2019 PROXY
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Notice of Meeting of Shareholders
to be held Thursday, September 19, 2019 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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| ☐ | Soliciting Material under§240.14a-12 |
Conagra Brands, Inc.
(Name of Registrant as Specified In Its Charter)
[NOT APPLICABLE]
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2019 PROXY
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Notice of Meeting of Shareholders
to be held Thursday, September 19, 2019 |
[Inside Front Cover – Intentionally Left Blank]
  | Conagra Brands, Inc. | |||
| 222 Merchandise Mart Plaza | ||||
| Suite 1300 | ||||
| Chicago, Illinois 60654 | ||||
August10, 2018August 9, 2019
Dear fellow shareholder:Shareholders,
I am pleased to invite you to join us for the Conagra Brands Inc. Annual Meeting of Shareholders which will be held on Friday,Thursday, September 21, 2018,19, 2019, at 8:30 a.m. Central Daylight Time1:00 p.m. CDT at the Wyndham Grand Chicago Riverfront in the Grand Salon on the 11th floor of the Gwen Hotel, 521 North Rush Street in Chicago, Illinois.
Chicago. The Annual Meeting will include a brief report on our business, a discussion of and voting on the matters described in the Notice of 20182019 Annual Meeting of Shareholders and Proxy Statement, and aquestion-and-answer session.
ThankFiscal 2019 was a year of remarkable transition for Conagra Brands. On an organic basis, we continued modernizing our portfolio of iconic and emerging brands. Our robust slate ofon-trend innovation led to a second year in a row of organic net sales growth. We also continued our disciplined approach to M&A. We successfully completed the acquisition of Pinnacle Foods, accelerating the next wave of change at Conagra. The addition of Pinnacle’s brands increased our scale, enhanced our frozen platform and added leading, iconic brands in attractive categories. We also divested severalnon-core assets during the year, using the proceeds to repay debt and return value to shareholders.
Our Board of Directors also saw change in fiscal 2019. Several directors retired early in the fiscal year. Subsequently, three new directors, with diverse and accomplished backgrounds, joined us. Our company benefited from the entire Board’s guidance in fiscal 2019.
With fiscal 2020 now underway, we remain as confident as ever in the long-term value creation potential of the company. On behalf of our entire organization, I thank you for your continuedshared confidence that Conagra Brands is a compelling investment in Conagra Brands.opportunity.
Sincerely,
Sean Connolly
President and Chief Executive Officer
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2019 PROXY STATEMENT III |
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 of
Shareholders and Proxy Statement and Annual Report for the fiscal year ended May 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 available on or about August10, 2018.
Notice of 2018 Annual Meeting of Shareholders
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| When | Where | Who May Vote | ||
| Thursday, | The Wyndham Grand | Shareholders of record as | ||
| September 19, 2019 | Chicago Riverfront | of the close of business on | ||
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
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| Grand Ballroom D (6th Floor) |
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Whether or not you plan to attendin-person, please be sure to vote your shares by proxy.
Your vote is important.
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| Chicago, Illinois 60601 | ||||
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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 ItemsITEMS OF BUSINESS
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| 3 | To vote, on an advisory basis, to approve our named executive officer compensation |
| 4 | To transact any other business properly brought before the meeting |
Colleen Batcheler
Executive Vice President, General Counsel
and Corporate Secretary
August 9, 2019
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AttendIn-Person | Attend by Audiocast | |||
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. | If you cannot attend the meeting in person, you may join a live audiocast on the Internet by visiting http://www.conagrabrands.com/ |
Whether or not you plan to attendin-person, please be sure to vote your shares by proxy. YOUR VOTE IS IMPORTANT. |
IV CONAGRA BRANDS |
Table of Contents
| 1 | ||||
Board of Directors & Corporate Governance | ||||
VOTING ITEM #1 Election of Directors | ||||
| Voting Recommendation | 7 | |||
| Who We Are | 8 | |||
| How We Are Selected | 14 | |||
| How We Govern | 17 | |||
| How to Communicate with Us | 26 | |||
| How We Are Paid | 26 | |||
Audit Matters | ||||
VOTING ITEM #2 Ratification of the Appointment of Our Independent Auditor for FY2020 | ||||
| Voting Recommendation | 30 | |||
| Audit / Finance Committee Report | 32 | |||
Executive Compensation Matters | ||||
VOTING ITEM #3 Approval, on an Advisory Basis, of Our Named Executive Officer Compensation | ||||
| Voting Recommendation | 33 | |||
| Compensation Discussion and Analysis | 35 | |||
| Other Fiscal 2019 Compensation | 51 | |||
| Compensation Committee Report | 59 | |||
| Summary Compensation Table – Fiscal 2019 | 59 | |||
| Grants of Plan-Based Awards – Fiscal 2019 | 61 | |||
| Outstanding Equity Awards at FiscalYear-End – Fiscal 2019 | 62 | |||
| Option Exercises and Stock Vested – Fiscal 2019 | 64 | |||
| Pension Benefits – Fiscal 2019 | 64 | |||
| Nonqualified Deferred Compensation — Fiscal 2019 | 65 | |||
| Potential Payments Upon Termination or Change of Control | 67 | |||
| CEO Pay Ratio | 77 | |||
Stock Ownership | ||||
| Information on Stock Ownership | 78 | |||
Other Matters | ||||
| Our Annual Meeting of Shareholders | 80 | |||
| Appendix A – Reconciliation of GAAP andNon-GAAP Information | ||||
2019 PROXY STATEMENT V |
Our Company
Conagra Brands (NYSE: CAG) is a pure-play branded food company. From our headquarters in Chicago we rely on a culture of innovation to steadily evolve our portfolio to satisfy people’s changing food preferences. Our iconic brands, such as Birds Eye®, Marie Callender’s®, Banquet®, Healthy Choice®, Slim Jim®,Reddi-wip®, and Vlasic®, as well as emerging brands, including Angie’s® BOOMCHICKAPOP®, Duke’s®, Earth Balance®, Gardein®, and Frontera®, offer choices for every occasion.
Conagra By the Numbers
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Number of Locations | Annualized Revenue | Number of Employees | ||||||
~50 | ~$11 Billion | ~18,000 |
1 CONAGRA BRANDS |
Fiscal 2019 Highlights
Fiscal 2019 was another important year in our transformation. The year was filled with accomplishments, and the acceleration of the next wave of change at Conagra Brands. Of particular note, we acquired Pinnacle Foods Inc., or Pinnacle, during fiscal 2019. Pinnacle’s well-known brands include Birds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic and Wish-Bone, among others. As a result,we are now the fourth largest food company in the United States, generating approximately $11 billion in annualized revenues.
We set rigorous operating goals for the year that were communicated to investors and incorporated into our compensation programs. Ultimately, our performance had bright spots and a few areas that fell short of our plans:
Organic Net Sales Growth: Below Guidance
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Met Guidance
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Slightly Below Guidance
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Exceeded Guidance
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On Track
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On Track
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We will also transact any other business that is properly brought before the meeting.
Fiscal 2018 Highlights
Fiscal 2018 was a successful year for Conagra Brands and another important year in our transformation. We accomplished the following:
Organic Net Sales Growth Fiscal 2019 was our second consecutive year of organic net sales growth. A robust innovation slate across frozen foods and snacks helped drive strong consumption trends in both businesses. |
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Capital ReturnedOur adjusted operating margin grew again in fiscal 2019. We delivered operating margin of 12.4% and adjusted operating margin of 15.4%1, in line with our guidance 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.investors.
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Culture: Today,During fiscal 2019, we have a morecontinued our work to cultivate an 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, includingIn addition to acquiring Pinnacle during fiscal 2018,2019, we readied ourselves to embarkcompleted the divestiture of several smaller,non-core business: our Wesson oil business, our Del Monte business in Canada, and Gelit, our Italian-based frozen pasta business.
We stayed on track against our deleveraging targets during fiscal 2019. We reduced our debt by $886 million between the next phaseclosing of our evolution. On June 26, 2018, shortly afterthe Pinnacle acquisition and the end of fiscal 2018,2019.
We paid $356.2 million in cash dividends during fiscal 2019.
| 1 | A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included in Appendix A to this Proxy Statement. |
2019 PROXY STATEMENT 2 |
Fiscal 2019 also concluded a three-year period of significant, impactful change at Conagra Brands. During this period, we enteredtransformed our portfolio through meaningful brand renovation, new product innovation, the Pinnacle acquisition, thespin-off of Lamb Weston into a definitive agreementseparate, independent, publicly-traded company, and the execution of a series of smaller acquisitions and divestitures. We brought our organic net sales growth rate from declining to acquire Pinnacle Foods Inc., makersnearly flat and then to growth in each of well-known brands such asBirds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,the last two fiscal years. In addition, over the three fiscal years ended in fiscal 2019, we grew adjusted diluted earnings per share from continuing operations, or EPS, expanded adjusted operating margin and returned nearly $3.1 billion to shareholders through dividends and share repurchases.
Fiscal 2017 through fiscal 2019 has been an important time in Conagra’s nearlyHungry-Man,100-year Log Cabin, Tim’s Cascade Snacks, Udi’s,Vlasichistory. As a result of our focus on reshaping the Conagra Brands portfolio over the last several years and Wish-Bone, among others. We our accomplishments in fiscal 2019, we believe that the combination of two portfolios of iconic brands – ours and Pinnacle’s - will serve aswe have entered fiscal 2020 with a catalystsolid foundation from which to accelerate value creationdeliver for shareholders.investors.
Fiscal 2019 Compensation
1 A reconciliation of thisnon-GAAP measure toFor fiscal 2019, the most directly comparable GAAP measure is included inAppendix A to this Proxy Statement.
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Director Nominees
Our director nominees are as follows. With the exception of Mr. Arora, who was first appointed to the Board in July 2018, each nominee was elected by shareholders at the 2017 annual meeting.
| Name and Position | Age* |
Director Since
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Anil Arora
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57
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2018
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✓
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Audit / Finance
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Thomas K. Brown
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62
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2013
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✓
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Audit / Finance
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Stephen G. Butler
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70
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2003
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✓
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Audit / Finance (Chair) Executive Committee
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Sean M. Connolly, CEO
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52
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2015
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Executive Committee
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Joie A. Gregor
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68
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2009
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✓
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Nominating, Governance & Public Affairs (Chair) Audit / Finance Executive Committee
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Rajive Johri
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68
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2009
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✓
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Nominating, Governance & Public Affairs Human Resources
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Richard H. Lenny, Chairman
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66
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2009
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✓
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Nominating, Governance & Public Affairs Human Resources Executive Committee (Chair)
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Ruth Ann Marshall
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64
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2007
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✓
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Nominating, Governance & Public Affairs Human Resources (Chair) Executive Committee
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Craig P. Omtvedt
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68
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2016
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✓
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Audit / Finance
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* Ages as of July 31, 2018
Auditor Ratification
KPMG LLP has conducted the audits of our financial statements since fiscal 2006 and the Audit / FinanceHuman Resources Committee of our Board has appointed the firmof Directors created an executive compensation program that was designed to conduct thepromote attainment of our fiscal 2019 audit. operating plan and long-term goals. More specifically, the program contained the following elements:
Fixed Compensation | Incentive Compensation | |
• Base Salary | • Fiscal 2019 Annual Incentive Plan (cash settled) | |
• Health and Welfare Benefits | • Long-term Incentive Plan (stock settled) | |
• Retirement Benefits | • One-time Performance Based Award (stock settled) |
In designing the event that shareholders do not ratify the appointment, the Audit / Finance Committee will reconsider the appointment. Even if the appointment of KPMG LLP is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in Conagra Brands’ and its shareholders’ best interests.
Fiscal 2018 Executive Compensation
Our fiscal 2018 performance, 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 ofprogram, the Human Resources Committee management haschose to include a mix of compensation types (salary, benefits, cash-based incentives and equity-based incentives) and a mix of performance periods (single year and multi-year) to promote long-term strategic decision-making. This approach was also been rewarded. intended to minimize the likelihood that our executives would be motivated to pursue risky or unsustainable results.
91% of our CEO’s FY19 Compensation Opportunity Was Tied to Company Performance | CEO Stock Ownership Requirement: 6x Base Salary | Relative and Absolute Performance Measures Included in Our Incentive Programs | 94% Say on Pay Approval Level in Each of the Last Four Years |
As more fully described in the Compensation Discussion and Analysis section of this Proxy Statement, our named executive officers, including ourbeginning on page 35, the Human Resources Committee considered the business outcomes described above in determining final payouts under incentive programs with performance periods concluding in fiscal 2019. Our Chief Executive Officer and other senior executives named in this Proxy Statement received annual incentiveAnnual Incentive Plan payouts at levels slightly abovebelow target for fiscal 2018, driven by strong profit and net sales growth performance. In addition, the named executive officer participants in the plan each2019. Each received long-term incentive payouts forunder the fiscal 2016 through 2018year 2017 to fiscal year 2019 cycle of the performance period at approximately 158.7% ofshare plan slightly above target.
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The Human Resources Committee believes that its fiscal 20182019 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.
We thank you for your continued investment in Conagra Brands.
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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. 2018 Annual Meeting of Shareholders, which we refer to as the 2018 Annual Meeting. We are first making our proxy materials available to shareholders on or about August10, 2018.
Shareholders of record as of the close of business on July 31, 2018 are entitled to attend and to vote at the 2018 Annual Meeting and at any postponements or adjournments of the 2018 Annual Meeting. On July 31, 2018, there were 391,645,253 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 2018 Annual Meeting to ensure that your shares are voted as you direct, even if you are unable to attend the 2018 Annual Meeting.
If you hold shares of 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;
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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 18, 2018 for shares held in the Conagra Brands Employee Stock Purchase Plan or the TreeHouse Private Brands Retirement Income Savings Plan. Internet and telephone voting is available through 11:59 p.m. Eastern Time on Thursday, September 20,2018 for all other shares.
If a broker, bank or other nominee holds your shares (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 Items and Recommendations
At the 2019 Annual Meeting of Shareholders, we are asking shareholders to vote on the following items:
| PROPOSAL #1 | ||||
Election of Each of the 11 Director Nominees Named in this Proxy Statement | ||||
✓The Board of Directors unanimously recommends a vote FOR each director nominee. Additional information about our director nominees and their approach to governance may be found beginning on page 7. | ||||
| PROPOSAL #2 | ||||
Ratification of the Appointment of KPMG LLP as Our Independent Auditor for Fiscal 2020 | ||||
✓The Board of Directors unanimously recommends a vote FOR the proposal. Additional information about this proposal may be found beginning on page 30. | ||||
| PROPOSAL #3 | ||||
Advisory Approval of Our Named Executive Officer Compensation | ||||
✓The Board of Directors unanimously recommends a vote FOR the proposal. Additional information about named executive officer compensation may be found beginning on page 33. | ||||
2019 PROXY STATEMENT 4 |
At Conagra, we believe that when our people, our communities and the environment are thriving, so are we. We publish a Citizenship Report each year and make it available on our website athttps://www.conagrabrands.com/our-company/ corporate-social-responsibility. The report details our citizenship strategy, which covers four focus areas: Good Food, Responsible Sourcing, Better Planet and Stronger Communities. It also summarizes our accomplishments. We encourage you to read our entire Citizenship Report; a few highlights follow.
| Stronger Communities. |
We believe that everybody has the right to good food. As a leading food company, we are deeply motivated to make a meaningful impact on the pervasive societal issue of hunger, and we take a holistic approach which includes employee engagement, financial contributions and production donations.
• The Conagra Brands Foundation has led the fight against hunger for more than 20 years, partnering with the Feeding America network to provide more than 491 million pounds of food and investing over $47 million to alleviate hunger over this time. | • Our 12th annual Shine the Light on Hunger campaign, an Omaha-based community-wide call to action to raise food, funds and awareness on the issue of hunger, raised over 2 million meals for the Food Bank for the Heartland in 2018. | |
• In fiscal 2018, we donated 13.4 million pounds of food to the Feeding America network of 200 food banks located throughout the United States. This equates to an average of over 1 million pounds of food donated to the Feeding America network of food banks every month. | • Each April, thousands of Conagra Brands employees volunteer withnon-profit organizations during our annual Month of Service. Many of these volunteers work on hunger-related projects. This year more than 2,600 employees volunteered over 7,430 hours of their time. | |
• In 2019, we were recognized as one of the 50 most community-minded companies in the United States as an honoree of The Civic 50, an initiative by Points of Light, the world’s largest organization dedicated to volunteer service. |
5 CONAGRA BRANDS |
| Better Planet; Responsible Sourcing.
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Our business is managed underWe are committed to making the directionplanet better. Because the majority of the Boardour environmental, social and related economic impacts lie outside of Directors,our direct operations and you are being asked to vote to elect the next members of the Board. within our extended supply chain, we manage our supplier relationships in ways that appropriately address those impacts and corresponding risks and opportunities.
• We have set measurable sustainability goals relating to greenhouse gas emissions, water, and waste. We measure our progress against those goals and regularly report our progress in our annual Citizenship Report. | • On an annual basis, we measure and disclose our water, climate, and deforestation (as it relates to palm oil, beef, timber-based products and soy) risk and mitigation strategies through the CDP disclosure program. | |
• Our Supplier Excellence Program assesses our key suppliers on environmental and social risk-related performance and disclosure. This group represents 75% of our overall ingredients, commodities and packaging spend. | • Our dedicated Supplier Quality and Risk team is responsible for supplier conformance with our Supplier Expectations Manual, which includes our requirements related to environmental compliance, child labor, and animal welfare. |
2019 PROXY STATEMENT 6 |
Currently, the Board consists of 1211 directors whose terms expire at the 20182019 Annual Meeting. Based on a recommendation of the Board’s Nominating, Governance and Public Affairs Committee, which we refer to as the N/G/PA Committee, the Board has nominated nineour 11 current directors, as named in this proxy statement,Proxy Statement, for election at the 20182019 Annual Meeting. Information about each of the nine11 nominees (as of July 30, 2019) is set forth on the pages that follow.8 – 13. If elected, each of the directors will hold office until the Conagra Brands 20192020 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.
Director 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 Board overall, and which inform Board succession planning and director nomination processes, include 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.
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 is set forth on the pages that follow.
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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:
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The collective profile of our director nominees, as of July 31, 2018, is as follows:
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The Board maintains a succession planning process that enables it to regularly evaluate the alignment of the Board’s membership with the needs of Conagra Brands. Through 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 broad range of skills, education, experiences, and qualifications that can be leveraged for the benefit of the company and its shareholders.
For additional information on the director nomination process, please see “Roles and Responsibilities of the Board and Its Committees – The Board’s Nominating, Governance and Public Affairs Committee – Director Nomination Process” below.
Director Independence
The Board has determined that eight of our nine nominees for director – directors Arora, Brown, Butler, 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 Messrs. Alford, Dickson and Goldstone, each of whom served as a director during fiscal 2018, had no material relationships with Conagra Brands and was independent within the meaning of applicable independence standards.
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 2018 (i.e., McDonald’s Corporation, Information Resources, Inc., Ford Motor Company, Unified Grocers Inc., Illinois Tool Works Inc., Conduent Incorporated, The Chefs’ Warehouse, Inc. and 3M Company). The relationships with these companies involved Conagra Brands’ purchase or sale of products and services in the ordinary course of business onarm’s-lengthSince: terms in amounts and under other circumstances that did not affect the relevant directors’ independence under our Corporate Governance Principles or under applicable law and NYSE listing standards.
Voting Item #1 – Election of Directors
In addition to satisfying our independence standards, each member of the Audit / Finance Committee of the Board, which we refer to as the Audit / Finance Committee, must satisfy an additional Securities and Exchange Commission, or SEC, independence requirement that provides that the member may not accept, directly or indirectly, any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than his or her director’s compensation and may not be an “affiliated person” of Conagra 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, which we refer to as the HR Committee. These rules require consideration of the source of HR Committee members’ 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.
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Voting Item #1 – Election of Directors
Biographical Information for Director Nominees (as of July 31, 2018)
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Independent
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• Public Company Experience; Former C-Suite Executive: Strong leadership capabilities and insights from experience as President and Chief Executive Officer of Yodlee, Inc. from start-up phase through its IPO and subsequent acquisition by Envestnet, and subsequently as Vice Chairman of Envestnet and Chief Executive of Envestnet | Yodlee.
• Technology Expertise:Extensive experience in technology, operating at the intersection of consumer, internet and technology sectors. • M&A Experience:Led Yodlee through its growth from start-up through ultimate acquisition. | Mr. Arora has served as a director |
Thomas “Tony” K. Brown Age: 63 Director Since: October 15, 2013 Independent Board Committees • Audit / Finance Committee • Nominating, Governance and Public Affairs Committee | Other public company • 3M Company (a global innovation company) since August 2013 • Tower International, Inc. (a metal component manufacturing company) since April 2014; has served as non-executive Chairman of the Board since 2017
Experiences, qualifications and skills considered in
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| 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. He joined Ford Motor Company in 1999 and served in various leadership capacities in global purchasing during his tenure. Prior to joining Ford Motor Company, he served in leadership positions at United Technologies Corporation (as Vice President, Supply Chain), QMS, Inc. and Digital Equipment Corporation. |
2019 PROXY STATEMENT 8 |
Stephen G. Butler Age: 71 Director Since: May 16, 2003 Independent Board Committees • Audit / Finance • Executive Committee | Other public company • Cooper Industries plc (an electrical products manufacturer) from 2002 until 2012 • Ford Motor Company (a motor vehicles manufacturer) since 2004
Experiences, qualifications and skills considered inre-nominating Mr.
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Voting Item #1 – Election of Directorsorganization, including service as Chairman of KPMG International.
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Mr. Butler is the retired Chairman and CEO of KPMG LLP (a national public accounting firm), a role he held from 1996 until June 2002. He also served as Chairman of KPMG International from 1999 until his retirement. He held a variety of management positions, both in the United States and internationally, during his34-year career at KPMG. |
Sean M. Connolly Age: 53 Director Since: April 6, 2015 Not Independent Board Committees • Executive Committee | Other public company • The Hillshire Brands Company (as President and CEO) from June 2012 to August 2014
Experiences, qualifications and skills considered inre-nominating Mr.
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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 2014. Before becoming CEO of Hillshire, Mr. Connolly served as Executive Vice President of Sara Lee Corporation (a branded food products |
Other public company directorships:
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Voting Item #1 – Election of Directors
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Joie A. Gregor Age: 69 Director Since: February 6, 2009
Independent
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• Technology Expertise:Significant technology experience from 13 years of service at IBM as well as her private equity portfolio experience. | ||||||||||||
Ms. Gregor served as a Managing Director with Warburg Pincus LLC (a private equity investment firm) from 2014 until 2016. In this role, she provided organizational guidance and strategic direction across all firm investing areas. Before her time with Warburg Pincus, Ms. Gregor’s professional experience included the following:
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Rajive Johri Age: 69 Director Since: January 1, 2009 Independent Board Committees • Human Resources Committee • Nominating, Governance and Public Affairs Committee | Other public company • Charter Communications Inc. (a telecommunications and mass media company) from 2006 until 2009
Experiences, qualifications and skills considered inre-nominating Mr. Johri
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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, Mr. Johri served as President of First National Credit Cards Center for First National Bank of Omaha. Prior to that, he served as an Executive Vice President for J.P. Morgan Chase Bank (a banking institution) from 1999 until 2004. |
Other public company directorships:
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Voting Item #1 – Election of Directors
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Richard H. Lenny Age: 67 Director Since: March 17, 2009
Non-Executive Chairman Since: May 28, 2018
Independent
• Human Resources Committee
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Experiences, qualifications and skills considered inre-nominating Mr.
| Mr. Lenny served as Chairman, President and Chief Executive Officer of The Hershey Company (manufacturer, distributor and marketer of candy, snacks and candy-related grocery products) from 2001 until his retirement in 2007. Prior to joining The Hershey Company, Mr. Lenny served as Group Vice President of Kraft Foods, Inc. (a packaged food company) and as President of Nabisco Biscuit Company (a packaged food company). Mr. Lenny served as non-executive Chairman of Information Resources, Inc. (a market research firm) from 2013 until 2018. He served as a senior advisor with Friedman, Fleischer & Lowe, LLC (a private equity firm) from 2014 until 2016 and as an operating partner from 2011 until 2014. | |||||||||||
Melissa Lora Age: 57 Director Since: January 4, 2019 Independent Board Committees • Audit / Finance Committee | Other public company directorships • KB Home (one of the largest homebuilders in the United States) since 2004 (lead independent director since 2016) • MGIC Investment Corporation (a mortgage insurance company) since 2018 Experiences, qualifications and skills considered in nominating Ms. Lora •Public Company Experience; Former C-Suite Executive: Strong leadership capabilities and insights from her experience in various leadership roles at Taco Bell Corp.; broad understanding of governance issues facing public companies from her board service to other public companies, including as lead independent director of KB Home. •Market Facing Experience; InternationalExpertise: Substantial international business and management experience from service as President of Taco Bell International. •Finance / Capital Management Expertise; Risk Management Expertise: Deep expertise in finance, risk and compliance oversight as a result of more than a decade of service as Chief Financial Officer of an operating division (Taco Bell Corp.) of Yum! Brands, Inc., as well as a decade of service as the Chair of the Audit Committee of KB Home. | Ms. Lora served as President of Taco Bell International, a segment of Taco Bell Corp. (a subsidiary of Yum! Brands, Inc., one of the world’s largest restaurant companies) from 2013 until her retirement in 2018. She also previously served in various other roles at Taco Bell Corp., including as Global Chief Financial and Development Officer from 2012 to 2013, Chief Financial and Development Officer from 2006 to 2012, and Chief Financial Officer from 2001 to 2006. |
11 CONAGRA BRANDS |
Ruth Ann Marshall Age: 65 Director Since: May 23, 2007 Independent Board Committees • Executive Committee • Human Resources Committee (Chair) • Nominating, Governance and Public Affairs Committee | Other public company directorships • Global Payments Inc. (a provider of payment technology services) since 2006 • Regions Financial Corporation (a provider of banking, trust, stockbrokerage and mortgage services) since 2011 Experiences, qualifications and skills considered inre-nominating Ms. Marshall •Public Company Experience; FormerC-Suite Executive: Strong leadership capabilities and insights from her service to MasterCard International, Inc., including marketing, account management and customer service. •Market Facing Experience; International Expertise; Technology Expertise: Significant domestic and international experience in growing the MasterCard Americas business, including through new product development. Technology expertise from a career in payments technology. •Finance / Capital Management Expertise; Risk Management Expertise: Expertise in finance from her service to MasterCard and on the Audit Committee of Regions Financial. Transactional experience from her board service to other public companies. | 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.
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Omtvedt
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Voting Item #1 – Election of Directors
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Independent
• Audit / Finance Committee
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Other public company directorships • Oshkosh Corporation (a manufacturer and marketer of specialty vehicles and vehicle bodies), since 2008; currentnon-executive Chairman of the Board • General Cable Corp. (a wire and cable manufacturer) from 2004 until 2018 • The Hillshire Brands Company from 2012 until 2014 Experiences, qualifications and skills considered inre-nominating Mr. Omtvedt •Public Company Experience; FormerC-Suite Executive: Broad understanding of governance issues facing public companies from his board service to other public companies; strong leadership capabilities and insights from his service as Chief Financial Officer of Fortune Brands. • Finance / Capital Management Expertise; Risk Management Expertise: Deep expertise in accounting and finance, based on decades of experience in accounting and finance roles, including Chief Financial Officer, Chief Accounting Officer, and Chief Internal Auditor, at a public company. | 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 2011. He served as a consultant to Beam Inc., the successor to Fortune Brands, during 2012. Previously, Mr. Omtvedt held a series of finance leadership positions of increasing responsibility with Fortune Brands, including Senior Vice President and Chief Accounting Officer; Vice President and Chief Accounting Officer; and Vice President, Deputy Controller and Chief Internal Auditor. He first joined Fortune Brands in 1989. Before joining Fortune Brands, Mr. Omtvedt served in financial positions of increasing responsibility at both The Pillsbury Company and Sears, Roebuck & Company. |
2019 PROXY STATEMENT 12 |
February 16, 2019 Independent Board Committees • Human Resources Committee | Other public company directorships • HD Supply Holdings, Inc. (an industrial distributor) since 2017 • Team Health Holdings, Inc. (a supplier of outsourced healthcare professional staffing and administrative services) from 2016 until 2017 Experiences, qualifications and skills considered in
•M&A Experience:Significant transactional experience as an investor, board member and investment banker. | Mr. Ostfeld is a partner of JANA Partners LLC (investment manager) where he is co-portfolio manager of JANA Strategic Investments, its active equity ownership strategy. Prior to joining JANA Partners LLC in 2006, Mr. Ostfeld was with GSC Partners in their distressed debt private equity group focused on acquiring companies through the bankruptcy restructuring process and enhancing value as an active equity owner. Prior to GSC Partners, Mr. Ostfeld was an investment banker at Credit Suisse First Boston where he worked on a |
13 CONAGRA BRANDS |
Our Skills and Qualifications
We seek independent directors with high standards for ethics and integrity. Individuals must be willing to commit the time needed to carry out their director duties, including overseeing our strategy, succession planning, and director refreshment. We also seek directors with experience in the following areas:
The following matrix summarizes our director nominees’ individual experiences, skills and characteristics. This summary is not an exhaustive list of each nominee’s contributions to the Board.
Public | Active /Former | Market-Facing | International | Finance / | M&A | Technology | Risk | |||||||||
Anil Arora |
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Thomas K. Brown |
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Stephen G. Butler |
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Richard H. Lenny |
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Melissa Lora |
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Ruth Ann Marshall |
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Craig P. Omtvedt |
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Scott Ostfeld |
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2019 PROXY STATEMENT 14 |
Voting Item #1 – Election of Directors
The nine director nomineesBoard 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:
15 CONAGRA BRANDS |
Director Refreshment
The Board desires that its membership collectively hold a broad range of skills, education, experiences and qualifications that can be leveraged for electionthe benefit of the company and its shareholders. The Board uses refreshment processes to enable it to evaluate the continued alignment of the Board’s membership with the needs of Conagra Brands. The Board’s refreshment processes involve reviewing and modifying the skills and characteristics required for membership. The Board also enables planned refreshment through its maintenance of a mandatory retirement age for directors. As a result of our refreshment processes, our Board represents a mix of long-tenured directors and directors who provide new and different insights, expertise and experiences. In fact, five of our current directors (including our CEO) are new to the Board currently servesince 2015.
For additional information on the director nomination process, please see “How We Govern – Nominating, Governance and Public Affairs Committee – Director Nomination Process” below.
Director Independence
The Board has determined that 10 of our 11 nominees for director – directors Arora, Brown, Butler, Gregor, Johri, Lenny, Lora, Marshall, Omtvedt and Ostfeld – 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. Bradley A. Alford, Mr. Thomas W. Dickson and Mr. Steven F. Goldstone, each of whom served as a director during fiscal 2019, had no material relationships with Conagra Brands and was independent within the meaning of applicable independence standards.
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. All nominees,Board served during fiscal 2019. The relationships with these companies involved Conagra Brands’ purchase or sale of products and services in the ordinary course of business onarm’s-length terms in amounts and under other than Mr. Anil Arora, were elected by shareholders atcircumstances that did not affect the relevant directors’ independence under our 2017 Annual Meeting of Shareholders. The Board appointed Mr. Arora as a director of Conagra Brands effective as of July 17, 2018. Mr. Arora was first introducedCorporate Governance Principles or under applicable law and NYSE listing standards.
In addition to the N/G/PA Committee as a potential nominee by current director, Richard H. Lenny.
If anysatisfying our independence standards, each member of the nominees 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. 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 ResponsibilitiesAudit / Finance Committee of the Board, which we refer to as the Audit / Finance Committee, must satisfy an additional Securities and Its CommitteesExchange Commission, or SEC, independence requirement. This requirement 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.
The SEC and NYSE have adopted rules relating to the independence of members of the Human Resources Committee, which we refer to as the HR Committee. These rules require consideration of the source of HR Committee members’ compensation, including any consulting, advisory or other compensatory fees paid to an HR Committee member, and each HR Committee member’s affiliation with us, any of our subsidiaries or any affiliates of our subsidiaries. Each member of the HR Committee satisfies these additional independence requirements.
2019 PROXY STATEMENT 16 |
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:
Fully Independent Standing Committees | Critical aspects of the Board’s work are handled by three standing committees, each of which is comprised solely of independent directors: an Audit/Finance Committee, a Human Resources Committee and a Nominating, Governance and Public Affairs Committee. | |
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 executive sessions per year. The Chairman of the Board presides at all Board meetings, including executive sessions. | |
| Over 90% Director Independence | The Board has determined that 10 of our 11 nominees for directors 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 our Corporate Governance Principles. |
17 CONAGRA BRANDS |
Independent Board | 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 Meetings and Annual Meetings of | During fiscal 2019, the Board met 14 times (five regular meetings and nine special meetings) and acted by unanimous written consent four times. Each Board member attended at least 75% or more of the total number of fiscal 2019 meetings of the Board and committees of the Board on which he or she served. 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 2018 Annual Meeting of Shareholders attended the 2018 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. | |
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 his or her election or appointment. The orientation includes presentations by senior management with respect to a wide range of topics, including our strategic plans, governance practices, control environment and human capital management priorities. Board members also receive materials and briefing sessions to continue their education on subjects that assist them in the discharge of their duties. We also provide reimbursement of expenses associated with our independent directors’ attendance at one outside director education program each fiscal year. |
2019 PROXY STATEMENT 18 |
Board Leadership 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 CEO roles have been separate. With separate Chairman and CEO roles, our CEO 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 CEO and senior leadership team between Board meetings on business developments and providing overall guidance to our CEO as to the Board’s views and perspectives, particularly on the strategic direction of the company.
Board Committees
The Board has established four standing committees: the Audit / Finance Committee, the Executive Committee, the HR Committee, and the N/G/PA Committee. The Audit / Finance Committee, HR Committee and N/G/PA Committee operate under written charters that have been approved by the full Board; each areof these three committees is comprised entirely of independent directors.
Membership on each of the Board’s standing committees as of July 31, 2018, wasis 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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Rajive Johri
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Richard H. Lenny
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Melissa Lora | | |||||||||||||||||||||||||||
Ruth Ann Marshall
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Craig P. Omtvedt
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Total Meetings in FY2018 | 12
| 1 | 5 | 5 | ||||||||||||||||||||||||
Scott Ostfeld | | |||||||||||||||||||||||||||
Total Meetings in FY2019 | 12 | 1 | 9 | 4 | ||||||||||||||||||||||||
19 CONAGRA BRANDS |
Voting Item #1 – Election of Directors
The Board’s Audit / Finance Committee
Committee
| Primary Responsibilities | |||||||
Anil Arora
Stephen G. Butler, Chair Melissa Lora Craig P. Omtvedt | • Oversee the integrity of the company’s financial statements and review annual and quarterly SEC filings and earnings releases
• Review, approve and ratify related-party transactions
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Financial Expertise and Financial Literacy
The Board has determined that directors Butler, Lora and Omtvedt are qualified as audit committee financial experts within the meaning of SEC regulations and that directors Arora Brown and GregorBrown are financially literate within the meaning of NYSE rules. All directors serving on the Audit / Finance Committee are independent.
Related-Party Transactions
The Audit / Finance Committee has adopted a written policy regarding the review, approval, and ratification of related-party transactions.transactions (generally, transactions involving an amount in excess of $120,000 in which the company is a participant and in which a related person has or will have a direct or indirect material interest). Under the policy, all related-party transactions must bepre-approved by the Audit / Finance Committee unless circumstances makepre-approval impracticable. In the latter case, management may enter into the transaction, but the transaction remains subject to ratification by the Audit / Finance Committee at its next regular,in-person meeting.
In determining whether to approve or ratify a related-party transaction, the Audit / Finance Committee will take into account, among other factors it deems appropriate, whether the transaction is fair and reasonableon terms no less favorable than terms generally available to an unaffiliated third party under the companysame or similar circumstances and the extent of the related-party’s interest in the transaction. No directorBoard member is permitted to participate in any approval of a related-party transaction in which he or she is involved.a related party, except that the Board member will provide all material information concerning the related party transaction to the Audit / Finance Committee. On at least an annual basis, the Audit / Finance Committee reviews and assesses ongoing related-party transactions to determine whether they are in compliance with the company’s guidelines and that the relationships remain appropriate. All related-party transactions are disclosed to the full Board.
2019 PROXY STATEMENT 20 |
Voting Item #1 – Election of Directors
During fiscal 2019, one related-party transaction arose. David B. Biegger is the company’s Executive Vice President and Chief Supply Chain Officer. One of Mr. Biegger’s immediate family members is employed by the company as a Brand Manager and earned total compensation in excess of $120,000. The Board’s immediate family member’s position does not report, directly or indirectly, to Mr. Biegger. In addition, the individual is compensated in a manner that is appropriate for their responsibilities and experience. The relationship described was reviewed and ratified in accordance with our policy for review of related-party transactions.
Executive Committee
Committee Members:
| Primary Responsibility | |||||||
Stephen G. Butler
Joie A. Gregor Richard H. Lenny, Chair Ruth Ann Marshall | • 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:
| Primary Responsibilities | |||||||
Joie A. Gregor
Richard H. Lenny Ruth Ann Marshall, Chair Scott Ostfeld | • Review, evaluate and approve compensation plans and programs for the company’s directors, executive officers and certain other senior employees
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21 CONAGRA BRANDS |
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 committeeHR Committee members set forth above, as well as Mr. Alford (who served as a director for a portion of fiscal 2019), served as members of the HR Committee during fiscal 2018.2019. During fiscal 2018,2019, 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:
| Primary Responsibilities | |||||||
Thomas K. Brown
Rajive Johri Richard H. Lenny Ruth Ann Marshall | • Identify qualified candidates for membership on the Board
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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 nomineeShareholders wishing to submit candidates for Board membershipelection as directors must notify our Corporate Secretary in writing by delivering or mailing a notice to our principal executive offices 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 provisions222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654. See “Our Annual Meeting of our amended and restated bylaws. See “Additional InformationShareholders – Shareholder Proposals to be Included in our 2019 Proxy Statement” and “Additional InformationOur 2020 Annual Meeting of Shareholders – Other Shareholder Proposals to be Presented at our 20192020 Annual Meeting.”Meeting” for further details regarding the procedures for submission of director nominations by shareholders.
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
2019 PROXY STATEMENT 22 |
or desirable. It is also based on whether, based on the information provided or otherwise available to the N/G/PA Committee, the prospective nominee is likely to satisfy the evaluation factors described below. If the N/G/PA Committee determines that additional consideration is warranted, it may request a third-party (e.g., a search firm) to gather additional information about the prospective director candidate. The N/G/PA Committee may also elect to interview a candidate.
TheAlthough the N/G/PA Committee does not have specific minimum qualifications that must be met for a prospective director candidate to be nominated, 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 Matrixqualifications and skills outlined on page 14 of this Proxy Statement 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;
diversity, including the extent to which the candidate reflects the composition of our constituencies;
whether the candidate has sufficient time to effectively carry out the duties of a director;
Voting Item #1 – Election of Directors
the candidate’s ability to represent all shareholders and not a particular interest group;
the candidate’s qualifications as independent and ability to serve on various committees of the Board;
diversity, including the extent to which the candidate reflects the composition of our constituencies; and
business experience, which should reflect a broad level of experience at the policy-making level.
With respect toAlthough the Board does not have a specific diversity policy, in evaluating potential director nominees, the N/G/PA Committee assesses whether the Board, collectively, represents diverse views, backgrounds and experiences that will enhance the Board’s and our effectiveness. The N/G/PA Committee seeks directors who have qualities to achieve the goal of a well-rounded, diverse Board as a whole.whole, including through the consideration of diversity in professional experience, skills, board tenure, race, ethnicity, gender and age.
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 11 director nominees for election to the Board currently serve as members of the Board. All nominees, other than Ms. Lora and Mr. Ostfeld, were elected by shareholders at our 2018 Annual Meeting of Shareholders. The Board appointed Ms. Lora as a director of Conagra Brands effective as of January 4, 2019. Ms. Lora was first introduced to the N/G/PA Committee as a potential nominee by a third party search firm engaged by the Board to identify potential board candidates. The Board appointed Mr. Ostfeld as a director of Conagra Brands effective as of February 16, 2019. Mr. Ostfeld was first introduced to the N/G/PA Committee as a potential nominee by a shareholder.
The Board’s Role in Risk Oversight
Our senior leadership is responsible for identifying, assessing, and managing our exposure to risk. A component of this work is performed through twomanagement-led, Board-appointed committees: the Enterprise Risk Management Committee, which is chaired by our Chief Risk Officer and focuses on assessing and managing enterprise-wide risk, and the Risk Oversight Committee, which ischaired by our Chief Risk Officer and focuses on financial risk related to commodities, foreign currency, interest rate, credit, insurable risk, risk of loss and counterparty risk. The Board and its committees play an active role in overseeing management’s activities and ensuring that management’s plans are balanced from a risk/reward perspective. The Board and its committees perform this oversight through the following mechanisms.
Board LevelBoard-Level Discussion
Each fiscal year, at least onethe Board meeting includes a discussion ofreviews and discusses our strategic plan and the longer-term risks and opportunities we face. At other times of the year, theThe Board routinely receives reports from significant business units and functions. Thesefunctions, and these presentations include a discussion of the business, regulatory, compliance, operational, and other risks associated with planned strategies and tactics, as well astactics. The Board also receives an annual report regarding the activities of management’s Enterprise Risk Management Committee and an annual succession planning matters.presentation.
23 CONAGRA BRANDS |
Audit / Finance Committee Oversight
The Audit / Finance Committee’s charter requires it to review our processes for identifying and managing enterprise-wide risks facing Conagra Brands,the company, including, but not limited to, financial risks (such as derivative and treasury risks), cybersecurity and information technology 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, andour Controller, our head of Internal Audit, and our independent auditors, and receiving regular legal and regulatory updates. Our management provides an enterprise risk management report to the Audit / Finance Committee on a semi-annual basis. The Chair of the Audit / Finance Committee reports to the full Board on its activities.
Human Resources Committee Oversight
The HR Committee reviews the company’s leadership development activities to ensure appropriate succession planning occurs and reviews the relationship between the company’s compensation programs and risk. The Chair of the HR Committee reports to the full Board on its activities. The HR Committee has also adopted a series of policies and practices to reduce risk in our compensation programs. These policies and practices include the following:
Annual Advisory Vote on Named Executive Officer Compensation | Consistent with our shareholders’ preference, last 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 Leaders | 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 our common stock with a value of at least $500,000. 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. | |||
Anti-Pledging / Hedging Policy | Our directors and executive officers, including our named executive officers, are prohibited from pledging their shares of company stock or hedging their ownership of company stock, including by trading in publicly-traded options, puts, calls, or other derivative instruments related to company 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. | |||
2019 PROXY STATEMENT 24 |
Voting Item #1 – Election of Directors
Nominating, Governance and Public Affairs Committee Oversight
The N/G/PA Committee assists the Board in managing risks associated with Board organization, membership and structure. It also assists management in the oversight of reputational risks and key public affairs matters. The Committee reviews the company’s policies and programs related to corporate citizenship, social responsibility and public policy issues, such as sustainability, environmental responsibility and philanthropic andactivities. The N/G/PA Committee also oversees the modest political activities of the company, including political contributions and contributions.lobbying expenditures, to ensure they focus on adding shareholder value and enhancing our position as a good corporate citizen. We publish a report of these activities on our website. The Chair of the N/G/PA Committee reports to the full Board on its activities.
Because issues related to risk oversight often overlap, certain issues may be addressed at both the committee and full Board level.
Our Corporate Governance PracticesInvestor Engagement
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:
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Our Corporate Governance Practices
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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 stockholdersshareholders 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. Investors and analysts may email IR@conagra.com or call (312)549-5002 to contact our Investor Relations Team.
Commitment to InvestingIn fiscal 2019, we hosted an Investor Day in Our People
We recognize thatChicago, Illinois at which our employees aremanagement team presented information about our greatest asset, and we strive to be a talent magnet. We are committed tovalue creating opportunities following the completion of 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 foracquisition of Pinnacle, including an update on 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 operationsinnovation slate, Pinnacle cost synergy opportunities and our processes and have become a partlong-term financial algorithm. A replay of our culture. We have established clear corporate citizenship goals, and we favor transparency with stakeholdersthis event is archived 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 ourinvestor relations website athttp: https://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 Oversightconagrabrandsinvestorday.com.
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 | • HR Committee Charter | |
• N/G/PA Committee Charter | • Corporate Governance Principles | |
• Code of Ethics for Senior Corporate Officers | • Code of Conduct | |
• Procedures for bringing concerns or complaints to the attention of the Audit / Finance Committee | • Procedures for communicating with the Board, our non-management directors as a group, or the Chairman of the Board | |
• Political Activity Disclosure | ||
From time to time these documents are updated, and we promptly post the updated documents toon our website. The information on our website is not, however, 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. TheThese documents are also available in print to any shareholder who requests them from the Corporate SecretarySecretary.
25 CONAGRA BRANDS |
We welcome opportunities to engage and receive feedback from our shareholders and other important stakeholders and believe that such engagement is critical to our effectiveness. You may contact any of Conagra Brands.
Communications with the Board
Interested parties may communicate with the membersour directors, any committee of the Board, ournon-management independent directors as a group, or theour Chairman of the Board, or the Board generally by writing to:
Conagra Brands Board of Directors
c/o Corporate Secretary, Conagra Brands, Inc.
222 Merchandise Mart Plaza, Suite 1300
Chicago, Illinois 60654
Communications are compiled by the Corporate Secretary and forwarded to the addressee(s) on at least abi-weekly basis.. The Corporate Secretary routinely filters communications that are solicitations, consumer complaints, unrelated to Conagra Brands or Conagra Brands’its business, or determined to pose a possible security risk to the addressee.
You may also attend the 2019 Annual Meeting, reach out to our Shareholder Services line at (402)240-4005 and share information with our Investor Relations team. See “Investor Engagement” above.
Non-Employee Director Compensation
We encourage you to share your feedback by voting on the voting items described in this Proxy Statement. We are attuned to input from each of these sources and encourage your feedback.
Non-Employee Director CompensationHow We Are Paid
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 for approval. In setting director compensation, the HR Committee receives input from Frederic W. Cook, or 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 limitsa limit on the equity awards that may be awarded to eachnon-employee directorsdirector in any fiscal year.
A summary ofnon-employee director compensation for fiscal 20182019 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 2018:2019. No changes were made to the compensation program described below from fiscal 2018 to fiscal 2019.
Annual Cash Retainer | $100,000 per year1 | ||||
Annual Chair Retainer2 |
$ | |||
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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 | 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 | |||
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 partial and full months served. |
The compensation program described above reflects
2019 PROXY STATEMENT 26 |
Allnon-employee directors (other than the following Board-approved increases overChairman) serving as of the first trading day of fiscal 2017, which were approved after a review2019 received 4,039 RSUs on May 29, 2018 (value of company$150,000). Because of our proration policy, Mr. Arora received 3,422 RSUs on August 1, 2018 (value of $125,000), Ms. Lora received 2,841 RSUs on February 1, 2019 (value of $62,500) 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.Mr. Ostfeld received 2,228 RSUs on March 1, 2019 (value of $50,000).
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 RSUsduring fiscal 2019 vested or will vest one year from the date of grant and wereare subject to continued service during the entire term of the RSUs.
Vesting would have beenof the RSUs is accelerated in the event of death or permanent disability. If thea director wasis no longer serving one year from the date of grant, vesting wasis prorated 25% for each fiscal quarter during which the director served for any amount of time. Dividend equivalents wereare 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 20182019 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 thirty30 trading days prior to the grant date of May 30, 2017. This reflects a Board-approved $25,000 increase over fiscal 2017’s amount.29, 2018. 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 2018:2019:
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;directors. Conagra Brands matched up to $10,000 of a director’s charitable donations permade during the fiscal year;year. An additional $10,000 was paid to a designated charitable organization on Mr. Goldstone’s behalf in recognition of his service and retirement; and
A nonqualified deferred compensation plan was available to allnon-employee directors. This plan providednon-employee directors the ability to defer receipt of their cash or stock compensation. This program did not provide above-market or preferential earnings (as defined by SEC rules).
Director Compensation Table – Fiscal 2018
27 CONAGRA BRANDS |
Mr. Arora joined the Board effective July 17, 2018, after the end of fiscal 2018. He did not receive any director compensation from us for fiscal 2018.
Name
| Fees Earned or Paid in Cash ($)(1)
| Stock Awards ($)(2)
| All Other Compensation ($)(3)
| Total ($)
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Bradley A. Alford
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| 100,000
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| 149,650
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| 7,000
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| 256,650
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Thomas K. Brown
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| 100,000
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| 149,650
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| -
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| 249,650
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Stephen G. Butler
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| 120,000
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| 149,650
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| 10,000
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| 279,650
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Thomas W. Dickson
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| 100,000
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| 149,650
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| -
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| 249,650
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Steven F. Goldstone
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| 424,067
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| 10,000
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| 434,067
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Joie A. Gregor
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| 104,500
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| 10,000
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| 264,150
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Rajive Johri
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| 100,000
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| 149,650
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| 10,000
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| 259,650
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Richard H. Lenny
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| 120,000
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| 149,650
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| 10,000
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| 279,650
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Ruth Ann Marshall
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| 120,000
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| 149,650
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| 10,000
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| 279,650
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Craig P. Omtvedt
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| 100,000
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| 149,650
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| 10,000
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| 259,650
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| Director Compensation Table – Fiscal 2019 |
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)1 | All Other Compensation ($)2 | Total ($) | ||||
Bradley A. Alford3 | 50,000 | 150,897 | --- | 200,897 | ||||
Anil Arora4 | 86,264 | 124,424 | --- | 210,688 | ||||
Thomas K. Brown | 100,000 | 150,897 | 10,000 | 260,897 | ||||
Stephen G. Butler | 124,500 | 150,897 | 10,000 | 285,397 | ||||
Thomas W. Dickson3 | 50,000 | 150,897 | --- | 200,897 | ||||
Steven F. Goldstone3 | 50,000 | 150,897 | 20,000 | 220,897 | ||||
Joie A. Gregor | 120,000 | 150,897 | 10,000 | 280,897 | ||||
Rajive Johri | 103,000 | 150,897 | 10,000 | 263,897 | ||||
Richard H. Lenny | --- | 427,548 | 10,000 | 437,548 | ||||
Melissa Lora4 | 39,286 | 60,797 | --- | 100,083 | ||||
Ruth Ann Marshall | 126,000 | 150,897 | 10,000 | 286,897 | ||||
Craig P. Omtvedt | 101,500 | 150,897 | 10,000 | 262,397 | ||||
Scott Ostfeld4 | 27,473 | 51,823 | --- | 79,296 | ||||
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Non-Employee Director Compensation
This column reflects the grant date fair value (computed in accordance with Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718) of the stock awards made tonon-employee directors during fiscal |
Name
| Outstanding Stock Awards Held at FYE (#) (a)
| Outstanding Stock Options Held at FYE (#)
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Bradley A. Alford |
| 3,956
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| -
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Thomas K. Brown |
| 3,956
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| -
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Stephen G. Butler |
| 3,956
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| 20,153
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Thomas W. Dickson |
| 3,956
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| -
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Steven F. Goldstone |
| 11,210
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| 409,881
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Joie A. Gregor |
| 3,956
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| -
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Rajive Johri |
| 3,956
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| -
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Richard H. Lenny |
| 3,956
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| 27,206
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Ruth Ann Marshall |
| 3,956
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| 26,199
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Craig P. Omtvedt
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| 3,956
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| -
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(a) For Mr. Goldstone, includes 201 dividend equivalents accrued on RSUs. For all othernon-employee directors, includes 71 dividend equivalents accrued on RSUs.
| Name | Outstanding Stock Awards Held at FYE (#)a | Outstanding Stock Options Held at FYE (#) | ||
Bradley A. Alford | - | - | ||
Anil Arora | 3,475 | - | ||
Thomas K. Brown | 4,126 | - | ||
Stephen G. Butler | 4,126 | - | ||
Thomas W. Dickson | - | - | ||
Steven F. Goldstone | - | 233,095 | ||
Joie A. Gregor | 4,126 | - | ||
Rajive Johri | 4,126 | - | ||
Richard H. Lenny | 11,691 | 20,153 | ||
Melissa Lora | 2,841 | - | ||
Ruth Ann Marshall | 4,126 | 13,436 | ||
Craig P. Omtvedt | 4,126 | - | ||
Scott Ostfeld | 2,228 | - | ||
a Includes dividend equivalents accrued on RSUs as follows: 53 for Mr. Arora; 247 for Mr. Lenny; 0 for Ms. Lora; 0 for Mr. Ostfeld; and 87 for each of the othernon-employee directors. | ||||
The amount reported reflects the amount paid to a designated charitable organization on the director’s behalf under the matching gifts |
| 3 | Messrs. Alford, Dickson and Goldstone ceased serving on the Board as of September 20, 2018 and they vested in 50% of their respective outstanding RSU awards due to their departure. |
| 4 | Mr. Arora joined the Board effective as of July 17, 2018, Ms. Lora joined the Board effective as of January 4, 2019, and Mr. Ostfeld joined the Board effective as of February 16, 2019. With the approval of the Board, Mr. Ostfeld has assigned his compensation for Board services to JANA Partners LLC. |
2019 PROXY STATEMENT 28 |
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 $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 the vesting of 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 company common stock of Conagra until they have reached the guideline. The following table reflectsAll of our Board members meet the stock ownership as of July 31, 2018, ofnon-employee directors who were serving as ofguidelines or have followed 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.retention requirements.
Director
| Stock Ownership Guideline
| Actual Ownership (1)
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Mr. Alford(2)
| $500,000
| $1,892,443
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Mr. Brown(2)
| $500,000
| $859,895
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Mr. Butler
| $500,000
| $4,583,037
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Mr. Dickson(2)
| $500,000
| $514,454
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Mr. Goldstone
| $500,000
| $13,438,629
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Ms. Gregor
| $500,000
| $2,143,235
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Mr. Johri
| $500,000
| $2,320,077
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Mr. Lenny
| $500,000
| $2,199,959
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Ms. Marshall
| $500,000
| $3,471,134
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Mr. Omtvedt(2) | $500,000 | $363,686 | ||
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| 29 CONAGRA BRANDS |
The Audit / Finance Committee Reporthas sole authority to appoint, retain, compensate, oversee and terminate our independent auditor. In addition, the Committee evaluates and ensures the rotation of the lead audit partner at our independent auditor and will, if it deems it advisable, consider the rotation of the audit firm.
The Audit / Finance Committee has appointed KPMG LLP, an independent registered public accounting firm, as our independent auditor for fiscal 2020 to conduct the audit of our financial statements. KPMG LLP has conducted the audits of our financial statements since fiscal 2006. The Audit / Finance Committee and the Board request that the shareholders ratify this appointment.
Representatives from KPMG LLP are expected to be present at the 2019 Annual Meeting. The representatives will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. In the event that shareholders do not ratify the appointment of KPMG LLP as our independent auditor, the Audit / Finance Committee will reconsider the appointment. Even if the appointment of KPMG LLP is ratified, the Audit / Finance Committee may appoint a different independent auditor at any time if, in its discretion, it determines that such a change would be in the company’s and its shareholders’ best interests.
Fees billed by KPMG LLP for services provided for fiscal years 2019 and 2018 were as follows:
Fiscal 2019 ($) | Fiscal 2018 ($) | |||||||||
Audit Fees | 7,108,000 | 4,953,000 | ||||||||
Audit-Related Fees | 73,000 | 84,000 | ||||||||
Tax Fees | 13,000 | 19,000 | ||||||||
All Other Fees | — | — | ||||||||
Total Fees | 7,194,000 | 5,056,000 | ||||||||
Audit FeesAudit fees consist of the audits of our annual financial statements, the reviews of our quarterly financial statements and foreign statutory audits. Amount for fiscal 2019 includes audit fees related to the acquisiton of Pinnacle and related financings.
Audit-Related Fees In fiscal years 2019 and 2018, audit-related fees consisted of a pension plan audit as well as other attestation services.
Tax FeesIn fiscal years 2019 and 2018, tax fees consisted of tax consultation and tax compliance services.
The Audit / Finance Committeepre-approves all audit andnon-audit services performed by our 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 Audit / Finance 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 during fiscal years 2019 and 2018.
31 CONAGRA BRANDS |
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. TheOur 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 theour 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 theour independent auditor and management; (3) theour 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 theour 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 27, 2018.26, 2019.
The Audit / Finance Committee also discussed with theour 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 theour independent auditor’s communications with the Audit / Finance 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 and the letter from KPMG LLP required by applicable professional and regulatory standards relating to KPMG’sKPMG LLP’s independence from Conagra Brands,the company, 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 20182019 was compatible with the auditor’s independence.
Based on these reviews and discussions and the report of theour 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, 201826, 2019 for filing with the SEC.
Conagra Brands, Inc. Audit / Finance Committee
| Thomas K. Brown | Stephen G. Butler, Chair | |||
| Melissa Lora | Craig P. Omtvedt | |||
Voting Item #2: Ratification of the Appointment of Our Independent Auditor for FY2019
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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 request 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 | ||||||||||||
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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.
2019 PROXY STATEMENT 32 |
Voting Item #3: Approval, on an Advisory Basis, of Our Named Executive Officer Compensation
Consistent with our shareholders’ preference, aslast 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 basisbasis. This vote is pursuant to Section 14A of the Securities Exchange Act.Act of 1934. 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 it in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, beginning on pages 2835 and 52,59, respectively.
Our executive compensation program is designed to reward performance, drive focus, engagement and execution, support our business strategies, discourage excessive risk-taking, make us competitive with other corporationsorganizations 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 A few notable items associated with 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 makes executive compensation decisions. Highlights of our2019 program include the following:
Consistent with ourpay-for-performance philosophy, the majoritymore thantwo-thirds of our named executive officers’ targeted fiscal 20182019 compensation was tied to company performance. For our CEO, incentive compensation represented 88%91% of his total compensation opportunity. For our other named executive officers, incentive compensation represented 78%approximately 80% of their total opportunity.opportunity on average.
Our fiscal 20182019 Annual Incentive Plan funded and paid out slightly below target for each named executive officer, aligned with our mixed performance during the year.
The fiscal 2017 to 2019 cycle of our performance share plan concluded in fiscal 2019 with payouts at levels slightly above target for each named executive officer, due to our earnings and net sales growth performance during fiscal 2018 andaligned with 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 performanceimpactful transformation accomplished 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. They may not hedge or pledge their stock.
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 timesregardless of marketplace or macroeconomic dynamics and to achieve our fundamental and overriding objective – to createobjectives of creating sustainable, profitable growth and long-term value for our shareholders.
Voting Item #3: Approval,Since we began seeking a shareholder vote 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, inshareholders have exhibited strong support of our executive compensation program. In each of the future. We expect to hold our next advisory vote at our 2019 Annual Meeting.past four fiscal years, we have received over 94% approval on this voting item.
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.”
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 2020 Annual Meeting.
The Board of Directors recommends a vote “FOR” the resolution approving our named executive officer compensation.
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Compensation Discussion and Analysis
and Analysis
Introduction
At Conagra Brands, our fundamental objectives are to create sustainable, profitable growth and long-term value for our shareholders. Management sets our annual and long-term business goals to support attainment of these objectives. The Board’s HR Committee (in this section, the Committee), designs and oversees our executive compensation program to promote their attainment.achievement of our goals.
This Compensation Discussion and Analysis describes and analyzes our executive compensation program. Specifically, we describe and analyze the program’s application to the executive officers listed in the Summary Compensation Table; these are our “named executive officers.” For fiscal 2018,2019, or FY18,FY19, which began on May 29, 201728, 2018 and ended on May 27, 2018,26, 2019, our named executive officers were:
Name | Title | |||
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| 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 | Executive Vice President andCo-Chief Operating Officer | |||
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Darren C. Serrao | Executive Vice President and | |||
On October 23, 2018, the Board appointed Messrs. McGough and Serrao to the positions they currently hold. From May 28, 2018 through October 22, 2018, Mr. McGough served as President of our operating segments and Mr. Serrao served as our Executive Vice President and Chief Growth Officer.
We have provided a summary of our fiscal 20182019 executive compensation program and fiscal 20182019 performance in the “Executive Summary” below. For more complete information on the program and the Committee’s processes related to the program, we encourage you to read this entire Compensation Discussion and Analysis.
Executive Summary
35 CONAGRA BRANDS |
Since fiscal 2016, we have been implementing a strategic plan focused on transforming Conagra Brands into a pure-play, branded food company and on establishing a solid platform for our company’s future growth. Our work to date has included significant portfolio reshaping. We have soldnon-core businesses and successfully executed thespin-off of Lamb Weston into an independent public company. Simultaneously, we have addedon-trend brands to our portfolio through a series of modernizing acquisitions. We have also invested within Conagra, building leading innovation capabilities and completely overhauling our culture.
At the start of fiscal 2018, we outlined for investors the imperatives for continuing our progress:
Maintaining the improving trends in our net sales growth rate, including through the new innovation that was just starting to hit the marketplace;Executive Summary
Continuing to focus on executional excellence;
Continuing to expand margins; and
Further reshaping our portfolio through disciplined M&A activity.
With these considerations in mind, the Committee, during the summer of 2017, approved the fiscal 2018Our executive compensation program foris designed to encourage and reward behavior that promotes attainment of our named executive officers.
Compensation Discussionannual and Analysis
Elements of Fiscal 2018 Executive Compensation
long-term goals. In turn, those goals are designed to lead to sustainable, profitable growth and long-term shareholder value. The elements of our fiscal 20182019 executive compensation program were as follows:
Base Salary and Benefits
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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.
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Annual Incentive
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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 | ||
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Long-Term Incentive
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| Performance Shares – 75% of Opportunity | Restricted Stock Units – 25% of Opportunity | |||
• Opportunity to earn shares of our common stock if we achievepre-set performance goals over a three-year period.
• Performance
• • EBITDA Return on Invested Capital • Adjusted Diluted EPS
• Payouts |
• Opportunity to earn shares of our common stock if the employee generally remains with Conagra over the
• Rewards stock price appreciation and tenure. | |||
One-Time Performance-Based Awards In fiscal 2019, the executive compensation program included aone-time grant of performance-based restricted stock units (PBRSUs). These awards provide an opportunity to earn shares of our common stock based on our total shareholder return (TSR) from the date of grant — April 15, 2019 — to the end of fiscal 2022. Vesting is contingent upon the achievement of rigorous absolute TSR hurdles and relative TSR performance compared to the median of the S&P 500 Index. Awards that vest are subject to a maximum value cap regardless of performance levels. | ||||
2019 PROXY STATEMENT 36 |
Fiscal 2018 Results2019 Highlights
Fiscal 20182019 was a successful year for Conagra Brands and another important year in our transformation. The year was filled with accomplishments, and the acceleration of the next wave of change at Conagra Brands. Of particular note, we acquired Pinnacle Foods Inc. during fiscal 2019. Pinnacle’s well-known brands include Birds Eye, Duncan Hines, Earth Balance, EVOL, Gardein, Glutino,Hungry-Man, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic and Wish-Bone, among others. As a result,we are now the fourth largest food company in the United States, generating approximately $11 billion in annualized revenues.
We set rigorous operating goals for the year that were communicated to investors and incorporated into our compensation programs. Ultimately, our performance had bright spots and a few areas that fell short of our plans:
Organic Net Sales Growth: Below Guidance | Adjusted Operating Margin: Met Guidance | Adjusted Diluted EPS: Slightly Below Guidance | ||
Free Cash Flow: Exceeded Guidance | Deleveraging Plan: On Track | Pinnacle Synergy Capture: On Track |
We accomplished the following:
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2Organic Net Sales Growth:Fiscal 2019 was our second consecutive year of organic net sales growth. A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is includedrobust innovation slate across frozen foods and snacks helped drive strong consumption trends inAppendix A to this Proxy Statement.
Compensation Discussion and Analysis
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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. both businesses.
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Culture: Today,Building Culture: During fiscal 2019, we have a morecontinued our work to cultivate an energized and enthusiastic team of employees who bring an externally focused, entrepreneurial spirit to their work every day.
By strengthening
Portfolio Changes: In addition to acquiring Pinnacle during fiscal 2019, we completed the divestiture of several smaller,non-core business: our foundation overWesson oil business, our Del Monte business in Canada, and Gelit, our Italian-based frozen pasta business.
Deleveraging: We stayed on track against our deleveraging targets during fiscal 2019. We reduced our debt by $886 million between the last three fiscal years, we readied ourselves to embark onclosing of the next phase of our evolution. On June 26, 2018, shortly afterPinnacle acquisition and the end of fiscal 2018,2019.
Capital Returned to Shareholders: We paid $356.2 million in cash dividends during fiscal 2019.
Fiscal 2019 also concluded a three-year period of significant, impactful change at Conagra Brands. During this period, we enteredtransformed our portfolio through meaningful brand renovation, new product innovation, the Pinnacle acquisition, thespin-off of Lamb Weston into a definitive agreementseparate, independent, publicly-traded company, and the execution of a series of smaller acquisitions and divestitures. We brought our organic net sales growth rate from declining to acquire Pinnacle Foods Inc., makersnearly flat and then to growth in each 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 oflast two portfolios of iconic brands – oursfiscal years. In addition, over the three fiscal years ended in fiscal 2019, we grew adjusted diluted EPS, expanded adjusted operating margin and Pinnacle’s – will serve as a catalystreturned nearly $3.1 billion to accelerate value creation for shareholders.shareholders, through dividends and share repurchases.
Fiscal 20182019 Pay Outcomes Summarized
Our fiscal 2018 performance, together with our results since our new strategic journey began three years ago, have created significant value for shareholders. The company has repeatedly delivered on its financial commitments to investors. Given the Committee’s pay for performance philosophy, management has also been rewarded. As more fully described in this Compensation Discussion and Analysis, as a result of the outcomes summarized above, our named executive officers, including our Chief Executive Officer, received annual incentiveAnnual Incentive Plan payouts at levels slightly abovebelow target for fiscal 2018, driven by strong profit and net sales growth performance.2019. In addition, the named executive officer participantsofficers each received long-term incentive payouts under the fiscal year 20162017 through fiscal year 20182019 cycle of the performance share plan at approximately 158.7% ofslightly above target.
In determining attainment of the underlying performance goals for our incentive programs, the Committee considered the impact of items that it believes were not indicative of the comparable operating performance of our businesses. Some of these items created financial benefits, and some of them created incremental expense or lost sales. The impact of these items was removed from our results for purposes of determining plan payouts. A particularly notable category of adjustment, for fiscal 2018 and performance shares outstanding during fiscal 2018, was tax expense, in light of the Tax Cuts and Jobs Act’s effectiveness during our third fiscal quarter. More information can be found below under “Additional Information on Compensation Practices – Use of Adjustments in Compensation Decisions.”
The Committee believes that its fiscal 20182019 compensation decisions appropriately reflect itspay-for-performance philosophy. This philosophy is focused on compensating executives based on actual company performance and aligning management’s interests with those of our shareholders.
A reconciliation of thisnon-GAAP measure to the most directly comparable GAAP measure is included in Appendix A to this Proxy Statement.3 A reconciliation of this non-GAAP measure to the most directly comparable GAAP measure is included in1
37 CONAGRA BRANDS |
Compensation Discussion and Analysis
ObjectivesBelow is a more detailed analysis of the fiscal 2019 compensation program for our named executive officers, as well as actual fiscal 2019 payouts under the programs.
Our Fiscal 2019 Executive Compensation Program; Mitigating RiskProgram
Our
For fiscal 2019, the Committee created an executive compensation program is designedwith multiple elements:
| Fixed Compensation | Incentive Compensation | |||
• Base Salary | • Fiscal 2019 Annual Incentive Plan (cash settled) | |||
• Health and Welfare Benefits | • Long-Term Incentive Plan (stock settled) | |||
• Retirement Benefits | • One-Time Performance Based Award (stock settled) | |||
The Committee’s use of a mix of compensation types (salary, benefits, cash incentives and equity-based incentives) and a mix of performance periods (single year and multi-year) was intended to promote behavior consistent with our long-term strategic plan and minimize the likelihood of executives having significant motivation to pursue risky or unsustainable results.
In designing this compensation program, the Committee thus sought to encourage and reward behavior that promotes attainment of our annual and long-term goals and that leadswould lead to sustainable growth in shareholder value. TheIn particular, the Committee strives to accomplish the following as it develops the program:focused on:
AlignAligning compensation programs, policies and practices to our company’s vision, mission and values;
BeBeing market competitive, but emphasizeemphasizing variable compensation to differentiate our program from that of peers;
DetermineDetermining pay mix based on executive position;
ProvideProviding a compensation structure that groups positions based on impact to the company;
AffordAffording opportunities and flexibility in pay positioning to ensure fair and equitable compensation and room for growth; and
RecognizeRecognizing and differentiatedifferentiating 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,respect to each individual named executive officer, the Committee undertook a risk review of our fiscal 2018 compensation programs for all employees. Based onalso considered the review, we believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the long-term, based in part on the following features of the programs:following:
Mr. Sean Connolly |
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Compensation Discussion and Analysis
We believe our compensation policies and practices are balanced and aligned with creating shareholder value and do not create risks that are reasonably likely to have a material adverse effect on our company.
Design and Approval of Our Fiscal 2018 Program
The Committee is charged with designing and approving our executive compensation program and setting compensation opportunities for our named executive officers and certain other senior leaders. The Committee uses a variety of inputs to make these decisions, including the results of our annual“say-on-pay” vote, the advice of the Committee’s independent compensation consultant, company and participant-focused considerations, the input of our Chief Executive Officer, and the unique circumstances of each named executive officer. We address each of these inputs here.
Annual Say on Pay Vote
In designing the executive compensation program for fiscal 2018, the Committee looked to our shareholders. The Committee’s policy is to present a“say-on-pay” vote to our shareholders annually. In September 2017, we received over 95% approval in oursay-on-pay vote, leading the Committee to the conclusion that material changes in compensation design, solely due to the outcome of thesay-on-pay vote, were not warranted for fiscal 2018.
Independent Consultant and Market Data
The Committee also leveraged the advice and counsel of its independent compensation consultant, FW Cook, in setting fiscal 2018 compensation. The consultant assists the Committee in monitoring policy positions of institutional shareholders and their advisors, emerging market practices in compensation design and philosophy, and policy developments relevant to the Committee’s work. The Committee’s consultant also provides internal and external pay comparison data. The Committee uses this data as a market check on its compensation decisions and does not mandate target ranges for our named executive officers’ salaries, annual incentive opportunities, long-term incentive opportunities, or total direct compensation levels as compared to the peer group. The Committee recognizes that over-reliance on external comparisons can be of concern; therefore, the Committee uses external comparisons as only one point of reference and is mindful of the value and limitations of comparative data.
The Committee’s first step in using external data for fiscal 2018 was the identification of an appropriate peer group. FW Cook initially prepared a list of potential peer companies (with an emphasis on food and beverage companies) based on the following criteria:
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Compensation Discussion and Analysis
We completed thespin-off of our Lamb Weston business in November 2016, about six months prior to the start of fiscal 2018. As a result, the Committee asked FW Cook tore-examine our peer group to ensure continued alignment with the company’s size post-spin. FW Cook identified potential peers with annual revenues within an approximate range of betweenone-third to three times our own on a post-spin basis. Ultimately, FW Cook’s recommendation resulted in multiple changes to our peer group for fiscal 2018. The Committee approved the following peer group of 17 companies for purposes of assessing fiscal 2018 compensation competitiveness:
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The companies removed from our fiscal 2018 peer group were PepsiCo, Inc., Altria Group, Inc., The Coca-Cola Company, Dean Foods Company, The Kraft Heinz Company, and Tyson Foods, Inc. For fiscal 2018, Church & Dwight Co., Inc., The Estée Lauder Companies Inc., The J. M. Smucker Company, Mattel, Inc., Mead Johnson Nutrition Company, Newell Brands Inc., and Pinnacle Foods Inc. were added.
Company and Participant Focused Matters
The Committee also generally considered the following company and participant focused matters in making fiscal 2018 compensation decisions:
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The Chief Executive Officer’s Views
Mr. Connolly, our Chief Executive Officer and President, played a role in several key areas of the design of our fiscal 2018 executive compensation program.
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Compensation Discussion and Analysis
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Individual Named Executive Officer Considerations
The Committee, and, in the case of our Chief Executive Officer, the independent directors, considered the following when setting fiscal 2018 compensation. No named executive officer played a direct role in his or her own compensation determination for fiscal 2018.
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2019 PROXY STATEMENT 38 |
Mr. David S. Marberger |
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Ms. Colleen R. Batcheler |
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Mr. Thomas M. McGough |
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Compensation Discussion and Analysis
dynamic marketplace |
Mr. Darren C. Serrao |
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Below is a more detailed analysis of each element of the fiscal 2018 compensation program for our named executive officers, as well as actual fiscal 2018 payouts under the programs.
Our Fiscal 2018 Executive Compensation Program
The fiscal 2018 compensationunique roles, contributions and tenure of our named executive officers consisted of the following key components:
The Committee believeshad a meaningful impact on their total fiscal 2019 compensation opportunity. A consistent theme across our named executive officers, however, is that using a mix of compensation types (salary, benefits, cash incentives and equity-based incentives) and a mix of performance periods (single year and multi-year) promotes behavior consistent with our long-term strategic plan and minimizes the likelihood of executives having significant motivation to pursue risky and unsustainable results.
Byby design, targeted incentive compensation for the named executive officers for fiscal 20182019 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 FY18fiscal 2019 Annual Incentive Plan award, and targeted long-term incentive value) for Mr. Connolly and for our other named executive officers as a group.
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Compensation Discussion and Analysis
No named executive officer played a direct role in his or her own compensation determination for fiscal 2019. More detail on each fiscal 2019 compensation element follows.
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%20% of the total fiscal 20182019 compensation opportunity for each named executive officer, other than the Chief Executive Officer, was provided in the form of base salary. For Mr. Connolly, our Chief Executive Officer, 12%9% 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
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Fiscal 2018 Base Salary Rate ($)
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Increase from Fiscal 2017 (%)
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Percent of Target Total
| Final Fiscal 2019 Base Salary Rate ($) | Total Increase from (%) | Percent of Target Total Direct Compensation (%) | ||||||||||||||
Mr. Connolly
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$1,150,000
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4.5%
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12%
| 1,200,000 | 4.3 | 9 | ||||||||||||||
Mr. Marberger
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$650,000
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12.1%
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23%
| 689,000 | 6.0 | 20 | ||||||||||||||
Ms. Batcheler
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$540,750
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20%
| 540,750 | - | 18 | ||||||||||||||
Mr. McGough
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$669,500
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23%
| 669,500 | - | 20 | ||||||||||||||
Mr. Serrao
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$505,000
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11.8%
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23%
| 610,000 | 20.8 | 21 | ||||||||||||||
2019 PROXY STATEMENT 40 |
In fiscal 2019, the Committee approved the following base salary increases for our named executive officers:
for Mr. Connolly, from $1,150,000 to $1,200,000, as negotiated under the terms of his letter agreement;
for Mr. Marberger, from $650,000 to $689,000 to recognize his internal and external impact, including his expanded responsibility for the M&A function and to provide more market-competitive compensation; and
for Mr. Serrao, from $505,000 to $565,600 in recognition of his impact as our Chief Growth Officer and giving consideration to internal equity. Later in fiscal 2019, effective December 17, 2018, the BoardCommittee approved aan additional base salary increase for Mr. Connolly from $1,100,000Serrao to $1,150,000, and$610,000. This increase aligned his salary more closely to the Committee approved a base salary increasemarket median for Mr. Marberger from $580,000 to $650,000and for Mr. Serrao from $451,681 to $505,000. his new role ofCo-Chief Operating Officer.
Please see the section above entitled “Design and Approval of Our“Our Fiscal 2018 Program – Individual Named2019 Executive Officer Considerations”Compensation Program” for discussion of the other factors the Committee considered when determining the salaries of each of the named executive officers.
Incentive Programs
Consistent with its overall compensation objectives, the Committee aligned
We use incentive programs to closely align management compensation with company performance through a mixperformance. Our incentive programs reward the achievement of our annual operating plan and our long-term incentivestrategic plan. For fiscal 2019, opportunities for fiscal 2018. Opportunities under these programs combined to represent approximately 88%91% of Mr. Connolly’s compensation opportunity for fiscal 2018.opportunity. For each named executive officer other than the Chief Executive Officer, targeted incentive compensation for fiscal 20182019 was approximately 78%80% of the total compensation opportunity.opportunity on average.
We provide details of our incentive programs below. Financial targets disclosed in these discussions are done so in the limited context of our incentive plans; they are not statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
Annual Incentive Plan
The FY18fiscal 2019 Annual Incentive Plan, or FY18FY19 AIP, provided a cash incentive opportunity to approximately 3,5004,800 employees, including our named executive officers. We have regularly provided an annual incentive opportunity to a broad group of employees, to reinforce ana sense of ownership mentality across our company. However,company and drive and sustain apay-for-performance culture.
At the start of fiscal 2019, the Committee approved fiscal 2019 EBIT and fiscal 2019 net sales (in each case subject to adjustment, as appropriate, for items impacting comparability of results) as the funding metric for the FY19 AIP.
The Committee selected these two goals, with EBIT weighted 75% in the plan and net sales weighted 25%, in recognition of the importance of sustained profit and net sales growth in the company’s annual operating plan. The role of net sales in the FY19 AIP was a change from the fiscal 2018 we expanded eligibilityAnnual Incentive Plan, or FY18 AIP. In fiscal 2018, net sales was a “kicker” metric in the FY18 AIP. Achieving apre-set level of net sales growth above operating plan levels allowed management to earn an incremental incentive. As a result of the “kicker” design, under the fiscal 2018 AIP, payouts could reach 220% of target. Under the fiscal 2019 AIP, net sales became a primary metric and the total payout opportunity for participants was reduced to 200% of targeted awards.
The net sales and EBIT goals set for the FY19 AIP adding more than 1,500 peoplewere as follows:
EBIT and Net Sales Matrix. The Committee developed EBIT and net sales goals to align with threshold, target and maximum incentive opportunities. Our EBIT and net sales performance would result in a pool that could fund payouts in the program, further increasing the connection between pay and performance within Conagra Brands.range from 0% to 200% of target.
| Metric | Weighting | Threshold (25% Payout) | Target (100% Payout) | Maximum (200% Payout) | ||||||||||
EBIT | 75% | $1,140.3 million | $1,341.5 million | $1,542.7 million | ||||||||||
Net Sales | 25% | $7,653.4 million | $8,056.2 million | $8,459.0 million | ||||||||||
For our named executive officers, our AIP has historically used a framework that positioned awards to potentially qualify as tax deductible “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended, which
Compensation Discussion and Analysis
we refer to as the Code. This framework discussed more in the following paragraphs, usesused 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 discontinuediscontinued this framework infor fiscal 2019 and beyond.2019. 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.information.
Overarching EPS Performance Goal. At
41 CONAGRA BRANDS |
Shortly after the start of fiscal 2018,year 2019, we entered into a definitive agreement to acquire Pinnacle Foods. The transaction was completed late in the second fiscal quarter of fiscal 2019. To incent management to maintain its focus on thepre-acquisition Conagra Brands portfolio (i.e., legacy Conagra) while simultaneously learning more about and integrating the Pinnacle business, the Committee approved an overarching goal underelected to maintain the FY18original FY19 AIP design and metrics. In lieu of adjusted EPS of $0.10. This goal, applicable onlymodifying the FY19 AIP performance goals to a small group of senior officers, includingaccount for the named executive officers, was required to be achieved before any payouts under the FY18 AIP could be made to the officers. The FY18 AIP further provided that if the overarching adjusted EPS goal was achieved,newly acquired Pinnacle business, the Committee could exercise negative discretionmade the decision to potentially reduce, but not increase, authorized payouts. This negative discretion was to be guidedmeasure FY19 AIP performance by performance against the underlying financial goals described in the next paragraph.
UnderlyingPre-Established Financial Goals. At the start of fiscal 2018, the Committee approved fiscal 2018 EBIT as the primary funding metric for the FY18 AIP (subject to adjustment, as appropriate, for items impacting comparability of results). The Committee also approved alooking at organic net sales growth “kicker” in the plan (also subject to adjustment). Assuming the overarching adjusted EPS goal was met, the named executive officers participating in the plan were eligible to earn a payout from 0% to 220% of their respective target amounts, calculated as follows:
Primary Metric – EBIT. The Committee developed EBIT goals to align with threshold, target and maximum incentive opportunities. Our EBIT performance would result in a pool that could fund payouts in the range from 0% to 200% of target.
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Net Sales Growth “Kicker”. For the FY18 AIP, the Committee included a net sales growth “kicker” to reinforce the importance of continued improvement in the company’s net sales growth trend. Under this “kicker,” management could earn an incremental incentive by delivering net sales growth above its operating plans. Specifically, 10 points of incentive funding would be added to the pool upon attainment of fiscal 2018 net sales growth that resulted in total net sales of $7.85 billion. 10 more points of incentive funding would be added to the pool upon attainment of fiscal 2018 net sales of $7.9 billion. The kicker was designed as a “stair-step” feature, and omitted any interpolation for performance between these levels. The maximum incremental funding from the kicker was 20 points.
The inclusion of the kicker meant that total payouts under the FY18 AIP could reach 220% of target. The Committee designed the kicker as a stretch goal, with a high degree of difficulty to achieve.legacy Conagra EBIT.
Individual CompensationPayout Opportunities.In addition to setting the financial goals for the FY18FY19 AIP, the Committee set corresponding target compensationAIP opportunities for each named executive officer, measured as a percentage of his or her base salary for fiscal 2018.2019. The following table shows the ranges of authorized payments (expressed as a percentage of base salary) for the named executive officers upon achievement of the EBIT and net sales growth goals approved for the
Compensation Discussion and Analysis
FY18 FY19 AIP. If the overarching adjusted EPS goal was not met, no payments would be made. No portion of the incentive was guaranteed.
| Named Executive Officer | Threshold AIP Award | Target AIP Award | Maximum AIP Award | ||||||||||||||
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Mr. Marberger | 25% of salary |
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Ms. Batcheler | 25% of salary |
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Mr. McGough | 25% of salary |
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Mr. Serrao | 23% of salary |
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For fiscal 2018, both2019, Mr. Marberger’s and Mr. Serrao’s target AIP award was increased from 80%90% of base salary to 90%100% of base salary.salary in recognition of his internal and external impact, internal equity and to more closely align his pay with market data. The targets for the remaining named executive officers remained unchanged from fiscal 2017.2018. Please see the section above entitled “Design and Approval of Our“Our Fiscal 2018 Program – Individual Named2019 Executive Officer Considerations”Compensation Program” for discussion of the factors the Committee considered when determining the target AIP awards of each of the named executive officers.
Fiscal 20182019 Results. As discussed above, we overdelivered on our adjusted earnings goalsresults were mixed in fiscal 2018. The company’s results led2019. Our organic net sales growth fell short of our plans but stayed positive for the second consecutive year. Operating margins expanded beyond our expectations in the year, but several marketplace and operational headwinds negatively impacted our ability to slightly above-targetperformance under the FY18 AIP. More specifically, for FY18fully achieve our EPS targets. For FY19 AIP purposes, the Committee determined that welegacy Conagra achieved fiscal 2018 adjusted EPS above $0.102019 EBIT of $1,327.2 million and fiscal 2018 EBIT of $1,357.9 million. In addition, the company achieved2019 adjusted net sales growth results at a level that permitted an incremental 10 points of incentive funding.$7,868.4 million. Formulaically, these results warrantedprovided for a payout equal to 117%95.1% of target.
| Metric | FY19 Target
($) | FY19 AIP Results
($) |
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EBIT (as adjusted) | 1,341.5 million | $ | ||||||||||||
Net Sales (as adjusted) | 8,056.2 million | $7,868.4 million | 84.6% of Target | |||||||||||
Once the performance metrics review was complete, the Committee considered the manner in which management executed the operating plan during the year to determine if any adjustments were necessary to the overall payout. The FY19 AIP permitted the Committee to increase or decrease the pool funding level by an amount, up to 15% of target, based on how the company achieved its business results. Reflecting on the many operational and strategic accomplishments from the year, and the company’s underperformance versus some of its financial targets, Mr. Connolly recommended, and the Committee agreed, to decrease the overall pool funding by 5 percentage points. The Committee determined the financial performance results for fiscal 2019, prior to the assessment of individual performance, warranted a payout level for all AIP participants equal to 90.1% of target.
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Determination of Individual Named Executive Officer Awards. The Committee’s final step was to determine each named executive officer’s individual payout under the FY19 AIP. This process involved an assessment of the individual’s target award, company performance against the performance goals and each executive’s individual performance. The Committee considered the factors set forth above under the heading “Our Fiscal 2019 Executive Compensation Program” when determining named executive officer payouts under the FY19 AIP, including the application of those factors during fiscal 2019. Mr. Connolly’s input on the individual contribution of these leaders, and his recommendations on program payouts, also assisted the Committee in approving specific AIP payouts. The full Board’s performance evaluation of Mr. Connolly was used in determining his payout. Ultimately, the Committee decided that each named executive officer should be compensated equally under the FY19 AIP, at the funded level. The Committee believes that the AIP awards paid to the named executive officers for fiscal 2019 are consistent with the level of accomplishment by the company and each named executive officer during the year.
Named Executive Officer
| Target Opportunity ($)
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| Actual Payout as (%)
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Mr. Connolly | 1,788,462 | 1,611,404 | 90.1 | |||
Mr. Marberger | 683,000 | 615,383 | 90.1 | |||
Ms. Batcheler | 540,750 | 487,216 | 90.1 | |||
Mr. McGough | 669,500 | 603,220 | 90.1 | |||
Mr. Serrao | 517,555 | 466,317 | 90.1 | |||
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 FY18FY19 AIP to exclude items impacting comparability from company-wide results and adjust actual results for specific items that occurred during the fiscal year. The use of adjustments approved by the Committee and applicable to the fiscal 2018 adjusted EPS,2019 EBIT and net sales growth metrics is described below under “Additional Information on Compensation Practices –- Use of Adjustments in Compensation Decisions.Incentive Programs.”
OnceFiscal 2020 Annual Incentive Plan. At the performance metrics review was complete,start of fiscal 2020, the Committee consideredapproved operating income, net sales, and free cash flow (in each subject to adjustment, as appropriate, for items impacting comparability of results) as the manner in which management executedfunding metrics for the operating plan during the year to determine the overall payout level. Reflecting on the many operational and strategic accomplishments from the year, the Committee determined the financial performance results for fiscal 2018, prior to the assessment of individual performance, warranted a payout level for all AIP participants equal to 113% of target.
Compensation Discussion and AnalysisLong-Term Incentive Overview
Determination of Individual Named Executive Officer Awards. The Committee’s final step was to determine each named executive officer’s individual payout under the FY18 AIP. This process involved an assessment of each executive’s individual performance. The Committee considered the factors set forth above under the heading “Design and Approval of Our Fiscal 2018 Program – Individual Named Executive Officer Considerations” when determining named executive officer payouts under the FY18 AIP, including the application of those factors during fiscal 2018. Mr. Connolly’s input on the individual contribution of these leaders, and his recommendations on program payouts, also assisted the Committee in approving specific AIP payouts. The full Board’s performance evaluation of Mr. Connolly was used in determining his payout. The Committee believes that the AIP awards paid to the named executive officers for fiscal 2018 are consistent with the level of accomplishment by the company and each named executive officer during the year.
Named Executive Officer | Target Opportunity | Actual AIP Payout | Actual Payout as | |||
| Mr. Connolly | $1,713,462 | $2,250,000 | 131.3% | |||
| Mr. Marberger | $575,308 | $715,107 | 124.3% | |||
| Ms. Batcheler | $540,750 | $672,152 | 124.3% | |||
| Mr. McGough | $669,500 | $832,189 | 124.3% | |||
| Mr. Serrao | $447,117 | $581,029 | 130.0% |
Long-Term Incentive Plan
The Committee firmly believes in aligning the interests of our senior leaders with those of our shareholders. The significant extent to which equity is included in our named executive officers’ compensation opportunity evidences this belief.
For fiscal 2018,2019, the long-term incentive program was intended to:
provide variable, competitive compensation based on long-term company performance;
incent and reward leaders who have the greatest ability to drive long-term company success; and
reward participants for desired results that align with shareholder value creation.
The fiscal 20182019 program for the named executive officers initially included two elements: an award of performance shares that are settled in shares of common stock, and an award of service-based restricted stock units (RSUs).
Combined, these two awards comprise the company’s core long-term incentive program. As further described below, in April 2019, the named executive officers and a very limited group of other senior officers of the company received aone-time grant of PBRSU awards. The actual numberPBRSUs are not a recurring element of targetedour named executive officer compensation or standard long-term incentive plan. As such, the majority of this portion of the Compensation Discussion and Analysis focuses on the performance shares and RSUs granted to eachRSUs. The PBRSU grants are discussed below, under “Performance-Based Restricted Stock Unit Award”.
43 CONAGRA BRANDS |
When the Committee sets long-term incentive opportunities in the core program for our named executive officer under the long-term incentive plan for fiscal 2018 was determinedofficers, it does so using a value-based approach. EachAt the start of fiscal 2019, each named executive officer was provided a total targeted grant value based on the considerations set forth above in the section entitled “Design and Approval of our“Our Fiscal 2018 Program – Individual Named2019 Executive Officer Considerations.Compensation Program.” 75% of thethis total targeted value was delivered asin the form of a performance shares,share grant, and 25% of thethis total targeted value was delivered as RSUs. Performance share andin the form of a RSU grant. Targeted values were converted into 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 on the NYSE for the 10 trading days prior to the grant date, but not including the grant date. The aggregate target opportunities for fiscal 2019 long-term incentive awards (in the core program) for the named executive officers were as follows:
Prior
| Named Executive Officer | Target Opportunity ($) | |||||
Mr. Connolly | 7,500,000 | |||||
Mr. Marberger | 1,600,000 | |||||
Ms. Batcheler | 1,600,000 | |||||
Mr. McGough | 1,600,000 | |||||
Mr. Serrao | 1,200,000 | |||||
Mr. Connolly’s target long-term incentive award increased from $6,750,000 to $7,500,000 in fiscal 2018,2019 in connection with the terms of his letter agreement. Other than Mr. Connolly’s increased target opportunity, no changes were made from the named executive officers’ target long-term incentive program also included grants of stock options, with weighting among instruments of 50% performance shares, 25% RSUs and 25% stock options. Duringawards from fiscal 2017,2018. In December 2018, the Committee undertook a comprehensive review of the total rewards program and determined to eliminate stock options at all levels of the
Compensation Discussion and Analysis
organization.The Committee’s decision took into consideration the relatively slow growth in the consumer packaged goods industry, dilution impacts of stock options, market practice, and perceived value to participants. With the elimination of stock options from its program, the Committee broadened participation in the performance share plan, to ensure that a sizable portion of each participant’sMr. Serrao’s aggregate long-term incentive remained fully performance based. Beginningopportunity should be increased from $1,200,000 to $1,600,000 to reflect his new role asCo-Chief Operating Officer. This increase was implemented in connection with Mr. Serrao’s fiscal 2018, 25 additional leaders throughout the company were added to the performance share program.
2020 long-term incentive program grants. Each element of the long-term incentive plan used in fiscal 20182019 is discussed more fully below. This section covers the core long-term incentive program (i.e., performance shares and RSUs) and the PBRSU grant made during fiscal 2019.
Long-Term Incentive Plan – Restricted Stock Units
RSUs generally represent the right to receive a defined number of shares of our common stock after completing a period of service established at the grant date. RSUs encourage long-term commitment to the company.
In general, all RSUs granted in fiscal 20182019 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 20182019 are not entitled to dividend equivalents.
The number of RSUs granted to each named executive officer pursuant to the fiscal 20182019 long-term incentive program is set forth below.
| Named Executive Officer | RSUs Granted During Fiscal | |||||
Mr. | ||||||
Mr. | ||||||
Ms. Batcheler | 11,150 | |||||
Mr. McGough | 11,150 | |||||
Mr. Serrao | 8,363 | |||||
The Committee considered the factors set forth above under the heading “Design and Approval of Our“Our Fiscal 2018 Program – Individual Named2019 Executive Officer Considerations”Compensation Program” when determining grant sizes by individual. Grants to the named executive officers other than Mr. Connolly were made on July 19, 2017.17, 2018. Mr. Connolly’s RSUs were granted on July 20, 2017.The18, 2018. The grant date fair value of the RSUs awarded to our named executive officers is included in the “Stock Awards” column of the Summary Compensation Table – Fiscal 2018.2019.
Long-Term Incentive Plan –
2019 PROXY STATEMENT 44 |
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. In general, the performance shares vest following completion of the third fiscal year following grant and provide the named executive officer participating in the cycle the opportunity to earn a payout, in shares of common stock, from 0% to 200% of their respective targeted award. Dividend equivalents are paid on the portion of performance shares actually earned at our regular dividend rate in additional shares of common stock.
The three-year nature of each performance share grant means that in any year, a named executive officer can have up to three outstanding performance share plan, or PSP, cycles outstanding. In fiscal 2018,2019, for example, each named executive officers could have been participantsofficer participated in our fiscal 2016 to 2018 PSP, our fiscal 2017 to 2019 PSP, and our fiscal 2018 to 2020 PSP and our fiscal 2019 to 2021 PSP.
The targeted number of performance shares granted to our named executive officers in fiscal 2018,2019, together with the performance share grants made under the comparable program in fiscal 20172018 and fiscal 2016,2017, are set forth below.
Named Executive Officer | Targeted Performance | Targeted Performance | Targeted Performance | Targeted Performance Shares for Fiscal 2019 to 2021 Cycle | Targeted Performance Shares for Fiscal 2018 to 2020 Cycle | Targeted Performance Shares for Fiscal 2017 to 2019 Cycle1 | ||||||
| Mr. Connolly | 151,128 | 88,665 | 94,372 | 156,328 | 151,128 | 88,665 | ||||||
| Mr. Marberger (2) | 35,710 | 22,698 | - | |||||||||
Mr. Marberger | 33,450 | 35,710 | 22,698 | |||||||||
| Ms. Batcheler | 35,710 | 22,698 | 24,159 | 33,450 | 35,710 | 22,698 | ||||||
| Mr. McGough | 35,710 | 22,698 | 24,159 | 33,450 | 35,710 | 22,698 | ||||||
| Mr. Serrao | 26,783 | 17,023 | 18,119 | 25,088 | 26,783 | 17,023 | ||||||
1 The number of performance shares noted here reflects an equitable adjustment made to the original award in connection with thespin-off of Lamb Weston into an independent public company on November 9, 2016. For information about equitable adjustments made to equity awards in connection with thespin-off, please see our 2017 proxy statement. | 1 The number of performance shares noted here reflects an equitable adjustment made to the original award in connection with thespin-off of Lamb Weston into an independent public company on November 9, 2016. For information about equitable adjustments made to equity awards in connection with thespin-off, please see our 2017 proxy statement. | |||||||||||
Goal Setting in the PSP.The Committee’s approach to selecting and setting performance goals for each cycle of the PSP is thorough. Prior to the start of a performance period, the Committee discusses a proposed plan design, taking into consideration the company’s strategic plan. Then, shortly after the start of each performance period, the Committee approves the actual metric or metrics for the program and the specific financial hurdles that must be met for awards to be earned. The Committee’s preferred approach is for the performance goals in each grant to cover the full three years of the performance period and remainun-revised throughout the cycle.
Significant internal and external factors have created a very dynamic operating environment for the company over the last four years. The company has implemented a significant cost and cultural overhaul. Conagra Brands has also engaged in material portfolio reshaping through acquisitions, including Pinnacle, and divestitures, including the sale of its Private Brands segment,spin-off of its Lamb Weston business and divestiture of smaller businesses, like Wesson. In addition, tax reform legislation known as the Tax Cuts and Jobs Act, or TCJA, became law in our fiscal 2018. Not only did the law meaningfully decrease our tax expense (to the benefit of EPS), but we decided to use a portion of our TCJA-driven cash savings to make an unplanned, significant contribution to our frozen, defined benefit pension plan. This was beneficial from a pension plan perspective, but it created a meaningful headwind to our EPS.
45 CONAGRA BRANDS |
Given these dynamics, the Committee made decisions over the past several years to deviate from its preferred approach to goal setting. Specifically:
For the fiscal 2017 to fiscal 2019 PSP grant, the Committee adopted a staged goal-setting approach in lieu of setting a three-year performance target. As discussed more below, the fiscal 2017 to fiscal 2019 PSP includes a single year EBITDA Return on Invested Capital goal for fiscal 2017 and an EPS CAGR goal for fiscal 2018 to fiscal 2019. In addition, during fiscal 2018, the EPS CAGR goal for this grant was revised to account for the impact of the TCJA.
For the fiscal 2018 to fiscal 2020 PSP grant, the Committee used a three-year EPS CAGR goal. However, as discussed more below, this EPS CAGR goal was revised during fiscal 2018 to account for the impact of the TCJA; it was further revised following the Pinnacle acquisition.
For the fiscal 2019 to fiscal 2021 PSP grant, the Committee used a three-year EPS CAGR goal. As discussed more below, this EPS CAGR goal was revised following the Pinnacle acquisition.
In each instance noted, the Committee made decisions which it believes best maintained the alignment of the company’s long-term incentive program with the company’s external financial commitments to investors.
The balance of this subsection of the Compensation Discussion and Analysis describes, in more detail, each cycle of our PSP outstanding during fiscal 2019.
FY19 to FY21 Performance Share Awards
Performance shares for the fiscal 2019 to fiscal 2021 cycle of the long-term incentive plan were granted at the start of fiscal 2019. The performance measure adopted for the cycle is a three-year EPS CAGR.
The performance period will conclude at the end of fiscal 2021 and the awards will pay out, to the extent earned, in shares of common stock in summer 2021. The specific plan targets are as follows:
| Fiscal 2019 to 2021 Cycle | ||||||
| Performance Period | Threshold Adjusted Diluted EPS CAGR, as revised1 | Target Adjusted Diluted EPS CAGR, as revised2 | Maximum Adjusted Diluted EPS CAGR, as revised3 | |||
Fiscal 2019 to 2021 | 2.5% | 5.8% | 8.9% | |||
1 An EPS CAGR below this level results in no payout; achievement at this level results in a payout equal to 25% of the targeted opportunity
2 An EPS CAGR at this level results in a payout equal to 100% of the targeted opportunity
3 An EPS CAGR at or above this level results in a payout equal to 200% of the targeted opportunity | ||||||
As noted above, plan targets in the fiscal 2019 to 2021 PSP were originally set prior to the completion of the Pinnacle acquisition. At that time, the Committee approved a targeted EPS CAGR of 6.9% for the fiscal 2019 to fiscal 2021 performance period. This level of EPS growth, when combined with the company’s results in fiscal 2017 and fiscal 2018, would have achieved the company’s externally disclosed strategic plan objective of a fiscal 2017 through fiscal 2019 adjusted EPS CAGR of 10%. Following completion of the Pinnacle acquisition, the company updated its long-term EPS growth targets and the Committee revised the PSP targets accordingly. The targets set forth in the table above reflect this revision.
The grant date fair value of all performance shares granted to the named executive officers under the fiscal 2019 to 2021 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 2019.
2019 PROXY STATEMENT 46 |
FY18 to FY20 Performance Share Awards
Performance shares for the fiscal 2018 to fiscal 2020 cycle of the long-term incentive plan were granted at the start of fiscal 2018. The performance period will conclude at the end of fiscal 2020, and the awards will pay out, to the extent earned, in shares of common stock in summer 2020. The specific plan targets, as revised for the TCJA and Pinnacle acquisition, are set forth here:
| Fiscal 2018 to 2020 Cycle | ||||||
| Performance Period | Threshold Adjusted Diluted EPS CAGR, as revised1 | Target Adjusted Diluted EPS CAGR, as revised2 | Maximum Adjusted Diluted EPS CAGR, as revised3 | |||
Fiscal 2018 to 2020 | 3.5% | 6.8% | 9.9% | |||
1 An EPS CAGR below this level results in no payout; achievement at this level results in a payout equal to 25% of the targeted opportunity
2 An EPS CAGR at this level results in a payout equal to 100% of the targeted opportunity
3 An EPS CAGR at or above this level results in a payout equal to 200% of the targeted opportunity | ||||||
As noted above, plan targets in the fiscal 2018 to 2020 PSP were originally set prior to the passage of the TCJA and prior to completion of the Pinnacle acquisition. The Committee originally approved a targeted EPS CAGR of 9.5% for the fiscal 2018 to fiscal 2020 performance period. It subsequently amended this EPS CAGR to be 12.4%, in light of the benefit to EPS the TCJA would provide. Following completion of the Pinnacle acquisition, the company updated its long-term EPS growth targets and the Committee adjusted the PSP targets accordingly. The targets set forth in the table above reflect this additional adjustment.
The grant date fair value of all performance shares granted to the original award in connection with thespin-off of Lamb Weston into an independent public company on November 9, 2016. For information about equitable adjustments made to equity awards in connection with the spin-off, please see our 2017 proxy statement.
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The level at which our named executive officers will earnunder the awards subjectfiscal 2018 to these grants is dependent2020 cycle, based on the company’s performance over time against two sets of goals: an overarching adjusted EPS goal and underlying performance goals.
Overarching EPS Performance Goal.Similar to the FY18 AIP, the PSP utilizes an overarching adjusted EPS performance goal for our most senior executive participants. The PSP’s framework was intended to allow performance share awards to potentially qualify as tax deductible under Section 162(m)probable outcome of the Code. However, as described above,performance conditions for such period, is included in 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“Stock Awards” column of the Summary Compensation Table –Fiscal 2019.
Also see “Additional Information on Compensation Practices –- Tax and Accounting Implications of the Committee’s Compensation Decisions” for more information on this plan design.
Thea discussion of an overarching adjusted EPS goal applicable toperformance hurdle that must be achieved for awards under the named executive officers in each PSP cycle outstanding during fiscal 2018 was as follows:to fiscal 2020 PSP to be earned.
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As with the FY18 AIP, the adjusted EPS goal must be met before any payout can be madeFY17 to a named executive officer under the PSP. If the overarching adjusted EPS goal is met, the Committee can exercise negative discretion to potentially reduce, but not increase, authorized payouts. This negative discretion is guided by performance against underlying financial goals approved by the Committee.FY19 Performance Share Awards
UnderlyingPre-EstablishedPerformance Goals.Shortly after the start of each performance period in a cycle of the PSP, the Committee approves underlying performance goals aligned with threshold, target, and maximum incentive opportunities. If the overarching adjusted EPS goal for the cycle is ultimately met, the named executive officers participating in the cycle are eligible to earn a payout, in shares of common stock, of between 0% and 200% of their respective targeted award. Dividend equivalents are paid on the portion of the performance shares actually earned; dividend equivalents are paid at the regular dividend rate in shares of our common stock.
The balance of this section of the Compensation Discussion and Analysis describes each cycle of our PSP outstanding during fiscal 2018 including, immediately below, the Committee’s philosophy on goal setting for each of these cycles.
Goal Setting During Times of Significant Change.As discussed earlier in this Proxy Statement, the last three years at Conagra Brands have been transformational. In August 2015, when the Committee was considering the goals for the fiscal 2016 to 2018 cycle of the performance share program, Mr. Connolly was only four months into his tenure as our CEO. Portfolio, cost, and cultural overhauls at the company had just commenced. In addition, strategic alternatives were being launched for a major business unit, Private Brands. As a result, multi-year performance objectives were challenging to set. With such significant change underway, the Committee made the decision to deviate from its preferred approach to goal setting for the PSP. Typically, shortly after the start of each three-year performance period, the Committee approves a three-year goal for the cycle. However, given the change being led by Mr. Connolly as fiscal 2016 began, the Committee
Compensation Discussion and Analysis
adopted aphased-in approach to goal setting for the program, to ensure that financial objectives during this period of change were ultimately relevant and transparent.
Although the Committee expected to return to three-year goal setting for the fiscal 2017 to fiscal 2019 cycle of the program, thespin-off of Lamb Weston into an independent public company was pendinglong-term incentive plan were granted at the start of fiscal 2017. 2017 and the performance period concluded at the end of fiscal 2019.
The Committee therefore determined that it was appropriate to continue using a staged goal-setting approachperformance measures and goals adopted for the PSP.
In fiscal 2018,2017 to fiscal 2019 cycle of the Committee returned to a three-year performance goal in the PSP.
In summary, the Committee has approached the performance share programs beginning inPSP were based on EBITDA Return on Invested Capital (for fiscal year 2017) and EPS CAGR (for fiscal years 2016, 2017 and 2018 to 2019). The specific plan targets (as adjusted for the TCJA as follows:discussed above) are as set forth here:
| Performance Period | Goal | Performance for Threshold (%) | Performance for Target (%)2 | Performance for Maximum (%)3 | ||||
Fiscal 20171 (1/3 of Total Grant) | EBITDA Return on Invested Capital | 17.94 | 20.5 | 22.8 | ||||
Fiscal 2018 to 2019 (2/3 of Total Grant) | Adjusted Diluted EPS CAGR, as revised | 8.05 | 13.2 | 18.2 | ||||
1 The FY17 EBITDA Return on Invested 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 Invested 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 EBITDA Return on Invested Capital or EPS CAGR at this level results in a payout equal to 100% of the targeted opportunity
3 EBITDA Return on Invested Capital or EPS CAGR at or above this level results in a payout equal to 200% of the targeted opportunity
4 EBITDA Return on Invested Capital at or below this level results in no payout
5 EPS CAGR below this level results in no payout; achievement at this level results in a payout equal to 25% of the targeted opportunity | ||||||||
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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 Invested Capital as the relevant performance metric. This metric is calculated as follows:
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In fiscal year 2018,by dividing Earnings Before Interest and Taxes, plus Depreciation and Amortization Expense, by the sum of Interest Bearing Debt plus Equity, on a 13 period average. The Committee shiftedmoved from this metric to the goals to a rate of compound annual growth in diluted earnings per share, as adjusted for items impacting comparability (EPS CAGR)EPS CAGR metric to simplify the PSP program for participant understandingparticipants and acknowledge the importance of capital allocation decisions in the company’s strategic plan. The Committee adopted aone-year EPS CAGR goal covering fiscal year 2018 for the fiscal 2016 to 2018 cycle, atwo-year EPS CAGR goal covering fiscal years 2018 and 2019 for the fiscal 2017 to 2019 cycle, and a three-year goal EPS CAGR goal in the fiscal 2018 to 2020 cycle.
Although the Committee returned to a three-year performance goal in the fiscal 2018 to 2020 cycle, a further development added complexity to the PSP – the Tax Cuts and Jobs Act, or TCJA, becoming law. As noted, the Committee implemented an EPS CAGR goal in fiscal 2018. At the time of this implementation, the company’s planned annual tax rate was approximately 33 to 34%. Following the passage of the TCJA, the company’s annualized planned tax rate decreased to approximately 23 to 24%. If the Committee did not take action, the TCJA would artificially inflate the company’s EPS growth rate when measuring performance for outstanding PSP cycles. In addition, the company decided to use a portion of its TCJA-driven cash savings to make an unplanned, significant contribution to its frozen, defined benefit pension plan. With a more fully funded and frozen plan, the trust was able to begin shifting its investment approach for the related trust assets to lower return asset classes. Due to the accounting treatment of pension plan asset returns, the company’s EPS will now be lower than planned.
Compensation Discussion and Analysis
After considering the impact of the TCJA and related pension actions on the company’s EPS CAGR goals in the fiscal 2017 to 2019 and fiscal 2018 to 2020 cycles of the PSP, and the Committee’s overarching desire to achieve simplicity, transparency and understandability in its compensation programs, it decided to amend the EPS CAGR goals for these two cycles. In July 2018, the Committee adopted the following changes:
Cycle
|
Original EPS CAGR at
|
Amended EPS CAGR
| ||||||
Fiscal 2018 to 2019
|
9.3%
|
13.2%
| ||||||
| Fiscal 2018 to 2020 | 9.5% | 12.4% |
In the following pages, we further detail the performance metrics, goals and current company performance under each of these cycles.
FY16 to FY18 Cycle of the Performance Share Plan
The performance metrics and goals adopted for the fiscal 2016 to 2018 cycle of the PSP were EBITDA Return on Capital (for fiscal years 2016 and 2017) and EPS CAGR (for fiscal year 2018). The specific plan targets are as set forth here:
Fiscal 2016 to 2018 Cycle
| ||||||||
Performance Period | Goal | Performance for | Performance for Target (1) | Performance for | ||||
Fiscal 2016 (1/3 of Total Grant) | Average EBITDA Return on Capital | 20.2% (3) | 22.8% | 25.1% | ||||
Fiscal 2017 (1/3 of Total Grant) | Average EBITDA Return on Capital | 17.9% (3) | 20.5% | 22.8% | ||||
Fiscal 2018 (1/3 of Total Grant) | Adjusted Diluted EPS CAGR | 0.6% (4) | 8.6% | 16.7% | ||||
|
|
|
|
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.plan for fiscal 2017. At the conclusion of fiscal 2018,2019, the Committee assessed our performance against the fiscal 2018 to 2019 goal and certified results overall. The company’s performance exceeded targetAs set forth in each year of the program. Ultimately,table below, our strong financial performance over the last three years resulted in a funding level equal to 158.7%106.1% 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.
Performance Period | Adjusted EPS Goal | Performance Metric | Plan Results (%) | Payout Earned (%) | Total Cycle Payout (%) | |||||
FY171 | Achieved | EBITDA Return on Invested Capital | 21.4 | 122.8 | 106.1 | |||||
FY18-FY19 | Achieved |
Adjusted Diluted EPS CAGR, as adjusted | 12.7 | 97.8 | ||||||
1 The FY17 EBITDA Return on Invested 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 Invested 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. | ||||||||||
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”Incentive Programs” 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% | ||||||||||||||||
|
|
The table below lists the number of shares of common stock that were issued to the named executive officers following fiscal 20182019 for the fiscal 20162017 to 20182019 cycle of the PSP. Mr. Marberger did not participate inIt is generally the cycle dueCommittee’s practice to pay performance share awards at a level equal to the timing of his hiring afterfunded amount, without applying further discretion. The Committee followed this practice for the program’s start.fiscal 2017 to fiscal 2019 PSP. 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) | Targeted Performance Shares Granted for Fiscal 2017 to 2019 Cycle1 | Actual Performance Shares Earned for Fiscal 2017 to 2019 Cycle2 | Actual as % of Target (without Dividend Equivalents) (%) | Actual as % of Target (with Dividend Equivalents) (%) | ||||||||||||||
Mr. Connolly
| 94,372
| 159,556
| 158.7%
| 169.1%
| 88,665 | 94,074 | 106.1 | 113.8 | ||||||||||||||
Mr. Marberger | 22,698 | 24,083 | 106.1 | 113.8 | ||||||||||||||||||
Ms. Batcheler
| 24,159
| 40,845
| 158.7%
| 169.1%
| 22,698 | 24,083 | 106.1 | 113.8 | ||||||||||||||
Mr. McGough
| 24,159
| 40,845
| 158.7%
| 169.1%
| 22,698 | 24,083 | 106.1 | 113.8 | ||||||||||||||
Mr. Serrao
|
18,119
|
30,634
|
158.7%
|
169.1%
| 17,023 | 18,062 | 106.1 | 113.8 | ||||||||||||||
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 thespin-off, please see our 2017 proxy statement. 2 Excludes dividends earned on such performance shares. |
Performance-Based Restricted Stock Unit Award
In April 2019, the Committee approvedone-time grants of PBRSU awards to the named executive officers and a very limited group of other senior officers of the company. The PBRSU awards are designed to strengthen the alignment between management and shareholders and incentivize shareholder value growth. In general, the PBRSU awards will be earned only to the extent management delivers strong absolute TSR and strong relative TSR versus the median TSR of the S&P 500 Index over a performance period running from the date of grant (April 15, 2019) until May 27, 2022 (the last trading day of fiscal 2022).
2019 PROXY STATEMENT 48 |
Compensation Discussion and Analysis
Unvested CyclesPBRSUs will be earned as follows:
First, our absolute TSR for the Performance Period will be determined. | • No PBRSUs will be earned if the company’s annualized TSR is not at least 12.20% for the performance period. • 100% of the PBRSUs will be earned for company annualized TSR of 12.20% for the performance period. • Subject to a maximum value cap (as described below) for the PBRSU award, 400% of the PBRSUs will be earned for annualized TSR at or above 23.86%. • Straight-line interpolation will be used to determine the number of PBRSUs earned for company annualized TSR between 12.20% and 23.86%. | |||||
If PBRSUs are earned based on absolute TSR, they become eligible for an upward adjustment based on relative TSR. | • If the company’s annualized TSR for the performance period is at least 15.79% and the company’s annualized TSR for the performance period exceeds that of the median of the S&P 500 Index, the earned PBRSU award will be increased by 25%. • No upward adjustment will occur if the company’s annualized TSR for the performance period is not at least 15.79%. • Subject to a maximum value cap (as described below), the earned PBRSU award may reach, but not exceed, 500% of the granted value. | |||||
Absolute TSR and relative TSR will generally be determined assuming reinvestment of dividends in additional shares of stock from the beginning of the Performance Share Plan: FY17 to FY19 Cycle
The performance measures and goals adopted forperiod through the fiscal 2017 to 2019 cycleend of the PSP were based on EBITDA Return on Capital (for fiscal year 2017)performance period and EPS CAGR (fiscal years 2018 to 2019). The plan will concludeusing20-day average closing stock prices before and at the end of fiscal 2019, andthe performance period.
The PBRSU award will pay out at zero if company performance fails to reach the hurdles noted above. Notwithstanding the maximum percentages noted above, in no event may the award pay out at a value greater than 8.6 times the grant value of each grantee’s PBRSU award (the maximum value cap).
The target grant values for the PBRSU awards for the named executive officers, and the maximum value caps, are as shown in the following table. Target award values were translated into a number of granted PBRSUs based on the average closing price of our common stock on the NYSE for the 20 trading days ended April 12, 2019, the last trading day prior 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:grant date.
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% | ||||
|
|
|
| Named Executive Officer | # of PBRSUs Granted | Target PBRSU Value ($) | Maximum Value Cap ($) | |||
Mr. Connolly | 92,343 | 2,500,000 | 21,500,000 | |||
Mr. Marberger | 14,775 | 400,000 | 3,440,000 | |||
Ms. Batcheler | 14,775 | 400,000 | 3,440,000 | |||
Mr. McGough | 14,775 | 400,000 | 3,440,000 | |||
Mr. Serrao | 14,775 | 400,000 | 3,440,000 | |||
|
|
Unvested CyclesIn consideration for the granting of the Performance Share Plan: FY18PBRSU awards, each grantee agreed to FY20 Cycle
anon-competition covenant. The performance measurenon-competition covenant limits each grantee’s ability to become employed by a food company that materially competes with us and goals adopted forhas annual revenue over $1 billion until the fiscal 2018 to 2020 cycleearlier of the PSP were based on EPS CAGR. The plan will conclude atfirst anniversary of either the endvesting of fiscal 2020, and pay out, to the extent earned, in sharesPBRSU award or the grantee’s termination of common stock in summer 2020. The specific plan targets (as amended for the TCJA, as discussed above) are as set forth here:employment.
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% | |||
|
|
|
The grant date fair value of all performance sharesPBRSUs granted under theduring fiscal 2018 to 2020 cycle,2019, 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 2018.2019.
2019 PROXY STATEMENT 50 |
Compensation Discussion and Analysis
Other Fiscal 20182019 Compensation
The additional material elements of our compensation program for the named executive officers during fiscal 20182019 were as follows:
Benefit Programs
We offer a package of core employee benefits to our employees, including our named executive officers. With respect to health and welfare benefits, we offer health, dental, and vision coverage and life and disability insurance. The company and employee participants share in the cost of these programs. We also offer a matching-gifts program through our Conagra Brands Foundation. To maximize community impact, the Conagra Brands Foundation offers matching gift opportunities to all employees, including the named executive officers. Donations made by the Foundation on behalf of a named executive officer are included in the “All Other Compensation” column of the Summary Compensation Table –Fiscal 2018.– Fiscal 2019.
With respect to retirement benefits, we maintain a qualified 401(k) retirement plan (with a company match on employee contributions)contributions and a nonelective employer contribution) and the named executive officers are entitled to participate in this plan on the same terms as other employees. Ms. Batcheler and Mr. McGough also participate in a qualified pension plan that was closed to new participants in 2013 and frozen effective December 31, 2017.
Some of the named executive officers and other employees at various levels of the organization participate in a voluntary deferred compensation plan. The voluntary deferred compensation plan enables us to pay retirement benefits in amounts that exceed the limitations imposed by the Code under our qualified plans. The plan allows the named executive officers, as well as a broader group of approximately 400568 employees, to defer receipt of up to 50% of their base salary, up to 90% of their annual cash incentive compensation, or up to 90% of their base compensation plus annual incentive in excess of $275,000.$280,000. A company match is made on deferrals of any compensation above the $280,000 limit, and a nonelective contribution is made on compensation above the limit. 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.
Effective January 1, 2019, the company adopted an amendment to the voluntary deferred compensation plan that removed the requirement that a participant be employed with the company on December 31 of a given year to receive a company matching contribution for that year.
We include contributions made by the company to the named executive officers’ 401(k) plan and voluntary deferred compensation accounts in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2018.2019. We provide a complete description of these retirement programs under the headings “Pension Benefits – Fiscal 2018”2019” and “Nonqualified Deferred Compensation – Fiscal 2018”2019” below.
Security Policy
The Committee has determined that it is appropriate to cover Mr. Connolly by our security policy. As a result, Mr. Connolly is required to take the 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 the company aircraft (for example, aircraft purchase costs, maintenance, insurance and flight crew
51 CONAGRA BRANDS |
salaries). Mr. Connolly’s reimbursement obligation to the company begins once the incremental cost of his personal flights exceeds $150,000 in a fiscal year. The incremental cost to us of providing these benefits in fiscal 2018,2019, if any, is included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal 2018.2019.
A copy of the Conagra Brands, Inc. Aircraft Use Policy is available to any shareholder who requests it from the Corporate Secretary at 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
Compensation Discussion and Analysis
Agreements with Named Executive Officers
Agreement with Mr. Connolly
We entered into an employment agreement with Mr. Connolly in February 2015 as a part of his hiring as our Chief Executive Officer. The agreement expired on August 1, 2018. The agreement generally described Mr. Connolly’s duties and responsibilities as CEO, and, for its term, provided for a minimum base salary of $1.1 million and a customary vacation allowance. The employment agreement also outlined Mr. Connolly’s participation in our incentive compensation programs during its term. Regarding the annual incentive program, the agreement provided that Mr. Connolly’s target opportunity would be at least 150% of his base salary. With respect to long-term incentives, commencing with fiscal 2016, Mr. Connolly was entitled, each year during the term of the agreement, to receive a targeted long-term award opportunity with a value of at least $6.25 million for any ensuing three-year performance period.
The agreement subjected Mr. Connolly to our stock ownership guidelines and aone-year post-employmentnon-competition restriction. It also required Mr. Connolly to execute our standard confidentiality andnon-solicitation agreement.
The employment agreement also provided Mr. Connolly with certain other benefits, including indemnification. The agreement entitledoutlined application of our security policy to Mr. Connolly, to use corporate aircraft, as further described above and under “Executive Compensation —– Summary Compensation Table – Fiscal 2018”2019” below.
The employment agreement provided for severance, termination and change of control benefits further described below under the heading “Executive Compensation — Potential Payments Upon Termination or Change of Control.”benefits.
The agreement also entitled Mr. Connolly to participate in benefit plans and programs that are made available to senior executives generally. For information about the terms of Mr. Connolly’s participation in our retirement plans and deferred compensation plans, see “Executive Compensation —– Nonqualified Deferred Compensation – Fiscal 2018”2019” below.
Given Mr. Connolly’s strong, results-oriented leadership during the first three years of his tenure, and the Board’s desire to retain Mr. Connolly as Conagra Brands’ CEO for the foreseeable future, on August 2, 2018, after the end of fiscal 2018, we entered into a new letter agreement with Mr. Connolly. The agreement includes terms that are materially consistent with those described above. The key features of the new letter agreement that differ from the expired employment agreement are as follows: (1) no set expiration date; (2) a minimum base salary of $1.2 million;million, subject to review and possible increase by the Committee and the Board’s independent directors; (3) a minimum targeted long-term award opportunity with a value equal to at least $7.5 million for any ensuingroutine three-year performance period;period approved by the Committee, subject to the terms and conditions established by the Committee; and (4) eligibility for payment of monthly COBRA premiums for up to 24 months following a termination without cause or for good reason; and (5) modified retirement treatment with respectreason (in addition to Mr. Connolly’s equity awards (specifically, a reductionthe benefits provided for in age requirements coupled with continued vesting, rather than immediate vesting)the original employment agreement). Under the new letter agreement, we also agreed to pay Mr. Connolly for professional fees incurred in the negotiation and preparation of the new letter agreement (and related documents).
The letter agreement also includes new retirement benefits for Mr. Connolly. The letter agreement provides that, for Mr. Connolly’s newequity awards granted on or after July 17, 2018, and for any annual incentive plan in effect in the year of his retirement, (a) any definition of “early retirement” will be no less favorable to Mr. Connolly than the requirement that Mr. Connolly attains at least age 55 but has not yet attained age 57, and (b) any definition of “normal retirement” will be no less favorable to Mr. Connolly than the requirement that Mr. Connolly attain at least age 57. In addition, if any RSU or performance share award or agreement with Mr. Connolly under the long-term incentive program for an award outstanding
2019 PROXY STATEMENT 52 |
at the time of his termination of employment provides for immediate vesting (eitherpro-rata or in full, as applicable) in the event of normal retirement or early retirement (as such terms are defined in the RSU or performance share award or agreement), and such normal retirement or early retirement is not within two years of a change of control (as that term is defined in the RSU or performance share award or agreement), then such RSU or performance share award or agreement will be deemed to be amended by the letter agreement so that it provides for continued vesting after the retirement in accordance with the normal vesting schedule for such award (eitherpro-rata or in full, as applicable). Mr. Connolly’s severance benefits under the letter agreement are further described in greater detail in next year’s proxy statement.below under the heading “Executive Compensation – Potential Payments Upon Termination or Change of Control.”
Change of Control / Severance Benefits
We have agreements with our named executive officers that are designed to promote stability and continuity of senior management in the event of a change of control. The Committee routinely evaluates participation in this program and its benefit levels to ensure their reasonableness. Since fiscal 2012, individuals promoted or hired into positions that, in the Committee’s view, are appropriate for change of control program participation have not been entitled to any excise taxgross-up protection. Although the Committee continues to believe in the importance of maintaining a change of control
Compensation Discussion and Analysis
program, it believes that offering excise taxgross-ups to new participants is inappropriate relative to best executive pay practices. We provide a complete description of the amounts potentially payable to our named executive officers under these agreements under the heading “Executive Compensation —– Potential Payments Upon Termination or Change of Control.”
Severance Benefits
We have also adopted a broad severance plan potentially applicable to mostall 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. No such arrangements currently exist with our named executive officers other than Mr. Connolly.
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 2019 Program
The Committee’s process to design the compensation program for the named executive officers is a robust one. To ensure that its design objectives are met and that program elements are reasonable, the Committee uses a variety of inputs, including the results of our annual“say-on-pay” vote, the advice of the Committee’s independent compensation consultant, company and participant-focused considerations, the input of our Chief Executive Officer and risk mitigation considerations. We address each of these inputs here.
Annual Say on Pay Vote
In designing the executive compensation program for fiscal 2019, the Committee looked to our shareholders. The Committee’s policy is to present a“say-on-pay” vote to our shareholders annually. In September 2018, we received over 94% 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 2019.
Independent Consultant and Market Data
The Committee also leveraged the advice and counsel of its independent compensation consultant, FW Cook, in setting fiscal 2019 compensation. The consultant assists the Committee in monitoring policy positions of institutional shareholders and their advisors, emerging market practices in compensation design and philosophy, and policy developments relevant to the Committee’s work. The Committee’s consultant also provides internal and external pay comparison data. The Committee uses this data as a market check on its compensation decisions and does not mandate target ranges for our named executive officers’ salaries, annual incentive opportunities, long-term incentive opportunities, or total direct compensation levels as compared to the peer group. The Committee recognizes that over-reliance on external comparisons can be of concern; therefore, the Committee uses external comparisons as only one point of reference and is mindful of the value and limitations of comparative data.
53 CONAGRA BRANDS |
The Committee’s first step in using external data for fiscal 2019 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 consideration of the following criteria:
Operations and Scale: Companies similar in size (based on revenue, market capitalization and enterprise value) and industry (packaged food and meats and broader brand-based consumer packaged goods companies);
Business Characteristics: Public companies listed on major U.S. exchanges and subject to U.S. disclosure rules and companies with whom we compete for talent; and
Proxy Advisor Peers: Companies included in peer groups used by shareholder advisory firms (as a reference).
The Committee approved the following peer group of 16 companies for purposes of assessing fiscal 2019 compensation competitiveness:
| Campbell Soup Company | General Mills, Inc. | Mattel, Inc. | ||
| Church & Dwight Co., Inc. | The Hershey Company | Mondelez International, Inc. | ||
| The Clorox Company | Hormel Foods Corporation | Newell Brands Inc. | ||
| Colgate-Palmolive Company | The J. M. Smucker Company | Pinnacle Foods Inc. | ||
| Dr. Pepper Snapple Group, Inc. | Kellogg Company | |||
| The Estée Lauder Companies Inc. | Kimberly-Clark Corporation | |||
The only company removed from our fiscal 2018 peer group for fiscal 2019 compensation decisions was Mead Johnson Nutrition Company, which was acquired by Reckitt Benckiser Group plc in June 2017. No companies were added to the peer group for fiscal 2019 compensation decisions.
Company and Participant Focused Matters
The Committee also generally considered the following company and participant focused matters in making fiscal 2019 compensation decisions:
| Company- Focused Matters | • Company performance in prior years and expectations for the future; • The anticipated degree of difficulty inherent in the targeted incentive performance goals; • The level of risk-taking the program would reward; • The general business environment; and • Practices and developments in compensation design and governance. | |||||
| Participant- Focused Matters | • Individual performance history; • The anticipated degree of difficulty inherent in individual goals; • Internal pay equity; and • The potential complexity of each program, preferring programs that are transparent to participants and shareholders and easily administered. | |||||
2019 PROXY STATEMENT 54 |
The Chief Executive Officer’s Views
Mr. Connolly, our Chief Executive Officer and President, played a role in several key areas of the design of our fiscal 2019 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 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 2019. Mr. Connolly provided the Committee his views on the appropriate company goals for use in our annual and long-term incentive plans. Mr. Connolly provided input based on his understanding of investor expectations and our operating plans and financial goals. The Committee had sole authority to approve the program metrics and targets, but found Mr. Connolly’s input valuable.
Assessing Company Performance.Financial performance is at the core of our incentive programs. However, the Committee retains the discretion to modify payouts based on the manner in which business results are delivered. At the end of fiscal 2019, Mr. Connolly offered the Committee his views of the quality of our performance against expectations.
Assessing Individual Performance.With respect to individual performance, which also informed fiscal 2019 compensation decisions, the Committee relied on Mr. Connolly’s regular performance evaluations of the senior leadership team. Mr. Connolly shared information on the named executive officers’ impact on strategic initiatives and organizational goals, as well as their leadership behaviors.
Mitigating Risk
The Committee designs the compensation program with multiple objectives in mind to help mitigate the risk that employees will take unnecessary and excessive risks that threaten the long-term health and viability of our company. With the assistance of Human Resources and Legal department personnel, the Committee undertook a risk review of our fiscal 2019 compensation programs for all employees. Based on the review, we believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the long-term, based in part on the following features of the fiscal 2019 program detailed on the next page.
55 CONAGRA BRANDS |
What We DO |  | Focus employees on both short- and long-term goals. | | Consider a mix of financial andnon-financial goals to prevent over-emphasis on any single metric. | ||||||||
| Allow for some subjective evaluation in the determination of incentive payouts, to ensure linkage between payouts and the “quality” of performance. | | Employ a greater portion of variable pay (i.e., incentives) at more senior levels of the organization. | |||||||||
| Require stock ownership for more than 97 of our most senior employees. | | Generally require a “double-trigger” for accelerated vesting to occur in equity awards in connection with a change of control. | |||||||||
| Provide for the clawback of amounts paid to any of our most senior officers in certain circumstances. | | Use a range of strong processes and controls, including Committee oversight, in our compensation practices. | |||||||||
| Engage an independent compensation consultant for the Committee; consultant performs no other work for our company. | | Pay incentive compensation only after our financial results have been finalized and certified by the Committee. | |||||||||
What We DON’T DO |  | No director or executive officer may pledge or hedge their ownership of company stock. | | No excessive perquisites are provided to executives. | ||||||||
| No backdating orre-pricing of options may occur without shareholder approval. | | Since fiscal 2012, no change in control agreements have been executed with excise tax“gross-up” protection. | |||||||||
| No additional years of credited service are provided to named executive officers in pension programs. | | No compensation programs that encourage unreasonable risk taking will be implemented. | |||||||||
2019 PROXY STATEMENT 56 |
Additional Information on Compensation Practices
Committee’s Views on Executive Stock Ownership
The Committee has adopted stock ownership guidelines applicable to approximately 8097 of our most senior employees, including our named executive officers. These guidelines, which are represented as a percentage of salary, increase with level of responsibility within the company. The Committee has adopted these guidelines because it believes that management stock ownership promotes alignment with shareholder interests. The named executive officers are expected to reach their respective ownership requirement within a reasonable period of time after appointment. Shares personally acquired by the executive through open market purchases or through our employee benefit plans (for example, our employee stock purchase plan), as well as restricted stock, RSUs and shares acquired upon the deferral of earned bonuses,outstanding RSU awards, are counted toward the ownership requirement. Neither unexercisedUnexercised stock options, nor unearned performance shares and unearned PBRSUs are not 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 sharesreceivedshares received from equity compensation awards.
The following table reflects the ownership, as of July 31, 2018 for30, 2019, of our continuing named executive officers.
Named Executive Officer | Stock Ownership Guideline | Actual Ownership | Stock Ownership Guideline (% of Salary) | Actual Ownership (% of Salary)1 | ||||||||||
Mr. Connolly
| 600%
| 1,189%
| 600 | 1,155 | ||||||||||
Mr. Marberger
| 400%
| 263%
| 400 | 338 | ||||||||||
Ms. Batcheler
| 400%
| 1,425%
| 400 | 1,253 | ||||||||||
Mr. McGough
| 400%
| 1,022%
| 400 | 912 | ||||||||||
Mr. Serrao
| 300%
| 478%
| 300 | 408 | ||||||||||
Based on the closing price of our common stock on the NYSE on July |
Use of Adjustments in Compensation Decisions
Our goal is to pay incentives based on the same underlying business trends and results that our investors are using to measure company performance. To incent management to make decisions that have positive long-term impacts, even at the expense of shorter term results, and to preventone-time gains and losses from having too great of an impact on incentive payouts, the Committee designed its programs to exclude certain items impacting comparability from results in the fiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP. The overarching metric for the fiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP was adjusted EPS. The underlying metrics for the fiscal 2018 AIP were fiscal 2018 EBIT and net sales growth. The underlying metrics for the fiscal 2016 to 2018 cycle of the PSP were EBITDA Return on Capital and EPS CAGR.
In both the fiscal 2018 AIP and the fiscal 2016 to 2018 cycle of the PSP, the Committee approved adjustments that are generally consistent with the adjustments presented to investors in our discussions of comparable earnings results
Compensation Discussion and Analysis
including, in the fiscal 2016 to 2018 cycle of the PSP, an adjustment to eliminate the impact of the TCJA on our adjusted EPS. In addition, in the fiscal 2018 AIP, the Committee approved an approximately $14 million adjustment to net sales results in light of management’s decision to shift brand investments from advertising and promotion expense to retailer marketing investments, as discussed above. On an unadjusted basis, the company’s fiscal 2018 net sales were approximately $1.1 million below the level otherwise required to earn the net sales “kicker.”
Committee’s Practices Regarding the Timing of Equity Grants
We do not backdate stock options or grant equity retroactively. We do not coordinate grants of equity with disclosures of positive or negative information. Most equity is granted in the ordinary course at an annual Committee meeting each July.
As discussed above, theThe Committee decided to eliminateeliminated the granting of stock options from its executive compensation program in fiscal 2018 and forward.2018. However, historically, stock options have beenwere granted with an exercise price equal to the closing market price of our common stock on the NYSE on the date of grant. And, if a stock option grant was made other than during the routine July Committee meeting, the company would require that the grant be made on the first trading day of the month on or following the grantee’s date of hire.
Additional Information on the Committee’s Compensation Consultant
The Committee engaged FW Cook directly to assist it in obtaining and reviewing information relevant to its compensation decisions. The independence and performance of FW Cook are of the utmost importance to the Committee. As a result, Committee policy prevents management from directly engaging the consultant without the prior approval of the Committee’s Chair. For fiscal 2018,2019, FW Cook did not provide any additional services to us or our affiliates. In addition, the Committee reviews the types of services provided by the consultant and all fees paid for those services on a regular basis and conducts a formal evaluation of the consultant on an annual basis. The Committee assessed the independence of FW Cook, as required under NYSE listing rules. The Committee has also considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to FW Cook during fiscal 2018.2019. Based on this review, the Committee did not identify any conflict of interest raised by the work performed by FW Cook.
Tax and Accounting Implications of the Committee’s Compensation Decisions
U.S. federal income tax law prohibits us from taking a tax deduction for certain compensation paid in excess of $1 million to certain executive officers (and, beginning in 2018, certain former executive officers). Historically, compensation that qualified as “performance-based compensation” under Section 162(m) of the Code could be excluded from this $1 million limit.
57 CONAGRA BRANDS |
This exception was repealed with the TCJA, effective for taxable years beginning after December 31, 2017, unless certain transition relief is available. The Committee’s general intent prior to implementation of the TCJA was to structure our executive compensation programs so that payments could qualify as “performance-based compensation.” However, the Committee may have decided from time to time to grant compensation that would not (or could not) be able to qualify as “performance-based compensation” if appropriate to achieve the objectives of the compensation program.
The fiscal 2017 to fiscal 2019 and fiscal 2018 to fiscal 2020 performance share awards to the named executive officers are subject to, and made in accordance with, performance-based compensation arrangements that were intended to qualify as tax deductible. To that end, the Committee approved a framework in which (1) maximum awards under these incentive programs would be authorized upon attainment of adjusted EPS of: $0.10 per year for the performance period for the fiscal 2017 to 2019 cycle of the PSP; and $0.10 per year for the performance period for the fiscal 2018 to 2020 cycle of the PSP; and (2) negative discretion would be applied by the Committee to decrease authorized awards based upon the program frameworks described above. For each of these cycles, the adjusted EPS goal must be met before any payout can be made to a named executive officer.
With the repeal of the “performance-based compensation” provisions of Section 162(m) of the Code, compensation granted by the Committee may, more frequently, benon-deductible.non-deductible and, beginning with incentive programs adopted in fiscal 2019, thetwo-tiered performance hurdle structure described in the immediately foregoing paragraph has been eliminated. 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,purposes.
Use of Adjustments in Incentive Programs
Our goal is to pay incentives based on the same underlying business trends and it is possibleresults that awards intendedour investors are using to qualify as “performance-based compensation” may
Compensation Discussionmeasure company performance. To incent management to make decisions that have positive long-term impacts, even at the expense of shorter term results, and Analysis
not so qualify. Moreover, even ifto preventone-time gains and losses from having too great of an impact on incentive payouts, the Committee intendeddesigned its programs to grant compensation that qualifies as “qualified performance-based compensation” for purposes of Section 162(m) ofexclude certain items impacting comparability from results in the Code, the company cannot guarantee that such compensation ultimately will be deductible.
For fiscal 2018, all annual incentiveFY19 AIP and performance share awards to covered employees were subject to, and made in accordance with, performance-based compensation arrangements that were then intended to qualify as tax deductible. To that end, the Committee approved a framework in which (1) maximum awards under these incentive programs would be authorized upon attainment of adjusted EPS of: $0.10 for the fiscal 2018 AIP; $0.10 per year for the performance period for the fiscal 20162017 to 20182019 cycle of the PSP; $0.10 per yearPSP. The metrics for the performance periodFY19 AIP were fiscal 2019 EBIT and net sales. The overarching metric for the fiscal 2017 to 2019 cycle of the PSP; and $0.10 per year for the performance periodPSP was adjusted EPS. The underlying metrics for the fiscal 20182017 to 20202019 cycle of the PSP;PSP were EBITDA Return on Invested Capital and (2) negative discretion would be applied byEPS CAGR.
In both the FY19 AIP and the fiscal 2017 to 2019 cycle of the PSP, the Committee approved adjustments that are generally consistent with the adjustments presented to decrease authorized awards based uponinvestors in our discussions of comparable earnings results.
Adjustments included“add-backs” for the program frameworks described above.following types of unplanned events, which negatively impacted our performance versus incentive plan targets but are not indicative of underlying business performance:
Restructuring events
Expenses associated with M&A and integration-related activities
Impairments on intangible assets
Tariff impacts
Lost sales and profits associated with unplanned divestitures
Certain pension and hedging matters
Adjustments also included the elimination of the impact of the following types of unplanned events, which positively impacted our performance versus incentive plan targets but are not indicative of underlying business performance:
Gains on divestitures
Benefits to legal accruals
Thenon-cash impact of the novation of a legacy guarantee
2019 PROXY STATEMENT 58 |
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 on FormForm 10-K for the fiscal year ended May 27, 2018.26, 2019.
Conagra Brands, Inc. Human Resources Committee
| Rajive Johri | Richard H. Lenny | |||||
| Ruth Ann Marshall, Chair | Scott Ostfeld | |||||
Executive Compensation
Summary Compensation Table – Fiscal 20182019
The table below presents compensation information for individuals who served as our Chief Executive Officer and Chief Financial Officer during fiscal 20182019 and for each of the other three most highly-compensated individuals who were serving as executive officers at the end of fiscal 2018. Mr. Marberger was not a named executive officer in fiscal 2016; as such, information about his compensation for fiscal 2016 is omitted.2019. Mr. Serrao was not a named executive officer in fiscal 2017 or 2016; as such,2017; information about his compensation for fiscal years 2017 and 2016 is similarly omitted.
The amounts in the following Summary Compensation Table for Mr. Connolly are based in part on his employment agreement.agreement (or, following its expiration, his letter agreement). For more information about the material terms of the employment agreement and letter agreement with Mr. Connolly and the change of control agreements we have entered into with each of our named executive officers, see “Compensation Discussion and Analysis —– Agreements with Named Executive Officers” above and “Potential Payments Upon Termination or Change of Control” below.
For more information about our named executive officers’ mix of base salary and annual incentive compensation to their total compensation, see the discussion under “Compensation Discussion and Analysis — Elements of“Our Fiscal 20182019 Executive Compensation”Compensation Program” 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 thespin-off of Lamb Weston. For additional information about such equitable adjustments, please see “Compensation Discussion and Analysis – Special Note on the Treatment of Equity Awards in the Spinoff” in our 2017 proxy statement.
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Plan | Change in qualified | All Other Compen- sation ($) (4) | Total ($) | |||||||||||||||||||||||||||
Sean Connolly
|
|
2018
|
|
|
1,142,308
|
|
|
-
|
|
|
6,676,835
|
|
|
-
|
|
|
2,250,000
|
|
|
-
|
|
|
404,128
|
|
|
10,473,271
|
| |||||||||
CEO and President
|
|
2017
|
|
|
1,100,000
|
|
|
-
|
|
|
4,628,385
|
|
|
1,246,952
|
|
|
2,314,950
|
|
|
-
|
|
|
477,990
|
|
|
9,768,277
|
| |||||||||
|
2016
|
|
|
1,100,000
|
|
|
-
|
|
|
4,396,589
|
|
|
1,032,499
|
|
|
3,258,750
|
|
|
-
|
|
|
157,972
|
|
|
9,945,810
|
| ||||||||||
David Marberger
|
|
2018
|
|
|
639,231
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
715,107
|
|
|
-
|
|
|
91,029
|
|
|
3,027,429
|
| |||||||||
Chief Financial Officer
|
|
2017
|
|
|
423,846
|
|
|
200,000
|
|
|
1,631,211
|
|
|
299,447
|
|
|
471,588
|
|
|
-
|
|
|
22,754
|
|
|
3,048,846
|
| |||||||||
Colleen Batcheler
|
|
2018
|
|
|
540,750
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
672,152
|
|
|
10,449
|
|
|
109,850
|
|
|
2,915,263
|
| |||||||||
General Counsel
|
|
2017
|
|
|
538,630
|
|
|
-
|
|
|
1,184,861
|
|
|
319,214
|
|
|
749,126
|
|
|
25,118
|
|
|
267,098
|
|
|
3,084,047
|
| |||||||||
|
2016
|
|
|
521,635
|
|
|
-
|
|
|
2,895,365
|
|
|
264,335
|
|
|
989,019
|
|
|
39,296
|
|
|
97,807
|
|
|
4,807,457
|
| ||||||||||
Tom McGough
|
|
2018
|
|
|
669,500
|
|
|
-
|
|
|
1,582,062
|
|
|
-
|
|
|
832,189
|
|
|
15,987
|
|
|
137,007
|
|
|
3,236,745
|
| |||||||||
President,
|
|
2017
|
|
|
666,875
|
|
|
-
|
|
|
1,184,861
|
|
|
319,214
|
|
|
878,675
|
|
|
35,360
|
|
|
150,550
|
|
|
3,235,535
|
| |||||||||
Operating Segments
|
|
2016
|
|
|
636,538
|
|
|
-
|
|
|
2,895,365
|
|
|
264,335
|
|
|
1,156,589
|
|
|
48,895
|
|
|
57,867
|
|
|
5,059,589
|
| |||||||||
Darren Serrao
|
|
2018
|
|
|
496,797
|
|
|
-
|
|
|
1,186,587
|
|
|
-
|
|
|
581,029
|
|
|
-
|
|
|
84,580
|
|
|
2,348,993
|
| |||||||||
Chief Growth Officer
| ||||||||||||||||||||||||||||||||||||
59 CONAGRA BRANDS |
Name and Principal Position
| Fiscal
| Salary ($)
| Bonus ($)
| Stock ($)1
| Option ($)
| Non-Equity ($)2
| Change in
| All Other ($)4
| Total ($)
| |||||||||||||||||||||||||||
Sean Connolly CEO and President |
|
2019
|
| 1,192,308 | - | 11,173,754 | - | 1,611,404 | - | 415,282 | 14,392,748 | |||||||||||||||||||||||||
|
2018
|
| 1,142,308 | - | 6,676,835 | - | 2,250,000 | - | 404,128 | 10,473,271 | ||||||||||||||||||||||||||
|
2017
|
| 1,100,000 | - | 4,628,385 | 1,246,952 | 2,314,950 | - | 477,990 | 9,768,277 | ||||||||||||||||||||||||||
David Marberger Executive Vice President and Chief Financial Officer |
|
2019
|
| 683,000 | - | 2,201,192 | - | 615,383 | - | 132,486 | 3,632,061 | |||||||||||||||||||||||||
|
2018
|
| 639,231 | - | 1,582,062 | - | 715,107 | - | 91,029 | 3,027,429 | ||||||||||||||||||||||||||
|
2017
|
| 423,846 | 200,000 | 1,631,211 | 299,447 | 471,588 | - | 22,754 | 3,048,846 | ||||||||||||||||||||||||||
Colleen Batcheler Executive Vice President and General Counsel |
|
2019
|
| 540,750 | - | 2,201,192 | - | 487,216 | 28,863 | 107,178 | 3,365,199 | |||||||||||||||||||||||||
|
2018
|
| 540,750 | - | 1,582,062 | - | 672,152 | 10,449 | 109,850 | 2,915,263 | ||||||||||||||||||||||||||
|
2017
|
| 538,630 | - | 1,184,861 | 319,214 | 749,126 | 25,118 | 267,098 | 3,084,047 | ||||||||||||||||||||||||||
Tom McGough Executive Vice President andCo-Chief Operating Officer
|
|
2019
|
| 669,500 | - | 2,201,192 | - | 603,220 | 28,693 | 134,058 | 3,636,663 | |||||||||||||||||||||||||
|
2018
|
| 669,500 | - | 1,582,062 | - | 832,189 | 15,987 | 137,007 | 3,236,745 | ||||||||||||||||||||||||||
|
2017
|
| 666,875 | - | 1,184,861 | 319,214 | 878,675 | 35,360 | 150,550 | 3,235,535 | ||||||||||||||||||||||||||
Darren Serrao Executive Vice President and Co- Chief Operating Officer
|
|
2019
|
| 575,062 | - | 1,805,401 | - | 466,317 | - | 109,880 | 2,956,660 | |||||||||||||||||||||||||
|
2018
|
| 496,797 | - | 1,186,587 | - | 581,029 | - | 84,580 | 2,348,993 | ||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||||||
Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for the stock awards granted during the reported fiscal years. For the performance shares awarded in fiscal |
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 |
For fiscal |
The measurement date for pension value for fiscal |
The components of fiscal |
| Perquisites and Personal Benefits (a) |
Perquisites and Personal Benefitsa
| (Column 3) Defined Contribution Plans
| ||||||||||||
Named Executive Officer | (Column 1) $ | (Column 2) $ | (Column 3) $ (c) |
(Column 1) Personal Use of Aircraft ($)
|
(Column 2) Matching Gifts ($)
| |||||||||
Mr. Connolly | 106,841 | - | 297,287 |
119,136
|
-
|
296,146
| ||||||||
Mr. Marberger | - | (b) | 85,029 |
-
|
-
|
132,486
| ||||||||
Ms. Batcheler | - | (b) | 108,350 |
-
|
-
|
107,178
| ||||||||
Mr. McGough | - | (b) | 135,507 |
-
|
(b)
|
132,558
| ||||||||
Mr. Serrao | - | (b) | 78,080 |
(b)
|
(b)
|
102,270
| ||||||||
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 |
2019 PROXY STATEMENT 60 |
For Columns 1 and 2, inclusive, a (b) notation in lieu of a dollar amount indicates that the named executive officer received the benefit but at an incremental cost to us of less than $25,000. |
Reflects the qualified CRISP contributions by us. In addition, reflects thenon-elective contribution made to each eligible participant’s account in the Voluntary Deferred Comp Plan (as further described below). See the discussion under “Nonqualified Deferred Compensation – Fiscal |
Executive Compensation
Grants of Plan-Based Awards – Fiscal 20182019
The following table presents information about grants of plan-based awards (equity andnon-equity) during fiscal 20182019 to the named executive officers. All equity-based grants were made under the shareholder approved Conagra Brands, Inc. 2014 Stock Plan, which we refer to as the 2014 Stock Plan.
| Name | Grant Date |
Estimated Possible Payouts |
Estimated Future Payouts | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) (3) | |||||||||||||||||
| Committee Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||
Mr. | - | - | 1,713,462 | 3,769,616 | - | - | - | - | - | |||||||||||||
Connolly | 7/20/2017 | 7/19/2017 | - | - | - | - | 151,128 | 302,256 | - | 5,100,570 | ||||||||||||
| 7/20/2017 | 7/19/2017 | - | - | - | - | - | - | 50,376 | 1,576,265 | |||||||||||||
Mr. | - | - | 575,308 | 1,265,678 | - | - | - | - | - | |||||||||||||
Marberger | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | ||||||||||||
| 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | |||||||||||||
Ms. | - | - | 540,750 | 1,189,650 | - | - | - | - | - | |||||||||||||
Batcheler | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | ||||||||||||
| 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | |||||||||||||
Mr. | - | - | 669,500 | 1,472,900 | - | - | - | - | - | |||||||||||||
McGough | 7/19/2017 | 7/19/2017 | - | - | - | - | 35,710 | 71,420 | - | 1,208,784 | ||||||||||||
| 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 11,903 | 373,278 | |||||||||||||
Mr. | - | - | 447,117 | 983,657 | - | - | - | - | - | |||||||||||||
Serrao | 7/19/2017 | 7/19/2017 | - | - | - | - | 26,783 | 53,566 | - | 906,605 | ||||||||||||
| 7/19/2017 | 7/19/2017 | - | - | - | - | - | - | 8,928 | 279,982 | |||||||||||||
Estimated Possible Payouts
| Estimated Future Payouts Under
|
All Other or Units
| Grant Date Awards
| |||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant Date
| Threshold
| Target ($)
| Maximum
| Threshold
| Target
| Maximum
| |||||||||||||||||||||||||||||||||||||||||||||
Mr. Connolly | - | - | 1,788,462 | 3,576,924 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/18/2018 | - | - | - | - | 156,328 | 312,656 | - | 5,579,346 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | 92,343 | 461,715 | - | 3,861,784 | ||||||||||||||||||||||||||||||||||||||||||||
7/18/2018 | - | - | - | - | - | - | 52,109 | 1,732,624 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Marberger | - | - | 683,000 | 1,366,000 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 33,450 | 66,900 | - | 1,207,880 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | 14,775 | 73,875 | - | 617,891 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 11,150 | 375,421 | ||||||||||||||||||||||||||||||||||||||||||||
Ms. Batcheler | - | - | 540,750 | 1,081,500 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 33,450 | 66,900 | - | 1,207,880 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | 14,775 | 73,875 | - | 617,891 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 11,150 | 375,421 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. McGough | - | - | 669,500 | 1,339,000 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 33,450 | 66,900 | - | 1,207,880 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | 14,775 | 73,875 | - | 617,891 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 11,150 | 375,421 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Serrao | - | - | 517,555 | 1,035,110 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 25,088 | 50,176 | - | 905,928 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | 14,775 | 73,875 | - | 617,891 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 8,363 | 281,582 | ||||||||||||||||||||||||||||||||||||||||||||
| 1 | Amounts reflect grants made under the |
| 2 | Amounts with grant dates in July 2018 reflect the performance shares granted to our named executive officers under our long-term incentive program for the fiscal |
| 3 | The grant date fair value of performance shares granted under our long-term incentive program for the fiscal |
61 CONAGRA BRANDS |
Executive Compensation
Outstanding Equity Awards at FiscalYear-End – Fiscal 20182019
The following table lists all stock options, performance shares, RSU and RSUPBRSU awards outstanding as of May 27, 201826, 2019 for the named executive officers.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Stock That Have | Equity Incentive (#) (6) | Equity Incentive Plan or Payout Value of Unearned Shares, Units or ($) (5) | |||||||||||||||||||||||||||||||
Mr. | 4/1/2015 | 806,150 | - | 27.44 | 3/31/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
Connolly | 8/28/2015 | 188,740 | 94,371 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
| 7/11/2016 | 91,103 | 182,206 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||
| 8/28/2015 | - | - | - | - | 47,185 | 1,765,191 | - | - | ||||||||||||||||||||||||||||||||
| 7/11/2016 | - | - | - | - | 45,551 | 1,704,063 | - | - | ||||||||||||||||||||||||||||||||
| 7/20/2017 | - | - | - | - | 50,376 | 1,884,566 | - | - | ||||||||||||||||||||||||||||||||
| 8/19/2016 | - | - | - | - | - | - | 184,669 | 6,908,467 | ||||||||||||||||||||||||||||||||
| 7/20/2017 | - | - | - | - | - | - | 309,517 | 11,579,031 | ||||||||||||||||||||||||||||||||
Mr. | 9/1/2016 | 23,082 | 46,166 | 34.26 | 8/31/2026 | - | - | - | - | |||||||||||||||||||||||||||||||
Marberger | 9/1/2016 | - | - | - | - | 11,541 | 431,749 | - | - | |||||||||||||||||||||||||||||||
| 9/1/2016 | - | - | - | - | 7,144 | (3) | 267,257 | - | - | |||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | ||||||||||||||||||||||||||||||||
| 8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||
Ms. | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | |||||||||||||||||||||||||||||||
Batcheler | 8/28/2015 | 48,320 | 24,160 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
| 7/11/2016 | 23,321 | 46,644 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||
| 7/17/2015 | - | - | - | - | 53,508 | 2,001,734 | - | - | ||||||||||||||||||||||||||||||||
| 8/28/2015 | - | - | - | - | 12,080 | 451,913 | - | - | ||||||||||||||||||||||||||||||||
| 7/11/2016 | - | - | - | - | 11,660 | 436,201 | - | - | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | ||||||||||||||||||||||||||||||||
| 8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||
Mr. | 7/16/2012 | 80,615 | - | 18.42 | 7/15/2022 | - | - | - | - | |||||||||||||||||||||||||||||||
McGough | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | |||||||||||||||||||||||||||||||
| 7/14/2014 | 205,951 | - | 23.00 | 7/13/2024 | - | - | - | - | ||||||||||||||||||||||||||||||||
| 8/28/2015 | 48,320 | 24,160 | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||
| 7/11/2016 | 23,321 | 46,644 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||
| 7/17/2015 | - | - | - | - | 53,508 | 2,001,734 | - | - | ||||||||||||||||||||||||||||||||
| 8/28/2015 | - | - | - | - | 12,080 | 451,913 | - | - | ||||||||||||||||||||||||||||||||
| 7/11/2016 | - | - | - | - | 11,660 | 436,201 | - | - | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | 11,903 | 445,291 | - | - | ||||||||||||||||||||||||||||||||
| 8/19/2016 | - | - | - | - | - | - | 47,275 | 1,768,558 | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | - | - | 73,136 | 2,736,018 | ||||||||||||||||||||||||||||||||
Mr. | 8/28/2015 | 36,238 | 18,120 | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||
Serrao | 7/11/2016 | 17,490 | 34,982 | 35.81 | 7/10/2026 | - | - | - | - | |||||||||||||||||||||||||||||||
| 8/28/2015 | - | - | - | - | 9,059 | 338,897 | - | - | ||||||||||||||||||||||||||||||||
| 9/1/2015 | - | - | - | - | 4,346 | (4) | 162,584 | - | - | |||||||||||||||||||||||||||||||
| 7/11/2016 | - | - | - | - | 8,745 | 327,150 | - | - | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | 8,928 | 333,996 | - | - | ||||||||||||||||||||||||||||||||
| 8/19/2016 | - | - | - | - | - | - | 35,455 | 1,326,372 | ||||||||||||||||||||||||||||||||
| 7/19/2017 | - | - | - | - | - | - | 54,853 | 2,052,051 | ||||||||||||||||||||||||||||||||
Executive Compensation
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant Date
| Number of
| Number of
| Option
| Option
| Number
| Market Value
| Equity Plan Awards: (#)
|
Equity ($)3
| |||||||||||||||||||||||||||||||||||||||||||
Mr. Connolly | 4/1/2015 | 806,150 | - | 27.44 | 3/31/2025 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | 283,111 | - | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | 182,206 | 91,103 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 45,551 | 1,313,235 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/20/2017 | - | - | - | - | 50,376 | 1,452,340 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/18/2018 | - | - | - | - | 52,109 | 1,502,302 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/20/2017 | - | - | - | - | - | - | 316,8544 | 9,134,901 | ||||||||||||||||||||||||||||||||||||||||||||
7/18/2018 | - | - | - | - | - | - | 319,4284 | 9,209,109 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | - | - | 92,3435 | 2,662,249 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Marberger | 9/1/2016 | 46,165 | 23,083 | 34.26 | 8/31/2026 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
9/1/2016 | - | - | - | - | 11,541 | 332,727 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 11,903 | 343,163 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 11,150 | 321,455 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 74,8704 | 2,158,502 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 68,3484 | 1,970,473 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | - | - | 14,7755 | 425,963 | ||||||||||||||||||||||||||||||||||||||||||||
Ms. Batcheler | 7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | 72,480 | - | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | 46,643 | 23,322 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 11,660 | 336,158 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 11,903 | 343,163 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 11,150 | 321,455 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 74,8704 | 2,158,502 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 68,3484 | 1,970,473 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | - | - | 14,7755 | 425,963 | ||||||||||||||||||||||||||||||||||||||||||||
2019 PROXY STATEMENT 62 |
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant Date
| Number of
| Number of
| Option
| Option
| Number
| Market Value
| Equity Plan Awards: (#)
|
Equity ($)3
| |||||||||||||||||||||||||||||||||||||||||||
Mr. McGough | 7/16/2012 | 80,615 | - | 18.42 | 7/15/2022 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/15/2013 | 187,607 | - | 27.46 | 7/14/2023 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/14/2014 | 205,951 | - | 23.00 | 7/13/2024 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
8/28/2015 | 72,480 | - | 31.06 | 8/27/2025 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | 46,643 | 23,322 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 11,660 | 336,158 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 11,903 | 343,163 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 11,150 | 321,455 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 74,8704 | 2,158,502 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 68,3484 | 1,970,473 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | - | - | 14,7755 | 425,963 | ||||||||||||||||||||||||||||||||||||||||||||
Mr. Serrao | 8/28/2015 | 54,358 | - | 31.06 | 8/27/2025 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | 34,981 | 17,491 | 35.81 | 7/10/2026 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/11/2016 | - | - | - | - | 8,745 | 252,118 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | 8,928 | 257,394 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | 8,363 | 241,105 | - | - | ||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | - | - | - | - | - | - | 56,1524 | 1,618,862 | ||||||||||||||||||||||||||||||||||||||||||||
7/17/2018 | - | - | - | - | - | - | 51,2624 | 1,477,883 | ||||||||||||||||||||||||||||||||||||||||||||
4/15/2019 | - | - | - | - | - | - | 14,7755 | 425,963 | ||||||||||||||||||||||||||||||||||||||||||||
| 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 | 94,371 | 94,371 | 8/28/18 | Mr. McGough | 24,160 | 24,160 | 8/28/18 |
| 91,103 |
|
| 91,103 |
| 7/11/19 |
| Mr. McGough |
|
| 23,322 |
|
| 23,322 |
|
| 7/11/19 |
| ||||||||||||||||||||||||
| 182,206 | 91,103 | 7/11/18 | 46,644 | 23,322 | 7/11/18 | |||||||||||||||||||||||||||||||||||||||||||||
| 91,103 | 7/11/19 | 23,322 | 7/11/19 | |||||||||||||||||||||||||||||||||||||||||||||||
Mr. Marberger | 46,166 | 23,083 | 9/1/18 | Mr. Serrao | 18,120 | 18,120 | 8/28/18 |
| 23,083 |
|
| 23,083 |
| 9/1/19 |
| Mr. Serrao |
|
| 17,491 |
|
| 17,491 |
|
| 7/11/19 |
| ||||||||||||||||||||||||
| 23,083 | 9/1/19 | 34,982 | 17,491 | 7/11/18 | ||||||||||||||||||||||||||||||||||||||||||||||
| 17,491 | 7/11/19 | |||||||||||||||||||||||||||||||||||||||||||||||||
Ms. Batcheler | 24,160 | 24,160 | 8/28/18 |
| 23,322 |
|
| 23,322 |
| 7/11/19 | ||||||||||||||||||||||||||||||||||||||||
| 46,644 | 23,322 | 7/11/18 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 23,322 | 7/11/19 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
The market value of unvested or unearned RSUs and unearned shares and PBRSUs is calculated using |
Reflects, on separate lines, as of May |
| 5 | Reflects, as of May 26, 2019, the target number of shares that could be earned under the PBRSUs, plus accrued dividend equivalents. Generally, the PBRSUs are only earned to the extent we achieve the performance targets with respect to such awards. Shares earned under the PBRSU awards, plus dividend equivalents, will be distributed, if earned, following fiscal 2022. |
63 CONAGRA BRANDS |
Option Exercises and Stock Vested – Fiscal 20182019
The following table summarizes the RSUs vested and the option awards exercised during fiscal 20182019 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 20162017 to 20182019 cycle of the PSP.
| 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 ($) | Number of Shares Acquired on Vesting (#)1 | Value Realized on ($) | ||||||||||||||||||||||||||||||||
Mr. Connolly | - | - | 225,939(2) | 8,417,195 | - | - | 148,068 | 4,629,750 | ||||||||||||||||||||||||||||||||
Mr. Marberger | - | - | 7,143(3) | 234,862 | - | - | 32,9702 | 1,008,913 | ||||||||||||||||||||||||||||||||
Ms. Batcheler | 254,320 | 3,477,847 | 40,845 | 1,528,011 | - | - | 91,414 | 3,117,412 | ||||||||||||||||||||||||||||||||
Mr. McGough | - | - | 40,845 | 1,528,011 | - | - | 91,414 | 3,117,412 | ||||||||||||||||||||||||||||||||
Mr. Serrao | - | - | 34,980(4) | 1,288,914 | - | - | 32,7743 | 1,048,593 | ||||||||||||||||||||||||||||||||
| 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 |
|
| 3 | The number of shares noted here includes 4,346 shares underlying RSUs awarded as part of asign-on grant to Mr. Serrao on September 1, |
Pension Benefits – Fiscal 20182019
Conagra Brands has historically maintained anon-contributory defined benefit pension plan for eligible employees, which we refer to as the Qualified Pension. The Qualified Pension was closed to new participants who joined the company on or after August 1, 2013. As a result, Messrs. Connolly, Marberger and Serrao are not eligible to participate. Of the named executive officers, only Ms. Batcheler and Mr. McGough participate.
In the Qualified Pension, the pension benefit formula for the named executive officer participants is determined by adding two components:
A multiple –- 0.9% —– of Average Monthly Earnings (up to the integration level) multiplied by years of credited service (up to 35 years of credited service).
A multiple –- 1.3% —– of Average Monthly Earnings (over the integration level) multiplied by years of credited service (up to 35 years of credited service).
“Average Monthly Earnings” is the monthly average of the executive’s annual compensation from the company, up to the IRS limit, for the highest five consecutive years of the final ten years of his or her service. Only salary and annual incentive payments (reported in the“Non-Equity Incentive Plan Compensation” column of the summary compensation table year to year) are considered for the named executive officers in computing Average Monthly Earnings. The integration level is calculated by the IRS by averaging the last 35 years of Social Security taxable wages, up to and including the year in which the executive’s employment ends.
Participants are vested in the pension benefit once they have five years of vesting service with the company; each of Ms. Batcheler and Mr. McGough are vested. Pension benefits become payable at age 65 for normal retirement, or at age 55 with 10 years of service for early retirement. There is no difference in the benefit formula upon an early retirement, and there is no payment election option that would impact the amount of annual benefits any of the named executive officers would receive. The Qualified Pension was frozen effective December 31, 2017. Credited service and Average Monthly Earnings were frozen as of such date.
| Name | Plan Name (1) | Number of Years Credited Service (#) (2) | Present Value of Accumulated Benefit ($) (3) | |||
Mr. Connolly (4) | Qualified Pension | - | - | |||
Mr. Marberger (4) | Qualified Pension | - | - | |||
Ms. Batcheler | Qualified Pension | 11.5 | 224,762 | |||
Mr. McGough | Qualified Pension | 10.9 | 292,390 | |||
Mr. Serrao (4) | Qualified Pension | - | - |
2019 PROXY STATEMENT 64 |
| Name | Plan Name1 | Number of Years Credited Service (#)2 |
Present Value of | |||||||||||||
Mr. Connolly4 | Qualified Pension | - | - | |||||||||||||
Mr. Marberger4 | Qualified Pension | - | - | |||||||||||||
Ms. Batcheler | Qualified Pension | 12.5 | 253,625 | |||||||||||||
Mr. McGough | Qualified Pension | 11.9 | 321,083 | |||||||||||||
Mr. Serrao4 | Qualified Pension | - | - | |||||||||||||
Qualified Pension refers to the Conagra Brands, Inc. Pension |
The number of years of credited service set forth above is calculated as of May |
The valuation methodology and all material assumptions applied in quantifying the present value of the accumulated benefit are presented in footnote |
Messrs. Connolly, Marberger and Serrao are not eligible to participate in the Qualified Pension. |
Executive Compensation
Nonqualified Deferred Compensation –- Fiscal 20182019
The table following this summary shows the nonqualified deferred compensation activity for each named executive officer during fiscal 2018.2019. The amounts shown include amounts deferred under the Conagra Brands Retirement Income Savings Plan, or Qualified CRISP, which is our qualified 401(k) plan, and the Conagra Brands, Inc. Voluntary Deferred Compensation Plan, as amended and restated, or Voluntary Deferred Comp Plan.
Under our Qualified CRISP, which is a broad-based plan for employees, the company will match 100% of the first 6% of salary and bonus the employee contributes to the plan, and make an additional contribution of 3% of salary and annual incentive. This formula was in effect for all of fiscal 2018 for Mr. Connolly, Mr. Marberger and Mr. Serrao. For Ms. Batcheler and Mr. McGough, who participated in the Qualified Pension during fiscal 2018 until it was frozen on December 31, 2017, this formula went into effect on January 1, 2018. Previously, the company matched only 66 2⁄3% of the first 6% of salary and bonus contributed to the plan. Participants are provided a wide-array of investment alternatives for their account balances.
Our Voluntary Deferred Comp Plan allows certain domestic management-level employees whose salary is $125,000 or more per year to defer receipt of 5% to 50% of their salary, up to 90% of their annual incentive payment, or up to 90% of their salary plus annual incentive payment in excess of $275,000. The investment alternatives for deferred amounts mirror those available under our Qualified CRISP. An election to participate in the plan must be timely filed with the company in accordance with IRS requirements.
Our Voluntary Deferred Comp Plan also provides nonqualified matching contribution benefits. The plan provides for company matching contributions and companynon-elective contributions for eligible participants associated with amounts of eligible compensation above IRS limits. The matching contribution is a dollar for dollar match, limited to 6% of eligible compensation earned by the participant and paid by the company in excess of the IRS limit. Eligible participants are allowed to defer no more than 50% of their base salary and no more than 90% of their annual incentive payment that exceeds the IRS limit. Thenon-elective contribution is equal to 3% of an eligible participant’s eligible compensation in excess of the IRS limit. Matching contributions andnon-elective contributions are credited on or about December 31st of each year if the eligible participant earns in excess of the IRS limit and the participant is actively employed at the end of the calendar year.
The Voluntary Deferred Comp Plan also provides that, unless the company determines otherwise with respect to a participant, the interest of each participant in his or her matching contributions andnon-elective contributions will be 100% vested.
With respect to distributions from the Voluntary Deferred Comp Plan, in general, amounts will be distributed in cash in a lump sum in January following the individual’s separation from service. Participants may also elect to receive their balances at certain other times, including in the January of the calendar year specified by the participant or 18 months following the occurrence of a change of control. Elections regarding the time and form of payment are intended to comply with Section 409A of the Code, and certain payments to executives meeting the definition of a “specified employee” under Section 409A will be delayed for six months after the date of the separation from service. Executives may make hardship withdrawals from the Voluntary Deferred Comp Plan under certain circumstances, but no hardship withdrawals were requested by executives during fiscal 2018.
| Name | Plan (1) | Executive Contributions in Last FY ($)(2) | Registrant Contributions in Last FY ($)(3) | Aggregate ($)(4) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(5) | ||||||||||||||||
Mr. Connolly | Voluntary Def Comp Plan | 187,039 | 278,422 | 67,654 | - | 1,402,740 | ||||||||||||||||
Mr. Marberger | Voluntary Def Comp Plan | 421,477 | 71,529 | 11,307 | - | 762,625 | ||||||||||||||||
Ms. Batcheler | Voluntary Def Comp Plan | 56,574 | 89,632 | 23,886 | (154,292) | 305,206 | ||||||||||||||||
Mr. McGough | Voluntary Def Comp Plan | 148,798 | 112,332 | 98,440 | (11,182) | 1,076,621 | ||||||||||||||||
Mr. Serrao | Voluntary Def Comp Plan | 47,681 | 60,599 | 13,335 | - | 255,109 | ||||||||||||||||
Executive Compensation2019.
65 CONAGRA BRANDS |
| Name | Plan1 | Executive Contributions in Last FY ($)2 | Registrant Contributions in Last FY ($)3 | Aggregate Earnings in Last FY ($)4 | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)5 | ||||||||
Mr. Connolly | Voluntary Def Comp Plan | 151,423 | 276,669 | 41,229 | - | 1,872,061 | ||||||||
Mr. Marberger | Voluntary Def Comp Plan | 78,723 | 97,386 | 26,391 | - | 965,125 | ||||||||
Ms. Batcheler | Voluntary Def Comp Plan | 45,178 | 82,428 | 3,452 | (133,892) | 302,372 | ||||||||
Mr. McGough | Voluntary Def Comp Plan | 149,658 | 107,808 | 9,095 | (10,371) | 1,332,811 | ||||||||
Mr. Serrao | Voluntary Def Comp Plan | 43,560 | 73,885 | 5,907 | - | 378,461 | ||||||||
| 1 | Voluntary Def Comp Plan refers to the Conagra Brands, Inc. |
The amounts reported are included in the “Salary” column of the Summary Compensation Table |
The amounts reported are included in the “All Other Compensation” column of the Summary Compensation Table – Fiscal |
Our Voluntary Def Comp Plan does not offer above market earnings (as defined by SEC rules). As a result, none of these earnings are included in the Summary Compensation Table – Fiscal |
The following amounts from this column were reported in Summary Compensation Tables for prior fiscal years: Mr. Connolly, |
2019 PROXY STATEMENT 66 |
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 the acceleration of certain benefits) upon a change of control. Severance and other benefits that are payable upon a termination of employment or upon a change of control are described below.
The tables following the narrative discussion summarize amounts payable upon termination or a change of control under varying circumstances, assuming that the change of control occurred on, or that the executive’s employment terminated on, May 25, 2018,24, 2019, the last business day of fiscal 2018.2019. Other key assumptions used in compiling the tables are set forth immediately preceding each table. In the event of an actual triggering event under any of the plans, agreements and arrangements discussed in this section, all benefits would be paid to the executive in accordance with, and at times permitted by, Section 409A of the Code.
Severance Pay Plan.We maintain a severance pay plan that provides severance guidelines for all salaried employees. Any benefits payable under the program are at the sole and absolute discretion of Conagra Brands; for any particular employee, we may elect to provide severance as suggested by the plan or to provide benefits equal to, greater than or less than those provided in the guidelines. Ms. Batcheler and Messrs. Marberger, McGough, and Serrao are potentially covered by the plan. UntilAs described further below, Mr. Connolly’s employmentConnolly is party to a letter agreement with us expired on August 1, 2018, Mr. Connolly’s severance benefits were to be paid in accordance with that agreement, as further described below, rather than the severance pay plan. On August 2, 2018, we entered into a new letter agreement with Mr. Connolly that, among other things, addresses his severance benefits from and after August 2, 2018.benefits. For information regarding the new letter agreement with Mr. Connolly, see “Compensation Discussion and Analysis —– Agreements with Named Executive Officers” above.
Under the severance pay plan, the severance guideline for individuals above a certain pay grade, including that of our named executive officers, is 52 weeks of salary continuation, plus one additional week of salary continuation for each year of continuous service prior to separation. The guidelines also provide that upon notice that the former employee has obtained new employment, we will provide him or her with a lump sum payment equal to 50% of the severance pay remaining; the other 50% would be forfeited. In addition, the guidelines provide for the provision during this period of the same type and level of health plan coverage that was in effect immediately prior to the executive officer’s termination of employment, up to a maximum of 18 months.
If a named executive officer is entitled to receive a severance payment under a change of control agreement (described below), we are not required to make payments to him or her under the severance pay plan.
Agreement with Mr. Connolly. As of May 25, 2018, we wereWe are party to an employmenta letter agreement with Mr. Connolly that addressedaddresses 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 letter agreement also addressedaddresses certain of Mr. Connolly’s severance benefits and right to participate in our change of control benefit program.benefits. For information regarding the new letter agreement with Mr. Connolly, see “Compensation Discussion and Analysis —– Agreements with Named Executive Officers” above.
A summary of Mr. Connolly’s severance benefits is provided below. Generally, any payments made under the employmentletter agreement upon disability or as a result of a termination without cause or for good reason (other than certain benefits required by law) would be conditioned on Mr. Connolly first signing a release agreement in a form approved by us.
We have excluded retirement as a hypothetical scenario in the table below because Mr. Connolly would not have been eligible for retirement at any time during fiscal 2018.2019.
67 CONAGRA BRANDS |
Involuntary Termination | Involuntary Termination
| Voluntary Termination without Good Reason | Death or Disability | |||||||||
| Salary |
| • Paid through month of termination, also paid a lump sum equal to 2 times annual salary
|
• Paid through month of termination |
• Paid through month of event | ||||||||
Annual Incentive Plan | • Not eligible for payment | •Paid termination sum equal to 2 times
| • Not eligible for payment | •Paid | ||||||||
Health and Welfare Benefit | •Paid
| • Company will pay monthly COBRA premium for |
| |||||||||
• Paid in accordance with plan provisions | • Paid in accordance with plan provisions | |||||||||||
PSP Awards | • Performance shares are forfeited | • Paid in accordance with plan provisions | • Performance shares are forfeited | • Paid in accordance with plan provisions | ||||||||
Stock Options | •Options terminate
•Unexercised options | •Sign-on options remain exercisable
•Other
|
• Unvested options are forfeited | • Vested options, including vestedsign-on options, remain exercisable for 90 days (or until earlier expiration date) •Unvested options are forfeited | • Death: Options fully vest and remain exercisable for 3 years after event (or until earlier expiration date)
• Disability: Options vest on a prorated basis | |||||||
RSUs |
| • Paid in accordance with plan provisions |
| • Paid in accordance with plan provisions | ||||||||
|
Executive Compensation
In addition, uponUpon any of the hypothetical termination scenarios described above, Mr. Connolly would be paid his balance under our Voluntary Deferred Comp Plan based on his advance elections, and would be eligible for health and welfare benefits in accordance with applicable plan provisions.
Mr. Connolly’s agreement provides that all cash payments are generally payable in a lump sum thesixty-first day following termination of employment, unless otherwise provided in an applicable plan. Payments under the annual incentive plan and thelong-term incentive plan are payable following the end of the fiscal year or other performance period at the same time such payments are made to the other senior executive officers. If Mr. Connolly is a “specified employee” within the meaning of Section 409A of the Code at the time of his separation, certain payments would be delayed for six months after the date of the separation from service.elections.
We currently maintain a separate change of control program, as discussed below. Mr. Connolly’s agreement provides him the right to participateConnolly currently participates in our change of control program as modified from time to time.
Either party to Mr. Connolly’s employment agreement could terminate the agreement at any time. Mr. Connolly has agreed tonon-competition restrictions extending one year after termination and to our standard confidentiality andtwo-yearnon-solicitation agreements.program.
Annual Incentive Plan (the “AIP”). The following terms of the AIP govern the impact of specific separation events not covered by an individual agreement:
|
Involuntary termination due to position elimination: If a participant’s position is involuntarily eliminated such that the employee is eligible for severance, he or she would be eligible for a prorated AIP award based on the number of days the individual was eligible to participate in the plan and actual performance.
|
Termination due to retirement: If a participant retires after reaching age 65, after reaching age 55 with at least 10 years of service, or after reaching age 60 with at least 5 years of service, during the fiscal year, the participant will be eligible for a prorated AIP award based on the number of days the individual was eligible to participate in the plan and actual performance. Pursuant to the terms of his letter agreement, Mr. Connolly would be eligible for this retirement treatment upon reaching age 57.
|
Termination due to death: Any AIP 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, based on actual performance.
Except as might otherwise be required by law, in the absence of one of the foregoing events (or a specific agreement with us), a participant would forfeit his or her AIP award if he or she failed to be an active employee at the end of the fiscal year. Any prorated award is based on actual performance for the fiscal year and is payable after the end of such fiscal year when payments are made to other participants.
The change of control agreements, described below, govern the payment of annual incentive awards in the event of a change of control.
Long-Term Incentive Plan – Performance Shares. The following terms of the PSP would have governedgovern the impact of a May 25, 2018specific separation from us on theevents:
Termination for any reason other than death, disability, retirement or certain involuntary terminations:
The participant forfeits all performance shares granted underthat had not been paid at the fiscal 2016date of termination, whether or not the shares are earned as of such date. The Committee has the discretion to 2018, fiscal 2017 to 2019 and fiscal 2018 to 2020 cyclespay out some or all of the PSP:forfeited performance shares if (i) they would have been earned based on performance and (ii) the Committee deems such a payout appropriate and in our best interests. Such performance shares will be distributed to the participant at the same time they are distributed to other participants who remain employed.
Termination due to disability or retirement:
|
Executive Compensation
|
For performance shares granted prior to July 19, |
For performance shares granted on or after July 19, |
|
Termination due to death:
For performance shares granted prior to July 19, |
69 CONAGRA BRANDS |
| actual performance for the fiscal |
For performance shares granted on or after July 19, |
|
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. For performance shares granted before July 19, 2017, if a participant experiences an involuntary termination, such participant’s awards will be forfeited.
Change of Control:In the event of a change of control (as defined in the PSP), the earned portion of a participant’s award will be determined as of the change of control, using a share valuation methodology further described in the PSP and based on the greater of target performance and actual performance through the end of our fiscal period that ends immediately prior to the change of control (the “Change“PSP Change of Control Value”). If no replacement award meeting the requirements set forth in the PSP is provided following a change of control, a participant will vest in a cash payment equal to the PSP 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 PSP 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:
|
Executive CompensationTermination for any reason other than death, disability, early retirement or retirement: The participant forfeits all options unvested at the date of termination and would have 90 days to exercise vested options. Options granted under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to job elimination, divestiture, or reduction in force occurs 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 theten-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 often-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 theten-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 prior to fiscal 2019 under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to job elimination, divestiture or reduction in force occurs at least one year after the date of grant (or, for RSUs granted in fiscal 2018, at any time prior to vesting). RSUs granted in fiscal 2019 under the 2014 Stock Plan are eligible for pro rata vesting if a termination due to a divestiture or an involuntary termination that results in severance or supplemental unemployment payments from us occurs.
2019 PROXY STATEMENT 70 |
|
|
Termination due to disability or early retirement: RSUs granted under the 2014 Stock Plan are eligible for pro rata vesting (for Mr. Connolly’s awards granted in fiscal 2019 or later, generally on the normal vesting schedule) if the termination occurs at least one year from the date of grant (or, for RSUs granted after fiscal 2017, at any time prior to vesting).
Termination due to death: All unvested RSUs would automatically vest.
Termination due to normal retirement: All unvested RSUs would fully vest (for Mr. Connolly’s awards granted in fiscal 2019 or later, generally on the normal vesting schedule) if the retirement occurs at least one year from the date of grant (or, for RSUs granted after fiscal 2017, at any time prior to vesting).
Each of the agreements evidencing outstanding awards of RSUs provide for double-trigger vesting, requiring both a change of control event and a qualifying termination of employment (or a failure of the surviving company to provide a replacement award) to trigger vesting.
PBRSUs.The treatmentfollowing terms generally govern the impact of Mr. Connolly’s equity awardsa separation from us on outstanding PBRSUs granted in fiscal 2019 (in each case, subject to the maximum payout limit described above):
Termination other than as described below: The participant generally forfeits all PBRSUs granted if the participant terminates employment during the performance period.
Termination due to disability or retirement: On termination due to disability, the participant will receive a pro rata portion of the PBRSUs 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 applicable award agreement), such participant’s PBRSUs 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: The PBRSUs will vest in full at the target level.
Involuntary Termination: If a participant experiences an involuntary termination of employment that results in severance or supplemental unemployment payments from us, such participant’s PBRSUs will vest based on actual performance for the full performance period, prorated based on days of service completed during the performance period.
Change of Control: In the event of a change of control (as defined for purposes of the PBRSUs), the earned portion of a participant’s award will be determined as of the change of control, using a share valuation methodology further described in the applicable award agreement and based on the greater of target performance and actual performance through the date immediately prior to the date of the change of control (the “PBRSU Change of Control Value”). The PBRSU Change of Control Value will generally be paid to the participant if the participant terminates employment on the date of the change of control, continues employment through the end of the performance period, or dies prior to the end of the performance period. The PBRSU Change of Control Value will also be paid to the participant if, within two years after the change of control, the participant experiences a termination of employment without “Cause”cause or for good reason (as each such term is defined in the applicable award agreement), terminates employment due to retirement, or experiences a resignation for “Good Reason” is further governed by his agreementtermination of employment due to disability.
The PBRSU award agreements includenon-competition restrictive covenants that generally apply until the earlier of theone-year anniversary of a participant’s termination of employment with us.us and theone-year anniversary of the vesting date of the PBRSU award.
Retirement Benefits. Each of our Qualified Pension and Voluntary Deferred Comp Plan contains provisions relating to the termination of the participant’s employment. These payments are described more fully in the disclosure provided in connection with the “Pension Benefits – Fiscal 2018”2019” and “Nonqualified Deferred Compensation – Fiscal 2018”2019” sections of this proxy statement.Proxy Statement.
Change of Control Program. The change of control program for senior executives is designed to encourage management to continue performing its responsibilities in the event of a pending or potential change of control. During fiscal 2018,2019, this program covered each of the named executive officers.
71 CONAGRA BRANDS |
Executive Compensation
Generally, a change of control under these agreements occurs if one of the following events occurs:
Individuals who constitute the Board, which, for these purposes, we refer to as the Incumbent Board, cease for any reason to constitute at least a majority of the Board. Anyone who becomes a director and whose election, or nomination for election, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board is considered a member of the Incumbent Board.
Consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were our shareholders immediately prior to the transaction do not, immediately thereafter, own more than fifty percent of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company.
A liquidation or dissolution of Conagra Brands or the sale of all or substantially all of our assets.
The agreements provide that upon a change of control, we may (at the sole and absolute discretion of the Board or Committee) pay each executive all or a prorated portion of the executive’s short and/or long-term incentive for the year in which the change of control occurs. The terms of our stock plan and award agreements govern the treatment of equity awards upon a change of control. With respect to severance, the change of control agreements are double-trigger arrangements, requiring both a change of control event and a qualifying termination of employment to trigger benefits. A qualifying termination event occurs if, within three years after a change of control, (1) the executive’s employment is involuntarily terminated without “cause” or (2) the executive terminates his or her employment for “good reason.”
Executives entitled to severance benefits under a change of control agreement forfeit any severance compensation and benefits under our severance pay plan guidelines and receive the following (subject to execution of a release of claims in favor of us):
a lump sum cash payment equal to a multiple of the executive’s base salary and annual bonus (calculated using the executive’s highest annual bonus for the three fiscal years preceding the change of control or the executive’s target bonus percentage as of the date the change of control agreement is executed, whichever is greater). The multiples range from two toare three (three for Mr. Connolly and Ms. Batcheler and two for Messrs. Marberger, McGough, and Serrao).Serrao.
continuation for three years (for agreements in place prior to July 2011) or two years (for agreements in place after July 2011) of medical, dental, disability, basic and supplemental life insurance to the extent such benefits remain in effect for other executives, with premiums paid by the executive at the rate required of other executive employees (or, for medical and dental benefits, the COBRA rate). Conagra Brands must pay the executive a single lump sum payment equal to an amount to offset taxes (for agreements in place prior to July 2011) plus the executive’s estimated cost to participate in the medical and dental plans.
a supplemental benefit under our Voluntary Deferred Comp Plan equal to three times (for agreements in place prior to July 2011) or one time (for agreements in place after July 2011) the maximum company contribution that the executive could have received under the Qualified CRISP and Voluntary Deferred Comp Plan in the year in which the change of control occurs.
outplacement assistance not exceeding $30,000.
Generally, a termination for “cause” under the agreement requires (as further described in the change of control agreements) (1) the willful and continued failure by the executive to substantially perform his or her duties, (2) the willful engaging by the executive in conduct that is demonstrably and materially injurious to us or (3) the executive’s conviction of a felony or misdemeanor that impairs his or her ability substantially to perform duties for us. A right of the executive to terminate with “good reason” following a change of control is generally triggered by (1) any failure of Conagra Brands to comply with and satisfy the terms of the change of control agreement, (2) a significant involuntary reduction of the authority, duties or responsibilities held by the executive immediately prior to the change of control, (3) any involuntary
Executive Compensation
removal of the executive from an officer position held by the executive immediately prior to the change of control, except in connection with promotions, (4) any involuntary reduction in the aggregate compensation level of the executive, (5) requiring the executive to become based at a new location or (6) requiring the executive to undertake substantially greater amounts of business travel. Certain payments to a “specified employee” within the meaning of Section 409A of the Code will be delayed for six months after the date of the separation from service.
2019 PROXY STATEMENT 72 |
For agreements in place prior to July 2011, the agreements also entitle each executive to an additional payment, if necessary, to make the executive whole as a result of any excise and related taxes imposed by the Code on any change of control benefits received. If the safe harbor amount at which the excise tax is imposed is not exceeded by more than 10%, the benefits will instead be reduced to avoid the excise tax.
Following a review of market practices in July 2011, the HR Committee adopted a policy that any future change of control benefits should be structured without any excise taxgross-up protection. Mr. Connolly’s, Mr. McGough’s, Mr. Marberger’s and Mr. Serrao’s agreements do not contain an excise taxgross-ups.gross-up. Although the Committee continues to believe in the importance of maintaining a change of control program, it believes that offering excise taxgross-upsgross-up in the future is inappropriate relative to best executive pay practices.
Each change of control agreement terminates, in the absence of a change of control, when the executive’s employment as our full-time employee is terminated or the executive enters into a written separation agreement with us. In addition, we may unilaterally terminate each agreement prior to a change of control following six months prior written notice to the executive.
Summary of Possible Benefits.In the disclosure below, the first table summarizes estimated incremental amounts payable upon termination under various hypothetical scenarios. A second table summarizes estimated incremental amounts payable upon a hypothetical change of control and upon termination following a change of control.
We have not included amounts payable regardless of the occurrence of the relevant triggering event. For example, we excluded accumulated balances in retirement plans when a terminating event would do nothing more than create a right to a payment of the balance. We also excluded death benefits where the executive would pay the premium.
The data in the tables assumes the following:
each triggering event occurred on May 25, 201824, 2019 (the last tradingbusiness day of fiscal 2018)2019), and the per share price of our common stock was $37.41$28.83 (the closing price of our stock on the NYSE on May 25, 2018)24, 2019);
with respect to salary continuation, if an executive did not have a right to salary continuation under a stand-alone agreement with us, the severance pay plan guidelines applied;
with respect to the AIP, awards were earned at target levels, and where the HR Committee had discretionary authority to award a payout, except in the cases of involuntary termination with cause and voluntary termination without good reason, it exercised that authority (including in the change of control scenario);
with respect to the AIP and equity awards, in the case of an involuntary termination not for cause without a change of control, the termination was due to a position elimination or another termination event that would have resulted in severance compensation on the last business day of fiscal 2018;2019;
with respect to performance shares and PBRSUs, 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 other than PBRSUs in the change of control scenario, a replacement award was provided;
with respect to performance shares in the change of control scenario, the HR Committee exercised any applicable discretionary authority to award a pro rata payout and did so at target levels; and
in the disability scenarios, the disabling event lasted one year into the future.
Executive Compensation
We have excluded retirement as a hypothetical scenario for the named executive officers in the table below because none of the named executive officers were eligible for either early retirement (age 55 and 10 years of service)service or, for certain of Mr. Connolly’s benefits, age 55) or normal retirement (age 65 or, for RSUs granted inafter fiscal 2018,2017, age 60 with five years of service)service, and for certain of Mr. Connolly’s benefits, age 57) treatment as of May 25, 2018.24, 2019.
Involuntary w/ $
| Involuntary w/o $
| Death $
| Disability $
| |||||||||||||||||
Mr. Connolly
| ||||||||||||||||||||
Lump Sum Severance
|
|
-
|
|
|
5,750,000
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
1,725,000
|
|
|
1,725,000
|
|
|
1,725,000
|
| ||||||||
Performance Shares
|
|
-
|
|
|
2,013,394
|
|
|
11,899,223
|
|
|
8,126,699
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
570,422
|
|
|
890,785
|
|
|
570,422
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
3,206,411
|
|
|
5,353,820
|
|
|
3,206,411
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
14,257
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
650,000
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
13,284,684
|
|
|
20,868,828
|
|
|
14,278,532
|
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Mr. Marberger
| ||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
662,500
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
585,000
|
|
|
585,000
|
|
|
585,000
|
| ||||||||
Performance Shares
|
|
-
|
|
|
475,731
|
|
|
1,969,188
|
|
|
1,077,857
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
52,992
|
|
|
145,423
|
|
|
52,992
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
642,030
|
|
|
1,144,297
|
|
|
569,530
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
13,739
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
400,000
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
2,437,192
|
|
|
4,843,908
|
|
|
2,685,379
|
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
Ms. Batcheler
| ||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
655,139
|
|
|
-
|
|
|
-
|
| ||||||||
Annual Incentive Plan
|
|
-
|
|
|
540,750
|
|
|
540,750
|
|
|
540,750
|
| ||||||||
Performance Shares
|
|
-
|
|
|
475,731
|
|
|
2,932,009
|
|
|
2,040,678
|
| ||||||||
Accelerated Stock Options
|
|
-
|
|
|
146,036
|
|
|
228,046
|
|
|
146,036
|
| ||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
2,812,521
|
|
|
3,335,139
|
|
|
2,715,704
|
| ||||||||
Benefits Continuation
|
|
-
|
|
|
16,331
|
|
|
-
|
|
|
-
|
| ||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| ||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
345,375
|
| ||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| ||||||||
Total
|
|
-
|
|
|
4,651,708
|
|
|
8,035,944
|
|
|
5,788,543
|
| ||||||||
|
|
|
|
|
|
|
| |||||||||||||
73 CONAGRA BRANDS |
Executive Compensation
Involuntary w/ $
| Involuntary w/o $
| Death $
| Disability $
|
Involuntary w/ Cause or
|
Involuntary w/o Cause or
| Death ($)
| Disability ($)
| |||||||||||||||||||||||||||||||
Mr. McGough
| ||||||||||||||||||||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
811,125
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||||||||||
Mr. Connolly | ||||||||||||||||||||||||||||||||||||||
Lump Sum Salary | - |
| 6,000,000 |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||
Annual Incentive Plan
|
|
-
|
|
|
669,500
|
|
|
669,500
|
|
|
669,500
|
| - |
| 1,800,000 |
|
| 1,800,000 |
|
| 1,800,000 |
| ||||||||||||||||
Performance Shares
|
|
-
|
|
|
475,731
|
|
|
2,932,009
|
|
|
2,040,678
|
| - |
| 4,776,324 |
|
| 11,976,846 |
|
| 7,517,564 |
| ||||||||||||||||
PBRSUs | - |
| 105,518 |
|
| 2,683,381 |
|
| 105,518 |
| ||||||||||||||||||||||||||||
Accelerated Stock Options
|
|
-
|
|
|
146,036
|
|
|
228,046
|
|
|
146,036
|
| - |
| - |
|
| - |
|
| - |
| ||||||||||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
2,812,521
|
|
|
3,335,139
|
|
|
2,715,704
|
| - |
| 2,580,170 |
|
| 4,267,878 |
|
| 2,580,170 |
| ||||||||||||||||
Benefits Continuation
|
|
-
|
|
|
16,331
|
|
|
-
|
|
|
-
|
| - |
| 40,956 |
|
| - |
|
| - |
| ||||||||||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| - |
| - |
|
| 1,000,000 |
|
| - |
| ||||||||||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
409,750
|
|
| - |
|
| - |
|
| 675,000 |
| |||||||||||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| - |
| 5,200 |
|
| - |
|
| - |
| ||||||||||||||||
Total
|
|
-
|
|
|
4,936,444
|
|
|
8,164,694
|
|
|
5,981,668
|
| - |
| 15,308,168 |
|
| 21,728,105 |
|
| 12,678,252 |
| ||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||
Mr. Serrao
| ||||||||||||||||||||||||||||||||||||||
Mr. Marberger | ||||||||||||||||||||||||||||||||||||||
Salary Continuation
|
|
-
|
|
|
524,423
|
|
|
-
|
|
|
-
|
| - |
| 715,500 |
|
| - |
|
| - |
| ||||||||||||||||
Annual Incentive Plan
|
|
-
|
|
|
454,500
|
|
|
454,500
|
|
|
454,500
|
| - |
| 689,000 |
|
| 689,000 |
|
| 689,000 |
| ||||||||||||||||
Performance Shares
|
|
-
|
|
|
356,817
|
|
|
2,199,035
|
|
|
1,530,543
|
| - |
| 1,092,196 |
|
| 2,780,456 |
|
| 1,793,946 |
| ||||||||||||||||
PBRSUs | - |
| 16,866 |
|
| 429,336 |
|
| 16,866 |
| ||||||||||||||||||||||||||||
Accelerated Stock Options
|
|
-
|
|
|
109,523
|
|
|
171,033
|
|
|
109,523
|
| - |
| - |
|
| - |
|
| - |
| ||||||||||||||||
Accelerated Restricted Stock Units
|
|
-
|
|
|
726,540
|
|
|
1,162,628
|
|
|
726,540
|
| - |
| 606,410 |
|
| 997,345 |
|
| 606,410 |
| ||||||||||||||||
Benefits Continuation
|
|
-
|
|
|
13,998
|
|
|
-
|
|
|
-
|
| - |
| 16,703 |
|
| - |
|
| - |
| ||||||||||||||||
Death Benefits
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
-
|
| - |
| - |
|
| 1,000,000 |
|
| - |
| ||||||||||||||||
Disability Benefits
|
|
-
|
|
|
-
|
|
|
-
|
|
|
327,500
|
|
| - |
|
| - |
|
| 419,500 |
| |||||||||||||||||
Outplacement
|
|
-
|
|
|
5,200
|
|
|
-
|
|
|
-
|
| - |
| 5,200 |
|
| - |
|
| - |
| ||||||||||||||||
Total | - | 2,191,001 | 4,987,196 | 3,148,606 | - |
| 3,141,875 |
|
| 5,896,137 |
|
| 3,525,722 |
| ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||||||||
Ms. Batcheler | ||||||||||||||||||||||||||||||||||||||
Salary Continuation | - |
| 665,538 |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||
Annual Incentive Plan | - |
| 540,750 |
|
| 540,750 |
|
| 540,750 |
| ||||||||||||||||||||||||||||
Performance Shares | - |
| 1,092,196 |
|
| 2,780,456 |
|
| 1,793,946 |
| ||||||||||||||||||||||||||||
PBRSUs | - |
| 16,866 |
|
| 429,336 |
|
| 16,866 |
| ||||||||||||||||||||||||||||
Accelerated Stock Options | - |
| - |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||
Accelerated Restricted Stock Units | - |
| 625,496 |
|
| 1,000,776 |
|
| 625,496 |
| ||||||||||||||||||||||||||||
Benefits Continuation | - |
| 19,796 |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||
Death Benefits | - |
| - |
|
| 1,000,000 |
|
| - |
| ||||||||||||||||||||||||||||
Disability Benefits |
| - |
|
| - |
|
| 345,375 |
| |||||||||||||||||||||||||||||
Outplacement | - |
| 5,200 |
|
| - |
|
| - |
| ||||||||||||||||||||||||||||
Total | - |
| 2,965,842 |
|
| 5,751,318 |
|
| 3,322,433 |
| ||||||||||||||||||||||||||||
2019 PROXY STATEMENT 74 |
Executive Compensation
| Change of Control and: | Involuntary w/ Cause or Voluntary w/o Good Reason |
Involuntary w/o Cause or ($) | Death ($) | Disability ($) | ||||||
Mr. McGough | ||||||||||
Salary Continuation | - | 824,000 | - | - | ||||||
Annual Incentive Plan | - | 669,500 | 669,500 | 669,500 | ||||||
Performance Shares | - | 1,092,196 | 2,780,456 | 1,793,946 | ||||||
PBRSUs | - | 16,866 | 429,336 | 16,866 | ||||||
Accelerated Stock Options | - | - | - | - | ||||||
Accelerated Restricted Stock Units | - | 625,496 | 1,000,776 | 625,496 | ||||||
Benefits Continuation | - | 19,796 | - | - | ||||||
Death Benefits | - | - | 1,000,000 | - | ||||||
Disability Benefits | - | - | - | 409,750 | ||||||
Outplacement | - | 5,200 | - | - | ||||||
Total | - | 3,253,054 | 5,880,068 | 3,515,558 | ||||||
Mr. Serrao | ||||||||||
Salary Continuation | - | 645,192 | - | - | ||||||
Annual Incentive Plan | - | 549,000 | 549,000 | 549,000 | ||||||
Performance Shares | - | 819,176 | 2,085,356 | 1,345,473 | ||||||
PBRSUs | - | 16,866 | 429,336 | 16,866 | ||||||
Accelerated Stock Options | - | - | - | - | ||||||
Accelerated Restricted Stock Units | - | 469,151 | 750,618 | 469,151 | ||||||
Benefits Continuation | - | 17,012 | - | - | ||||||
Death Benefits | - | - | 1,000,000 | - | ||||||
Disability Benefits | - | - | - | 380,000 | ||||||
Outplacement | - | 5,200 | - | - | ||||||
Total | - | 2,521,597 | 4,814,310 | 2,760,490 | ||||||
In the table that follows, if, following a change of control, any of Ms. Batcheler or Messrs. Marberger, McGough or Serrao was terminated for “Cause” or voluntarily terminated employment without “Good Reason,” the individual would not receive any benefits incremental to those shown in the “No Termination” column. Mr. Connolly would be entitled to salary continuation through the end of the month of the event.
| Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||||||||||
Mr. Connolly | ||||||||||||||
Lump Sum Salary | - | 3,450,000 | ||||||||||||
Annual Incentive Plan | 1,725,000 | 9,776,250 | ||||||||||||
Performance Shares | - | 13,329,557 | ||||||||||||
Accelerated Stock Options | - | 890,785 | ||||||||||||
Accelerated Restricted Stock Units | - | 5,353,820 | ||||||||||||
Voluntary Deferred Compensation Plan | - | 305,308 | ||||||||||||
Benefits Continuation | - | 35,150 | ||||||||||||
Death/Disability Benefit | - | 6,084 | ||||||||||||
Outplacement | - | 30,000 | ||||||||||||
Total | 1,725,000 | 33,176,954 | ||||||||||||
|
| |||||||||||||
Mr. Marberger | ||||||||||||||
Lump Sum Salary | - | 1,300,000 | ||||||||||||
Annual Incentive Plan | 585,000 | 1,170,000 | ||||||||||||
Performance Shares | - | 2,330,419 | ||||||||||||
Accelerated Stock Options | - | 145,423 | ||||||||||||
Accelerated Restricted Stock Units | - | 1,144,297 | ||||||||||||
Voluntary Deferred Compensation Plan | - | 121,890 | ||||||||||||
Benefits Continuation | - | 35,150 | ||||||||||||
Death/Disability Benefit | - | 6,084 | ||||||||||||
Outplacement | - | 30,000 | ||||||||||||
Total | 585,000 | 6,283,263 | ||||||||||||
|
| |||||||||||||
Ms. Batcheler | ||||||||||||||
No Termination ($) | Change of Control and Involuntary w/o Cause or Voluntary w/ Good Reason ($) | |||||||||||||
Mr. Connolly | ||||||||||||||
Lump Sum Salary | - | 1,622,250 | - | 3,600,000 | ||||||||||
Annual Incentive Plan | 540,750 | 2,967,057 | 1,800,000 | 9,776,250 | ||||||||||
Performance Shares | - | 3,293,240 | - | 12,392,146 | ||||||||||
PBRSUs | - | 2,683,382 | ||||||||||||
Accelerated Stock Options | - | 228,046 | - | - | ||||||||||
Accelerated Restricted Stock Units | - | 3,335,139 | - | 4,267,878 | ||||||||||
Voluntary Deferred Compensation Plan | - | 327,484 | - | 252,334 | ||||||||||
Benefits Continuation | - | 51,996 | - | 40,956 | ||||||||||
Death/Disability Benefit | - | 9,126 | ||||||||||||
Death/Disability Benefits | - | 6,167 | ||||||||||||
Outplacement | - | 30,000 | - | 30,000 | ||||||||||
Total | 540,750 | 11,864,338 | 1,800,000 | 33,049,113 | ||||||||||
|
| |||||||||||||
75 CONAGRA BRANDS |
Executive Compensation
| Change of Control and: | No Termination ($) | Involuntary w/o Cause or Voluntary w/Good Reason ($) | ||||||||
No Termination ($) | Change of Control and Involuntary w/o Cause or Voluntary w/ Good Reason ($) | |||||||||
Mr. Marberger | ||||||||||
Lump Sum Salary | - | 1,378,000 | ||||||||
Annual Incentive Plan | 689,000 | 1,430,215 | ||||||||
Performance Shares | - | 2,872,371 | ||||||||
PBRSUs | - | 429,345 | ||||||||
Accelerated Stock Options | - | - | ||||||||
Accelerated Restricted Stock Units | - | 997,345 | ||||||||
Voluntary Deferred Compensation Plan | - | 116,854 | ||||||||
Benefits Continuation | - | 40,956 | ||||||||
Death/Disability Benefits | - | 6,167 | ||||||||
Outplacement | - | 30,000 | ||||||||
Total | 689,000 | 7,301,253 | ||||||||
Ms. Batcheler | ||||||||||
Lump Sum Salary | - | 1,622,250 | ||||||||
Annual Incentive Plan | 540,750 | 2,967,057 | ||||||||
Performance Shares | - | 2,872,371 | ||||||||
PBRSUs | - | 429,345 | ||||||||
Accelerated Stock Options | - | - | ||||||||
Accelerated Restricted Stock Units | - | 1,000,776 | ||||||||
Voluntary Deferred Compensation Plan | - | 277,551 | ||||||||
Benefits Continuation | - | 60,630 | ||||||||
Death/Disability Benefits | - | 9,250 | ||||||||
Outplacement | - | 30,000 | ||||||||
Total | 540,750 | 9,269,230 | ||||||||
Mr. McGough | ||||||||||
Lump Sum Salary | - | 1,339,000 | - | 1,339,000 | ||||||
Annual Incentive Plan | 669,500 | 2,313,178 | 669,500 | 2,313,178 | ||||||
Performance Shares | - | 3,293,240 | - | 2,872,371 | ||||||
PBRSUs | - | 429,345 | ||||||||
Accelerated Stock Options | - | 228,046 | - | - | ||||||
Accelerated Restricted Stock Units | - | 3,335,139 | - | 1,000,776 | ||||||
Voluntary Deferred Compensation Plan | - | 135,152 | - | 114,545 | ||||||
Benefits Continuation | - | 35,150 | - | 40,956 | ||||||
Death/Disability Benefit | - | 6,084 | ||||||||
Death/Disability Benefits | - | 6,167 | ||||||||
Outplacement | - | 30,000 | - | 30,000 | ||||||
Total | 669,500 | 10,714,989 | 669,500 | 8,146,338 | ||||||
|
| |||||||||
Mr. Serrao | ||||||||||
Lump Sum Salary | - | 1,010,000 | - | 1,220,000 | ||||||
Annual Incentive Plan | 454,500 | 966,473 | 549,000 | 1,162,058 | ||||||
Performance Shares | - | 2,469,920 | - | 2,154,293 | ||||||
PBRSUs | - | 429,345 | ||||||||
Accelerated Stock Options | - | 171,033 | - | - | ||||||
Accelerated Restricted Stock Units | - | 1,162,628 | - | 750,618 | ||||||
Voluntary Deferred Compensation Plan | - | 97,004 | - | 93,724 | ||||||
Benefits Continuation | - | 35,150 | - | 40,956 | ||||||
Death/Disability Benefit | - | 6,084 | ||||||||
Death/Disability Benefits | - | 6,167 | ||||||||
Outplacement | - | 30,000 | - | 30,000 | ||||||
Total | 454,500 | 5,948,292 | 549,000 | 5,887,161 | ||||||
|
| |||||||||
2019 PROXY STATEMENT 76 |
CEO Pay Ratio
For fiscal 2018,2019, the ratio of the annual total compensation of Mr. Connolly, our CEO (referred to as CEO Compensation), to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries other than Mr. Connolly (referred to as Median Annual Compensation), was 290316 to 1. For purposes of this pay ratio disclosure, CEO Compensation was determined to be $10,473,271,$14,392,748, which represents the total compensation reported for Mr. Connolly under the “Summary Compensation Table – Fiscal 2018.2019.” Median Annual Compensation for the identified median employee was determined to be $36,143.$45,590.
Basis of AnalysisMedian Employee Methodology
To identifyFor the disclosure in our 2018 proxy statement, we identified the median employee we examinedby examining 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.
The median employee used for purposes of disclosing our fiscal 2018 pay ratio left Conagra during fiscal 2019. As permitted under SEC rules and regulations, we are electing to use an alternative employee whose fiscal 2018 compensation was substantially similar to the original median employee’s fiscal 2018 compensation based on the same compensation measures used to select the original median employee.
Approximately 5,400 employees of Pinnacle Foods, which we acquired in fiscal 2019, were not included in this determination or our employee population.
Other than as set forth above, we believe that there has been no change in our employee population or employee compensation arrangements during the 2019 fiscal year that would result in a significant change to our 2019 CEO Pay Ratio.
Median Annual Compensation Methodology
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,SEC rules, 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.
77 CONAGRA BRANDS |
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, 201830, 2019 by (1) beneficial owners of more than 5% of our outstanding common stock, (2) our current directors, (3) our named executive officers, and (4) all current directors and executive officers as a group.
As discussed elsewhere in this Proxy Statement, our directors and executive officers are committed to owning stock in Conagra Brands. Both groups have stock ownership requirements that preclude them from selling any Conagra Brands common stock in the market (other than to cover the cost of the exercise price and, in the case of executive officers, minimum statutory tax withholding) until they have enough shares to meet and maintain their stock ownership guidelinespre- and post-sale.
To better show the financial stake of our directors in the company, we have included a “Share Units” column in the table. The column, which is not required under SEC rules, shows share units earned by thenon-employee directors and deferred through the Conagra Brands, Inc. Directors’ Deferred Compensation Plan. Although these share units will ultimately be settled in shares of common stock, they currently have no voting rights and will not be settled within 60 days of July 31, 2018.30, 2019. None of our executive officers has any deferred share units deferred.units.
| Name | Number of Shares Owned (1) | Right to Acquire (2) | Percent of Class (3) | Share Units | ||||
The Vanguard Group (4)
|
46,272,871
|
-
|
11.81%
|
N/A
| ||||
BlackRock, Inc. (5)
|
27,823,099
|
-
|
7.10%
|
N/A
| ||||
Bradley A. Alford
|
26,500
|
2,020
|
*
|
21,012
| ||||
Anil Arora
|
-
|
-
|
*
|
-
| ||||
Thomas K. Brown
|
19,385
|
2,020
|
*
|
-
| ||||
Stephen G. Butler
|
75,695(6)
|
2,020
|
*
|
65,263
| ||||
Sean Connolly
|
1,354,237
|
141,556
|
*
|
N/A
| ||||
Thomas W. Dickson
|
-
|
2,020
|
*
|
9,975
| ||||
Steven F. Goldstone
|
448,998
|
2,020
|
*
|
146,133
| ||||
Joie A. Gregor
|
37,775
|
2,020
|
*
|
16,569
| ||||
Rajive Johri
|
4,270
|
2,020
|
*
|
54,891
| ||||
Richard H. Lenny
|
53,826
|
5,722
|
*
|
21,864
| ||||
Ruth Ann Marshall
|
23,288
|
2,020
|
*
|
87,382
| ||||
Craig P. Omtvedt
|
5,868
|
2,020
|
*
|
-
| ||||
David S. Marberger
|
27,917
|
30,227
|
*
|
N/A
| ||||
Colleen Batcheler
|
445,715
|
36,240
|
*
|
N/A
| ||||
Thomas M. McGough
|
708,677(6)
|
36,240
|
*
|
N/A
|
2019 PROXY STATEMENT 78 |
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
|
Name | Number of Stock Owned1 | Right to Acquire Shares of Common Stock2 | Percent of Class3 | Share Units | ||||
The Vanguard Group4 | 55,721,256 | - | 11.5% | N/A | ||||
T. Rowe Price Associates, Inc.5 | 55,042,589 | - | 11.3% | N/A | ||||
BlackRock, Inc.6 | 35,695,910 | - | 7.3% | N/A | ||||
Anil Arora | 1,600 | 6,030 | * | 1,742 | ||||
Thomas K. Brown | 30,636 | 2,527 | * | - | ||||
Stephen G. Butler | 55,5427 | 2,527 | * | 75,712 | ||||
Sean M. Connolly | 306,332 | 1,424,601 | * | N/A | ||||
Joie A. Gregor | 53,567 | 2,527 | * | 15,330 | ||||
Rajive Johri | 4,270 | 2,527 | * | 60,685 | ||||
Richard H. Lenny | 45,457 | 27,312 | * | 22,515 | ||||
Melissa Lora | - | 5,390 | * | - | ||||
Ruth Ann Marshall | 3,206 | 2,527 | * | 96,931 | ||||
Craig P. Omtvedt | 35,027 | 2,527 | * | - | ||||
Scott Ostfeld8 | - | 4,211 | * | - | ||||
David S. Marberger | 30,979 | 94,918 | * | N/A | ||||
Colleen Batcheler | 195,331 | 344,181 | * | N/A | ||||
Thomas M. McGough | 172,3687 | 630,747 | * | N/A | ||||
Darren C. Serrao | 53,722 | 117,671 | * | N/A | ||||
All Directors and Current Executive |
1,139,886 |
2,950,540 |
* |
272,915 | ||||
| * | Represents less than 1% of common stock |
| 1 | For executive officers and directors, reflects shares that have been acquired through one or more of the following: (a) open market purchases and (b) vesting or exercise of share-based |
| 2 | Reflects shares that the individual has the right to acquire within 60 days of July |
3 Based on 486,602,715 shares of common stock of Conagra Brands issued and outstanding as of July 30, 2019.
|
| 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 T. Rowe Price Associates, Inc., or T. Rowe Price, with the SEC on March 11, 2019, which Schedule 13G/A specifies that T. Rowe Price has sole voting power with respect to 21,836,804 shares and sole dispositive power with respect to 55,033,339 shares. T. Rowe Price’s address is listed on the Schedule 13G/A as: 100 E. Pratt Street, Baltimore, MD 21202. |
| 6 | Based on a Schedule 13G/A filed by BlackRock, Inc., or BlackRock, with the SEC on |
| 7 | 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
| 8 | Scott Ostfeld’s stock ownership also reflects shares of Conagra Brands common stock owned by JANA Partners LLC, or JANA, as a result of Mr. Ostfeld assigning all of his restricted stock units that he receives as a director to JANA. JANA may be deemed to be a director by deputization by virtue of the fact that Mr. Ostfeld currently serves on Conagra’s board of directors. |
Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers, and persons who own more than 10% of a registered class of our equity securities file with the SEC reports of ownership and changes in beneficial ownership of our common stock. Directors, executive officers, and greater than 10% owners are required to furnish us with copies of all reports they file on Section 16(a) forms. Based solely on a review of copies of these reports furnished to us or written representations that no other reports were required, we believe that during fiscal 2018 all required reports were filed on a timely basis.
79 CONAGRA BRANDS |
Additional Information
Additional InformationOur Annual Meeting of Shareholders
Information aboutWe are furnishing this Proxy Statement to our shareholders in connection with the 2018solicitation by the Board of Directors of proxies to be voted at the Conagra Brands, Inc. 2019 Annual Meeting of Shareholders.
Your vote is very important. The Board of Directors recommends that you submit a proxy card in advance of the 2019 Annual Meeting to ensure that your shares are voted as you direct, even if you are unable to attend the 2019 Annual Meeting.
Voting at the 2019 Annual Meeting
Shareholders of record as of the close of business on July 30, 2019 are entitled to attend and to vote at the 2019 Annual Meeting and at any postponements or adjournments of the 2019 Annual Meeting. On July 30, 2019, there were 486,602,715 voting shares of common stock, par value $5.00 per share, of 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.
Registered Shareholders (Shareholders “of Record”)
If you hold shares of common stock of Conagra Brands in your own name (known as ownership “of record”) on the books of our transfer agent, you are a registered shareholder. Registered shareholders (other than those who hold shares in the Conagra Brands Employee Stock Purchase Plan) may attend the meeting and vote their shares in person or may vote their 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 at www.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 Wednesday, September 18, 2019 for these shares.
Conagra Brands Employee Stock Purchase Plan
If you hold shares in the Conagra Brands Employee Stock Purchase Plan, your voting instruction card covers the shares credited to your plan account. The trustee for the Conagra Brands Employee Stock Purchase Plan must receive your voting instructions by 11:59 p.m. Eastern Time on Monday, September 16, 2019. If the 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 in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received.
Internet and telephone voting is available through 11:59 p.m. Eastern Time on Monday, September 16, 2019 for shares held in the Conagra Brands Employee Stock Purchase Plan.
Beneficial Owners (“Street Name”)
If a broker, bank or other nominee holds your shares (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.
2019 PROXY STATEMENT 80 |
Revoking a Proxy
You can revoke your proxy at any time before your shares are voted if you (1) are the record owner “of record” of your shares and submit a written revocation to our Corporate Secretary at or before the 20182019 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 20182019 Annual Meeting and vote in person, subject to the legal proxy requirement noted on page 1above for street name“street name” owners.
Conagra Brands Employee Stock Purchase Plan and TreeHouse Private Brands Retirement Income Savings PlanVote Requirements
If you hold shares in
Quorum: Shares Necessary to Conduct 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 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 majorityBusiness of the shares for which instructions are received.Meeting
Proxy Solicitation
We have engaged Innisfree M&A Incorporated as our proxy solicitor forTo conduct the 2018business of the 2019 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
Aa majority of the shares of common stock outstanding and entitled to vote on the record date must be present in person or by proxy at the meeting to constitute a quorum. meeting.
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 ofRequired to Approve Voting ProxiesItems
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”“How We Govern” 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 ofto ratify the appointment of theour independent auditor for fiscal 2019.2020.The appointment of theour independent auditor for fiscal 20192020 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 |
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” the election of alleach of the director nominees for director named in this Proxy Statement; “FOR” the ratification of the appointment of our independent auditor for fiscal 2019;2020; and “FOR” the resolution to approve our named executive officer compensation. If any matter not described above is properly presented at the meeting, the proxy gives authority to the persons named on the proxy card to vote as recommended by the Board on such other matters.
81 CONAGRA BRANDS |
Proxy Solicitation
We have engaged Innisfree M&A Incorporated as our proxy solicitor for the 2019 Annual Meeting at an estimated cost of approximately $12,000 plus 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.
Multiple Shareholders Sharing an Address
Pursuant to SEC rules, only one copy of the Notice of Internet Availability of Proxy Materials, Annual Report and Proxy Statement is being delivered to shareholders residing at the same address, unless the shareholders have notified us of their desire to receive multiple copies. We are allowedbelieve these rules benefit everyone by eliminating duplicate mailings that shareholders living at the same address receive, and by reducing our printing and mailing costs. Shareholders living at the same address will continue to receive individual proxy cards for each registered account. We will promptly deliver, upon oral or written request, a singleseparate copy of the Notice of Internet Availability of Proxy Materials, Annual Report and Proxy Statement to a householdany shareholder residing at an address to 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.only one copy was mailed. 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.
Our 2020 Annual Meeting of Shareholders
Shareholder Proposals to be Included in our 20192020 Proxy Statement
To be considered for inclusion in next year’s Proxy Statement, shareholder proposals submitted in accordance with SEC Rule14a-8 must be received at our principal executive offices no later than the close of business on April 12, 2019.Address11, 2020. 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 20192020 Annual Meeting
Ourby-laws provide that any shareholder proposal, including the nomination of directors, that is sought to be presented directly at the 20192020 Annual Meeting but not submitted for inclusion in the Proxy Statement for the 20192020 Annual Meeting must be received in writing at our principal executive office not lessoffices no earlier than 90May 22, 2020, nor morelater than 120 days prior to the first anniversary of the 2018 Annual Meeting.June 21, 2020. If the date of the 20192020 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the 2019 Annual Meeting, then the notice must be received not earlier than the 120th day prior to the meeting date and not later than the close of business on the 90th day prior to the meeting day or the tenth day following the first public announcement of the meeting date. Ourby-laws also specify the information that must accompany the notice.
The proxy card for the 2019 Annual Meeting will give discretionary authority with respect to all shareholder proposals properly brought before the 2019 Annual Meeting that are not included in the Proxy Statement for the 2019 Annual Meeting. Address proposals to the Corporate Secretary, Conagra Brands, Inc., 222 Merchandise Mart Plaza, Suite 1300, Chicago, Illinois 60654.
The proxy card for the 2020 Annual Meeting will give us discretionary authority with respect to all shareholder proposals properly brought before the 2020 Annual Meeting that are not included in the Proxy Statement for the 2020 Annual Meeting.
��
2019 PROXY STATEMENT 82 |
Appendix A
Reconciliation of GAAP andNon-GAAP Information
This Proxy Statement contains certainnon-GAAP financial measures, including organic net sales, adjusted diluted earnings per share from continuing operations and adjusted operating margin. Management considers GAAP financial measures as well asnon-GAAP financial measures in its evaluation of the company’s financial statements and believes thesenon-GAAP measures provide useful supplemental information to assess the company’s operating performance and financial position. These measures should be viewed in addition to, and not in lieu of, the company’s diluted earnings per share, operating performance, and financial measures as calculated in accordance with GAAP. Please see our Annual Report on FormForm 10-K for the fiscal year ended May 27, 201826, 2019 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
| FY18 | Operating profit | Diluted EPS from continuing operations | ||||||
Reported
|
$
|
1,033.5
|
|
$
|
1.95
|
| ||
% of Net Sales
|
|
13.0%
|
| |||||
Restructuring plans
|
|
38.0
|
|
|
0.07
|
| ||
Acquisitions and divestitures
|
|
15.7
|
|
|
0.03
|
| ||
Corporate hedging losses (gains)
|
|
(6.2)
|
|
|
(0.01)
|
| ||
Pension settlement and valuation adjustment
|
|
5.4
|
|
|
0.01
|
| ||
Intangible impairment charges
|
|
4.8
|
|
|
0.01
|
| ||
Early exit of an unfavorable lease contract by purchasing the building
|
|
34.9
|
|
|
0.06
|
| ||
Gain on substantial liquidation of an international joint venture
|
|
—
|
|
|
(0.01)
|
| ||
Legal matters
|
|
151.0
|
|
|
0.28
|
| ||
Wesson valuation allowance adjustment
|
|
—
|
|
|
0.19
|
| ||
Tax reform adjustments
|
|
—
|
|
|
(0.57)
|
| ||
Unusual tax items
|
|
—
|
|
|
0.10
|
| ||
Adjusted
|
$
|
1,277.1
|
|
$
|
2.11
|
| ||
% of Net Sales (Margin)
|
|
16.1%
|
| |||||
Year-over-year change – reported
|
|
56.0%
|
| |||||
Year-over-year change – adjusted
|
|
21.3%
|
| |||||
FY17
| ||||||||
Reported
|
$
|
925.0
|
|
$
|
1.25
|
| ||
% of Net Sales
|
|
11.8%
|
| |||||
Gain on sale of Spicetec and J.M. Swank businesses
|
|
(197.4)
|
|
|
(0.16)
|
| ||
Restructuring plans
|
|
63.6
|
|
|
0.09
|
| ||
Acquisitions and divestitures
|
|
31.4
|
|
|
0.05
|
| ||
Corporate hedging losses (gains)
|
|
5.1
|
|
|
0.01
|
| ||
Goodwill and intangible impairment charges
|
|
304.2
|
|
|
0.59
|
| ||
Early extinguishment of debt
|
|
93.3
|
|
|
0.14
|
| ||
Salaried pension plan lump sum settlement
|
|
13.8
|
|
|
0.02
|
| ||
Legal matters
|
|
(5.7)
|
|
|
(0.01)
|
| ||
Tax adjustment of valuation allowance
|
|
—
|
|
|
(0.21)
|
| ||
Unusual tax items
|
|
—
|
|
|
(0.03)
|
| ||
Income from discontinued operations, net of noncontrolling interests
|
|
—
|
|
|
—
|
| ||
Adjusted
|
$
|
1,233.3
|
|
$
|
1.74
|
| ||
% of Net Sales (Margin) | 15.8% | |||||||
 FY19 | Operating profit1 | |
Reported | $1,179.6 | |
% of Net Sales (Operating margin) | 12.4% | |
Restructuring plans | 181.4 | |
Acquisitions and divestitures | 106.2 | |
Integration costs | 8.9 | |
Corporate hedging derivative losses (gains) | 1.8 | |
Legal matters | (39.1) | |
Inventory fair valuemark-up rollout | 53.0 | |
Novation of a legacy guarantee | (27.3) | |
Fair value adjustment of cash settleable equity awards issued in connection with Pinnacle acquisition | (15.1) | |
Gain on divestiture of businesses | (69.4) | |
Intangible impairment charges | 89.6 | |
Adjusted operating profit | $1,469.6 | |
% of Net Sales (Adjusted operating margin) | 15.4% | |
| 1 | Operating profit is derived by taking Income from continuing operations before income taxes and equity method investment earnings, adding back Interest expense, net and removing Pension and postretirementnon-service income. |
83 CONAGRA BRANDS |
OUR BRANDS | Hunt’s® | |
ACT II® | Husman’s® | |
Alexia® | Jiffy Pop® | |
Andy Capp’s® | Kangaroo® | |
Angie’s BOOMCHICKAPOP® | Kid Cuisine® | |
Armour Star® | La Choy® | |
Aunt Jemima® | Lender’s® | |
Banquet® | Libby’s® | |
Bernstein’s® | Log Cabin® | |
Bertolli® | Manwich® | |
BIGS® | Marie Callender’s® | |
Birds Eye® | Mrs. Butterworth’s® | |
Birds Eye® C&W | Mrs. Paul’s® | |
Birds Eye® Voila | Nalley® | |
Blake’s® | Odom’s Tennessee Pride® | |
Blue Bonnet® | Open Pit® | |
Brooks® | Orville Redenbacher’s® | |
Celeste® Pizza for One™ | P.F. Chang’s Home Menu™ | |
Chef Boyardee® | PAM® | |
Crunch ‘n Munch® | Parkay® | |
DAVID® Seeds | Penrose® | |
Dennison’s® | Peter Pan® | |
Duke’s® | Poppycock® | |
Duncan Hines® | Ranch Style® Beans | |
Duncan Hines® Comstock® | Reddi-wip® | |
and Wilderness® | RO*TEL® | |
Earth Balance® | Rosarita® | |
Egg Beaters® | Sandwich Bros. of Wisconsin® | |
Erin’s® | Slim Jim® | |
EVOL® | Smart Balance® | |
Fiddle Faddle® | Snack Pack® | |
Fleischmann’s® | Snyder® of Berlin | |
Frontera® | Swiss Miss® | |
Gardein™ | Tim’s® Cascade Snacks | |
Glutino® | Udi’s® Gluten Free | |
Gulden’s® | Van Camp’s® | |
H.K. Anderson® | Van De Kamps® | |
Hawaiian® Snacks | Vlasic® | |
Healthy Choice® | Wicked Kitchen™ | |
Hebrew National® | Wish-Bone® | |
Hungry-Man® | Wolf® Brand Chili |
 | Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended May 26, 2019 are available at http://www.conagrabrands. com/investor-relations/financial-reports/annual-reports. |
| 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 | |
| — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | ||
DETACH AND RETURN THIS PORTION ONLY
| ||||||
| 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 |
☐ |
☐ |
☐ |
| |||||||||||||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||||||||||||||
CONAGRA BRANDS, INC. | ||||||||||||||||||||||||||||||||||
| The Board of Directors recommends a vote FOR each of the following nominees for director: | ||||||||||||||||||||||||||||||||||
1. | Election of directors | For | Against | Abstain | ||||||||||||||||||||||||||||||
| 1a. | Anil Arora | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
| 1b. | Thomas K. Brown | ☐ | ☐ | ☐ | The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | ||||||||||||||||||||||||||
| 1c. | Stephen G. Butler | ☐ | ☐ | ☐ | 2. | Ratification of the appointment of KPMG LLP as our independent auditor for fiscal 2020 | ☐ | ☐ | ☐ | |||||||||||||||||||||||||
| 1d. | Sean M. Connolly | ☐ | ☐ | ☐ | The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | ||||||||||||||||||||||||||
| 1e. | Joie A. Gregor | ☐ | ☐ | ☐ | 3. | Advisory approval of our named executive officer compensation | ☐ | ☐ | ☐ | |||||||||||||||||||||||||
| 1f. | Rajive Johri | ☐ | ☐ | ☐ | NOTE: The shares will be voted as directed, or if no direction is indicated, as described on the reverse side of this proxy card. | |||||||||||||||||||||||||||||
| 1g. | Richard H. Lenny | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
| 1h. | Melissa Lora | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
| 1i. | Ruth Ann Marshall | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
| 1j. | Craig P. Omtvedt | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
| 1k. | Scott Ostfeld | ☐ | ☐ | ☐ | 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. 20182019 Annual Meeting of Shareholders
Friday,Thursday, September 21, 201819, 2019
8:30 a.m.1:00 p.m. CDT
The Gwen Hotel,Wyndham Grand Chicago Riverfront
6th Floor 11- Grand Ballroom D
The Grand Salon Room
521 North Rush Street71 East Wacker Drive
Chicago, Illinois 6061160601
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, 2018.19, 2019. 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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E50133-P12300E83151-P27574
PROXY - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Proxy is Solicited by the Board of Directors for the
September 21, 201819, 2019 Annual Meeting of Shareholders.
The undersigned appoints each of Sean M. Connolly and Richard H. Lenny as proxies, with full power of substitution, to vote all shares of common stock of Conagra Brands, Inc. that the undersigned would be entitled to vote at the Annual Meeting of Shareholders and any adjournment or postponements thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS PROXY. IF YOU SIGN AND RETURN YOUR PROXY BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE PROXIES WILL VOTE THE SHARESFOR ALL NOMINEESEACH NOMINEE LISTED IN ITEM 1,FOR ITEMS 2 AND 3, AND AS RECOMMENDED BY THE BOARD OF DIRECTORS UPONIN CONNECTION WITH 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, 2018.18, 2019.
Continued and to be signed on reverse side
| VOTE BY INTERNET -www.proxyvote.com 1. Read the accompanying Proxy Statement and this voting instruction card. 2. Go to the Website www.proxyvote.com. 3. Follow the instructions.
VOTE BY PHONE - 1-800-690-6903 | |
222 Merchandise Mart Plaza | 1. Read the accompanying Proxy Statement and this voting instruction card. | |
Suite 1300 | 2. Call toll free at 1-800-690-6903. | |
Chicago, Illinois 60654 | 3. Follow the recorded instructions. | |
| VOTE BY MAIL | ||
1. Read the accompanying Proxy Statement and this voting instruction card. | ||
2. 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:
| KEEP THIS PORTION FOR YOUR RECORDS | |
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DETACH AND RETURN THIS PORTION ONLY
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| 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: |
☐ |
☐ |
☐ | |||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||||
CONAGRA BRANDS, INC. | ||||||||||||||||||||||||||||||||
| The Board of Directors recommends a vote FOR each of the following nominees for director: | ||||||||||||||||||||||||||||||||
1. | Election of directors. | For | Against | Abstain | ||||||||||||||||||||||||||||
| 1a. | Anil Arora | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||
| 1b. | Thomas K. Brown | ☐ | ☐ | ☐ | The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | ||||||||||||||||||||||||
| 1c. | Stephen G. Butler | ☐ | ☐ | ☐ | 2. | Ratification of the appointment of KPMG LLP as our independent auditor for fiscal 2020 | ☐ | ☐ | ☐ | |||||||||||||||||||||||
| 1d. | Sean M. Connolly | ☐ | ☐ | ☐ | The Board of Directors recommends a vote FOR the following proposal: | For | Against | Abstain | ||||||||||||||||||||||||
| 1e. | Joie A. Gregor | ☐ | ☐ | ☐ | 3. | Advisory approval of our named executive officer compensation | ☐ | ☐ | ☐ | |||||||||||||||||||||||
| 1f. | Rajive Johri | ☐ | ☐ | ☐ | 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. | |||||||||||||||||||||||||||
| 1g. | Richard H. Lenny | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||
| 1h. | Melissa Lora | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||
| 1i. | Ruth Ann Marshall | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||
| 1j. | Craig P. Omtvedt | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||
| 1k. | Scott Ostfeld | ☐ | ☐ | ☐ | 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. 20182019 Annual Meeting of Shareholders
Friday,Thursday, September 21, 201819, 2019
8:30 a.m.1:00 p.m. CDT
The Gwen Hotel,Wyndham Grand Chicago Riverfront
6th Floor 11- Grand Ballroom D
The Grand Salon Room
521 North Rush Street71 East Wacker Drive
Chicago, Illinois 6061160601
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, 2018.19, 2019. 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 E83153-P27574
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, 201819, 2019 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 NOMINEESEACH NOMINEE 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 ConagraofConagra Brands, Inc. and have an interest in the ESPP, your proportionate interest as of July 31, 201830, 2019 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, 2018.16, 2019.
Continued and to be signed on reverse side
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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THIS VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED.
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ADMISSION TICKET
Conagra Brands, Inc. 2018 Annual Meeting of Shareholders
Friday, September 21, 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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E50137-P12300
VOTING INSTRUCTION CARD - CONAGRA BRANDS, INC.
Please vote and sign on reverse side.
This Voting Instruction Card is Solicited by the Board of Directors for the
September 21, 2018 Annual Meeting of Shareholders.
As a participant in the TreeHouse Private Brands Retirement Income Savings Plan, I hereby direct T. Rowe Price, as Trustee, to vote all shares held in this plan account as I instruct in the instructions listed below.
THE SHARES REPRESENTED BY THIS VOTING INSTRUCTION CARD WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC INSTRUCTIONS AS INDICATED ON THE REVERSE SIDE OF THIS CARD. IF YOU SIGN AND RETURN YOUR INSTRUCTION CARD BUT DO NOT CHECK THE APPROPRIATE BOX FOR A PARTICULAR ITEM, THE TRUSTEE WILL VOTE THE SHARESFOR ALL NOMINEES LISTED IN ITEM 1 ANDFOR ITEMS 2 AND 3.
If you wish to vote using this voting instruction card, please mark the boxes accordingly, sign your name exactly as it appears on this card, indicate the date and return the card in the enclosed envelope. If you are a current or former employee ofConagra Brands, Inc. and have an interest in TreeHouse Private Brands Retirement Income Savings Plan, your proportionate interest as of July 31, 2018 is shown on this voting instruction card and the instructions you provide on this card will determine how the Trustee will vote. If you do not vote, the Trustee will vote the shares in a single block in accordance with the instructions received with respect to a majority of the shares for which instructions are received, unless contrary to applicable law.
You may also vote via telephone or the Internet. Please see the reverse side of this card for information about telephonic or Internet voting. Your telephone or Internet voting instruction authorizes T. Rowe Price to vote these shares in the same manner as if you marked, signed, and returned this voting instruction card. Whether you vote by mail, telephone or via the Internet, your vote must be returned by 11:59 p.m. (ET) on September 18, 2018.
Continued and to be signed on reverse side
