A letter from your broker, bank or other holder of record indicating that you were the beneficial owner of Company stock as of the Record Date; or
Your most recent account statement indicating that you were the beneficial owner of Company stock as of the Record Date.
Voting again by Internet or telephone prior to 11:59 p.m. EDT on May 2, 201720, 2019 (only the latest vote you submit will be counted); or
Submitting a new properly signed and dated paper proxy card with a later date (your proxy card must be received before the start of the Annual Meeting).
“FOR” the ratification of the appointment of Ernst & Young LLP as our independent auditors; and
“FOR” the approval of the compensation of the Company’s named executive officers (“NEOs”); and.
Vote your street-name shares even though you have not provided voting instructions; or
Choose not to vote your shares.
Overseeing the Company’s compliance with legal and regulatory requirements and the integrity of its financial statements;
Overseeing the Company’s policies and practices for identifying, managing and mitigating key enterprise risks;
Overseeing management, including reviewing the CEO’s performance and succession planning for key management roles; and
Overseeing executive and director compensation, and our compensation program and policies.
Calling meetings of the independent directors of the Board, in addition to the executive sessions of independent directors held during each Board meeting;
Establishing the agenda and presiding at all executive sessions and other meetings of the independent directors of the Board;
Communicating with the independent directors of the Board between meetings as necessary or appropriate;
Being available for consultation and direct communication at the request of major stockholders.
The remaining 10 directors will be elected by the holders of our Common Stock and Class B Common Stock voting together without regard to class.
NON-EMPLOYEE DIRECTOR COMPENSATION
The Hershey Company Directors’ Compensation Plan
We maintain a Directors’ Compensation Plan that is designed to:
Attract and retain highly qualified,non-employee directors; and
Align the interests ofnon-employee directors with those of our stockholders by paying a portion ofnon-employee compensation in units representing shares of our Common Stock.
Directors who are employees of the Company receive no additional compensation for their service on our Board.
Mr. Bilbrey, our current Chairman of the Board,Ms. Buck is the only employee of the Company who also served as a director during
20162018 and thus received no additional compensation for
hisher Board service.
The Board targets
non-employee director compensation at the
50th50th percentile of compensation paid to directors at a peer group of companies we call the
20162018 Peer Group. Information about the
20162018 Peer Group is included in the section entitled “Setting Compensation” in the Compensation Discussion & Analysis. Each year, with the assistance of the Compensation Committee and the Compensation Committee’s compensation consultant, the Board reviews the compensation paid to directors at companies in the current peer group to determine whether any changes to
non-employee director compensation are warranted.
As a result of its review in December 2015,2017, the Board determined that no changesincreased the annual restricted stock unit (“RSU”) award from $150,000 to $155,000 and increased the annual Audit Committee Chair retainer from $15,000 to $20,000.
non-employee director compensation were warranted for 2016.Accordingly, compensation paid tonon-employee directors in 20162018 was as follows:
| |
| | |
| |
| |
Annual retainer for Chairman of the Board(1) (2) | 150,000 |
|
Annual retainer for othernon-employee directors directors | | | 100,000 |
|
Annual restricted stock unit (“RSU”)RSU award | 155,000 | | 135,000 |
|
Annual fee for Lead Independent Director(1)(2) (3) | | | 25,000 |
|
Annual fee for chairs of Audit, Compensation, and Finance and Risk Management Committees(1)
| | | 15,000 | |
Annual fee for chair of Audit Committee(2) | 20,000 |
|
Annual fees for chairs of Compensation, Finance and Risk Management, and Governance CommitteeCommittees(1)(2) | 15,000 | | 10,000 |
|
| |
| (1) | Applies only when Chairman of the Board is a non-employee director. |
| |
| (2) | Paid in addition to $100,000 annual retainer fornon-employee directors. |
| |
| (3) | A Lead Independent Director is appointed if the Chairman of the Board is not independent. |
The Board completed its annual review of
non-employee director compensation in December
20162018 and determined that
no changes to any of the
following changescompensation elements were warranted for
2017 to ensure that the program remains aligned to the 50th percentile of compensation paid to directors from our 2016 Peer Group. The Board elected to increase the annual RSU award from $135,000 to $150,000 and to increase the annual Governance Committee Chair retainer from $10,000 to $15,000. The Board also elected to increase thenon-employee director stock ownership guidelines, as described below, from four times the annual retainer to five times the annual retainer. Except for these changes, all other elements of thenon-employee director compensation program described above remain unchanged for 2017.28
2019.
Payment of Annual Retainer, Lead Independent Director Fee and Committee Chair Fees
The annual retainer
(including the annual retainer for the Chairman of the Board, when applicable) and any applicable Lead Independent Director or committee chair fees for all
non-employee directors are paid in quarterly installments on the
15th15th day of March, June, September and December, or the prior business day if the
15th15th is not a business day.
Non-employee directors may elect to receive all or a portion of the annual retainer
(including the annual retainer for the Chairman of the Board, when applicable) in cash or in Common Stock.
Non-employee directors may also elect to defer receipt of all or a portion of the retainer,
(including the annual retainer for the Chairman of the Board, when applicable) any applicable Lead Independent Director fee or committee chair fees until the date their membership on the Board ends. Lead Independent Director and committee chair fees that are not deferred are paid only in cash.
Non-employee directors choosing to defer all or a portion of their retainer,
any applicable Lead Independent Director fee or committee chair fees may invest the deferred amounts in two ways:
In a cash account that values the performance of the investment based upon the performance of one or more third-party investment funds selected by the director from among the mutual funds or other investment options available to all employees participating in our 401(k) Plan. Amounts invested in the cash account are paid only in cash.
In a deferred common stock unit account that we value according to the performance of our Common Stock, including reinvested dividends. Amounts invested in the deferred common stock unit account are paid in shares of Common Stock.
RSUs are granted quarterly to
non-employee directors on the first day of January, April, July and October. In
2016,2018, the number of RSUs granted in each quarter was determined by dividing
$33,750$38,750 by the average closing price of a share of our Common Stock on the New York Stock Exchange (“NYSE”) on the last three trading days preceding the grant date. RSUs awarded to
non-employee directors vest one year after the date of grant, or earlier upon termination of the director’s membership on the Board by reason of retirement (termination of service from the Board after the director’s
60th60th birthday), death or disability, for any reason after a Change in Control as defined in our Executive Benefits Protection Plan (Group 3A) (“EBPP 3A”), or under such other circumstances as the Board may determine. Vested RSUs are payable to directors in shares of Common Stock or, at the option of the director, can be deferred as common stock units under the Directors’ Compensation Plan until the director’s membership on the Board ends. Dividend equivalent units are credited at regular rates on the RSUs during the restriction period and, upon vesting of the RSUs, are payable in shares of Common Stock or deferred as common stock units together with any RSUs the director has deferred.
As of March
6, 2017,22, 2019, Messrs.
Brown, Davis, Malcolm
Mead, Nevels, Ridge and Shedlarz and Mmes. Arway,
Haben and
HabenKoken had attained retirement age for purposes of the vesting of RSUs.
Other Compensation, Reimbursements and Programs
The Board occasionally establishes committees of limited duration for special purposes. When a special committee is established, the Board will determine whether to provide
non-employee directors with additional compensation for service on such committee based on the expected duties of the committee, the anticipated number and length of any committee meetings, and other factors the Board, in its discretion, may deem relevant.
In 2016, the Board approved payments of $25,000 to Ms. Arway as Chair and $20,000 to each of Ms. Haben and Messrs. Malcolm, Mead, Nevels and Shedlarz for their service on the special committeeNo such committees were established in
connection with the Company’s Chief Executive Officer search.29
2018.
We reimburse our directors for travel and other
out-of-pocket expenses they incur when attending Board and committee meetings and for minor incidental expenses they incur when performing directors’ services. We also provide reimbursement for at least one director continuing education program each year. Directors receive travel accident insurance while traveling on the Company’s business and receive discounts on the purchase of our products to the same extent and on the same terms as our employees. Directors also are eligible to participate in the Company’s Gift Matching Program. Under the Gift Matching Program, the Company will match, upon a director’s request, contributions made by the director to one or more charitable organizations, on a
dollar-for-dollar basis up to a maximum aggregate contribution of $5,000 annually.
Stock Ownership Guidelines
Pursuant to the Board’s Corporate Governance Guidelines,
non-employee directors are expected to own shares of Common Stock having a value equal to at least five times the annual retainer. Each
non-employee director has until January 1 of the year following his or her fifth anniversary of becoming a director to satisfy the guideline.
The Compensation Committee reviews the stock ownership guidelines annually to ensure they are aligned with external market comparisons. Prior to December 2016,non-employee directors were expected to own shares of Common Stock having a value equal to at least four times the annual retainer. As part of the annual review completed in December 2016, the Board, upon the recommendation of the
2018 Director Compensation Committee, elected to increase the
non-employee director stock ownership guidelines from four times the annual retainer to five times the annual retainer. Under the Board’s Corporate Governance Guidelines, eachnon-employee director serving on the Board as of the date of the increase has until January 1, 2019 to satisfy the new stock ownership guidelines. Anynon-employee director serving on the Board that had not yet reached his or her initial compliance date as of the date of the increase has until the second anniversary of such initial compliance date to satisfy the new stock ownership guidelines.2016 Director Compensation
The following table and explanatory footnotes provide information with respect to the compensation paid or provided tonon-employee directors during 2016:
| | | | | | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash(1) ($) | | | Stock Awards(2) ($) | | | All Other Compensation(3) ($) | | | Total ($) | |
Pamela M. Arway | | | 135,000 | | | | 135,000 | | | | 5,000 | | | | 275,000 | |
Robert F. Cavanaugh | | | 100,000 | | | | 135,000 | | | | 5,000 | | | | 240,000 | |
Charles A. Davis | | | 115,000 | | | | 135,000 | | | | 5,000 | | | | 255,000 | |
Mary Kay Haben | | | 120,000 | | | | 135,000 | | | | 5,000 | | | | 260,000 | |
Robert M. Malcolm | | | 120,000 | | | | 135,000 | | | | 5,000 | | | | 260,000 | |
James M. Mead | | | 135,000 | | | | 135,000 | | | | 5,000 | | | | 275,000 | |
James E. Nevels | | | 145,000 | | | | 135,000 | | | | 5,000 | | | | 285,000 | |
Anthony J. Palmer | | | 100,000 | | | | 135,000 | | | | 5,000 | | | | 240,000 | |
Thomas J. Ridge | | | 100,000 | | | | 135,000 | | | | 5,000 | | | | 240,000 | |
David L. Shedlarz | | | 135,000 | | | | 135,000 | | | | — | | | | 270,000 | |
|
| | | | | | | | |
Name | Fees Earned or Paid in Cash(3) ($) | Stock Awards(4) ($) | All Other Compensation(5) ($) | Total ($) |
| Pamela M. Arway | 100,000 |
| 155,000 |
| 5,000 |
| 260,000 |
|
John P. Bilbrey(1) | 84,478 |
| 52,376 |
| 1,500 |
| 138,354 |
|
| James W. Brown | 100,000 |
| 155,000 |
| 5,000 |
| 260,000 |
|
Charles A. Davis(2) | 207,761 |
| 155,000 |
| 5,000 |
| 367,761 |
|
| Mary Kay Haben | 115,000 |
| 155,000 |
| 5,000 |
| 275,000 |
|
| James C. Katzman | 66,209 |
| 102,624 |
| 5,000 |
| 173,833 |
|
| M. Diane Koken | 100,000 |
| 155,000 |
| 500 |
| 255,500 |
|
| Robert M. Malcolm | 115,000 |
| 155,000 |
| 5,000 |
| 275,000 |
|
James M. Mead(1) | 38,860 |
| 52,376 |
| 5,000 |
| 96,236 |
|
| Anthony J. Palmer | 109,931 |
| 155,000 |
| 5,000 |
| 269,931 |
|
Thomas J. Ridge(1) | 33,792 |
| 52,376 |
| 2,500 |
| 88,668 |
|
| Wendy L. Schoppert | 100,000 |
| 166,005 |
| 5,000 |
| 271,005 |
|
| David L. Shedlarz | 120,000 |
| 155,000 |
| — |
| 275,000 |
|
(1)Messrs. Bilbrey, Mead and Ridge retired from the Board on May 2, 2018.
(2)During 2018, Mr. Davis served as Lead Independent Director until May 2, 2018, when he was appointed Chairman of the Board.
(1) | |
| (3) | Includes amounts earned or paid in cash or shares of Common Stock at the election of the director or deferred by the director under the Directors’ Compensation Plan. Amounts credited as earnings on amounts deferred under the Directors’ Compensation Plan are based on investment options available to all participants in our 401(k) Plan or our Common Stock and, accordingly, the earnings credited during 20162018 were not considered “above market” or “preferential” earnings. |
30
The following table sets forth the portion of fees earned or paid in cash or Common Stock, and the portion deferred with respect to retainers and fees earned during 2018: |
| | | | | | | | | | | | |
Name | Immediate Payment | | Deferred and Investment Election | |
Cash Paid ($) | Value Paid in Shares of Common Stock ($) | Number of Shares of Common Stock (#) |
| Value Deferred to a Cash Account ($) |
| Value Deferred to a Common Stock Unit Account ($) |
| Number of Deferred Common Stock Units (#) |
|
| Pamela M. Arway | 100,000 |
| — |
| — |
| — |
| — |
| — |
|
| John P. Bilbrey | — |
| — |
| — |
| 84,478 |
| — |
| — |
|
| James W. Brown | 100,000 |
| — |
| — |
| — |
| — |
| — |
|
| Charles A. Davis | 207,761 |
| — |
| — |
| — |
| — |
| — |
|
| Mary Kay Haben | 115,000 |
| — |
| — |
| — |
| — |
| — |
|
| James C. Katzman | — |
| — |
| — |
| — |
| 66,209 |
| 669 |
|
| M. Diane Koken | 100,000 |
| — |
| — |
| — |
| — |
| — |
|
| Robert M. Malcolm | 115,000 |
| — |
| — |
| — |
| — |
| — |
|
| James M. Mead | 38,860 |
| — |
| — |
| — |
| — |
| — |
|
| Anthony J. Palmer | 9,931 |
| 100,000 |
| 992 |
| — |
| — |
| — |
|
| Thomas J. Ridge | 16,896 |
| 16,896 |
| 162 |
| — |
| — |
| — |
|
| Wendy L. Schoppert | 100,000 |
| — |
| — |
| — |
| — |
| — |
|
| David L. Shedlarz | 120,000 |
| — |
| — |
| — |
| — |
| — |
|
| The following table sets forth the portion of fees earned or paid in cash or Common Stock, and the portion deferred with respect to retainers and fees earned during 2016: |
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Immediate Payment | | | Deferred and Investment Election | |
| | Cash Paid ($) | | | Value Paid in Shares of Common Stock ($) | | | Number of Shares of Common Stock (#) | | | Value Deferred to a Cash Account ($) | | | Value Deferred to a Common Stock Unit Account ($) | | | Number of Deferred Common Stock Units (#) | |
Pamela M. Arway | | | 135,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Robert F. Cavanaugh | | | 100,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Charles A. Davis | | | 115,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Mary Kay Haben | | | 120,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Robert M. Malcolm | | | 120,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
James M. Mead | | | 135,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
James E. Nevels | | | 107,500 | | | | 37,500 | | | | 393 | | | | — | | | | — | | | | — | |
Anthony J. Palmer | | | — | | | | 100,000 | | | | 1,050 | | | | — | | | | — | | | | — | |
Thomas J. Ridge | | | 100,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
David L. Shedlarz | | | 135,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
(2)(4) | Represents the dollar amount recognized as expense during 20162018 for financial statement reporting purposes with respect to RSUs awarded to the directors during 2016.2018. RSUs awarded to directors are charged to expense in the Company’s financial statements at the grant date fair value on each quarterly grant date. TheWith the exception of Ms. Schoppert, the target annual grant date fair value of the RSUs for each director during 20162018 was $135,000. |
| $155,000. The following table provides information with respect to the number and markettarget annual grant date fair value of deferred common stock units andMs. Schoppert's 2018 RSUs held as of December 31, 2016, based on the $103.43 closing price of our Common Stock as reported by NYSE on December 30, 2016, the last trading day of 2016. The information presentedwas $166,005, which includes the accumulated value of each director’s deferred common stock units and RSUs. Balances shown below include dividend equivalent units creditedpro-rated RSUs related to her service in the formfinal quarter of additional common stock units on retainers and committee chair fees that have been deferred2017 as common stock units and dividend equivalent units creditedshe joined the Board in the form of additional common stock units on RSUs.December 2017. |
| | | | | | | | | | | | | | | | |
Name | | Number of Deferred Common Stock Units (#) | | | Market Value of Retainers and Committee Chair Fees Deferred to the Common Stock Unit Account as of December 31, 2016 ($) | | | Number of RSUs (#) | | | Market Value of RSUs as of December 31, 2016 ($) | |
Pamela M. Arway | | | — | | | | — | | | | 1,448 | | | | 149,767 | |
Robert F. Cavanaugh | | | 43,731 | | | | 4,523,097 | | | | 1,448 | | | | 149,767 | |
Charles A. Davis | | | — | | | | — | | | | 1,448 | | | | 149,767 | |
Mary Kay Haben | | | 3,485 | | | | 360,454 | | | | 1,448 | | | | 149,767 | |
Robert M. Malcolm | | | — | | | | — | | | | 1,448 | | | | 149,767 | |
James M. Mead | | | 8,107 | | | | 838,507 | | | | 1,448 | | | | 149,767 | |
James E. Nevels | | | — | | | | — | | | | 1,448 | | | | 149,767 | |
Anthony J. Palmer | | | — | | | | — | | | | 1,448 | | | | 149,767 | |
Thomas J. Ridge | | | 29,942 | | | | 3,096,901 | | | | 1,448 | | | | 149,767 | |
David L. Shedlarz | | | — | | | | — | | | | 1,448 | | | | 149,767 | |
The following table provides information with respect to the number and market value of deferred common stock units and RSUs held as of December 31, 2018, based on the $107.18 closing price of our Common Stock as reported by NYSE on December 31, 2018, the last trading day of 2018.
The information presented includes the accumulated value of each director’s deferred common stock units and RSUs. Balances shown below include dividend equivalent units credited in the form of additional common stock units on retainers and committee chair fees that have been deferred as common stock units and dividend equivalent units credited in the form of additional common stock units on RSUs. |
| | | | | | | | |
Name | Number of Deferred Common Stock Units (#) | Market Value of Retainers and Committee Chair Fees Deferred to the Common Stock Unit Account as of December 31, 2018 ($) |
| Number of RSUs (#) | Market Value of RSUs as of December 31, 2018 ($) |
| Pamela M. Arway | — |
| — |
| 1,553 |
| 166,451 |
|
| John P. Bilbrey | — |
| — |
| — |
| — |
|
| James W. Brown | 952 |
| 102,035 |
| 1,553 |
| 166,451 |
|
| Charles A. Davis | — |
| — |
| 1,553 |
| 166,451 |
|
| Mary Kay Haben | 6,649 |
| 712,640 |
| 1,553 |
| 166,451 |
|
| James C. Katzman | 673 |
| 72,132 |
| 1,061 |
| 113,718 |
|
| M. Diane Koken | 952 |
| 102,035 |
| 1,553 |
| 166,451 |
|
| Robert M. Malcolm | — |
| — |
| 1,553 |
| 166,451 |
|
| James M. Mead | — |
| — |
| — |
| — |
|
| Anthony J. Palmer | — |
| — |
| 1,553 |
| 166,451 |
|
| Thomas J. Ridge | 4,939 |
| 529,362 |
| — |
| — |
|
| Wendy L. Schoppert | — |
| — |
| 1,657 |
| 177,597 |
|
| David L. Shedlarz | — |
| — |
| 1,553 |
| 166,451 |
|
(3) | |
| (5) | Represents the Company match for contributions made by the director to one or more charitable organizations during 20162018 under the Gift Matching Program. |
31
SHARE OWNERSHIP OF DIRECTORS, MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the beneficial ownership of our outstanding voting securities and stock options by:
Stockholders who we believe owned more than 5% of our outstanding Common Stock or Class B Common Stock, as of March 6, 2017;22, 2019; and
Our directors, director nominees, NEOs and all directors and executive officers as a group, as of March 6, 2017.22, 2019.
| | | | | | | | | | | | | | | | | | | | | | | | |
Holder | | | Common Stock(1) | | | Exercisable Stock Options(2) | | | Percent of Common Stock(3) | | | Class B Common Stock | | | Percent of Class B Common Stock(4) | |
Hershey Trust Company, as trustee for the Milton Hershey School Trust(5)
100 Mansion Road
Hershey, PA 17033 Milton Hershey School(5)
Founders Hall
Hershey, PA 17033 | | | 
| | | | 12,753,521 | | | | — | | | | 8.4 | | | | 60,612,012 | | | | 99.9 | |
Hershey Trust Company(6) | | | | | | | 149,500 | | | | — | | | | ** | | | | — | | | | — | |
BlackRock, Inc.(7)
55 East 52nd Street
New York, NY 10055 | | | | | | | 9,680,398 | | | | — | | | | 6.4 | | | | — | | | | — | |
Vanguard Group, Inc.(8)
100 Vanguard Blvd.
Malvern, PA 19355 | | | | | | | 9,042,606 | | | | — | | | | 6.0 | | | | — | | | | — | |
Pamela M. Arway* | | | | | | | 11,125 | | | | — | | | | ** | | | | — | | | | — | |
John P. Bilbrey* | | | | | | | 105,126 | | | | 1,000,655 | | | | ** | | | | — | | | | — | |
James W. Brown* | | | | | | | — | | | | — | | | | ** | | | | — | | | | — | |
Michele G. Buck* | | | | | | | 21,039 | | | | 109,445 | | | | ** | | | | — | | | | — | |
Robert F. Cavanaugh* | | | | | | | 1,000 | | | | — | | | | ** | | | | — | | | | — | |
Charles A. Davis* | | | | | | | 19,103 | | | | — | | | | ** | | | | — | | | | — | |
Mary Kay Haben* | | | | | | | — | | | | — | | | | ** | | | | — | | | | — | |
M. Diane Koken* | | | | | | | 600 | | | | — | | | | ** | | | | — | | | | — | |
Patricia A. Little | | | | | | | — | | | | 22,486 | | | | ** | | | | — | | | | — | |
Robert M. Malcolm* | | | | | | | 7,061 | | | | — | | | | ** | | | | — | | | | — | |
James M. Mead* | | | | | | | 700 | | | | — | | | | ** | | | | — | | | | — | |
James E. Nevels* | | | | | | | 6,808 | | | | — | | | | ** | | | | — | | | | — | |
Terence L. O’Day | | | | | | | 34,913 | | | | 164,179 | | | | ** | | | | — | | | | — | |
Anthony J. Palmer* | | | | | | | 15,458 | | | | — | | | | ** | | | | — | | | | — | |
Thomas J. Ridge* | | | | | | | 1,864 | | | | — | | | | ** | | | | — | | | | — | |
David L. Shedlarz* | | | | | | | 18,336 | | | | — | | | | ** | | | | — | | | | — | |
Leslie M. Turner | | | | | | | 1,918 | | | | 51,896 | | | | ** | | | | — | | | | — | |
All directors and executive officers as a group (19 persons) | | | | | | | 285,270 | | | | 1,665,557 | | | | ** | | | | — | | | | — | |
32
|
| | | | | | | | | | |
Holder | Common Stock(1) | Exercisable Stock Options(2) | Percent of Common Stock(3) | Class B Common Stock | Percent of Class B Common Stock(4) |
Hershey Trust Company, as trustee for the Milton Hershey School Trust(5) 100 Mansion Road Hershey, PA 17033 Milton Hershey School(5) Founders Hall Hershey, PA 17033 | 3,800,791 |
| — |
| 2.6 |
| 60,612,012 |
| 99.9 |
|
Hershey Trust Company(6) | 102,330 |
| — |
| ** |
| — |
| — |
|
BlackRock, Inc.(7) 55 East 52nd Street New York, NY 10055 | 13,764,673 |
| — |
| 9.2 |
| — |
| — |
|
Vanguard Group, Inc.(8) 100 Vanguard Blvd. Malvern, PA 19355 | 11,174,446 |
| — |
| 7.5 |
| — |
| — |
|
Pamela M. Arway* | 14,013 |
| — |
| ** |
| — |
| — |
|
James W. Brown* | — |
| — |
| ** |
| — |
| — |
|
Michele G. Buck* | 51,815 |
| 211,288 |
| ** |
| — |
| — |
|
Charles A. Davis* | 21,992 |
| — |
| ** |
| — |
| — |
|
Mary Kay Haben* | — |
| — |
| ** |
| — |
| — |
|
James C. Katzman* | — |
| — |
| ** |
| — |
| — |
|
M. Diane Koken* | 600 |
| — |
| ** |
| — |
| — |
|
| Patricia A. Little | — |
| 12,641 |
| ** |
| — |
| — |
|
Robert M. Malcolm* | 9,950 |
| — |
| ** |
| — |
| — |
|
| Terence L. O’Day | 36,298 |
| 172,931 |
| ** |
| — |
| — |
|
Anthony J. Palmer* | 13,502 |
| — |
| ** |
| — |
| — |
|
Juan R. Perez* | — |
| — |
| ** |
| — |
| — |
|
Wendy L. Schoppert* | — |
| — |
| ** |
| — |
| — |
|
David L. Shedlarz* | 12,080 |
| — |
| ** |
| — |
| — |
|
| Todd W. Tillemans | 6,463 |
| 11,653 |
| ** |
| — |
| — |
|
| Leslie M. Turner | — |
| 118,238 |
| ** |
| — |
| — |
|
| Mary Beth West | 23,083 |
| 21,666 |
| ** |
| — |
| — |
|
All directors and executive officers as a group (20 persons) | 208,590 |
| 655,739 |
| ** |
| — |
| — |
|
____________________
(1) | Amounts listed for NEOs and other executive officers include, if applicable, shares of Common Stock allocated by the Company to the officer’s account in The Hershey Company 401(k) Plan. Amounts listed also include the following RSUs that will vest and be paid to the following holders within 60 days of March 6, 2017: |
(1)Amounts listed also include the following RSUs that will vest and be paid to the following holders within 60 days of March 22, 2019: | |
| | |
| |
| |
Pamela M. Arway | 405 | | 374 |
|
Michele G. Buck
| | | 1,289 | |
Charles A. Davis | 405 | | 374 |
|
Robert M. Malcolm | 405 | | 374 |
|
James E. Nevels
| | | 374 | |
Terence L. O’Day
| | | 910 | |
Anthony J. Palmer | 405 | | 374 |
|
Thomas J. Ridge
| | | 374 | |
David L. Shedlarz | 405 |
|
| Todd W. Tillemans | 3742,200 |
|
| Mary Beth West | 13,236 |
|
Amounts listed also include shares for which certain of the directors share voting and/or investment power with one or more other persons as follows: Ms. Arway, 13,608 shares owned jointly with her spouse; Ms. Koken, 600 shares held at Glenmede Trust Company; Mr. Malcolm, 9,545 shares owned jointly with his spouse; and Mr. Palmer, 13,097 shares owned jointly with his spouse.
| Amounts listed also include shares for which certain of the directors and NEOs share voting and/or investment power with one or more other persons as follows: Ms. Arway, 10,751 shares owned jointly with her spouse; Mr. Cavanaugh, 1,000 shares owned jointly with his spouse; Ms. Koken, 600 shares held at Glenmede Trust Company; Mr. Malcolm, 6,687 shares owned jointly with his spouse; Mr. Nevels, 5,546 shares owned jointly with his spouse and 888 shares owned jointly with another individual; Mr. Palmer, 15,084 shares owned jointly with his spouse; and Mr. Ridge, 1,490 shares owned jointly with his spouse. |
| (2) | This column reflects stock options that were exercisable by the NEOs and the executive officers as a group on March 6, 2017.22, 2019. For Ms.Mmes. Little and West and Mr. Tillemans, the column reflects stock options that will become exercisable within 60 days of March 6, 2017.22, 2019. |
| |
| (3) | Based upon 152,069,763147,913,263 shares of Common Stock outstanding on March 6, 2017.22, 2019. |
| |
| (4) | Based upon 60,619,77760,613,777 shares of Class B Common Stock outstanding on March 6, 2017.22, 2019. |
| |
| (5) | Hershey Trust Company, as trustee for the Milton Hershey School Trust, has the right at any time to convert its Class B Common Stock into Common Stock on ashare-for-share basis. If on March 6, 2017,22, 2019, Hershey Trust Company, as trustee for the Milton Hershey School Trust, converted all of its Class B Common Stock into Common Stock, Hershey Trust Company, as trustee for the Milton Hershey School Trust, would own beneficially 73,365,53364,412,803 shares of our Common Stock (12,753,521(3,800,791 Common Stock shares plus 60,612,012 converted Class B Common Stock shares), or 34.5%30.9% of the 212,681,775208,525,275 shares of Common Stock outstanding following the conversion (calculated as 152,069,763147,913,263 Common Stock shares outstanding prior to the conversion plus 60,612,012 converted Class B Common Stock shares). For more information about the Milton Hershey School Trust, Hershey Trust Company, Milton Hershey School and the ownership and voting of these securities, please seethesee the section entitled “Information Regarding Our Controlling Stockholder.” |
| |
| (6) | Please see the section entitled “Information Regarding Our Controlling Stockholder” for more information about shares of Common Stock held by Hershey Trust Company as investments. |
| |
| (7) | Information regarding BlackRock, Inc. and its beneficial holdings was obtained from a Schedule 13G/A filed with the SEC on January 24, 2017.February 4, 2019. The filing indicated that, as of December 31, 2016,2018, BlackRock, Inc. had sole voting and investment power over 9,680,39813,764,673 shares of Common Stock. The filing indicated that BlackRock, Inc. is a parent holding company or control person in accordance with Rule13d-1(b)(1)(ii)(G) and that various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, our Common Stock. |
| |
| (8) | Information regarding Vanguard Group, Inc. and its beneficial holdings was obtained from a Schedule 13G/A filed with the SEC on February 13, 2017.11, 2019. The filing indicated that, as of December 31, 2016,2018, Vanguard Group, Inc. had sole voting and investment power over 9,042,60611,174,446 shares of Common Stock. The filing indicated that Vanguard Group, Inc. is a parent holding company or control person in accordance with Rule13d-1(b)(1)(ii)(G) and that various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, our Common Stock. |
33
Ownership of Other Company Securities
Certain directors and NEOs hold Company securities not reflected in the beneficial ownership table above because they will not convert, or cannot be converted, to shares of Common Stock within 60 days of our March
6, 201722, 2019 Record Date. These securities include:
Certain unvested RSUs or deferred common stock units held by our directors and NEOs; and
Certain unvested stock options held by our NEOs.
The table below shows these holdings as of March 6, 2017.22, 2019. You can find additional information about RSUs and deferred common stock units held by directors in theNon-Employee Director Compensation section of this Proxy Statement. You can find additional information about stock options, RSUs and deferred common stock units held by the NEOs in the Executive Compensation section of this Proxy Statement. | | | | | | | | |
Holder | | Shares Underlying RSUs and
Common Stock Units Not Beneficially Owned | | | Shares Underlying Stock Options Not Beneficially Owned | |
Pamela M. Arway* | | | 1,053 | | | | — | |
John P. Bilbrey* | | | 90,579 | | | | — | |
James W. Brown* | | | — | | | | — | |
Michele G. Buck* | | | 146,595 | | | | 130,007 | |
Robert F. Cavanaugh* | | | 45,542 | | | | — | |
Charles A. Davis* | | | 1,053 | | | | — | |
Mary Kay Haben* | | | 5,296 | | | | — | |
M. Diane Koken* | | | — | | | | — | |
Patricia A. Little | | | 34,671 | | | | 60,364 | |
Robert M. Malcolm* | | | 1,053 | | | | — | |
James M. Mead* | | | 9,918 | | | | — | |
James E. Nevels* | | | 1,053 | | | | — | |
Terence L. O’Day | | | 10,459 | | | | 59,921 | |
Anthony J. Palmer* | | | 1,053 | | | | — | |
Thomas J. Ridge* | | | 30,996 | | | | — | |
David L. Shedlarz* | | | 1,053 | | | | — | |
Leslie M. Turner | | | 72,627 | | | | 68,332 | |
|
| | | | |
Holder | Shares Underlying RSUs and Common Stock Units Not Beneficially Owned | Shares Underlying Stock Options Not Beneficially Owned |
Pamela M. Arway* | 1,163 |
| — |
|
James W. Brown* | 2,869 |
| — |
|
Michele G. Buck* | 111,114 |
| 114,562 |
|
Charles A. Davis* | 1,163 |
| — |
|
Mary Kay Haben* | 8,565 |
| — |
|
James C. Katzman* | 2,331 |
| — |
|
M. Diane Koken* | 2,869 |
| — |
|
| Patricia A. Little | 49,158 |
| 35,590 |
|
Robert M. Malcolm* | 1,163 |
| — |
|
| Terence L. O’Day | 7,128 |
| 30,409 |
|
Anthony J. Palmer* | 1,163 |
| — |
|
Juan R. Perez* | — |
| — |
|
Wendy L. Schoppert* | 2,021 |
| — |
|
David L. Shedlarz* | 1,163 |
| — |
|
| Todd W. Tillemans | 7,960 |
| 21,042 |
|
| Leslie M. Turner | 38,195 |
| — |
|
| Mary Beth West | 23,336 |
| 40,469 |
|
____________________
Information Regarding Our Controlling Stockholder
In 1909, Milton S. and Catherine S. Hershey established a trust having as its sole beneficiary Milton Hershey School, a
non-profit school for the full-time care and education of disadvantaged children located in Hershey, Pennsylvania. Hershey Trust Company, a state-chartered trust company, is trustee of the Milton Hershey School Trust.
34
In its capacity as trustee for the Milton Hershey School Trust, Hershey Trust Company is our controlling stockholder. In this capacity, it will have the right to cast
8.4%2.6% of all of the votes entitled to be cast on matters requiring the vote of the Common Stock voting separately and
81.6%80.9% of all of the votes entitled to be cast on matters requiring the vote of the Common Stock and Class B Common Stock voting together. The board of directors of Hershey Trust Company, with the approval of the board of managers (governing body) of Milton Hershey School, decides how funds held by Hershey Trust Company, as trustee for the Milton Hershey School Trust, will be invested. The board of directors of Hershey Trust Company generally decides how shares of The Hershey Company held by Hershey Trust Company, as trustee for the Milton Hershey School Trust, will be voted.
As of the Record Date, Hershey Trust Company also held
149,500102,330 shares of our Common Stock as investments. The board of directors or management of Hershey Trust Company decides how these shares will be voted.
In all, Hershey Trust Company, as trustee for the Milton Hershey School Trust and as direct owner of investment shares, will be entitled to vote
12,903,0213,903,121 shares of our Common Stock and 60,612,012 shares of our Class B Common Stock at the Annual Meeting. Stated in terms of voting power, Hershey Trust Company will have the right to cast
8.5%2.6% of all of the votes entitled to be cast on matters requiring the vote of the Common Stock voting separately and
81.6%80.9% of all of the votes entitled to be cast on matters requiring the vote of the Common Stock and Class B Common Stock voting together at the Annual Meeting.
Our certificate of incorporation contains the following important provisions regarding our Class B Common Stock:
All holders of Class B Common Stock, including Hershey Trust Company, as trustee for Milton Hershey School Trust, may convert any of their Class B Common Stock shares into shares of our Common Stock at any time on ashare-for-share basis.
All shares of Class B Common Stock will automatically be converted to shares of Common Stock on ashare-for-share basis if Hershey Trust Company, as trustee for Milton Hershey School Trust, or any successor trustee, or Milton Hershey School, as appropriate, ceases to hold more than 50% of the total Class B Common Stock shares outstanding and at least 15% of the total Common Stock and Class B Common Stock shares outstanding.
We must obtain the approval of Hershey Trust Company, as trustee for Milton Hershey School Trust, or any successor trustee, or Milton Hershey School, as appropriate, before we issue any Common Stock or take any other action that would deprive Hershey Trust Company, as trustee for Milton Hershey School Trust, or any successor trustee, or Milton Hershey School, as appropriate, of the ability to cast a majority of the votes on any matter where the Class B Common Stock is entitled to vote, either separately as a class or together with any other class.
35
The Audit Committee is currently comprised of
fourfive directors, each of whom is considered independent under the NYSE Rules and the rules and regulations of the SEC. The Board has determined that each member of the Audit Committee is financially literate and that each of
Messrs. Davis, MeadMs. Schoppert and
NevelsMr. Shedlarz qualifies as an “audit committee financial expert,” as that term is defined under the rules promulgated by the SEC.
Our role as the Audit Committee is to assist the Board in its oversight of:
The integrity of the Company’s financial statements;
The Company’s compliance with legal and regulatory requirements;
The independent auditors’ qualifications and independence; and
The performance of the independent auditors and the Company’s internal audit function.
The Audit Committee operates under a written charter that was last reviewed by the Audit Committee on December
5, 2016.12, 2018.
Our duties as an Audit Committee include overseeing the Company’s management, internal auditors and independent auditors in their performance of the following functions, for which they are responsible:
Preparing the Company’s financial statements;
Establishing effective financial reporting systems and internal controls and procedures; and
Reporting on the effectiveness of the Company’s internal control over financial reporting.
Internal Audit Department
Independently assessing management’s system of internal controls and procedures; and
Reporting on the effectiveness of that system.
Auditing the Company’s financial statements;
Expressing an opinion about the financial statements’ conformity with U.S. generally accepted accounting principles; and
Annually auditing the effectiveness of the Company’s internal control over financial reporting.
We meet periodically with management, the internal auditors and independent auditors, independently and collectively, to discuss the quality of the Company’s financial reporting process and the adequacy and effectiveness of the Company’s internal controls. Prior to the Company filing its Annual Report on Form
10-K for the year ended December 31,
20162018 with the SEC, we also:
Reviewed and discussed the audited financial statements with management and the independent auditors;
Discussed with the independent auditors the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board;
36
Received the written disclosures and the letter from the independent auditors in accordance with applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Audit Committee concerning independence; and
Discussed with the independent auditors their independence from the Company.
We are not employees of the Company and are not performing the functions of auditors or accountants. We are not responsible as an Audit Committee or individually to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards. In carrying out our duties as Audit Committee members, we have relied on the information provided to us by management and the independent auditors. Consequently, we do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with U.S. generally accepted accounting principles or that the Company’s auditors are in fact “independent.”
Based on the reports and discussions described in this report, and subject to the limitations on our role and responsibilities as an Audit Committee referred to above and in our charter, we recommended to the Board that the audited financial statements be included in the Company’s Annual Report on
Form 10-K for the year ended December 31,
2016,2018, filed with the SEC on February
21, 2017.22, 2019.
Submitted by the Audit Committee:
Charles A. Davis,
David L. Shedlarz, Chair
Pamela
James W. Brown
Robert M.
MeadJames E. Nevels
37
Malcolm
Wendy L. Schoppert
INFORMATION ABOUT OUR INDEPENDENT AUDITORS
The following table sets forth the amount of audit fees, audit-related fees, tax fees and all other fees billed or expected to be billed by
KPMG,Ernst & Young LLP,
(“KPMG”), our independent auditors for the fiscal years ended December 31,
20162018 and December 31,
2015: | | | | | | | | |
Nature of Fees | | 2016 ($) | | | 2015 ($) | |
Audit Fees | | | 5,170,365 | | | | 5,674,000 | |
Audit-Related Fees(1) | | | 85,750 | | | | 346,500 | |
Tax Fees(2) | | | 962,073 | | | | 222,398 | |
All Other Fees | | | — | | | | — | |
Total Fees | | | 6,218,188 | | | | 6,242,898 | |
|
| | | | |
Nature of Fees | 2018 ($) | 2017 ($) |
| Audit Fees | 5,224,136 |
| 4,745,504 |
|
Audit-Related Fees(1) | 1,186,311 |
| 1,204,499 |
|
Tax Fees(2) | 593,707 |
| 1,820,281 |
|
All Other Fees(3) | 2,000 |
| 1,995 |
|
Total Fees | 7,006,154 |
| 7,772,279 |
|
____________________
| |
| (1) | Fees associated primarily with services related to due diligence for potential business acquisitions, auditing ofcarve-out financial statements and auditing of employee benefit plans.acquisitions. |
| |
| (2) | Fees pertaining primarily to tax consultation and tax compliance services. |
| |
| (3) | Fees for other permissible services that do not meet the above category descriptions, including subscription programs. |
The Audit Committee
pre-approves all audit, audit-related and
non-audit services performed by the independent auditors. The Audit Committee is authorized by its charter to delegate to one or more of its members the authority to
pre-approve any audit, audit-related or
non-audit services, provided that the approval is presented to the Audit Committee at its next scheduled meeting.
The Audit Committee
pre-approved all services provided by
KPMG in 2016.On April 21, 2016, upon the approval of the Audit Committee, we notified KPMG that it would be dismissed as our independent auditors effective upon the completion of KPMG’s audit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2016 (and the effectiveness of internal control over financial reporting as of December 31, 2016), and the issuance of their report thereon. The decision to dismiss KPMG was made as part of a competitive bidding process to determine the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.
The audit reports of KPMG on the Company’s consolidated financial statements as of and for the years ended December 31, 2016 and 2015 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of KPMG on the effectiveness of internal control over financial reporting as of December 31, 2016 and 2015 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that KPMG’s report indicates that the Company did not maintain effective internal control over financial reporting as of December 31, 2015, because of the effect of a material weakness related to the Company’s accounting for cocoa derivative instruments. During the Company’s two most recent fiscal years ended December 31, 2016 and December 31, 2015, there were no (1) disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreements in connection with its reports; and (2) events of the type listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of RegulationS-K, except for the material weakness as described in this paragraph.
38
On June 15, 2016, the Audit Committee appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2017. During the Company’s two most recent fiscal years ended December 31, 2016 and 2015, neither the Company nor anyone acting on its behalf consulted with Ernst & Young LLP regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Ernst & Young LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of RegulationS-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of RegulationS-K).
39
2018.
PROPOSAL NO. 2 – RATIFICATION OF APPOINTMENT
| | |
| |
ü | ✓ | | | The Board of Directors unanimously recommends that stockholders voteFORratification of the Audit Committee’sCommittee's appointment of Ernst & Young LLP as the Company’sCompany's independent auditors for 20172019
|
The Audit Committee has appointed Ernst & Young LLP as the Company’s independent auditors for
2017.2019. Although not required to do so, the Board, upon the Audit Committee’s recommendation, has determined to submit the Audit Committee’s appointment of Ernst & Young LLP as our independent auditors to stockholders for ratification as a matter of good corporate governance.
The Audit Committee’s appointment of Ernst & Young LLP as the Company’s independent auditors for
20172019 will be considered ratified if a majority of the shares of the Common Stock and Class B Common Stock (voting together without regard to class) present and entitled to vote at the Annual Meeting are voted for the proposal. If stockholders do not ratify the appointment of Ernst & Young LLP as the Company’s independent auditors for
2017,2019, the Audit Committee will reconsider its appointment.
Representatives of
both Ernst & Young LLP
and KPMG (our independent auditors for the fiscal year ended December 31, 2016) will attend the Annual Meeting, will have the opportunity to make a statement, if they so desire, and will
be available to respond to questions.
40
COMPENSATION DISCUSSION & ANALYSIS
This section discusses and analyzes the decisions we made concerning the compensation of our named executive officers (“NEOs”) for
2016.2018. It also describes the process for determining executive compensation and the factors considered in determining the amount of compensation awarded to our NEOs. Our NEOs for
20162018 are:
|
| |
Name | | Title |
John P. Bilbrey(1)
Michele G. Buck | | Chairman of the Board, President and Chief Executive Officer (“CEO”) |
Patricia A. Little | | Senior Vice President, Chief Financial Officer (“CFO”) |
Michele G. Buck(2)
Terence L. O’Day | | ExecutiveSenior Vice President, Chief OperatingProduct Supply and Technology Officer (“COO”) |
Terence L. O’Day
Todd W. Tillemans | President, U.S. |
| Mary Beth West | Senior Vice President, Chief Supply ChainGrowth Officer |
Leslie M. Turner (1) | | Former Senior Vice President, General Counsel and Corporate Secretary |
____________________
| |
| (1) | On MarchMs. Turner retired on April 1, 2017, Mr. Bilbrey retired from the position of President and CEO. He continues to serve as Chairman of the Board.2018. |
(2) | On June 2, 2016, Ms. Buck was promoted from President, North America to Executive Vice President, COO. On March 1, 2017, Ms. Buck became our President and CEO. |
Executive Summary
2016 Highlights
Strategic Plan
The Hershey Company (the “Company”), headquartered in Hershey, Pa., is a global confectionery leader known for bringing goodness to the world through its chocolate, sweets, mints, gum and other great-tasting snacks. We have approximately 17,98016,420 employees around the world who work every day to deliver delicious, quality products. We have more than 80 brands that drive approximately $7.4$7.8 billion in annual revenues. Building on its core business,
Our vision is to be an innovative snacking powerhouse. We are currently the Company is expanding its portfolionumber two snacking manufacturer in the United States with leading edge capabilities. We aspire to includebe a broader range of delicious snacks. The Company remainsleader in meeting consumers' evolving snacking needs while strengthening the capabilities that drive our growth. We are focused on growing its presencethree strategic imperatives to ensure the Company's success now and in key international markets while continuingthe future:
Reignite our core confection business and broaden participation in snacking;
Reallocate resources to extend its competitiveenable margin expansion and fuel growth; and
Invest to strengthen our capabilities and leverage technology for commercial advantage
in North America.and growth.
Our strategic plan and the financial metrics we establish to help achieve and measure success against that plan, serve as the foundation of our executive compensation program. In
January 2016,February 2018, we announced the following Company
expectations, which are substantially reflected in our 2016 incentive programs:financial expectations: Increase net sales between 5% and 7% from 2017; and
| |
| • | | Increase constant currency net sales(1) around 3% from 2015; and |
| • | | Increase adjusted earnings per share-diluted(2)(1) about 6%between 12% and 14% from 2015.2017. |
See the section entitled "Annual Incentives" for more information regarding our 2018 annual incentive targets and related results.
| |
| (1) | While we report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), we also usenon-GAAP financial measures within Management’s Discussion and Analysis in the 20162018 Annual Report on Form10-K that accompanies this Proxy Statement in order to provide additional information to investors to facilitate the comparison of past and present performance. Some of the financial targets under our short- and long-term incentive programs are also based onnon-GAAP financial measures.Non-GAAP financial measures are used by management in evaluating results of operations internally and in assessing the impact of known trends and uncertainties on our business, but they are not intended to replace the presentation of financial results in accordance with GAAP. |
| Constant currency net sales is anon-GAAP financial measure. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. |
(2) | Adjusted earnings per share-diluted is anon-GAAP financial measure. We define adjusted earnings per share-diluted as diluted earnings per share of the Company’s common stock (“Common Stock”), excluding unallocatedmark-to-market losses on commodity derivatives, costs associated with business realignment activities, costs relating to the integration of acquisitions,non-service related components of our pension expense (income) (“NSRPE(I)”), goodwill long-lived and other intangible asset impairment charges, unallocated gains and losses associated with mark-to-market commodity derivatives, pension settlement charges relating to Company-directed initiatives, the one-time impact of the Shanghai Golden Monkey liability in conjunction with the purchase of the remaining 20% of the outstanding shares of Shanghai Golden Monkey,U.S. tax reform and the gain realized on the sale of a trademark, costs associated with the early extinguishment of debt and othernon-recurring gains and losses.certain licensing rights. |
41
In April 2016, we lowered
While our
guidance for our expected 2016 constant currency2018 net sales
increase to 2.5% and for our expected 2016 adjusted earnings per share-diluted increase to 3% to 4%. See the section entitled “Annual Incentives” for more information regarding our 2016 annual incentive targets and related results.Actual results for 2016 were as follows:
While we did not meet our expectations, for net sales growth, we exceededdelivered on our adjusted earnings per share-diluted expectations. Becausecommitment and our financial performance exceeded the median performance of our mixed financial performance results, our NEOs earned significantly below-target performance stock unit (“PSU”) payouts and slightly above-target annual cash incentive awards, as2018 Peer Group. Our 2018 Peer Group is described furtherin more detail in the sectionssection entitled “Long-Term Incentives”"Setting Compensation."
Executive Compensation PhilosophyOur executive compensation philosophy is to provide compelling, dynamic, market-based total compensation tied to performance and
“Annual Incentives.”aligned with our stockholders’ interests. Our goal is to ensure the Company has the talent it needs to maintain sustained long-term performance for our stockholders, employees and communities. The guiding principles that help us achieve this goal are compensation programs which:
Hershey Has Strong
Pay-for-Performance Alignment
The Compensation and Executive Organization Committee (the “Compensation Committee”) of our Board of Directors (the “Board”) has oversight responsibility for our executive compensation framework and for aligning our executives’ pay with the Company’s performance. We believe we have
a strong
pay-for-performance alignment because a significant portion of each NEO’s target total direct compensation is tied to the financial performance of the Company as well as
shareholderstockholder returns.
In
2016,2018, approximately
70%87% of our CEO’s and
60%74% of our other NEOs’ target total direct compensation,
excluding Ms. Turner’s, was
variable and tied to Company performance,at-risk, including a substantial portion tied to
shareholderstockholder value. Specifically, 34% of our
PSUsPerformance Stock Units ("PSUs") were tied to Total Shareholder Return (“TSR”). Combined with the other financial and strategic metrics that determine our NEOs’ compensation, we have aligned our executive compensation program with the long-term interests of our stockholders.
42
Over the last three years, we have delivered a TSR of 14%, which is at the bottom of our Financial Peer Group described in the section entitled “Performance Stock Unit Targets and Results.”
Because our TSR metric was below threshold for the 2014-2016 PSU cycle, our NEOs received a 0% payout for this metric, significantly reducing their overall PSU payout, as described in more detail in the section entitled “Performance Stock Unit Targets and Results.”
Our Stockholders Strongly Approve of Our Pay Practices
Last year, our stockholders overwhelmingly approved our
“say-on-pay” “say-on-pay” resolution, with more than 93% of the votes cast by the holders of Common Stock and more than 99% of the combined votes cast by the holders of the Common Stock and Class B Common Stock voting in favor. Our Compensation Committee believes the results of last year’s
“say-on-pay” “say-on-pay” vote affirmed our stockholders’ support of our Company’s executive compensation program. Consequentially, our approach to executive compensation in
20162018 was substantially the same as the approach stockholders approved in
2015. In keeping with2017. At the
preference expressed by our stockholders at the 20112017 Annual Meeting of Stockholders, our
Board has committedstockholders voted to
continue having an annual
“say-on-pay” “say-on-pay” vote as described in Proposal No. 3
– Approval of–Advise on Named Executive Officer
Compensation on aNon-Binding Advisory Basis.Compensation. We
are askingplan to ask stockholders to express a preference for the frequency of the
“say-on-pay” “say-on-pay” vote
pursuant to Section 14Aat our 2023 Annual Meeting of
the Exchange Act, in this proxy statement.Stockholders.
We believe our compensation and governance policies and practices are significant drivers of our stockholder support. These policies and practices include:Pay for performance. A substantial percentage of each of our NEO’s target total direct compensation is variable, performance-based compensation.
Performance measures support strategic objectives. The performance measures we use for our variable, performance-based compensation reflect strategic and operating objectives, creating long-term value for our stockholders.
Appropriate risk-taking. We set performance goals that consider our publicly-announced financial expectations, which we believe will encourage appropriate risk taking. Our incentive programs are appropriately capped so as not to encourage excessive risk taking.
No taxgross-ups. We do not provide taxgross-ups, except for relocation expenses.
43
“Double-trigger” benefits in the event of a change in control. In the event of a change in control, the payment of severance benefits and the acceleration of vesting of time-based long-term incentive awards are “double-trigger” benefits. The severance payments and accelerated vesting of continuing incentive awards will not occur unless there is also a qualifying termination of employment upon or within two years following the change in control.
Nore-pricings or exchanges of underwater stock options. Our stockholder-approved Equity and Incentive Compensation Plan (“EICP”) prohibitsre-pricing or exchange of underwater stock options without stockholder approval.
Do not provide excessive perquisites.Executive perquisites are kept to a minimal level relative to a NEO’s total compensation and do not play a significant role in our executive compensation program.
Do not provide for the prepayment of dividends on unearned PSUs.Dividends are not paid on PSU awards during the three-year performance cycle.
Significant stock ownership guidelines. Our NEOs and other executives are required to accumulate and hold stock equal to a multiple of base salary. If an executive has not met his or her ownership requirement in a timely manner, the executive is required to retain a portion of shares received under long-term incentive awards until the requirements are met.
Anti-hedging policy. Our NEOs, directors and other insiders are prohibited from entering into hedging transactions related to our stock.
Anti-pledging policy. Our NEOs, directors and other insiders are prohibited from entering into pledging transactions related to our stock.
Clawbacks and other covenants.
|
| ¡ | |
| WHAT WE DO | ForPay for performance: A substantial percentage of each NEO's target total direct compensation is at-risk. |
Performance measures support strategic objectives: The performance measures we use in our compensation programs reflect strategic and operating objectives, creating long-term value for our stockholders. |
Appropriate risk-taking: We set performance goals that consider our publicly-announced financial expectations, which we believe will encourage appropriate risk taking. Our incentive programs are appropriately capped so as not to encourage excessive risk taking. |
“Double-trigger” benefits in the protectionevent of a change in control:In the Company, weevent of a change in control, the payment of severance benefits and the acceleration of vesting of long-term incentive awards that are replaced with qualifying awards will not occur unless there is also a qualifying termination of employment upon or within two years following the change in control. |
Clawbacks and other covenants: We require our NEOs to enter into an Employee Confidentiality and Restrictive Covenant Agreement (“ECRCA”) as a condition of receipt of long-term incentive awards. Failure to comply with the ECRCA may subject the employee to cancellation of awards and a requirement to repay amounts received from awards. |
| ¡ | | Under the EICP,Equity and Incentive Compensation Plan (“EICP”), when an individual’s actions result in the filing of financial documents not in compliance with financial reporting requirements, the Company has the right to recoup or require repayment of an award earned or accrued during the12-month period following the first public issuance or filing with the SECSecurities and Exchange Commission (“SEC”) of the financial documentnon-compliant document. |
Significant stock ownership guidelines:Our NEOs and other executives are required to accumulate and hold stock equal to a multiple of base salary. If an executive has not met his or her ownership requirement in compliance with sucha timely manner, the executive is required to retain a portion of shares received under long-term incentive awards until the requirement is met. |
| | |
| WHAT WE DON'T DO | Provide excessive perquisites:Executive perquisites are kept to a minimal level relative to a NEO’s total compensation and do not play a significant role in our executive compensation program. |
Tax gross-ups: We generally do not provide tax gross-ups, except for relocation expenses. |
Provide for the prepayment of dividends on unearned PSUs:Dividends are not paid on PSU awards during the three-year performance cycle. |
Hedging Company stock: Our NEOs, directors and other insiders are prohibited from entering into hedging transactions related to our stock, including forward sale purchase contracts, equity swaps, collars or exchange fund. |
Pledging Company stock: Our NEOs, directors and other insiders are prohibited from entering into pledging transactions related to our stock. |
Re-pricings or exchanges of underwater stock options: Our stockholder-approved EICP prohibits re-pricing or exchange of underwater stock options without stockholder approval. |
2018 Performance Results and Payouts
2018 One Hershey Incentive Program ("OHIP") - Performance Metrics and Results
Payouts under the 2018 OHIP reflect our below-target performance in net sales and above-target performance in adjusted earnings per share-diluted and operating cash flow. As a result, 65% of the 2018 OHIP award for each NEO was based on the Company performance score of 99.09%. The remainder of the 2018 OHIP award for each NEO was determined by individual performance as described in more detail in the section entitled "Annual Incentives." |
| | |
Metric | 2018 ResultsRe | 2018 Awards |
Net Sales(1) | 5.0% growth was below target | Company performance score of 99.09% |
Adjusted Earnings per Share-Diluted(2) | 14.9% growth was above target |
Operating Cash Flow(3) | 11.1% growth was above target |
| Individual Performance Metrics | Described in more detail in the section entitled "Annual Incentives" | Individual performance scores ranged from 80% to 130% of target for each NEO |
| |
| (1) | For purposes of determining the Company performance score, net sales is measured on a constant currency basis, further adjusted to reflect the impact of divestitures and acquisitions, which is a non-GAAP performance measure. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. For more information on our use of non-GAAP performance measures, please see footnote (1) in the section entitled "Executive Summary." |
| |
| (2) | For purposes of determining the Company performance score, adjusted earnings per share-diluted as determined for financial reporting requirement.purposes, which is a non-GAAP performance measure, is further adjusted to reflect the impact of divestitures and acquisitions. For more information regarding how we define adjusted earnings per share-diluted, please see footnote (1) in the section entitled “Executive Summary.” |
| |
| (3) | Operating cash flow is a non-GAAP performance measure. We define operating cash flow as the average of cash from operations less certain one-time items impacting comparability. For more information regarding our use of non-GAAP performance measures, please see footnote (1) in the section entitled “Executive Summary.” |
2016-2018 PSU Cycle - Performance Metrics and Results
Our TSR results were significantly above target for the 2016-2018 PSU cycle, therefore our NEOs received a 247% payout for this metric, significantly increasing their overall PSU payout, as shown in the table below and described in more detail in the section entitled “Performance Stock Unit Targets and Results." |
| | |
Metric | 2016-2018 ResultsRe | 2016-2018 Awards |
| Total Shareholder Return | 89th percentile was above target | 131.08% payout |
Three-year Compound Annual Growth Rate ("CAGR") in Net Sales Growth(1)(2) | 0.6% CAGR was below threshold |
Three-year CAGR in Adjusted Earnings per Share-Diluted(1)(3) | 7.1% CAGR was above target |
| |
| (1) | Results for our barkTHINS, Amplify and Pirate Brands businesses were excluded from the following metrics, as applicable, as these acquisitions were made subsequent to the approval of the 2016-2018 PSU cycle metrics: |
Three-year CAGR in net sales growth; and
Three-year CAGR in adjusted earnings per share-diluted.
| |
| (2) | Net Sales is measured on a constant currency basis, which is a non-GAAP performance measure. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the base fiscal year. |
| |
| (3) | Adjusted earnings per share-diluted is a non-GAAP performance measure. For more information regarding how we define adjusted earnings per share-diluted, please see footnote (1) in the section entitled “Executive Summary.” |
The Role
and Philosophy of the Compensation Committee
The Compensation Committee has primary responsibility for making compensation decisions for our NEOs other than our CEO. Our CEO’s compensation is approved by the independent members of the Board based on the recommendations of the Compensation Committee.
The Compensation Committee operates under a charter approved by the Board. The Compensation Committee uses information from
Mercer (US) Inc. (“Mercer”), the Compensation Committee’sits independent executive compensation consultant, input from our CEO (except for matters regarding
hisher own pay) and assistance from our Human Resources Department to make decisions and to conduct its annual review of the Company’s executive compensation program.
44
The Compensation Committee works with a rolling agenda, with its heaviest workload occurring during the first quarter of the year. During this quarter, decisions are made with respect to annual and long-term incentives earned based on the prior year’s performance and target compensation levels are finalized for the current year. The Compensation Committee also reviews and approves this Compensation Discussion & Analysis. During the second and third quarters, the Compensation Committee reviews materials relating to peer group composition, tally sheets, competitive pay analysis and other information that forms the foundation for future decisions. The Compensation Committee uses the third and fourth quarters to finalize decisions relating to the peer group and compensation plan design for use in the upcoming year.
The Compensation Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee and, pursuant to the provisions of the EICP, may appoint the CEO as a committee of the Board as necessary for the purpose of making equity grants under the EICP; provided, however, the Compensation Committee may not delegate the approval of certain transactions to a subcommittee or to the CEO if such transactions involve the approval or grant of equity-based compensation to an “officer” for purposes of Rule
16b-3 under the Securities Exchange Act of 1934 (“Exchange Act”) or
certification as to the attainment of performance goals for a “covered employee” for purposes of Section 162(m) of the Internal Revenue Code (“IRC”) unless such subcommittee consists solely of members of the Compensation Committee who are (i)
“Non-Employee “Non-Employee Directors” for the purposes of Rule
16b-3 under the Exchange Act, and (ii) “outside directors” for the purposes of Section 162(m) of the IRC.
Compensation Advisor Independence
The
philosophy of ourCompensation Committee retained Frederic W. Cook & Co., Inc. ("F.W. Cook") as its independent executive compensation
program is to provide a compelling, dynamic, market-based total compensation program tied to performance and aligned with our stockholders’ interests. Our goal is to ensure the Company has the talent it needs to maintain sustained long-term performanceconsultant for
our stockholders, employees and communities. The guiding principles that help us achieve this goal are:Recruit and retain.Our program is designed to be market competitive and flexible to recruit and retain top talent for our critical roles.
Pay for performance. A significant portion of our executives’ compensation is tied to the performance of our Company, rewarding executives for both short-term and long-term progress towards our strategic and operational goals.
Aligned with strategy. Our compensation program is aligned with the strategies of our Company.
Aligned with stockholders. Our compensation program, through both design and payouts, is aligned with the long-term interests of our stockholders.
Reinforce robust succession planning. Our compensation program plays a key role in making sure we have the talent we need for long-term success and to deliver our Company strategies.
Data-driven decision making. We design our executive compensation program and make pay decisions considering a balance of information.
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Compensation Advisor Independence
Under its engagement letter withfiscal 2018. F.W. Cook advised the Compensation Committee Mercer has acknowledged that the firm is retained byon director and performs its services for the Compensation Committee while working with management to provide advice, counsel and recommendations that reinforce the Company’s business strategy, economics, organization and management style. Mercer has provided and continues to provide services and products to the Company in addition to itsexecutive compensation, but did no other work for the Company. Mercer (US) Inc. (“Mercer”) served as the Compensation Committee, includingCommittee’s independent executive compensation consultant in fiscal 2017 and continued to provide ad-hoc services related to globalexecutive and director compensation consulting and surveys for various geographies. Mercer and its affiliates also provide products and services to the Company that are unrelated to compensation, including expatriate consulting services (provided by Mercer), international benefits consulting and claims processing services (provided by Mercer) and coordination of certain third party health and welfare benefits (coordinated by Marsh). Mercer’s affiliates, Marsh USA Inc. and Marsh INSCO LLC, provided property and casualty insurance consulting services until June 2016.
through February 2018.
The Compensation Committee reviews all fees for services related to executive and director compensation provided by
F.W. Cook. Because Mercer
continued to provide ad-hoc executive and director compensation consultation services to the Compensation Committee
through February 2018, as well as
fees forother compensation-related products and services
provided to the
Company. The decision to engage Mercer for other services was made by management. NeitherCompany, the Compensation Committee
nor the Board has a role in the engagement of Mercer or Mercer affiliates that provide products or services to the Company that are unrelated to compensation; however, the Compensation Committee reviews the fees for such products and services concurrently with its review of compensation-relatedalso reviewed fees paid to
Mercer.Mercer in 2018. Fees paid to Mercer and its affiliates for services provided in 20162018 related to executive and director compensation and compensation-related products and services totaled $476,782. Fees paid$26,706 and $111,231, respectively. The decision to engage Mercer for compensation-related products and its affiliates for other services provided in 2016 were as follows:
| | | | |
Compensation-related products and services | | $ | 116,301 | |
Services unrelated to compensation | | $ | 294,401 | |
| | | | |
Total other services | | $ | 410,702 | |
| | | | |
was made by management.
The Compensation Committee also received and discussed with
MercerF.W. Cook its letter to the Compensation Committee addressing factors relevant under the
Securities Exchange Commission (“SEC”)SEC and New York Stock Exchange (“NYSE”) rules in assessing
Mercer’sF.W. Cook’s independence from management and whether
Mercer’sF.W. Cook’s work for the Compensation Committee has raised any conflicts of interest, as well as
Mercer’sF.W. Cook’s belief that no conflict of interest exists and that it serves as an independent advisor to the Compensation Committee. The factors addressed included the extent of any business or personal relationships with any member of the Compensation Committee or any executive officer of the Company;
Mercer’s and its affiliates’F.W. Cook’s provision of other services to the Company; the level of fees received from the Company as a percentage of total revenue of
each of Mercer and Mercer’s parent company;F.W. Cook; the policies and procedures employed by
MercerF.W. Cook to avoid conflicts of interest; and any ownership of Company stock by individuals employed by
MercerF.W. Cook to advise the Compensation Committee. The Compensation Committee considered these factors before selecting or receiving advice from
Mercer,F.W. Cook, and after considering these and other factors in their totality, the Compensation Committee identified no conflicts of interest with respect to
Mercer’sF.W. Cook’s advice.
In establishing compensation levels and awards for executive officers other than our CEO, the Compensation Committee takes into consideration the recommendations of
Mercerthe independent executive compensation consultant and the Human Resources Department,
evaluations bycombined with our
CEOCEO's evaluations of each officer’s individual performance and Company performance. The Compensation Committee evaluates director compensation primarily on the basis of peer group data used for benchmarking director compensation provided by
Mercer.46
the independent executive compensation consultant.
Our executive compensation program includes the following key elements: | | |
| | | |
| |
| |
| |
|
Base Salary | | Fixed compensation component. Reviewed annually and adjusted as appropriate. | | Intended to attract and retain executives with proven skills and leadership abilities that will enable us to be successful. | | EachWith the exception of Ms. Turner, each NEO received an increase at the beginning of the year consistent with how the Company sets compensation as described below.(1) |
Annual Incentive Award | | Variable, performance-based compensation component. Payable based on business results and individual performance. | | Intended to motivate and reward executives for successful execution of strategic priorities. | | Targets as a percentage of base salary were established at the beginning of 20162018 for each NEO.(1) The metric weightings were changed in 2016 as follows: Net Sales(2) – 50% to 45%, Adjusted Earnings per Share-Diluted(3) –plan design remained at 40% and Operating Cash Flow(4) – 10% to 15%.consistent with the previous year. |
Long-Term Incentive Awards | | Variable performance-based compensation component. Granted annually as a combination of Restricted Stock Units (“RSUs”), PSUs and stock options. ThePSUs and stock options are considered to be performance-based; the value of amounts actually earned depend on Company and stock price performance. | | Intended to motivate and reward executives for long-term Company financial performance and enhanced long-term stockholder value by balancing compensation opportunity and risk, while encouraging sustained performance and retention. | | Targets as a percentage of base salary were established at the beginning of 20162018 for each NEO. In 2016,The plan design remained consistent with the Compensation Committee approved changing the equity mix from 50% stock options and 50% PSUs to 25% stock options, 50% PSUs and 25% RSUs. In addition, the Compensation Committee approved changing the PSU metrics and weightings for the 2016 – 2018 performance cycle as described in the section entitled “Long-Term Incentives.”previous year. |
(1) | Ms. Buck’s base salary and annual incentive award were adjusted when she was promoted to Executive Vice President, COO, as described further in the sections entitled “Base Salary” and “Annual Incentives.” |
(2) | Net Sales is measured on a constant currency basis, which is anon-GAAP performance measure. For more information regarding how we define constant currency net sales, please see footnote (1) in the section entitled “Executive Summary.” |
(3) | Adjusted earnings per share-diluted is anon-GAAP performance measure. For more information regarding how we define adjusted earnings per share-diluted, please see footnote (2) in the section entitled “Executive Summary.” |
(4) | Operating cash flow is anon-GAAP performance measure. We define operating cash flow as the average of cash from operations less certainone-time items impacting comparability. For more information regarding our use ofnon-GAAP performance measures, please see footnote (1) in the section entitled “Executive Summary.” |
47
The following charts illustrate the weighting of base salary, annual incentive awards and long-term incentive awards at target for our CEO and our other NEOs,
excluding Ms. Turner, during
2016:
2018:
|
| |
| At-Risk Compensation = 87% | At-Risk Compensation = 74% |
The Compensation Committee’s annual compensation review for
20162018 included an analysis of data, comparing the Company’s executive
and director compensation levels against a peer group of publicly-held consumer products companies.
MercerThe independent executive compensation consultant provides the Compensation Committee with advice, counsel and recommendations with respect to the composition of the peer group and competitive data used for benchmarking our compensation program. The Compensation Committee uses this and other information provided by
Mercerthe independent executive compensation consultant to reach an independent recommendation regarding compensation to be paid to our CEO, directors and other officers. The Compensation Committee’s final recommendation
with respect to CEO compensation is then given to the independent directors of our Board for review and final approval.
Before 2015, the Company had two separate peer groups, which we referred to as our Compensation Peer Group and our Financial Peer Group. Since 2015, the Compensation Committee has utilized one common peer group.
Companies in the peer group used to benchmark executive and director pay levels for 20162018 (the “2016“2018 Peer Group”) are: |
| | |
Brown-Forman Corporation | Dean Foods Company | Hormel Foods Corporation |
Campbell Soup Company
| | Kellogg Company |
Colgate-Palmolive Company
| | McCormick & Company, Inc. |
ConAgra Foods, Inc.
Campbell Soup Company | | Mead Johnson Nutrition Company |
Constellation Brands, Inc.
| | Molson Coors Brewing Company |
Dean Foods Company
| | Mondelez International |
Dr Pepper Snapple Group, Inc. | Molson Coors Brewing Company |
Colgate-Palmolive Company | General Mills, Inc. | Mondelez International |
ConAgra Foods, Inc. | Hormel Foods Corporation | The Clorox Company |
General Mills,
Constellation Brands, Inc. | Kellogg Company | The J. M. Smucker Company |
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The Compensation Committee selected these companies after reviewing publicly-held companies offering products/services similar to ours, with annual revenues within a range of approximately
one-half to two and
one-half times our annual revenue (with the exception of Mondelez International whom we also consider a peer company for executive talent) and market capitalization within a reasonable range of our market capitalization. The
20162018 Peer Group was composed of companies with annual revenues ranging from
$3.6$3.9 billion to
$29.6$25.9 billion
(as(trailing twelve months as of
fiscal year 2015)August 2017) and market capitalization ranging from
$1.6$1.8 billion to
$71.3$65.5 billion
(as(most recent quarter as of
December 31, 2015)August 2017). Hershey’s
fiscal year 2015equivalent 2017 revenue of
$7.4$7.5 billion and
December 31, 2015 market capitalization of
$19.4$23.2 billion were at the
51st45th and
56th66th percentiles, respectively.
Except for Colgate-Palmolive Company and Mead Johnson Nutrition Company, allAll of the companies in our
20162018 Peer Group were included in our
2015 Peer Group. Kraft Foods Group,2017 peer group. Mead Johnson Nutrition Company, which was also included in
2015,our 2017 peer group, was not included in
the 2016our 2018 Peer Group
due tobecause it was acquired in 2017. For the purposes of measuring performance in our open PSU cycles only, Dr Pepper Snapple Group, Inc. was removed from our 2018 Peer Group as a
result of its merger
occurringwith Keurig Green Mountain, Inc. in
2015.July 2018.
Data from the
20162018 Peer Group was supplemented by composite data from consumer products companies ranging in size from $3 billion to $17 billion in approximate annual sales. This information was included in three national surveys conducted by Aon Hewitt, Mercer and
Willis Towers Watson. The survey composite data provided us with broader, industry-specific information regarding pay levels at consumer products companies for
positions similar to those held by our NEOs.
The Compensation Committee reviewed a report summarizing
compensation levels at the 25th, 50th and 75th percentiles of the 2016 Peer Group and the survey composite data for positions comparable to those held by each of our NEOs. The Compensation Committee also reviewed a report comparing the target total cash compensation (base salary plus target annual incentive) and target total direct compensation (base salary plus target annual incentive plus target long-term incentive)
levels at the 25th, 50th and 75th percentiles of the 2018 Peer Group and the survey composite data for
positions comparable to those held by each of
the NEOs against these benchmarks. For retention and competitive considerations, the Companyour NEOs. Hershey targets
each NEO’s total cash compensation and total direct compensation
for its executive officers, in aggregate, at competitive pay levels
aroundusing the
50th percentilemedian of
the 2016 Peer Group data or survey composite data applicable to his or her position. The Compensation Committee’s final determinations with respect to base salary, target annual incentive compensationour peer group for reference. Positioning varies by job, and
target long-term incentive compensation reflect consideration of the Company’s and the NEO’s performance, internal comparisons and other factors the Compensation Committee
deems appropriate. Asconsiders a
resultnumber of
these factors
including market competitiveness, specific duties and responsibilities of the
executive versus those of peers, experience and succession planning. The Compensation Committee believes it is appropriate to reward the executive management team with compensation above or below the competitive median if the financial targets associated with its variable pay programs are above or below target,
total cash compensation and target total direct compensation of our NEOs in 2016 was generally set around the applicable median.respectively.
During
2016,2018, the Compensation Committee received detailed tally sheets prepared by management. Each tally sheet captures comprehensive compensation, benefits and stock ownership data. The tally sheets provide the Compensation Committee with a complete picture of each executive’s current and projected compensation and the amount of each element of compensation or other benefit the executive would receive in the event of voluntary or involuntary termination, retirement, disability, death, or upon change in control. The Compensation Committee considers this information, as well as the benchmark information, when making compensation decisions.
Base salary
is the largest fixed component of our executive compensation program andfor each NEO is determined by considering the relative importance of the position, the competitive marketplace and the individual’s performance, responsibilities and experience. Salary reviews are generally conducted annually at the beginning of the year. Each NEO’s base salary is compared to internal and external references. Base salary adjustments, if any, are made after considering market references, Company performance against financial goals and individual performance. CEO performance is evaluated by the Compensation Committee and independent members of the Board. The CEO evaluates the performance of
hisher direct reports, including all NEOs, and reviews
hisher recommendations for salary adjustments with the Compensation Committee prior to its approval of the base salary for each NEO. If a NEO has responsibility for a particular business unit, the business unit’s financial results also will be strongly considered.
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On the basis of the foregoing considerations, the Compensation Committee, and all independent directors in the case of our CEO, approved base salaries for 20162018 as follows: | | | | | | | | | | | | |
Name | | 2016 Base Salary ($) | | | Increase from 2015 (%) | | | Percent of Target Total Direct Compensation (%) | |
Mr. Bilbrey | | | 1,236,000 | | | | 3.0 | | | | 13.8 | |
Ms. Little | | | 627,000 | | | | 4.5 | | | | 26.7 | |
Ms. Buck | | | 750,000 | (1) | | | 14.9 | | | | 23.9 | |
Mr. O’Day | | | 587,800 | | | | 3.0 | | | | 29.9 | |
Ms. Turner | | | 627,000 | | | | 4.5 | | | | 29.4 | |
(1) | In addition to a merit increase at the beginning of the year to $672,400, Ms. Buck’s base salary was increased to $750,000 effective June 2, 2016 in connection with her promotion to Executive Vice President, COO. The percent of target total direct compensation for Ms. Buck is based on a base salary of $716,274, reflecting her target base salary both before and after the June increase. |
|
| | | |
Name | 2018 Base Salary ($) | Increase from 2017 (%) |
| Ms. Buck | 1,133,000 |
| 3.0 |
| Ms. Little | 658,730 |
| 2.0 |
| Mr. O'Day | 627,300 |
| 2.0 |
| Mr. Tillemans | 650,000 |
| 4.0 |
| Ms. West | 679,250 |
| 4.5 |
| Ms. Turner | 642,680 |
| 0.0 |
See Column (c) of the
20162018 Summary Compensation Table for information regarding the base salary earned by each of our NEOs during
2016.2018.
Our NEOs are eligible to receive an annual cash incentive award under the
One Hershey Incentive Program (“OHIP”), a program established under our EICP.OHIP. The OHIP links the NEO’s annual payout opportunity to measures he or she can affect most directly. For 2016,2018, our CEO and all employees reporting directly to him,her, including the NEOs, had common financial objectives tied to total Company performance consistent with their responsibility to manage the entire Company. Total Company performance targets are established in the context of our announced expectations for financial performance, prior year results and market conditions.
For 2016,2018, our NEOs were eligible to earn individual OHIP awards as follows: | | | | | | | | |
Name | | 2016 Target One Hershey Incentive Program (% of Base Salary) | | | Percent of Target Total Direct Compensation (%) | |
Mr. Bilbrey | | | 150 | | | | 20.7 | |
Ms. Little | | | 80 | | | | 21.3 | |
Ms. Buck | | | 90 | (1) | | | 21.0 | (1) |
Mr. O’Day | | | 65 | | | | 19.4 | |
Ms. Turner | | | 70 | | | | 20.6 | |
(1) |
| | |
Name | 2018 Target OHIP (% of Base Salary) |
Ms. Buck’s target was initially set at 85% in January 2016. Upon her promotion to Executive Vice President, COO, Buck | 150 |
|
Ms. Buck’s target increased to 90%. The percent of target total direct compensation for Little | 85 |
|
| Mr. O'Day | 80 |
|
| Mr. Tillemans | 80 |
|
Ms. Buck is based on a base salary of $716,274, reflecting her target base salary both before and after the June increase.West | 80 |
|
| Ms. Turner | 70 |
|
In determining the target OHIP percentage for each of the NEOs, the Compensation Committee, and the independent directors in the case of our CEO, considered the value of target total cash compensation against market references. Target total cash compensation levels for each of the NEOs fall within an appropriate range relative to the median for comparable positions given each incumbent’s performance, responsibilities and tenure in the role.
50
In general, the final OHIP award is determined by multiplying the NEO’s base salary, the applicable target percentage and performance scores ranging from 0% to 200% based on Company and individual performance. The Company performance goals are established at the beginning of each year by the Compensation Committee. Individual performance goals also are established at that time, or at the time of hire if later. If performance scores exceed the target objectives, a NEO may receive an OHIP payout greater than his or her target award value. If performance scores are below the target objectives, the NEO’s OHIP payout will be below his or her target award value, subject to no award if performance is below threshold levels.
For
2016,2018, Company financial performance metrics accounted for 65% of each NEO’s target award under the program. The remaining 35% was based upon individual performance toward achievement of
up to sixa common goal as well as individual performance goals focused on strategic priorities applicable to the NEO’s position, but tied to the overall Company’s top priorities for the year.
2016
2018 OHIP
Financial Performance Targets and Results
The Company (65% of Total OHIP)
Our 2018 OHIP financial performance targets, for the 2016 OHIP were as follows: | • | | Consolidated net sales(1) of $7.571 billion, a 2.5% increase from 2015; |
| • | | Adjusted earnings per share-diluted(2) of $4.37, a 6.0% increase from 2015; and |
| • | | Operating cash flow(3) of $1.190 billion, an 8.0% increase from 2015. |
Ourour financial performance during 2016results for 2018 and the resulting financial performance scores for OHIP were as follows:
| | | | | | | | | | | | |
Metric | | 2016
Target
($) | | 2016
Actual
($) | | Target
Award
(%) | | | Performance
Score
(%) | |
Net Sales(1) | | 7.571 billion | | 7.455 billion | | | 45.00 | | | | 43.50 | |
Adjusted Earnings per Share-Diluted(2) | | 4.37 | | 4.45 | | | 40.00 | | | | 48.86 | |
Operating Cash Flow(3) | | 1.190 billion | | 1.172 billion | | | 15.00 | | | | 14.73 | |
Total One Hershey Incentive Program Company Score | | | 100.00 | | | | 107.09 | |
|
| | | | | | | | | | |
Metric | 2018 Target | 2018 Actual | Target Award (%) | Performance Score (%) |
($) | (% growth) | ($) | (% growth) |
Net Sales(1) | 7.974 billion |
| 6.1 | 7.892 billion |
| 5.0 | 45.00 |
| 42.26 |
|
Adjusted Earnings per Share-Diluted(2) | 5.37 |
| 14.5 | 5.39 |
| 14.9 | 40.00 |
| 40.95 |
|
Operating Cash Flow(3) | 1.355 billion |
| 9.0 | 1.381 billion |
| 11.1 | 15.00 |
| 15.88 |
|
| Total OHIP Company Score | 100.00 |
| 99.09 |
|
| |
| (1) | Net SalesFor purposes of determining the Company performance score, net sales is measured on a constant currency basis, further adjusted to reflect the impact of divestitures and acquisitions, which is anon-GAAP performance measure. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. For more information regarding how we define constant currency net sales,on our use of non-GAAP performance measures, please see footnote (1) in the section entitled “Executive"Executive Summary.” The Net Sales results above differ from those disclosed in our fourth quarter 2016 earnings release as a result of acquisitions made during 2016." |
| |
| (2) | AdjustedFor purposes of determining the Company performance score, adjusted earnings per share-diluted as determined for financial reporting purposes, which is anon-GAAP performance measure.measure, is further adjusted to reflect the impact of divestitures and acquisitions. For more information regarding how we define adjusted earnings per share-diluted, please see footnote (2)(1) in the section entitled “Executive Summary.” Adjusted Earnings Per Share-Diluted results above differ from those disclosed in our fourth quarter 2016 earnings release as a result of acquisitions made during 2016. |
| |
| (3) | Operating cash flow is anon-GAAP performance measure. We define operating cash flow as the average of cash from operations less certainone-time items impacting comparability. For more information regarding our use ofnon-GAAP performance measures, please see footnote (1) in the section entitled “Executive Summary.” |
2018 OHIP Individual Performance Results (35% of Total OHIP)
2018 Common Goal
The NEOs had a common goal to design and implement a new enterprise organizational model to deliver peer leading growth and margin by reallocating resources to commercial capabilities that accelerate growth and improve operational efficiency, our workplace experience and the overall quality of our talent. The new model was installed ahead of schedule and over delivered on all financial and operational objectives.
We achieved below-target
Michele G. Buck, President and CEO
Ms. Buck delivered financial performance that solidly outperformed the Consumer Packaged Goods Food Sector peers while making strong progress towards creating an Innovative Snacking Powerhouse. Core brands were strengthened, and new media models were delivered (in house creative studio, new data and analytics for better targeting). Our International and Other Segment business delivered top-line organic growth(2) of 6.0% and over delivered operating income, with a record $74 million in profit.
| |
| (2) | Organic growth, which is a non-GAAP performance measure, excludes the impact of divestitures and acquisitions. For more information on our use of non-GAAP performance measures, please see footnote (1) in the section entitled "Executive Summary." |
Patricia A. Little, Senior Vice President, CFO
Ms. Little led, to a successful completion, the master data and central finance reporting streams of our Enterprise Resource Planning ("ERP") project. Ms. Little developed a 3-year profit and loss statement designed to deliver balanced revenue and margin growth in line with Hershey’s top quartile net sales and operating cash flowearnings before interest and above-target performance in adjusted earnings per share-diluted. As a result, 65% of the 2016 OHIP award for each NEO was based on the Company performance score of 107.09%. The remainder of the OHIP award was determined by individual performance ratings.taxes aspirations.
The individual performance goals for Mr. Bilbrey centered on delivery of the Company’s financial goals, strategic leadership and succession planning.
51
At the beginning of 2016, Ms. Buck served as our President, North America. On June 2, 2016, Ms. Buck took on an expanded role of Executive Vice President, COO, while continuing to lead the Company’sday-to-day North American operations. Her goals and evaluation reflected both roles. Ms. Buck was responsible for strategic leadership and delivery of the Company’s financial objectives, establishing future growth pipelines, building critical capabilities and improving the Company’s operations.
Ms. Little, our CFO, had individual performance goals that included building the Company’s global financial capabilities, delivering continued process improvements and delivering on our strategic plan. The individual performance goals for Mr.
Terence L. O’Day, Senior Vice President, Chief Product Supply Chainand Technology Officer
Mr. O’Day led the design and implementation of Hershey’s next generation ERP model, providing oversight and governance, delivering the project on time, on budget, and on scope for each workstream. He also activated initiatives to expand manufacturing, improve fulfillment and develop supply chain capabilities intended to further optimize manufacturing and distribution operations.
Todd W. Tillemans, President, U.S.
Mr. Tillemans designed and deployed growth enabling strategies focused on delivering a supply chain network that enablessustainable, profitable growth and deliveringmarket share gains. Progress was made in strengthening our digital commerce and U.S. commercial planning capabilities, and in sharpening our brand positioning with customers and consumers.
Mary Beth West, Senior Vice President, Chief Growth Officer
Ms. West designed the enterprise margin expansion. For Ms.growth strategy, defining the 2019-2021 strategic roadmap and key strategic growth initiatives that will deliver sustainable, profitable growth. She led the successful integration of Amplify Brands, Inc. and the acquisition of Pirate Brands to capture more snacking occasions.
Leslie M. Turner, Former Senior Vice President, General Counsel and Corporate Secretary the individual performance goals included enhancing our global ethics
Ms. Turner successfully executed and compliance culture as well as supporting our CEO and Board on a varietytransitioned all of legal matters.her general counsel accountabilities.
Following the close of
2016,2018, the Compensation Committee provided the independent directors with an assessment of
Mr. Bilbrey’s 2016Ms. Buck’s 2018 performance and achievement relative to
hisher individual performance goals.
Our financial results were around target despite challenging industry conditions in the category. Mr. Bilbrey also delivered on his strategic leadership goals, including enabling continued growth through portfolio expansion, investing in key geographies, capturing significant cost savings, delivering above-target innovation, succession planning and diversity efforts. Based upon those assessments, the Compensation Committee recommended, and the Board approved, the individual performance award and total OHIP payout for
Mr. BilbreyMs. Buck as shown in the table below.
Mr. Bilbrey
Ms. Buck provided the Compensation Committee with
hisher assessment of each NEO’s
20162018 performance and achievement in relation to their performance goals. Based upon those assessments,
Mr. BilbreyMs. Buck recommended, and the Compensation Committee approved, the individual performance awards and total OHIP payouts as shown in the table below.
Based upon a 65% weight for the Company financial score of 107.09%99.09% of target and a 35% weight for the individual performance, award, our NEOs earned the following 20162018 OHIP awards: | | | | | | | | | | | | | | | | | | | | |
Name | | Award Target (%) | | | Award Target(1) ($) | | | Company Financial Performance Award (65% Weighting) ($) | | | Individual Performance Award (35% Weighting) ($) | | | 2016 OHIP Award ($) | |
Mr. Bilbrey | | | 150 | | | | 1,853,169 | | | | 1,289,963 | | | | 810,762 | | | | 2,100,725 | |
Ms. Little | | | 80 | | | | 501,268 | | | | 348,925 | | | | 210,532 | | | | 559,457 | |
Ms. Buck | | | 90 | (2) | | | 629,778 | (2) | | | 438,379 | | | | 275,528 | | | | 713,907 | |
Mr. O’Day | | | 65 | | | | 381,898 | | | | 265,834 | | | | 200,496 | | | | 466,330 | |
Ms. Turner | | | 70 | | | | 438,609 | | | | 305,309 | | | | 191,892 | | | | 497,201 | |
|
| | | | | | | | | | |
Name | Award Target (%) | Award Target(1) ($) | Company Financial Performance Award (65% Weighting) ($) | Individual Performance Award (35% Weighting) ($) | 2018 OHIP Award ($) |
| Ms. Buck | 150 |
| 1,698,548 |
| 1,094,009 |
| 653,941 |
| 1,747,950 |
|
| Ms. Little | 85 |
| 559,709 |
| 360,500 |
| 195,899 |
| 556,399 |
|
| Mr. O'Day | 80 |
| 501,651 |
| 323,106 |
| 201,914 |
| 525,020 |
|
| Mr. Tillemans | 80 |
| 519,615 |
| 334,676 |
| 145,493 |
| 480,169 |
|
| Ms. West | 80 |
| 542,950 |
| 349,706 |
| 247,042 |
| 596,748 |
|
Ms. Turner(2) | 70 |
| 449,876 |
| 403,776 |
| 42,392 |
| 446,168 |
|
| |
| (1) | Target award is based upon actual salary received in 2016.2018. |
| |
| (2) | Per the terms of Ms. Buck’s targetTurner's Confidential Separation Agreement and General Release, her 2018 OHIP award was initially set at 85% in January 2016. Upon her promotion to Executive Vice President, COO, Ms. Buck’s target increased to 90%.calculated as follows: |
• From January 1, 2018 through March 31, 2018, Ms. Turner's 2018 OHIP award was based 65% on Company financial performance results and 35% on individual performance.
• From April 1, 2018 through December 31, 2018, Ms. Turner's 2018 OHIP award was based 100% on Company financial performance, calculated as the lower of the Company financial performance score or target.
The
20162018 OHIP payments are included in Column (g) of the
20162018 Summary Compensation Table for each NEO.
52
We provide long-term incentive opportunities to motivate, retain and reward our NEOs for their contributions to multi-year performance in achieving strategies and improving long-term share value. In February of each year, the Compensation Committee awards long-term incentive grants,
including PSUs, stock options and RSUs, to our NEOs.
Prior to 2016, long-term incentive grants were comprised of PSUs and stock options. In 2016, we updated our equity mix to include RSUs, increasing the retentive value of our long-term incentive program.The Compensation Committee, and the independent directors in the case of our CEO, determines the value of long-term incentive awards made to each NEO by considering the NEO’s target total direct compensation against internal and external references. The target award percentages approved in February 2016,2018, expressed as a percentage of base salary, were: | | | | | | | | |
Name | | Target Long-
Term Incentive Award (% of Salary) | | | Percent of Target Total Direct Compensation (%) | |
Mr. Bilbrey | | | 475 | | | | 65.5 | |
Ms. Little | | | 195 | | | | 52.0 | |
Ms. Buck | | | 230 | | | | 55.0(1) | |
Mr. O’Day | | | 170 | | | | 50.8 | |
Ms. Turner | | | 170 | | | | 50.0 | |
|
| | |
Name | Target Long- Term Incentive Award (% of Salary) |
| Ms. Buck | 500 |
|
| Ms. Little | 210 |
|
| Mr. O'Day | 170 |
|
| Mr. Tillemans | 180 |
|
| Ms. West | 230 |
|
Ms. Turner(1) | 170 |
|
| |
| (1) | The percent of target total direct compensation for Ms. Buck is basedTurner retired on a base salary of $716,274, reflecting her target base salary both before and after the June increase.April 1, 2018. |
The Compensation Committee values RSUs and PSUs using the closing stock price of the Company’s Common Stock on the NYSE on the date of grant. The Compensation Committee values stock options using the value of the stock options at the date of grant as determined for financial reporting purposes (the Black-Scholes value). Target total direct compensation levels for each of the NEOs fall within an appropriate range relative to the median for comparable positions given
the each incumbent’s performance, responsibilities and tenure in the role.
Performance Stock Unit Targets and Results
(50% of long-term incentive mix)
PSUs are granted to NEOs and other executives in a position to affect the Company’s long-term results. At the start of each three-year cycle, a contingent target number of PSUs is established for each executive. This target is expressed as a percentage of the executive’s base salary and is determined as part of a total compensation package based on the peer group and survey composite benchmarks. The PSU award generally represents approximately
one-half of the recipient’s long-term incentive compensation target award. Dividends are not paid on PSU awards during the three-year performance cycle.
2014-2016
2016-2018 PSU
Cycle Award
The performance objectives for the
2014-20162016-2018 performance cycle awarded in
20142016 were based upon the following metrics:
Three-year relative TSR versus the Financial Peer Group2016 peer group described below;
Three-year compound annual growth rate (“CAGR”)CAGR in organictotal Company net sales outside the United Statessales; and Canada;
Three-year CAGR in adjusted earnings per share-diluted measured against an internal target; andtarget.
53
Annual (as opposed to three-year) growth in adjusted earnings per share-diluted measured against an internal target for each year of the three-year performance cycle.
The Compensation Committee selected these metrics to measure performance against internal targets aligned with our stockholders’ interests and investment returns offered by our peer companies. Although the Company decided to utilize one commonThe 2016 peer group beginning in 2015, PSU cycles prior to 2015 still utilize our Financial Peer Group. The Financial Peer Group is a high-performing group of companies with whom we compete for investors in the food and beverage industry. Initially the Compensation Committee approved a Financial Peer Group of 15originally included 16 companies with median revenues of $8.1$6.2 billion. AsMead Johnson Nutrition Company and Dr Pepper Snapple Group, Inc. were subsequently removed from the 2016 peer group as a result of corporate transactions, Hillshire Brandswhich occurred in June 2017 and Kraft Foods Group were removed from the Financial Peer Group.July 2018, respectively. Therefore, 1314 companies remained in the 2014-20162016-2018 cycle for use in assessing our Company’s 2014-2016Company's 2016-2018 TSR.
Companies included in the Financial Peer Group2016 peer group for the 2014-20162016-2018 PSU cycle award were: |
| | |
Brown-Forman Corporation | | HormelDean Foods Corporation |
Campbell Soup Company
| | Kellogg Company |
ConAgra Foods, Inc.
| | McCormick & Company, Inc. |
Constellation Brands, Inc.
| | Molson Coors Brewing Company |
Dean Foods
Campbell Soup Company | General Mills, Inc. | Mondelez International |
Dr Pepper Snapple Group,Colgate-Palmolive Company
| Hormel Foods Corporation | The Clorox Company |
ConAgra Foods, Inc. | Kellogg Company | The J. M. Smucker Company |
General Mills,
Constellation Brands, Inc. | McCormick & Company, Inc. | | |
The Compensation Committee approves the annual adjusted earnings per share-diluted target for each year of the three-year performance cycle at the beginning of the performance year. The annual component allows the Compensation Committee to establish performance thresholds, targets and maximums that reflect current business conditions, thus strengthening the link between pay and performance for each year of the three-year cycle.
Payment of any amounts earned
including amounts based on the annual performance goals, will beis made in shares of
our Common Stock at the conclusion of the three-year performance cycle. The maximum award for any participant in a performance cycle is 250% of the contingent target award.
Targets and results for the 2014-20162016-2018 performance cycle and the Company’s TSR and financial performance during the three-year cycle were as follows: | | | | | | | | | | | | | | | | |
Metric | | Target | | | Actual
Performance | | | Target
Award
Weighting
(%) | | | Final
Performance
Score (%) | |
Total Shareholder Return | | | 50th Percentile | | | | 0th Percentile | | | | 50.00 | | | | 0.00 | |
Three-year CAGR in Organic Net Sales Outside the United States and Canada | | | 18.3% CAGR | (1) | | | 1.9% CAGR | (1) | | | 15.00 | | | | 0.00 | |
Three-year CAGR in Adjusted Earnings per Share-Diluted(3) | | | 10.1% CAGR | (1),(2) | | | 8.1% CAGR | (1),(2) | | | 15.00 | | | | 4.64 | |
2014 Adjusted Earnings per
Share-Diluted(3) | |
| $4.10
(10.2% increase) | (1)
| |
| $3.98
(7.0% increase) | (1)
| | | 6.66 | | | | 3.10 | |
2015 Adjusted Earnings per
Share-Diluted(3) | |
| $4.34
(9.0% increase) |
| |
| $4.12
(3.5% increase) |
| | | 6.67 | | | | 4.03 | |
2016 Adjusted Earnings per
Share-Diluted(3) | |
| $4.37
(6.1% increase) | (1)
| |
| $4.45
(8.0% increase) | (1)
| | | 6.67 | | | | 8.89 | |
Total | | | | | | | | | | | 100.00 | | | | 20.66 | |
54
|
| | | | | | |
| Metric | Target | Actual Performance | Target Award Weighting (%) | Final Performance Score (%) |
| Total Shareholder Return | 50th Percentile | 89th Percentile | 34.00 |
| 83.87 |
|
Three-year CAGR in Net Sales Growth(1)(2) | 3.0% CAGR | 0.6% CAGR | 33.00 |
| — |
|
Three-year CAGR in Adjusted Earnings per Share-Diluted(1)(3) | 6.0% CAGR | 7.1% CAGR | 33.00 |
| 47.21 |
|
| Total | | | 100.00 |
| 131.08 |
|
| |
| (1) | Results for our Shanghai Golden Monkey business, our Allan Candy business, our KRAVE businessbarkTHINS, Amplify and our barkTHINS businessPirate Brands businesses were excluded from the following metrics, as applicable, as these acquisitions were made in September 2014, December 2014, March 2015 and April 2016, January 2018 and October 2018, respectively: |
• Three-year CAGR in organic net sales outside the United Statesgrowth; and Canada;
• Three-year CAGR in adjusted earnings per share-diluted;
2014 adjusted earnings per share-diluted; and
2016 adjusted earnings per share-diluted.
| |
| (2) | ResultsNet Sales is measured on a constant currency basis, which is a non-GAAP performance measure. To calculate net sales on a constant currency basis, net sales for our Mauna Loa business were excluded from the three-year CAGRcurrent fiscal year period for entities reporting in adjusted earnings per share-diluted ascurrencies other than the divestiture was completed in February 2015.U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the base fiscal year. |
| |
| (3) | Adjusted earnings per share-diluted is anon-GAAP performance measure. For more information regarding how we define adjusted earnings per share-diluted, please see footnote (2)(1) in the section entitled “Executive Summary.” |
At the conclusion of each three-year,
and annual performance period, the Compensation Committee reviews the level of performance achieved and the percentage, if any, of the applicable portion of the target number of PSUs earned. In determining the final performance cycle score, negative adjustments may be made by the Compensation Committee to the Company’s performance score to take into account extraordinary or unusual items occurring during the period. No adjustments were made in determining the
20.66%131.08% performance score or the number of PSUs earned by our NEOs for the
2014-20162016-2018 performance cycle.
2015-2017
2017-2019 and 2018-2020 PSU
AwardAwards
The performance metrics and weightings for the
2015-20172017-2019 and the 2018-2020 performance
cyclecycles are the same as the
2014-20162016-2018 performance cycle.
In 2015,The three-year relative TSR metric for the
Company decided to utilize one common2017-2019 performance cycle is based on our 2017 peer group,
for benchmarking compensationwhich was unchanged from the 2016 peer group. As describe above, Mead Johnson Nutrition Company and
for measuring financial performance in PSU cycles. The 2015Dr Pepper Snapple Group, Inc. were subsequently removed from the 2017 peer group
originally included 15 companies, allas a result of
corporate transactions. The three-year relative TSR metric for the 2018-2020 performance cycle is based on our 2018 Peer Group, which
were includedis further described in the
Financialsection entitled “Setting Compensation.” Dr Pepper Snapple Group, Inc. was subsequently removed from the 2018 Peer Group
used for the 2014-2016 PSU cycle, except that Hillshire Brands was removed as a result of a corporate
transaction and was replaced by the Clorox Company. Kraft Foods Group was subsequently removed from the 2015 peer group as a result of a corporate transaction so that the 2015 peer group currently includes 14 companies. Actual Company results of $4.45 for the 2016 adjusted earnings per share-diluted metric reflected an 8% increase from 2015 exceeding the 2016 target of $4.37. As a result, 8.89% of the final award was earned for this metric in the 2015-2017 performance cycle. These PSUs will be paid at the end of the three-year performance cycle to participating executives who are entitled to payouts under the terms of the program.2016-2018 PSU Award
In December 2016, the Committee approved changes to the performance metrics and weightings for the 2016-2018 performance cycle to simplify our program, reduce complexity and improve focus on our current long-term growth strategies.
The performance objectives for the 2016-2018 performance cycle are based upon the following metrics:
transaction.Three-year relative TSR versus the 2016 Peer Group described above;
Three-year CAGR in Total Company net sales; and
Three-year CAGR in adjusted earnings per share-diluted measured against an internal target.
These metrics are weighted 34%, 33% and 33%, respectively.
See Column (e) of the 20162018 Summary Compensation Table, Columns (f) through (h) of the 20162018 Grants of Plan-Based Awards Table, Columns (i) and (j) of the Outstanding Equity Awards at 20162018 Fiscal-Year End Table and Columns (d) and (e) of the 20162018 Option Exercises and Stock Vested Table for more information about PSUs awarded to the NEOs.
55
Stock Options
Stock options are an important element (25% of our long-term incentive program, enabling us to align the interests of NEOs with those of stockholders. mix)
In general, stock options are awarded annually to the Company’s executives as well as to other key managerial employees. Stock options entitle the holder to purchase a fixed number of shares of Common Stock at a set price during a specified period of time. The right to exercise the options is subject to a vesting schedule. Because stock options vest over time and only have value if the price of our Common Stock increases, they encourage efforts to enhance long-term stockholder value.
The Compensation Committee sets guidelines for the value of stock options to be awarded based on competitive compensation data. The stock option award represents approximately
one-quarter of the NEO’s long-term incentive compensation target award. In
2016,2018, the target number of stock options awarded to each NEO was determined by multiplying the NEO’s base salary by
one-quarter of his or her target long-term incentive award percentage divided by the Black-Scholes value of each option on the grant date. The Black-Scholes option-pricing model is described in Note
1011 to the Consolidated Financial Statements contained in the
20162018 Annual Report on Form
10-K that accompanies this Proxy Statement. The actual number of options awarded may vary from the target level based on each NEO’s individual performance evaluation.
Stock options vest in equal increments over four years and have a
10-year term. As required by the EICP, the options have an exercise price equal to the closing market price of the Common Stock on the NYSE on the date of the award.
See Column (f) of the
20162018 Summary Compensation Table, Columns (j) through (l) of the
20162018 Grants of Plan-Based Awards Table, Columns (b) through (f) of the Outstanding Equity Awards at
20162018 Fiscal-Year End Table and Columns (b) and (c) of the
20162018 Option Exercises and Stock Vested Table for more information on stock options awarded to the NEOs.
Restricted Stock Units
In 2016, we updated our (25% of long-term incentive program to include RSUs in our annual equity mix. mix)
The Compensation Committee sets guidelines for the value of the annual RSUs to be awarded based on competitive compensation data. These RSU awards represent approximately
one-quarter of the NEO’s long-term incentive compensation target award. In
2016,2018, the target number of RSUs awarded to each NEO was determined by multiplying the NEO’s base salary by
one-quarter of his or her target long-term incentive award percentage divided by the closing price of the Company’s Common Stock on the NYSE on the grant date. The actual number of RSUs awarded may vary from the target level based on each NEO’s individual performance evaluation. Annual RSUs vest in equal increments over three years.
The Compensation Committee also awards RSUs to NEOs and other executives from time to time as special incentives. RSUs also are awarded by the Compensation Committee to replace compensation forfeited by newly-hired executive
officers and by the CEO to employees other than executive officers from the RSU pool described below. In February 2016, retention RSUs were granted to Mmes. Little, Buck and Turner, which vest in the event the recipient remains employed by the Company and/or its subsidiaries as of the third-anniversary of the grant date. In June 2016, retention RSUs were granted to Mr. O’Day, which vest in the event the recipient remains employed by the Company and/or its subsidiaries as of theone-year anniversary of the grant date.officers.
See Column (e) of the
20162018 Summary Compensation Table, Column (i) of the
20162018 Grants of Plan-Based Awards Table, Columns (g) and (h) of the Outstanding Equity Awards at
20162018 Fiscal-Year End Table and Columns (d) and (e) of the
20162018 Option Exercises and Stock Vested Table for more information about RSUs awarded to the NEOs.
56
Equity Pools
To ensure flexibility in providing awards for recruitment, retention, performance recognition or in conjunction with a promotion, the Compensation Committee is authorized under the EICP to establish a stock option pool, a PSU pool, a RSU pool and a separate CEO discretionary equity pool for use by our CEO for such purposes. The pools are available for approximately 12 months from the date created. The Compensation Committee determines whether to establish any or all of these pools annually. Options, PSUs and RSUs remaining in any pool at the end of the period do not carry over to pools established for a subsequent period. The CEO may not make discretionary awards from any pool to the NEOs. Awards from the CEO pools and the CEO discretionary equity pool are made monthly according to an annuallypre-determined schedule. The exercise price for the options is based on the closing price of our Common Stock on the date of the award.
Executive perquisites are kept to a minimal level relative to a NEO’s total compensation and do not play a significant role in our executive compensation program. The perquisites that we provide include personal use of Company aircraft
security services for our CEO, and financial counseling and tax preparation reimbursement. See the footnotes to Column (i) of the
20162018 Summary Compensation Table for information regarding the perquisites received by our NEOs.
Our CEO and the other NEOs are eligible to participate in our Gift Matching Program on the same basis as other employees, retirees or their spouses. Through the Gift Matching Program, we match contributions made to one or more
non-profit organizations on a
dollar-for-dollar basis up to a maximum aggregate contribution of $5,000 per employee annually. These matching contributions are not considered compensation and are not included in Column (i) of the
20162018 Summary Compensation Table.
NEOs
are eligible to participate in our
tax-qualified defined benefit pension plan (“pension plan”) and
tax-qualified defined contribution 401(k) plan (“401(k) plan”) on the same basis as other salaried employees of the Company. IRC regulations do not permit the Company to use base salary and other compensation paid above certain limits to determine the benefits earned by the NEOs under
tax-qualified plans. The Company maintains a defined benefit Supplemental Executive Retirement Plan (“DB SERP”), a defined contribution Supplemental Executive Retirement Plan (“DC SERP”) and a Deferred Compensation Plan to provide these and additional benefits that are comparable to those offered by our peers. Under the provisions of the Deferred Compensation Plan, our NEOs may elect to defer payments from the
DB SERP, DC SERP, OHIP, PSU and RSU awards, but not stock options or base salary.
The DB SERP was closed to new participants in 2006. No new participants have been or will be added to the DB SERP. NEOs and other senior executives reporting to the CEO not eligible for the DB SERP are considered by the Compensation Committee for participation in the DC SERP. In comparison, the DC SERP typically yields a lower benefit than the DB SERP upon retirement. The Company believes that the DB SERP, DC SERP and Deferred Compensation Plan help, in the aggregate, to attract and retain executive talent, as similar plans are often components of the executive compensation programs within our
Peer Group.peer group. The DC SERP was established as part of our Deferred Compensation Plan and is not a separate plan.
See the
20162018 Pension Benefits Table and accompanying narrative and the
20162018 Non-Qualified Deferred Compensation Table and accompanying narrative for more information regarding the DB SERP, DC SERP and other retirement benefits.
57
The Company entered into an employment agreement with
Mr. BilbreyMs. Buck in
August 2012,February 2017, which
providedprovides for
Mr. Bilbrey’sMs. Buck’s continued employment as President and CEO and continued nomination as a member of the Board of Directors.
In November 2015, the Company and Mr. Bilbrey entered into an amendment to this employment agreement to reflect revisions to Mr. Bilbrey’s compensation and other benefits as a result of his election as Chairman of the Board. The employment agreement
diddoes not have a specified term. Under the terms of the employment agreement, in the event
Mr. Bilbrey’sMs. Buck’s employment
wasis terminated by the Company without Cause or
he resignedshe resigns for Good Reason (in each case as defined in the employment agreement),
Mr. Bilbrey would have beenMs. Buck will be entitled to certain severance benefits. In the event of
hisher termination after a change in control,
Mr. Bilbrey would have beenMs. Buck will be eligible to receive benefits under the Executive Benefits Protection Plan (Group 3A) (“EBPP 3A”).
He wasShe is not entitled to an excise tax
gross-up. The employment agreement
subjected Mr. Bilbreysubjects Ms. Buck to certain
non-competition and
non-solicitation covenants under the ECRCA and to compensation recovery (clawback) to the extent required by applicable law and regulations.
Mr. Bilbrey retired as our President and CEO effective March 1, 2017. In connection with his retirement, the Company and Mr. Bilbrey entered into a retirement agreement in February 2017 in order to set forth the benefits Mr. Bilbrey will receive in connection with his retirement. The retirement agreement supersedes and replaces Mr. Bilbrey’s employment agreement.
In February 2017, the Company entered into an employment agreement with Ms. Buck to reflect the terms and conditions of her employment as President and CEO, effective March 1, 2017. The terms of Ms. Buck’s employment agreement are substantially similar to the terms of Mr. Bilbrey’s employment agreement prior to the November 2015 amendment.
See the section entitled “Potential Payments upon Termination or Change in Control” for information regarding the payments
Mr. Bilbrey and Ms. Buck would
have receivedreceive in the event of an applicable termination or change in control occurring on December 31,
2016.2018.
Other than as set forth above, we have not entered into employment agreements with any NEO.
Severance and Change in Control Plans
All of the NEOs are covered by our EBPP 3A. The EBPP 3A is intended to help us attract and retain executive talent and maintain a stable work environment in the event of activity that could potentially result in a Change in Control. The severance protection provided under the EBPP 3A upon a Change in Control is based upon a “double trigger.” The terms of the plan generally provide that a covered NEO whose employment with the Company terminates in qualifying circumstances within two years after a Change in Control of the Company is entitled to certain severance payments and benefits. The EBPP 3A also provides severance benefits in the event of involuntary termination without Cause unrelated to a Change in Control or voluntary termination for Good Reason within two years after election of a new CEO. Change in Control, Cause and Good Reason are defined in the EBPP 3A.
See the discussion in the section entitled “Potential Payments upon Termination or Change in Control” for information regarding the payments that would be due to our NEOs under the EBPP 3A in the event of an applicable termination of employment or a Change in Control.
58
Stock Ownership Guidelines
The Compensation Committee believes that requiring NEOs and other executive officers to hold significant amounts of our Common Stock strengthens their alignment with the interest of our stockholders and promotes achievement of long-term business objectives. Our executive stock ownership policy has been in place for more than 20 years. The Compensation Committee reviews ownership requirements annually to ensure they are aligned with external market comparisons. As a result of its review in May 2018, the Compensation Committee increased the CEO's stock ownership guideline level from 5 times base salary to 6 times base salary.
Executives with stock ownership requirements have five years from their initial election to their position to accumulate and hold the minimum number of shares required. For purposes of this requirement, “shares” include shares of our Common Stock that are owned by the executive, unvested time-based RSUs and vested RSUs and PSUs that have been deferred by the executive as Common Stock units under our Deferred Compensation Plan. It is anticipated that executives will hold a significant number of the shares earned from PSU and RSU awards and the exercise of stock options to satisfy their obligations. Minimum stockholding requirements for the CEO and the other executives are as follows: |
| |
Position | Stock Ownership Level |
CEO | 6 times base salary |
CFO and Senior Vice Presidents | 3 times base salary |
Other executives subject to stockholding requirements | 1 times base salary |
The dollar value of shares which must be acquired and held equals a multiple of the individual executive’s base salary. Stockholding requirements are updated whenever a change in base salary occurs. Failure to reach the minimum holding requirement within the five-year period results in a notification letter to the executive, with a copy to the CEO, and a requirement that future stock option exercises, RSU distributions and PSU payments be settled by retaining at least 50% of the shares of Common Stock received until the minimum ownership level is attained. The Compensation Committee receives an annual summary of each individual executive’s ownership status to monitor compliance.
Other Compensation Policies and Practices
Under the EICP, when an individual’s actions result in the filing of financial documents not in compliance with financial reporting requirements, the Company has the right to recoup or require repayment of an award earned or accrued during the twelve-month period following the first public issuance or filing with the SEC of the
non compliant financial
document not in compliance with such financial reporting requirement.document. Repayment or clawback occurs where the material noncompliance results from misconduct, the participant’s knowledge or gross negligence in engaging in the misconduct or failing to prevent the misconduct, or if the participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley
ActionAct of 2002.
In 2008, the Company initiated the execution of the ECRCA by executive officers as a condition for the receipt of long-term incentive awards and, for new executive officers, also as a condition of employment. The purpose of the ECRCA is to protect the Company and further align the interests of the executive officer with those of the Company. The terms of the ECRCA prohibit the executive from misusing or disclosing the Company’s confidential information, competing with the Company in specific categories for a period of 12 months following separation from employment, recruiting or soliciting the Company’s employees, or disparaging the Company’s reputation in any way. For those officers or employees based outside the U.S., the restrictive covenants and terms may be modified to comply with local laws.
Failure to comply with the provisions of the ECRCA may result in cancellation of the unvested portion of PSU and RSU awards, cancellation of any unexercised stock options and a requirement for repayment of amounts received from equity awards during the last year of employment, as well as any amounts received from the DB SERP or DC SERP.
Tax Considerations
The anticipated cost of the various components of executive compensation is also a factor
As in the Compensation Committee’s deliberations.effect through December 31, 2017, Section 162(m) of the IRC may limitgenerally disallowed the Company’s ability to deduct certain compensation in excess of $1$1.0 million paid to our CEO or to our other NEOs who arewere employed on the last day of the fiscal year (other than officers who served as CFO during the year). This limitation does, but did not apply todisallow a deduction for compensation that qualifies as “performance-based” under applicable Internal Revenue Service (“IRS”) regulations or that iswas paid after termination of employment. As a result of changes to Section 162(m) of the IRC resulting from federal legislation referred to as the Tax Cuts and Jobs Act, the $1.0 million deduction limitation described above has been expanded to disallow the deduction for compensation payable to a larger group of employees, effective for tax years beginning after December 31, 2017. Performance-based compensation, including equity awards, is no longer exempt from the Section 162(m) deduction limitation, subject to a transition rule. The employees (referred to as “covered employees”) to whom the deduction limitation applies include the CEO and CFO (in each case, whether or not serving as executive officers as of the end of the fiscal year) and the three other most highly compensated executive officers. In addition, once considered a “covered employee” for a given year, the individual will be treated as a “covered employee” for all subsequent years.
The Compensation Committee has considered the effect of Section 162(m) of the IRC on the Company’s executive compensation program. The Compensation Committee exercises discretion in setting base salaries, structuring incentive compensation awards and in determining payments in relation to levels of achievement of performance goals. The Compensation Committee believes that the total compensation program for NEOs should be managed in accordance with the objectives outlined in the Company’s compensation philosophy and in the best overall interests of the Company’s stockholders. Accordingly, compensation paid by the Company may not be deductible because such compensation exceeds the limitations
or does not meet the “performance-based” or other requirements, for deductibility under Section 162(m) of the IRC.
Section 409A of the IRC specifies certain rules and limitations regarding the operation of our Deferred Compensation Plan and other retirement programs. Failure to comply with these rules could subject participants in those plans and programs to additional income tax and interest penalties. We believe our plans and programs comply with Section 409A of the IRC.
59
Stock Ownership GuidelinesThe Compensation Committee believes that requiring NEOs and other executive officers to hold significant amounts of our Common Stock strengthens their alignment with the interest of our stockholders and promotes achievement of long-term business objectives. Our executive stock ownership policy has been in place for more than 20 years. The Compensation Committee reviews ownership requirements annually to ensure they are aligned with external market comparisons.
Executives with stock ownership requirements have five years from their initial election to their position to accumulate and hold the minimum number of shares required. For purposes of this requirement, “shares” include shares of our Common Stock that are owned by the executive, unvested time-based RSUs, PSUs earned for the annual segments of open performance cycles and vested RSUs and PSUs that have been deferred by the executive as Common Stock units under our Deferred Compensation Plan. It is anticipated that executives will hold a significant number of the shares earned from PSU and RSU awards and the exercise of stock options to satisfy their obligations. Minimum stockholding requirements for the CEO and the other NEOs are as follows:
| | |
Position
| | Stock Ownership Level
|
CEO
| | 5 times base salary |
COO
| | 4 times base salary |
CFO and Senior Vice Presidents
| | 3 times base salary |
Other executives subject to stockholding requirements
| | 1 times base salary |
The dollar value of shares which must be acquired and held equals a multiple of the individual executive’s base salary. Stockholding requirements are updated whenever a change in base salary occurs. Failure to reach the minimum within the five-year period results in a notification letter to the executive, with a copy to the CEO, and a requirement that future stock option exercises and PSU payments be settled by retaining at least 50% of the shares of Common Stock received until the minimum ownership level is attained. The Compensation Committee receives an annual summary of each individual executive’s ownership status to monitor compliance.
60
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed with management the Compensation Discussion & Analysis. Based on that review and discussion, we have recommended to the Board of Directors that the Compensation Discussion & Analysis be included in this Proxy Statement.
Submitted by the Compensation and Executive Organization Committee of the Board of Directors:
James
Anthony J. Palmer, Chair
Pamela M.
Mead, ChairArway
M.
MalcolmAnthony J. Palmer
David L. Shedlarz
Diane Koken
The independent members of the Board of Directors who are not members of the Compensation and Executive Organization Committee join in the Compensation Committee Report with respect to the approval of
Mr. Bilbrey’sMs. Buck’s compensation.
Pamela M. Arway
Robert F. Cavanaugh
James W. Brown
James
E. NevelsThomas J. Ridge
61
C. Katzman
Robert M. Malcolm
Wendy L. Schoppert
David L. Shedlarz
2016
2018 Summary Compensation Table
The following table and explanatory footnotes provide information regarding compensation earned by, held by, or paid to, individuals holding the positions of Chief (Principal) Executive Officer and Chief (Principal) Financial Officer during 2016 and2018, the three most highly compensated of our other executive officers whichand one additional executive officer who separated from service during the year, but whose compensation would have been among the highest of those who served as executive officers during 2018. These individuals collectively comprise our NEOs. The following table provides information with respect to 2016,2018, as well as 20152017 and 20142016 compensation where required. 20142016 information is not provided for Mmes. LittleMr. Tillemans and Ms. West and 2017 information is not provided for Ms. Turner because they were not NEOs in 2014. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal
Position(1) | | Year | | | Salary(2)
($) | | | Bonus(3)
($) | | | Stock
Awards(4)
($) | | | Option
Awards(5)
($) | | | Non-
Equity
Incentive
Plan
Compen-
sation(6) ($) | | | Change in Pension
Value and Non-Qualified Deferred Compensation Earnings(7) ($) | | | All
Other
Compen-
sation(8) ($) | | | Total ($) | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Mr. Bilbrey | | | 2016 | | | | 1,240,753 | | | | — | | | | 5,031,976 | | | | 1,470,896 | | | | 2,100,725 | | | | 2,700,403 | | | | 134,823 | | | | 12,679,576 | |
Chairman of the Board,
President and CEO | | | 2015 | | | | 1,204,616 | | | | — | | | | 3,146,305 | | | | 2,844,073 | | | | 1,005,930 | | | | 2,438,084 | | | | 170,991 | | | | 10,809,999 | |
| | | 2014 | | | | 1,164,462 | | | | — | | | | 3,947,534 | | | | 4,123,889 | | | | 1,018,395 | | | | 7,293,845 | | | | 229,276 | | | | 17,777,401 | |
Ms. Little | | | 2016 | | | | 629,412 | | | | — | | | | 2,067,059 | | | | 368,695 | | | | 559,457 | | | | — | | | | 194,425 | | | | 3,819,048 | |
Senior Vice President, CFO | | | 2015 | | | | 482,308 | | | | — | | | | 2,172,076 | | | | 510,003 | | | | 288,805 | | | | — | | | | 246,579 | | | | 3,699,771 | |
Ms. Buck | | | 2016 | | | | 720,352 | | | | — | | | | 6,208,007 | | | | 356,418 | | | | 713,907 | | | | 832,570 | | | | 67,490 | | | | 8,898,744 | |
Executive Vice President, COO | | | 2015 | | | | 655,310 | | | | — | | | | 746,418 | | | | 685,505 | | | | 403,015 | | | | 587,394 | | | | 73,220 | | | | 3,150,862 | |
| | | 2014 | | | | 642,461 | | | | — | | | | 944,845 | | | | 1,008,038 | | | | 307,046 | | | | 1,312,980 | | | | 69,596 | | | | 4,284,966 | |
Mr. O’Day | | | 2016 | | | | 590,061 | | | | — | | | | 1,354,674 | | | | 252,782 | | | | 466,330 | | | | — | | | | 188,577 | | | | 2,852,424 | |
Senior Vice President,
Chief Supply Chain Officer | | | 2015 | | | | 572,845 | | | | — | | | | 538,594 | | | | 485,067 | | | | 269,435 | | | | — | | | | 168,052 | | | | 2,033,993 | |
| | | 2014 | | | | 567,172 | | | | — | | | | 695,571 | | | | 576,407 | | | | 222,292 | | | | — | | | | 231,604 | | | | 2,293,046 | |
Ms. Turner | | | 2016 | | | | 629,412 | | | | — | | | | 3,959,690 | | | | 323,586 | | | | 497,201 | | | | — | | | | 210,647 | | | | 5,620,536 | |
Senior Vice President,
General Counsel and Secretary | | | 2015 | | | | 602,308 | | | | — | | | | 550,394 | | | | 765,062 | | | | 341,376 | | | | — | | | | 196,234 | | | | 2,455,374 | |
|
| | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary(2) ($) | Bonus(3) ($) | Stock Awards(4) ($) | Option Awards(5) ($) | Non- Equity Incentive Plan Compen- sation(6) ($) | Change in Pension Value and Non-Qualified Deferred Compen- sation Earnings(7) ($) | All Other Compen- sation(8) ($) | Total ($) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Ms. Buck | 2018 | 1,137,357 |
| — |
| 4,112,889 |
| 1,416,300 |
| 1,747,950 |
| 2,988,474 |
| 315,402 |
| 11,718,372 |
|
| President and CEO | 2017 | 1,043,462 |
| — |
| 3,986,306 |
| 1,243,048 |
| 1,307,941 |
| 2,491,271 |
| 202,573 |
| 10,274,601 |
|
| 2016 | 720,352 |
| — |
| 6,208,007 |
| 356,418 |
| 713,907 |
| 832,570 |
| 67,490 |
| 8,898,744 |
|
| Ms. Little | 2018 | 661,264 |
| — |
| 1,004,362 |
| 345,876 |
| 556,399 |
| — |
| 248,961 |
| 2,816,862 |
|
| Senior Vice President, Chief Financial Officer | 2017 | 645,809 |
| — |
| 1,114,210 |
| 342,326 |
| 531,541 |
| — |
| 251,353 |
| 2,885,239 |
|
| 2016 | 629,412 |
| — |
| 2,067,059 |
| 368,695 |
| 559,457 |
| — |
| 194,425 |
| 3,819,048 |
|
| Mr. O'Day | 2018 | 629,712 |
| — |
| 774,315 |
| 266,652 |
| 525,020 |
| — |
| 228,413 |
| 2,424,112 |
|
| Senior Vice President, Chief Product Supply and Technology Officer | 2017 | 606,003 |
| — |
| 2,326,600 |
| 379,181 |
| 463,975 |
| — |
| 218,867 |
| 3,994,626 |
|
| 2016 | 590,061 |
| — |
| 1,354,674 |
| 252,782 |
| 466,330 |
| — |
| 188,577 |
| 2,852,424 |
|
| | | | | | | | | |
| Mr. Tillemans | 2018 | 652,500 |
| — |
| 849,427 |
| 292,515 |
| 480,169 |
| — |
| 613,549 |
| 2,888,160 |
|
| President, U.S. | 2017 | 468,750 |
| 438,000 |
| 1,197,508 |
| 218,822 |
| 373,163 |
| — |
| 593,371 |
| 3,289,614 |
|
| Ms. West | 2018 | 681,863 |
| — |
| 1,329,645 |
| 585,886 |
| 596,748 |
| — |
| 977,954 |
| 4,172,096 |
|
| Senior Vice President, Chief Growth Officer | 2017 | 437,500 |
| 1,350,000 |
| 5,068,455 |
| 377,026 |
| 394,840 |
| — |
| 277,918 |
| 7,905,739 |
|
| | | | | | | | | |
Ms. Turner(1) | 2018 | 160,670 |
| — |
| 793,362 |
| 273,195 |
| 446,168 |
| — |
| 6,028,885 |
| 7,702,280 |
|
| Former Senior Vice President, General Counsel and Corporate Secretary | 2016 | 629,412 |
| — |
| 3,959,690 |
| 323,586 |
| 497,201 |
| — |
| 210,647 |
| 5,620,536 |
|
| | | | | | | | | |
| |
| (1) | Mr. Bilbrey was Chairman of the Board, President and CEO for the entirety of 2016, retiring from the position of President and CEOMs. Turner retired on MarchApril 1, 2017. Mr. Bilbrey continues to serve asnon-executive Chairman of the Board. Ms. Buck was promoted to Executive Vice President, COO in June 2016 and served in that position at the end of fiscal 2016. On March 1, 2017, Ms. Buck was promoted to President and CEO.2018. |
| |
| (2) | Column (c) reflects base salary earned, on an accrual basis, for the years indicated and includes IRC Section 125 deductions pursuant to The Hershey Company Flexible Benefits Plan and amounts deferred by the NEOs in accordance with the provisions of the 401(k) plan. |
| |
| (3) | With the exception of Mr. Tillemans and Ms. West, Column (d) indicates that no discretionary bonuses were paid to the NEOs in 2016, 20152018, 2017 or 2014.2016. Mr. Tillemans and Ms. West, who joined the Company in April 2017 and May 2017, respectively, each received a cash sign-on bonus in 2017 to replace awards forfeited at their prior employers. |
| |
| (4) | Column (e) shows the aggregate grant date fair value of RSUs and contingent target PSU awards granted to the NEOs in the years indicated. The assumptions used to determine the grant date fair value of awards listed in Column (e) are set forth in Note 1011 to the Company’s Consolidated Financial Statements included in our 20162018 Annual Report on Form10-K that accompanies this Proxy Statement. The amounts in Column (e) do not reflect the value of shares actually received or which may be received in the future with respect to such awards. |
The number of contingent target PSUs awarded in 2018 to each NEO is shown on the 2018 Grants of Plan-Based Awards Table in Column (g). Assuming the highest level of performance is achieved for each of the PSU awards included in Column (e), the value of the awards at grant date for each of the NEOs would be as follows:
|
| | | |
Name | Year | Maximum Value at Grant Date ($) |
| Ms. Buck | 2018 | 7,081,412 |
|
| | 2017 | 6,305,597 |
|
| | 2016 | 1,968,242 |
|
| Ms. Little | 2018 | 1,729,269 |
|
| | 2017 | 1,786,573 |
|
| | 2016 | 1,612,558 |
|
| Mr. O’Day | 2018 | 1,333,166 |
|
| | 2017 | 2,831,634 |
|
| | 2016 | 1,393,633 |
|
| Mr. Tillemans | 2018 | 1,462,536 |
|
| | 2017 | 1,093,884 |
|
| Ms. West | 2018 | 1,953,045 |
|
| | 2017 | 1,868,879 |
|
| Ms. Turner | 2018 | 1,365,933 |
|
| | 2016 | 1,475,165 |
|
The unvested portion of RSU awards is included in the amounts presented in Columns (g) and (h) of the Outstanding Equity Awards at 2018 Fiscal-Year End Table. The number of shares acquired and value received by the NEOs with respect to PSU and RSU awards that vested in 2018 is included in Columns (d) and (e) of the 2018 Option Exercises and Stock Vested Table.
As a result of her retirement on April 1, 2018, Ms. Turner forfeited a prorated portion of her outstanding PSU awards, including those shown in Column (e) of the 2018 Summary Compensation Table. She also forfeited a prorated portion of her 2018 RSU grant, the value of which is included in Column (e) of the 2018 Summary Compensation Table.
| For 2016, the amount shown in Column (e) includes the aggregate grant date fair value of contingent target PSU awards for the 2016-2018 performance cycle, the 2016 adjusted earnings per share-diluted component of the 2015-2017 performance cycle and, with the exception of Ms. Little, the 2016 adjusted earnings per share-diluted component of the 2014-2016 performance cycle. |
62
| The number of contingent target PSUs awarded in 2016 to each NEO is shown on the 2016 Grants of Plan-Based Awards Table in Column (g). Assuming the highest level of performance is achieved for each of the PSU awards included in Column (e), the value of the awards at grant date for each of the NEOs would be as follows: |
| | | | | | | | |
Name | | Year | | | Maximum Value at Grant Date ($) | |
Mr. Bilbrey | | | 2016 | | | | 8,194,305 | |
| | | | 2015 | | | | 7,308,849 | |
| | | | 2014 | | | | 7,858,523 | |
Ms. Little | | | 2016 | | | | 1,612,558 | |
| | | | 2015 | | | | 1,105,137 | |
Ms. Buck | | | 2016 | | | | 1,968,242 | |
| | | | 2015 | | | | 1,732,476 | |
| | | | 2014 | | | | 1,872,631 | |
Mr. O’Day | | | 2016 | | | | 1,393,633 | |
| | | | 2015 | | | | 1,251,856 | |
| | | | 2014 | | | | 1,389,453 | |
Ms. Turner | | | 2016 | | | | 1,475,165 | |
| | | | 2015 | | | | 1,276,533 | |
| The unvested portion of RSU awards is included in the amounts presented in Columns (g) and (h) of the Outstanding Equity Awards at 2016 Fiscal-Year End Table. The number of shares acquired and value received by the NEOs with respect to PSU and RSU awards that vested in 2016 is included in Columns (d) and (e) of the 2016 Option Exercises and Stock Vested Table. |
| (5) | Column (f) presents the grant date fair value of stock options awarded to the NEOs for the years indicated and does not reflect the value of shares actually received or which may be received in the future with respect to such stock options. The assumptions we made to determine the value of these awards are set forth in Note 1011 to the Company’s Consolidated Financial Statements included in our 20162018 Annual Report on Form10-K that accompanies this Proxy Statement. The number of stock options awarded to each NEO during 20162018 appears in Column (j) of the 20162018 Grants of Plan-Based Awards Table. As a result of her retirement on April 1, 2018, Ms. Turner forfeited a prorated portion of her 2018 stock option grant, the value of which is included in Column (e) of the 2018 Summary Compensation Table. |
| |
| (6) | Column (g) reflects the OHIP payments made to each NEO based upon actual salary received in 2016.2018. |
| |
| (7) | Column (h) reflects the aggregate change in the actuarial present value of the NEO’s retirement benefit under the Company’s pension plan and the DB SERP. The change in value calculation uses the same discount rate and mortality rate assumptions as the 20152018 and 20162017 audited financial statements, as applicable, and measures the change in value between the pension plan measurement date in the 20152018 and 20162017 audited financial statements. The change in value during a year is primarily driven by three factors: 1) changes in valuation assumptions; 2) changes in the NEO’s pensionable earnings; and 3) an additional year of service and age. During 2014, each2018, changes in valuation assumptions caused a minor decrease in pension value, while changes in the NEO's pensionable earnings and an additional year of these factors contributed significantly to theservice and age caused a relatively larger increase in the pension value. During 2015, the primary driver of the increase in pension value was the additional year of age and service. The impact of changes in valuation assumptions and pensionable earnings during 2015 were relatively smaller and mostly offsetting. During 2016,2017, each of the three factors driving change caused a minor increase to the pension value. The impact when combining each of the three minor increases resulted in a relatively largeran increase to the pension value. The amounts in Column (h) do not reflect amounts paid or that might be paid to the NEO. |
Mmes. Little, Turner and West and Messrs. O’Day and Tillemans participate in the DC SERP rather than the DB SERP. The DC SERP is established under the Company’s Deferred Compensation Plan. DC SERP contributions for Mmes. Little, Turner and West and Messrs. O’Day and Tillemans are included in Column (i) as explained in more detail in footnote (8) below.
The NEOs also participate in our non-qualified, non-funded Deferred Compensation Plan under which deferred amounts are credited with notional earnings based on the performance of one or more third-party investment options available to all participants in our 401(k) plan. No portion of the notional earnings credited during 2018 was “above market” or “preferential.” Consequently, no Deferred Compensation Plan earnings are included in amounts reported in Column (h) above. See the 2018 Pension Benefits Table and the 2018 Non-Qualified Deferred Compensation Table for more information on the benefits payable to the NEOs under the pension plan, DB SERP and Deferred Compensation Plan.
| Mmes. Little and Turner and Mr. O’Day participate in the DC SERP rather than the DB SERP. The DC SERP is established under the Company’s Deferred Compensation Plan. DC SERP contributions for Mmes. Little and Turner and Mr. O’Day are included in Column (i) as explained in more detail in footnote (8) below. |
| The NEOs also participate in ournon-qualified,non-funded Deferred Compensation Plan under which deferred amounts are credited with notional earnings based on the performance of one or more third-party investment options available to all participants in our 401(k) plan. No portion of the notional earnings credited during 2016 was “above market” or “preferential.” Consequently, no Deferred Compensation Plan earnings are included in amounts reported in Column (h) above. See the 2016 Pension Benefits Table and the 2016Non-Qualified Deferred Compensation Table for more information on the benefits payable to the NEOs under the pension plan, DB SERP and Deferred Compensation Plan. |
63
| (8) | All other compensation includes amounts as described below: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Retirement Income | | | Perquisites and Other Benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Year | | | 401(k) Match ($) | | | Supple-
mental 401(k) Match(a) ($) | | | Supple-
mental
Retirement Contri-
bution ($) | | | DC SERP
Contribution ($) | | | Core Retirement
Contri-
bution(b) ($) | | | Supple- mental Core Retirement
Contri-
bution(b) ($) | | | Personal
Use of
Company
Aircraft(c) ($) | | | Security
Services(d) ($) | | | Company-
Paid
Financial
Counseling ($) | | | Reimburse-
ment of
Personal
Tax Return
Preparation
Fee ($) | | | Relocation
Expenses and Related
Taxes(e) ($) | | | Attorney
Fees(f) ($) | | Year |
| Retirement Income | | Perquisites and Other Benefits |
Mr. Bilbrey | | | 2016 | | | | 11,925 | | | | 89,176 | | | | 1,034 | | | | — | | | | — | | | | — | | | | — | | | | 8,680 | | | | 8,400 | | | | 1,500 | | | | — | | | | 14,108 | | |
Name | | Year |
| 401(k) Match ($) |
| Supple- mental 401(k)
Match(a) ($) |
| Supple- mental Retirement Contri- bution ($) | DC SERP Contribution ($) |
| Core Retirement Contri-
bution(b) ($) |
| Supple- mental Core Retirement Contri-
bution(b) ($) |
| Personal Use of Company
Aircraft(c) ($) |
| Company- Paid Financial Counseling ($) |
| Reimburse- ment of Personal Tax Return Preparation Fee ($) |
| Relocation Expenses and Related
Taxes(d) ($) |
| Separation
Benefits(e) ($) |
|
| 12,375 |
| 97,663 |
| 1,021 |
| — |
| — |
| — |
| 192,443 |
| 10,400 |
| 1,500 |
| — |
| — |
|
| | | | 2015 | | | | 11,925 | | | | 87,882 | | | | 980 | | | | — | | | | — | | | | — | | | | 52,825 | | | | 7,479 | | | | 8,400 | | | | 1,500 | | | | — | | | | — | | 2017 |
| 12,150 |
| 66,932 |
| 967 |
| — |
| — |
| — |
| 100,455 |
| 10,300 |
| 1,500 |
| — |
| — |
|
| | | | 2014 | | | | 11,700 | | | | 154,189 | | | | 926 | | | | — | | | | — | | | | — | | | | — | | | | 52,561 | | | | 8,400 | | | | 1,500 | | | | — | | | | — | | 2016 | 11,925 |
| 38,627 |
| 913 |
| — |
| — |
| — |
| 4,325 |
| 10,200 |
| 1,500 |
| — |
| — |
|
Ms. Little | | | 2016 | | | | 11,925 | | | | 29,395 | | | | — | | | | 114,777 | | | | 7,950 | | | | 19,596 | | | | — | | | | — | | | | 10,782 | | | | — | | | | — | | | | — | | 2018 |
| 12,375 |
| 41,301 |
| — |
| 149,101 |
| 8,250 |
| 27,534 |
| — |
| 10,400 |
| — |
| — |
| — |
|
| | | | 2015 | | | | 11,925 | | | | 9,363 | | | | — | | | | 59,135 | | | | 7,950 | | | | 6,242 | | | | — | | | | — | | | | 12,379 | | | | — | | | | 139,585 | | | | — | | |
Ms. Buck | | | 2016 | | | | 11,925 | | | | 38,627 | | | | 913 | | | | — | | | | — | | | | — | | | | 4,325 | | | | — | | | | 10,200 | | | | 1,500 | | | | — | | | | — | | |
| | | | 2015 | | | | 11,925 | | | | 31,261 | | | | 859 | | | | — | | | | — | | | | — | | | | 18,975 | | | | — | | | | 10,200 | | | | — | | | | — | | | | — | | 2017 |
| 12,150 |
| 42,087 |
| — |
| 150,658 |
| 8,100 |
| 28,058 |
| — |
| 10,300 |
| — |
| — |
| — |
|
| | | | 2014 | | | | 11,700 | | | | 46,692 | | | | 805 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,914 | | | | 1,485 | | | | — | | | | — | | 2016 | 11,925 |
| 29,395 |
| — |
| 114,777 |
| 7,950 |
| 19,596 |
| — |
| 10,782 |
| — |
| — |
| — |
|
Mr. O’Day | | | 2016 | | | | 11,925 | | | | 26,752 | | | | — | | | | 107,437 | | | | 7,950 | | | | 17,835 | | | | — | | | | — | | | | 8,400 | | | | — | | | | 8,278 | | | | — | | 2018 |
| 12,375 |
| 36,841 |
| — |
| 136,711 |
| 8,250 |
| 24,561 |
| — |
| 8,400 |
| 1,275 |
| — |
| — |
|
| | | | 2015 | | | | 11,925 | | | | 23,754 | | | | — | | | | 99,110 | | | | 7,950 | | | | 15,836 | | | | — | | | | — | | | | 8,400 | | | | 1,077 | | | | — | | | | — | | 2017 |
| 12,150 |
| 35,205 |
| — |
| 131,542 |
| 8,100 |
| 23,470 |
| — |
| 8,400 |
| — |
| — |
| — |
|
| | | | 2014 | | | | 11,700 | | | | 38,285 | | | | — | | | | 138,847 | | | | 7,800 | | | | 25,523 | | | | — | | | | — | | | | 8,400 | | | | 1,049 | | | | — | | | | — | | 2016 | 11,925 |
| 26,752 |
| — |
| 107,437 |
| 7,950 |
| 17,835 |
| — |
| 8,400 |
| — |
| 8,278 |
| — |
|
| Mr. Tillemans | | 2018 |
| 12,375 |
| 33,780 |
| — |
| 128,208 |
| 8,250 |
| 22,520 |
| — |
| 10,760 |
| — |
| 397,656 |
| — |
|
| | | 2017 |
| 12,150 |
| 8,944 |
| — |
| 58,594 |
| 8,100 |
| 5,963 |
| — |
| 5,027 |
| — |
| 494,593 |
| — |
|
| Ms. West | | 2018 |
| 12,375 |
| 36,077 |
| — |
| 134,588 |
| 8,250 |
| 24,051 |
| — |
| 10,400 |
| — |
| 752,213 |
| — |
|
| | | 2017 |
| 12,150 |
| 7,538 |
| — |
| 54,688 |
| 8,100 |
| 5,025 |
| — |
| 6,914 |
| — |
| 183,503 |
| — |
|
Ms. Turner | | | 2016 | | | | 11,925 | | | | 31,760 | | | | — | | | | 121,348 | | | | 7,950 | | | | 21,174 | | | | — | | | | — | | | | 15,000 | | | | 1,490 | | | | — | | | | — | | 2018 |
| 7,786 |
| 14,814 |
| — |
| 75,525 |
| 8,250 |
| 9,876 |
| — |
| 15,000 |
| 1,500 |
| — |
| 5,896,134 |
|
| | | | 2015 | | | | 11,925 | | | | 28,515 | | | | — | | | | 112,334 | | | | 7,950 | | | | 19,010 | | | | — | | | | — | | | | 15,000 | | | | 1,500 | | | | — | | | | — | | 2016 |
| 11,925 |
| 31,760 |
| — |
| 121,348 |
| 7,950 |
| 21,174 |
| — |
| 15,000 |
| 1,490 |
| | — |
|
| |
| (a) | Employees who earn over the IRS compensation limit and/or defer any portion of their OHIP award are eligible for the Supplemental 401(k) Match, contingent on the employee contributing an amount to the 401(k) plan equal to the annualpre-tax limit established by the IRS. Mmes. Buck, Little, Turner and West and Messrs. Bilbrey and O’Day and Mmes. Little, Buck, and TurnerTillemans are eligible to receive a Supplemental 401(k) Match Contribution equal to 4.5% of the amount by which their eligible earnings (salary and OHIP) exceeds the IRS compensation limit. |
| |
| (b) | As are all new hires of the Company since January 1, 2007, Mmes. Little, and Turner and Mr.West and Messrs. O’Day and Tillemans are eligible to receive a contribution to their 401(k) plan account equal to 3% of base salary and OHIP up to the maximum amount permitted by the IRS. We call this contribution the Core Retirement Contribution (“CRC”). They also are eligible to receive a Supplemental Core Retirement Contribution (“Supplemental CRC”) equal to 3% of the amount by which their eligible earnings (salary and OHIP) exceeds the IRS compensation limit. |
| |
| (c) | The value of any personal use of Company aircraft by the NEOs is based on the Company’s aggregate incrementalper-flight hour cost for the aircraft used and flight time of the applicable flight. The incrementalper-flight hour cost is calculated by reference to fuel, maintenance (labor and parts), crew, landing and parking expenses. |
| |
| (d) | From timeMr. Tillemans and Ms. West received Company relocation benefits totaling $384,773 and $702,093, respectively, for shipment of household goods and assistance in selling a former residence. Mr. Tillemans and Ms. West also each received a net tax gross up totaling $12,883 and $50,120, respectively, to timeoffset the Company provides security services for Mr. Bilbrey when the Company determines that conditions warrant such services for the safety and protectionamounts imputed to their income as a result of Mr. Bilbrey and his family. The amount reported is the Company’s incremental cost for such services.these benefits. |
| |
| (e) | For Mr. O’Day, reflects payment for relocation expenses and related taxes incurred in years prior to 2016, but not billed until 2016. |
| (f) | Reflects attorney feesIncludes the following benefits paid or incurredunder the terms of EBPP 3A in connection with the negotiationMs. Turner's retirement on April 1, 2018: cash separation payment of Mr. Bilbrey’s retirement agreement.$964,020, pro-rated vesting of 2016-2018 PSUs ($635,943), pro-rated vesting of 2018 Annual RSUs ($75,269), full vesting of 2017 and 2016 Annual RSUs ($359,886), health and welfare benefit continuation ($4,054) and outplacement services ($35,000). In addition, Ms. Turner received full vesting of her retention RSUs granted in February 2016 ($3,821,961). |
64
2018 Grants of Plan-Based Awards Table
The following table and explanatory footnotes provide information with regard to the potential cash award that each NEO had the opportunity to earn during 20162018 under the OHIP, and with regard to PSUs, RSUs and stock options awarded to each NEO during 2016,2018, as applicable. The amounts that were actually earned under the OHIP during 20162018 by the NEOs are set forth in Column (g) of the 20162018 Summary Compensation Table. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant Date(1) | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units(4) (#) | | | All Other Option Awards: Number of Securities Under- lying Options(5) (#) | | | Exercise or Base Price of Option Awards(6) ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards(7) ($) | |
| | | Thresh- old ($) | | | Target ($) | | | Maximum ($) | | | Thresh- old (#) | | | Target (#) | | | Maxi- mum (#) | | | | | |
| (a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | | | (l) | |
Mr. Bilbrey | | | 02/16/2016 | | | | 6,486 | | | | 1,853,169 | | | | 3,706,338 | | | | 51 | | | | 36,262 | | | | 90,655 | | | | 16,136 | | | | 128,800 | | | | 90.39 | | | | 6,502,872 | |
Ms. Little | | | 02/16/2016 | | | | 1,754 | | | | 501,268 | | | | 1,002,535 | | | | 10 | | | | 7,136 | | | | 17,840 | | | | 15,060 | | | | 32,285 | | | | 90.39 | | | | 2,435,754 | |
Ms. Buck | | | 02/16/2016 | | | | 2,204 | | | | 629,778 | | | | 1,259,557 | | | | 12 | | | | 8,710 | | | | 21,775 | | | | 59,185 | | | | 31,210 | | | | 90.39 | | | | 6,564,425 | |
Mr. O’Day | | | 02/16/2016 | | | | 1,337 | | | | 381,898 | | | | 763,797 | | | | 9 | | | | 6,167 | | | | 15,418 | | | | 2,732 | | | | 22,135 | | | | 90.39 | | | | 1,107,420 | |
| | | | 06/15/2016 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,206 | | | | — | | | | 96.05 | | | | 500,036 | |
Ms. Turner | | | 02/16/2016 | | | | 1,535 | | | | 438,609 | | | | 877,218 | | | | 9 | | | | 6,528 | | | | 16,320 | | | | 36,687 | | | | 28,335 | | | | 90.39 | | | | 4,283,276 | |
|
| | | | | | | | | | | | | | | | | | | | | |
Name | Grant Date(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stock or Units(4) (#) | All Other Option Awards: Number of Securities Under- lying Options(5) (#) | Exercise or Base Price of Option Awards(6) ($) | Grant Date Fair Value of Stock and Option Awards(7) ($) |
Thresh- old ($) | Target ($) | Maximum ($) | Thresh- old (#) | Target (#) | Maxi- mum (#) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
| Ms. Buck | 2/20/2018 | 5,945 |
| 1,698,548 |
| 3,397,096 |
| 28 |
| 28,354 |
| 70,885 |
| 14,177 |
| 90,905 |
| 99.90 |
| 5,529,189 |
|
| Ms. Little | 2/20/2018 | 1,959 |
| 559,709 |
| 1,119,418 |
| 7 |
| 6,924 |
| 17,310 |
| 3,462 |
| 22,200 |
| 99.90 |
| 1,350,238 |
|
| Mr. O'Day | 2/20/2018 | 1,756 |
| 501,651 |
| 1,003,302 |
| 5 |
| 5,338 |
| 13,345 |
| 2,669 |
| 17,115 |
| 99.90 |
| 1,040,967 |
|
| Mr. Tillemans | 2/20/2018 | 1,819 |
| 519,615 |
| 1,039,230 |
| 6 |
| 5,856 |
| 14,640 |
| 2,928 |
| 18,775 |
| 99.90 |
| 1,141,942 |
|
| Ms. West | 2/20/2018 | 1,900 |
| 542,950 |
| 1,085,900 |
| 8 |
| 7,820 |
| 19,550 |
| 5,865 |
| 37,605 |
| 99.90 |
| 1,915,531 |
|
| Ms. Turner | 2/20/2018 | 1,575 |
| 449,876 |
| 899,752 |
| 5 |
| 5,469 |
| 13,673 |
| 2,735 |
| 17,535 |
| 99.90 |
| 1,066,557 |
|
| |
| (1) | Column (b) represents the grant date for the PSUs reflected in Columns (f), (g) and (h), the RSUs reflected in Column (i) and the stock options reflected in Column (j). All awards were made under the EICP. |
| |
| (2) | Columns (c), (d) and (e) represent the threshold, target and maximum potential amounts that each NEO had the opportunity to earn based on the OHIP targets approved for the NEOs in February 2016 and adjusted for Ms. Buck’s target change in June 2016.2018. All amounts shown in Columns (c), (d) and (e) are based upon actual salary received in 2016.2018. |
The threshold amount is the amount that would have been payable had the minimum individual performance score been achieved and the Company performance score been zero. The target amount is the amount that would have been payable had the Company and individual performance scores been 100% on all metrics. The maximum amount is the amount that would have been payable had the maximum score been achieved on all metrics.
| The threshold amount is the amount that would have been payable had the minimum individual performance score been achieved and the Company performance score been zero. The target amount is the amount that would have been payable had the business and individual performance scores been 100% on all metrics. The maximum amount is the amount that would have been payable had the maximum score been achieved on all metrics. |
| (3) | Columns (f), (g) and (h) represent the number of threshold, target and maximum potential PSUs that can be earned for the 2016-2018 performance cycle and for the 2016 adjusted earnings per share-diluted component of the 2015-2017 performance cycle and, with the exception of Ms. Little, the 2016 adjusted earnings per share-diluted component of the 2014-20162018-2020 performance cycle. |
Each PSU represents the value of one share of our Common Stock. The number of PSUs earned for the 2018-2020 performance cycle will depend upon achievement against the metrics explained in the Compensation Discussion & Analysis in the section entitled “Performance Stock Unit Targets and Results.”
Payment, if any, will be made in shares of the Company’s Common Stock at the conclusion of the three-year performance cycle. The minimum award as shown in Column (f) is the number of shares payable for achievement of the threshold level of performance on one of the metrics and the maximum award as shown in Column (h) is the number of shares payable for achievement of the maximum level of performance on all metrics.
More information regarding PSUs and the 2018 awards can be found in the Compensation Discussion & Analysis and the Outstanding Equity Awards at 2018 Fiscal-Year End Table.
| Each PSU represents the value of one share of our Common Stock. The number of PSUs earned for the 2016-2018 performance cycle and for the 2016 adjusted earnings per share-diluted component of the 2015-2017 and 2014-2016 performance cycles will depend upon achievement against the metrics explained in the Compensation Discussion & Analysis in the section entitled “Performance Stock Unit Targets and Results.” |
| Payment, if any, will be made in shares of the Company’s Common Stock at the conclusion of the three-year performance cycle. The Compensation Committee will approve the targets for the annual adjusted earnings per share-diluted metrics at the beginning of each of the three years in the performance cycle. The minimum award as shown in Column (f) is the number of shares payable for achievement of the threshold level of performance on one of the metrics and the maximum award as shown in Column (h) is the number of shares payable for achievement of the maximum level of performance on all metrics. |
| More information regarding PSUs and the 2016 awards can be found in the Compensation Discussion & Analysis and the Outstanding Equity Awards at 2016 Fiscal-Year End Table. |
| (4) | For each NEO, Column (i) represents the number of annual RSUs granted to Messrs. Bilbrey and O’Day and Mmes. Little, Buck and Turner on February 16, 2016.20, 2018. Target RSU awards were determined by multiplyingone-quarter of the executive’s long-term incentive target percentage times his or her 20162018 base salary, divided by the closing price of the Company’s Common Stock on the NYSE on the award date ($90.39) for each NEO.as shown in Column (k). The actual number of RSUs awarded varied from the target level based on the executive’s performance evaluation for the year ended December 31, 2015.2017. Annual RSU awards vest in thirds over three years. |
Information on the treatment of RSUs upon retirement, death, disability, termination, or Change in Control can be found in the section entitled “Potential Payments upon Termination or Change in Control.”
| For Mmes. Little, Buck and Turner, Column (i) also represents the number of retention RSUs granted to each NEO on February 16, 2016. These retention RSU awards will vest in the event the recipient remains employed by the Company and/or its subsidiaries as of February 16, 2019, the third-anniversary of the grant date. |
| For Mr. O’Day, the second number in Column (i) represents the number of retention RSUs granted to Mr. O’Day on June 15, 2016. These retention RSU awards will vest in the event the recipient remains employed by the Company and/or its subsidiaries as of June 15, 2017, theone-year anniversary of the grant date. |
| Information on the treatment of RSUs upon retirement, death, disability, termination, or Change in Control can be found in the section entitled “Potential Payments upon Termination or Change in Control.” |
65
| (5) | Column (j) represents the number of options awarded to each NEO. Target option awards were determined by multiplyingone-quarter of the executive’s long-term incentive target percentage times his or her 20162018 base salary, divided by the Black-Scholes value of (i) $11.42$15.58 per option for each NEO.option. The Black-Scholes value is based on the option exercise price, which is equal to the closing price of the Company’s Common Stock on the NYSE on the award date. The actual number of options awarded varied from the target level based on the executive’s performance evaluation for the year ended December 31, 2016.2017. |
Stock option awards vest in 25% increments over four years and have a 10-year term. Information on the treatment of stock options upon retirement, death, disability, termination, or Change in Control can be found in the section entitled “Potential Payments upon Termination or Change in Control.”
| Stock option awards vest in 25% increments over four years and have a10-year term. Information on the treatment of stock options upon retirement, death, disability, termination, or Change in Control can be found in the section entitled “Potential Payments upon Termination or Change in Control.” |
| (6) | Column (k) presents the exercise price for each option award based upon the closing price of the Company’s Common Stock on the NYSE on the award date shown in Column (b). |
| |
| (7) | Column (l) presents the aggregate grant date fair value of (1) the target number of PSUs reported in Column (g), (2) the number of RSUs reported in Column (i) and (3) the number of stock options reported in Column (j), in each case as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in determining these amounts are set forth in Note 1011 to the Company’s Consolidated Financial Statements included in our 20162018 Annual Report on Form10-K that accompanies this Proxy Statement. |
66
Outstanding Equity Awards at
20162018 Fiscal-Year End Table
The following table and explanatory footnotes provide information regarding unexercised stock options and unvested stock awards held by our NEOs as of December 31, 2016: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Option Awards(1) | | | Stock Awards | |
| | Number of
Securities
Underlying
Unexercised
Options-
Exercisable(2) (#) | | | Number of
Securities
Underlying
Unexercised
Options- Unexercisable(3) (#) | | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying Unexercised
Unearned
Options (#) | | | Option
Exercise
Price ($) | | | Option
Expiration
Date | | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested(4) (#) | | | Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested(4) ($) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other Rights
That
Have Not
Vested(5) (#) | | | Equity
Incentive Plan
Awards:
Market or Payout
Value of
Unearned
Shares,
Units or
Other
Rights That Have Not
Vested(5) ($) | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
Mr. Bilbrey | | | — | | | | 128,800 | | | | — | | | | 90.39 | | | | 02/15/2026 | | | | 16,136 | | | | 1,707,705 | | | | 81,363 | | | | 8,415,375 | |
| | | | 36,821 | | | | 110,464 | | | | — | | | | 105.91 | | | | 02/16/2025 | | | | — | | | | — | | | | 26,967 | | | | 2,789,197 | |
| | | | 95,637 | | | | 95,638 | | | | — | | | | 105.96 | | | | 02/17/2024 | | | | — | | | | — | | | | — | | | | — | |
| | | | 157,983 | | | | 52,662 | | | | — | | | | 81.73 | | | | 02/18/2023 | | | | — | | | | — | | | | — | | | | — | |
| | | | 207,370 | | | | — | | | | — | | | | 60.68 | | | | 02/20/2022 | | | | — | | | | — | | | | — | | | | — | |
| | | | 71,275 | | | | — | | | | — | | | | 55.48 | | | | 05/17/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | | 25,328 | | | | — | | | | — | | | | 51.42 | | | | 02/21/2021 | | | | — | | | | — | | | | — | | | | — | |
Total | | | 594,414 | | | | 387,564 | | | | — | | | | — | | | | — | | | | 16,136 | | | | 1,707,705 | | | | 108,330 | | | | 11,204,572 | |
Ms. Little | | | — | | | | 32,285 | | | | — | | | | 90.39 | | | | 02/15/2026 | | | | 27,468 | | | | 2,928,099 | | | | 16,995 | | | | 1,757,793 | |
| | | | 7,207 | | | | 21,623 | | | | — | | | | 100.65 | | | | 04/14/2025 | | | | — | | | | — | | | | 5,068 | | | | 524,183 | |
Total | | | 7,207 | | | | 53,908 | | | | — | | | | — | | | | — | | | | 27,468 | | | | 2,928,099 | | | | 22,063 | | | | 2,281,976 | |
Ms. Buck | | | — | | | | 31,210 | | | | — | | | | 90.39 | | | | 02/15/2026 | | | | 59,185 | | | | 6,263,667 | | | | 19,528 | | | | 2,019,781 | |
| | | | 8,875 | | | | 26,625 | | | | — | | | | 105.91 | | | | 02/16/2025 | | | | — | | | | — | | | | 6,472 | | | | 669,399 | |
| | | | 23,377 | | | | 23,378 | | | | — | | | | 105.96 | | | | 02/17/2024 | | | | — | | | | — | | | | — | | | | — | |
| | | | 31,740 | | | | 10,580 | | | | — | | | | 81.73 | | | | 02/18/2023 | | | | — | | | | — | | | | — | | | | — | |
| | | | 17,007 | | | | — | | | | — | | | | 60.68 | | | | 02/20/2022 | | | | — | | | | — | | | | — | | | | — | |
Total | | | 80,999 | | | | 91,793 | | | | — | | | | — | | | | — | | | | 59,185 | | | | 6,263,667 | | | | 26,000 | | | | 2,689,180 | |
Mr. O’Day | | | — | | | | 22,135 | | | | — | | | | 90.39 | | | | 02/15/2026 | | | | 7,938 | | | | 834,024 | | | | 13,820 | | | | 1,429,403 | |
| | | | 6,280 | | | | 18,840 | | | | — | | | | 105.91 | | | | 02/16/2025 | | | | — | | | | — | | | | 4,580 | | | | 473,709 | |
| | | | 13,367 | | | | 13,368 | | | | — | | | | 105.96 | | | | 02/17/2024 | | | | — | | | | — | | | | — | | | | — | |
| | | | 28,702 | | | | 9,568 | | | | — | | | | 81.73 | | | | 02/18/2023 | | | | — | | | | — | | | | — | | | | — | |
| | | | 49,890 | | | | — | | | | — | | | | 60.68 | | | | 02/20/2022 | | | | — | | | | — | | | | — | | | | — | |
| | | | 37,875 | | | | — | | | | — | | | | 51.42 | | | | 02/21/2021 | | | | — | | | | — | | | | — | | | | — | |
Total | | | 136,114 | | | | 63,911 | | | | — | | | | — | | | | — | | | | 7,938 | | | | 834,024 | | | | 18,400 | | | | 1,903,112 | |
Ms. Turner | | | — | | | | 28,335 | | | | — | | | | 90.39 | | | | 02/15/2026 | | | | 36,687 | | | | 3,882,658 | | | | 14,743 | | | | 1,524,868 | |
| | | | 9,905 | | | | 29,715 | | | | — | | | | 105.91 | | | | 02/16/2025 | | | | — | | | | — | | | | 4,816 | | | | 498,119 | |
| | | | 12,420 | | | | 12,420 | | | | — | | | | 105.96 | | | | 02/17/2024 | | | | — | | | | — | | | | — | | | | — | |
| | | | — | | | | 6,373 | | | | — | | | | 81.73 | | | | 02/18/2023 | | | | — | | | | — | | | | — | | | | — | |
Total | | | 22,325 | | | | 76,843 | | | | — | | | | — | | | | — | | | | 36,687 | | | | 3,882,658 | | | | 19,559 | | | | 2,022,987 | |
|
| | | | | | | | | | | | | | | | | | |
| Name | Option Awards(1) | Stock Awards |
Number of Securities Underlying Unexercised Options- Exercisable(2) (#) | Number of Securities Underlying Unexercised Options- Unexercisable(3) (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(4) (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(5) ($) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Ms. Buck | — |
| 90,905 |
| — |
| 99.90 |
| 2/19/2028 |
| 78,291 |
| 8,901,689 |
| 70,885 |
| 7,597,454 |
|
| | 19,290 |
| 57,870 |
| — |
| 109.40 |
| 2/28/2027 |
| — |
| — |
| 56,560 |
| 6,062,101 |
|
| | 15,605 |
| 15,605 |
| — |
| 90.39 |
| 2/15/2026 |
| — |
| — |
| — |
| — |
|
| | 26,625 |
| 8,875 |
| — |
| 105.91 |
| 2/16/2025 |
| — |
| — |
| — |
| — |
|
| | 46,755 |
| — |
| — |
| 105.96 |
| 2/17/2024 |
| — |
| — |
| — |
| — |
|
| | 42,320 |
| — |
| — |
| 81.73 |
| 2/18/2023 |
| — |
| — |
| — |
| — |
|
| | 2,000 |
| — |
| — |
| 60.68 |
| 2/20/2022 |
| — |
| — |
| — |
| — |
|
| Total | 152,595 |
| 173,255 |
| — |
| — |
| — |
| 78,291 |
| 8,901,689 |
| 127,445 |
| 13,659,555 |
|
| Ms. Little | — |
| 22,200 |
| — |
| 99.90 |
| 2/19/2028 |
| 22,068 |
| 2,520,219 |
| 17,310 |
| 1,855,286 |
|
| | 5,433 |
| 16,302 |
| — |
| 107.95 |
| 2/21/2027 |
| — |
| — |
| 15,705 |
| 1,683,262 |
|
| | — |
| 16,143 |
| — |
| 90.39 |
| 2/15/2026 |
| — |
| — |
| — |
| — |
|
| | — |
| 7,208 |
| — |
| 100.65 |
| 4/14/2025 |
| — |
| — |
| — |
| — |
|
| Total | 5,433 |
| 61,853 |
| — |
| — |
| — |
| 22,068 |
| 2,520,219 |
| 33,015 |
| 3,538,548 |
|
| Mr. O'Day | — |
| 17,115 |
| — |
| 99.90 |
| 2/19/2028 |
| 5,868 |
| 655,444 |
| 13,345 |
| 1,430,317 |
|
| | 6,018 |
| 18,057 |
| — |
| 107.95 |
| 2/21/2027 |
| — |
| — |
| 11,573 |
| 1,240,394 |
|
| | 11,067 |
| 11,068 |
| — |
| 90.39 |
| 2/15/2026 |
| — |
| — |
| 14,012 |
| 1,501,806 |
|
| | 18,840 |
| 6,280 |
| — |
| 105.91 |
| 2/16/2025 |
| — |
| — |
| — |
| — |
|
| | 26,735 |
| — |
| — |
| 105.96 |
| 2/17/2024 |
| — |
| — |
| — |
| — |
|
| | 38,270 |
| — |
| — |
| 81.73 |
| 2/18/2023 |
| — |
| — |
| — |
| — |
|
| | 49,890 |
| — |
| — |
| 60.68 |
| 2/20/2022 |
| — |
| — |
| — |
| — |
|
| Total | 150,820 |
| 52,520 |
| — |
| — |
| — |
| 5,868 |
| 655,444 |
| 38,930 |
| 4,172,517 |
|
| Mr. Tillemans | — |
| 18,775 |
| — |
| 99.90 |
| 2/19/2028 |
| 7,329 |
| 814,215 |
| 14,640 |
| 1,569,115 |
|
| | 3,480 |
| 10,440 |
| — |
| 108.92 |
| 4/2/2027 |
| — |
| — |
| 10,043 |
| 1,076,409 |
|
| Total | 3,480 |
| 29,215 |
| — |
| — |
| — |
| 7,329 |
| 814,215 |
| 24,683 |
| 2,645,524 |
|
| Ms. West | — |
| 37,605 |
| — |
| 99.90 |
| 2/19/2028 |
| 32,338 |
| 3,606,203 |
| 19,550 |
| 2,095,369 |
|
| | 6,132 |
| 18,398 |
| — |
| 107.05 |
| 4/30/2027 |
| — |
| — |
| 17,458 |
| 1,871,148 |
|
| Total | 6,132 |
| 56,003 |
| — |
| — |
| — |
| 32,338 |
| 3,606,203 |
| 37,008 |
| 3,966,517 |
|
| Ms. Turner | 4,383 |
| — |
| — |
| 99.90 |
| 2/19/2028 |
| — |
| — |
| 1,135 |
| 121,649 |
|
| | 21,060 |
| — |
| — |
| 107.95 |
| 2/21/2027 |
| — |
| — |
| 5,268 |
| 564,624 |
|
| | 28,335 |
| — |
| — |
| 90.39 |
| 2/15/2026 |
| — |
| — |
| — |
| — |
|
| | 39,620 |
| — |
| — |
| 105.91 |
| 2/16/2025 |
| — |
| — |
| — |
| — |
|
| | 24,840 |
| — |
| — |
| 105.96 |
| 2/17/2024 |
| — |
| — |
| — |
| — |
|
| Total | 118,238 |
| — |
| — |
| — |
| — |
| — |
| — |
| 6,403 |
| 686,273 |
|
| |
| (1) | Columns (b) through (f) represent information about stock options awarded to each NEO under the EICP. Stock option awards vest in 25% increments over four years and have aten-year term. Information on the treatment of stock options upon retirement, death, disability, termination, or Change in Control can be found in the section entitled “Potential Payments upon Termination or Change in Control.” |
| |
| (2) | Options listed in Column (b) are vested and may be exercised by the NEO at any time subject to the terms of the stock option. |
67
| |
| (3) | Options listed in Column (c) were not vested as of December 31, 2016.2018. The following table provides information with respect to the dates on which these options vested or are scheduled to vest, subject to continued employment (or retirement, death or disability), proratingand subject further to proration in the event of severance and possible acceleration in the event of a Change in Control: |
| | | | | | | | | | | | | | | | | | | | | | | | |
Grant Date | | Future Vesting Dates | | | Number of Options Vesting | |
| | | Mr. Bilbrey | | | Ms. Little | | | Ms. Buck | | | Mr. O’Day | | | Ms. Turner | |
02/16/2016 | | | 02/16/2017 | | | | 32,200 | | | | 8,071 | | | | 7,802 | | | | 5,533 | | | | 7,083 | |
| | | | 02/16/2018 | | | | 32,200 | | | | 8,071 | | | | 7,803 | | | | 5,534 | | | | 7,084 | |
| | | | 02/16/2019 | | | | 32,200 | | | | 8,071 | | | | 7,802 | | | | 5,534 | | | | 7,084 | |
| | | | 02/16/2020 | | | | 32,200 | | | | 8,072 | | | | 7,803 | | | | 5,534 | | | | 7,084 | |
04/15/2015 | | | 04/15/2017 | | | | — | | | | 7,208 | | | | — | | | | — | | | | — | |
| | | | 04/15/2018 | | | | — | | | | 7,207 | | | | — | | | | — | | | | — | |
| | | | 04/15/2019 | | | | — | | | | 7,208 | | | | — | | | | — | | | | — | |
02/17/2015 | | | 02/17/2017 | | | | 36,821 | | | | — | | | | 8,875 | | | | 6,280 | | | | 9,905 | |
| | | | 02/17/2018 | | | | 36,821 | | | | — | | | | 8,875 | | | | 6,280 | | | | 9,905 | |
| | | | 02/17/2019 | | | | 36,822 | | | | — | | | | 8,875 | | | | 6,280 | | | | 9,905 | |
02/18/2014 | | | 02/18/2017 | | | | 47,819 | | | | — | | | | 11,689 | | | | 6,684 | | | | 6,210 | |
| | | | 02/18/2018 | | | | 47,819 | | | | — | | | | 11,689 | | | | 6,684 | | | | 6,210 | |
02/19/2013 | | | 02/19/2017 | | | | 52,662 | | | | — | | | | 10,580 | | | | 9,568 | | | | 6,373 | |
Total per NEO | | | | | | | 387,564 | | | | 53,908 | | | | 91,793 | | | | 63,911 | | | | 76,843 | |
|
| | | | | | | | | | | | | |
Grant Date | Future Vesting Dates | Number of Options Vesting |
Ms. Buck | Ms. Little | Mr. O’Day | Mr. Tillemans | Ms. West | Ms. Turner |
| 2/20/2018 | 2/20/2019 | 22,726 |
| 5,550 |
| 4,278 |
| 4,693 |
| 9,401 |
| — |
|
| | 2/20/2020 | 22,726 |
| 5,550 |
| 4,279 |
| 4,694 |
| 9,401 |
| — |
|
| | 2/20/2021 | 22,726 |
| 5,550 |
| 4,279 |
| 4,694 |
| 9,401 |
| — |
|
| | 2/20/2022 | 22,727 |
| 5,550 |
| 4,279 |
| 4,694 |
| 9,402 |
| — |
|
| 5/1/2017 | 5/1/2019 | — |
| — |
| — |
| — |
| 6,133 |
| — |
|
| | 5/1/2020 | — |
| — |
| — |
| — |
| 6,132 |
| — |
|
| | 5/1/2021 | — |
| — |
| — |
| — |
| 6,133 |
| — |
|
| 4/3/2017 | 4/3/2019 | — |
| — |
| — |
| 3,480 |
| — |
| — |
|
| | 4/3/2020 | — |
| — |
| — |
| 3,480 |
| — |
| — |
|
| | 4/3/2021 | — |
| — |
| — |
| 3,480 |
| — |
| — |
|
| 3/1/2017 | 3/1/2019 | 19,290 |
| — |
| — |
| — |
| — |
| — |
|
| | 3/1/2020 | 19,290 |
| — |
| — |
| — |
| — |
| — |
|
| | 3/1/2021 | 19,290 |
| — |
| — |
| — |
| — |
| — |
|
| 2/22/2017 | 2/22/2019 | — |
| 5,434 |
| 6,019 |
| — |
| — |
| — |
|
| | 2/22/2020 | — |
| 5,434 |
| 6,019 |
| — |
| — |
| — |
|
| | 2/22/2021 | — |
| 5,434 |
| 6,019 |
| — |
| — |
| — |
|
| 2/16/2016 | 2/16/2019 | 7,802 |
| 8,071 |
| 5,534 |
| — |
| — |
| — |
|
| | 2/16/2020 | 7,803 |
| 8,072 |
| 5,534 |
| — |
| — |
| — |
|
| 4/15/2015 | 4/15/2019 | — |
| 7,208 |
| — |
| — |
| — |
| — |
|
| 2/17/2015 | 2/17/2019 | 8,875 |
| — |
| 6,280 |
| — |
| — |
| — |
|
| Total per NEO | | 173,255 |
| 61,853 |
| 52,520 |
| 29,215 |
| 56,003 |
| — |
|
| |
| (4) | For Ms. Buck, Column (g) includes unvested annual RSUs awarded to each NEOin February 2016, March 2017 and February 2018, which vest ratably over 3 years and unvested retention RSUs granted in February 2016, which cliff vest ratably overafter 3 years. For Ms. Little, Column (g) also includes unvested annual RSUs awarded in February 2016, February 2017 and February 2018, which vest ratably over 3 years, unvested retention RSUs granted in February 2016, which cliff vest after 3 years and unvested new hire RSUs granted in April 2015, which vest ratably over 3 years. For Mmes. Buck and Turner, Column (g) also includes unvested retention RSUs granted in February 2016, which cliff vest after 34 years. For Mr. O’Day, Column (g) also includes unvested retentionannual RSUs awarded in February 2016, February 2017 and February 2018, which vest ratably over 3 years. For Mr. Tillemans and Ms. West, Column (g) includes unvested new hire and replacement RSUs granted in June 2016,April 2017 and May 2017, respectively, which vest after 1 year.ratably over 3 years and unvested annual RSUs awarded in February 2018, which vest ratably over 3 years. Column (h) sets forth the value of the RSUs reported in Column (g) using the $103.43$107.18 closing price per share of our Common Stock on the NYSE on December 30, 2016,31, 2018, the last trading day of 2016.2018. Column (h) also includes the value of dividend equivalents accrued through December 31, 2016,2018, on the RSUs included in Column (g). |
| |
| (5) | Based on progress to date against the performance metrics established for open PSU performance cycles, the first number in Column (i) for each NEO is the maximum number of PSUs potentially payable for the 2016-20182018-2020 performance cycle ending on December 31, 20182020 and the second number in Column (i) for each NEO is the maximum number of PSUs potentially payable for the 2017-2019 performance cycle ending on December 31, 2019. For Mr. O’Day only, the third number in Column (i) is the target number of PSUs potentially payable for the 2015-2017special PSU award granted to him on May 2, 2017, with a performance cycle ending on December 31, 2017.May 2, 2019. The actual number of PSUs earned, if any, will be determined at the end of each performance cycle and may be fewer or more than the number reflected in Column (i). Column (j) sets forth the value of PSUs reported in Column (i) using the $103.43$107.18 closing price per share of our Common Stock on the NYSE on December 30, 2016,31, 2018, the last trading day of 2016.2018. |
68
2018 Option Exercises and Stock Vested Table
The following table and explanatory footnotes provide information with regard to amounts paid to or received by our NEOs during 20162018 as a result of the exercise of stock options or the vesting of stock awards: | | | | | | | | | | | | | | | | |
Name | | Option Awards(1) | | | Stock Awards(2) | |
| | Number of
Shares
Acquired on
Exercise (#) | | | Value
Realized on
Exercise ($) | | | Number of
Shares
Acquired on Vesting (#) | | | Value
Realized on
Vesting ($) | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | |
Mr. Bilbrey | | | — | | | | — | | | | 5,940 | | | | 641,223 | |
Ms. Little | | | — | | | | — | | | | 4,135 | (3) | | | 392,717 | (3) |
Ms. Buck | | | 34,369 | | | | 1,549,963 | | | | 1,446 | | | | 156,096 | |
Mr. O’Day | | | — | | | | — | | | | 1,034 | | | | 111,620 | |
Ms. Turner | | | 40,128 | | | | 1,017,311 | | | | 960 | | | | 103,632 | |
| | | | | | | | | | | | 7,000 | (4) | | | 823,263 | (4) |
|
| | | | | | | | |
Name | Option Awards(1) | Stock Awards(2) (3) |
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
(a) | (b) | (c) | (d) | (e) |
| Ms. Buck | — |
| — |
| 10,237 |
| 1,123,408 |
|
| | — |
| — |
| 5,044 |
| 510,297 |
|
Ms. Little(4) | 37,764 |
| 318,366 |
| 8,912 |
| 978,003 |
|
| | — |
| — |
| 6,505 |
| 675,289 |
|
| Mr. O'Day | — |
| — |
| 7,247 |
| 795,286 |
|
| | — |
| — |
| 2,054 |
| 210,847 |
|
Mr. Tillemans(5) | — |
| — |
| 2,199 |
| 202,937 |
|
Ms. West(6) | — |
| — |
| 13,234 |
| 1,234,097 |
|
Ms. Turner(7) | — |
| — |
| 5,795 |
| 635,943 |
|
| | — |
| — |
| 39,206 |
| 4,480,571 |
|
| |
| (1) | Column (b) represents the number of stock options exercised by eachthe NEO during 2016,2018, and Column (c) represents the market value at the time of exercise of the shares purchased less the exercise price paid. |
| |
| (2) | For Messrs. BilbreyMmes. Buck, Little and O’DayTurner and Ms. Buck, the number in Column (d), and for Ms. Turner,Mr. O’Day, the first number in Column (d), includes the number of PSUs earned from the 2014-20162016-2018 performance cycle that ended on December 31, 2016,2018, as determined by the Compensation Committee, or, in the case of Mr. Bilbrey,Ms. Buck, by the independent members of our Board. The aggregate results of the 2014-2016 performance cycle exceeded the financial thresholds, but did not meet the financial targets, established at the start of the performance cycle; therefore, the number of PSUs included in Column (d) reflects payment of the 2016-2018 PSU cycle at 20.66%131.08% of target. All of the applicable NEOs received payment of the award in Common Stock in February 2017.2019. In accordance with the terms of the PSU award agreement, each PSU represents one share of our Common Stock valued in Column (e) at $107.95$109.74, the closing price of our Common Stock on the NYSE on February 22, 2017,26, 2019, the date the Compensation Committee approved the PSU payment. |
Ms. Turner elected to defer 100% of the PSUs earned from the 2016-2018 performance cycle. As a result, on the award payment date, 266 shares were liquidated to cover the associated tax liability and the remaining 5,529 shares were credited to Ms. Turner's Deferred Compensation account.
| |
| (3) | For Mmes. Buck, Little and Turner and Mr. O’Day, the second number in Column (d) reflects annual RSUs that were distributed in 2018 from the 2016 and 2017 awards and the number in Column (e) sets forth the value of such RSUs at vesting on February 16, 2018 and March 22, 2018, respectively, and cash credits equivalent to dividends accrued during the vesting period. |
Ms. Little elected to defer 100% of her 2016 annual award. As a result, on the vesting date of these RSUs, because the cash credits earned for the shares deferred exceeded the tax liability associated with those shares, all of the 1,332 shares were credited to Ms. Little’s Deferred Compensation account and she received a cash payment for the remaining dividend value (less cash withheld to meet tax obligations).
Ms. Turner elected to defer 100% of her 2016 and 2017 annual awards. As a result, on the vesting date of these RSUs, because the cash credits earned for the 1,166 and 1,000 shares deferred, respectively, exceeded the tax liability associated with those shares, a total of 2,166 shares were credited to Ms. Turner’s Deferred Compensation account and she received a cash payment for the remaining dividend value (less cash withheld to meet tax obligations).
| |
| (4) | For Ms. Little, the second number in Column (d) also reflects RSUs that were distributed in 20162018 from a 2015 award and the number in Column (e) sets forth the value of such RSUs at vesting on MayApril 15, 20162018 and cash credits equivalent to dividends accrued during the vesting period. Ms. Little elected to defer 100% of this award. As a result, on the vesting date of these RSUs, becauseBecause the cash credits earned for the 4,135 shares deferred did not exceedexceeded the tax liability associated with those shares, 43 shares were liquidated to coverall of the tax liability. The remaining 4,0924,136 shares were credited to Ms. Little’s Deferred Compensation account and she received a cash payment for the remaining liquidated sharedividend value (less cash withheld to meet tax obligations). |
(4) | |
| (5) | For Ms. Turner,Mr. Tillemans, the second number in Column (d) reflects RSUs that were distributed in 20162018 from a 2012 award2017 awards and the second number in Column (e) sets forth the value of such RSUs at vesting on July 9, 2016May 3, 2018 and cash credits equivalent to dividends accrued during the vesting period. |
| |
| (6) | For Ms. West, the number in Column (d) reflects RSUs that were distributed in 2018 from 2017 awards and the number in Column (e) sets forth the value of such RSUs at vesting on June 1, 2018 and cash credits equivalent to dividends accrued during the vesting period. |
| |
| (7) | For Ms. Turner, the second number in Column (d) also reflects RSUs that were distributed in 2018 in connection with her retirement and the number in Column (e) sets forth the value of such RSUs at vesting on October 24, 2018 and cash credits equivalent to dividends accrued during the vesting period. These amounts are further described in the section entitled “Separation Payments under Confidential Separation Agreement and Release.” Ms. Turner elected to defer 80%100% of this awardher 2016 and to receive immediate payment in shares of the Company’s Common Stock for 20% of this award.2017 annual awards. As a result, on the vesting date of the portion of these RSUs,RSU awards that received accelerated vesting treatment in connection with Ms. Turner received immediate payment of 1,400 RSUs and their respective dividends (less cash and shares withheld to meet tax obligations). BecauseTurner's retirement, because the cash credits earned for the 5,6001,166 and 2,001 shares deferred, respectively, exceeded the tax liability associated with those shares, the 5,600a total of 3,167 shares were credited to Ms. Turner’s Deferred Compensation account and she received a cash payment for the remaining dividend value (less cash withheld to meet tax obligations). |
2018 Pension Benefits Table
Mr. Bilbrey and
Ms. Buck
are participantsis a participant in our pension plan and
areis fully vested in benefits under that plan.
Mr. Bilbrey and Ms. Buck
areis also eligible to participate in our
non-qualified DB SERP. No benefit is payable under the DB SERP if the executive officer terminates employment prior to age 55 or if he or she does not have five years of service with the Company. As of December 31,
2016, Mr. Bilbrey and2018, Ms. Buck had attained age 55 with five years of service and therefore
werewas fully vested in
their respectiveher DB SERP
benefits.69
benefit.
The combination of the pension and DB SERP plans was designed to provide a benefit upon retirement at or after reaching age 60 based on a joint and survivor annuity equal to 55% of final average compensation for an executive with 15 or more years of service (reduced pro rata for each year of service under 15). Effective January 1, 2007, the benefit payable under the DB SERP to an executive who was age 50 or over as of January 1, 2007, was reduced by 10%, and the benefit payable to an executive who had not attained age 50 as of January 1, 2007, was reduced by 20%. As a result, the benefit payable to
Mr. Bilbrey was reduced by 10% and the benefit payable to Ms. Buck was reduced by 20%.
Under the terms of the DB SERP, final average compensation is calculated as the sum of (i) the average of the highest three calendar years of base salary paid over the last five years of employment with the Company and (ii) the average of the highest three OHIP awards, paid or deferred, for the last five years of employment with the Company. The benefit accrued under the DB SERP is payable upon retirement (subject to the provisions of Section 409A of the IRC) as a lump sum or a life annuity with 50% benefit continuation to the participant’s surviving spouse, or payment may be deferred in accordance with the provisions of the Company’s Deferred Compensation Plan. The lump sum is equal to the actuarial present value of the joint and survivor pension earned, reduced by the lump sum value of the benefits to be paid under the pension plan and the value of the executive’s Social Security benefits. If the executive terminates employment after age 55 but before age 60, the benefit is reduced for early retirement at a rate of 5% per year for the period until the executive would have turned 60.
On November 16, 2015, the Company and Mr. Bilbrey entered into an amendment to his existing employment agreement, the effect of which was to increase, from five to ten years, the duration of the look-back period for selecting the highest three years of base salary and annual incentive payment used to calculate Mr. Bilbrey’s final average compensation for determining his benefit under the DB SERP. The amendment also established the interest rate to be applied to the calculation of amounts payable to Mr. Bilbrey under the DB SERP as the rate equal to the Lump Sum Interest Rate (as defined in the DB SERP) as of October 31, 2015.
The following table and explanatory footnote provide information regarding the present value of benefits accrued under the pension plan and the DB SERP, as applicable, for each NEO as of December 31, 2016.2018. The amounts shown for the DB SERP reflect the reduction for the present value of the benefits under the pension plan and Social Security benefits. |
| | | | |
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of
Accumulated Benefit(1)
($) | Payments During Last Fiscal Year ($) |
(a) | (b) | (c) | (d) | (e) |
| Ms. Buck | Pension Plan
| 14 | 169,528 | —
|
| | DB SERP | 14 | 10,859,612 | — |
| Ms. Little | — | — | — | — |
| Mr. O’Day | — | — | — | — |
| Mr. Tillemans | — | — | — | — |
| Ms. West | — | — | — | — |
| Ms. Turner | — | — | — | — |
(1)These amounts have been calculated using discount rate, mortality and other assumptions consistent with those used for financial reporting purposes as set forth in Note 10 to the Company’s Consolidated Financial Statements included in our 2018 Annual Report on Form 10-K which accompanies this Proxy Statement. The actual payments would differ due to plan assumptions. The estimated vested DB SERP benefit, as of December 31, 2018, for Ms. Buck was $11,002,231. The amount is based on Ms. Buck’s final average compensation under the terms of the DB SERP, as of December 31, 2018, as shown below: | | | | | | | |
| | |
| Name | | Plan Name | | Number of Years
Credited
Service
(#)
| | Present Value of
Accumulated
Benefit(1)
Final Average Compensation ($)
| | | Payments During
Last Fiscal
Year
($)
|
(a)
Ms. Buck | 1,857,532 | (b)
| | (c)
| | (d)
| | | (e)
|
Mr. Bilbrey
| | Pension Plan
DB SERP
| | 13
13
| |
| 184,718
24,683,231
|
| | —
—
|
Ms. Little | | — |
|
| Mr. O’Day | — |
|
| Mr. Tillemans | — | | | —
|
Ms. Buck | | Pension Plan
DB SERP
| | 12
12
| |
| 137,564
5,411,831
|
| | —
—
|
Mr. O’Day
| West | — |
|
| Ms. Turner | — | | | — | | | — |
Ms. Turner
| | — | | — | | | — | | | — |
70
(1) | These amounts have been calculated using discount rate, mortality and other assumptions consistent with those used for financial reporting purposes as set forth in Note 9 to the Company’s Consolidated Financial Statements included in our 2016 Annual Report on Form10-K which accompanies this Proxy Statement. The actual payments would differ due to plan assumptions. The estimated vested DB SERP benefit, as of December 31, 2016, for Mr. Bilbrey was $24,410,704. The estimated vested DB SERP benefit, as of December 31, 2016, for Ms. Buck was $5,898,259. The amounts are based on the final average compensation of each eligible executive officer under the terms of the DB SERP (as modified by Mr. Bilbrey’s amended employment agreement), as of December 31, 2016, as shown below: |
| | | | |
Name | | Final Average Compensation
($)
| |
Mr. Bilbrey
| | | 3,284,087 | |
Ms. Little
| | | — | |
Ms. Buck
| | | 1,216,194 | |
Mr. O’Day
| | | — | |
Ms. Turner
| | | — |
|
2018 Non-Qualified Deferred Compensation Table
Our NEOs are eligible to participate in the Company’s Deferred Compensation Plan. The Deferred Compensation Plan is a
non-qualified,non-funded plan that permits participants to defer compensation that would otherwise be paid to them currently. The Deferred Compensation Plan is intended to secure the goodwill and loyalty of participants by enabling them to defer compensation when the participants deem it beneficial to do so and by providing a vehicle for the Company to make, on a
non-qualified basis, contributions that could not be made on the participants’ behalf to the 401(k) plan. The Company credits the Deferred Compensation Plan with a specified percentage of compensation for NEOs participating in the
non-qualified DC SERP.
Our NEOs may elect to defer payments to be received from the
DB SERP, DC SERP, OHIP, PSU and RSU awards, but not stock options or base salary. Amounts deferred
under the DB SERP, DC SERP, OHIP, PSU and RSU awards are fully vested and are credited to the individual’s account under the Deferred Compensation Plan. Participants elect to receive payment at termination of employment or some other future date. DB SERP payments designated for deferral into the Deferred Compensation Plan are not credited as earned but are credited in full upon the participant’s retirement.
Payments are distributed in a lump sum or in annual installments for up to 15 years. All amounts are payable in a lump sum following a Change in Control (as such terms is defined in the EICP). All elections and payments under the Deferred Compensation Plan are subject to compliance with Section 409A of the IRC, which may limit elections and require a delay in payment of benefits in certain circumstances.
While deferred, amounts are credited with notional earnings as if they were invested by the participant in one or more investment options offered by the Deferred Compensation Plan. The investment options under the Deferred Compensation Plan consist of investment in a deferred common stock unit account that we value according to the performance of our Common Stock (for awards paid in stock) or in mutual funds or other investments available to participants in our 401(k) plan (for awards paid in cash). The participants’ accounts under the Deferred Compensation Plan fluctuate daily, depending upon performance of the investment options elected.
71
Effective January 1, 2007, we began crediting the deferred compensation accounts of all employees, including the NEOs, with the amount of employer matching contributions that exceed the limits established by the IRS for contribution to the 401(k) plan. These amounts are credited in the first quarter of the year after they are earned. As shown in the footnotes to the
20162018 Summary Compensation Table, these amounts are designated as “Supplemental 401(k) Match” and are included as “All Other Compensation” in the year earned. These amounts also are included in Column (c) of the
20162018 Non-Qualified Deferred Compensation Table in the year earned.
All of our NEOs are eligible for a Supplemental 401(k) Match credit for 2018. With the exception of
Mr. Tillemans and Ms.
Little,West, all of the NEOs are fully vested in the Supplemental 401(k) Match credits presented and will be paid at a future date or at termination of employment, as elected by the executive subject to the provisions of Section 409A of the IRC.
Mr. Tillemans and Ms.
LittleWest will vest in this benefit upon completion of two years of employment. If vested,
shethey will receive payment for this benefit at termination of employment subject to the provisions of Section 409A of the IRC.
Effective January 1, 2007, we began crediting the deferred compensation accounts of all employees hired on or after January 1, 2007, including eligible NEOs, with the amount of Core Retirement Contributions that exceed the limits established by the IRS for contribution to the 401(k) plan. These amounts are credited in the first quarter of the year after they are earned. As shown in the footnotes to the
20162018 Summary Compensation Table, these amounts are designated as “Supplemental Core Retirement Contribution” and are included as “All Other Compensation” in the year earned. These amounts also are included in Column (c) of the
20162018 Non-Qualified Deferred Compensation Table in the year earned. Mmes. Little,
and Turner and
Mr.West and Messrs. O’Day
and Tillemans are eligible for a Supplemental CRC credit for
2016.2018. Ms.
TurnerLittle and Mr. O’Day are fully vested in this benefit and will receive payment at termination of employment subject to the provisions of Section 409A of the IRC.
Mr. Tillemans and Ms.
LittleWest will vest in this benefit upon completion of two years of employment. If vested,
shethey will receive payment for this benefit at termination of employment subject to the provisions of Section 409A of the IRC.
Ms. Turner was fully vested in this benefit upon her retirement.
Mmes. Little and
TurnerWest and
Mr.Messrs. O’Day
and Tillemans are also eligible to participate in our DC SERP, a part of the Deferred Compensation Plan. The DC SERP provides annual allocations to the Deferred Compensation Plan equal to a percentage of compensation determined by the Compensation Committee in its sole discretion. In order to receive the annual DC SERP allocation, an executive must (i) defer into the 401(k) plan the maximum amount allowed by the Company or the IRS and (ii) be employed on the last day of the plan year, unless the executive terminates employment after age 55 and completion of five years of continuous employment preceding termination, dies or becomes disabled. After completing five years of service with the Company, an executive is vested in 10% increments based on his or her age. An executive age 46 with five years of service is 10% vested and an executive age 55 with five years of service is 100% vested. The annual DC SERP allocation for Mmes. Little and
TurnerWest and
Mr.Messrs. O’Day
and Tillemans is equal to 12.5% of base salary and OHIP award for the calendar year, whether paid or deferred. Mr. O’Day is 100% vested in his DC SERP benefit, while Mmes. Little and
TurnerWest and Mr. Tillemans are 0% vested because they have not yet completed five years of continuous employment with the Company.
72
Ms. Turner was eligible to participate in our DC SERP benefit prior to her retirement and she was fully vested at retirement.
The following table and explanatory footnotes provide information relating to the activity in the Deferred Compensation Plan accounts of the NEOs during 20162018 and the aggregate balance of the accounts as of December 31, 2016: | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in Last Fiscal Year(1) ($) | | | Registrant Contributions in Last Fiscal Year(2) ($) | | | Aggregate Earnings in Last Fiscal Year(3) ($) | | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last Fiscal Year-End(4) ($) | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | (f) | |
Mr. Bilbrey | | | — | | | | 88,937 | | | | 1,313,390 | | | — | | | 9,394,484 | |
Ms. Little | | | 379,287 | | | | 163,204 | | | | 58,186 | | | — | | | 675,417 | |
Ms. Buck | | | — | | | | 38,429 | | | | 1,302,335 | | | — | | | 9,201,259 | |
Mr. O’Day | | | — | | | | 151,519 | | | | 83,810 | | | — | | | 1,566,387 | |
Ms. Turner | | | 801,632 | | | | 173,717 | | | | 442,316 | | | — | | | 4,154,530 | |
|
| | | | | | | | | | |
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year(2) ($) | Aggregate Earnings in Last Fiscal Year(3) ($) | Aggregate Withdrawals/ Distributions(4) ($) | Aggregate Balance at Last Fiscal Year-End(5) ($) |
(a) | (b) | (c) | (d) | (e) | (f) |
| Ms. Buck | — |
| 97,439 |
| (241,511 | ) | — |
| 10,126,110 |
|
| Ms. Little | 534,511 |
| 217,380 |
| 2,927 |
| — |
| 2,365,723 |
|
| Mr. O'Day | — |
| 197,583 |
| (58,435 | ) | — |
| 2,076,715 |
|
| Mr. Tillemans | — |
| 183,911 |
| (4,458 | ) | — |
| 250,549 |
|
| Ms. West | — |
| 194,081 |
| (7,060 | ) | — |
| 251,771 |
|
| Ms. Turner | 861,496 |
| 102,687 |
| (157,767 | ) | 1,867,601 |
| 4,316,421 |
|
| |
| (1) | Column (b) reflects the value of RSU awards that otherwise would have been received by Mmes. Little and Turner during 20162018 and the value of PSU awards that otherwise would have been received by Ms. Turner during 2018 had they not been deferred under the Deferred Compensation Plan. |
| |
| (2) | For Mr. Bilbrey and Ms. Buck, Column (c) reflects the Supplemental 401(k) Match contributions earned for 2016.2018. For Mmes. Little, and Turner and Mr.West and Messrs. O’Day and Tillemans, Column (c) reflects the DC SERP, the Supplemental 401(k) Match contributions and the Supplemental CRC earned for 2016.2018. These contributions are included in Column (i) of the 20162018 Summary Compensation Table. |
| |
| (3) | Column (d) reflects the adjustment made to each NEO’s account during 20162018 to reflect the performance of the investment options chosen by the executive. Amounts reported in Column (d) were not required to be reported as compensation in the 20162018 Summary Compensation Table. |
| |
| (4) | Column (f)(e) reflects the aggregate balance creditedvalue of vested amounts under the Deferred Compensation Plan paid to each NEO as of December 31, 2016, including the 2016 amounts reflectedMs. Turner in Columns (b), (c) and (d). The following table indicates the portionconnection with her retirement in 2018. In accordance with section 409A of the Column (f) balance that reflects amounts disclosed in a Summary Compensation Table included in proxy statementsIRC, these payments were delayed for years prior to 2016:six months following Ms. Turner’s separation from service. |
(5)Column (f) reflects the aggregate balance credited to each NEO as of December 31, 2018, including the 2018 amounts reflected in Columns (b), (c) and (d). The following table indicates the portion of the Column (f) balance that reflects amounts disclosed in a Summary Compensation Table included in proxy statements for years prior to 2018: |
| | |
| | Amounts Reported in
|
Mr. Bilbrey
Ms. Buck | 3,852,805 | 7,027,379
|
Ms. Little | 2,148,342 | 512,214
|
Ms. Buck
Mr. O'Day | 1,870,940 | 3,463,701
|
Mr. O’Day Tillemans | 66,638 | 1,407,297
|
Ms. West | 57,690 |
|
| Ms. Turner | 4,187,286 | 3,794,064
|
| (1) |
| (a) | This amount reflects the fair market value as of December 31, 2016,2018, of vested PSU, RSU and OHIP awards as well as DC SERP, Supplemental 401(k) Match and Supplemental CRC credits. The amounts disclosed in the Summary Compensation Table included in proxy statements for years prior to 20162018 reflect the grant date value of such awards, rather than the fair market value as of December 31, 2016.2018. |
Potential Payments upon Termination or Change in Control
We maintain plans covering our NEOs that will require us to provide incremental compensation in the event of termination of employment or a Change in Control (as such term is defined in the applicable governing document), provided certain conditions are met.
The following narrative takes each hypothetical termination of employment situation – voluntary resignation, termination for Cause, death, disability, retirement, termination without Cause, and resignation for Good Reason – and a Change in Control of the Company, and describes the additional amounts, if any, that the Company would pay or provide to the NEOs, or their beneficiaries, as a result.
73
This narrative regarding hypothetical termination events does not include information on benefits the Company would pay or provide to Ms. Turner upon the occurrence of such events as she was no longer an employee of the Company on December 31, 2018. Instead, the actual payments made to Ms. Turner upon her retirement are described below under the section entitled “Separation Payments under Confidential Separation Agreement and General Release.”
The narrative below and the amounts shown reflect certain assumptions we have made in accordance with SEC rules. We have assumed that the termination of employment or Change in Control occurred on December 31,
2016,2018, and that the value of a share of our Common Stock on that day was
$103.43,$107.18, the closing price on the NYSE on December
30, 2016,31, 2018, the last trading day of
2016.2018.
In addition, in keeping with SEC rules, the following narrative and amounts do not include payments and benefits which are not enhanced by a qualifying termination of employment or Change in Control. These payments and benefits are referred to as “vested benefits” and include:
Vested benefits accrued under the 401(k) and pension plans;
Accrued vacation pay, health plan continuation and other similar amounts payable when employment terminates under programs generally applicable to the Company’s salaried employees;
Vested Supplemental 401(k) Match and Supplemental CRC provided to the NEOs on the same basis as all other employees eligible for Supplemental 401(k) Match and Supplemental CRC;
Vested benefits accrued under the DB SERP and account balances held under the Deferred Compensation Plan as previously described in the sections entitled “2016“2018 Pension Benefits Table” and “2016“2018 Non-Qualified Deferred Compensation Table”; and
Stock options which have vested and become exercisable prior to termination of employment or Change in Control.
Voluntary Resignation (other than a Resignation for Good Reason)
We are not obligated to pay amounts over and above vested benefits to a NEO who voluntarily resigns. Vested stock options may not be exercised after the NEO’s resignation date unless the executive meets retirement eligibility requirements (separation after attainment of age 55 with at least five years of continuous service).
If we terminate a NEO’s employment for Cause, we are not obligated to pay the executive any amounts over and above vested benefits. The NEO’s right to exercise vested stock options expires upon termination for Cause, and amounts otherwise payable under the DB SERP are subject to forfeiture at the Company’s discretion. In general, a termination will be for Cause if the executive has been convicted of a felony or has engaged in gross negligence or willful misconduct in the performance of duties, material dishonesty or a material violation of Company policies, including our Code of
Ethical Business Conduct, or bad faith actions in the performance of duties not in the best interests of the Company.
If a NEO dies prior to meeting the vesting requirements under the DB SERP, no benefits are paid. As of December 31,
2016, Mr. Bilbrey and2018, Ms. Buck
werewas fully vested in
their respectiveher DB SERP
benefitsbenefit and
their respective estatesher estate would therefore be entitled to a payout of such benefits in the event of
theirher death.
74
If a NEO dies or becomes disabled prior to meeting the vesting requirements under the 401(k) plan or for the Supplemental 401(k) Match, Supplemental CRC or DC SERP benefits, the accrued amounts under those plans become vested. Mr. Tillemans and Ms. West are not fully vested in these benefits. In the event of death or disability, Mr. Tillemans and Ms. West would have received $290,375 and $289,656, respectively, as a result of vesting. Ms. Little is not fully vested in her DC SERP benefit. In the event of death or disability, Ms. Little would have received $482,697 as a result of vesting.
In the event of termination due to disability, long-term disability (“LTD”) benefits are generally payable until age 65, but may extend for longer if disability benefits begin after age 60, and are offset by other benefits such as Social Security. The maximum amount of the monthly LTD payments from all sources, assuming LTD began on December 31, 2016,2018, is set forth in the table below: | | | | | | | | | | | | | | | | |
| | | Long-Term Disability Benefit | |
Name | | Maximum
Monthly
Amount ($) | | | Years and Months Until End
of LTD Benefits (#) | | | Total of Payments ($) | | | Lump Sum Benefit(1) ($) | |
Mr. Bilbrey | | | 35,000 | | | | 5 years 0 months | | | | 2,100,000 | | | | — | (2) |
Ms. Little | | | 25,000 | | | | 8 years 5 months | | | | 2,525,000 | | | | 446,900 | |
Ms. Buck | | | 35,000 | (3) | | | 9 years 9 months | | | | 4,095,000 | | | | 718,892 | |
Mr. O’Day | | | 25,000 | | | | 1 year 6 months | | | | 450,000 | | | | 187,383 | |
Ms. Turner | | | 25,000 | | | | 5 years 10 months | | | | 1,750,000 | | | | 787,586 | |
|
| | | | | | | |
| Name | Long-Term Disability Benefit |
Maximum Monthly Amount ($) | Years and Months Until End of LTD Benefits (#) | Total of Payments ($) | Lump Sum Benefit(1) ($) |
| Ms. Buck | 35,000 |
| 7 years 9 months | 3,255,000 |
| 317,566 |
|
| Ms. Little | 25,000 |
| 6 years 5 months | 1,925,000 |
| 851,681 |
|
| Mr. O'Day | 25,000 |
| 1 year | 300,000 |
| 169,148 |
|
| Mr. Tillemans | 25,000 |
| 7 years 3 months | 2,175,000 |
| 607,556 |
|
| Ms. West | 25,000 |
| 8 years 9 months | 2,625,000 |
| 622,624 |
|
| |
| (1) | For Ms. Buck, amounts reflectthe amount reflects additional DB SERP and pension plan benefits payable at age 65 that are attributable to vesting and benefit service credited during the disability period.period, along with additional SRC contributions through the year prior to which she reaches age 65. For Mr. O’Day, the amount reflects 1812 additional months of CRC, Supplemental CRC and DC SERP credit upon disability. For Ms. Turner,Little, the amount reflects two additional years of Supplemental CRC, credit and two additional years of DC SERP credit and vesting upon disability. For Ms. Little, the amount reflects reflect two additional years of Supplemental CRC and DC SERP credit and vesting in the DC SERP upon disability. In addition to theFor Mr. Tillemans and Ms. West, amounts shown, Ms. Little would become vestedreflect an additional two years of CRC, Supplemental CRC and DC SERP credits and vesting in hertheir respective 401(k) Match, CRC, Supplemental 401(k) Match, Supplemental CRC and Supplemental CRC. |
(2) | Mr. Bilbrey would not be entitled to any additional DBDC SERP or pension plan benefits in the event of termination due toupon disability. |
(3) | Ms. Buck’s maximum monthly amount increased from $25,000 to $35,000 effective June 2, 2016 in connection with her promotion to Executive Vice President, COO. |
Treatment of Stock Options upon Retirement, Death or Disability
In the event of retirement, death or disability, vested stock options remain exercisable for a period of three or five years, not to exceed the option expiration date. The exercise period is based upon the terms and conditions of the individual grant. Retirement is defined as separation after attainment of age 55 with at least five years of continuous service.
Options that are not vested at the time of retirement, death or disability will generally vest in full (subject to the exception described in the following sentence) and the options will remain exercisable for three or five years following termination, depending on the terms and conditions of the grant. Options granted in the year of retirement are prorated based upon the number of full calendar months worked in that year.
75
The following table provides the number of unvested stock options as of December 31, 2016, that would have become vested and remained exercisable during the three-year or five-year periods following death or disability, or retirement if applicable, on December 31, 2016,2018, and the value of those options based on the excess of the fair market value of our Common Stock on December 30, 2016,31, 2018, the last trading day of 2016,2018, over the applicable option exercise price. As of December 31, 2016, Messrs. Bilbrey, O’Day and2018, Ms. Buck and Mr. O’Day were considered retirement eligible based on the provisions of all outstanding option awards. Because Mmes. Little and TurnerWest and Mr. Tillemans were not considered retirement eligible as of December 31, 2016,2018, they would forfeit 53,908have forfeited 61,853 stock options, 56,003 stock options and 76,84329,215 stock options, respectively, upon voluntary separation. | | | | | | | | |
| | | Stock Options | |
Name | | Number(1) (#) | | | Value(2) ($) | |
Mr. Bilbrey | | | 387,564 | | | | 2,822,317 | |
Ms. Little | | | 53,908 | | | | 481,108 | |
Ms. Buck | | | 91,793 | | | | 636,564 | |
Mr. O’Day | | | 63,911 | | | | 496,266 | |
Ms. Turner | | | 76,843 | | | | 507,783 | |
|
| | | | |
| Name | Stock Options |
Number(1) (#) | Value(2) ($) |
| Ms. Buck | 173,255 |
| 935,068 |
|
| Ms. Little | 61,853 |
| 479,725 |
|
| Mr. O'Day | 52,520 |
| 318,405 |
|
| Mr. Tillemans | 29,215 |
| 136,682 |
|
| Ms. West | 56,003 |
| 276,156 |
|
| |
| (1) | Represents the total number of unvested options as of December 31, 2016.2018. |
| |
| (2) | Reflects the difference between $103.43$107.18, the closing price for our Common Stock on the NYSE on December 30, 2016,31, 2018, the last trading day of 2016,2018, and the exercise price for each option. Options for which the exercise price exceeds $103.43$107.18 are not included in the calculations. |
Treatment of RSUs upon Retirement, Death or Disability
Upon
In the event of retirement,
any unvesteddeath or disability, RSUs
that are
forfeited. Unvested RSUsnot vested will
generally vest in full
(subject to the exception described in the following sentence). RSUs granted in the year of retirement are prorated based upon
death or disability.the number of full calendar months worked in that year. The retention RSU awards granted to Ms. Buck and Ms. Little in 2016 were subject to forfeiture in the event of retirement.
The following table provides the number of unvested RSUs that would have vested on December 31, 2016,2018, if the executive’s employment terminated that day due to death or disability: | | | | | | | | |
| | | Restricted Stock Units | |
Name | | Number(1) (#) | | | Value(2) ($) | |
Mr. Bilbrey | | | 16,136 | | | | 1,707,705 | |
Ms. Little | | | 27,468 | | | | 2,928,099 | |
Ms. Buck | | | 59,185 | | | | 6,263,667 | |
Mr. O’Day | | | 7,938 | | | | 834,024 | |
Ms. Turner | | | 36,687 | | | | 3,882,658 | |
|
| | | | |
| Name | Restricted Stock Units |
Number(1) (#) | Value(2) ($) |
| Ms. Buck | 78,291 |
| 8,901,689 |
|
| Ms. Little | 22,068 |
| 2,520,219 |
|
| Mr. O'Day | 5,868 |
| 655,444 |
|
| Mr. Tillemans | 7,329 |
| 814,215 |
|
| Ms. West | 32,338 |
| 3,606,203 |
|
____________________
| |
| (1) | Represents the total number of unvested RSUs as of December 31, 2016.2018. |
| |
| (2) | Based on the closing price of $103.43$107.18 for our Common Stock on the NYSE on December 30, 2016,31, 2018, the last trading day of 2016,2018, plus accrued dividend equivalents. |
76
Treatment of PSUs upon Retirement, Death or Disability
In general, in the event of retirement, death or disability, any unvested contingent PSUs are prorated based on the number of full or partial months worked in each of the open PSU cycles. Any remaining unvested contingent PSUs not prorated are forfeited. The special PSU award granted to Mr. O’Day in 2017 is subject to forfeiture in the event of his retirement.
The following table provides the total number of contingent PSUs each NEO would be entitled to if the executive’s employment ended on December 31, 20162018 due to death or disability, or retirement if applicable. As of December 31, 2016, Messrs. Bilbrey2018, Ms. Buck and Mr. O’Day and Ms. Buck were considered retirement eligible based on the provisions of all open PSU cycles. Becausecycles, with the exception of Mr. O’Day’s special PSU award. Mmes. Little and TurnerWest and Mr. Tillemans were not considered retirement eligible as of December 31, 2016,2018 and they would forfeithave forfeited all of their contingent PSUs upon voluntary separation. | | | | | | | | |
| | | Performance Stock Units | |
Name | | Number(1) (#) | | | Value(2) ($) | |
Mr. Bilbrey | | | 34,766 | | | | 3,595,847 | |
Ms. Little | | | 5,645 | | | | 583,862 | |
Ms. Buck | | | 8,365 | | | | 865,192 | |
Mr. O’Day | | | 5,930 | | | | 613,340 | |
Ms. Turner | | | 6,137 | | | | 634,750 | |
|
| | | | |
| Name | Performance Stock Units |
Number(1) (#) | Value(2) ($) |
| Ms. Buck | 34,771 |
| 3,726,756 |
|
| Ms. Little | 15,408 |
| 1,651,429 |
|
| Mr. O'Day | 19,896 |
| 2,132,453 |
|
| Mr. Tillemans | 4,630 |
| 496,243 |
|
| Ms. West | 7,262 |
| 778,341 |
|
| |
| (1) | For the 2014-20162016-2018 PSU cycle, amount reflects the total number of contingent PSUs calculated by multiplying the number of contingent target PSUs by 20.66%131.08%, the final performance score for that cycle. For the 2015-20172017-2019 and 2016-20182018-2020 PSU cycles and Mr. O’Day’s special PSU award, amount reflects the total number of contingent PSUs at target. |
| |
| (2) | Based on the closing price of $103.43$107.18 for our Common Stock on the NYSE on December 30, 2016,31, 2018, the last trading day of 2016.2018. |
Termination without Cause; Resignation for Good Reason
Under Mr. Bilbrey’sMs. Buck’s employment agreement and the EBPP 3A, as applicable, we have agreed to pay severance benefits if we terminate a NEO’s active employment without Cause or if the NEO resigns from active employment for Good Reason, in each case as defined in the applicable document. Severance benefits consist of a lump sum payment calculated as a multiple of base salary and target OHIP as well as continuationcontinued OHIP eligibility, calculated as the lower of health and welfare benefitstarget or actual Company performance, for a set period of time, as shown in the table below. Additionally, all NEOs would be entitled to receive a pro rata payment of the OHIP award, if any, earned for the year in which termination occurs.occurs, continuation of health and welfare benefits and financial planning and tax preparation benefits for a set period of time, as shown in the table below as well as outplacement services up to $35,000. | | | |
| | | | |
Plan | | Benefit Entitlement | |
Severance | OHIP Continuation | Severance
Multiple
| | | Health and
| Financial Planning and Tax Preparation Benefits |
Mr. Bilbrey’sMs. Buck’s employment agreement and participants
in EBPP 3A on or before February 22, 2011
| | | 2 times | | | 24 months | 24 months | 24 months |
Participants in EBPP 3A after February 22, 2011 | | | 1.5 times | | | 18 months | 18 months | 18 months |
77
If a NEO has not met retirement eligibility requirements and his or her employment is terminated for reasons other than for Cause, or if the NEO terminates for Good Reason, he or she will be eligible to exercise all vested stock options and a prorated portion of his or her unvested stock options held on the date of separation from service for a period of 120 days following separation. If the NEO is age 55 or older with five or more years of continuous service and his or her employment is terminated for reasons other than for Cause, or if the NEO terminates for Good Reason, the NEO will be entitled to exercise any vested stock options until the earlier of three or five years (based on the provisions of the individual grant) from the date of termination or the expiration of the options.
In addition, if a
NEO’sNEO has not met retirement eligibility requirements and his or her employment is terminated for reasons other than for Cause, or if the NEO terminates for Good Reason, the NEO will vest in a prorated portion of any unvested RSUs held on the date of separation from service.
The following table provides the incremental amounts that would have beenvested and become payable to each NEO had his or her employment terminated on December 31, 2016,2018, under circumstances entitling the NEO to severance benefits as described above: | | | | | | | | | | | | | | | | |
Name | | Salary ($) | | | One Hershey Incentive Program at Target ($) | | | Value of Benefits Continuation(1) ($) | | | Total ($) | |
Mr. Bilbrey | | | 2,472,000 | | | | 3,708,000 | | | | 29,424 | | | | 6,209,424 | |
Ms. Little | | | 940,500 | | | | 752,400 | | | | 26,341 | | | | 1,719,241 | |
Ms. Buck | | | 1,500,000 | | | | 1,350,000 | | | | 38,242 | | | | 2,888,242 | |
Mr. O’Day | | | 1,175,600 | | | | 764,140 | | | | 25,558 | | | | 1,965,298 | |
Ms. Turner | | | 940,500 | | | | 658,350 | | | | 9,783 | | | | 1,608,633 | |
|
| | | | | | | | | | | | | | | | |
Name | Salary ($) | OHIP at Target ($) | PSU
Related
Payments(1)
($) | Vesting
of
Stock
Options(1)
($) | Vesting
of
Restricted
Stock
Units(1)
($) | Value of Benefits Continuation(2) ($) | Value of Financial Planning and Outplacement(3) ($) | Total ($) |
| Ms. Buck | 2,266,000 |
| 3,399,000 |
| — |
| — |
| 6,082,409 |
| 41,444 |
| 68,000 |
| 11,856,853 |
|
| Ms. Little | 988,095 |
| 839,881 |
| — |
| 343,048 |
| 2,199,100 |
| 28,006 |
| 59,750 |
| 4,457,880 |
|
| Mr. O'Day | 1,254,600 |
| 1,003,680 |
| — |
| — |
| — |
| 27,124 |
| 68,000 |
| 2,353,404 |
|
| Mr. Tillemans | 975,000 |
| 780,000 |
| — |
| 61,210 |
| 520,011 |
| 2,796 |
| 59,750 |
| 2,398,767 |
|
| Ms. West | 1,018,875 |
| 815,100 |
| — |
| 122,617 |
| 2,383,293 |
| 28,105 |
| 59,750 |
| 4,427,740 |
|
____________________
| |
| (1) | Reflects the value of equity awards that would have vested and become payable to each NEO over and above amounts they would have received upon a voluntary termination. |
| |
| (2) | Reflects projected medical, dental, vision and life insurance continuation premiums paid by the Company during the applicable time period following termination. |
| |
| (3) | Value of maximum payment for financial planning and tax preparation continuation during the applicable time period following termination plus outplacement services of $35,000. |
For information with respect to stock options,
RSUs and
RSUsPSUs held by each NEO as of December 31,
2016,2018, refer to the Outstanding Equity Awards at
20162018 Fiscal-Year End Table.
The EBPP 3A
providesand the terms of the applicable award agreements provide for the vesting and payment of the following benefits to each of the NEOs upon a Change in Control:
An OHIP payment for the year in which the Change in Control occurs, calculated as the greater of target or the estimated payment based on actual performance through the date of the Change in Control;
To the extent not vested, full vesting of benefits accrued under the DB SERP and the Deferred Compensation Plan; and
To the extent not vested, full vesting of benefits under the 401(k) and pension plans.plans;
If not replaced with awards that qualify as Replacement Awards (as defined in the EICP), full vesting of all outstanding RSUs and stock options;
If not replaced with awards that qualify as Replacement Awards (as defined in the EICP), a vested and non-forfeitable right to receive a lump sum cash payment equal to the target PSU grant for the performance cycle ending in the year of the Change in Control, determined based upon the greater of target or actual performance through the date of the Change in Control, with each PSU valued at the higher of (a) the highest closing price for our Common Stock during the 60 days prior to (and including the date of) the Change in Control and (b) the price at which an offer is made to purchase shares of our Common Stock from the Company’s stockholders, if applicable (the higher of (a) and (b), the “Transaction Value”); and
If not replaced with awards that qualify as Replacement Awards (as defined in the EICP), a vested and non-forfeitable right to receive a lump sum cash payment equal to the target PSU grant for the second year of the performance cycle and a prorated portion of the target PSU grant for the first year of the performance cycle at the time of the Change in Control, with each PSU valued at the higher of the Transaction Value and the highest closing price of our Common Stock from the date of the Change of Control until the earlier of the end of the applicable grant cycle or the NEO’s separation from service.
Under our EICP
and the terms of the applicable award agreements, awards
that are continued as
qualifying replacement awardsReplacement Awards after a Change in Control
and therefore, noare not subject to accelerated vesting or payment
will occur for such awards because ofupon the Change in Control. In the event of termination of employment within two years following the Change in Control for any reason other than termination for Cause or resignation without Good Reason, the replacement awards will vest and become payable as described below.
78
The following table and explanatory footnotes provide information with respect to the incremental amounts that would have vested and become payable on December 31, 2016,2018, if a Change in Control occurred on that date. All unvested awards would continue as qualifying replacement awards, and therefore are not included in the table below: | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | One Hershey
Incentive
Program
Related
Payment(1) ($) | | | PSU Related Payments ($) | | | Vesting
of Stock Options ($) | | | Vesting of Restricted Stock Units ($) | | | Retirement
and Deferred
Compensation
Benefits(2) ($) | | | Total(3) ($) | |
Mr. Bilbrey | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Ms. Little | | | — | | | | — | | | | — | | | | — | | | | 285,153 | | | | 285,153 | |
Ms. Buck | | | — | | | | — | | | | — | | | | — | | | | 1,795,122 | | | | 1,795,122 | |
Mr. O’Day | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Ms. Turner | | | — | | | | — | | | | — | | | | — | | | | 503,289 | | | | 503,289 | |
|
| | | | | | | | | | | | |
Name | OHIP Related Payment(1) ($) | PSU Related Payments(2) ($) | Vesting of Stock Options(3) ($) | Vesting of Restricted Stock Units(3) ($) | Retirement and Deferred Compensation Benefits(4) ($) | Total(5) ($) |
| Ms. Buck | — |
| 927,986 |
| — |
| 6,355,034 |
| — |
| 7,283,020 |
|
| Ms. Little | 3,310 |
| 970,207 |
| 479,725 |
| 2,520,219 |
| 482,697 |
| 4,456,158 |
|
| Mr. O'Day | — |
| 1,231,625 |
| — |
| — |
| — |
| 1,231,625 |
|
| Mr. Tillemans | 39,446 |
| 656,650 |
| 136,682 |
| 814,215 |
| 290,375 |
| 1,937,368 |
|
| Ms. West | — |
| 1,054,996 |
| 276,156 |
| 3,606,203 |
| 289,656 |
| 5,227,011 |
|
| |
| (1) | TheWith the exception of Ms. Little and Mr. Tillemans, the amount of the OHIP award earned for 20162018 was greater than target. Therefore, no incremental amount attributable to that program would have been payable upon a Change in Control. For Ms. Little and Mr. Tillemans, reflects the difference between the target amount and the actual amount earned. |
| |
| (2) | Amounts reflect vesting of PSUs awarded, as follows: |
For the performance cycle which ended on December 31, 2018, the difference between a value per PSU of $110.01, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2018, and a value per PSU of $107.18, the closing price of our Common Stock on the NYSE on December 31, 2018, the last trading day of 2018;
For the performance cycle ending December 31, 2019, and for Mr. O’Day’s special PSU award, at target performance, with a value per PSU of $110.01, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2018; and
For the performance cycle ending December 31, 2020, one-third of the contingent target units awarded, at target performance, with a value per PSU of $110.01, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2018.
Because Mr. O’Day and Ms. Buck were retirement eligible as of December 31, 2018, as of that date they had already vested in a portion of the PSU awards for the performance cycles ending December 31, 2019 and December 31, 2020. Accordingly, with respect to these NEOs, the amount for the performance cycle ending December 31, 2019, reflects only (i) an incremental payment of the portion of the PSU award that would vest upon ta Change in Control if the awards were not continued as Replacement Awards (i.e., 1/3 of the total award) and (ii) an incremental benefit equal to the difference between a value per PSU of $110.01, the highest closing price of our Common Stock on the NYSE during the last 60 days of 2018, and a value per PSU of $107.18, the closing price of our Common Stock on the NYSE on December 31, 2018, the last trading day of 2018, while the amount for the performance cycle ending December 31, 2020, reflects only an incremental benefit equal to the difference between a value per PSU of $110.01 and a value per PSU of $107.18.
| |
| (3) | Reflects the value of equity awards that would have vested and become payable to each NEO over and above amounts that would have already vested. |
| |
| (4) | Reflects the full vesting value of DB SERP benefits and more favorable early retirement discount factors as provided under the EBPP 3A. Mr. Bilbrey is fully vested in his unreduced DB SERP benefit so no additional benefit is applicable. Ms. Buck is fully vested in her DB SERP benefit and the more favorable early retirement factors do not apply to the CEO, so no additional benefit is applicable. For Ms. West and Mr. Tillemans, the amount includes the valuevesting of more favorable early retirement discount factors.their respective DC SERP benefit, 401(k), Supplemental 401(k) Match, CRC and Supplemental CRC. For Ms. Little, the amount includes the vesting of her DC SERP benefit, 401(k), Supplemental Match, CRC and Supplemental CRC.benefit. Mr. O’Day is fully vested in his DC SERP benefit so no additional benefit is applicable. For Ms. Turner, the amount includes the vesting of her DC SERP benefit. |
(3) | |
| (5) | For any given executive, the total payments made in the event of termination after a Change in Control would be reduced to the “safe harbor” limit under IRC Section 280G if such reduction would result in a greaterafter-tax benefit for the executive. |
Termination without Cause or Resignation for Good Reason after Change in Control
If a NEO’s employment is terminated by the Company without Cause or by the NEO for Good Reason within two years after a Change in Control, we pay severance benefits under the EBPP 3A to assist the NEO in transitioning to new employment. These severance benefits as of December 31,
2016,2018, consist of:
| • | | A lump sum cash payment equal to two (or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one) times: |
| ¡ | | The executive’s base salary; and |
| ¡ | | The highest OHIP award payment paid or payable during the three years preceding the year of the Change in Control (but not less than the OHIP target award for the year of the termination); |
A lump sum cash payment equal to two (or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one) times:
•The executive’s base salary; and
The highest OHIP award payment paid or payable during the three years preceding the year of the Change in Control (but not less than the OHIP target award for the year of the termination) ("Highest OHIP");
For replacement PSU awards, full vesting of PSUsa lump sum cash payment equal to the target PSU grant for the performance cycle ending in the year of the Change in Control. The cash payment will beControl, determined based upon the greater of target or actual performance through the date of the Change in Control, with each PSU valued at the highest closing price for our Common Stock during the 60 days prior to the Change in Control;Transaction Value;
For replacement PSU awards, full vesting of outstanding PSUs ata lump sum cash payment equal to the target that are inPSU grant for the second year of the performance cycle and a prorated vestingportion of outstanding PSUs atthe target that are inPSU grant for the first year of the performance cycle at the time of the Change in Control;Control, with each PSU valued at the higher of the Transaction Value and the highest closing price of our Common Stock from the date of the Change of Control until the NEO’s separation from service;
For replacement stock options and RSU awards (including accrued cash credits equivalent to dividends that would have been earned had the executive held Common Stock instead of RSUs), full vesting of all unvested stock options and RSUs;
79
Continuation of medical, dental, vision and life benefits for 24 months (or, if less, the number of months until the executive attains age 65, but not less than 12 months), or payment of the value of such benefits if continuation is not permitted under the terms of the applicable plan;
| • | | For executives who do not participate in the pension plan, a lump sum equal to the CRC rate times the sum of their base salary and OHIP earnings times the number of years in their severance period (two, or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one). IRS limitations imposed on the 401(k) and pension plans will not apply for this purpose; |
For executives who do not participate in the pension plan, a lump sum equal to the CRC rate times the sum of their base salary and Highest OHIP times the number of years in their severance period (two, or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one). IRS limitations imposed on the 401(k) and pension plans will not apply for this purpose;
Outplacement services up to $35,000 and reimbursement for financial counseling and tax preparation services for two years;
An enhanced matching contribution cash payment equal to the 401(k) matching contribution rate of 4.5% multiplied by the executive’s base salary and lastHighest OHIP payment calculated as if such amounts were paid during the years in the executive’s severance period. For this purpose, the IRS limitations imposed on the 401(k) plan do not apply;
For executives who participate in the DB SERP, an enhanced benefit reflecting an additional two years of credit; and
For executives who participate in the DC SERP, an enhanced benefit reflecting a cash payment equal to the applicable percentage rate multiplied by his or her base salary and lastHighest OHIP payment calculated as if such amounts were paid during the years in the executive’s severance period.
The following table provides the severance payments and all other amounts that would have vested and become payable ifto each NEO over and above amounts they would have received upon a termination by the Company without Cause or by the NEO for Good Reason, assuming a Change in Control occurred and the executive’s employment terminated on December 31, 2016: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Lump Sum
Cash
Severance
Payment ($) | | | PSU Related
Payments(1) ($) | | | Vesting
of Stock
Options(2) ($) | | | Vesting of
RSUs ($) | | | Value of
Medical and
Other Benefits
Continuation ($) | | | Value of
Financial
Planning
and
Outplace-
ment(3) ($) | | | Value of
Enhanced
DB SERP/ DC SERP
and
401(k)
Benefit(4) ($) | | | Total(5) ($) | |
Mr. Bilbrey | | | 7,525,372 | | | | 3,356,202 | | | | 2,822,317 | | | | 1,707,705 | | | | 29,424 | | | | 68,000 | | | | 4,419,735 | | | | 19,928,755 | |
Ms. Little | | | 2,257,200 | | | | 765,963 | | | | 481,108 | | | | 2,928,099 | | | | 35,444 | | | | 68,000 | | | | 451,440 | | | | 6,987,254 | |
Ms. Buck | | | 2,850,000 | | | | 813,819 | | | | 636,564 | | | | 6,263,667 | | | | 38,242 | | | | 68,000 | | | | 2,957,388 | | | | 13,627,680 | |
Mr. O’Day | | | 1,133,757 | | | | 579,643 | | | | 496,266 | | | | 834,024 | | | | 12,438 | | | | 68,000 | | | | 226,752 | | | | 3,350,880 | |
Ms. Turner | | | 2,166,965 | | | | 1,094,630 | | | | 507,783 | | | | 3,882,658 | | | | 13,149 | | | | 68,000 | | | | 433,393 | | | | 8,166,578 | |
|
| | | | | | | | | | | | | | | | |
| Name | Lump Sum Cash Severance Payment ($) | PSU Related Payments(1) ($) | Vesting of Stock Options ($) | Vesting of RSUs ($) | Value of Medical and Other Benefits Continuation ($) | Value of Financial Planning and Outplace- ment ($) | Value of Enhanced DB SERP/ DC SERP and 401(k) Benefit(2) ($) | Total(3) ($) |
| Ms. Buck | — |
| 927,986 |
| — |
| 272,625 |
| — |
| — |
| 6,756,963 |
| 7,957,574 |
|
| Ms. Little | 609,325 |
| 970,207 |
| 136,677 |
| 321,119 |
| 9,678 |
| 8,250 |
| 487,460 |
| 2,542,716 |
|
| Mr. O'Day | — |
| 1,231,625 |
| — |
| — |
| — |
| — |
| 225,828 |
| 1,457,453 |
|
| Mr. Tillemans | 585,000 |
| 656,650 |
| 75,472 |
| 294,204 |
| 946 |
| 8,250 |
| 468,000 |
| 2,088,522 |
|
| Ms. West | 611,325 |
| 1,054,996 |
| 153,539 |
| 1,222,910 |
| 9,712 |
| 8,250 |
| 489,060 |
| 3,549,792 |
|
| |
| (1) | Amounts reflect vesting of PSUs awarded as follows: |
For the performance cycle which ended on December 31, 2016, the difference between target and actual performance as of December 31, 2016, and the difference between a value per PSU of $104.44 the highest closing price for our Common Stock on the NYSE during the last 60 days of 2016, and a value per PSU of $103.43 the closing price of our Common Stock on the NYSE on December 30, 2016, the last trading day of 2016;
For the performance cycle ending December 31, 2017, at target performance, with a value per PSU of $104.44 the highest closing price for our Common Stock on the NYSE during the last 60 days of 2016; and
For the performance cycle ending December 31, 2018,one-third of the contingent target units awarded, at target performance, with a value per PSU of $104.44 the highest closing price for our Common Stock on the NYSE during the last 60 days of 2016.
80
Because Messrs. Bilbrey and O’Day and Ms. Buck were retirement eligible as of December 31, 2016, as of that date they had already vested in a portion of the PSU awards for the performance cycles ending December 31, 2017 and December 31, 2018. Accordingly, with respect to these NEOs, the amount for the performance cycle ending December 31, 2017, reflects only (i) an incremental payment of the portion of the PSU award that would vest upon termination following a Change in Control (i.e. 1/3 of the total award) and (ii) an incremental benefit equaldescribed in footnote (2) to the difference between a value per PSU of $104.44 the highest closing price of our Common Stock on the NYSE during the last 60 days of 2016, and a value per PSU of $103.43 the closing price of our Common Stock on the NYSE on December 30, 2016, the last trading day of 2016, while the amount for the performance cycle ending December 31, 2018, reflects only an incremental benefit equal to the difference between a value per PSU of $104.44 and a value per PSU of $103.43.
(2) | Reflects the value of unvested options that would vest upon the executive’s employment termination following a Change in Control based on the excess, if any, of the value of our Common Stock of $103.43 on December 30, 2016, the last trading day of 2016, over the exercise price for the options. Information regarding unvested options as of December 31, 2016 can be found in the Outstanding Equity Awards at 2016 Fiscal-Year End Table.table. |
(3) | Value of maximum payment for financial planning and tax preparation continuation for two years following termination of employment plus outplacement services of $35,000. |
(4)(2) | For Mr. Bilbrey and Ms. Buck, this value reflects the amounts of enhanced DB SERP, 401(k) Match and Supplemental 401(k) Match over a 24 month24-month period. For Mmes. Little and Turner the value reflects the amounts of DC SERP, CRC, Supplemental CRC, 401(k) Match and Supplemental 401(k) Match that would have been paid had they remained employees for 24 months after their termination. For Mr. O’Day, the value reflects the amounts of DC SERP, CRC, Supplemental CRC, 401(k) Match and Supplemental 401(k) Match that would have been paid had he remained an employee for 12 months after his termination. |
Mmes. Little and West and Mr. Tillemans, the value reflects the amounts of DC SERP, CRC, Supplemental CRC, 401(k) Match and Supplemental 401(k) Match that would have been paid had they remained employees for 24 months after their termination. For Mr. O’Day, the value reflects the amounts of DC SERP, CRC, Supplemental CRC, 401(k) Match and Supplemental 401(k) Match that would have been paid had he remained an employee for 12 months after his termination.
(5) | |
| (3) | For any given executive the total payments made in the event of termination after a Change in Control would be reduced to the “safe harbor” limit under IRC Section 280G if such reduction would result in a greaterafter-tax benefit for the executive. |
81
Separation Payments under Confidential Separation Agreement and General Release
On January 18, 2018, we announced that Ms. Turner, then Senior Vice President, General Counsel and Corporate Secretary, had informed the Company of her intention to retire effective March 31, 2018. In connection with her retirement, Ms. Turner entered into a Confidential Separation Agreement and General Release pursuant to which she received or will receive certain payments and benefits, including the following:
A lump sum cash separation payment equal to $964,020;
Payment of her 2018 OHIP award ($446,168) and eligibility to receive a pro rata 2019 OHIP award, depending on Company performance;
Retirement treatment for stock options, RSUs and PSUs, which resulted in accelerated vesting of 44,251 stock options, accelerated vesting and distribution of 3,850 RSUs and a non-forfeitable right to receive 6,982 contingent target PSUs;
Accelerated vesting and distribution of 33,190 retention RSUs granted in February 2016;
Health and welfare benefit continuation for 18 months;
A lump sum distribution of vested amounts under the Deferred Compensation Plan, including the DC SERP, equal to $1,867,601;
Reimbursement for financial counseling and tax preparation for a maximum of 24 months following her retirement (maximum reimbursement of $15,000 for financial counseling and $1,500 for tax preparation in 2018 and 2019, and $3,750 for financial counseling and $375 for tax preparation in 2020); and
Outplacement services equal to $35,000.
Under the terms of the Confidential Separation Agreement and General Release, Ms. Turner remains subject to all of the terms and conditions of her ECRCA with the Company, dated as of June 8, 2012, that survive the termination of her employment with the Company. In consideration of the payments and benefits provided to Ms. Turner under the Confidential Separation Agreement and General Release, she executed a release of all claims against the Company.
CEO Pay Ratio Disclosure
The annual total compensation of our CEO for fiscal year 2018 was $11,718,372. The median of the annual total compensation for all employees, excluding the CEO, for fiscal year 2018 was $29,270. As a result, we estimate that the ratio of the annual total compensation of our CEO to the annual total compensation of the median employee for fiscal year 2018 was 400 to 1.
We identified the median employee using base salary, including overtime, earned in the first nine months of 2018 for all employees, excluding our CEO, as of October 9, 2018, the second Tuesday in October in 2018. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology used for calculating the total compensation of our NEOs as set forth in the Summary Compensation Table.
Equity Compensation Plan Information
The following table provides information about all of the Company's equity compensation plans as of December 31, 2018: |
| | | | | | |
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) | Weighted-average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) |
| (a) | (b) | (c) |
Equity compensation plans approved by security holders(1) | | | |
| Stock Options | 5,394,382 |
| 94.28 |
| |
| Performance Stock Units and Restricted Stock Units | 999,018 |
| N/A |
| |
| Subtotal | 6,393,400 |
| 94.28 |
| 9,949,523 |
|
| Equity compensation plans not approved by security holders | N/A |
| N/A |
| N/A |
|
| Total | 6,393,400 |
| 94.28(2) |
| 9,949,523 |
|
____________________
(1) Includes amounts earned or paid in cash or shares of Common Stock at the election of the director or deferred by the director under the Directors' Compensation Plan. Column (a) includes stock options, PSUs and RSUs granted under the EICP. Of the securities available for future issuances under the EICP in column (c), 5,201,978 were available for awards of stock options and 4,747,545 were available for full-value awards such as PSUs, performance stock, RSUs, restricted stock and other stock-based awards. Securities available for future issuance of full-value awards may also be used for stock option awards.
(2) Weighted-average exercise price of outstanding stock options only.
PROPOSAL NO. 3 – ADVISE ON NAMED EXECUTIVE
| | |
| |
ü | ✓ | | | The Board of Directors unanimously recommends that stockholders voteFOR approval, on anon-binding advisory basis, of the compensation of the Company’sCompany's named executive officers |
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and related SEC rules, and as required under Section 14A of the Exchange Act, we are providing stockholders an opportunity to conduct an advisory vote regarding the compensation of our NEOs as disclosed in this Proxy Statement.
Prior to submitting your vote, we encourage you to read our Compensation Discussion & Analysis and the accompanying executive compensation tables for details about our executive compensation program, including information about the
20162018 compensation of our NEOs.
As discussed in more detail in the Compensation Discussion & Analysis, we believe our executive compensation program is competitive and governed by
pay-for-performance principles. We emphasize compensation opportunities that reward results. Our stock ownership requirements and use of stock-based incentives reinforce the alignment of the interests of our executives with those of our long-term stockholders. In doing so, our executive compensation program supports our strategic objectives and mission.
Accordingly, we ask you to approve the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders of The Hershey Company approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Proxy Statement for the
20172019 Annual Meeting of Stockholders pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion & Analysis, the Executive Compensation Tables and the related narrative discussion.”
Because your vote is advisory, it will not be binding upon the Board. However, as noted in the Compensation Discussion & Analysis, the Compensation Committee and the Board will, as deemed appropriate, take into account the outcome of the vote when considering future decisions affecting executive compensation.
The affirmative vote of the holders of at least a majority of the shares of Common Stock and Class B Common Stock (voting together as a class) represented at the Annual Meeting, in person or by proxy, is required to approve this proposal.
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PROPOSAL NO. 4 – ADVISE ON FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
| | | | |
| ✓ | | | The Board of Directors unanimously recommends that stockholders
vote to hold future advisory votes on named executive officer compensation
every1 YEAR
|
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and related SEC rules, and as required under Section 14A of the Exchange Act, we are providing stockholders an opportunity to conduct an advisory vote regarding the frequency with which future advisory votes on the compensation of our NEOs should be held.
At our 2011 Annual Meeting of Stockholders, a majority of stockholders indicated a preference for holding advisory votes on NEO compensation every year, and we have conducted such an annual vote since that time. Under Section 14A of the Exchange Act, every six years we are required to provide stockholders an opportunity to again advise on the frequency with which future votes on NEO compensation should be held.
After careful consideration, the Board has determined that continuing to conduct an advisory vote on NEO compensation each year remains the most appropriate policy at this time. The Board believes such an annual vote best enables stockholders to timely express their views on the Company’s executive compensation program and policies and assists the Board and the Compensation Committee in determining current stockholder sentiment. Additionally, conducting an annual advisory vote on NEO compensation is consistent with our practice of regularly seeking input from stockholders on corporate governance matters.
You are not being asked to vote “for” or “against” this proposal. Instead, this proposal asks stockholders to inform us how often we should conduct an advisory vote on the compensation of our NEOs. You may cast your vote by choosing the option of every 1, 2 or 3 years, or abstaining, in response to the following resolution:
“RESOLVED, that the option of every 1 year, 2 years or 3 years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold future advisory votes on named executive officer compensation, as disclosed in the Company’s annual proxy statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion & Analysis, the Executive Compensation Tables and the related narrative discussion.”
The frequency that receives the greatest number of votes from the holders of our Common Stock and Class B Common Stock voting together will be deemed to be stockholders’ preferred frequency for conducting future advisory votes on NEO compensation. Because your vote is advisory, it will not be binding upon the Board. However, the Board will, as it deems appropriate, take into account the outcome of the vote when determining how often the Company will conduct advisory votes on NEO compensation in future years.
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SECTION 16(a) BENEFICIAL OWNERSHIP
Section 16(a) of the Exchange Act requires our directors and executive officers, as well as any person who is the beneficial owner of more than 10% of our outstanding Common Stock, to file reports with the SEC and NYSE showing their ownership and changes in ownership of the Company’s securities. Copies of these reports also must be furnished to us. Based on an examination of these reports and on written representations provided to us, it is our opinion that all reports for
20162018 were timely
filed, except for a Form 4 filed by Thomas J. Ridge on April 21, 2016 reporting the disposition of shares on March 9, 2016.filed.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Item 404 of SEC Regulation
S-K requires that we disclose any transaction or series of similar transactions, or any currently proposed transaction(s), in which (i) the Company was or is to be a participant, (ii) the amount involved exceeds $120,000 and (iii) any of the following persons had or will have a direct or indirect material interest:
Our directors or nominees for director;
Our executive officers;
Persons owning more than 5% of any class of our outstanding voting securities; or
The immediate family members of any of the persons identified in the preceding three bullets.
Policies and Procedures Regarding Transactions with Related Persons
The Board has adopted a written Related Person Transaction Policy that governs the review, approval or ratification of related person transactions. The Related Person Transaction Policy may be viewed on the Investors section of our website atwww.thehersheycompany.com. Under the Related Person Transaction Policy, each related person transaction, and any significant amendment or modification to a related person transaction, must be reviewed and approved or ratified by a committee of our Board composed solely of independent directors who have no interest in the transaction. We refer to each such committee as a Reviewing Committee. The Related Person Transaction Policy also permits the disinterested members of the full Board to act as a Reviewing Committee.
The Board has designated the Governance Committee as the Reviewing Committee primarily responsible for the administration of the Related Person Transaction Policy. In addition, the Board has designated
a special Reviewing
CommitteesCommittee to oversee certain transactions involving the Company and Hershey Trust Company, Milton Hershey School, the Milton Hershey School Trust and companies owned by or affiliated with any of the foregoing. Finally, the Related Person Transaction Policy provides that the Compensation Committee will review and approve, or review and recommend to the Board for approval, any employment relationship or transaction involving an executive officer of the Company and any related compensation.
When reviewing, approving or ratifying a related person transaction, the Reviewing Committee will examine all material facts about the related person’s interest in, or relationship to, the transaction, including the approximate dollar value of the transaction. If the related person transaction involves an outside director or nominee for director, the Reviewing Committee also may consider whether the transaction would compromise the director’s status as an “independent director,” “outside director” or
“non-employee “non-employee director” under the Board’s Corporate Governance Guidelines, the NYSE Rules, the
CodeIRC or the Exchange Act.
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Transactions with Hershey Trust Company, Milton Hershey School and the
Milton Hershey School Trust
During
2016,2018, there were no transactions with the Company in which any executive officer, director or nominee for director, or any of their immediate family members, had a direct or indirect material interest that would need to be disclosed pursuant to Item 404 of SEC Regulation
S-K, nor were any such transactions planned.
In any given year, we may engage in certain transactions with Hershey Trust Company, Milton Hershey School, the Milton Hershey School Trust and companies owned by or affiliated with any of the foregoing. These transactions are typically immaterial, ordinary-course transactions that do not constitute related person transactions. However, from time to time we may also engage in related person transactions with Hershey Trust Company, Milton Hershey School, the Milton Hershey School Trust and/or their subsidiaries and affiliates. Under the Board’s Corporate Governance Guidelines, a special Reviewing Committee normally composed of the directors electedindependent, disinterested members of the Executive Committee must approve these transactions.
Effective November 7, 2018, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Milton Hershey School Trust, pursuant to which the Company agreed to purchase 450,000 shares of the Company’s common stock from Milton Hershey School Trust at a price equal to $106.30 per share, for a total purchase price of $47,835,000. The transaction was approved by the
holdersindependent directors of the
Common Stock voting separately as a class reviews and makes recommendations to theCompany’s Board
regarding these transactions. The Corporate Governance Guidelines also authorize the independent directors having no affiliation with Hershey Trust Company, Milton Hershey School, the Milton Hershey School Trust or their
affiliates to designate a different special Reviewing Committee to review these transactions.affiliates.
The Company was not a participant in any
other transactions in
2016,2018, and does not currently contemplate being a participant in any transactions in
2017, involving Hershey Trust Company, as trustee for the Milton Hershey School Trust, or2019, with any
other stockholder owning more than 5% of any class of the Company’s outstanding voting securities that would need to be disclosed pursuant to Item 404 of SEC Regulation
S-K.During
2016,2018, we engaged in transactions in the ordinary course of our business with Hershey Trust Company, Milton Hershey School and companies affiliated with Hershey Trust Company, Milton Hershey School and the Milton Hershey School Trust. These transactions involved the sale and purchase of goods and services as well as the leasing of real estate at market rates. The transactions were primarily with Hershey Entertainment & Resorts Company, a company that is owned by the Milton Hershey School Trust. All sales and purchases were made on terms and at prices we believe were generally available in the marketplace and were in amounts that were not material to us or to Hershey Entertainment & Resorts Company. Therefore, these transactions did not require approval under our Related Person Transaction Policy.
Although our transactions with Hershey Trust Company, Milton Hershey School and the companies affiliated with each of the foregoing and with the Milton Hershey School Trust (including Hershey Entertainment & Resorts Company) are either immaterial or otherwise not required to be disclosed under Item 404 of SEC Regulation
S-K, because of our relationship with these entities, we have elected to disclose the aggregate amounts of our purchase and sale transactions with these entities for your information. In this regard:
Our total sales to these entities in 20162018 were approximately $1.5 million; and
Our total purchases from these entities in 20162018 were approximately $3.2$1.7 million.
We do not expect the types of transactions or the amount of payments to change materially in
2017.85
The2019.
Effective June 1, 2017, the Company
also leases toentered into a lease with Hershey Entertainment & Resorts Company
for a portion of a building owned and occupied by the Company in Hershey, Pennsylvania. The leased area consists of approximately
67,50017,660 square feet of storage space in the building that is not being utilized currently by the Company. The lease
was first entered into on January 1, 2011, and had a term of one year. The lease permits Hershey Entertainment & Resorts Company to renew the lease for subsequent
one-year terms and, if space is available, to request an increase in the area occupied.
Hershey Entertainment & Resorts Company has renewed the lease for additionalone-year terms each year since 2012. The lease is on terms we believe are generally available in the marketplace and is not material to us or Hershey Entertainment & Resorts Company. Rent during
20162018 was
$288,900 and for 2017 is expected to be $297,000,$66,850, which
amounts includeincluded a pro rata allocation of utilities, insurance, maintenance and other operating costs.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Ms.
Mmes. Arway, Haben and
Koken and Messrs.
Malcolm, Mead, Palmer and
ShedlarzRidge served as members of our Compensation Committee
at various times during
2016.2018. None of the members of our Compensation Committee served as one of our officers or employees during
20162018 or at any time in the past, and neither they nor any other director served as an executive officer of any entity for which any of our executive officers served as a director or member of its compensation committee.
None of the members of our Compensation Committee has a relationship with us that is required to be disclosed under Item 404 of SEC Regulation
S-K.
Householding of Proxy Materials The SEC has adopted rules that allow us to send in a single envelope our Notice of Internet Availability of Proxy Materials or a single copy of our proxy solicitation and other required annual meeting materials to two or more stockholders sharing the same address. We may do this only if the stockholders at that address share the same last name or if we reasonably believe that the stockholders are members of the same family. If we are sending a Notice of Internet Availability of Proxy Materials, the envelope must contain a separate notice for each stockholder at the shared address. Each Notice of Internet Availability of Proxy Materials must contain a unique control number that each stockholder will use to gain access to our proxy materials and vote online. If we are mailing a paper copy of our proxy materials, the rules require us to send each stockholder at the shared address a separate proxy card.
We believe this rule is beneficial both to our stockholders and to the Company. Our printing and postage costs are lowered anytime we eliminate duplicate mailings to the same household. However, stockholders at a shared address may revoke their consent to the householding program and receive their Notice of Internet Availability of Proxy Materials in a separate envelope, or, if they have elected to receive a full copy of our proxy materials in the mail, receive a separate copy of these materials. If you have elected to receive paper copies of our proxy materials and want to receive a separate copy of these materials for our
20172019 Annual Meeting, please call our Investor Relations Department, toll free, at
(800) 539-0261. If you consented to the householding program and wish to revoke your consent for future years, simply call, toll free,
(866) 540-7095, or write to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
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Information Regarding the
20182020 Annual Meeting of Stockholders
The
20182020 Annual Meeting of Stockholders is expected to be held on May
2, 2018.12, 2020. To be eligible for inclusion in the proxy materials for the
20182020 Annual Meeting of Stockholders, a stockholder proposal must be received by our
Corporate Secretary by no later than
November 23, 2017,December 13, 2019, and must comply in all respects with applicable rules of the SEC. Stockholder proposals should be addressed to The Hershey Company, c/o
Corporate Secretary,
100 Crystal A Drive,19 East Chocolate Avenue, Hershey, Pennsylvania
17033-0810.17033.
A stockholder may present a proposal not included in our proxy materials from the floor of the
20182020 Annual Meeting of Stockholders only if our
Corporate Secretary receives notice of the proposal, along with additional information required by our
by-laws, between January
3, 201822, 2020 and February
2, 2018.21, 2020. Notice should be addressed to The Hershey Company, c/o
Corporate Secretary,
100 Crystal A Drive,19 East Chocolate Avenue, Hershey, Pennsylvania
17033-0810.17033.
The notice must contain the following additional information:
The stockholder’s name and address;
The stockholder’s shareholdings;
A brief description of the proposal;
A brief description of any financial or other interest the stockholder has in the proposal; and
Any additional information that the SEC would require if the proposal were presented in a proxy statement.
A stockholder may nominate a director from the floor of the
20182020 Annual Meeting of Stockholders only if our
Corporate Secretary receives notice of the nomination, along with additional information required by our
by-laws, between January
3, 201822, 2020 and February
2, 2018.21, 2020. The notice must contain the following additional information:
The stockholder’s name and address;
A representation that the stockholder is a holder of record of any class of our equity securities;
A representation that the stockholder intends to make the nomination in person or by proxy at the meeting;
A description of any arrangement the stockholder has with the individual the stockholder plans to nominate and the reason for making the nomination;
The nominee’s name, address and biographical information;
The written consent of the nominee to serve as a director if elected; and
Any additional information regarding the nominee that the SEC would require if the nomination were included in a proxy statement regardless of whether the nomination may be included in such proxy statement.statement; and
Any stockholder holding 25% or more of the votes entitled to be cast at the 20182020 Annual Meeting of Stockholders is not required to comply with these pre-notification requirements.
pre-notification requirements.By order of the Board of Directors,
Leslie M. Turner
Damien Atkins
General Counsel and Secretary
March 23, 2017
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HERSHEY THE HERSHEY COMPANY P.O. BOX 810 HERSHEY, PA 17033-0810 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions until 11:59 p.m. EDT on May 2, 2017. Have your proxy and voting instruction card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHON E-(800)690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. EDT on May 2, 2017. Have your proxy and voting instruction card in hand when you call and follow the instructions from the telephone voting site. VOTE BY MAIL Mark, sign and date your proxy and voting instruction card and return it in the postage-paid envelope we have provided or return it to The Hershey Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. 401(k) PLAN AND PR 401(k) PLAN PARTICIPANTS Your voting instructions must be received no later than 11:59 p.m. EDT on April 28, 2017. Use any of the voting methods above to submit your voting instructions. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E20239-P85907-Z69291 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY AND VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY THE HERSHEY COMPANY For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the The Board of Directors recommends you vote FOR number(s) of the nominee(s) on the line below. each of the following nominees: ! ! ! 1. Election of Directors Nominees: 01) P. M. Arway 07) M. D. Koken 02) J. P. Bilbrey 08) R. M. Malcolm 03) J. W. Brown 09) J. M. Mead 04) M. G. Buck 10) A. J. Palmer 05) C. A. Davis 11) T. J. Ridge 06) M. K. Haben 12) D. L. Shedlarz The Board of Directors recommends you vote FOR Proposals 2 and 3: For Against Abstain 2. Ratify the appointment of Ernst & Young LLP as independent auditors for 2017. ! ! ! 3. Approve named executive officer compensation on anon-binding11, 2019 advisory basis. ! ! ! The Board of Directors recommends you vote for a frequency of 1 YEAR on Proposal 4: 1 Year 2 Years 3 Years Abstain 4. The frequency of future advisory votes on named executive officer compensation. ! ! ! ! The proxies are authorized to vote, in their discretion, for a substitute should any nominee become unavailable for election and upon such other business as may properly come before the meeting. NOTE: Please follow the instructions above to vote by Internet or telephone, or mark, sign (exactly as name(s) appear(s) above) and date this card and mail promptly in the postage-paid, return envelope provided. Executors, administrators, trustees, attorneys, guardians, etc., should so indicate when signing. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date V.1.1
HERSHEY Admission Ticket THE HERSHEY COMPANY 2017 Annual Meeting of Stockholders Wednesday, May 3, 2017 10:00 a.m. EDT GIANT Center 550 West Hersheypark Drive Hershey, PA 17033 Presenting this Admission Ticket at HERSHEY’S CHOCOLATE WORLD Attraction entitles you to 25% off selected items from 9:00 a.m. until 6:00 p.m. EDT on May 3, 2017. Offer good on May 3, 2017, only. Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Stockholders to be held on May 3, 2017: The Notice of 2017 Annual Meeting and Proxy Statement, 2016 Annual Report to Stockholders and proxy card are available at www.proxyvote.com. FOLD AND DETACH HERE FOLD AND DETACH HERE E20240-P85907-Z69291 THE HERSHEY COMPANY STOCKHOLDER’S PROXY AND VOTING INSTRUCTION CARD The undersigned hereby appoints M. G. Buck and L. M. Turner, and each of them, as proxies, with full power of substitution, to attend The Hershey Company (the “Company”) Annual Meeting of Stockholders to be held at 10:00 a.m. EDT, May 3, 2017, at GIANT Center, 550 West Hersheypark Drive, Hershey, Pennsylvania, or at any adjournment thereof (“Annual Meeting”), and to vote all of the undersigned’s shares of the Company’s Common Stock in the manner directed on the reverse side of this card. The shares represented by this proxy, when executed properly, will be voted in the manner directed. If direction is not given but the card is signed, this proxy will be voted FOR the election of all nominees under Proposal 1, FOR Proposal 2, FOR Proposal 3 and for a frequency of 1 YEAR on Proposal 4 as set forth on the reverse side, and in the discretion of the proxies with respect to such other business as may properly come before the meeting. SPECIAL INFORMATION for participants in The Hershey Company 401(k) Plan (“401(k) Plan”) and The Hershey Company Puerto Rico 401(k) Plan (“PR 401(k) Plan”): This proxy also provides voting instructions for shares held on the record date for the Annual Meeting by Vanguard Fiduciary Trust Company (“Vanguard”),* as trustee of the 401(k) Plan or as custodian appointed by Banco Popular de Puerto Rico, trustee of the PR 401(k) Plan, as applicable. If you are a participant in either plan, this paragraph (and not the paragraph above) applies with respect to voting these plan shares. By marking and returning this card, you will direct Vanguard (i) how to vote the shares of Common Stock allocated to your account in that plan and (ii) how to vote a portion of the shares of Common Stock allocated to the accounts of other participants in that plan who have not submitted voting instructions by the voting deadline. If Vanguard receives your properly marked and executed card on or before April 28, 2017, Vanguard will vote these shares in the manner directed by you. If direction is not given or is received after April 28, 2017, Vanguard will vote these shares in the 401(k) Plan or PR 401(k) Plan, as applicable, in the same proportion, respectively, as the final aggregate vote of the 401(k) Plan or PR 401(k) Plan participants who submitted timely votes on the matter. This proxy is solicited on behalf of the Board of Directors pursuant to a separate Notice of 2017 Annual Meeting and Proxy Statement dated March 23, 2017, receipt of which is hereby acknowledged. The shares of Common Stock represented by this proxy shall be entitled to one vote for each such share held. Except with regard to voting separately as a class on the election of M. K. Haben and R. M. Malcolm, shares of Common Stock will vote together with shares of Class B Common Stock without regard to class. THIS PROXY AND VOTING INSTRUCTION CARD IS CONTINUED ON THE REVERSE SIDE. *Vanguard Fiduciary Trust Company, in its capacity as trustee or custodian, has appointed Broadridge as agent to tally the vote.
HERSHEY THE HERSHEY COMPANY P.O. BOX 810 HERSHEY, PA 17033-0810 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions until 11:59 p.m. EDT on May 2, 2017. Have your proxy and voting instruction card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - (800)690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. EDT on May 2, 2017. Have your proxy and voting instruction card in hand when you call and follow the instructions from the telephone voting site. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Hershey Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E20241-P85907-Z69291 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY THE HERSHEY COMPANY For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the The Board of Directors recommends you vote FOR number(s) of the nominee(s) on the line below. each of the following nominees: ! ! ! 1. Election of Directors Nominees: 01) P. M. Arway 06) M. D. Koken 02) J. P. Bilbrey 07) J. M. Mead 03) J. W. Brown 08) A. J. Palmer 04) M. G. Buck 09) T. J. Ridge 05) C. A. Davis 10) D. L. Shedlarz The Board of Directors recommends you vote FOR Proposals 2 and 3: For Against Abstain 2. Ratify the appointment of Ernst & Young LLP as independent auditors for 2017. ! ! ! 3. Approve named executive officer compensation on anon-binding advisory basis. ! ! ! The Board of Directors recommends you vote for a frequency of 1 YEAR on Proposal 4: 1 Year 2 Years 3 Years Abstain 4. The frequency of future advisory votes on named executive officer compensation. ! ! ! ! The proxies are authorized to vote, in their discretion, for a substitute should any nominee become unavailable for election and upon such other business as may properly come before the meeting. NOTE: Please follow the instructions above to vote by Internet or telephone, or mark, sign (exactly as name(s) appear(s) above) and date this card and mail promptly in the postage-paid, return envelope provided. Executors, administrators, trustees, attorneys, guardians, etc., should so indicate when signing. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date V.1.1
HERSHEY Admission Ticket THE HERSHEY COMPANY 2017 Annual Meeting of Stockholders Wednesday, May 3, 2017 10:00 a.m. EDT GIANT Center 550 West Hersheypark Drive Hershey, PA 17033 Presenting this Admission Ticket at HERSHEY’S CHOCOLATE WORLD Attraction entitles you to 25% off selected items from 9:00 a.m. until 6:00 p.m. EDT on May 3, 2017. Offer good on May 3, 2017, only. Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting of Stockholders to be held on May 3, 2017: The Notice of 2017 Annual Meeting and Proxy Statement, 2016 Annual Report to Stockholders and proxy card are available at www.proxyvote.com. FOLD AND DETACH HERE FOLD AND DETACH HERE E20242-P85907-Z69291 THE HERSHEY COMPANY CLASS B COMMON STOCK This Proxy is Solicited on Behalf of the Board of Directors The undersigned, having received the Notice of 2017 Annual Meeting and Proxy Statement of The Hershey Company (the “Company”) dated March 23, 2017, appoints M. G. Buck and L. M. Turner, and each of them, as proxies, with full power of substitution, to represent and vote all of the undersigned’s shares of the Company’s Class B Common Stock at the Annual Meeting of Stockholders to be held at 10:00 a.m. EDT, May 3, 2017, at GIANT Center, 550 West Hersheypark Drive, Hershey, Pennsylvania, or at any adjournment thereof. The shares represented by this proxy will be voted in the manner directed herein by the undersigned stockholder(s), who shall be entitled to cast ten votes for each such share held. If direction is not given but the card is signed, this proxy will be voted FOR the election of all nominees under Proposal 1, FOR Proposal 2, FOR Proposal 3 and for a frequency of 1 YEAR on Proposal 4 as set forth on the reverse side, and in the discretion of the proxies with respect to such other business as may properly come before the meeting. This proxy is continued on the reverse side. V.1.1
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions until 11:59 p.m. EDT on May 20, 2019. Have your proxy and voting instruction card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - (800) 690-6903
Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. EDT on May 20, 2019. Have your proxy and voting instruction card in hand when you call and follow the instructions from the telephone voting site.
VOTE BY MAIL
Mark, sign and date your proxy and voting instruction card and return it in the postage-paid envelope we have provided or return it to The Hershey Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
THE HERSHEY COMPANY
P.O. BOX 819
HERSHEY, PA 17033-0819
E70542-P16939-Z73811
THIS PROXY AND VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED.
For All
Withhold All
For All Except
To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below.
THE HERSHEY COMPANY
The Board of Directors recommends you vote FOR each of the following nominees: | 1. Election of Directors
Nominees:
07) M. D. Koken
08) R. M. Malcolm
09) A. J. Palmer
10) J. R. Perez
11) W. L. Schoppert
12) D. L. Shedlarz
01) P. M. Arway
02) J. W. Brown
03) M. G. Buck
04) C. A. Davis
05) M. K. Haben
06) J. C. Katzman
For
Against
Abstain
The Board of Directors recommends you vote FOR Proposals 2 and 3:
!
!
!
2. Ratify the appointment of Ernst & Young LLP as independent auditors for 2019.
!
!
!
3. Approve named executive officer compensation on a non-binding advisory basis.
The proxies are authorized to vote, in their discretion, for a substitute should any nominee become unavailable for election and upon such other business as may properly come before the meeting.
NOTE: Please follow the instructions above to vote by Internet or telephone, or mark, sign (exactly as name(s) appear(s) above) and date this card and mail promptly in the postage-paid, return envelope provided. Executors, administrators, trustees, attorneys, guardians, etc., should so indicate when signing.
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Admission Ticket
THE HERSHEY COMPANY
2019 Annual Meeting of Stockholders
Tuesday, May 21, 2019
10:00 a.m. EDT
GIANT Center
550 West Hersheypark Drive
Hershey, PA 17033
Presenting this Admission Ticket at
HERSHEY'S CHOCOLATE WORLD Attraction
entitles you to 25% off selected items
from 9:00 a.m. until 6:00 p.m. EDT
on May 21, 2019.
Offer good on May 21, 2019, only.
Important Notice Regarding the Availability of Proxy Materials for the
2019 Annual Meeting of Stockholders to be held on May 21, 2019:
The Notice of 2019 Annual Meeting and Proxy Statement, 2018 Annual Report to Stockholders
and proxy card are available at www.proxyvote.com.
FOLD AND DETACH HERE
FOLD AND DETACH HERE
E70543-P16939-Z73811
THE HERSHEY COMPANY
STOCKHOLDER'S PROXY AND VOTING INSTRUCTION CARD | The undersigned hereby appoints M. G. Buck and D. Atkins, and each of them, as proxies, with full power of substitution, to attend The Hershey Company (the “Company”) Annual Meeting of Stockholders to be held at 10:00 a.m. EDT, May 21, 2019, at GIANT Center, 550 West Hersheypark Drive, Hershey, Pennsylvania, or at any adjournment thereof (“Annual Meeting”), and to vote all of the undersigned’s shares of the Company’s Common Stock in the manner directed on the reverse side of this card. The shares represented by this proxy, when executed properly, will be voted in the manner directed. If direction is not given but the card is signed, this proxy will be voted FOR the election of all nominees under Proposal 1, FOR Proposal 2 and FOR Proposal 3 as set forth on the reverse side, and in the discretion of the proxies with respect to such other business as may properly come before the meeting.
This proxy is solicited on behalf of the Board of Directors pursuant to a separate Notice of 2019 Annual Meeting and Proxy Statement dated April 11, 2019, receipt of which is hereby acknowledged. The shares of Common Stock represented by this proxy shall be entitled to one vote for each such share held. Except with regard to voting separately as a class on the election of J. R. Perez and W. L. Schoppert, shares of Common Stock will vote together with shares of Class B Common Stock without regard to class.
THIS PROXY AND VOTING INSTRUCTION CARD IS CONTINUED ON THE REVERSE SIDE. |
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions until 11:59 p.m. EDT on May 20, 2019. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - (800) 690-6903
Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. EDT on May 20, 2019. Have your proxy card in hand when you call and follow the instructions from the telephone voting site.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Hershey Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
THE HERSHEY COMPANY
P.O. BOX 819
HERSHEY, PA 17033-0819
E70544-P16939-Z73811
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
For All
Withhold All
For All Except | To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below.
THE HERSHEY COMPANY
The Board of Directors recommends you vote FOR each of the following nominees:
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1. Election of Directors
Nominees:
01) P. M. Arway
02) J. W. Brown
03) M. G. Buck
04) C. A. Davis
05) M. K. Haben
06) J. C. Katzman
07) M. D. Koken
08) R. M. Malcolm
09) A. J. Palmer
10) D. L. Shedlarz
For
Against
Abstain
The Board of Directors recommends you vote FOR Proposals 2 and 3:
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2. Ratify the appointment of Ernst & Young LLP as independent auditors for 2019.
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3. Approve named executive officer compensation on a non-binding advisory basis.
The proxies are authorized to vote, in their discretion, for a substitute should any nominee become unavailable for election and upon such other business as may properly come before the meeting.
NOTE: Please follow the instructions above to vote by Internet or telephone, or mark, sign (exactly as name(s) appear(s) above) and date this card and mail promptly in the postage-paid, return envelope provided. Executors, administrators, trustees, attorneys, guardians, etc., should so indicate when signing. |
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Admission Ticket
THE HERSHEY COMPANY
2019 Annual Meeting of Stockholders
Tuesday, May 21, 2019
10:00 a.m. EDT
GIANT Center
550 West Hersheypark Drive
Hershey, PA 17033
Presenting this Admission Ticket at
HERSHEY'S CHOCOLATE WORLD Attraction
entitles you to 25% off selected items
from 9:00 a.m. until 6:00 p.m. EDT
on May 21, 2019.
Offer good on May 21, 2019, only.
Important Notice Regarding the Availability of Proxy Materials for the
2019 Annual Meeting of Stockholders to be held on May 21, 2019:
The Notice of 2019 Annual Meeting and Proxy Statement, 2018 Annual Report to Stockholders
and proxy card are available at www.proxyvote.com. | FOLD AND DETACH HERE
FOLD AND DETACH HERE
E70545-P16939-Z73811
THE HERSHEY COMPANY
CLASS B COMMON STOCK
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned, having received the Notice of 2019 Annual Meeting and Proxy Statement of The Hershey Company (the “Company”) dated April 11, 2019, appoints M. G. Buck and D. Atkins, and each of them, as proxies, with full power of substitution, to represent and vote all of the undersigned’s shares of the Company’s Class B Common Stock at the Annual Meeting of Stockholders to be held at 10:00 a.m. EDT, May 21, 2019, at GIANT Center, 550 West Hersheypark Drive, Hershey, Pennsylvania, or at any adjournment thereof.
The shares represented by this proxy will be voted in the manner directed herein by the undersigned stockholder(s), who shall be entitled to cast ten votes for each such share held. If direction is not given but the card is signed, this proxy will be voted FOR the election of all nominees under Proposal 1, FOR Proposal 2 and FOR Proposal 3 as set forth on the reverse side, and in the discretion of the proxies with respect to such other business as may properly come before the meeting.
This proxy is continued on the reverse side. |
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