authorized to grant to participants other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares or factors that may influence the value of shares. The Committee will determine the terms and conditions of such awards.
The Committee is also permitted to grant cash-based awards to participants. In its discretion, the Committee will determine the number of cash-based awards to grant to a participant, the duration of the period during which, and any conditions under which, the cash incentive awards will be eligible to vest or will be forfeited, and any other terms and conditions applicable.
The Committee is also permitted to grant equity interests in any entity with respect to which RBI holds, directly or indirectly, a controlling interest, whether such entity is a corporation, partnership or other entity.
Termination of employment
The Committee may provide, by rule or regulation or in any award agreement, or may determine in any individual case, the circumstances in which awards shall be exercised, vested, paid or forfeited in the event a participant ceases to provide service to the RBI or any affiliate prior to the end of a performance period or exercise or settlement of such award.
Change in control
Unless otherwise provided in an award agreement, in the event of a change in control (as defined in the 2014 Omnibus Plan) a participant’s unvested award will be treated in accordance with one of the following methods as determined by the Committee:
| | | Restaurant Brands International | | | (a) | awards, whether or not vested, will be continued, assumed or have new rights substituted as determined by the Committee; |
2020 Proxy Statement | Page 57 | (b) | the Committee, in its sole discretion, may provide for the purchase of any awards by RBI or an affiliate for an amount of cash equal to the excess of the change in control price of the shares covered by such awards, over the aggregate exercise price of such awards; or |
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Proposal 4 RBI’s programs, activities and financial or operational arrangements to support franchisees in adopting best practices for workforce management; and Systems and key performance indicators used by RBI to evaluate whether its minimum requirements and standards are being upheld in its own and franchisee operations. RBI’s Response: Our Board unanimously recommends that shareholders vote AGAINST this proposal for the following reasons: As one of the world’s largest and fastest-growing quick service restaurant companies, we are, and have always been, committed to acting responsibly and holding ourselves accountable for doing business the right way. RBI branded restaurants operate in a number of provincial, state and federal jurisdictions and markets around the world. Our restaurant owners deeply value their team members and all are required to maintain employment practices that align with local laws. We and our franchisees operate in highly competitive markets for labor and our restaurant owners know that we need to offer a valuable workplace experience to attract and retain talent. While we are committed to protecting and promoting a fair and rewarding work experience at our branded restaurants, we are generally subject to franchise agreements with our franchisees and do not adhere to aone-size-fits-all policy that ignores local market dynamics and applicable laws and regulations. Furthermore, our franchisees, who are independent business owners, are responsible for handling all employment matters, including all policies for benefits and wages, for their restaurants. For these reasons, we do not believe that a report would provide meaningful information to shareholders and would therefore be an inefficient use of resources. RBI respects and supports its franchise owners, who have created meaningful connections with their local communities, their employees and guests. Our mission is to continue to build and maintain great relationships with the best operators in the business. While striving to ensure that all of our franchisees foster and support our Brands’ values each and every day, we must also ensure that franchisees have the flexibility needed to allow them to maintain their competitive position and adapt in an ever-changing economic landscape. Requiring RBI to apply and report onacross-the-board workforce practices would oversimplify the complex human capital management issues at play and could restrict competitive flexibility for our franchisees going forward. | | | Page 58| 2020 Proxy Statement | | Restaurant Brands International |
Proposal 5 PROPOSAL 5 – SHAREHOLDER PROPOSAL TO DEVELOP A COMPREHENSIVE POLICY ON PLASTIC POLLUTION AND SUSTAINABLE PACKAGING AND ISSUE A REPORT TO INVESTORS | (c) | if and to the extent that the approach chosen by the Committee results in an acceleration or potential acceleration of the exercise, vesting or settlement of an award, the Committee may impose such conditions upon the exercise, vesting or settlement of such award as it determines. |
Term of the 2014 Omnibus Plan
No award will be granted under the 2014 Omnibus Plan after ten years from the original effective date for the Omnibus Plan. However, unless otherwise expressly provided in the 2014 Omnibus Plan or in an award agreement, any award granted may extend beyond such date, and the authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate the award, or to waive any conditions or rights under the award, and the authority of the Board to amend the 2014 Omnibus Plan, will extend beyond such date.
Assignability
Awards granted under the 2014 Omnibus Plan may not be sold, pledged or otherwise transferred, other than following the death of a participant by will or the laws of descent. A participant’s beneficiary or estate may exercise vested Options during the applicable exercise period following the death of the participant, subject to the same conditions that would have applied to exercise by the participant.
Amendment
The Board of Directors of RBI may amend, suspend or terminate the 2014 Omnibus Plan and any outstanding Awards granted under the 2014 Omnibus Plan, in whole or in part, at any time, provided that all material amendments to the 2014 Omnibus Plan require the prior approval of the shareholders and must comply with the rules of the TSX. Examples of the types of amendments that the Board is entitled to make without shareholder approval include, without limitation, the following: (i) ensuring continuing compliance with applicable law, the rules of the TSX or other applicable stock exchange rules and regulations or accounting or tax rules and regulations; (ii) minor changes of a “housekeeping” nature; (iii) changing the vesting provision of the 2014 Omnibus Plan or any Award, subject to certain limitations; (iv) waiving any conditions or rights under any award, subject to certain limitations, (v) changing the termination provisions of any award that does not entail an extension beyond the original expiration date thereof; (vi) adding a cashless exercise feature, payable in securities, where such feature provides for a full deduction of the number of underlying shares from the Plan reserve, and any amendment to a cashless exercise provision; (vii) adding a form of financial assistance and any amendment to a financial assistance provision which is adopted; (viii) changing the process by which a participant who wishes to exercise his or her award can do so; and (ix) delegating any and all of the powers of the Committee to administer the 2014 Omnibus Plan to officers of RBI.
No amendment to the 2014 Omnibus Plan requiring the approval of the shareholders of RBI under any applicable securities laws or requirements will become effective until such approval is obtained. In addition, the approval of the holders of a majority of the common shares present and voting in person or by proxy at a meeting of shareholders shall be required for, among other things, an increase in the maximum number of common shares that may be made the subject of awards under the 2014 Omnibus Plan, any adjustment (other than in connection with a stock dividend, recapitalization or other transaction where an adjustment is permitted or required under the 2014 Omnibus Plan) an amendment that reduces or would have the effect of reducing the exercise price of an option or SAR previously granted under the 2014 Omnibus Plan or an extension to the term or an outstanding option or SAR beyond the expiry date thereof. Furthermore, except as otherwise permitted under the 2014 Omnibus Plan, no change to an outstanding award that will adversely impair the rights of a participant may be made without the consent of the participant except to the extent that such change is required to comply with applicable law, stock exchange rules and regulations or accounting or tax rules and regulations.
Section 162(m)
Section 162(m) currently provides that if, in any year, the compensation that is paid to the Chief Executive Officer or to any of the three other most highly compensated executive officers (currently excluding the Chief Financial Officer) exceeds $1,000,000 per person, any amounts that exceed the $1,000,000 threshold will not be deductible
RBI has been advised that several shareholders, the names and shareholdings of which will be furnished promptly to any shareholder upon written or oral request to our Corporate Secretary at our executive offices, intend to submit the following proposal at the Meeting: | | | Page 62| 2016 Proxy Statement | | Restaurant Brands International
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by RBI for U.S. federal income tax purposes, unless the compensation qualifies for an exception to Section 162(m). Certain performance-based awards under plans approved by shareholders are not subject to the deduction limit. Options and SARs that will be awarded under the 2014 Omnibus Plan are intended to be eligible for this performance-based exception.
Sections 409A and 457A
Sections 409A and 457A of the Code impose restrictions on nonqualified deferred compensation. Failure to satisfy these rules will result in accelerated taxation, an additional tax to the holder of the amount equal to 20% of the deferred amount, and a possible interest charge. Stock options granted with an exercise price that is not less than the fair market value of the underlying shares on the date of grant will not give rise to “deferred compensation” for this purpose unless they involve additional deferral features. Stock options that will be awarded under the 2014 Omnibus Plan are intended to be eligible for this exception. In addition, it is intended that the provisions of the 2014 Omnibus Plan comply with Sections 409A and 457A of the Code, and all provisions of the 2014 Omnibus Plan will be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under these rules.
Insider Participation Limit
The number of shares that may be issued under all of RBI’s security-based compensation plans to directors and senior officers of RBI or its subsidiaries, 10% shareholders of RBI, and associates and affiliates of such persons may not exceed 10% of RBI’s issued and outstanding common shares at any time or within a one-year period.
U.S. Federal Income Tax Consequences
The United States federal income tax consequences of the issuance and/or exercise of option awards under the 2014 Omnibus Plan is as follows.
Incentive Stock Options
An incentive stock option results in no taxable income to the optionee or a deduction to RBI at the time it is granted or exercised. However, upon exercise, the excess of the fair market value of the shares acquired over the option exercise price is an item of adjustment in computing the alternative minimum taxable income of the optionee, if applicable. If the optionee holds the shares received as a result of an exercise of an incentive stock option for the later of two years from the date of the grant or one year from the date of exercise, then the gain realized on disposition of the shares is treated as a long-term capital gain. If the shares are disposed of during this period, however (i.e., a “disqualifying disposition”), then the optionee will include into income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares, upon exercise of the option over the option exercise price (or, if less, the excess of the amount realized upon disposition of the shares over the option exercise price). Any additional gain or loss recognized upon the disposition will be recognized as a capital gain or loss by the optionee. In the event of a disqualifying disposition, RBI will be entitled to a deduction, in the year of such a disposition, in an amount equal to the amount includible in the optionee’s income as compensation. The optionee’s tax basis in the shares acquired upon exercise of an incentive stock option is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
Non-Qualified Stock Options
A non-qualified stock option results in no taxable income to the optionee or deduction to RBI at the time it is granted. An optionee exercising a non-qualified stock option will, at that time, realize taxable compensation in the amount equal to the excess of the then fair market value of the shares over the option exercise price. Subject to the applicable provisions of the Code, RBI will be entitled to a deduction for federal income tax purposes in the year of exercise in an amount equal to the taxable compensation realized by the optionee. The optionee’s tax basis in shares received upon exercise is equal to the sum of the option exercise price plus the amount includible in his or her income as compensation upon exercise.
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Any gain (or loss) upon subsequent disposition of the shares will be a long or short-term capital gain to the optionee (or loss), depending upon the holding period of the shares. If a non-qualified option is exercised by tendering previously owned shares in payment of the option price, then, instead of the treatment described above, the following will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the optionee’s basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee will have compensation income equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchanged shares; the optionee’s basis in such excess shares will be equal to the amount of such compensation income, and the holding period in such shares will begin on the date of exercise.
New Plan Benefits
The benefits that will be awarded or paid under the 2014 Omnibus Plan as proposed to be amended and restated cannot currently be determined. Awards granted under the 2014 Omnibus Plan are within the discretion of the Compensation Committee, and the Compensation Committee has not determined future awards or who might receive them. As of April 15, 2016, the closing price of a common share of RBI on the NYSE was $40.04 and the closing price of a common share of RBI on the TSX was C$51.39.
Existing Plan Benefits
The following table summarizes the number of common shares subject to options granted by RBI under the 2014 Omnibus Plan since the consummation of the Transactions in December 2014 through April 1, 2016.
Plastic pollution is a global environmental crisis and Restaurant Brands International has not developed comprehensive packaging sustainability policies to deal with low recycling rates of its packaging and the high volume of plastic waste that ends up in oceans. | | | | | Name and Position
| | Options(1) | | Daniel S. Schwartz
Chief Executive Officer and Director
| | | 666,153 | | Joshua Kobza
Chief Financial Officer
| | | 335,494 | | José Cil
President, BK brand
| | | 327,634 | | Elias Dias Sesé
President, TH brand
| | | 342,476 | | Heitor Gonçalves
Chief Information, People and Performance Officer
| | | 282,418 | | Executive Group
| | | 2,200,512 | | Non-Executive Director Group
| | | 41,409 | | Non-Executive Officer Employee Group
| | | 4,268,093 | |
As our brands Burger King and Tim Hortons have helped to foster a wasteful “to go” disposable packaging culture, plastic pollution of land and water has become an urgent environmental issue. The ocean contains an estimated 150 million tons of plastic, with up to 12 million tons added annually, equivalent to a garbage truck load every minute. Experts predict there will be more plastic than fish by weight in oceans by 2050. In the marine environment, plastic straws, cups, and lids break down into small indigestible particles that birds and marine animals mistake for food, resulting in illness and death. Packaging that degrades waterways can also transfer hazardous chemicals and potentially to humans. (1) | The options reported in this column include discretionary option grants to certain employees of RBI, including Messrs. Schwartz, Kobza, Cil, Diaz Sesé and Gonçalves, as well as matching options to employees who participated in the Bonus Swap Program. For more information about the Bonus Matching Options issued in connection with the 2014 Bonus Swap Program, see the CD&A section above under the heading “2014 Bonus Swap Program.” For more information regarding the discretionary option grants, see the CD&A section above under the heading “Discretionary Equity Grants.” |
Fast food plastic straws, cups and lids are prevalent in street and marine litter. They are among the top 10 items found in beach cleanups. Americans and Canadians use 550 million plastic straws daily, which are not recycled and can harm marine animals. Tim Hortons was cited as the second largest plastic polluter in Greenpeace Canada’s 2018 and 2019 beach cleanup brand audits. | | | Page 64| 2016 Proxy Statement | | Restaurant Brands International
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Prior Plans and Equity Compensation Plan Information
Below is a summary description of the incentive plans of BKW and Tim Hortons that existed prior to December 12, 2014 at which time the obligations for outstanding awards under each incentive plan were assumed by RBI.
BKW
All stock options and RSUs under Burger King Holdings, Inc.’s 2011 Omnibus Incentive Plan (the “2011 Omnibus Plan”) outstanding on June 20, 2012 were assumed by BKW and converted into stock options to acquire common stock and RSUs of BKW, and BKW assumed all of the obligations of Burger King Worldwide Holdings, Inc. under the 2011 Omnibus Plan. On February 14, 2013, the board of directors of BKW unanimously approved the Burger King Worldwide, Inc. Amended and Restated 2012 Omnibus Plan (the “2012 Omnibus Plan”), and the 2012 Omnibus Plan was approved by BKW stockholders at the annual meeting of stockholders held on May 15, 2013. All of the option awards issued during 2014 to the NEOs were granted under the 2012 Omnibus Plan. In connection with the Transactions, RBI assumed the obligations of BKW under the 2011 Omnibus Plan and 2012 Omnibus Plan (together, the “BKW Legacy Plans”) and for all equity awards outstanding under the BKW Legacy Plans. The BKW Legacy Plans were adopted by RBI effective on December 11, 2014 and amended to the extent necessary to reflect such assumption and to comply with TSX requirements.
Tim Hortons
Tim Hortons 2006 Stock Incentive Plan (the “2006 Plan”) and 2012 Stock Incentive Plan (the “2012 Plan” and together with the 2006 Plan, the “Tim Hortons Legacy Plans”) were designed to allow for a broad range of equity-based compensation awards in the form of RSUs, stock options, SARs, dividend equivalent rights, performance awards and share awards. The 2012 Plan was approved by Tim Hortons shareholders at its annual and special meeting of shareholders held on May 10, 2012. The 2012 Plan was adopted as a result of the substantial completion of the 2006 Plan, under which no further awards were granted. Outstanding awards granted under the 2006 Plan will continue to be settled using shares registered under the 2006 Plan. Tim Hortons provided compensation to certain employees under the 2006 Plan and, subsequent to May 10, 2012, the 2012 Plan, in the form of RSUs and stock options with tandem SARs. In connection with the Transactions, RBI assumed the obligations of Tim Hortons under the Tim Hortons Legacy Plans and for each vested and unvested Tim Hortons stock option with tandem SARs that was not surrendered in connection with the Transactions on the same terms and conditions as the original awards, adjusted by an exchange ratio of 2.41. The Tim Hortons Legacy Plans were adopted by RBI effective on December 11, 2014 and amended to the extent necessary to reflect such assumption and to comply with TSX requirements.
The BKW Legacy Plans and Tim Hortons Legacy Plans (together, the “Prior Plans”) have been frozen, and all equity awards issued since the consummation of the Transactions have been issued under the 2014 Omnibus Plan.
The total number of RBI common shares that can be issued from treasury under the Prior Plans and the 2014 Omnibus Plan is as follows:
the 2011 Omnibus Plan pursuant to which 11,940,911 common shares are issuable, representing 5.1% of the issued and outstanding shares of RBI as of March 31, 2016 (2.6% on a fully exchanged basis, assuming that 100% of the outstanding Partnership units are exchanged for RBI common shares);
the 2012 Omnibus Plan pursuant to which 6,026,044 common shares are issuable, representing 2.6% of the issued and outstanding shares of RBI as of March 31, 2016 (1.3% on a fully exchanged basis);
the 2006 Plan pursuant to which 27,538 common shares are issuable, representing 0.01% of the issued and outstanding shares of RBI as of March 31, 2016 (0.006% on a fully exchanged basis);
the 2012 Plan pursuant to which 774,585 common shares are issuable, representing 0.33% of the issued and outstanding shares of RBI as of March 31, 2016 (0.17% on a fully exchanged basis); and
The company does not disclose the extent to which paper and plastic cups are collected and recycled at its brands. Most of the billions of cups our company uses every year end up in landfills. Further, a Canadian media investigation found that significant numbers of Tim Hortons cups collected to be recycled still ended up in the trash. Our company lags competitors. Starbucks has a specific goal for reusable coffee container usage, recycles plastic and paper cups left in its stores, set a deadline for phase out of plastic straws, and uses 10% recycled paper cup fiber. Blue Bottle Coffee plans to phase out all single use beverage cups by the end of 2020. Our brands lack any of these commitments. | | | Page 65| 2016 Proxy Statement | | Restaurant Brands International
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Proposal 4
Burger King has locations in China, Indonesia, and the Philippines, countries suffering some of the worst impacts of the plastic pollution crisis. The company is vulnerable to environmental impacts of business expansion in markets lacking waste management capacity. BE IT RESOLVED: Shareholders request the company issue a report to shareholders, to be prepared at reasonable cost and omitting proprietary information, to develop environmental leadership commitments on plastic pollution and recycling through a comprehensive policy on sustainable packaging. Supporting Statement: Proponent believes the company should evaluate and report on policies and metrics relative to the company’s performance, such as: recycled content and container recycling goals, adopting reusable/refillable beverage mug programs, ensuring thatsingle-use cups collected actually get recycled, eliminatingnon-recyclables such as plastic straws and polystyrene foam, and plans to recycle or compost packaging waste at company restaurants. We believe the requested report is in the best interest of the company and its shareholders. the 2014 Omnibus Plan pursuant to which 8,848,635 common shares are issuable, representing 3.8% of the issued and outstanding shares of RBI as of March 31, 2016 (1.9% on a fully exchanged basis).
Accordingly, an aggregate of 27,617,713 common shares are currently issuable under all security based compensation arrangements, representing 11.85% of the issued and outstanding shares of RBI as of the Record Date (6.0% on a fully exchanged basis).
The total number of equity awards outstanding which will result in common shares being issued and the percentage such common shares represent of RBI’s currently outstanding capital for the Prior Plans and the 2014 Omnibus Plan are as follows:
the 2011 Omnibus Plan pursuant to which 84 option awards (with 11,814,509 options under grant) and 3 restricted stock unit awards (with 126,402 RSUs under grant) are outstanding, representing 5.1% and 0.05% of the issued and outstanding common shares of RBI as of March 31, 2016 (2.7% and 0.03%on a fully exchanged basis);
the 2012 Omnibus Plan pursuant to which 280 option awards (with 5,924,771 options under grant) and 13 restricted stock unit awards (with 101,273 RSUs under grant) are outstanding, representing 2.5% and 0.04% of the issued and outstanding common shares of RBI as of March 31, 2016 (1.3% and 0.02% on a fully exchanged basis);
the 2006 Plan pursuant to which 2 option awards (with 27,538 options under grant) are outstanding, representing 0.01% of the issued and outstanding common shares of RBI as of March 31, 2016 (0.006% on a fully exchanged basis);
the 2012 Plan pursuant to which 33 option awards (with 774,585 options under grant) are outstanding, representing 0.33% of the issued and outstanding common shares of RBI as of March 31, 2016 (0.17% on a fully exchanged basis);
the 2014 Omnibus Plan pursuant to which 398 option awards (with 6,510,014 options under grant) and 314 restricted stock unit awards (with 760,768 RSUs under grant) and 32 performance shares awards (with 1,577,853 performance share units under grant) are outstanding, representing 2.8%, 0.33% and 0.68% of the issued and outstanding common shares of RBI as of March 31, 2016 (1.4%, 0.17% and 0.34% on a fully exchanged basis).
The following table presents information regarding equity awards outstanding under our compensation plans as of December 31, 2015 (amounts in thousands):
| | | | | | | | | | | | | | | (a) | | | (b) | | | (c) | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(1) | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | Equity Compensation Plans Approved by Security Holders | | | 24,016 | | | $ | 16.28 | | | | 9,803 | | Equity Compensation Plans Not Approved by Security Holders | | | — | | | | — | | | | — | | | | | | | | | | | | | | | Total | | | 24,016 | | | $ | 16.28 | | | | 9,803 | | | | | | | | | | | | | | |
(1) | The weighted average exercise price does not take into account the common shares issuable upon outstanding RSUs vesting, which have no exercise price. |
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Proposal 4
Recommendation of the Board of Directors
The Board of Directors recommends a vote “FOR” adoption of the resolution approving the amendments to the 2014 Omnibus Plan.
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Proposal 5
PROPOSAL 5 – SHAREHOLDER PROPOSAL TO ADOPT A WRITTEN BOARD DIVERSITY POLICY
RBI has been advised that OceanRock Investments Inc., 505 Burrard Street, Suite 1920, Vancouver, British Columbia, Canada V7X 1M6, which has indicated it is a beneficial owner of 13,286 common shares, intends to submit the following proposal at the Meeting:
WHEREAS:
Gender diversity is a critical attribute of a well-functioning board and a measure of sound corporate governance. Competing in a global marketplace requires companies to promote and select individuals for leadership positions who will bring diverse perspectives to the decision-making process. Research has demonstrated that companies that have women on the Board of Directors have outperformed their peers that do not.
Recognizing the benefits of gender diversity on corporate boards the Ontario Securities Commission recently made amendments to National Instrument 58-101. These amendments follow a “comply or explain” model and require issuers to make disclosures regarding the number of women on the board and in executive officer positions.
Prior to merging with Burger King to become RBI, Tim Hortons had three women on its twelve-person Board. Post-merger, RBI has no women on its Board of Directors. Furthermore, in its 2015 Management Information Circular RBI notes that it does not have a formal written policy relating to the identification and nomination of women directors nor does it have a formal written diversity policy.
Many of its competitors such as McDonalds, Starbucks, Dunkin’ Brands and Wendy’s have at least two women directors on their boards. As long-term shareholders, we believe that Restaurant Brands International (RBI) will benefit from expanding its recruitment pool and promoting a more diverse board.
| | RBI has said that “although we do not have a formal, written policy relating to the identification and nomination of women directors or a formal, written diversity policy, the NCG Committee seeks a diverse group of director candidates, including diversity with respect to age, gender and ethnic background.” However RBI’s current Nominating and Corporate Governance Committee consists entirely of members of Burger King’s former board of directors. Before becoming RBI, Burger King, which was previously controlled by 3G Capital, had no women on its board of directors either. We therefore believe that the Board needs to adopt a more formal and systematic approach to improving diversity in its ranks.2020 Proxy Statement | Page 59
RESOLVED:
Shareholders request that the Board of Directors:
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Proposal 5 | a) | Adopt and publish a formal, written Board diversity policy by December 2016; and |
RBI’s Response: | b) | Provide to shareholders a report by December 2016, at reasonable cost and omitting proprietary information, which outlines the Board’s plans, timelines, process and activities for increasing gender diversity on the Board of Directors and amongst senior management. We propose that the requested report should also address the number of women in the candidate pool for the most recent recruiting period. |
RBI’s Response
The Board has carefully considered the shareholder proposal and has determined not to make a recommendation either in favor of or opposed to the proposal.
In response to the shareholder proposal, our Board and NCG Committee decided to amend the NCG Committee’s charter and our Governance Guidelines to enhance our new director nomination process in a manner we believe both supports board diversity and is responsive to the concerns outlined in the shareholder
Our Board unanimously recommends that shareholders vote AGAINST this proposal due to our current and ongoing efforts to improve the recyclability of our packaging and the size and use of packaging to reduce our overall carbon footprint. At the end of 2019, we launched an updated Sustainability website that will be updated periodically to provide much of the information requested by the proposal. During 2019, RBI conducted an assessment to identify the most important sustainability issues for our business. We are committed to the simple principle of doing what’s right. As one of the largest restaurant companies in the world, it is both our responsibility and opportunity to advance the issue of sustainability in the food service industry. Our assessment identified packaging and recycling as one of the areas of focus and we are committed to continue our work to advance packaging sustainability by improving materials and reducing overall packaging used. Working closely with our suppliers, we are innovating to reduce our use of packaging, transition to more sustainable materials and help our guests to reuse and recycle. We are starting to make progress on key initiatives, including: Switching fromsingle-use plastics | | | Page 68| 2016Tim Hortons implemented new straw-less lids for cold beverages in Canada and the United States, which use 15% less plastic than the former lid and straw combination and will remove 120 million plastic straws from our supply chain each year. For guests who still require the use of a straw, paper straws are being tested as an alternative in British Columbia and at Tim Hortons Innovation Cafe. Tim Hortons also is transitioning to wooden stir sticks across Canada in 2020, which is expected to remove 186 million plastic stir sticks annually. Globally, Burger King is committed to completely phasing out nonbio-degradable plastic toys from its system by the end of 2025. In the UK, Burger King has already completely removed all plastic toys from its King Junior Meals, estimated to save 320 tons of single use plastic annually. We continue to phase out expanded polystyrene (EPS) foam from all centrally managed guest packaging at Burger King and Popeyes, targeting a requirement by 2021 that markets not use EPS foam for any local guest packaging items. Sourcing fiber-based materials from sustainably managed forests We are committed to sourcing fiber-based packaging from certified or recycled sources. Burger King and Tim Hortons achieved this goal globally in 2019. Popeyes shares this commitment and is working towards achieving this goal by 2021. Increasing the use of recycled content Tim Hortons multi-item paper bags in Canada are now made of 100% recycled fiber. Using materials that are easier to recycle, and facilitating waste diversion One of our waste reduction strategies is to serve guests the food they love in packaging that can be recycled in their local communities. A challenge we face is that some regions lack the necessary facilities to be able to properly recycle all types of plastics. To tackle this challenge, Tim Hortons new hot beverage lid is now made from polypropylene, a material type that is 100% recyclable and accepted in 95% of curbside recycling programs across Canada. We are committed to facilitate access to waste diversion, starting with recycling guest packaging in 100% of Burger King and Tim Hortons restaurants in Canada and the US by 2025. We recognize that addressing the impact we have on our environment is important to our shareholders and imperative for the long-term sustainability of our business. Our website currently contains a description of our progress to date and we intend to regularly communicate our future progress to our shareholders, investors, partners and stakeholders by updating the “Sustainability” section of www.rbi.com. Consequently, we believe we are already providing the type of information requested and do not agree with the shareholder proposal that additional funds be spent on a standalone report to achieve these objectives. | | | Page 60| 2020 Proxy Statement | | Restaurant Brands International
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Proposal 5
proposal. In evaluating prospective new director candidates for recommendation to the Board, our Governance Guidelines, as amended, require the NCG Committee to consider diverse candidates in terms of race, gender, geography, thought, viewpoints, backgrounds, skills, experience, and expertise. Pursuant to the NCG Committee’s charter, as amended, any search firm retained to assist the NCG Committee in seeking new director candidates for the Board will be instructed to seek to include diverse candidates who possess these qualifications and criteria. These qualifications and criteria are aimed at identifying candidates who are diverse with respect to race, gender and background and who also possess the qualifications and attributes that will best perpetuate the success of the business and serve as the foundation for an effective director.
RBI values its diverse and dynamic workforce and promotes a culture of equality and inclusion. This culture extends to our senior leadership team, which currently includes two women executive officers, Jacqueline Friesner, Controller and Chief Accounting Officer, and Jill Granat, General Counsel and Corporate Secretary. We strive to promote this culture and diversity through our hiring, advancement and retention efforts.
While our board has determined not to make a recommendation either in favor of or opposed to the shareholder proposal, we believe that our current practices and recent enhancements to our new director candidate selection process support board diversity.
Recommendation of the Board of Directors
The Board of Directors makes no recommendation regarding this proposal.
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Security Ownership
SECURITY OWNERSHIP
This table shows ownership information for (i) any person or company known by our directors and executive officers to beneficially own, or control or direct, directly or indirectly, 5% or more of our common shares or common shares, preferred shares or Partnership exchangeable units carrying 10% or more of the voting rights attached to that class, (ii) each of our directors and nominees, (iii) each of the executive officers named in the Summary Compensation Table on page 45 and (iv) all directors and executive officers as a group. This information is presented as of March 31, 2016. The percentage ownership under the columns entitled “Common Shares”, “Preferred Shares” and “Partnership Exchangeable Units” specifies the percentage of the applicable class represented by the number of common shares, preferred shares or Partnership exchangeable units so owned, controlled or directed and is based upon 233,004,921 common shares, 68,530,939 preferred shares and 227,365,646 Partnership exchangeable units outstanding as of the close of business on March 31, 2016. The percentage of “Total Voting Power” is calculated (i) assuming that the holders of all of the Partnership exchangeable units properly provide voting instructions and (ii) reflecting the carve-back of voting rights imposed on the preferred shares as discussed in footnote (3) to the table below.
Under SEC rules, “beneficial ownership” for purposes of this table takes into account stock as to which the individual has or shares voting and/or investment power as well as shares that may be acquired within 60 days (such as by exercising vested stock options) and is different from beneficial ownership for purposes of Section 16 of the Exchange Act.
Except as indicated in the footnotes to this table, to the best of our knowledge, the persons and entities named in the table have sole voting and investment power with respect to all common shares, preferred shares or Partnership exchangeable units shown as beneficially owned by them. Except as otherwise indicated, the address of each individual or entity named in this table is c/o Restaurant Brands International Inc., 226 Wyecroft Road, Oakville, Ontario, L6K 3X7, Canada.
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Security Ownership SECURITY OWNERSHIP This table shows ownership information for (i) any person or company known by our directors and executive officers to beneficially own, or control or direct, directly or indirectly, more than 5% of our common shares or more than 5% of the Partnership exchangeable units, (ii) each of our directors and nominees, (iii) each of the executive officers named in the Summary Compensation Table on page 43 and (iv) all directors and executive officers as a group. This information is presented as of March 31, 2020. The percentage ownership under the columns entitled “Common Shares” and “Partnership Exchangeable Units” specifies the percentage of the applicable class represented by the number of common shares or Partnership exchangeable units so owned, controlled or directed and is based upon 300,175,412 common shares, and 165,329,153 Partnership exchangeable units outstanding as of the close of business on March 31, 2020. The percentage of “Total Voting Power” is calculated assuming that the holders of all of the Partnership exchangeable units properly provide voting instructions. Under SEC rules, “beneficial ownership” for purposes of this table takes into account shares as to which the individual has or shares voting and/or investment power as well as shares that may be acquired within 60 days (such as by exercising vested stock options) and is different from beneficial ownership for purposes of Section 16 of the Exchange Act. Except as indicated in the footnotes to this table, to the best of our knowledge, the persons and entities named in the table have sole voting and investment power with respect to all common shares or Partnership exchangeable units shown as beneficially owned by them. Except as otherwise indicated, the address of each individual or entity named in this table is c/o Restaurant Brands International Inc., 130 King Street West, Suite 300, Toronto, Ontario, Canada M5X 1E1. Voting Securities Beneficially Owned | Name of Beneficial Owner | | Common Shares (#) | | % of Class of Common Shares | | Preferred Shares (#) | | % of Class of Preferred Shares | | Partnership Exchangeable Units (#) | | % of Class of Partnership Exchangeable Units | | Total Shares Beneficially Owned (#) | | Total Voting Power (%) | | | Common Shares (#) | | % of Class of Common Shares | | Partnership Exchangeable Units (#) | | % of Class of Partnership Exchangeable Units | | Total Shares Beneficially Owned (#) | | Total Voting Power (%) | | 3G Funds(1) | | | — | | | | — | | | | — | | | | — | | | 218,166,502 | | | 96.0 | % | | 218,166,502 | | | 42.7 | % | | | — | | | | — | | | 149,028,921 | | | 90.1 | % | | 149,028,921 | | | 32.0 | % | | FMR LLC(2) | | 14,945,767 | | | 6.4 | % | | | — | | | | — | | | | — | | | | — | | | 14,945,767 | | | 2.9 | % | | | National Indemnity Company(3) | | 8,438,225 | | | 3.6 | % | | 68,530,939 | | | 100 | % | | | — | | | | — | | | 76,969,164 | | | 11.6 | % | | | Pershing Square Funds(4) | | 38,003,984 | | | 16.3 | % | | | — | | | | — | | | | — | | | | — | | | 38,003,984 | | | 7.4 | % | | | Pershing Square Funds(2) | | | 16,032,121 | | | 5.3 | % | | 3,942,553 | | | 2.4 | % | | 19,974,647 | | | 4.3 | % | Capital World Investors(3) | | | 15,873,173 | | | 5.3 | % | | | — | | | | — | | | 15,873,173 | | | 3.4 | % | Named Executive Officers, Directors and Nominees: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alexandre Behring | | | 313,959 | (5) | | * | | | | — | | | | — | | | | — | | | | — | | | 313,959 | | | † | | | 267,098 | (4) | | * | | | | — | | | | — | | | 267,098 | | | † | | | Marc Caira | | | 221,513 | (6) | | * | | | | — | | | | — | | | | — | | | | — | | | 221,513 | | | † | | | 99,915 | (5) | | * | | | | — | | | | — | | | 99,915 | | | † | | | Martin E. Franklin | | | 11,595 | (7) | | * | | | | — | | | | — | | | | 1,596,485 | (8) | | * | | | 1,608,080 | | | † | | | | João M. Castro-Neves | | | 2,613 | (6) | | * | | | | — | | | | — | | | 2,613 | | | † | | Paul J. Fribourg | | | 268,977 | (9) | | * | | | | — | | | | — | | | | — | | | | — | | | 268,977 | | | † | | | 250,714 | (7) | | * | | | | — | | | * | | | 250,714 | | | † | | | Neil Golden | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 15,662 | (8) | | * | | | | — | | | | — | | | 15,662 | | | † | | | John A. Lederer | | | 55,093 | (10) | | * | | | | — | | | | — | | | | — | | | | — | | | 55,093 | | | † | | | | Thomas V. Milroy | | | 23,231 | (11) | | * | | | | — | | | | — | | | | — | | | | — | | | 23,231 | | | † | | | | Alan Parker | | | 15,393 | (12) | | * | | | | — | | | | — | | | | — | | | | | 15,393 | | | † | | | | Ali G. Hedayat | | | 26,587 | (9) | | * | | | | — | | | | — | | | 26,587 | | | † | | Golnar Khosrowshahi | | | 8,730 | (10) | | * | | | | — | | | | — | | | 8,730 | | | † | | Carlos Alberto Sicupira | | | 948,012 | (13) | | * | | | | — | | | | — | | | | — | | | | — | | | 936,605 | | | † | | | 946,664 | (11) | | * | | | 1,500,000 | (12) | | * | | | 2,446,664 | | | † | | | Roberto Moses Thompson Motta | | | 18,847 | (14) | | * | | | | — | | | | — | | | | — | | | | — | | | 7,440 | | | † | | | 62,251 | (13) | | * | | | | — | | | | — | | | 62,251 | | | † | | | Alexandre Van Damme | | | 5,295,103 | (15) | | 2.3 | % | | | — | | | | — | | | | — | | | | — | | | 5,295,103 | | | 1.0 | % | | 5,444,829 | (14) | | 1.8 | % | | 3,872,142 | (15) | | 2.3 | % | | 9,316,971 | | | 2.0 | % | | Daniel S. Schwartz | | | 878,217 | (16) | | * | | | | — | | | | — | | | 137,996 | | | * | | | 1,016,213 | | | † | | | 1,733,909 | (16) | | * | | | 137,996 | (17) | | * | | | 1,871,905 | | | † | | Maximilien de Limburg Stirum | | | | — | | | * | | | | — | | | * | | | | — | | | † | | Giovanni (John) Prato | | | | — | | | * | | | | — | | | * | | | | — | | | † | | José E. Cil | | | 905,091 | (18) | | * | | | 105,758 | | | * | | | 1,010,849 | | | † | | Matthew Dunnigan | | | 37,297 | (19) | | * | | | | — | | | | — | | | 37,297 | | | † | | Jill Granat | | | 429,354 | (20) | | * | | | 52,965 | | | * | | | 482,319 | | | † | | Joshua Kobza | | | 585,326 | (21) | | * | | | 5,413 | | | * | | | 590,739 | | | † | | Alexandre Macedo | | | 21,184 | * | | | | | — | | | * | | | | — | | | † | | All executive officers and directors as a group (20 persons) | | | | 11,494,348 | (22) | | | 3.8 | % | | | 5,685,911 | | | | 3.4 | % | | | 17,180,259 | | | | 3.7 | % |
| | | Page 70| 2016 Proxy StatementRestaurant Brands International | | Restaurant Brands International2020 Proxy Statement | Page 61
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Security Ownership | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name of Beneficial Owner | | Common Shares (#) | | | % of Class of Common Shares | | | Preferred Shares (#) | | | % of Class of Preferred Shares | | | Partnership Exchangeable Units (#) | | | % of Class of Partnership Exchangeable Units | | | Total Shares Beneficially Owned (#) | | | Total Voting Power (%) | | Joshua Kobza | | | 13,343 | | | | * | | | | — | | | | — | | | | 5,413 | | | | * | | | | 18,756 | | | | † | | | | | | | | | | | José E. Cil | | | 694,822 | (17) | | | * | | | | — | | | | — | | | | 105,758 | | | | * | | | | 800,580 | | | | † | | | | | | | | | | | Luis Heitor De Queiroz Gonçalves | | | 544,032 | (18) | | | * | | | | — | | | | — | | | | 107,478 | | | | * | | | | 651,510 | | | | † | | | | | | | | | | | Elias Diaz Sesé | | | 233,759 | (19) | | | * | | | | — | | | | — | | | | 686 | | | | * | | | | 234,445 | | | | † | | | | | | | | | | | All executive officers and directors as a group (17 persons) | | | 9,867,406 | | | | 4.2 | % | | | — | | | | — | | | | 2,015,879 | | | | * | | | | 11,883,285 | (20) | | | 2.2 | % |
* | Represents beneficial ownership of less than one percent (1%) of the class of outstanding common shares preferred shares or Partnership exchangeable units, as applicable. |
† | Represents beneficial ownership of less than one percent (1%) of the combined voting power of the outstanding common shares preferred shares and Partnership exchangeable units. |
(1) | According to the Schedule 13D (Amendment No. 3)12) filed on December 16, 2015September 26, 2019 by 3G Restaurant Brands Holdings General Partner Ltd., a Cayman Islands exempted company (“3G RBH GP”) and 3G Restaurant Brands Holdings LP, a Cayman Islands limited partnership (“3G RBH”, and together with 3G RBH GP, the “3G Funds”), the 3G Funds own an aggregate of 218,166,502149,028,921 Partnership exchangeable units with voting rights in respect of the common shares on a one vote per unit basis. Each of the 3G Funds shares voting and investment power with respect to all 218,166,502149,028,921 Partnership exchangeable units. The principal business address of the 3G Funds is c/o 3G Capital, Inc., 600 Third Avenue 37th Floor, New York, New York 10016. |
(2) | According to the Schedule 13G filed on February 12, 2016 by FMR LLC (“FMR”), of the 14,945,767 common shares beneficially owned, FMR has (a) sole voting power with respect to 13,988,148 common shares, and (b) sole investment power with respect to all 14,945,767 common shares. Members of the Johnson family, including Abigail P. Johnson, director, vice chairman, chief executive officer and president of FMR, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR, representing 49% of the voting power of FMR. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940 (the “Investment Company Act”), to form a controlling group with respect to FMR. Neither FMR nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The principal business address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. |
(3) | National Indemnity Company, a wholly owned subsidiary of Berkshire Hathaway Inc. (“Berkshire”), holds all 68,530,939 preferred shares RBI is authorized to issue under its Articles of Incorporation. Pursuant to the Securities Purchase Agreement, dated August 16, 2014, between RBI and Berkshire, Berkshire has agreed to vote the number of preferred shares over which it holds voting power in excess of 10% of the total votes attached to all voting shares of RBI in a manner proportionate to the vote of the other holders of the voting shares voting on such matters. Except as otherwise required by law or certain special approval matters, the common shares, the special voting share and the preferred shares vote together as a single class. The principal business address of Berkshire is 3555 Farnam Street, Omaha, Nebraska 68131. |
(4) | According to a Schedule 13G (Amendment No. 5) filed on January 5, 2015February 14, 2020 by Pershing Square Capital Management, L.P., a Delaware limited partnership (“Pershing Square”), PS Management GP, LLC, a Delaware limited liability company (“PS Management”), and William A. Ackman, a citizen of the United States of America. Pershing Square advises the accounts of Pershing Square, L.P., a Delaware limited partnership (“PS”), Pershing Square II, L.P., a Delaware limited partnership (“PS II”), Pershing Square Holdings, Ltd., a limited liability company incorporated in Guernsey (“PSH”), and Pershing Square International, Ltd., a Cayman Islands exempted company (“PS International” and collectively with PS PS II and PSH, the “Pershing Square Funds”). PS Management serves as the general partner of Pershing Square. Mr. Ackman is the Chief Executive Officer of Pershing Square and the managing member of PS Management. EachOf the total amount beneficially owned, each of the Pershing Square, PS Management and Mr. Ackman shares voting and investment power with respect to 16,413,126 common shares and 381,005 Partnership exchangeable units, and Mr. Ackman has sole voting and investment power with respect to 3,561,548 Partnership exchangeable units. The principal business address of Pershing Square is 787 Eleventh Avenue, 9th Floor, New York, New York 10019. |
(3) | According to the Schedule 13G (Amendment No. 1) filed on February 14, 2020 by Capital World Investors (“Capital World”), an investment adviser registered under the Investment Advisers Act of 1940, as amended, and division of Capital Research and Management Company (“CRMC”). Of the 15,873,173 common shares beneficially owned, Capital World has (a) sole voting power with respect to 15,755,372 common shares, and (b) sole investment power with respect to all 38,003,98415,873,173 common shares. According to the Schedule 13G, Capital World divisions of CRMC and Capital International Limited (“CIL”) collectively provide investment management services under the name Capital World Investors. The principal business address of Capital World is 333 South Hope Street, Los Angeles, CA 90071. |
(4) | This amount includes (i) 119,098 RSUs that settle upon termination of board service, of which 115,379 RSUs are held by ABH Investments Holdings Limited (“ABH Investments”) and (ii) 148,000 common shares held by ABH Investments. Mr. Behring is the director and sole equity owner of ABH Investments. Mr. Behring disclaims beneficial ownership of any shares in which he does not have a pecuniary interest. |
(5) | This amount includes 101,854(i) 14,819 RSUs that settle upon termination of board service and 212,105(ii) 17,747 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.2020. |
(6) | This amount represents RSUs that settle upon termination of board service. |
(7) | This amount includes 4,039(i) 60,174 RSUs that settle upon termination of board service, and 200,000(ii) 75,678 common shares issuable pursuant to optionsheld by a corporation of which Mr. Fribourg is the Chairman and tandem stock appreciation rights that are exercisable within 60 days after March 31, 2016. |
(7) | This amount represents RSUsCEO, and (iii) 114,862 common shares held by Mr. Franklin that settle upon termination of board service. |
(8) | Of this amount, 435,016 Partnership exchangeable units are held by RSMA, LLC.Fribourg’s grantor retained annuity trust. Mr. Franklin is the managing member of RSMA, LLC and may be considered to have beneficial ownership of RSMA, LLC’s interests. Mr. FranklinFribourg disclaims beneficial ownership of any shares in which he does not have a pecuniary interest. |
(9)(8) | This amount includes 50,115represents RSUs that settle upon termination of board service and 106,050 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.service. |
(10)(9) | This amount includes 2,6936,587 RSUs that settle upon termination of board service. |
(11)(10) | This amount includes 3,2313,060 RSUs that settle upon termination of board service. |
(12) | This amount represents (i) 14,943 RSUs held by Mr. Parker that settle upon termination of board service, (ii) 150 common shares held by Mr. Parker and (iii) 300 common shares held by Oyster Reach Limited. Mr. Parker is the sole shareholder and director of Oyster Reach Limited. Mr. Parker disclaims beneficial ownership of any shares in which he does not have a pecuniary interest. |
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Security Ownership
(13) | This amount includes (i) 51,46561,524 RSUs that settle upon termination of board service, (ii) 106,050 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016,2020, and (iii) 779,090 common shares held by Lobstertail Corporation and (iv) 11,407 common shares held by LTS Trading Company LLC.CHL Investment Fund Ltd. (“CHL”). Mr. Sicupira is an indirect beneficial owner of equity interests in Lobstertail Corporation.CHL. This amount does not include 11,407 common shares held by LTS Trading Company LLC (“LTS”). Mr. Sicupira has shared voting control over the shares held by LTS Trading Company LLC as one of four managers, where majority consent of the managers is required. Mr. SicupiuraSicupira disclaims beneficial ownership of any shares in which he does not have a pecuniary interest. |
(14)(12) | These Partnership exchangeable units are held by CHL. |
(13) | This amount includes (i) 7,44014,624 RSUs that settle upon termination of board service, (ii) 22,000 shares held by Mr. Thompson Motta’s spouse and (ii)(iii) 25,627 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2020. This amount does not include 11,407 common shares held by LTS Trading Company LLC.LTS. Mr. Thompson Motta has shared voting control over the shares held by LTS Trading Company LLC as one of four managers, where majority consent of the managers is required. He has no pecuniary interest in the shares held by LTS Trading Company LLC. Mr. Thompson Motta disclaims beneficial ownership of any shares in which he does not have a pecuniary interest.LTS. |
(15)(14) | This amount includes 16,978(i) 25,599 RSUs that settle upon termination of board service and 5,278,125(ii) 5,419,230 common shares held by Legacy Participations S.a.r.l. (“Legacy”), which shares are pledged. Legacy is controlled by Societe Familiale d’Investissements.d’Investissements (“SFI”). Mr. Van Damme is an indirect beneficial owner of equity interests in Societe Familiale d’Investissements.SFI. Mr. Van Damme disclaims beneficial ownership of any shares in which he does not have a pecuniary interest. |
(15) | These Partnership exchangeable units are held by Legacy and all are pledged. |
(16) | This amount includes 848,420(i) 1,549 RSUs that settle upon termination of board service, (ii) 416,153 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.2020 and held by Miami Restaurant Holdings LLC (“MRH”), (iii) 53,941 common shares and 407,696 restricted shares held by MRH, and (iv) 854,570 shares held by Ameco Food Holdings LLC (“Ameco”). Mr. Schwartz holds all voting and dispositive power over the securities held by Ameco and MRH. Mr. Schwartz disclaims beneficial ownership of any shares in which he does not have a pecuniary interest. |
(17) | This amount includes 678,735(i) 14,296 Partnership exchangeable units held by MRH and (ii) 123,700 Partnership exchangeable units held by Ameco. |
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Security Ownership (18) | This amount includes 202,634 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.2020. |
(18)(19) | This amount includes 530,26030,000 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.2020. |
(19)(20) | This amount includes 148,470136,277 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.2020. |
(20)(21) | This amount includes 335,494 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2020. |
(22) | Includes in the aggregate (i) 264,353325,309 RSUs that settle upon the termination of board service by respective board members and (ii) 3,160,1681,803,286 common shares issuable pursuant to options that are exercisable within 60 days after March 31, 2016.2020. |
Section 16(a) beneficial ownership reporting compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of the outstanding common shares to file with the SEC reports of their ownership and changes in their ownership of our common shares. Directors, executive officers and greater-than-ten percent shareholders are also required to furnish us with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us and representations that no other reports were required, all of our directors and executive officers complied with all Section 16(a) filing requirements, except that due to administrative oversight, (i) a Form 4 was not timely filed for Mr. Lederer to report a common share purchase transaction, (ii) Form 4s were not timely filed for each of Messrs. Caira, Lederer and Milroy to report that each had received an initial option grant as a director and (iii) Form 4s were not timely filed for each of Messrs. Sicupira and Van Damme to report in each case an indirect common share purchase transaction.
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Other Matters OTHER MATTERS Shareholder Proposals for the 20172021 Annual Meeting RBI is subject to both the rules of the SEC under the Exchange Act and the provisions of the CBCA with respect to shareholder proposals. As indicated under the CBCA and in the rules of the SEC under the Exchange Act, simply submitting a shareholder proposal does not guarantee its inclusion in the proxy statement as compliance with applicable law is a prerequisite for inclusion. A shareholder proposal submitted pursuant to the rules of the SEC under the Exchange Act for inclusion in the proxy statement distributed to shareholders prior to the 20172021 Annual Meeting of Shareholders (other than in respect of the nomination of directors) must be received by us no later than December 30, 2016,31, 2020 and must comply with the requirements of Rule14a-8 of the Exchange Act. The CBCA permits certain eligible shareholders to submit shareholder proposals (including proposals in respect of director nominations) to RBI, which proposals may be included in RBI’s proxy materials. To be considered for inclusion in the proxy materials for the 20172021 Annual Meeting, any such shareholder proposal under the CBCA must be received by us no later than January 29, 2017.28, 2021. Upon receipt of a proposal in compliance with the requirements of the CBCA and which has not been refused by RBI in accordance with the CBCA, RBI will set out such proposal in the proxy statement distributed to shareholders prior to the 20172021 Annual Meeting. Written requests for inclusion of a shareholder proposal pursuant to the rules of the SEC under the Exchange Act or pursuant to the CBCA should be addressed to: Restaurant Brands International Inc., 226 Wyecroft Road, Oakville,130 King Street West, Suite 300, Toronto, Ontario, L6K 3X7, Canada.Canada M5X 1E1. The proposal should be sent to the attention of the Corporate Secretary. Nominations for directors not made in accordance with the shareholder proposal requirements of the CBCA will be considered by RBI’s NCG Committee in accordance with the requirements of our bylaws.by-laws. In accordance with our bylaws,by-laws, shareholder nominations for candidates for election as directors must be delivered to the Corporate Secretary no earlier than February 9, 201711, 2021 and no later than March 11, 2017,12, 2021, provided that in the event that the 20172021 Annual Meeting is held on a date that is not within 30 days before or after the first anniversary of the date of the 2016 Annual and Special Meeting, notice must be delivered to the Corporate Secretary not later than the tenth day following the day on which the first public announcement of the date of the 20172021 Annual Meeting is made. A notice providing a director nomination must include, among other things, (i) the name, age, business and residential address, principal occupation or employment and country of residence of the person who the shareholder proposes to nominate, as well as the class or series and number of shares in our capital that person owns of record or beneficially or that person controls or directs and any other information regarding the nominee required to be disclosed in a proxy statement pursuant to applicable securities laws, and (ii) full particulars regarding any proxy, contract, agreement, arrangement, understanding or relationship pursuant to which the nominating shareholder has a right to vote or direct the voting of any shares of RBI and any other information regarding the nominating shareholder required to be disclosed in a proxy statement pursuant to applicable securities laws. Shareholders should refer to Section 9 of our bylawsby-laws for more details relating to the requirements for such notice. Shareholders wishing to put forward a proposal or nominate a director for election should carefully review the relevant provisions of the Exchange Act, the CBCA and our bylaws.by-laws. The chairman of the meeting may refuse to allow the transaction of any business, or to acknowledge the nomination of any person, not made in compliance with the foregoing procedures. List of Shareholders Entitled to Vote at the Meeting The names of holders of record entitled to vote at the Meeting will be available at our corporate office prior to the Meeting. | | | Page 7364| 20162020 Proxy Statement | | Restaurant Brands International |
Other Matters Expenses Relating to this Proxy Solicitation We will bear the cost of preparing, assembling and delivering the proxy material and of reimbursing brokers, nominees, fiduciaries and other custodians forout-of-pocket and clerical expenses of transmitting copies of the proxy material to the beneficial owners of our stock. A few of our officers and employees may participate in the solicitation of proxies without additional compensation. Communication with our Board of Directors Shareholders and other parties interested in communicating directly with the Chairman of the Board or with thenon-management directors may do so by writing to: Chairman of the Board, c/o Jill Granat, General Counsel and Corporate Secretary, Restaurant Brands International Inc., 226 Wyecroft Road, Oakville,130 King Street West, Suite 300, Toronto, Ontario, L6K 3X7, Canada.Canada M5X 1E1. All communications should include the name, address, telephone number and email address (if any) of the person submitting the communication and indicate whether the person is a shareholder. The Board has approved a process for handling correspondence received by RBI and addressed to the Chairman or tonon-management members of the Board. Under that process, the General Counsel and Corporate Secretary reviews all such correspondence and maintains a log of and forwards copies of correspondence that, in the opinion of the General Counsel and Corporate Secretary, deals with the functions of the Board or committees thereof or that she otherwise determines requires their attention. The General Counsel and Corporate Secretary may screen frivolous or unlawful communications and commercial advertisements. Directors may review the log maintained by the General Counsel and Corporate Secretary at any time. Available Information We maintain an internet website at www.rbi.com. Copies of the committee charters of each of the Audit Committee, Compensation Committee, NCG Committee, Operations and Strategy Committee and Conflicts Committee, together with certain other corporate governance materials, including our Code of Business Ethics and Conduct forNon-Restaurant Employees, Code of Ethics for Executive Officers and Code of Conduct for Directors, can be found under the “Investors – “Investors—Corporate Governance” section of our website at www.rbi.com, and such information is also available in print to any shareholder who requests it through our Corporate Secretary at the address below. Our internet website and information contained therein or incorporated therein is not intended to be incorporated in this proxy statement. We will furnish without charge to each person whose proxy is being solicited, upon request of any such person, a copy of our annual report as filed with the SEC, including the financial statements and schedules thereto, but not the exhibits. Copies of these documents and this proxy statement may be obtained on SEDAR at www.sedar.com or free of charge, through the “Investors – “Investors—Investor Information” section of our website at www.rbi.com. A request for such copies should be directed to Restaurant Brands International Inc., 226 Wyecroft Road, Oakville,130 King Street West, Suite 300, Toronto, Ontario, L6K 3X7, Canada M5X 1E1, Attention: Corporate Secretary. A copy of any exhibit to the 20152019 Form10-K will be forwarded following receipt of a written request with respect thereto addressed to the Corporate Secretary. Financial information relating to RBI is included in the comparative Audited Consolidated Financial Statements for the fiscal year ended December 31, 2015,2019, and the Management’s Discussion & Analysis related thereto contained in theRBI’s Annual Report of RBIon Form10-K for the year ended December 31, 2015.2019. Additional information relating to RBI may be found on SEDAR at www.sedar.com and on the SEC’s website at www.sec.gov. U.S. Householding Some brokers, banks or other intermediaries may be participating in the practice of “householding” our proxy materials. This means that only one copy of the proxy statement and the annual report or the Notice, as applicable, may have been sent to multiple shareholders in the same household. We will promptly deliver separate copies, or one copy (if you currently receive separate copies), of either the proxy materials or the Notice, as applicable, to you if you request them. You can notify us by sending a written request to Restaurant Brands International Inc., 226 Wyecroft Road, Oakville,130 King Street West, Suite 300, Toronto, Ontario, L6K 3X7, Canada M5X 1E1, or by contacting us by telephoneour Transfer Agent at (905) 339-4940.(800)564-6253 (toll free North America) or (514)982-7555 (international direct dial). | | | Page 74| 2016 Proxy StatementRestaurant Brands International | | Restaurant Brands International2020 Proxy Statement | Page 65
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Other Matters Approval by Directors The contents of this proxy statement and the delivery thereof to the shareholders have been approved by the Board of Directors of RBI. | By Order of the Board of Directors Jill Granat General Counsel & Corporate Secretary April 29, 201628, 2020 |
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Appendix A APPENDIX A SUMMARY OF TERMS OF THE SECURITIES OF RBI AND PARTNERSHIP As discussed above, each of RBI and Restaurant Brands International Limited Partnership (“Partnership”) is a reporting issuer in each of the provinces and territories of Canada and, as a result, is subject to Canadian continuous disclosure and other reporting obligations under applicable Canadian securities laws. Partnership has received exemptive relief dated October 31, 2014 from the Canadian securities regulators. This exemptive relief exempts Partnership from the continuous disclosure requirements of National Instrument51-102 –Continuous Disclosure Obligations, effectively allowing Partnership to satisfy its Canadian continuous disclosure obligations by relying on the Canadian continuous disclosure documents filed by RBI, for so long as certain conditions are satisfied. Among these conditions is a requirement that Partnership concurrently send to all holders of the Partnership exchangeable units all disclosure materials that RBI sends to its shareholders and a requirement that Partnership separately report all material changes in respect of Partnership that are not also material changes in respect of RBI. This exemptive relief is also conditioned upon RBI including certain disclosures in its proxy solicitation materials. These disclosures are included throughout this proxy statement, including in this Appendix A. The following summary addresses certain disclosure conditions to the exemptive relief that Restaurant Brands International Limited Partnership (“Partnership”) received from the Canadian securities regulatory authorities. This summary is not complete and is qualified in its entirety by the complete text of the Amended and Restated Limited Partnership Agreement, dated December 11, 2014, between RBI, 8997896 Canada Inc. and each person who is admitted as a Limited Partner in accordance with the terms of the agreement (the “partnership agreement”), the Voting Trust Agreement (the “voting trust agreement”), dated December 12, 2014, between RBI, the Partnership and Computershare Trust Company of Canada (the “trustee”), the Securities Purchase Agreement, dated August 16, 2014, between RBI and Berkshire Hathaway Inc. (“securities purchase agreement”) and RBI’s Articles of Incorporation, as amended, copies of which are available on SEDAR at www.sedar.com and at www.sec.gov. RBI hereby gives notice to all limited partners of the partnership that its address for the purpose of service has changed to 130 King Street West, Toronto, Ontario, Canada M5X 1E1. The Partnership Management: The General Partner RBI is the sole general partner of Partnership (the “General Partner”) and manages all of Partnership’s operations and activities in accordance with the partnership agreement. Subject to the terms of the partnership agreement and the Ontario Limited Partnerships Act, the General Partner has the full and exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership. The partnership agreement provides that, where the General Partner is granted discretion under the partnership agreement in managing Partnership’s operations and activities, the General Partner shall be entitled to consider only such interests and factors as it desires, including its own interests and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of, or factors affecting, Partnership, and will not be subject to any other standards imposed by the partnership agreement, any other agreement, the Ontario Limited Partnerships Act or any other law. Despite the foregoing, the General Partner will only be able to take certain actions (as set forth in the partnership agreement) if the same are approved, consented to or directed by the Conflicts Committee. Capital Structure of Partnership The capital of Partnership consists of three classes of units: the common units, the preferred units and the Partnership exchangeable units. The interest of General Partner is represented by common units and preferred units. The interests of the limited partners are represented by the Partnership exchangeable units.
Appendix A The Partnership Exchangeable Units Summary of Economic and Voting Rights The Partnership exchangeable units are intended to provide economic rights that are substantially equivalent, and voting rights with respect to RBI that are equivalent, to the corresponding rights afforded to holders of our common shares. Under the terms of the partnership agreement, the rights, privileges, restrictions and conditions attaching to the Partnership exchangeable units include the following: › | | The Partnership exchangeable units are exchangeable at any time, at the option of the holder (the “exchange right”), on aone-for-one basis for common shares of RBI (the “exchanged shares”), subject to our right as the general partner (subject to the approval of the Conflicts Committee in certain circumstances) to determine to settle any such exchange for a cash payment in lieu of our common shares. If we elect to make a cash payment in lieu of issuing common shares, the amount of the cash payment will be the weighted average trading price of the common shares on the NYSE for the 20 consecutive trading days ending on the last business day prior to the exchange date (the “exchangeable units cash amount”). Written notice of the determination of the form of consideration shall be given to the holder of the Partnership exchangeable units exercising the exchange right no later than ten business days prior to the exchange date. |
Appendix A
› | | If a dividend or distribution has been declared and is payable in respect of a RBI common share, Partnership will make a distribution in respect of each Partnership exchangeable unit in an amount equal to the dividend or distribution in respect of a common share. The record date and payment date for distributions on the Partnership exchangeable units will be the same as the relevant record date and payment date for the dividends or distributions on our common shares. |
› | | If we issue any common shares in the form of a dividend or distribution on the RBI common shares, Partnership will issue to each holder of Partnership exchangeable units, in respect of each exchangeable unit held by such holder, a number of Partnership exchangeable units equal to the number of common shares issued in respect of each common share. |
› | | If we issue or distribute rights, options or warrants or other securities or assets of RBI to all or substantially all of the holders of our common shares, Partnership is required to make a corresponding distribution to holders of the Partnership exchangeable units. |
› | | No subdivision or combination of our outstanding common shares is permitted unless a corresponding subdivision or combination of Partnership exchangeable units is made. |
› | | We and our board of directors are prohibited from proposing or recommending an offer for our common shares or for the Partnership exchangeable units unless the holders of the Partnership exchangeable units and the holders of RBI common shares are entitled to participate to the same extent and on equitably equivalent basis. |
› | | Upon a dissolution and liquidation of Partnership, if Partnership exchangeable units remain outstanding and have not been exchanged for our common shares, then the distribution of the assets of Partnership between holders of our common shares and holders of Partnership exchangeable units will be made on a pro rata basis based on the numbers of common shares and Partnership exchangeable units outstanding. Assets distributable to holders of Partnership exchangeable units will be distributed directly to such holders. Assets distributable in respect of our common shares will be distributed to us. Prior to this pro rata distribution, Partnership is required to pay to us sufficient amounts to fund our expenses or other obligations (to the extent related to our role as the general partner or our business and affairs that are conducted through Partnership or its subsidiaries) to ensure that any property and cash distributed to us in respect of the RBI common shares will be available for distribution to holders of RBI common shares in an amount per share equal to distributions in respect of each Partnership exchangeable unit. The terms of the Partnership exchangeable units do not provide for an automatic exchange of Partnership exchangeable units into RBI common shares upon a dissolution or liquidation of Partnership or RBI. |
› | | Approval of holders of the Partnership exchangeable units is required for an action (such as an amendment to the Partnership agreement) that would affect the economic rights of an exchangeable unit relative to a RBI common share. |
Appendix A › | The holders of Partnership exchangeable units are indirectly entitled to vote in respect of matters on which holders of our common shares are entitled to vote, including in respect of the election of our directors, through a special voting share of RBI. The special voting share is held by a trustee, entitling the trustee to that number of votes on matters on which holders of RBI common shares are entitled to vote equal to the number of Partnership exchangeable units outstanding. The trustee is required to cast such votes in accordance with voting instructions provided by holders of Partnership exchangeable units. The trustee will exercise each vote attached to the special voting share only as directed by the relevant holder of Partnership exchangeable units and, in the absence of instructions from a holder of an exchangeable unit as to voting, will not exercise those votes. Except as otherwise required by the partnership agreement, voting trust agreement or applicable law, the holders of the Partnership exchangeable units are not directly entitled to receive notice of or to attend any meeting of the unitholders of Partnership or to vote at any such meeting. |
A more detailed description of certain economic, voting and other rights, privileges, restrictions and conditions attaching to the Partnership exchangeable units follows below. For more details, see our Annual Report on Form10-K for the fiscal year ended December 31, 20142019 filed with the SEC.
Appendix A
Voting Rights of Holders of Partnership Exchangeable Units and Statutory Rights with Respect to RBI Voting Rights with Respect to RBI Under the voting trust agreement, RBI has issued one special voting share to the trustee for the benefit of the holders of Partnership exchangeable units (other than RBI and its subsidiaries). The special voting share has the number of votes, which may be cast by the trustee at any meeting at which the holders of RBI common shares are entitled to vote or in respect of any written consent sought by RBI from holders of RBI common shares, equal to the then outstanding number of Partnership exchangeable units (other than Partnership exchangeable units held by RBI and its subsidiaries). Each holder of a Partnership exchangeable unit (other than RBI and its subsidiaries) on the record date for any meeting or shareholder consent at which holders of RBI common shares are entitled to vote is entitled to instruct the trustee to exercise the votes attached to the special voting share for each Partnership exchangeable unit held by the exchangeable unitholder. The trustee will exercise each vote attached to the special voting share only as directed by the relevant holder of Partnership exchangeable units and, in the absence of instructions from a holder of a Partnership exchangeable unit as to voting, will not exercise those votes. A holder of Partnership exchangeable units may, upon instructing the trustee, obtain a proxy from the trustee entitling such holder to vote directly at the meeting the votes attached to the special voting share to which the holder of Partnership exchangeable units is entitled. Notwithstanding the foregoing, in the event that under applicable law any matter requires the approval of the holder of record or the special voting share, voting separately as a class, the trustee will, in respect of such vote, exercise all voting rights: (i) in favor of the relevant matter where the result of the vote of the RBI common shares the RBI preferred shares and the special voting share, voting together as a single class on such matter, was the approval of such matter; and (ii) against the relevant matter where the result of such combined vote was against the relevant matter, provided that in the event of a vote on a proposal to amend the articles of RBI to: (x) effect an exchange, reclassification or cancellation of the special voting share, or (y) add, change or remove the rights, privileges, restrictions or conditions attached to the special voting share, in either case, where the special voting share is permitted or required by applicable law to vote separately as a single class, the trustee will exercise all voting rights for or against such proposed amendment based on whether it has been instructed to cast a majority of the votes for or against such proposed amendment. The voting trust agreement provides that the trustee will mail or cause to be mailed (or otherwise communicate) to the holders of Partnership exchangeable units the notice of each meeting at which the holders of RBI common shares are entitled to vote, together with the related materials and a statement as to the manner in which the holder may instruct the trustee to exercise the votes attaching to the special voting share, on the same day as RBI mails (or otherwise communicates) the notice and materials to the holders of RBI common shares.
Appendix A Statutory Rights with Respect to RBI Wherever and to the extent that the CBCA confers a prescribed statutory right on a holder of voting shares, RBI has agreed that the holders of Partnership exchangeable units (other than RBI and its subsidiaries) are entitled to the benefit of such statutory rights through the trustee, as the holder of record of the special voting share. The prescribed statutory rights set out in the voting trust agreement include rights provided for in sections 21, 103(5), 137, 138(4), 143, 144, 175, 211, 214, 229, 239 and 241 of the CBCA. Upon the written request of a holder of Partnership exchangeable units delivered to the trustee, provided that certain conditions are satisfied, RBI and the trustee will cooperate to facilitate the exercise of such statutory rights on behalf of such holder so entitled to instruct the trustee as to the exercise thereof, such exercise of the statutory right to be treated, to the maximum extent possible, on the basis that such holder was the registered owner of the RBI common shares receivable upon the exchange of the Partnership exchangeable units owned of record by such holder. Offers for Units or Shares The partnership agreement contains provisions to the effect that if a take-over bid is made for all of the outstanding Partnership exchangeable units and not less than 90% of the Partnership exchangeable units (other than units of Partnership held at the date of the take-over bid by or on behalf of the offeror or its associates or
Appendix A
associates) are taken up and paid for by the offeror, the offeror will be entitled to acquire the Partnership exchangeable units held by unitholders who did not accept the offer on the terms offered by the offeror. The partnership agreement further provides that for so long as Partnership exchangeable units remain outstanding, (i) RBI will not propose or recommend a formal bid for RBI’s common shares, and no such bid will be effected with the consent or approval of RBI’s board of directors, unless holders of Partnership exchangeable units are entitled to participate in the bid to the same extent and on an equitably equivalent basis as the holders of RBI’s common shares, and (ii) RBI will not propose or recommend a formal bid for Partnership exchangeable units, and no such bid will be effected with the consent or approval of RBI’s board of directors, unless holders of RBI’s common shares are entitled to participate in the bid to the same extent and on an equitably equivalent basis as the holders of Partnership exchangeable units. Canadian securities regulatory authorities may intervene in the public interest (either on application by an interested party or by staff of a Canadian securities regulatory authority) to prevent an offer to holders of common shares of RBI preferred shares or Partnership exchangeable units being made or completed where such offer is abusive of the holders of one of those security classes that are not subject to that offer. Description of RBI Share Capital The authorized share capital of RBI consists of (i) an unlimited number of RBI common shares, (ii) one special voting share, and (iii) 68,530,939 RBI preferred shares.shares, each of which was redeemed for cancellation and may not be reissued. The following is a summary of the material rights, privileges, restrictions and conditions that attach to RBI’s common shares and special voting share and preferred shares.share. RBI Common Shares Notice of Meeting and Voting Rights Except as otherwise provided by law, the holders of RBI common shares are entitled to receive notice of and to attend all meetings of the shareholders of RBI and will vote together as a single class with the RBI preferred shares and the special voting share. The holders of RBI common shares are entitled to one vote per RBI common share. Dividend and Liquidation Entitlements The holders of RBI common shares are entitled to receive dividends, as and when declared by the board of directors of RBI, in such amounts and in such form as the board of directors of RBI may from time to time determine, subject to the preferential rights of the RBI preferred shares and any other shares ranking prior to the RBI common shares. All dividends declared on the RBI common shares will be declared and paid in equal amounts per share. No dividends will be declared or paid on the RBI common shares except as permitted by the terms of the RBI preferred shares. See “–RBI Preferred Shares – Dividend Entitlements” below.
Appendix A In the event of the dissolution, liquidation orwinding-up of RBI, the holders of RBI common shares shall be entitled to receive the remaining property and assets of RBI after satisfaction of all liabilities and obligations to creditors of RBI, after satisfaction of the RBI preferred share liquidation preference and subject to the preferential rights of any other shares ranking prior to the RBI common shares. Special Voting Share Notice of Meeting and Voting Rights Except as otherwise provided by law, the special voting share shall entitle the holder thereof to vote on all matters submitted to a vote of the holders of RBI common shares at any shareholders meeting of RBI and to exercise the right to consent to any matter for which the written consent of the holders of RBI common shares is sought, and will, with respect to any shareholders meeting or written consent, vote together as a single class with the RBI common shares and RBI preferred shares. The holder of the special voting share shall not be entitled to vote separately as a class on a proposal to amend the articles of amendment of RBI to: (i) increase or decrease the
Appendix A
maximum number of special voting shares that RBI is authorized to issue, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the special voting share; or (ii) create a new class of shares equal or superior to the special voting share. The holder of the special voting share shall be entitled to attend all shareholder meetings of RBI which the holders of RBI common shares are entitled to attend, and shall be entitled to receive copies of all notices and other materials sent by RBI to its holders of RBI common shares relating to such meetings and any consents sought from the holders of common shares. The holder of the special voting share is entitled to that number of votes equal to the number of votes which would attach to the RBI common shares receivable by the holders of Partnership exchangeable units upon the exchange of all Partnership exchangeable units outstanding from time to time (other than the Partnership exchangeable units held by RBI and its subsidiaries), determined as of the record date for the determination of shareholders entitled to vote on the applicable matter or, if no record date is established, the date such vote is taken. See “The Partnership Exchangeable Units – Units—Voting Rights of Holders of Partnership Exchangeable Units and Statutory Rights With Respect to RBI”above. Dividend and Liquidation Entitlements The holder of the special voting share is not entitled to receive dividends and has no entitlements with respect to the property or assets of RBI in the event of the dissolution, liquidation orwinding-up of RBI. Redemption Right At such time as there are no Partnership exchangeable units outstanding, the special voting share shall automatically be redeemed and cancelled for $1 to be paid to the holder thereof. RBI Preferred Shares
Our articles provide that the maximum number of RBI preferred shares that we are authorized to issue is limited to 68,530,939 RBI preferred shares, which is the number of RBI preferred shares issued to National Indemnity Company (a wholly owned subsidiary of Berkshire Hathaway Inc. (“Berkshire”)) in connection with the Transactions pursuant to the securities purchase agreement. The original issue date (the “original issue date”) of these RBI preferred shares is December 12, 2014.
Dividend Entitlements
The holders of the RBI preferred shares are entitled to receive, as and when declared by our board of directors, cumulative cash dividends at an annual rate of 9% on the amount of the purchase price per preferred share, payable quarterly in arrears (“regular quarterly dividends”). Such dividends accrue daily on a cumulative basis, whether or not declared by our board of directors. If any such dividend or make-whole dividend (defined below) is not paid in full on the scheduled payment date or the required payment date, as applicable (the unpaid portion, “past due dividends”), additional cash dividends (“additional dividends”) shall accrue daily on a cumulative basis on past due dividends at an annual rate of 9%, compounded quarterly, whether or not such additional dividends are declared by our Board of Directors.
For each fiscal year of RBI during which any preferred shares are outstanding, beginning with the year that includes the third anniversary of the original issue date of such shares, in addition to the regular quarterly dividends, we are required to pay to the holder of the preferred shares an additional amount (a “make-whole dividend”). The amount of the make-whole dividend is determined by a formula designed to ensure that on an after tax basis the net amount of the dividends received by the holder on the preferred shares from the original issue date is the same as it would have been had we been a U.S. corporation. The make-whole dividend can be paid, at our option, in cash, common shares or a combination of both. If, however, the common shares issued to the holder would be “restricted securities” within the meaning of Rule 144(a)(3) of the Securities Act, such common shares must be covered by an effective registration statement permitting them to be freely tradable. In addition, any common shares so issued will be valued for purposes of the make-whole dividend at 97% of the
Appendix A
average volume weighted average price of our common shares over the five consecutive trading days prior to the delivery of such shares. The make-whole dividends are payable not later than 75 days after the close of each fiscal year starting with the fiscal year that includes the third anniversary of the original issue date. The right to receive the make-whole dividends shall terminate if and at the time that 100% of the outstanding preferred shares are no longer held by Berkshire or any one of its subsidiaries; provided, however, that in the event of a redemption of preferred shares or a liquidation, dissolution or winding up of our affairs, a final make-whole dividend for the year of redemption or liquidation will be computed and paid with respect to all preferred shares subject to the redemption, and in the case of a liquidation, with respect to all preferred shares.
No dividend may be declared or paid on common shares of RBI until a dividend is declared or paid on the RBI preferred shares. In addition, if holders of at least a majority of the outstanding preferred shares have delivered a notice to exercise their right to have RBI redeem the RBI preferred shares, no dividend may be declared or paid on our common shares (except that dividends declared on our common shares prior to the date of such delivery may be paid), unless on the date of such declaration or payment all RBI preferred shares subject to such notice have been redeemed in full.
Redemption
The RBI preferred shares may be redeemed at our option, in whole or in part, at any time on and after the third anniversary of their original issuance on the closing date of the Transactions. After the tenth anniversary of the original issue date, holders of not less than a majority of the outstanding RBI preferred shares may cause us to redeem the RBI preferred shares at a redemption price of 109.9% of the amount of the purchase price per RBI preferred share plus accrued and unpaid dividends and unpaid make-whole dividends. Holders of RBI preferred shares also hold a contingently exercisable option to cause us to redeem their preferred shares at the redemption price in the event of a change in control. In the event that a triggering event (as defined below) is announced, the holders of not less than a majority of the RBI preferred shares may require us, to the fullest extent permitted by law, to redeem all of the outstanding RBI preferred shares of such holders at a price equal to the redemption price for each redeemed share on the date of the consummation of the triggering event. For this purpose, a “triggering event” means the occurrence of one or more of the following: (i) the acquisition of RBI by another entity by means of a merger, amalgamation, arrangement, consolidation, reorganization or other transaction or series of related transactions if RBI’s shareholders constituted immediately prior to such transaction or series of related transactions hold less than 50% of the voting power of the surviving or acquiring entity; (ii) the closing of the transfer, in one transaction or a series of related transactions, to a person or entity (or a group of persons or entities) of RBI’s securities if, after such closing, RBI’s shareholders constituted immediately prior to such transaction or series of related transactions hold less than 50% of the voting power of RBI or its successor; or (iii) a sale, license or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of RBI. Once a RBI preferred share has been redeemed in full, it must be cancelled and may not be reissued.
Voting Rights
Except as otherwise provided by law, the holders of RBI preferred shares are entitled to (i) receive notice of and to attend all meetings of the shareholders of RBI that the holders of the RBI common shares and the special voting share are entitled to attend, (ii) receive copies of all notices and other materials sent by RBI to its shareholders relating to such meetings, and (iii) vote at such meetings. At any such meeting, the holders of the RBI preferred shares are entitled to cast one vote for each RBI preferred share entitled to vote. In addition, Berkshire has agreed with RBI that (i) with respect to preferred shares representing 10% of the total votes attached to all voting shares of RBI, Berkshire may vote such shares with respect to matters on which it votes as a class with all RBI voting shares, in any manner it wishes and (ii) with respect to preferred shares representing in excess of 10% of the total votes attached to all voting shares of RBI, Berkshire will vote such shares with respect to matters on which it votes as a class with all RBI voting shares, in a manner proportionate to the manner in which the other holders of voting shares voted in respect of such matter. This voting agreement does not apply with respect to special approval matters.
Appendix A
Except as otherwise required by law or the special approval matters described in the next paragraph below, the RBI common shares, the special voting share and the RBI preferred shares shall vote together as a single class.
So long as any RBI preferred shares are outstanding, the vote or consent of the holders of a majority of the outstanding RBI preferred shares, separately as a class, shall be necessary for effecting or validating any of the following matters (“special approval matters”):
› | | Authorization, Creation or Issuance of Shares of RBI. Any amendment or alteration of the articles of amendment of RBI to (i) authorize or create, or increase the authorized amount of, any shares of any class or series of shares of RBI, or the issuance of any shares of any class or series of shares of RBI, in each case, ranking senior to or equally with the RBI preferred shares with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of RBI, or having or sharing any voting or consent rights with respect to any special approval matter or (ii) decrease the authorized amount of RBI common shares; |
› | | Authorization or Issuance of Additional RBI Preferred Shares or Certain Other Shares. The authorization or issuance of (or obligation to issue) (i) any RBI preferred shares in addition to the RBI preferred shares authorized and issued on the original issue date, (ii) any shares of any class or series of shares of RBI ranking equally with or senior to the RBI preferred shares with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of RBI, or (iii) any shares of any class or series of shares of RBI that is not perpetual and has a term that ends on or before the eleventh anniversary of the original issue date, or provides for mandatory redemption thereof on any date on or before the eleventh anniversary of the original issue date, or provides for any right of the holder thereof to put such shares to RBI or otherwise cause or require the purchase of such shares by RBI on or before the eleventh anniversary of the original issue date, or that is convertible or exchangeable into any of the foregoing; |
› | | Amendments. Any amendment, alteration or repeal of any provision of the terms of the RBI preferred shares set out in the articles of amendment of RBI or other amendment, alteration or repeal of the articles of amendment or bylaws of RBI that affects or changes the rights, preferences, privileges or powers of the RBI preferred shares; and |
› | | Share Exchanges, Reclassifications, Mergers, Amalgamations and Consolidations. Any consummation of a share exchange or reclassification involving the RBI preferred shares, or of a merger, amalgamation, arrangement or consolidation of RBI with another corporation or other entity, unless as a result thereof (x) the RBI preferred shares remain outstanding or are converted into or exchanged for preference securities of the surviving entity with rights, preferences, privileges and powers substantially identical to those of the RBI preferred shares, and (y) there is no other class or series of equity outstanding that would not be permitted to be issued and outstanding as described under “Ranking” below or the issuance of which would be a special approval matter if the same were to be issued by RBI on the date of consummation of such exchange, reclassification, merger, amalgamation, arrangement or consolidation (provided, that if pursuant to such transaction the holders of RBI preferred shares hold preference securities in a surviving entity, the equity of such surviving entity shall also comply with the requirements of this clause (y)). |
No other class or series of shares of RBI shall have or share any voting or consent rights with the holders of RBI preferred shares with respect to any special approval matter.
Transfer
The RBI preferred shares are subject to restrictions on transfer. Berkshire has agreed in the securities purchase agreement that, until the fifth anniversary of the closing of the Transactions, it may not transfer the RBI preferred shares without the consent of the holders of at least 25% of the RBI common shares (except to a subsidiary in which it owns at least 80% of the equity interests). On or after such fifth anniversary, Berkshire (or any such subsidiary) may transfer the RBI preferred shares provided that any such transfer must be in minimum increments of at least $600,000,000 of aggregate liquidation value.
Appendix B APPENDIX B RESTAURANT BRANDS INTERNATIONAL INC.
2014 OMNIBUS INCENTIVE PLAN (AS PROPOSED TO BE AMENDED AND RESTATED)
Amended and Restated June 9, 2016
Section 1. Purpose. The purpose of the Restaurant Brands International Inc. 2014 Omnibus Incentive Plan is to attract, retain and reward those employees, directors and other individuals who are expected to contribute significantly to the success of the Company and its Affiliates, to incentivize such individuals to perform at the highest level, to strengthen the mutuality of interests between such individuals and the Company’s stockholders and, in general, to further the best interests of the Company and its shareholders.
Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:
“Act” shall mean the Securities Exchange Act of 1934, as amended. Reference to a specific section of the Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
“Affiliate” shall mean: (i) any entity that, directly or indirectly, controls (as well as is controlled by or under common or joint control with) the Company; or (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee; provided that, unless otherwise determined by the Committee, the Shares subject to any Options or SAR that are granted to a service provider of an Affiliate constitutes “service recipient stock” for purposes of Section 409A of the Code or otherwise does not subject the Award to the excise tax under Section 409A of the Code.
“Award” shall mean any Option, Stock Appreciation Right, award of Restricted Stock, Restricted Stock Unit, Deferred Stock, annual or long-term Performance Award, Other Stock-Based Award or Cash-Based Award granted under the Plan, which may be denominated or settled in Shares, cash, equity interests in any entity with respect to which the Company holds, directly or indirectly, a controlling interest, whether such entity is a corporation, partnership or other entity, or in such other forms as provided for herein. All Awards shall be granted by an Award Agreement.
“Award Agreement” shall mean the agreement (whether in written or electronic form) or other instrument or document evidencing any Award granted under the Plan, which may, but need not, be executed or acknowledged by a Participant.
“Beneficiary” shall mean a person or persons entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of the Participant’s death. If no such person is named by a Participant, such individual’s Beneficiary shall be the individual’s estate.
“Blackout Period” means a period when the Participant is prohibited from trading in the Company’s securities pursuant to securities regulatory requirements or the Company’s insider trading policy or other applicable policy or requirement of the Company.
“Board” shall mean the board of directors of the Company.
“Cash-Based Award” means an Award granted pursuant to Section 11 of the Plan and payable in cash at such time or times and subject to such terms and conditions as determined by the Committee in its sole discretion.
Appendix B
“Change in Control” shall mean the occurrence of:
(i) any “person” (as defined in Section 13(d) of the Act) (other than the Company, its Affiliates or an employee benefit plan or trust maintained by the Company or its affiliates, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Shares of the Company) becoming the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of more than 50% of the combined voting power of the Company’s then outstanding securities (excluding any “person” who becomes such a beneficial owner (x) in connection with a transaction described in clause (A) of paragraph (ii) below or (y) in connection with a distribution to them in their capacity as a member or partner (whether general or limited partners) in 3GRestaurant Brands Holdings LP, a limited partnership formed under the laws of the Cayman Islands (“3G”));
(ii) the consummation of (A) a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or any parent thereof) more than 20% of the combined voting power or the total fair market value of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in paragraph (i) of this definition) acquires more than 50% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control of the Company; or
(iii) a complete liquidation or dissolution of the Company or the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the Company; other than such liquidation, sale or disposition to a person or persons who beneficially own, directly or indirectly, more than 20% of the combined voting power of the outstanding voting securities of the Company at the time of the sale.
Notwithstanding the foregoing, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. Any reference to any section of the Code shall also be a reference to any successor provision and any treasury regulation promulgated thereunder.
“Committee” shall mean the Compensation Committee of the Board or such other committee as may be designated by the Board. If the Board does not designate the Committee, references herein to the “Committee” shall refer to the Board.
“Company” shall mean Restaurant Brands International Inc.
“Consultant” means a person or corporation engaged by the Company to provide services for an initial, renewable or extended period of 12 months or more.
“Covered Employee” means an individual who is (i) a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto and (ii) any individual who is designated by the Committee, in its discretion, at the time of any Award or at any subsequent time, as reasonably expected to be a “covered employee” with respect to the taxable year of the Company in which any applicable Award will be paid.
“Deferred Stock” shall mean a right to receive Shares or other Awards or a combination thereof at the end of a specified deferral period, granted under Section 9.
Appendix B
“Dividend Equivalent” means a right, granted to a Participant under the plan, to receive cash, shares, other Awards or other property equal in value to dividends paid with respect to Shares.
“Effective Date” shall mean the “Closing Date” as defined in the Arrangement Agreement dated August 26, 2014 among the Company, Burger King Worldwide, Inc. and Tim Hortons Inc.
“Fair Market Value” means, for purposes of the Plan, unless otherwise required by any applicable provision of the Code, any regulations issued thereunder or other applicable law, as of any date and except as provided below, the last sales price reported for the Shares on the applicable date: (i) as reported on the TSX, in the case of a Canadian Participant; or (ii) the NYSE in the case of a U.S. Participant or other Participant who is not a Canadian Participant; or (iii) if the Shares are not traded, listed or otherwise reported or quoted, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate taking into account the requirements of Section 409A of the Code and any other applicable law. For purposes of the grant of any Award, the applicable date shall be the trading day immediately prior to the date on which the Award is granted. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or its designee, as applicable, or, if not a day on which the applicable market is open, the next day that it is open.
“Incentive Stock Option” shall mean an option representing the right to purchase Shares from the Company, granted under and in accordance with the terms of Section 6, that is intended to be and is designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.
“NYSE” means the New York Stock Exchange.
“Non-Qualified Stock Option” shall mean an option representing the right to purchase Shares from the Company, granted under and in accordance with the terms of Section 6, that is not an Incentive Stock Option.
“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
“Other Stock-Based Award” means an Award granted pursuant to Section 11 of the Plan.
“Participant” shall mean the recipient of an Award granted under the Plan.
“Performance Award” means an Award granted pursuant to Section 10 of the Plan.
“Performance Goals” means goals established by the Committee as contingencies for Awards to vest and/ or become exercisable or distributable based on one or more of the performance goals set forth in Exhibit A hereto.
“Performance Period” means the period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any Performance Goals specified by the Committee with respect to such Award are measured or must be satisfied.
“Plan” shall mean the Restaurant Brands International Inc. 2014 Omnibus Incentive Plan, as the same may be amended from time to time.
“Prior Plan Award” shall mean a grant of a restricted stock unit, an option or other stock based award granted under a Prior Plan.
“Prior Plans” shall mean the Company’s 2006 Stock Incentive Plan, the Company’s 2012 Stock Incentive Plan, the Company’s 2011 Omnibus Incentive Plan, and the Company’s Amended and Restated 2012 Omnibus Incentive Plan, each as amended effective as of the Effective Date.
“Restricted Stock” shall mean any Share granted under Section 8.
“Restricted Stock Unit” shall mean a contractual right granted under Section 8 that is denominated in Shares. Each Restricted Stock Unit represents a right to receive one Share or the value of one Share upon the terms and conditions set forth in the Plan and the applicable Award Agreement.
Appendix B
“Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Act as then in effect or any successor provision.
“SAR” or “Stock Appreciation Right” shall mean any right granted to a Participant pursuant to Section 7 to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right on the date of grant, or if granted in connection with an outstanding Option on the date of grant of the related Option, as specified by the Committee in its sole discretion, which, except in the case of Substitute Awards or in connection with an adjustment provided in Section 5(c), shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be.
“Securities Act” means the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
“Service” shall mean the active performance of services for the Company or an Affiliate by a person who is an employee or director of the Company or an Affiliate. Notwithstanding the foregoing, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a termination of “Service” under the Plan for purposes of payment of such Award unless such event is also a “separation from service” within the meaning of Section 409A of the Code.
“Shares” shall mean shares of the common stock of the Company.
“Subsidiary” shall mean any corporation of which stock representing at least 50% of the ordinary voting power is owned, directly or indirectly, by the Company.
“Substitute Awards” shall mean Awards granted in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by the Company or with which the Company combines.
“Transfer” means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in any entity), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). “Transferred” and “Transferable” shall have a correlative meaning.
“TSX” means the Toronto Stock Exchange.
Section 3. Eligibility.
(a) Any employee, director, Consultant or other advisor of, or any other individual who provides services to, the Company or any Affiliate, shall be eligible to be selected to receive an Award under the Plan. Notwithstanding the foregoing, only eligible employees of the Company, its subsidiaries and its parent (as determined in accordance with Section 422(b) of the Code) are eligible to be granted Incentive Stock Options under the Plan. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee in its sole discretion.
(b) An individual who has agreed to accept employment by the Company or an Affiliate shall be deemed to be eligible for Awards hereunder as of the date of such acceptance; provided that vesting and exercise of Awards granted to such individual are conditioned upon such individual actually becoming an employee of the Company or an Affiliate.
(c) Holders of Options and other types of Awards granted by a company acquired by the Company or with which the Company combines are eligible for grant of Substitute Awards hereunder.
Appendix B
Section 4. Administration.
(a) The Plan shall be administered by the Committee. The Committee shall be appointed by the Board and shall consist of not less than two directors. To the extent required by applicable law, rule or regulation, it is intended that each member of the Committee shall qualify both as a “non-employee director” under Rule 16b-3 and an “outside director” under Section 162(m) of the Code. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify. The Board may designate one or more directors as alternate members of the Committee who may replace any absent or disqualified member at any meeting of the Committee. The Committee may delegate to one or more officers of the Company the authority to grant Awards except that such delegation shall not be applicable to any Award for a person then covered by Section 16 of the Act or a Covered Employee. The Committee may issue rules and regulations for administration of the Plan. It shall meet at such times and places as it may determine.
(b) Subject to Section 15, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and with respect to Awards intended to be “performance-based,” the applicable provisions of Section 162(m) of the Code, and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith.
(c) Subject to the terms of the Plan and applicable law and the rules of the TSX and in addition to those authorities provided in Section 4(c), the Committee (or its delegate) shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards (including Substitute Awards) to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards; (iv) determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the Shares relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion); (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee, taking into consideration the requirements of Section 409A of the Code; (vii) determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for a period of time as determined by the Committee, in its sole discretion, following the date of the acquisition of such Award; (viii) to determine whether an Option is an Incentive Stock Option or Non-Qualified Option; (ix) to modify, extend or renew an Award, provided, however, that such action does not subject the Award to Section 409A of the Code without the consent of the Participant and provided that such extension of the Award does not benefit an Insider (as defined in Section 21 of the Plan); (x) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (xi) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xii) solely to the extent permitted by applicable law and the rules of the TSX, to determine whether, to what extent and under what circumstances to provide loans (which may be on a recourse basis and shall bear interest at the rate the Committee shall provide) to Participants in order to exercise Options
Appendix B
or acquire Shares under the Plan; (ix) to permit accelerated vesting or lapse of restrictions of any Award at any time; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(d) All decisions of the Committee shall be final, conclusive and binding upon all parties, including the Company, the shareholders and the Participants.
Section 5. Shares Available for Awards; Per Person Limitations.
(a) Subject to adjustment as provided below, the maximum number of Shares available for issuance under the Plan is15,000,000 Shares.equal to (i) 15,000,000, plus (ii) any Shares subject to Prior Plan Awards which, on or after the Effective Date, cease for any reason to be subject to such Prior Plan Awards other than by reason of exercise or settlement of the Prior Plan Awards to the extent they are exercised for or settled in Shares reserved under a Prior Plan or settled pursuant to the exercise of a stock appreciation right issued in tandem with the Prior Plan Award. The maximum possible number of Shares subject to Prior Plan Awards that could be made available for purposes of the Plan is 18,769,078. Therefore, the maximum number of Shares available for issuance under the Plan is 33,769,078.The maximum number of these reserved Shares with respect to which Incentive Stock Options may be granted under the Plan shall be 15,000,000 Shares. With respect to Stock Appreciation Rights settled in Shares, upon settlement, only the number of Shares delivered to a Participant (based on the difference between the Fair Market Value of the Shares subject to such Stock Appreciation Right on the date such Stock Appreciation Right is exercised and the exercise price of each Stock Appreciation Right on the date such Stock Appreciation Right was awarded) shall count against the aggregate and individual share limitations set forth under this Section 5. If any Option, Stock Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of Shares underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in Shares awarded under the Plan to a Participant are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in Shares shall again be available for purposes of Awards under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations.
(b) Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or Shares acquired by the Company.
(c) To the extent required by Section 162(m) of the Code for Awards under the Plan to qualify as “performance-based compensation,” the following individual Participant limitations shall apply:
(i) The maximum number of Shares subject to any Award of Options, or Stock Appreciation Rights, shares of Restricted Stock, Restricted Stock Units or Other Stock-Based Awards for which the grant of such Award or the lapse of the relevant restriction period is subject to the attainment of Performance Goals in accordance with Section 10 which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 2,000,000 Shares per type of Award (which shall be subject to any further increase or decrease pursuant to Section 5(d)) provided that the maximum number of Shares for all types of Awards granted to any Participant does not exceed 2,000,000 Shares (which shall be subject to any further increase or decrease pursuant to Section 5(d)) during any fiscal year of the Company. If a Stock Appreciation Right is granted in tandem with an Option, it shall apply against the Participant’s individual share limitations for both Stock Appreciation Rights and Options.
(ii) There are no annual individual share limitations applicable to Participants on Restricted Stock, Restricted Stock Units or Other Stock-Based Awards for which the grant, vesting or payment (as applicable) of any such Award is not subject to the attainment of Performance Goals.
(iii) The maximum number of Shares subject to any Performance Award which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 2,000,000 Shares (which shall be subject to any further increase or decrease pursuant to Section 5(d)) with respect to any fiscal year of the Company.
Appendix B
(iv) The maximum value of a cash payment made under a Performance Award which may be granted under the Plan with respect to any fiscal year of the Company to any Participant shall be $10,000,000.
(v) The individual Participant limitations set forth in this Section 5(c) (other than Section 5(c)(iii)) shall be cumulative; that is, to the extent that Shares for which Awards are permitted to be granted to a Participant during a fiscal year are not covered by an Award to such Participant in a fiscal year, the number of Shares available for Awards to such Participant shall automatically increase in the subsequent fiscal years during the term of the Plan until used.
(d) Changes
(i) The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize (a) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (b) any merger or consolidation of the Company or any Affiliate, (c) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares (d) the dissolution or liquidation of the Company or any Affiliate, (e) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (f) any other corporate act or proceeding.
(ii) Subject to the provisions of Section 5(d)(iv), if there shall occur any such change in the capital structure of the Company by reason of any stock split, reverse stock split, stock dividend, extraordinary dividend, subdivision, combination or reclassification of shares that may be issued under the Plan, any recapitalization, any merger, any consolidation, any spin off, any reorganization or any partial or complete liquidation, or any other corporate transaction or event having an effect similar to any of the foregoing (a “Corporate Event”), then (i) the aggregate number and/or kind of shares that thereafter may be issued under the Plan, (ii) the number and/ or kind of shares or other property (including cash) to be issued upon exercise of an outstanding Award granted under the Plan, and/or (iii) the purchase price thereof, shall be appropriately adjusted. In addition, subject to Section 5(d)(iv), if there shall occur any change in the capital structure or the business of the Company that is not a Corporate Event (an “Other Extraordinary Event”), including by reason of any ordinary dividend (whether cash or stock), any conversion, any adjustment, any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of stock, or any sale or transfer of all or substantially all of the Company’s assets or business, then the Committee, in its sole discretion, may adjust any Award and make such other adjustments to the Plan. Any adjustment pursuant to this Section 5(d) shall be consistent with the applicable Corporate Event or the applicable Other Extraordinary Event, as the case may be, and in such manner as the Committee may, in its sole discretion, deem appropriate and equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, Participants under the Plan. Any such adjustment determined by the Committee shall be final, binding and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors and permitted assigns. Except as expressly provided in this Section 5(d) or in the applicable Award Agreement, a Participant shall have no rights by reason of any Corporate Event or any Other Extraordinary Event.
(iii) Fractional shares of Shares resulting from any adjustment in Awards pursuant to Section 5(d)(i) or Section 5(d)(ii) shall be aggregated until, and eliminated at, the time of exercise by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.
(iv) In the event of a merger or consolidation of the Company or in the event of any transaction that results in the acquisition of substantially all of the Company’s outstanding Shares by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of all or substantially all of the Company’s assets (all of the foregoing being referred to as an “Acquisition Event”), then the Committee may, in its sole discretion, terminate all outstanding and unexercised Options, Stock Appreciation Rights, or any Other Stock-Based Award that provides for a Participant elected exercise, effective as of the date of the Acquisition Event, by (i) cashing-out such Awards upon the date of consummation of the Acquisition Event,
Appendix B
or (ii) delivering notice of termination to each Participant at least 5 days prior to the date of consummation of the Acquisition Event, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of such Participant’s Awards that are then outstanding (without regard to any limitations on exercisability otherwise contained in the Award Agreements), but any such exercise shall be contingent on the occurrence of the Acquisition Event, and, provided that, if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void. If an Acquisition Event occurs but the Committee does not terminate the outstanding Awards pursuant to this Section 5(d)(iv), then the provisions of Section 5(d)(ii) and Section 13 shall apply.
(e) Shares underlying Substitute Awards and Shares underlying awards that can only be settled in cash shall not reduce the number of Shares remaining available for issuance under the Plan.
(f) Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued Shares are issued under the Plan, such shares shall not be issued for a consideration that is less than as permitted under applicable law and the rules of the TSX.
(g) The maximum number of Shares subject to any Award which may be granted under the Plan during any fiscal year of the Company to any director shall be 1,000,000 Shares (which shall be subject to any further increase or decrease pursuant to Section 5(d)).
Section 6. Options.
The Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) The purchase price per Share under an Option shall be determined by the Committee; provided, however, that, except in the case of Substitute Awards, such purchase price shall not be less than the 100% (or 110% in the case of an Incentive Stock Option granted to a person owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its subsidiaries or its parent, determined in accordance with Section 422(b)(6)) of the Code) of the Fair Market Value of a Share on the date of grant of such Option.
(b) The term of each Option shall be fixed by the Committee but shall not exceed 10 years from the date of grant thereof. Notwithstanding the foregoing, if the term of an Option (other than an Incentive Stock Option) held by any Participant not subject to Section 409A of the Code would otherwise expire during, or within ten business days of the expiration of a Blackout Period applicable to such Participant, then the term of such Option shall be extended to the close of business on the tenth business day following the expiration of the Blackout Period.
(c) The Committee shall determine the time or times at which an Option may be exercised in whole or in part.
(d) To the extent vested and exercisable, Options may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Company specifying the number of Shares to be purchased. Such notice shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law, if the Shares are traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; or (iii) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, having the Company withhold Shares issuable upon exercise of the Option, or by payment in full or in part in the form of Shares owned by the Participant, based on the Fair Market Value of the Shares on the payment date as determined by the Committee). No Shares shall be issued until payment therefor, as provided herein, has been made or provided for.
Appendix B
(e) The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant Employee during any calendar year under the Plan and/or any other stock option plan of the Company, any subsidiary or any parent exceeds $100,000, such Options shall be treated as Non-Qualified Options. Should any provision of the Plan not be necessary in order for the Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company, subject to the rules of the TSX. Should any provision of the Plan not be necessary in order for the Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company, subject to the rules of the TSX. To the extent that any such Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option.
Section 7. Stock Appreciation Rights.
(a) The Committee is hereby authorized to grant Stock Appreciation Rights (“SARs”) to Participants with terms and conditions as the Committee shall determine not inconsistent with the provisions of the Plan.
(b) SARs may be granted hereunder to Participants either alone (“freestanding”) or in addition to other Awards granted under the Plan (“tandem”) and may, but need not, relate to a specific Options granted under Section 6.
(c) Any tandem SAR related to an Option may be granted at the same time such Option is granted to the Participant. In the case of any tandem SAR related to any Option, the SAR or applicable portion thereof shall not be exercisable until the related Option or applicable portion thereof is exercisable and shall terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a SAR granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the exercise or termination of the related Option exceeds the number of Shares not covered by the SAR. Any Option related to any tandem SAR shall no longer be exercisable to the extent the related SAR has been exercised.
(d) A freestanding SAR shall not have a term of greater than 10 years or, unless it is a Substitute Award, an exercise price less than 100% of Fair Market Value of the Share on the date of grant. Notwithstanding the foregoing, if the term of a SAR held by any Participant not subject to Section 409A of the Code would otherwise expire during, or within ten business days of the expiration of a Blackout Period applicable to such Participant, then the term of such SAR shall be extended to the close of business on the tenth business day following the expiration of the Blackout Period.
Section 8. Restricted Stock and Restricted Stock Units.
(a) The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants.
(b) Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or dividend equivalent or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate.
(c) Any share of Restricted Stock granted under the Plan may be evidenced in such manner as the Committee may deem appropriate including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock
Appendix B
granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such Shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in the event that such Award is forfeited in whole or part.
(d) The Committee may in its discretion, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all restrictions with respect to Shares of Restricted Stock or Restricted Stock Units.
(e) The Committee, in its discretion, may award Dividend Equivalents with respect to Awards of Restricted Stock Units. The entitlements on such Dividend Equivalents will not be available until the vesting of the Award of Restricted Stock Units.
(f) If the Committee intends that an Award under this Section 8 shall constitute or give rise to “qualified performance based compensation” under Section 162(m) of the Code, such Award may be structured in accordance with the requirements of Section 10, including without limitation, the Performance Goals and the Award limitation set forth therein, and any such Award shall be considered a Performance Award for purposes of the Plan.
Section 9. Deferred Stock. The Committee is authorized to grant Deferred Stock to Participants, subject to the following terms and conditions:
(a) Deferred Stock shall be settled upon expiration of the deferral period specified for an Award of Deferred Stock by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Deferred Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, and under such other circumstances as the Committee may determine at the date of grant or thereafter. Deferred Stock may be satisfied by delivery of Shares, other Awards, or a combination thereof, as determined by the Committee at the date of grant or thereafter.
(b) The Committee, in its discretion, may award Dividend Equivalents with respect to Awards of Deferred Stock. The entitlements on such Dividend Equivalents will not be available until the expiration of the deferral period for the Award of Deferred Stock.
Section 10. Performance Awards.
(a) The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. The Committee may grant Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, as well as Performance Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code. If the Performance Award is payable in shares of Restricted Stock, such shares shall be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Section 8. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in shares of Restricted Stock (based on the then current Fair Market Value of such shares), as determined by the Committee, in its sole and absolute discretion. Each Performance Award shall be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may from time to time approve. With respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall condition the right to payment of any Performance Award upon the attainment of objective Performance Goals established pursuant to Section 10(b)(iii).
Appendix B
(b)Terms and Conditions. Performance Awards awarded pursuant to this Section 10 shall be subject to the following terms and conditions:
(i)Earning of PerformanceAward. At the expiration of the applicable Performance Period, the Committee shall determine the extent to which the Performance Goals established pursuant to Section 10(b) are achieved and the percentage of each Performance Award that has been earned.
(ii)Non-Transferability. Subject to the applicable provisions of the Award Agreement and the Plan, Performance Awards may not be Transferred during the Performance Period.
(iii)Objective Performance Goals, Formulae or Standards. With respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) the impact of any of the following that the Committee determines to be appropriate: (i) corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances,
(ii) restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Principles Board Opinion No. 30 and/or management’s discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable year; (iii) an event either not directly related to the operations of the Company or any of its Affiliates or not within the reasonable control of the Company’s management, (iv) a change in tax law or accounting standards required by generally accepted accounting principles, or (v) such other exclusions or adjustments as the Committee specifies at the time the Award is granted. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
(c)Dividends.Unless otherwise determined by the Committee in an Award Agreement, amounts equal to dividends declared during the Performance Period with respect to the number of Shares covered by a Performance Award will not be paid to the Participant. In all cases, such dividends would not become payable until the expiration of the applicable Performance Period.The Committee may, in its discretion, award Dividend Equivalents with respect to Performance Awards. Except as otherwise specified in a Performance Award Agreement, the entitlements on such Dividend Equivalents shall be subject to the same vesting conditions and shall be settled at the same times that apply with respect to the underlying Performance Award.
(d)Payment. Following the Committee’s determination in accordance with Section 10(b)(i) the Company shall settle Performance Awards, in such form (including, without limitation, in Shares or in cash) asdetermined by the Committee, in an amount equal to such Participant’s earned Performance Awards. Notwithstanding the foregoing, the Committee may, in its sole discretion, award an amount less than the earned Performance Awards and/or subject the payment of all or part of any Performance Award to additional vesting, forfeiture and deferral conditions as it deems appropriate.
(e)Termination. Subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s termination of Service for any reason during the Performance Period for a given Performance Award, the Performance Award in question will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.
(f)Accelerated Vesting. Based on service, performance and/or such other factors or criteria, if any, as the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award.
Appendix B
Section 11. Other Stock-Based and Cash Based Awards.
(a) The Committee is authorized, subject to limitations under applicable law and the rules of the TSX, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of Shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or business units thereof, Shares awarded purely as a bonus and not subject to restrictions or conditions, equity interests in any entity with respect to which the Company holds, directly or indirectly, a controlling interest, whether such entity is a corporation, partnership or other entity, or any other factors designated by the Committee. The Committee shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 11 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, other Awards, notes, or other property, as the Committee shall determine. Unless otherwise determined by the Committee in an Award Agreement, the recipient of an Award under this Section 11 shall not be entitled to receive, currently or on a deferred basis, dividends or Dividend Equivalents in respect of the number of Shares covered by the Award. In all cases, such dividends or Dividend Equivalents would not become payable until the expiration of any applicable performance period. An Other Stock-Based Award that is in the form of a grant of an equity interest in any entity with respect to which the Company holds, directly or indirectly, a controlling interest, may be granted in exchange for, replacement of, or substitution for an Award previously granted under the Plan (or any predecessor plan) or Substitute Award; provided, that, if such Award or Substitute Award is a stock option or a stock appreciation right, then the Other Stock-Based Award granted in exchange, replacement, or substitution thereof, may not have the economic effect of reducing the exercise price or term of such Award or Substitute Award.
(b) The Committee may from time to time grant Cash-Based Awards to Participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law, as it shall determine in its sole discretion. Cash-Based Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time in its sole discretion. The grant of a Cash-Based Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder.
(c) Notwithstanding any other provision of the Plan, when an Award with an exercise price is granted under the Plan and the exercise of the Award by the Participant may result in the issuance of Shares to the Participant, the exercise price (taking into account any conversion, exchange or other substitutions) of the Award may not be less than the Fair Market Value of a Share on the date of grant of the Award.
Section 12. Effect of Termination of Service on Awards. The Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, the circumstances in which Awards shall be exercised, vested, paid or forfeited in the event a Participant ceases to provide Service to the Company or any Affiliate prior to the end of a performance period or exercise or settlement of such Award.
Section 13. Change in Control Provisions. In the event of a Change in Control, and except as otherwise provided by the Committee in an Award Agreement, a Participant’s unvested Award shall be treated in accordance with one of the following methods as determined by the Committee:
(a) Awards, whether or not then vested, shall be continued, assumed, have new rights substituted therefor or be treated in accordance with Section 5(d) hereof, as determined by the Committee, and restrictions to which shares of Restricted Stock or any other Award granted prior to the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock or other Award shall, where appropriate in the sole discretion of the Committee, receive the same distribution as other Shares on such terms as determined by the Committee; provided that the Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).
Appendix B
(b) The Committee, in its sole discretion, may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash (either on a current basis or, to the extent such right does not subject the Award to the excise tax under Section 409A of the Code, a deferred basis) equal to the excess of the Change in Control Price (as defined below) of the Shares covered by such Awards, over the aggregate exercise price of such Awards. For purposes of this Section 13(b), “Change in Control Price” shall mean the highest price per Share paid in any transaction related to a Change in Control of the Company.
(c) If and to the extent that the approach chosen by the Committee results in an acceleration or potential acceleration of the exercisability, vesting or settlement of any Award, the Committee may impose such conditions upon the exercise, vesting and/or settlement of the Award (including without limitation a requirement that some or all of the proceeds from the accelerated portion of the Award be held in escrow and/or remain subject to risks of forfeiture or other conditions) as it shall determine; provided that those risks of forfeiture or other conditions are not in the good faith judgment of the Committee more restrictive than those under the original terms of the Award Agreement and do not result in any violation of Section 409A of the Code. The Committee shall give written notice of any proposed transaction referred to in this Section 13(c) at a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after the approval of such transaction), in order that Participants may have a reasonable period of time prior to the closing date of such transaction within which to exercise any Awards that are then exercisable (including any Awards that may become exercisable upon the closing date of such transaction). A Participant may condition his or her exercise of any Awards upon the consummation of the transaction.
Section 14. General Provisions Applicable to Awards.
(a) Awards may be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law.
(b) Awards may, in the discretion of the Committee, be granted either alone or in addition to or in tandem with any other Award or any award granted under any other plan of the Company. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
(c) Subject to the terms of the Plan, payments or transfers to be made by the Company upon the grant, exercise or payment of an Award may be made in the form of cash, Shares, other securities or other Awards, or any combination thereof, as determined by the Committee in its discretion at the time of grant, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee and in compliance with Section 409A of the Code. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest (or no interest) on installment or deferred payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments.
(d) Except as may be permitted by the Committee or as specifically provided in an Award Agreement, (i) no Award or other benefit payable under the Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner other than by will or the law of descent, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person, and (ii) each Award, and each right under any Award, shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. The provisions of this paragraph shall not apply to any Award which has been fully exercised, earned or paid, as the case may be, and shall not preclude forfeiture of an Award in accordance with the terms thereof.
(e) A Participant may designate a Beneficiary or change a previous beneficiary designation at such times prescribed by the Committee by using forms and following procedures approved or accepted by the Committee
Appendix B
for that purpose. If no Beneficiary designated by the Participant is eligible to receive payments or other benefits or exercise rights that are available under the Plan at the Participant’s death, the Beneficiary shall be the Participant’s estate.
(f) All certificates for Shares and/or Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(g) The Committee may impose restrictions on any Award with respect to non-competition, confidentiality and other restrictive covenants, as it deems necessary in its sole discretion and/or for the clawing back of any rights or benefits under any Awards as a result of any breaches of any of the foregoing covenants and/or for any reasons specified in the Award Agreement or in any employment or other agreement between the Company or any Affiliate and the Participant, and/or for clawing back any rights or benefits under any Awards to the extent provided under any Company policies (including without limitation any policies adopted or amended to comply with applicable securities or other laws or stock exchange requirements, whether those policies were adopted or amended before or after the date on which the Award was granted).
Section 15. Amendments and Termination.
(a) The Board may amend, alter, suspend, discontinue or terminate the Plan and any outstanding Awards granted hereunder, in whole or in part, at any time without notice to or approval by the shareholders of the Company, for any purpose whatsoever, provided that all material amendments to the Plan shall require the prior approval of the shareholders of the Company and must comply with the rules of the TSX. Examples of the types of amendments that are not material that the Board is entitled to make without shareholder approval include, without limitation, the following:
(i) ensuring continuing compliance with applicable law, the rules of the TSX or other applicable stock exchange rules and regulations or accounting or tax rules and regulations;
(ii) amendments of a “housekeeping” nature, which include amendments to correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement in the manner and to the extent it shall deem desirable to carry the Plan into effect;
(iii) changing the vesting provision of the Plan or any Award (subject to the limitations for Awards subject to Section 10(b));
(iv) waiving any conditions or rights under any Award (subject to the limitations for Awards subject to Section 10(b));
(v) changing the termination provisions of any Award that does not entail an extension beyond the original expiration date thereof;
(vi) adding a cashless exercise feature payable in securities, where such feature provides for a full deduction of the number of underlying securities from the Plan reserve, and any amendment to a cashless exercise provision;
(vii) adding a form of financial assistance and any amendment to a financial assistance provision which is adopted;
(viii) changing the process by which a Participant who wishes to exercise his or her Award can do so, including the required form of payment for the Shares being purchased, the form of written notice of exercise provided to the Company and the place where such payments and notices must be delivered; and
(ix) delegating any or all of the powers of the Committee to administer the Plan to officers of the Company.
Appendix B
(b) Notwithstanding anything contained herein to the contrary, no amendment to the Plan requiring the approval of the shareholders of the Company under any applicable securities laws or requirements shall become effective until such approval is obtained. In addition to the foregoing, the approval of the holders of a majority of the Shares present and voting in person or by proxy at a meeting of shareholders shall be required for:
(i) an increase in the maximum number of Shares that may be made the subject of Awards under the Plan;
(ii) any adjustment (other than in connection with a stock dividend, recapitalization or other transaction where an adjustment is permitted or required under Section 5(d)(i) or Section 5(d)(ii)) or amendment that reduces or would have the effect of reducing the exercise price of an Option or Stock Appreciation Right previously granted under the Plan, whether through amendment, cancellation or replacement grants, or other means (provided that, in such a case, insiders of the Company who benefit from such amendment are not eligible to vote their Shares in respect of the approval);
(iii) an increase in the limits on Awards that may be granted to any Participant under Section 5(c) and Section 5(g);
(iv) an extension of the term of an outstanding Option or Stock Appreciation Right beyond the expiry date thereof;
(v) permitting Options granted under the Plan to be Transferrable other than for normal estate settlement purposes; and
(vi) any amendment to the plan amendment provisions set forth in this Section 15 which is not an amendment within the nature of Section 15(a)(i) or Section 15(a)(ii), unless the change results from application of Section 5(d)(i) or Section 5(d)(ii).
Furthermore, except as otherwise permitted under the Plan, no change to an outstanding Award that will adversely impair the rights of a Participant may be made without the consent of the Participant except to the extent that such change is required to comply with applicable law, stock exchange rules and regulations or accounting or tax rules and regulations.
Section 16. Miscellaneous.
(a) The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company.
(b) No employee, Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of employees, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. Any Award granted under the Plan shall be a one-time Award which does not constitute a promise of future grants. The Company, in its sole discretion, maintains the right to make available future grants hereunder.
(c) The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of Shares or the payment of any cash hereunder, payment by the Participant of, any federal, state or local taxes required by law to be withheld. Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company. Any statutorily required withholding obligation with regard to any Participant may be satisfied, subject to the consent of the Committee, by reducing the number of Shares otherwise deliverable or by delivering Shares already owned. Any fraction of a Share required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant.
(d) Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.
Appendix B
(e) The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or to continue to provide services to, the Company or any Affiliate. Further, the Company or the applicable Affiliate may at any time dismiss a Participant, free from any liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement or in any other agreement binding the parties. The receipt of any Award under the Plan is not intended to confer any rights on the receiving Participant except as set forth in such Award.
(f) If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.
(g) Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.
(h) No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.
(i) No Award or other benefit payable under the Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person.
(j) Unless otherwise determined by the Committee, as long as the Shares are listed on a national securities exchange including the TSX or system sponsored by a national securities association, the issuance of Shares pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. The Company shall have no obligation to issue such Shares unless and until such Shares are so listed, and the right to exercise any Option or other Award with respect to such Shares shall be suspended until such listing has been effected. If at any time counsel to the Company shall be of the opinion that any sale or delivery of Shares pursuant to an Option or other Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to Shares or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company. A Participant shall be required to supply the Company with certificates, representations and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent or approval the Company deems necessary or appropriate.
(k) No Award granted or paid out under the Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates nor affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation. The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.
(l) All elections and transactions under the Plan by persons subject to Section 16 of the Act involving Shares are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish
Appendix B
and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.
(m) The Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Board, the Company, its Affiliates and their employees, agents and representatives with respect thereto.
Section 17. Effective Date of the Plan. The Plan shall be effective as of the Effective Date, which is the date of adoption by the Board, subject to the approval of the Plan by the shareholders of the Company in accordance with the requirements of the laws of the Province of Ontario.
Section 18. Term of the Plan. No Award shall be granted under the Plan after ten years from the Effective Date. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and the authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board to amend the Plan, shall extend beyond such date.
Section 19. Section 409A of the Code.
(a) The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the contrary, any provision in the Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and to the extent such provision cannot be amended to comply therewith, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period.
(b) Notwithstanding the foregoing, the Company does not make any representation to any Participant or Beneficiary as to the tax consequences of any Awards made pursuant to this Plan, and the Company shall have no liability or other obligation to indemnify or hold harmless the Participant or any Beneficiary for any tax, additional tax, interest or penalties that the Participant or any Beneficiary may incur as a result of the grant, vesting, exercise or settlement of an Award under this Plan.
Section 20. Governing Law; Waiver of Jury Trial. This Plan shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable in the Province of Ontario. Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the Province of Ontario. In that context, and without limiting the generality of the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or
Appendix B
for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the Province of Ontario, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Ontario court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Company and each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the Province of Ontario.
Section 21. TSX Requirements.
The number of Shares issuable to Insiders, at any time, under all Security Based Compensation Arrangements of the Company, may not exceed 10% of the Company’s issued and outstanding Shares; and the number of Shares issued to Insiders within any one-year period, under all Security Based Compensation Arrangements of the Company, may not exceed 10% of the Company’s issued and outstanding Shares. For the purpose of this Section 21, “Insider” shall mean, (i) every director or senior officer of the Company; (ii) every director or senior officer of a company that is itself an insider or subsidiary of the Company; (iii) any person or company who beneficially owns, directly or indirectly, voting securities of the Company or who exercises control or direction over voting securities of the Company or a combination of both carrying more than 10% of the voting rights attached to all voting securities of the Company for the time being outstanding other than voting securities held by the person or company as underwriter in the course of a distribution; (iv) any associate or affiliate of the Insider; and (v) the Company where it has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities, and “Security Based Compensation Arrangement” shall mean any (i) any stock option plans for the benefit of employees, insiders, service providers or any one of such groups; (ii) individual stock options granted to employees, service providers or insiders if not granted pursuant to a plan previously approved by the Company’s securityholders; (iii) share purchase plans where the Company provides financial assistance or where the Company matches the whole or a portion of the securities being purchased; (iv) stock appreciation rights involving issuances of securities from treasury; (v) any other compensation or incentive mechanism involving the issuance or potential issuances of securities of the Company; and (vi) security purchases from treasury by an employee, insider or service provider which is financially assisted by the Company by any means whatsoever.
Appendix B
EXHIBIT A
PERFORMANCE GOALS
To the extent permitted under Section 162(m) of the Code, performance goals established for purposes of Awards intended to be “performance-based compensation” under Section 162(m) of the Code, shall be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following performance goals, which may include performance relative to the Company’s peers or those of the Company’s Affiliates or to the industry or industries in which the Company and/or its affiliates operates:
earnings per share;
net earnings;
operating income;
gross income;
net income (before or after taxes);
cash flow (including free cash flow, operating cash flow and cash flow return on investment);
gross profit;
profit before taxes;
operating profit;
gross profit return on investment;
gross margin return on investment;
gross margin;
operating margin;
working capital;
earnings before interest and taxes;
earnings before interest, tax, depreciation and amortization;
net income before depreciation and amortization, interest expense, net, loss on early extinguishment of debt, and income tax expense, and excluding the impact of share-based compensation, other operating income (expense), net, and any other identified costs associated with non-recurring projects.
earnings ratios;
return on equity;
return on assets;
return on capital;
return on invested capital;
net revenues;
gross revenues;
revenue growth;
annual recurring revenues;
recurring revenues;
license revenues;
sales or market share;
Appendix B
total shareholder return;
economic value added;
customers or customer growth;
number of restaurants or restaurant growth;
restaurant traffic;
inventory turnover;
receivable turnover;
financial return ratios;
customer satisfaction surveys;
productivity;
specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or that of any of its Affiliates or other long-term or short-term public or private debt or other similar financial obligations of the Company or any of its Affiliates, which may be calculated net of cash balances and/or other offsets and adjustments as may be established by the Committee in its sole discretion;
the fair market value of a Share;
Share price (including, but not limited to, growth in Share price);
the growth in the value of an investment in the Share assuming the reinvestment of dividends;
reduction in operating and/or other expenses;
Restaurant cleanliness and/or other operational, safety and/or quality metrics measured by the Company or any of its Affiliates;
Restaurant image or remodeling; or
Product innovation or menu.
With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, the Committee may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or occurrence, or of any item, reflected in Section 10(b)(iii) of the Plan that the Committee determines should be appropriately excluded or adjusted.
Performance goals may also be based upon individual participant performance goals, as determined by the Committee, in its sole discretion. In addition, Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code may be based on the performance goals set forth herein or on such other performance goals as determined by the Committee in its sole discretion.
In addition, such performance goals may be based upon the attainment of specified levels of Company (or subsidiary, other Affiliate, division, other operational unit, administrative department or product category of the Company or any of its Affiliates) performance under one or more of the measures described above relative to the performance of other corporations. With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, but only to the extent permitted under Section 162(m) of the Code (including, without limitation, compliance with any requirements for stockholder approval), the Committee may also:
| (a) | designate additional business criteria on which the performance goals may be based; or |
| (b) | adjust, modify or amend the aforementioned business criteria. |
Appendix C
APPENDIX C
GAAP TONON-GAAP RECONCILIATIONS Below, we define thenon-GAAP financial measures used in this proxy statement, provide a reconciliation of eachnon-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP, and discuss the reasons that we believe this information is useful to management and may be useful to investors. These measures do not have standardized meanings under GAAP and may differ from similarly captioned measures of other companies in our industry. Effective January 1, 2019, we adopted the new lease accounting standard (“New Lease Standard”). Our consolidated financial statements for 2019 reflect the application of the New Lease Standard, while our consolidated financial statements for periods prior to 2019 were prepared under the guidance of the previously applicable lease accounting standard. Effective January 1, 2018, RBI adopted the new revenue recognition accounting standard (“New Revenue Recognition Standard”). RBI’s consolidated financial statements for 2018 reflect the application of the New Revenue Recognition Standard, while RBI’s consolidated financial statements for 2017 were prepared under the guidance of previously applicable accounting standards (“Previous Standards”). RBI’s results presented herein indicate which revenue recognition methodology applies in each respective period. Adjusted EBITDA EBITDA is defined as earnings (net income or loss) before interest expense, net, (gain) loss on early extinguishment of debt, taxes,income tax (benefit) expense, and depreciation and amortization and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding thenon-cash impact of share-based compensation andnon-cash incentive compensation expense and (income) loss from equity method investments, net of cash distributions received from equity method investments, as well as other operating (income) expenses net, and all other(income), net. Other specifically identified costs associated withnon-recurring projects are also excluded from Adjusted EBITDA, including PLK transaction costs associated with the acquisition accounting impact on cost of salesPopeyes, corporate restructuring and Transactiontax advisory fees, and restructuringoffice centralization and relocation costs. Adjusted EBITDA is used by management to measure operating performance of the business, excluding thesenon-cash and other specifically identified items that management believes doare not directly reflect our core operations, andrelevant to management’s assessment of operating performance or the performance of an acquired business. Adjusted EBITDA, as defined above, also represents our measure of segment income.income for each of our three operating segments. | | | | | | | | | | | Year Ended December 31, | | | | 2015 | | | 2014 PF(1) | | | | (in millions) | | Segment income: | | | | | | | | | TH | | $ | 906.7 | | | $ | 816.4 | | BK | | | 759.5 | | | | 726.0 | | | | | | | | | | | Adjusted EBITDA | | | 1,666.2 | | | | 1,542.4 | | Share-based compensation and non-cash incentive compensation expense(2) | | | 51.8 | | | | 39.1 | | Acquisition accounting impact on cost of sales | | | 0.5 | | | | — | | TH transaction and restructuring costs(3) | | | 116.7 | | | | 33.9 | | Impact of equity method investments(4) | | | 17.7 | | | | 10.2 | | Other operating expenses (income), net | | | 105.5 | | | | 39.6 | | | | | | | | | | | EBITDA | | | 1,374.0 | | | | 1,419.6 | | Depreciation and amortization | | | 181.8 | | | | 194.4 | | | | | | | | | | | Income from operations | | | 1,192.2 | | | | 1,225.2 | | Interest expense, net | | | 478.3 | | | | 452.3 | | Loss on early extinguishment of debt | | | 40.0 | | | | — | | Income tax expense | | | 162.2 | | | | 335.8 | | | | | | | | | | | Net income | | $ | 511.7 | | | $ | 437.1 | | | | | | | | | | |
Appendix C B | | | | | | | | | | | Twelve Months Ended December 31 | | (in US$ millions) | | 2019 | | | 2018 | | Segment income: | | | | | | | | | TH | | $ | 1,122 | | | $ | 1,127 | | BK | | | 994 | | | | 928 | | PLK | | | 188 | | | | 157 | | | | | | | | | | | Adjusted EBITDA | | | 2,304 | | | | 2,212 | | Share-based compensation andnon-cash incentive compensation expense(1) | | | 74 | | | | 55 | | PLK Transaction costs(2) | | | — | | | | 10 | | Corporate restructuring and tax advisory fees(3) | | | 31 | | | | 25 | | Office centralization and relocation costs(4) | | | 6 | | | | 20 | | Impact of equity method investments(5) | | | 11 | | | | (3 | ) | Other operating expenses (income), net | | | (10 | ) | | | 8 | | | | | | | | | | | EBITDA | | | 2,192 | | | | 2,097 | | Depreciation and amortization | | | 185 | | | | 180 | | | | | | | | | | | Income from operations | | | 2,007 | | | | 1,917 | | Interest expense, net | | | 532 | | | | 535 | | Loss on early extinguishment of debt | | | 23 | | | | — | | Income tax (benefit) expense(6)(7) | | | 341 | | | | 238 | | | | | | | | | | | Net income | | $ | 1,111 | | | $ | 1,144 | | | | | | | | | | |
Organic Growth in Combined Adjusted EBITDA Adjusted EBITDA growth, on an organic basis, is anon-GAAP measure that excludes the impact of foreign currency exchange rate (“FX”) movements. Management believes that organic growth is an important metric for measuring the core operating performance of the business as it excludeshelps identify underlying business trends, without distortion from the effects of FX impact.movements. We calculate the impact of FX movements by translating current year results at prior year monthly average exchange rates. | | | Actual | | 2015 vs. 2014 | | Impact of FX Movements | | Organic Growth | | | Actual | | | 2019 vs. 2018 | | Impact of New Standard | | | Impact of FX Movements | | | Organic Growth | | (in US$ millions) | | 2015 | | | 2014 | | $ | | | % | | $ | | $ | | | % | | | 2019 | | | 2018 | | | $ | | | % | | $ | | | $ | | | $ | | | % | | Calculation: | | | | | A | | B | | | | | C | | B-C=D | | | D/A | | | Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TH | | | $ | 3,344 | | | $ | 3,292 | | | $ | 52 | | | | 1.6 | % | | $ | 85 | | | $ | (66 | ) | | $ | 33 | | | | 1.0 | % | BK | | | $ | 1,777 | | | $ | 1,651 | | | $ | 126 | | | | 7.7 | % | | $ | 43 | | | $ | (30 | ) | | $ | 113 | | | | 7.0 | % | PLK | | | $ | 482 | | | $ | 414 | | | $ | 68 | | | | 16.4 | % | | $ | 2 | | | $ | (1 | ) | | $ | 67 | | | | 16.2 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Revenues | | | $ | 5,603 | | | $ | 5,357 | | | $ | 246 | | | | 4.6 | % | | $ | 130 | | | $ | (97 | ) | | $ | 213 | | | | 4.0 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TH | | $ | 906.7 | | | $ | 816.4 | (1) | | $ | 90.3 | | | | 11.1 | % | | $ | (144.8 | ) | | $ | 235.1 | | | | 28.8 | % | | $ | 1,122 | | | $ | 1,127 | | | $ | (5 | ) | | | (0.5 | )% | | $ | — | | | $ | (22 | ) | | $ | 17 | | | | 1.5 | % | BK | | $ | 759.5 | | | $ | 726.0 | | | $ | 33.5 | | | | 4.6 | % | | $ | (61.9 | ) | | $ | 95.4 | | | | 13.1 | % | | $ | 994 | | | $ | 928 | | | $ | 66 | | | | 7.1 | % | | $ | — | | | $ | (26 | ) | | $ | 92 | | | | 10.2 | % | PLK | | | $ | 188 | | | $ | 157 | | | $ | 31 | | | | 20.2 | % | | $ | — | | | $ | (1 | ) | | $ | 32 | | | | 20.7 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | RBI | | $ | 1,666.2 | | | $ | 1,542.4 | (1) | | $ | 123.8 | | | | 8.0 | % | | $ | (206.7 | ) | | $ | 330.5 | | | | 21.4 | % | | Adjusted EBITDA | | | $ | 2,304 | | | $ | 2,212 | | | $ | 92 | | | | 4.2 | % | | $ | — | | | $ | (49 | ) | | $ | 141 | | | | 6.5 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Percentage changes may not recalculate due to rounding.
Appendix B Adjusted Diluted Earnings Per Share (EPS) Adjusted Net Income is defined as net income excluding the impact of those same items excluded from Adjusted EBITDA and also excluding(i) franchise agreement amortization as a result of acquisition accounting, (ii) amortization of deferred financing costs and original issue discount, (iii) loss on early extinguishment of debt and interest expense, which representsnon-cash interest expense related to losses reclassified from accumulated comprehensive income (loss) into interest expense in connection with interest rate swapsde-designated in May 2015 and November 2019, (iv) (income) loss (gain) on extinguished debt. from equity method investments, net of cash distributions received from equity method investments, (v) other operating expenses (income), net, and (vi) other specifically identified costs associated withnon-recurring projects. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the number of diluted shares of RBI during the reporting period. Adjusted Net Income and Adjusted Diluted EPS are used by management to evaluate the core operating performance of the business, excluding certainnon-cash and other specifically identified items that management believes are not relevant to management’s assessment of operating performance or the performance of an acquired business. | | | | | | | | | | | Year Ended December 31, | | | | 2015 | | | 2014 PF(1) | | | | (in millions, except per share data) | | | | | Net income | | $ | 511.7 | | | $ | 437.1 | | Income tax expense | | | 162.2 | | | | 335.8 | | | | | | | | | | | Income before income taxes | | | 673.9 | | | | 772.9 | | Adjustments: | | | | | | | | | Franchise agreement amortization | | | 27.8 | | | | 29.4 | | Amortization of deferred financing costs and original issue discount | | | 34.9 | | | | 32.8 | | Interest expense and loss on extinguished debt(2) | | | 53.2 | | | | — | | Share-based compensation and non-cash incentive compensation expense(3) | | | 51.8 | | | | 39.1 | | Acquisition accounting impact on cost of sales | | | 0.5 | | | | — | | TH transaction and restructuring costs(4) | | | 116.7 | | | | 33.9 | | Impact of equity method investments(5) | | | 17.7 | | | | 10.2 | | Other operating expenses (income), net | | | 105.5 | | | | 39.6 | | | | | | | | | | | Total adjustments | | | 408.1 | | | | 185.0 | | Adjusted income before income taxes | | | 1,082.0 | | | | 957.9 | | | | | | | | | | | Adjusted income tax expense(6) | | | 249.7 | | | | 220.3 | | | | | | | | | | | Adjusted net income | | | 832.3 | | | | 737.6 | | | | | | | | | | | Preferred share dividends | | | 271.2 | | | | 270.0 | | | | | | | | | | | Adjusted net income attributable to common shareholders | | $ | 561.1 | | | $ | 467.6 | | | | | | | | | | | Adjusted diluted earnings per share | | $ | 1.18 | | | $ | 0.98 | | | | | | | | | | | Diluted average shares outstanding | | | 476.0 | | | | 476.1 | | | | | | | | | | |
Appendix C
| | | | | | | | | | | Twelve Months Ended December 31 | | (in US$ millions, except per share data) | | 2019 | | | 2018 | | Net income | | $ | 1,111 | | | $ | 1,144 | | Income tax (benefit) expense(6(7)) | | | 247 | | | | 341 | | | | | | | | | | | Income before income taxes | | | 1,423 | | | | 1,452 | | Adjustments: | | | | | | | | | Franchise agreement amortization | | | 31 | | | | 31 | | Amortization of deferred financing costs and debt issuance discount | | | 29 | | | | 29 | | Interest expense and loss on extinguished debt(8) | | | 37 | | | | 12 | | PLK Transaction costs(2) | | | — | | | | 10 | | Corporate restructuring and tax advisory fees(3) | | | 31 | | | | 25 | | Office centralization and relocation costs(4) | | | 6 | | | | 20 | | Impact of equity method investments(5) | | | 11 | | | | (3 | ) | Other operating expenses (income), net | | | (10 | ) | | | 8 | | | | | | | | | | | Total adjustments | | | 135 | | | | 132 | | Adjusted income before income taxes | | | 1,587 | | | | 1,514 | | | | | | | | | | | Adjusted income tax expense(6)(7)(9) | | | 313 | | | | 272 | | | | | | | | | | | Adjusted net income | | $ | 1,274 | | | $ | 1,242 | | | | | | | | | | | Adjusted diluted earnings per share | | $ | 2.72 | | | $ | 2.63 | | Weighted average diluted shares outstanding | | | 469 | | | | 473 | |
Footnotes to Reconciliation Tables (1) | Represents historical results of operations for the year ended December 31, 2014 that have been adjusted to give pro forma effect to certain events. Please see the heading below entitled “Pro Forma Financial Information” for more information. |
(2) | Represents (gain) loss on early extinguishment of debt, $3.2 million and $11.3 million of non-cash interest expense for the three and twelve months ended December 31, 2015, respectively, related to losses reclassified from accumulated other comprehensive income (loss) into interest expense in connection with interest rate swaps settled in May 2015 and $1.9 million of incremental interest expense for the twelve months ended December 31, 2015 related to the redemption of certain TH notes and the March 2015 mandatory prepayment of our term loan. |
(3) | Represents share-based compensation expense associated with employee stock optionsequity awards for the periods indicated; also includes the portion of annualnon-cash incentive compensation expense that eligible employees elected to receive or are expected to elect to receive as common equity in lieu of their 20142018 and 20152019 cash bonus, respectively. |
(2) | In connection with the acquisition of Popeyes Louisiana Kitchen, Inc., we incurred certainnon-recurring selling, general and administrative expenses primarily consisting of professional fees and compensation related expenses. |
(3) | Costs arising primarily from professional advisory and consulting services associated with corporate restructuring initiatives related to the interpretation and implementation of the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, including final, proposed and temporary Treasury regulations issued in 2018 and 2019. |
Appendix B (4) | In connection with the TH Transactions (as defined below)centralization and a seriesrelocation of post-closing transactions during 2015 that resultedour Canadian and U.S. restaurant support centers to new offices in changes to our legalToronto, Ontario, and capital structure,Miami, Florida, respectively, we incurred certain non-recurring financing, legal and advisory fees. We also incurred non-recurring costs to realign our global structure to better accommodate the needsnon-operational expenses consisting primarily of the combined business and support successful global growth. In addition, after consummation of the TH Transactions, we implemented a restructuring plan that resulted in work force reductions throughout our TH business and as a result incurred incremental costs. The restructuring is part of our on-going cost reduction efforts with the goal of driving efficiencies and creating fiscal resources that will be reinvested into our TH business. The non-recurring general and administrative expenses include financing, legal and advisory fees, severance benefits and other compensationduplicate rent expense, moving costs, and trainingrelocation-driven compensation expenses. Lastly, in connection with the Refinancing (as defined below), we incurred non-recurring financing, legal and advisory fees. |
(5) | Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income. |
(6) | The effective tax rate for the twelve months ended December 31, 2019 reflects a $37 million income tax expense provision adjustment related to a prior restructuring transaction not applicable to ongoing operations which increased our effective tax rate by 2.5% during the twelve months ended December 31, 2019. The effective tax rate for the twelve months ended December 31, 2019 also reflects a $16 million income tax expense provision adjustment related to revaluing our Swiss net deferred tax liabilities due to Swiss tax reform which increased our effective tax rate by 1.1% during the twelve months ended December 31, 2019. Adjusted income tax expense excludes the impact of these adjustments. |
(7) | The effective tax rate was reduced by 2.2% and 5.0% for the yearstwelve months ended December 31, 2019 and 2018, respectively, and our adjusted effective tax rate was reduced by 2.0% and 4.6% for the twelve months ended December 31, 2019 and 2018, respectively, as a result of benefits from stock option exercises. |
(8) | Represents loss on early extinguishment of debt and interest expense, which representsnon-cash interest expense related to losses reclassified from accumulated comprehensive income (loss) into interest expense in connection with interest rate swapsde-designated in May 2015 and 2014, respectively,November 2019. |
(9) | Adjusted income tax expense includes the tax impact of thenon-GAAP adjustments and is calculated using RBI’sour statutory tax rate in the jurisdiction in which the costs were incurred. |
Pro Forma (PF) Financial
Appendix C APPENDIX C DESCRIPTION OF INCENTIVE PLANS Equity Compensation Plan Information These non-GAAP reconciliations include pro forma financialThe following table presents information regarding equity awards outstanding under our compensation plans as of December 31, 2019 (amounts in thousands):
| | | | | | | | | | | | | | | (a) | | | (b) | | | (c) | | Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(1) | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | Equity Compensation Plans Approved by Security Holders | | | 15,576 | | | $ | 45.29 | | | | 14,148 | | Equity Compensation Plans Not Approved by Security Holders | | | — | | | | — | | | | — | | | | | | | | | | | | | | | Total | | | 15,576 | | | | 45.29 | | | | 14,148 | | | | | | | | | | | | | | |
(1) | The weighted average exercise price does not take into account the common shares issuable upon outstanding RSUs vesting, which have no exercise price. |
Burn Rate | | | | | | | | | | | | | | | 2017 | | | 2018 | | | 2019 | | Number of Securities Issued under the 2014 Omnibus Plan (amounts in millions) | | | 3.1 | | | | 2.9 | | | | 3.8 | | Burn Rate | | | 0.7% | | | | 0.6% | | | | 0.8% | |
The total number of RBI THcommon shares that can be issued from treasury under our equity compensation plans is as follows: the 2011 Omnibus Plan pursuant to which 232,452 common shares are issuable, representing 0.1% of the issued and BKW.outstanding shares of RBI as of March 31, 2020 (0.05% on a fully exchanged basis, assuming that 100% of the outstanding Partnership exchangeable units are exchanged for RBI common shares); the 2012 Omnibus Plan pursuant to which 607,787 common shares are issuable, representing 0.2% of the issued and outstanding shares of RBI as of March 31, 2020 (0.1% on a fully exchanged basis); and the 2014 Omnibus Plan pursuant to which 15,740,826 common shares are issuable pursuant to awards currently outstanding and an additional 11,858,348 are issuable, together representing 5.3% of the issued and outstanding shares of RBI as of March 31, 2020 (3.4% on a fully exchanged basis). Accordingly, an aggregate of 28,410,652 common shares are currently issuable under all security based compensation arrangements, representing 9.5% of the issued and outstanding shares of RBI as of the Record Date (6.1% on a fully exchanged basis). The total number of equity awards outstanding which will result in common shares being issued and the percentage such common shares represent of RBI’s currently outstanding capital for our prior plans and the 2014 Omnibus Plan are as follows: the 2011 Omnibus Plan pursuant to which 1 option award (with 106,050 options under grant) and 3 restricted stock unit awards (with 126,402 RSUs under grant) are outstanding, representing 0.04% and 0.04% of the issued and outstanding common shares of RBI as of March 31, 2020 (0.02% and 0.03% on a fully exchanged basis);
Appendix C the 2012 Omnibus Plan pursuant to which 61 option awards (with 543,756 options under grant) and 9 restricted stock unit awards (with 64,031 RSUs under grant) are outstanding, representing 0.2% and 0.02% of the issued and outstanding common shares of RBI as of March 31, 2020 (0.1% and 0.01% on a fully exchanged basis); and the 2014 Omnibus Plan pursuant to which 581 option awards (with 9,212,318 options under grant) and 1,770 restricted stock unit awards (with 1,654,071 RSUs under grant) and 157 performance shares awards (with 4,874,437 performance share units under grant) are outstanding, representing 3.1%, 0.6% and 1.6% of the issued and outstanding common shares of RBI as of March 31, 2020 (2%, 0.4% and 1% on a fully exchanged basis). About the 2014 Omnibus Plan A summary of the Restaurant Brands International Inc. Amended and Restated 2014 Omnibus Incentive Plan (the “2014 Omnibus Plan”) is set out below. The purpose of the 2014 Omnibus Plan is to attract, retain and reward those employees, directors and other individuals who are expected to contribute significantly to our success, to incentivize such individuals to perform at the highest level, to strengthen the mutuality of interests between such individuals and our shareholders and, in general, to further the best interests of RBI and our shareholders. As discussed in our Form 8-K filed on December 9, 2015 with the SEC and Canadian securities regulatory authorities (the “Pro Forma Form 8-K”), the historical results of operations for the year ended DecemberMarch 31, 2014 have been adjusted to give pro forma effect to those events that are directly attributable to (i) the BKW merger with TH (the “Combination”), (ii) our entry into a new $6,750.0 million term loan facility, (iii) our issuance of $2,250.0 million aggregate principal amount of second lien senior secured notes, (iv) our issuance of $3.0 billion of 9% cumulative compounding perpetual voting preferred shares and the warrant to purchase our2020, 15,740,826 common shares are authorized and issuable under the 2014 Omnibus Plan. This maximum number of common shares can be increased to a subsidiary of Berkshire Hathaway, Inc., (v) the repayment of $2,923.4 million of existing BKW indebtedness, (vi) extinguishment of approximately $1.0 billion of TH legacy notes (as detailed in the Pro Forma Form 8-K, (i) through (vi) collectively, the “TH Transactions”), (vii) the issuance of $1,250.0 million of first lien senior secured notes, and (viii) an amendmentinclude any common shares not used to settle awards issued under our credit agreement and repayment of $1,550.0 million of our term loan facility (as detailed in the Pro Forma Form 8-K, (vii) and (viii), the “Refinancing”), as if the TH Transactions and Refinancing occurred on the first day of fiscal 2014.prior plans. The pro forma statements of operations in the Pro Forma Form 8-K include the impact of acquisition accounting adjustments resulting from the application of acquisition accounting to the Combination and adjustments to interest expense resulting from the Combination and Refinancing as if the TH Transactions and Refinancing occurred on the first day of fiscal 2014. For more information regarding the pro forma financial information, please refer to our Pro Forma Form 8-K.
| | | Awards Granted | | | Participants | | • Any director, employee or consultant of RBI, its subsidiaries or any of its affiliates is eligible to participate in the 2014 Omnibus Plan | | | Plan administration | | • The Compensation Committee of RBI (the “Committee”) administers the 2014 Omnibus Plan | | | Stock options | | • The holder receives common shares when options are exercised upon payment of the exercise price • Except under certain circumstances described in the 2014 Omnibus Plan, the term of each option will not exceed 10 years • The Committee fixes the vesting conditions it deems appropriate when granting options • The exercise price per share under an option is determined by the Committee at the time of original grant, however the exercise price will not be less than fair market value of a common share on the date the option is granted • To the extent vested and exercisable, options may be exercised in whole or in part at any time during the term, by providing notice and payment in full of the purchase price, which can be paid as follows: (i) in cash or by check, bank draft or money order payable to RBI; (ii) as permitted by law and the Committee, through a payment by the participant’s broker; or (iii) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, having RBI withhold common shares issuable upon exercise of the option, or by payment in full or in part in the form of common shares owned by the participant, based on the Fair market value of the common shares on the payment date as determined by the Committee) |
Appendix C | | | Awards Granted | | | Stock appreciation rights (SARs) | | • The Committee may grant stock appreciation rights (“SARs”) under the 2014 Omnibus Plan • SARs may be granted to participants either alone (“freestanding”) or in addition to other awards granted under the 2014 Omnibus Plan (“tandem”) • Except under certain circumstances described in the 2014 Omnibus Plan, a freestanding SAR will not have a term of greater than ten years • Unless it is a substitute award, a freestanding SAR will not have a grant price less than the fair market value of the share on the date of grant • In the case of any tandem SAR related to an option, the SAR will not be exercisable until the related option is exercisable and will terminate, and no longer be exercisable, upon the termination or exercise of the related option | | | Restricted Stock/Restricted Stock Units (RSUs) | | • Shares of restricted stock and restricted stock units (“RSUs”) will be subject to any restrictions that the Committee may impose, including any limitation on the right to vote a share of restricted stock or the right to receive any dividend or dividend equivalent | | | Deferred Stock | | • Deferred stock will be settled upon expiration of the deferral period specified for an award by the Committee • In addition, deferred stock will be subject to any restrictions on transferability, risk of forfeiture and other restrictions that the Committee may impose and, the Committee, in its discretion, may award dividend equivalents with respect to awards of deferred stock | | | Performance awards | | • The Committee may grant a performance award to a participant payable upon the attainment of specific performance goals | | | Other awards | | • The Committee may grant other awards that may be that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares or factors that may influence the value of shares • The Committee is also permitted to grant cash-based awards to participants and determine any conditions or terms of such awards • The Committee is also permitted to grant equity interests in any entity with respect to which RBI holds, directly or indirectly, a controlling interest, whether such entity is a corporation, partnership or other entity. a performance award to a participant payable upon the attainment of specific performance goals | | | Issue limits | | • The number of shares that may be issued under all of RBI’s security-based compensation plans to directors and senior officers of RBI or its subsidiaries, 10% shareholders of RBI, and affiliates of such persons may not exceed 10% of RBI’s issued and outstanding common shares at any time or within aone-year period |
Appendix D C | | | Awards Granted | | | Issuing common shares | | • We can issue any combination of the following kinds of common shares: • authorized for issue but not yet issued • acquired by RBI • If we issue common shares in settlement of an option or SAR, the number of common shares available for issue under the 2014 Omnibus Plan will be reduced by the same number of shares issued in settlement | | | Value of awards | | • Fair market value of common shares on any relevant grant date means the closing price of our common shares on the TSX (for Canadian participants) or the NYSE (fornon-Canadian participants) on the trading day immediately prior to the relevant grant date | | | Clawback and forfeiture | | • Any award granted after January 1, 2017 is subject to mandatory repayment or forfeiture by the participant to RBI, as applicable, if required pursuant to the terms of the RBI clawback policy or any law rule or regulation which imposes mandatory recoupment under the circumstances • The Committee also reserves the right in an award agreement to cause the forfeiture of the gain realized by a participant with respect to an award on account of actions taken, or failed to be taken, by such participant in breach of their obligations under applicable company agreements, obligations or policies | | | Termination of awards | | • If an award expires, is cancelled, is settled in cash, or is otherwise terminated without being exercised or payment being made, the common shares subject to that award shall remain available for issuance under the 2014 Omnibus Plan | | | Termination of employment | | • The 2014 Omnibus Plan provides the Committee with discretion to provide in any award agreement, or in an individual case, the circumstances in which awards shall be exercised, vested, paid or forfeited in the event a participant ceases to provide service to RBI prior to exercise or settlement or the end of a performance period | | | Change in control | | • Unless otherwise provided in an award agreement, in the event of a change in control a participant’s unvested award will be treated in accordance with one of the following methods as determined by the Committee: • awards, whether or not vested, will be continued, assumed or have new rights substituted as determined by the Committee; • the Committee, in its sole discretion, may provide for the purchase of any awards by RBI or an affiliate for an amount of cash equal to the excess of the change in control price of the shares covered by such awards, over the aggregate exercise price of such awards; or • if and to the extent that the approach chosen by the Committee results in an acceleration or potential acceleration of the exercise, vesting or settlement of an award, the Committee may impose such conditions upon the exercise, vesting or settlement of such award as it determines | | | Financial Assistance | | • The 2014 Omnibus Plan does not include provisions to provide financial assistance to participants to facilitate the exercise of options |
APPENDIX D
Appendix C | | | Awards Granted | | | Making changes to the 2014 Omnibus Plan | | • The board of directors of RBI may amend, suspend, or terminate the 2014 Omnibus Plan, in whole or in part, at any time, provided that all material amendments to the 2014 Omnibus Plan require the prior approval of the shareholders and must comply with the rules of the TSX • The following changes require approval by our Board and our shareholders: • an increase in the maximum number of common shares that may be made the subject of awards under the 2014 Omnibus Plan • making a change or adjustment (other than for a stock dividend, recapitalization or other transaction where an adjustment is permitted or required under the terms of the plan) that reduces or would have the effect of reducing the exercise price of an option or SAR granted under the plan, whether through amendment, cancellation or replacement grants, or other means • increasing the limits on awards that can be made to participants • extending the term of an outstanding option or SAR beyond its expiration date, except as specified for awards that expire outside of an established trading window • making a change that would permit options granted under the plan to be transferred or assigned other than to settle an estate • changing the plan’s amendment provisions that is not either for “housekeeping” purposes or to maintain compliance with applicable laws or regulations • Examples of changes the Committee can make without shareholder approval: • ensuring continuing compliance with applicable law, the rules of the TSX or other applicable stock exchange rules and regulations or accounting or tax rules and regulations • minor changes of a “housekeeping” nature • changing the vesting provision of the 2014 Omnibus Plan or any Award, subject to certain limitations • waiving any conditions or rights under any award, subject to certain limitations • changing the termination provisions of any award that does not entail an extension beyond the original expiration date thereof • adding a cashless exercise feature, payable in securities, where such feature provides for a full deduction of the number of underlying shares from the Plan reserve, and any amendment to a cashless exercise provision • adding a form of financial assistance and any amendment to a financial assistance provision which is adopted • changing the process by which a participant who wishes to exercise his or her award can do so • delegating any and all of the powers of the Committee to administer the 2014 Omnibus Plan to officers of RBI |
DESCRIPTION OF INCENTIVE PLANS
About the 2014 Omnibus Plan
Appendix C A summary of the Restaurant Brands International Inc. 2014 Omnibus Incentive Plan (the “2014 Omnibus Plan”) is set out in Proposal 4 on page 58 of the proxy statement in the section entitled “Summary of the 2014 Omnibus Plan.”
| | | Awards Granted | | | Transferability | | • Awards are generallynon-transferrable and may be exercised, during a grantee’s lifetime, only by the grantee or, in limited circumstances, by the holder’s legal representative • No awards under the 2014 Omnibus Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be transferable in any manner other than by will or the law of descent |
About the 2012 Omnibus Incentive Plan The Restaurant Brands International Inc. Amended and Restated 2012 Omnibus Incentive Plan (the “2012 Omnibus Plan”) is based on the Burger King Worldwide, Inc. Amended and Restated 2012 Omnibus Plan as amended effective as of December 12, 2014 to reflect that RBI assumed all of the obligations of Burger King Worldwide, Inc. for purposes of the 2012 Omnibus Plan and all outstanding award agreements thereunder. Effective as of December 12, 2014, the only outstanding awards under the 2012 Omnibus Plan are stock options and restricted stock units. As of December 12, 2014, no new awards can be granted under the 2012 Omnibus Plan and no employee, director or other individual are permitted to commence participation in the 2012 Omnibus Plan. AAs of March 31, 2020, a maximum of 6,026,044607,787 common shares are authorized and issuable under the 2012 Omnibus Plan. The terms of the 2012 Omnibus Plan are substantially equivalent to the 2014 Omnibus Plan described above. About the 2012 Plan
The Restaurant Brands International Inc. 2012 Stock Incentive Plan (the “2012 Plan”) is based on the Tim Hortons Inc. 2012 Stock Incentive Plan as amended effective as of December 12, 2014 to reflect that RBI assumed all of the obligations of Tim Hortons Inc. for purposes of the 2012 Plan and all outstanding award agreements thereunder. Effective as of December 12, 2014, the only outstanding awards under the 2012 Plan are stock options and tandem stock appreciation rights which replaced stock options and tandem stock appreciation rights outstanding at the time of the closing of the Transaction as more fully described in Section 3.2(j) of Schedule D to the Arrangement Agreement. As of December 12, 2014, no new awards can be granted under the 2012 Plan and no employee, director or other individual are permitted to commence participation in the 2012 Plan. A maximum of 774,585 common shares are authorized and issuable under the 2012 Plan.
| | | Awards Granted
| | | Participants
| | • Employees, non-employee directors and individuals that had received a formal written offer of employment were eligible to participate in the 2012 Plan
| Plan administration
| | • The Compensation Committee of RBI (the “Committee”) administers the 2012 Plan
| Stock options
| | • The holder receives common shares when the options are exercised based on the price of our common shares at the time of exercise
• When exercised, the holder surrenders the related number of stock appreciation rights for cancellation
• The exercise times, vesting and term of the options (which did not exceed 10 years at time of issue) remain unchanged
| Stock appreciation rights (SARs) | | • The outstanding SARs have been granted in tandem with the outstanding options and:
• can only be exercised when the related option is exercisable
• the holder receives, in the discretion of the Committee, cash, common shares or a combination of both when SARs are exercised
|
Appendix D
| | | | | • the amount the holder receives is: the number of SARs exercised x (the fair market value of common shares on the date the SARs were exercised, less the option price)
• when exercised, the holder surrenders the related number of stock options for cancellation
• terminate when the related option is exercised, expires or is forfeited
| Issue limits
| | • The 2012 Plan includes the following limitations:
• Non-employee directors – we can grant up to 0.25% of our issued and outstanding common shares (at the time the award is granted) to non-employee directors as a group, or $100,000 to each individual non-employee director in a calendar year
• Insiders – we can grant a total of up to 10% of our issued and outstanding common shares under all security-based compensation arrangements to all insiders as a group, and no more than 10% in any one-year period
| Issuing common shares
| | • We can issue any combination of the following kinds of common shares:
• authorized for issue but not yet issued
• acquired by or on behalf of a trust we establish and hold for future delivery
• acquired by delivery of cash to a broker to acquire shares on behalf of eligible participants
• If we issue common shares in settlement of an option or SAR, the number of common shares available for issue under the 2012 Plan will be reduced by the same number of shares issued in settlement
| Value of awards
| | • Fair market value of common shares on any relevant date means the closing price of our common shares on the TSX or, if the Committee chooses, the NYSE, on the trading day just before the relevant date
| Termination of awards
| | • If an award expires, is cancelled, is settled in cash, or is otherwise terminated without being exercised or payment being made, the common shares subject to that award shall remain available for issuance under the plan but no new awards will be made under the 2012 Plan
| Termination of employment
| | • The 2012 Plan contains provisions concerning the treatment of options and SARS upon termination of employment, which apply unless otherwise set forth in an applicable Award agreement, or unless otherwise determined by the Committee, with the consent of the holder
• If a holder dies or becomes disabled the holder’s options and SARs will become immediately exercisable and may be exercised for a period of four years following death or disability (but in no event beyond the maximum term of the option or SAR)
• If a holder’s employment is terminated by reason of retirement the holder’s options and SARs will remain outstanding for a period of four years (but in no event beyond the maximum term of the option or SAR) and unvested options and SARs will continue to vest in accordance with their applicable vesting schedule
• If a grantee’s employment is terminated without cause in connection with a sale or other disposition of a subsidiary the holder’s options and SARs will remain outstanding for one year (but in no event beyond the maximum term of the option or SAR) and unvested options and SARs will become immediately vested on the termination date
|
Appendix D
| | | | | • If a grantee’s employment terminates for any other reason all of the holder’s options and SARS will be forfeited immediately unless otherwise determined by the Human Resource and Compensation Committee with the holder’s consent, except any vested options or SARs the holder holds will remain exercisable for a period of 90 days following termination of employment or, in the event such holder dies during such 90 day period, remain exercisable for a period of one year following the termination date but, in no event, beyond the maximum term of the option or SAR
| Change in control
| | • Except as otherwise provided in an Award agreement or another agreement between the holder and the company (or a subsidiary thereof), in the event that, within 24 months following the occurrence of a “change in control”, a holder’s employment is terminated without cause or for good reason all options/SARs outstanding on the termination date, whether or not exercisable, will become immediately exercisable
| Financial Assistance
| | • The 2012 Plan does not include provisions to provide financial assistance to participants to facilitate the exercise of options
| Making changes to the 2012 Plan | | • Except as described below, the Committee could amend, suspend, discontinue or terminate the 2012 Plan and any outstanding awards, in whole or in part, at any time without giving notice to shareholders or receiving their approval, provided that all material amendments to the 2012 Plan receive shareholder approval
• The following changes require approval by our Board and our shareholders:
• making a change or adjustment (other than for a stock dividend, recapitalization or other transaction where an adjustment is permitted or required under the terms of the plan) that reduces or would have the effect of reducing the exercise price of an option or SAR granted under the plan, whether through amendment, cancellation or replacement grants, or other means
• extending the term of an outstanding option or SAR beyond its expiration date, except as specified for awards that expire outside of an established trading window
• increasing the limits on awards that can be made to non-employee directors and insiders
• making a change that would permit options granted under the plan to be transferred or assigned other than to settle an estate
• changing the plan’s amendment provisions that is not either for “housekeeping” purposes or to maintain compliance with applicable laws or regulations
• In addition, we may not change an outstanding option or tandem SAR in a way that will materially adversely impair the rights of the holder without his or her consent, unless we are making the change so we can continue to comply with applicable laws or regulations.
• Examples of changes the Committee can make without shareholder approval:
• changes that relate to a stock dividend, recapitalization or other transaction where an adjustment is allowed or required
• changes that relate to a change in capitalization that leads to a change in shares or an exchange of shares for a different number or kind of shares or other securities of RBI
|
Appendix D
| | | | | • changing a vesting provision or changing the termination provisions, but not extending it beyond its original expiration date
• adding a form of financial assistance, and making a change to an existing financial assistance provision
• changes to continue to comply with applicable laws, regulations, requirements, rules or policies of any governmental authority or stock exchange
• “housekeeping” changes, including changes that eliminate ambiguity or that correct or supplement any provision
| Transferability
| | • Options and SARs are generally non-transferrable and may be exercised, during a grantee’s lifetime, only by the grantee
• If a holder of an options and SAR becomes incapacitated, the holder’s legal representative or estate may exercise the option or SAR
|
About the 2006 Plan
The Restaurant Brands International Inc. 2006 Stock Incentive Plan (the “2006 Plan”) is based on the Tim Hortons Inc. 2006 Stock Incentive Plan as amended effective as of December 12, 2014 to reflect that as a result of the Arrangement Agreement and Plan of Merger among RBI, Burger King Worldwide, Inc. and Tim Hortons Inc., RBI assumed all of the obligations of Tim Hortons, Inc. for purposes of the 2006 Plan and all outstanding award agreements thereunder. Effective as of December 12, 2014, the only outstanding awards under the 2006 Plan are stock options and tandem stock appreciation rights which replaced stock options and tandem stock appreciation rights outstanding at the time of the closing of the Transaction as more fully described in Section 3.2(j) of Schedule D to the Arrangement Agreement. As of December 12, 2014, no new awards can be granted under the 2006 Plan and no employee, director or other individual are permitted to commence participation in the 2006 Plan. A maximum of 27,538 common shares are authorized and issuable under the 2006 Plan. The terms of the 2006 Plan are substantially equivalent to the 2012 Plan described above.
About the 2011 Omnibus Incentive Plan The Restaurant Brands International Inc. 2011 Omnibus Incentive Plan (the “2011 Omnibus Plan”) is based on the Burger King Worldwide Holdings, Inc. 2011 Omnibus Plan. All stock options and restricted stock units under the 2011 Omnibus Plan outstanding on June 20, 2012 were assumed by Burger King Worldwide, Inc. and converted into stock options to acquire common stock and restricted stock units of Burger King Worldwide, Inc., and Burger King Worldwide, Inc. assumed all of the obligations of Burger King Worldwide Holdings, Inc. under the 2011 Omnibus Plan. The 2011 Omnibus Plan was amended effective as of December 12, 2014 to reflect that RBI assumed all of the obligations of Burger King Worldwide, Inc. for purposes of the 2011 Omnibus Plan and all outstanding award agreements thereunder. Effective as of December 12, 2014, the only outstanding awards under the 2011 Omnibus Plan are stock options and restricted stock units. AAs of December 12, 2014, no new awards can be granted under the 2011 Omnibus Plan and no employee, director or other individual is permitted to commence participation in the 2011 Omnibus Plan. As of March 31, 2020, a maximum of 11,940,911232,452 common shares are authorized and issuable under the 2011 Omnibus Plan. | | | Awards Granted | | | | | Participants | | • Employees, directors and consultants were eligible to participate in the 2011 Omnibus Plan | | | Stock options | | • The holder receives common shares when the options are exercised upon payment of the purchase price • The exercise times, vesting and term of the options (which did not exceed 10 years at time of issue) remain unchanged • The purchase price per share under an option was determined by the Committee at the time of original grant and was not less than the fair market value of a share on the date of grant.grant |
Appendix D
| | | Restricted Share Units | | • The holder has a contractual right to receive one share or the value of one share pursuant to the terms and conditions in the applicable award agreement.agreement |
Appendix C | | | Awards Granted | | | Issuing common shares | | • We can issue any combination of the following kinds of common shares: • authorized for issue but not yet issued • acquired by RBI • If we issue common shares in settlement of an option or restricted share unit, the number of common shares available for issue under the 2011 Omnibus Plan will be reduced by the same number of shares issued in settlement | | | Value of awards | | • Fair market value of common shares on any relevant date means the closing price of our common shares on the NYSE on the date in question (or the preceding date trading day just before the relevant date if there was no trading on the date in question). Prior to the predecessor of BKW becoming public, fair market value was determined by the Committee at the time, acting in good faith | | | Termination of awards | | • If an award expires, is cancelled, is settled in cash, or is otherwise terminated without being exercised or payment being made, the common shares subject to that award shall remain available for issuance under the plan but no new awards will be made under the 2011 Omnibus Plan | | | Plan administration | | • The Committee administers the 2011 Omnibus Plan | | | Termination of employment | | • The 2011 Omnibus Plan provided the Committee with discretion to provide in any award agreement the circumstances in which a stock option or restricted share unit shall be exercised, vested, paid or forfeited in the event a participant ceases to provide service to RBI prior to exercise or settlement | | | Financial Assistance | | • The 2011 Omnibus Plan does not include provisions to provide financial assistance to participants to facilitate the purchase of securities or exercise of awards | | | Making changes to the 2011 Omnibus Incentive Plan | | • The 2011 Omnibus Plan provides the board of directors of RBI with broad powers to amend the Plan without shareholder approval unless such shareholder approval is required pursuant to TSX or NYSE rules or applicable law • The 2011 Omnibus Plan provides the Committee with certain powers, including: • make amendments to achieve the stated purposes of the 2011 Omnibus Plan in atax-efficient manner and to comply with foreign law • amend outstanding awards provided that the rights of a participant are not adversely affected (unless changes are made to continue to comply with applicable laws or exchange requirements) and the amendment does not have the effect of reducing the exercise price of the award • adjust awards in recognition of certain corporate events where appropriate to prevent dilution or enlargement of the benefits intended to be made available under the 2011 Omnibus Plan | | | Transferability | | • Options and restricted share units are generallynon-transferrable and may be exercised, during a grantee’s lifetime, only by the grantee |
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| | 000001 | | | | Mr A Sample | | | | Designation (if any) | | Security Class | | Add1 | | 123 | | Add2 | | | | add3 | | Holder Account Number | | add4 | | | | add5 | | C1234567890 XXX | | | | | | | | | | | | | | Fold |
| Form of Proxy - Annual and Special Meeting to be held on June 9, 2016 |
This Form of Proxy is solicited by and on behalf of Management of Restaurant Brands International Inc.
Notes to proxy
1. Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse).
2. If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be required to provide documentation evidencing your power to sign this proxy.
3. This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy.
4. If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder.
5. The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by the Board of Directors.
6. The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly.
7. This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the meeting or any adjournment or postponement thereof.
8. This proxy should be read in conjunction with the accompanying documentation provided by Management and the Board of Directors.
9. If the meeting is adjourned or postponed, your proxy must be received by 8:00 a.m. (Eastern Time) on the last business day preceding the day of the reconvened meeting.
| | | | | | | | | | Mr A Sample Designation (if any) Add1 Add2 add3 add4 add5 add6 | | 000001 | | Security Class 123 Holder Account Number C1234567890 XXX |
- - - - Fold We are monitoringCOVID-19 concerns, if anin-person Meeting is not permitted or advisable, we will announce alternative arrangements which may include switching to a hybrid or virtual meeting or changing the time, date or location. Any such change will be announced by press release and the filing of additional proxy materials. Please review the proxy materials before voting. | | | This Form of Proxy is solicited by and on behalf of Management of Restaurant Brands International Inc. Notes to proxy 1.Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse). 2. If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be required to provide documentation evidencing your power to sign this proxy. 3. This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy. 4. If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder. 5. The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by the Board of Directors. 6. The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly. 7. This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the meeting or any adjournment or postponement thereof. 8. This proxy should be read in conjunction with the accompanying documentation provided by Management and the Board of Directors. 9. If the meeting is adjourned or postponed, your proxy must be received by 8:00 a.m. (Eastern Time) on the last business day preceding the day of the reconvened meeting. | | - - - - Fold |
Proxies submitted must be received by 11:59 p.m., Eastern Daylight Time, (Eastern Time) on June 7, 20168, 2020. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! | | | | | | | | |
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| | | | | • Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683) Toll Free | | • Go to the following web site: www.investorvote.com •Smartphone? Scan the QR code to vote now.
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| | • You can enroll to receive future securityholder communications electronically by visiting www.investorcentre.com and clicking at the bottom of the page. | 1-866-732-VOTE (8683) Toll Free | | | |
If you vote by telephone or the Internet, DO NOT mail back this proxy. Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this proxy. Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy. To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below. CONTROL NUMBER 123456789012345
| | | | | CONTROL NUMBER 123456789012345 | | | | | 01L97C | | CPUQC01.E.INT/000001/i1234 | | |
| | | | | | | | | | | + | | MR SAM SAMPLE | | | | C1234567890 | | | | + | | | | | | | XXX 123 | | | | Appointment of Proxyholder | | | | |
Appointment of Proxyholder | | | | | | | | | I/We, being holder(s) of Restaurant Brands International Inc. common shares hereby appoint: Jill Granat, or failing this person, Jose E. Cil | | OR | | Print the name of the person you are appointing if this person is someone other than the Management Nominees listed herein. | | | | | I/We, being holder(s) of Restaurant Brands International Inc.common shares hereby appoint: Jill Granat, or failing this person, Daniel S. Schwartz
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as my/our proxyholder with full power of substitution and to attend, act and to vote for and on behalf of the shareholder in accordance with the following directions (or if no directions have been given, as the proxyholder sees fit) on all proposals set forth below and all other matters that may properly come before theAnnual and SpecialGeneral Meeting of shareholders ofRestaurant Brands International Inc. to be held at the offices of Restaurant Brands International Inc., 226 Wyecroft Road, Oakville,130 King Street West, Suite 300, Toronto, Ontario, L6K 3X7M5X 1E1 on June 9, 201610, 2020 at 8:00 a.m., Eastern Daylight Time, (Eastern Time) and at any adjournment or postponement thereof. The Board of Directors recommends a vote “FOR” proposals 1, 2, 3 and recommends a vote “AGAINST” proposals 4 and makes no recommendation regarding shareholder proposal 5. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors | | | | | For | | Withhold | | | | For | | Withhold | | | | For | | Withhold | | | | | | | | | | | | | 01. Alexandre Behring | | ¨☐ | | ¨ | | 02. Marc Caira☐ | | ¨02. João M. Castro-Neves
| | ☐ | | ☐ | | ¨03. Maximilien de Limburg Stirum
| | 03. Martin E. Franklin☐ | | ¨ ☐ | | ¨
| | | | | | | | | | | 04. Paul J. Fribourg | | ☐ | | ☐ | | ¨05. Neil Golden
| | ☐ | | ☐ | | ¨06. Ali Hedayat
| | 05. Neil Golden☐ | | ☐ | | ¨
| | ¨Fold
| | 06. John A. Lederer | | ¨
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| | | | | | | | | | | | | 07. Thomas V. MilroyGolnar Khosrowshahi | | ☐ | | ☐ | | ¨08. Giovanni (John) Prato
| | ☐ | | ☐ | | ¨09. Daniel S. Schwartz
| | 08. Daniel S. Schwartz☐ | | ¨ ☐ | | ¨
| | 09. Carlos Alberto Sicupira | | ¨
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| | Fold | | | | | | | | | | | 10. Carlos Alberto Sicupira | | ☐ | | ☐ | | 11. Roberto Moses Thompson Motta | | ¨
| | ¨ ☐ | | 11. Alexandre Van Damme | | ¨
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| | | | | | | | | | | For | | Against | | Withhold | | | | | | | | 2. Say-On-Pay Approve,Approval, on a non-binding advisory basis, of the compensation paid to our named executive officers.
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| | ☐ | | | | | | | For | | Withhold | | | | | | | | 3. Appointment of Auditors Appoint KPMG LLP as our auditors to serve until the close of the 20172021 Annual Meeting of Shareholders and authorize our directors to fix the auditors’ remuneration. | | | | ☐ ¨
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| | | | | For | | For Against | | AgainstWithhold | | | | | | | | 4. AmendmentsShareholder Proposal Consider a shareholder proposal to 2014 Omnibus Incentive Plan Approve amendmentsreport on Restaurant Brands International Inc.’s minimum requirements and standards related to the 2014 Omnibus Incentive Plan that would permit common shares not used to settle awards under prior plans to be used under the 2014 Omnibus Plan and make other administrative changes.workforce practices.
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| | | | | For | | Against | | Withhold | |
| | | | | | 5. Shareholder Proposal Consider a shareholder proposal to adoptdevelop a written board diversitycomprehensive policy if such proposal is properly presented at the Meeting.on plastic pollution and sustainable packaging and issue a report to investors. | | ¨☐ | | ☐ ¨
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| | | | | | | | | | | | | Authorized Signature(s) -– This section must be completed for your instructions to be executed. | | Signature(s)
| | Signature(s) | | Date | | | I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting.If no voting instructions are indicated above, this Proxy will be voted as recommended by the Board of Directors. | | | | | | | | | | MM/ DD/ YY | | |
| | | | | | | Interim Financial Statements - Mark this box if you would like to receive Interim Financial Statements and accompanying Management’s Discussion and Analysis by mail. | | ¨ | | Annual Financial Statements - Mark this box if you would NOT like to receive the Annual Financial Statements and accompanying Management’s Discussion and Analysis by mail. | | ¨ |
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