UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule14a-101)
SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934
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Conagra Brands, Inc.
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Notice of Meeting of Shareholders and Proxy Statement
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[Inside Front Cover – Intentionally Left Blank]
Conagra Brands, Inc. 222 Merchandise Mart Plaza Suite 1300 Chicago, Illinois 60654 |
August 11, 2017August10, 2018
Dear fellow shareholder:
I am pleased to invite you to join us for the Conagra Brands, Inc. Annual Meeting of Shareholders, which will be held on Friday, September 22, 2017,21, 2018, at 8:30 a.m. Central Daylight Time in the Grand Salon on the 11th floor of the Gwen Hotel, 521 North Rush Street in Chicago, Illinois.
The Annual Meeting will include a report on our business, a discussion of and voting on the matters described in the Notice of 20172018 Annual Meeting of Shareholders and Proxy Statement, and aquestion-and-answer session.
Thank you for your continued investment in Conagra Brands.
Sincerely, |
Sean Connolly |
Chief Executive Officer |
Sean Connolly
Chief Executive Officer
Notice of 2017 Annual Meeting of Shareholders
Date and Time
Friday, September 22, 2017
8:30 a.m. Central Daylight Time
Location
The Gwen Hotel
The Grand Salon (11th Floor)
521 North Rush Street
Chicago, Illinois 60611
If you attend the meeting, you will be asked to present a valid form of government-issued photo identification and an admission ticket or bank/brokerage statement to confirm stock ownership as of the record date.
Audiocast
If you cannot attend the meeting in person, you may join a live audiocast on the Internet by visiting http://www.conagrabrands.com/investor-relations at 8:30 a.m. Central Daylight Time on September 22, 2017.
Items of Business
Who May Vote
Shareholders of record as of the close of business on July 31, 2017 are entitled to notice of and to vote at the meeting and at any postponements or adjournments thereof.
Whether or not you plan to join us in person, please be sure to vote your shares by proxy. It is important that your shares be represented.
August 11, 2017
Colleen Batcheler
Corporate Secretary
Notice of Internet Availability of Proxy Materials
We are pleased to provide access to our proxy materials via the Internet.Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended May 28, 2017 27, 2018 are available athttp://www.conagrabrands.com/investor-relations/financial-reports/annual-reports.
If you receive a Notice of Internet Availability of Proxy Materials by mail, you will not receive a paper copy of our Notice of Annual Meeting, Proxy Statement and Annual Report unless you specifically request a copy. You may request a paper copy by following the instructions on the Notice of Internet Availability of Proxy Materials. We began making our proxy materials first available on or about August 11, 2017.August10, 2018.
Notice of 2018 Annual Meeting of Shareholders
Date and Time Friday, September 21, 2018 8:30 a.m. Central Daylight Time | Location The Gwen Hotel The Grand Salon (11th Floor) 521 North Rush Street Chicago, Illinois 60611 | Who May Vote Shareholders of record as of the close of business on July 31, 2018 |
Items of Business
To elect as directors the nine nominees named in the Proxy Statement
To ratify the appointment of KPMG LLP as our independent auditor for fiscal 2019
To vote, on an advisory basis, to approve our named executive officer compensation
To transact any other business properly brought before the meeting
Colleen Batcheler |
Executive Vice President, General Counsel and Corporate Secretary |
August 10, 2018 |
Attend In-Person If you attend the meeting, you will be asked to | Attend by Audiocast If you cannot attend the meeting in person, you |
Whether or not you plan to attendin-person, please be sure to vote your shares by proxy.
Your vote is important.
Page | ||
i | ||
1 | ||
Board of Directors & Corporate Governance | ||
2 | ||
| 5 | |
10 | ||
Our Corporate Governance Practices | 16 | |
Non-Employee Director Compensation | 20 | |
Audit / Finance Matters | ||
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for FY2019 | 25 | |
Executive Compensation Matters | ||
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation | 26 | |
Outstanding Equity Awards at FiscalYear-End – Fiscal | ||
Other Matters | ||
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Appendix A – Reconciliation of GAAP and Non-GAAP Information | 75 |
Summary of the Proxy Statement
We have included this summary of the Proxy Statement to assist your review of the proposals to be acted upon. The following information is only a summary; you should read the entire Proxy Statement before voting.
Fiscal 2018 Voting Items
| Board | Page | ||
Item #1 – Election as directors of
| FOR all nominees
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Item #2 – Ratification of the appointment of KPMG LLP as our independent auditor for fiscal
| FOR
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Item #3 – Approval, on an advisory basis, of our named executive officer compensation
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| 26
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We will also transact any other business that is properly brought before the meeting.
Fiscal 2018 Highlights
Fiscal 2017 Highlights2018 was a successful year for Conagra Brands and Executive Compensation
Fiscal 2017 was another important year of significant change for our company. Notably, we took the final steps in our structural transformation to a branded, pure-play packaged food company – Conagra Brands. Our management set challenging goals at the start of the fiscal year, and ultimately led our organization in the accomplishment oftransformation. We accomplished the following:
• | Revenues: During fiscal 2018, our net sales grew 1.4%, with organic net sales nearly flat.1 These results were near the high end of our guidance range to investors. Our net sales performance was supported by our introduction of a full line of new product innovation. We also remained focused on our “value over volume” strategy and rationalizedlow-value products and inefficient trade programs. We made the strategic decision during the year to shift some of our brand investments from advertising and promotion to retailer marketing to drive brand saliency, enhanced distribution, and consumer trial and were appropriate for the long term. |
• | Operating Margin: Despite higher-than-expected input cost inflation during the year, we delivered fiscal 2018 operating margin of 13.0% and adjusted operating margin of 16.1%,1 in line with our investor commitments. |
• | EPS: Earnings per share from continuing operations increased 56% in fiscal 2018, to $1.95, and adjusted diluted EPS from continuing operations grew to $2.11,1 a more than 20% improvement. These results were above the high end of our guidance range, even after adjusting for the unplanned benefit of the Tax Cuts and Jobs Act, which became law in fiscal 2018. |
Capital Returned to Shareholders: We paid $342 million in dividends during fiscal 2018, and contemporizing, by successfully completing the spinoffrepurchased approximately $967 million of our Lamb Weston business into a separate, independent, publicly traded company, by executing a series of acquisitions and divestitures, and by building a full innovation pipeline forcommon stock. Over the last three fiscal 2018;years, we have returned nearly $3.2 billion to shareholders.
• | M&A: During the second quarter of fiscal 2018, we acquired theAngie’s |
Culture: Today, we have a more energized and enthusiastic team of employees who bring an externally focused, entrepreneurial spirit to their work every day.
By strengthening our planfoundation over the last three fiscal years, including during fiscal 2018, we readied ourselves to deliver $200 million in annualembark on the next phase of our evolution. On June 26, 2018, shortly after the end of fiscal 2018, we entered into a definitive agreement to acquire Pinnacle Foods Inc., makers of well-known brands such asBirds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,run-rateHungry-Man, efficiencies through reductions in our selling, generalLog Cabin, Tim’s Cascade Snacks, Udi’s,Vlasic and administrative expenses;
1 A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
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Director Nominees
Our director nominees are as follows. With the exception of Mr. Arora, who was first appointed to the Board in July 2018, each nominee was elected by approximately $2.5 billion, maintaining a competitive dividend and repurchasing approximately $1 billion in shares;
Our strong performance in
Name and Position | Age* |
Director Since
| Independent | Committee Memberships | ||||
Anil Arora
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57
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2018
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✓
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Audit / Finance
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Thomas K. Brown
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62
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2013
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✓
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Audit / Finance
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Stephen G. Butler
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70
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2003
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✓
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Audit / Finance (Chair) Executive Committee
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Sean M. Connolly, CEO
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52
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2015
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Executive Committee
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Joie A. Gregor
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68
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2009
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✓
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Nominating, Governance & Public Affairs (Chair) Audit / Finance Executive Committee
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Rajive Johri
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68
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2009
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✓
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Nominating, Governance & Public Affairs Human Resources
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Richard H. Lenny, Chairman
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66
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2009
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✓
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Nominating, Governance & Public Affairs Human Resources Executive Committee (Chair)
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Ruth Ann Marshall
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64
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2007
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✓
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Nominating, Governance & Public Affairs Human Resources (Chair) Executive Committee
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Craig P. Omtvedt
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68
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2016
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✓
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Audit / Finance
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* Ages as of July 31, 2018
Auditor Ratification
KPMG LLP has conducted the audits of our financial statements since fiscal 2017 resulted in above-target payouts under2006 and the Audit / Finance Committee of our fiscal 2017 Management Incentive Plan (fiscal 2017 MIP) and positively impacted earned awards underBoard has appointed the firm to conduct the fiscal 2015 to 2017 cycle2019 audit. In the event that shareholders do not ratify the appointment, the Audit / Finance Committee will reconsider the appointment. Even if the appointment of our Performance Share Plan. More specifically:KPMG LLP is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in Conagra Brands’ and its shareholders’ best interests.
Fiscal 2018 Executive Compensation
Our fiscal 2017 MIP funded2018 performance, together with the company’s results since our new strategic journey began three years ago, have created significant value for shareholders. We have repeatedly delivered on our financial commitments to investors. Given the pay for performance philosophy of the Human Resources Committee, management has also been rewarded. As more fully described in the Proxy Statement, our named executive officers, including our Chief Executive Officer, received annual incentive payouts at levels slightly above target for fiscal 2018, driven by strong profit and paid out at above-target levels for eachnet sales growth performance. In addition, the named executive officer due to our earnings performance during fiscal 2017 andparticipants in the individual contributions of our executives.
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The Human Resources Committee of the Board of Directors believes that these outcomesits fiscal 2018 compensation decisions appropriately reflect itspay-for-performance philosophy. This philosophy which is focused on compensating executives based on performance and aligning management’s interests with those of our shareholders. The HR Committee intends to continue focusing on compensating executives based on impact and aligning management’s interests with those of our shareholders.
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Conagra Brands, Inc.
222 Merchandise Mart Plaza, Suite 1300
Chicago, Illinois 60654
We are furnishing this Proxy Statement to our shareholders in connection with the solicitation by the Board of Directors of proxies to be voted at the Conagra Brands, Inc. 20172018 Annual Meeting of Shareholders, which we refer to as the 20172018 Annual Meeting. We are first making our proxy materials available to shareholders on or about August 11, 2017.August10, 2018.
Shareholders of record as of the close of business on July 31, 20172018 are entitled to attend and to vote at the 20172018 Annual Meeting and at any postponements or adjournments of the 20172018 Annual Meeting. On July 31, 2017,2018, there were 415,655,136391,645,253 voting shares of common stock, par value $5.00 per share, of Conagra Brands, Inc., or Conagra Brands, issued and outstanding. Each share of common stock is entitled to one vote for each director to be elected and one vote for each of the other matters to be voted on.
Your vote is very important. The Board of Directors recommends that you submit a proxy card in advance of the 20172018 Annual Meeting to ensure that theyour shares of common stock you own will beare voted as you direct, even if you are unable to attend the 20172018 Annual Meeting.
If you hold shares of common stock of Conagra Brands in your own name (known as ownership “of record”), you may attend the meeting and vote your shares in person or you may vote your shares by proxy in one of the following manners:
By completing, signing, dating and returning (in the postage-paid envelope provided) the proxy card enclosed with paper copies of our proxy materials;
• | By visiting the Internet atwww.proxyvote.com and following the instructions; or |
By calling (800)690-6903 on a touch-tone telephone and following the recorded instructions.
Internet and telephone voting is available through 11:59 p.m. Eastern Time on Tuesday, September 19, 201718, 2018 for shares held in the ConAgra FoodsConagra Brands Employee Stock Purchase Plan andor the TreeHouse Private Brands Retirement Income Savings Plan. Internet and telephone voting is available through 11:59 p.m. Eastern Time on Thursday, September 21,201720,2018 for all other shares.
If a broker, bank or other nominee holds your stockshares (also known as ownership in “street name”), your broker, bank or nominee, as applicable, will send you a voting instruction form. You may vote your shares by completing, signing, dating and returning the voting instruction form according to the instructions provided by your broker, bank or other nominee. If you wish to vote in person at the meeting, you must obtain from your broker, bank or nominee a legal proxy executed in your favor.
Please see “Additional Information” at the end of this Proxy Statement for more information about voting.
Voting Item #1 – Election of Directors
Voting Item #1 – Election of Directors
Identification of Director Nominees
Our business is managed under the direction of the Board of Directors, of Conagra Brands, which we referand you are being asked to in this Proxy Statement asvote to elect the next members of the Board. Currently, the Board consists of 12 directors whose terms expire at the 2018 Annual Meeting. Based on a recommendation of the Board’s Nominating, Governance and Public Affairs Committee, of the Board (whichwhich we refer to as the N/G/PA Committee),Committee, the Board has nominated the 11nine current directors, as named in this Proxy Statementproxy statement, for election at the 20172018 Annual Meeting. Information about each of the 11nine nominees for director is set forth on the pages that follow. If elected, each of the directors will hold office until the Conagra Brands 20182019 Annual Meeting of Shareholders, and until their successors have been elected and qualified. We have no reason to believe that any of the nominees for director will be unable to serve if elected.
AllDirector Nominees’ Skills and Qualifications
Our Board is a highly independent, well-qualified group of individuals that collectively has the experience, background and diversity to be effective in overseeing our long-term strategy. The skills and characteristics that the Board seeks in evaluating the composition of the 11Board overall, and which inform Board succession planning and director nomination processes, include the following:
Public company board experience | Finance/capital management expertise | |
Active or formerC-Suite executive | M&A experience | |
Market-facing experience | Technology expertise | |
International expertise | Risk management expertise |
In addition, all directors are expected to demonstrate high standards of ethics and integrity and to commit sufficient time to effectively carry out the duties of a director.
Our director nominees’ individual experiences, skills and characteristics are highlighted in the following matrix. This matrix is intended as a summary and is not an exhaustive list of each nominees’ contributions to the Board. Further biographical information about our director nominees foris set forth on the pages that follow.
Public Company Board Experience | Active / C-Suite | Market- Facing Experience | Inter- national | Finance / Capital Manage- ment | M&A | Technology | Risk Manage- ment | |||||||||||||||||||||||||||||||||
Anil Arora | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||
Thomas K. Brown | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | |||||||||||||||||||||||||||||||||
Stephen G. Butler | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||||||
Sean M. Connolly | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | |||||||||||||||||||||||||||||||||
Joie A. Gregor | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||||||
Rajive Johri | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||
Richard H. Lenny | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ||||||||||||||||||||||||||||||||||
Ruth Ann Marshall | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ | |||||||||||||||||||||||||||||||||
Craig P. Omtvedt | ◾ | ◾ | ◾ | ◾ | ◾ | ◾ |
Voting Item #1 – Election of Directors
The Board also values diversity and strives to build a Board of diverse attitudes, perspectives and experiences. While diversity is viewed broadly at Conagra Brands, the Board also measures its diversity along more traditional lines, including by examining:
Board Tenure (years served per director and the average tenure of the Board) | Director Age (individually and the average age of the Board) | Gender Mix | Race/Ethnic Diversity Mix |
The collective profile of our director currently servenominees, as membersof July 31, 2018, is as follows:
Independence | Tenure | Age | Female or Ethnically Diverse | |||
The Board maintains a succession planning process that enables it to regularly evaluate the alignment of the Board. All nominees other than Mr. Thomas W. Dickson and Mr. Craig P. Omtvedt were elected by shareholders at our 2016 Annual Meeting of Shareholders.
During fiscal 2017, we completed thespin-off of our Lamb Weston business into a separate, independent, publicly traded company known as Lamb Weston Holdings, Inc. Throughout this Proxy Statement, we refer to this transaction as the Spinoff and to Lamb Weston Holdings, Inc. as Lamb Weston. In connectionBoard’s membership with the Spinoff, we appointed two of our then-sitting directors, Mr. W. G. Jurgensen and Mr. Timothy R. McLevish to the board of directors of Lamb Weston; they departed our Board upon completion of the Spinoff. Following their departure, the Board appointed Mr. Dickson and Mr. Omtvedt as directorsneeds of Conagra Brands. Mr. Omtvedt’s candidacyThrough this process, the Board adds new skills and qualifications required for membership on the Board as appropriate. The Board desires its members to collectively hold a nomineebroad range of skills, education, experiences, and qualifications that can be leveraged for the Board was suggested by our Chief Executive Officer; he was interviewed by our Chairman and the N/G/PA Committee before being recommended for appointment to the full Board. Mr. Dickson’s candidacy as a nominee was recommended by a shareholder, as discussed more in the next paragraph.
Mr. Bradley A. Alford and Mr. McLevish were initially appointed to the Board pursuant to an agreement, dated July 8, 2015, with JANA Partners LLC, a shareholder. The appointment resulted from discussions betweenbenefit of the company and JANA Partners. In connection with these discussions, we entered into an agreement with JANA Partners that contained customary standstill provisionsits shareholders.
For additional information on the director nomination process, please see “Roles and voting commitments and our commitment to appoint Messrs. Alford and McLevish to the Board. Messrs. Alford and McLevish werere-nominated for election by shareholders at the 2016 Annual Meeting pursuant to an amendment and restatementResponsibilities of the agreement, dated May 27, 2016. Following Mr. McLevish’s departure from the Board in connection with the Spinoff, Mr. Dickson was appointed to the Board pursuant to the agreement. Messrs. Alford and Dickson are being nominated for election by shareholders at the 2017 Annual Meeting pursuant to the agreement.Its Committees – The agreement, as amendedBoard’s Nominating, Governance and restated, is more fully described in the company’s Current Report on Form8-K filed with the Securities and Exchange Commission, or the SEC, on May 31, 2016.Public Affairs Committee – Director Nomination Process” below.
If any nominee other than Mr. Alford or Mr. Dickson becomes unavailable for election to the Board for any reason not presently known or contemplated, the proxy holders will have discretionary authority in that instance to vote the proxies for a substitute or to reduce the size of the Board. If during the standstill period either Mr. Alford or Mr. Dickson becomes unavailable to serve as a director, JANA Partners retains the right to identify a successor, who must be reasonably satisfactory to Conagra Brands.
Consideration of Director Independence
The Board has determined that 10eight of our 11nine nominees for director – directors Alford,Arora, Brown, Butler, Dickson, Goldstone, Gregor, Johri, Lenny, Marshall and Omtvedt – have no material relationships with Conagra Brands and are independent within the meaning of applicable independence standards. The Board has also determined that each of Mr. McLevish, Mr. Jurgensen,Messrs. Alford, Dickson and Mr. Andrew J. Schindler,Goldstone, each of whom served as a director during fiscal 2017,2018, had no material relationships with Conagra Brands and was independent within the meaning of applicable independence standards.
Voting Item #1 – Election of Directors
In making its independence determinations, the Board applied the listing standards of the New York Stock Exchange, or NYSE, and the categorical independence standards contained in our Corporate Governance Principles. The Board considers even immaterial relationships in its decision-making process to ensure a complete view of each director’s independence.
The Board also reviewed our commercial relationships with companies on whose boards members of the Board served during fiscal 20172018 (i.e., McDonald’s Corporation, Information Resources, Inc., Ford Motor Company, McDonald’s Corporation, Warburg Pincus LLC portfolio companies, Unified Grocers andInc., Illinois Tool Works) or where members of the Board previously served as an executive officer (i.e.Works Inc., Kraft FoodsConduent Incorporated, The Chefs’ Warehouse, Inc. and Walgreens)3M Company). The relationships with these companies involved Conagra Brands’ purchase or sale of products and services in the ordinary course of business on arms-lengtharm’s-length terms in amounts and under other circumstances that did not affect the relevant directors’ independence under our Corporate Governance Principles or under applicable law and NYSE listing standards.
Voting Item #1 – Election of Directors
In addition to satisfying our independence standards, each member of the Audit / Finance Committee of the Board, (whichwhich we refer to as the Audit / Finance Committee),Committee, must satisfy an additional Securities and Exchange Commission, or SEC, independence requirement that provides that the member may not accept, directly or indirectly, any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than his or her director’s compensation and may not be an “affiliated person” of Conagra Brands. Each member of the Audit / Finance Committee satisfies this additional independence requirement.
Similarly, the SEC and NYSE have adopted rules relating to the independence of members of the Human Resources Committee, of the Board (whichwhich we refer to as the HR Committee).Committee. These rules require consideration of the source of HR Committee membermembers’ compensation, including any consulting, advisory or other compensatory fees paid to the HR Committee member, and HR Committee member affiliation with us, any of our subsidiaries or any affiliates of our subsidiaries. Each member of the HR Committee satisfies these additional independence requirements.
Consideration of Director Nominees’ Skills and Qualifications
The Board has a director succession planning process designed to provide for a highly independent, well-qualified Board that has the diversity, experience, and background to be effective and provide strong oversight for Conagra Brands. The Board regularly evaluates the needs of Conagra Brands and adds new skills and qualifications to the Board as appropriate. The Board desires its members to collectively hold a broad range of skills, education, experiences, and qualifications that can be leveraged for the benefit of the company and its shareholders.
During fiscal 2017, the Board was particularly interested in maintaining a mix of skills, qualifications, backgrounds and experiences that included the following:
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In addition, all directors are expected to demonstrate high standards of ethics and integrity and to commit sufficient time to effectively carry out the duties of a director. For additional information on the director nomination process, please see “Board Committees – N/G/PA Committee – Director Nomination Process” below.
Voting Item #1 – Election of Directors
A short biographyBiographical Information for each director nominee follows.Director Nominees (as of July 31, 2018)
Anil Arora | Thomas “Tony” K. Brown | |||
Age: 57 Director Independent Board Committees: ◾ Audit / Finance Committee
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Age: 62
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Director Since:October 15, 2013
Independent Board Committees: ◾ Audit / Finance Committee | ||||
Mr. Arora has served as a director and Vice Chairman of Envestnet, Inc. (a cloud based financial technology, data intelligence and wealth management company) and Chief Executive of Envestnet | Yodlee since November 2015. Prior to that, he served as President, Chief Executive Officer and a director of Yodlee, Inc. (a data intelligence and financial technology products provider) from February 2000 until its initial public offering in March 2014 and as Chairman of the board of directors of Yodlee, Inc. from March 2014 until November 2015. Prior to joining Yodlee, Mr. Arora served in various positions with Gateway, Inc. (a computer hardware manufacturer). Earlier in his career, Mr. Arora served in various strategy and marketing positions for The Pillsbury Company (a manufacturer and marketer of branded consumer foods) and Kraft Foods Group, Inc. (a manufacturer and marketer of branded consumer foods). Other public company directorships: ◾ Envestnet, Inc. since November 2015 ◾ Yodlee, Inc. (as Chairman) from March 2014 until November 2015 Experiences, qualifications and skills considered in nominating Mr. Arora: ◾Public Company Experience; FormerC-Suite Executive: Strong leadership capabilities and insights from experience as President and Chief Executive Officer of Yodlee, Inc. fromstart-up phase through its IPO and subsequent acquisition by Envestnet, and subsequently as Vice Chairman of Envestnet and Chief Executive of Envestnet | Yodlee. ◾Technology Experience: Extensive experience in technology, operating at the intersection of consumer, internet and technology sectors. ◾M&A Experience: Led Yodlee through its growth fromstart-up through ultimate acquisition. | Mr. Brown served as Group Vice President, Global Purchasing with Ford Motor Company (a motor vehicles manufacturer) from 2008 until his retirement in August 2013. Other public company directorships:
◾ Tower International, Inc. (a metal component manufacturing company) since April
companies. |
Voting Item #1 – Election of Directors
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Stephen G. Butler |
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Age:70
Director Since:May 16, 2003
Independent Board Committees: ◾ Audit / Finance Committee (Chair) ◾ Executive Committee | Age: 52 Director Since: April 6, 2015 Board Committees: ◾ Executive Committee | |||
Mr. Butler Other public company directorships: ◾ Cooper Industries plc (an electrical products manufacturer) from 2002 until ◾ Ford Motor Company (a motor vehicles manufacturer) since 2004
◾Finance / Capital Management Expertise; Risk Management Expertise: Expertise in accounting and finance, both in the U.S. and internationally, based on a34-year career with
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| Mr. Connolly has served as our President and Chief Executive Officer and a member of the Board since April 6, 2015. Previously, he served as President and Chief Executive Officer and a director of The Hillshire Brands Company (a branded food products company) from June 2012 to August
◾ The Hillshire Brands Company (as President and CEO) from June 2012 to August 2014 Experiences, qualifications and skills considered inre-nominating Mr. Connolly:
◾Market Facing Experience:
industry. |
Voting Item #1 – Election of Directors
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Voting Item #1 – Election of Directors
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Joie A. Gregor |
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Age: 68
Director
Since:February 6, 2009
Independent Board Committees: ◾ Audit / Finance Committee ◾ Executive Committee ◾ Nominating, Governance and Public Affairs Committee (Chair) | Age: 68 Director Since: January 1, 2009 Independent Board Committees: ◾ Human Resources Committee ◾ Nominating, Governance and Public Affairs Committee | |||
Ms. Gregor served as a Managing Director with Warburg Pincus LLC (a private equity ◾ From 2007 to ◾ From 2002 to 2007, Vice Chairman of Heidrick & Struggles International, Inc. (an executive search firm) ◾ Ms. Gregor Other public company directorships: ◾ Conduent Incorporated (a business process services company) since
◾Market Facing Experience:
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| Mr. Johri served as President and Director of First National Bank of Omaha (a banking institution) from 2006 until his retirement in 2009. From September 2005 to June 2006, Other public company directorships: ◾ Charter Communications Inc. from 2006 until
regions. |
Voting Item #1 – Election of Directors
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Richard H. Lenny |
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Age:66
Director Since:March 17, 2009
Non-Executive Chairman Since:May 28, 2018 Independent Board Committees: ◾ Executive Committee ◾ Human Resources Committee ◾ Nominating, Governance and Public Affairs Committee | Age: 64 Director Since: May 23, 2007 Independent Board Committees: ◾ Executive Committee ◾ Human Resources Committee (Chair) ◾ Nominating, Governance and Public Affairs Committee | |||
Mr. Lenny Other public company directorships: ◾ Discover Financial Services (a direct banking and payment services firm) ◾ Illinois Tool Works Inc. (a global manufacturer of industrial products and equipment) since ◾ McDonald’s Corporation (a
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strategy, marketing and business development in the
| Ms. Marshall was President of the Americas at MasterCard International, Inc. (payments industry) from October 1999 until her retirement in June 2006. At MasterCard, Ms. Marshall was responsible for building all aspects of MasterCard’s issuance and acceptance business in the United States, Canada, Latin America and the Caribbean. Prior to joining MasterCard International, Inc., Ms. Marshall served as Senior Executive Vice President of Concord EFS, Inc. (an electronic payment services company), where she oversaw marketing, account management, customer service and product development. Other public company directorships: ◾ Global Payments Inc. (a provider of payment technology services) since 2006 ◾ Regions Financial Corporation (a financial holding company) since
companies. |
Voting Item #1 – Election of Directors
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Craig P. Omtvedt | ||||
Director Since:November 11, 2016
Independent Board Committees: ◾ Audit / Finance Committee | ||||
Mr. Omtvedt served as Senior Vice President and Chief Financial Officer of Fortune Brands, Inc. (a former leading consumer products company) from 2000 until his retirement in October Other directorships: ◾ General Cable Corp. (a wire and cable manufacturer) from 2004 until 2018 ◾ The Hillshire Brands Company from 2012 until 2014 ◾ Oshkosh Corporation (a manufacturer and marketer of specialty vehicles and vehicle bodies)
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Voting Item #1 – Election of Directors
The nine director nominees for election to the Board currently serve as members of the Board. All nominees, other than Mr. Anil Arora, were elected by shareholders at our 2017 Annual Meeting of Shareholders. The Board appointed Mr. Arora as a director of Directors recommendsConagra Brands effective as of July 17, 2018. Mr. Arora was first introduced to the N/G/PA Committee as a vote “FOR” eachpotential nominee by current director, Richard H. Lenny.
If any of the nominees for directors listed above.
Corporate Governance
Our Corporate Governance Practices
The Board is committed to performing its responsibilities in a manner consistent with sound governance practices. It routinely reviews its processes, assesses the regulatory and legislative environment, and adopts governance practices as needed that support informed, competent, and independent oversight on behalf of our shareholders. Our Corporate Governance Principles provide a summary of these practices and are available on our website at http://www.conagrabrands.com/investor-relations/corporate-governance/principles. Highlights of our corporate governance practices include:
Annual Election of Directors. To promote greater accountability to shareholders, all of our directors standbecomes unavailable for election on an annual basis.
Majority Voting in Uncontested Director Elections. To be elected in an uncontested election, a director nominee must receive the affirmative vote of a majority of the votes cast in the election. If an incumbent nominee is not elected, he or she is required to promptly tender a resignation to the Board subjectfor any reason not presently known or contemplated, the proxy holders will have discretionary authority in that instance to acceptance or rejection byvote the Board. Within 90 daysproxies for a substitute. The proxies cannot be voted for a greater number of persons than the nine nominees named.
Three current Board members are not standing forre-election at the 2018 Annual Meeting. Bradley A. Alford and Thomas W. Dickson have not been nominated to stand forre-election. In accordance with our retirement policy for directors, Steven F. Goldstone has not been nominated to stand forre-election and will retire from the Board at the 2018 Annual Meeting.
Roles and Responsibilities of the certification of the election results, the Board will publicly disclose its decision as to whether to accept or reject the resignation.and Its Committees
Over 90% Director Independence. The Board has determined that 10 of our 11 nominees for directors – directors Alford, Brown, Butler, Dickson, Goldstone, Gregor, Johri, Lenny, Marshall, and Omtvedt – have no material relationship with Conagra Brands and are independent within the meaning of applicable independence standards, including the listing standards of the NYSE and the categorical standards contained in the Corporate Governance Principles.
Board Leadership Structure.Structure
The Board believes that independent Board leadership is a critical component of our governance structure. Our Corporate Governance Principles require us to have either an independent Chairman of the Board or, if the positions of Chairman and Chief Executive Officer are held by the same person, a lead independent director. Since 2005, our Chairman and Chief Executive OfficerCEO roles have been separate. With separate Chairman and Chief Executive OfficerCEO roles, our Chief Executive OfficerCEO can focus his time and energy on setting the strategic direction for the company, overseeing daily operations, engaging with external constituents, developing our leaders and promoting employee engagement at all levels of the organization. Meanwhile, our independent Chairman leads the Board in the performance of its duties by establishing agendas and ensuring appropriate meeting content, engaging with the Chief Executive OfficerCEO and senior leadership team between Board meetings on business developments and providing overall guidance to our Chief Executive OfficerCEO as to the Board’s views and perspectives, particularly on the strategic direction of the company.
Independent Board Committees and Committee Charters. Each of
The Board has established four standing committees: the Audit / Finance Committee, the Executive Committee, the HR Committee, and the N/G/PA Committee. The Audit / Finance Committee, is comprised entirely of independent directorsHR Committee and operatesN/G/PA Committee operate under a written chartercharters that hashave been approved by the full Board.Board; each are comprised entirely of independent directors.
Regularly-Scheduled Executive Sessions.Membership on each of the Board’s standing committees, as of July 31, 2018, was as follows:
Name | Audit / Finance Committee | Executive Committee | HR Committee | N/G/PA Committee | ||||||||||||||||
Bradley A. Alford
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Anil Arora
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Thomas K. Brown
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Stephen G. Butler
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Sean M. Connolly
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Thomas W. Dickson
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Stephen F. Goldstone
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Joie A. Gregor
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| Chair
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Rajive Johri
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Richard H. Lenny
| Chair
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Ruth Ann Marshall
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| Chair
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Craig P. Omtvedt
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Total Meetings in FY2018 | 12
| 1 | 5 | 5 |
Voting Item #1 – Election of Directors
The Board’s Audit / Finance Committee
Committee Members: Anil Arora Thomas K. Brown Stephen G. Butler, Chair Joie A. Gregor Craig P. Omtvedt | Primary Responsibilities ◾ Oversee the integrity of the company’s financial statements and review annual and quarterly SEC filings and earnings releases ◾ Receive reports on critical accounting policies of the company, significant changes in the company’s selection or application of accounting principles and the company’s internal control processes ◾ Retain the independent auditor and review the qualifications, independence, and performance of the independent auditor;pre-approve audit andnon-audit services performed by the independent auditor ◾ Review the qualifications, independence and performance of the internal audit department ◾ Receive reports on the activities of management’s Enterprise Risk Management Committee and Risk Oversight Committee, as well as on the company’s processes for overseeing financial risks, including management’s assessment and control of derivative and treasury risks ◾ Review the company’s compliance with legal and regulatory requirements ◾ Review the company’s strategies and plans related to capital structure, including borrowing, liquidity, and allocation of capital |
Financial Expertise and Financial Literacy
The Board meets onhas determined that directors Butler and Omtvedt are qualified as audit committee financial experts within the meaning of SEC regulations and that directors Arora, Brown and Gregor are financially literate within the meaning of NYSE rules.
Related-Party Transactions
The Audit / Finance Committee has adopted a regularly-scheduled basiswritten policy regarding the review, approval, and holds an executive session without management present at every regularly-scheduled meeting. The Board holds five regularly-scheduled meetings per year. The Chairmanratification of related-party transactions. Under the Board presides atpolicy, all Board meetings, including executive sessions.
Board, Committee, and Individual Evaluation Process. Each of the Board,related-party transactions must bepre-approved by the Audit / Finance Committee unless circumstances makepre-approval impracticable. In the latter case, management may enter into the transaction, but the transaction remains subject to ratification by the Audit / Finance Committee at its next regular,in-person meeting. In determining whether to approve or ratify a related-party transaction, the Audit / Finance Committee will take into account, among other factors it deems appropriate, whether the transaction is fair and reasonable to the company and the extent of the related-party’s interest in the transaction. No director is permitted to participate in any approval of a related-party transaction in which he or she is involved. On at least an annual basis, the Audit / Finance Committee reviews and assesses ongoing related-party transactions to determine whether the relationships remain appropriate. All related-party transactions are disclosed to the full Board.
Voting Item #1 – Election of Directors
The Board’s Executive Committee
Committee Members: Stephen G. Butler Sean M. Connolly Steven F. Goldstone Joie Gregor Richard H. Lenny, Chair Ruth Ann Marshall | Primary Responsibility ◾ Act on behalf of the Board between meetings as exigency requires or at the request of the full Board |
The Board’s Human Resources Committee
Committee Members: Bradley A. Alford Rajive Johri Richard H. Lenny Ruth Ann Marshall, Chair | Primary Responsibilities ◾ Review, evaluate and approve compensation plans and programs for the company’s directors, executive officers and senior employees ◾ Annually review and approve corporate goals and objectives relevant to CEO compensation and, together with the other independent directors, at least annually evaluate the CEO’s performance in light of these goals and objectives ◾ Review directly, or with the full Board, succession plans for all senior positions ◾ Review whether the company’s compensation programs for employees generally are designed in a manner that does not incent employees to take inappropriate or excessive risks and whether any compensation policies or practices are reasonably likely to have a material adverse effect on the company ◾ Retain and terminate consultants or outside advisors to support the Committee, and approve related fees and engagement terms; determine whether any conflicts of interest with such consultants or advisors exist |
Executive and Director Compensation
The HR Committee has retained authority over the determination of executive and director compensation, subject only to the further involvement of the other independent directors with respect to the approval of the overall compensation fornon-employee directors and any base salary change for the CEO. The HR Committee may delegate its responsibilities to subcommittees comprised of one or more HR Committee members or to selected members of management, subject to requirements of ourby-laws and applicable laws, regulations and the terms of shareholder-approved plans. Additional information about the HR Committee’s processes for determining executive compensation and the role of the HR Committee’s compensation consultant can be found in the “Compensation Discussion and Analysis” section of this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
The committee members set forth above served as members of the HR Committee during fiscal 2018. During fiscal 2018, none of the current or former executive officers of Conagra Brands or any of its current employees served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on the HR Committee or the Board of Conagra Brands.
Voting Item #1 – Election of Directors
Additional information about the roles and responsibilities of the HR Committee is provided in the “Compensation Discussion and Analysis” section of this Proxy Statement.
The Board’s Nominating, Governance and Public Affairs Committee
Committee Members: Thomas W. Dickson Joie A. Gregor, Chair Rajive Johri Richard H. Lenny Ruth Ann Marshall | Primary Responsibilities ◾ Identify qualified candidates for membership on the Board ◾ Propose to the Board a slate of directors for election by the shareholders at each annual meeting ◾ Propose to the Board candidates to fill vacancies on the Board ◾ Consider and make recommendations to the Board concerning the size and functions of the Board and the various Board committees ◾ Consider and make recommendations to the Board concerning corporate governance policies ◾ Assess the independence of Board members ◾ Advise management on internal and external factors and relationships affecting our image and reputation, including those related to corporate citizenship and public policy issues significant to the company |
Director Nomination Process
The N/G/PA Committee considers Board candidates suggested by Board members, management and shareholders. The N/G/PA Committee may also retain a third-party search firm to identify candidates. A shareholder recommending a prospective nominee for Board membership must notify our Corporate Secretary in writing at least 120 days before the annual meeting and include whatever supporting material the shareholder considers appropriate. The N/G/PA Committee will also consider nominations by a shareholder pursuant to the provisions of our amended and restated bylaws. See “Additional Information – Shareholder Proposals to be Included in our 2019 Proxy Statement” and “Additional Information – Other Shareholder Proposals to be Presented at our 2019 Annual Meeting.”
The N/G/PA Committee makes an initial determination as to whether to conduct a full evaluation of a director candidate once he or she has been identified. This initial determination is based on whether additional Board members are necessary or desirable. It is also based on whether, based on the information provided or otherwise available to the N/G/PA Committee, conducts a self-evaluation of its performance on an annual basis. In addition, individual director evaluations are also conducted on an annual basis.
Director Attendance at Board Meetings and Annual Meetings of Shareholders. During fiscal 2017, the Board met 9 times (five regular meetings and four special meetings) and acted by unanimous written consent four times. All members other than Mr. Brown, who experienced unanticipated conflicts duringprospective nominee is likely to satisfy the year (including personal illness), attended at
Corporate Governance
least 75% of the total number of meetings that required his or her attendance. Excluding his absences due to personal illness, Mr. Brown would have attended at least 75% of the total number of meetings that required his attendance. Board members are encouraged to attend the company’s annual meeting of shareholders each year. All nominees for director who were serving at the time of the 2016 Annual Meeting (other than Mr. Brown) attended the 2016 Annual Meeting.
Annual Advisory Vote on Named Executive Officer Compensation. Consistent with our shareholders’ preference as indicated at the 2011 annual meeting of shareholders, our shareholders are given an opportunity every year to vote, on an advisory basis, to approve our named executive officer compensation. This year, our shareholders will also have the opportunity to recommend, on an advisory basis, the frequency of future advisory votes on named executive officer compensation.
Stock Ownership Guidelines for Directors and Senior Leadership. Directors and senior leaders across the company are subject to stock ownership guidelines.
Allnon-employee directors are expected to acquire and hold during their tenure shares of Conagra Brands common stock with a value of at least $450,000 for fiscal 2017. Directors are expected to acquire these shares within five years following their first election to the Board. Ownership levels for ournon-employee Board members are detailed in the section of this Proxy Statement entitled“Non-Employee Director Compensation – Director Stock Ownership Requirements.”
Each senior leader across the company is subject to stock ownership guidelines equal to a multiple of that person’s salary. Sean Connolly, our Chief Executive Officer, is required to own shares of our common stock having a value of at least six times his salary, and each of our other continuing named executive officers is required to own shares of our common stock having a value of at least three or four times his or her salary. See the section of this Proxy Statement entitled “Compensation Discussion and Analysis – Committee’s Views on Executive Stock Ownership” for a summary of the stock ownership of each named executive officer.
Anti-Pledging/Hedging Policy. Our directors and executive officers, including our named executive officers, are prohibited from pledging their shares of Conagra Brands stock or hedging their ownership of Conagra Brands stock, including by trading in publicly-traded options, puts, calls, or other derivative instruments related to Conagra Brands stock or debt.
Clawback Policy. We have a clawback policy that requires excess amounts paid to any of our senior officers under our incentive compensation programs to be recovered in the event of a material restatement of our financial statements for fiscal 2013 or later fiscal years, when such restatement results from the fraudulent, dishonest or reckless actions of the senior officer.
Commitment to Investing in Our People. We recognize that our employees are our greatest asset, and we strive to be a talent magnet. We are committed to our employees’ safety, development, and wellness. We take pride in attracting, retaining, and developing top talent, and we offer comprehensive learning programs that begin when employees join the company and continue throughout their careers.
Commitment to Sustainable Business Practices and Corporate Citizenship. We believe that we have an obligation to be a good steward of the environment, give back to the communities we serve, and drive economic gain for stakeholders. These commitments are ingrained in our operations and our processes and have become a part of our culture. We have established clear corporate citizenship goals, and we favor transparency with stakeholders on our corporate responsibility progress. We are proud of our focus on corporate citizenship, and we routinely discuss these matters withevaluation factors described below. If the N/G/PA Committee.
A few examples of our many corporate responsibility achievements in recent years includeCommittee determines that additional consideration is warranted, it may request a third-party (e.g., a search firm) to gather additional information about the following:
Corporate Governance
Political Contributions and Lobbying Expenditure Oversight.prospective director candidate. The N/G/PA Committee receives reportsmay also elect to interview a candidate.
The N/G/PA Committee evaluates each prospective director candidate against the standards and qualifications set forth in our Corporate Governance Principles, including, but not limited to:
Board skill needs, taking into account the Board Skills Matrix and the experience of current Board members;
the candidate’s background, including demonstrated high standards of ethics and integrity, as well as the candidate’s ability to work toward business goals with other Board members;
whether the candidate has sufficient time to effectively carry out the duties of a director;
Voting Item #1 – Election of Directors
the candidate’s ability to represent all shareholders and not a particular interest group;
the candidate’s qualifications as independent and ability to serve on the modest political activitiesvarious committees of the company. Our political expenditures are limited,Board;
diversity, including the extent to which the candidate reflects the composition of our constituencies; and we focus on matters
business experience, which should reflect a broad level of experience at the policy-making level.
With respect to Board diversity, the N/G/PA Committee assesses whether the Board, collectively, represents diverse views, backgrounds and experiences that we believe will create or preserve shareholder value. In August 2015, we began publishingenhance the Board’s and our effectiveness. The N/G/PA Committee seeks directors who have qualities to achieve the goal of a report of these activities on our website at http://www.conagrabrands.com/investor-relations/corporate-governance/political-activity-disclosure.well-rounded, diverse Board as a whole.
After completing its evaluation process, the N/G/PA Committee makes a recommendation to the full Board as to who should be nominated, and the Board determines the director nominees after considering the N/G/PA Committee’s recommendations. The evaluation process for nominees recommended by shareholders does not differ from the process set forth above.
The Board’s Role in Risk Oversight
Our senior leadership is responsible for identifying, assessing, and managing our exposure to risk. A component of this work is performed through twomanagement-led, Board-appointed committees: the Enterprise Risk Management Committee, which is chaired by the Executive Vice President andour Chief FinancialRisk Officer and focuses on assessing and managing enterprise-wide risk, and the Risk Oversight Committee, which ischaired by our Chief Risk Officer and focuses on financial risk related to commodities, foreign currency, interest rate, credit, insurable risk, risk of loss and counterparty risk. The Board and its committees play an active role in overseeing management’s activities and ensuring that management’s plans are balanced from a risk/reward perspective. The Board and its committees perform this oversight through the following mechanisms:mechanisms.
Board Discussion.Level Discussion
Each fiscal year, at least one Board meeting includes a discussion of our strategic plan and the longer-term risks and opportunities we face. At other times of the year, the Board receives reports from significant business units and functions. These presentations include a discussion of the business, regulatory, compliance, operational, and other risks associated with planned strategies and tactics, as well as succession planning matters.
Audit / Finance Committee Oversight.Oversight
The Audit / Finance Committee’s charter requires it to review our processes for identifying and managing enterprise-wide risks facing Conagra Brands, including, but not limited to, financial risks (such as derivative and treasury risks) and operational risks, and to oversee our risks related to capital structure, including borrowing, liquidity, and allocation of capital. The Audit / Finance Committee also oversees our management of financial risks by, among other things, reviewing our significant accounting policies and the activities of management’s Enterprise Risk Management Committee and Risk Oversight Committee, maintaining direct oversight of our Internal Audit function, holding regular executive sessions with our Chief Financial Officer and Controller, our head of Internal Audit, and our independent auditors, and receiving regular legal and regulatory updates. Our management provides an enterprise risk management report to the Audit / Finance Committee on a semi-annual basis. The Chair of the Audit / Finance Committee reports to the full Board on its activities.
Human Resources Committee Oversight.Oversight
The HR Committee reviews the company’s leadership development activities to ensure appropriate succession planning occurs and reviews the relationship between the company’s compensation programs and risk. The Chair of the HR Committee reports to the full Board on its activities.
Voting Item #1 – Election of Directors Nominating, Governance and Public Affairs Committee The N/G/PA Committee assists the Board in managing risks associated with Board organization, membership, and structure. It also assists management in the oversight of reputational risks and key public affairs Because issues related to risk oversight often overlap, certain issues may be addressed at both the committee and full Board level.Oversight.OversightCorporate Governancematters andmatters. The Committee reviews the company’s policies and programs related to corporate citizenship, social responsibility, and public policy issues, such as sustainability, environmental responsibility, and philanthropic and political activities and contributions. The Chair of the N/G/PA Committee reports to the full Board on its activities.
Our Corporate Governance Practices
Our Corporate Governance Practices
Commitment to Board Best Practices
The Board is committed to performing its responsibilities in a manner consistent with sound governance practices. It routinely reviews its processes, assesses the regulatory and legislative environment, communicates with investors, and adopts governance practices as needed that support informed, competent, and independent oversight on behalf of our shareholders. Our Corporate Governance Principles provide a summary of these practices and are available on our website at http://www.conagrabrands.com/investor-relations/corporate-governance/principles. Highlights of our corporate governance practices include the following:
Annual Election of Directors | To promote greater accountability to shareholders, our directors stand for election on an annual basis. | |
Majority Voting in Uncontested Director Elections | To be elected in an uncontested election, a director nominee must receive the affirmative vote of a majority of the votes cast in the election. If an incumbent nominee is not elected, he or she is required to promptly tender a resignation to the Board, subject to acceptance or rejection by the Board. Within 90 days of the certification of the election results, the Board will publicly disclose its decision as to whether to accept or reject the resignation. | |
Regularly- Scheduled Executive Sessions | The Board meets on a regularly-scheduled basis and holds an executive session without management present at every regularly-scheduled meeting. The Board holds five regularly-scheduled sessions per year. The Chairman of the Board presides at all Board meetings, including executive sessions. | |
Over 88% Director Independence | The Board has determined that eight of our nine nominees for directors – directors Arora, Brown, Butler, Gregor, Johri, Lenny, Marshall and Omtvedt – have no material relationship with Conagra Brands and are independent within the meaning of applicable independence standards, including the listing standards of the NYSE and the categorical standards contained in the Corporate Governance Principles. | |
Independent Board Leadership | The Board believes that independent Board leadership is a critical component of our governance structure. Since 2005, our Chairman and CEO roles have been separate. | |
Director Attendance at Board Meetings and Annual Meetings of Shareholders | During fiscal 2018, the Board met 12 times (10 regular meetings and 2 special meetings) and acted by unanimous written consent once. All members attended at least 75% of the total number of meetings that required his or her attendance. Board members are encouraged to attend the company’s annual meeting of shareholders each year. All nominees for director who were serving at the time of the 2017 Annual Meeting of Shareholders attended the 2017 Annual Meeting of Shareholders. | |
Board, Committee and Individual Evaluation Process | Each of the Board, the Audit / Finance Committee, the HR Committee and the N/G/PA Committee conducts a self-evaluation of its performance on an annual basis. In addition, individual director evaluations are conducted on an annual basis. |
Our Corporate Governance Practices
Retirement Age | No director may be nominated to a new term if he or she would be over age 72 at the time of the election. | |
Orientation and Continuing Education | We conduct an orientation program for each new director as soon as possible following the meeting at which the new director is elected. The orientation includes presentations by senior management with respect to a wide range of topics, including our strategic plans, financial reporting, governance practices, Code of Conduct, and auditing processes. Board members also periodically receive materials and briefing sessions to continue their education on subjects that assist them in the discharge of their duties. For example, during fiscal 2018 we spent additional time on discussions of cybersecurity. We also provide reimbursement of expenses associated with our independent directors’ attendance at one outside director education program each fiscal year. |
Commitment to Compensation Best Practices
Annual Advisory Vote on Named Executive Officer Compensation
Consistent with our shareholders’ preference as indicated at the 2017 Annual Meeting of Shareholders, our shareholders are given an opportunity every year to vote, on an advisory basis, to approve our named executive officer compensation.
Stock Ownership Guidelines for Directors and Senior Leadership
Directors and senior leaders across the company are subject to stock ownership guidelines. Allnon-employee directors are expected to acquire and hold during their tenure shares of Conagra Brands common stock with a value of at least $500,000. Directors are expected to acquire these shares within five years following their first election to the Board. Current ownership levels for ournon-employee Board members are detailed in the section of this Proxy Statement entitled“Non-Employee Director Compensation – Director Stock Ownership Requirements.”
Each senior leader across the company is subject to stock ownership guidelines equal to a multiple of that person’s salary. Sean Connolly, our President and CEO, is required to own shares of our common stock having a value of at least six times his salary, and each of our other named executive officers is required to own shares of our common stock having a value of at least three or four times his or her salary. See the section of this Proxy Statement entitled “Compensation Discussion and Analysis – Additional Information on Compensation Practices – Committee’s Views on Executive Stock Ownership” for a summary of the stock ownership of each named executive officer.
Anti-Pledging / Hedging Policy
Our directors and executive officers, including our named executive officers, are prohibited from pledging their shares of Conagra Brands stock or hedging their ownership of Conagra Brands stock, including by trading in publicly-traded options, puts, calls, or other derivative instruments related to Conagra Brands stock or debt.
Clawback Policy
We have a clawback policy that requires excess amounts paid to any of our senior officers under our incentive compensation programs to be recovered in the event of a material restatement of our financial statements for fiscal 2013 or later fiscal years, when such restatement results from the fraudulent, dishonest or reckless actions of the senior officer.
Our Corporate Governance Practices
Commitment to Investor Engagement
We conduct investor outreach throughout the year. Our efforts help ensure that management and the Board understand and consider the issues that matter most to our stockholders and allow us to effectively address them. Management regularly attends investor conferences and holdsone-on-one meetings and calls with investors, and also has the opportunity to directly interact with investors and analysts during our quarterly earnings conference calls.
Commitment to Investing in Our People
We recognize that our employees are our greatest asset, and we strive to be a talent magnet. We are committed to our employees’ safety, development, and wellness. We take pride in attracting, retaining, and developing top talent, and we offer competitive compensation and benefit packages. We also provide comprehensive learning and development programs for our employees that begin immediately upon hire and continue throughout our employees’ careers.
Commitment to Sustainable Business Practices and Corporate Citizenship
We believe that we have an obligation to be a good steward of the environment, give back to the communities we serve, and drive economic gain for stakeholders. These commitments are ingrained in our operations and our processes and have become a part of our culture. We have established clear corporate citizenship goals, and we favor transparency with stakeholders on our corporate responsibility progress. We are proud of our focus on corporate citizenship, and we routinely discuss these matters with the N/G/PA Committee.
A few examples of our many corporate responsibility achievements in recent years include the following:
We publish an annual Citizenship Report, which is periodically updated and is available on our website athttp://www.conagrabrands.com/our-company/corporate-social-responsibility/citizenship-reports.
We sponsor an annual, internal Sustainable Development Awards program, which is intended to drive and reward innovative approaches to sustainability. During fiscal 2018, employees entered 57 projects in the program. Together, these projects reduced waste by more than 9,200 tons, optimized and improved packaging while using 1,400 fewer tons of material, conserved more than 170 million gallons of water, and reduced greenhouse gas emissions by more than 5,900 metric tons.
Conagra Brands employees volunteered approximately 5,600 hours during our April 2018 month of service. This year, 117 volunteer projects were organized by employees across 18 states and 5countries. With nearly 2,300 employees taking part, our activities generated the equivalent of 639,169 meals for people facing food insecurity.
For more than 20 years, Conagra Brands and the Conagra Brands Foundation have been leading the fight against hunger. Through a longstanding partnership with the Feeding America network, we have provided more than 475 million pounds of food and invested more than $46 million to help alleviate hunger over this time.
Commitment to Political Contributions and Lobbying Expenditure Oversight
The N/G/PA Committee receives reports on the modest political activities of the company. Our political expenditures are limited, and we focus on matters that we believe will create or preserve shareholder value. We publish a report of these activities on our website at http://www.conagrabrands.com/investor-relations/corporate-governance/political-activity-disclosure.
Our Corporate Governance Practices
Corporate Governance Materials Available on Our Website
To learn more about our governance practices, you can review any of the following listed documents at http://www.conagrabrands.com/investor-relations/corporate-governance:
Audit / Finance Committee Charter Political Activity Disclosure Code of Ethics for Senior Corporate Officers Procedures for bringing concerns or complaints to the attention of the Audit / Finance Committee N/G/PA Committee Charter Corporate Governance Principles HR Committee Charter Code of Conduct Procedures for communicating with the Board, ournon-management directors as a group, or the Chairman of the Board
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From time to time these documents are updated, and we promptly post the updated documents to our website. The information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated by reference into any of our other filings with the SEC. The documents are also available in print to any shareholder who requests them from the Corporate Secretary of Conagra Brands.
Communications with the Board
Interested parties may communicate with the members of the Board, ournon-management directors as a group, or the Chairman of the Board by writing to:
Conagra Brands Board of Directors
c/o Corporate Secretary, Conagra Brands, Inc.,
222 Merchandise Mart Plaza, Suite 1300
Chicago, Illinois 60654. 60654
Communications are compiled by the Corporate Secretary and forwarded to the addressee(s) on at least abi-weekly basis. The Corporate Secretary routinely filters communications that are solicitations, consumer complaints, unrelated to Conagra Brands, or Conagra Brands’ business or determined to pose a possible security risk to the addressee.
Board Committees
Non-Employee Director Compensation
Non-Employee Director Compensation
We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on the Board. On an annual basis, the HR Committee recommends thenon-employee director compensation program to the full Board Committeesfor approval. In setting director compensation, the HR Committee receives input from FW Cook, its independent compensation consultant, on factors including the time commitment and skill level required to serve on the Board, as well as market practices. In addition, our shareholder-approved Conagra Brands, Inc. 2014 Stock Plan places limits on the equity awards that may be awarded tonon-employee directors in any fiscal year.
A summary ofnon-employee director compensation for fiscal 2018 is set forth below.
Non-Employee Director Compensation – Other than the Chairman
The following table summarizes the compensation program for ournon-employee directors other than the Chairman that was in effect during fiscal 2018:
Annual Cash Retainer: | $100,000 per year (1) | |
Annual Committee Chair Retainer (2): | $20,000 for each Committee Chair (1) | |
Meeting Fees: | None, unless the director’s attendance is required at more than a total of 24 Board and Committee meetings during a fiscal year. A fee of $1,500 is paid for each meeting attended and at which a director’s attendance was required in excess of 24 meetings | |
Equity Compensation: | A grant of restricted stock units, or RSUs, with a value equal to $150,000, effective on the first trading day of the fiscal year (3) | |
(1) | Directors who join the Board or who are elected as the Chair of a Committee after the start of a fiscal quarter receive a prorated retainer for that quarter based on the number of days served. |
(2) | Excludes the Executive Committee. No retainer is paid for service to this Committee. |
(3) | Directors who join the Board after the start of a fiscal year receive a prorated grant for that year based on the number of months served. |
The compensation program described above reflects the following Board-approved increases over fiscal 2017, which were approved after a review of company and market practice: (1) a $10,000 increase in the annual cash retainer; (2) a $10,000 increase in equity compensation (RSU) value; and (3) a $5,000 increase to each Committee Chair retainer.
The number of RSUs granted to eachnon-employee director other than the Chairman was determined by dividing $150,000 by the average closing price of our common stock on the NYSE for the thirty trading days prior to the grant date of May 30, 2017. The RSUs vested one year from the date of grant and were subject to continued service during the entire term of the RSUs. Vesting would have been accelerated in the event of death or permanent disability. If the director was no longer serving one year from the date of grant, vesting was prorated 25% for each fiscal quarter during which the director served for any amount of time. Dividend equivalents were paid on the RSUs at the regular dividend rate in shares of our common stock.
Non-Employee Director Compensation
Non-employee directors other than the Chairman who join the Board or who are elected to a Chairmanship after the start of the fiscal year are entitled to receive a prorated retainer (based on the actual number of days of service).Non-employee directors other than the Chairman who join the Board after the start of the fiscal year are also entitled to receive a prorated RSU grant (based on the number of months remaining in the fiscal year at that time).
Non-Employee Director Compensation – Chairman
In lieu of the elements described above, the Chairman’s compensation for fiscal 2018 consisted of a grant of RSUs with a value equal to $425,000, with the number of RSUs determined by dividing $425,000 by the average closing price of our common stock on the NYSE for the thirty trading days prior to the grant date of May 30, 2017. This reflects a Board-approved $25,000 increase over fiscal 2017’s amount. The material terms of the RSUs were identical to those described above fornon-employee directors other than the Chairman.
OtherNon-Employee Director Compensation Programs
In addition to the cash payments and equity awards described above,non-employee directors were entitled to participate in the following programs during fiscal 2018:
Medical plan access was available to directors who were enrolled in the plan by December 22, 2014, with the cost of the premium borne entirely by the director. Directors who were not enrolled by that date were not eligible to participate;
A matching gifts program was available to allnon-employee directors; Conagra Brands matched up to $10,000 of a director’s charitable donations per fiscal year; and
A nonqualified deferred compensation plan was available to allnon-employee directors. This plan providednon-employee directors the ability to defer receipt of their cash or stock compensation. This program did not provide above-market or preferential earnings (as defined by SEC rules).
Director Compensation Table – Fiscal 2018
Mr. Arora joined the Board effective July 17, 2018, after the end of fiscal 2018. He did not receive any director compensation from us for fiscal 2018.
Name
| Fees Earned or Paid in Cash ($)(1)
| Stock Awards ($)(2)
| All Other Compensation ($)(3)
| Total ($)
| ||||||||||||||||
Bradley A. Alford
|
| 100,000
|
|
| 149,650
|
| 7,000
|
| 256,650
|
| ||||||||||
Thomas K. Brown
|
| 100,000
|
|
| 149,650
|
| -
|
| 249,650
|
| ||||||||||
Stephen G. Butler
|
| 120,000
|
|
| 149,650
|
| 10,000
|
| 279,650
|
| ||||||||||
Thomas W. Dickson
|
| 100,000
|
|
| 149,650
|
| -
|
| 249,650
|
| ||||||||||
Steven F. Goldstone
|
| -
|
|
| 424,067
|
| 10,000
|
| 434,067
|
| ||||||||||
Joie A. Gregor
|
| 104,500
|
|
| 149,650
|
| 10,000
|
| 264,150
|
| ||||||||||
Rajive Johri
|
| 100,000
|
|
| 149,650
|
| 10,000
|
| 259,650
|
| ||||||||||
Richard H. Lenny
|
| 120,000
|
|
| 149,650
|
| 10,000
|
| 279,650
|
| ||||||||||
Ruth Ann Marshall
|
| 120,000
|
|
| 149,650
|
| 10,000
|
| 279,650
|
| ||||||||||
Craig P. Omtvedt
|
| 100,000
|
|
| 149,650
|
| 10,000
|
| 259,650
|
|
(1) | Amounts include annual cash retainer of $100,000 for directors who served for the full fiscal year. Amounts also include an additional annual committee chair retainer ($5,000 per quarter) for each of Mr. Butler, Mr. Lenny, and Ms. Marshall for their |
Non-Employee Director Compensation
service during fiscal 2018. For directors who attended more than a total of 24 Board and committee meetings during fiscal year 2018, amounts include an additional $1,500 per meeting paid for each Board or committee meeting attended in excess of the 24th meeting. |
(2) | This column reflects the grant date fair value (computed in accordance with Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718) of the stock awards made tonon-employee directors during fiscal 2018. The number of RSUs granted to all directors (other than Mr. Goldstone) was determined by dividing $150,000 by the average of the closing stock price of our common stock on the NYSE for the thirty trading days prior to the grant date. The number of RSUs granted to Mr. Goldstonewas determined by dividing $425,000 by this average. At fiscal year-end, the aggregate number of outstanding stock awards and outstanding unexercised option awards held by eachnon-employee director was as set forth below: |
Name
| Outstanding Stock Awards Held at FYE (#) (a)
| Outstanding Stock Options Held at FYE (#)
| ||||||
Bradley A. Alford |
| 3,956
|
|
| -
|
| ||
Thomas K. Brown |
| 3,956
|
|
| -
|
| ||
Stephen G. Butler |
| 3,956
|
|
| 20,153
|
| ||
Thomas W. Dickson |
| 3,956
|
|
| -
|
| ||
Steven F. Goldstone |
| 11,210
|
|
| 409,881
|
| ||
Joie A. Gregor |
| 3,956
|
|
| -
|
| ||
Rajive Johri |
| 3,956
|
|
| -
|
| ||
Richard H. Lenny |
| 3,956
|
|
| 27,206
|
| ||
Ruth Ann Marshall |
| 3,956
|
|
| 26,199
|
| ||
Craig P. Omtvedt
|
| 3,956
|
|
| -
|
|
(a) For Mr. Goldstone, includes 201 dividend equivalents accrued on RSUs. For all othernon-employee directors, includes 71 dividend equivalents accrued on RSUs.
(3) | The amount reported reflects the amount paid to a designated charitable organization on the director’s behalf under the matching gifts program described above. |
Non-Employee Director Compensation
Director Stock Ownership Requirements
The Board has established various committeesadopted stock ownership requirements for itsnon-employee directors. Allnon-employee directors, including the Chairman, are expected to assist in its responsibilities. Currently,acquire and hold shares of common stock of Conagra Brands during their tenure with a value of at least $500,000. All directors must acquire this ownership level within five years following their first election to the Board. Shares personally acquired by thenon-employee directors through open market purchases or RSUs, and shares acquired upon the deferral of fees, are counted toward the ownership requirement. Unexercised stock options are not counted. Prior to meeting the guideline,non-employee directors agree not to sell any shares of common stock of Conagra until they have reached the guideline. The following table reflects ownership, as of July 31, 2018, ofnon-employee directors who were serving as of the end of fiscal 2018. Mr. Arora joined the Board effective July 17, 2018, after the end of fiscal 2018 and is therefore excluded from the table below.
Director
| Stock Ownership Guideline
| Actual Ownership (1)
| ||
Mr. Alford(2)
| $500,000
| $1,892,443
| ||
Mr. Brown(2)
| $500,000
| $859,895
| ||
Mr. Butler
| $500,000
| $4,583,037
| ||
Mr. Dickson(2)
| $500,000
| $514,454
| ||
Mr. Goldstone
| $500,000
| $13,438,629
| ||
Ms. Gregor
| $500,000
| $2,143,235
| ||
Mr. Johri
| $500,000
| $2,320,077
| ||
Mr. Lenny
| $500,000
| $2,199,959
| ||
Ms. Marshall
| $500,000
| $3,471,134
| ||
Mr. Omtvedt(2) | $500,000 | $363,686 | ||
(1) | Based on the closing price of our common stock on the NYSE on July 31, 2018 ($36.71) and stock ownership requirements of thenon-employee directors in effect as of fiscal year end. |
(2) | Joined the Board fewer than five years ago. |
Audit / Finance Committee Report
Audit / Finance Committee Report
The Audit / Finance Committee assists the Board in fulfilling its oversight responsibilities by reviewing (1) the integrity of the financial statements of the company, (2) the qualifications, independence and performance of the company’s independent auditor and internal audit department, (3) compliance by the company with legal and regulatory requirements, and (4) the company’s financing strategies and capital structure. The Audit / Finance Committee acts under a written charter, adopted by the Board, a copy of which is available on our website.
Management is responsible for the company’s financial reporting process and internal controls. The independent auditor is responsible for performing an independent audit of the company’s consolidated financial statements, issuing an opinion on the conformity of those audited financial statements with generally accepted accounting principles and assessing the effectiveness of the company’s internal control over financial reporting. The Audit / Finance Committee oversees the company’s financial reporting process and internal controls on behalf of the Board.
The Audit / Finance Committee has four standing committees:sole authority to appoint, retain, compensate, oversee and terminate the independent auditor. The Audit / Finance Committee reviews the company’s annual audited financial statements, quarterly financial statements and other filings with the SEC. The Audit / Finance Committee reviews reports on various matters, including: (1) critical accounting policies of the company; (2) material written communications between the independent auditor and management; (3) the independent auditor’s internal quality-control procedures; (4) significant changes in the company’s selection or application of accounting principles; and (5) the effect of regulatory and accounting initiatives on the financial statements of the company. The Audit / Finance Committee also has the authority to conduct investigations within the scope of its responsibilities and to retain legal, accounting and other advisors to assist the Audit / Finance Committee in its functions.
During the Executive Committee, the HR Committee, and the N/G/PA Committee. All members oflast fiscal year, the Audit / Finance Committee met and held discussions with representatives of Conagra Brands’ management, its internal audit staff, and KPMG LLP, Conagra Brands’ independent auditor. Representatives of financial management, the HRinternal audit staff, and the independent auditor have unrestricted access to the Audit / Finance Committee and periodically meet privately with the N/G/PAAudit / Finance Committee. The Audit / Finance Committee arereviewed and discussed with the company’s management and KPMG LLP the audited financial statements contained in the company’s Annual Report on Form10-K for the fiscal year ended May 27, 2018.
The Audit / Finance Committee also discussed with the independent auditor the matters required to be discussed by the auditor with the Audit / Finance Committee under the applicable rulesrequirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee, as well as by SEC regulations. The Audit / Finance Committee also reviewed and NYSEdiscussed with KPMG LLP its independence and, under ouras part of that review, received the written disclosures required by applicable professional and regulatory standards relating to KPMG’s independence standards.from Conagra Brands, including those of the Public Company Accounting Oversight Board. The Audit / Finance Committee also considered whether the provision ofnon-audit services provided by KPMG LLP to the company during fiscal 2018 was compatible with the auditor’s independence.
Based on these reviews and discussions and the report of the independent auditor, the Audit / Finance Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the company’s Annual Report on Form10-K for the fiscal year ended May 27, 2018 for filing with the SEC.
Conagra Brands, Inc. Audit / Finance Committee
Stephen G. Butler, Chair | Thomas K. Brown | |||
Craig P. Omtvedt | Joie A. Gregor
|
|
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for FY2019
The Audit / Finance Committee has sole authority to appoint, retain, compensate, oversee and terminate the independent auditor. In addition, the Committee evaluates and ensures the rotation of the lead audit partner at the independent auditor and will, if it deems it advisable, consider the rotation of the audit firm.
The Audit / Finance Committee has appointed KPMG LLP, an independent registered public accounting firm, as our independent auditor for fiscal 2019 to conduct the audit of our financial statements. KPMG LLP has conducted the audits of our financial statements since fiscal 2006. The Audit / Finance Committee and the Board Committeesrequest that the shareholders ratify this appointment.
Representatives from KPMG LLP are expected to be present at the 2018 Annual Meeting. The representatives will have the opportunity to make a statement and will be available to respond to appropriate questions. In the event that shareholders do not ratify the appointment, the Audit / Finance Committee will reconsider the appointment. Even if the appointment of KPMG LLP is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in Conagra Brands’ and its shareholders’ best interests.
Fees billed by KPMG LLP for services provided for fiscal years 2018 and 2017 were as follows:
Fiscal 2018 | Fiscal 2017 | |||||||||||||||
Audit Fees | $ | 4,953,000 | $ | 7,061,000 | ||||||||||||
Audit-Related Fees | 84,000 | 60,000 | ||||||||||||||
Tax Fees | 19,000 | 95,000 | ||||||||||||||
All Other Fees | — | — | ||||||||||||||
Total Fees | $ | 5,056,000 | $ | 7,216,000 |
|
|
• | Audit-Related Fees. In fiscal years 2018 and 2017, audit-related fees consisted of a pension plan audit as well as other attestation services. |
• | Tax Fees. In fiscal years 2018 and 2017, tax fees consisted of tax consultation and tax compliance services. |
The Audit / Finance Committeepre-approves all audit andnon-audit services performed by the independent auditor. The Audit / Finance Committee will periodically grant a generalpre-approval of categories of audit andnon-audit services. Any other services must be specifically approved by the Audit / Finance Committee, and any proposed services exceedingpre-approved cost levels must be specificallypre-approved by the Audit / Finance Committee. In periods between Audit / Finance Committee meetings, the Chairman of the Audit / Finance Committee has been delegated authority from the Committee topre-approve additional services; any suchpre-approvals are subsequently communicated to the full Audit / Finance Committee at its next meeting.
The Audit / Finance Committee approved 100% of the services performed by KPMG LLP that were billed as Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees during fiscal years 2018 and 2017.
|
| |
|
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation
Consistent with our shareholders’ preference as indicated at our 2017 Annual Meeting of Shareholders, we give our shareholders an opportunity to vote, on an advisory basis, to approve the compensation of our named executive officers on an annual basis pursuant to Section 14A of the Exchange Act. This vote is not intended to address any specific item of our compensation program, but rather to address our overall approach to our named executive officer compensation as we have described in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, beginning on pages 28 and 52, respectively. Our executive compensation program is designed to reward performance, support our business strategies, discourage excessive risk-taking, make us competitive with other corporations for top talent, and align the interests of our executive officers with the long-term interests of our shareholders.
Since we began seeking a shareholder vote on our named executive officer compensation, shareholders have exhibited strong support of our executive compensation program. In fact, in each of the past three fiscal years, we have received over 95% approval on this voting item.
Our Compensation Discussion and Analysis describes in detail the components of our executive compensation program and the process by which the Board Committeesmakes executive compensation decisions. Highlights of our program include the following:
Consistent with ourpay-for-performance philosophy, the majority of our named executive officers’ targeted fiscal 2018 compensation was tied to company performance. For our CEO, incentive compensation represented 88% of his total compensation opportunity. For our other named executive officers, incentive compensation represented 78% of their total opportunity.
Our fiscal 2018 Annual Incentive Plan funded and paid out slightly above target for each named executive officer, due to our earnings and net sales growth performance during fiscal 2018 and the individual contributions of our executives.
The fiscal 2016 to 2018 cycle of the performance share plan concluded this year with payouts at above-target levels for each named executive officer who participated in the plan, due to our strong financial performance over the last three fiscal years.
Multiple performance metrics are utilized in our plans and programs to discourage excessive risk-taking. Our program’s design does not encourage excessive focus on a single performance goal to the detriment of other measures of success.
Substantial stock ownership requirements ensure that our senior executives maintain a significant stake in our long-term success.
Our clawback policy allows recovery of certain incentive compensation payments from executives in the event of a material restatement of our financial statements resulting from their fraudulent, dishonest, or reckless actions.
We design our compensation programs to motivate our executives to win during tough economic times and to achieve our fundamental and overriding objective – to create sustainable, profitable growth for our shareholders.
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation
While this vote is advisory and not binding on our company, the Board and its HR Committee value the opinions of our shareholders and expect to consider the outcome of the vote, along with other relevant factors, when considering named executive officer compensation in the future. We expect to hold our next advisory vote at our 2019 Annual Meeting.
We are asking our shareholders to once again indicate their support for our named executive officer compensation as described in this Proxy Statement. Accordingly, we are asking our shareholders to vote to approve the following resolution:
“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this Proxy Statement, is hereby APPROVED.”
|
| |
|
Compensation Discussion and Analysis
Compensation Discussion and Analysis
Introduction
OurAt Conagra Brands, our fundamental objectives are to create sustainable, profitable growth and long-term value for our shareholders. Management sets our annual and long-term business goals to support attainment of these objectives. The Board’s HR Committee which we refer to as(in this section, the Committee throughout this Compensation Discussion and Analysis section,Committee), designs and oversees our executive compensation program to promote attainment of our objectives.their attainment.
This Compensation Discussion and Analysis section describes and analyzes our executive compensation program. It coversSpecifically, we describe and analyze the work of the Committeeprogram’s application to approve the design of our executive compensation program, set fixed pay, determine the results that must be achieved to earn incentives under the program and ultimately authorize incentive payouts. The focus of this section is on the executive compensation program covering the executive officers listed in the Summary Compensation Table, who we refer to as the namedTable; these are our “named executive officers.” For fiscal 2017 (or FY17),2018, or FY18, which began on May 30, 201629, 2017 and ended on May 28, 2017,27, 2018, our named executive officers were:
Name | Title | |||
Sean M. Connolly | Chief Executive Officer and President | |||
David S. Marberger | Executive Vice President and Chief Financial Officer | |||
Colleen R. Batcheler | Executive Vice President, General Counsel and Corporate Secretary | |||
Thomas M. McGough | President, Operating Segments | |||
Darren C. Serrao | Executive Vice President and Chief Growth Officer |
A shortWe have provided a summary of our fiscal 20172018 executive compensation program and our fiscal 20172018 performance is included in the “Executive Summary” below. For more complete information on the program and the Committee’s processes related to the program, we encourage you to read this entire Compensation Discussion and Analysis section.Analysis.
Executive Summary
Fiscal 2017 was another year of significant change for Conagra. As the year began,Since fiscal 2016, we werehave been implementing a strategic plan focused on completing several significant transactions that would transform ustransforming Conagra Brands into a pure-play, branded pure-play packaged food company and on establishing a solid platform for our company’s future growth. Our work to date has included significant portfolio reshaping. We have soldnon-core businesses and successfully executed thespin-off of Lamb Weston into an independent public company. Most notably, at the startSimultaneously, we have addedon-trend brands to our portfolio through a series of the fiscal year we were in the process of completing the Spinoff. modernizing acquisitions. We have also invested within Conagra, building leading innovation capabilities and completely overhauling our culture.
At the start of fiscal 2018, we outlined for investors the year, the imminent Spinoff made it challenging to set full year fiscal 2017 guidanceimperatives for continuing our shareholders, or to finalize three-year financial goals for our company. However, we announced the following imperatives:progress:
Maintaining the improving trends in our net sales growth rate, including through the new innovation that was just starting to hit the marketplace;
Continuing to focus on executional excellence;
Continuing to expand margins; and contemporize
Further reshaping our portfolio through organic and inorganic means, including through completion of the Spinoff, disciplined M&A and the rebuilding of our innovation pipeline;
activity.
With these imperatives,considerations in mind, the management team developed a fiscal 2017 operating plan and,Committee, during the summer of 2016, the Committee2017, approved the incentive programs and related performance measures for performance periods beginning in fiscal 2017. The fiscal 2017 incentive2018 executive compensation program for our named executive officers was comprised of the following elements:officers.
Compensation Discussion and Analysis
Elements of Fiscal 2018 Executive Compensation
The elements of our fiscal 2018 executive compensation program were as follows:
Base Salary and Benefits | ||
A fixed compensation program with salaries reviewed annually and adjusted as appropriate (as further described below). Benefit packages that are market competitive and generally broad-based in the company. | ||
Annual Incentive Awards | ||
A cash-based annual incentive program based on a single year of performance results. Performance measures are aligned to our annual operating plan. Payouts in fiscal 2018 could range from 0 to 220% of target. | ||
FY18 Annual Incentive Plan Performance Measures • Diluted earnings per share from continuing operations, adjusted for items impacting comparability (adjusted EPS); • Earnings before interest and taxes, adjusted for items impacting comparability (EBIT); and • Net sales growth, adjusted for items impacting comparability. | ||
Long-Term Incentive Awards | ||
Stock-based incentive program based on multi-year results or service. |
|
| |||
•
| ||||
•
•
•
| ||||
Restricted Stock Units
• | ||||
• Rewards stock price appreciation and tenure. |
Compensation Discussion and Analysis
In October 2016, as the completion of the Spinoff neared, the company held an investor day and outlined its financial guidance for the balance of FY17 and for the three years beginning with fiscalFiscal 2018 (or FY18). Among other metrics for FY17, we provided guidance of adjusted earnings per share in the range of $1.65 to $1.70.
Fiscal 2017 Results. Fiscal 2017 was a successful year for Conagra Brands and another important year in our transformation. We accomplished the company. Management led the team to achieve our goals:following:
• | Revenues: During fiscal 2018, our net sales grew 1.4%, with organic net sales nearly flat.2 These results were near the high end of our guidance range to investors. Our net sales performance was supported by our introduction of a full line of new product innovation. We |
The closing market price of our common stock rose from $35.29 per share on the first trading day of fiscal 2017 (as adjusted to account for the later Spinoff of Lamb Weston) to $39.03 per share on the last trading day of fiscal 2017. With dividends (and assuming dividend reinvestment), this represents a total return to shareholders of approximately 13%. On a three-year basis, from fiscal 2015 through fiscal 2017, the closing market price of our common stock grew from $24.37per share on the first trading day of fiscal 2015 (again, as adjusted to account for the later Spinoff of Lamb Weston) to $39.03 per share on the last trading day of fiscal 2017. With dividends (and assuming dividend reinvestment), this represents a total return to shareholders of over 70%.
1 A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
2 A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
strategy and rationalizedlow-value products and inefficient trade programs. We made the strategic decision during the year to shift some of our brand investments from advertising and promotion to retailer marketing. The accounting treatment of retailer investments is an offset to gross sales, while A&P investments are accounted for below gross margin. As a result, our net sales, versus our original plan, were impacted by this decision. However, we believe our FY18 choices to drive brand saliency, enhanced distribution, and consumer trial are appropriate for the long term. |
• | Operating Margin: Despite higher-than-expected input cost inflation during the year, we delivered fiscal 2018 operating margin of 13.0% and adjusted operating margin of 16.1%,3 in line with our investor commitments. |
• | EPS: EPS from continuing operations increased 56% in fiscal 2018, to $1.95, and adjusted EPS grew to $2.11,3 a more than 20% improvement. These results were above the high end of our guidance range, even after adjusting for the unplanned benefit of the Tax Cuts and Jobs Act, which became law during fiscal 2018. |
Capital Returned to Shareholders: We paid $342 million in dividends during fiscal 2018, and repurchased approximately $967 million of our common stock. Over the last three fiscal years, we have returned nearly $3.2 billion to shareholders.
• | M&A: During the second quarter of fiscal 2018, we acquired theAngie’s® BOOMCHICKAPOP® popcorn business, and during the third quarter of fiscal 2018, we acquired theSandwich Bros. of Wisconsin business. |
Culture: Today, we have a more energized and enthusiastic team of employees who bring an externally focused, entrepreneurial spirit to their work every day.
By strengthening our foundation over the last three fiscal years, we readied ourselves to embark on the next phase of our evolution. On June 26, 2018, shortly after the end of fiscal 2018, we entered into a definitive agreement to acquire Pinnacle Foods Inc., makers of well-known brands such asBirds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic and Wish-Bone, among others. We believe that the combination of two portfolios of iconic brands – ours and Pinnacle’s – will serve as a catalyst to accelerate value creation for shareholders.
Fiscal 20172018 Pay Outcomes Summarized
Our fiscal 2018 performance, together with our results since our new strategic journey began three years ago, have created significant value for shareholders. The company has repeatedly delivered on its financial commitments to investors. Given the Committee’s pay for performance philosophy, management has also been rewarded. As more fully described in this Compensation Decisions. Our strong performance in fiscal 2017 impacted the compensation earned byDiscussion and Analysis, our named executive officers, including our Chief Executive Officer, received annual incentive payouts at levels slightly above target for the year. Our fiscal 2017 MIP funded2018, driven by strong profit and paid out at above-target levels for eachnet sales growth performance. In addition, the named executive officer due to our earnings performance duringparticipants each received long-term incentive payouts under the fiscal 2017 and the individual contributions of our executives. In addition, as discussed more fully below, ouryear 2016 through fiscal 2017 results had a positive impact on each outstandingyear 2018 cycle of ourthe performance share program.plan at approximately 158.7% of target.
In determining attainment of the underlying performance goals for our incentive programs, the Committee considered the impact of items that it believes were not indicative of the comparable operating performance of our businesses. Some of these items created financial benefits, and some of them created incremental expense or lost sales. The impact of these items was removed from our results for purposes of determining plan payouts. A particularly notable category of adjustment, for fiscal 2018 and performance shares outstanding during fiscal 2018, was tax expense, in light of the Tax Cuts and Jobs Act’s effectiveness during our third fiscal quarter. More information can be found below under “Use“Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions.”
The Committee believes that its fiscal 20172018 compensation decisions appropriately reflect itspay-for-performance philosophy. This philosophy is focused on compensating executives based on performance and aligning management’s interests with those of our shareholders.
3 A reconciliation of this non-GAAP measure to the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
Objectives of Our Compensation ProgramProgram; Mitigating Risk
Our executive compensation program is designed to encourage and reward behavior that promotes attainment of our annual and long-term goals and that leads to sustainable growth in shareholder value. The Committee believes thatstrives to accomplish the program must accomplish five objectives:following as it develops the program:
Align compensation programs, policies and practices to our company’s vision, mission and values;
Be market competitive, but emphasize variable compensation to differentiate our program from that of peers;
Determine pay mix based on executive position;
Provide a compensation structure that groups positions based on impact to the company;
Afford opportunities and flexibility in pay positioning to ensure fair and equitable compensation and room for growth; and
Recognize and differentiate based on individual, team and company performance.
The Committee’s design of the compensation program with multiple objectives in mind helps mitigate the risk that employees will take unnecessary and excessive risks that threaten the long-term health and viability of our company. With the assistance of Human Resources and Legal department personnel, and FW Cook, the Committee’s independent compensation consultant, the Committee undertook a risk review of our fiscal 20172018 compensation programs for all employees. Based on the review, we believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the long-term. We believe our compensation policies and practices are balanced and aligned with creating shareholder value and do not create risks that are reasonably likely to have a material adverse effectlong-term, based in part on our company.
Compensation Discussion and Analysis
What We Do
| |
What We Don’t Do | |
✓ Focus employees on
✓ Consider a mix of financial andnon-financial goals to prevent over-emphasis on any single metric.
✓ Allow for some subjective evaluation in the determination of incentive
✓ Employ a greater portion of variable pay (i.e., incentives) at more senior levels of the organization.
✓ Require stock ownership for more than 80 of our most senior employees.
✓ Generally require a “double-trigger” for accelerated vesting to occur in equity awards in connection with a change of control.
✓
✓ Use a range of strong processes and controls, including Committee
✓
✓ Pay incentive compensation only after our financial results are complete and the Committee has certified our performance results.
| |
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× No director or executive officer may pledge or hedge their ownership of company stock.
× No excessive perquisites are provided to executives.
× No backdating orre-pricing of options may occur without shareholder approval.
× Since fiscal 2012, no change in control agreements have been executed with excise tax“gross-up” protection.
× No additional years of credited service are provided to named executive
× No compensation programs that encourage unreasonable risk taking will be implemented. |
Compensation Discussion and Analysis
We believe our compensation policies and practices are balanced and aligned with creating shareholder value and do not create risks that are reasonably likely to have a material adverse effect on our company.
Design and Approval of Our Fiscal 20172018 Program
The Committee is charged with designing and approving our executive compensation program and setting compensation opportunities for our named executive officers and certain other senior leaders. The Committee uses a variety of inputs to make these decisions, including the results of our annual“say-on-pay” vote, the advice of the Committee’s independent compensation consultant, including with respect to market data, company and participant-focused considerations, the input of our Chief Executive Officer, and the unique circumstances of each named executive officer. We address each of these inputs here.
Annual Say on Pay Vote.Vote
In designing the executive compensation program for fiscal 2017,2018, the Committee looked to our shareholders. The Committee’s policy is to present a“say-on-pay” vote to our shareholders annually. In fiscal 2016,September 2017, we received nearly 96%over 95% approval in oursay-on-pay vote, leading the Committee to the conclusion that material changes in compensation design, solely due to the outcome of thesay-on-pay vote, were not warranted for fiscal 2017.2018.
Compensation Discussion and Analysis
Independent Consultant and Market Data.Data
The Committee also leveraged the advice and counsel of its independent compensation consultant, FW Cook, in setting fiscal 20172018 compensation. The consultant assists the Committee in monitoring policy positions of institutional shareholders and their advisors, emerging market practices in compensation design and philosophy, and policy developments relevant to the Committee’s work. The Committee’s consultant also provides information on internal and external pay comparison data. The Committee uses this data as a market check on its compensation decisions.decisions and does not mandate target ranges for our named executive officers’ salaries, annual incentive opportunities, long-term incentive opportunities, or total direct compensation levels as compared to the peer group. The Committee recognizes that over-reliance on external comparisons can be of concern, andconcern; therefore, the Committee uses external comparisons as only one point of reference and is mindful of the value and limitations of comparative data.
The Committee’s first step in using external data for fiscal 20172018 was the identification of an appropriate peer group. FW Cook initially prepared a list of potential peer companies (with an emphasis on food and beverage companies) based on the following criteria:
• | Operations: Companies similar in size and operational scope (industry and |
• | Investors: Companies with which we compete for investor capital (similar performance characteristics, growth orientation, access to capital and business cycles); and |
• | Talent: Companies with which we compete for executive |
Compensation Discussion and Analysis
We completed thespin-off of our Lamb Weston business in November 2016, about six months prior to the start of fiscal 2018. As a result, the Committee asked FW Cook tore-examine our peer group to ensure continued alignment with the company’s size post-spin. FW Cook identified companiespotential peers with annual revenues within an approximate range of betweenone-third to three times ourpre-Spinoff revenue. (With the Spinoff pending at the time of the peer group’s authorization, own on a post-spin basis. Ultimately, FW Cook recommended, and the Committee agreed,Cook’s recommendation resulted in multiple changes to assess itsour peer group based onfor fiscal 2018. The Committee approved the business owned at the start of fiscal 2017.) To further enhance the comparability of the companies included in thefollowing peer group FW Cook used regression analysis as needed to adjust the compensation data on a comparable basis to the size of the peer group in the aggregate. The Committee also asked FW Cook to ensure that the peer group would be large enough to withstand unanticipated changes in our, or an included company’s, structure or compensation programs.
Ultimately, the Committee decided to retain its fiscal 2016 peer group, consisting of the following17 companies for an additional year:purposes of assessing fiscal 2018 compensation competitiveness:
Campbell Soup Company | General Mills, Inc. | Mattel, Inc. | ||
Church & Dwight Co., Inc. | The Hershey Company | Mead Johnson Nutrition Company | ||
The Clorox Company | Hormel Foods Corporation | Mondelez International, Inc. | ||
Colgate-Palmolive Company | The J. M. Smucker Company | Newell Brands Inc. | ||
Dr. Pepper Snapple Group, Inc. | Kellogg Company | Pinnacle Foods Inc. | ||
The Estée Lauder Companies Inc. | Kimberly-Clark Corporation |
The median revenue of thecompanies removed from our fiscal 2018 peer group listed above was similar to ours prior to the Spinoff; all of the companies fell within the desired range of approximatelyone-third to three times our annual revenue, with the exception ofwere PepsiCo, Inc. Although PepsiCo,, Altria Group, Inc. had revenues greater than three times larger than ours, the Committee determined to keep it in the peer group for, The Coca-Cola Company, Dean Foods Company, The Kraft Heinz Company, and Tyson Foods, Inc. For fiscal 2017 due to its status as a direct competitor for business2018, Church & Dwight Co., Inc., The Estée Lauder Companies Inc., The J. M. Smucker Company, Mattel, Inc., Mead Johnson Nutrition Company, Newell Brands Inc., and executive talent.Pinnacle Foods Inc. were added.
The Committee used data from the fiscal 2017 peer group, together with general industry data, as a market check on its fiscal 2017 compensation decisions. As noted above, this was just one of many factors that played a role in compensation decisions. The Committee does not mandate target ranges for our named executive officers’ salaries, annual incentive opportunities, long-term incentive opportunities, or total direct compensation levels as compared to the peer group. The Committee will continue to use peer data mindfully, as one of many tools for assessing the market competitiveness and appropriateness of executive pay opportunities.
Compensation Discussion and Analysis
Company and Participant Focused Matters.Matters
The Committee also generally considered the following company and participant focused matters in making fiscal 20172018 compensation decisions:
| • Company performance in prior years and expectations for the
• The anticipated degree of difficulty inherent in the targeted incentive performance
• The level of risk-taking the program would
• The general business
• Practices and developments in compensation design and
| |
Participant- Focused Matters | • Individual performance
• The anticipated degree of difficulty inherent in individual
• Internal pay
• The potential complexity of each program, preferring programs that administered. |
The Chief Executive Officer’s Views. Views
Mr. Connolly, our Chief Executive Officer and President, played a role in several key areas of the design and approval of our fiscal 20172018 executive compensation program.
• | Selecting Performance Metrics and Targeted Performance Levels. An important part of designing incentive compensation programs is the selection of plan metrics and performance targets. To help ensure that the |
Compensation Discussion and Analysis
Committee’spay-for-performance goals are achieved, selected metrics must be tied to shareholder value creation. In addition, performance targets must be set at levels that balance investor expectations against achievability, without incenting undue risk taking. The Committee sought Mr. Connolly’s input on these matters for fiscal |
• | Assessing Company Performance. Financial performance is at the core of our incentive programs. However, the Committee retains the discretion to modify payouts based on the manner in which business results are delivered. At the end of fiscal |
• | Assessing Individual Performance. With respect to individual performance, which also informed fiscal |
Individual Named Executive Officer Considerations.
The Committee, and, in the case of our Chief Executive Officer, the independent directors, specifically considered the following when setting fiscal 2017 compensation opportunities for each of our named executive officers.2018 compensation. No named executive officer played a direct role in his or her own compensation determination for fiscal 2017.2018.
• | Mr. Sean Connolly. Mr. Connolly has served as our Chief Executive Officer and a member of the Board since April 2015. The Committee believes that within our company, Mr. Connolly should have the largest aggregate |
Compensation Discussion and Analysis
compensation opportunity due to his level of responsibility and business experience. The Committee also believes Mr. Connolly should have the greatest proportion ofat-risk compensation. External market data supports this conclusion. For fiscal |
• | Mr. David S. Marberger. Mr. Marberger |
• | Ms. Colleen R. Batcheler. Ms. Batcheler has served as our Executive Vice President, General Counsel and Corporate Secretary since September 2009 and as Senior Vice President, General Counsel and Corporate Secretary since February 2008. She joined the company in 2006. When setting Ms. Batcheler’s compensation |
• | Mr. |
Compensation Discussion and Analysis
marketplace dynamics facing the branded food business, |
• | Mr. |
Below is a more detailed analysis of each element of the fiscal 20172018 compensation program for our named executive officers, as well as actual fiscal 20172018 payouts under the programs.
Compensation Discussion and Analysis
Key Elements of ourOur Fiscal 20172018 Executive Compensation Program
The fiscal 20172018 compensation of our named executive officers consisted of the following key components:
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Incentive | Fiscal 2018 Annual | |
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The Committee believes that using a mix of compensation types (salary, benefits, cash incentives and equity-based incentives) and a mix of performance periods (single year and multi-year periods)multi-year) promotes behavior consistent with our long-term strategic plan and minimizes the likelihood of executives having significant motivation to pursue risky and unsustainable results.
Opportunity Mix.By design, targeted incentive compensation for the named executive officers for fiscal 20172018 was a significant percentage of the total compensation opportunity. The Committee’s general policy is to provide the greatest percentage of the incentive opportunity in the form of long-term compensation payable in shares of our common stock. The Committee believes that the emphasis on stock-based compensation is the best method of aligning management interests with those of our shareholders.
The charts below show the total compensation opportunity (calculated using base salary rate, targeted FY17 MIPFY18 Annual Incentive Plan award, and targeted long-term incentive value) for Mr. Connolly and for our other named executive officers (other than Mr. Gehring) as a group. Due to his anticipated retirement during fiscal 2017, Mr. Gehring did not receive grants under the fiscal 2017 long-term incentive plan and is not included in the charts below.
Compensation Mix (at Target)
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Compensation Discussion and Analysis
Base Salaries.
We pay salaries to our named executive officers to provide them with a base level of fixed income for services rendered. On average, 22% of the total fiscal 20172018 compensation opportunity for each named executive officer, other than the Chief Executive Officer, and Mr. Gehring, was provided in the form of base salary. For Mr. Connolly, our Chief Executive Officer, 13%12% of his total compensation opportunity was provided in the form of base salary. For more information on Mr. Connolly’s base salary, see “Agreements with Named Executive Officers — Agreement with Mr. Connolly” below.
A summary of the salaries of our named executive officers is set forth below.
Name
|
Fiscal 2018 Base Salary Rate ($)
|
Increase from Fiscal 2017 (%)
|
Percent of Target Total
| |||||||||||
Mr. Connolly
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$1,150,000
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4.5%
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12%
| |||||||||||
Mr. Marberger
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$650,000
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12.1%
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23%
| |||||||||||
Ms. Batcheler
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$540,750
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-
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20%
| |||||||||||
Mr. McGough
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$669,500
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-
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23%
| |||||||||||
Mr. Serrao
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$505,000
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11.8%
|
23%
|
In fiscal 2018, the Board approved a base salary increase for Mr. Connolly from $1,100,000 to $1,150,000, and the Committee approved a base salary increase for Mr. Marberger from $580,000 to $650,000and for Mr. Serrao from $451,681 to $505,000. Please see the section above entitled “Individual“Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” for a discussion of the factors the Committee considered when determining the salaries of each of the named executive officers. In fiscal 2017, the
Compensation Discussion and Analysis
Committee approved an initial base salary of $580,000 for Mr. Marberger and salary increases for each of Ms. Batcheler (from $525,000 to $540,750), Mr. Biegger (from $500,000 to $511,260), and Mr. McGough (from $650,000 to $669,500). No changes were made to Mr. Connolly’s salary or to Mr. Gehring’s salary in fiscal 2017. For more information on the compensation of each named executive officer, please see “Executive Compensation — Summary Compensation Table –Fiscal 2017.”
Incentive Programs.
Consistent with its overall compensation objectives, the Committee aligned management compensation with company performance through a mix of annual and long-term incentive opportunities for fiscal 2017.2018. Opportunities under these programs combined to represent approximately 78%88% of theMr. Connolly’s compensation opportunity for fiscal 2018. For each named executive officer other than the Chief Executive Officer, and Mr. Gehring. For Mr. Connolly, targeted incentive compensation for fiscal 20172018 was approximately 87%78% of histhe total compensation opportunity.
We provide details of our incentive programs below. Financial targets disclosed in these discussions are done so in the limited context of our incentive plans; they are not statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
ManagementAnnual Incentive Plan
The FY17 MIPFY18 Annual Incentive Plan, or FY18 AIP, provided a cash incentive opportunity to approximately 1,900employees,3,500 employees, including our named executive officers. We providehave regularly provided an annual incentive opportunity to a broad group of employees, to reinforce an ownership mentality across our company. However, in fiscal 2018, we expanded eligibility for the AIP, adding more than 1,500 people to the program, further increasing the connection between pay and performance within Conagra employees are incented to create shareholder value.Brands.
For our named executive officers, our FY17 MIPAIP has historically used a framework that positioned awards to potentially qualify as tax deductible “performance-based compensation” under Section 162(m) of the Internal Revenue Code, which
Compensation Discussion and Analysis
we refer to as the Code. This framework, discussed more in the following paragraphs, uses an overarching performance goal and underlying performance goals. Because the “performance-based compensation” exemption under Section 162(m) of the Code has been repealed (subject to limited transition relief), effective for taxable years beginning after December 31, 2017, we expect to discontinue this framework in fiscal 2019 and beyond. Please refer to our discussion under “Tax“Additional Information on Compensation Practices – Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
Overarching EPS Performance Goal.At the start of fiscal 2017,2018, the Committee approved an overarching goal under the FY17 MIPFY18 AIP of adjusted EPS of $0.10. This goal, applicable only to a small group of senior officers, including the named executive officers, was required to be achieved before any payouts under the FY17 MIPFY18 AIP could be made to the officers. The FY17 MIPFY18 AIP further provided that if the overarching adjusted EPS goal was achieved, the Committee could exercise negative discretion to potentially reduce, but not increase, authorized payouts. This negative discretion was to be guided by performance against the underlying financial goals described in the next paragraph.
UnderlyingPre-Established Financial Goals.At the start of fiscal 2017,2018, the Committee approved fiscal 2018 EBIT as the underlyingprimary funding metric for the FY17 MIP (to be adjusted,FY18 AIP (subject to adjustment, as appropriate, for items impacting comparability of results). BecauseThe Committee also approved a net sales growth “kicker” in the Spinoffplan (also subject to adjustment). Assuming the overarching adjusted EPS goal was expectedmet, the named executive officers participating in the plan were eligible to be completed within the first halfearn a payout from 0% to 220% of the fiscal year, the Committee adopted fiscal 2017their respective target amounts, calculated as follows:
Primary Metric – EBIT goals specific to the businesses that would remain with Conagra (referred to as the Conagra Brands businesses). The Committee developed EBIT goals to align with threshold, target and maximum incentive opportunities as follows:opportunities. Our EBIT performance would result in a pool that could fund payouts in the range from 0% to 200% of target.
Threshold EBIT
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| Target EBIT | Maximum EBIT | |||||
$ | $ | $ | ||||||
Achievement at | Achievement at this level would result in a payout equal to 100% of the targeted opportunity | Achievement at or above this level would result in a payout equal to 200% of the targeted opportunity |
Compensation Discussion and Analysis
In fiscal 2016,Net Sales Growth “Kicker”. For the MIP’s underlying goals were EBIT and net sales. TheFY18 AIP, the Committee included a net sales goal was included as agrowth “kicker” to EBIT-driven results, allowing up to 20 additional pointsreinforce the importance of MIP payout to be earned. While achievement ofcontinued improvement in the company’s net sales commitmentsgrowth trend. Under this “kicker,” management could earn an incremental incentive by delivering net sales growth above its operating plans. Specifically, 10 points of incentive funding would be added to shareholders remainedthe pool upon attainment of fiscal 2018 net sales growth that resulted in total net sales of $7.85 billion. 10 more points of incentive funding would be added to the pool upon attainment of fiscal 2018 net sales of $7.9 billion. The kicker was designed as a priority in fiscal 2017, the “kicker”“stair-step” feature, was removedand omitted any interpolation for performance between these levels. The maximum incremental funding from the FY17 MIP. Managementkicker was focused on eliminating lower value sales in favor20 points.
The inclusion of more profitable ones during fiscal 2017. Given the planned reduction in fiscal 2017 net sales andkicker meant that total payouts under the importanceFY18 AIP could reach 220% of profit growth,target. The Committee designed the Committee chosekicker as a stretch goal, with a high degree of difficulty to limit the underlying FY17 MIP metric to EBIT.achieve.
Individual Compensation Opportunities.In addition to setting the financial goals for the FY17 MIP,FY18 AIP, the Committee set corresponding target compensation opportunities for each named executive officer, measured as a percentage of his or her base salary earnings.for fiscal 2018. The following table shows the ranges of authorized payments (expressed as a percentage of base salary earned during fiscal 2017)salary) for the named executive officers upon achievement of the threshold, target,EBIT and maximum EBITnet sales growth goals approved for the FY17 MIP.
Compensation Discussion and Analysis
FY18 AIP. If the overarching adjusted EPS goal was not met, no payments would be made. No portion of the incentive was guaranteed.
Named Executive Officer | Threshold AIP Award | Target AIP Award | Maximum | |||||||||||
Mr. Connolly | 37.5% of salary | 150% of salary | 330% of salary | |||||||||||
Mr. | 22.5% of salary | 90% of salary | ||||||||||||
198% of salary | ||||||||||||||
Ms. Batcheler | 25% of salary | 100% of salary | ||||||||||||
220% of salary | ||||||||||||||
Mr. McGough | 25% of salary | 100% of salary | 220% of salary | |||||||||||
Mr. | 22.5% of salary | |||||||||||||
| 90% of salary | |||||||||||||
| 198% of salary |
For fiscal 2018, both Mr. Marberger’s and Mr. Serrao’s target AIP award was increased from 80% of base salary to 90% of base salary. The targets for the remaining named executive officers remained unchanged from fiscal 2017. Please see the section above entitled “Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” for discussion of the factors the Committee considered when determining the target AIP awards of each of the named executive officers.
Fiscal 20172018 Results.As discussed above, Conagrawe overdelivered itson our adjusted earnings goals in fiscal 2017.2018. The company’s results led to above-target performanceslightly above-targetperformance under the FY17 MIP. For FY17 MIPFY18 AIP. More specifically, for FY18 AIP purposes, the Committee determined that we achieved fiscal 20172018 adjusted EPS above $0.10 (as discussed above) and fiscal 20172018 EBIT forof $1,357.9 million. In addition, the Conagra Brands businessescompany achieved adjusted net sales growth results at a level that permitted an incremental 10 points of $1,302.0 million.incentive funding. Formulaically, these results warranted a payout equal to 127%117% of target.
Metric | FY18 Target | FY18 AIP Results | Funding Level | |||||||||
Adjusted EPS | ³ $0.10 threshold for any payout | $2.11 | Achieved | |||||||||
EBIT (as adjusted) | $1,315.0 million | $1,357.9 million | 107%of Target | |||||||||
Net Sales (as adjusted) | $7,850.0 million (10 points) | $7,862.9 million | Additional 10points | |||||||||
$7,900.0 million (20 points) |
To incent management to make decisions that have positive long-term impacts, even at the expense of shorter-term results, and to prevent unusual gains and losses from having too great of an impact on plan payouts in any year, the Committee retained discretion in the FY17 MIPFY18 AIP to exclude items impacting comparability from company-wide results and adjust actual results for specific items that occurred during the fiscal year. The use of adjustments approved by the Committee and applicable to the fiscal 20172018 adjusted EPS, EBIT and EBITnet sales growth metrics is described below under “Use“Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions.”
Quality of Results. Once the performance metrics review was complete, the Committee considered the manner in which management executed the operating plan during the year to determine the overall payout level. Reflecting on the many operational and strategic accomplishments from the year, as set forth above under the heading “Executive Summary – Fiscal 2017 Results,” the Committee determined the financial performance results for fiscal 2017, before consideration2018, prior to the assessment of individual performance, warranted a payout level for all MIPAIP participants equal to 122%113% of target.
Compensation Discussion and Analysis
Determination of Individual Named Executive Officer Awards.The Committee’s final step was to determine each named executive officer’s individual payout under the FY17 MIP.FY18 AIP. This process involved an assessment of each executive’s individual performance. The Committee considered the factors set forth above under the heading “Individual“Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” when determining named executive officer payouts under the FY17 MIP.FY18 AIP, including the application of those factors during fiscal 2018. Mr. Connolly’s input on the individual contribution of these leaders, and his recommendations on program payouts, also assisted the Committee in approving specific MIPAIP payouts. The full Board’s performance evaluation of Mr. Connolly was used in determining his payout. The Committee believes that the MIPAIP awards paid to the named executive officers for fiscal 20172018 are consistent with the level of accomplishment by the company and each named executive officer during the year.
Named Executive Officer | Target Payout | Actual MIP Payout | Actual Payout as a % of Target | |||
Mr. Connolly | $1,650,000 | $2,314,950 | 140% | |||
Mr. Marberger | $339,077(1) | $471,588 | 139% | |||
Ms. Batcheler | $538,630 | $749,126 | 139% | |||
Mr. Biegger | $407,796 | $552,237 | 135% | |||
Mr. McGough | $666,875 | $878,675 | 132% | |||
Mr. Gehring | $302,105(2) | $368,568 | 122% |
Named Executive Officer | Target Opportunity | Actual AIP Payout | Actual Payout as | |||
Mr. Connolly | $1,713,462 | $2,250,000 | 131.3% | |||
Mr. Marberger | $575,308 | $715,107 | 124.3% | |||
Ms. Batcheler | $540,750 | $672,152 | 124.3% | |||
Mr. McGough | $669,500 | $832,189 | 124.3% | |||
Mr. Serrao | $447,117 | $581,029 | 130.0% |
Long-Term Incentive Plan
The Committee firmly believes in aligning the interests of our senior leaders with those of our shareholders. The significant extent to which equity is included in our named executive officers’ compensation opportunity evidences this belief. The long-term incentive plan for executive officers has historically been the primary vehicle for delivering this equity-based compensation.
For fiscal 2017,2018, the long-term incentive program was intended to focus participantsto:
provide variable, competitive compensation based on driving long-term success in a time of rapid and significant short-term change and to company performance;
incent and reward those leaders who have the greatest impact on our ability to achieve our ambitiondrive long-term company success; and deliver
reward participants for desired results that align with shareholder value to our shareholders. creation.
The fiscal 20172018 program for the named executive officers included threetwo elements: an award of stock options, an award of performance shares that are settled in shares of common stock, and an award of service-based RSUs. The same vehicles were used in fiscal 2016.restricted stock units (RSUs).
The actual number of stock options, targeted performance shares and RSUs granted to each named executive officer under the long-term incentive plan for fiscal 20172018 was determined using a value-based approach. Each named executive officer was provided a total targeted grant value, based on the considerations set forth above in the section entitled “Individual“Design and Approval of our Fiscal 2018 Program – Individual Named Executive Officer Considerations.” Fifty percent (50%)75% of the total targeted value was delivered as performance shares, 25% of the total targeted value was delivered as RSUs, and 25% of the total targeted value was delivered as stock options.RSUs. Performance share and (for named executive officers other than Mr. Marberger) RSU grant sizes were determined by dividing the dollar value of the targeted opportunity by the average of the closing market price of our common stock for the 30 consecutive trading days as of 10 trading days prior to and not including, the grant date. For Mr. Marberger, RSU grant sizes were determined by dividing
Prior to fiscal 2018, the dollar valuelong-term incentive program also included grants of stock options, with weighting among instruments of 50% performance shares, 25% RSUs and 25% stock options. During fiscal 2017, the Committee undertook a comprehensive review of the targeted opportunity by the averagetotal rewards program and determined to eliminate stock options at all levels of the closing market price of our
Compensation Discussion and Analysis
common stock fororganization.The Committee’s decision took into consideration the 30 trading days prior to, and not including,relatively slow growth in the grant date. Stock option grant totals were determined by multiplying the number of RSUs granted by six. The Committee used this approach to deliver what it views as an equal mixconsumer packaged goods industry, dilution impacts of stock options, market practice, and RSUsperceived value to participants.
Due With the elimination of stock options from its program, the Committee broadened participation in the performance share plan, to his anticipated retirement during fiscal 2017, Mr. Gehring did not receive grants under the fiscal 2017ensure that a sizable portion of each participant’s long-term incentive plan.remained fully performance based. Beginning in fiscal 2018, 25 additional leaders throughout the company were added to the performance share program.
Each element of the long-term incentive plan used in fiscal 20172018 is discussed more fully below.
Long-Term Incentive Plan – Stock Options
Historically, the Committee has used stock options to directly align the interests of the named executive officers with those of our shareholders. All stock options granted for fiscal 2017 have aten-year term and an exercise price equal to the closing market price of our common stock on the grant date. The options vest pro rata on each of the first three anniversaries of the grant date, generally subject to the executive’s continued employment with the company.
The number of options granted to each named executive officer during fiscal 2017 was:
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The Committee considered the factors discussed above under the heading “Individual Named Executive Officer Considerations” when determining grant sizes by individual. Grants to the named executive officers other than Mr. Marberger were made on July 11, 2016 with an exercise price (after the Spinoff-related equitable adjustment) of $35.81 per share. Mr. Marberger did not commence employment with us until August 8, 2016, and his option grant was made on September 1, 2016 with an exercise price (after the Spinoff-related equitable adjustment) of $34.26 per share. The grant date fair value of the stock options awarded to our named executive officers is included in the “Option Awards” column of the Summary Compensation Table – Fiscal 2017.
For fiscal 2018, the Committee has chosen to discontinue the use of stock options in our long-term incentive program. Instead, the named executive officers received a mix of performance shares, weighted at 75% of the total targeted opportunity, and RSUs, which made up the remaining 25%. The Committee’s decision regarding stock options was based on a review of market practices and a preference for performance shares as a means of aligning executive and shareholder interests.
Compensation Discussion and Analysis
Long-Term Incentive Plan – Restricted Stock Units
RSUs generally represent the right to receive a defined number of shares of our common stock after completing a period of service established at the grant date. RSUs support our compensation objective of encouragingencourage long-term commitment to the company.
In general, all RSUs granted forin fiscal 20172018 vest in full on the third anniversary of the date of grant, subject to the executive’s continued employment with us. Awards granted in fiscal 20172018 are not entitled to dividend equivalents.
The number of RSUs granted to each named executive officer pursuant to the fiscal 20172018 long-term incentive program is set forth below.
Named Executive Officer | RSUs Granted During Fiscal | |
Mr. Connolly | ||
Mr. Marberger | ||
Ms. Batcheler | ||
Mr. McGough | ||
Mr. |
The Committee considered the factors set forth above under the heading “Individual“Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” when determining grant sizes by individual. Grants to the named executive officers other than Mr. MarbergerConnolly were made on July 11, 2016. As with his option award,19, 2017. Mr. Marberger’sConnolly’s RSUs were granted effective September 1, 2016.Theon July 20, 2017.The grant date fair value of the RSUs awarded to our named executive officers is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2017.2018.
Long-Term Incentive Plan – Performance Shares
Performance shares generally represent an opportunity to earn a defined number of shares of our common stock if we achievepre-set performance goals over time. The three-year nature of each performance share grant means that in any year, a named executive officer can have up to three outstanding performance share plan, or PSP, cycles outstanding. In fiscal 2017,2018, for example, named executive officers could have been participants in our fiscal 2015 to 2017 PSP, our fiscal 2016 to 2018 PSP, and our fiscal 2017 to 2019 PSP.
Compensation DiscussionPSP and Analysis
our fiscal 2018 to 2020 PSP.
The targeted number of performance shares granted to our named executive officers in fiscal 2017,2018, together with the performance share grants made under the comparable program in fiscal 20162017 and fiscal 2015,2016, are set forth below.
Named Executive Officer | Targeted Performance Shares for Fiscal 2017 to 2019 Cycle (1) | Targeted Performance Shares for Fiscal 2016 to 2018 Cycle (1) | Targeted Performance Shares for Fiscal 2015 to 2017 Cycle (1) | Targeted Performance | Targeted Performance | Targeted Performance | ||||||
Mr. Connolly | 88,665 | 94,372 | 80,832 (2) | 151,128 | 88,665 | 94,372 | ||||||
Mr. Marberger | 22,698 | - | - | |||||||||
Mr. Marberger (2) | 35,710 | 22,698 | - | |||||||||
Ms. Batcheler | 22,698 | 24,159 | 34,325 | 35,710 | 22,698 | 24,159 | ||||||
Mr. Biegger | 17,023 | 19,492 (3) | - | |||||||||
Mr. McGough | 22,698 | 24,159 | 34,325 | 35,710 | 22,698 | 24,159 | ||||||
Mr. Gehring | - | 8,054 (4) | 22,884 (4) | |||||||||
Mr. Serrao | 26,783 | 17,023 | 18,119 |
Compensation Discussion and Analysis
(1) | The number of performance shares noted here reflects an equitable adjustment made to the original award in connection with the |
(2) | Mr. |
The level at which our named executive officers will earn the awards subject to these grants is dependent on the company’s performance over time against two sets of goals: an overarching adjusted EPS goal and underlying performance goals.
Overarching EPS Performance Goal.Similar to the FY17 MIP,FY18 AIP, the PSP utilizes an overarching adjusted EPS performance goal for our most senior executive participants. The PSP’s framework allowswas intended to allow performance share awards to potentially qualify as tax deductible under Section 162(m) of the Code. However, as described above, the “performance-based compensation” exemption under Section 162(m) has been repealed, effective for taxable years beginning after December 31, 2017, unless certain transition relief is available. Please refer to our discussion under “Additional Information on Compensation Practices – Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
The overarching adjusted EPS goal applicable to the named executive officers in each PSP cycle outstanding during fiscal 20172018 was as follows:
Compensation Discussion and Analysis
|
| |
Fiscal 2016 to 2018 cycle
| Adjusted EPS of $0.10 in each of fiscal years 2016, 2017, and 2018
| |
Fiscal 2017 to 2019 cycle
| Adjusted EPS of $0.10 in each of fiscal years 2017, 2018, and 2019
|
Adjusted EPS of |
As with the FY17 MIP,FY18 AIP, the adjusted EPS goal must be met before any payout can be made to a named executive officer.officer under the PSP. If the overarching adjusted EPS goal is met, the Committee can exercise negative discretion to potentially reduce, but not increase, authorized payouts. This negative discretion is guided by performance against underlying financial goals approved by the Committee. Refer to our discussion below under “Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
UnderlyingPre-Established Performance Goals.NearShortly after the beginningstart of each performance period ofin a cycle of the PSP, the Committee approves underlying performance goals aligned with threshold, target, and maximum incentive opportunities. If the overarching adjusted EPS goal for the cycle is ultimately met, the named executive officers participating in the cycle are eligible to earn a payout, in shares of common stock, of between 0% and 220% (in the case of the fiscal 2015 to 2017 cycle) or 0% and 200% (in the case of the fiscal 2016 to 2018 and fiscal 2017 to 2019 cycles) of their respective target amounts with respect to each applicable performance period.
For each cycle of the PSP outstanding during fiscal 2017, EBITDA Return on Capital was a key underlying performance metric. This metric is calculated by dividing EBITDA by average invested capital as follows:
|
| |||
For the fiscal 2015 to 2017 cycle of the PSP, the Committee chose to include a second underlying performance metric: average net sales growth (“Net Sales Growth”) over the three-year performance period. The Committee has chosen not to include a net sales metric as part of the 2016 and 2017 tranches of the fiscal 2016 to 2018 cycle or the 2017 tranche of the fiscal 2017 to 2019 cycle.
In the case of both EBITDA Return on Capital and Net Sales Growth, the operating results may be adjusted for items impacting comparability of results.
FY15 to FY17 Cycle of the PSP. The underlying performance goals for the fiscal 2015 to 2017 cycle were set as follows.
Compensation Discussion and Analysis
Plan Cycle | Threshold 3-Year Average EBITDA Return on Capital | Target 3-Year Average EBITDA | Maximum 3-Year Average EBITDA | |||
FY15-FY17 Cycle | 14.2% | 17.5% | 19.5% | |||
Achievement at this level would result in a payout equal to 25% of the targeted opportunity; achievement below this level would result in a 0% payout | Achievement at this level would result in a payout equal to 100% of the targeted opportunity (with an opportunity for additional funding based on the Net Sales Growth feature) | Achievement at or above this level would result in a payout equal to 200% of the targeted opportunity – the maximum level of payout, before taking into account the Net Sales Growth feature |
|
As a result of thetwo-metric structure, high levels of financial performance were designed to result in payouts up to a total of 220% of targeted shares under the fiscal 2015 to 2017 cycle.
The Committee selected these financial metrics for the fiscal 2015 to 2017 cycle because it believed they have a positive impact on shareholder value. At the time the goals were set, the Committee believed they appropriately balanced the interests of shareholders and participants.
FY16 to FY18 Cycle of the PSP. For the fiscal 2016 to 2018 cycle of the PSP, the Committee chose to approve the underlying performance goals in a multi-step process. This shift was a result of the significant amount of change being led by Mr. Connolly. At the time of incentive plan goal setting for fiscal 2016, Mr. Connolly was only four months into his tenure. The portfolio, cost, and cultural overhauls he identified had just commenced. In addition, strategic alternatives were being launched for a major business unit, Private Brands. As a result, multi-year performance objectives were challenging to set. Therefore, the Committee decided to set the underlying goals relevant to the fiscal 2016 to 2018 cycle of the PSP in stages.
In August 2015, the Committee approved the first set of underlying performance goals for the fiscal 2016 to 2018 PSP. The Committee approved a fiscal 2016 EBITDA Return on Capital goal applicable to 1/3 of the total targeted fiscal 2016 to 2018 award. Thereafter, in August 2016, the Committee approved the second set of underlying performance goals for the fiscal 2016 to 2018 PSP. Again, the Committee used EBITDA Return on Capital. It applied this goal, for fiscal 2017 performance, to a second 1/3 of the total targeted fiscal 2016 to 2018 award. The Committee agreed to approve the underlying performance goal for fiscal 2018 performance and the remaining 1/3 of the targeted award in the summer of 2017.
Compensation Discussion and Analysis
We refer to a portion of a PSP award as a tranche, and detail the specific EBITDA Return on Capital goals for the fiscal 2016 to 2018 cycle here:
Plan Cycle | Threshold Average EBITDA Return on Capital | Target Average EBITDA Return on Capital | Maximum Average EBITDA Return on Capital | |||
FY16 Tranche of FY16-FY18 Cycle (1)
(1/3 of Total Grant) | 20.2%
| 22.8%
| 25.1%
| |||
FY17 Tranche of FY16-FY18 Cycle (2)
(1/3 of Total Grant) | 17.9%
| 20.5%
| 22.8%
| |||
Achievement at or below these levels would result in no payout for the related tranche | Achievement at this level would result in a payout equal to 100% of the targeted opportunity for the related tranche | Achievement at or above this level would result in a payout equal to 200% of the targeted opportunity – the maximum level of payout –for the related tranche
|
As noted above, the Committee chose to eliminate the Net Sales Growth goal for the fiscal 2016 to 2018 cycle of the PSP. Achievement of the company’s net sales commitments to shareholders remained a priority. However, with the portfolio work underway, the Committee determined that profit improvement and capital allocation were more important focus areas for the senior leadership.
FY17 to FY19 Cycle of the PSP. During fiscal 2016, the company continued its transformation under Mr. Connolly’s leadership. Among other initiatives, the company announced and began preparing for the Spinoff. With the Spinoff still pending at the start of fiscal 2017, the Committee determined that it was appropriate to continue using a staged goal-setting approach for the PSP. The Committee knew that the company’s portfolio of businesses would be changed meaningfully during fiscal 2017, and that a three-year goal would be challenging to set. As a result, the Committee determined that it was appropriate to approve the underlying performance goals for the fiscal 2017 to 2019 cycle of the PSP in two tranches: a fiscal 2017 goal, set in the summer of 2016, would be applicable to 1/3 of the total targeted fiscal 2017 to 2019 award, and a second fiscal 2018 to 2019 goal, set in the summer of 2017, would be applicable to the remaining 2/3 of the targeted award.
Compensation Discussion and Analysis
In August 2016, the Committee approved the following fiscal 2017 EBITDA Return on Capital goal applicable to 1/3 of the total targeted fiscal 2017 to 2019 PSP award:
Plan Cycle | Threshold Average EBITDA Return on Capital | Target Average EBITDA Return on Capital | Maximum Average EBITDA Return on Capital | |||
FY17 Tranche of FY17-FY19 Cycle (1)
(1/3 of Total Grant) | 17.9%
| 20.5%
| 22.8%
| |||
Achievement at or below these levels would result in no payout for the related tranche | Achievement at this level would result in a payout equal to 100% of the targeted opportunity for the related tranche | Achievement at or above this level would result in a payout equal to 200% of the targeted opportunity – the maximum level of payout –for the related tranche
|
Because the overarching performance goal for the total fiscal 2017 to 2019 PSP cycle was established in fiscal 2017, the grant date fair value of all performance shares granted under the fiscal 2017 to 2019 cycle, based on the probable outcome of the performance conditions for such period, is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2017.
PSP Awards Earned for Fiscal 2017: FY15 to FY17 Cycle. At the end of fiscal 2017, the fiscal 2015 to 2017 cycle of the PSP concluded. The Committee certified the overarching performance goals for adjusted EPS; the company’s performance exceeded the thresholds in the plan (as discussed above). The Committee also assessed the company’s average EBITDA Return on Capital and average Net Sales Growth performance. The Committee’s assessment of these underlying performance goals was impacted by the Spinoff.
In connection with the Spinoff, we entered into an employee matters agreement with Lamb Weston, which we refer to as the Employee Matters Agreement. Among other things, the Employee Matters Agreement provided that the Committee would score our average EBITDA Return on Capital and average Net Sales Growth achievement for purposes of the fiscal 2015 to 2017 cycle of the PSP as of the end of the company’s last fiscal period ending prior to the Spinoff. After factoring in reported results and approved adjustments, we achieved average EBITDA Return on Capital of 17.2%. Our average Net Sales Growth failed to reach threshold payout levels. According to thepre-established goals, this performance level equated to a payout of 94.9% of the targeted performance share awards. For more information about this process, see “Special Note on the Treatment of Equity Awards in the Spinoff” and “Use of Adjustments in Compensation Decisions” below.
Although the underlying performance metrics were scored prior to the end of fiscal 2017, the awards granted to the named executive officers remained subject to the cycle’s overarching adjusted EPS goal for the entire original performance period and, generally, continued employment.
Compensation Discussion and Analysis
The table below lists the number of shares of common stock that were issued to the named executive officers following fiscal 2017 for the fiscal 2015 to 2017 cycle of the PSP. Neither Mr. Marberger nor Mr. Biegger participated in the cycle. The noted amounts include dividend equivalents on earned shares, which were paid in additional shares.
Named Executive Officer | Targeted Performance Shares Granted for Fiscal 2015 to 2017 Cycle (1) | Actual Performance Shares Earned for Fiscal 2015 to 2017 Cycle | Actual as % of Target (with Dividend Equivalents) | |||
Mr. Connolly | 80,832 | 80,820 | 100% | |||
Ms. Batcheler | 34,325 | 35,070 | 102% | |||
Mr. McGough | 34,325 | 35,070 | 102% | |||
Mr. Gehring
| 22,884
| 23,380
| 102%
|
PSP Awards Notionally Earned for Fiscal 2017: FY17 Tranches of the FY16 to FY18 Cycle and FY17 to FY19 Cycle. After fiscal 2017 was completed, the Committee determined the relative achievement against the underlying performance metric applicable to the fiscal 2017 tranche of the fiscal 2016 to 2018 cycle and fiscal 2017 to 2019 cycle of the PSP. Awards granted to the named executive officers under both cycles (including the 2017 tranche) remain subject to the overarching adjusted EPS goals applicable to the cycle and, generally, continued employment. After factoring in reported results and approved adjustments, we achieved fiscal 2017 average EBITDA Return on Capital of 21.4%. According to thepre-established goals, this level of performance permits funding at 122.8% of target for the 2017 tranche under both cycles. This percentage can still be adjusted by the Committee prior to payout after the three-year performance period for the fiscal 2016 to 2018 cycle or fiscal 2017 to 2019 cycle, as applicable, is completed, depending on the Committee’s further evaluation of performance under the applicable underlying metrics and other considerations, subject to the funding conditions for such award. For information about the use of adjustments approved by the Committee and applicable to the 2017 tranche of the fiscal 2016 to 2018 PSP and the fiscal 2017 to 2019 PSP, please see “Use of Adjustments in Compensation Decisions.”
Dividend Equivalents. Dividend equivalents are paid on the portion of the performance shares actually earned; dividend equivalents are paid at the regular dividend rate in shares of our common stock.
Other Notes on Performance Shares. In general, performance shares that have not been paid at the timeThe balance of a participant’s termination of employment are forfeited. An exception allows for pro rata payouts, based on actual plan performance, in the event of death, disability or retirement. The Committee has also retained the discretion to provide for payouts on termination when it finds it appropriate and in the best interest of Conagra Brands. To date, however, the Committee has not used this discretion.
Special Note on the Treatment of Equity Awards in the Spinoff
In connection with the Spinoff, certain equitable adjustments were made to allsection of the company’s outstanding equity awards, including those held by the named executive officers. The equitable adjustments were made to maintain after the Spinoff the approximate aggregate intrinsic value that the original award had prior to the Spinoff. A description of the equitable adjustments is set forth below.
Compensation Discussion and Analysis
describes each cycle of our PSP outstanding during fiscal 2018 including, immediately below, the Committee’s philosophy on goal setting for each of these cycles.Each outstanding company equity incentive award other than performance shares held by aGoal Setting During Times of Significant Change.As discussed earlier in this Proxy Statement, the last three years at Conagra Brands employee (which includes the named executive officers other than Mr. Gehring) that was outstanding as of the Spinoff was equitably adjusted to retain, immediately after the Spinoff, the approximate intrinsic value that it had immediately prior to the Spinoff.have been transformational. In each case, the equitable adjustment was accomplished by adjusting the number of shares subject to the award (and, in the case of stock options, the applicable exercise price). More specifically, the number of shares underlying each award was recalculated based on a ratio comparing the average volume weighted average price per share of Conagra Brands for the five trading day period prior to the Spinoff to the average volume weighted average price per share of Conagra Brands for the five trading day period following the Spinoff. The ratio was applied to the number of company shares subject to the award. Generally, such awards remain subject to substantially the same terms and conditions after the Spinoff as the terms and conditions that applied prior to the Spinoff.
Performance shares held by Conagra Brands employees (which includes the named executive officers other than Mr. Gehring) that were outstanding as of the Spinoff were equitably adjusted in accordance with the terms of our equity plans so that the awards immediately after the Spinoff, in the aggregate, generally maintained the same approximate intrinsic value that the awards had immediately prior to the Spinoff. Specific treatment was dependent upon the year in which the performance shares were originally granted and whether such awards were intended to constitute “qualified performance-based compensation” for purposes of Section 162(m) of the Code.
Mr. Gehring ceased employment with Conagra Brands and continued employment with Lamb Weston, effective as of the Spinoff. Mr. Gehring joined Lamb Weston as its interim Chief Financial Officer. Because Mr. Gehring planned to serve as the interim Chief Financial Officer of Lamb Weston for only a limited period of time, and in accordance with his Interim Position andNon-Compete Agreement (as described below), Mr. Gehring’s outstanding company equity awards were treated similarly to those held by the other named executive officers. That is, they were equitably adjusted to reflect the Spinoff and continued to cover shares of Conagra Brands common stock. However, as of the Spinoff, the service or employment requirements under Mr. Gehring’s equity awards were based on Mr. Gehring’s service or employment with Lamb Weston rather than Conagra Brands. For more information about Mr. Gehring’s retirement from Conagra, please see “Agreements with Named Executive Officers – Departure of Mr. Gehring” below.
As provided for under the Employee Matters Agreement (and as described above),August 2015, when the Committee equitably adjustedwas considering the performance shares for the fiscal 2015 to 2017 cycle for all of our named executive officers (including Mr. Gehring) and scored the underlying EBITDA Return on Capital and Net Sales Growth metrics as of the end of the last fiscal period ending prior to the Spinoff. Because of the timing of the Spinoff, the cycle was scored based on two years and five months of performance. Based on our performance results for such underlying metrics, the Committee approved achievement of the metrics at 94.9% of target. However, the vesting of such awards remained subject to achievement of the threshold adjusted EPS performance goal applicable to the fiscal 2015 to 2017 cycle. For performance sharesgoals for the fiscal 2016 to 2018 cycle of the performance share program, Mr. Connolly was only four months into his tenure as our CEO. Portfolio, cost, and cultural overhauls at the company had just commenced. In addition, strategic alternatives were being launched for a major business unit, Private Brands. As a result, multi-year performance objectives were challenging to set. With such significant change underway, the Committee made the decision to deviate from its preferred approach to goal setting for the PSP. Typically, shortly after the start of each three-year performance period, the Committee approves a three-year goal for the cycle. However, given the change being led by Mr. Connolly as fiscal 2016 began, the Committee
Compensation Discussion and Analysis
adopted aphased-in approach to goal setting for the program, to ensure that financial objectives during this period of change were ultimately relevant and transparent.
Although the Committee expected to return to three-year goal setting for the fiscal 2017 to 2019 cycle of the program, thespin-off of Lamb Weston into an independent public company was pending at the start of fiscal 2017. The Committee therefore determined that it was appropriate to continue using a staged goal-setting approach for the PSP.
In fiscal 2018, the Committee returned to a three-year performance goal in the PSP.
In summary, the Committee has approached the performance share programs beginning in fiscal years 2016, 2017 and 2018 as follows:
FY16 | FY17 | FY18 | FY19 | FY20 | ||||||
FY16-18 PSP Cycle | 1 year goal | 1 year goal | 1 year goal | |||||||
FY17-19 PSP Cycle | 1 year goal | 2 year goal | ||||||||
FY18-20 PSP Cycle | 3 year goal |
In fiscal years 2016 and 2017, the Committee adopted EBITDA Return on Capital as the relevant performance metric. This metric is calculated as follows:
EBITDA | = | Earnings before interest and taxes + Depreciation and amortization expense | ||
Average Invested Capital | Interest bearing debt + Equity (13 period average) |
In fiscal year 2018, the Committee shifted the goals to a rate of compound annual growth in diluted earnings per share, as adjusted for items impacting comparability (EPS CAGR) to simplify the program for participant understanding and acknowledge the importance of capital allocation decisions in the company’s strategic plan. The Committee adopted aone-year EPS CAGR goal covering fiscal year 2018 for the fiscal 2016 to 2018 cycle, atwo-year EPS CAGR goal covering fiscal years 2018 and 2019 for the fiscal 2017 to 2019 cycle, and a three-year goal EPS CAGR goal in the fiscal 2018 to 2020 cycle.
Although the Committee returned to a three-year performance goal in the fiscal 2018 to 2020 cycle, a further development added complexity to the PSP – the Tax Cuts and Jobs Act, or TCJA, becoming law. As noted, the Committee implemented an EPS CAGR goal in fiscal 2018. At the time of this implementation, the company’s planned annual tax rate was approximately 33 to 34%. Following the passage of the TCJA, the company’s annualized planned tax rate decreased to approximately 23 to 24%. If the Committee did not take action, the TCJA would artificially inflate the company’s EPS growth rate when measuring performance for outstanding PSP cycles. In addition, the company decided to use a portion of its TCJA-driven cash savings to make an unplanned, significant contribution to its frozen, defined benefit pension plan. With a more fully funded and frozen plan, the trust was able to begin shifting its investment approach for the related trust assets to lower return asset classes. Due to the accounting treatment of pension plan asset returns, the company’s EPS will now be lower than planned.
Compensation Discussion and Analysis
After considering the impact of the TCJA and related pension actions on the company’s EPS CAGR goals in the fiscal 2017 to 2019 and fiscal 2018 to 2020 cycles held by allof the PSP, and the Committee’s overarching desire to achieve simplicity, transparency and understandability in its compensation programs, it decided to amend the EPS CAGR goals for these two cycles. In July 2018, the Committee adopted the following changes:
Cycle
|
Original EPS CAGR at
|
Amended EPS CAGR
| ||||||
Fiscal 2018 to 2019
|
9.3%
|
13.2%
| ||||||
Fiscal 2018 to 2020 | 9.5% | 12.4% |
In the following pages, we further detail the performance metrics, goals and current company performance under each of these cycles.
FY16 to FY18 Cycle of the Performance Share Plan
The performance metrics and goals adopted for the fiscal 2016 to 2018 cycle of the PSP were EBITDA Return on Capital (for fiscal years 2016 and 2017) and EPS CAGR (for fiscal year 2018). The specific plan targets are as set forth here:
Fiscal 2016 to 2018 Cycle
| ||||||||
Performance Period | Goal | Performance for | Performance for Target (1) | Performance for | ||||
Fiscal 2016 (1/3 of Total Grant) | Average EBITDA Return on Capital | 20.2% (3) | 22.8% | 25.1% | ||||
Fiscal 2017 (1/3 of Total Grant) | Average EBITDA Return on Capital | 17.9% (3) | 20.5% | 22.8% | ||||
Fiscal 2018 (1/3 of Total Grant) | Adjusted Diluted EPS CAGR | 0.6% (4) | 8.6% | 16.7% |
(1) | Results in a payout equal to 100% of the targeted opportunity for the related tranche |
(2) | At or above results in a payout equal to 200% of the targeted opportunity for the related tranche |
(3) | At or below results in no payout for the related tranche |
(4) | Below results in no payout for the related tranche; achievement at this level results in payout equal to 25% of the targeted opportunity for the related tranche |
Compensation Discussion and Analysis
PSP Awards Earned for the FY16 to FY18 Cycle
At the conclusion of both fiscal year 2016 and fiscal year 2017, the Committee assessed our performance against the goals set forth in the plan. At the conclusion of fiscal 2018, the Committee assessed our performance against the fiscal 2018 goal and certified results overall. The company’s performance exceeded target in each year of the program. Ultimately, our strong financial performance over the last three years resulted in a funding level equal to 158.7% of the targeted PSP awards. It is generally the Committee’s practice to pay performance share awards at a level equal to the funded amount, without applying further discretion. For more information about the Committee’s assessment of our performance versus program goals, see “Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions” below.
Performance Period | Adjusted EPS Goal | Performance Metric | Plan Results
| Payout Earned
| Total Cycle Payout
| |||||||||||||||
FY16 (1) | Achieved | Average EBITDA Return on Capital | 25.1% | 200% | 158.7%
| |||||||||||||||
FY17 (2) | Achieved |
Average EBITDA Return on Capital | 21.4% | 122.8% | ||||||||||||||||
FY18 | Achieved |
Adjusted Diluted EPS CAGR
| 13.8% | 153.4% |
(1) | The FY16 EBITDA Return on Capital goal related to the company’s portfolio of businesses prior to thespin-off of Lamb Weston. As reported in our 2016 proxy statement, we achieved EBITDA Return on Capital of 25.1% for fiscal 2016, resulting in this tranche being notionally earned at 200% of target. For more information regarding the portion of theFY16-18 PSP award notionally earned in fiscal 2016, see our 2016 proxy statement. |
(2) | The FY17 EBITDA Return on Capital goal relates solely to the company’s portfolio of business after thespin-off of Lamb Weston. As reported in our 2017 proxy statement, we achieved EBITDA Return on Capital of 21.4% for fiscal 2017, resulting in this tranche being notionally earned at 122.8% of target. For more information regarding the portion of theFY16-18 PSP award notionally earned in fiscal 2017, see our 2017 proxy statement. |
The table below lists the number of shares of common stock that were issued to the named executive officers (includingfollowing fiscal 2018 for the fiscal 2016 to 2018 cycle of the PSP. Mr. Gehring),Marberger did not participate in the underlyingcycle due to the timing of his hiring after the program’s start. The noted amounts include dividend equivalents on earned shares, which were paid in additional shares.
Named Executive Officer | Targeted Performance Shares Granted for Fiscal 2016 to 2018 Cycle (1) | Actual Performance 2016 to 2018 Cycle | Actual as % of Target (without Equivalents) | Actual as % of Target (with Equivalents) | ||||||||||
Mr. Connolly
| 94,372
| 159,556
| 158.7%
| 169.1%
| ||||||||||
Ms. Batcheler
| 24,159
| 40,845
| 158.7%
| 169.1%
| ||||||||||
Mr. McGough
| 24,159
| 40,845
| 158.7%
| 169.1%
| ||||||||||
Mr. Serrao
|
18,119
|
30,634
|
158.7%
|
169.1%
| ||||||||||
(1) | The number of target performance shares noted here reflects an equitable adjustment made to the original award in connection with thespin-off of Lamb Weston on November 9, 2016. For information about equitable adjustments made to equity awards in connection with the spin-off, please see our 2017 proxy statement. |
Compensation Discussion and Analysis
Unvested Cycles of the Performance Share Plan: FY17 to FY19 Cycle
The performance metrics continuemeasures and goals adopted for the fiscal 2017 to apply.2019 cycle of the PSP were based on EBITDA Return on Capital (for fiscal year 2017) and EPS CAGR (fiscal years 2018 to 2019). The plan will conclude at the end of fiscal 2019, and pay out, to the extent earned, in shares of common stock in summer 2019. The specific plan targets (as adjusted for the TCJA, as discussed above) are as set forth here:
Fiscal 2017 to 2019 Cycle
| ||||||||
Performance Period | Goal | Performance for | Performance for | Performance for | ||||
Fiscal 2017 (1) (1/3 of Total Grant) | Average EBITDA Return on Capital | 17.9% (4) | 20.5% | 22.8% | ||||
Fiscal 2018 to 2019 (2/3 of Total Grant)
| Adjusted Diluted EPS CAGR, as amended
| 8.0% (5) | 13.2% | 18.2% |
(1) | The FY17 EBITDA Return on Capital goal relates solely to the company’s portfolio of businesses after thespin-off of Lamb Weston. As reported in our 2017 proxy statement, we achieved EBITDA Return on Capital of 21.4% for fiscal 2017, resulting in this tranche being notionally earned at 122.8% of target. For more information regarding the portion of the FY17 to FY19 PSP award notionally earned in fiscal 2017, see our 2017 proxy statement. |
(2) | Results in a payout equal to 100% of the targeted opportunity for the related tranche |
(3) | At or above results in a payout equal to 200% of the targeted opportunity for the related tranche |
(4) | At or below results in no payout for the related tranche |
(5) | Below results in no payout for the related tranche; achievement at this level results in payout equal to 25% of the targeted opportunity for the related tranche |
Unvested Cycles of the Performance Share Plan: FY18 to FY20 Cycle
The performance measure and goals adopted for the fiscal 2018 to 2020 cycle of the PSP were based on EPS CAGR. The plan will conclude at the end of fiscal 2020, and pay out, to the extent earned, in shares of common stock in summer 2020. The specific plan targets (as amended for the TCJA, as discussed above) are as set forth here:
Fiscal 2018 to 2020 Cycle
| ||||||
Performance Period | Threshold Adjusted Diluted EPS CAGR, as amended (1) | Target Adjusted Diluted EPS CAGR, as amended (2) | Maximum Adjusted Diluted EPS CAGR, as amended (3) | |||
Fiscal 2018 to 2020 (100% of Total Grant) | 8.8% | 12.4% | 15.8% |
(1) | Below results in no payout for the related tranche; achievement at this level results in payout equal to 25% of the targeted opportunity |
(2) | Results in a payout equal to 100% of the targeted opportunity |
(3) | At or above results in a payout equal to 200% of the targeted opportunity |
The grant date fair value of all performance shares granted under the fiscal 2018 to 2020 cycle, based on the probable outcome of the performance conditions for such period, is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2018.
Compensation Discussion and Analysis
Other Fiscal 20172018 Compensation
The additional material elements of our compensation program for the named executive officers during fiscal 20172018 were as follows:
Benefit Programs. Programs
We offer a package of core employee benefits to our employees, including our named executive officers. With respect to health and welfare benefits, we offer health, dental, and vision coverage and life and disability insurance. The company and employee participants share in the cost of these programs. We also offer a matching-gifts program through our Conagra Brands Foundation. To maximize community impact, the Conagra Brands Foundation will match, dollar for dollar, donationsoffers matching gift opportunities to all employees, make to eligible organizations, up to $1,000 in a calendar year.including the named executive officers. Donations made by the Foundation on behalf of a named executive officer are included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2017.
Compensation Discussion and Analysis
–Fiscal 2018.
With respect to retirement benefits, we maintain a qualified 401(k) retirement plansplan (with a company match on employee contributions) and qualified pension plans. Thethe named executive officers are entitled to participate in these plansthis plan on the same terms as other employees. Ms. Batcheler and Mr. McGough also participate in a qualified pension plan that was closed to new participants in 2013 and frozen effective December 31, 2017.
Some of the named executive officers and other employees at various levels of the organization participate in anon-qualified pension plan,non-qualified 401(k) plan, and/or voluntary deferred compensation plan. Thenon-qualified pension,non-qualified 401(k), and voluntary deferred compensation plans permitplan enables us to pay retirement benefits in amounts that exceed the limitations imposed by the Code under our qualified plans.
Our voluntary deferred compensation The plan allows the named executive officers, as well as a broader group of approximately 400 employees, to defer receipt of up to 50% of their base salary, andup to 90% of their annual cash incentive compensation.compensation, or up to 90% of their base compensation plus annual incentive in excess of $275,000. The program permits executives to save for retirement in atax-efficient way at minimal administrative cost to the company. Executives who participate in the program are not entitled to above-market (as defined by the SEC) or guaranteed rates of return on their deferred funds.
We include contributions made by the company to the named executive officers’ 401(k) plannon-qualified 401(k) plan, and voluntary deferred compensation accounts in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2017.2018. We provide a complete description of these retirement programs under the headings “Pension Benefits – Fiscal 2017”2018” and “Nonqualified Deferred Compensation – Fiscal 2017”2018” below.
Perquisites. Security Policy
The Committee has determined that it is appropriate to cover Mr. Connolly by our security policy. As a result, Mr. Connolly is required to take corporate aircraft for all business and personal air transportation. To offset a portion of the incremental cost to the company of his personal use of corporate aircraft, we entered into an aircraft time share agreement with Mr. Connolly. Under the agreement, Mr. Connolly is responsible for reimbursing us, in cash, certain amounts to help offset a portion of our incremental costs of personal flights, consisting of the cost of fuel and incidentals such as landing and parking fees, airport taxes and catering costs for such flights. We do not charge for the fixed costs that would be incurred in any event to operate company aircraft (for example, aircraft purchase costs, maintenance, insurance and flight crew salaries). Mr. Connolly’s reimbursement obligation to the company begins once the incremental cost of his personal flights exceeds $150,000 in a fiscal year. The incremental cost to us of providing these benefits in fiscal 2017,2018, if any, is included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2017.2018.
A copy of the Conagra Brands, Inc. Aircraft Use Policy is available upon request by ato any shareholder towho requests it from the Corporate Secretary at 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
Relocation Benefits. In fiscal 2016, the decision was made, as a part of the company’s efforts to overhaul its culture, to relocate its headquarters from Omaha, Nebraska to Chicago, Illinois. As a result, Ms. Batcheler’s role was moved to the new headquarters. In connection with her relocation to Chicago, Illinois, Ms. Batcheler was provided relocation benefits consistent with those provided to other officers of the company, plus associated tax assistance. Mr. Biegger also received relocation benefits in fiscal 2017, which relocation benefits were consistent with those provided to other officers of the company, plus associated tax assistance, as well as additional payments to assist him with expenses incurred as a result of the significant amount of time his role was required to spend at our Omaha offices following the relocation of his role to Chicago. The incremental cost to us of providing these benefits in fiscal 2017, if any, is included in the “All Other Compensation” column of the Summary
Compensation Table – Fiscal 2017.Discussion and Analysis
Agreements with Named Executive Officers
Agreement with Mr. Connolly.
We entered into an employment agreement with Mr. Connolly in February 2015 as a part of his hiring as our Chief Executive Officer. The agreement expiresexpired on August 1, 2018. The agreement generally describesdescribed Mr. Connolly’s duties and responsibilities as CEO, and, for its term, providesprovided for a minimum base salary of $1.1 million and a customary vacation allowance. The employment agreement also outlinesoutlined Mr. Connolly’s participation in our incentive compensation programs during its term. Regarding the annual incentive program, the agreement providesprovided that Mr. Connolly’s target opportunity mustwould be at least 150% of his base salary. With respect to long-term incentives,
Compensation Discussion and Analysis
commencing with fiscal 2016, Mr. Connolly iswas entitled, each year during the term of the agreement, to receive a targeted long-term award opportunity with a value of at least $6.25 million for any ensuing three-year performance period. For the 2015 to 2017 performance cycle, the employment agreement entitled Mr. Connolly to an award opportunity under the PSP with a grant date value of $2.09 million, which award is described above.
The agreement subjectssubjected Mr. Connolly to our stock ownership guidelines and aone-year post-employmentnon-competition restriction. It also requiresrequired Mr. Connolly to execute our standard confidentiality andnon-solicitation agreement.
The employment agreement also providesprovided Mr. Connolly with certain other benefits, including indemnification. The agreement entitlesentitled Mr. Connolly to use corporate aircraft, as further described above and under “Executive Compensation — Summary Compensation Table – Fiscal 2017”2018” below.
The employment agreement providesprovided for severance, termination and change of control benefits further described below under the heading “Executive Compensation — Potential Payments Upon Termination or Change of Control.”
The agreement also entitlesentitled Mr. Connolly to participate in benefit plans and programs that are made available to senior executives generally. For information about the terms of Mr. Connolly’s participation in our retirement plans and deferred compensation plans, see “Executive Compensation — Nonqualified Deferred Compensation – Fiscal 2017”2018” below.
Departure ofGiven Mr. Gehring. On May 18, 2016, Mr. Gehring notified us Connolly’s strong, results-oriented leadership during the first three years of his intenttenure, and the Board’s desire to retire fromretain Mr. Connolly as Conagra Brands’ CEO for the company. It was initially anticipated that Mr. Gehring would continue to serve as our principal financial officer untilforeseeable future, on August 29, 2016 and retire from Conagra Brands on or about September 30, 2016. In connection with his anticipated retirement,2, 2018, after the end of fiscal 2018, we entered into a Transition andNon-Competition Agreement, dated August 29, 2016,new letter agreement with Mr. Gehring which, among other things, required Mr. GehringConnolly. The agreement includes terms that are materially consistent with those described above. The key features of the new letter agreement that differ from the expired employment agreement are as follows: (1) no set expiration date; (2) a minimum base salary of $1.2 million; (3) a minimum targeted long-term award opportunity with a value equal to comply with certainnon-competition and employeenon-solicitation obligationsat least $7.5 million for periodsany ensuing three-year performance period; (4) eligibility for payment of 12 andmonthly COBRA premiums for up to 24 months following hisa termination without cause or for good reason; and (5) modified retirement date and provided that, until his cessation of employment, Mr. Gehring would provide certain services in connection with Mr. Marberger’s transition into the CFO role. The agreement also provided that, subject to the terms of the agreement, we would make certain cash payments to Mr. Gehring.
However, it was subsequently determined that Mr. Gehring would serve as principal financial officer for Lamb Weston on an interim basis prior to, and for a limited time following, the Spinoff. As such, on September 28, 2016, we and Mr. Gehring entered into an Interim Position andNon-Compete Agreement, which we refer to as the Gehring Interim Agreement. The Gehring Interim Agreement superseded in its entirety the Transition andNon-Competition Agreement.
Under the Gehring Interim Agreement, Mr. Gehring was to serve as the Vice President and interim Chief Financial Officer of Lamb Weston for a limited period that was generally expected to continue until December 15, 2016. The Gehring Interim Agreement provided that Mr. Gehring would receive a base salary during his employment at an annual rate of $650,000. It further provided that Mr. Gehring would continue to participate in the company’s FY17 MIP until the completion of the Spinoff, but that his payout would bepro-rated based on his actual service to Conagra Brands during fiscal year 2017 prior to the Spinoff. The Gehring Interim Agreement also provided that Mr. Gehring would participate in Lamb Weston’s fiscal year 2017 short-term annual cash incentive program after completion of the Spinoff on apro-rata basis tied to his actual service to Lamb Weston during fiscal 2017 following the Spinoff.
Under the Gehring Interim Agreement, Mr. Gehring’s equity awards outstanding at the time of the Spinoff were to be equitably adjusted under the terms of our equity plans to reflect the Spinoff, would settle in shares of Conagra Brands stock, and would continue vesting based on his service to Lamb Weston after the Spinoff. Mr. Gehring would also remain eligible for “early retirement” treatment for his equity awards.
Pursuant to the Gehring Interim Agreement, prior to the Spinoff, Mr. Gehring would continue to participate in our applicable benefit plans, but he would cease such participation at the time of the Spinoff and participate in Lamb Weston’s benefit plans thereafter. Mr. Gehring would also be entitled to (1) use our or Lamb Weston’s aircraft for commuting purposes related to his employment and (2) reimbursement for reasonable legal expenses relating to the execution of the Gehring Interim Agreement. He would also be available to assist and cooperate with Conagra Brands with respect to matters of which he is knowledgeable for up to one year after the Spinoff.
Compensation Discussion and Analysis
Mr. Connolly’s equity awards (specifically, a reduction in age requirements coupled with continued vesting, rather than immediate vesting). Under the Gehring Interim Agreement,new letter agreement, we also agreed to pay Mr. Gehring is eligibleConnolly for a payment of $250,000 as consideration for his executionprofessional fees incurred in the negotiation and thenon-revocation of a customary release of claims. In addition, if Mr. Gehring complies with the termspreparation of the Gehring Interim Agreement (including certain customary confidentiality,two-yearnon-solicitation,one-yearnon-competition, and mutualnon-disparagement covenants) and executes and does not revoke both the first release and an additional customary release of claims following his separation from service, henew letter agreement (and related documents). Mr. Connolly’s new agreement will be entitled to receive $400,000, $200,000 of which is payable six months following his separation from service and the remaining $200,000 of which is payable 12 months following his separation from service.described in greater detail in next year’s proxy statement.
Commencement of Employment of Mr. Marberger. In connection with his commencement of employment as Executive Vice President and Chief Financial Officer in August 2016, Mr. Marberger executed an offer letter, dated July 1, 2016. The offer letter provided that Mr. Marberger’s initial base salary would be $580,000 and that he would be eligible to participate in our annual and long-term incentive programs. As noted above, he participated in the FY17 MIP with a target opportunity of 80% of his annual base salary, prorated for fiscal 2017 based on his days of employment. In addition, Mr. Marberger is a participant in our long-term incentive program, as described above. His participation in the long-term incentive program provided an initial targeted opportunity equal to $1,600,000.
Pursuant to the offer letter, on September 1, 2016, Mr. Marberger was granted asign-on grant of 14,287 RSUs (after the Spinoff-related equitable adjustment), which RSUs are generally scheduled to vest ratably on each of the first two anniversaries of the grant date. These RSUs will vest in full if we terminate Mr. Marberger’s employment without cause prior to the second anniversary of the grant date.
Pursuant to the offer letter, Mr. Marberger also received aone-time cashsign-on cash payment of $200,000. Fifty percent (50%) of this payment was intended to compensate Mr. Marberger for travel and housing expenses during his first 12 months of employment and to assist with costs associated with Mr. Marberger’s commute from his home to our Chicago office prior to his permanent relocation. In addition, if Mr. Marberger’s interim travel and housing expenses exceed $100,000 during his first 12 months of employment, Mr. Marberger may be eligible to receive an additional cash payment of $50,000. However, if Mr. Marberger’s employment terminates voluntarily or involuntarily within one year of his commencement of employment (other than for reasons unrelated to his performance or behavior), then $100,000 of such payments must be repaid to us. We made these grants to ease the employment transition for Mr. Marberger, as he forfeited an annual incentive opportunity and equity awards in connection with his termination of employment with his prior employer.
The offer letter also provided that Mr. Marberger would be eligible to participate in our standard relocation program for our officers and health and welfare and retirement programs generally applicable to our employees.
Arrangements with Mr. Biegger.In connection with his commencement of employment and assumption of the role of Executive Vice President, Chief Supply Chain Officer in October2015, Mr. Biegger executed an offer letter, dated September 9, 2016. Among other things, the offer letter provided that Mr. Biegger’s initial base salary would be $500,000. The offer letter also provided that Mr. Biegger would be eligible to participate in our annual and long-term incentive programs, as described above. Pursuant to the offer letter, if Mr. Biegger departs the company after he has reached age 62 but before he has achieved retirement eligibility under the company’s equity programs, then, with the approval of the Committee, which approval will not be unreasonably withheld, (1) stock options granted pursuant to the annual long-term incentive program and vested at the time of his departure will be amended to provide Mr. Biegger the remaining life of the option to exercise, and (2) his departure will be treated as a position elimination for purposes of determiningpro-rata vesting of RSU grants that are made prior to the date of Mr. Biegger’s notice to Conagra of his intent to depart pursuant to our annual long-term incentive program. The offer letter also provided that Mr. Biegger would be eligible to participate in our standard relocation program for senior officers.
Change of Control / Severance Benefits.
We have agreements with our named executive officers that are designed to promote stability and continuity of senior management in the event of a change of control. The Committee routinely evaluates participation in this program and its benefit levels to ensure their reasonableness. Since fiscal 2012, individuals
Compensation Discussion and Analysis
promoted or hired into positions that, in the Committee’s view, are appropriate for change of control program participation have not been entitled to any excise taxgross-up protection. Although the Committee continues to believe in the importance of maintaining a change of control
Compensation Discussion and Analysis
program, it believes that offering excise taxgross-ups to new participants is inappropriate relative to best executive pay practices. We provide a complete description of the amounts potentially payable to our named executive officers under these agreements under the heading “Executive Compensation — Potential Payments Upon Termination or Change of Control.”
We have also adopted a broad severance plan applicable to most salaried employees, including the named executive officers. In some circumstances, as part of negotiations during the hiring or recruiting process, we have supplemented this plan with specific severance arrangements.
Additional Information on Compensation Practices
Committee’s Views on Executive Stock Ownership
The Committee has adopted stock ownership guidelines applicable to approximately 80 of our senior employees.employees, including our named executive officers. These guidelines, which are represented as a percentage of salary, increase with level of responsibility within the company. The Committee has adopted these guidelines because it believes that management stock ownership promotes alignment with shareholder interests. The named executive officers are expected to reach their respective ownership requirement within a reasonable period of time after appointment. Shares personally acquired by the executive through open market purchases or through our employee benefit plans (for example, our employee stock purchase plan,plan), as well as restricted stock, RSUs and shares acquired upon the deferral of earned bonuses, are counted toward the ownership requirement. Neither unexercised stock options nor unearned performance shares are counted. If a named executive officer’s ownership position is below the applicable ownership requirement, the named executive officer is required to hold 75% of the net sharesreceived from equity compensation awards.
The following table reflects ownership as of July 31, 20172018 for our continuing named executive officers.
Named Executive Officer | Stock Ownership Guideline (% of Salary) | Actual Ownership (% of Salary)(1) | ||
Mr. Connolly | 600% | 795% | ||
Mr. Marberger | 400% | 223% | ||
Ms. Batcheler | 400% | 1598% | ||
Mr. Biegger | 300% | 301% | ||
Mr. McGough | 400% | 880% |
Named Executive Officer | Stock Ownership Guideline | Actual Ownership | ||
Mr. Connolly
| 600%
| 1,189%
| ||
Mr. Marberger
| 400%
| 263%
| ||
Ms. Batcheler
| 400%
| 1,425%
| ||
Mr. McGough
| 400%
| 1,022%
| ||
Mr. Serrao
| 300%
| 478%
|
(1) | Based on the closing price of our common stock on the NYSE on July 31, |
Use of Adjustments in Compensation Decisions
Our goal is to pay incentives based on the same underlying business trends and results that our investors are using to measure managementcompany performance. To incent management to make decisions that have positive long-term impacts, even at the expense of shorter term results, and to preventone-time gains and losses from having too great of an impact on incentive payouts, the Committee designed its programs to exclude certain items impacting comparability from results in the fiscal 2017 MIP,2018 AIP and the fiscal 20152016 to 20172018 cycle of the PSP,PSP. The overarching metric for the fiscal 2018 AIP and the 2017 tranches of each of the fiscal 2016 to 2018 cycle of the PSP and the fiscal 2017 to 2019 cycle of the PSP. The underlying metric for the fiscal 2017 MIP was fiscal 2017 EBIT.adjusted EPS. The underlying metrics for the fiscal 20152018 AIP were fiscal 2018 EBIT and net sales growth. The underlying metrics for the fiscal 2016 to 20172018 cycle of the PSP were EBITDA Return on Capital and average Net Sales Growth. The underlying metric forEPS CAGR.
In both the 2017 tranche of each offiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP, and the fiscal 2017 to 2019 cycle of the PSP was EBITDA Return on Capital.
The Committee approved adjustments that are generally consistent with the adjustments presented to investors in our discussions of comparable earnings results.results
Compensation Discussion and Analysis
including, in the fiscal 2016 to 2018 cycle of the PSP, an adjustment to eliminate the impact of the TCJA on our adjusted EPS. In addition, in the fiscal 2018 AIP, the Committee approved an approximately $14 million adjustment to net sales results in light of management’s decision to shift brand investments from advertising and promotion expense to retailer marketing investments, as discussed above. On an unadjusted basis, the company’s fiscal 2018 net sales were approximately $1.1 million below the level otherwise required to earn the net sales “kicker.”
Committee’s Practices Regarding the Timing of Equity Grants
We do not backdate stock options or grant equity retroactively. We do not coordinate grants of equity with disclosures of positive or negative information. Most equity is granted in the ordinary course at an annual Committee meeting each July.
TheAs discussed above, the Committee has decided to eliminate the granting of stock options from its executive compensation program in fiscal 2018 and forward. However, historically, stock options have been granted with an exercise price equal to the closing market price of our common stock on the NYSE on the date of grant. And, if a stock option grant was made other than during the routine July Committee meeting, the company would require that the grant be made on the first trading day of the month on or following the grantee’s date of hire.
Additional Information on the Committee’s Compensation Consultant
The Committee engaged FW Cook directly to assist it in obtaining and reviewing information relevant to its compensation decisions. The independence and performance of FW Cook are of the utmost importance to the Committee. As a result, Committee policy prevents management from directly engaging the consultant without the prior approval of the Committee’s Chair. For fiscal 2017,2018, FW Cook did not provide any additional services to us or our affiliates. In addition, the Committee reviews the types of services provided by the consultant and all fees paid for those services on a regular basis and conducts a formal evaluation of the consultant on an annual basis. The Committee assessed the independence of FW Cook, as required under NYSE listing rules. The Committee has also considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to FW Cook during fiscal 2017.2018. Based on this review, the Committee did not identify any conflict of interest raised by the work performed by FW Cook.
Tax and Accounting Implications of the Committee’s Compensation Decisions
U.S. federal income tax law prohibits us from taking a tax deduction for certain compensation paid in excess of $1 million to our chief executive officer or any of our three other most highly compensatedcertain executive officers other than the chief financial officer, who are employed(and, beginning in 2018, certain former executive officers). Historically, compensation that qualified as “performance-based compensation” under Section 162(m) of the end ofCode could be excluded from this $1 million limit. This exception was repealed with the year. This limitation does not apply to qualified performance-based compensation under federal tax law. Generally, qualified-performance based compensationTCJA, effective for taxable years beginning after December 31, 2017, unless certain transition relief is compensation paid only if performance meetspre-established, objective goals based on performance metrics approved by our shareholders.available. The Committee’s general intent isprior to implementation of the TCJA was to structure our executive compensation programs so that payments may be able tocould qualify as fully tax deductible.“performance-based compensation.” However, while the Committee believes it is in the best interests of the company and its shareholders tomay have the ability to grant “qualified performance-based compensation” under Section 162(m) of the Code, it may decidedecided from time to time to grant compensation that willwould not (or could not) be able to qualify as “qualified performance-based“performance-based compensation” for purposesif appropriate to achieve the objectives of the compensation program.
With the repeal of the “performance-based compensation” provisions of Section 162(m) of the Code.Code, compensation granted by the Committee may, more frequently, benon-deductible. The Committee believes that the tax deduction limitation should not be permitted to compromise its ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes, and it is possible that awards intended to qualify as “performance-based compensation” may
Compensation Discussion and Analysis
not so qualify. Moreover, even if the Committee intendsintended to grant compensation that qualifies as “qualified performance-based compensation” for purposes of Section 162(m) of the Code, the company cannot guarantee that such compensation ultimately will be deductible.
For fiscal 2017,2018, all annual incentive and performance share awards to covered employees were subject to, and made in accordance with, performance-based compensation arrangements that were then intended to qualify as tax deductible. In order to achieve this potential result,To that end, the Committee approved a framework in which (1) maximum awards under these incentive programs would be authorized upon attainment of adjusted EPS of: $0.10 for the fiscal 2017 MIP; $0.10 per year for the performance period (for Mr. Connolly, excluding fiscal 2015) for the fiscal 2015 to 2017 cycle of the PSP;2018 AIP; $0.10 per year for the performance period for the fiscal 2016 to 2018 cycle of the PSP for each named executive officer other than Mr. Biegger; $0.05 for the second quarter through the fourth quarter of fiscal 2016 and $0.10 per year for each of 2017 and 2018 for the fiscal 2016 to 2018 cycle of the PSP for Mr. Biegger; andPSP; $0.10 per year for the performance period for the fiscal 2017 to 2019 cycle of the PSP; and $0.10 per year for the performance period for the fiscal 2018 to 2020 cycle of the PSP; and (2) negative discretion would be applied by the Committee to decrease
Compensation Discussion and Analysis
authorized awards based upon the program frameworks described above. The Committee intends to continue using this type of approach to potentially preserve the tax deductibility of its compensation arrangements in the future. However, the Committee does retain the discretion to make payments or grants of equity that are not fully deductible (for example, a portion of Mr. Connolly’s salary) when, in its judgment, those payments or grants are needed to achieve its overall compensation objectives.
Compensation Committee Report
The Human Resources Committee has reviewed and discussed the above section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement and incorporated by reference in the company’s Annual Report onForm 10-K for the fiscal year ended May 28, 2017.27, 2018.
Conagra Brands, Inc. Human Resources Committee
Bradley A. Alford | Rajive Johri | |||||
Richard H. Lenny | Ruth Ann Marshall | |||||
Executive Compensation
Summary Compensation Table – Fiscal 20172018
The table below presents compensation information for individuals who served as our Chief Executive Officer and Chief Financial Officer during fiscal 20172018 and for each of the other three most highly-compensated individuals who were serving as executive officers at the end of fiscal 2017. Neither2018. Mr. Marberger nor Mr. Biegger was not a named executive officer in fiscal 2015 or fiscal 2016; as such, information about such officers’his compensation for fiscal 2015 and fiscal 2016 is omitted. Mr. Serrao was not included.a named executive officer in fiscal 2017 or 2016; as such, information about his compensation for fiscal years 2017 and 2016 is similarly omitted.
The amounts in the following Summary Compensation Table for Mr. Connolly reflect, for fiscal 2015, his employment with the company beginning in April 2015. In addition, the amounts for Mr. Connolly are based in part on his employment agreement. For more information about the material terms of the employment agreement with Mr. Connolly and the change of control agreements we have entered into with each of our named executive officers, see “Compensation Discussion and Analysis — Agreements with Named Executive Officers — Change of Control/Severance Benefits” and “Compensation Discussion and Analysis — Agreements with Named Executive Officers — Agreement with Mr. Connolly”Officers” above and “Potential Payments Upon Termination or Change of Control” below.
For more information about our named executive officers’ mix of base salary and annual incentive compensation to their total compensation, see the discussion under “Compensation Discussion and Analysis — Key Elements of our Fiscal 20172018 Executive Compensation Program”Compensation” above.
Please note that all share amounts and (if applicable) exercise prices included in the tables in this “Executive Compensation” section for awards granted prior to November 9, 2016 reflect the equitable adjustments to the company’s outstanding equity awards that were made in connection with the Spinoff.spin-off of Lamb Weston. For additional information about such equitable adjustments, please see “Compensation Discussion and Analysis – Special Note on the Treatment of Equity Awards in the Spinoff.”Spinoff” in our 2017 proxy statement.
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Plan | Change in qualified | All Other Compen- sation ($) (6) | Total ($) | |||||||||||||||||||||||||||
Sean Connolly | 2017 | 1,100,000 | - | 4,628,385 | 1,246,952 | 2,314,950 | - | 477,990 | 9,768,277 | |||||||||||||||||||||||||||
CEO and | 2016 | 1,100,000 | - | 4,396,589 | 1,032,499 | 3,258,750 | - | 157,972 | 9,945,810 | |||||||||||||||||||||||||||
President | 2015 | 249,615 | - | 3,915,232 | 2,304,000 | - | - | 171,728 | 6,640,576 | |||||||||||||||||||||||||||
David Marberger | 2017 | 423,846 | 200,000 | 1,631,211 | 299,447 | 471,588 | - | 22,754 | 3,048,846 | |||||||||||||||||||||||||||
EVP and Chief | ||||||||||||||||||||||||||||||||||||
Financial Officer | ||||||||||||||||||||||||||||||||||||
Colleen Batcheler | 2017 | 538,630 | - | 1,184,861 | 319,214 | 749,126 | 25,118 | 267,098 | 3,084,047 | |||||||||||||||||||||||||||
EVP, General Counsel and | 2016 | 521,635 | - | 2,895,365 | 264,335 | 989,019 | 39,296 | 97,807 | 4,807,457 | |||||||||||||||||||||||||||
Corporate Secretary | 2015 | 500,000 | - | 789,147 | 502,775 | - | 31,785 | 41,249 | 1,864,956 | |||||||||||||||||||||||||||
David Biegger | 2017 | 509,744 | - | 888,611 | 239,401 | 552,237 | - | 399,112 | 2,589,105 | |||||||||||||||||||||||||||
EVP and Chief Supply | ||||||||||||||||||||||||||||||||||||
Chain Officer | ||||||||||||||||||||||||||||||||||||
Executive Compensation
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Plan | Change in qualified | All Other Compen- sation ($) (6) | Total ($) | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Plan | Change in qualified | All Other Compen- sation ($) (4) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sean Connolly
|
|
2018
|
|
|
1,142,308
|
|
|
-
|
|
|
6,676,835
|
|
|
-
|
|
|
2,250,000
|
|
|
-
|
|
|
404,128
|
|
|
10,473,271
|
| |||||||||||||||||||||||||||||||||||||||||||||
CEO and President
|
|
2017
|
|
|
1,100,000
|
|
|
-
|
|
|
4,628,385
|
|
|
1,246,952
|
|
|
2,314,950
|
|
|
-
|
|
|
477,990
|
|
|
9,768,277
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
2016
|
|
|
1,100,000
|
|
|
-
|
|
|
4,396,589
|
|
|
1,032,499
|
|
|
3,258,750
|
|
|
-
|
|
|
157,972
|
|
|
9,945,810
|
| ||||||||||||||||||||||||||||||||||||||||||||||
David Marberger
|
|
2018
|
|
|
639,231
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
715,107
|
|
|
-
|
|
|
91,029
|
|
|
3,027,429
|
| |||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer
|
|
2017
|
|
|
423,846
|
|
|
200,000
|
|
|
1,631,211
|
|
|
299,447
|
|
|
471,588
|
|
|
-
|
|
|
22,754
|
|
|
3,048,846
|
| |||||||||||||||||||||||||||||||||||||||||||||
Colleen Batcheler
|
|
2018
|
|
|
540,750
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
672,152
|
|
|
10,449
|
|
|
109,850
|
|
|
2,915,263
|
| |||||||||||||||||||||||||||||||||||||||||||||
General Counsel
|
|
2017
|
|
|
538,630
|
|
|
-
|
|
|
1,184,861
|
|
|
319,214
|
|
|
749,126
|
|
|
25,118
|
|
|
267,098
|
|
|
3,084,047
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
2016
|
|
|
521,635
|
|
|
-
|
|
|
2,895,365
|
|
|
264,335
|
|
|
989,019
|
|
|
39,296
|
|
|
97,807
|
|
|
4,807,457
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Tom McGough | 2017 | 666,875 | - | 1,184,861 | 319,214 | 878,675 | 35,360 | 150,550 | 3,235,535 |
|
2018
|
|
|
669,500
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
832,189
|
|
|
15,987
|
|
|
137,007
|
|
|
3,236,745
|
| ||||||||||||||||||||||||||||||||||||
President, | 2016 | 636,538 | - | 2,895,365 | 264,335 | 1,156,589 | 48,895 | 57,867 | 5,059,589 |
|
2017
|
|
|
666,875
|
|
|
-
|
|
|
1,184,861
|
|
|
319,214
|
|
|
878,675
|
|
|
35,360
|
|
|
150,550
|
|
|
3,235,535
|
| ||||||||||||||||||||||||||||||||||||
Operating Segments | 2015 | 524,039 | - | 789,147 | 502,775 | - | 45,107 | 59,968 | 1,921,036 |
|
2016
|
|
|
636,538
|
|
|
-
|
|
|
2,895,365
|
|
|
264,335
|
|
|
1,156,589
|
|
|
48,895
|
|
|
57,867
|
|
|
5,059,589
|
| ||||||||||||||||||||||||||||||||||||
Darren Serrao
|
|
2018
|
|
|
496,797
|
|
|
-
|
|
|
1,186,587
|
|
|
-
|
|
|
581,029
|
|
|
-
|
|
|
84,580
|
|
|
2,348,993
|
| |||||||||||||||||||||||||||||||||||||||||||||
Chief Growth Officer
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John Gehring | 2017 | 302,105 | 250,000 | - | - | 368,568 | 264,627 | 5,119 | 1,190,419 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former EVP and Chief | 2016 | 643,269 | - | 2,895,365 | 264,335 | 1,118,001 | 365,019 | 20,172 | 5,306,161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Officer | 2015 | 600,000 | - | 789,147 | 502,775 | - | 306,119 | 36,198 | 2,234,239 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. |
Reflects the aggregate grant date fair value computed in accordance with |
Executive Compensation
reported are based on the probable outcome of the relevant performance conditions as of the grant date. Assuming the highest level of performance is achieved for the performance shares awarded in fiscal |
2. | For fiscal 2018, reflects awards earned under the fiscal 2018 AIP. A description of the fiscal 2018 AIP is included in the Compensation Discussion and Analysis. |
3. |
The measurement date for pension value for fiscal |
Executive Compensation
The components of fiscal |
Named Executive Officer | Perquisites and Personal Benefits (a) | |||||||||||||||||||||||||||||||||
Perquisites and Personal Benefits (a) | ||||||||||||||||||||||||||||||||||
Named Executive Officer | (Column 1) Personal $ | (Column 2) Security $ | (Column 3) Matching $ | (Column 4) Relocation $ | (Column 5) $ | (Column 6) Company $ (c) | (Column 7) Tax $ (d) | (Column 1) $ | (Column 2) $ | (Column 3) $ (c) | ||||||||||||||||||||||||
89,431 | (b | ) | - | - | - | 384,079 | - | 106,841 | - | 297,287 | ||||||||||||||||||||||||
Mr. Marberger | - | - | - | - | - | 22,754 | - | - | (b) | 85,029 | ||||||||||||||||||||||||
Ms. Batcheler | - | - | - | 139,943 | (e) | - | 109,007 | 18,148 | - | (b) | 108,350 | |||||||||||||||||||||||
Mr. Biegger | - | - | - | 293,578 | (f) | - | 80,369 | 25,165 | ||||||||||||||||||||||||||
Mr. McGough | - | (b | ) | - | - | - | 147,206 | - | - | (b) | 135,507 | |||||||||||||||||||||||
Mr. Gehring | - | - | - | - | - | 5,119 | - | |||||||||||||||||||||||||||
Mr. Serrao | - | (b) | 78,080 |
(a) | All amounts shown are valued at the incremental cost to us of providing the benefit. For Column 1, also includes the incremental cost of repositioning flights associated with personal use by the named executive officer. With respect to Mr. Connolly’s use of company aircraft (Column 1), Mr. Connolly is a party to an aircraft time share agreement with us. Under this agreement, Mr. Connolly reimburses us in cash for a portion of our incremental costs of personal flights (in other words, the cost of fuel and incidentals, such as landing and parking fees, airport taxes and catering costs for such flights). We do not charge Mr. Connolly for the fixed costs that would be incurred in any event to operate the company aircraft (for example, aircraft purchase costs, maintenance, insurance and flight crew salaries). Because the incremental cost of such flights did not exceed $150,000 in fiscal |
(b) | For Columns 1 |
(c) | Reflects the qualified CRISP contributions by us. |
Executive Compensation
Grants of Plan-Based Awards – Fiscal 20172018
The following table presents information about grants of plan-based awards (equity andnon-equity) during fiscal 20172018 to the named executive officers. All equity-based grants were made under the shareholder approved ConAgra FoodsConagra Brands, Inc. 2014 Stock Plan, which we refer to as the 2014 Stock Plan.
Name | Grant Date | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2)(3) | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | Exercise or Base Price of Option Awards ($/Sh) (5) | Grant Date Fair Value of Stock and Option Awards ($) (6) | Grant Date |
Estimated Possible Payouts |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thres- hold ($) | Target ($) | Maximum ($) | Thres- hold (#) | Target (#) | Maximum (#) | Committee Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | - | - | 1,650,000 | 3,300,000 | - | - | - | - | - | - | - | - | - | 1,713,462 | 3,769,616 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Connolly | 8/19/2016 | - | - | - | - | 88,665 | 177,330 | - | - | - | 3,097,664 | 7/20/2017 | 7/19/2017 | - | - | - | - | 151,128 | 302,256 | - | 5,100,570 | |||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | 45,551 | - | - | 1,530,720 | 7/20/2017 | 7/19/2017 | - | - | - | - | - | - | 50,376 | 1,576,265 | ||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | - | 273,309 | 35.81 | 1,246,952 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | - | - | 339,077 | 678,154 | - | - | - | - | - | - | - | - | - | 575,308 | 1,265,678 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Marberger | 8/19/2016 | - | - | - | - | 22,698 | 45,396 | - | - | - | 793,004 | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | |||||||||||||||||||||||||||||||||||||||||||||
9/1/2016 | - | - | - | - | - | - | 11,541 | - | - | 369,885 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/1/2016 | - | - | - | - | - | - | 14,287 | - | - | 468,321 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/1/2016 | - | - | - | - | - | - | - | 69,248 | 34.26 | 299,447 | 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | ||||||||||||||||||||||||||||||||||||||||||||||
Ms. | - | - | 538,630 | 1,077,260 | - | - | - | - | - | - | - | - | - | 540,750 | 1,189,650 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Batcheler | 8/19/2016 | - | - | - | - | 22,698 | 45,396 | - | - | - | 793,004 | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | |||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | 11,660 | - | - | 391,857 | 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | ||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | - | 69,965 | 35.81 | 319,214 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | - | - | 407,796 | 815,592 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Biegger | 8/19/2016 | - | - | - | - | 17,023 | 34,046 | - | - | - | 594,730 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | 8,745 | - | - | 293,881 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | - | 52,472 | 35.81 | 239,401 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | - | - | 666,875 | 1,333,750 | - | - | - | - | - | - | - | - | - | 669,500 | 1,472,900 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
McGough | 8/19/2016 | - | - | - | - | 22,698 | 45,396 | - | - | - | 793,004 | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | |||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | 11,660 | - | - | 391,857 | 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | ||||||||||||||||||||||||||||||||||||||||||||||
Mr. | - | - | 447,117 | 983,657 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Serrao | 7/19/2017 | 7/19/2017 | - | - | - | - | 26,783 | 53,566 | - | 906,605 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | - | - | - | 69,965 | 35.81 | 319,214 | 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 8,928 | 279,982 | ||||||||||||||||||||||||||||||||||||||||||||||
Mr. | - | - | 302,105 | 604,210 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gehring |
1. | Amounts reflect grants made under the fiscal |
2. | Amounts reflect the performance shares granted to our named executive officers under our long-term incentive program for the fiscal |
3. |
|
Executive Compensation
The grant date fair value of performance shares granted under our long-term incentive program for the fiscal |
Executive Compensation
Outstanding Equity Awards at FiscalYear-End – Fiscal 20172018
The following table lists all stock options, performance shares and RSU awards outstanding as of May 28, 201727, 2018 for the named executive officers.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Stock That Have | Equity Incentive (#) (7) | Equity Incentive Plan or Payout Value of Unearned Shares, Units or ($) (6) | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Stock That Have | Equity Incentive (#) (6) | Equity Incentive Plan or Payout Value of Unearned Shares, Units or ($) (5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | 4/1/2015 | 537,433 | 268,717 | 27.44 | 3/31/2025 | - | - | - | - | 4/1/2015 | 806,150 | - | 27.44 | 3/31/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Connolly | 8/28/2015 | 94,370 | 188,741 | 31.06 | 8/27/2025 | - | - | - | - | 8/28/2015 | 188,740 | 94,371 | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | 273,309 | 35.81 | 7/10/2026 | - | - | - | - | 7/11/2016 | 91,103 | 182,206 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2015 | - | - | - | - | 65,197 | (3) | 2,544,633 | - | - | 8/28/2015 | - | - | - | - | 47,185 | 1,765,191 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 47,185 | 1,841,631 | - | - | 7/11/2016 | - | - | - | - | 45,551 | 1,704,063 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 45,551 | 1,777,856 | - | - | 7/20/2017 | - | - | - | - | 50,376 | 1,884,566 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | - | - | 196,361 | 7,663,986 | 8/19/2016 | - | - | - | - | - | - | 184,669 | 6,908,467 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 180,336 | 7,038,525 | 7/20/2017 | - | - | - | - | - | - | 309,517 | 11,579,031 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | 9/1/2016 | - | 69,248 | 34.26 | 8/31/2026 | - | - | - | - | 9/1/2016 | 23,082 | 46,166 | 34.26 | 8/31/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marberger | 9/1/2016 | - | - | - | - | 11,541 | 450,445 | - | - | 9/1/2016 | - | - | - | - | 11,541 | 431,749 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/1/2016 | - | - | - | - | 14,287 | (4) | 557,622 | - | - | 9/1/2016 | - | - | - | - | 7,144 | (3) | 267,257 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 46,166 | 1,801,843 | 7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ms. | 7/16/2012 | 48,369 | - | 18.42 | 7/15/2022 | - | - | - | - | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Batcheler | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | 8/28/2015 | 48,320 | 24,160 | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/14/2014 | 144,164 | 61,787 | 23.00 | 7/13/2024 | - | - | - | - | 7/11/2016 | 23,321 | 46,644 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | 24,160 | 48,320 | 31.06 | 8/27/2025 | - | - | - | - | 7/17/2015 | - | - | - | - | 53,508 | 2,001,734 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | 69,965 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/17/2015 | - | - | - | - | 53,508 | 2,088,417 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 12,080 | 471,482 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 11,660 | 455,090 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | - | - | 50,268 | 1,961,959 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 46,166 | 1,801,843 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | 11/2/2015 | 19,584 | 39,168 | 30.45 | 11/1/2025 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Biegger | 7/11/2016 | - | 52,472 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/2/2015 | - | - | - | - | 13,056 | (5) | 509,576 | - | - | 8/28/2015 | - | - | - | - | 12,080 | 451,913 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/2/2015 | - | - | - | - | 9,792 | 382,182 | - | - | 7/11/2016 | - | - | - | - | 11,660 | 436,201 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 8,745 | 341,317 | - | - | 7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/5/2015 | - | - | - | - | - | - | 40,556 | 1,582,904 | 8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 34,623 | 1,351,343 | 7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | 7/16/2012 | 80,615 | - | 18.42 | 7/15/2022 | - | - | - | - | 7/16/2012 | 80,615 | - | 18.42 | 7/15/2022 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
McGough | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/14/2014 | 144,164 | 61,787 | 23.00 | 7/13/2024 | - | - | - | - | 7/14/2014 | 205,951 | - | 23.00 | 7/13/2024 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | 24,160 | 48,320 | 31.06 | 8/27/2025 | - | - | - | - | 8/28/2015 | 48,320 | 24,160 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | 69,965 | 35.81 | 7/10/2026 | - | - | - | - | 7/11/2016 | 23,321 | 46,644 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/17/2015 | - | - | - | - | 53,508 | 2,088,417 | - | - | 7/17/2015 | - | - | - | - | 53,508 | 2,001,734 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 12,080 | 471,482 | - | - | 8/28/2015 | - | - | - | - | 12,080 | 451,913 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 11,660 | 455,090 | - | - | 7/11/2016 | - | - | - | - | 11,660 | 436,201 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | - | - | 50,268 | 1,961,959 | 7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 46,166 | 1,801,843 | 8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. | 8/28/2015 | - | - | - | - | - | - | 16,756 | 653,981 | 8/28/2015 | 36,238 | 18,120 | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gehring | 8/28/2015 | 7,215 | - | 31.06 | 12/15/2019 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Serrao | 7/11/2016 | 17,490 | 34,982 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | - | - | - | - | 9,059 | 338,897 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/1/2015 | - | - | - | - | 4,346 | (4) | 162,584 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 8,745 | 327,150 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 8,928 | 333,996 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/19/2016 | - | - | - | - | - | - | 35,455 | 1,326,372 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 54,853 | 2,052,051 |
Executive Compensation
1. | All options were granted with an exercise price equal to the closing market price of our common stock on the NYSE on the date of grant. The vesting schedule for options that were outstanding but that could not be exercised at fiscalyear-end for the named executive officers is as follows: |
Unexercisable at FYE | Vesting Schedule | Unexercisable at FYE | Vesting Schedule | Unexercisable at FYE | Vesting Schedule | Unexercisable at FYE | Vesting Schedule | |||||||||||||||||||||||||||||||||||||||||
# of Shares | Vesting Date | # of Shares | Vesting Date | # of Shares | Vesting Date | # of Shares | Vesting Date | |||||||||||||||||||||||||||||||||||||||||
Mr. Connolly | 268,717 | 268,717 | 4/1/18 | Mr. Biegger | 39,168 | 19,584 | 11/2/17 | 94,371 | 94,371 | 8/28/18 | Mr. McGough | 24,160 | 24,160 | 8/28/18 | ||||||||||||||||||||||||||||||||||
188,741 | 94,370 | 8/28/17 | 19,584 | 11/2/18 | ||||||||||||||||||||||||||||||||||||||||||||
94,371 | 8/28/18 | 52,472 | 17,490 | 7/11/17 | ||||||||||||||||||||||||||||||||||||||||||||
273,309 | 91,103 | 7/11/17 | 17,491 | 7/11/18 | ||||||||||||||||||||||||||||||||||||||||||||
91,103 | 7/11/18 | 17,491 | 7/11/19 | 182,206 | 91,103 | 7/11/18 | 46,644 | 23,322 | 7/11/18 | |||||||||||||||||||||||||||||||||||||||
91,103 | 7/11/19 | Mr. McGough | 61,787 | 61,787 | 7/14/17 | 91,103 | 7/11/19 | 23,322 | 7/11/19 | |||||||||||||||||||||||||||||||||||||||
Mr. Marberger | 69,248 | 23,082 | 9/1/17 | 48,320 | 24,160 | 8/28/17 | 46,166 | 23,083 | 9/1/18 | Mr. Serrao | 18,120 | 18,120 | 8/28/18 | |||||||||||||||||||||||||||||||||||
23,083 | 9/1/18 | 24,160 | 8/28/18 | 23,083 | 9/1/19 | 34,982 | 17,491 | 7/11/18 | ||||||||||||||||||||||||||||||||||||||||
23,083 | 9/1/19 | 69,965 | 23,321 | 7/11/17 | 17,491 | 7/11/19 | ||||||||||||||||||||||||||||||||||||||||||
Ms. Batcheler | 61,787 | 61,787 | 7/14/17 | 23,322 | 7/11/18 | 24,160 | 24,160 | 8/28/18 | ||||||||||||||||||||||||||||||||||||||||
48,320 | 24,160 | 8/28/17 | 23,322 | 7/11/19 | 46,644 | 23,322 | 7/11/18 | |||||||||||||||||||||||||||||||||||||||||
24,160 | 8/28/18 | 23,322 | 7/11/19 | |||||||||||||||||||||||||||||||||||||||||||||
69,965 | 23,321 | 7/11/17 | ||||||||||||||||||||||||||||||||||||||||||||||
23,322 | 7/11/18 | |||||||||||||||||||||||||||||||||||||||||||||||
23,322 | 7/11/19 |
2. | Unless otherwise indicated, RSUs generally vest in full on the third anniversary of the grant date. |
3. |
Represents asign-on grant of RSUs awarded to Mr. Marberger on September 1, 2016 pursuant to the terms of his offer letter. These RSUs generally vest in two equal installments on each of the first two anniversaries of the grant date. |
Represents a |
The market value of unvested or unearned RSUs and unearned shares is calculated using |
Reflects, on separate lines, as of May |
Executive Compensation
Option Exercises and Stock Vested – Fiscal 20172018
The following table summarizes the RSUs vested and the option awards exercised during fiscal 20172018 for each of the named executive officers as well as the performance shares that were earned by and paid out to the named executive officers for the fiscal 20152016 to 2017 cycle of the PSP. Mr. Marberger began employment with us on August 8, 2016 and was appointed as Executive Vice President and Chief Financial Officer on August 29, 2016. Mr. Biegger began employment with us in November 2015. Accordingly, they did not participate in the fiscal 2015 to 20172018 cycle of the PSP.
The performance period for the fiscal 2015 to 2017 cycle of the PSP ended on May 28, 2017. Except as otherwise noted below, the column entitled “Stock Awards” below includes only shares earned under that cycle for cumulative three-year performance.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($) | ||||||||||||||||||||||||||||||||
Mr. Connolly | - | - | 80,820 | 3,154,405 | - | - | 225,939(2) | 8,417,195 | ||||||||||||||||||||||||||||||||
Mr. Marberger | - | - | - | - | - | - | 7,143(3) | 234,862 | ||||||||||||||||||||||||||||||||
Ms. Batcheler | - | - | 35,070 | 1,368,782 | 254,320 | 3,477,847 | 40,845 | 1,528,011 | ||||||||||||||||||||||||||||||||
Mr. Biegger | - | - | 6,528 | (2) | 238,403 | |||||||||||||||||||||||||||||||||||
Mr. McGough | - | - | 35,070 | 1,368,782 | - | - | 40,845 | 1,528,011 | ||||||||||||||||||||||||||||||||
Mr. Gehring | 264,913 | 3,479,960 | 53,856 | (3) | 2,083,409 | |||||||||||||||||||||||||||||||||||
Mr. Serrao | - | - | 34,980(4) | 1,288,914 |
1. | Pursuant to the terms of the PSP, dividend equivalents on earned shares, paid in additional shares of common stock, were also distributed to the named executive officers. The shares distributed to the named executive officers through this dividend equivalent feature (and included in this table) were: |
Executive Compensation
2. | The number of shares noted here includes 4,502 additional shares of common stock from dividend equivalents provided as part of asign-on RSU grant awarded to Mr. Connolly on April 1, 2015. |
The number of shares noted here is comprised solely of the portion of asign-on RSU grant awarded to Mr. Marberger on September 1, 2016 that vested during fiscal 2018. |
4. | The number of shares noted here includes 4,346 shares underlying RSUs awarded as part of asign-on grant to Mr. |
Pension Benefits – Fiscal 20172018
Conagra Brands maintainshas historically maintained anon-contributory defined benefit pension plan for all eligible employees, which we refer to as the Qualified Pension. Employees eligible to participate in the Qualified Pension are salaried employees, including the named executive officers, hired prior to August 1, 2013. The Qualified Pension was closed to new participants who joined the company on or after August 1, 2013. As a result, Messrs. Connolly, Marberger and BieggerSerrao are not eligible to participate.
Employees hired before June 1, 2004 were given aone-time opportunity during 2004 to choose between (A) the benefit formulas in the Qualified Pension and qualified 401(k) plan at that time and (B) effective October 1, 2004, a new Qualified Pension formula plus an enhanced company match in our qualified 401(k) plan. Employees hired on or after June 1, 2004 were automatically enrolled in option (B) effective upon their date of hire. With respect to Of the named executive officers, only Ms. Batcheler and Mr. McGough joinedparticipate.
In the company after June 1, 2004 but prior to August 1, 2013 and were automatically enrolled in option (B). Mr. Gehring was employed prior to June 1, 2004 and was enrolled in option (A).
Under both option (A) and option (B),Qualified Pension, the pension benefit formula for the named executive officer participants is determined by adding threetwo components:
A multiple – 0.9% — of Average Monthly Earnings (up to the integration level) multiplied by years of credited service (up to 35 years of credited service). This multiple is 1.0% for option (A) and 0.9% for option (B).
A multiple – 1.3% — of Average Monthly Earnings (over the integration level) multiplied by years of credited service (up to 35 years of credited service). This multiple is 1.44% for option (A) and 1.3% for option (B).
Executive Compensation
“Average Monthly Earnings” is the monthly average of the executive’s annual compensation from the company, up to the IRS limit, for the highest five consecutive years of the final ten years of his or her service. Only salary and annual incentive payments (reported in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table – Fiscal 2017)summary compensation table year to year) are considered for the named executive officers in computing Average Monthly Earnings. The integration level is calculated by the Internal Revenue Service, or IRS by averaging the last 35 years of Social Security taxable wages, up to and including the year in which the executive’s employment ends.
Participants are vested in the pension benefit once they have five years of vesting service with the company.company; each of Ms. Batcheler and Mr. McGough are vested. Pension benefits become payable for option (A) participants at theage 65 for normal retirement, age of 65, or age 60 if the participant has 25 or more years of service. Normal retirement age for option (B) participants is 65. Under either option, the Qualified Plan defines early retirement asat age 55 with 10 years of service.service for early retirement. There is no difference in the benefit formula upon an early retirement, and there is no payment election option that would impact the amount of annual benefits any of the named executive officers would receive.
Mr. Gehring also participated in a supplemental retirement plan (which we refer to in the table below as the Nonqualified Pension). To the extent that a participant’s benefit under the The Qualified Pension exceeds the limit on the maximum annual benefit payable under the Employee Retirement Income Security Act of 1974 or such participant’swas frozen effective December 31, 2017. Credited service and Average Monthly Earnings exceeds the limit under the Code on the maximum amountwere frozen as of compensation that can be taken into account under the Qualified Pension, payments are made under the Nonqualified Pension. The retirement age and benefit formulas are the same as those used for the Qualified Plan except as described in the following paragraphs.
Generally, a participant’s benefit under the Nonqualified Pension is payable in installments beginning in January following the participant’s separation from service or disability, but the participant may also elect to receive the payment as a lump sum and elect a specified year in which payment will be made or commence, or elect to receive his or her benefit in the form of annuity payments. Elections regarding the time and form of payment are intended to comply with Section 409A of the Code, and certain payments to executives meeting the definition of a “specified employee” under Section 409A of the Code will be delayed for six months after the date of the separation from service.
Pension Benefits – Fiscal 2017such date.
Name | Plan Name (1) | Number of Years Credited Service (#) (2) | Present Value of Accumulated Benefit ($) (3) | |||||||
Mr. Connolly (4) | Qualified Pension | - | - | |||||||
Nonqualified Pension | - | - | ||||||||
Mr. Marberger (4) | Qualified Pension | - | - | |||||||
Nonqualified Pension | - | - | ||||||||
Ms. Batcheler | Qualified Pension | 10.9 | 214,313 | |||||||
Nonqualified Pension | - | - | ||||||||
Mr. Biegger (4) | Qualified Pension | - | - | |||||||
Nonqualified Pension | - | - | ||||||||
Mr. McGough | Qualified Pension | 10.3 | 276,403 | |||||||
Nonqualified Pension | - | - | ||||||||
Mr. Gehring | Qualified Pension | 14.8 | 554,874 | |||||||
Nonqualified Pension | 14.8 | 1,647,379 |
Executive Compensation
Name | Plan Name (1) | Number of Years Credited Service (#) (2) | Present Value of Accumulated Benefit ($) (3) | |||
Mr. Connolly (4) | Qualified Pension | - | - | |||
Mr. Marberger (4) | Qualified Pension | - | - | |||
Ms. Batcheler | Qualified Pension | 11.5 | 224,762 | |||
Mr. McGough | Qualified Pension | 10.9 | 292,390 | |||
Mr. Serrao (4) | Qualified Pension | - | - |
1. | Qualified |
2. | The number of years of credited service set forth above is calculated as of May |
3. | The valuation methodology and all material assumptions applied in quantifying the present value of the accumulated benefit are presented in footnote |
4. | Messrs. Connolly, Marberger and |
Executive Compensation
Nonqualified Deferred Compensation – Fiscal 20172018
The table following this summary of our nonqualified deferred compensation plans shows the nonqualified deferred compensation activity for each named executive officer during fiscal 2017.2018. The amounts shown include amounts deferred under the ConAgra Foods, Inc. Amended and Restated Nonqualified CRISP Plan, as amended, or Nonqualified CRISP, which is our nonqualified 401(k) plan, and the Conagra Brands, Inc. Amended and Restated Voluntary Deferred Compensation Plan, as amended, or Voluntary Deferred Comp Plan, which is our voluntary deferred compensation plan. The Conagra Brands Retirement Income Savings Plan, or Qualified CRISP, which is our qualified 401(k) plan. The amounts shown forplan, and the Nonqualified CRISP include company contributions during fiscal 2017.Conagra Brands, Inc. Voluntary Deferred Compensation Plan, as amended and restated, or Voluntary Deferred Comp Plan.
The Nonqualified CRISP (which has limited participation) supplementsUnder our Qualified CRISP, which is available to a broad base of salaried employees. Mr. Gehring is the only named executive officer who participated in the Nonqualified CRISP during fiscal 2017. Because the Code limits the annualbefore-tax contributions that an individual can make to a qualified retirementbroad-based plan if a named executive officer reached this maximum, he or she would lose the ability to receive the full extent of the available company matching contribution. The Nonqualified CRISP was used to enable the company to provide this population with the company matching contribution. Under the plan, the company made a contribution equal to 3% of the named executive officer’s eligible earnings less the maximum employer contribution the named executive officer could have received from the Qualified CRISP.
Under our Qualified CRISP, for employees, enrolled in option (A) under the Qualified Pension, the company will match the first 50% of the first 6% of salary and bonus the employee contributes to the Qualified CRISP. For employees enrolled in option (B) under the Qualified Pension, the company will match 66 2/3% of the first 6% of salary and bonus the employee contributes to the plan. Under the Qualified CRISP, for employees not eligible for the Qualified Pension (hired on or after August 1, 2013), the company will match 100% of the first 6% of salary and bonus the employee contributes to the plan, and make an additional company contribution of 3% of salary and bonus.
Theannual incentive. This formula was in effect for all of fiscal 2018 for Mr. Connolly, Mr. Marberger and Mr. Serrao. For Ms. Batcheler and Mr. McGough, who participated in the Qualified Pension during fiscal 2018 until it was frozen on December 31, 2017, this formula went into effect on January 1, 2018. Previously, the company contributionmatched only 66 2⁄3% of the first 6% of salary and bonus contributed to the Nonqualified CRISP is made annually on or about December 31st.plan. Participants are generally required to be employed on that date to receive the contribution.
Generally, an executive’sprovided a wide-array of investment alternatives for their account balance under the Nonqualified CRISP is payable in cash in a lump sum in January following the executive’s separation from service, but executives meeting certain qualifications may also elect to receive payment in the form of installments. All outstanding distributions are ten year installments. Elections regarding the time and form of payment are intended to comply with Section 409A of the Code, and certain payments to executives meeting the definition of “specified employee” under Section 409A will be delayed for six months after the date of the separation from service.balances.
Our Voluntary Deferred Comp Plan also allows certain domestic management-level employees whose salary is $125,000 or more per year to defer receipt of 5% to 50% of their salary, and up to 90% of their annual incentive payment.payment, or up to 90% of their salary plus annual incentive payment in excess of $275,000. The investment alternatives for deferred amounts are an interest bearing account, a Conagra Brands stock account (which, effective June 1, 2017, is not available for executive officers who are required to file reports pursuant to Section 16 of the Securities Exchange Act of 1934, as amended) or other investment options that mirror those available under our Qualified
Executive Compensation
CRISP. The stock account includes a dividend reinvestment feature that converts dividends into additional shares. Amounts deferred into the stock account, together with earnings and dividends thereon, are ultimately distributed in shares of Conagra Brands common stock. Amounts deferred into the interest bearing account or the accounts that mirror those available under the Qualified CRISP funds are ultimately distributed in cash. An election to participate in the plan must be timely filed with the company in accordance with IRS requirements.
Our Voluntary Deferred Comp Plan also provides nonqualified matching contribution retirement benefits to those employees not receiving such benefits, including the named executive officers who do not participate in the Nonqualified CRISP (Mr. Connolly, Mr. Marberger, Ms. Batcheler, Mr. Biegger, and Mr. McGough).benefits. The Voluntary Deferred Comp Planplan provides for company matching contributions and companynon-elective contributions to the Voluntary Deferred Comp Plan for eligible participants forassociated with amounts of salary and bonus that areeligible compensation above IRS limits.
The company matching contribution is made at the end of each calendar year. At that time, the company credits an eligible participant’s account in the Voluntary Deferred Comp Plan with (1) a matching contribution equal to a dollar for dollar match, limited to 6% of eligible compensation earned by the participant and paid by the company in excess of the IRS limit and (2) anon-elective contribution equal to 3% of an eligible participant’s compensation in excess of the IRS limit. Eligible participants are allowed to defer no more than 50% of their base salary and no more than 90% of their annual incentive payment that exceeds the IRS limit. Thenon-elective contribution is equal to 3% of an eligible participant’s eligible compensation in excess of the IRS limit. Matching contributions andnon-elective contributions will beare credited on or about December 31st of each year if the eligible participant earns in excess of the IRS limit and the participant is actively employed at the end of the calendar year.
The Voluntary Deferred Comp Plan also provides that, unless the company determines otherwise with respect to a participant, the interest of each participant in his or her matching contributions andnon-elective contributions will be 100% vested.
Because Mr. Gehring was participating in other nonqualified contribution retirement plans, and because the Voluntary Deferred Comp Plan was designed to provide nonqualified contribution retirement benefits to those who were not already receiving such benefits, Mr. Gehring was not eligible for company matching contributions under the Voluntary Deferred Comp Plan.
With respect to distributions from the Voluntary Deferred Comp Plan, an individual who departs from the company who was neither retirement nor early retirement eligible (generally, age 55 and 10 years of service) under the Qualified Pension is required to take distributions of certain amounts earned and vested prior to 2005, or grandfathered amounts, in a lump sum payment in the quarter end following the individual’s separation from service. An executive who retires or who retires after meeting the early retirement provisions of the Qualified Pension will receive his or her grandfathered amounts in annual installments.
In general, allnon-grandfathered amounts will be distributed in cash in a lump sum and/or in shares of Conagra Brands common stock (to the extent phantom shares are credited to the participant’s notional account under the Voluntary Deferred Comp Plan) in January following the individual’s separation from service.
Participants may also elect to receive thenon-grandfathered amountstheir balances at certain other times, including in the January of the calendar year specified by the participant or 18 months following the occurrence of a change of control. Elections regarding the time and form of payment are intended to comply with Section 409A of the Code, and certain payments to executives meeting the definition of a “specified employee” under Section 409A will be delayed for six months after the date of the separation from service. Executives may make hardship withdrawals from the Voluntary Deferred Comp Plan under certain circumstances, but no hardship withdrawals were requested by executives during fiscal 2017.2018.
Although Mr. Gehring ceased employment with us in connection with the Spinoff, the liabilities associated with his accounts and accrued benefits under the Nonqualified CRISP and the Voluntary Deferred Comp Plan were not transferred to Lamb Weston or a Lamb Weston nonqualified deferred compensation plan in connection with the Spinoff, but remained under the Nonqualified CRISP and the Voluntary Deferred Comp Plan, as applicable.
Name | Plan (1) | Executive Contributions in Last FY ($)(2) | Registrant Contributions in Last FY ($)(3) | Aggregate ($)(4) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(5) | ||||||||||||||||
Mr. Connolly | Voluntary Def Comp Plan | 187,039 | 278,422 | 67,654 | - | 1,402,740 | ||||||||||||||||
Mr. Marberger | Voluntary Def Comp Plan | 421,477 | 71,529 | 11,307 | - | 762,625 | ||||||||||||||||
Ms. Batcheler | Voluntary Def Comp Plan | 56,574 | 89,632 | 23,886 | (154,292) | 305,206 | ||||||||||||||||
Mr. McGough | Voluntary Def Comp Plan | 148,798 | 112,332 | 98,440 | (11,182) | 1,076,621 | ||||||||||||||||
Mr. Serrao | Voluntary Def Comp Plan | 47,681 | 60,599 | 13,335 | - | 255,109 |
Executive Compensation
Nonqualified Deferred Compensation – Fiscal 2017
Name | Plan (1) | Executive Contributions in Last FY ($)(2) | Registrant Contributions in Last FY ($)(3) | Aggregate ($)(4) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(5) | ||||||||||||||||
Mr. Connolly | Nonqualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp Plan | 188,697 | 359,779 | 52,381 | 0 | 869,625 | |||||||||||||||||
Mr. Marberger | Nonqualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp Plan | 258,102 | 0 | 211 | 0 | 258,312 | |||||||||||||||||
Ms. Batcheler | Nonqualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp Plan | 58,326 | 98,165 | 19,769 | 0 | 289,406 | |||||||||||||||||
Mr. Biegger | Nonqualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp Plan | 33,143 | 59,902 | 28,537 | 0 | 428,639 | |||||||||||||||||
Mr. McGough | Nonqualified CRISP | - | - | - | - | - | ||||||||||||||||
Voluntary Def Comp Plan | 76,383 | 136,306 | 82,355 | 0 | 728,233 | |||||||||||||||||
Mr. Gehring | Nonqualified CRISP | - | - | 52,542 | 0 | 385,350 | ||||||||||||||||
Voluntary Def Comp Plan | 93,125 | - | 373,932 | (248,937 | ) | 3,679,356 |
1. | Voluntary Def Comp Plan refers to the Conagra Brands, Inc. Amended and Restated Voluntary Deferred Compensation Plan, as amended. |
2. | The amounts reported |
3. | The amounts reported |
4. | Our Voluntary Def Comp Plan |
5. | The following amounts from this column were reported in Summary Compensation Tables for prior fiscal years: Mr. Connolly, |
Potential Payments Upon Termination or Change of Control
Our named executive officers’ employment may be terminated under several possible scenarios. In some of these scenarios, our plans, agreements and arrangements would provide severance benefits in varying amounts to the executive. Further, our plans, agreements and arrangements would provide for certain benefits (or for acceleration of certain benefits) upon a change of control. Severance and other benefits that are payable upon a termination of employment or upon a change of control are described below.
For the named executive officers other than Mr. Gehring (who ceased employment with us in connection with the Spinoff), theThe tables following the narrative discussion summarize amounts payable upon termination or a change of control under varying circumstances, assuming that the change of control occurred on, or that the executive’s employment
Executive Compensation
terminated on, May 26, 2017,25, 2018, the last business day of fiscal 2017.2018. Other key assumptions used in compiling the tables are set forth immediately preceding each table. In the event of an actual triggering event under any of the plans, agreements and arrangements discussed in this section, all benefits would be paid to the executive in accordance with, and at times permitted by, Section 409A of the Code.
Severance Pay Plan. We maintain a severance pay plan that provides severance guidelines for all salaried employees. Any benefits payable under the program are at the sole and absolute discretion of Conagra Brands; for any particular employee, we may elect to provide severance as suggested by the plan or to provide benefits equal to, greater than or less than those provided in the guidelines. Ms. Batcheler and Messrs. Marberger, Biegger,McGough, and McGoughSerrao are potentially covered by the plan. Until Mr. Connolly’s employment agreement with us expiresexpired on August 1, 2018, Mr. Connolly’s severance benefits wouldwere to be paid in accordance with his agreements with us,that agreement, as further described below, rather than the severance pay plan. After such date,On August 2, 2018, we entered into a new letter agreement with Mr. Connolly that, among other things, addresses his severance benefits from and after August 2, 2018. For information regarding the severance pay plan would apply tonew letter agreement with Mr. Connolly.Connolly, see “Compensation Discussion and Analysis — Agreements with Named Executive Officers” above.
Under the severance pay plan, the severance guideline for individuals above a certain pay grade, including that of our named executive officers, is 52 weeks of salary continuation, plus one additional week of salary continuation for each year of continuous service prior to separation. The guidelines also provide that upon notice that the former employee has obtained new employment, we will provide him or her with a lump sum payment equal to 50% of the severance pay remaining; the other 50% would be forfeited. In addition, the guidelines provide for the provision during this period of the same type and level of health plan coverage that was in effect immediately prior to the executive officer’s termination of employment, up to a maximum of 18 months.
If a named executive officer is entitled to receive a severance payment under a change of control agreement (described below), we are not required to make payments to him or her under the severance pay plan.
Agreement with Mr. Connolly. We are a As of May 25, 2018, we were party to an employment agreement with Mr. Connolly that addressesaddressed matters such as his salary, participation in our annual and long-term incentive plans and participation in
Executive Compensation
health and welfare benefit plans and other benefit programs and arrangements. The agreement also addressesaddressed Mr. Connolly’s severance benefits and right to participate in our change of control benefit program. For information regarding the new letter agreement with Mr. Connolly, see “Compensation Discussion and Analysis — Agreements with Named Executive Officers” above.
A summary of Mr. Connolly’s severance benefits are describedis provided below. Generally, any payments made under the employment agreement upon disability or as a result of a termination without cause or for good reason (other than certain benefits required by law) arewould be conditioned on Mr. Connolly first signing a release agreement in a form approved by us. On August 1, 2018, Mr. Connolly’s employment agreement terminates, and his severance benefits become governed by the programs and plans in place at the company at that time.
Executive Compensation
We have excluded retirement as a hypothetical scenario in the table below because Mr. Connolly iswould not have been eligible for retirement (age 65) or early retirement (age 55 and 10 years of service) in the near future.at any time during fiscal 2018.
Involuntary | Involuntary without Cause or Voluntary
| Voluntary | Death or | |||||
Salary | Paid through month of termination | Paid through month of termination, sum equal to 2 times annual salary | Paid through month of termination | Paid through month of event | ||||
Annual Incentive Plan | Not eligible for payment | Paid no less than prorated award for year of termination based on actual results, plus a lump sum equal to 2 times target for year of termination | Not eligible for payment | Paid no less than a prorated award for the year of event based on actual results | ||||
PSP Awards | In all scenarios, paid in accordance with plan provisions | |||||||
Stock Options | Options terminate
Unexercised options | Sign-on options fully vest and remain exercisable for 3 years (or until earlier expiration date)
Unvested options awarded under the fiscal 2016 to 2018 long-term incentive plan vest and become exercisable on a prorated basis
Vested options remain exercisable for 90 days (or until earlier expiration date)
Other unvested options are forfeited | Vested options remain exercisable for 90 days (or until earlier expiration date)
Unvested options are forfeited | Options fully vest and remain exercisable for 3 years after event (or until earlier expiration date) (for death)
Options vest on a prorated basis | ||||
RSUs | RSUs are forfeited | Sign-on RSUs fully vest
Unvested RSUs are forfeited | Unvested RSUs are forfeited | Unvested RSUs fully vest (for death)
Unvested RSUs vest on a prorated basis |
Executive Compensation
In addition, to the above, upon any of the hypothetical termination scenarios described above, Mr. Connolly would be paid amountshis balance under our Voluntary Deferred Comp Plan if any (not including retirement benefits), based on his advance elections, and would be eligible for health and welfare benefits in accordance with applicable plan provisions.
Mr. Connolly’s agreement provides that all cash payments are generally payable in a lump sum thesixty-first day following termination of employment, unless otherwise provided in an applicable plan. Payments under the annual incentive plan and thelong-term incentive plan are payable following the end of the fiscal year or other performance period at the same time such payments are made to the other senior executive officers. If Mr. Connolly is a “specified employee” within the meaning of Section 409A of the Code at the time of his separation, certain payments would be delayed for six months after the date of the separation from service.
Executive Compensation
We currently maintain a separate change of control program, as discussed below. Mr. Connolly’s agreement provides him the right to participate in our change of control program as modified from time to time.
Either party to Mr. Connolly’s employment agreement maycould terminate the agreement at any time. Mr. Connolly has agreed tonon-competition restrictions extending one year after termination and to our standard confidentiality andtwo-yearnon-solicitation agreements with us.agreements.
Annual Management Incentive Plan (the “MIP”“AIP”). The following terms of the MIPAIP govern the impact of specific separation events not covered by an individual agreement:
• | Involuntary termination due to position elimination: If a participant’s position is involuntarily eliminated |
• | Termination due to retirement: If a participant retires after reaching age 65, |
• | Termination due to death: Any incentive payment for which a participant would have been eligible would be prorated based on the number of days the individual was eligible to participate in the plan to the date of the participant’s death, and paid to his or her estate. |
Except as might otherwise be required by law, in the absence of one of the foregoing events (or a specific agreement with us), a participant would forfeit his or her MIPAIP award if he or she failed to be an active employee at the end of the fiscal year. Any prorated award is based on actual performance for the fiscal year and is payable after the end of such fiscal year when payments are made to other participants.
The change of control agreements, described below, govern the payment of annual incentive awards in the event of a change of control.
Long-Term Incentive Plan – Performance Shares. The following terms of the PSP would have governed the impact of a May 26, 201725, 2018 separation from us on the performance shares granted under the fiscal 2015 to 2017, fiscal 2016 to 2018, and fiscal 2017 to 2019 and fiscal 2018 to 2020 cycles of the PSP:
• | Termination for any reason other than death, disability, retirement or |
Executive Compensation
• | Termination due to disability or retirement: |
o | For performance shares granted prior to July 19, 2017: The participant will receive a pro rata share of the performance shares that would have been earned for the full performance period, prorated based upon the full number of fiscal years completed during the performance period as of the participant’s termination date if such performance shares have been earned based on performance. Such performance shares will be distributed to the participant at the same time they are distributed to other participants who remain |
o | For performance shares granted on or after July 19, 2017: On termination due to disability, the participant will receive a pro rata share of the performance shares that would have been earned for the full performance period at the “target” level, prorated based upon days of service as of the participant’s termination date. On termination due to normal retirement or early retirement (as each term is defined in the PSP), such participant’s awards will vest based on actual performance for the full performance period (but, in the case of early retirement, the award will be prorated based on days of service during the performance period). |
• | Termination due to death: |
o | For performance shares granted prior to July 19, 2017: The participant will receive a pro rata share of the targeted performance shares based on the number of full fiscal years in the performance period during which the employee was employed. For example, upon a June 15, 2017 death, a participant would have been eligible for a payout at actual performance for the fiscal 2015 to 2017 award, since the performance period ended prior to the death, and the participant would have been eligible for a payout at targeted levels fortwo-thirds of the total fiscal 2016 to 2018 award andone-third of the total fiscal 2017 to 2019 award. |
o | For performance shares granted on or after July 19, 2017: The performance shares will vest in full at the target level. |
Executive Compensation
• | Involuntary Termination: For performance shares granted on or after July 19, 2017, if a participant experiences an involuntary termination of employment that results in severance, such participant’s awards will vest based on actual performance for the full performance period, prorated based on days of service completed during the performance period. |
In the event of a change of control (as defined in the Board or Committee may exercise its discretion to pay a participant all or aPSP), the earned portion of his or her outstanding performance shares. Changea participant’s award will be determined as of control under this program has the same definition as in the change of control, agreementsusing a share valuation methodology further described below.in the PSP and based on the greater of target performance and actual performance through the end of our fiscal period that ends immediately prior to the change of control (the “Change of Control Value”). If no replacement award meeting the requirements set forth in the PSP is provided, a participant will vest in a cash payment equal to the Change of Control Value. If a qualifying replacement award is provided, it will generally take the form of a time-based, stock-settled award with a value equal to the Change of Control Value and will generally vest, subject to continued employment, at the end of the performance period applicable to the original performance share award. Following a change of control, a replacement award will also vest in full if the participant dies or, within two years of the change of control, becomes retirement eligible (only for awards granted prior to July 19, 2017) or terminates employment due to normal or early retirement (only for awards granted on or after July 19, 2017), is terminated without cause (as defined in the PSP) or resigns for good reason (as defined in the PSP), or is terminated due to disability.
Long-Term Incentive Plan – Stock Options. The following terms generally govern the impact of a separation from us on outstanding stock options:
• | Termination for any reason other than death, disability, early retirement or retirement: The participant forfeits all options unvested at the date of termination and would have 90 days to exercise vested options. Options |
Executive Compensation
granted under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to job elimination, divestiture, or reduction in force occurs at least one year from the date of grant. |
• | Termination due to disability or early retirement: All vested options are exercisable for three years after termination (but not beyond the end of the seven-year orten-year term of such options). The participant forfeits all other options that have not vested at the date of termination. Options granted under the 2014 Stock Plan are eligible for pro rata vesting if the termination occurs at least one year from the date of grant. |
• | Termination due to death: All unvested options would automatically become vested and exercisable, and such options would remain exercisable for three years following the participant’s death (but not beyond the end of the seven-year orten-year term of such options). |
• | Termination due to normal retirement: All unvested options would automatically become vested and exercisable. Such options would remain exercisable for three years following termination (but not beyond the end of the seven-year orten-year term of such options). |
Each of the agreements evidencing outstanding awards of stock options that were entered into prior to October 2014 provide that the vesting of the award will accelerate upon a change of control. Award agreements entered into after October 2014 provide for double-trigger vesting, requiring both a change of control event and a qualifying termination of employment (or a failure of the surviving entity to provide a replacement award) to trigger vesting.
Long-Term Incentive Plan – RSUs. The following terms generally govern the impact of a separation from us on outstanding RSUs:
• | Termination for any reason other than death, disability, early retirement or retirement: The participant forfeits all RSUs unvested at the date of termination. RSUs granted under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to job elimination, divestiture or reduction in force occurs at least one year after the date of |
• | Termination due to disability or early retirement: RSUs granted under the 2014 Stock Plan are eligible for pro rata vesting if the termination occurs at least one year from the date of |
• | Termination due to death: All unvested RSUs would automatically vest. |
• | Termination due to normal retirement: All unvested RSUs would automatically vest if the retirement occurs at least one year from the date of |
Each of the agreements evidencing outstanding awards of RSUs provide for double-trigger vesting, requiring both a change of control event and a qualifying termination of employment (or a failure of the surviving company to provide a replacement award) to trigger vesting.
The treatment of Mr. Connolly’s equity awards upon a termination without “Cause” or a resignation for “Good Reason” is further governed by his agreement with us.
Recent Changes to our Long-Term Incentive Plan. In July 2017, the Committee approved an amendment to the PSP (the “PSP Amendment”) that generally memorializes“double-trigger” treatment in the event of a change of control, as
Executive Compensation
described below. Previously, the PSP required that the HR Committee determine the impact of the change of control upon outstanding awards in connection with the event. The PSP Amendment would not have applied in the event of a change of control and termination of employment occurring on May 26, 2017, and its terms are therefore not reflected in the tabular disclosure below; however, the PSP Amendment would apply to awards under the fiscal 2016 to 2018 cycle and fiscal 2017 to 2019 cycle of the PSP in the event of a change of control and termination of employment occurring after the July 2017 effective date of the PSP Amendment.
The PSP Amendment provides that, in the event of a change of control, the earned portion of a participant’s award will be determined as of the change of control, based on the greater of target performance and actual performance through the end of the company’s fiscal period ending immediately prior to the change of control (such value, the “Change of Control Value”).
If a replacement award qualifying under the terms of the PSP is not provided, a participant will vest in a cash payment equal to the Change of Control Value. If a qualifying replacement award is provided, it will generally take the form of atime-based,stock-settled award with a value equal to the Change of Control Value and will generally vest, subject to continued employment, at the end of the performance period applicable to the original performance share award. Certain acceleration events will also apply to replacement awards, as set forth below.
Retirement Benefits. Each of our Qualified Pension Nonqualified Pension, Nonqualified CRISP and Voluntary Deferred Comp Plan contains provisions relating to the termination of the participant’s employment. These payments are described more fully in the disclosure provided in connection with the “Pension Benefits – Fiscal 2017”2018” and “Nonqualified Deferred Compensation – Fiscal 2017”2018” sections of this proxy statement.
Change of Control Program. The change of control program for senior executives is designed to encourage management to continue performing its responsibilities in the event of a pending or potential change of control. During fiscal 2017,2018, this program covered each of the named executive officers.
Executive Compensation
Generally, a change of control under these agreements occurs if one of the following events occurs:
Individuals who constitute the Board, which, for these purposes, we refer to as the Incumbent Board, cease for any reason to constitute at least a majority of the Board. Anyone who becomes a director and whose election, or nomination for election, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board is considered a member of the Incumbent Board.
Consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were our shareholders immediately prior to the transaction do not, immediately thereafter, own more than fifty percent of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company.
A liquidation or dissolution of Conagra Brands or the sale of all or substantially all of our assets.
The agreements provide that upon a change of control, we may (at the sole and absolute discretion of the Board or Committee) pay each executive all or a prorated portion of the executive’s short and/or long-term incentive for the year in which the change of control occurs. The terms of our stock plan and award agreements govern the treatment of equity awards upon a change of control.
Executive Compensation
With respect to severance, the change of control agreements are double-trigger arrangements, requiring both a change of control event and a qualifying termination of employment to trigger benefits. A qualifying termination event occurs if, within three years after a change of control, (1) the executive’s employment is involuntarily terminated without “cause” or (2) the executive terminates his or her employment for “good reason.”
Executives entitled to severance benefits under a change of control agreement forfeit any severance compensation and benefits under our severance pay plan guidelines and receive the following (subject to execution of a release of claims in favor of us):
a lump sum cash payment equal to a multiple of the executive’s base salary and annual bonus (calculated using the executive’s highest annual bonus for the three fiscal years preceding the change of control or the executive’s target bonus percentage as of the date the change of control agreement is executed, whichever is greater). The multiples range from onetwo to three (three for Mr. Connolly and Ms. Batcheler and two for Messrs. Marberger, Biegger,McGough, and McGough)Serrao).
continuation for three years (for agreements in place prior to July 2011) or two years (for agreements in place after July 2011) of medical, dental, disability, basic and supplemental life insurance to the extent such benefits remain in effect for other executives, with premiums paid by the executive at the rate required of other executive employees (or, for medical and dental benefits, the COBRA rate). Conagra Brands must pay the executive a single lump sum payment equal to an amount to offset taxes (for agreements in place prior to July 2011) plus the executive’s estimated cost to participate in the medical and dental plansplans.
outplacement assistance not exceeding $30,000.
Generally, a termination for “cause” under the agreement requires (as further described in the change of control agreements) (1) the willful and continued failure by the executive to substantially perform his or her duties, (2) the willful engaging by the executive in conduct that is demonstrably and materially injurious to us or (3) the executive’s conviction of a felony or misdemeanor that impairs his or her ability substantially to perform duties for us. A right of the executive to terminate with “good reason” following a change of control is generally triggered by (1) any failure of Conagra Brands to comply with and satisfy the terms of the change of control agreement, (2) a significant involuntary reduction of the authority, duties or responsibilities held by the executive immediately prior to the change of control, (3) any involuntary
Executive Compensation
removal of the executive from an officer position held by the executive immediately prior to the change of control, except in connection with promotions, (4) any involuntary reduction in the aggregate compensation level of the executive, (5) requiring the executive to become based at a new location or (6) requiring the executive to undertake substantially greater amounts of business travel. Certain payments to a “specified employee” within the meaning of Section 409A of the Code will be delayed for six months after the date of the separation from service.
For agreements in place prior to July 2011, the agreements also entitle each executive to an additional payment, if necessary, to make the executive whole as a result of any excise and related taxes imposed by the Code on any change of control benefits received. If the safe harbor amount at which the excise tax is imposed is not exceeded by more than 10%, the benefits will instead be reduced to avoid the excise tax.
Executive Compensation
Following a review of market practices in July 2011, the Committee adopted a policy that any future change of control benefits should be structured without any excise taxgross-up protection. Mr. Connolly’s, Mr. McGough’s, Mr. Marberger’s and Mr. Biegger’sSerrao’s agreements do not contain an excise taxgross-ups. Although the Committee continues to believe in the importance of maintaining a change of control program, it believes that offering excise taxgross-ups in the future is inappropriate relative to best executive pay practices.
Each change of control agreement terminates, in the absence of a change of control, when the executive’s employment as our full-time employee is terminated or the executive enters into a written separation agreement with us. In addition, we may unilaterally terminate each agreement prior to a change of control following six months prior written notice to the executive.
Departure of Mr. Gehring. As noted above, Mr. Gehring ceased employment with us upon completion of the Spinoff. For a description of the agreement with Mr. Gehring in connection with his departure, see “Compensation Discussion and Analysis – Agreements with Named Executive Officers – Departure of Mr. Gehring.”
Summary of Possible Benefits. In the disclosure below, the first table summarizes estimated incremental amounts payable upon termination under various hypothetical scenarios. A second table summarizes estimated incremental amounts payable upon a hypothetical change of control and upon termination following a change of control.
We have not included amounts payable regardless of the occurrence of the relevant triggering event. For example, we excluded accumulated balances in retirement plans when a terminating event would do nothing more than create a right to a payment of the balance. We also excluded death benefits where the executive paidwould pay the premium.
The data in the tables assumes the following:
each triggering event occurred on May 26, 201725, 2018 (the last trading day of fiscal 2017)2018), and the per share price of our common stock was $39.03$37.41 (the closing price of our stock on the NYSE on May 26, 2017)25, 2018);
with respect to salary continuation, if an executive did not have a right to salary continuation under a stand-alone agreement with us, the severance pay plan guidelines applied;
with respect to the annual incentive plan,AIP, awards were earned at target levels, and where the Committee had discretionary authority to award a payout, except in the cases of involuntary termination with cause and voluntary termination without good reason, it exercised that authority (including in the change of control scenario);
with respect to the annual incentive plan,AIP and equity awards, in the case of an involuntary termination not for cause without a change of control, the termination was due to a position elimination inon the last business day of fiscal 2017 fourth quarter;2018;
with respect to performance shares, awards were earned at target levels (these amounts also include a cash value of dividend equivalents on the number of shares assumed to have been earned);
with respect to equity awards in the change of control scenario, a replacement award was provided;
with respect to performance shares in the change of control scenario, the Committee exercised itsany applicable discretionary authority to award a pro rata payout and did so at target levels; and
Executive Compensation
We have excluded retirement as a hypothetical scenario for the named executive officers in the table below because none of the named executive officers arewere eligible for either early retirement (age 55 and 10 years of service) or normal retirement (age 65) treatment.65 or, for RSUs granted in fiscal 2018, age 60 with five years of service) treatment as of May 25, 2018.
Involuntary w/ $ | Involuntary w/o $ | Death $ | Disability $ | Involuntary w/ $
| Involuntary w/o $
| Death $
| Disability $
| |||||||||||||||||||||||||||||
Mr. Connolly | ||||||||||||||||||||||||||||||||||||
Lump Sum Severance | - | 5,500,000 | - | - |
|
-
|
|
|
5,750,000
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Annual Incentive Plan | - | 1,650,000 | 1,650,000 | 1,650,000 |
|
-
|
|
|
1,725,000
|
|
|
1,725,000
|
|
|
1,725,000
|
| ||||||||||||||||||||
Performance Shares | - | - | 7,140,343 | 7,150,907 |
|
-
|
|
|
2,013,394
|
|
|
11,899,223
|
|
|
8,126,699
|
| ||||||||||||||||||||
Accelerated Stock Options | - | 3,673,725 | 5,498,751 | 1,031,008 |
|
-
|
|
|
570,422
|
|
|
890,785
|
|
|
570,422
|
| ||||||||||||||||||||
Accelerated Restricted Stock Units | - | 3,614,992 | 6,164,119 | 2,895,229 |
|
-
|
|
|
3,206,411
|
|
|
5,353,820
|
|
|
3,206,411
|
| ||||||||||||||||||||
Benefits Continuation | - | 14,175 | - | - |
|
-
|
|
|
14,257
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Death Benefits | - | - | 1,000,000 | - |
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||||||||||||||
Disability Benefits | - | - | - | 625,000 |
|
-
|
|
|
-
|
|
|
-
|
|
|
650,000
|
| ||||||||||||||||||||
Outplacement | - | 6,100 | - | - |
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Total | - | 14,458,992 | 21,453,213 | 13,352,144 |
|
-
|
|
|
13,284,684
|
|
|
20,868,828
|
|
|
14,278,532
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Mr. Marberger | ||||||||||||||||||||||||||||||||||||
Salary Continuation | - | 580,000 | - | - |
|
-
|
|
|
662,500
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Annual Incentive Plan | - | 464,000 | 464,000 | 464,000 |
|
-
|
|
|
585,000
|
|
|
585,000
|
|
|
585,000
|
| ||||||||||||||||||||
Performance Shares | - | - | 310,328 | 312,526 |
|
-
|
|
|
475,731
|
|
|
1,969,188
|
|
|
1,077,857
|
| ||||||||||||||||||||
Accelerated Stock Options | - | - | 330,313 | - |
|
-
|
|
|
52,992
|
|
|
145,423
|
|
|
52,992
|
| ||||||||||||||||||||
Accelerated Restricted Stock Units | - | - | 1,008,067 | - |
|
-
|
|
|
642,030
|
|
|
1,144,297
|
|
|
569,530
|
| ||||||||||||||||||||
Benefits Continuation | - | 13,650 | - | - |
|
-
|
|
|
13,739
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Death Benefits | - | - | 1,000,000 | - |
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||||||||||||||
Disability Benefits | - | - | - | 365,000 |
|
-
|
|
|
-
|
|
|
-
|
|
|
400,000
|
| ||||||||||||||||||||
Outplacement | - | 6,100 | - | - |
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Total | - | 1,063,750 | 3,112,708 | 1,141,526 |
|
-
|
|
|
2,437,192
|
|
|
4,843,908
|
|
|
2,685,379
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Ms. Batcheler | ||||||||||||||||||||||||||||||||||||
Salary Continuation | - | 644,740 | - | - |
|
-
|
|
|
655,139
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Annual Incentive Plan | - | 540,750 | 540,750 | 540,750 |
|
-
|
|
|
540,750
|
|
|
540,750
|
|
|
540,750
|
| ||||||||||||||||||||
Performance Shares | - | - | 2,419,353 | 2,422,033 |
|
-
|
|
|
475,731
|
|
|
2,932,009
|
|
|
2,040,678
|
| ||||||||||||||||||||
Accelerated Stock Options | - | 143,189 | 1,600,843 | 143,189 |
|
-
|
|
|
146,036
|
|
|
228,046
|
|
|
146,036
|
| ||||||||||||||||||||
Accelerated Restricted Stock Units | - | 2,362,447 | 3,014,989 | 1,567,874 |
|
-
|
|
|
2,812,521
|
|
|
3,335,139
|
|
|
2,715,704
|
| ||||||||||||||||||||
Benefits Continuation | - | 16,275 | - | - |
|
-
|
|
|
16,331
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Death Benefits | - | - | 1,000,000 | - |
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||||||||||||||
Disability Benefits | - | - | - | 345,375 |
|
-
|
|
|
-
|
|
|
-
|
|
|
345,375
|
| ||||||||||||||||||||
Outplacement | - | 6,100 | - | - |
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Total | - | 3,713,501 | 8,575,935 | 5,019,221 |
|
-
|
|
|
4,651,708
|
|
|
8,035,944
|
|
|
5,788,543
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Mr. Biegger | ||||||||||||||||||||||||||||||||||||
Salary Continuation | - | 521,092 | - | - | ||||||||||||||||||||||||||||||||
Annual Incentive Plan | - | 409,008 | 409,008 | 409,008 | ||||||||||||||||||||||||||||||||
Performance Shares | - | - | 770,608 | 772,664 | ||||||||||||||||||||||||||||||||
Accelerated Stock Options | - | 94,595 | 505,021 | 94,595 | ||||||||||||||||||||||||||||||||
Accelerated Restricted Stock Units | - | 342,527 | 1,233,075 | 342,527 | ||||||||||||||||||||||||||||||||
Benefits Continuation | - | 13,912 | - | - | ||||||||||||||||||||||||||||||||
Death Benefits | - | - | 1,000,000 | - | ||||||||||||||||||||||||||||||||
Disability Benefits | - | - | - | 409,750 | ||||||||||||||||||||||||||||||||
Outplacement | - | 6,100 | - | - | ||||||||||||||||||||||||||||||||
Total | - | 1,387,234 | 3,917,712 | 2,028,544 | ||||||||||||||||||||||||||||||||
|
|
|
|
Executive Compensation
Involuntary w/ $
| Involuntary w/o $
| Death $
| Disability $
| |||||||||||||||||||||||||||||||||
Involuntary w/ $ | Involuntary w/o $ | Death $ | Disability $ | |||||||||||||||||||||||||||||||||
Mr. McGough | ||||||||||||||||||||||||||||||||||||
Salary Continuation | - | 798,250 | - | - |
|
-
|
|
|
811,125
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Annual Incentive Plan | - | 669,500 | 669,500 | 669,500 |
|
-
|
|
|
669,500
|
|
|
669,500
|
|
|
669,500
|
| ||||||||||||||||||||
Performance Shares | - | - | 2,419,353 | 2,422,033 |
|
-
|
|
|
475,731
|
|
|
2,932,009
|
|
|
2,040,678
|
| ||||||||||||||||||||
Accelerated Stock Options | - | 143,189 | 1,600,843 | 143,189 |
|
-
|
|
|
146,036
|
|
|
228,046
|
|
|
146,036
|
| ||||||||||||||||||||
Accelerated Restricted Stock Units | - | 2,362,447 | 3,014,989 | 1,567,874 |
|
-
|
|
|
2,812,521
|
|
|
3,335,139
|
|
|
2,715,704
|
| ||||||||||||||||||||
Benefits Continuation | - | 16,275 | - | - |
|
-
|
|
|
16,331
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Death Benefits | - | - | 1,000,000 | - |
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||||||||||||||
Disability Benefits | - | - | - | 409,750 |
|
-
|
|
|
-
|
|
|
-
|
|
|
409,750
|
| ||||||||||||||||||||
Outplacement | - | 6,100 | - | - |
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||
Total | - | 3,995,761 | 8,704,685 | 5,212,346 |
|
-
|
|
|
4,936,444
|
|
|
8,164,694
|
|
|
5,981,668
|
| ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Mr. Serrao
| ||||||||||||||||||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
524,423
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||||||
Annual Incentive Plan
|
|
-
|
|
|
454,500
|
|
|
454,500
|
|
|
454,500
|
| ||||||||||||||||||||||||
Performance Shares
|
|
-
|
|
|
356,817
|
|
|
2,199,035
|
|
|
1,530,543
|
| ||||||||||||||||||||||||
Accelerated Stock Options
|
|
-
|
|
|
109,523
|
|
|
171,033
|
|
|
109,523
|
| ||||||||||||||||||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
726,540
|
|
|
1,162,628
|
|
|
726,540
|
| ||||||||||||||||||||||||
Benefits Continuation
|
|
-
|
|
|
13,998
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||||||||||||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
327,500
|
| ||||||||||||||||||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||||||
Total | - | 2,191,001 | 4,987,196 | 3,148,606 | ||||||||||||||||||||||||||||||||
|
|
|
|
Executive Compensation
In the table that follows, if, following a change of control, any of Ms. Batcheler or Messrs. Marberger, McGough or BieggerSerrao was terminated for “Cause” or voluntarily terminated employment without “Good Reason,” the individual would not receive any benefits incremental to those shown in the “No Termination” column. Mr. Connolly would be entitled to salary continuation through the end of the month of the event.
Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/ Good Reason ($) | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||||||||||||
Mr. Connolly | ||||||||||||||||||
Lump Sum Salary | - | 3,300,000 | - | 3,450,000 | ||||||||||||||
Annual Incentive Plan | 1,650,000 | 9,776,250 | 1,725,000 | 9,776,250 | ||||||||||||||
Performance Shares | 7,140,343 | 7,140,343 | - | 13,329,557 | ||||||||||||||
Accelerated Stock Options | - | 5,498,751 | - | 890,785 | ||||||||||||||
Accelerated Restricted Stock Units | - | 6,164,119 | - | 5,353,820 | ||||||||||||||
Voluntary Deferred Compensation Plan | - | 392,288 | - | 305,308 | ||||||||||||||
Benefits Continuation | - | 34,508 | - | 35,150 | ||||||||||||||
Death/Disability Benefit | - | 6,084 | - | 6,084 | ||||||||||||||
Outplacement | - | 30,000 | - | 30,000 | ||||||||||||||
Total | 8,790,343 | 32,342,343 | 1,725,000 | 33,176,954 | ||||||||||||||
|
| |||||||||||||||||
|
| |||||||||||||||||
Mr. Marberger | ||||||||||||||||||
Lump Sum Salary | - | 1,160,000 | - | 1,300,000 | ||||||||||||||
Annual Incentive Plan | 464,000 | 943,177 | 585,000 | 1,170,000 | ||||||||||||||
Performance Shares | 310,328 | 310,328 | - | 2,330,419 | ||||||||||||||
Accelerated Stock Options | - | 330,313 | - | 145,423 | ||||||||||||||
Accelerated Restricted Stock Units | - | 1,008,067 | - | 1,144,297 | ||||||||||||||
Voluntary Deferred Compensation Plan | - | 38,146 | - | 121,890 | ||||||||||||||
Benefits Continuation | - | 34,508 | - | 35,150 | ||||||||||||||
Death/Disability Benefit | - | 6,084 | - | 6,084 | ||||||||||||||
Outplacement | - | 30,000 | - | 30,000 | ||||||||||||||
Total | 774,328 | 3,860,623 | 585,000 | 6,283,263 | ||||||||||||||
|
|
|
| |||||||||||||||
Ms. Batcheler | ||||||||||||||||||
Lump Sum Salary | - | 1,622,250 | - | 1,622,250 | ||||||||||||||
Annual Incentive Plan | 432,600 | 2,967,057 | 540,750 | 2,967,057 | ||||||||||||||
Performance Shares | 2,419,353 | 2,419,353 | - | 3,293,240 | ||||||||||||||
Accelerated Stock Options | 990,446 | 1,600,843 | - | 228,046 | ||||||||||||||
Accelerated Restricted Stock Units | - | 3,014,989 | - | 3,335,139 | ||||||||||||||
Voluntary Deferred Compensation Plan | - | 371,965 | - | 327,484 | ||||||||||||||
Benefits Continuation | - | 51,071 | - | 51,996 | ||||||||||||||
Death/Disability Benefit | - | 9,126 | - | 9,126 | ||||||||||||||
Outplacement | - | 30,000 | - | 30,000 | ||||||||||||||
Total | 3,842,399 | 12,086,654 | 540,750 | 11,864,338 | ||||||||||||||
|
|
|
|
Executive Compensation
Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/ Good Reason ($) | ||||||
Mr. Biegger | ||||||||
Lump Sum Salary | - | 1,022,520 | ||||||
Annual Incentive Plan | 409,008 | 882,368 | ||||||
Performance Shares | 770,608 | 770,608 | ||||||
Accelerated Stock Options | - | 505,021 | ||||||
Accelerated Restricted Stock Units | - | 1,233,075 | ||||||
Voluntary Deferred Compensation Plan | - | 85,584 | ||||||
Benefits Continuation | - | 34,508 | ||||||
Death/Disability Benefit | - | 6,084 | ||||||
Outplacement | - | 30,000 | ||||||
Total | 1,179,616 | 4,569,768 | ||||||
|
|
|
| |||||
Mr. McGough | ||||||||
Lump Sum Salary | - | 1,339,000 | ||||||
Annual Incentive Plan | 669,500 | 2,313,178 | ||||||
Performance Shares | 2,419,353 | 2,419,353 | ||||||
Accelerated Stock Options | 990,446 | 1,600,843 | ||||||
Accelerated Restricted Stock Units | - | 3,014,989 | ||||||
Voluntary Deferred Compensation Plan | - | 150,612 | ||||||
Benefits Continuation | - | 34,508 | ||||||
Death/Disability Benefit | - | 6,084 | ||||||
Outplacement | - | 30,000 | ||||||
Total | 4,079,299 | 10,908,567 | ||||||
|
|
|
| |||||
Mr. McGough Lump Sum Salary Annual Incentive Plan Performance Shares Accelerated Stock Options Accelerated Restricted Stock Units Voluntary Deferred Compensation Plan Benefits Continuation Death/Disability Benefit Outplacement Total Mr. Serrao Lump Sum Salary Annual Incentive Plan Performance Shares Accelerated Stock Options Accelerated Restricted Stock Units Voluntary Deferred Compensation Plan Benefits Continuation Death/Disability Benefit Outplacement Total Non-Employee Director CompensationChange of Control and: No Termination ($) Involuntary w/o Cause or
Voluntary w/Good Reason ($) - 1,339,000 669,500 2,313,178 - 3,293,240 - 228,046 - 3,335,139 - 135,152 - 35,150 - 6,084 - 30,000 669,500 10,714,989 - 1,010,000 454,500 966,473 - 2,469,920 - 171,033 - 1,162,628 - 97,004 - 35,150 - 6,084 - 30,000 454,500 5,948,292
CEO Pay Ratio
Non-Employee Director CompensationCEO Pay Ratio
We use a combinationFor fiscal 2018, the ratio of cash and equity-based incentivethe annual total compensation of Mr. Connolly, our CEO (referred to attract and retain qualified candidates to serve on the Board. On an annual basis, the HR Committee recommends thenon-employee director compensation programas CEO Compensation), to the full Board for approval. In setting director compensation, the HR Committee receives input from FW Cook, its independent compensation consultant, on factors including the time commitment and skill level required to serve on the Board, as well as market practices.
A summary ofnon-employee director compensation for fiscal 2017 is set forth below. Mr. Andrew J. Schindler retired from service on the Board asmedian of the 2016 Annual Meeting. Mr. Omtvedtannual total compensation of all of our employees and Mr. Dickson joined the Board effective November 11, 2016 and December 7, 2016, respectively. Compensation disclosed for those directors reflects that they served for only a portion of fiscal 2017.
Non-Employee Director Compensation – Other than the Chairman
The following table summarizes the compensation programs for ournon-employee directors consolidated subsidiaries other than the Chairman in effect during fiscal 2017:
The numberMr. Connolly (referred to as Median Annual Compensation), was 290 to 1. For purposes of RSUs granted to eachnon-employee director other than the Chairmanthis pay ratio disclosure, CEO Compensation was determined by dividing $140,000 byto be $10,473,271, which represents the average closing price of our common stock ontotal compensation reported for Mr. Connolly under the NYSE for the thirty trading days prior to the grant date of May 30, 2016. The RSUs vested one year from the date of grant and were subject to continued service during the entire term of the RSUs. Vesting would have been accelerated in the event of death or permanent disability. If the director was no longer serving one year from the date of grant, vesting was prorated 25% for each fiscal quarter during which the director served for any amount of time. Dividend equivalents were paid on the RSUs at the regular dividend rate in shares of our common stock.
Non-employee directors other than the Chairman who join the Board or who are elected to a Chairmanship after the start of the fiscal year are entitled to receive a prorated retainer (based on the actual number of days of service). Non-employee directors other than the Chairman who join the Board after the start of the fiscal year are also entitled to receive a prorated RSU grant (based on the number of months remaining in the fiscal year at that time).
Compensation of theNon-Employee Chairman
In lieu of the elements described above, the Chairman’s compensation for fiscal 2017 consisted of a grant of RSUs with a value equal to $400,000, with the number of RSUs determined by dividing $400,000 by the average closing price of our common stock on the NYSE for the thirty trading days prior to the grant date of May 30, 2016. The material terms of the RSUs were identical to those described above fornon-employee directors other than the Chairman.
Non-Employee Director Compensation
Director Stock Ownership Requirements
The Board has adopted stock ownership requirements for itsnon-employee directors. Allnon-employee directors, including the Chairman, are expected to acquire and hold shares of common stock of Conagra Brands during their tenure with a value of at least $450,000. All directors must acquire this ownership level within five years following their first election to the Board. Shares personally acquired by thenon-employee directors through open market purchases or RSUs, and shares acquired upon the deferral of fees are counted toward the ownership requirement. Unexercised stock options are not counted.
The following table reflects ownership, as of July 31, 2017, ofnon-employee directors who were serving as of the end of fiscal 2017.
Director | Stock Ownership Guideline | Actual Ownership (1) | ||
Mr. Alford | $450,000 | $1,516,670 | ||
Mr. Brown | $450,000 | $ 660,524 | ||
Mr. Butler | $450,000 | $3,972,439 | ||
Mr. Dickson | $450,000 | $ 240,180 | ||
Mr. Goldstone | $450,000 | $8,716,741 | ||
Ms. Gregor | $450,000 | $2,024,583 | ||
Mr. Johri | $450,000 | $1,981,993 | ||
Mr. Lenny | $450,000 | $1,639,495 | ||
Ms. Marshall | $450,000 | $3,069,594 | ||
Mr. Omtvedt | $450,000 | $ 196,901 | ||
1. Based on the closing price of our common stock on the NYSE on July 31, 2017 ($34.24) and stock ownership requirements of the non-employee directors in effect as of fiscal year end. |
OtherNon-Employee Director Compensation Programs
In addition to the cash payments and equity awards described above, allnon-employee directors were entitled to participate in the following programs during fiscal 2017:
Non-Employee Director Compensation
Director“Summary Compensation Table – Fiscal 20172018.” Median Annual Compensation for the identified median employee was determined to be $36,143.
Name | | Fees Earned or Paid in Cash ($)(1) |
| | Stock Awards ($)(2) |
| | All Other Compensation ($)(3) |
| | Total ($) |
| ||||
Bradley A. Alford | 90,000 | 140,761 | - | 230,761 | ||||||||||||
Thomas K. Brown | 90,000 | 140,761 | - | 230,761 | ||||||||||||
Stephen G. Butler | 108,000 | 140,761 | 10,000 | 258,761 | ||||||||||||
Thomas W. Dickson | 22,500 | 73,049 | - | 95,549 | ||||||||||||
Steven F. Goldstone | - | 402,220 | 10,000 | 412,220 | ||||||||||||
Joie A. Gregor | 97,500 | 140,761 | 10,000 | 248,261 | ||||||||||||
Rajive Johri | 90,000 | 140,761 | 10,000 | 240,761 | ||||||||||||
W.G. Jurgensen | 45,000 | 140,761 | - | 185,761 | ||||||||||||
Richard H. Lenny | 108,000 | 140,761 | 10,000 | 258,761 | ||||||||||||
Ruth Ann Marshall | 109,500 | 140,761 | 8,750 | 259,011 | ||||||||||||
Timothy R. McLevish | 45,000 | 140,761 | - | 185,761 | ||||||||||||
Craig P. Omtvedt | 49,203 | 73,049 | 10,000 | 132,252 | ||||||||||||
Andrew J. Schindler | 45,000 | 140,761 | - | 185,761 |
Name | Outstanding Stock Awards Held at FYE (#)(a) | Outstanding Stock Options Held at FYE (#)(b) | ||
Bradley A. Alford | 4,270 | - | ||
Thomas K. Brown | 4,270 | - | ||
Stephen G. Butler | 4,270 | 44,337 | ||
Thomas W. Dickson | 1,866 | - | ||
Steven F. Goldstone | 12,201 | 515,508 | ||
Joie A. Gregor | 4,270 | - | ||
Rajive Johri | 4,270 | - | ||
Richard H. Lenny | 4,270 | 27,206 | ||
Ruth Ann Marshall | 4,270 | 38,291 | ||
Craig P. Omtvedt | 1,866 | - |
Non-Employee Director Compensation
To identify the median employee, we examined our total employee population as of March 9, 2018 (the Determination Date). We included all U.S. andnon-U.S. full-time, part-time, seasonal and temporary employees of Conagra and our consolidated subsidiaries. We excluded independent contractors and “leased” workers. Our analysis identified 12,891 individuals.
To determine Median Annual Compensation, we generally reviewed compensation for the period beginning on March 10, 2017 and ending on the Determination Date. However, for 487 of our employees (including our employees in Mexico and employees employed by one of our joint ventures), we measured compensation for the full months of March 2017 through February 2018, due to different payroll schedules applicable to these employees. As permitted by applicable SECrules, we excluded from the compensation measurement under the “de minimis” exemption the compensation of 519 individuals (all of the individuals in each of Colombia (one individual), Italy (53 individuals), India (458 individuals), Panama (five individuals) and the Philippines (two individuals)).
We measured Median Annual Compensation by totaling, for each employee other than Mr. Connolly, base earnings (salary, hourly wages and overtime, as applicable) and annual cash incentives paid during the measurement period. We did not use any statistical sampling orcost-of-living adjustments for purposes of this pay ratio disclosure. A portion of our employee workforce (full-time and part-time) worked for less than the full fiscal year (due to start dates, disability status or similar factors). In determining the Median Annual Compensation, we generally annualized the total compensation for such individuals other than seasonal employees (but avoided creating full-time equivalencies) based on reasonable assumptions and estimates relating to our employee compensation program.
Due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this pay ratio disclosure is a reasonable estimate.
Information on Stock Ownership
Information on Stock Ownership
Voting Securities of Directors, Officers and Greater Than 5% Owners
The table below shows the shares of Conagra Brands common stock beneficially owned as of July 31, 20172018 by (1) beneficial owners of more than 5% of our outstanding common stock, (2) our current directors, (3) our named executive officers, and (4) all current directors and executive officers as a group.
As discussed elsewhere in this Proxy Statement, our directors and executive officers are committed to owning stock in Conagra Brands. Both groups have stock ownership requirements that preclude them from selling any Conagra Brands common stock in the market (other than to cover the cost of the exercise price and, in the case of executive officers, minimum statutory tax withholding) until they have enough shares to meet and maintain their stock ownership guidelinespre- and post-sale.
To better show the financial stake of our directors in the company, we have included a “Share Units” column in the table. The column, which is not required under SEC rules, shows share units earned by thenon-employee directors and deferred through the ConAgra Foods,Conagra Brands, Inc. Directors’ Deferred Compensation Plan. Although these share units will ultimately be settled in shares of common stock, they currently have no voting rights and will not be settled within 60 days of July 31, 2017.2018. None of our executive officers has any share units deferred through the Voluntary Deferred Comp Plan.deferred.
Name
| Number of
| Right to
| Percent of Class (3)
| Share Units
| Number of Shares Owned (1) | Right to Acquire (2) | Percent of Class (3) | Share Units | ||||||||||||||||
The Vanguard Group (4) | 45,137,366 | - | 10.86% | N/A |
46,272,871
|
-
|
11.81%
|
N/A
| ||||||||||||||||
BlackRock, Inc. (5) | 26,152,998 | - | 6.29% | N/A |
27,823,099
|
-
|
7.10%
|
N/A
| ||||||||||||||||
JANA Partners LLC (6) | 21,586,352 | - | 5.19% | N/A | ||||||||||||||||||||
Bradley A. Alford | 26,500 | 1,943 | * | 13,910 |
26,500
|
2,020
|
*
|
21,012
| ||||||||||||||||
Anil Arora
|
-
|
-
|
*
|
-
| ||||||||||||||||||||
Thomas K. Brown | 15,406 | 1,943 | * | - |
19,385
|
2,020
|
*
|
-
| ||||||||||||||||
Stephen G. Butler | 55,542 | (7) | 34,188 | * | 56,590 |
75,695(6)
|
2,020
|
*
|
65,263
| |||||||||||||||
Sean Connolly | 47,228 | 817,276 | * | N/A |
1,354,237
|
141,556
|
*
|
N/A
| ||||||||||||||||
Thomas W. Dickson | - | 3,808 | * | 1,264 |
-
|
2,020
|
*
|
9,975
| ||||||||||||||||
Steven F. Goldstone | 111,795 | 415,386 | * | 131,774 |
448,998
|
2,020
|
*
|
146,133
| ||||||||||||||||
Joie A. Gregor | 36,377 | 1,943 | * | 18,867 |
37,775
|
2,020
|
*
|
16,569
| ||||||||||||||||
Rajive Johri | 4,270 | 1,943 | * | 49,730 |
4,270
|
2,020
|
*
|
54,891
| ||||||||||||||||
Richard H. Lenny | 22,641 | 29,149 | * | 21,356 |
53,826
|
5,722
|
*
|
21,864
| ||||||||||||||||
Ruth Ann Marshall | 4,879 | 34,188 | * | 80,886 |
23,288
|
2,020
|
*
|
87,382
| ||||||||||||||||
Craig P. Omtvedt | - | 3,808 | * | - |
5,868
|
2,020
|
*
|
-
| ||||||||||||||||
David S. Marberger | - | 30,225 | * | N/A |
27,917
|
30,227
|
*
|
N/A
| ||||||||||||||||
Colleen Batcheler | 163,145 | 513,568 | * | N/A |
445,715
|
36,240
|
*
|
N/A
| ||||||||||||||||
David Biegger | 4,497 | 37,074 | * | N/A | ||||||||||||||||||||
Thomas M. McGough | 82,879 | (7) | 545,814 | * | N/A |
708,677(6)
|
36,240
|
*
|
N/A
| |||||||||||||||
John Gehring | 19,885 | 7,215 | * | N/A | ||||||||||||||||||||
All Directors and Current Executive Officers as a Group (18 people) | 625,911 | 2,652,964 | * | 374,377 |
Information on Stock Ownership
Name | Number of Shares Owned (1) | Right to Acquire (2) | Percent of Class (3) | Share Units | ||||
Darren C. Serrao
|
97,601
|
31,525
|
*
|
N/A
| ||||
All Directors and Current Executive Officers as a Group (19 people)
| 3,611,882
| 331,046
| *
| 423,089
|
* | Represents less than 1% of common stock outstanding. |
Information on Stock Ownership
1. | For executive officers and directors, reflects shares that have been acquired through one or more of the following: (a) open market purchases, (b) vesting or exercise of share-based awards, and (c) crediting to defined contribution plan accounts. |
2. | Reflects shares that the individual has the right to acquire within 60 days of July 31, |
3. | Based on |
4. | Based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February |
5. | Based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January |
6. |
For Mr. Butler, includes 6,000 shares held in a trust for the benefit of his spouse, who resides with him. For Mr. McGough, includes 400 shares held by his spouse, who resides with him. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers, and persons who own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and changes in beneficial ownership of our common stock. Directors, executive officers, and greater than 10% owners are required to furnish us with copies of all reports they file on Section 16(a) forms they file.forms. Based solely on a review of copies of these reports furnished to us or written representations that no other reports were required, we believe that during fiscal 20172018 all required reports were filed on a timely basis, other than the filing of (a) a Form 4 for Mr. Thomas P. Werner reporting the vesting of one RSU grant, which Form 4 was inadvertently filed late (due to an administrative error) on August 7, 2017 on behalf of Mr. Werner, and (b) a Form 4 for Ms. Charisse Brock reporting the vesting of two RSU grants, which Form 4 was inadvertently filed late (due to an administrative error) on July 18, 2017 on behalf of Ms. Brock. The company has recently evaluated the cause of such delinquent filings and enacted additional controls to prevent future delinquent filings.basis.
Audit / Finance Committee Report
Audit / Finance Committee Report
The Audit / Finance Committee assists the Board in fulfilling its oversight responsibilities by reviewing (1) the integrity of the financial statements of the company, (2) the qualifications, independence and performance of the company’s independent auditor and internal audit department, (3) compliance by the company with legal and regulatory requirements, and (4) the company’s financing strategies and capital structure. The Audit / Finance Committee acts under a written charter, adopted by the Board, a copy of which is available on our website.
Management is responsible for the company’s financial reporting process and internal controls. The independent auditor is responsible for performing an independent audit of the company’s consolidated financial statements, issuing an opinion on the conformity of those audited financial statements with generally accepted accounting principles and assessing the effectiveness of the company’s internal control over financial reporting. The Audit / Finance Committee oversees the company’s financial reporting process and internal controls on behalf of the Board.
The Audit / Finance Committee has sole authority to appoint, retain, compensate, oversee and terminate the independent auditor. The Audit / Finance Committee reviews the company’s annual audited financial statements, quarterly financial statements and other filings with the SEC. The Audit / Finance Committee reviews reports on various matters, including: (1) critical accounting policies of the company; (2) material written communications between the independent auditor and management; (3) the independent auditor’s internal quality-control procedures; (4) significant changes in the company’s selection or application of accounting principles; and (5) the effect of regulatory and accounting initiatives on the financial statements of the company. The Audit / Finance Committee also has the authority to conduct investigations within the scope of its responsibilities and to retain legal, accounting and other advisors to assist the Audit / Finance Committee in its functions.
During the last fiscal year, the Audit / Finance Committee met and held discussions with representatives of Conagra Brands’ management, its internal audit staff, and KPMG LLP, Conagra Brands’ independent auditor. Representatives of financial management, the internal audit staff, and the independent auditor have unrestricted access to the Audit / Finance Committee and periodically meet privately with the Audit / Finance Committee. The Audit / Finance Committee reviewed and discussed with the company’s management and KPMG LLP the audited financial statements contained in the company’s Annual Report on Form10-K for the fiscal year ended May 28, 2017.
The Audit / Finance Committee also discussed with the independent auditor the matters required to be discussed by the auditor with the Audit / Finance Committee under applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee, as well as by SEC regulations. The Audit / Finance Committee also reviewed and discussed with KPMG LLP its independence and, as part of that review, received the written disclosures required by applicable professional and regulatory standards relating to KPMG’s independence from Conagra Brands, including those of the Public Company Accounting Oversight Board. The Audit / Finance Committee also considered whether the provision ofnon-audit services provided by KPMG LLP to the company during fiscal 2017 was compatible with the auditor’s independence.
Based on these reviews and discussions and the report of the independent auditor, the Audit / Finance Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the company’s Annual Report on Form10-K for the fiscal year ended May 28, 2017 for filing with the SEC.
Conagra Brands, Inc. Audit / Finance Committee
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for Fiscal 2018
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for Fiscal 2018
The Audit / Finance Committee has sole authority to appoint, retain, compensate, oversee and terminate the independent auditor. In addition, the Committee evaluates and ensures the rotation of the lead audit partner at the independent auditor and will, if it deems it advisable, consider the rotation of the audit firm.
The Audit / Finance Committee has appointed KPMG LLP, an independent registered public accounting firm, as our independent auditor for fiscal 2018 to conduct the audit of our financial statements. KPMG LLP has conducted the audits of our financial statements since fiscal 2006. The Audit / Finance Committee and the Board request that the shareholders ratify this appointment.
Representatives from KPMG LLP are expected to be present at the 2017 Annual Meeting. The representatives will have the opportunity to make a statement and will be available to respond to appropriate questions. In the event that shareholders do not ratify the appointment, the Audit / Finance Committee will reconsider the appointment. Even if the appointed auditor is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in Conagra Brands’ and its shareholders’ best interests.
Fees billed by KPMG LLP for services provided for fiscal years 2017 and 2016 were as follows:
Fiscal 2017 | Fiscal 2016 | |||||||
Audit Fees | $7,061,000 | $7,540,000 | ||||||
Audit-Related Fees | $60,000 | 78,000 | ||||||
Tax Fees | $95,000 | 141,000 | ||||||
All Other Fees | – | – | ||||||
|
|
|
| |||||
Total Fees | $7,216,000 | $7,759,000 |
The Audit / Finance Committeepre-approves all audit andnon-audit services performed by the independent auditor. The Audit / Finance Committee will periodically grant a generalpre-approval of categories of audit andnon-audit services. Any other services must be specifically approved by the Audit / Finance Committee, and any proposed services exceedingpre-approved cost levels must be specificallypre-approved by the Audit / Finance Committee. In periods between Audit / Finance Committee meetings, the Chairman of the Audit / Finance Committee has been delegated authority from the Committee topre-approve additional services; any suchpre-approvals are subsequently communicated to the full Audit / Finance Committee at its next meeting.
The Audit / Finance Committee approved 100% of the services performed by KPMG LLP that were billed as Audit Fees, Audit-Related Fees and Tax Fees and All Other Fees during fiscal years 2017 and 2016.
The Board of Directors recommends a vote “FOR” the ratification of the appointment of KPMG LLP as our independent auditor for fiscal 2018.
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation
Consistent with our shareholders’ preference as indicated at our 2011 Annual Meeting of Shareholders, we give our shareholders an opportunity to vote, on an advisory basis, to approve the compensation of our named executive officers on an annual basis pursuant to Section 14A of the Exchange Act. This vote is not intended to address any specific item of our compensation program, but rather to address our overall approach to our named executive officer compensation as we have described in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, beginning on page 17. Our executive compensation program is designed to reward performance, support our business strategies, discourage excessive risk-taking, make us competitive with other corporations for top talent, and align the interests of our executive officers with the long-term interests of our shareholders.
Since we began seeking a shareholder vote on our named executive officer compensation, shareholders have exhibited strong support of our executive compensation program. In fact, over the past two fiscal years, we have received over 95% approval on this voting item.
Our Compensation Discussion and Analysis describes in detail the components of our executive compensation program and the process by which the Board makes executive compensation decisions. Highlights of our program include the following:
While this vote is advisory and not binding on our company, the Board and its HR Committee value the opinions of our shareholders and expect to consider the outcome of the vote, along with other relevant factors, when considering named executive officer compensation in the future. We expect to hold our next advisory vote at our 2018 Annual Meeting.
We are asking our shareholders to once again indicate their support for our named executive officer compensation as described in this Proxy Statement. Accordingly, we are asking our shareholders to vote to approve the following resolution:
“RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this Proxy Statement, is hereby APPROVED.”
The Board of Directors recommends a vote “FOR” the resolution approving our named executive officer compensation.
Voting Item #4: Recommendation, on an Advisory Basis, Regarding the Frequency of Future Advisory Votes on Our Named Executive Officer Compensation
Voting Item #4: Recommendation, on an Advisory Basis, Regarding the Frequency of Future Advisory Votes on Our Named Executive Officer Compensation
In addition to providing our shareholders with the opportunity to cast an advisory vote on our named executive officer compensation, we are also conducting an advisory vote on how frequently future advisory votes on named executive officer compensation should be presented to our shareholders.
At our 2011 Annual Meeting of Shareholders, a strong majority of shares voted indicated a preference for holding advisory votes on our named executive officer compensation on an annual basis, and we have conducted such a vote every year since that time. Under Section 14A of the Exchange Act, every six years we are required to provide shareholders an opportunity to recommend the frequency with which future votes on named executive officer compensation should be held.
After careful consideration, the Board has determined that continuing to conduct an advisory vote on named executive officer compensation each year remains the most appropriate policy at this time. The Board believes such an annual vote best enables shareholders to timely express their views on the company’s executive compensation program and policies and assists the Board and the HR Committee in determining current shareholder sentiment. In addition, conducting an annual advisory vote on named executive officer compensation is consistent with our practice of regularly seeking input from shareholders on corporate governance matters.
You are not being asked to vote “for” or “against” this proposal. Instead, this proposal asks shareholders to inform us how often we should conduct an advisory vote on our named executive officer compensation. You may cast your vote to indicate whether you prefer the advisory vote every one year, every two years, or every three years, or you may abstain. While this vote is advisory and not binding on our company, the Board expects to take into account the outcome of the vote, along with other relevant factors, when considering the frequency of future advisory votes on our named executive officer compensation.
The Board of Directors recommends that shareholders vote to hold future advisory votes on our named executive officer compensation every “ONE YEAR.”
Additional Information
Information about the 20172018 Annual Meeting
Revoking a Proxy.Proxy
You can revoke your proxy at any time before your shares are voted if you (1) are the record owner of your shares and submit a written revocation to our Corporate Secretary at or before the 20172018 Annual Meeting (mail to: Conagra Brands, Inc., Attn: Corporate Secretary, 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654), (2) submit a timely later-dated proxy (or voting instruction card if you hold shares through a broker, bank or nominee), or (3) provide timely subsequent Internet or telephone voting instructions. You may also attend the meeting in person2018 Annual Meeting and vote in person, subject to the legal proxy requirement noted on page 1 for street name owners.
Conagra Brands Employee Stock Purchase Plan and TreeHouse Private Brands Retirement Income Savings Plan.Plan
If you hold shares in the Conagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan, your voting instruction card covers the shares credited to your plan account. The trustee for the Conagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan, as applicable, must receive your voting instructions by 11:59 p.m. Eastern Time on Tuesday, September 19, 2017.18, 2018. If the respective plan trustee does not receive your instructions by that time, the trustee will vote the shares held by the Conagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan, as applicable, in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received.
Proxy Solicitation.Solicitation
We have engaged Innisfree M&A Incorporated as our proxy solicitor for the 20172018 Annual Meeting at an estimated cost of approximately $12,000plus disbursements. Our directors, officers, and other employees may also solicit proxies in the ordinary course of their employment. Conagra Brands will bear the cost of the solicitation, including the cost of reimbursing brokerage houses and other custodians for their expenses in sending proxy materials to you.
Quorum.Quorum
A majority of the shares of common stock outstanding on the record date must be present in person or by proxy at the meeting to constitute a quorum. The inspectors of election intend to treat properly executed proxies marked “abstain” as “present” for purposes of determining whether a quorum has been achieved. The inspectors will also treat proxies held in “street name” by brokers where the broker indicates that it does not have authority to vote on one or more of the proposals coming before the meeting (“brokernon-votes”) as “present” for purposes of determining whether a quorum has been achieved.
Vote Requirements and Manner of Voting Proxies. Proxies
If a quorum is present:
We will hold an election of directors.Each outstanding share of common stock of Conagra Brands is entitled to cast one vote for each director seat. In an uncontested election, a director will be elected if he or she receives the affirmative vote of a majority of the votes cast in the election. An incumbent director nominee who does not receive the affirmative vote of a majority of the votes cast in the election is required promptly to tender his or her resignation to the Board, and the resignation will be accepted or rejected by the Board as more fully described in the “Our Corporate Governance Practices” section of this Proxy Statement. Abstentions and brokernon-votes are not treated as votes cast and, therefore, will not affect the outcome of the election of directors.
We will vote on ratification of the appointment of the independent auditor for fiscal 2019.The appointment of the independent auditor for fiscal 2019 will be ratified if approved by a majority of the votes cast.
Additional Information
Abstentions are not treated as votes cast and therefore will not affect the outcome of the vote. Because the ratification of the appointment of the independent auditor is considered a “routine” matter, there will be no brokernon-votes with respect to this matter. |
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Additional Information
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We will vote, on an advisory basis, to approve our named executive officer compensation.The advisory resolution to approve our named executive officer compensation, as described in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, will be considered adopted if approved by a majority of the votes cast. Abstentions and brokernon-votes are not treated as votes cast and, therefore, will not affect the outcome of the votes on this matter.
The shares represented by valid proxies received by Internet, by telephone or by mail and not properly revoked will be voted in the manner specified. Where specific choices are not indicated, the shares represented by all valid proxies received will be voted: “For”“FOR” the election of all of the director nominees for director named in this Proxy Statement; “For”“FOR” the ratification of the appointment of our independent auditor for fiscal 2018; “For”2019; and “FOR” the resolution to approve our named executive officer compensation; and to hold future advisory votes on our named executive officer compensation every “One Year.”compensation. If any matter not described above is properly presented at the meeting, the proxy gives authority to the persons named on the proxy card to vote as recommended by the Board on such other matters.
Multiple Shareholders Sharing an Address
We are allowed to deliver a single Notice of Internet Availability of Proxy Materials, Annual Report, and Proxy Statement to a household at which two or more shareholders reside when we believe those shareholders are members of the same family. We believe this rule benefits everyone. It eliminates duplicate mailings that shareholders living at the same address receive, and it reduces our printing and mailing costs. You will continue to receive individual proxy cards for each registered account. If you receive a single set of proxy materials but prefer to receive separate copies for each registered account in your household, please contact our agent, Broadridge, by telephone at (866)540-7095 or in writing at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Broadridge will remove you from the householding program within 30 days after it receives your request, at which point you will begin receiving an individual copy of the proxy materials for each registered account. You can also contact Broadridge at the telephone number or address above if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
Shareholder Proposals to be Included in our 20182019 Proxy Statement
To be considered for inclusion in next year’s Proxy Statement, shareholder proposals must be received at our principal executive offices no later than the close of business on April 13, 2018.Address12, 2019.Address proposals to the Corporate Secretary, Conagra Brands, Inc., 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
Other Shareholder Proposals to be Presented at our 20182019 Annual Meeting
Ourby-laws provide that any shareholder proposal that is sought to be presented directly at the 20182019 Annual Meeting but not submitted for inclusion in the Proxy Statement for the 20182019 Annual Meeting must be received at our principal executive office not less than 90 nor more than 120 days prior to the first anniversary of the 20172018 Annual Meeting. If the date of the 20182019 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date, then the notice must be received not later than the 90th day prior to the meeting day or the tenth day following public announcement of the meeting date. Ourby-laws also specify the information that must accompany the notice.
The proxy card for the 20182019 Annual Meeting will give discretionary authority with respect to all shareholder proposals properly brought before the 20182019 Annual Meeting that are not included in the Proxy Statement for the 20182019 Annual Meeting. Address proposals to the Corporate Secretary, Conagra Brands, Inc., 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
***
Appendix A
Appendix A – Reconciliation of GAAP andNon-GAAP Information
This Proxy Statement contains certainnon-GAAP financial measures, including organic net sales, adjusted diluted earnings per share from continuing operations and adjusted grossoperating margin. Management considers GAAP financial measures as well asnon-GAAP financial measures in its evaluation of the company’s financial statements and believes thesenon-GAAP measures provide useful supplemental information to assess the company’s operating performance and financial position. These measures should be viewed in addition to, and not in lieu of, the company’s diluted earnings per share, operating performance, and financial measures as calculated in accordance with GAAP. Please see our Annual Report onForm 10-K for the fiscal year ended May 28, 201727, 2018 for a reporting of our financial results in accordance with GAAP.
The following information is provided to reconcile thenon-GAAP financial measures disclosed in this Proxy Statement to their most directly comparable GAAP measures.
Organic Net Sales
FY18 | FY17 | % Change | ||||||||||
Net Sales | $ | 7,938.3 | $ | 7,826.9 | 1.4 | % | ||||||
Impact of foreign exchange | (27.9) | — | ||||||||||
Net sales from acquired businesses | (169.1) | — | ||||||||||
Net sales from divested businesses | — | (71.1) | ||||||||||
Organic Net Sales | $ | 7,741.3 | $ | 7,755.8 | (0.2 | )% | ||||||
Appendix A
Adjusted Operating Margin & Adjusted Diluted EPS from Continuing Operations
FY17 | FY16 | % Change | ||||||||||
Diluted earnings per share (EPS) from continuing operations | $ | 1.25 | $ | 0.29 | 331.0 | % | ||||||
Net expense related to restructuring plans | 0.09 | 0.41 | ||||||||||
Net expense related to planned divestiture | 0.05 | - | ||||||||||
Net benefit related to gain on sale of Spicetec and JM Swank businesses | (0.16 | ) | - | |||||||||
Net expense related to Goodwill & Intangible impairment charges | 0.59 | 0.07 | ||||||||||
Net expense related to pension valuation adjustment | - | 0.49 | ||||||||||
Net expense related to salaried pension plan lump sum settlement | 0.02 | - | ||||||||||
Net expense related to early retirement of debt | 0.14 | 0.04 | ||||||||||
Net expense (benefit) related to legal matters | (0.01 | ) | 0.01 | |||||||||
Net expense (benefit) related to hedging | 0.01 | (0.02 | ) | |||||||||
Net benefit related to tax adjustment of valuation allowance | (0.21 | ) | - | |||||||||
Net expense (benefit) related to unusual tax items | (0.03 | ) | 0.03 | |||||||||
Rounding | - | (0.02 | ) | |||||||||
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Adjusted Diluted EPS from continuing operations | $ | 1.74 | $ | 1.30 | 33.8 | % | ||||||
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Gross Margin Reconciliation
Gross Margin: Gross Profit as a % of Net sales
FY17 | FY16 | |||||||
Net sales | $ | 7,826.9 | $ | 8,664.1 | ||||
Cost of goods sold | 5,484.8 | 6,234.9 | ||||||
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Gross Profit | $ | 2,342.1 | $ | 2,429.2 | ||||
Net expense related to planned divestiture | 0.5 | - | ||||||
Net expense related to restructuring plans included in cost of goods sold | 17.2 | 49.0 | ||||||
Net expense (income) related to hedging | 5.1 | (16.4 | ) | |||||
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Adjusted Gross Profit | $ | 2,364.9 | $ | 2,461.8 | ||||
Adjusted Gross Margin | 30.2 | % | 28.4 | % |
FY18 | Operating profit | Diluted EPS from continuing operations | ||||||
Reported
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$
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1,033.5
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$
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1.95
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| ||
% of Net Sales
|
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13.0%
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Restructuring plans
|
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38.0
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|
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0.07
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Acquisitions and divestitures
|
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15.7
|
|
|
0.03
|
| ||
Corporate hedging losses (gains)
|
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(6.2)
|
|
|
(0.01)
|
| ||
Pension settlement and valuation adjustment
|
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5.4
|
|
|
0.01
|
| ||
Intangible impairment charges
|
|
4.8
|
|
|
0.01
|
| ||
Early exit of an unfavorable lease contract by purchasing the building
|
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34.9
|
|
|
0.06
|
| ||
Gain on substantial liquidation of an international joint venture
|
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—
|
|
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(0.01)
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| ||
Legal matters
|
|
151.0
|
|
|
0.28
|
| ||
Wesson valuation allowance adjustment
|
|
—
|
|
|
0.19
|
| ||
Tax reform adjustments
|
|
—
|
|
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(0.57)
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| ||
Unusual tax items
|
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—
|
|
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0.10
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| ||
Adjusted
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$
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1,277.1
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$
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2.11
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| ||
% of Net Sales (Margin)
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16.1%
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| |||||
Year-over-year change – reported
|
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56.0%
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| |||||
Year-over-year change – adjusted
|
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21.3%
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| |||||
FY17
| ||||||||
Reported
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$
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925.0
|
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$
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1.25
|
| ||
% of Net Sales
|
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11.8%
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| |||||
Gain on sale of Spicetec and J.M. Swank businesses
|
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(197.4)
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|
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(0.16)
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| ||
Restructuring plans
|
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63.6
|
|
|
0.09
|
| ||
Acquisitions and divestitures
|
|
31.4
|
|
|
0.05
|
| ||
Corporate hedging losses (gains)
|
|
5.1
|
|
|
0.01
|
| ||
Goodwill and intangible impairment charges
|
|
304.2
|
|
|
0.59
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| ||
Early extinguishment of debt
|
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93.3
|
|
|
0.14
|
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Salaried pension plan lump sum settlement
|
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13.8
|
|
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0.02
|
| ||
Legal matters
|
|
(5.7)
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|
|
(0.01)
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| ||
Tax adjustment of valuation allowance
|
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—
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|
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(0.21)
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Unusual tax items
|
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—
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(0.03)
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Income from discontinued operations, net of noncontrolling interests
|
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—
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|
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—
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Adjusted
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$
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1,233.3
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$
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1.74
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% of Net Sales (Margin) | 15.8% | |||||||
VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this proxy card. 2. Go to the Website www.proxyvote.com. 3. Follow the instructions.
VOTE BY PHONE - 1-800-690-6903 | ||
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this proxy card. | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this proxy card. | ||
2. Complete, sign, and date your proxy card. | ||
3. Return your proxy card in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you vote by Phone or Internet, please do not mail this |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| KEEP THIS PORTION FOR YOUR RECORDS | |
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
CONAGRA BRANDS, INC.
| For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following nominees for director: | ||||||||||||||||||||||||||||||||||||||||
1. |
Election of directors |
☐ |
☐ |
☐ |
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01) | Anil Arora | 06) | Rajive Johri | |||||||||||||||||||||||||||||||||||||
02) | Thomas K. Brown | 07) | Richard H. Lenny | |||||||||||||||||||||||||||||||||||||
03) | Stephen G. Butler | 08) | Ruth Ann Marshall | |||||||||||||||||||||||||||||||||||||
04) | Sean M. Connolly | 09) | Craig P. Omtvedt | |||||||||||||||||||||||||||||||||||||
05) | Joie A. Gregor | |||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
2. | Ratification of the appointment of independent auditor for fiscal 2019 | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
3. | Advisory approval of the Company’s named executive officer compensation | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this proxy card. | ||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ADMISSION TICKET
Conagra Brands, Inc. 20172018 Annual Meeting of Shareholders
Friday, September 22, 201721, 2018
8:30 a.m. CDT
The Gwen Hotel, Floor 11
The Grand Salon Room
521 North Rush Street
Chicago, Illinois 60611
You must present this admission ticket, along with one form of government-issued photo identification (such as a valid driver’s license or passport), in order to gain admittance to the Annual Meeting of Shareholders on September 22, 2017.21, 2018. This ticket is not transferable and admits only the shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
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E31870-P96061E50133-P12300
PROXY - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Proxy is Solicited by the Board of Directors for the
September 22, 201721, 2018 Annual Meeting of Shareholders.
The undersigned appoints each of Steven F. Goldstone and Sean M. Connolly and Richard H. Lenny as proxies, with full power of substitution, to vote all shares of common stock of Conagra Brands, Inc. that the undersigned would be entitled to vote at the Annual Meeting of Shareholders and any adjournment or postponements thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS PROXY. IF YOU SIGN AND RETURN YOUR PROXY BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE PROXIES WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1,FOR ITEMS 2 AND 3, FORONE YEAR FOR ITEM 4, AND AS RECOMMENDED BY THE BOARD OF DIRECTORS UPON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF SHAREHOLDERS.
If you wish to vote by mailing this proxy card, please mark the boxes accordingly, indicate the date, sign your name exactly as it appears on this card, and return it in the enclosed envelope. When signing as attorney, executor, administrator, trustee, guardian, or officer of a corporation, please give your full title as such. Information on telephonic and Internet voting is on the reverse side of this proxy card.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet vote authorizes the named proxies to vote these shares in the same manner as if you marked, signed, and returned your proxy card. Telephone and Internet voting are available until 11:59 p.m. (ET) on September 20, 2018.
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VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this voting instruction card. 2. Go to the Website www.proxyvote.com. 3. Follow the instructions. VOTE BY PHONE - 1-800-690-6903 | ||
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this voting instruction card. | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this voting instruction card. | ||
2. Complete, sign, and date your voting instruction card. | ||
3. Return your voting instruction card in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you vote by Phone or Internet, please do not mail this Voting Instruction Card. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E50134-P12300 | KEEP THIS PORTION FOR YOUR RECORDS | |
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DETACH AND RETURN THIS PORTION ONLY | ||||||
THIS VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED. |
CONAGRA BRANDS, INC.
| For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following: |
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1. |
Election of directors. |
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01) | Anil Arora | 06) | Rajive Johri | |||||||||||||||||||||||||||||||||||||
02) | Thomas K. Brown | 07) | Richard H. Lenny | |||||||||||||||||||||||||||||||||||||
03) | Stephen G. Butler | 08) | Ruth Ann Marshall | |||||||||||||||||||||||||||||||||||||
04) | Sean M. Connolly | 09) | Craig P. Omtvedt | |||||||||||||||||||||||||||||||||||||
05) | Joie A. Gregor | |||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
2. | Ratification of the appointment of independent auditor for fiscal 2019 | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
3. | Advisory approval of the Company’s named executive officer compensation | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||
NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this voting instruction card. | ||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ADMISSION TICKET
Conagra Brands, Inc. 2018 Annual Meeting of Shareholders
Friday, September 21, 2017.2018
8:30 a.m. CDT
The Gwen Hotel, Floor 11
The Grand Salon Room
521 North Rush Street
Chicago, Illinois 60611
You must present this admission ticket, along with one form of government-issued photo identification (such as a valid driver’s license or passport), in order to gain admittance to the Annual Meeting of Shareholders on September 21, 2018. This ticket is not transferable and admits only the shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
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E50135-P12300
VOTING INSTRUCTION CARD - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Voting Instruction Card is Solicited by the Board of Directors for the
September 21, 2018 Annual Meeting of Shareholders.
As a participant in the Conagra Brands Employee Stock Purchase Plan (the "ESPP"), I hereby direct Computershare, as Trustee, to vote all shares of common stock I hold in this plan account in accordance with the instructions set forth on the reverse side.
THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN YOUR INSTRUCTION CARD BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE TRUSTEE WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1 ANDFOR ITEMS 2 AND 3.
If you wish to vote using this voting instruction card, please mark the boxes accordingly, sign your name exactly as it appears on this card, indicate the date, and return this card in the enclosed envelope. If you are a current or former employee of Conagra Brands, Inc. and have an interest in the ESPP, your proportionate interest as of July 31, 2018 is shown on this voting instruction card and the instructions you provide will determine how the Trustee will vote. If you do not vote, the Trustee will vote the shares in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received, unless contrary to applicable law.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet voting instruction authorizes Computershare to vote these shares in the same manner as if you marked, signed, and returned this voting instruction card. Whether you vote by mail, telephone, or via the Internet, your vote must be returned by 11:59 p.m. (ET) on September 18, 2018.
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VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this voting instruction card. 2. Go to the Website www.proxyvote.com. 3. Follow the instructions.
VOTE BY PHONE - 1-800-690-6903 | ||
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this voting instruction card. | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this voting instruction card. | ||
2. Complete, sign, and date your voting instruction card. | ||
3. Return your voting instruction card in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||
If you vote by Phone or Internet, please do not mail this Voting Instruction Card. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| E50136-P12300 KEEP THIS PORTION FOR YOUR RECORDS | |||
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| DETACH AND RETURN THIS PORTION ONLY |
THIS VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED.
CONAGRA BRANDS, INC. | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following nominees for director: | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||
1. Election of directors | ||||||||||||||||||||||||||||||||||||||||||||
01) | ||||||||||||||||||||||||||||||||||||||||||||
06) Rajive Johri | ||||||||||||||||||||||||||||||||||||||||||||
| 07) Richard H. Lenny | |||||||||||||||||||||||||||||||||||||||||||
| 08) Ruth Ann Marshall | |||||||||||||||||||||||||||||||||||||||||||
| 09) Craig P. Omtvedt | |||||||||||||||||||||||||||||||||||||||||||
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The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||||
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2. Ratification of the appointment of independent auditor for fiscal | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||||
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3. Advisory approval of the Company’s named executive officer compensation | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||||||||
NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this voting instruction card. | ||||||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
ADMISSION TICKET
Conagra Brands, Inc. 20172018 Annual Meeting of Shareholders
Friday, September 22, 201721, 2018
8:30 a.m. CDT
The Gwen Hotel, Floor 11
The Grand Salon Room
521 North Rush Street
Chicago, Illinois 60611
You must present this admission ticket, along with one form of government-issued photo identification (such as a valid driver’s license or passport), in order to gain admittance to the Annual Meeting of Shareholders on September 22, 2017.21, 2018. This ticket is not transferable and admits only the shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
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E31872-P96061E50137-P12300
VOTING INSTRUCTION CARD - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Voting Instruction Card is Solicited by the Board of Directors for the
September 22, 2017 Annual Meeting of Shareholders.
As a participant in the ConAgra Foods Employee Stock Purchase Plan (the “ESPP”), I hereby direct Computershare, as Trustee, to vote all shares of common stock I hold in this plan account in accordance with the instructions set forth on the reverse side.
THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN YOUR INSTRUCTION CARD BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE TRUSTEE WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1,FOR ITEMS 2 AND 3, AND FOR ONE YEAR FOR ITEM 4.
If you wish to vote using this voting instruction card, please mark the boxes accordingly, sign your name exactly as it appears on this card, indicate the date, and return this card in the enclosed envelope. If you are a current or former employee ofConagra Brands, Inc. and have an interest in the ESPP, your proportionate interest as of July 31, 2017 is shown on this voting instruction card and the instructions you provide will determine how the Trustee will vote. If you do not vote, the Trustee will vote the shares in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received, unless contrary to applicable law.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet voting instruction authorizes Computershare to vote these shares in the same manner as if you marked, signed, and returned this voting instruction card. Whether you vote by mail, telephone, or via the Internet, your vote must be returned by 11:59 p.m. (ET) on September 19, 2017.
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ADMISSION TICKET
Conagra Brands, Inc. 2017 Annual Meeting of Shareholders
Friday, September 22, 2017
8:30 a.m. CDT
The Gwen Hotel, Floor 11
The Grand Salon Room
521 North Rush Street
Chicago, Illinois 60611
You must present this admission ticket, along with one form of government-issued photo identification (such as a valid driver’s license or passport), in order to gain admittance to the Annual Meeting of Shareholders on September 22, 2017. This ticket is not transferable and admits only the shareholder(s) listed on the reverse side and one guest. Cameras, recording devices, and large packages/containers will not be permitted at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com.
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E31874-P96061
VOTING INSTRUCTION CARD - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Voting Instruction Card is Solicited by the Board of Directors for the
September 22, 2017 Annual Meeting of Shareholders.
As a participant in the TreeHouse Private Brands Retirement Income Savings Plan, I hereby direct T. Rowe Price, as Trustee, to vote all shares held in this plan account as I instruct in the instructions listed below.
THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN YOUR INSTRUCTION CARD BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE TRUSTEE WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1 ANDFOR ITEMS 2 AND 3, AND FORONE YEAR FOR ITEM 4.3.
If you wish to vote using this voting instruction card, please mark the boxes accordingly, sign your name exactly as it appears on this card, indicate the date and return the card in the enclosed envelope. If you are a current or former employee ofConagra Brands, Inc. and have an interest in TreeHouse Private Brands Retirement Income Savings Plan, your proportionate interest as of July 31, 20172018 is shown on this voting instruction card and the instructions you provide on this card will determine how the Trustee will vote. If you do not vote, the Trustee will vote the shares in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received, unless contrary to applicable law.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet voting instruction authorizes T. Rowe Price to vote these shares in the same manner as if you marked, signed, and returned this voting instruction card. Whether you vote by mail, telephone or via the Internet, your vote must be returned by 11:59 p.m. (ET) on September 19, 2017.18, 2018.
Continued and to be signed on reverse side