UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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þ | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting Material Pursuant to §240.14a-12 |
POPEYES LOUISIANA KITCHEN, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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PROXY STATEMENT AND NOTICE OF
2016
ANNUAL SHAREHOLDERS MEETING
400 Perimeter Center Terrace, Suite 1000
Atlanta, Georgia 30346
April 20, 2016
To our Shareholders:
It is our pleasure to invite you to attend our 2016 Annual Meeting (the Annual Meeting) of Shareholders which will be held on Thursday, May 19, 2016, at the Le Meridien Atlanta Perimeter, 111 Perimeter Center West, Atlanta, Georgia 30346. The Annual Meeting will start at 8:30 a.m., local time.
The ballot for the Annual Meeting, to which this proxy statement relates, includes a proposal for the election of nine directors nominated to serve on our Board of Directors until the 2017 annual meeting, a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 25, 2016, and a proposal to approve, on an advisory basis, the compensation of our named executive officers as disclosed in the attached proxy statement.
Please note that you will need to show that you are a shareholder of Popeyes Louisiana Kitchen, Inc. to attend the Annual Meeting. If your shares are registered in your name, your admission card is included with this proxy statement, and you will need to bring that card with you to the meeting, together with valid picture identification. If your shares are held in the name of your broker or another nominee or you received your proxy materials electronically, you will need to bring evidence of your stock ownership, such as your most recent brokerage account statement, and valid picture identification. You will be able to attend the meeting only if you have either an admission card or proof that you own Popeyes Louisiana Kitchen, Inc. stock.
If you will need special assistance at the meeting because of a disability, please contact our Corporate Secretary, Harold M. Cohen, at (404) 459-4650. Whether or not you plan to attend our Annual Meeting, you can make certain that your shares are represented at the meeting by promptly completing, signing and returning the enclosed proxy card or voting by Internet or telephone.
Thank you for your support.
Sincerely,
John M. Cranor, III
Chairman of the Board
Popeyes Louisiana Kitchen, Inc.
NOTICE OF 2016 ANNUAL MEETING OF SHAREHOLDERS
Time: |
8:30 a.m., local time, on Thursday, May 19, 2016 | |
Place: |
Le Meridien Atlanta Perimeter, 111 Perimeter Center West, Atlanta, Georgia 30346 | |
Items of Business: |
(1) To elect nine directors nominated by the Board of Directors to our Board of Directors; | |
(2) To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 25, 2016; | ||
(3) To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement; and | ||
(4) To transact such other business properly coming before the meeting or any adjournment thereof. | ||
Who Can Vote: |
You can vote if you were a shareholder of record of our commonstock, par value $.01 per share, on April 1, 2016. | |
Annual Report: |
A copy of our 2015 Annual Report on Form 10-K is enclosed. | |
Date of Mailing: |
This notice and the proxy statement are first being mailed to shareholders on or about April 20, 2016. | |
By Order of the Board of Directors Harold M. Cohen, Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Shareholders: The proxy statement and annual report are available at
www.edocumentview.com/PLKI
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Audit Committee Report and Fees Paid to Independent Registered Public Accounting Firm |
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Ratification of Independent Registered Public Accounting Firm |
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ABOUT THE MEETING |
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ABOUT THE MEETING |
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ABOUT THE MEETING |
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ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES | ||
(Item 1 on the proxy card) |
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ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES | ||
(Item 1 on the proxy card) |
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ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES | ||
(Item 1 on the proxy card) |
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ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES | ||
(Item 1 on the proxy card) |
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What are the committees of the Board?
Our Board currently has the following committees and membership:
Name of Committee |
Primary Functions of the Committee |
Number of |
||||
Executive: |
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John M. Cranor, III, Chair Cheryl A. Bachelder Carolyn Hogan Byrd |
Exercises the authority of the full Board between meetings |
1 | ||||
Audit: |
||||||
Martyn R. Redgrave, Chair Carolyn Hogan Byrd S. Kirk Kinsell |
Oversees the Companys financial reporting process and systems of internal controls on behalf of the Board Selects and oversees independent auditors Receives, accepts and reviews the report of independent auditors Oversees performance of the Companys internal audit function |
8 | ||||
People Services (Compensation): |
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Krishnan Anand, Chair S. Kirk Kinsell Joel K. Manby Martyn R. Redgrave |
Reviews and determines all elements of compensation of executive officers and directors Makes grants of stock awards to officers and employees pursuant to stock plans Oversees the administration of stock and bonus plans Reviews annually the Companys compensation strategies and policies Reviews the process for managing executive succession and development training |
4 | ||||
Corporate Governance and Nominating: |
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Carolyn Hogan Byrd, Chair Krishnan Anand John M. Cranor, III Lizanne Thomas |
Takes a leadership role in shaping the Companys corporate governance policies Considers, reviews, evaluates and recommends director-nominees to the Board Establishes minimum qualifications for director-nominees Reviews director-nominees submitted by shareholders Develops and facilitates continuing education program for directors Makes recommendations to the Board with respect to strategic plans, including potential mergers and acquisitions and financing alternatives |
4 |
The charters that have been adopted for each of the Audit, People Services (Compensation) and Corporate Governance and Nominating Committees are available on the Investor Relations page on our website at http://investor.popeyes.com. Our Board has determined that all members of the People Services (Compensation) Committee are independent within the meaning of applicable Nasdaq Global Market rules. Pursuant to its charter, the People Services (Compensation) Committee may delegate authority and responsibilities to subcommittees, as it deems proper. For additional information about the People Services (Compensation) Committees processes and the role of executive officers and compensation consultants in determining compensation, see Compensation Discussion and Analysis.
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AUDIT COMMITTEE REPORT AND FEES PAID TO INDEPENDENT | ||
REGISTERED PUBLIC ACCOUNTING FIRM |
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AUDIT COMMITTEE REPORT AND FEES PAID TO INDEPENDENT | ||
REGISTERED PUBLIC ACCOUNTING FIRM |
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AUDIT COMMITTEE REPORT AND FEES PAID TO INDEPENDENT | ||
REGISTERED PUBLIC ACCOUNTING FIRM |
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CORPORATE GOVERNANCE |
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CORPORATE GOVERNANCE AND | ||
NOMINATING COMMITTEE |
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CORPORATE GOVERNANCE AND | ||
NOMINATING COMMITTEE |
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The following table sets forth information known to us regarding the beneficial ownership of our common stock as of January 31, 2016 by:
| each shareholder known by us to own beneficially more than 5% of our common stock; |
| each of our directors; |
| each of our named executive officers; and |
| all of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, shares of common stock subject to options held by that person that are currently exercisable or will become exercisable within 60 days after January 31, 2016, and restricted stock units and restricted stock that vests within 60 days after January 31, 2016, are deemed outstanding, while these shares are not deemed outstanding for computing percentage ownership of any other person. Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable. The address for those individuals for which an address is not otherwise indicated is: c/o Popeyes Louisiana Kitchen, Inc., 400 Perimeter Center Terrace, Suite 1000, Atlanta, Georgia 30346.
The percentages of common stock beneficially owned are based on 22,571,439 shares of common stock outstanding as of January 31, 2016.
Shares Beneficially Owned |
Percentage of Class |
|||||||
Directors and Named Executive Officers: |
||||||||
Cheryl A. Bachelder(1) |
276,485 | 1.2 | % | |||||
Andrew G. Skehan(2) |
14,087 | * | ||||||
William P. Matt(3) |
5,780 | * | ||||||
Richard H. Lynch(4) |
69,922 | * | ||||||
Harold M. Cohen(5) |
9,978 | * | ||||||
Krishnan Anand(6) |
16,604 | * | ||||||
Carolyn Hogan Byrd(7) |
39,536 | * | ||||||
John M. Cranor, III(8) |
45,653 | * | ||||||
S. Kirk Kinsell(9) |
2,118 | * | ||||||
Joel K. Manby(10) |
7,180 | * | ||||||
Candace S. Matthews(11) |
430 | * | ||||||
Martyn R. Redgrave(12) |
9,981 | * | ||||||
Lizanne Thomas(13) |
1,080 | * | ||||||
All directors and executive officers as a group (13 persons) |
498,834 | 2.2 | % | |||||
Five Percent Shareholders: |
||||||||
BlackRock, Inc.(14) |
2,119,534 | 9.4 | % | |||||
Nicholas Company, Inc.(15) |
1,508,158 | 6.7 | % | |||||
OppenheimerFunds, Inc.(16) |
1,191,170 | 5.3 | % | |||||
RS Investment Management Co. LLC (17) |
1,472,289 | 6.6 | % | |||||
The Vanguard Group, Inc.(18) |
1,704,025 | 7.6 | % |
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* | Less than 1% of the outstanding shares of common stock. |
(1) | Ms. Bachelder owns 66,923 shares of her beneficially owned shares indirectly through a trust. Includes 73,776 shares of common stock underlying stock options that are exercisable or will become exercisable within sixty (60) days of January 31, 2016. |
(2) | Includes 0 shares of common stock underlying stock options that are exercisable or will become exercisable within sixty (60) days of January 31, 2016. |
(3) | Includes 780 shares of common stock underlying stock options that are exercisable or will become exercisable within sixty (60) days of January 31, 2016. |
(4) | Includes 31,506 shares of common stock underlying stock options that are exercisable or will become exercisable within sixty (60) days of January 31, 2016. |
(5) | Includes 1,748 shares of common stock underlying stock options that are exercisable or will become exercisable within sixty (60) days of January 31, 2016. |
(6) | Mr. Anands business address is Molson Coors Brewing Company, 1225 17th Street, Suite 3200, Denver, Colorado 80202. Includes 14,400 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(7) | Ms. Byrds business address is 400 Perimeter Center Terrace, NE, Suite 1000, Atlanta, Georgia 30346. Includes 39,536 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(8) | Mr. Cranors business address is 400 Perimeter Center Terrace, NE, Suite 1000, Atlanta, Georgia 30346. Includes 37,653 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(9) | Mr. Kinsells business address is Loews Hotels and Resorts, 667 Madison Avenue, New York, NY 10065. Includes 2,118 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(10) | Mr. Manbys business address is SeaWorld Parks & Entertainment, 9205 SouthPark Center Loop, Suite 400, Orlando, FL 32819. Includes 5,280 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(11) | Ms. Matthews business address is Amway Corporation, 7575 Fulton Street East, Ada, MI 49355. Includes 430 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(12) | Mr. Redgraves business address is 400 Perimeter Center Terrace, NE, Suite 1000, Atlanta, Georgia 30346. Includes 4,981 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
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(13) | Ms. Thomas business address is Jones Day, 1420 Peachtree Street, NE, Suite 800, Atlanta, GA 30309. Includes 880 shares of common stock for which the director has the vested right to acquire (within sixty (60) days of January 31, 2016) through the conversion of restricted stock units upon termination of service as a director of the Company. |
(14) | Represents shares of common stock beneficially owned by BlackRock, Inc. (BlackRock). BlackRock has sole voting power with respect to 1,310,890 shares and sole dispositive power with respect to 1,364,512 shares. This information is included in reliance upon a Schedule 13G/A filed with the SEC on January 12, 2015. The address of BlackRock is 55 East 52nd Street, New York, New York 10022. |
(15) | Represents shares of common stock beneficially owned by Nicholas Company, Inc. (Nicholas Company), Nicholas Fund, Inc. (Nicholas Fund), and Albert O. Nicholas (Albert Nicholas). Nicholas Company has sole dispositive power with respect to 1,508,158 shares. Nicholas Fund has sole voting power with respect to 1,261,171 shares. Albert Nicholas has sole voting power with respect to 530,000 shares and sole dispositive power with respect to 530,000 shares. This information is included in reliance upon a Schedule 13G/A filed with the SEC on February 11, 2016. The address of Nicholas Company, Nicholas Fund, and Albert Nicholas is 700 North Water Street, Milwaukee, Wisconsin 53202. |
(16) | Represents shares of common stock beneficially owned by OppenheimerFunds, Inc. (Oppenheimer). Oppenheimer has shared voting power with respect to 1,191,170 shares and shared dispositive power with respect to 1,191,170 shares. This information is included in reliance upon a Schedule 13G filed with the SEC on February 4, 2016. The address of Oppenheimer is 2 World Financial Center, 225 Liberty Street, New York, New York 10281. |
(17) | Represents shares of common stock beneficially owned by RS Investment Management Co. LLC (RS Investment Management). RS Investment Management has sole voting power with respect to 1,444,289 shares and sole dispositive power with respect to 1,472,829 shares. This information is included in reliance upon a Schedule 13G filed with the SEC on February 12, 2016. The address of RS Investment Management is One Bush Street, Suite 900 San Francisco, CA 94104. |
(18) | Represents shares of common stock beneficially owned by The Vanguard Group, Inc. (Vanguard). Vanguard has sole voting power with respect to 50,407 shares, sole dispositive power with respect to 1,653,018 shares, and shared dispositive power with respect to 51,007 shares. This information is included in reliance upon a Schedule 13G/A filed with the SEC on February 10, 2016. The address of Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The following Compensation Discussion and Analysis, or CD&A, describes our 2015 executive compensation program. This CD&A is intended to be read in conjunction with the tables beginning under the heading 2015 Summary Compensation Table below, which provide detailed historical compensation information for our following named executive officers, or NEOs.
Name |
Title | |
Cheryl A. Bachelder | Chief Executive Officer | |
Andrew G. Skehan | President International | |
William P. Matt | Chief Financial Officer | |
Richard H. Lynch | Chief Brand Officer | |
Harold M. Cohen | General Counsel, Chief Administrative Officer and Corporate Secretary |
2015 Executive Compensation Program Changes
After a highly successful year in 2014, in February 2015 the People Services (Compensation) Committee (the Committee) approved the following changes to the executive compensation program for 2015:
| Executive base salaries were increased to improve competitiveness; |
| Target short-term incentive opportunities as a percent of salary remained the same; |
| The performance measures and weights for the 2015 short-term incentive plan remained the same, but performance ranges were reset based on expectations for the year, all performance measures were set to operate independently once the Companys threshold EBITDA level was achieved, and any achieved payouts for performance were to be calculated using a sliding scale between threshold and maximum amounts; |
| Target long-term equity incentive grant values were increased to improve competitiveness; and |
| The annual equity award mix was changed to 25% restricted stock with 3-year cliff vesting, 25% stock options with 3-year ratable vesting, and 50% performance shares tied to 3-year cumulative EBITDA with a plus or minus 10% adjustment based on the Companys 3-year relative total shareholder return. |
The Committee believed that these changes were reasonable and appropriate in order to (a) recognize the extraordinary performance of the executive leadership team, (b) maintain the competitiveness of the compensation program, (c) continue a strong alignment between executive pay and Company performance, and (d) retain our talented and successful team.
2015 Business Performance Results
The following is a high level summary of our 2015 business results:
| Added 166 Net New Restaurants, for a total of 2,539 restaurants globally; |
| Increased total System-Wide Sales by 11.8%, for a two-year compounded growth rate of over 25%; |
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| Increased total Global Same-Store Sales by 5.9%; |
| Increased Adjusted Earnings Per Share by 15.8%, from $1.65 to $1.91(1); and |
| Delivered Total Shareholder Return for the 3-year period ending December 27, 2015, which was at the 75th percentile of our restaurant industry peer group. |
These results were generally above budgeted expectations established by the Board at the beginning of the year, and continued our multi-year achievement of System-Wide Sales growth and earnings growth, which has yielded superior returns to our shareholders.
2015 Executive Compensation Results
These strong financial results and shareholder returns yielded the following executive compensation results for 2015:
| Short-term incentives were earned between target and maximum for all NEOs; |
| Performance shares tied to the 2013-2015 performance cycle were earned between target and maximum, with an additional positive 10% adjustment based on the Companys superior relative total shareholder return over the 3-year period; and |
| Outstanding stock options and restricted stock accrued realizable value commensurate with the increase in stock price and shareholder value creation during the year. |
After evaluating the performance and compensation results for 2015, the Committee believes that the executive compensation program accomplished the stated objective of aligning pay and performance while also effectively attracting and retaining superior executive talent.
(1) | See the heading entitled Managements Use of Non-GAAP Financial Measures contained in Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations in our 2015 Annual Report on Form 10-K. |
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The Committee also reviewed and considered the results from the 2015 Say on Pay vote, for which 95% of our shareholders expressed support for our executive compensation program. The Committee considered the level of shareholder support of its compensation approach, and will continue to seek and respond to shareholder views on our executive compensation program. Furthermore, in seeking the continued support of our shareholders, we highlight the following sound executive compensation governance principles and practices at Popeyes:
What We Do (Best Practices)
|
What We Dont Do or Allow
| |
Separate Chairman and CEO
Executive Sessions without management
Independent Compensation Consultant
Review of Total Compensation Tally Sheets
Annual Compensation Risk Assessment
Significant Amount of Pay At Risk
Significant Use of Equity-Based Pay
Multiple Performance Measures
Capped Incentive Opportunities
Clawback Policy Upon a Restatement
Robust Stock Ownership Requirements
Anti-Hedging and Pledging Policies
|
Excessive Severance
Single Trigger Equity Acceleration at CIC
Excise Tax Gross-Ups
Dividends on Unearned Performance Shares
Option Repricing or Buyouts |
2015 CEO Compensation
Beginning in late 2014, the Board began discussing a new Employment Agreement with the CEO. As part of this process, the Committee and its independent consultant conducted a thorough review of CEO pay relative to industry peers. Based on the success of the Company during the CEOs tenure thus far, the objective of securing her continued employment for the foreseeable future, and competitive pay levels at likely competitors for talent, the Committee approved the following changes to CEO pay for 2015:
Pay Component and Level |
2014 | 2015 | ||||||
Base Salary |
$ | 725,000 | $ | 825,000 | ||||
Target Short-Term Incentive % of Salary |
100 | % | 100 | % | ||||
Target Short-Term Incentive $ Value |
$ | 725,000 | $ | 825,000 | ||||
Target Long-Term Incentive $ Value |
$ | 1,550,000 | $ | 2,400,000 | ||||
Target Total Direct Compensation |
$ | 3,000,000 | $ | 4,050,000 |
Target Pay Mix |
2014 | 2015 | ||
Base Salary |
24% | 20% | ||
Short-Term Incentive |
24% | 20% | ||
Long-Term Incentive |
52% | 60% | ||
Fixed |
24% | 20% | ||
Variable |
76% | 80% | ||
Short-Term |
48% | 41% | ||
Long-Term |
52% | 59% |
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In developing the new compensation package, the Committee intentionally favored increases in variable compensation over fixed compensation and long-term incentives over short-term incentives. The Committee believes that these changes result in a competitive pay arrangement that is highly performance-based and shareholder aligned.
2016 Executive Compensation Program Changes
Given our superior financial results, tight linkage between pay and performance, strong shareholder support, and sound governance principles and practices, the Committee approved relatively few changes to the executive compensation program for 2016, which included the following:
| Select increases to base salary and target long-term incentive values to recognize performance and improve competitiveness; |
| Elimination of international and new restaurant sales measures from the short-term incentive plan; and |
| Removal of two companies from the Restaurant Peer Group used for relative Total Shareholder Return performance for the 2016-2018 cycle performance shares. |
In addition to the above changes, the Committee successfully negotiated and entered into new employment agreements with the CEO and the Chief Brand Officer. Securing the continued commitment and engagement of these senior leaders was a major accomplishment and should enable the Company to continue developing and successfully executing shareholder value enhancing strategies for years to come. The new employment agreements include the following:
| Multi-year terms; |
| Increases in base salaries; |
| New disability and retirement benefits; |
| New non-compete obligations; and |
| Elimination of excise tax gross-up provisions. |
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Compensation Decision Process
Role of Management and the Committee
The Committee approves all compensation for executive officers. For NEOs other than the CEO and the Chief People Officer, our CEO and Chief People Officer make compensation recommendations to the Committee. In making these recommendations, the CEO and Chief People Officer consider peer group market data, individual experience and performance and financial impact to the Company. For the Chief People Officer, our CEO makes separate compensation recommendations to the Committee, without the Chief People Officer being present. The Committee reviews and discusses all recommendations prior to approval.
The Committee is solely responsible for the review of the performance and compensation for the CEO. Management does not make compensation-related recommendations for the CEO. In executive session, without management present, the Committee, in conjunction with its compensation consultant, reviews CEO compensation, including a review of competitive market data and individual performance assessments.
Role of the Independent Compensation Consultant
In 2015, the Committee retained Pearl Meyer as its independent compensation consultant. In accordance with the Committees charter, the consultant reports directly to the Committee. The Committee retains sole authority to hire or terminate its compensation consultant, approve its compensation, determine the nature and scope of services and evaluate its performance. A representative of the compensation consultant attends Committee meetings, as requested, and communicates with the Committee Chair between meetings. The Committee makes all final decisions. Other than Pearl Meyers roles and services listed below with respect to compensation consulting, it performs no other services for the company.
Pearl Meyers specific compensation consultation roles include, but are not limited to, the following:
| Advise the Committee and management on executive compensation trends and regulatory developments; |
| Provide a total compensation study for executives against the companies in our peer group and recommendations for executive pay; |
| Provide advice to the Committee on governance best practices, as well as any other areas of concern or risk; |
| Serve as a resource to the Committee Chair for meeting agendas and supporting materials in advance of each meeting; |
| Review and comment on proxy disclosure items, including the Compensation Discussion and Analysis; and |
| Advise the Committee on managements pay recommendations. |
The Compensation Committee has considered and assessed all relevant factors, including but not limited to those set forth in the Exchange Act, as well as the requirements of Nasdaq Global Market, that impact independence and could give rise to a potential conflict of interest with respect to Pearl Meyer. Based on this review, the Committee determined that Pearl Meyer was independent and that there were no conflicts of interest raised by the work performed by Pearl Meyer.
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Role of Peer Companies and Competitive Market Data
The Committee reviews competitive market data annually for the CEO and at least biennially for the other NEOs, as developed and presented by the Committees independent compensation consultant. In February 2015, the Committee reviewed competitive market data for all NEO positions.
How Do We Determine Peer Companies?
We develop a peer group for compensation purposes according to multiple selection criteria:
| GICS code sub-industry: Restaurant companies; |
| Highly-franchised: Restaurants with franchised sales representing approximately 50% or more of system-wide sales/units; |
| Annual system-wide sales: Approximately 1/3x to 3x Popeyes annual system-wide sales; |
| Market capitalization: Approximately 0.2x to 5x Popeyes market capitalization; and |
| Direct competitors: For business and management talent. |
Although we strive to include companies that meet all of the above criteria, not all of the selected peers meet all of the above criteria.
The competitive market data that was reviewed by the Committee when making 2015 executive compensation decisions was prepared by Pearl Meyer during Q4 2014 and relied upon the same peer group companies that were reviewed and approved by the Compensation Committee for the prior year, which consisted of the following companies:
Brinker International, Inc.
Buffalo Wild Wings, Inc.
Dennys Corporation
DineEquity, Inc.
Dominos Pizza, Inc.
Einstein Noah Restaurant Group, Inc. |
Famous Daves of America, Inc.
Jack in the Box, Inc.
Krispy Kreme Doughnuts, Inc.
Panera Bread Company
Papa Johns International, Inc.
Sonic Corp. |
How Do We Determine Competitive Market Values?
Competitive market values are determined by Pearl Meyer using both proxy-reported pay data from our peer group companies and survey reported data from a variety of reputable compensation surveys that contain pay data for comparable executive positions with the restaurant, retail, and hospitality industries. Both the peer group data and the survey data reflect companies of comparable size, as measured by System-Wide Sales.
Why Do We Use System-Wide Sales and Not Corporate Revenues?
System-wide sales capture the size, scope and complexity of operating a highly-franchised global business model like ours. System-wide sales are disclosed in a variety of public sources, including a companys Form 10-K and corporate investor relations websites.
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Corporate revenues are not used because they primarily represent a pass-through of franchise royalties and significantly underestimates the size and complexity of our highly-franchised business model. For that reason, we do not use corporate revenues to develop competitive market values and we believe they should not be used by investors or shareholder advisory firms to analyze our compensation programs.
Considerations Regarding 2015 NEO Compensation
Components of 2015 NEO Compensation
The following table outlines the major components of our 2015 executive compensation program for our NEOs:
Pay Component
|
Purpose |
Characteristics |
Fixed or Performance |
Short or Long-Term | ||||
Base Salary
|
Attract and retain executives through market-based pay
|
To compensate the executive fairly and competitively for the responsibility level of the position
|
Fixed
|
Short-Term
| ||||
Annual Incentive Plan
|
Encourages achievement of strategic and financial performance metrics that create long-term shareholder value
|
Based on achievement of predefined corporate performance objectives
|
Performance
|
Short-Term
| ||||
Long-Term Incentives (LTI)
|
Aligns executives long-term compensation interests with shareholders investment interests; creates a retention incentive through multi-year vesting and performance cycles
|
Value to the executive is based on long-term stock price performance and financial performance goal achievement
|
Performance
|
Long-Term
| ||||
Health/Welfare Plans and Retirement Benefits
|
Provides competitive benefits that promote employee health and productivity and support financial security
|
Similar to benefits offered to other employees
|
Fixed
|
Long-Term
| ||||
Perquisites
|
Provides business-related benefits, where appropriate
|
Limited to Company paid annual medical physicals, life insurance and the Companys contributory share of the costs of participation in general benefit plans, including medical, dental, life and disability insurance plans.
|
Fixed
|
Short-Term
|
29
Total Compensation Mix
Overall, the Committee believes targeted compensation should be more heavily weighted on variable at-risk compensation and longer-term components. Our target total compensation for Ms. Bachelder and the other NEOs is approximately 80% and 62% at-risk (annual incentive award and LTI), respectively.
Base Salary
The Committee determines base salaries for the NEOs and other executives based on a number of factors, including but not limited to, market data, individual performance, company performance, and management recommendations (except for the CEO). In November 2014 and February 2015, the Committee reviewed market data provided by its compensation consultant Pearl Meyer.
At the February 2015 meeting, the Committee reviewed competitive market data, Ms. Bachelders recommendations based on individual performance and the Committees assessment of Ms. Bachelders performance. Based on this review, the Committee approved salary increases for all of the NEOs with respect to 2015.
Name |
2014 Base Salary |
2015 Base Salary |
||||||
Cheryl A. Bachelder |
$ | 725,000 | $ | 825,000 | ||||
Andrew G. Skehan |
$ | 370,000 | $ | 430,000 | ||||
William P. Matt |
$ | 370,000 | $ | 400,000 | ||||
Richard H. Lynch |
$ | 370,000 | $ | 430,000 | ||||
Harold M. Cohen |
$ | 320,000 | $ | 350,000 |
The increase for Ms. Bachelder was part of a holistic review and assessment of her total compensation opportunity conducted by the Committee and its independent consultant in preparation for entering into a new Employment Agreement.
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Annual Incentive Plan
NEOs and other executives are eligible to participate in our Annual Incentive Plan and receive annual cash incentives based on the achievement of various performance metrics. The 2015 performance metrics and weightings approved for the NEOs were:
Operational Metrics | ||||||||||||||||||||
Name |
EBITDA | International EBIT |
Same-Store Sales |
Restaurant Openings |
New Restaurant Sales |
|||||||||||||||
Cheryl A. Bachelder |
60 | % | 20 | %(1) | 10 | %(1) | 10 | %(1) | ||||||||||||
Andrew G. Skehan |
25 | % | 30 | % | 20 | %(2) | 12.5 | %(2) | 12.5 | %(2) | ||||||||||
William P. Matt |
60 | % | 20 | %(1) | 10 | %(1) | 10 | %(1) | ||||||||||||
Richard H. Lynch |
60 | % | 40 | %(1) | | | ||||||||||||||
Harold M. Cohen |
60 | % | 20 | %(1) | 10 | %(1) | 10 | %(1) |
(1) | Represents a system-wide performance goal |
(2) | Represents an international performance goal |
The basic framework of our Annual Incentive Plan is consistent with prior years, with some changes to create scales for operating metrics (same-store-sales, openings, and new restaurant sales) based on absolute values and remove the link between those operating metrics and target EBITDA (once the EBITDA has been achieved), with payouts based on each metrics independent scale and relevant weighting. Management and the Committee believe EBITDA growth is critical to our stock price appreciation and our commitment to sustained shareholder value. Accordingly, EBITDA continues to have the highest weighting for our NEOs at 60%, with the exception of our President International whose weighting is primarily tied to specific international performance goals.
The operational metrics (same store sales, restaurant openings, and new restaurant sales) are critical to our growth objectives. Therefore, the combined operating metrics have a 40% weight (45% for our President International), which varies by NEO based on their role in the organization. Same-store sales focus on growth within our existing restaurant framework. Restaurant openings and new restaurant sales measure both the volume and quality of new restaurant openings.
Funding. The Annual Incentive Plan is funded as follows:
| If EBITDA performance is below 95% of target, then no incentive awards are funded for any metric. |
| If the minimum EBITDA performance of 95% of target is achieved, incentive award payments are based on each operational metrics independent scale and relevant weighting. |
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Performance / Payout Scales. The payout opportunities associated with minimum, target and maximum performance levels are consistent across the four performance metrics for each of the system-wide, domestic and international performance goals. The minimum payout opportunity is 50% of target if the minimum performance level is achieved. Target is earned if targeted performance is achieved. The maximum payout opportunity is 200% of target if the maximum performance level is achieved.
System- Wide |
EBITDA* | SAME STORE SALES | RESTAURANT OPENINGS | NEW RESTAURANT SALES* | ||||||||||||||||||
Performance | Payout | Performance | Payout | Performance | Payout | Performance | Payout | |||||||||||||||
95% | 50% | 3.00% | 50% | 205 | 50% | $ 90 | 50% | |||||||||||||||
Target g | 100% | 100% | 4.50% | 100% | 225 | 100% | $ 98.9 | 100% | ||||||||||||||
110% | 200% | 6.75% | 200% | 245 | 200% | $ 110 | 200% | |||||||||||||||
Domestic | SAME STORE SALES | RESTAURANT OPENINGS | NEW RESTAURANT SALES* | |||||||||||||||||||
Performance | Payout | Performance | Payout | Performance | Payout | |||||||||||||||||
3.00% | 50% | 120 | 50% | $ 70 | 50% | |||||||||||||||||
Target g | 4.50% | 100% | 130 | 100% | $ 77.4 | 100% | ||||||||||||||||
6.75% | 200% | 140 | 200% | $ 86 | 200% | |||||||||||||||||
Inter-national | EBIT* | SAME STORE SALES | RESTAURANT OPENINGS | NEW RESTAURANT SALES* | ||||||||||||||||||
Performance | Payout | Performance | Payout | Performance | Payout | Performance | Payout | |||||||||||||||
95% | 50% | 3.00% | 50% | 85 | 50% | $ 20 | 50% | |||||||||||||||
Target g | 100% | 100% | 4.50% | 100% | 95 | 100% | $ 21.5 | 100% | ||||||||||||||
110% | 200% | 6.75% | 200% | 105 | 200% | $ 24 | 200% |
* | All dollar values in millions |
2015 Annual Incentive Targets. At the start of each fiscal year the Committee approves annual incentive compensation targets (as a % of base salary) based on a review of competitive market data, managements recommendations and other relevant factors. The 2015 annual incentive targets for our NEOs (which did not change from 2014) are as follows:
Name |
Target | |
Cheryl A. Bachelder |
100% of Base Salary | |
Andrew G. Skehan |
60% of Base Salary | |
William P. Matt |
60% of Base Salary | |
Richard H. Lynch |
60% of Base Salary | |
Harold M. Cohen |
60% of Base Salary |
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2015 Actual Performance. Actual results and funding for the 2015 Annual Incentive Plan were certified by the Committee, as follows, based on the performance goals and funding scales approved in the first quarter of 2015:
| EBITDA: The 2015 performance target was $83.7 million. We achieved EBITDA of $84.0 million, or approximately 100.3% of target. The EBITDA portion was funded at approximately 103%. The operational metrics were funded independently because EBITDA achieved the performance target. |
| Same store sales: The same store sales growth goal for 2015 was 4.5% for each of the domestic, international and system-wide metrics. We achieved domestic same-store sales growth of 5.7% (153.3% funding), international growth of 7.00% (200% funding) and system-wide same-store sales growth of 5.9% (162.2% funding). |
| Restaurant openings: The domestic, international and system-wide restaurant opening goals for 2015 were 130, 95 and 225, respectively. We achieved domestic restaurant openings of 125 (75.0% funding), international restaurant openings of 94 (95.0% funding) and system-wide restaurant openings of 219 (85.0% funding). |
| New restaurant sales: The domestic, international and system-wide new restaurant sales goals for 2015 were $77.4 million, $21.5 million and $98.9 million, respectively. We achieved domestic new restaurant sales of $71.6 million (60.5% funding), international new restaurant sales of $25.3 million (200% funding) and system-wide new restaurant sales of $96.8 million (88.4% funding). |
| International EBIT: The 2015 performance target was $6.3 million. We achieved International EBIT of $6.9 million, or approximately 109.5% of target. The International EBIT portion was funded at approximately 195%. |
The following table summarizes the 2015 bonuses earned based on actual performance, as compared to the target opportunity for each NEO:
2015 Annual Incentive Awards | ||||||||||||
Name |
Target Incentive Award ($) |
Actual Incentive Award ($) |
Percent of Target Incentive Award |
|||||||||
Cheryl A. Bachelder |
$ | 825,000 | $ | 997,673 | 121 | % | ||||||
Andrew G. Skehan |
$ | 258,000 | $ | 415,522 | 161 | % | ||||||
William P. Matt |
$ | 240,000 | $ | 290,232 | 121 | % | ||||||
Richard H. Lynch |
$ | 258,000 | $ | 327,144 | 127 | % | ||||||
Harold M. Cohen |
$ | 210,000 | $ | 253,953 | 121 | % |
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Long-Term Incentives (LTI)
The Committee annually determines the grant-date value for each executive based on a review of competitive market data, individual performance, historical awards and managements recommendations. For 2015, the target grant-date value for LTI awards to the named executive officers was as follows:
Name |
2015 LTI Target Values | |||
Cheryl A. Bachelder |
$ | 2,400,000 | ||
Andrew G. Skehan |
$ | 450,000 | ||
William P. Matt |
$ | 450,000 | ||
Richard H. Lynch |
$ | 450,000 | ||
Harold M. Cohen |
$ | 350,000 |
The target grant-date value of the 2015 LTI awards was delivered to executives 25% in the form of stock options, 25% in restricted shares and 50% performance shares.
Stock Options. Stock options create direct shareholder alignment and vest one-third per year.
Restricted Shares. Restricted stock creates retention strength and vests at the end of three years.
Performance Shares. Performance shares create linkage to our long-term financial performance and shareholder returns, and are earned over a 3-year period, as follows:
| Three-year cumulative EBITDA: A three-year cumulative EBITDA goal is approved by the Committee at the start of the performance period. Payouts are earned based on a sliding scale of performance above and below the performance goal. The sliding scale is anchored by a minimum performance requirement of 95% of three-year cumulative EBITDA. If 95% of the performance goal is not achieved, then no performance shares are earned. If 95% is achieved, then 50% of the targeted shares are earned. If 100% of the performance goal is achieved, then a target award is earned. The maximum performance requirement is 110% of cumulative EBITDA. If maximum performance is achieved, then 200% of the targeted shares are earned. |
| Three-year TSR: The number of shares earned by three-year cumulative EBITDA performance will be adjusted based on our three-year TSR against a broader of group of restaurant companies (market cap ranges from $100 million to $10 billion). This broader group represents restaurant companies competing with Popeyes for investment dollars. Shares earned will be adjusted -10% if three-year TSR performance is in the bottom quartile, and will be adjusted +10% if three-year TSR performance is in the upper quartile. TSR, as defined in the new three-year program, represents stock price appreciation and dividends over the three-year performance period. |
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Performance Share Peer Group Companies
2013-2015 Grants
Arcos Dorados Holdings, Inc. | Chuys Holdings, Inc. | Krispy Kreme Doughnuts, Inc. | ||
Biglari Holdings, Inc. | Cracker Barrel Old Country Store, Inc. | Lubys, Inc. | ||
BJs Restaurants, Inc. | Darden Restaurants, Inc. | Nathans Famous, Inc. | ||
Bloomin Brands, Inc. | Del Friscos Restaurant Group, Inc. | Panera Bread Company | ||
Bob Evans Farms, Inc. | Dennys Corporation | Papa Johns International, Inc. | ||
Bravo Brio Restaurant GP, Inc. | DineEquity, Inc. | Red Robin Gourmet Burgers, Inc. | ||
Brinker International, Inc. | Dominos Pizza, Inc. | Ruby Tuesday, Inc. | ||
Buffalo Wild Wings, Inc. | Dunkin Brands Group, Inc. | Ruths Hospitality Group, Inc. | ||
Burger King Worldwide, Inc. | Einstein Noah Restaurant Group, Inc. | Sonic Corp. | ||
Carrols Restaurant Group, Inc. | Fiesta Restaurant Group, Inc. | Texas Roadhouse, Inc. | ||
CEC Entertainment, Inc. | Ignite Restaurant Group, Inc. | Tim Hortons, Inc. | ||
Cheesecake Factory, Inc. | Jack in the Box, Inc. | The Wendys Company | ||
Chipotle Mexican Grill, Inc. | Jamba, Inc. |
In 2015, performance shares granted included the new three-year program for the 2015-2017 cycle. The 2015 equity grants made to our NEOs are summarized below:
Name |
Stock Options |
Exercise Price |
Performance Shares |
Restricted Shares |
||||||||||||
Cheryl A. Bachelder |
24,273 | $ | 59.75 | 19,753 | 9,876 | |||||||||||
Andrew Skehan |
4,551 | 59.75 | 3,703 | 1,851 | ||||||||||||
William P. Matt |
4,551 | 59.75 | 3,703 | 1,851 | ||||||||||||
Richard H. Lynch |
4,551 | 59.75 | 3,703 | 1,851 | ||||||||||||
Harold M. Cohen |
3,539 | 59.75 | 2,880 | 1,440 |
2013-2015 Actual Performance. For our three-year performance share program that concluded in 2015, the 2013-2015 cumulative EBITDA target was $208.1 million. We achieved cumulative EBITDA of $223.9 million, or approximately 107.6% of target. Based on the funding scale approved by the Committee, we earned 170% of the targeted performance shares. In addition, our three-year TSR performance was in the top quartile against the designated group of restaurant industry companies, resulting in the total amount earned being increased by a 10% multiplier, for a total payout of 187%.
The performance shares earned under our 2013-2015 grant, based on 2013-2015 performance, are as follows:
Name |
Performance Shares Earned1 |
|||
Cheryl A. Bachelder |
42,710 | |||
Andrew Skehan |
5,980 | |||
William P. Matt |
(2) | |||
Richard H. Lynch |
6,477 | |||
Harold M. Cohen |
6,548 |
(1) | Represents the shares earned from the 2013-2015 performance share grant, and includes the three-year total shareholder return (TSR) of 10%. |
(2) | Mr. Matt did not participate in the 2013-2015 performance period. |
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Stock Ownership Guidelines
Executives: Target ownership for our CEO is four times annual base salary. Our other NEOs have a guideline of one times annual base salary. Executives have five years to achieve their ownership guideline. The Committee reviews progress towards achievement annually. For purposes of calculating ownership under the guidelines, we include outright shares owned by the executive and restricted shares. We do not include unearned performance shares or vested / unvested stock options. In addition, we require executive officers to retain 33% of the net shares received from any equity-based awards, after deductions for taxes and exercise costs, until the ownership guidelines are met.
Non-employee directors: The stock ownership guideline for non-employee directors is five times annual retainer. See the section entitled Director Compensation for 2015 for a detailed description of this guideline.
Equity Compensation Grant Practices
Stock options are awarded with exercise prices equal to the closing price of our stock on the date of the grant. It is the intention of the Committee to approve grants under the long term incentive plan at a committee meeting in the first quarter of our fiscal year in order to maximize the motivational value associated with the awards and to comply with Section 162(m) tax deductibility standards. Share awards are typically approved by the Committee with a grant date to coincide with a common anniversary of prior grants. Grant amounts are determined by dividing the dollar value approved by the Committee by our average share price for the 30-day period immediately preceding the grant date. The 30-day average is used to minimize the volatility of daily share price movements on grant amounts.
Retirement, Perquisites, and Other Benefits
To provide our NEOs with a competitive level of benefits, NEOs are eligible for an annual executive physical, pre-retirement life insurance of five times base salary and disability benefits that make up, in part, for limits on our broad-based plan. Other than an enhanced disability benefit, members of senior management participate in our other benefit plans on the same terms as other employees. These plans include 401(k) matching contributions, and medical, dental and life insurance. Relocation benefits also are reimbursed from time to time, but are individually negotiated when they occur. We do not have a pension plan or a deferred compensation arrangement that covers the NEOs or any other employees.
Limitations on the Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the deductibility of executive compensation paid by publicly-held corporations to $1 million per NEO, excluding the Chief Financial Officer. The $1 million limitation does not apply to compensation that qualifies as performance-based. The Company considers the tax and accounting impact of all compensation decisions and balances the need for competitive compensation programs with the desire to control expenses and maximize tax deductibility. The Committee intends to use performance-based compensation to mitigate the deduction limits. Consequently, our annual incentive plan and portions of our long-term equity incentive program (stock options and performance shares) have been designed to qualify as performance-based compensation and meet the Section 162(m) requirements. However, we must attract, retain and reward critical executive talent to maximize shareholder value and the loss of a tax deduction may be necessary and appropriate in certain circumstances.
36
Employment Agreements
We have employment agreements with each of our NEOs. The employment agreements provide for base salary subject to annual adjustment by the Committee, an annual incentive award, participation in Company-sponsored broad-based and executive benefit plans and such other compensation as may be approved by the Committee.
In February 2016, we entered into new employment agreements with our CEO, Cheryl Bachelder, and Chief Brand Officer, Dick Lynch, which each continue through December 31, 2019, unless earlier terminated or otherwise renewed pursuant to the terms thereof. They are automatically extended for successive one-year periods following the expiration of each term unless notice is given by the Company or the executive not to renew. Each of those new agreements contained new provisions, including certain disability and retirement benefits, non-compete obligations, along with usual and customary employment agreement terms. We also eliminated the excise tax gross-up provision contained in their prior employment agreements.
Other than the agreements entered into with our CEO and Chief Brand Officer in 2016, our employment agreements have a term of one year, unless earlier terminated or otherwise renewed pursuant to the terms thereof and are automatically extended for successive one-year periods following the expiration of each term unless notice is given by the Company or the executive not to renew.
Upon an involuntary termination by the Company without cause or by the executive under circumstances constituting a constructive discharge (as such terms are defined in the employment agreements, and regardless of whether or not there has been a change in control of the Company), the agreements provide for severance payments, vesting of outstanding equity awards and certain limited perquisites. These payments and benefits are described under the heading Potential Payments Upon Termination or Change in Control below.
Recoupment (Clawback) Policy
We have adopted an incentive-based compensation recovery policy for executive officers. If we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the federal securities laws, we will seek to recover incentive-based compensation (including stock options) from any of our current or former executive officers who (a) received incentive-based compensation during the three-year period preceding the date on which we announce we are required to prepare the accounting restatement and (b) engaged in misconduct or negligent conduct resulting, directly or indirectly, in our being required to prepare the accounting restatement. We will seek to recover the excess of the incentive-based compensation paid to the executive officer based on the erroneous data over the incentive-based compensation that would have been paid to the executive officer if the financial accounting statements had been as presented in the restatement.
Hedging, Pledging and Insider Trading Compliance Policy
Our Insider Trading Compliance Policy prohibits all our employees and directors from engaging in hedging, derivative and margin transactions with respect to our securities and prohibits our directors and executive officers from pledging our securities. None of our executive officers or directors holds any of our stock subject to pledge. Our Insider Trading Compliance Policy also prohibits our
37
employees, officers and directors from purchasing or selling our securities while in possession of material non-public information, and limits purchases or sales of our securities by directors and senior officers to designated trading windows.
Compensation Program Risk Assessment
In 2015, The Committee reviewed a comprehensive compensation program risk assessment conducted by Pearl Meyer. The Committee concluded that our compensation programs are not reasonably likely to have a material adverse effect on the Company.
Our compensation program provides a balanced mix of cash and equity, annual and long-term incentives, and stock price performance and internal financial performance metrics, all of which mitigate risk. Specific program features that mitigate risk include:
| Using a combination of performance shares, restricted shares and stock options for equity awards balances risk incentives between stock price appreciation and internal financial performance; |
| The performance share program implemented in 2013 measures three-year cumulative performance, an enhancement that separates the time frames being measured by the annual and long-term incentive plans; |
| We utilize a combination of internal (EBITDA) and external (TSR) performance metrics; |
| Annual incentive awards and performance share awards to executive officers are capped at a maximum performance level; |
| The performance goals under our annual and long-term incentive programs include Company-wide and division metrics which we believe encourage decision-making that is in the best long-term interest of shareholders; |
| Company-wide and division performance goals are reviewed and approved by the Committee; |
| No single executive has complete and direct influence over any of the performance metrics; |
| The time-based and performance-based vesting of three years for our long-term incentive equity awards helps ensure that our executives long-term interests align with those of our shareholders; and |
| All NEOs are subject to stock ownership guidelines. |
38
2015 SUMMARY COMPENSATION TABLE
The following table includes information concerning compensation for the CEO, the CFO, and the three other executive officers having the highest total compensation calculated in accordance with SEC rules and regulations (the named executive officers).
Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($)(2) |
Option Awards ($)(3) |
Non-Equity Incentive Plan Compensation ($)(4) |
All
Other Compensation ($)(5) |
Total ($) |
||||||||||||||||||||||||
Cheryl A. Bachelder |
2015 | 801,823 | 1,796,407 | 599,978 | 997,673 | 45,865 | 4,241,746 | |||||||||||||||||||||||||
Chief Executive Officer |
2014 | 719,231 | 1,047,865 | 542,492 | 877,250 | 39,829 | 3,226,667 | |||||||||||||||||||||||||
2013 | 694,231 | 1,250,471 | 387,433 | 729,400 | 39,279 | 3,100,814 | ||||||||||||||||||||||||||
Andrew Skehan, |
2015 | 416,154 | 336,739 | 112,491 | 415,522 | 28,535 | 1,309,441 | |||||||||||||||||||||||||
President International |
2014 | 360,391 | 243,215 | 94,497 | 349,650 | 26,203 | 1,073,956 | |||||||||||||||||||||||||
William P. Matt, |
2015 | 393,077 | 336,739 | 112,491 | 290,232 | 69,664 | 1,202,203 | |||||||||||||||||||||||||
Chief Financial Officer |
2014 | 130,923 | 100,000 | (1) | 273,187 | 39,113 | 103,315 | 56,604 | 703,142 | |||||||||||||||||||||||
Richard H. Lynch, |
2015 | 416,154 | 336,739 | 112,491 | 327,144 | 31,875 | 1,224,403 | |||||||||||||||||||||||||
Chief Brand Officer |
2014 | 370,000 | 223,094 | 115,508 | 310,800 | 26,258 | 1,045,660 | |||||||||||||||||||||||||
2013 | 338,615 | 177,034 | 58,755 | 210,101 | 26,422 | 810,927 | ||||||||||||||||||||||||||
Harold M. Cohen, |
2015 | 343,391 | 261,922 | 87,477 | 253,953 | 36,401 | 983,144 | |||||||||||||||||||||||||
General Counsel |
2014 | 319,200 | 182,531 | 94,497 | 233,307 | 32,148 | 861,683 | |||||||||||||||||||||||||
2013 | 310,385 | 178,414 | 59,403 | 195,062 | 29,859 | 773,123 |
(1) | The amount in this column for Mr. Matt reflects a signing bonus paid in the amount of $100,000 upon his joining the Company as CFO. |
(2) | Amounts reflect the aggregate grant date fair value of restricted stock and performance shares under FASB ASC Topic 718. The grant date fair values of restricted stock awards with only service conditions are calculated using the Nasdaq Global Market closing price of our stock on the date of grant. The grant date fair values of restricted stock awards with service and market conditions are valued utilizing a Monte Carlo simulation model. With respect to the restricted performance shares granted subject to performance conditions, the grant date fair value is based on a 100% probability of meeting the target performance conditions. See Note 13 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2015, regarding assumptions underlying valuation of equity awards. An overview of the features of our performance share awards can be found in the Compensation Discussion and Analysis section above. The maximum grant date fair value of the performance share grants in this column related to the new three year program for the fiscal 2015-2017 cycle which has performance conditions and assuming the highest level of performance conditions will be achieved, is equal to 200% of the respective target amounts. The maximum value that could be earned by each named executive officer under the performance awards is as follows: |
39
Name |
Value at
Target ($) |
2014-2016
Cycle Maximum Value (200% of Target) ($) |
||||||
Cheryl A. Bachelder |
1,206,316 | 2,412,632 | ||||||
Andrew Skehan |
226,142 | 452,284 | ||||||
William P. Matt |
226,142 | 452,284 | ||||||
Richard H. Lynch |
226,142 | 452,284 | ||||||
Harold M. Cohen |
175,882 | 351,764 |
(3) | Amounts in this column reflect the grant date fair value of stock options under FASB ASC Topic 718. The grant date fair value of option awards was estimated using a Black-Scholes option-pricing model. See Note 13 of the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2015 regarding assumptions underlying valuation of equity awards. An overview of the features of our stock option awards can be found in the Compensation Discussion and Analysis section above. |
(4) | The amounts in this column reflect the cash awards earned by the named individuals under the annual incentive plan. For information about the 2015 Incentive Plan, see Annual Incentive Plan in the Compensation Discussion and Analysis section above. |
(5) | The amounts shown in this column for 2015 reflect the following components: |
| With respect to Ms. Bachelder and Messrs. Skehan, Lynch and Cohen, the amounts of $4,692, $2,126, $2,959 and $2,271, respectively, for the cost of an annual physical examination. |
| With respect to Ms. Bachelder and Messrs. Skehan, Lynch and Cohen, the amounts of $12,851, $5,917, $7,883 and $4,843, respectively, for a Company paid life insurance policy having death benefits of five times the executives base salary. |
| With respect to Ms. Bachelder and Messrs. Skehan, Matt, Lynch and Cohen, the amount of $6,625 for matching contributions to each individuals account in our 401(k) plan. |
| With respect to Ms. Bachelder and Messrs. Skehan, Matt, Lynch and Cohen, the amounts of $21,310, $13,660, $19,451, $13,814 and $21,014, respectively, for the amounts of our contributory share of the costs of each individuals participation in our general benefit plans, including medical, dental, life and disability insurance plans. |
| With respect to Ms. Bachelder and Messrs. Skehan, Matt, Lynch and Cohen, the amounts of $387, $207, $387, $594 and $207, respectively, for the costs to us for each individuals participation in our group term life insurance policy. |
| With respect to Mr. Matt, the amount of $43,201 for relocation expenses, which was comprised of $28,794 for actual relocation expenses and $14,407 for a tax gross-up. |
| With respect to Mr. Cohen, the amount of $1,441 for a twenty year service award payment. |
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GRANTS OF PLAN-BASED AWARDS IN FISCAL 2015
The following table sets forth certain information regarding potential payouts under the 2015 Incentive Plan and certain information regarding performance shares and stock options granted during the fiscal year ended December 27, 2015 to each of our named executive officers.
Name |
Grant Date |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Possible Payouts Under Equity Incentive Plan Awards(2) |
Restricted Stock Awards: (#)(3) |
All Other Option Awards: Number of Securities Underlying Options (#)(4) |
Exercise Or Base Price of Option Awards ($/share) |
Grant Date Fair Value of Stock And Option Awards ($)(5) |
|||||||||||||||||||||||||||||||||||||
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||
Cheryl A. Bachelder |
412,500 | 825,000 | 1,650,000 | |||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 9,876 | 19,753 | 39,506 | 1,206,316 | ||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 9,876 | 590,091 | ||||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 24,273 | 59.75 | 599,978 | |||||||||||||||||||||||||||||||||||||||||
Andrew G. Skehan |
129,000 | 258,000 | 516,000 | |||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,851 | 3,703 | 7,406 | 226,142 | ||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,851 | 110,597 | ||||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 4,551 | 59.75 | 112,491 | |||||||||||||||||||||||||||||||||||||||||
William P. Matt |
120,000 | 240,000 | 480,000 | |||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,851 | 3,703 | 7,406 | 226,142 | ||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,851 | 110,597 | ||||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 4,551 | 59.75 | 112,491 | |||||||||||||||||||||||||||||||||||||||||
Richard H. Lynch |
129,000 | 258,000 | 516,000 | |||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,851 | 3,703 | 7,406 | 226,142 | ||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,851 | 110,597 | ||||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 4,551 | 59.75 | 112,491 | |||||||||||||||||||||||||||||||||||||||||
Harold M. Cohen |
105,000 | 210,000 | 420,000 | |||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,440 | 2,880 | 5,760 | 175,882 | ||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 1,440 | 86,040 | ||||||||||||||||||||||||||||||||||||||||||
4/5/2015 | 3,539 | 59.75 | 87,477 |
(1) | Reflects the threshold, target and maximum payment levels under the 2015 Annual Incentive Plan. Actual amounts earned by our named executive officers are reported in the Non-Equity Incentive Plan Compensation column in the 2015 Summary Compensation Table. |
(2) | Reflects the threshold, target and maximum number of performance shares that could be earned under the 2015 LTI awards based on the Companys three-year cumulative EBITDA goal and three-year relative TSR, provided that the named executive officer remains employed as of the vesting date. For information about the performance criteria, see the Compensation Discussion and Analysis. |
(3) | Reflects the number of restricted awards granted under the 2006 Stock Incentive Plan. The restricted shares have a three-year cliff vest, and will vest on April 5, 2018. |
(4) | Reflects the number of stock options granted under the 2006 Stock Incentive Plan. The stock options vest over a three year period with 1/3 vesting on April 5, 2016, April 5, 2017, and April 5, 2018, respectively. |
(5) | Reflects the grant date fair value of restricted stock grants, performance shares and stock options under FASB ASC Topic 718 granted to each of the named executive officers in 2015. The grant date fair value of restricted awards is based on the close of the Companys stock on the date of grant. With respect to the performance shares, the grant date fair value is based on a 100% probability of meeting the target performance conditions. The grant date fair value of option awards was estimated on the date of grant using a Black-Scholes option-pricing model. There can be no assurance that the grant date fair value of the restricted stock, performance shares and option awards will ever be realized. |
41
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
The following table includes information regarding the value of all unexercised options and restricted stock awards held by the named executive officers as of December 27, 2015.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number
of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Grant Date |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($)(2) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) |
|||||||||||||||||||||||||||
Cheryl A. Bachelder |
46,610 | 0 | 16.52 | 04/10/12 | 04/10/19 | 9,876 | (4) | 573,697 | 22,840 | (5) | 1,326,776 | |||||||||||||||||||||||||
0 | 24,273 | (3) | 59.75 | 04/05/15 | 04/05/22 | 1,465 | (1) | 85,102 | 24,335 | (6) | 1,413,620 | |||||||||||||||||||||||||
17,131 | 8,566 | (3) | 34.75 | 04/05/13 | 04/05/20 | 2,527 | (1) | 146,793 | 19,753 | (7) | 1,147,452 | |||||||||||||||||||||||||
10,035 | 20,070 | (3) | 41.66 | 04/05/14 | 04/05/21 | |||||||||||||||||||||||||||||||
Andrew G. Skehan |
0 | 4,551 | (3) | 59.75 | 04/05/15 | 04/05/22 | 1,851 | (4) | 107,525 | 3,198 | (5) | 185,772 | ||||||||||||||||||||||||
0 | 1,200 | (3) | 34.75 | 04/05/13 | 04/05/20 | 1,491 | (8) | 86,612 | 4,239 | (6) | 246,244 | |||||||||||||||||||||||||
0 | 3,496 | (3) | 41.66 | 04/05/14 | 04/05/21 | 3,708 | (7) | 215,107 | ||||||||||||||||||||||||||||
William P. Matt |
780 | 1,561 | (3) | 39.27 | 08/21/14 | 08/21/21 | 1,851 | (4) | 107,525 | 3,703 | (7) | 215,107 | ||||||||||||||||||||||||
0 | 4,551 | (3) | 59.75 | 04/05/15 | 04/05/22 | 1,893 | (6) | 109,964 | ||||||||||||||||||||||||||||
Richard H. Lynch |
4,730 | 0 | 15.32 | 04/05/11 | 04/05/18 | 1,851 | (4) | 107,525 | 5,181 | (6) | 399,964 | |||||||||||||||||||||||||
0 | 4,551 | (3) | 59.75 | 04/05/15 | 04/05/22 | 3,464 | (5) | 201,224 | ||||||||||||||||||||||||||||
8,300 | 0 | 8.30 | 08/31/09 | 08/31/16 | 3,703 | (7) | 215,107 | |||||||||||||||||||||||||||||
7,810 | 0 | 10.94 | 04/05/10 | 04/05/17 | ||||||||||||||||||||||||||||||||
2,598 | 1,299 | (3) | 34.75 | 04/05/13 | 04/05/20 | |||||||||||||||||||||||||||||||
2,136 | 4,274 | (3) | 41.66 | 04/05/14 | 04/05/21 | |||||||||||||||||||||||||||||||
5,932 | 0 | 16.52 | 04/10/12 | 04/10/19 | ||||||||||||||||||||||||||||||||
Harold M. Cohen |
0 | 3,539 | (3) | 59.75 | 04/05/15 | 04/05/22 | 1,440 | (4) | 83,650 | 3,502 | (5) | 203,431 | ||||||||||||||||||||||||
0 | 1,314 | (3) | 34.75 | 04/05/13 | 04/05/20 | 2,880 | (7) | 167,299 | ||||||||||||||||||||||||||||
1,748 | 3,496 | (3) | 41.66 | 04/05/14 | 04/05/21 | 4,239 | (6) | 246,244 |
(1) | The restricted stock units earned by Ms. Bachelder as a Board member of the Company prior to becoming CEO are fully vested, but the shares are not issued until such time as Ms. Bachelder no longer serves on the Companys Board. |
(2) | Market value was calculated using the closing price of our stock on the last business day of fiscal 2015 ($58.09) multiplied by the number of unvested shares on December 27, 2015. |
(3) | The stock options vest in equal parts on each of the first three anniversaries of the date of the grant. |
(4) | The restricted stock vests on April 5, 2018. |
(5) | The performance shares vested on April 5, 2016, as performance measure conditions for the cumulative fiscal years of 2013-2015 were satisfied at approximately 107.6% and the recipient continuously remained our employee through the vest period. |
(6) | Reflects the target number of shares of performance shares that will vest if the performance measures conditions for the cumulative fiscal years of 2014-2016 are satisfied and the recipient continuously remains our employee through the three year measurement period. |
(7) | Reflects the target number of shares of performance shares that will vest if the performance measures conditions for the cumulative fiscal years of 2015-2017 are satisfied and the recipient continuously remains our employee through the three year measurement period. |
(8) | The restricted stock vests on September 2, 2017. |
42
OPTION EXERCISES AND STOCK VESTED IN 2015
The following table includes information regarding exercises of stock options, and vesting of performance shares and restricted stock during 2015 for the named executive officers.
Option Awards | Stock Awards | |||||||||||||||
Name |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($)(1) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(2) |
||||||||||||
Cheryl A. Bachelder |
166,721 | 7,941,799 | 95,218 | 5,689,276 | ||||||||||||
Andrew Skehan |
10,078 | 351,942 | 12,117 | 723,991 | ||||||||||||
William P. Matt |
0 | | 5,000 | 274,850 | ||||||||||||
Richard H. Lynch |
0 | | 15,749 | 941,003 | ||||||||||||
Harold M. Cohen |
6,406 | 223,026 | 13,849 | 827,478 |
(1) | Reflects the value as calculated by the difference between the market price of our common stock at the time of the exercise and the exercise price of the stock options. |
(2) | Reflects the value as calculated by multiplying the number of shares of stock by the closing market price of our common stock on the date of vesting. |
43
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Our Compensation Committee believes that we should provide reasonable severance benefits to our employees, and that it is necessary to provide these benefits in order to retain our management. With respect to senior management, these severance benefits are intended to reflect the fact that it may be difficult for employees at the senior level to find comparable employment within a short period of time.
As of the end of our fiscal year 2015, we had employment agreements with our named executive officers that provide for defined severance benefits upon the occurrence of certain employment termination events including death, disability, termination without cause and termination as a result of a constructive discharge.
Where the termination is involuntary by the Company without cause or by the executive under circumstances constituting a constructive discharge (as such terms are defined in the employment agreements), these employment agreements provide for benefits equal to (a) two years of base salary and targeted incentive award and an annual incentive award for the year of termination in the case of our CEO and a pro rata portion of the target annual incentive award in the year of termination in the case of our General Counsel, and (b) one year of base salary and targeted incentive award and a pro rata portion of the target annual incentive award in the year of termination in the case of our other NEOs. These employment agreements also provide that we accelerate unvested rights under any equity grants. These benefits are payable to the named executive officers under the circumstances described above regardless of whether there has been a change in control of the Company, and are conditioned upon the delivery of a general release in favor of the Company.
Where the termination is for cause or voluntary on the part of any member of senior management, our employment agreements do not provide for severance benefits and there is no acceleration of any unvested rights under any equity grants. We consider early retirement a voluntary termination for these purposes and our employment agreements do not provide for severance benefits or acceleration of any unvested rights under any equity grants in this event. For our executives, cause will be deemed to exist where the individual commits fraud or is convicted of a crime involving moral turpitude, has been guilty of gross neglect or gross misconduct resulting in harm to us, failed to materially comply with our policies or shall have refused to follow or comply with our policies or the duly promulgated directives of the Board, breached a covenant not to disclose proprietary or confidential information, non-disparagement or non-solicitation or otherwise materially breaches the terms of employment with us.
44
The following table reflects the amounts that would be payable to each of the named executive officers in the event of certain employment termination events, including involuntary termination, and termination due to death or disability. The amounts shown assume that such termination, death or disability was effective as of December 27, 2015. Our closing stock price on the last business day prior to December 27, 2015 was $58.09.
Name |
Base
Salary ($)(1) |
Annual Incentives ($) |
Vesting
of Stock Options ($)(4) |
Vesting
of Stock Awards ($)(4) |
Career
Planning ($)(5) |
Total ($) |
||||||||||||||||||
Cheryl A. Bachelder |
||||||||||||||||||||||||
Termination Without Cause or due to Constructive Discharge |
1,650,000 | 1,650,000 | (2) | 529,681 | 4,693,440 | 15,000 | 8,538,121 | |||||||||||||||||
Death |
| 997,673 | (3) | | | | 750,000 | |||||||||||||||||
Disability |
| 997,673 | (3) | | | | 750,000 | |||||||||||||||||
Andrew G. Skehan |
||||||||||||||||||||||||
Termination Without Cause or due to Constructive Discharge |
430,000 | 258,000 | (2) | 170,136 | 841,260 | 15,000 | 1,714,396 | |||||||||||||||||
Death |
| 415,522 | (3) | | | | 258,000 | |||||||||||||||||
Disability |
| 415,522 | (3) | | | | 258,000 | |||||||||||||||||
William P. Matt |
||||||||||||||||||||||||
Termination Without Cause or due to Constructive Discharge |
400,000 | 240,000 | (2) | 29,378 | 432,596 | 15,000 | 1,116,974 | |||||||||||||||||
Death |
| 290,232 | (3) | | | | 240,000 | |||||||||||||||||
Disability |
| 290,232 | (3) | | | | 240,000 | |||||||||||||||||
Richard H. Lynch |
||||||||||||||||||||||||
Termination Without Cause or due to Constructive Discharge |
430,000 | 258,000 | (2) | 100,540 | 824,820 | 15,000 | 1,628,360 | |||||||||||||||||
Death |
| 327,144 | (3) | | | | 258,000 | |||||||||||||||||
Disability |
| 327,144 | (3) | | | | 258,000 | |||||||||||||||||
Harold M. Cohen |
||||||||||||||||||||||||
Termination Without Cause or due to Constructive Discharge |
700,000 | 420,000 | (2) | 149,399 | 700,623 | 15,000 | 1,985,022 | |||||||||||||||||
Death |
| 253,953 | (3) | | | | 210,000 | |||||||||||||||||
Disability |
| 253,953 | (3) | | | | 210,000 |
(1) | Amounts reflect two times current base salary for Ms. Bachelder and Mr. Cohen, and one times current base salary for the other named executive officers. |
(2) | Amounts reflect two times target annual incentive for Ms. Bachelder and Mr. Cohen, and one times target annual incentive for the other named executive officers. |
(3) | Amounts reflect the annual incentive actually earned by the named executive officer. These amounts are reported as 2015 compensation in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. |
(4) | Reflects the value of unvested time-based stock options and restricted stock, and performance shares for which performance goals have been established, that would accelerate and vest upon the specific termination event. For purposes of this table, it is assumed that all of the stock options and restricted stock held by Ms. Bachelder and Messrs. Skehan, Matt, Lynch and Cohen would accelerate as of December 27, 2015. For purposes of this table, it is assumed that with respect to performance shares for which performance goals have been established, held by Ms. Bachelder and Messrs. Skehan, Matt, Lynch and Cohen would accelerate as of December 27, 2015, to the target amount of performance shares. Our closing stock price on the last business day prior to December 27, 2015 was $58.09. |
(5) | Upon a termination without cause, we would provide outplacement services for a period of six months. |
45
DIRECTOR COMPENSATION FOR 2015
We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, the Board considers the significant amount of time that directors expend in fulfilling their duties to us as well as the experience and skills of the Board member.
Upon election to the Board at our annual meeting of shareholders, non-employee members of the Board (other than the Chairman of the Board) receive an annual cash retainer of $60,000. The Chairman of the Board receives an annual cash retainer of $160,000. The directors who serve as chair of the Audit Committee and the People Services (Compensation) Committee each receive $15,000 annually in addition to the annual cash retainer. The director who serves as chair of the Corporate Governance and Nominating Committee receives $7,500 annually in addition to the annual cash retainer. Additionally, all non-employee members of the Board receive an annual grant of restricted stock units with an estimated grant date fair value equal to $100,000, with the number of restricted stock units granted being based on a 30 day average of our closing stock price prior to the date of the grant. The restricted stock units vest on the one-year anniversary of the grant date, and are settled in stock at the termination of the non-employee directors service on the Board unless the non-employee director makes an election otherwise in accordance with the our director compensation policies; provided, however, that any non-employee director that leaves Board service prior to the fulfillment of their term will vest in a prorated portion of such award. Non-employee directors are required to accumulate three times their annual cash retainer over the first five years of service.
Cheryl A. Bachelder receives no additional compensation for serving as a member of the Board. Ms. Bachelders compensation as CEO and President can be found in the Summary Compensation Table above.
The following table includes information regarding the compensation paid to our non-employee directors for 2015:
Name(3) |
Fees Earned or Paid in Cash ($)(1) |
Stock Awards ($)(2) |
Total ($) |
|||||||||
Krishnan Anand |
75,000 | 100,407 | 175,407 | |||||||||
Carolyn Hogan Byrd |
67,500 | 100,407 | 167,907 | |||||||||
John M. Cranor, III |
160,000 | 100,407 | 260,407 | |||||||||
S. Kirk Kinsell |
60,000 | 129,259 | 189,259 | |||||||||
Joel K. Manby |
60,000 | 100,407 | 160,407 | |||||||||
Martyn R. Redgrave |
75,000 | 100,407 | 175,407 | |||||||||
Lizanne Thomas(4) |
35,000 | 58,611 | 93,611 |
(1) | The amounts shown in this column include annual cash retainers and committee chairmanship fees. |
(2) | Amounts in this column are calculated utilizing the grant date fair value of restricted stock units under FASB ASC Topic 718. The grant date fair values of the restricted stock unit awards are calculated using the Nasdaq Global Market closing price on the date of grant. The actual grant date fair value of restricted stock units differs from the estimated grant date fair value of $100,000, as the estimated grant amount for each director was calculated by dividing the value of $100,000 by the 30 day average of our closing stock price prior to the date of the grant. |
(3) | Candace S. Matthews is not included as she did not serve as a member of the Board during 2015. |
(4) | Ms. Thomas was appointed to the Board on November 2, 2015. |
.
46
The following table reflects the outstanding restricted stock units held by our non-employee directors as of December 27, 2015:
Krishnan Anand |
14,547 | |||
Carolyn Hogan Byrd |
39,683 | |||
John M. Cranor III |
37,800 | |||
S. Kirk Kinsell |
2,265 | |||
Joel K. Manby |
5,427 | |||
Martyn R. Redgrave |
5,128 | |||
Lizanne Thomas |
1,027 |
47
The People Services (Compensation) Committee has reviewed the Compensation Discussion and Analysis (CD&A) and discussed it with management. Based on the review and the discussions with management, the Compensation Committee recommended to the Board that the CD&A be included in the 2016 proxy statement and incorporated by reference in the Annual Report on Form 10-K for the year ended December 27, 2015 filed with the Securities and Exchange Commission.
The People Services (Compensation) Committee |
Krishnan Anand, Chair S. Kirk Kinsell Joel K. Manby Martyn R. Redgrave |
48
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 27, 2015.
Plan Category |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted-average Exercise Price of Outstanding Options, Warrants and Rights(1) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans |
|||||||||
Equity compensation plans approved by security holders: |
||||||||||||
AFC Enterprises, Inc. 2002 Incentive Stock Plan |
0 | 0 | 0 | |||||||||
AFC Enterprises, Inc. 2006 Incentive Stock Plan |
291,647 | $ | 33.93 | 990,269 | (2) | |||||||
Popeyes Louisiana Kitchen, Inc. 2015 Incentive Stock Plan |
1,645 | $ | 57.00 | 2,183,167 | (2) | |||||||
Equity compensation plans not approved by security holders: |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
293,292 | $ | 34.06 | 3,173,436 |
(1) | During 2005, in connection with the declaration of a special cash dividend, our Board approved adjustments to outstanding options under our Employee stock option plans. The modifications adjusted the exercise price and the number of shares associated with each employees outstanding stock options to preserve the value of the options after the special cash dividend. We did not recognize a charge as a result of the modifications because the intrinsic value of the awards and the ratio of the exercise price to the market value per share for each award did not change. |
(2) | All of these shares are available for issuance pursuant to grants of full-value stock awards. |
49
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm to audit our consolidated financial statements for the year ending December 25, 2016. PwC also served as our independent registered public accounting firm to audit our consolidated financial statements for the years ending December 27, 2015 and December 28, 2014. A representative of PwC will be present at the Annual Meeting of shareholders, will have the opportunity to make a statement and will be available to respond to appropriate questions by shareholders. Notwithstanding the ratification, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that the change would be in the best interests of the Company and our shareholders. In the event that the appointment of PwC is not ratified, the Audit Committee will consider the appointment of another independent registered public accounting firm, but will not be required to appoint a different firm.
Board Recommendation
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
50
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Pay that reflects performance and alignment of pay with the long-term interests of our shareholders are key principles that underlie our compensation program. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, shareholders have the opportunity to vote, on an advisory basis, on the compensation of our named executive officers. This is often referred to as a say on pay, and provides you, as a shareholder, with the ability to cast a vote with respect to our executive compensation programs and policies and the compensation paid to the named executive officers as disclosed in this Proxy Statement through the following resolution:
RESOLVED, that the shareholders approve, on an advisory (non-binding) basis, the compensation of the named executive officers of the Company, as described in the Compensation Discussion and Analysis section and in the compensation tables and accompanying narrative disclosure in this Proxy Statement.
As discussed in the Compensation Discussion and Analysis section, the compensation paid to our named executive officers reflects the following principles and objectives of our compensation program:
| Attract and retain qualified management; |
| Be competitive with comparable employers; and |
| Align managements incentives with the long-term interests of our shareholders. |
Although the vote is non-binding, the People Services (Compensation) Committee will review the voting results. To the extent there is any significant negative vote, we will consult directly with shareholders to better understand the concerns that influenced the vote.
Board Recommendation
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF EXECUTIVE COMPENSATION.
51
52
GENERAL |
53
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES IN ITEM 1. |
1. Election of Directors: | 01 - Krishnan Anand 05 - S. Kirk Kinsell 09 - Lizanne Thomas |
02 - Cheryl A. Bachelder 06 - Joel K. Manby |
03 - Carolyn Hogan Byrd 07 - Candace S. Matthews |
04 - John M. Cranor, III 08 - Martyn R. Redgrave |
+ |
¨ | Mark here to vote FOR all nominees |
¨ | Mark here to WITHHOLD vote from all nominees |
¨ |
For All EXCEPT - To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below. | |||||||||
|
B | THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 2 AND 3. |
For | Against | Abstain | For | Against | Abstain | |||||||||
2. Ratification of the appointment of PricewaterhouseCoopers LLP as PLKIs independent registered public accounting firm for the fiscal year ending December 25, 2016. |
¨ | ¨ | ¨ | 3. Approval, on an advisory basis, of the compensation of the named executive officers. |
¨ | ¨ | ¨ | |||||||
4. To transact such other business properly coming before the meeting or any adjournment thereof. |
C | Non-Voting Items |
Change of Address Please print new address below.
|
D | Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below |
Please sign EXACTLY as your name(s) appears hereon. If shares are held jointly, each joint owner should sign. When signing as administrator, attorney, executor, guardian or trustee, please give your full title. If the shareholder is a corporation or partnership, please sign the full corporate or partnership name by a duly authorized person.
Date (mm/dd/yyyy) Please print date below. | Signature 1 Please keep signature within the box. | Signature 2 Please keep signature within the box. |
/ / |
02C5IA
2016 Annual Shareholders Meeting
Admission Card
You should bring this Admission Card to the Annual Meeting to be admitted.
Only the shareholder whose name appears on this card will be admitted.
Due to space limitation, admission to the meeting will be on a first-come, first-served basis.
Registration will begin at 8:00 A.M.
Thursday, May 19, 2016, 8:30 A.M. Local Time
Le Meridien Atlanta Perimeter
111 Perimeter Center West
Atlanta, Georgia 30346
YOUR VOTE IS IMPORTANT
If you do not vote by telephone or Internet, please sign and date this proxy card and return it promptly in the enclosed postage-paid envelope to Computershare Trust Company, N.A., P.O. Box 43101, Providence, RI 02940-3070, so your shares may be represented at the Annual Meeting. If you vote by telephone or Internet, it is not necessary to return this proxy card.
Proxy card must be signed and dated on the reverse side.
Please fold and detach card at perforation before mailing.
Important notice regarding the Internet availability of
proxy materials for the Annual Meeting of shareholders.
The proxy statement and annual report are available at:
www.edocumentview.com/PLKI
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy POPEYES LOUISIANA KITCHEN, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POPEYES LOUISIANA KITCHEN, INC.
The undersigned hereby appoints Peter H. Ward and Harold M. Cohen, and each of them, as proxies with full power of substitution, for and in the name of the undersigned, to vote all shares of common stock, par value $.01 per share, of Popeyes Louisiana Kitchen, Inc. that the undersigned would be entitled to vote on the matters described in the accompanying Proxy Statement and Notice of 2016 Annual Shareholders Meeting, receipt of which is hereby acknowledged, and upon any other business which may properly come before the Annual Meeting to be held at the Le Meridien Atlanta Perimeter, 111 Perimeter Center West, Atlanta, Georgia 30346, on Thursday, May 19, 2016 at 8:30 a.m., local time, or any adjournment thereof. This proxy, if properly executed and delivered, will revoke all prior proxies.
The proxies shall vote subject to the directions indicated on this proxy card, and the proxies are authorized to vote in their discretion upon other business as may properly come before the Annual Meeting or any adjournment thereof. The proxies will vote as the Board of Directors recommends where a choice has not been specified. If you wish to vote in accordance with the recommendations of the Board of Directors, all you need to do is sign and return this card. The proxies cannot vote your shares unless you sign, date and return this proxy card.
IF YOU DO NOT VOTE BY TELEPHONE OR INTERNET, PLEASE SIGN, DATE AND MAIL THIS PROXY CARD IN THE ACCOMPANYING ENVELOPE.
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