DEF 14A 1 d754382ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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Aramark

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LOGO Notice of 2020 Annual Meeting of Shareholders And Proxy Statement Aramark


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LOGO

2020 Annual Meeting of Shareholders Wednesday, January 29, 2020 at 10:00 AM EST The Rittenhouse Hotel 210 W. Rittenhouse Square, Philadelphia, PA 19103


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Letter from Our Chairman

Dear Fellow Shareholders,

2019 has been a year of progress for Aramark that included solid revenue growth, higher earnings, greater procurement scale and strong free cash flow that drove increased financial flexibility. The Board has taken a number of actions to invigorate the Company’s culture and position Aramark to unlock the future economic potential of the business. We are committed to creating sustainable shareholder value through execution against a focused strategy, prudent risk management, robust succession planning, sound corporate governance, effective executive compensation programs, and environmental and social responsibility initiatives. Below we highlight a few areas of particular significance.

New Leadership

The Board recently appointed industry veteran John Zillmer as Chief Executive Officer and a member of the Board of Directors. John has a proven track record of driving market-leading business results, including 23 years of prior experience at Aramark. Following his initial tenure at Aramark, John served as Chairman and CEO of Allied Waste Industries, where his transformation of the company became an industry benchmark, and as Chairman and CEO at Univar, where he advanced corporate culture and drove substantial operational improvements. The Board is excited to welcome John back to the Company and to work closely with him as Aramark charts a dynamic path forward.

Board Composition

As part of our evolution of the Board, we appointed four new independent directors: Susan Cameron, former Chairman and CEO of Reynolds American Inc.; Paul Hilal, founder and CEO of Mantle Ridge LP; Karen King, former Executive Vice President and Chief Field Officer of McDonald’s Corporation; and Art Winkleblack, former Executive Vice President and Chief Financial Officer of H.J. Heinz Company. An additional independent director, Greg Creed, Chief Executive Officer of Yum! Brands, will stand for election at our upcoming Annual Meeting.

These new directors join our existing directors who bring a range of skills and industry experience, including demonstrated expertise in driving transformational cultural change and organic operating performance in their respective leadership positions.

As part of our leadership framework, I assumed the role of independent Chairman of the Board. In addition, Paul Hilal, Aramark’s largest shareholder, now serves as Vice Chairman, with considerable experience as an owner-steward.

I would like to thank the recently retired directors for their many contributions and years of dedicated service to the Company.

Say-on-Pay

The arrival of a new CEO has provided an opportunity to address shareholder feedback on CEO pay. To this end, the compensation package for the CEO recognizes an appropriate level of pay consistent with market competitive practices, while retaining strong pay for performance alignment and elements of our overall compensation program. We have also addressed other aspects of our compensation program applicable to all of our named executive officers, as detailed in this proxy statement.

Sustainability Plan

Our new sustainability plan, Be Well. Do Well., accelerates our sustainability efforts and centers on positively impacting both people and planet. As part of this strategy, we identified priorities that align with our business objectives, with a focus on efforts to help people and our planet, as we serve the Company’s client partners, employees, shareholders and other stakeholders.

Employee engagement is a priority of our plan, as we advance our diverse and inclusive culture. In 2019, we introduced programs that benefit our employees, including targeted wage increases, expanding training and development, and scholarships for our employees and their children.

Well Positioned for the Future

The Board, Leadership Team and I firmly believe that now is the time to pursue a more accelerated revenue growth strategy, while balancing other important financial drivers of the business. We are confident that our plan will propel future success and deliver meaningful value for all stakeholders.

It is a privilege to serve as your Chairman and I greatly value your support of Aramark. On behalf of my fellow directors, we look forward to updating you on the Company’s progress in the coming year.

Sincerely,

 

 

LOGO

Stephen I. Sadove

Chairman of the Board

 

 


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A Message from Our Chief Executive Officer

Dear Fellow Shareholders,

I want to thank Steve Sadove and the Board for the opportunity to return to Aramark, a company where I spent 23 years earlier in my career, and a company that I have always greatly admired and respected. While market trends and dynamics have changed considerably since I was Global President of Aramark’s Food & Support Services, one constant remains – the extraordinary pride of the Aramark associates who passionately serve our valued business partners and customers every day. This entrepreneurial spirit is what brought me back to Aramark at such an exciting time in our 80+ year history.

I applaud the organization for tripling procurement scale, growing the portfolio, and strengthening the balance sheet. While still early in my time back with the Company, I am confident there is substantial opportunity to move the business forward and create significant value for all of our stakeholders.

My immediate priority is to nurture a hospitality culture that solidifies the foundation for our accelerated growth strategies. This means a renewed commitment to engaging and supporting our diverse employee base; sharpening our focus on quality and innovation; and operating with integrity, day in and day out.

I greatly appreciate the honor to lead this iconic company and look forward to charting Aramark’s future success with our valued team members and partners.

Sincerely,

 

 

LOGO

John Zillmer

Board of Directors

 

 

LOGO

Left to Right:

Art Winkleblack, Daniel Heinrich, Susan Cameron, Paul Hilal, John Zillmer, Stephen Sadove, Irene Esteves, Calvin Darden, Karen King, Richard Dreiling

 

 


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LOGO

 

Notice of 2020 Annual Meeting of Shareholders

 

DATE AND TIME:

Wednesday, January 29, 2020 at 10:00 am (Eastern Standard Time)

PLACE:

The Rittenhouse Hotel, 210 W. Rittenhouse Square, Philadelphia, PA 19103

ITEMS OF BUSINESS:

 

PROPOSAL 1.    To elect the 11 director nominees listed in the proxy statement to serve until the 2021 annual meeting of shareholders and until their respective successors have been duly elected and qualified;

 

PROPOSAL 2.

  

 

To consider and vote upon a proposal to ratify the appointment of KPMG LLP as Aramark’s independent registered public accounting firm for the fiscal year ending October 2, 2020;

 

PROPOSAL 3.

  

 

To hold a non-binding advisory vote on executive compensation;

 

PROPOSAL 4.

  

 

To approve the Company’s Second Amended and Restated 2013 Stock Incentive Plan; and

 

PROPOSAL 5.

  

 

To approve the Company’s Second Amended and Restated Certificate of Incorporation to permit the holders of at least fifteen percent (15%) of the Company’s outstanding shares of common stock to call special meetings of shareholders for any purpose permissible under applicable law and to delete certain obsolete provisions.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

RECORD DATE:

The Board of Directors has fixed December 9, 2019 as the record date for the meeting. This means that only shareholders as of the close of business on that date are entitled to receive this notice of the meeting and vote at the meeting and any adjournments or postponements of the meeting.

HOW TO VOTE:

Shareholders of record can vote their shares by using the Internet or the telephone or by attending the meeting in person and voting by ballot. Instructions for voting by using the Internet or the telephone are set forth in the Notice of Internet Availability that has been provided to you. Shareholders of record who received a paper copy of the proxy materials also may vote their shares by marking their votes on the proxy card provided, signing and dating it, and mailing it in the envelope provided, or by attending the meeting in person and voting by ballot.

 

By Order of the Board of Directors,

LOGO

Harold B. Dichter

Secretary

December 20, 2019

 

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Table of Contents

 

 

 

 

Proxy Statement Summary

     2  

Corporate Governance Matters

     3  

Proposal No. 1 – Election of Directors

     3  

Overview of Our Director Nominees

     4  

Director Nominees

     5  

Corporate Governance

     13  

Director Compensation

     20  

Audit Committee Matters

     23  

Proposal No.  2 – Ratification of Independent Registered Public Accounting Firm

     23  

Fees to Independent Registered Public Accounting Firm

     24  

Report of Audit and Corporate Practices Committee

     25  

Compensation Matters

     26  

Proposal No.  3 – Advisory Vote to Approve Executive Compensation

     26  

Compensation Discussion and Analysis

     27  

Compensation Committee Report

     55  

Compensation Tables

     56  

Equity Compensation Plan Information

     73  

Proposal No.  4 – Vote to Approve Second Amended and Restated 2013 Stock Incentive Plan

     74  

Proposal No.  5 – Vote to Approve Second Amended and Restated Certificate of Incorporation

     83  

Certain Relationships and Related Transactions

     85  

Security Ownership of Certain Beneficial Owners and Management

     86  

Delinquent Section 16(a) Reports

     88  

General Information

     89  

2020 Annual Shareholders Meeting

     89  

2021 Annual Shareholders Meeting

     93  

Annex A

     Annex-1  

Appendix A

     A-1  

Appendix B

     B-1  

 

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LOGO

 

Proxy Statement Summary

 

 

This summary highlights information contained elsewhere in this proxy statement, which is first being sent or made available to shareholders on or about December 20, 2019. You should read the entire proxy statement carefully before voting. For more information regarding the Company’s 2019 performance, please review Aramark’s Annual Report.

VOTING MATTERS AND BOARD RECOMMENDATIONS

 

 

Proposal

 

 

 

Board’s Recommendation

 

Proposal 1. Election of 11 Director Nominees (page 3)

 

 

FOR Each Director Nominee

 

Proposal 2. Ratification of KPMG LLP as Independent Registered Public

Accounting Firm for 2020 (page 23)

 

 

FOR

 

Proposal 3. Advisory Approval of Executive Compensation (page 26)

 

 

FOR

 

Proposal 4. Approval of Company Second Amended and Restated 2013 Stock Incentive Plan (page 74)

 

 

FOR

 

Proposal 5. Approval of Company Second Amended and Restated Certificate of Incorporation to permit holders of at least fifteen percent (15%) of the Company’s outstanding shares of common stock to call special meetings of shareholders for any purpose permissible under applicable law and to delete certain obsolete provisions (page 83)

 

 

FOR

 

2020 ANNUAL MEETING OF SHAREHOLDERS

 

Date and Time:

   Wednesday, January 29, 2020 at 10:00 am EST

Record Date:

   December 9, 2019

Place:

   The Rittenhouse Hotel, 210 W. Rittenhouse Square, Philadelphia, PA 19103

 

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Corporate Governance Matters

 

 

 

PROPOSAL NO. 1 — ELECTION OF DIRECTORS

 

PROPOSAL SUMMARY

What Are You Voting On?

We are asking our shareholders to elect 11 director nominees listed below to serve on the Board for a one-year term. Information about the Board and each director nominee is included in this section.

Voting Recommendation

The Board recommends that you vote “FOR” each director nominee listed below. After consideration of the individual qualifications, skills and experience of each of our director nominees and his or her prior contributions to the Board, if applicable, it believes a Board composed of the 11 director nominees would be well-balanced and effective.

The Board, upon recommendation from the Nominating and Corporate Governance Committee (the “Nominating Committee”), has nominated 11 directors for election at the Annual Meeting. Each of the directors elected at the annual meeting will hold office until the annual meeting of shareholders to be held in 2021 or until his or her successor has been elected and qualified, or until his or her earlier death, resignation, removal or disqualification.

Unless contrary instructions are given, the shares represented by a properly executed proxy will be voted “FOR” each of the director nominees presented below. If, at the time of the meeting, one or more of the director nominees has become unavailable to serve, shares represented by proxies will be voted for the remaining director nominees and for any substitute director nominee or nominees designated by the Board of Directors, unless the size of the Board is reduced. The Board knows of no reason why any of the director nominees will be unavailable or unable to serve. Proxies cannot be voted for a greater number of persons than the director nominees listed.

 

 

LOGO

The Board of Directors recommends a vote "FOR" each nominee for director

 

 

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OVERVIEW OF OUR DIRECTOR NOMINEES

Each of our 11 nominees has extensive leadership experience and relevant expertise and, except for Mr. Creed, currently serves as a director for the Company. The Board undergoes an annual self-assessment and review to ensure that it has a balanced mix of skills and attributes to best oversee our business.

 

       

 

Director

 

 

Age

 

 

Background

 

 

Current Committee

Memberships

 

Susan M. Cameron

 

 

61

 

 

Former Chairman and Chief

Executive Officer, Reynolds

American Inc.

 

 

Compensation and Human

Resources Nominating and

Corporate Governance

 

Greg Creed

 

 

62

 

 

Chief Executive Officer, Yum!

Brands, Inc.

 

 

 

None, New Director Nominee

 

Calvin Darden

 

 

69

 

 

Former Senior Vice President, U.S.

Operations, United Parcel Service,

Inc.

 

 

Audit and Corporate Practices

Finance

 

Richard W. Dreiling

 

 

66

 

 

Former Chairman and Chief

Executive Officer, Dollar General

Corporation

 

 

Compensation and Human

Resources Nominating and

Corporate Governance

 

Irene M. Esteves

 

 

60

 

 

Former Chief Financial Officer, Time

Warner Cable Inc.

 

 

 

Audit and Corporate Practices

Finance

 

Daniel J. Heinrich

 

 

63

 

 

Former Executive Vice President

and Chief Financial Officer, The

Clorox Company

 

 

Audit and Corporate Practices

Finance

 

Paul C. Hilal

 

 

53

 

 

Founder and Chief Executive Officer,

Mantle Ridge LP

 

 

Compensation and Human

Resources Nominating and

Corporate Governance

 

Karen M. King

 

 

63

 

 

Former Executive Vice President,

Chief Field Officer, McDonald’s Corp.

 

 

 

Audit and Corporate Practices

Finance

 

Stephen I. Sadove

 

 

68

 

 

Former Chairman and Chief

Executive Officer, Saks Incorporated

 

 

Compensation and Human

Resources Nominating and

Corporate Governance

 

Arthur B. Winkleblack

 

 

62

 

 

Former Executive Vice President

and Chief Financial Officer, H.J.

Heinz Company

 

 

Audit and Corporate Practices

Nominating and Corporate

Governance

 

John J. Zillmer

 

 

64

 

 

Chief Executive Officer, Aramark

 

 

 

 

None

 

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DIRECTOR NOMINEES

The following information describes certain information regarding our director nominees as of December 9, 2019.

Director Nominee Composition

 

 

LOGO

TENURE70-3 years2 4-6 years 2 7 + years 2yrs. Average Tenure 40%Diversity 3 Women / 2 Ethnically Diverse

Director Nominee Skills, Experience, and Background

The Board regularly reviews the skills, experience, and background that it believes are desirable to be represented on the Board and, in conjunction with the Board’s refreshment process described below, has recently re-evaluated these skills and qualifications to better align with the Company’s strategic vision, and business and operations. The following is a description of some of these skills, experience, and background:

 

 

LOGO

Strategic Leadership Experience driving strategic direction and growth of an organization Industry Background Knowledge of or experience in one or more of the Companys specific industries (e.g., food, facilities management, and uniform services) Financial Acumen & Expertise Experience or expertise in financial accounting and reporting or the financial management of a major organization Senior Management Leadership Experience serving in a senior leadership role of a major organization (e.g., Chief Financial Officer, General Counsel, President, or Division Head) CEO Leadership Experience serving as the Chief Executive Officer of a major organization Operations Management Expertise Experience or expertise in managing the operations of a business or major organization Public Company Board Service Experience as a board member of another publicly-traded company Corporate Finance & M&A Experience Experience in corporate lending or borrowing, capital markets transactions, significant mergers or acquisitons, private equity, or investment banking Technology Background or Expertise Experience or expertise in information technology or the use of digital media or technology to facilitate business objectives International Experience Experience doing business internationally

 

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The following is a summary of some of the skills, experience, and background that our director nominees bring to the Board:

 

 

LOGO

SKILLS, EXPERIENCE AND BACKGROUND STRATEGIC LEADERSHIP 100% CORPORATE FINANCE & M&A EXPERIENCE 73% SENIOR MANAGEMENT LEADERSHIP 100% INTERNATIONAL EXPERIENCE 45% TECHNOLOGY BACKGROUND OR EXPERTISE 18% FINANCIAL ACUMEN & EXPERTISE 64% PUBLIC COMPANY BOARD SERVICE 91% INDUSTRY BACKGROUND 27% CEO LEADERSHIP 55% OPERATIONS MANAGEMENT EXPERTISE 73%

 

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Susan M. Cameron Director since: 2019 Age: 61 Former Chairman and Chief Executive Officer, Reynolds American Inc. Biography: Susan M. Cameron most recently served as the Non-Executive Chairman of Reynolds American Inc. from May 2017 to July 2017, its Executive Chairman from January 2017 to May 2017, and its President and Chief Executive Officer and member of the board of directors from 2014 to December 2016 and 2004 to 2011. Prior to that, Ms. Cameron held various marketing, management and executive positions at Brown & Williamson Tobacco Corporation, a U.S. tobacco company. She currently serves as a director of nVent Electric plc and Tupperware Brands Corporation. Ms. Cameron previously served as a director of Reynolds American Inc., and R.R. Donnelley & Sons Company. Skills & Qualifications: Ms. Cameron's experience as a public company CEO, her experience on the boards of other public companies and her considerable experience in the marketing for international name-brand consumer products companies enable her to provide key leadership and strategic perspectives to the Board. Experience Highlights: CEO Leadership, Public Company Board Service, Senior Management Leadership, Corporate Finance & M&A Expertise, Strategic Leadership Independent Director Aramark Committees: Compensation & Human Resources (Chair); Nominating & Corporate Governance Other Public Boards: Tupperware Brands Corporation, nVent Electric plc

 

 

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Greg Creed Director since: New Nominee Age: 62 Chief Executive Officer, Yum! Brands, Inc. Biography: Greg Creed has been the Chief Executive Officer of Yum! Brands, Inc. since 2015 and will retire as Chief Executive Officer effective January 1, 2020. He served as Chief Executive Officer of Taco Bell Division from 2011 to 2014, and as President and Chief Concept Officer of Taco Bell U.S. from 2007 to 2011 after holding various other positions with the company since 1994. Mr. Creed currently serves as a director of Yum! Brands, Inc. and Whirlpool Corporation. He previously served as a director of International Game Technology. Skills & Qualifications: Mr. Creed's expertise as a public company CEO for a leading global operator of quick service restaurants will allow him to contribute key insights and strategic leadership to the Board. His international experience will also be very valuable to the Board. Experience Highlights: CEO Leadership, Public Company Board Service, Industry Background, Senior Management Leadership, Strategic Leadership, International Experiance Independent Director Aramark Committees: New Nominee Other Public Boards: Yum! Brands, Inc., Whirlpool Corporation

 

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Experience Highlights: Operations Management Expertise, Senior Management Leadership, Strategic Leadership, Public Company Board Service Independent Director Aramark Committees: Audit & Corporate Practices; Finance Other Public Boards: Cardinal Health, Inc., Target Corporation Calvin Darden Director since: 2018 Age: 69 Former Senior Vice President, U.S. Operations, United Parcel Service, Inc. Biography: Calvin Darden most recently served as the Chief Executive Officer and Chairman of Darden Petroleum & Energy Solutions. LLC, a national distributor and regional provider of refined petroleum products and bio fuels founded by Mr. Darden in 2015. From 1995 to 2005, Mr. Darden served as Senior Vice President, U.S. Operations of United Parcel Service, Inc. Mr. Darden had a 33-year career with UPS where he served in a variety of senior leadership roles. Mr. Darden currently serves as a director of Target Corporation and Cardinal Health, Inc. Mr. Darden served on the board of directors of Coca-Cola Enterprises, Inc. (now known as Coca-Cola European Partners Plc) from 2004 to 2016. Skills & Qualifications: Mr. Darden's expertise in supply chain networks, logistics and other operational matters is highly valuable to the Board. In addition. Mr. Darden's senior management experience for many years in a high-headcount business with a significant customer service element provides important insights to the Board. Mr. Darden's service on a number of public company boards is also valuable to the Board as it relates to governance and similar matters.

 

 

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Experience Highlights: CEO Leadership - Former, Strategic Leadership, Operations Management Expertise, Public Company Board Service Independent Director Aramark Committees: Compensation & Human Resources; Nominating & Corporate Governance Other Public Boards: Kellogg Company, Lowe's Companies, Inc., PulteGroup, Inc. Richard W. Dreiling Director since: 2016 Age: 66 Former Chairman and Chief Executive Officer, Dollar General Corporation Biography: Richard Dreiling is the former Chairman and Chief Executive Officer of Dollar General Corporation, serving as Chief Executive Officer from January 2008 until June 2015 and Chairman of the board of directors from December 2008 until January 2016. Before joining Dollar General, Mr. Dreiling served as Chief Executive Officer, President and a director of Duane Reade Holdings, Inc. and Duane Reade Inc., from November 2005 until January 2008, and as Chairman of the Board of Duane Reade from March 2007 until January 2008. Prior to that, Mr. Dreiling, beginning in March 2005, served as Executive Vice President - Chief Operating Officer of Longs Drug Stores Corporation, an operator of a chain of retail drug stores on the West Coast and Hawaii, after having joined Longs in July 2003 as Executive Vice President and Chief Operations Officer. From 2000 to 2003, Mr. Dreiling served as Executive Vice President - Marketing, Manufacturing and Distribution at Safeway, Inc. Prior to that, Mr. Dreiling served from 1998 to 2000 as President of Vons, a southern California food and drug division of Safeway. Mr. Dreiling is a director of Kellogg Company, Lowe's Companies, Inc., and PulteGroup, Inc. Skills & Qualifications: Mr. Dreiling's over 40 years of retail industry experience at all operating levels has added significant value to the Board. Mr. Dreiling has served as Chief Executive Officer of a large public company and brings to the Board very valuable insight and leadership attributes as a result of that experience.

 

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Irene M. Esteves Director since: 2015 Age: 60 Former Chief Financial Officer, Time Warner Cable Inc. Biography: Irene M. Esteves most recently served as Chief Financial Officer of Time Warner Cable Inc. from July 2011 to May 2013. She previously served as Executive Vice President and Chief Financial Officer of XL Group plc. Prior to that, Ms. Esteves was Senior Vice President and Chief Financial Officer of Regions Financial Corporation. She currently serves as a director of KKR Real Estate Finance Trust Inc., R.R. Donnelley & Sons Company, and Spirit AeroSystems Holdings Inc. and previously served as a director of Level 3 Communications, Inc. and tw telecom inc. Skills & Qualifications: Ms. Esteves' experience as a public company CFO and her over 20 years of experience overseeing global finance, risk management, and corporate strategy for U.S. and multi-national companies make her well qualified to serve on the Board. The Board has determined Ms. Esteves to be an audit committee financial expert and her accounting experience and skills are important to the Company. Experience Highlights: Senior Management Leadership, Financial Acumen & Expertise, Corporate Finance & M&A, Strategic Leadership Independent Director Aramark Committees: Audit & Corporate Practices; Finance (Chair) Other Public Boards: KKR Real Estate Finance Trust Inc., R.R. Donnelley & Sons Company, Spirit AeroSystems Holdings Inc.

 

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Daniel J. Heinrich Director since: 2013 Age: 63 Former Executive Vice President and Chief Financial Officer, The Clorox Company Biography: Daniel J. Heinrich most recently served as Executive Vice President and Chief Financial Officer at The Clorox Company from June 2009 to November 2011. He started with Clorox in 2001 as Vice President and Controller and served in that role until 2003. In 2003, he became Vice President and Chief Financial Officer and in 2009 he became Senior Vice President and Chief Financial Officer. Prior to joining Clorox, his roles included Senior Vice President and Treasurer of Transamerica Finance Corporation; Senior Vice President, Controller and Treasurer of Granite Management Company; Senior Vice President, Controller and Chief Accounting Officer of First Nationwide Bank; and as an accountant and then Senior Audit Manager at Ernst & Young LLP. Mr. Heinrich serves as a director of Edgewell Personal Care, Inc. (formerly Energizer Holdings, Inc.), Ball Corporation, and privately-held E. & J. Gallo Winery. He previously served as a director of Advanced Medical Optics and privately-held G3 Enterprises, Inc. Skills & Qualifications: The Board greatly values Mr. Heinrich's extensive financial and business background and his tenure as a public company CFO. The Board has determined Mr. Heinrich to be an audit committee financial expert and his accounting experience and skills are important to the Company. In addition, Mr. Heinrich brings to the Board significant experience on information technology issues. Experience Highlights: Senior Management Leadership, Financial Acumen & Expertise, Corporate Finance & M&A, Public Company Board Service Independent Director Aramark Committees: Audit & Corporate Practices (Chair); Finance Other Public Boards: Edgewell Personal Care, Inc., Ball Corporation

 

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Experience Highlights: Strategic Leadership, Public Company Board Service, Financial Acumen & Expertise, Senior Management Leadership Independent Director Aramark Committees: Compensation & Human Resources; Nominating & Corporate Governance Other Public Boards: CSX Corproation Paul C. Hilal Director since: 2019 Age: 53 Founder and Chief Executive Officer, Mantle Ridge LP Biography: Paul C. Hilal is the Founder and Chief Executive Officer of Mantle Ridge LP. Prior to founding Mantle Ridge, Mr. Hilal was a Partner and Senior Investment Professional at Pershing Square Capital Management from 2006 to 2016. He serves as Vice Chairman on the board of directors of CSX Corporation. Mr. Hilal was formerly on the boards of three other public companies, including Canadian Pacific Railway Limited, where he chaired the Compensation Committee; Ceridan Corporation; and WorldTalk Communications, where he served as Chairman of the Board. Skills & Qualifications: Mr. Hilal's experience as a value investor, capital allocator, and engaged steward during corporate transformations, provides the Board with valuable financial acumen and experience. In addition, Mr. Hilal's experience on the boards of a number of public companies allows him to provide a key strategic perspective to the Board.

 

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Experience Highlights: Senior Management Leadership, Strategic Leadership, Operations Management Expertise, Human Resources Experience Independent Director Aramark Committees: Audit & Corporate Practices; Finance Other Public Boards: None Karen M. King Director since: 2019 Age: 63 Former Executive Vice President, Chief Field Officer, McDonald's Corp. Biography: Karen M. King is the former Executive Vice President, Chief Field Officer of McDonald's Corp. from 2015 to 2016. Prior to that, Ms. King held various management and executive positions at McDonald's Corp. since 1994, including having served as its Chief People Officer, President, East Division, Vice-President, Strategy and Business Development and General Manager and Vice President, Florida Region, among others. Skills & Qualifications: Ms. King's substantial experience and expertise in field operations and talent development for a high head count business in the quick service food industry provides the Board with key insights and perspective on operations, consumer focused marketing and service delivery.

 

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Experience Highlights: CEO Leadership - Former, Operations Management Expertise, Strategic Leadership, Public Company Board Service Independent Director Aramark Committees: Compensation & Human Resources; Nominating & Corporate Governance Other Public Boards: Colgate- Palmolive, Company, Park Hotels & Resorts Inc., Movado Group, Inc. Stephen I. Sadove Director since: 2013 Age: 68 Former Chairman and Chief Executive Officer, Saks Incorporated Biography: Stephen I. Sadove is currently head of Stephen Sadove & Associates and a founding partner of JW Levin Partners. He served as Chief Executive Officer of Saks Incorporated from 2006 until November 2013 and Chairman and CEO from May 2007 until November 2013. He was Chief Operating Officer of Saks from 2004 to 2006. Prior to joining Saks in 2002, Mr. Sadove was with Bristol-Myers Squibb Company from 1991 to 2002, first as President, Clairol from 1991 to 1996, then President, Worldwide Beauty Care from 1996 to 1997, then President, Worldwide Beauty Care and Nutritionals from 1997 to 1998, and finally, Senior Vice President and President, Worldwide Beauty Care. He was employed by General Foods Corporation from 1975 to 1991 in various managerial roles, most recently as Executive Vice President and General Manager, Desserts Division from 1989 until 1991. Mr. Sadove currently serves as a director of Colgate-Palmolive Company, Park Hotels & Resorts Inc., and Movado Group, Inc. and previously served as director of Ruby Tuesday, Inc., J.C. Penney Company, Inc. and privately-held Buy It Mobility. Skills & Qualifications: Mr. Sadove's extensive knowledge of financial and operational matters in the retail industry, including technology matters, and his experience as a public company Chief Executive Officer are highly valuable to the Board. In addition, Mr. Sadove's service on a number of public company boards provides important insights to the Board on governance and similar matters.

 

 

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Experience Highlights: Senior Management Leadership, Financial Acumen & Expertise, Corporate Finance & M&A, Strategic Leadership, Public Company Board Service Independent Director Aramark Committees: Audit & Corporate Practices; Nominating & Corporate Governance (Chair) Other Public Boards: The Wendy's Company, Performance Food Group Company, Inc., Church & Dwight Co., Inc. Arthur B. Winkleblack Director since: 2019 Age: 62 Former Executive Vice President and Chief Financial Officer, H.J. Heinz Company Biography: Arthur B. Winkleblack most recently provided financial, strategic planning and capital markets consulting services for Ritchie Bros. Auctioneers, where he has served as Senior Advisor to the CEO from 2014 to 2019. From 2002 to 2013, he served as Executive Vice President and Chief Financial Officer of H.J. Heinz Company. From 1999 to 2001, Mr. Winkleblack worked at Indigo Capital as Acting Chief Operating Officer of Perform.com and Chief Executive Officer of Freeride.com. Prior to that, he served as Executive Vice President and Chief Financial Officer of C. Dean Metropoulos Group from 1998 to 1999, as Vice President and Chief Financial Officer of Six Flags Entertainment Corporation from 1996 to 1998 and as Vice President and Chief Financial Officer of Commercial Avionics Systems, a division of AlliedSignal, Inc., from 1994 to 1996. Previously, he held various finance, strategy and business planning roles at PepsiCo, Inc. from 1982 to 1994. Mr. Winkleblack currently serves as a director of The Wendy's Company, Performance Food Group (PFG) Company, Inc. and Church & Dwight Co., Inc. He previously served as a director of RTI International Metals. Skills & Qualifications: Ms. Winkleblack's experience as a public company CFO enables him to provide key financial and accounting related insight to the Board as well as a strategic business perspective. The Board has determined Mr. Winkleblack to be an audit committee financial expert and his accounting experience and skills are important to the Company.

 

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Experience Highlights: CEO Leadership, Strategic Leadership, Operations, Management Expertise, Public Company Board Service Aramark Committees: None Other Public Boards: CSX Corporation, Veritiv Corporation, Ecolab, Inc. John J. Zillmer Director since: 2019 Age: 64 Chief Executive Officer, Aramark Biography: John J. Zillmer has been our Chief Executive Officer ("CEO") since October 2019. Prior to joining us, Mr. Zillmer served as Chief Executive Officer and Executive Chairman of Univar from 2009 until 2012. Prior to that, Mr. Zillmer served as Chairman and Chief Executive Officer of Allied Waste Industries from 2005 to 2008 and various positions at Aramark, including Vice President of Operating Systems, Regional Vice President, Area Vice President, Executive Vice President Business Dining Services, President of Business Services Group, President of International and President of Global Food and Support Services, from 1986 to 2005. Mr. Zillmer serves on the board of directors as Non-Executive Chairman of CSX Corporation, as well as board of directors of Veritiv Corporation and Ecolab, Inc. Mr. Zillmer was formerly on the board of directors of Performance Food Group (PFG) Company, Inc. and Reynolds American Inc. Skills & Qualifications: Having served as our CEO since October 2019 and with over 30 years of experience in the managed food and services hospitality industry, including 23 years with Aramark, Mr. Zillmer's extensive knowledge of the Company and the industries in which it is engaged are invaluable to the Board. In addition, Mr. Zillmer's experience prior to joining Aramark as a Chief Executive Officer of two public companies provides key leadership experience and perspective and is greatly valued by the Board.

 

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CORPORATE GOVERNANCE

Recent Developments

On October 6, 2019, the Company entered into a Stewardship Framework Agreement (the “Stewardship Framework Agreement”) with MR BridgeStone Advisor LLC (“Mantle Ridge”), on behalf of itself and its affiliated funds (such funds, together with Mantle Ridge, collectively, the “Mantle Ridge Group”), which have a combined beneficial ownership interest in approximately 9.6% of the Company’s outstanding shares of common stock and an additional economic interest of approximately 10%. Pursuant to the Stewardship Framework Agreement, former directors of the company, Mr. Pierre-Olivier Beckers-Vieujant, Ms. Lisa Bisaccia, Ms. Patricia B. Morrison and Mr. John A. Quelch each resigned from the Board of Directors and each of Messrs. Zillmer, Hilal and Winkleblack and Mses. Cameron and King were elected to the Board, and they and Mr. Creed are nominated for election to the Board at the 2020 Annual Meeting pursuant to the Stewardship Framework Agreement. Pursuant to the Stewardship Framework Agreement, Mr. Hilal was also appointed Vice Chairman of the Board.

Pursuant to the Stewardship Framework Agreement, the Company agreed to limit the size of the Board to eleven directors until the end of the Company’s fiscal year ending September 30, 2022, agreed to permit Mr. Hilal to designate himself or another individual to be appointed to the Board during the term of the Stewardship Framework Agreement, and also agreed to include for consideration by the Company’s shareholders at the 2020 annual meeting a proposal to amend the Company’s Amended and Restated Certificate of Incorporation to permit shareholders of at least 15% of the outstanding shares of common stock to call a special meeting of shareholders.

Board Structure and Leadership

The Board manages or directs the business and affairs of the Company, as provided by Delaware law, and conducts its business through meetings of the Board and four standing committees: the Audit and Corporate Practices Committee (the “Audit Committee”), the Compensation and Human Resources Committee (the “Compensation Committee”), the Nominating and Corporate Governance Committee (the “Nominating Committee”) and the Finance Committee. The Board is currently led by Mr. Sadove, our Chairman and Mr. Hilal, our Vice Chairman.

The Board, upon the recommendation of the Nominating Committee, has determined that, at this time, having a separate Chairman and Chief Executive Officer is the best board organization for Aramark. 10 of the 11 Board nominees, if elected, will be independent directors. The Board’s committees are composed solely of, and chaired by, independent directors. Our independent directors meet at each regularly scheduled Board meeting in separate executive sessions, without Mr. Zillmer present, chaired by the Chairman.

Aramark’s strong Board, with an independent Chairman and Vice Chairman and independent committee chairs, ensures that the Board, and not the Chief Executive Officer alone, determines the Board’s areas of focus.

Director Independence and Independence Determinations

Under our Corporate Governance Guidelines and NYSE rules, a director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with the Company or any of its subsidiaries.

The Board has established guidelines of director independence to assist it in making independence determinations, which conform to the independence requirements in the NYSE listing standards. In addition to applying these guidelines, which are set forth in our Corporate Governance Guidelines (which may be found on the Corporate Governance page of the Investor Relations section on our website at www.aramark.com), the Board will consider all relevant facts and circumstances in making an independence determination. Our Corporate Governance Guidelines provide that none of the following relationships will disqualify any director or nominee from being considered “independent” and such relationships will be deemed to be an immaterial relationship with Aramark:

 

 

A director’s or a director’s immediate family member’s ownership of five percent or less of the equity of an organization that has a relationship with Aramark;

 

 

A director’s service as an executive officer or director of or employment by, or a director’s immediate family member’s service as an executive officer of, a company that makes payments to or receives payments from Aramark for property or services in an amount which, in any fiscal year, is less than the greater of $1 million or two percent of such other company’s consolidated gross revenues; or

 

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A director’s service as an executive officer of a charitable organization that received annual contributions from Aramark and its Foundation that have not exceeded the greater of $1 million or two percent of the charitable organization’s annual gross revenues (Aramark’s automatic matching of employee contributions will not be included in the amount of Aramark’s contributions for this purpose).

The policy of the Board is to review the independence of all directors at least annually. Earlier in fiscal 2019, the Nominating Committee and Board evaluated the independence of each of Messrs. Beckers-Vieujant, Darden, Dreiling, Heinrich, Mehra, Sadove and Ms. Bisaccia, Ms. Esteves and Ms. Morrison and determined that each of them was independent under the guidelines for director independence set forth in our Corporate Governance Guidelines and for purposes of applicable NYSE standards. In connection with the Stewardship Framework Agreement, the Nominating Committee and the Board evaluated the independence of the new directors elected to the Board in October 2019 as well as Mr. Creed, a new nominee for election at the Annual Meeting. In addition, following the end of fiscal 2019 the Nominating Committee undertook its annual review of director independence and made a recommendation to the Board of Directors regarding director independence. In making both independence determinations, the Nominating Committee and the Board considered various transactions and relationships between Aramark and the directors or nominees or between Aramark and certain entities affiliated with a director or nominee. The Nominating Committee and the Board considered that Mr. Creed will be employed until December 31, 2019 by an organization that does business with Aramark, where such transactional relationship was for the purchase or sale of goods and services in the ordinary course of Aramark’s business, and the amount received by Aramark or such company in each of the previous three years did not exceed the greater of $1 million and 1% of either Aramark’s or such organization’s consolidated gross revenues. As a result of this review, the Board affirmatively determined that each of Messrs. Creed, Darden, Dreiling, Heinrich, Hilal, Sadove and Winkleblack, and Mses. Cameron, Esteves and King is independent under the guidelines for director independence set forth in our Corporate Governance Guidelines and for purposes of applicable NYSE standards. In addition, at the committee level, the Board has also determined that each member of the Audit Committee is “independent” for purposes of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and each member of the Compensation Committee is independent for purposes of applicable NYSE standards.

Board Assessment

The Board is focused on enhancing its performance through a rigorous assessment process of the effectiveness of the Board and its committees in order to increase shareholder value. We have designed our Board evaluation process to solicit input and perspective from all of our directors on various matters, including:

 

 

the effectiveness of the Board and its operations;

 

 

the Board’s leadership structure;

 

 

board composition, including the directors’ capabilities, experiences and knowledge;

 

 

the quality of Board interactions; and

 

 

the effectiveness of the Board’s committees.

As set forth in its charter, the Nominating Committee oversees the Board and committee evaluation process. Annually, the Chairman, the Vice Chairman and the Nominating Committee will determine the appropriate form of evaluation and consider the design of the process to ensure it is both meaningful and effective. In 2017, the Board initially engaged an independent third party to assist with the evaluation of the Board and the Audit, Compensation, Nominating and Finance Committees and intends to do so in the future from time to time. In 2018 and in 2019, prior to the execution of the Stewardship Framework Agreement, the Board conducted a self-evaluation process in which the Lead Director and CEO conducted interviews with the independent directors.

Board Committees and Meetings

The Board held 11 meetings during fiscal 2019. During fiscal 2019, each director attended at least 75% of the aggregate of all Board meetings and all meetings of committees on which he or she served, in each case with respect to the portion of fiscal 2019 that they each served. All Aramark directors standing for election are expected to attend the annual meeting of shareholders. All of the directors who were elected at the 2019 Annual Meeting attended the meeting.

 

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Each of our four standing committees operates under a written charter approved by the Board. The charters of each of our standing committees are available in the Investor Relations section of our website at www.aramark.com.

The current composition of each Board committee is set forth below:

 

Director

Audit     

Committee*     

Compensation     

Committee     

Finance     

Committee     

Nominating     

Committee     

 

John J. Zillmer

 

 

Susan M. Cameron

 

 

Chair    

 

 

X    

 

 

Calvin Darden

 

 

X    

 

 

X    

 

 

Richard W. Dreiling

 

 

X    

 

 

X    

 

 

Irene M. Esteves

 

 

X#@

 

 

Chair    

 

 

Daniel J. Heinrich

 

 

Chair#    

 

 

X    

 

 

Paul C. Hilal, Vice Chairman

 

 

X    

 

 

X    

 

 

Karen M. King

 

 

X    

 

 

X    

 

 

Stephen I. Sadove, Chairman

 

 

X    

 

 

X    

 

 

Arthur B. Winkleblack

 

 

X#  

 

 

Chair    

 

 

Meetings in fiscal 2019

 

 

9    

 

 

4    

 

 

4    

 

 

4    

 

 

*

All members of the Audit Committee are financially literate within the meaning of the NYSE listing standards

#

Qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K

@

Ms. Esteves currently serves on the audit committee of three other public companies. The Board has determined that the simultaneous service by Ms. Esteves on the audit committee of three additional public companies would not impair her ability to effectively serve on the Audit and Corporate Practices Committee.

 

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Committee    Responsibilities

Audit and Corporate Practices Committee

  

•  Prepares the audit committee report required by the U.S. Securities and Exchange Commission (the “SEC”) to be included in our proxy statement

 

•  Assists the Board in overseeing and monitoring the quality and integrity of our financial statements

 

•  Oversees the Company’s management of enterprise risk and monitors our compliance with legal and regulatory requirements

 

•  Oversees the work of the internal auditors and the qualifications, independence, and performance of our independent registered public accounting firm

Compensation and Human Resources Committee

  

•  Sets our compensation program and compensation of our executive officers and recommends the compensation program for our directors

 

•  Monitors our incentive and equity-based compensation plans and reviews our contribution policy and practices for our retirement benefit plans

 

•  Prepares the compensation committee report required to be included in our proxy statement and annual report under the rules and regulations of the SEC

 

Nominating and Corporate Governance Committee

  

•  Identifies individuals qualified to become new members of the Board, consistent with criteria approved by the Board of Directors

 

•  Reviews the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the Board select, the director nominees for the next annual meeting of shareholders

 

•  Identifies Board members qualified to fill vacancies on any Board committee and recommends that the Board appoint the identified member or members to the applicable committee

 

•  Reviews and recommends to the Board applicable corporate governance guidelines

 

•  Oversees the evaluation of the Board and handles such other matters that are specifically delegated to the Committee by the Board from time to time

 

Finance Committee

  

•  Reviews our long-term business and financial strategies and plans

 

•  Reviews with management and recommends to the Board our overall financial plans, including operating budget, capital expenditures, acquisitions and divestitures, securities issuances, incurrences of debt and the performance of our retirement benefit plans and recommends to the Board specific transactions involving these matters

 

•  Approves certain financial commitments and acquisitions and divestitures by the Company up to specified levels

 

 

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Oversight of Risk Management

Aramark’s management is responsible for day-to-day risk management activities. The Board, acting directly and through its committees, is responsible for the oversight of Aramark’s risk management.

Our Audit Committee periodically reviews our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. In addition, our Audit Committee reviews risks related to compliance with ethical standards, including our Business Conduct Policy, the Company’s approach to enterprise risk management and operational risks, including those related to information security and system disruption. With respect to cybersecurity, the Audit Committee monitors Aramark’s cybersecurity risk profile, receives periodic updates from management on all matters related to cybersecurity and reports out to the full Board. Through its regular meetings with management, including the accounting, finance, legal, information technology and internal audit functions, our Audit Committee reviews and discusses the risks related to its areas of oversight and reports to the Board with regard to its review. Our Finance Committee focuses on financial risks associated with the Company’s capital structure and acquisitions and divestitures that the Company is considering. Our Compensation Committee oversees compensation-related risk management, as discussed further in this proxy statement under “Compensation Matters-Compensation Discussion and Analysis-Compensation Risk Disclosure.” Our Nominating Committee oversees risks associated with board structure and other corporate governance policies and practices. Our Finance, Compensation and Nominating Committees also regularly report their findings to the Board.

Our Chief Executive Officer and other executive officers regularly report to the non-executive directors and the Audit, the Compensation, the Nominating and the Finance Committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. In addition, the Board receives periodic detailed operating performance reviews from management. Our vice president of internal audit reports functionally and administratively to our chief financial officer and directly to the Audit Committee. We believe that the leadership structure of the Board provides appropriate risk oversight of our activities.

Sustainability

The Board oversees and supports Aramark’s sustainability goals. Aramark’s new sustainability plan, Be Well. Do Well., accelerates the Company’s sustainability efforts and centers on positively impacting both people and planet.

As part of this strategy, we identified priorities that align with our business objectives. Our approach is to foster growth and longevity and to create long-term stakeholder value by considering every dimension of how our Company operates – ethical, economic, and environmental. Through this plan, we strive to contribute to bettering our world by making a positive impact on people and the planet. This includes commitments to engage our employees; empower healthy consumers; support local communities; source ethically, inclusively and responsibly; operate efficiently; and to effectively manage food waste, packaging, emissions and other activities that could adversely impact the environment and planet.

We are fostering a culture of purpose. One that empowers employee volunteerism, addresses food insecurity in our communities, leverages plant-forward menus to improve health and minimize our environmental footprint and scales environmental commitments and social practices. Using these objectives as guideposts, we are focused on developing solutions, approaches and commitment that align with our mission. Our core beliefs guide behavior, influence strategy and help the Company look holistically at issues that mean the most to our stakeholders.

As a global company, we connect with millions of people every day. Our size and reach affords us the opportunity to influence purchase decisions, engage consumers and minimize environmental impacts in hundreds of locations and local communities around the world. We are focused on ensuring we are operating effectively, seeking new and innovative ways to enhance our practices, and offering our expertise to thousands of clients and consumers worldwide, while making a positive impact on people and planet.

 

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Management Succession Planning

The Board’s responsibilities include succession planning for the Chief Executive Officer and other executive officer positions. The Compensation Committee oversees the development and implementation of our succession plans. At least once annually, the Chief Executive Officer provides the Board with an assessment of senior managers and their potential to succeed to the position of Chief Executive Officer. This assessment will be developed in consultation with the Chairman and the Chair of the Compensation Committee. The Compensation Committee is also responsible for follow-up actions with respect to succession planning as may be delegated by the Board from time to time. High potential executives meet regularly with the members of the Board.

Executive Sessions

From time to time, and, consistent with our Corporate Governance Guidelines, at least semi-annually, the Board meets in executive session without members of management present. The Chairman presides at these executive sessions.

Code of Conduct

We have a Business Conduct Policy that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer, which is available on the Investor Relations section of our website at www.aramark.com. Our Business Conduct Policy contains a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our Internet website.

Committee Charters and Corporate Governance Guidelines

The charters of the Compensation Committee, the Nominating Committee, the Audit Committee and the Finance Committee and our Corporate Governance Guidelines are available under the Investor Relations section of our website at www.aramark.com. Please note that all references to our website in this Proxy Statement are intended to be inactive textual references only.

Copies of our Business Conduct Policy, the charters of the Compensation Committee, the Nominating Committee, the Audit Committee and the Finance Committee and our Corporate Governance Guidelines also are available at no cost to any shareholder who requests them by writing or telephoning us at the following address or telephone number:

Aramark

2400 Market Street

Philadelphia, PA 19103

Attention: Investor Relations

Telephone: (215) 409-7287

Director Nomination Process

The Nominating Committee does not set specific, minimum qualifications that directors must meet in order for the Nominating Committee to recommend them to the Board. Rather, it believes that each director and director candidate should be evaluated based on his or her individual merits, taking into account Aramark’s needs and the composition of the Board. In nominating a slate of directors, the Nominating Committee’s objective is to select individuals with skills and experience that can be of assistance in operating our business. The Nominating Committee will consider candidates recommended by shareholders and all candidates are evaluated in the same manner regardless of who recommended such candidate for nomination. When reviewing the qualifications of potential director candidates, the Nominating Committee considers:

 

 

whether individual directors possess the following personal characteristics: integrity, education, accountability, business judgment, business experience, reputation and high performance standards, and

 

 

all other factors it considers appropriate, which may include accounting and financial expertise; industry knowledge; corporate governance background; executive compensation background; strategic leadership experience; senior management experience; prior public company board service; international experience or background; age, gender and ethnic and racial background; civic and community relationships; existing commitments to other businesses; potential conflicts of interest with other pursuits; legal considerations, such as antitrust issues; and the size, composition and combined expertise of the existing Board.

 

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The Board believes that, as a whole, it should strive to possess the following core competencies: accounting and finance, management, crisis response, industry knowledge, international leadership and strategy/vision, among others. While the Board does not have a formal policy with regard to diversity, the Nominating Committee and the Board strive to ensure that the Board is composed of individuals who together possess a breadth and depth of experience relevant to the Board’s oversight of Aramark’s business and strategy. The Company’s Corporate Governance Guidelines provide that, except as may be approved by the Nominating Committee, no person may serve as a non-employee director if he or she would be 75 years or older at the commencement of such term as a director.

Each of Messrs. Zillmer, Creed, Hilal and Winkleblack and Mses. Cameron and King are nominated for election at the 2020 Annual Meeting in accordance with the Stewardship Framework Agreement. Prior to their election to the Board, each of Messrs. Creed and Winkleblack and Mses. Cameron and Ms. King entered into an Engagement and Indemnity Agreement with Mantle Ridge pursuant to which Mantle Ridge agreed to pay each of them certain amounts, and reimburse them for expenses incurred, in connection with their time and efforts relating to potentially joining the Board. The Engagement Agreements however do not provide for any agreements or obligations among Mantle Ridge or any of them with respect to any period following their joining the Board. Mr. Zillmer was party to a consulting agreement with Mantle Ridge that terminated when Mr. Zillmer was appointed to serve as the Chief Executive Officer of the Company.

Proxy Access

In August 2017, the Board approved an amendment and restatement of the Company’s By-laws to implement proxy access. Our By-laws, as amended, permit a shareholder, or a group of up to 20 shareholders, that has continuously owned for three years at least 3% of the Company’s outstanding common shares, to nominate and include in the Company’s annual meeting proxy materials up to the greater of two directors or 20% of the number of directors serving on the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our By-laws. For further information regarding submission of a director nominee using the Company’s proxy access By-law provision, see “General Information – 2021 Annual Shareholders Meeting – How can I nominate a director or submit a Shareholder proposal for the 2021 Annual Meeting of Shareholders?”.

 

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Board Refreshment

The Board and the Nominating Committee regularly consider the long-term make up of our Board and how the members of our Board change over time. The Board and Nominating Committee also consider the skills, experience, and backgrounds needed for the Board as our business and the industries and sectors in which we do business evolve. The Board and Nominating Committee also understand the importance of Board refreshment and aim to strike a balance between the knowledge that comes from longer-term service on the Board with the new experience, ideas and energy that can come from adding directors to the Board. In connection with our entry into the Stewardship Framework Agreement, the Nominating Committee and Board recommended and elected five new directors to the Board and four of our directors retired. Pursuant to the Stewardship Framework Agreement, the Company also agreed to nominate Mr. Creed for election to the Board. Assuming the election of this year’s proposed director nominees, since the Company’s initial public offering, and in connection with the exit of the private equity sponsors and the Stewardship Framework Agreement, we will have added 12 new independent directors to the Board and have had 12 directors step down or not stand for re-election. We believe the average tenure for our director nominees of approximately 2 years reflects the new and independent Board that is well-positioned to continue the Company’s growth.

 

 

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HOW WE THINK ABOUT BOARD REFRESHMENT + Skills, Expertise & Experience +Annual Board Evaluation + Retirement Age = Board Evolution BOARD REFRESHMENT: Since IPO 13 New Directors Elected 5 Women Directors Elected 2 Ethnically Diverse Directors Elected 12 Independent Directors Added

DIRECTOR COMPENSATION

Annual Cash Compensation for Board Service

In fiscal 2019, each non-employee director received compensation at an annual rate of $100,000 for service on the Board, payable quarterly in arrears. The Lead Director was eligible to receive an additional annual retainer of $50,000, and the chairpersons of the Audit Committee, Compensation Committee, Nominating Committee and Finance Committee were eligible to receive an additional annual retainer of $20,000, provided, in each case, that such committee chairperson was a non-employee director. Directors who join the Board during the fiscal year or serve as a committee chairperson for a portion of the fiscal year receive a prorated amount of the relevant annual cash compensation. In connection with our separation of the Chairman and Chief Executive Officer roles, the Board determined that the non-employee Chairman of the Board will also be entitled to receive an additional annual cash retainer of $100,000.

In fiscal 2019, Messrs. Beckers-Vieujant, Heinrich and Sadove and Mses. Bisaccia and Esteves each received additional fees for serving as Lead Director, Chairman and/or chairing the Nominating, Audit, Compensation or Finance Committee. Mr. Sadove is entitled to receive the additional fee for service as Chairman of the Board beginning August 25, 2019, the date he became Chairman of the Board.

Annual Deferred Stock Unit Grant

Under the Company’s current director compensation policy, which has been in effect since January 1, 2016, non-employee directors are eligible for an annual grant of deferred stock units (“DSUs”) with a value of $160,000 on the date of the annual meeting of shareholders. Directors have the right to elect whether the DSUs granted will deliver shares on: (i) the vesting date of the DSUs or (ii) the first day of the seventh month after the date the director ceases to serve on the Board.

 

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In accordance with the director compensation policy, each member of the Board who was not an employee of the Company received a grant of approximately $160,000 worth of DSUs under the Amended and Restated 2013 Management Stock Incentive Plan (the “2013 Stock Plan”) in January 2019. These DSUs will vest on the day prior to the Company’s first annual meeting of shareholders that occurs after the grant date, subject to the director’s continued service on the Board through the vesting date, and will be settled in shares of the Company’s common stock pursuant to each director’s election as described above. In connection with the retirement of Messrs. Beckers-Vieujant and Quelch, and Mses. Bisaccia and Morrison from the Board, the Board accelerated the vesting of the DSUs that they had been granted on the date of the 2019 annual meeting of shareholders.

Directors who are appointed to the Board during the year will be entitled to a prorated grant of DSUs for the year they join the Board. Accordingly, Messrs. Hilal and Winkleblack, and Mses. Cameron and King will be entitled to a grant of additional DSUs on the date of the 2020 Annual Meeting based on their period of service on the Board prior to the 2020 Annual Meeting. All DSUs accrue dividend equivalents from the date of grant until the date of settlement. The Chairman of the Board is also entitled to an additional grant of DSUs with a value of $100,000 on the date of each annual meeting of shareholders. Mr. Sadove will be entitled to a pro rata portion of such additional DSUs for his period of service as Chairman prior to the 2020 Annual Meeting that will be granted on the date of the 2020 Annual Meeting.

Ownership Guidelines

Effective November 11, 2015, the Board of Directors has adopted a minimum ownership guideline, providing that each director must retain at least five times the value of the annual cash retainer in shares of common stock or DSUs, and that the required level of ownership be attained five years after the later of the date of approval of the guidelines and the director’s start date.

Director Deferred Compensation Plan

Non-employee directors are able to elect with respect to all or a portion of their cash board retainer fees to (i) receive all or a portion of such cash fees in the form of DSUs or (ii) defer all or a portion of such cash fees under our 2005 Deferred Compensation Plan. The DSUs that a director elects to receive in lieu of cash fees will be awarded under our 2013 Stock Plan and will be fully vested on grant and settled in shares of our common stock on the first day of the seventh month after the director ceases to serve on the Board. Cash amounts that a director elects to defer under the unfunded 2005 Deferred Compensation Plan are credited at an interest rate based on Moody’s Long Term Corporate Baa Bond Index rate for October of the previous year, which was 5.07% beginning January 1, 2019. From October 1, 2018 until December 31, 2018, we credited amounts deferred with an interest rate equal to 4.32%. The 2005 Deferred Compensation Plan permits participants to select a payment date and payment schedule at the time they make their deferral election, subject to a three-year minimum deferral period. All or a portion of the amount then credited to a deferral account may be withdrawn, if the withdrawal is necessary in light of a severe financial hardship.

The interest rate for 2005 Deferred Compensation Plan will be adjusted on January 1, 2020, based on the Moody’s Long Term Corporate Baa Bond Index rate for October 2019 which was 3.93%.

Other Benefits

All directors are eligible for an annual matching contribution to a college or other non-profit organization in an amount up to $10,000 and directors are also eligible for matching contributions in an amount up to $10,000 in response to natural disasters through the Company’s community involvement efforts to the same extent as employees of the Company.

 

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Director Compensation Table for Fiscal 2019

The following table sets forth compensation information for our non-employee directors in fiscal 2019.

 

Name   Fees
Earned
or Paid in
Cash(1)  ($)
   

Stock
Awards(2)

($)

   

Option
Awards

($)

   

Change in

Pension Value

and

Nonqualified

Deferred
Compensation

Earnings(3) ($)

    All Other
Compensa-
tion(4) ($)
   

Total

($)

 

 

Pierre-Olivier Beckers-Vieujant

 

 

 

 

 

 

113,242

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

273,243

 

 

 

 

 

Lisa G. Bisaccia

 

 

 

 

 

 

101,868

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

263,086

 

 

 

 

 

Calvin Darden

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

260,154

 

 

 

 

 

Richard W. Dreiling

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

260,001

 

 

 

 

 

Irene M. Esteves

 

 

 

 

 

 

120,000

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

280,001

 

 

 

 

 

Daniel J. Heinrich

 

 

 

 

 

 

120,000

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,727

 

 

 

 

 

 

 

 

 

292,728

 

 

 

 

 

Sanjeev K. Mehra

 

 

 

 

 

 

57,912

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21,453

 

 

 

 

 

 

 

 

 

79,365

 

 

 

 

 

Patricia B. Morrison

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

 

 

270,001

 

 

 

 

 

John A. Quelch

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

 

 

270,001

 

 

 

 

 

Stephen I. Sadove

 

 

 

 

 

 

155,907

 

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,727

 

 

 

 

 

 

 

 

 

328,635

 

 

 

 

 

(1)

Includes base director fees at an annual rate of $100,000, as well as a Lead Director fee at an annual rate of $50,000 for Mr. Sadove, which applied from January 30, 2019 through August 25, 2019, and a Chairman fee at an annual rate of $100,000 for Mr. Sadove that applied for the period from August 25, 2019 through the end of the 2019 fiscal year. Committee chairperson fees at an annual rate of $20,000 pro-rated based on their time served were provided to each of Messrs. Beckers-Vieujant, Heinrich, Mehra, and Sadove and Mses. Bisaccia and Esteves. Messrs. Dreiling, Mehra, and Quelch and Ms. Esteves elected to defer 100% of their cash retainers (inclusive of fees) into DSUs. Ms. Bisaccia and Mr. Darden elected to defer their cash retainers (inclusive of fees) into the 2005 Deferred Compensation Plan, 100% and 20% respectively.

 

(2)

Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with respect to the 4,908 DSUs granted on January 30, 2019 (which had a grant date fair value of $32.60 per DSU). As of the end of fiscal 2019, directors held the following deferred stock units (including dividend equivalent units), all of which are vested except for those granted on January 30, 2019 and related dividend equivalents:

 

Name  

DSUs and

Equivalents

          Name  

DSUs and

Equivalents

 

 

Pierre-Olivier Beckers-Vieujant

 

 

 

 

 

 

22,750

 

 

 

 

   

 

Daniel J. Heinrich

 

 

 

 

 

 

28,996

 

 

 

 

 

Lisa G. Bisaccia

 

 

 

 

 

 

22,603

 

 

 

 

   

 

Sanjeev K. Mehra

 

 

 

 

 

 

 

 

 

 

 

Calvin Darden

 

 

 

 

 

 

8,519

 

 

 

 

   

 

Patricia B. Morrison

 

 

 

 

 

 

4,955

 

 

 

 

 

Richard W. Dreiling

 

 

 

 

 

 

28,196

 

 

 

 

   

 

John A. Quelch

 

 

 

 

 

 

28,196

 

 

 

 

 

Irene M. Esteves

 

 

 

 

 

 

33,914

 

 

 

 

   

 

Stephen I. Sadove

 

 

 

 

 

28,996

 

 

For additional information on the valuation assumptions and more discussion with respect to the deferred stock units, refer to Note 11 to our audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 27, 2019.

 

(3)

Includes amounts earned on deferred compensation in excess of 120% of the applicable federal rate, based upon the above-market return at the time the rate basis was set.

 

(4)

The following are included in this column:

 

  (a)

Charitable contributions of $10,000 made in the name of or on behalf of each of Messrs. Quelch, Mehra, and Sadove and Ms. Morrison in accordance with the Company’s director charitable contribution matching program. Additionally, includes contributions for disaster relief of $10,000 made in the name of or on behalf of Messrs. Heinrich and Mehra.

 

  (b)

The dollar value of dividend equivalents accrued on deferred stock units granted prior to February 5, 2014 (the date the Company announced the payment of its first quarterly dividend), where dividends were not factored into the grant date fair value required to be reported for such awards. The total value of dividend equivalents accrued on deferred stock units for the directors during fiscal 2019, in each case for awards granted prior to February 5, 2014, is as follows: for Mr. Heinrich, $2,727, for Mr. Mehra, $1,453, and for Mr. Sadove, $2,727. For awards granted on or after February 5, 2014, the value of dividend equivalents allocated to deferred stock units in the form of additional units with the same vesting terms as the original awards is not included in this column because their value is factored into the grant date fair value of awards. Additional units awarded in connection with dividend adjustments are subject to vesting and delivery conditions as part of the underlying awards.

 

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Audit Committee Matters

 

 

 

PROPOSAL NO. 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

PROPOSAL SUMMARY

What Are You Voting On?

We are asking our shareholders to ratify the appointment of KPMG LLP (“KPMG”) to serve as the Company’s independent registered public accounting firm for fiscal 2020, which ends October 2, 2020. Although the Audit Committee has the sole authority to appoint the Company’s independent registered public accounting firm, the Audit Committee and the Board submit the selected firm to the Company’s shareholders as a matter of good corporate governance.

Voting Recommendation

The Board recommends that you vote “FOR” the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm for fiscal 2020.

The Audit Committee has selected KPMG to serve as the Company’s independent registered public accounting firm for fiscal 2020. Although action by the shareholders on this matter is not required, the Audit Committee values shareholder views on the Company’s independent registered public accounting firm and believes it is appropriate to seek shareholder ratification of this selection. If the shareholders do not ratify the appointment of KPMG, the selection of the independent registered public accounting firm may be reconsidered by the Audit Committee. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time of the year if it determines that such a change would be in the best interests of the Company and its shareholders. The Company has been advised that representatives of KPMG are scheduled to attend the Annual Meeting, and they will have an opportunity to make a statement if the representatives desire to do so. It is expected that the KPMG representatives will also be available to respond to appropriate questions.

The shares represented by your properly executed proxy will be voted “FOR” this proposal, which would be your vote to ratify the selection of KPMG LLP as our independent registered public accounting firm, unless you specify otherwise.

 

 

LOGO

The Board recommends that you vote "FOR" the ratification of the appointment of KPMG

 

The Audit Committee assists the Board in its oversight of the Company’s independent registered public accounting firm, which assistance includes the responsibility to appoint, compensate, retain, and oversee the firm. The independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee reviews the independent registered public accounting firm’s qualifications, independence, and performance at least annually. In connection with this review, the Audit Committee considers whether there should be a regular rotation of the independent registered public accounting firm to assure continuing auditor independence. Further, in conjunction with the mandated rotation of the independent audit firm’s lead engagement partner, the Audit Committee is involved in the selection of the independent audit firm’s lead engagement partner.

 

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The Audit Committee has appointed KPMG as the Company’s independent registered public accounting firm for fiscal 2020. KPMG has served as the Company’s independent registered public accounting firm since 2002. The Audit Committee believes that the continued retention of KPMG as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. In addition to KPMG’s independence, the Audit Committee considered:

 

•  KPMG’s capabilities, expertise, and historical performance on the Company’s audits;

 

  

•  KPMG’s compliance with regulations; and

•  The effectiveness of KPMG’s processes, including its quality control, timeliness, and responsiveness and interaction with management;

  

•  KPMG’s efforts towards efficiency, including with respect to process improvements and fees.

Benefits of KPMG’s tenure as the Company’s independent registered public accounting firm include:

 

Increased Audit Quality

After years of experience as the

Company’s independent auditor, KPMG

has gained institutional knowledge of and

deep expertise in the Company’s global

operations and businesses, accounting

policies and practices, and internal control

over financial reporting that increases the

quality of their audit.

  

Competitive Fees

KPMG’s fees are competitive with their

peers because of their familiarity with

the Company and its businesses.

  

Avoid Transition to New Auditor

Engaging a new independent auditor
would likely result in additional costs

and require a significant time

commitment from management, which

could distract management from its

focus on other areas, such as financial

reporting and internal controls.

FEES TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Set forth below is information relating to the aggregate fees billed by KPMG for professional services rendered for each of the last two fiscal years as well as a description of each fee category.

 

    

 

Fiscal

2018

   

 

Fiscal

2019

 

 

Audit Fees

 

 

 

$

 

 

7,493,428

 

 

 

 

 

 

$

 

 

6,571,162

 

 

 

 

 

Audit-related Fees

 

 

 

$

 

 

311,327

 

 

 

 

 

 

$

 

 

252,941

 

 

 

 

 

Tax Fees

 

 

 

$

 

 

347,525

 

 

 

 

 

 

$

 

 

522,493

 

 

 

 

 

All Other Fees

 

 

 

$

 

 

25,000

 

 

 

 

 

 

$

 

 

75,000

 

 

 

 

 

TOTAL

 

 

 

$

 

 

8,177,280

 

 

 

 

 

 

$

 

 

7,421,596

 

 

 

 

Audit fees include the audit of annual financial statements, the review of quarterly financial statements, the performance of statutory audits, procedures and comfort letters related to registration statements.

Audit-related fees include assurance and related services that were reasonably related to the audit of annual financial statements and reviews of quarterly financial statements, but not reported under Audit Fees. Audit-related fees include: retirement plan audits, accounting consultations for proposed transactions and certain reports.

Tax fees include domestic and international tax consulting.

All other fees include participation in Executive education workshops.

The Audit Committee considered whether providing the non-audit services shown in this table was compatible with maintaining KPMG’s independence and concluded that it was.

Policy for the Pre-Approval of Audit and Permissible Non-Audit Services

The Audit Committee annually reviews and pre-approves the services that may be provided by the Company’s independent registered public accounting firm without obtaining further specific pre-approval from the Audit Committee. The Audit Committee has also adopted a Pre-Approval Policy that contains a list of pre-approved services, which the Audit Committee may revise from time to time, based on subsequent determinations. The Audit Committee has delegated pre-approval authority to the chairman of the Audit Committee, or in his absence or unavailability, to another specified member of the Audit Committee. The chairman of the Audit Committee or such specified member will report any pre-approval decisions to the Audit Committee at its next scheduled meeting. All of the audit fees, audit-related fees, tax fees and all other fees were pre-approved by the Audit Committee or the chairman of the Audit Committee.

 

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REPORT OF AUDIT AND CORPORATE PRACTICES COMMITTEE

The Audit Committee represents and assists the Board and is composed solely of directors who satisfy the independence and financial literacy requirements, and the heightened independence criteria applicable to audit committee members, of the NYSE Rules and applicable securities laws. In addition, the Board has determined that each of Daniel J. Heinrich, Irene M. Esteves and Arthur B. Winkleblack is an audit committee financial expert as defined under the rules of the SEC.

The Audit Committee operates under a written charter approved and adopted by the Board, which sets forth its duties and responsibilities. This charter can be found on the Company’s website at www.aramark.com under the Investor Relations section. This charter is reviewed annually and updated as appropriate to reflect the Audit Committee’s evolving role, changes in regulatory requirements and oversight practices, and investor feedback.

The Audit Committee’s purpose is to assist the Board in its oversight of:

 

 

The performance of the Company’s internal audit function;

 

 

The qualifications, independence, and performance of the independent auditors;

 

 

The Company’s management of enterprise risk and compliance with legal and regulatory requirements; and

 

 

The accounting, reporting, and financial practices of the Company, including the quality and integrity of the Company’s financial statements.

The Audit Committee met nine times in fiscal 2019 and fulfilled each of its duties and responsibilities as outlined in its charter. The Audit Committee regularly conferred with KPMG, the Company’s internal auditors, and senior management in separate executive sessions to discuss any matters that the Audit Committee, KPMG, the Company’s internal auditors, or senior management believed should be discussed privately with the Audit Committee. The Audit Committee has direct access to KPMG and the Company’s internal auditors, which each report directly to the Audit Committee.

2019 Audited Financial Statements and Internal Controls

The Company’s management has primary responsibility for establishing and maintaining effective internal control over financial reporting and preparing the Company’s financial statements and disclosures. KPMG, the Company’s independent registered public accounting firm for fiscal 2019, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles in the United States and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee oversees the performance of these responsibilities by KPMG and management, including the processes by which these responsibilities are fulfilled.

In the performance of its oversight function and in accordance with its responsibilities under its charter, the Audit Committee has reviewed and discussed with management and KPMG the Company’s audited financial statements as of and for the fiscal year ended September 27, 2019. The Audit Committee also discussed with KPMG the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission.” Finally, the Audit Committee received the written disclosures and the letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence, and discussed with KPMG their independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2019 filed with the SEC.

Members of the Audit and Corporate Practices Committee:

Daniel J. Heinrich, Chairman

Calvin Darden

Irene M. Esteves

Karen M. King

Arthur B. Winkleblack

 

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Compensation Matters

 

 

 

PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

PROPOSAL SUMMARY

What Are You Voting On?

Pursuant to Section 14A of the Exchange Act, we are asking our shareholders to vote on a non-binding, advisory basis to approve the compensation paid to our Named Executive Officers, as disclosed in this proxy statement.

Voting Recommendation

The Board recommends that you vote “FOR” this proposal, because it believes that the Company’s compensation policies and practices effectively achieve the Company’s primary goals of attracting and retaining key executives, rewarding achievement of the Company’s short-term and long-term business goals, and aligning our executives’ interests with those of our shareholders to create long-term sustainable value.

This proposal calls for the approval of the following resolution:

“RESOLVED, the shareholders of the Company hereby approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement, pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.”

In considering your vote, we invite you to review the Compensation Discussion and Analysis beginning on the next page. This advisory proposal, commonly referred to as a “say on pay” proposal, is not binding on the Board. However, the Board takes shareholder feedback seriously and it and the Compensation Committee will review and consider the voting results when evaluating the Company’s executive compensation program.

The shares represented by your properly executed proxy will be voted “FOR” this proposal, which would be your vote to approve, on a non-binding basis, the compensation paid to our named executive officers, unless you specify otherwise.

The Board has adopted a policy of providing for annual “say on pay” votes, so the next “say on pay” vote will take place at the Company’s 2021 annual meeting.

 

LOGO

 

The Board recommends that you vote "FOR" approval of executive compensation

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis (CD&A) describes material elements of our Named Executive Officer (“NEO”) compensation and describes the objectives and principles underlying Aramark’s executive compensation programs, the compensation decisions we made under those programs, and factors we considered in making those decisions.

In 2019, our NEOs included Eric Foss and Stephen Reynolds, who were no longer executive officers at fiscal year (FY) end, and the executive officers listed below were active at September 27, 2019. John Zillmer became our Chief Executive Officer on October 6, 2019. From August 25, 2019, the date Mr. Foss stepped down as Chairman, President & CEO and the date Stephen Sadove was appointed as Board Chairman, through October 6, 2019, Mr. Sadove, Stephen Bramlage, Lynn McKee, and Lauren Harrington served as members of the Office of the Chairman. Mr. Sadove effectively also served as the Company’s Principal Executive Officer (PEO) during this six-week period, for which he and the other members of the Office of the Chairman earned no additional compensation. Following the appointment of Mr. Zillmer on October 6, 2019, the Office of the Chairman was dissolved, at which time Mr. Sadove remained Board Chairman and Mr. Zillmer was appointed as a director.

Newly Appointed CEO Fiscal Year End Executives

 

 

 

 

 

 

 

 

 

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John Zillmer(1)

CEO

 

Stephen P. Bramlage(2)

EVP, CFO

 

Lynn B. McKee(2)

EVP, HR

 

Keith Bethel

Chief Growth Officer

 

Lauren A. Harrington(2)

General Counsel

Effective Interim Principal Executive Officer and Office of the Chairman

 

 

 

 

Former Executives

 

   

Stephen I. Sadove(2)

Chair; Member Office of the Chairman

 

Eric J. Foss(3)

Former Chairman, President & CEO

 

Stephen R. Reynolds(4)

Former General Counsel

   

 

(1)

On October 6, 2019, Mr. Zillmer was appointed as Chief Executive Officer and a director of the Company.

 

(2)

From August 25, 2019 through October 6, 2019, Mr. Sadove effectively served as the Company’s Principal Executive Officer (PEO). During this six-week period, Messrs. Sadove and Bramlage and Mses. McKee and Harrington also served as members of the Office of the Chairman and received no additional compensation in respect of their service in such role. See the Summary Compensation Table section of this proxy statement for details related to Mr. Sadove’s compensation. After Mr. Zillmer’s hire on October 6, 2019, Mr. Sadove relinquished his PEO duties and the Office of the Chairman was dissolved, but Mr. Sadove remained Board Chairman.

 

(3)

On August 25, 2019, Mr. Foss stepped down from his role as Chairman, President & CEO of the Company.

 

(4)

On April 1, 2019, Mr. Reynolds retired from the Company. Lauren Harrington was appointed as SVP, General Counsel of the Company effective March 4, 2019.

 

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Our executive compensation philosophy is focused on linking pay with performance. It is designed to reflect appropriate governance practices and shareholder feedback, align with the needs of our business, and maintain a strong link between executive pay and successful execution of our strategy and long-term shareholder value creation.

 

 

CEO Transition (August – October 2019)

In October 2019, John Zillmer became our CEO after Eric Foss stepped down in August 2019. Our Compensation Committee closely considered shareholder feedback in developing the pay package for our new CEO, which we discuss throughout this proxy statement.

 

  CD&A TABLE OF CONTENTS

  

  Executive Summary

 

   28  

 

  Detailed Compensation Program Discussion

 

   34  

 

Addressing Say-on-Pay

 

   34  

 

Base Salary

 

   35  

 

Annual Incentives

 

   36  

 

Long-Term Incentives

 

   40  

 

  Executive Transitions

 

   43  

 

  Other Compensation Components

 

   45  

 

  Market Benchmarking

 

   46  

 

  Independent Compensation Consultant

 

   51  

 

  Implications of Regulatory Requirements

 

   54  

 

 

 

CD&A EXECUTIVE SUMMARY

CEO Transition

Mr. Foss stepped down as Chairman, President & CEO effective August 25, 2019 and separated from the Company on October 2, 2019. Mr. Foss is contractually entitled to post-termination benefits in connection with his departure, which we describe in this CD&A. On October 6, 2019, Mr. Zillmer was appointed CEO and a member of the Board. A respected business leader for over three decades, Mr. Zillmer previously spent 23 years at Aramark. Under his leadership as Global President of Global Food & Support Services, Aramark experienced significant growth, ultimately becoming the largest food management provider in North America. Following his prior tenure at Aramark, Mr. Zillmer served as Chairman and CEO of Allied Waste Industries from 2005 until the merger of Allied Waste with Republic Services in December 2008. Mr. Zillmer then led Univar, a global chemical and ingredients distributor, as its CEO and Executive Chairman from 2009 to 2012.

Addressing Shareholder Feedback – FY 2020 Target CEO Pay

As part of the CEO transition, and in response to shareholder feedback, the Compensation Committee (which we refer to as the “Committee”) developed an overall target pay package for our new CEO of $13.075 million, significantly lower than the overall compensation provided to the former CEO. This includes:

 

 

Setting a 24% lower base salary for our new CEO;

 

 

Setting a target annual incentive 25 percentage points lower for our new CEO (175% vs. 200% of base salary);

 

 

Providing a $2.5 million lower equity award ($9.5 million vs. $12.0 million) or a 21% decrease; and

 

 

Reducing and eliminating certain perquisites.

These changes provide direct alignment between CEO interests and those of long-term shareholders. The Committee also designed CEO compensation with the same structure as that of our NEOs to ensure alignment of interests across our executive leadership team.

FY 2019 Target CEO Pay – Eric Foss

($ in millions)

 

           

$1.70

  $3.40   $6.00   $3.60   $2.40   $17.10
Salary   Target Annual Incentive   Performance Share Units   Stock Options   RSUs   Total
           

 

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FY 2020 Target CEO Pay – John Zillmer

($ in millions)

 

           

$1.30

  $2.275   $4.75   $2.85   $1.90   $13.075
Salary   Target Annual Incentive   Performance Share Units   Stock Options   RSUs   Total
           

Eliminated CEO-Specific Perquisites. We eliminated CEO’s personal use of corporate aircraft and Company-provided car and driver perquisites valued at up to approximately $300,000 annually.

Adopted New Compensation Peer Group for FY 2020. As described more under Market Benchmarking, the Committee worked with its independent consultant to develop a new peer group for FY 2020. FY 2020 pay decisions informed by the new peer group are highlighted throughout this proxy statement.

2019 Performance Highlights

In 2019, we drove balanced improvement and progress across multiple key operating financial metrics. At the total company level and across most business units, these results were relatively in line with expectations, while Adjusted Operating Income was below target. This performance is reflected in slightly below target FY 2019 annual incentive payouts. Overall, 2019 performance was commendable in areas that include growing the portfolio, increasing procurement scale, and driving free cash flow to strengthen the balance sheet and enhance financial flexibility. These results build a strong platform for the future. We note the following performance highlights as context in reviewing Aramark’s FY 2019 executive pay decisions.

 

Top Line1

   

Bottom Line Results1

   

Cash Flow

   

Net Debt and Leverage Ratio

   
+3.6%     +5%   +8%     $499M        $593M   3.86x
   

Legacy Revenue

Growth

          

Adjusted Operating  

Income Growth

 

Adjusted EPS

Growth

           Free Cash Flow  

    

 

Net Debt

Reduction

  Leverage Ratio

 

1 

Calculated on a constant currency basis.

Note: In our discussion of executive pay, we refer to Adjusted Revenue, Legacy Business Revenue, Adjusted Operating Income, Adjusted Earnings Per Share and Free Cash Flow as metrics used in incentive programs, which measures are calculated in a manner largely consistent with the performance measures described above. Later in this proxy statement, we provide information about how our performance measures are calculated. Reconciliations of the above measures to measures calculated in accordance with generally accepted accounting principles (“GAAP”) are provided in Annex A.

Aramark’s Executive Compensation Principles

Aramark’s executive compensation program has three primary objectives.

 

 

Pay for Performance

 

        

 

Alignment with Shareholders

 

        

 

Attraction and Retention of High-Performing Talent

 

The vast majority of pay for executives is at-risk and performance-based with metrics that are aligned to the Company’s strategy and that drive long-term shareholder value creation.    

Programs align executives’ interests with those of our shareholders. The majority of executive pay is provided through equity and tied to stock price. We also maintain stock ownership guidelines for all executives reinforced with conditional holding requirements for executives who have not met their guideline.

 

   

We provide competitive pay and benefits to attract and retain talented, high-performing executives with specific skill sets and relevant experience to drive the business, create shareholder value, and develop future leaders.

 

 

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Our executive compensation program also adheres to high standards of compensation governance.

 

What We Do        What We Don’t Do

 

 Risk Mitigation – Varied metrics and measurement periods in incentive plans mitigate risk that executives will be motivated to pursue results with respect to any one metric.

 Compensation Recoupment Policy – We have a “clawback” recoupment policy for reimbursement of pay in certain circumstances for a broad executive group.

 Stock Ownership Guidelines – All of the NEOs and directors are subject to stock ownership guidelines with conditional holding requirements.

 Double-Trigger Change-in-Control Provisions –Both a change-in-control and termination are required for equity vesting acceleration benefits to apply.

 Annual Say-on-Pay Vote – We seek annual shareholder feedback on our executive pay program and directly engage with shareholders.

 Annual Evaluation – We annually review our executive pay program to ensure that it continues to be aligned with market practice.

 

     

 

×   No Guaranteed Bonuses – Our annual bonus plans are performance-based and do not include any minimum payment levels.

×   No Hedging and Restriction on Pledging – We prohibit directors and employees from engaging in hedging, and prohibit directors and NEOs from pledging Aramark shares without specific pre-approval.1

×   No Dividends on Unvested Equity Awards – We do not pay dividends or dividend equivalents on equity awards prior to vesting.

×   No Repricing or Exchange of Underwater Stock Options

×   No Tax Gross-UpsWe do not provide tax gross-ups on benefits or perquisites in new employment agreements.

×   No Recycling of Shares withheld for Taxes.

 

1.

The prohibition on hedging and requirements with respect to pledging do not apply to transactions by Mantle Ridge.

Compensation Highlights

 

Informed and Thoughtful Approach to Executive Pay

 

Aramark’s programs reflect industry best practices with a focus on providing market competitive pay opportunities that are closely aligned with performance. Incentive plan metrics are selected and reviewed annually to ensure they are designed to drive long-term return and are aligned with strategy. As part of its annual review process, the Committee reviews our peer group when setting total target pay opportunity and made significant changes to our peer group for FY 2020.

 

 

      

Shareholder Feedback

 

The Committee considers shareholder feedback on compensation matters and took shareholder feedback into account when setting the pay and benefits package for our new CEO in FY 2020. We provided direct compensation that is significantly lower than the prior CEO and eliminated perquisites with a total value of up to approximately $300,000, which included personal use of Company aircraft and Company-provided car and driver.

 

 

Compensation Governance

 

Our executive compensation program adheres to high standards of compensation governance that facilitate strong pay for performance and alignment with shareholder interests.

      

Independent Advisor

 

Independent compensation consultants provided advice on executive pay including market competitive pay levels, incentive plan design, compensation risk, the overall executive compensation program policies and practices, and compensation governance.

 

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FY 2019 and FY 2020 Target Executive Pay Mix

The Compensation Committee designed our executive compensation programs so that a significant percentage of annual compensation is variable and at risk, with earned amounts based on Company operational and stock price performance. A significant portion of executive compensation is delivered in the form of equity, which promotes alignment with shareholder interests and creates incentive for long-term performance and shareholder value creation.

The current target pay mix applicable to our new CEO and fiscal year-end executive officers demonstrates strong alignment with long-term shareholder value creation. CEO compensation is closely linked to the financial, strategic and operational performance of the Company. The new CEO’s target total compensation is 90% performance-based (with 73% of pay exposed to Aramark’s share price), and, on average, 77% performance-based for other executive officers (with 54% of average pay exposed to Aramark’s share price). Current long-term incentive allocation (i.e., 50% PSUs, 30% stock options, 20% RSUs) is consistent with shareholder feedback received two years ago when the Company increased its PSU allocation to 50% (from 40%) and reduced its stock option allocation to 30% (from 40%).

FY 2020 CEO Target Compensation (John Zillmer)

 

 

    Salary    

 

10%

 

 

 

 

 

 

+

 

 

 

 

  

 

 

 

 

 

    Annual Incentive    

 

17%

 

 

 

 

 

 

 

 

 

 

 

+

 

 

 

 

  

 

PSUs

 

36%

 

 

 

+

 

  

 

 

 

 

 

    Options    

 

22%

 

 

 

 

 

 

 

 

 

 

 

+

 

 

 

 

  

 

 

 

 

 

    RSUs    

 

15%

 

 

 

 

 

 

                   
                     

 

73% Exposed to Aramark’s Share Price

 

 

       90% Performance-Based  

Note: Former CEO’s FY 2019 target pay mix was 10% Base Salary; 20% target annual incentive; 35% PSUs; 21% options, and 14% RSUs. Overall, 70% of FY 2019 CEO pay was exposed to share price and 90% was performance-based.

 

 

FY 2019 Average NEO Target Compensation (Non-CEO NEOs)

 

 

              Salary               

 

21%

 

 

 

 

 

 

+

 

 

 

 

  

 

 

 

 

 

    Annual Incentive    

 

20%

 

 

 

 

 

 

 

 

 

 

 

+

 

 

 

 

  

 

PSUs

 

29%

 

 

 

+

 

  

 

 

 

 

 

    Options    

 

18%

 

 

 

 

 

 

 

 

 

 

 

+

 

 

 

 

 

 

 

 

 

 

    RSUs    

 

12%

 

 

 

 

 

 

                  
                     

 

59% Exposed to Aramark’s Share Price

 

 

       79% Performance-Based  

 

 

 

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2019 Actual Performance Pay Outcomes Reflect Our Pay-for-Performance Philosophy

FY 2019 compensation decisions and pay outcomes reflect shareholder feedback as well as our pay-for-performance philosophy.

Annual Incentives for FY 2019: Based on FY 2019 performance, annual incentive payouts were below target. Our 2019 results generally yielded a payout of 87.8% of target annual incentive opportunity (exceptions detailed in the Detailed Compensation Program Discussion), based on the following performance goals (shown in millions), weightings, and performance outcomes (shown in millions).

 

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1

Adjusted Operating Income, for the purposes of calculating annual incentive attainment, was equal to Adjusted Operating Income as reported externally by the Company further reduced by approximately $10 million related to asset impairment costs.

 

2

Mr. Foss’s performance for purposes of the Individual Objectives portion of his FY 2019 annual incentive payout was determined based on the Company’s performance against financial objectives of the award per the terms of his separation Letter Agreement effective August 25, 2019.

Long-Term Incentives (FY 2017 – FY 2019 Performance Period): PSUs that vested at the end of FY 2019 had a performance target of three-year cumulative adjusted EPS for the FY 2017 – FY 2019 performance period of $5.88 per share. Our cumulative three-year adjusted EPS from FY 2017 through FY 2019 was $6.24, which is above the target goal resulting in a 162% (of target) payout earned.

 

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1

For purposes of calculating three-year Adjusted EPS performance achievement under the PSU awards for each of the three fiscal years during the performance period, Adjusted EPS previously disclosed annually was further adjusted to better align payouts with items within management control. For example, the Committee made adjustments to reflect the effect of currency translation over the three years, the number of outstanding shares set forth in the award agreements, the impact of the FY 2018 Avendra and AmeriPride acquisitions, the FY 2019 disposition of our Healthcare Technologies business, the change in our definition of Adjusted EPS in FY 2019 from the FY 2017 definition, the impact of the California fires and the impact on the Company’s tax rate as a result of the Tax Cuts and Jobs Act passed in December 2017.

 

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Former CEO’s Relative Total Shareholder Return (TSR) Awards for FY 2017 – FY 2019 Performance Period: In November 2016, Mr. Foss was granted performance restricted stock units, performance stock options, and performance restricted stock awards with vesting contingent on Aramark’s three-year TSR (FY 2017 – FY 2019) relative to Aramark’s proxy peer group. In order to vest, this relative TSR had to be among the highest five organizations in the peer group. Aramark did not meet this performance condition for the FY 2017 – FY 2019 performance period; therefore, Mr. Foss forfeited 18,208 performance restricted stock units, 141,844 performance stock options, and 35,212 performance restricted stock awards.

 

 

 

 

 

END OF CD&A EXECUTIVE SUMMARY

 

 

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Detailed Compensation Program Discussion

 

 

 

Aramark’s Executive Compensation Principles

Our executive pay program directly supports one of the anchors of our strategy – attracting and retaining the best talent – which in turn supports two of the other anchors of the Company’s strategy: accelerating growth and activating productivity. The executive pay program has three key principles:

 

1.

Align with Shareholder Interests: Align executives’ interests with those of our shareholders by requiring significant stock ownership, tying significant portions of pay to performance, paying a significant portion of compensation in equity and subjecting equity compensation to multi-year performance conditions, vesting periods, and ownership guidelines with conditional holding requirements;

 

2.

Pay for Performance: Tie significant portions of pay to performance and achievement of our short- and long-term goals; and

 

3.

Attract and Retain High Performing Talent: Attract and retain key executives with the capability to lead the business forward.

Addressing the 2018 and 2019 Say-on-Pay Votes

Our annual say-on-pay vote is an inflection point to receive shareholder feedback regarding our executive pay program. We actively sought shareholder feedback to better understand what motivated their votes and what actions we could take to address their concerns about our executive pay program. Our Committee considered these vote results and the corresponding feedback we received as it developed the FY 2020 pay package for our new CEO and evaluated the pay opportunities provided to our other executives.

Since our last Annual Shareholder Meeting, we engaged with shareholders representing more than 65% of our outstanding common stock to specifically request feedback regarding our executive pay program given the level of say-on-pay support in 2018 and 2019.

In our meetings with shareholders, we heard the following concerns related to our executive compensation program.

 

 

What We Heard

 

  

 

How We Responded

 

  

 

Intended Outcome and When Effective

 

 

Overall magnitude of CEO pay remains high

  

 

The target pay opportunity for our new CEO is 24% lower than our former CEO (by approximately $4 million)

  

 

Aligns FY 2020 CEO total direct compensation more closely with that of peers (see Executive Transitions and Market Benchmarking sections of this proxy statement). Effective for FY 2020.

 

 

While shareholders were supportive of increased PSU weighting to 50% of overall LTI grant (from 40%), some indicated that long-term awards should consider a total shareholder return perspective

 

  

 

Our FY 2020 PSUs have a relative TSR modifier so payouts reflect Aramark’s performance relative to peers in addition to 3-year operational metrics

  

 

Further incentivizes long-term performance and ties executive pay more closely with total shareholder return. Effective for grants in FY 2020 for 3-year period FY 2020 – FY 2022. Effective for FY 2020.

 

Proxy compensation peer group includes several substantially larger organizations

  

 

Early in FY 2020, the Committee redeveloped the peer group to eliminate significantly larger peers and add new size and industry appropriate peers. See the discussion under Market Benchmarking for detail on the new peer group. Pending redevelopment of the peer group, no changes were made to NEO compensation.

 

  

 

Committee made decisions related to FY 2020 NEO compensation based on a market review conducted in early FY 2020 that included the new FY 2020 Compensation Peer Group. Effective for FY 2020.

 

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CEO FY 2020 Target Total Pay is $4 Million Lower (vs. FY 2019)

The Committee reduced the new CEO’s target pay opportunity by $4 million for FY 2020. This change represents a 24% decrease compared to FY 2019. We believe this change directly addresses shareholder feedback relating to the overall magnitude of our CEO pay package.

 

Fiscal Year

 

  

CEO

 

  

Base

Salary

 

    

Target Annual
Incentive

 

  

Granted Long-Term
Incentive Value

 

  

Total Direct

Pay

 

 

 

2020

 

  

 

John Zillmer 

 

  

 

 

 

 

$1,300,000

 

 

 

 

  

 

$2,275,000

 

  

 

$  9,500,000

 

  

 

 

 

 

$13,075,000

 

 

 

 

 

2019

 

  

 

Eric Foss

 

  

 

 

 

 

$1,700,000

 

 

 

 

  

 

$3,400,000

 

  

 

$12,000,000

 

  

 

 

 

 

$17,100,000

 

 

 

 

Compensation Actions in Relation to FY 2019 and FY 2020

Overview of the Compensation Components

As discussed in the executive summary, the principal components of Aramark’s executive compensation program are base salary, an annual cash incentive and long-term equity incentives. We also provide market competitive employee benefits, post-employment benefits and a limited number of perquisites.

Base Salary

Base salary reflects the value of the position and the attributes the executive brings to Aramark, including tenure, experience and skill level. Salary levels for our executives are reviewed at least annually.

The Committee annually reviews the base salaries of the Executive Leadership Team (ELT), including all NEOs, and adjusts them periodically as needed to maintain market position and consistency with evolving responsibilities. Upon consideration of competitive market analysis (see Market Benchmarking for more details) and input from its independent consultant, the Committee increased salaries for Mr. Bramlage, Ms. McKee, and Mr. Reynolds at the beginning of FY 2019. Increases for Ms. McKee and Mr. Reynolds were reflective of Aramark’s standard employee merit increase for FY 2019. The FY 2019 salary increase for Mr. Bramlage was provided to maintain Mr. Bramlage’s competitive market positioning at median relative to the peer group (see Market Benchmarking). Mr. Foss did not receive a base salary increase for FY 2019. Mr. Bethel and Ms. Harrington were new to their roles in 2019 and were not NEOs in 2018. Ms. Harrington was promoted to General Counsel after Mr. Reynolds’ departure, and the Committee adjusted her salary in 2019 to reflect her new role responsibilities and intended positioning relative to market survey data (see Market Benchmarking for more details). Mr. Bramlage and Mses. McKee and Harrington did not receive any additional compensation during the period from August 25, 2019 until October 6, 2019 in which they served in the role of Office of the Chairman. Ms. Harrington received an additional 4.5% annual base salary increase effective January 1, 2020, based on the Committee’s review of Ms. Harrington’s competitive positioning relative to the new FY 2020 Compensation Peer Group.

 

   

 

FY 2018

 

FY 2019

 

FY 2020

NEO

 

Job Title

 

Salary

 

 

Salary

 

 

% Increase 

 

 

Salary

 

 

% Increase 

 

             

John Zillmer

 

 CEO

 

 

 

N/A 

 

 

 

 

N/A 

 

 

 

 

N/A

 

 

$

 

1,300,000 

 

 

 

 

N/A

 

 

             

Stephen P. Bramlage

 

 EVP, CFO

 

$

 

707,227 

 

 

$

 

777,950 

 

 

 

 

10.0

 

%

 

$

 

777,950 

 

 

 

 

0

 

%

 

             

Lynn B. McKee

 

 EVP, HR

 

$

 

700,232 

 

 

$

 

717,738 

 

 

 

 

2.5

 

%

 

$

 

717,738 

 

 

 

 

0

 

%

 

             

Keith Bethel

 

 Chief Growth Officer

 

 

 

N/A 

 

 

$

 

500,000 

 

 

 

 

N/A

 

 

$

 

500,000 

 

 

 

 

0

 

%

 

             

Lauren Harrington

 

 General Counsel

 

 

 

N/A 

 

 

$

 

478,500 

 

 

 

 

N/A

 

 

$

 

500,000 

 

 

 

 

4.5

 

%

 

             

Eric Foss

 

 Former Chairman, President &  CEO

 

$

 

1,700,000 

 

 

$

 

1,700,000 

 

 

 

 

0.0

 

%

 

 

 

N/A 

 

 

 

 

N/A

 

 

             

Stephen Reynolds

 

 Former General Counsel

 

$

 

543,876 

 

 

$

 

557,466 

 

 

 

 

2.5

 

%

 

 

 

N/A 

 

 

 

 

N/A

 

 

 

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Annual Incentive Plan

The annual cash incentive is designed to drive and reward performance and is based on financial objectives and individual functional or business group objectives established by the Committee. Annual incentive targets as a percentage of base salary are provided in the table below. The Committee made no adjustments to the NEOs’ annual incentive targets for FY 2020. Actual payouts are based on annual performance.

 

NEO Job Title FY 2018 FY 2019 % Change FY 2020 % Change
             

John Zillmer

 

CEO

 

N/A

 

N/A

 

N/A

 

175%

 

N/A

 

             

Stephen P. Bramlage

 

EVP, CFO

 

100%

 

100%

 

0%

 

100%

 

0%

 

             

Lynn B. McKee

 

EVP, HR

 

100%

 

100%

 

0%

 

100%

 

0%

 

             

Keith Bethel

 

Chief Growth Officer

 

N/A

 

85%

 

N/A

 

85%

 

0%

 

             

Lauren Harrington

 

General Counsel

 

N/A

 

85%

 

N/A

 

85%

 

0%

 

             

Eric Foss

 

Former Chairman, President & CEO

 

200%

 

200%

 

0%

 

N/A

 

N/A

 

             

Stephen Reynolds

 

Former General Counsel

 

100%

 

100%

 

0%

 

N/A

 

N/A

 

FY 2019 Annual Incentive Performance Metrics

For 2019, the Annual Incentive Plan comprised three financial objectives – Adjusted Operating Income, Adjusted Revenue and Free Cash Flow – for a combined weighting of 90%, and individual or business objectives weighted 10%. The Company must attain a threshold, or minimum, performance on each financial measure for the participant to receive any payout under such part of the financial portion, while payout under the individual portion is based on achievement of functional objectives as reviewed and approved by the Committee. If the maximum performance for all measures was achieved, the executive would receive a payout up to 195% of target. The Committee is authorized to exercise negative discretion to reduce payments; other than the reduction related to asset impairment costs previously described for Adjusted Operating Income, the Committee did not apply negative discretion to FY19 annual incentive payouts.

 

Annual Incentive Performance Metric Weighting
Financial Performance Metrics    
           

 

Adjusted

Operating Income

(40%)

 

    +      

 

Adjusted

Revenue

(25%)

 

    +      

 

Free

Cash Flow

(25%)

 

    +      

 

Individual

Performance

(10%)

 

 

FY 2019 Annual Incentive Metric Selection and Target-Setting Process

Financial objectives for the annual incentive plan are chosen to drive Company performance and are closely linked to our strategy.

 

 

Adjusted Operating Income: The Compensation Committee selected this metric because it is an important measure of the Company’s operating profitability and a key component of the Company’s long-term expectations for the business.

 

 

Adjusted Revenue: The Compensation Committee selected Adjusted Revenue because it allows for an assessment of the Company’s revenue without the effect of currency fluctuations, which are beyond the control of management.

 

 

Free Cash Flow: The Compensation Committee selected Free Cash Flow because it represents the Company’s ability to invest, repay debt and distribute earnings to shareholders.

 

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FY 2019 Annual Incentive Metrics Summary

 

         
Type   Metric   Weighting     Definition   Rationale
         

Financial

  Adjusted Operating Income   40%  

Adjusted Operating Income represents operating income adjusted to eliminate the change in amortization of acquisition-related intangible assets; the impact of the change in fair value related to certain gasoline and diesel agreements; severance and other charges; the effect of divestitures (including the gain on the sale); merger and integration related charges; tax reform related employee reinvestments; advisory fees related to shareholder matters; and other items impacting comparability.

 

 

•  Focuses management on driving profitable top line growth and managing expenses

 

•  Drives tangible goal achievement and focuses on factors most in executives’ control

 

•  When considered in conjunction with Adjusted EPS (used for FY 2017 – 2019 long-term plan), focuses management on overall profitability of the Company

         
    Adjusted Revenue   25%   Adjusted Revenue represents revenue growth, adjusted to eliminate the impact of currency translation and divestitures.  

•  Allows for an assessment of the Company’s revenue without the effect of currency fluctuations, which are beyond the control of management

 

•  Excludes acquisitions to more closely align attained results with the business that existed at the time targets were set

 

         
    Free Cash Flow   25%   Free Cash Flow represents net cash provided by operating activities less net purchases of property and equipment and other.  

•  Focuses management on cash flow through increased earnings and management of working capital levels and capital expenditures

 

         

Non-Financial

  Individual Performance Objectives   10%  

• Mr. Foss

 

•  Implement and execute a focused business plan to achieve the key financial goals;

 

•  Develop, pursue and execute a strategic plan enabling long-term value creation;

 

•  Develop and execute a plan to strengthen the Board and improve Board effectiveness;

 

•  Develop a high performing organization; and

 

•  Successfully integrate the Avendra and AmeriPride acquisitions

 

• Other NEOs

 

•  Improve year-over-year overall employee engagement based on annual survey

 

 

•  Focuses executives on critical, non-financial objectives that are important and expected to drive value creation for shareholders

 

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Performance targets are designed to be challenging and take into consideration results from the prior year, expectations going forward, and the Company’s strategic plan. The Committee establishes performance targets at the beginning of the fiscal year consistent with the Company’s long-term expectations for the business, which include:

 

 

Mid-to-high single-digit growth in adjusted operating income

 

 

Organic or adjusted revenue growth of two percent to five percent

 

 

Positive free cash flow growth

For FY 2019, Adjusted Operating Income, Adjusted Revenue, and Free Cash Flow targets were set substantially above 2018 performance. The Compensation Committee also approved individual functional and business group objectives, which are evaluated against each NEO’s individual performance at year end.

FY 2019 Annual Incentive Opportunities and Outcomes

FY 2019 Payout Factors – Financial Metrics

Payout factors begin at 25% of target (for threshold performance) and are capped at 200% of target (for maximum performance). There are no payouts for below threshold performance and at no point can the Committee approve a payout above 200% of target.

 

    

Threshold

 

 

Target

 

 

Maximum

 

 

Result

 

 

% Earned
before
Weighting

 

 

Weighted %
of Target
Bonus
Earned

 

AOI (40% weight)

 

$1,029.4

 

$1,143.8

 

$1,258.2

 

$1,090.61

       

Payout Factor (% of Target)

 

25%

 

100%

 

200%

     

65.2%

 

26.1%

Adjusted Sales (25% weight)

 

$14,741.0

 

$16,378.9

 

$18,016.8

 

$16,502.4

       

Payout Factor (% of Target)

 

25%

 

100%

 

200%

     

107.5%

 

26.9%

Free Cash Flow (25% weight)

 

$400.0

 

$500.0

 

$600.0

 

$499

       

Payout Factor (% of Target)

 

25%

 

100%

 

200%

   

99.8%

 

24.8%

 

1 

Adjusted Operating Income, for the purposes of calculating annual incentive attainment, was equal to Adjusted Operating Income as reported externally by the Company further reduced by approximately $10 million related to asset impairment costs.

FY 2019 Payout Factors – Individual Performance Objectives

The individual functional or business group objectives, having a payout range from 0% to 150%, consisted of the following:

 

NEO(s)

 

Non-Financial Performance Outcomes

 

Result

 

% Earned
before
Weighting

 

Weighted %
of Target
Bonus
Earned

 

 

Mr. Foss

 

Per the terms of his August 25, 2019 Letter Agreement, the individual objective portion of FY 2019 annual bonus payable was based on actual performance of the Company relative to the Plan’s Financial Objectives (see preceding section)

 

 

Based
Solely on
Financial
Metric
Outcomes

 

 

86.4%

 

8.6%

 

Other NEOs    

 

The Committee determined that each of Messrs. Bramlage, Reynolds, and Bethel and Mses. McKee and Harrington achieved a 100% level of performance of their Non-Financial Individual Performance objectives.

 

 

At Target

 

100%

 

10.0%

 

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FY 2019 Final Payouts by NEO

Actual annual incentive payouts based on FY 2019 performance are shown below for each NEO:

 

NEO   Job Title   Target Annual
Incentive ($)
    Actual Annual
Incentive ($)
   

% Paid

(as a % of
Target)

 

Stephen P. Bramlage

 

EVP, CFO

 

 

$   777,950

 

 

 

$   682,729

 

 

 

87.8%  

 

Lynn B. McKee

 

EVP, HR

 

 

$   717,738

 

 

 

$   629,887

 

 

 

87.8%  

 

Keith Bethel

 

Chief Growth Officer

 

 

$   425,000

 

 

 

$   372,980

 

 

 

87.8%  

 

Lauren Harrington1

 

General Counsel

 

 

$   277,398

 

 

 

$   242,600

 

 

 

87.5%  

 

Eric Foss2

 

Former Chairman, President & CEO

 

 

$3,400,000

 

 

 

$2,937,600

 

 

 

86.4%  

 

Stephen Reynolds3

 

Former General Counsel

 

 

$   277,952

 

 

 

$   243,931

 

 

 

87.8%  

 

 

1 

Ms. Harrington’s target annual incentive award was pro-rated to reflect her partial year as General Counsel. Her full year General Counsel target would have been $406,725. Additionally, her performance metric mix prior to her promotion to General Counsel was 50% AOI; 40% Adjusted Revenue; and 10% Individual Objectives; therefore, her overall payout as a percentage of target is slightly different than the other NEOs.

 

2 

Per his August 25, 2019 Letter Agreement, Mr. Foss’s 2019 annual incentive payout determination was based solely on achievement of Financial Objectives. The percentage achieved based on the financial metrics (i.e., 86.4%) was applied to the Individual Performance Objectives portion of his payout resulting in a slightly reduced payout relative to other NEOs.

 

3 

Mr. Reynolds’ target annual incentive reflects a pro-rata portion of his target annual incentive based on his retirement date.

FY 2020 Annual Incentive Metrics

To support the Company’s current focus of its business strategy on prioritizing investing to grow revenue, for FY 2020, the Committee determined to change the weightings of metrics under our annual incentive plan to focus more heavily on revenue growth and profitability, which are key to the Company’s success. FY 2020 annual incentive plan metrics changes include:

 

 

Adjusted Operating Income – Increased the weight of the Adjusted Operating Income metric from 40% to 45%

 

 

Adjusted Revenue Increased the weight of the Adjusted Revenue metric from 25% to 45%

 

 

Free Cash Flow – Eliminated the Free Cash Flow metric. The Committee believes that discontinuing the use of the Free Cash Flow metric does not diminish its importance in our business strategy but reflects stronger alignment with our growth-oriented business strategies.

 

 

Individual Objective – Maintained Individual Objective metric at 10% weighting

 

    Weight          FY 2020 Performance Targets
Metric   FY 2019     FY 2020     FY 2020 Performance
and Payouts
  Threshold   Target   Maximum

Adjusted Operating Income

 

 

40%    

 

 

 

45%    

 

 

Performance Range

 

90% of target

 

100% of target

 

110% of target

 

Payout Range

 

25% of target

 

100% of target

 

200% of target

Adjusted Revenue

 

 

25%    

 

 

 

45%    

 

 

Performance Range

 

95% of target

 

100% of target

 

105% of target

 

Payout Range

 

25% of target

 

100% of target

 

200% of target

Free Cash Flow

 

 

25%    

 

 

 

0%    

 

 

N/A

 

N/A

 

N/A

 

N/A

Individual Objectives

 

 

10%    

 

 

 

10%    

 

 

Payout Range

 

0% of target

 

100% of target

 

150% of target

FY 2020 performance targets are set at levels that exceed FY 2019 achievement and are designed to be both challenging and aligned with driving shareholder value creation.

 

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Long Term Incentives (LTI)

FY 2019 Long-Term Incentive Vehicles: Aligns executives’ interests with those of shareholders. Grants are made early in the fiscal year (generally mid-November). For FY 2019, LTI awards for NEOs were granted in November 2018 and comprised three vehicles:

 

Performance Share Units – PSUs (50%)

  

Options (30%)

  

RSUs (20%)

Performance Based Vesting

  

Time-Based Vesting

  

Time-Based Vesting

3-Year Cliff based on Achievement of Performance Targets

Adjusted EPS (50%) & Return on Invested Capital (50%)

Payout can range from 0% to 200% (of target)

   4-Year Annual    4-Year Annual

RSUs and PSUs accrue dividend equivalents until settlement that are subject to the same vesting terms as the underlying RSUs and PSUs (with dividend equivalents earned on PSUs determined based upon actual performance; no dividends or equivalents are paid on RSUs that do not vest or PSUs that are not earned and vested). Time vesting RSUs, PSUs, and stock options also vest in connection with certain termination events, as described in more detail in “Potential Post-Employment Benefits.”

FY 2019 PSU Performance Metrics. For the FY 2019 – FY 2021 performance period, PSUs are based on two, equally weighted metrics: Cumulative Adjusted EPS and Return on Invested Capital (ROIC). Performance targets are set by the Committee at challenging levels to drive company performance and to ensure continued long-term executive focus. Long-term targets are designed to exceed prior achievement and be challenging, while taking into account future expectations and the Company’s strategic plan. Goals also align with the Company’s long-term targets communicated to investors. The Cumulative Adjusted EPS target set for the FY 2019 – FY 2021 performance period was set higher than historical performance to reflect the Company’s performance outlook and would not have been attained based on results during the last three-year performance period (FY 2017 – FY 2019). The ROIC target is generally aligned with historical averages and capital cost considerations. The Committee believes these two metrics closely link executive interests with long-term value creation.

 

 

Metric

 

 

Weight   

 

 

Definition

 

 

Rationale

  Performance / Payout Relationship
  Threshold   Target   Maximum

 

3-Year Cumulative Adjusted EPS

 

 

50%   

 

 

Cumulative Adjusted Net Income during the Performance Period divided by Diluted Shares Outstanding

 

 

Transparent metric that aligns with our communication to the investor community and measures our progress on our strategic initiatives.

 

 

92.7% of
target

(50% of
target
payout)

 

 

100%

 

 

107.9% of
target

(200% of
target
payout)

 

3-Year Return on Invested Capital (ROIC)

 

 

50%   

 

 

Adjusted Operating Income divided by Average Invested Capital

 

 

ROIC measures the return we are driving for our shareholders and incentivizes efficient use of capital. Added as a metric to better align with Company’s business goals and in response to shareholder feedback.

 

 

90.9% of
target

(50% of
target
payout)

 

 

100%

 

 

109.1% of
target

(200% of
target
payout)

 

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FY 2019 Long Term Incentive Awards

The following table shows grant date value for each award type. Factors considered by the Committee in making FY 2019 awards included value of previously granted awards, pay relative to target market positioning (see Market Benchmarking for more details), individual performance, and the value of outstanding equity awards.

 

NEO

Job Title

Total Target

LTI $

2019 LTI Allocation (November 2018
Grant Unless  Noted)

Stock

Options

RSUs

PSUs

(FY2019 –
2021)

Stephen P. Bramlage

  EVP, CFO

$

3,000,000

$

900,000

$

600,000

$

1,500,000

Lynn B. McKee

  EVP, HR

$

1,500,000

$

450,000

$

300,000

$

750,000

Keith Bethel

  Chief Growth Officer

$

1,500,000

$

450,000

$

300,000

$

750,000

Lauren Harrington1

  General Counsel

$

1,135,000

$

340,500

$

227,000

$

567,500

Eric Foss

  Former Chairman, President
  & CEO

$

12,000,000

$

3,600,000

$

2,400,000

$

6,000,000

Stephen Reynolds

  Former General Counsel

$

1,500,000

$

450,000

$

300,000

$

750,000

 

1

Includes two additional LTI grants received by Ms. Harrington during FY 2019 to recognize her promotion and new role and responsibilities (awards granted March 4, 2019 and August 8, 2019). These awards are described in more detail under Executive Transitions and in the Grants of Plan Based Awards Table.

Performance and Payout Outcomes for Awards Related to FY 2017 – FY 2019 Performance Period

PSUs that vested at the end of FY 2019 had a performance target related to three-year cumulative adjusted EPS for the FY 2017 – FY 2019 performance period of $5.88 per share. Our cumulative three-year adjusted EPS from FY 2017 – FY 2019 exceeded the targeted performance level at $6.24, which resulted in a 162% (of target) payout earned.

 

     

Threshold

    

Target

    

Maximum

    

Result

    

% Earned

 

3-Year Cumulative Adjusted EPS (100% weight)

  

$

5.34

 

  

$

5.88

 

  

$

6.46

 

  

$

6.24

1 

        

Payout Factor (% of Target)

  

 

50%

 

  

 

100%

 

  

 

200%

 

           

 

162%

 

 

1

For purposes of calculating three-year Adjusted EPS performance achievement under the PSU awards for each of the three fiscal years during the performance period, Adjusted EPS previously disclosed annually was further adjusted to better align payouts with items within management control. For example, the Committee made adjustments to reflect the effect of currency translation over the three years, the number of outstanding shares set forth in the award agreements, the impact of the FY 2018 Avendra and AmeriPride acquisitions, the FY 2019 disposition of our Healthcare Technologies business, the change in our definition of Adjusted EPS in FY 2019 from the FY 2017 definition, the impact of the California fires and the impact on the Company’s tax rate as a result of the Tax Cuts and Jobs Act passed in December 2017.

Former CEO’s Relative TSR Awards for FY 2017 – FY 2019 Performance Period: In November 2016, Mr. Foss was granted performance RSUs, performance stock options, and performance restricted stock awards. These awards had vesting contingencies dependent on Aramark’s 3-year TSR (FY 2017- FY 2019) relative to the peer group. Aramark did not meet the performance condition necessary to vest in any portion of these awards; therefore, Mr. Foss forfeited these awards – 18,208 performance RSUs, 141,844 performance stock options, and 35,212 performance restricted stock awards.

 

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FY 2020 Long Term Incentive Awards

The following table shows the grant date value for each award granted in early FY 2020. The LTI grant values were kept consistent with the value granted in FY 2019, except in the case of Ms. Harrington whose FY 2020 grant value is updated to reflect the value of her new role as the Company’s General Counsel and overall targeted market positioning relative to survey data (see Market Benchmarking for more details). Additionally, Mr. Zillmer’s FY 2020 long-term incentive grant was made pursuant to his Offer Letter dated October 6, 2019 (see Market Benchmarking and Executive Transitions for details).

 

NEO

 

  

Job Title

 

  

Target

LTI $

 

     2020 LTI Allocation (November 2019 Grant)  
  

Stock Options

(30%)

    

RSUs

(20%)

    

PSUs

(50%)

 

John Zillmer

  

CEO

  

$

9,500,000

 

  

$

2,850,000

 

  

$

1,900,000

 

  

$

4,750,000

 

Stephen P. Bramlage

  

EVP, CFO

  

$

3,000,000

 

  

$

900,000

 

  

$

600,000

 

  

$

1,500,000

 

Lynn B. McKee

  

EVP, HR

  

$

1,500,000

 

  

$

450,000

 

  

$

300,000

 

  

$

750,000

 

Keith Bethel

  

Chief Growth Officer

  

$

1,500,000

 

  

$

450,000

 

  

$

300,000

 

  

$

750,000

 

Lauren Harrington

  

General Counsel

  

$

1,500,000

 

  

$

450,000

 

  

$

300,000

 

  

$

750,000

 

FY 2020 Long Term Incentive Performance Metrics Related to FY 2020 PSU Grant

To support the Company’s business strategy of prioritizing investing to grow revenue, for FY 2020, the Committee changed the performance metrics underlying our FY 2020 PSU awards to focus on revenue growth, profitability growth, and long-term return on capital, all of which are key to the Company’s long-term success and shareholder value creation. Additionally, to ensure the PSU payouts based on the referenced operational metrics are aligned with shareholder value creation, the Company also introduced a relative total shareholder return modifier. The modifier is designed to adjust final payouts by +/- 25% based on the Company’s total shareholder return relative to a broad performance peer group consisting of 51 organizations (see Market Benchmarking for more details). Performance metrics for PSUs granted in FY 2020 (November 2019) related to the FY 2020 – FY 2022 performance period include:

 

 

Adjusted Operating Income Growth – 30% weighting

 

 

Revenue Growth – 40% weighting

 

 

Return on Invested Capital – 30% weighting

 

 

Relative Total Shareholder Return Modifier – Impacts final payout by +/- 25% based on relative total shareholder return

FY 2020 – 2022 performance targets are set at levels that generally exceed historical achievement and are designed to be both challenging and sufficient to drive shareholder value creation.

 

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Recently Earned and Outstanding Performance Stock Units1

In the table below, we show the PSUs recently earned and outstanding, highlighting the applicable performance periods. PSU attainment is dependent on performance relative to the metrics shown below and will not be determined until the end of each respective performance period.

 

Performance Period and Metrics

 

 

Weight  

 

 

PSUs Earned and/or Outstanding

 

2017   

 

2018   

 

2019   

 

2020   

 

2021   

 

2022   

 

Earned   

2017 – 2019 Performance Period1

   

FY 2017 Grant

           

Adjusted EPS

 

100%

               

162%

Earned for Period Ending September 2019

                               

2018 – 2020 Performance Period1

     

  FY 2018 Grant

         

Adjusted EPS

 

50%

                     

ROIC

 

50%

                           

2019 – 2021 Performance Period2

       

  FY 2019 Grant

       

Adjusted EPS

 

50%

                     

ROIC

 

50%

                           

2020 – 2022 Performance Period

         

  FY 2020 Grant

     

Revenue Growth

 

40%

                     

Adjusted Operating Income Growth

 

30%

                     

ROIC

 

30%

                     

Relative Total Shareholder Return

 

Modifier

                           

 

1

Mr. Foss received PSU awards in FY 2017 and FY 2018 with payouts on a portion of such awards contingent on relative total shareholder return (“TSR awards”). As explained above, Mr. Foss’s FY 2017 TSR awards were forfeited for not meeting the relative TSR performance condition. The remainder of Mr. Foss’s PSUs awarded in FY 2017 vested as indicated in the table above. Payouts, if any, related to FY 2018 TSR awards will be determined based, in part, on relative TSR through 2020 FYE.

 

2

Mr. Foss received PSU awards in FY 2019. Based on the terms of those awards, Mr. Foss is entitled to continued PSU vesting with respect to two-thirds (67%) of the total PSUs granted in FY 2019 to the extent such PSUs are earned based on Company performance at the end of the applicable performance period.

EXECUTIVE TRANSITIONS

CEO Transition

Mr. Zillmer’s FY 2020 Target Pay Pursuant to October 6, 2019 Offer Letter

Our Offer Letter with Mr. Zillmer provides the following minimum compensation- and benefit-related terms annually. Actual payouts for incentive plans are based on performance achievement as defined by the plan. The post-termination payments described below are payable pursuant to the employment agreement Mr. Zillmer entered into upon commencement of employment with us, and are conditioned on Mr. Zillmer’s agreement not to compete with the Company for two years following his termination of employment.

 

Element   Value or Description

Base Salary

 

 

$1,300,000

 

Annual Cash Incentive Target

 

 

175% (of base salary)

 

Long-Term Incentive

 

Overall award to be provided with a guaranteed minimum grant date fair value of $9.5 million when granted in November 2019

 

• Performance Share Units: $4,750,000

 

• Stock Options: $2,850,000

 

• Restricted Stock Units: $1,900,000

 

Benefits and Perquisites

 

 

Generally consistent with those provided to other executives.

 

 

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Mr. Zillmer’s Payments and Benefits on Termination by Aramark without Cause / Resignation for Good Reason

In Anticipation of or Within Two Years after a Change of Control (the “CIC Protected Period”)

 

• Lump sum payment equal to the sum of: (x) 2.5 times salary, (y) 2.5 times his annual target bonus, and (z) pro rata portion of annual target bonus for year of termination

 

• 2.5 year continuation of company-paid medical and life insurance

 

• Equity awards to be treated in accordance with applicable plans and agreements that are generally consistent with those provided to other executives

Other Than During the CIC Protected Period

 

• 2 years of salary continuation payable monthly beginning within 75 days post-termination

 

• 2-year continuation of company-paid medical and life insurance

 

• Equity awards to be treated in accordance with applicable plans and agreements that are generally consistent with those provided to other executives

Payments in Connection with Mr. Foss’s Separation

As disclosed in Aramark’s Current Report on Form 8-K filed on August 26, 2019 describing Mr. Foss’s August 25, 2019 Letter Agreement, Mr. Foss’s separation from service was treated as a termination without cause pursuant to Mr. Foss’s pre-existing agreement relating to employment and post-employment competition with Aramark entered into on May 7, 2012, as amended, and, as such, Mr. Foss is due the following post-termination payments and benefits. All post-termination payments and benefits under that agreement are conditioned on Mr. Foss’s agreement not to compete with the company for two years following his termination, in addition to compliance with certain other post-employment restrictive covenants. The equity vesting benefits described below are as set forth in the applicable Aramark equity award agreements pursuant to which Mr. Foss’s equity awards were granted and include vesting provisions applicable to retirement-eligible employees since Mr. Foss met the Amended and Restated 2013 Stock Incentive Plan’s Retirement definition prior to his separation (i.e., 60 years of age with five years of Aramark service).

 

 

Payment Element

 

  

 

Description

 

  

 

Value

 

     

Base Salary Continuation

  

2 years of salary continuation payable monthly beginning 60 days post termination.

 

   $3,400,000
     

Annual Cash Incentive

  

2 times 2019 annual bonus (such bonus based on actual performance) payable monthly beginning 60 days post termination.

 

   $5,875,200
     

Benefit Continuation

  

2-year continuation of company-paid medical and life insurance.

 

   $88,494
     

Automobile Allowance

 

  

2-year continuation of monthly automobile allowance.

 

  

$48,000

 

     

Equity Vesting

  

• Accelerated vesting of two additional tranches of outstanding time-based stock options

 

• One additional year of continued vesting of outstanding time-vested RSUs

 

• PSUs granted in FY 2017 with vesting subject to Aramark total shareholder return were forfeited because Aramark did not meet the performance condition

 

• PSUs granted in FY 2017 with vesting subject to three-year cumulative EPS vested at 162% (of target) as described above

 

• PSUs granted in FY 2018 – Continued PSU vesting with respect to 100% of the total PSUs granted to extent PSUs are earned based on performance; this includes outstanding awards with performance contingent on FY 2018 – FY 2020 relative TSR performance

 

• PSUs granted in FY 2019 – Continued PSU vesting with respect to two-thirds (67%) of the total PSUs granted to extent PSUs are earned based on performance

 

   Determined Upon Exercise / Vesting. See Outstanding Equity Awards Table for more details.

 

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General Counsel Transition

On January 31, 2019, Mr. Reynolds provided notice that he intended to retire effective April 1, 2019. He was entitled to retirement benefits available to all retirement-eligible executives, including a pro-rata portion of his annual incentive for FY 2019 as well as the retirement provisions associated with his equity vesting (see Post-Termination Benefits).

Lauren Harrington was promoted to General Counsel effective March 4, 2019. During FY 2019, Ms. Harrington’s annual base salary was increased to $478,500 and her annual incentive target was increased to 85% of base salary. In March 2019, Ms. Harrington received a one-time equity award of $500,000 to recognize her promotion. Additionally, Ms. Harrington was provided an equity-based award of $500,000 in August 2019 based on the Committee’s review of Ms. Harrington’s role and competitive positioning of Ms. Harrington’s pay package relative to market survey data. Ms. Harrington’s off-cycle equity awards reflected the LTI mix of the annual equity grant (i.e., 50% PSUs, 30% stock options, 20% RSUs). In November 2019, the Committee awarded Ms. Harrington a long-term incentive grant valued at $1,500,000 for FY 2020. In connection with Ms. Harrington’s promotion, she entered into an agreement relating to employment and post-employment competition with Aramark in August 2019, which we refer to as an employment agreement, in substantially the same form as the employment agreement applicable to Mr. Bramlage, as described in more detail in “Potential Post-Employment Benefits.”

Other Compensation Components

The Compensation Committee provides additional benefits to the NEOs that are customary for executives of similar rank to enable our executives to focus on our business and enhance their commitment to us.

Savings Incentive Retirement Plan: We make available a non-qualified savings plan intended as a substitute for those employees ineligible to participate in our 401(k) plan because of certain legal requirements.

Severance Arrangements and Payments upon a Change of Control: We have employment agreements with all of the named executive officers for indeterminate periods terminable by either party, and in most cases our executives are entitled to certain payments and benefits in connection with certain terminations of employment. These provisions are intended to align executive and shareholder interests by enabling executives to consider corporate transactions that are in the best interests of the shareholders and our other constituents without concern over whether the transactions may jeopardize the executive’s own employment. While we do have these agreements in place, from time to time it has been necessary to renegotiate some terms upon actual termination.

Equity awards granted since the IPO and agreements with our NEOs that provide for other payments in connection with a change of control contain a “double trigger” in order for the executive to receive compensation, meaning that awards will be accelerated only if the executive’s employment is terminated within a certain period following the change of control. For more information about change of control and severance payments for our named executive officers, see the disclosure under “Potential Post-Employment Benefits.”

Perquisites: We provide our NEOs with other benefits that the Committee believes are reasonable and encourage retention. The costs of these benefits constitute a small percentage of each named executive officer’s total compensation. These benefits are reflected in the All Other Compensation column in the Summary Compensation Table and include:

 

 

premiums paid on life insurance

 

 

a survivor income protection plan (entitling a surviving spouse or domestic partner and dependent children to receive the executive’s full base salary for one year after the executive’s death and one half of the executive’s base salary for the subsequent nine years, or alternatively, an amount equal to his or her base salary upon retirement or death for a participant who is at least 65 years old and has attained five years of employment – currently, this plan is frozen and only Ms. McKee participates);

 

 

disability insurance and executive health insurance;

 

 

receipt of a taxable car allowance and no cost parking at a garage near Company offices;

 

 

an executive physical;

 

 

financial planning services;

 

 

personal use of Company tickets or the Company box and related items at sporting or other events;

 

 

for Mr. Foss, our former Chairman, President & CEO, the use of a Company provided aircraft, car and driver;

 

 

for Mr. Zillmer, payment of legal fees and costs incurred in negotiating his Offer Letter, up to $35,000

 

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Pursuant to Company policy, Mr. Foss, our former Chairman, President & CEO was required to use aircraft and automobiles provided by the Company for all air travel, whether personal or business, whenever possible. Under the policy, the CEO could also designate other members of senior management to use the Company aircraft for air travel. In November 2019, the Committee amended the Company’s policy to no longer require the CEO to use company-provided aircraft or car and driver for all business and personal travel.

Mr. Foss was required to reimburse the Company for the amount by which the aggregate incremental cost to the Company attributable to his personal use of the Company’s aircraft exceeded $250,000 per fiscal year. Beginning in FY 2020, any future personal use of the Company aircraft by the CEO will require pre- approval by the Chairman of the Board or the Chair of the Committee.

MARKET BENCHMARKING

Competitive Market Practices

Our compensation program is structured to enable us to maintain our competitive position for key executive talent. To establish our market competitive compensation practices, our Compensation Committee refers, in part, to peer group data and a subset of the Willis Towers Watson CDB General Industry Executive Compensation Survey – U.S. that is size-adjusted based on Aramark’s revenue (“Survey Data” and together with the Company’s applicable peer group data, “Market Practice”).

Peer Group

The Committee refers to a peer group to review executive pay levels for the CEO and CFO or other executives (to the extent sufficient proxy data is available), plan design and award decisions. When making pay decisions the Committee generally targets the peer group median but retains flexibility to position employees above or below median based on employee experience and skill-set. In 2015, the Committee, taking into account the advice of its independent compensation consultant, established the Company’s peer group using a variety of quantitative and qualitative factors. The Committee again reviewed the peer group in 2017 and made no changes at that time. The peer group was originally determined in 2015 based on the following criteria (in each case, originally using data relative to the Company in fiscal 2014):

 

   

Factors

 

 

Criteria

 

   

Comparable in Size

 

Revenue between 0.3 times and 3 times

 

   
   

Enterprise value between 0.25 times and 5 times

 

   
   

Operating margin between 2.5% and 10%

 

   

Similar Industry/Operating Model

 

 

Provides business services

 

   
   

Logistics-centered business model

 

   
   

Repeatable business model and consumer facing

 

   

Competitor for Talent

 

 

Attracting new employees to the Company and retaining current executives

 

Based on our fiscal 2019 results, as compared to the peer group, our revenues were generally near the 50th percentile, while our enterprise value and adjusted operating margin generally approximated the 25th percentile.

 

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FY 2019 Peer Group and Characteristics

The following table sets forth characteristics of the FY 2019 peer group.

Size Comparisons (Approximate Aramark Ranking Relative to the FY 2019 Peers)1

 

LOGO

 

1

All data sourced from S&P Capital IQ as of November 2019; revenue and operating margin are measured on a trailing 12-month basis, and enterprise value reflects a six-month average as of October 2019.

 

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Industry and Operating Model Comparisons to Aramark – FY 2019 Peers

 

 

Industry and Operating Model Characteristics

Company Name

Business

Services

Logistics

Consumer Facing

With Repeatable

Business Model

Competitor

For Talent

Carnival

X

X

C.H. Robinson Worldwide

X

X

Darden Restaurants

X

X

FedEx

X

X

X

Hertz Global Holdings

X

X

X

Macy’s

X

X

 

X

Manpower

X

X

Marriott International

X

X

 

X

McDonalds

X

X

 

X

MGM Resorts International

X

X

PepsiCo

X

 

X

RR Donnelley & Sons

X

X

Starbucks

X

X

 

X

Sysco

X

X

 

X

United Parcel Service

X

X

X

 

X

Waste Management

X

X

Yum! Brands

X

X

 

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FY 2020 Compensation Peer Group

Considering shareholder feedback, the Committee worked with its independent executive compensation advisor, Meridian Compensation Partners, in early FY 2020 to redevelop the compensation peer group. The Committee reviewed the peer group proposed for FY 2020 compensation programs and, upon the recommendation of Meridian, made the following changes.

 

Changes for FY 2020 Aramark Peer Group

     

Aramark’s FY 2020 Compensation Peer Group

Deleted for FY 2020:

   

1.   ABM Industries Incorporated

1.   FedEx Corporation

   

2.  Carnival Corporation

2. Marriott International Inc.

   

3.  C.H. Robinson Worldwide, Inc.

3. McDonald’s Corporation

   

4.  Cintas Corporation

4.   PepsiCo, Inc.

   

5.  Darden Restaurants, Inc.

5. R.R. Donnelley & Sons Company

   

6.  Dollar General Corporation

6. Starbucks Corporation

   

7.  Dollar Tree, Inc.

7. Sysco Corporation

   

8.  Expeditors International of Washington, Inc.

8. United Parcel Services, Inc.

   

9.  Hertz Global Holdings, Inc.

9. Waste Management Inc.

   

10.  Kohl’s Corporation

     

11.  Macy’s, Inc.

Added for FY 2020:    

12.  Manpower Group Inc.

1.  ABM Industries Incorporated

   

13.  MGM Resorts International

2.  Cintas Corporation

   

14.  Performance Food Group Company

3.  Dollar General Corporation

   

15.  Republic Services, Inc.

4.  Dollar Tree, Inc.

   

16.  Royal Caribbean Cruises, Ltd.

5.  Expeditors International of Washington, Inc.

   

17.  US Foods Holding Corp.

6.  Kohl’s Corporation

   

18.  XPO Logistics, Inc.

7.  Performance Food Group Company

   

19.  YUM! Brands Inc.

8.  Republic Services, Inc.

     

9.  Royal Caribbean Cruises Ltd.

     

10.  US Foods Holding Co.

     

11.  XPO Logistics, Inc.

     

 

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The changes aimed to more closely position us near the median of the peer group across selected variables used to evaluate potential peers. The financial variables considered in the peer group redesign included revenue, enterprise value, market capitalization, assets, and adjusted operating margin. Additionally, the Committee selected companies that generally focus on providing business services, have a logistics-centered business model, have a repeatable business model and are consumer facing with large workforces. See below for a comparison of how we compare to the peer group for select financial metrics.

 

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1

All data sourced from S&P Capital IQ as of November 2019; revenue and operating margin are measured on a trailing 12-month basis, and enterprise value reflects a six-month average as of October 2019.

 

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FY 2020 Performance Peer Group for Relative Total Shareholder Return

The Committee also worked with Meridian to develop a Performance Peer Group to be used in determining relative total shareholder return performance for PSUs granted in FY 2020 (November 2019 grant) covering the FY 2020 – FY 2022 performance period.

The Performance Peer Group generally consists of companies in the FY 2020 Compensation Peer Group as well as a broader list of organizations that compete with us for investors’ dollars and face similar business dynamics and challenges, including peers located outside the U.S. (e.g., Compass Group, Sodexo). Share price correlation analysis was used to identify companies whose share price movement has historically aligned with ours. The Committee believes that generally higher-correlated companies should be those which are similarly affected by macro-level factors, and out- or under-performance against that of a highly correlated group should be evidence of results driven by management. Each potential market peer company was then reviewed based on capital structure and share price volatility. Finally, and most critically, the Committee reviewed business model/industry alignment, with management input. The FY 2020 Performance Peer Group consists of the following companies:

 

FY 2020 Performance Peer Group (Relative TSR Peer Group for FY 2020 – FY 2022 PSUs)

1.   ABM Industries Inc.

  

14.  EMCOR

  

27. McDonald’s Corporation

  

40. Sodexo S.A.

2.   Autogrill S.p.A.

  

15.   Expeditors International

  

28. Mondelez International

  

41.  SSP Group

3.   C.H. Robinson Worldwide

  

16.  FedEx Corporation

  

29. Norwegian Cruise Line

  

42. Starbuck Corporation

4.   Carnival Corporation & Plc

  

17.   Healthcare Service Group

  

30.  Old Dominion Freight Line

  

43.  Sysco Corporation

5.   CBRE Group, Inc.

  

18.   Hilton Worldwide Holdings

  

31.  PepsiCo, Inc.

  

44.  Madison Square Garden

6.   Cinemark Holdings, Inc.

  

19.  Hyatt Hotels Corporation

  

32. Premier, Inc.

  

45.  The Wendy’s Company

7.   Cintas Corporation

  

20.  ISS A/S

  

33. Rentokil Initial plc

  

46.  UniFirst Corporation

8.   Compass Group PLC

  

21.  J.B. Hunt Transport Svcs.

  

34.  Republic Services, Inc.

  

47. United Parcel Service, Inc.

9.   Darden Restaurants

  

22. Jones Lang LaSalle

  

35. Restaurant Brand Int’l

  

48.  Waste Connection, Inc.

10.   Domino’s Pizza

  

23. Landstar System, Inc.

  

36. Robert Half International

  

49.  Waste Management, Inc.

11.   Dunkin’ Brands

  

24. Manpower Group Inc.

  

37. Royal Caribbean Cruises

  

50.  Wyndham Destinations

12.   Elior Group S.A.

  

25. Marriott International

  

38. Ryder System, Inc.

  

51.  YUM! Brands, Inc.

13.   Elis SA

  

26. Marriott Vacations

  

39. Service Corporation

    

Survey Data

In evaluating the compensation of certain of our NEOs, the Compensation Committee also references certain survey data. In 2019, the Committee referred to, in part, peer group data and a subset of the Willis Towers Watson 2018 CDB General Industry Executive Compensation Survey that is size-adjusted through regression analysis based on our revenue, to perform a market check of the individual components of compensation and total compensation for Ms. McKee, Mr. Bethel, Ms. Harrington, and Mr. Reynolds. We do not consider any specific company included in the survey to be a material factor in the review of the compensation of our NEOs. When making pay decisions the Committee generally targets the market median of survey data but retains flexibility to position employees above or below median based on employee experience, skill-set, and performance.

Independence of the Compensation Consultant

The Committee’s independent compensation consultant is selected and retained by the Committee to advise on executive and director compensation and it is not intended that the consultant will do any other work for the Company. The independent compensation consultant to the Committee was Frederic W. Cook (FW Cook) until January 2019, Pay Governance, LLC (Pay Governance) from January 2019 through October 2019, and Meridian Compensation Partners, LLC (Meridian) beginning October 2019. The Committee considered FW Cook’s, Pay Governance’s, and Meridian’s independence and determined that the engagements did not raise any conflict of interest or other issues that would adversely impact their independence, including using the six factors set forth in the SEC and New York Stock Exchange rules regarding compensation advisor conflict of interest and independence. Accordingly, the Committee determined FW Cook, Pay Governance, and Meridian to be independent and free from conflicts of interest. During FY19, none of FW Cook, Pay Governance, or Meridian provided other services to the Company outside of its relationship with the Committee.

As part of its normal practice, the Committee periodically considers whether to change consultants. A search for a new consultant was conducted in late 2018, and Pay Governance was selected. In October 2019, in light of membership changes to the Committee, the Committee engaged Meridian as its independent compensation consultant. Meridian will not provide services to the Company outside of its role as independent advisor to the Committee.

Role of Independent Compensation Consultant

The Compensation Committee’s independent compensation consultant provides the Committee with general services related to executive and director compensation each year. These services include market intelligence, compensation trends, suggestions about compensation program design, general views on specific requests to the Compensation

 

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Committee from management regarding compensation program design or decisions, the review of the peer group, benchmarking executive pay against the peer group and against the broader market for executive talent, and an analysis of the risk profile of the compensation system. In particular years, the services also have included thorough analyses of various compensation issues.

Specifically, with respect to FY 2019 compensation decisions, FW Cook:

 

 

Analyzed pay levels and market practice to assess whether NEO salaries and target bonus opportunities support the competitiveness of the Company’s compensation programs and were aligned with our performance and compensation philosophy; and

 

 

Reviewed Mr. Foss’s compensation compared to the peer group and analyzed his equity awards to assist the Committee with setting his pay, linking pay to financial performance and shareholder experience and encouraging retention

With respect to FY 2019, Pay Governance:

 

 

Evaluated competitiveness of executive compensation and benefit programs, including base salary, annual incentives, long-term incentives, executive benefits, perquisites, and severance provisions;

 

 

Reviewed the Company’s peer group;

 

 

Evaluated competitiveness of Company’s Board of Director compensation program;

 

 

Provided the Committee an update on trends in executive compensation and benefits among public organization and on regulatory, legislative, and other relevant developments; and

 

 

Advised the Committee on the elements of compensation to be included in the compensation package for our new CEO, John Zillmer.

At the request of the Compensation Committee, a representative of FW Cook or Pay Governance regularly attended the Compensation Committee’s meetings during FY 2019. It is expected that a representative of Meridian will regularly attend Compensation Committee meetings during FY 2020.

While Meridian was not engaged until after the end of FY 2019, Meridian did review compensation decisions related to Aramark’s 2019 annual incentive and long-term incentive attainment. During the first quarter of 2020, Meridian also advised the Committee with respect to modifications related to Aramark’s annual and long-term incentive plan design and its compensation peer group.

Interaction of the Compensation Committee with Executive Officers and Others

CEO: The Committee regularly seeks input from the CEO on the performance of his direct reports including other NEOs and his views on how performance metrics and goals will motivate other executives and the workforce. The Committee also discusses with the CEO matters relating to the retention of key executives and employees and seeks his input on his performance results and his objectives. Mr. Foss acted in this capacity through the date he stepped down as Chairman, President & CEO. We expect Mr. Zillmer to act in a similar capacity during FY 2020.

EVP, Human Resources: The Compensation Committee regularly asks Ms. McKee, Executive Vice President, Human Resources to attend portions of the Compensation Committee’s meetings in order to discuss compensation design and award issues, allow her to review and respond to suggestions about compensation matters and ask for her input about compensation decisions.

Other Executive Officers: As necessary, the Executive Vice President and CFO attends Compensation Committee meetings to discuss and review financial metrics relating to our compensation programs. Additionally, the General Counsel or the Senior Vice President and Deputy General Counsel attend Compensation Committee meetings to advise about legal requirements and provide regulatory updates.

In administering the annual cash and long term equity incentive plans of the Company, the Committee approves cash and equity awards to executives and/or recommends such approval by a subcommittee of the Committee (or, prior to February 2019, the Stock Committee), as appropriate, for purposes of obtaining certain exemptions under Rule 16b-3 of the Exchange Act. References in this proxy statement to actions taken by the Committee may, in certain circumstances, refer to actions formally taken by a subcommittee of the Committee or the Stock Committee in conjunction with additional corresponding actions taken by the full Committee.

 

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Long Term Incentive Grant Procedures

Timing of Awards: The Committee intends to make annual awards of long term equity incentives at its meeting held early in each fiscal year, typically in November. The Committee has in the past, and may in the future, make limited grants of long term incentives on other dates, including to retain key employees, to compensate an employee in connection with a promotion or to compensate newly hired executives for equity or other benefits lost upon termination of their previous employment or to otherwise induce them to join our Company.

Grant Date and Exercise Price: The grant date of long term incentives to executives may be the date of Compensation Committee approval or, if specified in the approval, a later date, including a date of subcommittee or Stock Committee approval if designated by the Compensation Committee. The exercise price of option grants is the closing market price of our common stock on the date of grant.

Stock Ownership Guidelines

The Compensation Committee has adopted the following stock ownership guidelines to help align the interests of each NEO with those of Aramark’s shareholders.

 

Executive

 

Title

 

Stock Ownership Guideline(1)

Mr. Sadove

 

Chairman

 

5x annual cash retainer

Mr. Zillmer

 

CEO

 

6x annual base salary

Mr. Bramlage

 

EVP & CFO

 

3x annual base salary

Ms. McKee

 

EVP, HR

 

3x annual base salary

Mr. Bethel

 

Chief Growth Officer

 

3x annual base salary

Ms. Harrington

 

General Counsel

 

3x annual base salary

Mr. Foss

 

Former Chairman, President & CEO

 

6x annual base salary

Mr. Reynolds

 

Former General Counsel

 

3x annual base salary

 

(1)

Multiple of base salary. Prior to attainment, absolute value is determined annually based on the then-current salary and the prior year’s average of month-end stock closing prices. Mr. Sadove’s stock ownership requirement is consistent with the requirement for Company Directors, as described in the Director Compensation section of this proxy statement.

For purposes of determining compliance with the guidelines, shares included are limited to those that are (1) directly or indirectly beneficially owned (held indirectly, such as through family trusts or by immediate family members) or (2) unvested restricted stock units or restricted shares. Therefore, unexercised vested and unvested stock options and unearned or unvested PSUs or performance restricted stock are not considered when determining compliance with the guidelines.

These guidelines require that the specified amount be attained by the fifth anniversary of the later of (1) the date the named executive officer became subject to their current ownership guideline or (2) November 10, 2015 (the date this timing requirement was adopted). If a named executive officer has not attained the guideline amount by such date, one half of all shares delivered upon vesting of awards held by such NEO (net of withholding for tax obligations) must be retained until the guideline amount has been attained.

All of our named executive officers have met or are on track to meet/exceed their ownership guideline by their target ownership date.

Prohibitions on Hedging and Restrictions on Pledging

The Company’s Securities Trading Policy restricts pledging and prohibits our directors, officers and employees from engaging in hedging, speculative or other transactions that hedge or offset any decrease in the market value of Aramark stock (including swaps, forwards, options, futures, collars, exchange funds and other derivative transactions or arrangements). While this policy applies to all executives and directors, the prohibition on hedging does not apply to Mantle Ridge. None of our directors or named executive officers or other executive officers has currently pledged Aramark stock.

Clawback Policy

The Compensation Committee and Board approved a robust incentive compensation recoupment, or “clawback” policy for executive officers and CEO direct reports in fiscal 2015. This policy provides that if an individual was

 

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overpaid incentive compensation (annual incentive and performance-based long-term incentives) as a result of reported financial or operating results that were misstated and that such person engaged in misconduct that contributed to a misstatement, the Company may seek to recover the amount of any overpayment or cancel such excess incentive compensation. In November 2018, the Compensation Committee expanded the scope of the policy to cover approximately 165 executives and to provide that the Company can recover incentive compensation if an executive commits a material violation of law that results in significant economic or reputational damage to the Company.

Compensation Risk Disclosure

As part of its responsibility to set appropriate executive compensation, the Committee annually considers balance in the compensation program and its impact on Aramark’s risk management profile.

Specifically, in 2019, the Compensation Committee considered whether the mix of performance-based pay, the performance metrics and the degree of difficulty of the performance goals was sufficient to encourage management to strive for strong performance without encouraging risk taking beyond established risk parameters. The Committee also considered the input of its independent compensation consultants, FW Cook and Pay Governance, regarding the risk profile of the compensation program as well as various factors that would mitigate risks associated with Aramark’s compensation program. These factors include: an effective balance between the cash and equity mix and short and long-term focus; the use of multiple performance metrics for annual incentive programs; substantial stock ownership guidelines; a clawback policy; an anti-hedging policy; and independent committee oversight of the compensation programs.

After discussing all such matters, the Compensation Committee determined that in relation to 2019, Aramark’s compensation program is appropriately structured and does not motivate individuals or groups to take risks that are reasonably likely to have a material adverse effect on the Company.

Impact of Regulatory Requirements on Executive Compensation

Sections 280G and 4999. Sections 280G and 4999 of the Internal Revenue Code (the “Code”) limit our ability to take a tax deduction for certain “excess parachute payments” (as defined in the Code) and impose excise taxes on each executive that receives “excess parachute payments” in connection with his or her severance and other payments from us that are contingent on or in connection with a change of control.

The Compensation Committee considered the adverse tax liabilities imposed by Sections 280G and 4999 of the Code, as well as other competitive factors, when it structured certain post-termination compensation payable to our named executive officers. The potential adverse tax consequences to us and/or the executive, however, are not necessarily determinative factors in such decisions. Our 2007 employment agreement with Ms. McKee requires us to make a gross-up payment to compensate her for any excise taxes (and income taxes on such gross-up payment) that she incurs under Section 4999 of the Code. Subsequently, as market practices changed, the Compensation Committee determined it would no longer provide such gross-up payments in new agreements entered into with executive officers. As a result, no gross-up payment provisions were included in the employment agreements entered into with Messrs. Zillmer, Foss, Bramlage, Reynolds, and Bethel and Ms. Harrington.

Section 162(m). Section 162(m) of the Code (“Section 162(m)”) generally disallows a tax deduction to a public corporation for compensation over $1,000,000 paid in any fiscal year to a company’s chief executive officer or other named executive officers (excluding the company’s principal financial officer, in the case of tax years commencing before 2018). However, in the case of tax years commencing before 2018, the statute exempted qualifying performance-based compensation from the deduction limit if certain requirements were met. Section 162(m) was amended in December 2017 by the Tax Cuts and Jobs Act to eliminate the exemption for performance-based compensation (other than with respect to payments made pursuant to certain “grandfathered” arrangements entered into prior to November 2, 2017) and to expand the group of current and former executive officers who may be covered by the deduction limit under Section 162(m). While Aramark’s shareholder approved incentive plans were previously structured to provide that certain awards could be made in a manner intended to qualify for the performance-based compensation exemption, that exemption will no longer be available for the current and future tax years (other than with respect to certain “grandfathered” arrangements as noted above).

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K and in this Proxy Statement relating to our 2020 Annual Meeting of Shareholders. Submitted by the Compensation Committee of the Board:

Susan Cameron, Chairman

Richard W. Dreiling

Paul C. Hilal

Stephen I. Sadove

 

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COMPENSATION TABLES

2019 Summary Compensation Table

The following tables, narrative and footnotes discuss the compensation of our Chairman, who served in the Office of the Chairman, at the end of the 2019 fiscal year, the Chief Financial Officer, the three other most highly compensated executive officers serving at the end of fiscal 2019, our former President and Chief Executive Officer and our former General Counsel who are referred to as named executive officers or NEOs.

 

Name and

Principal position

Year

Salary(1)

($)

Bonus

($)

Stock

Awards(2)

($)

Option

Awards(3)

($)

Non-

Equity

Incentive

Plan

Compen-

sation(4)

($)

Change in

Pension value

And Non-

Qualified

Deferred

Compensation

Earnings(5)

($)

All

Other

Compen-

sation(6)

($)

Total

($)

                   

Stephen I. Sadove,

Member, Office of the Chairman(7)

 

 

 

2019

 

 

 

 

155,907

 

 

 

 

 

 

 

 

160,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,727

 

 

 

 

328,635

 

                   

Stephen P. Bramlage,

EVP and Chief Financial Officer,

Member, Office of the Chairman

 

 

 

2019

 

 

 

 

757,541

 

 

 

 

 

 

 

 

2,100,022

 

 

 

 

900,004

 

 

 

 

682,729

 

 

 

 

1,315

 

 

 

 

72,180

 

 

 

 

4,513,791

 

 

 

 

2018

 

 

 

 

695,656

 

 

 

 

 

 

 

 

1,470,062

 

 

 

 

630,000

 

 

 

 

546,900

 

 

 

 

755

 

 

 

 

45,898

 

 

 

 

3,389,271

 

 

 

 

2017

 

 

 

 

648,720

 

 

 

 

 

 

 

 

960,034

 

 

 

 

640,007

 

 

 

 

671,000

 

 

 

 

382

 

 

 

 

61,689

 

 

 

 

2,981,832

 

                   

Lynn B. McKee,

EVP, Human Resources

Member, Office of the Chairman

 

 

 

2019

 

 

 

 

712,685

 

 

 

 

 

 

 

 

1,050,029

 

 

 

 

450,002

 

 

 

 

629,887

 

 

 

 

16,946

 

 

 

 

56,479

 

 

 

 

2,916,028

 

 

 

 

2018

 

 

 

 

700,227

 

 

 

 

 

 

 

 

1,120,024

 

 

 

 

480,008

 

 

 

 

541,500

 

 

 

 

14,692

 

 

 

 

55,634

 

 

 

 

2,912,084

 

 

 

 

2017

 

 

 

 

695,831

 

 

 

 

 

 

 

 

960,034

 

 

 

 

640,007

 

 

 

 

710,900

 

 

 

 

13,709

 

 

 

 

58,382

 

 

 

 

3,078,863

 

                   

Keith Bethel,

Chief Growth Officer

 

 

 

2019

 

 

 

 

474,610

 

 

 

 

 

 

 

 

1,050,029

 

 

 

 

450,002

 

 

 

 

372,980

 

 

 

 

3,123

 

 

 

 

59,886

 

 

 

 

2,410,631

 

                   

Lauren Harrington,

General Counsel,

Member, Office of the Chairman

 

 

 

2019

 

 

 

 

380,624

 

 

 

 

 

 

 

 

794,623

 

 

 

 

340,506

 

 

 

 

242,600

 

 

 

 

2,252

 

 

 

 

40,184

 

 

 

 

1,800,788

 

                   

Eric J. Foss,

Former President and Chief

Executive Officer

 

 

 

2019

 

 

 

 

1,700,005

 

 

 

 

 

 

 

 

8,400,013

 

 

 

 

3,600,008

 

 

 

 

2,937,600

 

 

 

 

5,500

 

 

 

 

317,391

 

 

 

 

16,960,517

 

 

 

 

2018

 

 

 

 

1,700,004

 

 

 

 

 

 

 

 

7,801,697

 

 

 

 

3,505,894

 

 

 

 

2,629,400

 

 

 

 

4,160

 

 

 

 

317,753

 

 

 

 

15,958,908

 

 

 

 

2017

 

 

 

 

1,700,000

 

 

 

 

 

 

 

 

6,388,467

 

 

 

 

4,467,809

 

 

 

 

3,451,900

 

 

 

 

3,239

 

 

 

 

313,583

 

 

 

 

16,324,998

 

                   

Stephen R. Reynolds,

Former General Counsel

 

 

 

2019

 

 

 

 

298,397

 

 

 

 

 

 

 

 

1,050,029

 

 

 

 

450,002

 

 

 

 

243,931

 

 

 

 

3,120

 

 

 

 

57,939