DEF 14A 1 pfgc3601411-def14a.htm DEFINITIVE PROXY STATEMENT

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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 (Amendment No. )

Filed by the Registrant Filed by a Party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material Under Rule 14a-12

Performance Food Group

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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NOTICE OF
2019 ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT




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    Logistics
   
    WHEN       WHERE       WHO CAN VOTE
Wednesday,
November 13, 2019;
9:00 A.M. Eastern Time
Quirk Hotel
201 West Broad Street
Richmond, VA 23220
You may vote at the Annual Meeting of Stockholders to be held on November 13, 2019 (the “Annual Meeting”) if you were a stockholder of record at the close of business on September 24, 2019.
    Items of Business
   
    Board
Recommendation
PROPOSAL 1       To elect the two Class I director nominees listed in the Proxy Statement.       FOR each director nominee
PROPOSAL 2 To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2020. FOR
PROPOSAL 3 To approve, in a non-binding advisory vote, the compensation paid to the named executive officers. FOR
PROPOSAL 4 To approve the Share Increase Amendment under our 2015 Omnibus Incentive Plan. FOR
PROPOSAL 5 To approve the Performance Food Group Company Employee Stock Purchase Plan. FOR
PROPOSAL 6 To approve the Second Amended and Restated Certificate of Incorporation to remove the supermajority voting requirement for amending the governing documents and removing directors. FOR
PROPOSAL 7 To approve the Second Amended and Restated Certificate of Incorporation to eliminate the prohibition against stockholders calling special meetings of stockholders. FOR

   

Stockholders will also consider such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. Proxy votes must be received no later than 11:59 P.M., Eastern Time, on November 12, 2019.

This Proxy Statement, together with a form of proxy card and the Annual Report on Form 10-K for the fiscal year ended June 29, 2019 (the “Annual Report”) are first being sent to stockholders on or about October 8, 2019.

Your vote is important to us. Thank you for voting.

By Order of the Board of Directors,


A. Brent King
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY

      3 Ways to Vote Your Proxy                
                                                    

BY INTERNET
Go to the website www.proxyvote.com and follow the instructions, 24 hours a day, seven days a week.

You will need the 16-digit number included on your proxy card to obtain your records and to vote by internet.


BY TELEPHONE
From a touch-tone telephone, dial 1-800-690-6903 and follow the recorded instructions, 24 hours a day, seven days a week.

You will need the 16-digit number included on your proxy card in order to vote by telephone.


BY MAIL
Mark your selections on the proxy card.

Date and sign your name exactly as it appears on your proxy card.

Mail the proxy card in the enclosed postage-paid envelope provided to you.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON WEDNESDAY, NOVEMBER 13, 2019:
This Proxy Statement and our Annual Report are available free of charge on the Annual Report and Proxy tab in the Financial Information section in the Investors section of our website (https://investors.pfgc.com/financials/annual-reports/default.aspx; https://investors.pfgc.com/financials/proxy/default.aspx).



2019 Proxy Statement      1


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   Dear Fellow Stockholders:   
     
   

Fiscal 2019 was a busy and very successful year for Performance Food Group Company (“PFG”). I’m pleased with our team’s execution throughout the year. Our core business segments performed well and delivered strong financial results. We announced two strategic acquisitions that we believe position us well for continued growth. We also made key leadership changes to support our business development now and into the future.

Our fiscal 2019 financial results include:

Total case volume growth of 6.0%
Net sales increased 12.1% to $19.7 billion
Gross profit improved 9.6% to $2.5 billion
Net income declined 16.1% to $166.8 million
Adjusted EBITDA increased 11.4% to $475.5 million1
Diluted Earnings Per Share (“EPS”) decreased 16.3% to $1.59
Adjusted Diluted EPS increased 20.1% to $1.851

Acquisitions
PFG has been a disciplined and proven acquirer over the past several years with a history of successful integrations. Our acquisition of Eby-Brown, which we completed in 2019, enhances our Vistar segment with a path to quickly and strategically expand in the fast-growing convenience store channel. Combined, we service over 70,000 locations making Vistar one of the largest convenience distributors in the U.S.

In July 2019, we announced an agreement to acquire Reinhart Foodservice. Upon the closing of this transaction, PFG will become one of the largest distributors in the U.S. with approximately $30 billion in annual net sales. This pending acquisition helps us expand in the Midwest, fortifies the Northeast and enhances the South, while also providing increased density of sales representatives and enhanced offerings for customers.

New Leadership
We continuously invest in our associates and infrastructure to build our business and provide best-in-class services to our customers. We made some key changes on our Board and leadership team during fiscal 2019. Manny Fernandez, an accomplished executive with significant technology expertise, was appointed Lead Independent Director of our Board. I am pleased to be working closely with him in my new role as Chairman of the Board. Craig Hoskins, an industry expert with nearly three decades of distribution experience, was promoted to President and CEO of our Foodservice segment.

In addition, Don Bulmer from our Vistar segment joined PFG’s senior leadership team as our new Chief Information Officer, and we welcomed Erika Davis to PFG as our new Chief Human Resources Officer.

I am happy to welcome our newest associates from Eby-Brown and thank all of our associates for their hard work. PFG is a great company because of our committed workforce striving every day to deliver the best customer experience. With the strength of 18,000 talented associates driving our success, PFG is well positioned to drive stockholder value over the next several years.

Sincerely,


George L. Holm
CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CHIEF EXECUTIVE OFFICER

     










I’m pleased with our team’s execution throughout the year. Our core business segments performed well and delivered strong financial results.











   

1 Please see Appendix D at the end of this Proxy Statement for the definitions of non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP.

2019 Proxy Statement      3


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This summary highlights information about Performance Food Group Company (the “Company” or “PFG”) and certain other information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider in voting your shares; therefore, you should read the entire Proxy Statement carefully before voting. Except where the context requires otherwise, references to “the Company,” “we,” “us” and “our” refer to Performance Food Group Company. Capitalized terms used but not defined herein have the meanings set forth in our Annual Report.

     About Performance Food Group   
     
     

PFG at a Glance

   
Leading
distributor
           
3rd
         largest
Vistar is one of the leading distributors of candy, snacks and beverages to multiple distribution channels PFG is one of the leading distributors to casual dining restaurant chains PFG is the 3rd largest foodservice distribution company in the U. S.
           
18,000
Over 18,000
associates nationwide
     
175M
Over 175,000,000 miles
logged with one of the
nation’s largest truck fleets

83
83 distribution
centers

160,000
     
PFG delivers approximately 160,000 national and proprietary branded food and food-related products
PFG delivers to more than 170,000 customer locations
       
   

   

2019 Performance Highlights(1)

   
2019 Net Sales = $19.7B       EBITDA by Segment       EBITDA Profit Margins
$475.5MM
2019 Adj. EBITDA(2)
           

(1) Percentages presented for segments exclude corporate overhead and other non-reportable segments.
(2) Please see Appendix D at the end of this Proxy Statement for the definitions of non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP.

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Proxy Summary

       
  Our Geographic Footprint
   
 
   
   
Core Strategies
   

     

Grow our independent customer base and brands in Foodservice and expand our channels in Vistar

     

Pursue strategic acquisitions

     

Deliver consistent financial performance through strong operating cash flows
                 

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Proxy Summary

Voting Roadmap

Proposal  
       
01 Election of Directors
See page 13 for further information.
Your Board of Directors recommends that you vote “FOR” the election of the two Class I director nominees.

The Board of Directors of Performance Food Group Company (the “Board” or “Board of Directors ”)

Director
Since
Board Committees Other Current Public
Company Boards
        Name and Principal Position Age Independence    AC CHRC NCGC TC   
GEORGE L. HOLM
Class I Director Nominee
Chairman, President and Chief Executive
Officer of Performance Food Group
64 No 2002
ARTHUR B. WINKLEBLACK
Class I Director Nominee
Former Executive Vice President and Chief
Financial Officer of the HJ Heinz Company
62 Yes 2015
Aramark
Church & Dwight Co., Inc.
The Wendy’s Company
JOHN J. ZILLMER*
Chief Executive Officer of Aramark
64 Yes 2015
Aramark
CSX Corporation
Ecolab Inc.
Veritiv Corporation
MEREDITH ADLER
Former Managing Director and Senior
Equity Analyst at Barclays Capital
65 Yes 2016
JEFFREY M. OVERLY
Former Operating Partner of
The Blackstone Group
61 Yes 2013
WILLIAM F. DAWSON, JR
Chief Executive Officer of Wellspring
Capital Management LLC
55 No 2002
MANUEL A. FERNANDEZ
Managing Director of SI Ventures
Former Chief Executive Officer of
Gartner, Inc.
73 Yes 2017
Brunswick Corporation
Leggett & Platt, Incorporated
KIMBERLY S. GRANT
Chief Executive Officer of ThinkFoodGroup
48 Yes 2017
RANDALL N. SPRATT
Former Executive Vice President, Chief
Information Officer and Chief Technology
Officer of McKesson Corporation
67 Yes 2018

AC Audit Committee       NCGC Nominating and Corporate Governance Committee      

Chair

CHRC Compensation and Human Resources Committee TC Technology Committee

Member


* On October 7, 2019, Mr. Zillmer notified PFG of his decision not to stand for reelection to the Board at the Annual Meeting in order to focus on his other commitments, including his new position as President and Chief Executive Officer of Aramark. Mr. Zillmer will continue to serve as a Class I director until the expiration of his term at the Annual Meeting.

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Proxy Summary

        Board Snapshot      
   
   
   

INDEPENDENCE

TENURE

GENDER

AGE

  

Corporate Governance Highlights

Board Independence
Fully independent Audit, Compensation and Human Resources, Nominating and Corporate Governance and Technology Committees
Regular executive sessions of independent directors
Board Performance
Three of the four members of our Audit Committee qualify as an “audit committee financial expert”
Stockholder Rights
Majority voting standard for the election of directors in uncontested elections
Proxy access bylaw provision enabling a stockholder who has owned a significant amount of our common stock for a significant amount of time to submit director nominees
Other Board and Board
Committee Practices
Stock ownership requirements for executive officers and directors
Policies prohibiting hedging our shares
7-year rotation policy for committee chairpersons and the Lead Independent Director (subject to the Board’s discretion to permit service for longer than seven consecutive years if in the best interests of the Company)
Beginning with this annual meeting, directors are elected for 1-year terms. Commencing at the 2021 annual meeting, the Board will be declassified and all directors will be elected for 1-year terms.
Policies, Programs
and Guidelines
Corporate Governance Guidelines place limits on the number of public company directorships held by our directors

2019 Proxy Statement      7


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Proxy Summary

Proposal  
       
02 Ratification of Independent Registered Public Accounting Firm
See page 30 for further information.
Your Board of Directors recommends that you vote “FOR” the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2020.

Proposal  
       
03 Advisory Vote on Executive Officer Compensation
See page 35 for further information.
Your Board of Directors recommends that you vote “FOR” the approval of the compensation paid to our named executive officers.

Framework of 2019 Named Executive Officer Compensation

Compensation Element       Compensation Objectives Designed to be Achieved
BASE SALARY Recognize ongoing performance of job responsibilities.
CASH BONUS
OPPORTUNITY
Compensation “at risk” and designed to encourage the achievement of annual business goals.
LONG-TERM
EQUITY INCENTIVE
OPPORTUNITY
Compensation “at risk” and designed to encourage the creation of stockholder value and the achievement of long-term business goals.


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Proxy Summary

2019 Executive Total Targeted Compensation Mix

CEO Compensation Mix Other NEO Compensation Mix

    Compensation Practices  
   
       

What We Do

Performance Driven Pay: We base a very high percentage of executive pay on Company performance through annual and long-term incentives that are capped. We require executives to achieve annual and long-term performance-based goals tied to stockholder value.
Pay Aligned to Peers: We target median compensation levels and benchmark market data of our peer group companies when making executive compensation decisions.
Annual Say-on-Pay: We hold an annual advisory Say-on-Pay vote concerning executive compensation.
Clawbacks: Our clawback policy subjects sign-on grants, incentive cash and/or equity awards to clawbacks upon misconduct regardless of a restatement of the financial statements or an error in the calculation of such incentive-based or equity-based compensation.
Stock Ownership Requirements: We apply mandatory stock ownership guidelines for executive officers and directors.
Independent Compensation Consulting Firm reporting directly to the Board: Our Board engages an independent compensation consulting firm, that does not provide any other services to our company, to provide counsel, evaluate and manage risk in our compensation programs.
Double-Trigger Severance Agreements: We maintain double-trigger equity award vesting acceleration upon involuntary termination following a Change in Control (CIC).
Modest Perquisites: We provide our executives with limited and reasonable perquisites in order to attract and retain them.

What We Don’t Do

No excise tax gross-ups
No modified single-trigger or single-trigger CIC severance agreements (we only use double-trigger CIC severance provisions)
No uncapped incentive compensation opportunities
No hedging of shares by our directors or employees
No excessive perquisites
No repricing of underwater stock options
No dividends provided on unearned performance awards

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Proxy Summary

Proposal  
       
04 Approve the Share Increase Amendment Under Our 2015 Omnibus Incentive Plan
See page 62 for further information.
Your Board of Directors recommends that you vote “FOR” the approval of the share increase amendment under our 2015 Omnibus Incentive Plan.

Proposal  
       
05 Approve Company’s Employee Stock Purchase Plan
See page 73 for further information.
Your Board of Directors recommends that you vote “FOR” the approval of the Company’s Employee Stock Purchase Plan.

Proposal  
       
06 Approve Second Amended and Restated Certificate of Incorporation to Remove the Supermajority Voting Requirement for Amending the Governing Documents and Removing Directors
See page 76 for further information.
Your Board of Directors recommends that you vote “FOR” the approval of the Second Amended and Restated Certificate of Incorporation to remove the supermajority voting requirement for amending the governing documents and removing directors.

Proposal  
       
07 Approve Second Amended and Restated Certificate of Incorporation to Eliminate the Prohibition Against Stockholders Calling Special Meetings of Stockholders
See page 78 for further information.
Your Board of Directors recommends that you vote “FOR” the approval of the Second Amended and Restated Certificate of Incorporation to eliminate the prohibition against stockholders calling special meetings of stockholders.

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Message from Our Chairman, President and Chief Executive Officer 03
 
Proxy Summary 04
 
Corporate Governance at Performance Food Group 13
 
Proposal 01
Election of Directors
13
 
The Board of Directors 13
Nominees for Election to the Board of Directors 14
Continuing Members of the Board of Directors 16
Director Nomination Process 19
Board Tenure Policy 19
 
The Board’s Role and Responsibilities 19
Oversight of Risk Management 20
Management Succession Planning 20
Communications with the Board 20
Code of Business Conduct 20
 
Board Structure 21
Changes in Fiscal 2019 21
Selection of Chairperson of the Board and Chief Executive Officer 21
Lead Director 21
Director Independence and Independence Determinations 23
Executive Sessions 23
Board Committees 23
 
Board Practices, Processes and Policies 27
The Board of Directors and Certain Governance Matters 27
Board Meetings and Attendance 28
Board Performance Evaluations 28
Director Orientation and Continuing Education 28
Committee Charters and Corporate Governance Guidelines 28
Transactions with Related Persons 29
 
Audit Matters   30
 
Proposal 02
Ratification of Independent Registered Public Accounting Firm
30
 
Audit and Non-Audit Fees   30
 
Pre-Approval Policy for Services of Independent Registered Public Accounting Firm 31
 
Report of the Audit Committee 31
 
Executive Officers of the Company   32
 
Executive Compensation   35
 
Proposal 03
Advisory Vote on Executive Officer Compensation
35
 
Report of the Compensation and Human Resources Committee 35
 
Compensation Committee Interlocks and Insider Participation 35
 
Compensation Discussion and Analysis 36
Leadership Changes 36
 
Business Highlights 37
Executive Compensation Program Objectives and Overview 38
 
Executive Compensation Program Elements 39
Base Salaries 39
Cash Bonus Opportunities 39
Long-Term Equity Incentive Awards 41
Benefits and Perquisites 43
Severance and Other Benefits 43
Compensation Determination Process 44
Hedging and Pledging Policies 44
Clawback Policy 45
Employment Agreements 45
Stock Ownership Guidelines 45
Section 162(m) of the Internal Revenue Code 46

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Compensation Actions Taken for Fiscal 2020 46
 
Tabular Executive Compensation Disclosure 48
 
Summary Compensation Table 48
 
Fiscal 2019 Grants of Plan-Based Awards 49
 
Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards 50
Summary of Employment Agreement of Mr. Holm 50
Summary of Letter Agreement with Ms. O’Connell 50
Outstanding Equity Awards at 2019 Fiscal Year-End 51
Fiscal 2019 Option Exercises and Stock Vested 53
Fiscal 2019 Pension Benefits 53
Potential Payments Upon Termination or Change in Control 53
 
Severance Arrangements and Restrictive Covenants 55
Mr. Holm 55
Messrs. Hope, Hagerty and Hoskins and Ms. O’Connell 56
 
Treatment of Equity Awards in Connection with a Change in Control or Qualifying Termination 57
 
CEO Pay Ratio Disclosure 57
  
Equity Compensation Plan Information 59
 
Compensation of Directors 60
   
Share Increase Amendment 62
 
Proposal 04
Approve Share Increase Amendment Under Our 2015 Omnibus Incentive Plan
62
 
Employee Stock Purchase Plan 73
 
Proposal 05
Approve Company’s Employee Stock Purchase Plan
73
 
Charter Amendment Proposal 06 76
   
Proposal 06
Approve Second Amended and Restated Certificate of Incorporation to Remove the Supermajority Voting Requirement for Amending the Governing Documents and Removing Directors
76
 
Charter Amendment Proposal 07 78
 
Proposal 07
Approve Second Amended and Restated Certificate of Incorporation to Eliminate the Prohibition Against Stockholders Calling Special Meetings of Stockholders
78
 
Ownership of Securities 80
 
Beneficial Ownership 80
 
Delinquent Section 16(a) Reports 81
 
General Information 82
  
Questions and Answers about Voting and the Annual Meeting 82
 
Stockholder Proposals for the 2020 Annual Meeting 86
 
Other Business 87
 
Appendix A – Amendment No. 1 to the 2015 Omnibus Incentive Plan 88
 
Appendix B – Employee Stock Purchase Plan 91
   
Appendix C – Second Amended and Restated Certificate of Incorporation 99
 
Appendix D – Reconciliation of Non-GAAP Items 107

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  Proposal    
       
  01   Election of Directors
 
    Your board of directors recommends that you vote “FOR” the election of two Class I director nominees.

Our Amended and Restated Certificate of Incorporation previously provided for a classified Board of Directors divided into three classes. At our 2018 Annual Meeting, our stockholders approved a proposal to declassify our Board of Directors and to make our directors subject to annual election beginning with this Annual Meeting and continuing thereafter, as the existing three-year terms of our directors expire in 2019, 2020 and 2021. Beginning in 2021, all of our directors will be subject to annual election. George L. Holm, Arthur B. Winkleblack and John J. Zillmer constitute a class with a term that expires at the Annual Meeting (the “Class I Directors”); Meredith Adler and Jeffrey M. Overly constitute a class with a term that expires at the 2020 Annual Meeting of Stockholders (the “Class II Directors”); and William F. Dawson, Jr., Manuel A. Fernandez, Kimberly S. Grant and Randall N. Spratt constitute a class with a term that expires at the 2021 Annual Meeting of Stockholders (the “Class III Directors”).

Upon the recommendation of the Nominating and Corporate Governance Committee, the full Board of Directors has considered and nominated the following slate of Class I Director nominees to hold office for one year until the 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”) and until their successors have been elected and qualified, subject to their earlier death, resignation or removal: George L. Holm and Arthur B. Winkleblack. Action will be taken at the Annual Meeting for the election of these two Class I nominees. On October 7, 2019, Mr. Zillmer notified PFG of his decision not to stand for reelection to the Board at the Annual Meeting in order to focus on his other commitments, including his new position as President and Chief Executive Officer of Aramark. Mr. Zillmer will continue to serve as a Class I director until the expiration of his term at the Annual Meeting. Consequently, the Board will be reduced to eight members on the date of the Annual Meeting. Proxies may not be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

Unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) included with this Proxy Statement intend to vote the proxies held by them “FOR” the election of George L. Holm and Arthur B. Winkleblack. Each of these nominees has indicated that he is willing and able to serve as a director. If either of these nominees ceases to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.

The Board of Directors

INDEPENDENCE TENURE GENDER AGE

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Corporate Governance at Performance Food Group

Nominees for Election to the Board of Directors

The following information describes the offices held, other public company directorships and the term of service of each director nominee. Beneficial ownership of equity securities of the director nominees is shown under “Ownership of Securities.”

CLASS I DIRECTOR NOMINEES (IF ELECTED, TERM WILL EXPIRE AT ANNUAL MEETING OF STOCKHOLDERS IN 2020)

    George L. Holm   
  
  
Age: 64
Director since: 2002
Committees:
None
BACKGROUND
Mr. Holm has served as our President and Chief Executive Officer since September 2002, when he founded the Company and subsequently led the Company through its expansion into the broadline foodservice distribution industry with the Performance Food Group Company acquisition in May 2008. Additionally, in January 2019, Mr. Holm was named Chairman of the Board. Prior to joining the Company, he held various senior executive positions with Sysco Corporation, Alliant Foodservice, and US Foods. Mr. Holm received a Bachelor of Science degree in business administration from Grand Canyon University.
KEY EXPERIENCES

Leadership

Foodservice
Distribution
Industry
We considered Mr. Holm’s experience as an executive in the U.S. foodservice distribution industry. Furthermore, we also considered how his additional role as our Chief Executive Officer and President would bring management perspective to board deliberations and provide valuable information about the status of our day-to-day operations.

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Corporate Governance at Performance Food Group

    Arthur B. Winkleblack    
  
  
Age: 62
Director since: 2015
Committees:
Audit (Chair)
Technology
BACKGROUND
Mr. Winkleblack retired in June 2013 as Executive Vice President and Chief Financial Officer of the HJ Heinz Company, a global packaged food manufacturer, where he had been employed as Executive Vice President and Chief Financial Officer since January 2002. From 1999 through 2001, Mr. Winkleblack held a number of positions with portfolio companies of Indigo Capital, including Acting Chief Operating Officer of Perform.com and Chief Executive Officer of Freeride.com. Earlier in his career, Mr. Winkleblack held senior management and finance positions at the C. Dean Metropoulos Group, Six Flags Entertainment Corporation, AlliedSignal, Inc. and PepsiCo, Inc. Mr. Winkleblack also provided financial and capital markets consulting services to Ritchie Brothers Auctioneers, an industrial auctioneer, where he served as the Senior Advisor to the CEO. Mr. Winkleblack currently serves on the boards of directors of Aramark, Church & Dwight Co., Inc. and The Wendy’s Company. Mr. Winkleblack served on the board of RTI International Metals, Inc. from 2013 until 2015 when the company was sold to Alcoa Inc. Mr. Winkleblack earned a Bachelor of Arts in Business Economics from the University of California, Los Angeles and an MBA degree from The Wharton School at the University of Pennsylvania.
KEY EXPERIENCES

Financial

Risk Management

Public Company
Governance

Investor
Relations

Public Reporting
& Auditing
We considered Mr. Winkleblack’s substantial executive experience across a broad range of industries. In addition, his nearly twelve years of experience as the Chief Financial Officer of a large, publicly-traded consumer goods company enables him to bring important perspectives to our Board of Directors on performance management, business analytics, compliance, risk management, public reporting, and investor relations.

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Corporate Governance at Performance Food Group

Continuing Members of the Board of Directors

The following information describes the offices held, other public company directorships and the class and term of each director whose term continues beyond the Annual Meeting and who is not subject to election this year. Beneficial ownership of equity securities for these directors is also shown under “Ownership of Securities.”

CLASS II DIRECTORS (TERM EXPIRES AT ANNUAL MEETING OF STOCKHOLDERS IN 2020)

    Meredith Adler   
  
  
Age: 65
Director since: 2016
Committees:
Audit
Technology
BACKGROUND
Ms. Adler served as a Managing Director and Senior Equity Analyst at Barclays Capital, and at Lehman Brothers prior to its acquisition by Barclays, from 1996 until her retirement in July 2016. In her role at Barclays, Ms. Adler followed a wide range of consumer-oriented companies, including foodservice distributors, food and drug retailers, discounters, and healthy living retailers. She also provides consulting services to The Vitamin Shoppe, Inc. Ms. Adler graduated from Boston University and received an MBA degree from New York University’s Stern School of Business.
KEY EXPERIENCES

Financial

Investor
Relations
We considered Ms. Adler’s knowledge of the foodservice industry and significant experience in financial matters and investor relations.

    Jeffrey M. Overly   
  
  
Age: 61
Director since: 2013
Committees:
Compensation and Human Resources
Nominating and Corporate Governance
BACKGROUND
Mr. Overly retired as an Operating Partner at The Blackstone Group, one of the world’s leading investment firms (“Blackstone”), in August 2018. Before joining Blackstone in 2008, Mr. Overly was Vice President of Global Fixture Operations at Kohler Company. Prior to that, he served 25 years at General Motors Corporation and Delphi Corporation in numerous operations and engineering positions. Mr. Overly has a Bachelor of Science degree in Industrial Management from the University of Cincinnati and a Masters in Business from Central Michigan University.
KEY EXPERIENCES

Operations

We considered Mr. Overly’s significant operational experience in public companies and from his active involvement in Blackstone’s investments in numerous portfolio companies.

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Corporate Governance at Performance Food Group

CLASS III DIRECTORS (TERM EXPIRES AT ANNUAL MEETING OF STOCKHOLDERS IN 2021)

    William F. Dawson, Jr.   
  
  
Age: 55
Director since: 2002
Committees:
None
BACKGROUND
Mr. Dawson is the Chief Executive Officer of Wellspring Capital Management LLC; a leading private equity firm (“Wellspring”). He has served as the chair of Wellspring’s investment committee since 2004. Mr. Dawson has led or co-sponsored several of Wellspring’s most successful investments in distribution, consumer services, business services, healthcare, energy services and industrial companies. Prior to joining Wellspring, Mr. Dawson was a partner at Whitney & Co., where he was head of the middle-market buyout group. Prior to that, Mr. Dawson spent 14 years at Donaldson, Lufkin & Jenrette Securities Corporation where he was most recently a managing director at DLJ Merchant Banking. Mr. Dawson received a Bachelor of Science degree from St. Francis College and an MBA from Harvard Business School.
KEY EXPERIENCES

Financial

Investment

Operations

We considered Mr. Dawson’s significant financial, investment, and operational experience from his involvement in Wellspring’s investments in numerous portfolio companies, as well as his seventeen years of experience as a director of the Company and its predecessor.

    Manuel A. Fernandez   
  
  
Age: 73
Director since: 2017
Committees:
Compensation and Human Resources (Chair)
Nominating and Corporate Governance
Technology
BACKGROUND
Mr. Fernandez serves as the Managing Director of SI Ventures, a venture capital firm focused on information technology and communications infrastructure. He has held that position with the firm since its inception in 1998. Mr. Fernandez served as Chief Executive Officer of Gartner, Inc., a leading research and advisory company, from 1991 to 1998, and Chairman of the Board of Directors of Gartner, Inc. from 1991 until 2001. He has also been Chairman and Chief Executive Officer of three technology-driven companies: Dataquest, Inc., Gavilan Computer Corporation and Zilog Incorporated. Mr. Fernandez currently serves on the Board of Directors of The Brunswick Corporation, where he is the Chairman of the Board, and Leggett & Platt, Incorporated. He previously served on the Board of Directors of Time, Inc. from 2014 to 2018, Flowers Foods, Inc. from 2005 to 2014 and Sysco Corporation from 2006 to 2013. Mr. Fernandez graduated from the University of Florida with a degree in electrical engineering and completed post-graduate work in solid-state engineering at the University of Florida.
KEY EXPERIENCES

Strategic
Planning

Innovation

Technology

Leadership

We considered Mr. Fernandez’s extensive experience leading both public and private companies in foodservice and other industries, including three technology companies, allowing him to bring significant experience and knowledge to our Board regarding strategic planning, innovation, technology, acquisitions, corporate governance, distribution, operations and human resources.

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    Kimberly S. Grant   
  
  
Age: 48
Director since: 2017
Committees:
Audit
Technology
BACKGROUND
Ms. Grant has served as the Chief Executive Officer of ThinkFoodGroup, a global hospitality management company, which owns and operates innovative dining concepts created by two-star Michelin awarded chef José Andrés, since September 2014. From January 2014 to September 2014, Ms. Grant was Chief Operating Officer of ThinkFoodGroup. Prior to this role, Ms. Grant was with Ruby Tuesday Inc., a publicly traded restaurant company, for approximately 21 years. Her last positions at Ruby Tuesday Inc. were Chief Operations Officer and President from June 2002 to June 2013 and Vice President and Controller from 1998 to 2002. Ms. Grant earned a Master of Science in Banking and Financial Services Management from Boston University and a Bachelor of Science in Hotel and Restaurant Management from Thomas Edison State University, and she has attended Harvard Business School’s Executive Education program.
KEY EXPERIENCES

Operations

Financial

Restaurant

We considered Ms. Grant’s knowledge, experience and expertise in the restaurant and hospitality industry and significant experience in operations and finance. Her over twenty years of experience in the restaurant and hospitality industry enables her to bring valuable perspectives of a foodservice industry customer to our Board of Directors.

    Randall N. Spratt   
  
  
Age: 67
Director since: 2018
Committees:
Audit
Technology (Chair)
BACKGROUND
Mr. Spratt most recently served as the Executive Vice President, Chief Information Officer and Chief Technology Officer of McKesson Corporation, a global pharmaceutical distribution services and information technology company, from 2009 to 2015. Mr. Spratt joined McKesson in 1999 and held various executive positions at McKesson prior to becoming Chief Information Officer and Chief Technology Officer, including as Chief Information Officer from 2005 to 2009, Chief Process Officer for McKesson Provider Technologies from 2003 to 2005 and Senior Vice President, Imaging, Technology and Business Process Improvement from 2000 to 2003. Mr. Spratt previously served on the board of directors of Imperva Inc from May 2016 until the company was acquired by Thoma Bravo, LLC in January 2019. Mr. Spratt received a Bachelor of Science in biology from the University of Utah.
KEY EXPERIENCES

Technology

We considered Mr. Spratt’s extensive experience leading the information technology functions of a multi-national large distributor, which allows him to provide invaluable advice and guidance to the Company’s management and Board of Directors.

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Director Nomination Process

The Nominating and Corporate Governance Committee weighs the characteristics, experience, independence and skills of potential candidates for election to the Board and recommends nominees for director to the Board for election. In considering candidates for the Board, the Nominating and Corporate Governance Committee also assesses the size, composition and combined expertise of the Board. As the application of these factors involves the exercise of judgment, the Nominating and Corporate Governance Committee does not have a standard set of fixed qualifications that is applicable to all director candidates, although the Nominating and Corporate Governance Committee does at a minimum assess each candidate’s strength of character, judgment, industry knowledge or experience, independence of thought and his or her ability to work collegially with the other members of the Board. In addition, although the Board considers diversity in the broadest meaning of the word, the Board does not have a formal diversity policy. In identifying prospective director candidates, the Nominating and Corporate Governance Committee may seek referrals from other members of the Board, management, stockholders and other sources, including third party recommendations. The Nominating and Corporate Governance Committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the Company. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. When considering director candidates, the Nominating and Corporate Governance Committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness.

In connection with its annual recommendation of a slate of nominees, the Nominating and Corporate Governance Committee also may assess the contributions of those directors recommended for re-election in the context of the Board evaluation process and other perceived needs of the Board.

When considering whether the nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on each nominee’s current performance as a director and on the information discussed in each board member’s biographical information. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. Any recommendation submitted to the Secretary of the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected. Stockholders wishing to propose a candidate for consideration may do so by submitting the above information to the attention of the Secretary, Performance Food Group Company, 12500 West Creek Parkway, Richmond, Virginia 23238. All recommendations for nomination received by the Secretary that satisfy the requirements in our Amended and Restated Bylaws (the “Bylaws”) relating to director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. Stockholders also must satisfy the notification, timeliness, consent and information requirements set forth in our Bylaws. These requirements are also described under “Stockholder Proposals for the 2020 Annual Meeting.”

Board Tenure Policy

The Board does not have a policy to impose term limits for directors because such a policy may deprive the Board of the service of directors who have developed, through valuable experience over time, an increased insight into the Company and its operations.

The Board’s Role and Responsibilities

The Board directs and oversees the management of the business and affairs of the Company in a manner consistent with the best interests of the Company and its stockholders. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the stockholders. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

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Oversight of Risk Management

The Board of Directors has extensive involvement in the oversight of risk management related to us and our business. The Board accomplishes this oversight both directly and through its committees, each of which assists the Board in overseeing a part of our overall risk management and regularly reports to the Board regarding risk and the related risk management. In addition, our Board receives periodic detailed operating performance reviews from management regarding certain risks and related risk management processes and procedures.

 
The Audit Committee represents the Board by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements and the oversight of our financial controls. Through its regular meetings with management, including the finance, legal and internal audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the Board all areas of risk and the appropriate mitigating factors. The Compensation and Human Resources Committee considers, and discusses with management, management’s assessment of certain risks, including whether any risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us. The Nominating and Corporate Governance Committee oversees and evaluates programs and risks associated with Board organization, membership and structure, succession planning and corporate governance. The Committee oversees our compliance with our Code of Business Conduct and our ethics, risk management, quality assurance, safety and compliance programs.
 

Management Succession Planning

The Board periodically reviews a succession plan relating to the CEO and other executive officers that is developed by management. The Board may also delegate oversight of the succession plan developed by management to a committee of the Board. The succession plan includes, among other things, an assessment of the experience, performance and skills for possible successors to the CEO.

Communications with the Board

As described in our Corporate Governance Guidelines, stockholders and other interested parties who wish to communicate with a member or members of our Board of Directors, including the chair of our Board of Directors and each of the Audit, Compensation, Technology or Nominating and Corporate Governance Committees or to the non-management or independent directors as a group, may do so by addressing such communications or concerns to the Secretary of the Company, 12500 West Creek Parkway, Richmond, Virginia 23238, who will forward such communication to the appropriate party.

Code of Business Conduct

We maintain a Code of Business Conduct that is applicable to all of our directors, officers and employees, including our Chairman, Chief Executive Officer (principal executive officer), Chief Financial Officer (principal financial officer), Chief Accounting Officer (principal accounting officer) and other senior financial officers. The Code of Business Conduct sets forth our policies and expectations on a number of topics, including conflicts of interest, corporate opportunities, confidentiality, compliance with laws (including insider trading laws), use of our assets and business conduct and fair dealing. This Code of Business Conduct also satisfies the requirements for a code of ethics, as defined by Item 406 of Regulation S-K promulgated by the SEC. The Code of Business Conduct may be found on our website at www.pfgc.com under Investors: Corporate Governance: Governance Documents: Code of Business Conduct.

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We will disclose within four business days any substantive changes in or waivers of the Code of Business Conduct granted to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, or persons performing similar functions, by posting such information on our website as set forth above rather than by filing a Current Report on Form 8-K. In the case of a waiver for an executive officer or a director, the required disclosure also will be made available on our website within four business days of such determination.

Board Structure

Changes in Fiscal 2019

In January 2019, Douglas M. Steenland retired from his position as Chairman of the Board. In connection with Mr. Steenland’s retirement, our Nominating and Corporate Governance Committee reviewed the Board’s organization and leadership structure, considering both the Board’s and the Company’s strategic and leadership needs, as well as board leadership trends and practices at our peers and across public companies. Upon the conclusion of this review, the Nominating and Corporate Governance Committee recommended to our Board of Directors for approval, and the Board approved, the appointment of George L. Holm to the additional position of Chairman of the Board and the appointment of Manuel A. Fernandez to the position of Lead Director.

The Board of Directors believes that, at this time, the combination of the offices of Chairman of the Board and Chief Executive Officer is appropriate for the Company.

The combination allows Mr. Holm to leverage his extensive knowledge of the Company and industry experience into the strategic vision for the management and direction of the Company at both the Board and management level in order to enhance stockholder value, grow and expand the Company’s business and execute the Company’s strategies. Mr. Holm is supported in the day-to-day management of the Company by our executive management team. Additionally, the Board believes it is appropriate to have a Lead Independent Director while Mr. Holm serves as Chairman of the Board in order to provide a leadership role for our independent directors. Mr. Fernandez brings a strong understanding of the Company and its business, as well as significant leadership, corporate governance and public company experience.

Selection of Chairperson of the Board and Chief Executive Officer

The Board shall select its chairperson (“Chairperson”) and the Company’s Chief Executive Officer (“CEO”) in any way the Board considers to be in the best interests of the Company. Therefore, the Board does not have a policy on whether the role of Chairperson and CEO should be separate or combined and, if it is to be separate, whether the Chairperson should be selected from the independent directors. As indicated above, the Board believes that, at this time, the combination of the offices of Chairman of the Board and Chief Executive Officer, with Mr. Holm serving in such roles, is in the best interests of the Company.

Lead Director

Whenever the Chairperson is also the Chief Executive Officer or is a director who does not otherwise qualify as an “independent director”, the independent directors will elect from among themselves a Lead Director of the Board (“Lead Director”). Following nomination by the Nominating and Corporate Governance Committee, each independent director will be given the opportunity to vote in favor of a Lead Director nominee or to write in a candidate of his or her own. The Lead Director will be elected by a plurality vote and will serve until the Board meeting immediately following the next annual meeting of stockholders, unless otherwise determined by the Board. Service as Lead Director, however, generally should not exceed seven consecutive years but is subject to the Board’s discretion to permit service for longer than seven consecutive years upon the recommendation of the Nominating and Corporate Governance Committee in specific instances based on the then-existing facts and circumstances.

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The Lead Director shall help coordinate the efforts of the independent and non-management directors in the interest of ensuring that objective judgment is brought to bear on sensitive issues involving the management of the Company and, in particular, the performance of senior management, and shall have the following authority:
Preside over all meetings of the Board at which the Chairperson is not present, including any executive sessions of the independent directors or the non-management directors;
Assist in scheduling Board meetings and approve meeting schedules to ensure that there is sufficient time for discussion of all agenda items;
Request the inclusion of certain materials for Board meetings;
Serve as an ex-officio member of each Board committee and attend meetings of the various committees regularly;
Seek to ensure effective communication among the Board committees;
Collaborate with the Chairperson to review and recommend to the Nominating and Corporate Governance Committee Board committee memberships and chairpersons;
Communicate to the CEO, together with the Chairperson of the Compensation Committee and Human Resources Committee (the “Compensation Committee”), the results of the Board’s evaluation of CEO performance and compensation actions for the CEO;
Collaborate with the CEO on Board meeting agendas and approve such agendas;
Collaborate with the CEO in determining the need for special meetings of the Board;
In collaboration with the Chair of the Nominating and Corporate Governance Committee, lead the Board’s annual process of performance self-assessment, including feedback to individual directors;
Meet with any director who is not adequately performing his or her duties as a member of the Board or any Board committee;
Provide leadership and serve as temporary Chairperson of the Board or CEO in the event of the inability of the Chairperson of the Board or CEO to fulfill his/her role due to crisis or other event or circumstance which would make leadership by existing management inappropriate or ineffective, in which case the Lead Director shall have the authority to convene meetings of the full Board or management;
Be available for consultation and direct communication if requested by major stockholders, ratings agencies, regulators and/or advisory firms;
Act as the liaison between the independent or non-management directors and the Chairperson of the Board, as appropriate;
Interview prospective members of the Board and communicate any invitation to be nominated to join the Board to a prospective member, unless such action is performed by the Chairman;
Provide oversight of the Company’s Chairman/CEO succession planning process;
Provide leadership to the Board relating to the Company’s position on matters to be voted upon by the stockholders;
Review and provide input on the agenda for the Company’s Annual Meeting of Stockholders;
Call meetings of the independent or non-management directors when necessary and appropriate;
Recommend to the Board, in concert with the chairpersons of the respective Board committees, the retention of consultants and advisors who directly report to the Board, including such independent legal, financial or other advisors as he or she deems appropriate, without consulting or obtaining the advance authorization of any officer of the Company; and
Perform such other duties as delegated from time to time by the independent and non-management directors.

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Corporate Governance at Performance Food Group

Director Independence and Independence Determinations

Under our Corporate Governance Guidelines and the rules of the New York Stock Exchange (“NYSE”), a director is not independent unless our Board of Directors affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries.

Our Corporate Governance Guidelines define independence in accordance with the independence definition in the current NYSE corporate governance rules for listed companies. Our Corporate Governance Guidelines require our Board of Directors to review the independence of all directors at least annually.

In the event a director has a relationship with the Company that is relevant to his or her independence and is not addressed by the objective tests set forth in the NYSE independence definition, our Board of Directors will determine, considering all relevant facts and circumstances, whether such relationship is material.

Our Board of Directors has determined that each of Messrs. Fernandez, Spratt, Winkleblack, Zillmer and Overly and Ms. Adler and Ms. Grant is independent under the guidelines for director independence set forth in the Corporate Governance Guidelines and under all applicable NYSE guidelines, including with respect to committee membership. Our Board also has determined that each of Messrs. Spratt and Winkleblack and Ms. Adler and Ms. Grant is “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that each of Messrs. Fernandez, Overly and Zillmer is “independent” for purposes of Section 10C(a)(3) of the Exchange Act. Mr. Holm serves on our Board of Directors but, as our President and Chief Executive Officer, he cannot be deemed independent. In making the director independence determinations, the Board considered the fact that Mr. Overly was formerly affiliated with Blackstone, which received payments from the Company during fiscal 2017. Payments received by Blackstone pursuant to the foregoing transaction did not exceed the greater of $1 million or 2% of Blackstone’s consolidated gross revenues in any of the last three fiscal years.

Executive Sessions

Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled during each regularly scheduled Board and Committee meeting. In addition, at least once a year, the independent directors will meet in a private session that excludes management and any non-independent directors. Our Lead Independent Director, Mr. Fernandez, presides at the executive sessions.

Board Committees

The following table summarizes the current membership of each of the Board’s committees.

      Audit
Committee
      Compensation and
Human Resources
Committee
      Nominating and
Corporate Governance
Committee
      Technology
Committee
     
Meredith Adler
Manuel A. Fernandez

Chair

Kimberly S. Grant
Jeffrey M. Overly
Randall N. Spratt Chair
Arthur B. Winkleblack

Chair

John J. Zillmer

Chair


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Audit Committee

Members
Meredith Adler
Kimberly S. Grant
Randall N. Spratt
Arthur B. Winkleblack (Chair)
Meetings
8 meetings in fiscal 2019
Attendance
96%
DUTIES AND RESPONSIBILITIES
Overseeing the adequacy and integrity of our financial statements and our financial reporting and disclosure practices.
Overseeing the soundness of our system of internal controls to assure compliance with financial and accounting requirements.
Retaining and reviewing the qualifications, performance, and independence of our independent auditor.
Reviewing and discussing with management and the independent auditor prior to public dissemination our annual audited financial statements, quarterly unaudited financial statements, earnings press releases and financial information and earnings guidance provided to analysts and rating agencies.
Overseeing our guidelines and policies relating to risk assessment and risk management regarding financial risks, and management’s plan for financial risk monitoring and control.
Overseeing our internal audit function.
Reviewing and approving or ratifying all transactions between us and any “Related Person” (as defined in the federal securities laws and regulations) that are required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated under the Exchange Act.

All members of the Audit Committee have been determined to be “independent,” consistent with our Audit Committee charter, Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors in general and audit committees in particular. Our Board of Directors also has determined that each of the members of the Audit Committee is “financially literate” within the meaning of the listing standards of the NYSE. In addition, our Board of Directors has determined that each of Ms. Adler, Ms. Grant and Mr. Winkleblack qualifies as an “audit committee financial expert” as defined by applicable SEC regulations.

The Audit Committee also prepares the report of the committee required by the rules and regulations of the SEC to be included in our annual proxy statement.

The charter of the Audit Committee permits the committee to delegate any or all of its authority to one or more subcommittees. In addition, the Audit Committee has the authority under its charter to engage independent counsel and other advisors as it deems necessary or advisable.

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Compensation and Human Resources Committee

Members
Manuel A. Fernandez (Chair)
Jeffrey M. Overly
John J. Zillmer

Meetings
5 meetings in fiscal 2019

Attendance
92%
DUTIES AND RESPONSIBILITIES
Establishing and reviewing our overall compensation philosophy.
Overseeing the goals, objectives and compensation of our Chief Executive Officer, including evaluating the performance of the Chief Executive Officer in light of those goals.
Overseeing the compensation of our other executives and non-management directors.
Reviewing all employment, severance, and termination agreements with our executive officers.
Reviewing and approving, or recommending to the Board of Directors, our incentive-compensation plans and equity-based plans.
Providing strategic review of the Company’s human resources strategies and initiatives to ensure the Company is seeking, developing and retaining human capital appropriate to the Company’s needs.
Preparing and issuing the Compensation Committee Report for inclusion in our annual proxy statement.

Messrs. Fernandez, Overly and Zillmer have been determined to be “independent” as defined by our Corporate Governance Guidelines and the NYSE listing standards applicable to boards of directors in general and compensation committees in particular.

With respect to our reporting and disclosure matters, the responsibilities and duties of the Compensation Committee include overseeing the preparation of the Compensation Discussion and Analysis for inclusion in our annual proxy statement and Annual Report on Form 10-K in accordance with applicable rules and regulations of the SEC.

The charter of the Compensation Committee permits the committee to delegate any or all of its authority to one or more subcommittees and to delegate to one or more of our officers the authority to make awards to any non-Section 16 officer under our incentive compensation or other equity-based plans, subject to compliance with the plan and the laws of our state of jurisdiction. In addition, the Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable.

See “Executive Compensation—Compensation Discussion and Analysis—Compensation Determination Process” and “Compensation of Directors” for a description of our process for determining executive and director compensation, including the role of our compensation consultant.

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Nominating and Corporate Governance Committee

Members Meetings Attendance
Manuel A. Fernandez
Jeffrey M. Overly
John J. Zillmer (Chair)
     

5 meetings in fiscal 2019

     
93%
DUTIES AND RESPONSIBILITIES
Identifying and recommending nominees for election to the Board of Directors.
Reviewing the composition and size of the Board of Directors.
Overseeing an annual evaluation of the Board of Directors and each committee.
Regularly reviewing our corporate governance documents, including our corporate charter and bylaws and Corporate Governance Guidelines.
Recommending members of the Board of Directors to serve on committees of the Board.
Overseeing and approving the management succession planning process.
Overseeing compliance with our Code of Business Conduct and our ethics, risk management, quality assurance, safety and compliance programs.

Each of Messrs. Fernandez, Overly and Zillmer has been determined to be “independent” as defined by our Corporate Governance Guidelines and the NYSE listing standards.

The charter of the Nominating and Corporate Governance Committee permits the committee to delegate any or all of its authority to one or more subcommittees. In addition, the Nominating and Corporate Governance Committee has the authority under its charter to retain outside counsel or other experts as it deems necessary or advisable.

Technology Committee

Members Meetings Attendance
Meredith Adler
Manuel A. Fernandez
Kimberly S. Grant
Arthur B. Winkleblack
Randall N. Spratt (Chair)
      3 meetings in fiscal 2019
(formed on August 9, 2018)
     
100%
DUTIES AND RESPONSIBILITIES
Reviewing the Company’s information technology planning and strategy.
Reviewing significant information technology investments and expenditures.
Receiving reports on existing and future trends in information technology and cybersecurity that may affect the Company’s strategic plans, including monitoring overall industry trends.
Reviewing or discussing, as and when appropriate, with management the Company’s risk management and risk assessment guidelines and policies regarding information technology security, including the quality and effectiveness of the Company’s cybersecurity and the Company’s disaster recovery capabilities.

Each of Messrs. Fernandez, Spratt and Winkleblack and Ms. Grant and Ms. Adler has been determined to be “independent” as defined by our Corporate Governance Guidelines and the NYSE listing standards.

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Special Committees

From time to time, the Board may form and appoint members to special committees with responsibility to address topics designated at the time of such committee formation.

Board Practices, Processes and Policies

The Board of Directors and Certain Governance Matters

Our Board of Directors oversees our business and affairs, as provided by Delaware law, and conducts its business through meetings of the Board of Directors and four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Technology Committee.

We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance include:

Board Independence
Fully independent Audit, Compensation, Nominating and Corporate Governance and Technology Committees
Regular executive sessions of independent directors
Board Performance
Three of the four members of our Audit Committee qualify as an “audit committee financial expert”
Stockholder Rights
Majority voting standard for the election of directors in uncontested elections
Proxy access bylaw provision enabling a stockholder who has owned a significant amount of our common stock for a significant amount of time to submit director nominees
Other Board and Board Committee Practices
Stock ownership requirements for executive officers and directors
Policies prohibiting hedging our shares
7-year rotation policy for committee chairpersons and the Lead Independent Director (subject to the Board’s discretion to permit service for longer than seven consecutive years if determined to be in the best interests of the Company)
Beginning with this Annual Meeting, directors are elected for 1-year terms. Commencing at the 2022 annual meeting, the Board will be declassified and all directors will be elected for 1-year terms.
Policies, Programs
and Guidelines
Corporate Governance Guidelines place limits on the number of public company directorships held by our directors

Our Board of Directors evaluates the Company’s corporate governance policies and practices on an ongoing basis with a view toward maintaining appropriate corporate governance practices in the context of the Company’s current business environment. Additionally, the Board seeks to align our governance practices closely with the interests of our stockholders. This commitment is demonstrated through the Board’s recent changes to the Bylaws discussed above, along with the Board’s submission of Proposal No. 6 (concerning the removal of the supermajority voting requirement for amending the governing documents and removing directors) and Proposal No. 7 (concerning the elimination of the prohibition against stockholders calling special meetings of stockholders) for stockholder vote at the Annual Meeting.

Our Board of Directors and management value the perspectives of our stockholders and encourage stockholders to communicate with the Board of Directors.

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Board Meetings and Attendance

The Board currently plans at least four meetings each year, with further meetings to occur (or action to be taken by unanimous consent) at the discretion of the Board.

All directors are expected to make every effort to attend all meetings of the Board, meetings of the committees of which they are members and the annual meeting of stockholders. During the fiscal year ended June 29, 2019, the Board held 9 meetings, the Audit Committee held 8 meetings, the Compensation Committee held 5 meetings, the Nominating and Corporate Governance Committee held 5 meetings and the Technology Committee held 3 meetings (after being formed on August 9, 2018). In fiscal 2019, all incumbent directors then in office attended at least 75% of the aggregate number of meetings of our Board and of all committees on which they served during their respective terms of service. In addition, all directors except one then in office attended the 2018 Annual Meeting.

Board Performance Evaluations

The Board, acting through the Nominating and Corporate Governance Committee, conducts a self-evaluation at least annually to determine whether it and its committees are functioning effectively. The Nominating and Corporate Governance Committee periodically considers the mix of skills and experience that directors bring to the Board to assess whether the Board has the necessary tools to perform its oversight function effectively. Each committee of the Board conducts a self-evaluation at least annually and reports the results to the Board. Each committee’s evaluation must compare the performance of the committee with the requirements of its written charter.

Director Orientation and Continuing Education

Management, working with the Board, provides an orientation process for new directors and coordinates director continuing education programs. The orientation programs are designed to familiarize new directors with the Company’s businesses, strategies and challenges and to assist new directors in developing and maintaining skills necessary or appropriate for the performance of their responsibilities. As appropriate, management prepares additional educational sessions for directors on matters relevant to the Company and its business. Directors are also encouraged to participate in educational programs relevant to their responsibilities, including programs conducted by universities and other educational institutions.

Committee Charters and Corporate Governance Guidelines

Our commitment to good corporate governance is reflected in our Corporate Governance Guidelines, which describe our Board of Directors’ views and policies on a wide range of governance topics. These Corporate Governance Guidelines are reviewed from time to time by our Nominating and Corporate Governance Committee and, to the extent deemed appropriate in light of emerging practices, revised accordingly, upon recommendation to and approval by our Board of Directors.

Our Corporate Governance Guidelines, Audit, Compensation, Nominating and Corporate Governance and Technology Committee charters, and other corporate governance information are available on our website at www.pfgc.com under Investors: Corporate Governance: Governance Documents. Any stockholder also may request them in print, without charge, by contacting the Secretary of Performance Food Group Company, 12500 West Creek Parkway, Richmond, Virginia 23238.

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Transactions with Related Persons

Our Board of Directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our “related person transaction policy.” Our related person transaction policy requires that (i) any “related person transaction” (defined as any transaction, consistent with Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) be approved or ratified by an approving body comprised of the disinterested members of our Board of Directors or any committee of the Board of Directors (provided that a majority of the members of the Board of Directors or such committee, respectively, are disinterested) and (ii) any employment relationship or transaction involving an executive officer and any related compensation be approved by the Compensation Committee or recommended by the Compensation Committee to the Board of Directors for its approval. It is our policy that directors interested in a related person transaction will recuse themselves from any vote on a related person transaction in which they have an interest.

FMR LLC (“Fidelity”) filed a Schedule 13G/A stating that it holds approximately 10.2% of the Company’s stock. An affiliate of Fidelity provides investment management and record keeping services to the Company’s 401(k) Plan. The participants in the 401(k) Plan paid $509,416 for record keeping services and $522,885 for investment management services to Fidelity in fiscal 2019. The investment management agreement was entered into on an arm’s-length basis.

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Proposal  
       
02 Ratification of Independent Registered Public Accounting Firm
 
Your Board of Directors recommends that you vote “FOR” the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2020.

The Audit Committee has selected Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal 2020.

Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Deloitte & Touche LLP to our stockholders for ratification as a matter of good corporate governance and because we value our stockholders’ views on the Company’s independent registered public accounting firm. If our stockholders fail to ratify the selection, it will be considered as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.

A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. The representative will also have the opportunity to make a statement if he or she desires to do so, and the representative is expected to be available to respond to appropriate questions.

The shares represented by your proxy will be voted “FOR” the ratification of the selection of Deloitte & Touche LLP unless you specify otherwise.

Audit and Non-Audit Fees

In connection with the audit of the fiscal 2020 financial statements, we entered into an agreement with Deloitte & Touche LLP which sets forth the terms by which Deloitte & Touche LLP will perform audit services for the Company.

The following table presents fees for professional services rendered by our independent registered public accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates (collectively, “Deloitte & Touche”) for the audits of our annual consolidated financial statements for the fiscal years ended June 29, 2019 and June 30, 2018:

2019 2018
Audit fees(1)       $ 1,695,000 $ 1,819,000
Audit-related fees(2) 44,642
Tax fees(3)
All other fees(4)
Total: $ 1,695,000 $ 1,863,642

(1) Includes the aggregate fees recognized in each of the last two fiscal years for professional services rendered for the audit of the Company’s annual financial statements and the reviews of financial statements and, the audit of the Company’s internal control over financial reporting. The fees are for services that are normally provided in connection with statutory or regulatory filings or engagements.
(2) Includes fees billed in each of the last two fiscal years for services performed that are related to the Company’s SEC filings (including costs relating to the Company’s secondary offerings in September 2017, November 2017 and December 2017) and other research and consultation services.

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(3) Includes the aggregate fees recognized in each of the last two fiscal years for professional services rendered for tax compliance, tax advice and tax planning.
(4) Includes fees related to permissible non-audit services over internal controls.

Pre-Approval Policy for Services of Independent Registered Public Accounting Firm

Consistent with SEC policies regarding auditor independence and the Audit Committee’s charter, the Audit Committee has responsibility for engaging, setting compensation for and reviewing the performance of the independent registered public accounting firm. In exercising this responsibility, the Audit Committee has established procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm and pre-approves all audit and permitted non-audit services provided by the independent registered public accounting firm prior to each engagement.

Report of the Audit Committee

The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee. A brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under “The Board of Directors and Certain Governance Matters—Board Committees and Meetings—Audit Committee.” Under the Audit Committee charter, our management is responsible for the preparation, presentation and integrity of our financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America.

In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial statements of the Company with management and with the independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by the applicable auditing standards adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm their independence.

Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to the Board that the audited financial statements of the Company be included in the Annual Report on Form 10-K for the fiscal year ended June 29, 2019 filed with the SEC.

Submitted by the Audit Committee of the Board of Directors:

Arthur B. Winkleblack, Chair
Meredith Adler
Kimberly S. Grant
Randall N. Spratt

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Set forth below is certain information regarding each of our executive officers other than Mr. Holm, our Chief Executive Officer, whose biographical information is presented under “Continuing Members of the Board of Directors.” As previously disclosed, Carol A. O’Connell resigned as our Senior Vice President and Chief Human Resources Officer effective August 2, 2019.

   

Patrick T. Hagerty

     
          

Mr. Hagerty has served as our Executive Vice President and President and Chief Executive Officer of Vistar since January 2018. Prior to being named Executive Vice President, Mr. Hagerty was Senior Vice President of the Company and President and Chief Executive Officer of Vistar since September 2008. From May 2006 to September 2008, he was Vice President and Chief Operating Officer of Vistar. From November 1994 to May 2006, he was Vice President, Merchandising with the Company and its predecessor.

EXECUTIVE VICE PRESIDENT;
PRESIDENT AND CHIEF EXECUTIVE
OFFICER (VISTAR)

                                                                

Age: 61


   

James D. Hope

     
          

Mr. Hope has served as our Executive Vice President and Chief Financial Officer since March 2018, after serving as our Executive Vice President, Operations since July 2014. Prior to joining the Company, he was with Sysco Corporation for approximately 30 years. His last positions at Sysco were Executive Vice President, Business Transformation from January 2010 to June 2013, Senior Vice President, Business Transformation from January 2009 to December 2009, and Senior Vice President, Sales and Marketing from July 2007 to December 2008.

EXECUTIVE VICE PRESIDENT AND  
CHIEF FINANCIAL OFFICER

                                                                

Age: 59


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Executive Officers of the Company

   

Craig H. Hoskins

     
          

Mr. Hoskins was named Executive Vice President and President & Chief Executive Officer of PFG’s Foodservice segment in January 2019. He became President & CEO of PFG Customized Distribution and a Senior Vice President of PFG in January 2012 after serving as President & Chief Operating Officer of Customized Distribution. He assumed additional responsibility for Performance Foodservice’s sales and marketing in January 2018. He served as Senior Vice President and President and Chief Operating Officer of PFG Customized from July 2011 to December 2011. Prior to that, he served as PFG’s Senior Vice President, Sales from October 2007 to July 2011 and at its predecessor. Prior to that, he served in various operating and customer facing leadership roles with our predecessor since joining in August 1990 as Marketing Manager.

EXECUTIVE VICE PRESIDENT;
PRESIDENT AND CHIEF EXECUTIVE
OFFICER (FOODSERVICE)

                                                                

Age: 58


   

A. Brent King

     
          

Mr. King has served as our Senior Vice President, General Counsel and Secretary since March 2016. Prior to joining the Company, he was Vice President, General Counsel and Secretary of Tredegar Corporation, a global manufacturer of plastic films and aluminum extrusions, from October 2008 to March 2016. From October 2005 until October 2008, he served as Vice President and General Counsel at Hilb Rogal & Hobbs Company, a former publicly traded insurance broker now part of Willis Group Holdings. He served as Vice President and Associate General Counsel for Hilb Rogal & Hobbs Company from October 2001 to October 2005. Prior to that, Mr. King was a corporate attorney with the Williams Mullen law firm from 1994 to 2001. Mr. King earned a bachelor of arts degree from the University of Virginia, and a law degree from the University of Richmond.

SENIOR VICE PRESIDENT,                
GENERAL COUNSEL
AND SECRETARY

                                                                

Age: 50


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Executive Officers of the Company

   

Erika T. Davis

     
          

Ms. Davis has served as our Senior Vice President and Chief Human Resources Officer since July 2019. Prior to joining the Company, she was with Owens & Minor, a global healthcare supply chain company, since 1993. Her last positions at Owens & Minor were Senior Vice President and Chief Administrative Officer from October 2016 to July 2019, Senior Vice President and Chief of Staff from August 2015 to October 2016, Senior Vice President, Administration & Operations from August 2013 to August 2015, and Senior Vice President, Human Resources of Owens and Minor from 2001 to 2013. Ms. Davis earned her undergraduate degree from the University of Richmond, and a Master of Public Administration from the University of North Carolina at Chapel Hill.

SENIOR VICE PRESIDENT                 
AND CHIEF HUMAN
RESOURCES OFFICER

                                                                

Age: 55


   

Donald S. Bulmer

     
          

Mr. Bulmer was named PFG’s Senior Vice President & Chief Information Officer in March 2019, after serving on Vistar’s senior leadership team as Vice President of Corporate Information Technology for six years. Before joining Vistar, he held IT leadership roles in multiple industries, including ProBuild Holdings, the nation’s largest supplier of building materials; Gates Corporation, a manufacturer/distributor of automotive parts; and Nupremis Inc., a start-up that provided hosting and managed services. Mr. Bulmer earned a bachelor’s degree in economics from Colorado State University and a master’s degree in management information systems from the University of Colorado at Denver.

SENIOR VICE PRESIDENT & CHIEF  
INFORMATION OFFICER

                                                                

Age: 54


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Proposal  
       
03 Advisory Vote on Executive Officer Compensation
 
Your Board of Directors recommends that you vote “FOR” the approval of the compensation paid to our named executive officers.

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, stockholders are being asked to approve, in a non-binding advisory vote, the compensation of our named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. The Company currently intends to hold such votes annually. The next such vote will be held at the Company’s 2020 Annual Meeting. While the results of the vote are non-binding and advisory in nature, the Board and the Compensation Committee intend to carefully consider the results of this vote.

The text of the resolution in respect of Proposal No. 3 is as follows:

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion is hereby APPROVED.”

In considering their vote, stockholders may wish to review with care the information on our compensation policies and decisions regarding the named executive officers presented in Compensation Discussion and Analysis on pages 36 to 47, as well as the discussion regarding the Compensation Committee on page 25.

Report of the Compensation and Human Resources Committee

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2019.

Submitted by the Compensation Committee of the Board of Directors:

Manuel A. Fernandez, Chair
Jeffrey M. Overly
John J. Zillmer

Compensation Committee Interlocks and Insider Participation

During fiscal 2019, none of the members of our Compensation Committee have at any time been one of our executive officers or employees. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

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Compensation Discussion and Analysis

This section contains a discussion of the material elements of compensation awarded to, earned by, or paid to our Chairman, President and Chief Executive Officer, our Executive Vice President and Chief Financial Officer, and each of our three other most highly compensated executive officers who served in such capacities at the end of our fiscal year on June 29, 2019, collectively known as the “Named Executive Officers” or “NEOs.”

Our Named Executive Officers for fiscal 2019 were:

George L. Holm James D. Hope
Chairman, President and Chief Executive Officer Executive Vice President and Chief Financial Officer

Patrick T. Hagerty Craig H. Hoskins Carol O’Connell
Executive Vice President; President and
Chief Executive Officer (Vistar)
    Executive Vice President; President and
Chief Executive Officer (Foodservice)
    Former Senior Vice President and
Chief Human Resources Officer

Leadership Changes   
 

Effective February 1, 2019, the Board of Directors appointed Craig H. Hoskins to serve as Executive Vice President of the Company and President and Chief Executive Officer of the Company’s Foodservice segment. Mr. Hoskins replaced David E. Flitman, who resigned as our Executive Vice President and President and Chief Executive Officer of Performance Foodservice, effective September 21, 2018. Upon Mr. Flitman’s departure, Mr. Hoskins assumed responsibility of Performance Foodservice on an interim basis until February 1, 2019.

On March 4, 2019, the Company and Carol A. O’Connell entered into a letter agreement pursuant to which Ms. O’Connell’s employment with the Company ended on August 2, 2019.


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Business Highlights for Fiscal 2019

(1) Please see Appendix D at the end of this Proxy Statement for the definitions of non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP.

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Executive Compensation Program Objectives and Overview

Our current executive compensation program is intended to achieve two fundamental objectives:
 
1 attract, motivate, and retain high-caliber talent
2 align executive compensation with achievement of our overall business goals, adherence to our core values, and stockholder interests
In structuring our current executive compensation program, we are guided by the following basic philosophies:
 

Competitive Compensation. Our executive compensation program should provide a fair and competitive compensation opportunity that enables us to attract and retain high-caliber executive talent. Executives should be appropriately rewarded for their contributions to our successful performance.

   

Pay for Performance. A significant portion of each executive’s compensation should be “at risk” and tied to overall Company, business unit, and individual performance.

   

Alignment with Stockholder Interests. Executive compensation should be structured to include elements that link executives’ financial rewards to stockholder returns.



   WHAT WE DO   
     
Performance driven pay
Pay aligned to peers
Transparency to stockholders
Clawback policy
Stock ownership requirements
Independent compensation consulting firm reporting directly to the Board of Directors
Double-trigger severance agreements
Modest perquisites
Insider trading requirements
   WHAT WE DON’T DO   
     
No excise tax gross-ups
No modified single-trigger or single-trigger change-in-control severance agreements
No uncapped incentive compensation opportunities
No hedging of shares by our directors or employees
No excessive perquisites
No repricing of underwater stock options
No dividends provided on unearned performance awards

As described in more detail below, the material elements of our executive compensation program for NEOs include base salary, a cash bonus opportunity, a long-term equity incentive opportunity, and broad-based employee benefits. The NEOs may also receive severance payments and other benefits in connection with certain terminations of employment or a change in control of the Company. We believe that each element of our executive compensation program helps us to achieve one or more of our compensation objectives, as illustrated by the table below.

      Compensation Element       Compensation Objectives Designed to
be Achieved
Base Salary Recognize ongoing performance of job responsibilities.
Cash Bonus Opportunity Compensation “at risk” and tied to achievement of annual business goals.
Long-Term Equity Incentive Opportunity Compensation “at risk” and aligned to create stockholder value and achieve long-term business goals.
Benefits and Perquisites Attract and retain high-caliber talent and provide a basic level of protection from health, dental, life, and disability risks.
Severance and other Benefits Potentially Payable Upon Certain Terminations of Employment or a Change in Control Encourage the continued attention and dedication of our executives and provide reasonable individual security to enable our executives to focus on our best interests, particularly when considering strategic alternatives.

These individual compensation elements are intended to create a total compensation package for each NEO that we believe achieves our compensation objectives and provides competitive compensation opportunities.



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     Say on Pay and Say on Frequency Votes   
     
In fiscal 2019, the Compensation Committee considered the outcome of the stockholder advisory vote on fiscal 2018 executive compensation when making decisions relating to the compensation of our NEOs and our executive compensation program and policies. Our stockholders voted at our 2018 Annual Meeting, in a non-binding, advisory vote, on the fiscal 2018 compensation paid to our NEOs. Approximately 96% of the votes were cast in favor of the Company’s fiscal 2018 NEO compensation decisions. Based on this level of support, the Compensation Committee decided that the say on pay vote result did not necessitate any substantive changes to our compensation program.

At our 2018 Annual Meeting, stockholders showed strong support for our executive compensation programs with 96% of the votes cast approving our advisory resolution.

 

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders can vote on the frequency of say on pay voting once every six years. We expect this vote to next occur at our 2022 annual meeting. Until that time, we expect to hold an advisory, non-binding say on pay vote on an annual basis.

Executive Compensation Program Elements

Base Salaries

Base salaries are an important element of compensation because they provide the NEOs with a base level of income, which ensures a level of financial security. Generally, our NEOs are eligible for an adjustment to their base salaries each year at the discretion of the Compensation Committee depending on performance and market competitiveness. During fiscal 2019, as a result of the evaluation described below under “—Compensation Determination Process,” the Compensation Committee determined not to increase the base salaries for Messrs. Holm and Hope and Ms. O’Connell. Mr. Hagerty’s annual base salary was increased from $450,000 to $500,000 effective February 4, 2019 based on merit performance and market competitiveness. In connection with Mr. Hoskins’ appointment as our Executive Vice President and President and Chief Executive Officer of the Foodservice segment, Mr. Hoskins’ annual base salary was increased from $402,800 to $500,000 effective February 4, 2019.

Cash Bonus Opportunities

ANNUAL CASH BONUS OPPORTUNITY

We maintain an annual incentive plan (the “AIP”). All of our NEOs are eligible to participate in the AIP. The primary purpose of the AIP is to focus management on key measures that drive financial performance and provide competitive bonus opportunities tied to the achievement of our financial and strategic growth objectives.

FISCAL 2019 AIP

The Compensation Committee annually establishes a target annual bonus, which is expressed as a percentage of base salary. The Compensation Committee may adjust the target in connection with an NEO’s promotion, performance, or based upon competitive conditions. For our NEOs at the corporate level, including Messrs. Holm, Hope and Hoskins and Ms. O’Connell, the AIP award, which is a cash bonus, is tied to our overall financial results as measured by our Adjusted EBITDA, which is defined as Adjusted EBITDA, as we define it in our Annual Report on Form 10-K for the fiscal year ended June 29, 2019. For our NEO at the segment level, including Mr. Hagerty, the AIP award is tied to our overall financial results as measured by our Adjusted EBITDA and to Adjusted EBITDA for the applicable segment (excluding certain adjustments). We believe that tying part or all of the NEOs’ bonuses to Company-wide performance goals encourages collaboration across the executive leadership team, while tying part of the bonus of our NEO at the segment level to Adjusted EBITDA for his segment also rewards the NEO for achievements with respect to the business

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unit. We use Adjusted EBITDA as a measure of financial performance because we believe that it provides a reliable indicator of our strategic growth and the strength of our cash flow and overall financial results.

Actual amounts paid to our NEOs at the corporate level under the fiscal 2019 AIP were calculated by multiplying each such NEO’s target annual bonus for fiscal 2019 (which was 100% of base salary in effect at fiscal year-end, pro-rated with respect to date of hire, time in position, significant changes to base salary and AIP opportunity, and excludes leaves of absence greater than 30 days) by a payout percentage based on our actual achievement relative to our overall Adjusted EBITDA performance objective.

The payout percentage was determined by calculating our actual achievement against the overall Adjusted EBITDA performance target based on the pre-established scale set forth in the following table:

Performance Food Group—All Segments

Performance Scale       Payout Percentage
<$436.9 million 0.0 %
Threshold: $436.9 million 5.0 %
Target: $474.9 million 100.0 %
Maximum: $484.8 million 133.0 %

Based on the pre-established scale set forth above, no cash incentive award would have been paid to our NEOs at the corporate level unless our actual performance for fiscal 2019 was at or above 92.0% of our overall Adjusted EBITDA target. If our actual performance was 92.0% of target, they would have been entitled to 5% of their respective target bonus amounts. If our actual performance was 102.1% or more of target, they would have been entitled to 133.0% of their respective target bonus amounts. For performance percentages between these levels, the resulting payout percentage would be adjusted on a linear basis.

For fiscal 2019, the actual overall Adjusted EBITDA was $475.5 million, which resulted in a payout percentage of 102.2% of the target bonus amounts of our NEOs at the corporate level under the fiscal 2019 AIP. The following table illustrates the calculation of the annual cash bonus payable to each of Messrs. Holm, Hope and Hoskins and Ms. O’Connell under the fiscal 2019 AIP in light of these performance results.

Name 2019 Base Salary Target
Bonus
%
Target
Bonus
Amount
Overall
Adjusted
EBITDA
Payout
Percentage
Actual
Bonus
Paid
George L. Holm             $ 1,000,000 100 % $ 1,000,000 102.2 % $ 1,022,000
James D. Hope $ 600,000 100 % $ 600,000 102.2 % $ 613,200
Craig H. Hoskins $ 442,054 (1)  100 % $ 442,054 102.2 % $ 451,779 (1) 
Carol A. O’Connell $ 425,000 100 % $ 425,000 102.2 % $ 434,350

(1) Amount shown is prorated to reflect the change to Mr. Hoskins’ base salary on February 4, 2019 from $402,800 to $500,000.

Vistar Segment Adjusted EBITDA (Mr. Hagerty)

The actual amount paid to Mr. Hagerty under the fiscal 2019 AIP was calculated by multiplying his target annual bonus for fiscal 2019 (which was 100% of his prorated base salary) by a weighted achievement factor determined by the sum of (1) the Vistar segment Adjusted EBITDA achievement factor (80% multiplied by the Vistar segment Adjusted EBITDA payout percentage) and (2) the overall Adjusted EBITDA achievement factor (20% multiplied by the overall Adjusted EBITDA payout percentage).

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The overall Adjusted EBITDA achievement factor was determined by calculating our actual achievement against the overall Adjusted EBITDA performance target based on the pre-established scale set forth in the table above. The Adjusted EBITDA achievement factor for the Vistar segment was determined by the Vistar segment’s achievement against the Vistar Adjusted EBITDA performance target based on the pre-established scale set forth in the following table:

Performance Scale Payout Percentage  
<$145.4 million 0.0 %
Threshold: $145.4 million 25.0 %
Target: $160.8 million 100.0 %

Based on the pre-established scales set forth above, no cash incentive award would have been paid to Mr. Hagerty at the segment level unless our actual performance for fiscal 2019 was at or above 92.0% of our overall Adjusted EBITDA target and actual performance by our Vistar segment was at or above 90.5% of the target Adjusted EBITDA for our Vistar segment. For performance percentages between the levels set forth above, the resulting payout percentage would be adjusted on a linear basis.

For fiscal 2019, the actual Adjusted EBITDA achieved for our Vistar segment was $172.7 million, which resulted in a payout percentage of 100%. The Vistar segment had a weighted achievement factor of 100.4% when combined with the overall Adjusted EBITDA payout percentage of 102.2%.

The following table illustrates the calculation of the annual cash incentive award payable to Mr. Hagerty under the fiscal 2019 AIP in light of these performance results.

Name    2019
Base Salary
Target
Bonus
%
Target
Bonus
Amount
Segment
Adjusted
EBITDA
Payout
Percentage
Overall
Adjusted
EBITDA
Payout
Percentage
Weighted
Achievement
Factor
Actual
Bonus Paid
Patrick T. Hagerty $470,192 (1)  100 % $470,192 100 % 102.2 % 100.4 % $472,261 (1) 

(1)

Amount shown is prorated to reflect the change to Mr. Hagerty’s base salary on February 4, 2019 from $450,000 to $500,000.

Long-Term Equity Incentive Awards

We believe that the NEOs’ long-term compensation should be directly linked to the value we deliver to our stockholders. Equity awards to the NEOs are designed to provide long-term incentive opportunities over a period of several years.

Since our initial public offering in October 2015 (the “IPO”), we have made annual grants under our 2015 Omnibus Incentive Plan that provide a mix of performance shares, time-based stock options, and time-based restricted stock.

This long-term equity incentive program is consistent with our compensation objective of providing a long-term equity incentive opportunity that aligns compensation with the creation of stockholder value and achievement of business goals. Based on a review of peer group data, the Compensation Committee has approved target long-term equity incentive award guidelines based on a percentage of base salary for each of the NEOs as follows:

  Target long-term equity incentive award
(% of base salary)
Mr. Holm 400 %
Messrs. Hope and Hagerty 160 %
Mr. Hoskins and Ms. O’Connell 130 %

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Actual long-term equity incentive awards may differ from the target percentages based upon discretionary performance factors as determined by the Compensation Committee.

2019 LONG-TERM EQUITY INCENTIVE GRANTS

On September 10, 2018, in connection with our annual compensation review, the Compensation Committee approved annual long-term equity incentive grants to our NEOs. We granted awards of performance shares, time-based stock options, and shares of time-based restricted stock to each of Messrs. Holm, Hope, Hagerty and Hoskins and Ms. O’Connell under our 2015 Omnibus Incentive Plan.

The following table sets forth the total grant value of these long-term equity incentive grants for each of Messrs. Holm, Hope, Hagerty and Hoskins and Ms. O’Connell, which were translated into a number of performance shares, stock options, and shares of restricted stock by taking such dollar amount and dividing it by the per share “fair value” that will be used for reporting the compensation expense associated with the grant under applicable accounting guidance, which “fair value” was based in part on the per share closing price of our common stock on the NYSE on the date of grant.

Name Total Grant
Value
Performance
Shares
Restricted
Stock
Stock
Options
George L. Holm   $ 4,000,000 42,736 41,026 105,070
James D. Hope $ 960,000 10,257 9,847 25,217
Craig H. Hoskins $ 523,640 5,595 5,371 13,755
Patrick H. Hagerty $ 720,000 7,693 7,385 18,913
Carol A. O’Connell $ 552,500 5,903 5,667 14,513

Subject to the recipient’s continued service with the Company through each applicable vesting date:

one fourth of the shares subject to stock options will vest on each anniversary of the date of grant and will remain exercisable through the end of the ten-year term;
one fourth of the shares of time-based restricted stock will vest on each anniversary of the date of grant;
performance shares will vest on the date the Compensation Committee certifies the Company’s performance, subject to the recipient’s continued service to the Company through the end of the performance period (which began on July 1, 2018, and ends on July 3, 2021), if the applicable performance goals are attained; and
Ms. O’Connell’s long-term equity incentive awards will continue to vest (subject to the terms and conditions thereof) after her separation from the Company on August 2, 2019, as if she continued her employment through August 2, 2020, and all other unvested equity will be forfeited.

See “Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards—Description of Fiscal 2019 Equity-Based Awards—Awards Granted Under the 2015 Omnibus Incentive Plan” for a more detailed description of the material terms of these awards and a description of the potential vesting of these awards that may occur in connection with certain terminations of employment.

Performance Shares

For the performance shares, 50% of the award will be earned based on achievement of return on invested capital (“ROIC”) goals that are established at the beginning of the three-year performance period, and 50% of the award will be earned based on achievement of total shareholder return (“TSR”) relative to companies in the S&P MidCap 400 Index that are public throughout the entire performance period. The Company’s total shareholder return is calculated as (i) (a) the average closing price of a share of common stock of the Company over the 10 trading day period ending on (and including) the last date of the performance period (assuming dividends are reinvested) minus (b) the price of a share of our common stock at the beginning of the performance period (the “Beginning Share Price”) divided by (ii) the Beginning Share Price. Relative TSR is expressed as a relative percentile ranking of the Company among the total shareholder return of companies in the S&P MidCap 400 Index over the performance period.

The Compensation Committee believes that the performance goals for the performance shares are reasonably attainable yet provide an appropriate incentive to maximize our performance and shareholder value. The Compensation Committee believes that achievement of maximum performance against the goals would require exceptional corporate performance over the performance period.

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For the most recently completed performance cycle (ending June 29, 2019), the earned amounts were determined based on the following performance and payout scales:

Performance ROIC Target
Payout %
Threshold 15.5% 50%
Target 16.5% 100%
Maximum 17.5% 150%
Earned Amount 16.8% 115%

Performance Relative
TSR Ranking
Target
Payout %
Threshold 40th percentile 25%
Target 60th percentile 100%
Maximum 80th percentile 150%
Earned Amount 63rd percentile 109%

For performance percentages between the levels set forth above, the resulting payout percentage would be adjusted on a linear basis.

Benefits and Perquisites

We provide to all our employees, including our NEOs, broad-based benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. Broad-based employee benefits include:

a 401(k) savings plan (the “401(k) plan”);
medical, dental, vision, life and accident insurance, disability coverage, dependent care and healthcare flexible spending accounts; and
employee assistance program benefits.

We maintain the 401(k) plan, a qualified contributory retirement plan, that is intended to qualify as a profit-sharing plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). Eligible employees, including our NEOs, may contribute up to 50% of their eligible compensation, subject to statutory limits imposed by the Code. We are also permitted to make profit-sharing contributions and matching contributions, and currently provide for matching contributions equal to 100% of employee contributions up to 3.5% of eligible compensation. Our contributions to the plan are made subject to certain minimum requirements specified in the plan. All matching contributions by us become vested on the four-year anniversary of the participant’s hire date. As of January 1, 2009, the 401(k) plan merged with the Self-Directed Tax Advantaged Retirement (STAR) Plan of PFGC, Inc. Employees employed on or before December 31, 2008, are also eligible for an annual contribution based on the employee’s salary and years of service (a “STAR Contribution”). Messrs. Holm, Hagerty and Hoskins are the only NEOs eligible to receive the additional STAR Contributions.

In addition, at no cost to the employee, we provide an amount of basic life and accident insurance coverage valued at one times annual salary up to a maximum of $1 million combined benefit.

We also provide our NEOs with limited perquisites and personal benefits that are not generally available to all employees, such as an annual auto allowance, eligibility to participate in our executive health programs, reimbursement of relocation expenses, and temporary housing allowances. We provide these limited perquisites and personal benefits in order to further our goal of attracting and retaining our executive officers. The benefits and perquisites not generally available to all employees that were provided to our NEOs in fiscal 2019 are reflected in the “All Other Compensation” column of the Summary Compensation Table and the accompanying footnote in accordance with SEC rules.

Severance and Other Benefits

We believe that severance protections can play a valuable role in attracting and retaining high-caliber talent. In the competitive market for executive talent, we believe severance payments and other termination benefits are an effective way to offer executives financial security to offset the risk of foregoing an opportunity with another company. Consistent with our objective of using severance payments and benefits to attract and retain executives, our Senior Management Severance Plan (the “Severance Plan”) provides our executives with severance benefits that we believe will permit us to attract and/or continue to employ high-caliber talent.

Each of our NEOs, other than Mr. Holm, is eligible for the Severance Plan benefits under the terms of the Severance Plan, as modified by the severance letter agreements we have entered into with Messrs. Hope, Hagerty and Hoskins and Ms. O’Connell (the “Severance Letter Agreements”). Mr. Holm is eligible for severance benefits under the terms of his employment agreement. See “Potential Payments Upon Termination or Change in Control” for descriptions of these arrangements.

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Executive Compensation

Compensation Determination Process

The Compensation Committee is responsible for establishing, maintaining, and administering our compensation and benefit policies and determines the compensation for our NEOs. Our CEO is not a member of the Compensation Committee and does not participate in deliberations regarding his compensation.

In fiscal 2019, the Compensation Committee retained Frederic W. Cook & Co., Inc. (“FW Cook”), an independent compensation consulting firm, to advise on executive and non-employee director compensation. FW Cook evaluated the competitiveness of our executive and director compensation programs using peer group compensation data of the following peer group companies:

 
Applied Industrial Technologies, Inc. W.W. Grainger, Inc. Sysco Corporation
Aramark MRC Global Inc. United Natural Foods, Inc.
The Chefs’ Warehouse, Inc. Pilgrim’s Pride Corporation US Foods Holding Corp.
Compass Group PLC SpartanNash Company WESCO International, Inc.
Dean Foods Company SUPERVALU Inc.
 

This peer group is composed of companies of appropriate size and similar stature in our industry. FW Cook analyzed 2018 target compensation levels for senior executives benchmarked against the updated compensation peer group and size-appropriate general industry survey data. Our executive officers without an exact functional position match were compared against peer group executives based upon relative pay rank.

Based on this evaluation, FW Cook recommended, and the Compensation Committee determined, to set total target direct compensation (comprised of base salary, cash bonus opportunity at target and long-term equity incentive opportunity at target) at levels that approximate the median of the peer group. As a result, the Compensation Committee determined not to change target bonus levels for any of our executive officers and not to increase the base salaries for Messrs. Holm and Hope and Ms. O’Connell. Mr. Hoskins’ annual base salary was increased in connection with his appointment as the Company’s Executive Vice President and President and Chief Executive Officer of the Foodservice segment. Mr. Hagerty’s annual base salary was also increased during fiscal year 2019 based on merit performance and market competitiveness. FW Cook recommended, and the Compensation Committee approved, target long-term equity incentive award guidelines based on a percentage of base salary for each of the NEOs as described under “—Executive Compensation Program Elements—Long-Term Equity Incentive Awards.”

During its engagement, which ended in March 2019, FW Cook reported directly to the Chair of the Compensation Committee and performed no other work for the Company. FW Cook generally attended all meetings where the Compensation Committee evaluates the overall effectiveness of the executive compensation programs or where the Compensation Committee analyzes or approves executive compensation.

In March of 2019, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) to serve as the Committee’s consultant for the remainder of fiscal year 2019 and beyond. In connection with engaging FW Cook and Meridian, the Compensation Committee considered the independence of both firms in light of the standards embodied in SEC rules and NYSE listing standards. The Compensation Committee took into account these considerations, along with other factors relevant to the firms’ independence from management, and concluded that each firm was independent and the engagement of each firm would not raise any conflict of interest.

Hedging and Pledging Policies

The Company’s Insider Trading Policy requires directors and executive officers to consult the Company’s General Counsel prior to engaging in transactions involving the Company’s securities. The Company’s Insider Trading Policy prohibits directors and executive officers from hedging or monetization transactions, including, but not limited to, through the use of financial instruments such as exchange funds, variable forward contracts, equity swaps, puts, calls, and other derivative instruments, or through the establishment of a short position in the Company’s securities. The Company’s Insider Trading Policy limits the pledging of Company securities to those limited situations approved by the Company’s General Counsel.

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Clawback Policy

In August 2019, we adopted a Clawback Policy that allows us to recoup incentive-based compensation from our current or former executive officers under certain circumstances. Pursuant to the policy, we may demand repayment of any incentive-based or equity-based compensation paid or granted to an executive officer in the event of (i) a required accounting restatement of a financial statement of the Company (whether or not based on fraud or misconduct) due to material noncompliance of the Company with any financial reporting requirement under the U.S. federal securities laws or (ii) an error in the calculation of such incentive-based or equity-based compensation as a result of a restatement in financial statements or otherwise.

Employment Agreements

We do not typically enter into formal employment agreements with our executive officers. However, we have an employment agreement with Mr. Holm. In addition, we typically enter into offer letters with our executive officers. In connection with the commencement of their employment, we entered into offer letters with Messrs. Hagerty, Hope and Hoskins and Ms. O’Connell, setting forth their initial compensation and benefits. We entered into a letter agreement with Ms. O’Connell in connection with her resignation from the position of Senior Vice President and Chief Human Resources Officer of the Company in 2019. A summary of the material terms of Mr. Holm’s employment agreement and Ms. O’Connell’s letter agreement are presented below in “—Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards.”

Stock Ownership Guidelines

EXECUTIVE OFFICERS

To align the interests of our management with those of our stockholders, the Board of Directors concluded that certain of our executive officers (the “Covered Executives”) should have a significant financial stake in the Company’s stock. To further that goal, we have implemented stock ownership guidelines (the “Guidelines”). The Covered Executives are required to hold a specific level of equity ownership as outlined below:

Executives
The Guidelines will apply to the Covered Executives in the following Tiers

     

Tier One
Chief Executive Officer

     

Tier Two
Chief Financial Officer

     

Tier Three
All other Senior Executives (direct reports of the Chief Executive Officer)

Covered Executives’ Stock Ownership Multiples
The stock ownership levels under the Guidelines, expressed as a multiple of the Covered Executive’s base annual salary rate as of January 1st of the year, are as follows:

6 times base annual salary rate
3 times base annual salary rate
1 times base annual salary rate

Retention Requirement
There is no required time period within which a Covered Executive must attain the applicable stock ownership level under the Guidelines. However, until the applicable ownership level is achieved, the following retention requirements will apply:

100% of shares
50% of shares
50% of shares

The shares counted toward these ownership requirements include shares of common stock owned directly by the Covered Executive and outstanding restricted stock and restricted stock units.

These ownership requirements are set at levels that the Company believes are reasonable given the Covered Executive’s respective salaries and responsibility levels. As of September 24, 2019, each of the Named Executive Officers has met the applicable ownership level.

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Executive Compensation

Section 162(m) of the Internal Revenue Code

Section 162(m) of the Code generally prohibits public companies from taking a tax deduction for compensation paid in excess of $1,000,000 to certain executive officers. Prior to its amendment as implemented by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), Section 162(m) of the Code provided an exception from the compensation deduction limitations for compensation that was considered “qualified performance-based compensation” under the applicable regulations. The regulations under Section 162(m) of the Code provide that a company that becomes public in connection with an initial public offering is exempt from applying the compensation deduction limitations for a specified period of time following its initial public offering (the “IPO Transition Period”). The Tax Act’s amendment of Section 162(m) of the Code, among other things, eliminated the exception to the compensation deduction limitations for “qualified performance-based compensation,” other than in limited circumstances. The IPO Transition Period was not impacted by the Tax Act’s amendments to Section 162(m) of the Code. This IPO Transition Period may extend until the first annual stockholders meeting that occurs after the end of the third calendar year following the calendar year in which our IPO occurred, unless the transition period is terminated earlier under the Section 162(m) of the Code post-offering transition rules. Our IPO Transition Period is expected to extend until the 2019 annual meeting, unless it is terminated earlier.

While the 2007 Management Option Plan and the 2015 Omnibus Incentive Plan currently include certain provisions that had been intended to allow the Compensation Committee, following the expiration of the IPO Transition Period, to grant awards that could be considered “qualified performance-based compensation” for purposes of Section 162(m) of the Code, the Tax Act’s amendments to Section 162(m) of the Code have made these provisions inapplicable for such purposes. Accordingly, following the expiration of the IPO Transition Period, any performance equity awards granted to employees covered by Section 162(m) of the Code, as amended, will be subject to the compensation deduction limitations set forth in Section 162(m) of the Code.

Although the Compensation Committee considers tax deductibility in making compensation program decisions, the Compensation Committee’s primary consideration is whether the compensation program aligns the interests of our executives with those of the Company and our stockholders.

Compensation Actions Taken for Fiscal 2020

For fiscal 2020 compensation determinations, the Compensation Committee retained Meridian Compensation Partners LLC, an independent compensation consulting firm, to advise on executive and non-employee director compensation. The Compensation Committee re-examined the then-existing compensation peer group to reflect the changes in our market capitalization and to account for changes in the competitive market. Based on this effort, in May 2019 the Compensation Committee approved a revised compensation peer group consisting of the following companies for use in fiscal 2020:

 
Aramark Dollar Tree, Inc. Sysco Corporation
Avnet, Inc. Genuine Parts Company Tyson Foods, Inc.
The Chefs’ Warehouse, Inc. Henry Schein, Inc. United Natural Foods, Inc.
Compass Group PLC Pilgrim’s Pride Corporation US Foods Holding Corp.
Core-Mark Holding Company SpartanNash Company WESCO International, Inc.
Dean Foods Company SYNNEX Corporation W.W. Grainger, Inc.
 

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Executive Compensation

Based on a review of compensation programs conducted by management as well as a comprehensive review from the Compensation Committee’s compensation consultant, we made certain changes to our compensation program for fiscal 2020, as summarized below.

Compensation
Program Changes
      Specific Change Rationale

Annual Incentive
Plan (AIP)

Shifts earnings metric from EBITDA to EBIT
Free Cash Flow and Management Objectives (MBOs) are added as metrics
Metric weights: 80% EBIT, 10% Company Free Cash Flow, 10% MBOs
Segment Executives EBIT metric weighted at 30% Company EBIT and 70% Segment EBIT
Increases accountability for capital expenditures
More closely aligns with focus of investors
Increases accountability for individual performance
MBOs are meant to capture individual contributions to the achievement of critical strategic milestones including, but not limited to, long-term business objectives, acquisition integration, succession planning, safety, and cyber security

Long-Term Incentive
Plan (LTIP)

Increased relative weighting of performance awards in relation to total equity awards as follows: from 33.3% to 65% for senior management
Relative weighting of restricted stock awards increased from 33.3% to 35%
Options will no longer be granted as part of the LTIP
Enhances focus on company performance
Promotes more prudent share usage
More closely aligns realized compensation with execution of our long-term plan and performance

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Summary Compensation Table

The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of our NEOs for the fiscal years indicated.

Name and
Principal Position
Year Salary
($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
All Other
Compensation
($)(5)
Total
($)
George L. Holm 2019 1,000,000 2,666,708 1,333,338 1,022,000 39,644 6,061,690
Chairman, President and 2018 1,000,000 2,466,716 1,233,339 420,000 40,231 5,160,288
Chief Executive Officer 2017 1,000,000 3,081,603 1,787,947 660,000 37,040 6,566,589
James D. Hope 2019 600,000 640,045 320,004 613,200 31,906 2,205,155
Executive Vice President and 2018 533,516 533,371 266,670 224,077 29,234 1,586,868
Chief Financial Officer 2017 500,000 660,347 383,136 330,000 24,614 1,898,098
Craig H. Hoskins 2019 442,054 349,120 174,551 451,779 45,074 1,462,578
Executive Vice President of
the Company and President
and Chief Executive Officer,
Foodservice
Patrick T. Hagerty 2019 470,192 480,033 240,006 472,261 54,337 1,716,829
Executive Vice President of the 2018 436,538 390,019 195,008 382,050 51,079 1,454,694
Company and President and 2017 380,000 434,957 252,363 188,480 42,831 1,298,631
Chief Executive Officer, Vistar
Carol O'Connell 2019 425,000 368,350 184,170 434,350 31,496 1,443,366
Former Senior Vice President and 2018 417,308 368,352 184,175 178,500 32,541 1,180,875
Chief Human Resources Officer 2017 385,000 440,604 255,624 254,100 29,514 1,364,841

(1) In connection with Mr. Hoskins’ transition into his new role effective February 4, 2019, his base salary was increased from $402,800 to $500,000. Effective February 4, 2019, Mr. Hagerty’s base salary was increased from $450,000 to $500,000.
(2) Amounts shown in this column include the grant date fair value, calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and using the assumptions discussed in Note 18, “Stock-based Compensation,” of the audited financial statements in our Annual Report, of the performance shares and restricted stock received in fiscal 2019, as described under “Compensation Discussion and Analysis—Long-Term Equity Awards—2019 Long-Term Equity Incentive Grants.”
With respect to the performance shares in the Fiscal 2019 Grants, 50% vest according to ROIC (as defined below) and 50% vest according to Relative TSR (as defined below). The grant date fair value of the shares that vest according to ROIC was computed in accordance with FASB ASC Topic 718 based upon the probable outcome of the performance conditions as of the grant date. Assuming the highest level of performance is achieved, the aggregate grant date fair value of the ROIC awards would be: Mr. Holm—$1,041,690; Mr. Hope—$249,990; Mr. Hoskins—$136,354; Mr. Hagerty—$187,493; and Ms. O’Connell—$143,861.
As the shares that vest according to Relative TSR are subject to market conditions as defined under FASB ASC Topic 718 and are not subject to performance conditions as defined under FASB ASC Topic 718, they have no maximum grant date fair values that differ from the grant date fair values presented in the table.
(3) Amounts shown in this column for fiscal 2019 include the grant date fair value, calculated in accordance with FASB ASC Topic 718 and using the assumptions discussed in Note 18, “Stock-based Compensation” of the audited financial statements in our Annual Report, of the options received in the Fiscal 2019 Grants, as described under “Compensation Discussion and Analysis—Long-Term Equity Awards—2019 Long-Term Equity Incentive Grants.”

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(4) Amounts shown in this column reflect amounts earned under our AIP. Amounts shown for Messrs. Hoskins and Hagerty were prorated to reflect their change in base salary as of February 4, 2019.
(5) Amounts reported under All Other Compensation for fiscal 2019 include contributions to our 401(k) plan on behalf of our NEOs, including annual STAR Contributions under our 401(k) plan, as follows: Mr. Holm, annual STAR Contribution of $11,000; Mr. Hope, matching contribution of $9,800; Mr. Hoskins, matching contribution of $9,428 and annual STAR Contribution of $13,750; Mr. Hagerty, matching contribution of $10,332 and annual STAR Contribution of $13,750; and Ms. O’Connell, matching contribution of $9,625. Amounts reported for each NEO also include annual auto allowances, fees for participation in our executive health programs, gifts (and tax reimbursement related to gifts), as well as amounts with respect to the payment of life insurance premiums as follows: $1,344 for Mr. Holm, $807 for Mr. Hope, $597 for Mr. Hoskins, $633 for Mr. Hagerty, and $571 for Ms. O’Connell.

Fiscal 2019 Grants of Plan-Based Awards

The following table sets forth information concerning grants of plan-based awards to our NEOs during fiscal 2019.

Name Grant
Date
Award
Type
 


Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
    Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(3)(#)
All Other
Option
Awards:
Number
of Securities
Underlying
Options
(4)(#)
Exercise
or Base
Price of
Option
Awards
($/Sh)
Grant Date
Fair Value
of Stock
and Option
Awards
(5)($)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
George L.
Holm
2019 AIP 50,000 1,000,000 1,330,000
9/10/2018 Performance Shares 5,342 42,736 64,104 1,333,363
9/10/2018 Restricted Stock 41,026 1,333,345
9/10/2018 Options 105,070 32.50 1,333,338
James D.
Hope
2019 AIP 30,000 600,000 798,000
9/10/2018 Performance Shares 1,282 10,257 15,386 320,018
9/10/2018 Restricted Stock 9,847 320,028
9/10/2018 Options 25,217 32.50 320,004
Craig H.
Hoskins
2019 AIP 22,103 442,054 587,932
9/10/2018 Performance Shares 700 5,595 8,393 174,564
9/10/2018 Restricted Stock 5,371 174,558
9/10/2018 Options 13,755 32.50 174,551
Patrick T.
Hagerty
2019 AIP 4,702 470,192 501,225
9/10/2018 Performance Shares 962 7,693 11,540 240,022
9/10/2018 Restricted Stock 7,385 240,013
9/10/2018 Options 18,913 32.50 240,006
Carol A.
O’Connell
2019 AIP 21,250 425,000 565,250
9/10/2018 Performance Shares 738 5,903 8,855 184,174
9/10/2018 Restricted Stock 5,667 184,178
9/10/2018 Options 14,513 32.50 184,170

(1) Amounts represent awards payable under our AIP. See “Compensation Discussion and Analysis—Executive Compensation Program Elements—Cash Bonus Opportunities—Annual Cash Bonus Opportunity” above for a description of our AIP. Amounts shown for Messrs. Hoskins and Hagerty are prorated to reflect their change in base salary as of February 4, 2019. Actual amounts paid under our fiscal 2019 AIP are set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
(2) Reflects the number of shares that will vest for the applicable level of performance under the performance share portion of the fiscal 2019 grants made pursuant to the 2015 Omnibus Incentive Plan, the terms of which are summarized under “Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards—Description of Fiscal 2019 Equity-Based Awards—Awards Granted Under the 2015 Omnibus Incentive Plan” below.
(3) Reflects the time-based restricted stock portion of the fiscal 2019 grants made pursuant to the 2015 Omnibus Incentive Plan, the terms of which are summarized under “Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards—Description of Fiscal 2019 Equity-Based Awards—Awards Granted Under the 2015 Omnibus Incentive Plan” below.
(4) Reflects the stock option portion of the fiscal 2019 grants made pursuant to the 2015 Omnibus Incentive Plan, the terms of which are summarized under “Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards—Description of Fiscal 2019 Equity-Based Awards—Awards Granted Under the 2015 Omnibus Incentive Plan” below.

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Tabular Executive Compensation Disclosure

(5) Represents the grant date fair value of the performance share portion, the time-based restricted stock portion, and the stock option portion of the fiscal 2019 grants.

The grant date fair value of the performance shares that vest according to ROIC was computed in accordance with FASB ASC Topic 718 based upon the probable outcome of the performance conditions as of the grant date and was determined to be for each of Messrs. Holm, Hope, Hoskins and Hagerty and Ms. O’Connell, $694,460, $166,660, $90,903, $124,995 and $95,908, respectively. The grant date fair value of the performance shares that vest based on Relative TSR was determined to be for each of Messrs. Holm, Hope, Hoskins and Hagerty and Ms. O’Connell, $638,903, $153,357, $83,660, $115,025 and $88,265, respectively.

Narrative to Summary Compensation Table and Fiscal 2019 Grants of Plan-Based Awards

Summary of Employment Agreement of Mr. Holm

Mr. Holm’s employment agreement, dated as of September 6, 2002, as amended effective January 2003, provides that he serves as President and Chief Executive Officer, for an initial term of three years that automatically extends for successive automatic one-year periods, unless we or Mr. Holm elect not to extend the term by providing 30 days’ advance notice.

Mr. Holm’s employment agreement establishes: (1) an initial base salary, subject to discretionary annual increases; (2) eligibility to receive an annual bonus, with a target amount equal to 100% of his base salary if performance targets set by the Compensation Committee are achieved, which he may elect to receive as shares of our common stock; and (3) a requirement that he purchase $2 million of our common stock. Mr. Holm is also entitled to participate in all employee benefit and fringe plans made available to our employees generally.

Mr. Holm’s employment agreement also contains restrictive covenants, including an indefinite covenant not to disclose confidential information and not to disparage us, and, during Mr. Holm’s employment and for the one-year period following the termination of his employment, covenants related to non-competition and non-solicitation of our employees, customers, or suppliers.

Mr. Holm’s employment agreement also provides for severance benefits following certain terminations of employment. See “Potential Payments Upon Termination or Change in Control” for a description of these provisions.

Summary of Letter Agreement with Ms. O’Connell

In connection with her resignation, we entered into a letter agreement with Ms. O’Connell, dated March 4, 2019 (the “O’Connell Letter Agreement”). Pursuant to the O’Connell Letter Agreement, the employment of Ms. O’Connell ended at the close of business on August 2, 2019 (the “Termination Date”). The O’Connell Letter Agreement, among other things, also provided for the following: (a) a severance benefit equal to 52 weeks of Ms. O’Connell’s current base salary of $425,000 payable over time bi-weekly in accordance with the Company’s payroll practices; (b) continued health care coverage under the Company’s health plan for a period of 12 months from the Termination Date; and (c) Ms. O’Connell’s long-term equity incentive awards granted under the Company’s 2015 Omnibus Incentive Plan will continue to vest (subject to the terms and conditions thereof) after the Termination Date as if she continued her employment through August 2, 2020, and all other unvested equity will be forfeited.

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Tabular Executive Compensation Disclosure

Outstanding Equity Awards at 2019 Fiscal Year-End

The following table sets forth information regarding outstanding equity awards made to our NEOs as of June 29, 2019.

Option Awards Stock Awards
Name Grant
Date
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(2)
Option
Exercise
Price
($)
Option
Expiration
Date
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(3)
Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)
(4)
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)

Equity Incentive Plan
Awards: Market
or Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
($)(4)

George L. Holm 9/30/2015   303,570 15,351 19.00 9/30/2025      
9/30/2015 15,351 614,501  
8/9/2016 97,065 97,066 26.57 8/9/2026  
8/9/2016 51,231 (5)  2,050,777  
8/9/2016 36,036 1,442,521  
9/21/2017 30,169 90,510 28.80 9/21/2027  
9/21/2017 55,758 (6)  2,231,993  
9/21/2017 32,119 1,285,724  
9/10/2018 105,070 32.50 9/10/2028  
9/10/2018 42,736 (7)  1,710,722  
9/10/2018 41,026 1,642,271
James D. Hope 3/12/2015 19,400 4,850 16.76 3/12/2025  
9/30/2015 44,097 11,848 19.00 9/30/2025  
9/30/2015 4,432 177,413  
8/9/2016 20,800 20,800 26.57 8/9/2026  
8/9/2016 10,977 (5)  439,409  
8/9/2016 7,723 309,152  
9/21/2017 6,523 19,570 28.80 9/21/2027  
9/21/2017                 12,057 (6)  482,642  
9/21/2017 6,945 278,008  
9/10/2018 25,217 32.50 9/10/2028  
9/10/2018 10,257 (7)  410,588  
9/10/2018 9,847 394,175
Craig H. Hoskins 9/30/2015 31,691 2,167 19.00 9/30/2025  
9/30/2015 2,167 86,745  
8/9/2016 13,700 13,701 26.57 8/9/2026  
8/9/2016 7,231 (5)  289,457  
8/9/2016 5,087 203,633  
9/21/2017 4,269 12,810 28.80 9/21/2027  
9/21/2017 7,892 (6)  315,917  
9/21/2017 4,546 181,976  
9/10/2018 13,755 32.50 9/10/2028  
9/10/2018 5,595 (7)  223,968  
9/10/2018 5,371 215,001
Patrick T. Hagerty 9/30/2015 34,767 2,167 19.00 9/30/2025  
9/30/2015 2,167 86,745  
8/9/2016 13,700 13,701 26.57 8/9/2026  
8/9/2016 7,231 (5)  289,457  
8/9/2016 5,087 203,633  
9/21/2017 4,770 14,311 28.80 9/21/2027  
9/21/2017 8,817 (6)  352,945  
9/21/2017 5,079 203,312  
9/10/2018 18,913 32.50 9/10/2028  
9/10/2018 7,693 (7)  307,951  
9/10/2018 7,385 295,622

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Tabular Executive Compensation Disclosure

Option Awards Stock Awards
Name Grant
Date

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(2)
Option
Exercise
Price
($)
Option
Expiration
Date
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(3)
Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)(4)

Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)

Equity Incentive Plan
Awards: Market
or Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
($)(4)

Carol A. O’Connell 9/30/2015   2,198 19.00 9/30/2025      
9/30/2015 2,198 87,986  
8/9/2016 6,939 26.57 8/9/2026  
8/9/2016 7,326 (5)  293,260  
8/9/2016 2,576 103,117  
9/21/2017 4,505 28.80 9/21/2027  
9/21/2017                    8,327 (6)  333,330  
9/21/2017 1,599 64,008  
9/10/2018 3,628 32.50 9/10/2028  
9/10/2018 1,416 56,682

(1) Represents fully-vested time-vesting and time and performance-vesting options. Options in this column granted on March 12, 2015, represent time-vesting options granted pursuant to the 2007 Management Option Plan. Options in this column granted on September 30, 2015, represent time and performance-vesting options granted pursuant to the 2007 Management Option Plan and time-vesting options granted pursuant to the 2015 Omnibus Incentive Plan. Options in this column granted on August 9, 2016, and September 21, 2017, represent time-vesting options granted pursuant to the 2015 Omnibus Incentive Plan.
(2) Represents unvested time-vesting options. Options in this column granted on September 30, 2015, August 9, 2016, September 21, 2017, and September 10, 2018 were granted pursuant to the 2015 Omnibus Incentive Plan and vest in four equal annual installments on each of the first four anniversaries of the applicable date of grant. Options in this column granted on March 12, 2015, to Mr. Hope were granted pursuant to the 2007 Management Option Plan and vest in five equal annual installments on each of the first five anniversaries of September 3, 2014. For Mr. Hope, there are 8,558 options granted on September 30, 2015, pursuant to the 2007 Management Option Plan that have met their performance-vesting requirement and time-vested on September 3, 2019.
(3) Represents time-vesting restricted stock granted pursuant to the 2015 Omnibus Incentive Plan that vests in four equal annual installments on each of the first four anniversaries of the date of grant. For Mr. Hope, there are 1,142 shares of restricted stock granted on September 30, 2015, pursuant to the 2007 Management Option Plan that have met their performance-vesting requirement and time-vested on September 3, 2019.
(4) Based on $40.03, the closing price of our common stock on June 28, 2019, the last trading day on the New York Stock Exchange of fiscal 2019.
(5) The performance shares granted on August 9, 2016 vested based on the Company’s achievement of each performance measure (ROIC and Relative TSR) with respect to the period that began on July 3, 2016, and ended on June 29, 2019, as determined by the Compensation Committee on August 7, 2019. The achievement levels for both the ROIC and Relative TSR were between target and maximum performance. Accordingly, the number of shares reported in the table reflect the actual amounts based on 115% of target performance for ROIC and 109% of target performance for Relative TSR.
(6) The performance shares granted on September 21, 2017, will vest, if at all, based on the Company’s achievement of each performance measure (ROIC and Relative TSR) with respect to the period that began on July 2, 2017, and ends on June 27, 2020, as determined by the Compensation Committee following the end of fiscal 2020. As of June 29, 2019, the achievement level with respect to ROIC was between threshold and target performance, and the achievement level with respect to Relative TSR was between target and maximum performance. Accordingly, the number of shares reported in the table reflect amounts based on target performance for ROIC and maximum performance for Relative TSR. The actual number of shares that will vest with respect to the performance shares is not yet determinable.
(7) The performance shares granted on September 10, 2018, will vest, if at all, based on the Company’s achievement of each performance measure (ROIC and Relative TSR) with respect to the period that began on July 1, 2018, and ends on July 3, 2021, as determined by the Compensation Committee following the end of fiscal 2021. As of June 29, 2019, the achievement level with respect to ROIC was between threshold and target performance, and the achievement level with respect to Relative TSR was between threshold and target performance. Accordingly, the number of shares reported in the table reflect amounts based on target performance for both ROIC and Relative TSR. The actual number of shares that will vest with respect to the performance shares is not yet determinable.

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Tabular Executive Compensation Disclosure

Fiscal 2019 Option Exercises and Stock Vested

The following table provides information with respect to our NEOs regarding options exercised and stock vested during fiscal 2019.

Option Awards Stock Awards
Name

Number of Shares
Acquired on Exercise
(#)

Value Realized
on Exercise
($)(1)
Number of Shares
Acquired on Vesting
(#)(2)
Value Realized
on Vesting
($)(3)
George L. Holm   224,702 5,831,265     130,039 4,735,792  
James D. Hope 29,026 1,053,224  
Craig H. Hoskins 18,355 668,445  
Patrick T. Hagerty 8,083 206,379 18,532 674,357  
Carol A. O’Connell 13,641 127,172 18,675 679,912

(1) We report the value realized on exercise as the difference between the fair market value of the shares acquired on exercise and the exercise price of the stock option.
(2) Represents the vesting of one fourth of the shares of time-based restricted stock granted on September 30, 2015, August 9, 2016, and September 21, 2017. Additionally, the performance shares granted on September 30, 2015, vested based on the Company’s achievement of each performance metric (ROIC and Relative TSR) with respect to the period that began on September 30, 2015, and ended on June 30, 2018, as determined by the Compensation Committee on August 8, 2018. The achievement level with respect to ROIC was between target and maximum performance, and the achievement level with respect to Relative TSR was at maximum. Accordingly, the number of shares reported in the table reflect the actual amounts based on 130% of target performance for ROIC and 150% of target performance for Relative TSR.
(3) Represents the value realized on August 9, 2018, September 21, 2018, and September 30, 2018 for the second, first and third vesting dates of the August 9, 2016, September 21, 2017, and September 30, 2015 time-based restricted stock grants, respectively. Additionally, the amount represents the value realized on August 8, 2018, as a result of the performance vesting of shares of restricted stock granted on September 30, 2015, under the 2015 Omnibus Incentive Plan.

Fiscal 2019 Pension Benefits

We have no pension benefits for our executive officers, including our NEOs.

Potential Payments Upon Termination or Change in Control

The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and contractual agreements to which the NEOs would have been entitled assuming an eligible termination if a termination of employment or change in control occurred on June 28, 2019, the last business day of fiscal 2019.

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Tabular Executive Compensation Disclosure

The amounts shown in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms, or operation in favor of the NEOs. These include accrued but unpaid salary and distributions of vested plan balances under our 401(k) savings plan.

Cash
Severance
Payment
($)(1)
Continuation
of Group
Health Plans
($)(2)

Value of Equity
Acceleration Under
2007 Management
Option Plan
($)(3)

Value of Equity
Acceleration Under
2015 Omnibus
Incentive Plan
($)(4)

Total
($)
George L. Holm
Eligible Termination       250,000 2,395 252,395
Change in Control 14,415,434 14,415,434
Death or Disability 12,530,961 12,530,961
James D. Hope
Eligible Termination 634,615 12,455 647,070
Change in Control 112,860 3,204,468 3,317,328
Death or Disability 2,769,869 2,769,869
Craig H. Hoskins
Eligible Termination 528,846 12.455 541,301
Change in Control 1,994,084 1,994,084
Death or Disability 1,739,460 1,739,460
Patrick T. Hagerty
Eligible Termination 528,846 12,455 541,301
Change in Control 2,272,747 2,272,747
Death or Disability 1,949,792 1,949,792
Carol A. O’Connell(5)
Eligible Termination 449,519 8,124 457,643
Change in Control 1,155,892 1,155,892
Death or Disability 1,044,788 1,044,788

(1) Cash severance payment includes the following:
Mr. Holm—continued payment of his base salary through the expiration of his employment agreement ($192,308) plus the value of his accrued but unused vacation days ($57,692).
Mr. Hope—52 weeks’ base salary ($600,000) plus the value of his accrued but unused vacation days ($34,615).
Mr. Hoskins—52 weeks’ base salary ($500,000) plus the value of his accrued but unused vacation days ($28,846).
Mr. Hagerty—52 weeks’ base salary ($500,000) plus the value of his accrued but unused vacation days ($28,846).
Ms. O’Connell—52 weeks’ base salary ($425,000) plus the value of her accrued but unused vacation days ($24,519).
The amount of cash severance does not include amounts payable under the AIP because these amounts are accrued and payable as of the last day of the fiscal year regardless of whether an employee is employed on the applicable payment date.
(2) With respect to Mr. Holm, reflects the cost of providing the executive officer with continued group health coverage as enrolled at the time of his termination through the expiration of his employment agreement. With respect to Messrs. Hope, Hoskins and Hagerty and Ms. O’Connell, reflects amounts to be paid equivalent to the cost of providing continued group health coverage (on the same basis such coverage was received at the time of the executive’s termination) under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for a period of 52 weeks.
(3) Upon a change in control assuming no replacement by the successor entity, our NEOs’ unvested options subject solely to time-based vesting would become immediately vested. Other than with respect to Mr. Hope, all options held by our NEOs subject solely to time-based vesting under the 2007 Management Option Plan were fully vested as of June 29, 2019. Amounts reported assume that the time and performance-vesting options and restricted stock granted pursuant to the 2007 Management Option Plan do not vest upon a change in control.

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(4) Amounts reported under “Death or Disability” reflect the value of the acceleration of the grants under the 2015 Omnibus Incentive Plan upon a termination due to death or disability. See “Treatment of Equity Awards in Connection with a Change in Control or Qualifying Termination.” Amounts reported under “Change in Control” reflect the value of the acceleration of grants under the 2015 Omnibus Incentive Plan upon a qualifying termination following a “change in control”. The performance shares granted on August 9, 2016 reflect accelerated vesting for the ROIC awards at 115% of target performance and for the Relative TSR awards at 109% of target performance. The performance shares granted on September 21, 2017 reflect accelerated vesting for the ROIC awards at target performance and the Relative TSR awards at maximum performance. The performance shares granted on September 10, 2018 reflect accelerated vesting for the ROIC awards and the Relative TSR awards at target performance.
(5) The Letter Agreement with Ms. O’Connell provides for severance benefits equal to 52 weeks of Ms. O’Connell’s current base salary of $425,000 plus the value of her accrued but unused vacation days (up to a maximum of $24,519). The Letter Agreement also provides for continued health care coverage under the Company’s health plan for a period of 12 months from the Termination Date. The value of equity acceleration under the 2015 Omnibus Incentive Plan in the event of a “Change in Control” or “Death or Disability” is based on the number of shares that will continue to vest in accordance with Ms. O’Connell’s Letter Agreement.

Severance Arrangements and Restrictive Covenants

We have adopted the Severance Plan for the benefit of certain key employees. Each of the NEOs other than Mr. Holm, whose severance terms are contained in his employment agreement, is eligible for severance pay and benefits under the Severance Plan.

Mr. Holm

Under the terms of his employment agreement, if, prior to the expiration of the term of his employment agreement, (1) the Company terminates Mr. Holm’s employment other than for “cause” or other than by reason of his “disability” or (2) Mr. Holm terminates his employment for “good reason,” then, subject to his execution of a valid release and waiver of claims and his continued compliance with the restrictive and future cooperation covenants in his employment agreement, Mr. Holm will be entitled to receive:

continued payment of his base salary for the remainder of the then-existing term of his employment agreement;
a lump sum payment equal to his annual bonus for the fiscal year in which the termination occurs, based on Company performance during such year through the date of his termination, prorated for the portion of the year actually worked; and
continued group health coverage (on the same basis such coverage was received at the time of his termination) for the remainder of the then-existing term of his employment agreement.

For purposes of the severance provisions of Mr. Holm’s employment agreement:

“cause” means a finding by the Company that Mr. Holm has (1) committed a felony or a crime involving moral turpitude, (2) committed any act of gross negligence or fraud, (3) failed, refused, or neglected to substantially perform his duties (other than by reason of a physical or mental impairment) or to implement the directives of the Company, or materially breached any provision of his employment agreement, where such failure, refusal, neglect, or breach continued for 30 days after he had received written notice thereof, or (4) engaged in conduct that is materially injurious to the Company, monetarily or otherwise.
“disability” means a finding by the Company that Mr. Holm has been unable to perform his job functions by reason of a physical or mental impairment for a period of 180 days within a period of 360 consecutive days.
“good reason” means (1) a material breach by the Company of any provision of Mr. Holm’s employment agreement that continues for 30 days after Mr. Holm has provided the Company with written notice thereof, or (2) the principal place of Mr. Holm’s employment is relocated more than 100 miles from his principal place of employment on the effective date of his employment agreement.

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Tabular Executive Compensation Disclosure

Messrs. Hope, Hagerty and Hoskins and Ms. O’Connell

Under the terms of the Severance Plan, as modified by their Severance Letter Agreements, if either of Messrs. Hope’s, Hagerty’s or Hoskins’ or Ms. O’Connell’s employment terminates other than (1) for “cause”; (2) because of a layoff relating to which he or she has recall or rehire rights; (3) due to his or her voluntary retirement, voluntary resignation (other than for “good reason”), “disability,” or death; or (4) because of any cause beyond the reasonable control of the Company, including, but not limited to, inclement weather, war, riot, malicious or terrorist acts of damage, civil commotion, power failure, fire, or unforeseeable acts of third parties, upon proper execution and filing of a valid release agreement, the NEO will be entitled to receive:

continued payment of base salary at the level of the executive’s base salary immediately before his or her termination for 52 weeks; 
the annual bonus, if any, that he or she would have been entitled to receive, if such termination of employment had not occurred, based on the Company’s achievement of the applicable performance targets, in respect of the year of such termination, prorated for the portion of the year actually worked and payable at such time as annual bonuses are paid to other executives of the Company, but no later than two and one half months after the last day of the performance year to which such bonus relates; and
a payment equivalent to the cost of continued group health coverage (on the same basis such coverage was received at the time of the executive’s termination) under COBRA for a period of 52 weeks.

Under the terms of the Severance Plan, if an executive is re-employed by the Company within six months of his or her termination, he or she must return any severance payments in excess of the base pay he or she would have been paid during the time of unemployment if he or she had not experienced a termination of employment.

For purposes of the Severance Plan:

“cause” means termination for any of the following reasons: (1) failure to perform the executive’s assigned duties, including failure to comply with Company policies; (2) conviction (including any plea of nolo contendere) of any felony or crime involving dishonesty or moral turpitude; (3) act of personal dishonesty knowingly taken in connection with the executive’s responsibilities as an associate of the Company and which is intended to result in the executive’s personal enrichment or that of any other person; (4) bad faith conduct that is materially detrimental to the Company; (5) inability of the executive to perform his or her duties because of his or her alcohol or drug use; (6) failure to comply with any legal written directive of the Board of Directors of the Company; (7) any act or omission of substantial detriment to the Company because of the executive’s intentional failure to comply with any statute, rule, or regulation, except any act or omission the executive believes in good faith to have been in or not opposed to the best interest of the Company (without the executive’s intent to gain, directly or indirectly, a profit to which the executive is not legally entitled) or any act or omission resulting from the executive’s bad judgment or negligence other than habitual neglect of duty; or (8) insubordination or any other act, or failure to act, or other conduct which is determined by the Company, in its sole discretion, to be demonstrably and materially injurious to the Company monetarily or otherwise.
“disability” means a physical or mental condition which qualifies the executive for benefits under the Company’s long-term disability plan or, in the absence of such a plan, a physical or mental condition pursuant to which the executive has become entitled to a disability award under the U.S. Social Security Act. 

For purposes of the Severance Plan, as modified by Messrs. Hope’s, Hagerty’s and Hoskins’ and Ms. O’Connell’s Severance Letter Agreements:

“good reason” means, provided that the Company has failed to cure such event within 30 days of receipt of written notice from the executive of such event and that such event occurred within fewer than 90 days of the executive’s resignation, (1) a diminution in the executive’s base salary or annual bonus opportunity; (2) any material diminution in the executive’s authority, duties, or responsibilities; (3) failure of the Company or its subsidiaries to pay or cause to be paid the executive’s base salary or annual bonus, when due; or (4) relocation of the executive’s principal place of employment more than 50 miles from the Richmond, Virginia, metropolitan area; provided that none of these events will constitute “good reason” until the Company fails to cure the event within 30 days after receipt of written notice of the event which constitutes “good reason.” In addition, “good reason” will cease to exist for an event on the 90th day following its occurrence.

In addition to the foregoing, we provide each of our NEOs with basic life and accident insurance coverage valued at one times annual salary up to a maximum of $1 million combined benefit. Therefore, if the benefits were triggered on

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Tabular Executive Compensation Disclosure

June 29, 2019, under our life insurance plans, the designated beneficiaries of our NEOs would have received the following amounts: Mr. Holm ($1,000,000), Mr. Hope ($600,000), Mr. Hagerty ($500,000), Mr. Hoskins ($500,000) and Ms. O’Connell ($425,000).

The O’Connell Letter Agreement, among other things, also provides for the following: (a) a severance benefit equal to 52 weeks of Ms. O’Connell’s current base salary of $425,000 payable over time bi-weekly in accordance with the Company’s payroll practices (commencing as soon as the release discussed below is signed); (b) continued health care coverage under the Company’s health plan for a period of 12 months from the Termination Date; and (c) Ms. O’Connell’s long-term equity incentive awards granted under the Company’s 2015 Omnibus Incentive Plan will continue to vest (subject to the terms and conditions thereof) after the Termination Date as if she continued her employment through August 2, 2020, and all other unvested equity will be forfeited.

Treatment of Equity Awards in Connection with a Change in Control or Qualifying Termination

Immediately prior to a “change in control,” any outstanding and unvested stock options and time-based restricted stock will become fully vested to the extent the acquiring or successor entity does not assume, continue, or substitute for the stock options and time-based restricted stock. If the recipient’s employment is terminated by us without cause or the recipient resigns with good reason within 18 months following a “change in control,” any outstanding and unvested stock options and time-based restricted stock will become fully vested (to the extent the acquiring or successor entity assumes, continues, or substitutes for the stock options and time-based restricted stock). On a “change in control,” any outstanding and unvested performance shares will be converted to time-based restricted stock that will vest on the third anniversary of the date of grant (“Converted Awards”). Such conversion will be based on the target award opportunity if the “change in control” occurs prior to the 18-month anniversary of the start of the performance period or after the 18-month anniversary of the start of the performance period if the actual performance is not measurable on the date of the “change in control”; otherwise, the conversion will be based on the actual performance at the time of the “change in control.”

Vesting of the Converted Awards will be accelerated if the acquiring or successor entity does not assume, continue or substitute for the Converted Awards or if the recipient’s employment is terminated by us without cause or the recipient resigns with good reason within 18 months following a “change in control” (to the extent the acquiring or successor entity assumes, continues or substitutes for the stock options and restricted stock).

Any outstanding and unvested stock options and time-based restricted stock will become fully vested in the event of the recipient’s termination of employment by the recipient due to death or disability. Any outstanding and unvested performance shares will pay out pro-rata based on actual performance at the end of the performance period in the event of the recipient’s termination of employment by the recipient due to death or disability. Upon any other termination of employment, all unvested stock options, time-based restricted stock and performance shares will be forfeited.

CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our CEO and the median of the annual total compensation of our employees. For fiscal year 2019, the annual total compensation of our CEO was $6,079,432 and the median of the annual total compensation of our employees, other than our CEO, was $69,614. As a result, we estimate the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our employees for fiscal year 2019 was 87 to 1.

To identify the median employee, we used the following methodology:

We determined that as of June 18, 2019, our employee population (including employees of our consolidated subsidiaries) totaled approximately 15,746 full-time, part-time and temporary employees in the U.S. As permitted under SEC rules, we excluded from our employee population 2,457 associates who became employees of the Company during fiscal year 2019 due to our asset transactions with Master Wholesale & Vending Supply, Inc., and Maxima Supply, Inc., and a stock transaction with Eby-Brown Company, LLC.

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Tabular Executive Compensation Disclosure

To identify the median employee from our employee population, we first determined the amount of each employee’s “annual total compensation” for calendar year 2019. For this purpose, “annual total compensation” refers to the sum of an employee’s annual salary and wages, fiscal year 2019 bonus paid under the AIP, the value of Company-provided health and welfare benefits, and employer matching contributions to our 401(k) plan made on behalf of the employee. In making this determination, we annualized the compensation of any full-time employees who were hired in fiscal year 2019 but did not work for us for the entire fiscal year.
We then identified our median employee from our employee population by arraying and sorting our employee population from highest to lowest annual total compensation and then choosing the employee whose annual total compensation ranked in middle of the population.
After identifying our median employee, we calculated the annual total compensation for the median employee and for the CEO in the following manner:

The median employee’s annual total compensation was calculated based on same methodology used to determine our NEOs’ annual total compensation as reported in the Summary Compensation Table included on page 48 of this Proxy Statement plus the value of the median employee’s fiscal 2019 health and welfare benefits (i.e., $8,090).

The annual total compensation of the CEO was based on the amount reported for the CEO in the “Total” column of our Summary Compensation Table included on page 48 of this Proxy Statement plus the value of the CEO’s fiscal 2019 health and welfare benefits (i.e., $17,742).

In calculating pay ratios, the SEC allows companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in industries and geographical dispersion, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their pay ratios.

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The following table sets forth information as of June 29, 2019, regarding the Company’s equity compensation plans.

   Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights(1)
Weighted-average
exercise price of
outstanding options,
warrants and rights(2)
Number of securities
remaining available for
future issuance under equity
compensation plans(3)
Equity compensation plan approved
by stockholders
2007 Management Option Plan 1,200,434 $17.39
2015 Omnibus Incentive Plan 988,337 $27.33 1,692,268

(1) Relates to options outstanding under our 2007 Management Option Plan, and 958,393 options and 29,944 restricted stock units outstanding under our 2015 Omnibus Incentive Plan.
(2) The weighted-average exercise price for the 2015 Omnibus Incentive Plan excludes the impact of outstanding restricted stock units as they have no exercise price.
(3) Relates to additional shares reserved for future awards under our 2015 Omnibus Incentive Plan. No further awards will be granted under the 2007 Management Option Plan.

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Each of our non-employee directors is entitled to annual compensation as follows:

Cash retainer of $100,000, payable in quarterly installments in arrears;
Additional cash retainer of $50,000 payable in quarterly installments in arrears for serving as the lead independent director of the Board of Directors;
Additional cash retainer payable in quarterly installments in arrears for serving as the chair of a committee as follows:
$20,000 annual fee for the Audit Committee chair;
$15,000 annual fee for the Compensation Committee chair;
$15,000 annual fee for the Nominating and Corporate Governance Committee chair; and
$15,000 annual fee for the Technology Committee chair; and
$120,000 in the form of (i) restricted stock units vesting in full on the earlier of: (a) the first anniversary of the date of grant and (b) the next regularly scheduled annual meeting of stockholders of the Company following the date of grant and subject to accelerated vesting in the event of a “change of control”, or (ii) deferred stock units that are settled on the earlier of (a) the date of a “separation from service” from the Company (within the meaning of Treasury Regulation § 1.409A-1(h) or successor guidance thereto) or (b) in the event of a “change in control”.

Director Compensation for Fiscal 2019

The table below sets forth information regarding non-employee director compensation for the fiscal year ended June 29, 2019.

Name       Fees Earned or
Paid in Cash
($)(1)
Stock
Awards
($)(2)
Total
($)
Meredith Adler 100,000 120,001 220,001
William F. Dawson, Jr. 100,000 120,001 220,001
Manuel A. Fernandez 130,552 120,001 250,553
Kimberly S. Grant 100,000 120,001 220,001
Jeffrey M. Overly 100,000 120,001 220,001
Randall N. Spratt 106,250 120,001 226,251
Douglas M. Steenland(3) 126,014 195,021 321,035
Arthur B. Winkleblack 120,000 120,001 240,001
John J. Zillmer 115,667 120,001 235,668

(1) Amounts reported reflect fees earned by our directors during fiscal 2019.
(2) Represents the grant date fair value of restricted stock units, calculated in accordance with FASB ASC Topic 718, issued to our directors on November 13, 2018. The aggregate number of restricted stock units outstanding as of June 29, 2019, for our non-employee directors was as follows: 3,743 restricted stock units for Ms. Adler, 3,743 restricted stock units for Mr. Dawson, 3,743 restricted stock units for Mr. Fernandez, 3,743 restricted stock units for Ms. Grant, 3,743 restricted stock units for Mr. Overly, 3,743 restricted stock units for Mr. Spratt, 6,083 restricted stock units for Mr. Steenland, 3,743 restricted stock units for Mr. Winkleblack, and 3,743 restricted stock units for Mr. Zillmer.
(3) Mr. Steenland resigned from his position on the Board of Directors effective January 30, 2019. The 6,083 restricted stock units granted to Mr. Steenland were forfeited upon his resignation.

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Compensation of Directors

Stock Ownership Guidelines

DIRECTORS

To align the interests of our Board of Directors with those of our stockholders, the Board of Directors concluded that the members of our Board of Directors (the “Covered Directors”) should have a significant financial stake in the Company’s stock. To further that goal, we implemented director stock ownership guidelines on September 21, 2017 (the “Director Guidelines”). The Covered Directors are required to hold a specific level of equity ownership as outlined below:

Covered Directors’ Stock Ownership Multiples

The stock ownership level under the Director Guidelines, expressed as a multiple of the Covered Director’s annual cash retainer, is five times each Covered Director’s annual cash retainer.

Retention Requirement

There is no required time period within which a Covered Director must attain the applicable stock ownership level under the Director Guidelines. However, until the applicable ownership level is achieved, a stock retention requirement of 100% of shares will apply.

The shares counted toward these ownership requirements include shares of common stock owned directly by the Covered Director and outstanding restricted stock and restricted stock units.

These ownership requirements are set at levels that the Company believes are reasonable given the Covered Director’s respective annual cash retainers. In addition, FW Cook (our Compensation Committee's former consultant) reviewed our Director Guidelines and confirmed that they are consistent with the corresponding practices of our peer group.

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Proposal  
       
04 Approve the Share Increase Amendment Under Our 2015 Omnibus Incentive Plan
 
Your Board of Directors recommends that you vote “FOR” the approval of the share increase amendment under our 2015 Omnibus Incentive Plan.

On September 16, 2019, our Board of Directors approved and recommended for approval by the Company’s stockholders Amendment No. 1 (the “Amendment”) to the Performance Food Group Company 2015 Omnibus Incentive Plan (the “2015 Omnibus Incentive Plan”). We refer to the 2015 Omnibus Incentive Plan, as amended by the Amendment, as the “Amended 2015 Omnibus Incentive Plan” throughout this Proxy Statement. References in this proposal to our Board of Directors include the Compensation and Human Resources Committee of the Board of Directors, where applicable.

The Amendment makes the following key changes to the 2015 Omnibus Incentive Plan (along with certain other clarifying changes):

Increases the maximum number of shares that may be issued pursuant to the 2015 Omnibus Incentive Plan by 4,000,000 shares to 14,000,000 shares;
Lowers the annual non-employee director compensation limit to $1,000,000 per fiscal year, which applies to both cash and equity compensation;
Lowers the maximum number of shares of common stock for which stock options or stock appreciation rights may be granted to any individual participant during any single fiscal year to 1,000,000;
Lowers the maximum number of shares of common stock for which performance compensation awards denominated in shares may be granted to any individual participant in respect of a single fiscal year to 1,000,000;
Provides that shares withheld, repurchased or delivered to satisfy the exercise price or tax withholding requirements relating to stock options or stock appreciation rights granted on or after November 13, 2019 will not be made available again for issuance under the Amended 2015 Omnibus Incentive Plan;
Implements a requirement (subject to certain exceptions described in “Minimum Vesting Requirements” below) that no stock award granted may vest until at least the first anniversary of the date of grant of such award, except that up to 5% of the share reserve of the Amended 2015 Omnibus Incentive Plan may be subject to awards that do not meet such vesting requirements; and
Requires dividends and dividend equivalents to be subject to the same restrictions and risks of forfeiture (including any service-based or performance-based vesting conditions) as the awards to which they relate.

If stockholders do not approve this Proposal 4, the Amendment will not become effective, the proposed additional shares will not become available for issuance under the 2015 Omnibus Incentive Plan, and the 2015 Omnibus Incentive Plan will continue as in effect prior to the Amendment, subject to previously authorized share limits.

Background and Purposes of the Amendment

The Board of Directors is asking our stockholders to approve the Amendment because the Board of Directors believes that it is in the best interests of the Company and our stockholders to provide, through the Amended 2015 Omnibus Incentive Plan, a comprehensive equity and long-term compensation program designed to enable us to attract, retain, and reward employees, officers, and directors to the Company. The Board of Directors also believes that long-term equity compensation is essential to link executive compensation with long-term stockholder value creation. Equity compensation represents a significant portion of the compensation package of our executive officers. Our equity awards generally vest over several years, therefore, the value ultimately realized from these awards depends on the long-term value of our common stock. The Board of Directors believes that the Amended 2015 Omnibus Incentive Plan is an integral part of our long-term compensation philosophy and the Amended 2015 Omnibus Incentive Plan is necessary to continue providing the appropriate levels and types of equity compensation for employees and non-employee directors of the Company.

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The Amended 2015 Omnibus Incentive Plan also incorporates several provisions that we believe are key compensation and governance best practices, including the following:

No annual evergreen. The Amended 2015 Omnibus Incentive Plan does not contain an annual “evergreen” provision that automatically increases the number of shares available for issuance each year.

Minimum vesting requirement. No awards granted under the Amended 2015 Omnibus Incentive Plan may vest until the first anniversary of the applicable grant date (subject to limited exceptions).

Aggregate non-employee director compensation limits. Under the Amended 2015 Omnibus Incentive Plan, the sum of the aggregate grant date fair value of all equity-based grants and any cash fees paid to a single non-employee director, for services as a non-employee director, in a fiscal year may not exceed $1,000,000.
Aggregate individual participant compensation limits. Under the Amended 2015 Omnibus Incentive Plan, (i) grants of options or stock appreciation rights in respect of no more than 1,000,000 shares of common stock and (ii) no more than 1,000,000 shares of common stock may be issued in respect of performance compensation awards denominated in shares of common stock granted pursuant to the Plan may be made to any individual Participant during any single fiscal year of the Company.
Payment of dividends and dividend equivalents only if underlying awards vest. Under the Amended 2015 Omnibus Incentive Plan, neither dividends nor dividend equivalents may be paid with respect to unvested awards unless and until the underlying award subsequently vests. No dividends or dividend equivalents will be payable in respect of outstanding stock options or stock appreciation rights.
Limitation on terms of stock options and stock appreciation rights. The maximum term of each stock option and stock appreciation right is ten years.
Limitation on share recycling. Shares withheld or delivered to satisfy the exercise price or tax withholding requirements relating to a stock option or stock appreciation right or shares repurchased with stock option proceeds, in each case, with respect to awards granted on or after November 13, 2019 will not be made available again for issuance under the Amended 2015 Omnibus Incentive Plan.
No replacement, cash buyouts or repricing of awards without stockholder approval. Under the Amended 2015 Omnibus Incentive Plan, without stockholder approval, (i) awards may not be repriced and (ii) outstanding stock options and stock appreciation rights may not be replaced with new stock options or stock appreciation rights (with a lower exercise price or strike price, as the case may be) or other awards or cash payments with a greater intrinsic value than the canceled stock option or stock appreciation right.

Current Overview of Outstanding Equity Information

As of June 29, 2019, the Company had 1,692,268 shares available for grant under the 2015 Omnibus Incentive Plan, a number that the Board of Directors believes to be insufficient to meet our anticipated needs. The Board of Directors believes that it is desirable to increase the share reserve so that the Company can continue to meet the goals of our equity incentive program of attracting, retaining and motivating Company executives, employees and directors and linking their interests with those of our stockholders. If the Amendment to increase the share reserve is not approved by our stockholders, the Company will be unable to maintain its current new hire and Company annual equity grant practices, and therefore the Company will be at a significant competitive disadvantage in attracting and retaining talent. If the Amendment is approved by our stockholders, the Company will have an additional 4,000,000 shares available for grant after the Annual Meeting. The Company anticipates this to be a pool of shares necessary to provide a predictable amount of equity for attracting, retaining, and motivating executives, employees and directors of the Company.

Burn Rate

The 2015 Omnibus Incentive Plan is the only active equity plan under which we may grant equity. The Amended 2015 Omnibus Incentive Plan authorizes an additional 4,000,000 shares for issuance of equity awards under the Amended 2015 Omnibus Incentive Plan. In setting and recommending to stockholders the number of additional shares to authorize

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under the Amended 2015 Omnibus Incentive Plan, the Board of Directors considered the historical number of equity awards granted under the 2015 Omnibus Incentive Plan, as well as the Company’s burn rate for the preceding three fiscal years as follows and the three-year average burn rate for such period:

Fiscal Year Stock
Options
Granted
(a)
Restricted
Stock/
RSUs
Awards
Granted
(b)
Incremental
Performance
Shares
Earned
(c)
Total
(a)+(b)+(c)
Weighted
Average
Common
Shares
Outstanding
Burn
Rate
2019 210,456 497,328 49,515 757,299 105,115,700 0.72%
2018 323,430 578,726 902,156 104,307,016 0.86%
2017 448,719 593,032 1,041,751 103,546,973 1.01%
Three-Year Average 0.86%

The Company’s average burn rate for the preceding three fiscal years as set forth in the table above was 0.86%. The burn rate is the ratio of the number of shares underlying awards granted under the 2015 Omnibus Incentive Plan during a fiscal year (or, with respect to incremental performance shares, earned under the 2015 Omnibus Incentive Plan during a fiscal year) to the number of weighted average common shares outstanding at the corresponding fiscal year end.

Overhang

Set forth below is the number of shares available for issuance pursuant to outstanding and future equity awards under the 2015 Omnibus Incentive Plan and the Performance Food Group Company Amended and Restated 2007 Management Option Plan, as of June 29, 2019:

Total number of shares of common stock subject to outstanding stock options         2,158,827
Weighted-average exercise price of outstanding stock options $ 21.80
Weighted-average remaining term of outstanding stock options 6.51
Total number of shares of common stock subject to outstanding restricted stock awards, performance shares (at target level of achievement) and RSUs 1,234,119
Total number of shares of common stock available for grant under the 2015 Equity Incentive Plan 1,692,268
Total number of shares of common stock outstanding 105,193,173

The aggregate shares shown in the table above represent a fully diluted overhang of approximately 4.66% based on the Company’s number of shares of common stock outstanding as of June 29, 2019. If the Amendment is approved, the additional 4,000,000 shares available for issuance would increase the overhang to approximately 8.03%. The Company calculates the fully diluted “overhang” as the total of (a) shares underlying outstanding equity awards plus shares available for issuance under future equity awards, divided by (b) the total number of shares outstanding, shares underlying outstanding equity awards and shares available for issuance under future equity awards.

When considering the number of additional shares to add to the 2015 Omnibus Incentive Plan, the Board of Directors reviewed, among other things, the potential dilution to current stockholders as measured by burn rate and overhang, projected future share usage and projected future forfeitures. Based on our historical grant rate, the 4,000,000 shares to be added to the 2015 Omnibus Incentive Plan pursuant to the Amendment, in combination with the remaining authorized shares, are projected to satisfy the Company’s equity compensation needs through the 2024 Annual Meeting of Stockholders. In light of the factors considered, the Board of Directors believes that this number of shares represents reasonable potential equity dilution and provides a significant incentive for officers, employees, and directors to increase the value of the Company for all stockholders.

In light of the factors described above, and the fact that the Company’s ability to continue to grant equity and equity-based compensation is vital to its ability to continue to attract and retain key personnel, the Board of Directors has determined that the size of the share reserve under the Amended 2015 Omnibus Incentive Plan is reasonable and appropriate at this time.

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Summary of the Material Features of the Amended 2015 Omnibus Incentive Plan

A description of the material provisions of the Amended 2015 Omnibus Incentive Plan is set forth below. The statements made in this Proposal 4 concerning the terms and provisions of the Amended 2015 Omnibus Incentive Plan are summaries and do not purport to be a complete recitation of the Amended 2015 Omnibus Incentive Plan provisions. These statements are qualified in their entirety by express reference to the full text of the 2015 Omnibus Incentive Plan (incorporated by reference as Exhibit 10.8 to Amendment No. 4 to the Company’s Registration Statement on Form S-1, filed on August 5, 2015), as amended by the Amendment, which is attached to this Proxy Statement as Appendix A and incorporated by reference herein.

Purpose. The purpose of the Amended 2015 Omnibus Incentive Plan is to provide a means through which to attract and retain key personnel and to provide a means whereby employees, officers, directors, consultants, and advisors can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to the Company’s welfare and aligning their interests with those of our stockholders.

Administration. The Amended 2015 Omnibus Incentive Plan will be administered by the Compensation and Human Resources Committee or such other committee of our Board of Directors to which it has properly delegated power, or if no such committee or subcommittee exists, our Board of Directors (the “Plan Committee”). The Plan Committee is currently the Compensation and Human Resources Committee. The Plan Committee is authorized to (1) designate participants; (2) determine the type or types of awards to be granted to a participant; (3) determine the number of shares of common stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, awards; (4) determine the terms and conditions of any award; (5) determine whether, to what extent, and under what circumstances awards may be settled in, or exercised for, cash, shares of common stock, other securities, other awards or other property, or canceled, forfeited or suspended and the method or methods by which awards may be settled, exercised, canceled, forfeited or suspended; (6) determine whether, to what extent, and under what circumstances the delivery of cash, shares of common stock, other securities, other awards, or other property and other amounts payable with respect to an award shall be deferred either automatically or at the election of the participant or of the Plan Committee; (7) interpret, administer, reconcile any inconsistency in, correct any defect in, and/or supply any omission in the Amended 2015 Omnibus Incentive Plan and any instrument or agreement relating to, or award granted under, the Amended 2015 Omnibus Incentive Plan; (8) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Plan Committee deems appropriate for the proper administration of the Amended 2015 Omnibus Incentive Plan; (9) accelerate the vesting of awards and waive any conditions or restrictions imposed with respect to awards or the shares of common stock issued pursuant to awards; (10) adopt sub-plans; and (11) make any other determination and take any other action that the Plan Committee deems necessary or desirable for the administration of the Amended 2015 Omnibus Incentive Plan. Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which our securities are listed or traded, the Plan Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it in accordance with the terms of the Amended 2015 Omnibus Incentive Plan. Any such allocation or delegation may be revoked by the Plan Committee at any time. Unless otherwise expressly provided in the Amended 2015 Omnibus Incentive Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Amended 2015 Omnibus Incentive Plan or any award or any documents evidencing awards granted pursuant to the Amended 2015 Omnibus Incentive Plan are within the sole discretion of the Plan Committee, may be made at any time and are final, conclusive, and binding upon all persons or entities, including, without limitation, the Company, any participant, any holder or beneficiary of any award, and any of our stockholders.

Persons Eligible for Grants. The Amended 2015 Omnibus Incentive Plan permits the Plan Committee to make grants to our employees, officers, directors, consultants and advisors. As of September 13, 2019, we had approximately 148 employees and officers eligible to participate in the 2015 Omnibus Incentive Plan, as well as 8 non-employee directors.

Awards Subject to the Amended 2015 Omnibus Incentive Plan. The Amended 2015 Omnibus Incentive Plan provides that the total number of shares of common stock that may be issued under the Amended 2015 Omnibus Incentive Plan is 14,000,000 (the “Absolute Share Limit”). Of this amount, the maximum number of shares of common stock for which incentive stock options may be granted is 14,000,000;

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the maximum number of shares of common stock for which stock options or stock appreciation rights may be granted to any individual participant during any single fiscal year is 1,000,000; the maximum number of shares of common stock for which performance compensation awards denominated in shares may be granted to any individual participant in respect of a single fiscal year is 1,000,000 (or if any such awards are settled in cash, the maximum amount may not exceed the fair market value of such shares on the last day of the performance period to which such award relates); the maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1,000,000 in total value; and the maximum amount that may be paid to any individual participant for a single fiscal year under a performance compensation award denominated in cash is $10,000,000. Except for Substitute Awards (as described below), in the event any award expires or is canceled, forfeited, terminated, settled in cash, or otherwise settled without delivery to the participant of the full number of shares to which the award related, the undelivered shares of common stock may be granted again under the Amended 2015 Omnibus Incentive Plan. Shares of common stock withheld in payment of the exercise price or taxes relating to an award, and shares equal to the number of shares surrendered in payment of any exercise price or taxes relating to an award, are deemed to constitute shares not issued to the participant and are deemed to again be available for awards under the Amended 2015 Omnibus Incentive Plan, unless the shares are withheld or surrendered after the termination of the Amended 2015 Omnibus Incentive Plan, or at the time the shares are withheld or surrendered, it would constitute a material revision of the Amended 2015 Omnibus Incentive Plan subject to stockholder approval under any then-applicable rules of the exchange on which the shares of common stock are listed, provided that shares of common stock subject to an award of stock options or stock appreciation rights granted on or after November 13, 2019 may not again be made available for issuance if such shares of common stock are withheld in payment of the exercise price or taxes relating to such award or repurchased on the open market with the proceeds of a stock option exercise. Awards may, in the sole discretion of the Plan Committee, be granted in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by the Company or with which we combine (“Substitute Awards”), and such Substitute Awards will not be counted against the Absolute Share Limit, except that Substitute Awards intended to qualify as “incentive stock options” will count against the limit on incentive stock options described above. No award may be granted under the Amended 2015 Omnibus Incentive Plan after the tenth anniversary of the Effective Date (as defined therein), but awards granted before then may extend beyond that date.

Minimum Vesting Requirements. The Amended 2015 Omnibus Incentive Plan provides that other than (i) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders that is at least 50 weeks after the immediately preceding year’s annual meeting and (ii) any additional awards that the Plan Committee may grant up to 5% of the share reserve of the Amended 2015 Omnibus Incentive Plan, no stock award (or any installment or portion thereof) may vest until at least the first anniversary following the date of grant of such award.

Options. The Plan Committee may grant non-qualified stock options and incentive stock options, under the Amended 2015 Omnibus Incentive Plan, with terms and conditions determined by the Plan Committee that are not inconsistent with the Amended 2015 Omnibus Incentive Plan; provided, that all stock options granted under the Amended 2015 Omnibus Incentive Plan are required to have a per share exercise price that is not less than 100% of the fair market value of our common stock underlying such stock options on the date such stock options are granted (other than in the case of stock options that are Substitute Awards), and all stock options that are intended to qualify as incentive stock options must be granted pursuant to an award agreement expressly stating that the stock options are intended to qualify as incentive stock options, and will be subject to the terms and conditions that comply with the rules as may be prescribed by Section 422 of the Code. The maximum term for stock options granted under the Amended 2015 Omnibus Incentive Plan will be ten years from the initial date of grant, or with respect to any stock options intended to qualify as incentive stock options, such shorter period as prescribed by Section 422 of the Code. However, if a non-qualified stock option would expire at a time when trading of shares of our common stock is prohibited by our insider trading policy (or “blackout period” imposed by the Company), the term will automatically be extended to the 30th day following the end of such period. The purchase price for the common stock shares as to which a stock option is exercised may be paid to the Company, to the extent permitted by law, (1) in cash or its equivalent at the time the stock option is exercised; (2) in common stock shares having a fair market value equal to the aggregate exercise price of the stock option being exercised and satisfying any requirements that may be imposed by the Plan Committee (provided that such shares are not subject to any pledge or other security interest and have been held by the participant for at least six months or

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such other period established by the Plan Committee to avoid adverse accounting treatment); or (3) by such other method as the Plan Committee may permit in its sole discretion, including, without limitation, (a) in other property having a fair market value on the date of exercise equal to the exercise price, (b) if there is a public market for the common stock shares at such time, through the delivery of irrevocable instructions to a broker to sell the common stock shares being acquired upon the exercise of the stock option and to deliver to us the amount of the proceeds of such sale equal to the aggregate exercise price of the stock option being exercised, or (c) through a “net exercise” procedure effected by withholding the minimum number of common stock shares needed to pay the exercise price and any applicable required withholding taxes. Any fractional shares of common stock will be settled in cash.

Stock Appreciation Rights. The Plan Committee may grant stock appreciation rights under the Amended 2015 Omnibus Incentive Plan with terms and conditions determined by the Plan Committee that are not inconsistent with the Amended 2015 Omnibus Incentive Plan. The Plan Committee also may award stock appreciation rights independent of any stock option. Generally, each stock appreciation right will entitle the participant upon exercise to an amount (in cash, shares, or a combination of cash and shares, as determined by the Plan Committee) equal to the product of (1) the excess of (a) the fair market value on the exercise date of one share of common stock, over (b) the strike price per share of common stock covered by the stock appreciation right, times (2) the number of shares of common stock covered by the stock appreciation right, less any taxes required to be withheld. The strike price per share of common stock covered by a stock appreciation right will be determined by the Plan Committee at the time of grant but in no event may such amount be less than 100% of the fair market value of a share of common stock on the date the stock appreciation right is granted (other than in the case of stock appreciation rights granted in substitution of previously granted awards). The maximum term of a stock appreciation right will be ten years from the date of grant, except that if the term would expire during a blackout period, the term of the stock appreciation right will be extended to the 30th day after the end of the blackout period.

Restricted Shares and Restricted Stock Units. The Plan Committee may grant restricted shares of our common stock or restricted stock units, representing the right to receive, upon vesting and the expiration of any applicable restricted period, one share of common stock for each restricted stock unit, or, in the sole discretion of the Plan Committee, the cash value thereof (or any combination thereof). As to restricted shares of our common stock, subject to the other provisions of the Amended 2015 Omnibus Incentive Plan, the holder will generally have the rights and privileges of a stockholder as to such restricted shares of common stock, including, without limitation, the right to vote such restricted shares of common stock, provided that any dividends payable on such restricted shares of common stock will be retained, and delivered without interest to the holder of such shares when the restrictions on such shares lapse. To the extent provided in the applicable award agreement, the holder of outstanding restricted stock units will be entitled to be credited with dividend equivalent payments (upon the payment by the Company of dividends on shares of common stock) either in cash or, at the sole discretion of the Plan Committee, in shares of common stock having a value equal to the amount of such dividends (and interest may, at the sole discretion of the Plan Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Plan Committee), which will be payable at the same time as the underlying restricted stock units are settled following the release of the restrictions on such restricted stock units. A participant will have no rights or privileges as a stockholder as to restricted stock units.

Other Equity-Based Awards and Other Cash-Based Awards. The Plan Committee may grant other equity-based or cash-based awards under the Amended 2015 Omnibus Incentive Plan, with terms and conditions determined by the Plan Committee that are not inconsistent with the Amended 2015 Omnibus Incentive Plan.

Performance Compensation Awards. The Plan Committee has the authority, at or before the time of grant of any award, to designate such award as a performance compensation award. The Plan Committee has the sole discretion to select the length of any applicable performance periods, the types of performance compensation awards to be issued, the applicable performance criteria and performance goals, and the kinds and/or levels of performance goals that are to apply. The performance criteria that will be used to establish the performance goals may be based on the attainment of specific levels of our performance (and/or our subsidiaries, divisions or operational and/or business units, product lines, brands, business segments, administrative departments, or any combination of the foregoing) and are limited to the following, which may be determined in accordance with GAAP or on a non-GAAP basis: (1) net earnings, net income (before or after taxes) or consolidated net income; (2) basic or diluted earnings per share (before or after taxes); (3) net revenue or net revenue growth; (4) gross revenue or gross revenue growth, gross profit or gross profit growth; (5) net operating profit (before or after taxes); (6) return measures (including, but not limited to, return on investment, assets, capital, employed capital, invested capital, equity, or sales); (7) cash flow measures (including, but not limited to, operating cash flow,

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free cash flow, or cash flow return on capital), which may be, but are not required to be, measured on a per share basis; (8) actual or adjusted earnings before or after interest, taxes, depreciation and/or amortization (including EBIT and EBITDA); (9) gross or net operating margins; (10) productivity ratios; (11) share price (including, but not limited to, growth measures and total stockholder return); (12) expense targets or cost reduction goals, general and administrative expense savings; (13) operating efficiency; (14) objective measures of customer/ client satisfaction; (15) working capital targets; (16) measures of economic value added or other ‘value creation’ metrics; (17) enterprise value; (18) sales; (19) stockholder return; (20) customer/client retention; (21) competitive market metrics; (22) employee retention; (23) objective measures of personal targets, goals or completion of projects (including but not limited to succession and hiring projects, completion of specific acquisitions, dispositions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets); (24) comparisons of continuing operations to other operations; (25) market share; (26) cost of capital, debt leverage, year-end cash position or book value; (27) strategic objectives; or (28) any combination of the foregoing.

Following the completion of a performance period, the Plan Committee will review and certify in writing whether, and to what extent, the performance goals for the performance period have been achieved and, if so, calculate and certify in writing that amount of the performance compensation awards earned for the period based upon the performance formula. In determining the actual amount of an individual participant’s performance compensation award for a performance period, the Plan Committee has the discretion to reduce or eliminate the amount of the performance compensation award. Unless otherwise provided in the applicable award agreement, the Plan Committee does not have the discretion to (1) grant or provide payment in respect of performance compensation awards for a performance period if the performance goals for such performance period have not been attained; or (2) increase a performance compensation award above the applicable limitations set forth in the Amended 2015 Omnibus Incentive Plan.

Effect of Certain Events on the Amended 2015 Omnibus Incentive Plan and Awards. In the event of (1) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of common stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of shares of common stock or other securities, issuance of warrants or other rights to acquire shares of common stock or other securities, or other similar corporate transaction or event that affects the shares of common stock (including a Change in Control, as defined in the Amended 2015 Omnibus Incentive Plan); or (2) unusual or nonrecurring events affecting the Company, including changes in applicable rules, rulings, regulations or other requirements, that the Plan Committee determines, in its sole discretion, could result in substantial dilution or enlargement of the rights intended to be granted to, or available for, participants (any event in (1) or (2), an “Adjustment Event”), the Plan Committee will, in respect of any such Adjustment Event, make such proportionate substitution or adjustment, if any, as it deems equitable, to any or all of (a) the Absolute Share Limit, or any other limit applicable under the Amended 2015 Omnibus Incentive Plan with respect to the number of awards which may be granted thereunder; (b) the number of shares of common stock or other securities of the Company (or number and kind of other securities or other property) which may be issued in respect of awards or with respect to which awards may be granted under the Amended 2015 Omnibus Incentive Plan or any sub-plan; and (c) the terms of any outstanding award, including, without limitation, (i) the number of shares of common stock or other securities of the Company (or number and kind of other securities or other property) subject to outstanding awards or to which outstanding awards relate; (ii) the exercise price or strike price with respect to any award; or (iii) any applicable performance measures (including, without limitation, performance criteria and performance goals); provided, that in the case of any “equity restructuring,” the Plan Committee will make an equitable or proportionate adjustment to outstanding awards to reflect such equity restructuring. In connection with any Adjustment Event, the Plan Committee may, in its sole discretion, provide for any one or more of the following: (1) substitution or assumption of awards, acceleration of the exercisability of, lapse of restrictions on, or termination of, awards or a period of time for participants to exercise outstanding awards prior to the occurrence of such event; and (2) subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code, cancellation of any one or more outstanding awards and payment to the holders of such awards that are vested as of such cancellation (including, without limitation, any awards that would vest as a result of the occurrence of such event but for such cancellation or for which vesting is accelerated by the Plan Committee in connection with such event) the value of such awards, if any, as determined by the Plan Committee (which value, if applicable, may be based upon the price per share of common stock received or to be received by other holders of our common stock in such event), including, without limitation, in the case of stock options and stock appreciation rights, a cash payment equal to the excess, if any, of the fair market value of the shares of common stock subject to the stock option or stock appreciation right over the aggregate exercise price or strike price thereof, or, in the case of restricted stock, restricted stock units, or other equity-based awards

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that are not vested as of such cancellation, a cash payment or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such award prior to cancellation of the underlying shares in respect thereof.

Nontransferability of Awards. No award will be permitted to be assigned, alienated, pledged, attached, sold, or otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against us or any of our subsidiaries. However, the Plan Committee may, in its sole discretion, permit awards (other than incentive stock options) to be transferred without consideration, including transfers to a participant’s family members, any trust established solely for the benefit of a participant or such participant’s family members, any partnership or limited liability company of which a participant or such participant and such participant’s family members, are the sole member(s), and a beneficiary to whom donations are eligible to be treated as “charitable contributions” for tax purposes.

Amendment and Termination. Our Board of Directors may amend, alter, suspend, discontinue, or terminate the Amended 2015 Omnibus Incentive Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuance, or termination may be made without stockholder approval if (1) such approval is necessary to comply with any regulatory requirement applicable to the Amended 2015 Omnibus Incentive Plan or for changes in GAAP to new accounting standards; (2) it would materially increase the number of securities which may be issued under the Amended 2015 Omnibus Incentive Plan (except for adjustments in connection with certain corporate events); or (3) it would materially modify the requirements for participation in the Amended 2015 Omnibus Incentive Plan; provided, further, that any such amendment, alteration, suspension, discontinuance, or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any award will not to that extent be effective without such individual’s consent.

The Plan Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award granted or the associated award agreement, prospectively or retroactively (including after a termination of a participant’s employment or service); provided, that, except as otherwise permitted in the Amended 2015 Omnibus Incentive Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation, or termination that would materially and adversely affect the rights of any participant with respect to such award will not to that extent be effective without such individual’s consent; provided, further, that without stockholder approval, except as otherwise permitted in the Amended 2015 Omnibus Incentive Plan, (1) no amendment or modification may reduce the exercise price of any stock option or the strike price of any stock appreciation right; (2) the Plan Committee may not cancel any outstanding stock option or stock appreciation right and replace it with a new stock option or stock appreciation right (with a lower exercise price or strike price, as the case may be) or other award or cash payment that is greater than the value of the canceled stock option or stock appreciation right; and (3) the Plan Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which our securities are listed or quoted.

Dividends and Dividend Equivalents. The Plan Committee in its sole discretion may provide as part of an award dividends or dividend equivalents, on such terms and conditions as may be determined by the Plan Committee in its sole discretion; provided, that (1) no dividends or dividend equivalents will be payable in respect of outstanding stock options or stock appreciation rights and (2) dividends and dividend equivalents shall be subject to the same restrictions and risks of forfeiture (including any service-based or performance-based vesting conditions) as the awards to which they relate and paid within 15 days after such awards are earned and become payable or distributable.

Clawback/Repayment. All awards are subject to reduction, cancellation, forfeiture, or recoupment to the extent necessary to comply with (1) any clawback, forfeiture, or other similar policy adopted by our Board of Directors or the Plan Committee and as in effect from time to time and (2) applicable law. To the extent that a participant receives any amount in excess of the amount that the participant should otherwise have received under the terms of the award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations, or other administrative error), the participant will be required to repay any such excess amount to the Company.

Detrimental Activity. If a participant has engaged in any detrimental activity, as defined in the Amended 2015 Omnibus Incentive Plan, as determined by the Plan Committee, the Plan Committee may, in its sole discretion, provide for one or more of the following: (1) cancellation of any or all of such participant’s outstanding awards; or (2) forfeiture by the participant of any gain realized on the vesting or exercise of awards, and repayment of any such gain promptly to the Company.

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Share Increase Amendment

Certain Material U.S. Federal Income Tax Consequences

The information set forth below is a summary only and does not purport to be complete. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may depend on his or her particular situation, each participant should consult the participant’s tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of an award or the disposition of stock acquired as a result of an award. The Amended 2015 Omnibus Incentive Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligations.

Non-Qualified Stock Options. A participant will not be subject to tax at the time a non-qualified stock option is granted, and no tax deduction will then be available to us. Upon the exercise of a non-qualified stock option, an amount equal to the difference between the exercise price and the fair market value of the shares acquired on the date of exercise will be included in the participant’s ordinary income and we will generally be entitled to deduct the same amount. Upon disposition of shares acquired upon exercise, appreciation or depreciation after the date of exercise will generally be treated by the participant or transferee of the non-qualified stock option as either capital gain or capital loss.

Incentive Stock Options. A participant will not be subject to regular income tax at the time an incentive stock option is granted or exercised, and no tax deduction will then be available to us; however, the participant may be subject to the alternative minimum tax on the excess of the fair market value of the shares received upon exercise of the incentive stock option over the exercise price. Upon disposition of the shares acquired upon exercise of an incentive stock option, capital gain or capital loss will generally be recognized in an amount equal to the difference between the sale price and the exercise price, as long as the participant has not disposed of the shares within two years after the date of grant or within one year after the date of exercise and has been employed by us at all times from the grant date until the date three months before the date of exercise (one year in the case of permanent disability). If the participant disposes of the shares without satisfying both the holding period and employment requirements, the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price but, in the case of a failure to satisfy the holding period requirement, not more than the excess of the fair market value of the shares on the date the incentive stock option is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss.

We are not entitled to a tax deduction upon either the exercise of an incentive stock option or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares.

Stock Appreciation Rights. A participant granted a stock appreciation right will generally recognize ordinary income on the date the stock appreciation right is exercised in an amount equal to the difference between the stock appreciation right’s exercise price and the fair market value of the shares underlying the stock appreciation right on the date of exercise.

Restricted Stock. Following a grant of restricted stock, unless the participant makes a timely election under Section 83(b) of the Code, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the restricted stock on the date of vesting of the shares over the purchase price, if any, paid for the shares. Any further gain or loss from the subsequent sale of such restricted stock constitutes capital gain or loss. If the participant makes a timely election under Section 83(b), the individual is taxed, at ordinary income rates, on the excess of the fair market value of the restricted stock on the date of grant over the purchase price, if any, paid for the shares, and any further gain or loss on the subsequent sale of the stock constitutes a capital gain or loss.

Restricted Stock Units. A participant generally will recognize no income upon the receipt of an award of RSUs. Upon the settlement of RSUs, the participant generally will recognize ordinary income in the year of settlement in an amount equal to the cash received and/or the fair market value of any substantially vested shares received in respect of vested RSUs.

Section 162(m) of the Internal Revenue Code. Section 162(m) of the Code generally prohibits public companies from taking a tax deduction for compensation paid in excess of $1,000,000 to certain executive officers. Prior to its amendment, as implemented by the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), Section 162(m) of the Code provided an exception from the compensation deduction limitations for compensation that was considered “qualified performance-

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based compensation” under the applicable regulations. The Tax Act’s amendment of Section 162(m) of the Code, among other things, eliminated the exception to the compensation deduction limitations for “qualified performance-based compensation,” other than in limited circumstances. The regulations under Section 162(m) of the Code provide that a company that becomes public in connection with an initial public offering is exempt from applying the compensation deduction limitations for a specified period of time following its initial public offering (the “IPO Transition Period”). Our IPO Transition Period is expected to end at the Annual Meeting, unless terminated earlier.

While the 2015 Omnibus Incentive Plan currently includes certain provisions that had been intended to allow the Plan Committee, following the expiration of the IPO Transition Period, to grant awards that could be considered “qualified performance-based compensation” for purposes of Section 162(m) of the Code, the Tax Act’s amendments to Section 162(m) of the Code have made these provisions inapplicable for such purposes. Accordingly, following the expiration of the IPO Transition Period, any performance equity awards granted to employees covered by Section 162(m) of the Code, as amended, will be subject to the compensation deduction limitations set forth in Section 162(m) of the Code.

Although the Plan Committee considers tax deductibility in making compensation program decisions, the Plan Committee’s primary consideration is whether the compensation program aligns the interests of our executives with those of the Company and our stockholders.

Section 280G of the Internal Revenue Code. If awards under the Amended 2015 Omnibus Incentive Plan are granted, vest or are paid contingent on a change in control or a subsequent termination of employment, some or all of the value of the award may be considered an “excess parachute payment” under Section 280G of the Code, which would result in the imposition of a 20 percent federal excise tax on the recipients of the excess parachute payments and a loss of our deduction for the excess parachute payments.

Section 409A of the Internal Revenue Code. Section 409A of the Code contains certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards granted under the Amended 2015 Omnibus Incentive Plan with a deferral feature will be subject to the requirements of Section 409A of the Code. If an award is subject to and fails to satisfy the requirements of Section 409A of the Code, the participant may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A of the Code fails to comply with provisions of Section 409A of the Code, Section 409A of the Code imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. In addition, certain states have laws similar to Section 409A of the Code and, as a result, failure to comply with such similar laws may result in additional state income, penalty and interest charges.

New Plan Benefits

Because grants under the Amended 2015 Omnibus Incentive Plan to participants are generally within the discretion of the Plan Committee, it is not possible to determine the future grants that will be made to participants, other than non-employee directors, under the Amended 2015 Omnibus Incentive Plan.

The Amended 2015 Omnibus Incentive Plan authorizes the grant of equity-based awards to non-employee directors pursuant to our director compensation program as in effect from time to time, as described under the heading “Compensation of Directors.” Historically, our non-employee directors have received annual equity grants under the 2015 Omnibus Incentive Plan in accordance with our director compensation program. The table below sets forth the aggregate grant date fair value of annual equity-based awards that all non-employee directors as a group are expected to receive in fiscal 2020 pursuant to our director compensation program as currently in effect. If our stockholders do not approve this Proposal 4, we expect that sufficient shares will remain available for grant under the 2015 Omnibus Incentive Plan to issue an annual equity grant in respect of fiscal 2020 to our non-employee directors under the 2015 Omnibus Incentive Plan, as in effect prior to the Amendment.

Name and Position       Dollar Value Number of
Units
All current non-executive officer directors as a group(1) $960,000

(1) The number of RSUs granted to non-executive director nominees on the 2019 Annual Meeting date cannot be determined at this time since the grant value will be converted to a number of RSUs using our closing stock price on the 2019 Annual Meeting date.

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Share Increase Amendment

Awards Granted Under the 2015 Omnibus Incentive Plan

The following table sets forth, for each of the individuals and various groups indicated, the total number of shares of our common stock that have been granted subject to stock option awards and restricted stock units under the 2015 Omnibus Incentive Plan since its inception through June 29, 2019.

Name and Position Number
of Stock
Options
Granted(1)(2)
Number
of RSUs
Granted(1)(2)
George L. Holm – President and Chief Executive Officer 481,283
James D. Hope – Executive Vice President and Chief Financial Officer 106,067
Patrick T. Hagerty – Executive Vice President of the Company and President and
Chief Executive Officer of Vistar
74,061
Craig H. Hoskins – Executive Vice President of the Company and President and
Chief Executive Officer of the Company’s Foodservice segment
66,901
Carol O’Connell – Senior Vice President and Chief Human Resources Officer 69,078
All current executive officers as a group 896,259
All current non-executive officer directors as a group 17,742
Each nominee for election as a director 481,283 35,484
Each associate of any executive officers, current directors or director nominees
Each other person who received or is to receive 5% of the options or restricted stock units under the 2015 Omnibus Incentive Plan 121,175
All non-executive officer employees as a group 234,817 268,450

(1) The table above includes only stock options and restricted stock units granted and does not includes restricted stock or performance share awards granted.
(2) Amount represents the number of all stock option and restricted stock unit awards ever granted under the 2015 Omnibus Incentive Plan, including to previous employees, executives and directors and includes awards that may have been forfeited in whole or part.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE 2015 OMNIBUS INCENTIVE PLAN.

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Proposal  
       
05 Approve Company’s Employee Stock Purchase Plan
 
Your Board of Directors recommends that you vote “FOR” the approval of the Company’s Employee Stock Purchase Plan.

On May 15, 2019, our Board of Directors approved and recommended for approval by the Company’s stockholders the Performance Food Group Company Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). The Employee Stock Purchase Plan is intended to qualify for favorable tax treatment under Section 423 of the Code. Under the Employee Stock Purchase Plan, eligible employees of the Company and its subsidiaries may purchase common stock, subject to IRS and other limits set forth in the Employee Stock Purchase Plan, during pre-specified offering periods at a discount established by the Company not to exceed 15% of the then-current fair market value. If the Employee Stock Purchase Plan is approved by the Company’s stockholders, our executive officers will be eligible to participate in the plan on the same terms and conditions as all other participating employees.

A description of the material provisions of the Employee Stock Purchase Plan is set forth below. The statements made in this Proposal 5 concerning terms and provisions of the Employee Stock Purchase Plan are summaries and do not purport to be a complete recitation of the Employee Stock Purchase Plan provisions. These statements are qualified in their entirety by express reference to the full text of Employee Stock Purchase Plan, a copy of which is attached to this proxy statement as Appendix B and is incorporated by reference herein.

Summary of the Material Features of the Employee Stock Purchase Plan

Purpose. The Employee Stock Purchase Plan is designed to provide associates of the Company and its subsidiaries with an opportunity to purchase common stock of the Company through payroll deductions. The Employee Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Accordingly, the provisions of the plan shall be construed in a manner consistent with the requirements of Section 423 of the Code and the regulations promulgated thereunder.

Administration. The Employee Stock Purchase Plan is administered by the Compensation and Human Resources Committee of the Board of Directors, which may delegate authority under the Employee Stock Purchase Plan to one or more persons designated by the Compensation and Human Resources Committee, including members of management of the Company and/or members of the human resources function of the Company.

Shares Available Under the Employee Stock Purchase Plan. The maximum number of shares of our common stock available for purchase under the Employee Stock Purchase Plan is 5,000,000. The Company has not yet issued any shares under the plan. As of September 18, 2019, the closing price of a share of our common stock was $46.20.

Eligible Employees. Any person who is employed by, and who is classified as an employee on the payroll records, of the Company or any of its subsidiaries is eligible to participate in the Employee Stock Purchase Plan, except that any employees who own 5% or more of the combined voting power or value of all of our issued and outstanding stock will not be eligible to participate. As of September 13, 2019, the number of employees eligible to participate in the Employee Stock Purchase Plan was approximately 15,803, which number represents all of our officers and employees.

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Employee Stock Purchase Plan

Offering. Under the Employee Stock Purchase Plan, participants are offered the option to purchase shares of our common stock at a discount on the acquisition date for each offering period. Unless a participant previously canceled his or her participation in the Employee Stock Purchase Plan, the participant shall automatically purchase and acquire the number of shares of our common stock that his or her accumulated payroll deductions will buy at the purchase price. No fractional shares will be purchased. Accordingly, the balance of a participant’s contributions will be carried forward to the next offering period unless the participant elects to withdraw from the Employee Stock Purchase Plan or the administrator determines that surplus shall not be carried forward. A participant may cancel his or her payroll deduction authorization at any time prior to the end of the offering period.

Offering Period. A decision on when to commence offering periods under the plan will be made if the Employee Stock Purchase Plan is approved by the stockholders. Unless otherwise determined by the administrator, each offering period shall be for a period of six months and it is expected that the initial offering period will begin on January 1, 2020.

Compensation Limitations. The Employee Stock Purchase Plan limits the number of shares that a participant may purchase in a calendar year to the number of shares of our common stock that has a fair market value (as of the date of grant for the applicable offering period) equal to $25,000. Subject to the calendar year limits of $25,000, the maximum value of shares that a participant shall have the right to purchase in any offering period shall be equal to 15% of the participant’s compensation earned during such offering period or such lesser percentage or other fixed dollar amount as the administrator shall determine. The administrator may also set a maximum aggregate number of shares or maximum aggregate fair market value of shares that may be purchased with respect to any offering period.

Discount. The purchase price per share with respect to an offering period shall be 85% of the fair market value of a share on the acquisition date. For so long as our common stock is listed on the NYSE or other established stock exchange, the fair market value of the common stock on any given date will be equal to the closing sale price of our common stock on the exchange on which it is listed on the immediately preceding trading date.

Acquisition of Shares. Any purchase of shares for a participant shall be effected at the end of each offering period.

Change in Capitalization or Other Corporate Event. The number or kind of shares of our common stock available for purchase under the Employee Stock Purchase Plan, as well as the number or kind of shares covered by a purchase right under the Employee Stock Purchase Plan that has not yet been exercised shall be equitably adjusted as necessary or appropriate to reflect any stock dividend, extraordinary dividend, stock split or share recombination or any recapitalization, merger, consolidation, exchange of shares, spin-off, liquidation or dissolution of the Company or other similar transaction affecting our common stock.

Effect of a Change in Control. Upon a future change in control of us, the administrator, in its sole discretion, may take whatever action it deems necessary or appropriate in connection therewith, including, but not limited to (i) shortening any offering period then in progress such that the acquisition date is on or prior to the change in control, (ii) shortening an offering period then in progress and refunding each participant’s contributions, (iii) cancelling all outstanding share purchase rights and paying each holder thereof an amount equal to the difference between the per share fair market value on the change in control date and the purchase price as determined in accordance with the plan or (iv) granting a substitute right to purchase shares in accordance with Section 424 of the Code.

Term of Plan. The Employee Stock Purchase Plan shall terminate on the earlier of (i) November 13, 2029, (ii) the termination of the plan by the administrator as discussed below or (iii) the date on which no more shares of our common stock are available for issuance under the plan.

Amendment or Alteration. The administrator may at any time amend, suspend, discontinue or terminate the Employee Stock Purchase Plan; provided that if the plan is amended in a manner that is considered the adoption of a new plan pursuant to Section 423 of the Code, such amendment shall not be effective until approved by our stockholders.

New Plan Benefits. No purchases have been made under the Employee Stock Purchase Plan. Participation in the Employee Stock Purchase Plan is voluntary and depends on each employee’s election to participate and his or her determination as to the level of contributions to the Employee Stock Purchase Plan. Accordingly, it is not possible to determine the future benefits that will be received under the plan. Nor is it possible to determine the benefits that would have been received if the Employee Stock Purchase Plan had been in effect in fiscal 2019.

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Employee Stock Purchase Plan

Federal Income Tax Consequences

Generally, no income will be taxable to a participant at the time shares of common stock are purchased under the Employee Stock Purchase Plan. Upon the sale or disposition of shares of common stock purchased under the Employee Stock Purchase Plan, the participant will generally be liable for tax, and the amount of the tax will depend on the holding period of the shares. If the shares are sold or otherwise disposed of more than one year after the purchase date and more than two years after the commencement date of the applicable offering period, or if the participant dies prior to such sale or other disposition, then the participant generally will recognize ordinary income measured as the lesser of: (i) the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price paid by the participant, or (ii) the excess of the fair market value of the shares on the commencement date of the applicable offering period over the purchase price paid by the participant. Any gain in excess of the amount of ordinary income recognized by the participant will generally be treated as long-term capital gain. If the sale price is less than the purchase price, then the participant will not recognize any ordinary income and such deficit will be treated as a long-term capital loss.

If the shares are sold or otherwise disposed of before the expiration of the one-year or two-year holding periods described above, the participant will generally recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the date the shares are purchased over the purchase price. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on the holding period.

We generally will not be entitled to a deduction with respect to shares of common stock purchased under the Employee Stock Purchase Plan, unless the employee disposes of such shares prior to the expiration of the one-year or two-year holding periods described above. We generally will be entitled to a deduction only to the extent ordinary income is recognized by participants upon a sale or disposition prior to the expiration of the holding periods described above. In all other cases, no deduction is allowed by the Company.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL
OF THE EMPLOYEE STOCK PURCHASE PLAN.

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Proposal  
       
06 Approve Second Amended and Restated Certificate of Incorporation to Remove the Supermajority Voting Requirement for Amending the Governing Documents and Removing Directors
 
Your Board of Directors recommends that you vote “FOR” the approval of the Second Amended and Restated Certificate of Incorporation to remove the supermajority voting requirement for amending the governing documents and removing directors. 

Our Amended and Restated Certificate of Incorporation (the “Charter”) currently provides that certain provisions of the Charter, including those related to the amendment of the Charter and the Amended and Restated Bylaws of the Company (the “Bylaws”), may be amended, altered, repealed or rescinded, in whole or in part, only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class. Additionally, the Charter currently provides that, until the completion of the Company’s 2021 annual meeting of stockholders (the “2021 Annual Meeting”), directors can be removed only for cause and only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class, and after the 2021 Annual Meeting, directors may be removed with or without cause by the affirmative vote of a majority in voting power of all outstanding shares of stock of the Company entitled to vote thereon, voting as a single class. On the recommendation of the Nominating and Corporate Governance Committee of the Board (the “Nominating and Corporate Governance Committee”), the Board has approved, and recommends to the stockholders for approval, certain amendments to the Charter to eliminate these supermajority voting provisions.

Background of the Proposal

As part of the Board’s review of our corporate governance practices, the Nominating and Corporate Governance Committee and the Board as a whole considered the advantages and disadvantages of the various supermajority voting provisions contained in the Charter. Supermajority voting provisions are intended to facilitate corporate governance stability by requiring broad stockholder consensus to effect changes. In addition, supermajority voting provisions are intended to provide protection against self-interested action by large stockholders and to encourage a person seeking control of a company to negotiate with its board of directors to reach terms that are fair and provide the best results for all stockholders. However, many investors and others view supermajority voting provisions as conflicting with principles of good corporate governance because the provisions may impede accountability to stockholders and contribute to board and management entrenchment. These investors assert that supermajority voting provisions cause boards and management to be less responsive to stockholders. Since certificates of incorporation often set forth rights and privileges of stockholders, some view supermajority voting restrictions on the ability to amend a certificate of incorporation as a limitation on stockholder rights. After considering the advantages and disadvantages of supermajority voting provisions, the Board has determined that it is in the best interests of the Company and its stockholders that the supermajority voting provisions in Article V of the Charter be eliminated.

Description of the Charter Amendment

Section 216 of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), provides that, subject to a Delaware corporation’s certificate of incorporation and bylaws, in all matters other than the election of directors, the affirmative vote of holders of the majority of shares present in person or represented by proxy at a stockholder meeting and

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Charter Amendment Proposal 06

entitled to vote shall be the act of stockholders. Article V of the Charter sets forth the supermajority voting requirement with respect to any proposed amendment, alteration, repeal or rescission of Article V (amendment of the Charter and Bylaws), Article VI (requirements with respect to director appointments, nominations and removal), Article VII (limitation of liability of directors), Article VIII (written consent of stockholders in lieu of a meeting and annual and special meetings of stockholders), Article IX (competition and corporate opportunities) and Article X (DGCL Section 203 and certain business combinations). If this Proposal No. 6 is approved by stockholders, the vote required for any amendment, alteration or repeal of any such Article of the Charter will be, and in the case of the above-described sections will be reduced from 66 2/3% in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class, to, a simple majority in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class. In addition, Article VI of the Charter provides that, until the completion of the 2021 Annual Meeting, directors may be removed only for cause and only with a supermajority vote, and after the 2021 Annual Meeting, directors may be removed with or without cause and with a simple majority vote. If this Proposal No. 6 is approved by stockholders, until the completion of the 2021 Annual Meeting, directors may be removed only for cause with the affirmative vote of a majority in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class. This discussion is qualified in its entirety by reference to the complete text of the proposed amendment to the Charter, which is attached to this Proxy Statement as Appendix C. Furthermore, any necessary conforming changes to the Bylaws to comport with the Charter amendment, should it be approved by stockholders, shall be made and become effective at that time.

Text of the Charter Amendment

The proposed amendments to the Charter described above are reflected in Appendix C to this Proxy Statement, which shows our Second Amended and Restated Certificate of Incorporation and reflects changes that will be made to the Charter, assuming Proposal No. 6 of this Proxy Statement is approved by our stockholders at the Annual Meeting, with deletions indicated by strike-outs and additions indicated by underlining. If this proposal is approved by our stockholders, we will amend and restate the Charter to reflect the revisions contemplated by this proposal as set forth in Appendix C and the resulting Second Amended and Restated Certificate of Incorporation will become effective upon its filing with the Secretary of State of the State of Delaware, which is anticipated to occur promptly after the Annual Meeting.

Bylaws

Article IX of the Bylaws also requires a supermajority vote to amend certain provisions of the Bylaws consistent with the provisions in Article V of the Charter discussed above. If the proposal to amend the Charter to remove certain supermajority voting provisions is approved, the Board intends to amend the Bylaws to remove the supermajority voting requirements contained in Article IX thereof and to make the Bylaws consistent with the amended Charter.

Vote Required

The affirmative vote of holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class, is needed to approve this proposal. Therefore, the failure to vote, either by proxy or in person, will have the same effect as a vote against the approval of the proposal. Abstentions also will have the same effect as a vote against the approval of the proposal. This proposal to amend the Charter is considered a “non-routine” item upon which brokerage firms may not vote in their discretion on behalf of their clients if such clients have not furnished voting instructions. Therefore, broker “non-votes” will have the same effect as a vote against this proposal. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, the proxies will be voted FOR this proposal.

Not Conditioned on Other Proposals

This Proposal No. 6 is separate from, and is not conditioned on, the approval of Proposal No. 7 (Approve Amended and Restated Certificate of Incorporation to Eliminate the Prohibition Against Stockholders Calling Special Meetings of Stockholders as Permitted by the Bylaws). Your vote on Proposal No. 7 will not affect your vote on this Proposal No. 6.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE CHARTER AMENDMENTS TO REMOVE THE SUPERMAJORITY VOTING REQUIREMENT FOR AMENDING THE GOVERNING DOCUMENTS AND REMOVING DIRECTORS.

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Proposal  
       
07 Approve Second Amended and Restated Certificate of Incorporation to Eliminate the Prohibition Against Stockholders Calling Special Meetings of Stockholders
 
Your Board of Directors recommends that you vote “FOR” the approval of the Second Amended and Restated Certificate of Incorporation to eliminate the prohibition against stockholders calling special meetings of stockholders. 

After careful consideration, the Board recommends that stockholders vote “FOR” the proposal to amend certain provisions of the Charter to permit stockholders to call special meetings of stockholders from time to time as may be permitted by the Bylaws.

Background of the Proposal

As part of the Board’s review of our corporate governance practices, the Nominating and Corporate Governance Committee and the Board as a whole considered the advantages and disadvantages of permitting stockholders to call special meetings. The ability of stockholders to call special meetings is increasingly considered an important aspect of good corporate governance. While the Board recognizes that providing stockholders the right to call special meetings is consistent with corporate governance best practices, the Board also believes that special meetings of stockholders should be extraordinary events that are held only when strategic concerns or other similar considerations require that the matters to be addressed not be delayed until the next annual meeting. Moreover, because special meetings are expensive and time-consuming for the Company and potentially disruptive to its normal business operations, the Board believes that a small percentage of stockholders should not be entitled to utilize the right to call a special meeting for their own interests, which may not be shared by the majority of the Company’s stockholders. The Board has determined that implementing an ownership threshold of at least 20% to call special meetings in the Bylaws is appropriate based on the Company’s current size and stockholder composition, as it would provide the Company’s stockholders with a meaningful right to request a special meeting, while mitigating the risk that corporate resources are wasted to serve the narrow self-interests of a few minority stockholders. If this proposal is approved, special meetings of stockholders may be called from time to time as may be permitted by the Bylaws; however, the Board will continue to have the ability to call special meetings of stockholders in other instances when it determines is appropriate. In light of these considerations, the Board has determined that it is in the best interests of the Company and its stockholders to amend the Charter to permit special meetings of stockholders to be called from time to time as may be permitted by the Bylaws.

Description of the Charter Amendment

The DGCL does not grant stockholders of a corporation the absolute right to call a special meeting. Rather, it provides that special meetings of stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws. The Charter currently allows special meetings of stockholders to be called only by or at the direction of the Board or the Chairman of the Board. If this Proposal No. 7 is approved by stockholders, special meetings of stockholders may be called from time to time as may be permitted by the Bylaws. This discussion is qualified in its entirety by reference to the complete text of the proposed amendment to the Charter, which is attached to this Proxy Statement as Appendix C. Furthermore, any necessary conforming changes to the Bylaws to comport with the Charter amendment, should it pass, shall be made and become effective at that time.

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Charter Amendment Proposal 07

Text of the Charter Amendment

The proposed amendments to the Charter described above are reflected in Appendix C to this Proxy Statement, which shows our Second Amended and Restated Certificate of Incorporation and reflects changes that will be made to the Charter, assuming Proposal No. 7 of this Proxy Statement is approved by our stockholders at the Annual Meeting, with deletions indicated by strike-outs and additions indicated by underlining. If this proposal is approved by our stockholders, we will amend and restate the Charter to reflect the revisions contemplated by this proposal as set forth in Appendix C and the resulting Second Amended and Restated Certificate of Incorporation will become effective upon its filing with the Secretary of State of the State of Delaware, which is anticipated to occur promptly after the Annual Meeting.

Bylaws

If the proposal to amend the Charter to permit stockholders to call special meetings of stockholders as permitted by the Bylaws is approved, the Board intends to adopt, promptly following the Annual Meeting, a Bylaw permitting certain stockholders to call special meetings. The Bylaw intended to be adopted by the Board would permit stockholders owning 20% of outstanding shares of common stock of the Company, which shares are determined to be Net Long Shares as set forth in the Bylaws, to request that a special meeting of stockholders be called; provide that special meetings requests for substantially the same purpose or purposes and substantially the same matters proposed to be acted on at the meeting will be considered together if they have been dated and delivered to the Secretary of the Company within 60 days of the earliest dated request; provide that any reduction in Net Long Shares acts as a revocation of the meeting request to the extent of the reduction; provide for the circumstances under which it would not be appropriate to call a special meeting because the same or similar business was recently addressed or soon will be addressed at another stockholder meeting or the special meeting is requested too close in time to the calling of the Company’s annual meeting of stockholders; and set forth the information required to be provided by the stockholders making the meeting request. The Board will have the power to amend, modify or change, from time to time, such Bylaw relating to the calling of special meetings by stockholders.

Vote Required

The affirmative vote of holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company, voting together as a single class, is needed to approve this proposal. Therefore, the failure to vote, either by proxy or in person, will have the same effect as a vote against the approval of the proposal. Abstentions also will have the same effect as a vote against the approval of the proposal. This proposal to amend the Charter is considered a “non-routine” item upon which brokerage firms may not vote in their discretion on behalf of their clients if such clients have not furnished voting instructions. Therefore, broker “non-votes” will have the same effect as a vote against this proposal. Unless instructions to the contrary are specified in a proxy properly voted and returned through available channels, the proxies will be voted FOR this proposal.

Not Conditioned on Other Proposals

This Proposal No. 7 is separate from, and is not conditioned on, the approval of Proposal No. 6 (Approve Amended and Restated Certificate of Incorporation to Remove the Supermajority Voting Requirement for Amending the Governing Documents and Removing Directors). Your vote on Proposal No. 6 will not affect your vote on this Proposal No. 7.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE CHARTER AMENDMENTS TO PERMIT SPECIAL MEETINGS OF STOCKHOLDERS TO BE CALLED FROM TIME TO TIME BY STOCKHOLDERS AS MAY BE PERMITTED BY THE BYLAWS.

2019 Proxy Statement      79


Table of Contents

Beneficial Ownership

The following table sets forth information regarding the beneficial ownership of shares of our common stock as of September 13, 2019 by (1) each person known to us to beneficially own more than 5% of our outstanding common stock, (2) each of our directors and named executive officers and (3) all of our directors and executive officers as a group. The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

Unless otherwise noted, the address for each beneficial owner listed below is c/o Performance Food Group Company, 12500 West Creek Parkway, Richmond, VA 23238.

Name Amount and Nature of
Beneficial Ownership
Percent of Common
Stock Outstanding
Principal Stockholder:
FMR LLC(1) 10,673,958 10.2%
245 Summer Street
Boston, MA 02210
The Vanguard Group(2) 9,338,202 8.9%
100 Vanguard Blvd.
Malvern, PA 19355
Wellington Management Group LLP(3) 9,074,373 8.6%
280 Congress Street
Boston, MA 02210
JPMorgan Chase & CO(4) 8,146,775 7.7%
270 Park Avenue
New York, NY 10017
BlackRock Inc(5) 7,358,969 7.0%
55 East 52nd Street
New York, NY 10055
Directors and Named Executive Officers:
George L. Holm(6)(7) 2,757,367 2.6%
James D. Hope(7) 259,999 *
Patrick T. Hagerty(7) 231,742 *
Craig H. Hoskins(7) 185,662 *
Carol A. O’Connell(7) 30,327 *
Meredith Adler(7) 8,736 *
William F. Dawson, Jr.
Manuel A. Fernandez(7) 3,928 *
Kimberly S. Grant(7) 3,928 *

80      2019 Proxy Statement


Table of Contents

Ownership of Securities

Name Amount and Nature of
Beneficial Ownership
Percent of Common
Stock Outstanding
Jeffrey M. Overly
Randall N. Spratt
Arthur B. Winkleblack(7) 13,999 *
John J. Zillmer(7) 13,999 *
Directors and executive officers as a group (15 persons)(8) 3,552,209 3.4%

*

Less than 1%

(1)

Based on a Schedule 13G/A filed with the SEC on August 12, 2019, reflects 10,673,958 shares of our common stock held by FMR LLC.

(2)

Based on a Schedule 13G filed with the SEC on February 11, 2019, reflects 9,338,202 shares of our common stock held by Vanguard Group Inc.

(3)

Based on a Schedule 13G filed with the SEC on February 10, 2019, reflects 9,074,373 shares of our common stock held by Wellington Management Group LLP, as parent holding company of certain holding companies and the Wellington Investment Advisers. Wellington Investment Advisors Holding LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP.

(4)

Based on a Schedule 13G filed with the SEC on January 25, 2019, reflects 8,146,775 shares of our common stock held by JPMorgan Chase & CO.

(5)

Based on a Schedule 13G filed with the SEC on February 6, 2019, reflects 7,358,969 shares of our common stock held by Blackrock Inc.

(6)

Includes an aggregate of 291,000 shares held by trusts of which Mr. Holm’s children are the beneficiaries and for which Mr. Holm’s wife acts as trustee. Mr. Holm may be deemed to beneficially own such shares.

(7)