DEF 14A 1 lsysco2013_def14a.htm SYSCO CORPORATION - DEF 14A SYSCO CORPORATION - DEF 14A


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 Pursuant to §240.14a-12

SYSCO CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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Table of Contents

INVITATION FROM OUR LEADERSHIP

4

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

5

PROXY SUMMARY

6

PROXY STATEMENT

10

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

10

CORPORATE GOVERNANCE

15

Board Leadership Structure

15

Board Meetings and Committees

16

Director Independence

17

Certain Relationships and Related Person Transactions

18

Risk Oversight

19

Codes of Conduct

20

Compensation Consultants

20

BOARD OF DIRECTORS MATTERS

21

Election of Directors at 2013 Annual Meeting (Item 1)

22

Board Composition

25

DIRECTOR COMPENSATION

29

Overview of Non-Employee Director Compensation

29

Overview of Executive Chairman Compensation

29

Directors Deferred Compensation Plan

30

Directors Stock Plans

30

2009 Non-Employee Directors Stock Plan

30

Stock Ownership Guidelines

33

EXECUTIVE OFFICERS

33

Management Development and Succession Planning

34

STOCK OWNERSHIP

35

Security Ownership of Officers and Directors

35

Security Ownership of Certain Beneficial Owners

36

Stock Ownership Guidelines

36

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

37

EQUITY COMPENSATION PLAN INFORMATION

37




COMPENSATION DISCUSSION AND ANALYSIS

37

Executive Summary

38

Philosophy of Executive Compensation Program

41

How Executive Pay Is Established

44

What We Paid and Why

46

Executive Compensation Governance and Other Information

56

Forward-Looking Statements

58

REPORT OF THE COMPENSATION COMMITTEE

58

EXECUTIVE COMPENSATION

58

Summary Compensation Table

59

Grants of Plan-Based Awards

61

Cash Performance Unit Plan

62

Employment Arrangement with Mr. Shurts

63

Severance Arrangements with Mr. Hope

64

Management Incentive Plan

64

Outstanding Equity Awards at Fiscal Year-End

67

Option Exercises and Stock Vested

69

Pension Benefits

70

Fiscal 2013 Nonqualified Deferred Compensation

73

Quantification of Termination/Change in Control Payments

76

Compensation Risk Analysis

80

VOTE TO APPROVE THE ADOPTION OF THE SYSCO CORPORATION 2013 LONG-TERM INCENTIVE PLAN (ITEM 2)

81

Proposed Terms of the 2013 Long-Term Incentive Plan

81

The 2013 Long-Term Incentive Plan

82

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (ITEM 3)

88

REPORT OF THE AUDIT COMMITTEE

89

FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

89

RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS (ITEM 4)

90

STOCKHOLDER PROPOSALS

90

Presenting Business

90

Nominating Directors for Election

90

Meeting Date Changes

90

ANNEX I – NON-GAAP RECONCILIATIONS

91

ANNEX II – LONG TERM INCENTIVE PLAN

93




INVITATION FROM OUR LEADERSHIP

  

Dear Fellow Stockholder,

It is our pleasure to invite you to join us, our Board of Directors, senior leadership and other associates at Sysco Corporation’s 2013 Annual Meeting of Stockholders, to be held on Friday, November 15, 2013 at 10:00 a.m. at The Houstonian Hotel located at 111 North Post Oak Lane, Houston, Texas 77024.

Please vote right away

Our stockholder meeting is an opportunity for our senior management and Board of Directors to present Sysco’s performance and strategy, and to respond to your questions. By participating in our stockholder meeting, you play an active role in the future of your company. Please vote right away over the internet, by telephone or by signing and mailing the attached proxy card.

Enhanced stockholder communications

We are committed to ensuring that our proxy statement and associated materials are clear and easy to read. Our 2013 proxy statement displays our ongoing commitment to clearly explain the matters to be addressed at our Annual Meeting of Stockholders. We encourage you to begin your review of this year’s document with our proxy summary which provides highlights of the detailed information included elsewhere in the proxy statement.

If you wish to receive future E-Proxy Notices electronically which helps to reduce Sysco’s printing costs and aligns with our sustainability principles, please visit http://enroll.icsdelivery.com/syy for additional information.

Board and Leadership

We continuously strive for the most effective Board and Leadership Structure to promote Sysco’s vision to be our customer’s most valued and trusted business partner and to represent the long-term interests of Sysco’s stockholders. We have active participation by all Directors, including eight independent directors. We believe that the structure of our Board, relying on leadership from both independent and non-independent directors, positions Sysco to benefit from the respective strengths of our CEO, Executive Chairman and Lead Director. On September 25, 2013, Manny Fernandez notified the Board that he will not seek re-election as a board member at our 2013 Annual Meeting, and thus, will retire from the Board on that date. Mr. Fernandez has served on Sysco’s Board for seven years and was appointed Chairman of the Board in June 2009 and Executive Chairman in April 2012. Mr. Fernandez will continue to serve as Executive Chairman and as a Board member until the Annual Meeting. You will find detailed information about the qualifications of all of our Directors on page 23.

Thank you for your interest

We trust that enhanced communication about our annual stockholder meeting will reinforce our dialogue with stockholders, and encourage you to cast your vote right away. Thank you for your continued trust and confidence in Sysco.

Bill DeLaney, President and Chief Executive Officer

Manny Fernandez, Executive Chairman

SYSCO CORPORATION2013 Proxy Statement   4


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1390 Enclave Parkway

Houston, Texas 77077-2099

Notice of Annual Meeting Of Stockholders

November 15, 2013

10:00 a.m.

The Houstonian Hotel located at 111 North Post Oak Lane, Houston, Texas 77024

The Annual Meeting of Stockholders of Sysco Corporation, a Delaware corporation, will be held on Friday, November 15, 2013 at 10:00 a.m. at The Houstonian Hotel located at 111 North Post Oak Lane, Houston, Texas 77024, for the following purposes:

1.

To elect as directors the six nominees named in the attached proxy statement to serve until the Annual Meeting of Stockholders in 2014;

2.

To approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan as a successor to Sysco’s 2007 Stock Incentive Plan;

3.

To hold an advisory vote to approve the compensation paid to Sysco’s named executive officers, as disclosed in this proxy statement;

4.

To ratify the appointment of Ernst & Young LLP as Sysco’s independent accountants for fiscal 2014; and

5.

To transact any other business as may properly be brought before the meeting or any adjournment thereof.

Only stockholders of record at the close of business on September 17, 2013 will be entitled to receive notice of and to vote at the Annual Meeting. For instructions on voting, please refer to the notice you received in the mail or, if you requested a hard copy of the proxy statement, on your enclosed proxy card. You may inspect a list of stockholders of record at the company’s headquarters during regular business hours during the 10-day period before the Annual Meeting. You may also inspect this list at the Annual Meeting.

October 3, 2013

Houston, Texas

 

By Order of the Board of Directors

 

Russell T. Libby

 

Senior Vice President,

General Counsel & Corporate Secretary

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Proxy Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references (“XX”) are supplied to help you find further information in this proxy statement.

2013 Annual Meeting of Stockholders

Date and Time: Friday, November 15, 2013 at 10:00 a.m.

Location: The Houstonian Hotel located at 111 North Post Oak Lane, Houston, Texas 77024

Record Date: September 17, 2013

Voting matters and Board Recommendations

 

Our Board Vote Recommendation

Election of Six Director Nominees (page 22)

FOR each Director Nominee

Approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan (page 81)

FOR

Advisory Vote on Executive Compensation (page 88)

FOR

Ratification of Auditors (page 90)

FOR

Business Highlights

(For more detail please see our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). Our discussion below of our results includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measure will be denoted as an adjusted measure and, except for measures provided pursuant to benefit plan formulas, will exclude expenses from our Business Transformation Project, withdrawals from multiemployer pension plans, restructuring charges, and a one-time acquisition charge. More information on the rationale for the use of these measures and reconciliations to GAAP numbers can be found in Annex I - Non-GAAP Reconciliations.)

Fiscal 2013 was a year in which we progressed with our Business Transformation Project while facing a challenging business and economic environment. The foodservice industry has not fully participated in the overall economic recovery primarily due to constrained consumer spending for food-away-from-home. Our results of operations reflect these challenges as well as the impact of increased expenses from our Business Transformation Project, severance and charges related to the withdrawal from certain multiemployer pension plans. We believe our sales growth and expense management on a cost per case basis was acceptable. Our gross profit performance, however, did not meet our expectations due partially to competitive pressures and a shift in customer mix. We remain focused on the execution of our business plan and our Business Transformation Project, with the goal for these initiatives to contribute to the long-term success of our customers and in turn, growth in our earnings.

Financial highlights from fiscal 2013 include the following:

Sales of $44.4 billion.

Operating income of $1.7 billion.

Net earnings of approximately $1.0 billion.

Diluted earnings per share was $1.67. Adjusted* diluted earnings per share was $2.14.

Cash flow from operations of $1.5 billion and free cash flow of $1.0 billion.

Acquisition of 14 companies with annualized sales in excess of $1 billion.

Annual dividend increased by 3.8% and $648 million paid to our stockholders in dividend payments.

*See “Non-GAAP Reconciliations” for an explanation of these non-GAAP financial measures.

Governance Highlights (page 15)

Board Leadership Structure – In fiscal 2013, Manny Fernandez served in the role of Executive Chairman of the Board, and Jackie Ward served as the Lead Director of the Board. We have active participation by all Directors, including eight independent directors. Mr. Fernandez will not stand for re-election at the Annual Meeting and will retire as Executive Chairman effective following the Annual Meeting. We believe that the structure of our Board, relying on leadership from both independent and non-independent directors, positions Sysco to benefit from the respective strengths of our CEO, Executive Chairman and Lead Director. The Board intends to elect an independent chairperson on or before the date of the 2013 Annual Meeting.

Declassification of the Board – As previously planned and approved by stockholders in November 2011, the directors nominated for election at each annual meeting will be elected for a term of one year only. This year, six of our directors are nominated to serve a one-year term.

Director Independence – Our Corporate Governance Guidelines require that at least a majority of our directors meet the criteria for independence that the New York Stock Exchange has established for continued listing, as well as the additional criteria set forth in the Guidelines. Additionally, we require that all members of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee be independent and that all members of the Audit Committee satisfy the additional requirements of the New York Stock Exchange and applicable rules promulgated under the Securities Exchange Act of 1934.

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Current Members of Our Board of Directors and Board Nominees (page 25)

Name

Age

Director since

Experience

Inde-

pendent

Committee

Memberships(1)

Other Public

Company Boards

2013

Nominee

John M. Cassaday

60

November 2004

President and CEO, as well as a director, of Corus Entertainment Inc.

Yes

Compensation*

CG&N

Executive

Manulife Financial Corporation

Corus Entertainment Inc.

Yes

Judith B. Craven, M.D.

67

July 1996

Served as President of the United Way of the Texas Gulf Coast

Yes

CG&N Sustainability*

Belo Corporation

Luby’s

Sun America Funds, Inc.

VALIC

 

William J. DeLaney

57

January 2009

CEO of Sysco

No

Finance

Executive

Express Scripts, Inc.

 

Manuel A. Fernandez(3)

67

November 2006

Executive Chairman of Sysco

No

Finance

Executive*

Brunswick Corporation

Flowers Foods, Inc.

 

Larry C. Glasscock

65

September 2010

Former Chairman of the Board of Directors, CEO and President of WellPoint, Inc.

Yes

Compensation

CG&N

Sustainability

Simon Property Group, Inc.

Zimmer Holdings, Inc.

 

Jonathan Golden

76

February 1984

Partner of Arnall Golden Gregory LLP

No

Finance

Sustainability

 

Yes

Joseph A. Hafner, Jr.

68

November 2003

Former Chairman, CEO and President of Riviana Foods, Inc.

Yes

Audit

Executive

Finance*

Sustainability

 

Yes

Hans-Joachim Koerber

67

January 2008

Served as the chairman and CEO of METRO Group (Germany)

Yes

Audit

Finance

Air Berlin PLC

Eurocash S.A.

Yes

Nancy S. Newcomb

68

February 2006

Served as Senior Corporate Officer, Risk Management, of Citigroup

Yes

Audit

Finance

The DIRECTV Group, Inc.

Yes

Richard G. Tilghman

73

November 2002

Former Vice Chairman and Director of SunTrust Banks

Yes

Audit*

Executive

Finance

 

 

Jackie M. Ward(2)

75

September 2001

Former Chairman, President and CEO of Computer Generation Incorporated

Yes

Compensation

CG&N*

Executive

Flowers Foods, Inc.

Sanmina-SCI Corporation

Yes

(1)

Full committee names are as follows:

Audit – Audit Committee

Compensation– Compensation Committee

CG&N– Corporate Governance and Nominating Committee

Executive– Executive Committee

Finance– Finance Committee

Sustainability– Corporate Sustainability Committee

*

denotes committee chairperson

(2)

Ms.Ward serves as the Lead Director. For more details see page 26.

(3)

In September, Manny Fernandez notified the Board that he will not seek re-election as a board member at our 2013 Annual Meeting and thus will retire from the Board on that date.

Executive Compensation

Philosophy and Principles (page 41)

We believe our long-term success depends on our ability to attract, retain and motivate highly talented individuals who are committed to Sysco’s vision and strategy. One of the key objectives of our executive compensation program is to link executives’ pay to their performance and their advancement of Sysco’s overall performance and business strategies. Other objectives include aligning the executives’ interests with those of stockholders and encouraging high-performing executives to remain with Sysco over the course of their careers. We use the following key principles as the cornerstone of Sysco’s executive compensation philosophy to attract, develop and retain business leaders to drive financial and strategic growth and build long-term stockholder value:

Pay for Performance: Provide base salaries that reflect each NEOs background, experience and performance combined with variable, incentive compensation, such that superior performance rewards executives at higher levels than at peer companies while subpar performance results in less compensation than would be the case at peer companies;

Competitiveness and Retention: Provide a competitive pay opportunity that attracts and retains the highest quality professionals;

Accountability for Short- and Long- Term Performance: Strike an appropriate balance between short-term and longer-term compensation and short- and longer-term interests of the business; and

Alignment with Stockholders’ Interests: Link the interests of our executive officers with those of our stockholders through the risks and rewards of significant equity based compensation.

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Pay Mix (page 40)

The information in the charts below should be read in connection with the explanatory information contained on page 41, and is qualified in its entirety by reference to such explanatory information.

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2013 Executive Total Compensation Mix (page 59)

Set forth below is the 2013 compensation for each Named Executive Officer (“NEO”) as determined under the Securities and Exchange Commission (“SEC”) rules. See the notes accompanying the Summary Compensation Table on page 59 for more information.

Name and Principal

Position

Salary

Bonus

Stock

Awards

Option

Awards

Non-Equity

Incentive Plan

Compensation

Change in

Pension Value and

Nonqualified Deferred

Compensation

Earnings

All Other

Compensation

Total

William J. DeLaney

President and Chief Executive Officer

1,170,833

0

4,611,949

2,400,000

1,470,280

1,227,127

5,800

10,885,989

Robert C. Kreidler

Executive Vice President and Chief Financial Officer

683,333

0

1,828,489

980,000

530,198

165,874

6,437

4,194,331

Michael W. Green

Executive Vice President and President of Foodservice Operations

691,667

0

556,267

910,000

611,781

273,109

5,575

3,048,399

Wayne R. Shurts

Executive Vice President and Chief Technology Officer

407,292

150,000

945,987

747,501

174,379

12

85,619

2,510,790

William B. Day

Executive Vice President, Merchandising

508,333

0

374,111

612,000

390,111

130,969

4,920

2,020,444

James D. Hope

Former Executive Vice President, Business Transformation

525,000

0

385,106

630,000

394,785

0

55,200

1,990,091

Important Dates for 2014 Annual Meeting of Stockholders (page 90)

Stockholder proposals submitted for inclusion in our 2014 proxy statement pursuant to SEC Rule 14a-8 must be received by June 5, 2014.

Notice of stockholder proposals to be raised from the floor of the 2014 Annual Meeting of Stockholders outside Rule 14a-8 must be received by August 17, 2014.

If you would like to present a proposal under Rule 14a-8 of the Securities Exchange Act of 1934 at our 2014 Annual Meeting of Stockholders, send the proposal in time for us to receive it no later than June 5, 2014. If the date of our 2014 Annual Meeting is subsequently changed by more than 30 days from the date of this year’s Annual Meeting, we will inform you of the change and the date by which we must receive proposals. If you want to present business at our 2014 Annual Meeting outside of the stockholder proposal rules of Rule 14a-8 of the Exchange Act and instead pursuant to Article I, Section 8 of the company’s Bylaws, the Corporate Secretary must receive notice of your proposal by August 17, 2014, but not before July 8, 2014, and you must be a stockholder of record on the date you provide notice of your proposal to the company and on the record date for determining stockholders entitled to notice of the meeting and to vote.

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Sysco Corporation

1390 Enclave Parkway

Houston, Texas 77077-2099

October 3, 2013

PROXY STATEMENT

We are providing you with a Notice of Internet Availability of Proxy Materials and access to these proxy materials, which include this 2013 Proxy Statement, the proxy card for the 2013 Annual Meeting and our Annual Report on Form 10-K for fiscal 2013, because our Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting. Unless the context otherwise requires, the terms “we,” “our,” “us,” the “company” or “Sysco” as used in this proxy statement refer to Sysco Corporation. Our Annual Meeting will be held on Friday, November 15, 2013 at 10:00 a.m. at The Houstonian Hotel located at 111 North Post Oak Lane, Houston, Texas 77024.

At the close of business on September 17, 2013, there were 583,704,017 shares of Sysco Corporation common stock outstanding and entitled to vote at the Annual Meeting. All of our current directors and executive officers (20 persons) owned, directly or indirectly, an aggregate of 918,812 shares, which was less than 1% of our outstanding stock as of September 17, 2013.

Only owners of record of shares of Sysco’s common stock as of the close of business on the record date, September 17, 2013, are entitled to notice of, and to vote at the Annual Meeting or at any adjournments or postponements of the Annual Meeting. Each owner of record is entitled to one vote for each share owned on the record date on each matter presented at the Annual Meeting.

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

1.   What is a proxy statement and what is a proxy?

A proxy statement is a document that Securities and Exchange Commission (the “SEC”) regulations require us to give you when we ask you to sign a proxy designating individuals to vote on your behalf. A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated three of our officers as proxies for the 2013 Annual Meeting of Stockholders. These three officers are William J. DeLaney, Chris Kreidler and Russell T. Libby.

2.   Why did I receive a one-page notice (the “E-Proxy Notice”) in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

In accordance with rules and regulations adopted by the SEC, instead of mailing a printed copy of our proxy materials, including our annual report to stockholders, to each stockholder of record, we now generally furnish proxy materials, including our annual report to stockholders, to our stockholders on the Internet. Unless you have previously signed up to receive your materials in paper, you will receive a document entitled Notice of Internet Availability of Proxy Materials (which we also refer to as the E-Proxy Notice) and will not receive a printed copy of the proxy materials or the annual report to stockholders (unless you specifically request them). Instead, the E-Proxy Notice will instruct you as to how you may use the Internet to access and review all of the important information contained in the proxy materials, including our annual report to stockholders. The E-Proxy Notice also instructs you as to how you may submit your proxy on the Internet. Instructions for requesting printed proxy materials are included in the E-Proxy Notice. E-Proxy Notices are distributed by mail, unless you previously signed up to receive your proxy materials electronically, in which case it will be emailed to you. Set forth below is a summary of delivery methods.

Stockholders who previously signed up to Receive Proxy Materials Electronically: If you previously signed up to receive proxy materials electronically, we will send the E-Proxy Notice to you via e-mail, to the last e-mail address you have supplied to us. We will e-mail electronic E-Proxy Notices on or about October 4, 2013.

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Stockholders who previously signed up to Receive Future Proxy Materials in Printed Format by Mail: If you previously submitted a valid election to receive all proxy materials in printed format, then we will send you a full set of printed proxy materials, including our annual report to stockholders. We will begin mailing these materials on or about October 3, 2013.

All other Stockholders: If you have not submitted any elections, we will send you a printed E-Proxy Notice by mail. We will begin mailing E-Proxy Notices on or about October 3, 2013.

Receiving Future Proxy Materials Electronically and Receiving the E-Proxy Notice by e-mail: If you previously elected to receive your proxy materials in printed format, but would like to receive an E-Proxy Notice only and use the Internet to access proxy materials, please visit http://enroll.icsdelivery.com/syy for additional information. This would significantly reduce our printing and postage costs and eliminate bulky paper documents from your personal files. To receive your E-Proxy Notice by e-mail, please visit http://enroll.icsdelivery.com/syy for additional information.

3.   What is the difference between holding shares as a stockholder of record and as a beneficial stockholder?

These terms describe the manner in which your shares are held. If your shares are registered directly in your name with the Company’s registrar and transfer agent, American Stock Transfer, you are considered a “stockholder of record” with respect to those shares. If your shares are held in a brokerage account, bank, trust or other nominee as custodian on your behalf, you are considered the “beneficial owner” or “street name holder” of those shares. See questions 5, 6 and 9 below for important information for beneficial owners.

4.   How do I vote?

You may vote your shares as follows:

In person at the Annual Meeting. All stockholders of record may vote in person at the meeting. Beneficial owners may vote in person at the meeting if they have a legal proxy, as described in the response to question 6.

By telephone or Internet (see the instructions at www.ProxyVote.com). All stockholders of record also can vote by touchtone telephone from the U.S., Puerto Rico and Canada, using the toll-free telephone number on the proxy card, or through the Internet, using the procedures and instructions described on the proxy card. Beneficial owners may vote by telephone or Internet if their bank or broker makes those methods available, in which case the bank or broker will include the instructions with the proxy materials. Stockholders may also vote through the Internet via our stockholders forum located at www.ProxyVote.com. The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares and to confirm that their instructions have been recorded properly.

By Written Proxy. All stockholders of record can vote by written proxy card. If you received a printed copy of these proxy materials by mail, you may vote by signing, dating and mailing the enclosed proxy card, or if you are a beneficial owner, you may request a written proxy card or a vote instruction form from your bank or broker.

5.   How do I attend the meeting in person? What do I need to bring?

You need to bring documentation showing that you owned Common Stock on the record date, September 17, 2013. You also will need to bring a photo ID to gain admission. Please note that cameras, sound or video recording equipment, cellular telephones, smartphones or other similar equipment, electronic devices, large bags, briefcases or packages may not be allowed in the meeting room. If you are a beneficial owner, bring the notice or voting instruction form you received from your bank, brokerage firm or other nominee for admission to the meeting. You also may bring your brokerage statement reflecting your ownership of Common Stock as of September 17, 2013 with you to the meeting. Please note that you will not be able to vote your shares at the meeting without a legal proxy, as described in the response to question 6.

6.   How can I vote at the meeting if I am a beneficial owner?

You will need to ask your broker, bank or other intermediary to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting and hand it in with a signed ballot that will be provided to you at the meeting. You will not be able to vote your shares at the meeting without a legal proxy. If you do not receive the legal proxy in time, you can follow the procedures described in the response to question 5 to gain admission to the meeting. However, you will not be able to vote your shares at the meeting. Accordingly, we encourage you to vote your shares in advance, even if you intend to attend the meeting. Please note that if you request a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the meeting and vote in person or legally appoint another proxy to vote on your behalf.

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7.   What are my voting choices for each of the proposals to be voted on at the 2013 Annual Meeting?

Proposal

Voting Choices and Board Recommendation

Item 1:

Election of Six Director Nominees

vote in favor of all nominees

vote against all nominees;

vote for or against specific nominees;

abstain from voting with respect to all nominees; or

abstain from voting with respect to specific nominees.

The Board recommends a vote FOR each of the nominees.

Item 2:

Approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan

vote in favor of the Sysco Corporation 2013 Long-Term Incentive Plan;

vote against the Sysco Corporation 2013 Long-Term Incentive Plan; or

abstain from voting on the proposal.

The Board recommends a vote FOR the approval of the adoption of the 2013 Long-Term Incentive Plan.

Item 3:

Advisory Proposal to Approve Executive Compensation

vote in favor of the advisory proposal;

vote against the advisory proposal; or

abstain from voting on the advisory proposal.

The Board recommends a vote FOR the advisory vote to approve executive compensation.

Item 4:

Ratification of the Appointment of Ernst &Young LLP as Independent Auditors

vote in favor of the ratification;

vote against the ratification; or

abstain from voting on the ratification.

The Board recommends a vote FOR the ratification.

If you vote by proxy, the individuals named on the proxy card (your proxies) will vote your shares in the manner you indicate. Directors will be elected by a majority of the votes cast, either for or against, by the holders of the shares of Common Stock voting in person or by proxy at the meeting. In order to be approved, each other proposal will require approval by a majority of the votes cast, either for or against, by the holders of the shares of Common Stock voting in person or by proxy at the meeting. As an advisory vote, the proposal to approve executive compensation is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholders and will consider the outcome of the vote when making future compensation decisions.

8.   What if I am a stockholder of record and do not specify a choice for a matter when returning a proxy?

Stockholders should specify their choices for each matter on the proxy card. If no specific instructions are given, proxies that are signed and returned will be voted:

FOR the election of the six nominees for director;

FOR the approval of the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan;

FOR the approval of the compensation paid to Sysco’s named executive officers, as disclosed in this proxy statement; and

FOR the ratification of the appointment of Ernst & Young as independent accountants for fiscal 2014.

9.   What if I am a beneficial owner and do not give voting instructions to my broker?

As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the materials you receive from your bank, broker or other nominee. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered for vote.

Non-Discretionary Items. The election of Directors, proposal to approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan, and advisory proposal to approve executive compensation are non-discretionary items and may not be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial owners.

Discretionary Items. The ratification of the appointment of Ernst & Young LLP as Independent Auditors is a discretionary item. Generally, brokers, banks and other nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.

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10.   What can I do if I want to revoke or change my vote?

You may revoke or change your proxy at any time prior to the completion of voting at the Annual Meeting by:

delivering written notice of revocation to Sysco’s Corporate Secretary in time for him to receive it before the Annual Meeting;

voting again by telephone, Internet or mail (provided that such new vote is received in a timely manner pursuant to the instructions above); or

voting in person at the Annual Meeting.

The last vote that we receive from you will be the vote that is counted.

11.   Is there a Quorum Requirement?

A quorum is necessary to hold a valid meeting. A quorum will exist if the holders of at least 35% of all the shares entitled to vote at the meeting are present in person or by proxy. All shares voted by proxy are counted as present for purposes of establishing a quorum, including those that abstain or as to which the proxies contain broker non-votes as to one or more items.

12.   What votes are Necessary for Action to be Taken?

Sysco’s Bylaws and Corporate Governance Guidelines include a majority vote standard for uncontested director elections. Since the number of nominees timely nominated for the Annual Meeting does not exceed the number of directors to be elected, each director to be elected shall be elected if the number of votes cast “for” election of the director exceeds those cast “against.” Any incumbent director who is not re-elected will be required to tender his or her resignation promptly following certification of the stockholders’ vote. The Corporate Governance and Nominating Committee will consider the tendered resignation and recommend to the Board of Directors whether to accept or reject the resignation offer, or whether other action should be taken. The Board of Directors will act on the recommendation within 120 days following certification of the stockholders’ vote and will promptly make a public disclosure of its decision regarding whether to accept the director’s resignation offer.

Pursuant to Sysco’s Bylaws, the affirmative vote of a majority of the votes cast, either for or against, is required for the approval of:

the compensation paid to Sysco’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K;

the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan;

the ratification of the appointment of the independent accountants.

The vote on compensation paid to Sysco’s named executive officers is being provided pursuant to Section 14A of the Securities Exchange Act of 1934. In light of the stockholder recommendation at Sysco’s 2011 Annual Meeting of Stockholders regarding the frequency of the stockholder advisory votes on executive compensation, it is the current intention of the Sysco Board of Directors to conduct an annual stockholder advisory vote on executive compensation until the next required vote on the frequency of stockholder advisory votes on executive compensation that will occur at our 2017 Annual Meeting of Stockholders.

Broker non-votes will be disregarded with respect to the election of directors and each of the other proposals. Abstentions will be disregarded with respect to the election of directors and all other proposals except the proposal to approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan. NYSE rules require that the proposal to approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan receives a majority of the votes cast, whether for, against or abstain. Accordingly, abstentions will count as votes against with respect to this proposal.

13.   Who Will Count Votes?

We will appoint one or more Inspectors of Election who will determine the number of shares outstanding, the voting power of each, the number of shares represented at the Annual Meeting, the existence of a quorum and whether or not the proxies and ballots are valid and effective.

The Inspectors of Election will determine, and retain for a reasonable period a record of the disposition of, any challenges and questions arising in connection with the right to vote, and will count all votes and ballots cast for and against and any abstentions or broker non-votes with respect to all proposals and will determine the results of each vote.

14.   How are abstentions and broker non-votes counted?

Abstentions and broker non-votes are included in determining whether a quorum is present. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting authority and has not received voting instructions from the beneficial owner.

Broker non-votes will be disregarded with respect to the election of directors and each of the other proposals. Abstentions will be disregarded with respect to the election of directors and all other proposals except the proposal to approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan. NYSE rules require that the proposal to approve the adoption of the Sysco Corporation 2013 Long-Term Incentive Plan receives a majority of the votes cast, whether for, against or abstain. Accordingly, abstentions will count as votes against with respect to this proposal.

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15.   How are proxies solicited and what are the costs of proxy solicitation?

We will pay all of the cost of solicitation of proxies including preparing, printing and mailing this proxy statement and the E-Proxy Notice. Solicitation may be made personally or by mail, telephone or electronic data transfer by officers, directors and employees of the company (who will not receive any additional compensation for any solicitation of proxies).

We will also authorize banks, brokerage houses and other custodians, nominees and fiduciaries to forward copies of proxy materials and will reimburse them for their costs in sending the materials. We have retained Georgeson Shareholder Communications to help us solicit proxies from these entities and certain other stockholders, in writing or by telephone, at an estimated fee of $12,000 plus reimbursement for their out-of-pocket expenses.

16.   Will any other matters be presented at the Annual Meeting?

We do not know of any matter that will be presented at the Annual Meeting other than the election of directors and the other proposals discussed in this proxy statement. However, if any other matter is properly presented at the Annual Meeting, your proxies will act on such matter in their best judgment.

17.   Where can I access the Annual Report?

We will furnish additional copies of our annual report to stockholders, which includes our Annual Report on Form 10-K, without exhibits, for the year ended June 29, 2013, as filed with the Securities and Exchange Commission (the “Annual Report on Form 10-K”), for no charge, upon your written request if you are a record or beneficial owner of Sysco Corporation common stock whose proxy we are soliciting in connection with the Annual Meeting. Please address requests for a copy of the annual report to the Investor Relations Department, Sysco Corporation, 1390 Enclave Parkway, Houston, Texas 77077-2099. The Annual Report on Form 10-K is also available on our website under “Investors— Financial Information” at www.sysco.com.

18.   What is Householding and where can I get additional copies of proxy materials?

If your shares are held in the name of your broker or agent, and you share the same last name and address with another Sysco stockholder, you and the other stockholders at your address may receive only one copy of the E-Proxy Notice and any other proxy materials we choose to mail unless contrary instructions are provided from any stockholder at that address. This is referred to as “householding.” If you prefer to receive multiple copies of the E-Proxy Notice, and any other proxy materials that we mail, at the same address, additional copies will be provided to you promptly upon written or oral request, and if you are receiving multiple copies of the E-Proxy Notice and other proxy materials, you may request that you receive only one copy. Please address requests for a copy of the E-Proxy Notice and other proxy materials to the Investor Relations Department, Sysco Corporation, 1390 Enclave Parkway, Houston, Texas 77077-2099, or call the Investor Relations Department at 281-584-1308. The Annual Report on Form 10-K is also available on our website under “Investors— Financial Information” at www.sysco.com.

If your shares are not registered in your own name, you can request additional copies of the E-Proxy Notice and any other proxy materials we mail or you can request householding by notifying your broker or agent in whose name your shares are registered.

19.   Will the Company announce the voting results?

We will announce the preliminary voting results at the Annual Meeting of Stockholders. The Company will report the final results on our website and in a Current Report on Form 8-K filed with the SEC.

20.   Does the Company have a policy about Directors’ attendance at the Annual Meeting of Stockholders?

It is the Board’s policy that directors attend the Annual Meeting of Stockholders, to the extent practicable. In fiscal 2013, all directors who were in office at that time attended the Annual Meeting held in November 2012.

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CORPORATE GOVERNANCE

We believe that good corporate governance is critical to achieving business success. The Company has adopted certain documents, referred to herein as our Governance Documents, to provide a general framework for the Company and reflect our commitment to sound governance practices, including:

Sysco’s By-laws,

the Corporate Governance Guidelines adopted by the Board of Directors,

the charters of the Board’s committees,

the Code of Conduct, and

the Code of Conduct for non-employee directors.

These Governance Documents outline the functions of the Board, director responsibilities, and various processes and procedures designed to ensure effective and responsive governance. These guidelines also outline qualities and characteristics we consider when determining whether a member or candidate is qualified to serve on the Board, including diversity, skills, experience, time available and the number of other boards the member sits on, in the context of the needs of the Board and Sysco. The Corporate Governance Guidelines comply with the listing standards of the NYSE and include guidelines for determining director independence and qualifications. Our Board regularly reviews the Governance Documents and makes changes from time to time to reflect developments in the law and the corporate governance area.

Copies of the Governance Documents can be accessed from the Corporate Governance page of the Company’s investor relations website at “Investors— Corporate Governance” at www.sysco.com. These documents will also be provided without charge to any stockholder upon written request to the Corporate Secretary at Sysco Corporation, 1390 Enclave Parkway, Houston, Texas 77077.

Board Leadership Structure

The Governance Documents provide the Board with the flexibility to select the appropriate leadership structure for the Company.

BOARD LEADERSHIP

Executive Chairman of the Board: Manuel A. Fernandez (through November 15, 2013)

Lead Director of the Board: Jackie M. Ward

Active participation by all Directors, including the CEO, William J. DeLaney

73% independent directors

We believe that the structure of our Board, relying on leadership from both independent and non-independent directors, positions Sysco to benefit from the respective strengths of our CEO, our Executive Chairman and our Lead Director. Following Mr. Fernandez’ retirement from the Board on November 15, 2013, the Board will continue to benefit from the leadership of an independent director, as the Board intends to elect an independent chairperson on or before the date of the 2013 Annual Meeting.

Mr. Fernandez served as the non-executive Chairman of Sysco’s Board of Directors from June 2009 until April 2012, when he was elected as the Board’s Executive Chairman. The Board elected Mr. Fernandez its Executive Chairman so that he might, among other things, provide additional support to Sysco’s management team with his unique leadership and technological capability, particularly as the Company continued to implement its business transformation. Mr. Fernandez also focused his time on strategic direction and business development. Mr. Fernandez has notified the Board that he will not seek re-election as a board member at our Sysco Annual Meeting and thus will retire from the Board on that date. As a result, the Board has reduced the size of the Board from eleven to ten members, effective as of the Annual Meeting. Mr. Fernandez will continue to serve as Executive Chairman and as a Board member until the Annual Meeting. The Board intends to elect a new chairperson on or before the date of the 2013 Annual Meeting.

At times when our chairman is not independent or when otherwise appropriate, we utilize an independent Lead Director in order to ensure that the Board continues to maintain an independent thought process that ultimately benefits stockholders. The Lead Director, among other things, reviews meeting schedules and agendas with the Executive Chairman of the Board and serves as the primary liaison between the independent directors and the Executive Chairman of the Board.

The independent directors meet in executive session at least once a year, without the other directors present, and the Lead Director presides at such meetings. The non-management directors meet regularly without the CEO or any other member of management present and in fiscal 2013 met nine times. Ms. Ward, as Lead Director, presided over the sessions of the non-management and independent directors in fiscal 2013. The directors anticipate that the Lead Director, an independent chairman (if selected) or another independent director, will preside over these meetings in fiscal 2014.

Communicating with the Board

Interested parties may communicate with the Lead Director, the non-management directors or independent directors as a group and the individual members of the Board by confidential web submission or by mail. All such correspondence will be delivered to the parties to whom they are addressed. The Board requests that items unrelated to the duties and responsibilities of the Board not be submitted, such as product inquiries and complaints, job inquiries, business solicitations and junk mail. You may access the form to communicate by confidential web submission in the corporate governance section of Sysco’s website under “Investors — Corporate Governance— Contact the Board” at www.sysco.com. You can contact any of our Directors by mail in care of the Office of the Corporate Secretary, Sysco Corporation, 1390 Enclave Parkway, Houston, Texas 77077.

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Board Meetings and Committees

During fiscal 2013, the Board held nine meetings, including five regular meetings and four special meetings, and committees of the Board held a total of 34 meetings. Overall attendance at such meetings was approximately 96%. Each director attended 75% or more of the aggregate of all meetings of the Board and the committees on which he or she served during fiscal 2013. The Board has an Audit Committee, a Compensation Committee, a Corporate Governance and Nominating Committee, a Corporate Sustainability Committee, a Finance Committee, and an Executive Committee. Current copies of the written charters for the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee, the Finance Committee and the Corporate Sustainability Committee are published on our website under “Investors— Corporate Governance— Committees” at www.sysco.com. The current membership and primary responsibilities of the committees are summarized in the following table.

Committee Name and Members

Primary Responsibilities

Fiscal 2013

Meetings

Audit(1)

Mr. Tilghman (Chair)

Mr. Hafner

Dr. Koerber

Ms. Newcomb

Oversees and reports to the Board with respect to various auditing and accounting matters, including the selection of the independent public accountants, the scope of audit procedures, the nature of all audit and non-audit services to be performed by the independent public accountants, the fees to be paid to the independent public accountants, and the performance of the independent public accountants

Oversees and reports to the Board with respect to Sysco’s accounting practices and policies

Responsible for discussing the Company’s policies with respect to risk assessment and risk management, including discussion of enterprise-wide guidelines and policies to govern the process by which risk assessment and management is undertaken

Oversees and reports to the Board with respect to compliance with legal and regulatory requirements, corporate accounting, reporting practices and the integrity of the financial statements of the Company

nine

Compensation(2)(3)

Mr. Cassaday (Chair)

Dr. Craven

Mr. Glasscock

Ms. Ward

Establishes compensation policies that effectively attract, retain and motivate executive officers

Establish and approve all compensation of the CEO and the other senior officers, including the named executive officers

Oversees the administration of Sysco’s qualified and nonqualified benefit plans, incentive compensation plans, equity-based plans and Sysco’s group benefit medical plan

Appropriately delegates and oversees compensation and granting authority, except for decisions that impact the compensation of Sysco’s CEO and executive officers

Oversees administrative committees or individuals delegated oversight of employee and executive benefit plans

Amends, establishes or terminates any benefit plan that is maintained primarily for the benefit of Sysco’s senior officers

Resolves claims under any benefit plan with respect to any senior officer

ten

Corporate Governance and Nominating(2)

Ms. Ward (Chair)

Mr. Cassaday

Dr. Craven

Mr. Glasscock

Proposes directors, committee members and officers to the Board for election or reelection

Oversees the evaluation of management, including the CEO

Reviews the performance of the members of the Board and its committees

Recommends to the Board the annual compensation of non-employee directors

Reviews related party transactions

Reviews and makes recommendations regarding the organization and effectiveness of the Board and its committees, the establishment of corporate governance principles, the conduct of meetings, succession planning and Sysco’s Governing Documents

Reviews and makes recommendations regarding changes to Sysco’s Codes of Conduct, periodically reviews overall compliance with the Codes and approves any waivers to the Codes given to Sysco’s executive officers and directors

Monitors compliance with and approves waivers to Sysco’s Policy on Trading in Company Securities.

eight

Corporate Sustainability

Dr. Craven (Chair)

Mr. Glasscock

Mr. Golden

Mr. Hafner

Reviews and acts in an advisory capacity to the Board and management with respect to policies and strategies that affect Sysco’s role as a socially responsible organization as well as Sysco’s long-term sustainability

Reviews, evaluates, and provides input on Sysco’s Sustainability Strategy, which focuses on Food, Operations, and Community, and on implementation of the strategy

Reviews philanthropic giving, agriculture programs, and warehouse and transportation initiatives designed to improve the environmental impact of the company

Reviews external disclosures on sustainability matters such as Sysco’s annual sustainability report and Carbon Disclosure Project (CDP) surveys

three

Finance Committee

Mr. Hafner (Chair)

Mr. DeLaney

Mr. Fernandez

Mr. Golden

Dr. Koerber

Ms. Newcomb

Mr. Tilghman

Assist the Board in satisfying its fiduciary responsibilities relating to Sysco’s financial performance and financial planning

Reviews policies regarding capital structure, dividends and liquidity

Reviews and recommends the sale or issuance of equity and debt securities

Reviews acquisitions and financing alternatives

Reviews and approves certain capital expenditures

Reviews and recommends insurance risk management strategies as proposed by management;

Approves and monitors high-level investment and funding objectives and investment performance and funding of Sysco’s tax-qualified retirement plans and non-qualified retirement and deferred compensation plans

Reviews and oversees Sysco’s information technology and security matters

Assists the Audit Committee in reviewing and overseeing Sysco’s environmental, health and safety matters and related regulatory compliance

four

Executive

Mr. Fernandez (Chair)

Mr. Cassaday

Mr. DeLaney

Mr. Hafner

Mr. Tilghman

Ms. Ward

Exercise all of the powers of the Board when necessary, to the extent permitted by applicable law

zero

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(1)

Each member of the Audit Committee has been determined by the Board to be independent, as defined in the NYSE’s listing standards, Section 10A of the Securities Exchange Act of 1934 and the Company’s Corporate Governance Guidelines. Each member of the Audit Committee is financially literate and the Board has determined that Messrs. Hafner and Tilghman and Ms. Newcomb each meet the definition of an audit committee financial expert as promulgated by the Securities and Exchange Commission. No Audit Committee member serves on the audit committees of more than two other companies.

(2)

Each member of the Committee has been determined by the Board to be independent, as defined in the NYSE’s listing standards and the Company’s Corporate Governance Guidelines.

(3)

Except for decisions that impact the compensation of Sysco’s CEO, the Compensation Committee is generally authorized to delegate any decisions it deems appropriate to a subcommittee. In such a case, the subcommittee must promptly make a report of any action that it takes to the full Compensation Committee. In addition, the Compensation Committee may delegate to any one or more members of the Board its full equity grant authority with respect to any equity-based grants other than grants made to officers that are subject to reporting obligations under Section 16 of the Securities Exchange Act of 1934; and the Compensation Committee has delegated such authority to Mr. DeLaney with respect to certain non-executive employees, subject to specified limitations. In carrying out its duties, the Compensation Committee may also delegate its oversight of Sysco’s employee and executive benefit plans to any administrative committees of the respective plans or to such officers or employees of Sysco as the Compensation Committee deems appropriate, except that it may not delegate its powers to amend, establish or terminate any benefit plan that is maintained primarily for the benefit of Sysco’s senior officers, resolve claims under a benefit plan with respect to any senior officer, or modify the compensation of any senior officer as provided under any nonqualified or executive incentive compensation plan. For a detailed description of the Compensation Committee’s processes and procedures for consideration and determination of executive compensation, including the role of executive officers and compensation consultants in recommending the amount and form of executive compensation, see “— Compensation Consultants,” and “Compensation Discussion and Analysis.”

Director Independence

Director Independence

Our Corporate Governance Guidelines require that at least a majority of our directors meet the criteria for independence that the New York Stock Exchange has established for continued listing, as well as the additional criteria set forth in the Guidelines. Additionally, we require that all members of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee be independent and that all members of the Audit Committee satisfy the additional requirements of the New York Stock Exchange and applicable rules promulgated under the Securities Exchange Act of 1934.

Under New York Stock Exchange listing standards, to consider a director to be independent, we must determine that he or she has no material relationship with Sysco other than as a director. The standards specify the criteria by which we must determine whether directors are independent, and contain guidelines for directors and their immediate family members with respect to employment or affiliation with Sysco or its independent public accountants.

In addition to the NYSE’s standards for independence, our Corporate Governance Guidelines contain categorical standards that provide that the following relationships will not impair a director’s independence:

if a Sysco director is an executive officer of another company that does business with Sysco and the annual sales to, or purchases from, Sysco are less than two percent of the annual revenues of the company he or she serves as an executive officer;

if a Sysco director is an executive officer of another company which is indebted to Sysco, or to which Sysco is indebted, and the total amount of either company’s indebtedness to the other is less than two percent of the total consolidated assets of the company he or she serves as an executive officer, so long as payments made or received by Sysco as a result of such indebtedness do not exceed the two percent thresholds provided above with respect to sales and purchases; and

if a Sysco director serves as an officer, director or trustee of a tax-exempt charitable organization, and Sysco’s discretionary charitable contributions to the organization are less than two percent of that organization’s total annual charitable receipts; Sysco’s automatic matching of employee charitable contributions will not be included in the amount of Sysco’s contributions for this purpose.

The Board of Directors has reviewed all relevant relationships of the directors with Sysco. The relationships reviewed included those described under “Certain Relationships and Related Transactions,” and several relationships that did not automatically make the individual non-independent under the NYSE standards or our Corporate Governance Guidelines, either because of the type of affiliation between the director and the other entity or because the amounts involved did not meet the applicable thresholds. These additional relationships include the following (for purposes of this section, “Sysco”, “we,” “us” and “our” include our operating companies):

Mr. Cassaday serves as a director of Irving Oil Limited (formerly Fort Reliance), which is one of our suppliers;

Dr. Craven serves as a member of the Board of Directors of Luby’s, Inc., which is one of our customers;

Mr. DeLaney, our CEO and non-independent director, serves as a member of the Board of Directors of Express Scripts, Inc., which is our prescription drug service provider for our employees;

Mr. Fernandez, our Executive Chairman and non-independent director, serves as a member of the Board of Directors of Flowers Foods, Inc., which is one of our suppliers, and was former Chairman, President and CEO of Gartner, Inc., a technology firm that provides certain services to which we subscribe;

During fiscal year 2013, Mr. Glasscock served as a director of Sprint Nextel Corp., which is one of our suppliers;

Mr. Hafner serves as a Trustee of The Kinkaid School, which is one of our customers; Mr. Hafner also serves on the boards or committees of several non-profit organizations to which Sysco makes donations; in addition, Mr. Hafner serves as a member of the President’s Advisory Council of the University of Houston — Downtown, which purchases our products through subcontracting arrangements;

Ms. Newcomb was a director of Moody’s Corporation during fiscal 2011, which provides credit ratings for certain of our debt obligations;

Mr. Tilghman is the former Chairman and a former trustee of the Colonial Williamsburg Foundation, a former director of the Colonial Williamsburg Company and a director of The Coral Bay Club; all three of these organizations are our customers;

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Ms. Ward is a director of Flowers Foods, Inc., which is one of our suppliers, during fiscal year 2013, she served as a director of WellPoint, Inc. which is paid by Sysco’s insurer for services rendered to covered Sysco employees, and her granddaughter’s husband works for one of Sysco’s subsidiaries as a marketing associate.

After reviewing such information, the Board of Directors has determined that each of Mr. Cassaday, Dr. Craven, Mr. Glasscock, Mr. Hafner, Dr. Koerber, Ms. Newcomb, Mr. Tilghman and Ms. Ward has no material relationship with Sysco and is independent under the NYSE standards and the categorical standards set forth in the Corporate Governance Guidelines and described above. Mr. DeLaney, Mr. Fernandez and Mr. Golden are not currently considered to be independent. The Board has also determined that each member of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee is independent. Our Corporate Governance Guidelines also provide that no independent director who is a member of the Audit, Compensation or Corporate Governance and Nominating Committees may receive any compensation from Sysco other than in his or her capacity as a non-employee director or committee member. The Board has determined that no non-employee director received any compensation from Sysco at any time since the beginning of fiscal 2013, other than in his or her capacity as a non-employee director, committee member, committee chairman, lead director or non-executive Chairman of the Board.

Certain Relationships and Related Person Transactions

Related Person Transactions Policies and Procedures

The Board has adopted written policies and procedures for review and approval or ratification of transactions with related persons. We subject the following related persons to these policies: directors, director nominees, executive officers, beneficial owners of more than five percent of our stock and any immediate family members of these persons.

We follow the policies and procedures below for any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which Sysco was or is to be a participant, the amount involved exceeds $100,000, and in which any related person had or will have a direct or indirect material interest. These policies specifically apply without limitation to purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness, and employment by Sysco of a related person. The Board of Directors has determined that the following do not create a material direct or indirect interest on behalf of the related person, and are, therefore, not related person transactions to which these policies and procedures apply:

Interests arising only from the related person’s position as a director of another corporation or organization that is a party to the transaction; or

Interests arising only from the direct or indirect ownership by the related person and all other related persons in the aggregate of less than a 10% equity interest, other than a general partnership interest, in another entity which is a party to the transaction; or

Interests arising from both the position and ownership level described in the two bullet points above; or

Interests arising solely from the ownership of a class of Sysco’s equity securities if all holders of that class of equity securities receive the same benefit on a pro rata basis, such as dividends; or

A transaction that involves compensation to an executive officer if the compensation has been approved by the Compensation Committee, the Board of Directors or a group of independent directors of Sysco performing a similar function; or

A transaction that involves compensation to a director for services as a director of Sysco if such compensation will be reported pursuant to Item 402(k) of Regulation S-K.

Any of our employees, officers or directors who have knowledge of a proposed related person transaction must report the transaction to our General Counsel. Whenever practicable, before the transaction goes effective or becomes consummated, the Corporate Governance and Nominating Committee of the Board of Directors will review and approve the proposed transaction in accordance with the terms of this policy. If the General Counsel determines that it is not practicable to obtain advance approval of the transaction under the circumstances, the Committee will review and, in its discretion may ratify, the transaction at its next meeting. In addition, the Board of Directors has delegated to the Chair of the Committee the authority to pre-approve or ratify, as applicable, any related person transaction in which the aggregate amount involved is expected to be less than $500,000.

In addition, if a related person transaction is ongoing in nature and the Committee has previously approved it, or the transaction otherwise already exists, the Committee will review the transaction during its first meeting of each fiscal year to:

ensure that such transaction has been conducted in accordance with the previous approval granted by the Committee, if any;

ensure that Sysco makes all required disclosures regarding the transaction; and

determine if Sysco should continue, modify or terminate the transaction.

We will consider a related person transaction approved or ratified if the transaction is authorized by the Corporate Governance and Nominating Committee or the Chair, as applicable, in accordance with the standards described below, after full disclosure of the related person’s interests in the transaction. As appropriate for the circumstances, the Committee will review and consider such of the following as it deems necessary or appropriate:

the related person’s interest in the transaction;

the approximate dollar value of the amount involved in the transaction;

the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;

whether the transaction was undertaken in Sysco’s ordinary course of business;

whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to Sysco than terms that could have been reached with an unrelated third party;

the purpose of, and the potential benefits to Sysco of, the transaction; and

any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

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The Committee will review such additional information about the transaction as it in its sole discretion shall deem relevant. The Committee may approve or ratify the transaction only if the Committee determines that, based on its review, the transaction is in, or is not inconsistent with, the best interests of Sysco. The Committee may, in its sole discretion, impose such conditions as it deems appropriate on Sysco or the related person when approving a transaction. If the Committee or the Chair, as applicable, does not ratify a related person transaction, we will either rescind or modify the transaction, as the Committee or the Chair, as applicable, directs, as soon as practicable following the failure to ratify the transaction. The Chair will report to the Committee at its next regularly scheduled meeting any action that he or she has taken under the authority delegated pursuant to this policy. If any director has an interest in a related person transaction, he or she is not allowed to participate in any discussion or approval of the transaction, except that the director is required to provide all material information concerning the transaction to the Committee.

Transactions with Related Persons

Mr. Golden, one of our directors, is the sole stockholder of Jonathan Golden, P.C., a partner in the law firm of Arnall Golden Gregory LLP, Atlanta, Georgia, which provided legal services to Sysco during fiscal 2013 and continues to do so in fiscal 2014. During fiscal 2013, Sysco incurred approximately $2.5 million in legal fees and disbursements related to these services. We believe the amounts were fair and reasonable in view of the level and extent of services rendered. Due to this relationship, Mr. Golden is not considered to be an independent director under the NYSE standards or the categorical standards set forth in Sysco’s Corporate Governance Guidelines.

Michael W. Green’s brother-in-law works for, and handles the account for, Red Gold, Inc., a company which supplies tomato products to Sysco. Sysco paid Red Gold approximately $52.9 million during fiscal 2013. Mr. Green’s sister and brother-in-law own Sunrise Café, one of Sysco’s customers. Sysco and its affiliates sold approximately $146,000 in product to Sunrise Café during fiscal 2013. Mr. Green serves as our Executive Vice President and President of Foodservice Operations.

Ms. Twila Day, who is not an executive officer, is the wife of William Day, our Executive Vice President, Merchandising. Ms. Day previously served as Sysco’s Vice President and Chief Information Officer from December 2005 until January 2010, when she was promoted to Senior Vice President and Chief Information Officer, and served in this position until her departure from Sysco effective June 29, 2013. With respect to fiscal 2013, we paid Ms. Day a base salary of $383,333, and she received a MIP annual incentive award of $153,384, which we paid in August 2013. Ms. Day received a CPU grant in November 2012 of 256,667 units with a target value of $1 each (total target value of $256,667), which would have been payable following conclusion of fiscal 2015 if all specified criteria were met; however, these CPUs were forfeited upon her departure from the Company. See “Executive Compensation— Cash Performance Unit Plan.” In November 2012, Ms. Day received a grant of stock options to purchase 64,167 shares of common stock, and a grant of 8,379 restricted stock units pursuant to our 2007 Stock Incentive Plan. The options had a grant date fair value as calculated in accordance with Accounting Standards Codification (ASC) 718, “Compensation— Stock Compensation” of $205,334 and the restricted stock units were valued at $251,035, based on the closing price of Sysco common stock on the last business day prior to grant of $29.96 per share. In November 2012, 1,000, 2,833, and 3,004 restricted stock units that were granted to Ms. Day in November 2009, 2010 and 2011, respectively, fully vested. In August 2012, Ms. Day received a $20,913.48 payment with respect to the September 2008 CPU grant. In August 2013, Ms. Day received a payment of $144,698 with respect to the 2011 CPU grant. Prior to her departure, she was also a participant in the SERP, the EDCP, the MSP and other regular and customary employee benefit plans, programs and benefits generally available to our officers, including those described in the “Compensation Discussion and Analysis” section, under the heading “What We Paid and Why.” She was fully vested in the SERP and EDCP upon her departure. In July 2013, Ms. Day received a lump sum separation payment of $1,155,000.

The Corporate Governance and Nominating Committee has approved all of the above transactions in accordance with the disclosed policies and procedures.

Risk Oversight

One of the primary oversight functions of the Board is to ensure that Sysco has an appropriate risk management process in place that is commensurate with both the short and long-term goals of the Company. In order to effectively fulfill this oversight role, the Board relies on various individuals and committees within management and among our Board members. See “Board of Directors Matters— Election of Directors at 2013 Annual Meeting (Item I) —Director Qualifications” and “Board of Directors Matters—Board Composition” below for a description of individual director qualifications, including risk management experience.

Management is responsible for identifying, managing and mitigating risks, and reports directly to the Audit Committee and the Board on a regular basis with respect to risk management. As discussed above under “Board Meetings and Committees of the Board,” the Audit Committee reviews Sysco’s process by which management assesses and manages the Company’s exposure to risk. The Audit Committee also makes recommendations to the Board of Directors with respect to the process by which members of the Board and relevant committees will be made aware of the Company’s significant risks, including recommendations regarding what committee of the Board would be most appropriate to take responsibility for oversight of management with respect to the most material risks faced by the Company. On an annual basis management reviews with the Board the key enterprise risks identified in the process, such as strategic, operational, financial, compliance and reputation risks, as well as management’s process for addressing and mitigating the potential effects of such risks. Through this process Sysco has developed enhanced risk management procedures that include frequent discussion and prioritization of key risk issues by the executive management team, enhanced tracking and monitoring of risk information and identification of particular risks for which management intends to develop or enhance Sysco’s management and mitigation plans.

The Board’s committees help oversee the risk management process within the respective areas of the committees’ delegated oversight authority. The Audit Committee is primarily responsible for hiring and evaluating our independent auditor, review of our internal controls, oversight of our internal audit function, oversight of customer credit risk, reviewing contingent liabilities that may be material to the Company and various regulatory and compliance oversight functions. The Compensation Committee is responsible for ensuring that our executive compensation policies and practices do not incentivize excessive or inappropriate risk-taking by employees. The Corporate Governance and Nominating Committee monitors risk by ensuring that proper corporate governance standards are maintained, that the Board is comprised of qualified Directors, and that qualified individuals are chosen as senior officers. The Finance Committee oversees risks involving capital structure of the enterprise, including borrowing, liquidity, allocation of capital, major capital transactions and expenditures, funding of benefit plans, credit/counterparty risk and investment risk. The Executive Chairman of the Board and the Lead Director work together to coordinate the flow of information regarding risk oversight from each respective committee to the independent Directors and participate in the review of the agenda for each Board and Committee meeting. As the areas of oversight among committees sometimes overlap, committees may hold joint meetings when appropriate and address certain risk oversight issues at the full Board level. The Board considers risk in evaluating the Company’s strategy, including specific strategic and emerging risks, and annually reviews and approves corporate goals and capital budgets. The Board also monitors any specific risks for which it has chosen to retain oversight rather than delegating oversight to one of its committees, such as risks related to our Business Transformation Project.

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Codes of Conduct

We require all of our officers and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, to comply with our Code of Conduct applicable to Sysco employees to help ensure that we conduct our business in accordance with the highest standards of moral and ethical behavior. This Code of Conduct addresses the following, among other topics:

professional conduct, including customer relationships, equal opportunity, payment of gratuities and receipt of payments or gifts,

competition and fair dealing,

compliance with the Foreign Corrupt Practices Act,

political contributions,

antitrust,

conflicts of interest,

legal compliance, including compliance with laws addressing insider trading,

financial disclosure,

intellectual property, and

confidential information.

Our Code, which was amended and restated in August 2010, effective as of November 1, 2010, requires strict adherence to all laws and regulations applicable to our business and requires employees to report any violations or suspected violations of the Code. In August 2010, we also adopted a separate Code of Conduct applicable to non-employee directors that is similar in scope to the employee Code but is tailored to the issues and concerns facing Sysco directors. We have published the Codes of Conduct for employees and non-employee directors on our website under “Investors— Corporate Governance” at www.sysco.com. We intend to disclose any future amendments to or waivers of our Code applicable to our principal executive officer, principal financial officer, principal accounting officer and controller, as well as any employees performing similar functions, on our website at www.sysco.com under the heading “Investors— Corporate Governance.”

Reporting a Concern or Violation

Our Code of Conduct explains that there are multiple channels for an employee to report a concern, including to his or her manager, human resource professional or legal counsel, to our internal audit department, or to the Sysco Associate Hotline, which is monitored by Global Compliance. Our Global Compliance Hotline is available 24 hours a day, seven days a week, to receive calls or web submissions from anyone wishing to report a concern or complaint, anonymous or otherwise. Our HotLine contact information can be found on our website at www.sysco.com under the heading “Investors— Corporate Governance—Contact the Board.”

Any report to any one of our multiple channels for reporting concerns that raise a concern or allegation of impropriety relating to our accounting, internal controls or other financial or audit matters is immediately forwarded to the Office of the General Counsel, which is then responsible for reporting such matters, unfiltered, to the Chair of our Audit Committee. All such matters are investigated and responded to in accordance with the procedures established by the Audit Committee to ensure compliance with the Sarbanes-Oxley Act of 2002.

Compensation Consultants

Since September 2009, the Compensation Committee has retained Compensation Advisory Partners (“CAP”) as its executive compensation consultant. Retained by and reporting directly to the Compensation Committee, CAP has provided the Committee with assistance in evaluating Sysco’s executive compensation programs and policies, and, where appropriate, has assisted with the redesign and enhancement of elements of the programs. The scope of CAP’s assignments in fiscal 2013 included:

Assistance with proxy disclosure issues;

Review of long-term incentive program design and assistance with determination of awards;

Provision of external perspective on executive compensation, including development of key trends reports regarding executive compensation, evolving best practices and relevant regulatory changes;

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Review of the total compensation program, including competitive peer group comparisons and analysis, and analysis of executive benchmark positions and competitive levels in relation to broader market survey data, and assessment of annual NEO pay and performance relationship versus the peer group; and

Periodic compensation consulting at the request of the Compensation Committee and management.

CAP also advises the Corporate Governance and Nominating Committee with respect to non-employee director compensation. At the Corporate Governance and Nominating Committee’s request, CAP has provided data regarding the amounts and type of compensation paid to non-employee directors at the companies in Sysco’s peer group, and has also identified trends in director compensation. All decisions regarding non-employee director compensation are recommended by the Corporate Governance and Nominating Committee and approved by the Board of Directors. In addition to providing background information and written materials, CAP representatives attend meetings at which the Committee Chairmen believe that their expertise would be beneficial to the Committees’ discussions. Neither CAP nor any of its affiliates provided any additional services to Sysco and its affiliates in fiscal 2013 or in fiscal 2014 through the date of the proxy statement. Sysco does not expect CAP to provide any such services to Sysco during the remainder of fiscal 2014. The Compensation Committee has determined CAP to be independent from the company and that no conflicts of interest exist related to CAP’s services provided to the Compensation Committee. See “Compensation Discussion and Analysis– How Executive Pay is Established—Committee Oversight.”

Since September 2010, Towers Watson (“TW”) has provided advice directly to Sysco’s management team and has assisted management in making recommendations to the Compensation Committee and the Board of Directors with respect to certain aspects of executive compensation. In this capacity, TW has consulted directly with management and provided, among other things, reports based on TW’s proprietary data and information regarding market benchmarks. The Compensation Committee’s decisions are indirectly impacted by input from TW that is presented by management, and such information is used by the Committee in its dialogue with CAP representatives.

BOARD OF DIRECTORS MATTERS

We believe that our directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of Sysco’s stockholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment. We endeavor to have a Board representing a range of backgrounds and experiences in areas that are relevant to the company’s activities so that the Board, as a whole, possesses the combination of skills, professional experience, and diversity of backgrounds necessary to oversee Sysco’s business. In particular, we place a high level of importance on knowledge and experience specific to and relevant in our industry, with nine directors with direct food industry experience.

All of our Directors possess all of the following characteristics:

1. Integrity and Accountability: Directors must have demonstrated high ethical standards and integrity in their personal and professional dealings, and must be willing to act on – and remain accountable for – their boardroom decisions.

2. Informed Judgment: Directors must be able to provide wise, thoughtful counsel on a broad range of issues and must possess high intelligence and wisdom which is applied in decision making.

3. Financial Literacy: Directors must be financially literate and should know how to read a balance sheet, an income statement and a cash flow statement, and they should understand the use of financial ratios and other indices for evaluating Company performance.

4. Mutual Confidence: Directors must value Board and team performance over individual performance, must possess respect for others, be open to other opinions and be willing to listen. Directors must be assertive, responsible and supportive while being willing to raise tough questions in a manner that encourages open discussion.

5. High Performance Standards and Leadership: Directors must have a history of achievements that reflect high standards of performance by themselves and the persons they lead.

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Election of Directors at 2013 Annual Meeting (Item 1)

Election Process

The company’s Bylaws provide for majority voting in uncontested director elections. Majority voting means that directors are elected by a majority of the votes cast— that is, the number of shares voted “for” a director must exceed the number of shares voted “against” that director. Any incumbent director who is not re-elected in an election in which majority voting applies shall tender his or her resignation promptly following certification of the stockholders’ vote. The Corporate Governance and Nominating Committee shall consider the tendered resignation and recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken. The director who tenders his or her resignation shall not participate in the recommendation of the committee or the decision of the Board with respect to his or her resignation. The Board shall act on the recommendation within 120 days following certification of the stockholders’ vote and shall promptly disclose its decision regarding whether to accept the director’s resignation offer. In contested elections, where there are more nominees than seats on the Board as of the record date of the meeting at which the election will take place, directors are elected by a plurality vote. This means that the nominees who receive the most votes of all the votes cast for directors will be elected.

Nomination Process

The Corporate Governance and Nominating Committee is responsible for identifying and evaluating candidates for election to Sysco’s Board of Directors. In considering candidates for election to the Board, the Committee will determine the incumbent directors whose terms expire at the upcoming Annual Meeting and who wish to continue their service on the Board. The Committee will also identify and evaluate new candidates for election to the Board for the purpose of filling vacancies. The Committee will solicit recommendations for nominees from persons that the Committee believes are likely to be familiar with qualified candidates. These persons may include members of the Board, Sysco’s management and stockholders who beneficially own individually or as a group at least five percent of Sysco’s outstanding shares for at least one year and who have expressed an interest in recommending director candidates. In evaluating candidates, the Committee will consider the absence or presence of material relationships with Sysco that might impact independence, as well as the diversity, age, skills, experience, time available and the number of other boards the candidate sits on in the context of the needs of the Board and Sysco, and such other criteria as the Committee shall determine to be relevant at the time. The Committee may also determine to engage a professional search firm to assist in identifying qualified candidates. Where such a search firm is engaged, the Committee shall set its fees and scope of engagement.

The Committee will also consider candidates recommended by stockholders. The Committee will evaluate such recommendations using the same criteria that it uses to evaluate other candidates. Stockholders can recommend candidates for consideration by the Committee by writing to the Corporate Secretary, 1390 Enclave Parkway, Houston, Texas 77077, and including the following information:

the name and address of the stockholder;

the name and address of the person to be nominated;

a representation that the stockholder is a holder of the Sysco stock entitled to vote at the meeting to which the director recommendation relates;

a statement in support of the stockholder’s recommendation, including a description of the candidate’s qualifications;

information regarding the candidate as would be required to be included in a proxy statement filed in accordance with the rules of the Securities and Exchange Commission; and

the candidate’s written, signed consent to serve if elected.

The Committee typically recommends director candidates to the Board in early July of each year. The Committee will consider in advance of Sysco’s next Annual Meeting of stockholders those director candidate recommendations that the Committee receives by May 1st.

With respect to all incumbent and new candidates that the Committee believes merit consideration, the Committee will:

cause to be assembled information concerning the background and qualifications of the candidate, including information required to be disclosed in a proxy statement under the rules of the SEC or any other regulatory agency or exchange or trading system on which Sysco’s securities are listed, and any relationship between the candidate and the person or persons recommending the candidate;

determine if the candidate satisfies the qualifications required by the company’s Corporate Governance Guidelines of candidates for election as director, as set forth above;

determine if the candidate possesses qualities, experience or skills that the Committee has determined to be desirable;

consider the contribution that the candidate can be expected to make to the overall functioning of the Board;

consider the candidate’s capacity to be an effective director in light of the time required by the candidate’s primary occupation and service on other boards;

consider the extent to which the membership of the candidate on the Board will promote diversity among the directors; and

consider, with respect to an incumbent director, whether the director satisfactorily performed his or her duties as director during the preceding term, including attendance and participation at Board and Committee meetings, and other contributions as a director.

In its discretion, the Committee may designate one or more of its members, or the entire Committee, to interview any proposed candidate. Based on all available information and relevant considerations, the Committee will recommend to the full Board for nomination those candidates who, in the view of the Committee, are most suited for membership on the Board.

The Committee has not received any recommendations for director nominees for election at the 2013 annual stockholders meeting from any Sysco security holder or group of security holders beneficially owning more than five percent of Sysco’s outstanding common stock.

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If we receive by June 5, 2014 a recommendation of a director candidate from one or more stockholders who have beneficially owned at least five percent of our outstanding common stock for at least one year as of the date the stockholder makes the recommendation, then we will disclose in our next proxy materials relating to the election of directors the identity of the candidate, the identity of the nominating stockholder(s) and whether the Committee determined to nominate such candidate for election to the Board. However, we will not provide this disclosure without first obtaining written consent of such disclosure from both the nominating stockholder and the candidate it is planning to identify. The Committee will maintain appropriate records regarding its process of identifying and evaluating candidates for election to the Board.

Director Qualifications

The Board and the Corporate Governance and Nominating Committee consider the qualification of directors and director candidates individually and in the broader context of the Board’s overall composition and the company’s current and future needs. Below we identify and describe some of the key experience, qualifications and skills that our Corporate Governance and Nominating Committee believes individuals serving as directors of Sysco should collectively bring to the Board, in addition to the key characteristics described above, and that are important in light of our business and structure. The priorities and emphasis of the Corporate Governance and Nominating Committee and of the Board with regard to these factors may change from time to time to take into account changes in our business and other trends, as well as the portfolio of skills and experience of current and prospective Board members.

Leadership, Corporate Strategy and Development Experience  — The Board believes that experience as a senior executive in a large and complex public, private, government or academic organization enables a director to better oversee the management of the company. Such individuals also bring perspective in analyzing, shaping and overseeing the execution of important operational and policy issues at a senior level, and tend to demonstrate a practical understanding of organizations, strategy, risk management and the methods to drive change and growth. Finally, directors with experience in significant leadership positions generally possess the ability to identify and develop leadership qualities in others, including members of our management team.

Foodservice Industry or Marketing Experience  — Directors with experience as executives, directors or in other leadership positions in various aspects of the foodservice industry gain extensive knowledge that is valuable to Sysco’s operating plan and strategy, including ways in which Sysco can better fulfill the needs of its customers and suppliers. In addition, as the foodservice market continues to mature, directors with marketing knowledge provide valuable insights as we focus on ways in which Sysco can grow organically by identifying and developing new markets.

Technology, e-Commerce and Enterprise Resource Planning Experience  — Technology is already an integral part of Sysco’s distribution and supply chain. In addition, we are in the process of implementing a multi-year Business Transformation Project, a component of which, the Enterprise Resource Planning (“ERP”), is designed to combine the systems of many Sysco operating companies into a single system. The use of a single system is expected to drive efficiencies and cost savings through consolidation and standardization, allow us to leverage data to make better decisions as we develop a better enterprise-wide view of the business and enhance our customers’ experience through improved online ordering and customer support systems. Directors with experience in the areas of technology and ERP implementation can provide valuable insights to guide these efforts.

Distribution/Supply Chain Experience  — Directors that have experience in distribution logistics and supply chain management can help us find ways to optimize warehouse and delivery activities across the Sysco organization to achieve a more efficient delivery of products to our customers.

Global Experience/Broad International Exposure  — Although Sysco’s primary focus is on growing and optimizing the core foodservice distribution business in North America we continue to explore and identify opportunities to grow our global capabilities in, and source products directly from, international markets. We benefit from the experience and insight of directors with a global business perspective as we identify the best strategic manner in which to expand our operations outside of North America. As Sysco’s reach becomes more global, directors with international business experience can assist us in navigating the business, political, and regulatory environments in countries in which Sysco does, or seeks to do, business.

Accounting, Finance and Financial Reporting Experience  — An understanding of accounting, finance and financial reporting processes is important for our directors to evaluate our financial statements and capital investments. Although we expect all of our directors to be financially knowledgeable, many of our directors have developed much more extensive experience in accounting and financial matters through their executive leadership roles in the public and private sector.

Risk Oversight and Risk Management  — The Board oversees management’s efforts to understand and evaluate the types of risks facing Sysco and its business, evaluate the magnitude of the exposure, and enhance risk management practices. Directors with risk management experience can provide valuable insights as Sysco seeks to strike an appropriate balance between enhancing profits and managing risk.

Public Company Board Experience  — Directors who have served on other public company boards can offer advice and insights with regard to the dynamics and operation of the Board, board practices of other public companies and the relationship between the Board and the management team. Most public company directors also have corporate governance experience to support our goals of Board and management accountability, greater transparency, legal and regulatory compliance and the protection of stockholder interests. Many of our directors currently serve, or have previously served, on the boards of directors of other public companies.

Diversity  — Our Corporate Governance Guidelines provide that the Corporate Governance and Nominating Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics new Board members should possess as well as the composition of the Board as a whole. This review includes consideration of diversity, age, skills, experience, time available and the number of other boards the member sits on in the context of the needs of the Board and the company, and such other criteria as the Committee shall determine to be relevant at the time. While the Board has not prescribed standards for considering diversity, as a matter of practice it looks for diversity in nominees such that the individuals can enhance perspective and experience through diversity in race, gender, ethnicity, cultural background, geographic origin, education, and professional and life experience. Because we value gender and racial diversity among our Board members, three of our current Board members are women, including one African American, the Chairman of the Board is Hispanic and two of our current Board members are from outside the United States.

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Included in the individual biographies below is a discussion of the most significant aspects of each director’s background that strengthen the Board’s collective qualifications, skills and experience and that the Corporate Governance and Nominating Committee and the Board considered in reaching their conclusion that he or she should continue to serve as a director of Sysco.

Nominees for Election as Directors at the 2013 Annual Meeting

Six directors are to be elected at the meeting. The Board of Directors currently consists of eleven members. Mr. Fernandez is not standing for re-election and will leave the Board effective at the Annual Meeting. As a result, the Board has reduced its size from eleven to ten members effective as of the Annual Meeting. The Board of Directors was previously divided into three classes, and prior to 2012, the directors of only one of the three classes were elected at each annual meeting, for a three-year term. However, at the 2011 annual meeting of stockholders, the stockholders approved an amendment to the Bylaws to provide for the staggered de-classification of the Board, beginning in 2012.

This year, six directors are nominated for election at the annual meeting, for a term of one year only. The Board’s nominees are those directors who were previously designated as Class II and Class III directors, and who are standing for re-election and whose terms expire at this year’s annual meeting. The terms of those directors designated as Class I directors will expire at the 2014 annual meeting. Beginning with the 2014 Annual Meeting, all directors will be elected for a one-year term.

The Board of Directors has nominated the following six persons for election as directors to serve for one-year terms or until their successors are elected and qualified:

Jonathan Golden

Joseph A. Hafner, Jr.

Nancy S. Newcomb

John M. Cassaday

Hans-Joachim Koerber

Jackie M. Ward

Each of the nominees is currently serving as a director of Sysco and was previously designated as a Class II or Class III director. Each of the nominees has consented to serve if elected. Although management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, the proxies will vote for any nominee who is designated by the present Board of Directors to fill the vacancy.

The Board believes that the combination of the various qualifications, skills and experiences of the nominees for election as Directors at the 2013 Annual Meeting would contribute to an effective and well-functioning Board. Set forth below is biographical information for each director, including the nominees for election as a director at the 2013 Annual Meeting. Unless otherwise noted, the persons named below have been engaged in the principal occupations shown for the past five years or longer. In addition to the information described below, many of our directors serve as trustees, directors or officers of various non-profit, educational, charitable and philanthropic organizations.

The Board of Directors recommends a vote FOR each of the nominees listed above.

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Board Composition

Nominees for Election as Directors whose terms expire at the 2014 Annual Meeting (Previously designated as Class II or III Directors):

  Jonathan Golden

Age: 76

Director Since: February 1984

Committees: Finance Committee, Corporate Sustainability Committee

Primary Occupation: Mr. Golden is a partner of Arnall Golden Gregory LLP, counsel to Sysco.

Key Director Qualifications: Mr. Golden is a graduate of Princeton University and Harvard Law School. He also has served as an adjunct professor at Emory Law School in Atlanta for nine years. Mr. Golden, who is not considered an independent director, has developed an extensive knowledge of Sysco’s business through his service as a director of the company since 1984 and through Arnall Golden Gregory LLP, a firm that has served as legal advisor to the company on numerous transactions. Mr. Golden has served as Chairman of that firm for approximately eleven years. He personally has a long history of representing participants in the food industry, including manufacturers, distributors and food industry trade associations. Mr. Golden has gained further experience regarding the distribution and supply chain of foodservice companies as a member of the Board of Directors of a major privately-held food manufacturer that is the leader in the frozen food industry and sells to foodservice customers, particularly in-store bakeries and retail marketplaces. In addition to his legal and regulatory experience and focus on corporate responsibility, Mr. Golden has developed a knowledge of other public company Board practices through his past service on the Boards of The Profit Recovery Group International, Inc., Intermedics, Inc., Automatic Service Company and Butler Shoe Corp.

  Joseph A. Hafner, Jr.

Age: 68

Director Since: November 2003

Committees: Finance Committee (Chair), Audit Committee, Corporate Sustainability Committee

Primary Occupation: Mr. Hafner retired as Chairman of Riviana Foods, Inc. in 2006, a position he had held since March 2005. He served as President and Chief Executive Officer of Riviana from 1984 until March 2004.

Key Director Qualifications: Mr. Hafner attended Dartmouth College, where he graduated cum laude, then earned a master of business administration degree with high distinction from Dartmouth’s Amos Tuck School of Business Administration. After graduation, Mr. Hafner served for two years in the Latin American Internship Program of Cornell University and the Ford Foundation in Lima, Peru, followed by two years with the Arthur Andersen & Co. accounting firm in Houston. In 1972, Mr. Hafner began his career with Riviana Foods, Inc. in Guatemala City as Controller of Riviana’s Central American Division. For over 30 years, Mr. Hafner worked in positions of increasing authority for Riviana, a company that processed, marketed and distributed rice products in the U.S. and Europe, as well as other food products in Central America and Europe. Mr. Hafner continued his international exposure through the oversight of Riviana’s rice operations in South Africa and Australia. His career culminated in his service as President and CEO of Riviana for over 20 years, providing him with experience in the areas of leadership, corporate strategy and development, the foodservice industry, distribution and supply chains, finance and accounting and international operations. In addition, Mr. Hafner has developed finance and accounting expertise during his career at Arthur Andersen and Riviana and is a member of the American Institute of Certified Professional Accountants.

  Nancy S. Newcomb

Age: 68

Director Since: February 2006

Committees: Audit Committee, Finance Committee

Primary Occupation: Ms. Newcomb served as Senior Corporate Officer, Risk Management, of Citigroup from May 1998 until her retirement in 2004. She served as a customer group executive of Citicorp (the predecessor corporation of Citigroup) from December 1995 to April 1998, and as a division executive, Latin America from September 1993 to December 1995. From January 1988 to August 1993 she was the principal financial officer, responsible for liquidity, funding and capital management.

Other Boards: Ms. Newcomb is a director of The DIRECTV Group, Inc., and during the last five years, was a director of Moody’s Corporation.

Key Director Qualifications: Ms. Newcomb is a graduate of Connecticut College and received a Master’s Degree in Economics from Boston University. She also graduated from Harvard Business School’s Program for Management Development. Ms. Newcomb’s 35-year career with Citigroup, a major international financial services company, and its predecessors Citicorp and Citibank, provided her with experience in the areas of leadership, corporate strategy and development, finance, risk management and international operations. Ms. Newcomb developed extensive risk management experience throughout her career, including holding the position of Citigroup’s Senior Corporate Officer of Risk Management for the last six years of her career. In the area of Finance and International Operations, Ms. Newcomb served as Citigroup’s Principal Financial Officer, responsible for liquidity, funding and capital management. She has had extensive international experience as head of worldwide treasury operations in over 100 countries, and co-head of Citigroup’s global, multinational customer business.

  John M. Cassaday

Age: 60

Director Since: November 2004

Committees: Compensation Committee (Chair), Corporate Governance and Nominating Committee

Primary Occupation: Since September 1999, Mr. Cassaday has served as President and Chief Executive Officer, as well as a director, of Corus Entertainment Inc., a media and entertainment company based in Canada.

Other Boards: Mr. Cassaday is a director of Manulife Financial Corporation, a director of Corus Entertainment Inc., and a director of privately held company Irving Oil Limited.

Key Director Qualifications: Mr. Cassaday earned a Bachelor of Arts degree from the University of Western Ontario and a Master of Business Administration Degree with honors from the University of Toronto’s Rotman School of Management. Prior to his current position as the founding President and CEO of Corus Entertainment Inc., a Canadian leader in radio and specialty television, Mr. Cassaday served as President and CEO of CTV Television Network Ltd. Mr. Cassaday’s career prior to broadcasting included executive positions in a number of leading packaged goods companies including RJR-Macdonald, Inc., General Foods Corporation and Campbell Soup Company, where he gained food processing and food safety experience while advancing through positions in sales, marketing, and strategic planning in Canada, the United States, and the United Kingdom. His career at Campbell’s culminated in service as President of Campbell Soup Company’s operations in Canada and then the United Kingdom. Mr. Cassaday gained additional foodservice experience through his service as a director of Loblaw Companies Limited, Canada’s largest food distributor, and of J.M. Schnieder, a meat processing company. This background has provided Mr. Cassaday with extensive experience and knowledge in the areas of leadership, corporate strategy and development, the foodservice industry, distribution and supply chains, marketing, international operations, accounting, finance and financial reporting. In addition, Mr. Cassaday’s service on the Board of Directors of Manulife Financial Corporation has provided a greater understanding of risk management and global compensation considerations. Mr. Cassaday has received many business, industry and charitable honors, including designation as the most distinguished alumni of the University of Toronto’s Rotman School of Management in 1998, receipt of the Gold Medal from the Association of Canadian Advertisers in 2004 (which recognizes individuals who have made an outstanding contribution to the advancement of marketing communications in Canada) and induction in the Marketing Hall of Legends of Canada in 2006. In 2013, Mr. Cassaday was inducted into the Order of Canada, Canada’s highest civilian honor.

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  Hans-Joachim Koerber

Age: 67

Director Since: January 2008

Committees: Audit Committee, Finance Committee

Primary Occupation: Dr. Koerber served as the chairman and chief executive officer of METRO Group, Germany’s largest retailer, from 1999 until his retirement in October 2007.

Other Boards: Dr. Koerber is chairman of the board of directors of Air Berlin PLC, as well as a director of several private European companies, including Klüh Service management GmbH, WEPA Industrieholding SE, DAW SE, and Eurocash SA (since June 2013).

Key Director Qualifications: Dr. Koerber earned a degree as a Master Brewer in Brewing Technology and a Ph.D. in Business Management from the Technical University of Berlin. Dr. Koerber began his career in the beverage industry, including management positions in which he was responsible for finance and accounting, information technology, purchasing and personnel. He first became involved with the company that would eventually become METRO when he joined the predecessor company’s cash-and-carry, self-service wholesale company in charge of finance and accounting, controlling, logistics and information technology. His responsibilities continued to expand to include international cash-and-carry activities in six countries. When METRO AG was formed in 1996, Dr. Koerber became part of the METRO management board. His responsibilities included corporate development, corporate communications and investor relations and he became chairman and chief executive officer in 1999. Dr. Koerber introduced a new management style, streamlined the company to focus on four of the original 16 business divisions in order to remain competitive and achieve profitability, adopted international accounting standards and rapidly developed METRO’s international presence, including hands-on experience in expanding METRO into Eastern Europe and Asia, including China and India. These efforts helped make METRO Germany’s largest retailer, operating wholesale cash & carry stores, supermarkets, hypermarkets, department stores and consumer electronics shops throughout the world. Throughout his career, Dr. Koerber developed experience and qualifications in the areas of leadership, corporate strategy and development, the foodservice industry, distribution and supply chains, marketing and risk management. Dr. Koerber’s insights on running and expanding a foodservice business with international operations have been, and will continue to be, particularly helpful to Sysco. Dr. Koerber’s career at METRO AG, combined with his 10 years of service on the Board of Skandinaviska Enskilda Banken AB (the parent company of the SEB Group, a North European banking concern catering to corporations, institutions, and private individuals) and the Board of Directors of several other international companies, has provided him with financial expertise, particularly with regard to international financial accounting standards. His service on the Board of Air Berlin PLC (Germany’s second largest airline) has deepened his experience in marketing.

  Jackie M. Ward

Age: 75

Director Since: September 2001 (Lead Director since May 2012)

Committees: Corporate Governance and Nominating Committee (Chair), Compensation Committee

Primary Occupation: Ms. Ward is the former Chairman, President and Chief Executive Officer of Computer Generation Incorporated (CGI), a company she founded in 1968 that was acquired in December 2000 by Crescent Capital and later Intec Telecom Systems PLC, a technology company based in the United Kingdom.

Other Boards: Director of Flowers Foods, Inc., Sanmina-SCI Corporation. In the last five years, Ms. Ward also served as a director of Bank of America Corporation, Equifax Inc. and WellPoint, Inc.

Key Director Qualifications: Ms. Ward attended Georgia State College for Women and the University of Georgia Extension Center, where she majored in psychology and mathematics. She later attended the London School of Business and was awarded a Doctor of Laws from Mercer University. Early in her career, Ms. Ward held programming, engineering, marketing and management positions with UNIVAC (a division of Sperry Corporation), General Electric Company and J.P. Stevens Company. Ms. Ward then founded, was elected chairman, president and chief executive officer, and had over 30 years of experience with Computer Generation Incorporated (CGI), a provider of software/hardware solutions to the telecommunications and general industry with operations in the U.S., England and much of Europe, Australia, South Africa, Mexico and Latin America. Ms. Ward’s lengthy career has provided her with extensive leadership, information technology, retail/mass marketing, corporate strategy and development, finance, banking, and international experience. In addition, significant projects undertaken by CGI for governmental and private entities provided unique experience for Ms. Ward in developing and implementing supply chain inventory control systems, fraud detection systems and software/hardware to handle generalized and specific accounting functions. Ms. Ward has gained knowledge of the foodservice industry through her membership on the Board of Directors of Flowers Foods, Inc., one of the largest producers and marketers of bakery products in the U.S., as well as developing systems for related food clients, such as Edwards Baking Company and Eastern Food Services. She also has significant public company board experience as a current or former member of numerous Boards of Directors where she served in various leadership positions, including lead director, presiding director and the chairman of various committees. With respect to Flowers Foods, Ms. Ward currently serves as the Chair of the Nominating and Corporate Governance Committee and a member of the Compensation and Executive Committees. With respect to WellPoint, Ms. Ward served as Chairman of the Board, Chair of the Corporate Governance Committee and Executive Committee, and a member of the Compensation Committee. She also serves as the Chair of the Nominating and Governance Committee of Sanmina-SCI Corporation. Ms. Ward furthered her expertise in the areas of finance and risk management as Chairman of the Asset Quality Committee of Bank of America’s Board of Directors for 15 years and her expertise in the areas of accounting and internal audit as a member of the Board of PRG-Schultz International, Inc., which provides recovery audit services to organizations with high volumes of payment transactions, including retail and wholesale businesses, manufacturers, health care, and government agencies.

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Directors whose terms expire at the 2014 Annual Meeting (Class I Directors):

  Judith B. Craven, M.D.

Age: 67

Director Since: July 1996

Committees: Corporate Sustainability Committee (Chair), Corporate Governance and Nominating Committee, Compensation Committee

Primary Occupation: Dr. Craven served as President of the United Way of the Texas Gulf Coast from 1992 until her retirement in September 1998.

Other Boards: Director of Belo Corporation, Luby’s, Inc., Sun America Funds and VALIC.

Key Director Qualifications: Dr. Craven earned a B.S. degree in Biology and English from Bowling Green State University, then completed premedical requirements at Texas Southern University before earning a Doctor of Medicine from Baylor College of Medicine and a Master of Public Health from the University of Texas School of Public Health. She also completed the Harvard University Program for Senior Managers in Government at the John F. Kennedy School of Government. Dr. Craven provides a unique viewpoint on Sysco’s Board as a medical doctor and distinguished public health expert. She gained a distinctive understanding of the foodservice industry after serving as Director of Public Health for the City of Houston from 1980 through 1983, which included responsibility for the regulation of all foodservice establishments in the City of Houston, including an emphasis on food safety and food handling. Following this appointment, Dr. Craven served as Dean of the University of Texas School of Allied Health Sciences from 1983 to 1992. She also serves on the Board of Directors of Luby’s, Inc., which operates almost 100 restaurants and provides food services to select hospital and other medical institutions in Texas. Dr. Craven also has a strong commitment to diversity and social responsibility, having led many initiatives to help increase and incorporate diversity in schools, the workplace and the community. Dr. Craven served as Vice President for Multicultural Affairs for the University of Texas Health Science Center at Houston from 1987 to 1992, and served as Chair of the Committee on Diversity for the University of Texas Board of Regents for six years. Under Dr. Craven’s leadership as president for six years, The United Way of The Texas Gulf Coast won the first National Award for diversity from the United Way of America. She has also served as a member of the Board of Directors of Compaq Corporation and the Houston Branch of the Federal Reserve Bank of Dallas. Dr. Craven has received numerous awards and honors, including the NAACP VIP Award for Community Service, Houston’s Thirty Most Influential Black Women Award and induction into the Texas Women’s Hall of Fame in 1989.

  William J. DeLaney

Age: 57

Director Since: January 2009

Committees: Finance Committee

Primary Occupation: Mr.DeLaney began serving as Sysco’s Chief Executive Officer in March 2009. He assumed the additional title of President in March 2010. Mr. DeLaney began his Sysco career in 1987 as Assistant Treasurer at the company’s corporate headquarters. Hewas promoted to Treasurer in 1991, and in 1993 he was named a Vice President of the company, continuing in those responsibilities until 1994. Mr. DeLaney joined Sysco Food Services of Syracuse in 1996 as chief financial officer, progressed to senior vice president in 1998 and executive vice president in 2002. In 2004, Mr. DeLaney was appointed president and chief executive officer of Sysco Food Services of Charlotte. He held that position until December 2006, when he was named Sysco’s Senior Vice President of Financial Reporting. Effective July 1, 2007, Mr. DeLaney was promoted to the role of Executive Vice President and Chief Financial Officer and continued to serve in such position following his promotion to CEO until October 2009.

Other Boards: Mr. DeLaney is a director of Express Scripts, Inc. and serves on the Compensation Committee and the Audit Committee of the Express Scripts, Inc. Board of Directors.

Key Director Qualifications: Mr. DeLaney earned a Bachelor of Business Administration degree from the University of Notre Dame, and a Master of Business Administration degree from the Wharton Graduate Division of the University of Pennsylvania. Mr. DeLaney has worked in various capacities at Sysco and its subsidiaries for more than 20 years. Through various accounting, finance, operations and management positions within Sysco and its operating companies, Mr. DeLaney has gained valuable insight into the foodservice industry, as well as Sysco’s competitive advantages and how to further build upon them. Throughout his career, Mr. DeLaney has developed experience and knowledge in the areas of leadership and management development, corporate strategy and development, finance and accounting and distribution and supply chain management. Further, the Corporate Governance and Nominating Committee and the Board believe that it is appropriate and beneficial to Sysco to have its Chief Executive Officer serve as management’s voice on the Board.

  Larry C. Glasscock

Age: 65

Director Since: September 2010

Committees: Compensation Committee, Corporate Governance and Nominating Committee, Corporate Sustainability Committee

Primary Occupation: In March 2010, Mr. Glasscock retired from his position as Chairman of the Board of Directors of WellPoint, Inc., one of the largest health benefits companies in the United States, after serving in the role since November 2005. He also served as WellPoint’s President and CEO from November 2004 until July 2007. Mr. Glasscock previously served as Chairman, President and CEO of Anthem, Inc., a health benefits company, from 2001 to 2004, assuming additional responsibilities as Chairman from 2003 to 2004.

Other Boards: Mr. Glasscock has served as a director of Simon Property Group, Inc., a real estate investment trust, since March 2010; and a director of Zimmer Holdings, Inc., a global leader in the design, development, manufacture and marketing of orthopedic reconstructive implants, dental implants, spinal implants, trauma products and related surgical devices, since August 2001. In the last five years, Mr. Glasscock served as a director of WellPoint, Inc. and Sprint Nextel Corp.

Key Director Qualifications: Mr. Glasscock attended Cleveland State University, where he received a bachelor’s degree in business administration. He later studied at the School of International Banking, participated in the American Bankers Association Conference of Executive Officers, and completed the Commercial Bank Management Program at Columbia University. Mr. Glasscock has developed significant leadership and corporate strategy expertise through over 30 years of business experience, including former service as President and CEO of WellPoint, Inc., COO of CareFirst, Inc., President and CEO of Group Hospitalization and Medical Services, Inc., President and COO of First American Bank, N.A., and President and CEO of Essex Holdings, Inc. During his tenure at WellPoint, Inc., he played a major role in transforming the company from a regional health insurer into a national healthcare leader and championed company efforts to improve quality and customer service. Throughout his career, Mr. Glasscock has developed expertise in the successful completion and integration of mergers, utilization of technology to improve productivity and customer service, and team building and human capital development. Mr. Glasscock’s expertise in the utilization of technology to improve productivity will be valuable to Sysco as we implement and build upon our Business Transformation Project. His knowledge and experience in team building and human capital development are also extremely valuable to Sysco, as management development was one of our CEO’s key non-financial goals during fiscal 2012 and 2013. Mr. Glasscock also has considerable financial experience, as he has supervised the chief financial officers of major corporations. Earlier in his career he served as a bank officer lending to major corporations and supervised assessments of companies’ creditworthiness. Mr. Glasscock also has significant experience as a public company director and as a member of various committees related to important board functions, including audit, finance, governance and compensation.

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  Richard G. Tilghman

Age: 73

Director Since: November 2002

Committees: Audit Committee (Chair), Finance Committee

Primary Occupation: Mr. Tilghman served as Vice Chairman and Director of SunTrust Banks from 1999 until his retirement in 2000. He served as Chairman and Chief Executive Officer of Crestar Financial Corporation, a bank holding company, from 1986 until 1999.

Key Director Qualifications: After graduating from the University of Virginia with a B.A. in Foreign Affairs and serving in the U.S. Army as a lieutenant, Mr. Tilghman enjoyed a 34-year banking career, including service as Vice Chairman and Director of Suntrust Banks, as well as the former Chairman and CEO of Crestar Financial Corporation, a bank holding company for fifteen years. His career provided him with experience and expertise in the areas of leadership, corporate strategy and development, finance, banking, accounting and risk management. Mr. Tilghman’s experience overseeing a business and technology transformation for a series of banks acquired through acquisitions is very important to Sysco as we undertake to streamline our operations using a common technology platform. Mr. Tilghman also gained high tech and regional marketing experience that has been valuable to Sysco as we have redefined oversight of our operating companies by marketing region and focus on the use of e-Commerce technologies to service Sysco customers more efficiently. Mr. Tilghman’s experience also includes approximately 20 years of service on the Board of Directors of Chesapeake Corporation, which was then a leading supplier of cartons, labels, leaflets, and specialty plastic packaging, with manufacturing facilities in Asia, Europe and the U.S. at that time.

Current director not standing for re-election:

  Manuel A. Fernandez

Age: 67

Director Since: November 2006 (Mr. Fernandez has served as the Executive Chairman of the Board since April 2012, and prior to April 2012, he served as non-executive Chairman of the Board since June 2009)

Committees: Finance Committee.

Primary Occupation: Mr. Fernandez has served as Executive Chairman of Sysco since April 2012. Prior to his present positions, Mr. Fernandez was Chairman, President, and CEO of Gartner, Inc., a leading information technology research and consulting company and the Managing Director of SI Ventures, a venture capital firm focusing on information technology and communications infrastructure companies that enable e-business.

Other Boards: Mr. Fernandez also serves on the board of directors of Brunswick Corporation and Flowers Foods, Inc., and during the last five years was a director of Stanley Black & Decker, Inc. and of its predecessor the Black & Decker Company.

Key Director Qualifications: Mr. Fernandez earned a Bachelor’s Degree in electrical engineering from the University of Florida and completed post-graduate studies in solid state engineering. He began his career in engineering positions, eventually becoming a Group Executive Vice President of Fairchild Semiconductor with direct oversight for operations and manufacturing facilities in the US and in several foreign countries. Among the engineering breakthroughs in his career, Mr. Fernandez was part of a design team at Harris Semiconductors that developed the first programmable memory. He later served as President and CEO of three technology-driven companies, including Zilog Incorporated (a publicly-traded semiconductor manufacturer and a leader in the microprocessor industry, with operations in over 20 countries), Gavilan Computer Corporation (a technology company he founded that developed one of the first battery-operated laptop computers in 1982) and Dataquest (an information services company that was later acquired by Gartner). During Mr. Fernandez’s service as CEO and later Chairman of the Board of Gartner, he oversaw the company’s dramatic growth, from a research boutique with revenue of $46 million in 1991 to a global technology research and advisory firm with over $950 million of revenue in 2001, including taking the company public in 1994. At the time of his retirement, Gartner had locations in over 40 international locations serving customers in 80 countries. Together, these positions provided Mr. Fernandez with extensive leadership, corporate strategy and development, information technology, IT strategy, strategic planning and international experience.

Mr. Fernandez has gained knowledge of distribution and supply chains as a member of the Board of Directors of:

Brunswick Corporation, a leading global manufacturer and marketer of recreation products including marine engines, boats, fitness equipment and bowling and billiards equipment, where he currently serves as Lead Director and a member of the Human Resources and Compensation Committee (which he previously chaired) and previously served as chairman of the Nominating and Corporate Governance Committee;

The Black & Decker Corporation, a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems, where he previously served as Lead Director and Chairman of the Corporate Governance Committee; and

Stanley Black & Decker, Inc., a diversified global supplier of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, where he served on the Finance and Pension Committee and the Corporate Governance Committee.

Mr. Fernandez’s service on the Board of Directors of Flowers Foods, Inc., one of the largest producers and marketers of bakery products in the United States, has provided him with extensive knowledge of the foodservice industry. At Flowers Foods he also serves as chairman of the Compensation Committee and a member of the Corporate Governance Committee.

Mr. Fernandez has invested in over 20 start-up companies in the information technology field, has served on the Boards of Directors of multiple public and private companies and was appointed by the President of the United States as a member of the Presidential Information Technology Action Committee. He is a former Chairman of the Board of Trustees of the University of Florida.

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DIRECTOR COMPENSATION

Overview of Non-Employee Director Compensation

The Company uses a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board, as described below. Members of the Board who are employees of the Company are not compensated for services on the Board or any of its Committees. We currently pay each non-employee director a base retainer of $100,000 per year. Non-employee directors who serve as committee chairpersons receive annual additional amounts as follows:

Audit Committee Chair— $25,000

Compensation Committee Chair— $20,000

Corporate Governance and Nominating Committee Chair— $20,000

Finance Committee Chair— $20,000

Sustainability Committee Chair— $15,000

In May 2012, the Board selected Ms. Ward as its Lead Director. In addition to the compensation received by all non-employee directors, Ms. Ward receives an additional annual retainer of $40,000, paid quarterly, for her service as Lead Director.

Each November the Board grants approximately $160,000 in time vesting equity incentives to each of the non-employee directors in the form of restricted stock awards. For fiscal 2013, the Board granted approximately $160,000 in restricted stock awards which vest in full on the first anniversary of the grant date. See “2009 Non-Employee Directors Stock Plan— Restricted Stock and Restricted Stock Units” below for a description of the plan under which these awards may currently be granted and the Fiscal 2013 Non-Employee Director Compensation table below for detailed compensation information for fiscal 2013 for each of our non-employee directors.

Reimbursement of Expenses

All non-employee directors are entitled to receive reimbursements of expenses for all services as director, including committee participation or special assignments. We pay the annual retainers quarterly. Directors are invited to have their spouses accompany them to dinners and other functions held in connection with one or two board meetings each year, and the company pays, either directly or through reimbursement, all expenses associated with their travel to and attendance at these business-related functions. Reimbursement for non-employee director travel may include reimbursement of a portion of the cost of travel on private aircraft. Specifically, this includes reimbursement for non-commercial air travel in connection with Sysco business, subject to specified maximums, provided that amounts related to the purchase price of an aircraft or fractional interest in an aircraft are not reimbursable and any portion of the reimbursement that relates to insurance, maintenance and other non-incremental costs is limited to a maximum annual amount. Non-employee directors also receive discounts on products carried by the company and its subsidiaries comparable to the discounts offered to all company employees.

Overview of Executive Chairman Compensation

Mr. Fernandez will not stand for re-election at the Annual Meeting and will retire as Executive Chairman effective following the Annual Meeting. Mr. Fernandez was elected to the Executive Chairman position in April 2012 and his compensation for this role was determined by the Compensation Committee at that time. Prior to that time, he served as a non-employee director and non-executive chairman of the board of Sysco. The Committee considered various factors in determining the compensation for the Executive Chairman, and based upon the Committee’s determination and assessment of the role, responsibilities and time requirements, the Committee approved the following compensation for Mr. Fernandez:

An annual base salary of $900,000; and

Reimbursement of travel expenses, including the necessary housing, transportation, commercial and non-commercial air travel in connection with Sysco business and other expenses to support his travel and stays in Houston and other cities in accordance with the performance of his job duties.

On August 22, 2013, the Committee granted additional equity incentive compensation valued at approximately $2.9 million to Mr. Fernandez as part of Mr. Fernandez’s executive compensation package in his role as Executive Chairman. The grant is composed of 45,601 restricted stock units, valued at $1,458,320, based on the closing price of Sysco common stock on August 21, 2013, and 364,583 stock options, valued at $1,458,332 (using a value of $4 per option because the Committee used the higher of the Black Scholes value or $4.00 per option in determining actual option value) with each award vesting one-third per year over three years, provided that the awards will continue to vest in accordance with their terms upon Mr. Fernandez’ retirement in good standing from his position as Executive Chairman or from Board service. The Committee granted this award in connection with his service to Sysco Corporation from April 2013 to November 2013. In addition, at the time of his election as Executive Chairman in April 2012, the Compensation Committee awarded Mr. Fernandez $2.5 million of stock options and $2.5 million of restricted stock units. The restricted stock units and the options vest one-third per year on the anniversary of the grant date. The Committee valued the restricted stock units at the closing price of Sysco common stock on the day prior to the grant and valued the options at $4.00 per option in determining actual share awards. In April 2012 and August 2013, the Black-Scholes value based on standard assumptions was less than $4.00, and the adjustment to $4.00 reduced the value of options granted. The Committee determined that Mr. Fernandez would not receive any additional form of long-term incentives, such as CPUs, would not participate in the Management Incentive Plan (“MIP”) annual incentive award, other MIP benefits, the SERP, EDCP or MSP, but would participate in the broad-based employee benefits program. Because Mr. Fernandez is of retirement age, following the termination of his employment as Executive Chairman effective at the Annual Meeting date, all of his outstanding equity awards will continue to vest in accordance with their terms.

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Directors Deferred Compensation Plan

Non-employee directors may defer all or a portion of their annual retainer, including additional fees paid to committee chairpersons and the non-executive Chairman of the Board’s and/or Lead Directors’ annual retainer, under the Directors Deferred Compensation Plan. The plan was amended in 2012, in order to allow Mr. Fernandez to include his additional retainer paid for serving as non-executive Chairman of the Board prior to April 2012. In order to respect Mr. Fernandez’ prior deferral elections made while he was still non-executive Chair, Sysco allowed Mr. Fernandez to defer $25,000 of his calendar year 2012 Executive Chair salary into the DDCP. It is not anticipated that any future deferrals into the DDCP by Mr. Fernandez will be allowed for salary paid to him as an Executive Chair. Non-employee directors may choose from a variety of investment options, including Moody’s Average Corporate Bond Yield plus 1%, with respect to amounts deferred prior to fiscal 2009. This investment option was reduced to Moody’s Average Corporate Bond Yield, without the addition of 1%, for amounts deferred after fiscal 2008. We credit such deferred amounts with investment gains or losses until the non-employee director’s retirement from the Board or until the occurrence of certain other events.

Directors Stock Plans

As of September 17, 2013, the non-employee directors held options and shares of restricted stock that were issued under the 2009 Non-Employee Directors Stock Plan, the Amended and Restated 2005 Non-Employee Directors Stock Plan, the Non-Employee Directors Stock Plan, as amended and restated, and the Amended and Restated Non-Employee Directors Stock Option Plan. They also held elected and match shares (as described below) issued under the 2009 Non-Employee Directors Stock Plan. We may not make any additional grants under the Amended and Restated 2005 Non-Employee Directors Stock Plan, the Non-Employee Directors Stock Plan, as amended and restated, or the Amended and Restated Non-Employee Directors Stock Option Plan. Since we may currently only make grants under the 2009 Non-Employee Directors Stock Plan, the description below relates only to such plan.

2009 Non-Employee Directors Stock Plan

Election to Receive a Portion of the Annual Retainer in Common Stock

Under the 2009 Non-Employee Directors Stock Plan, instead of receiving his or her full annual retainer fee in cash, a non-employee director may elect to receive up to 100% of his or her annual retainer fee, including any additional retainer fee paid to the non-executive Chairman of the Board and/or Lead Director for his or her service in such capacity and any fees paid to a committee chairman for his or her service in such capacity, in 10% increments, in common stock. If a director makes this election, on the date we make each quarterly payment of the director’s annual retainer fee we will credit the director’s stock account with:

The number of shares of Sysco common stock that the director could have purchased on that date with the portion of his or her cash retainer that he or she has chosen to receive in stock, assuming a purchase price equal to the last closing price of the common stock on the first business day prior to that date; we call these shares elected shares; and

With respect to up to half of his or her annual retainer fee, excluding any additional retainer fee paid for chairing the Board or one of its committees and/or serving as Lead Director and any fees paid for meeting attendance or service on a committee, 50% of the number of elected shares we credited to the director’s account; we call these extra shares additional shares.

The elected shares and additional shares vest as soon as we credit the director’s account with them, but we do not issue them until the end of the calendar year. The director may not transfer the additional shares, however, until one year after we issue them, or, if deferred, the date that we otherwise would have issued them, provided that certain events will cause this transfer restriction to lapse.

The one year transfer restriction on additional shares will lapse if:

the director dies;

the director leaves the Board:

due to disability;

after having served out his or her full term; or

after reaching age 71; or

a change in control, as defined in the plan, occurs.

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Restricted Stock and Restricted Stock Units

The plan provides that the Board may grant shares of restricted stock and restricted stock units in the amounts and on such terms as it determines but specifies that no grant may vest earlier than one year following the grant date. A restricted stock unit is an award denominated in units whose value is derived from common stock, and which is subject to similar restrictions and possibility of forfeiture, as is the restricted stock. In November 2012, we issued restricted stock awards to non-employee directors under this plan. We have not yet issued any restricted stock units under this plan.

Generally, if a director ceases to serve as a director of Sysco, he or she will forfeit all the unvested restricted stock and restricted stock units that he or she holds. However, if the director leaves the board after serving out his or her term, or for any reason after reaching age 71, his or her restricted stock and restricted stock units will remain in effect and continue to vest as if the director had remained a director of Sysco. All unvested restricted stock and restricted stock units will automatically vest upon the director’s death.

Deferral of Shares

A non-employee director may elect to defer receipt of all or any portion of any shares of common stock issued under the plan, whether such shares are to be issued as a grant of restricted stock, elected shares or additional shares, or upon the vesting of a restricted stock unit grant. In order to respect Mr. Fernandez’ prior deferral elections made while he was still non-executive Chair, Sysco allowed Mr. Fernandez to defer $160,000 of RSUs awarded to Mr. Fernandez in 2012 in his capacity as Executive Chair. It is not anticipated that any future deferrals into the DSDP by Mr. Fernandez will be allowed for RSUs or any other stock awards payable to him as Executive Chair. Generally, the receipt of stock may be deferred until the earliest to occur of the death of the non-employee director, the date on which the non-employee director ceases to be a director of the company, or a change of control of Sysco. All such deferral elections shall be made in accordance with the terms and conditions set forth in Sysco’s 2009 Board of Directors Stock Deferral Plan.

Change in Control

Grant agreements under the 2009 Non-Employee Directors Stock Plan will determine vesting provisions upon the occurrence of a specified change in control.

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Fiscal 2013 Director Compensation

The following table provides compensation information for fiscal 2013 for each of our directors who served for any part of the fiscal year, other than Mr. DeLaney, whose compensation is disclosed in the Summary Compensation Table on page 59:

Name

Fees Earned or

Paid in Cash($)(1)

Stock Awards($)

(2)(3)(4)

Non-Qualified Deferred

Compensation Earnings($)(5)

Other

Compensation(6)

Total($)

Cassaday

$

120,000

$

185,016

$

$

$

305,016

Craven

 

115,000

 

185,016

 

3,207

 

 

300,016

Fernandez(7)

 

900,000

 

0

 

2,428

 

56,917

 

959,345

Glasscock

 

100,000

 

185,016

 

 

 

285,016

Golden

 

100,000

 

185,016

 

38,167

 

 

323,183

Hafner

 

120,000

 

185,016

 

 

 

305,016

Koerber

 

100,000

 

185,016

 

 

 

285,016

Newcomb

 

100,000

 

185,016

 

 

 

285,016

Tilghman

 

125,000

 

185,016

 

 

 

310,016

Ward

 

160,000

 

185,016

 

8,640

 

 

353,656

(1)

Except for Mr. Fernandez for whom annual base salary is reported, includes retainer fees, including any retainer fees for which the non-employee director has elected to receive shares of Sysco common stock in lieu of cash and fees for the fourth quarter of fiscal 2013 that were paid at the beginning of fiscal 2014. Although we credit shares to a director’s account each quarter, the elected shares are not actually issued until the end of the calendar year unless the director’s service as a member of the Board of Directors terminates. The number of shares of stock actually credited to each non-employee director’s account in lieu of cash during fiscal 2013, excluding match shares, which are reported in the column titled “stock awards,” was as follows: 1,517 shares for each of Mr. Cassaday, Mr. Golden, Mr. Hafner, Ms. Newcomb and Mr. Tilghman; and 4,856 shares for Ms. Ward. Directors may choose to defer receipt of the elected shares described in this footnote under the Sysco Corporation 2009 Board of Directors Stock Deferral Plan. The number of elected shares of stock deferred by each non-employee director during fiscal 2013 (which are included in the elected shares described above) was as follows: Dr. Craven, Mr. Glasscock and Dr. Koerber — 1,517 shares and Ms. Ward — 757 shares. To the extent cash dividends are paid on our common stock, non-employee directors also receive the equivalent amount of the cash dividend credited to their account with respect to all elected shares that are deferred. If the director has chosen to defer the receipt of any shares, they will be credited to the director’s account and issued on the earlier to occur of the death of the director, the date on which the director ceases to be a director of the company, or a change of control of Sysco.

Compensation paid in cash to Mr. Fernandez includes the annual base salary paid for his service as Executive Chairman for fiscal 2013.

(2)

For fiscal 2013, the Board, upon the recommendation of the Corporate Governance and Nominating Committee, determined that it would grant approximately $160,000 in equity incentives to each of the non-employee directors. Therefore, on November 13, 2012, the Board granted each of the non-employee directors 5,341 shares of restricted stock valued at $29.96 per share, the closing price of Sysco common stock on the New York Stock Exchange on November 12, 2012. These awards were granted under the 2009 Non-Employee Directors Stock Plan and vest in full on the first anniversary of the grant date. The amounts in this column reflect the grant date fair value of the awards computed in accordance with ASC 718, “Compensation — Stock Compensation”. See Note 17 of the consolidated financial statements in Sysco’s Annual Report for the year ended June 29, 2013 regarding assumptions underlying valuation of equity awards.

The amounts in this column also reflect the grant date fair value of awards computed in accordance with ASC 718, “Compensation — Stock Compensation” with respect to a 50% stock match for directors who elect to receive a portion of their annual retainer fee in common stock. The value of any “elected” shares is included in the column entitled “Fees Earned or Paid in Cash” as described in footnote (1) above. See “Directors Stock Plans” above for a more detailed description. Although we credit shares to a director’s account each quarter, the shares are not actually issued until the end of the calendar year unless the director’s service as a member of the Board of Directors terminates. The number of additional shares actually credited to each non-employee director’s account during fiscal 2013 is as follows: 757 shares for each of Mr. Cassaday, Dr. Craven, Mr. Glasscock, Mr. Golden, Mr. Hafner, Dr. Koerber, Ms. Newcomb, Mr. Tilghman and Ms. Ward.

Directors may choose to defer receipt of the restricted stock and the matched shares described in this footnote under the Sysco Corporation 2009 Board of Directors Stock Deferral Plan. The number of shares of restricted stock and matched shares deferred by each non-employee director during fiscal 2013 (which are included in the additional shares described above) was as follows: Dr. Craven, Mr. Glasscock, Dr. Koerber and Ms. Ward — 757 shares. To the extent cash dividends are paid on our common stock, non-employee directors also receive the equivalent amount of the cash dividend credited to their account with respect to all deferred restricted stock awards and all matched shares that are deferred, in the form of stock units. Directors may elect an “in-service” distribution date for deferrals that is at least one year following the end of the plan year in which shares would otherwise have been transferred to the Director. Otherwise, distributions occur upon the earlier of the death of the director, the date on which the director ceases to be a director of the company, or a change of control of Sysco, unless the director applies for and qualifies for a hardship withdrawal. Mr. Fernandez did not receive a stock award in fiscal 2013; however, see footnote 7 below for details related to the August 2014 RSU grant to Mr. Fernandez.

(3)

The aggregate number of options and unvested stock awards held by each director, other than Mr. DeLaney, as of June 29, 2013 was as follows:

 

Aggregate Unvested Stock Awards

Outstanding as of June 29, 2013

Aggregate Options Outstanding

as of June 29, 2013

Cassaday

5,341

3,500

Craven

5,341

11,500

Fernandez

56,612

628,500

Glasscock

5,341

Golden

5,341

Hafner

5,341

11,500

Koerber

5,341

Newcomb

5,341

3,500

Tilghman

5,341

11,500

Ward

5,341

Except with respect to Mr. Fernandez, all of the options shown in the table above are fully vested. Mr. Fernandez’ April 2012 grants of 84,918 restricted stock units and options to purchase 625,000 shares of common stock each vested as to one-third of the grant in April 2013, with the remaining two-thirds scheduled to vest ratably in April of 2014 and 2015. The remaining grants shown for each director relate to restricted stock awards granted in November 2012 that vest in November 2013.

(4)

None of the directors shown in the table received option grants during fiscal 2013. However, see footnote 7 below for details related to the August 2014 stock option grant awarded to Mr. Fernandez.

(5)

We do not provide a pension plan for the non-employee directors. For each non-employee director, the amounts shown in this column represent above-market earnings on amounts deferred under the Non-Employee Director Deferred Compensation Plan. Directors who do not have any amounts in this column were not eligible to participate in such plan, did not participate in such plan or did not have any above-market earnings.

(6)

The amount shown for Mr. Fernandez reflects the reimbursements for the cost of a condo lease and fees in Houston, Texas for Mr. Fernandez’s use while in Houston attending to Sysco business in the amount of $56,917. Except for Mr. Fernandez, the total value of all perquisites and personal benefits received by each of the non-employee directors with respect to fiscal 2013, including reimbursements for spousal airfare and meals associated with certain Board meetings was less than $10,000.

(7)

On August 22, 2013, the Committee granted additional equity incentive compensation valued at approximately $2.9 million to Mr. Fernandez as part of Mr. Fernandez’s executive compensation package in his role as Executive Chairman. The grant is composed of 45,601 restricted stock units, valued at $1,458,320, based on the closing price of Sysco common stock on August 21, 2013, and 364,583 stock options, valued at $1,458,332 (using a value of $4 per option because the Committee used the higher of the Black Scholes value or $4.00 per option in determining actual option awards) with each award vesting one-third per year over three years, provided that the awards will continue to vest in accordance with their terms upon Mr. Fernandez’ retirement in good standing from his position as Executive Chairman or from Board service. The Committee granted this award in connection with his service to Sysco Corporation from April 2013 to November 2013.

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Mr. DeLaney did not receive any compensation in or for fiscal 2013 for Board service other than the compensation for services as an employee that is disclosed elsewhere in this proxy statement. See “Executive Compensation – Summary Compensation Table” for details regarding compensation received by Mr. DeLaney for fiscal 2013.

Stock Ownership Guidelines

The Corporate Governance Guidelines provide that after five years of service as a non-employee director, such individuals are expected to continuously own a minimum of 16,500 shares of Sysco common stock. All of the current non-employee directors with at least five years of service, as well as the Executive Chairman, beneficially held the requisite number of shares as of September 17, 2013. The Executive Chairman is subject to the stock ownership guidelines applicable to Sysco’s non-employee directors, as well as a stock ownership requirement applicable to the Executive Chairman position. Stock ownership guidelines applicable to executive officers are described under “Stock Ownership— Stock Ownership Guidelines.”

EXECUTIVE OFFICERS

The following persons currently serve as executive officers of Sysco. Each person listed below, other than Mr. Bené, Mr. Fernandez, Mr. Kreidler, Mr. Moskowitz and Mr. Shurts, has served as an officer of Sysco and/or its subsidiaries for at least the past five years.

Name

Title

Age

Tom L. Bené

Executive Vice President and Chief Commercial Officer

51

William B. Day*

Executive Vice President, Merchandising

56

William J. DeLaney*

President and Chief Executive Officer

57

G. Mitchell Elmer

Senior Vice President, Controller and Chief Accounting Officer

54

Manuel A. Fernandez

Executive Chairman

67

Michael W. Green*

Executive Vice President and President, Foodservice Operations

54

Robert C. Kreidler*

Executive Vice President and Chief Financial Officer

49

Russell T. Libby

Senior Vice President, General Counsel and Corporate Secretary

47

Paul T. Moskowitz

Senior Vice President, Human Resources

49

Wayne R. Shurts*

Executive Vice President and Chief Technology Officer

54

*

Named Executive Officer.

Thomas L. Bené has served as Executive Vice President and Chief Commercial Officer since September 1, 2013 and Executive Vice President, Chief Merchandising Officer from May 2013 to September 2013. Prior to joining Sysco, Mr. Bené served as President of PepsiCo Foodservices from 2011 until 2013. Between 2008 and 2011, he held various senior roles with PepsiCo, including President, Pepsi-Cola North American Beverages; SVP, Sales and Franchise Development; President, PepsiCo Foods & Beverages, Canada; and Chief Operating Officer, South Beach Beverage Co. Mr. Bené joined PepsiCo in 1989 after working for American Hospital Supply.

William B. Day has served as Executive Vice President, Merchandising since July 2010. He served as Senior Vice President— Merchandising and Supply Chain from July 2009 to July 2010. He began his Sysco career in 1983 as a staff accountant at Sysco’s Memphis, Tennessee subsidiary. Between 1984 and 1987 he divided his time between Sysco’s corporate headquarters and Sysco’s Atlanta subsidiary, where he served as the Chief Financial Officer. In 1987 Mr. Day officially moved to Sysco’s corporate headquarters in Houston where he served in a variety of roles until 1999, when he was promoted to Assistant Controller. Mr. Day started Sysco’s RDC project in 2000, was named Vice President, Supply Chain Management in 2003 and was promoted to Senior Vice President, Supply Chain in July 2007.

William J. DeLaney is described under “Board of Directors Matters.”

G. Mitchell Elmer was promoted to Senior Vice President and Controller in November 2008 after serving as Vice President and Controller from 2000 to November 2008 and assumed the added responsibility of Chief Accounting Officer in July 2005. Mr. Elmer began his Sysco career in 1989 as a staff auditor in operations review at Sysco’s corporate office in Houston. In 1991 he transferred to Sysco’s Virginia subsidiary as Director of Finance, and the following year he was named Vice President of Finance and Administration. Mr. Elmer was appointed Vice President of Finance for Sysco’s Louisville, Kentucky operation in 1995 and progressed to Senior Vice President of Marketing, Merchandising and Finance at that company in 1997. The following year he transferred to Sysco’s Denver operation as Vice President of Finance. In 2000 he returned to Sysco’s corporate office to serve as Vice President and Controller.

Manuel A. Fernandez is described under “Board of Directors Matters.”

Michael W. Green has served as Executive Vice President and President, Foodservice Operations since September 1, 2013. Prior to this, Mr. Green served as Executive Vice President and Group President from October 2011 to September 2013, as Executive Vice President, Foodservice Operations, with expanded responsibilities over all of Sysco’s U.S. Broadline Foodservice Operations from July 2010 to October 2011, and as Executive Vice President of Northeast and North Central U.S. Foodservice Operations from January 2008 to July 2010. Mr. Green began his Sysco career in 1991 as a member of the Management Development Program and was named Sysco Chicago’s Vice President of Marketing later that year. In 1992, he was promoted to Senior Vice President of Marketing and Merchandising, and then to Executive Vice President, of Sysco’s Chicago operating company. In 1994, Mr. Green became the President and Chief Executive Officer of Sysco Food Services of Detroit. He was promoted in 2004 to Senior Vice President of Operations for Sysco’s Midwest Region.

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Robert C. Kreidler has served as Sysco’s Executive Vice President and Chief Financial Officer since October 2009. Prior to joining Sysco, Mr. Kreidler served as Executive Vice President and Chief Financial Officer of C&S Wholesale Grocers, a large privately-held food wholesaler, from February 2007 through March 2009. Between June 1996 and February 2007, he held various senior roles with Yum! Brands, Inc., which includes the worldwide operations of KFC, Pizza Hut and Taco Bell. His last position with Yum! Brands was Senior Vice President of Corporate Strategy and Treasurer from December 2003 to February 2007.

Russell T. Libby has served as Sysco’s Senior Vice President, General Counsel and Corporate Secretary since November 2011. He joined Sysco in October 2007 as Assistant Vice President, Mergers and Acquisitions and Real Estate and was promoted to Vice President and Assistant General Counsel in July 2009, and was promoted to Vice President, General Counsel and Corporate Secretary in December 2010. From 1997 through September 2007, Mr. Libby worked for the North America unit of COFRA Holding A.G., a Swiss international conglomerate, in various positions of increasing responsibility, culminating in service as President of COFRA North America and Vice President, Legal for Good Energies, Inc., an affiliated investment advisor.

Paul T. Moskowitz has served as Senior Vice President, Human Resources since January 2011. Prior to joining Sysco, Mr. Moskowitz served as Chief Human Resources Officer of Dean Foods Company, a large dairy processing company from 2007 until 2011. Between 1996 and 2004, he held various senior roles with Yum! Brands. His last position with Yum! Brands was Chief People Officer at Pizza Hut from 2004 to 2007.

Wayne R. Shurts has served as Executive Vice President, Chief Technology Officer since October 2012. Prior to joining Sysco, Mr. Shurts served as Executive Vice President of SuperValu Inc. from 2010 until 2013. Between 2006 and 2010, he held various senior roles with Cadbury. His last position with Cadbury was Chief Information Officer from 2008 to 2010.

Management Development and Succession Planning

On an ongoing basis, the Board plans for succession to the position of CEO and other key management positions, and the Corporate Governance and Nominating Committee oversees this management development and succession planning process. To assist the Board, the CEO periodically provides the Board with an assessment of senior executives and their potential to succeed to the position of CEO, as well as perspective on potential candidates from outside the company. On an annual basis, the Board and its Corporate Sustainability Committee have engaged in discussions with management regarding increasing the diversity of Sysco’s executive management team. In addition, the CEO periodically provides the Board with an assessment of potential successors to other key positions.

In fiscal 2013, Sysco’s effectiveness in management development and succession planning were a part of our CEO’s non-financial performance goals, which are reviewed at the end of each fiscal year by the Compensation and Corporate Governance and Nominating Committees. In addition, the Compensation Committee assessed Sysco’s performance in select non-financial areas, including the overall effectiveness of its management development and succession planning processes in determining the magnitude of the 2013 bonus payment to our CEO. Management development and succession planning remain top priorities of executive management and the Board during fiscal 2013, as evidenced by the following:

Sysco’s Board discussed human capital and succession planning at its annual strategy meeting and several other regularly scheduled meetings, and

one of our CEO’s five fiscal year 2014 strategic goals is to make continued strides toward the human capital plan and high level succession planning. Success in this goal will affect our CEO’s MIP bonus payment for fiscal 2014, as described under “Executive Compensation— Management Incentive Plan.”

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STOCK OWNERSHIP

Security Ownership of Officers and Directors

The following table sets forth certain information with respect to the beneficial ownership of Sysco’s common stock, as of September 17, 2013, by (i) each current director, (ii) each named executive officer (as defined under “Compensation Discussion and Analysis”), and (iii) all current directors and executive officers as a group. Unless otherwise indicated, each stockholder identified in the table has sole voting and investment power with respect to his or her shares. Fractional shares have been rounded down to the nearest whole share.

 

Shares of

Common

Stock Owned

Directly

 

Shares of

Common

Stock Owned

Indirectly

 

Shares of

Common

Stock

Underlying

Options(1)

 

Shares of

Common Stock

Underlying

Restricted

Stock Units(2)

 

Total Shares of

Common Stock

Beneficially

Owned(1)(2)

 

Percent of

Outstanding

Shares(3)

 

John M. Cassaday

46,389

(4)

 

 

 

46,389

 

 

*

Judith B. Craven

71,315

(4)

 

 

 

71,315

 

 

*

William B. Day

39,767

 

21,153

 

149,252

 

12,101

 

222,273

 

 

*

William J. DeLaney

128,572

 

 

517,900

 

67,111

 

713,583

 

 

*

Manuel A. Fernandez

76,070

(4)

 

211,833

 

 

 

287,903

 

 

*

Larry C. Glasscock

24,181

 

 

 

 

24,181

 

 

*

Jonathan Golden

87,263

(4)

18,500

(5)

 

 

105,763

 

 

*

Michael W. Green

24,991

 

 

189,388

 

17,301

 

231,680

 

 

*

Joseph A. Hafner, Jr.

52,514

(4)

 

8,000

 

 

60,514

 

 

*

James D. Hope (11)

49,580

 

 

 

801

 

 

50,381

 

 

 

Hans-Joachim Koerber

47,957

(4)

 

 

 

47,957

 

 

*

Robert C. Kreidler

22,974

 

810

(5)

336,053

 

25,747

 

385,584

 

 

*

Nancy S. Newcomb

38,988

(4)

 

 

 

38,988

 

 

*

Wayne R. Shurts

0

 

 

46,718

 

10,525

 

57,243

 

 

*

Richard G. Tilghman

68,873

(4)

1,957

(6)

 

 

70,830

 

 

*

Jackie M. Ward

64,065

(4)

61

(6)

 

 

64,126

 

 

*

All Directors, Director Nominees and Executive Officers as a Group (20 Persons)

876,331

(7)

42,481

(8)

1,597,374

(9)

160,791

(10)

2,676,977

(7)(8)(9)(10)

 

*

(*)

Less than 1% of outstanding shares.

(1)

Includes shares underlying options that are presently exercisable or will become exercisable within 60 days after September 17, 2013. Shares subject to options that are presently exercisable or will become exercisable within 60 days after September 17, 2013 are deemed outstanding for purposes of computing the percentage ownership of the person holding such options, but are not deemed outstanding for purposes of computing the percentage ownership of any other persons.

(2)

Includes shares underlying restricted stock units (RSUs) that will vest and settle within 60 days after September 17, 2013. Shares underlying RSUs that will vest and settle within 60 days after September 17, 2013 are deemed outstanding for purposes of computing the percentage ownership of the person holding such RSUs, but are not deemed outstanding for purposes of computing the percentage ownership of any other persons. It is expected that approximately one-third of the shares underlying these RSUs will be withheld to pay taxes related to the RSUs as they vest and settle.

(3)

Applicable percentage of beneficial ownership at September 17, 2013 is based on 583,704,017 shares outstanding.

(4)

Includes shares that were elected to be received in lieu of non-employee director retainer fees during the first half of calendar 2013, and related matching shares under the Non-Employee Directors Stock Plan. For Ms. Ward, this includes 2,305 elected shares and 359 matching shares; for each of the other current non-employee directors, this includes 720 elected shares and 359 matching shares. Unless the director has chosen to defer the shares under the Sysco Corporation 2009 Board of Directors Stock Deferral Plan (“Stock Deferral Plan”), these shares will be issued on December 31, 2013 or within 60 days after a non-employee director ceases to be a director, whichever occurs first. Directors may choose to defer receipt of these shares related to director retainer fees, as well as shares awarded pursuant to restricted stock grants, and these deferred amounts are also included in this line item. To the extent cash dividends are paid on our common stock, non-employee directors also receive the equivalent amount of the cash dividend credited to their account with respect to all deferred restricted stock awards, and all elected and matched shares that are deferred. The number of shares in each non-employee director’s deferred stock account, including related dividend equivalents, is as follows: Mr. Cassaday — none, Dr. Craven— 25,881, Mr. Fernandez— 21,776, Mr. Glasscock— 23,060, Mr. Golden— none, Mr. Hafner— none, Dr. Koerber— 20,263, Ms. Newcomb— none, Mr. Tilghman — none, and Ms. Ward— 11,361. In addition, Dr. Craven, Mr. Fernandez, Mr. Glasscock, Mr. Koerber and Ms. Ward have elected to defer receipt of the elected and match shares described above. If the director has chosen to defer the receipt of any shares, they will be credited to the director’s account in the Stock Deferral Plan and issued on the earliest to occur of the death of the director, the date on which the director ceases to be a director of the company, or a change of control of Sysco. Deferred shares are deemed outstanding for purposes of computing the percentage ownership of the persons holding such shares, but are not deemed outstanding for purposes of computing the percentage ownership of any other persons.

(5)

These shares are held by a family trust affiliated with the executive officer or director.

(6)

These shares are held by the spouse of the director or executive officer.

(7)

Includes an aggregate of 32,832 shares directly owned by the current executive officers other than the named executive officers.

(8)

Includes an aggregate of 0 shares owned by the spouses and/or dependent children of current executive officers other than the named executive officers.

(9)

Includes an aggregate of 137,429 shares underlying options that are presently exercisable or will become exercisable within 60 days after September 17, 2013 held by current executive officers other than the named executive officers.

(10)

Includes an aggregate of 28,006 shares underlying restricted stock units (RSUs) that will vest and settle within 60 days after September 17, 2013 held by current executive officers other than the named executive officers.

(11)

Based on information provided by Mr. Hope regarding his stock ownership at the time of his retirement from the Company at the end of fiscal 2013 and Sysco’s records on outstanding options and RSUs and option exercises.

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Security Ownership of Certain Beneficial Owners

The following table sets forth information concerning beneficial ownership of our common stock by persons or groups known to us to be beneficial owners of more than 5% of Sysco’s common stock outstanding as of September 17, 2013.

 

Total Shares of Common Stock

Beneficially Owned

Percent of Outstanding Shares

 

BlackRock and certain affiliates(1)

29,654,159

5.07

%

State Street Corporation and certain affiliates(2)

30,172,518

5.15

%

Yacktman Asset Management LP(3)

32,690,269

5.58

%

(1)

This information is based on a Schedule 13G filed on January 30, 2013 by BlackRock, Inc. (“BlackRock”). According to the Schedule 13G, BlackRock has the sole power to vote, or to direct the vote of, and sole power to dispose, or to direct the disposition of, these shares of common stock. The address for BlackRock is BlackRock, Inc., 40 East 52nd Street, New York, NY 10022. Applicable percentage of beneficial ownership at December 31, 2012 is based on 585,349,231 shares outstanding.

(2)

This information is based on a Schedule 13G filed on February 12, 2013 by State Street Corporation (“State Street”). According to the Schedule 13G, State Street has shared power to vote, or to direct the vote of, and shared power to dispose, or to direct the disposition of, these shares of common stock. The address for State Street is State Street Financial Center, One Lincoln Street, Boston, MA 02111. Applicable percentage of beneficial ownership at December 31, 2012 is based on 585,349,231 shares outstanding.

(3)

On a Schedule 13F filed with the SEC by Yacktman Asset Management LP for the quarter ended June 30, 2013. The Company has not undertaken any independent verification of the information presented. The Form 13F filed by Yacktman Asset Management LP indicates that the reporting person and certain of its affiliates held investment discretion and sole voting authority with respect to 32,690,296 shares of Sysco common stock as of June 30, 2013. Yacktman Asset Management LP’s address, as reported on the Form 13F, is 6300 Bridgepoint Parkway, Building One, STE 500, Austin, TX 78730. Applicable percentage of beneficial ownership at June 30, 2013 is based on 586,106,470 shares outstanding.

Stock Ownership Guidelines

To align the interests of our executives with those of our stockholders, Sysco’s Board of Directors concluded that our executive officers should have a significant financial stake in Sysco stock. To further that goal, for several years we have maintained stock ownership guidelines for our executives. In August 2013, we amended our Corporate Governance Guidelines in order to increase the requirements applicable to the CEO and Executive Chairman positions, and to provide clarity to the stock ownership guidelines. Beginning in August 2016 or upon the end of the five-year period from the date the officer is hired, promoted or otherwise becomes subject to the guidelines, whichever is later, the executives should own the number of shares, by position, as described in the following table.

Position

Required to Own by Fifth Anniversary in Position

CEO

225,000 shares

Executive Chairman

100,000 shares

Executive Vice Presidents

60,000 shares

Senior Vice Presidents

20,000 shares

Other Section 16 Officers

10,000 shares

Executive officers have five years to achieve these ownership requirements. The five-year period begins the date the officer is hired, promoted or otherwise becomes subject to the guidelines. If an individual was hired after August 26, 2011, or promoted after August 26, 2011 to a position that requires the ownership of a greater amount of stock than his or her prior position, the five-year period pertaining to the new position will begin to run upon the effectiveness of the hiring or promotion; provided, further, however, that a promoted individual shall continue to comply with the above ownership requirements applicable to his or her prior position at all times subsequent to the promotion.

The shares counted towards ownership requirements shall include Sysco shares of common stock owned directly or indirectly by the executive officer, any other shares of vested restricted stock held by the executive officer that may be subject to transfer restrictions or potential clawbacks, two-thirds of an executive officer’s shares underlying unvested restricted stock units and two-thirds of an executive officer’s unvested restricted stock, and shall not include shares held through any other form of indirect beneficial ownership, or shares underlying unexercised options.

In addition to the ownership requirements described above, each executive officer of the Company, including the Executive Chairman, may need to retain a percentage (not to exceed 25% as described below) of the net shares acquired upon exercise of stock options and of the net shares acquired pursuant to vested restricted stock and restricted stock unit (RSU) grants until the executive officer’s holdings of Company stock equal or exceed all future ownership guidelines not yet applicable to the executive officer. For these purposes, “net shares” shall mean the shares remaining after disposition of shares necessary to pay the related tax liability and, if applicable, exercise price.

We adopted guidelines with a specific number of shares rather than a multiple of salary to protect executives from unnecessary concern regarding fluctuations in the stock price, and the Corporate Governance and Nominating Committee will periodically review the guidelines to determine if they need to be updated due to, among other things, significant changes in the price of Sysco stock. Based on an assumed $32 Sysco stock price, the CEO ownership requirement of 225,000 shares equals a value of approximately six times Mr. DeLaney’s salary. The other officer ownership requirements are set at lower levels that Sysco believes are reasonable given their salaries and responsibility levels. Restricted stock and restricted stock unit incentives, coupled with shares obtained from the exercise of stock options, are anticipated to provide all executives with the opportunity to satisfy these requirements within the specified time frames.

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The guidelines also provide that after five years of service as a non-employee director, such individuals are expected to continuously own a minimum of 16,500 shares of Sysco common stock. The Executive Chairman is subject to the stock ownership guidelines applicable to Sysco’s non-employee directors, as well as a stock ownership requirement applicable to the Executive Chairman position.

We provide the Board of Directors with the status of the executives’ and directors’ stock ownership at all of the regularly-scheduled meetings to ensure compliance with these holding requirements. As of September 17, 2013, all named executive officers and directors met their then-applicable stock ownership requirement.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the rules issued thereunder, our executive officers and directors and any persons holding more than ten percent (10%) of our common stock are required to file with the Securities and Exchange Commission and the New York Stock Exchange reports of initial ownership of our common stock and changes in ownership of such common stock. To our knowledge, no person beneficially owns more than 10% of our common stock. Copies of the Section 16 reports filed by our directors and executive officers are required to be furnished to us. Based solely on our review of the copies of the reports furnished to us, or written representations that no reports were required, we believe that, during fiscal 2013, all of our executive officers and directors complied with the Section 16(a) requirements, except as follows: one late filing by each of Messrs. Day, DeLaney, Elmer, Green, Hope, Kreidler, Libby, Moskowitz, Pulliam and Shurts related to the fiscal year 2013 restricted stock unit grant and stock option grant on November 13, 2012 and restricted stock unit grant to Messrs. DeLaney and Kreidler on November 14, 2012, all of which were filed late on November 20, 2012 due to an administrative error.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information regarding equity compensation plans as of June 29, 2013.

Plan Category

Number of Securities to

be Issued Upon Exercise

of Outstanding Options,

Warrants and Rights

Weighted-Average

Exercise Price of

Outstanding Options,

Warrants and Rights

Number of Securities

Remaining Available for

Future Issuance Under

Equity Compensation

Plans (Excluding Securities

Reflected in First Column)

 

Equity compensation plans approved by security holders

31,556,789

$

29.07

14,412,673

(1)

Equity compensation plans not approved by security holders

 

 

TOTAL

31,556,789

$

29.07

14,412,673

(1)

(1)

Includes 10,159,110 shares issuable pursuant to our 2007 Stock Incentive Plan, as amended, of which 5,530,402 shares eligible to be granted as full value awards; 483,096 shares issuable pursuant to our 2009 Non-Employee Directors Stock Plan; and 3,770,467 shares issuable pursuant to our Employees’ Stock Purchase Plan as of June 29 2013. Does not reflect the issuance of 332,270 shares in July 2012 pursuant to the completion of the fourth quarter purchase under our Employees’ Stock Purchase Plan.

COMPENSATION DISCUSSION AND ANALYSIS

In this section, we provide an overview of our philosophy and objectives of our executive compensation program and describe the material components of our executive compensation program for our fiscal 2013 named executive officers or “NEOs,” whose compensation is set forth in the 2013 Summary Compensation Table and other compensation tables contained in this proxy statement:

William J. DeLaney, our Chief Executive Officer;

Robert C. Kreidler, our Executive Vice President and Chief Financial Officer;

Michael W. Green, our Executive Vice President and President of Foodservice Operations;

Wayne R. Shurts, our Executive Vice President and Chief Technology Officer;

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William B. Day, our Executive Vice President, Merchandising; and

James D. Hope, our former Executive Vice President, Business Transformation.

In addition, we explain how and why the Compensation Committee of our Board (the “Committee”) arrives at compensation policies and decisions involving the NEOs.

Executive Summary

Sysco is the global leader in selling, marketing and distributing food products, equipment and supplies to the foodservice industry. As such, our long-term success depends on our ability to attract, engage, motivate and retain highly talented individuals who are committed to Sysco’s vision and strategy. One of the key objectives of our executive compensation program is to link executives’ pay to their performance and their advancement of Sysco’s overall annual and long-term performance and business strategies. Other objectives include aligning the executives’ interests with those of stockholders and encouraging high-performing executives to remain with Sysco over the course of their careers. We believe that the amount of compensation for each NEO reflects extensive management experience, high performance and exceptional service to Sysco and our stockholders. We also believe that Sysco’s compensation strategies have been effective in attracting executive talent and promoting performance and retention.

Business Highlights

Fiscal 2013 was a year in which we progressed with our Business Transformation Project while facing a challenging business and economic environment. The foodservice industry has not fully participated in the overall economic recovery primarily due to constrained consumer spending for food-away-from-home. Our results of operations reflect these challenges as well as the impact of increased expenses from our Business Transformation Project, severance and charges related to the withdrawal from certain multiemployer pension plans. We believe our sales growth and expense management on a cost per case basis was acceptable. Our gross profit performance, however, did not meet our expectations due partially to competitive pressures and a shift in customer mix. We remain focused on the execution of our business plan and our Business Transformation Project, with the goal for these initiatives to contribute to the long-term success of our customers and in turn, growth in our earnings.

Financial highlights from fiscal 2013 include the following:

Sales of $44.4 billion.

Operating income of $1.7 billion.

Net earnings of approximately $1.0 billion.

Diluted earnings per share was $1.67. Adjusted* diluted earnings per share was $2.14.

Cash flow from operations of $1.5 billion and free cash flow of $1.0 billion.

Acquisition of 14 companies with annualized sales in excess of $1 billion.

Annual dividend increased by 3.8% and $648 million paid to our stockholders in dividend payments.

*(For more detail please see our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). Our discussion of our results herein includes certain non-GAAP financial measures that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measure will be denoted as an adjusted measure and, except for measures provided pursuant to benefit plan formulas, will exclude expenses from our Business Transformation Project, withdrawals from multiemployer pension plans, restructuring charges, and a one-time acquisition related charge. More information on the rationale for the use of these measures and reconciliations to GAAP numbers can be found in Annex I - Non-GAAP Reconciliations.)

Say on Pay – Stockholder Feedback

At last year’s Annual Meeting, 92% of the stockholders who cast a vote for or against the proposal voted in favor of the Company’s “Say on Pay” proposal on executive compensation. Further, throughout the year, management engaged in dialogue with our largest investors to solicit their feedback and gather information on their views and opinions on various operations and governance issues, including executive compensation practices. The Company did not take specific action in response to the 2012 “Say on Pay” vote. However, based on the results and our ongoing dialogue with our stockholders, the Committee and our Board concluded that, even though our overall executive compensation policies and practices enjoy favorable stockholder support, it was appropriate to continue to adjust the compensation mix of our named executive officers to ensure that fixed and variable compensation components and target total direct compensation are set at levels that ensure that earned compensation awards are reflective of Sysco’s performance relative to its peers and our internal pay philosophy.

The Committee carefully considers feedback from our stockholders regarding our executive compensation program. In addition to the annual “Say on Pay” advisory vote on NEO compensation, stockholders are invited to express their views to the Committee as described under the heading “Corporate Governance– Communicating with the Board.”

Changes to Executive Compensation Program

Sysco is committed to providing and maintaining a competitive executive compensation program. Recent changes to Sysco’s executive compensation programs approved by the Committee include the following:

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Fiscal 2013 Changes:

Component:

Change:

Objective:

Annual Incentive Award

Refined performance goal setting and financial objectives to align with Sysco’s annual profit plan.

Ensure the goals will better reflect market conditions, operating expectations and other relevant factors as reflected in Sysco’s profit plan.

Reinforce accountability to annual profit plan goals.

Annual Incentive

Award – NEO Individual Objectives

Modified the form of the annual incentive award agreement for the NEOs (in line with that of the CEO which changed in 2012) and other senior level officers to allow the Committee to adjust annual incentive awards for strategic bonus objectives (“SBOs”). Implemented an umbrella bonus plan funding structure pool for the CEO and other NEOs.

Provide the Committee the opportunity to assess each NEO’s performance with respect to specified SBOs and make relevant adjustments to promote pay for performance by individuals.

Maintain Section 162(m) compliance for annual incentive award payments while providing the Committee more flexibility in determining such payments.

Total Compensation Opportunity

Maintained competitiveness through increases in performance incentives and merit based salary increases.

Maintain an appropriate balance between long-term and short- term orientation to the business, with a continued strong focus on variable pay for performance.

Retirement Benefits

Approved changes to the structure of our qualified and executive nonqualified retirement program; including (i) the freezing of future benefit accruals under the Sysco Retirement Plan and the Supplemental Executive Retirement Plan (the “SERP”), (ii) the cessation of deferrals and company matches under the Executive Deferred Compensation Plan (the “EDCP”), and (iii) the enhancement of the Sysco 401(k) Plan and the adoption of the new Management Savings Plan (the “MSP”), as a successor to the SERP and EDCP.

Increase focus on variable, performance-related compensation and away from fixed retirement compensation.

Maintain consistency with market practice of a defined contribution approach to retirement savings.

Align executive compensation retirement benefits with broad based retirement benefits and best practice.

Manage on-going costs and expense volatility.

Fiscal 2014 Changes:

Component:

Change:

Objective:

Annual Incentive Award

Aligned performance goal setting and financial objectives with Sysco’s annual profit plan. Adjusted sales metric to consider both percentage increase in sales and gross profit dollars growth.

Ensure the goals, operating expectations and other relevant factors are those reflected in Sysco’s profit plan.

Reinforce focus on profitable sales growth.

Annual Incentive

Award – NEO Individual Objectives

Increased percentage of annual incentive award that is subject to adjustment from 20% to 40% based on satisfaction of SBOs.

Reinforce and increase the Committee’s ability to assess each NEO’s performance with respect to SBOs and make relevant upward or downward adjustments to promote individual pay for performance.

Long-term Incentives

Modified mix for future long-term incentive compensation award to 40% stock options, 35% CPUs and 25% RSUs.

Strike a more appropriate balance of variable pay for performance vehicles used to incentivize executives.

Reflect prevailing market practices.

Change-in-Control

Moved from single-trigger to double-trigger for accelerated vesting for future long-term incentive grants under certain change of control scenarios.

Enhance the retention of key executives following a change-in-control event.

Reflect prevailing market practices.

Stock Ownership

Increased stock ownership requirements for the CEO and Executive Chairman positions.

Strengthen alignment with stockholders.

Ensure long term view of stockholder value creation.

During fiscal 2013, Sysco made changes to retirement benefits offered to employees and executives. We moved from a defined benefit to a defined contribution strategy for qualified and non-qualified plans in order to further align Sysco with our peer group, increase flexibility, simplfiy the benefit structure, retain key talent and reduce and stablize costs. Going forward, wealth accumulation at Sysco will be focused mainly on annual and long-term incentive plans, each of which are better aligned with stockholder interests and Sysco performance. The program changes, however, were expected to result in signifcant reductions in antipated retirement benefits for then current participants. In order to effect the new strategy, while retaing key leaders, Sysco implemented a transition strategy to address the reduction in anticipated value of retirement benefits. A transition program was developed aorund the key tennant that no impacted participant would experience an aggregate reduction of more than 20% in his or her expected retirement benefits as a result of the fiscal 2013 plan changes. The change in anticipated value reduction was measured by comparing the lump-sum value of an individual’s anticipated benefit at his or her earliest unreduced retirement age under each of the alternative models. To mitigate this loss in expected benefits, impacted individuals will receive transitional contributions under the MSP of up to an additional 10% of pay for up to each of next ten years. In addition, for each of the 32 of our senior executives where the supplemental MSP contributions was insufficient to reduce the exected loss to an acceptable range, the executive also received a one-time grant of RSUs. The value of the RSU grant was an amount equal to the difference between the anticipated benefit at earliest unreduced retirement age under the revised plan structure and 80% or 85% (depending on years of services) of the anticipated benefit at earliest unreduced retirement age under the former plan strcuture. Of the NEOs, Messrs. Delaney and Kreidler received a one-time, transitional RSU grant.

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How Pay is Tied to Performance

Sysco’s executive compensation program directly links a substantial portion of executive compensation to Sysco’s financial performance through annual and long-term incentives. The mix of the key non-retirement compensation elements for the CEO and other NEOs for fiscal 2013 is shown below. The Target Compensation Mix charts describe each element of compensation as a percent of total target direct compensation while the Actual Compensation Paid charts describe each element of compensation that was actually paid out (for cash incentives) or granted (for equity awards) in fiscal 2013, other than those specifically described in the paragraph below.

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The Committee has not historically used an exact formula for allocating between fixed and variable, cash and non-cash, or short-term and longer-term compensation, allowing it to incorporate flexibility into our annual and longer-term compensation programs and adjust for the evolving business environment. The Target Compensation Mix charts above include award opportunities related to annual and long-term incentive compensation, granted in fiscal 2013 and valued at target levels, and do not include (i) any amounts paid with respect to prior years’ incentive award grants, (ii) components of one-time payments, such as sign-on awards or severance payments, or (iii) any value of retirement benefits, including the one-time RSU grants awarded to Messrs. DeLaney and Kreidler as part of the defined benefit to defined contribution retirement plan transition. The Actual Compensation Paid charts include the annual incentive and CPU award amounts paid out to the NEOs in cash with respect to fiscal 2013 or measurement period ending in fiscal 2013, and do not include (i) the value of the CPU award grant made in November 2012 for the 2012-2014 period, (ii) the sign-on award made to Mr. Shurts (both cash sign-on and RSU grant), (iii) any severance payments made to Mr. Hope, or (iv) the value of the one-time RSU grants awarded to Messrs. DeLaney and Kreidler as part of the transition from a defined benefit to defined contribution retirement plan strategy. All charts include salary with respect to fiscal 2013 and the estimated grant date value of stock options and RSUs granted during fiscal 2013 as part of the NEOs long-term incentive compensation. Additionally, the CEO Actual Compensation Paid chart does include the one-time RSU make up grant awarded to Mr. DeLaney as part of the option over-grant, such grant is further described in “-- What We Paid and Why.”

The value of all of Sysco’s stock options and RSUs is time vested and depends upon Sysco’s stock performance. The value of CPUs is time vested and depends on performance against pre-established performance goals over a three-year peformance period. How we derive the values of the components of Sysco’s long-term incentives is discussed under “—How Executive Pay is Established.” Including the annual incentive award, payment of which is largely dependent on Sysco’s financial performance, these four performance-linked components constituted approximately 80% to 88% of the total target direct compensation, and approximately 73% to 85% of the total actual direct compensation paid for fiscal 2013 to each of the NEOs.

Philosophy of Executive Compensation Program

Historically, our executive compensation plans have directly linked a substantial portion of annual executive compensation to Sysco’s performance. These plans are designed to deliver superior compensation for superior company performance. Likewise, when company performance falls short of expectations, certain programs deliver lower levels of compensation. However, the Committee tries to balance pay-for-performance objectives with retention considerations, so that even during temporary downturns in the economy and the foodservice industry, the programs continue to ensure that successful, high-achieving employees stay committed to increasing Sysco’s long-term value. Furthermore, to attract and retain highly skilled management, our compensation program must remain competitive with that of comparable employers who compete with us for talent.

Core Principles

We use the following key principles as the cornerstone of Sysco’s executive compensation philosophy to attract, develop and retain business leaders to drive financial and strategic growth and build long-term stockholder value:

Pay for Performance: Provide base salaries that reflect each NEOs background, experience and performance combined with variable, incentive compensation, such that superior performance rewards executives at higher levels than at peer companies while subpar performance results in less compensation than would be the case at peer companies;

Competitiveness and Retention: Provide a competitive pay opportunity that attracts and retains the highest quality professionals;

Accountability for Short- and Long- Term Performance: Strike an appropriate balance between short-term and longer-term compensation and short- and longer-term interests of the business; and

Alignment with Stockholders’ Interests: Link the interests of our executive officers with those of our stockholders through the risks and rewards of significant equity based compensation.

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Our Practices

Below we highlight certain executive compensation practices applicable to our NEOs, both the practices we have implemented to drive performance and the practices we have not implemented because we do not believe they would serve our stockholders’ long-term interests.

What We Do

Pay for Performance – We link pay to Sysco and individual performance. The great majority of non-retirement executive pay is at risk.

Mitigate Undue Risk – We mitigate undue risk associated with compensation, including utilizing a mix of elements, caps on potential payments, clawback provisions, multiple performance targets and robust Board and management processes to identify risk. We do not believe any of Sysco’s compensation programs create risks that are reasonably likely to have a material adverse impact on Sysco, which we validate through our compensation risk analysis each year.

Independent Compensation Consulting Firm – The Committee benefits from its utilization of an independent compensation consulting firm that does not provide any other services to Sysco.

Executive Compensation Recoupment Policy – The Committee has the authority to recoup compensation that resulted from a material misstatement of financial results.

Reasonable Change in Control Provisions – We believe we have reasonable change in control provisions that generally apply to executive officers in the same manner as the applicable broader employee population.

Modest Perquisites – We provide only modest perquisites that have a sound benefit to Sysco’s business. We do not allow personal use of the private aircraft.

Significant Stock Ownership Guidelines – We have adopted stringent stock ownership guidelines. We review and adjust these guidelines when appropriate.

Regular Review of Share Utilization – We evaluate share utilization by reviewing overhang levels (dilutive impact of equity compensation on our shareowners) and annual run rates (the aggregate shares awarded as a percentage of total outstanding shares).

Limited Trading Windows – Executive officers and directors can only purchase and sell Sysco comon stock and exercise stock options during approved trading windows, which generally open two business days after Sysco issues its quarterly earnings release. Trading windows typically close 7 weeks after the opening of the window.

What We Don’t Do

None of our current NEOs has an employment contract.

No tax gross-ups for personal aircraft use, financial planning or loss on sale of home in relocations.

No separate change in control agreements.

Prohibition on Hedging – Our insider trading policy prohibits executive officers and directors from using strategites or products (such as derivative securities or short-selling techniques) to hedge against the potential decrease in the market value of Sysco common stock.

No excise tax gross-ups upon change in control.

No repricing of underwater stock options.

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Components and Objectives of Executive Compensation Program

The Committee has built the executive compensation program upon a framework that includes the following components and objectives, each of which is described in greater detail later in this Compensation Discussion and Analysis. The Committee reviews each component of the executive compensation program to see how it affects target total pay levels and generally targets total direct compensation at or slightly above the median of the target total pay ranges for similar executive positions among companies in our peer group.

 

Component

Description

Objective of Element

Annual Compensation

Base Salary

The Committee generally sets competitive base salaries to attract and retain talented executives and to provide a fixed base of cash compensation. The Committee then may adjust the base salaries based on a number of factors, which may include the executive’s unique job responsibilities, management experience, individual contributions, number of years in his or her position and current salary, which is described under “How Executive Pay is Established” below.

Create a pay mix with an appropriate balance between fixed and variable and short- and long-term pay components.

Generally targeted at the median of the salary ranges for similar executive positions among companies in our peer group.

MIP - Annual Incentive Award

The MIP annual incentive award is designed to offer opportunities for cash compensation tied directly to company performance. Under the MIP, we pay the annual incentive award in cash with payments made in the first quarter of the fiscal year for bonuses earned with respect to performance in the prior fiscal year. Payment of the annual incentive award is based on satisfaction of performance criteria that the Committee believes ultimately create stockholder value. The threshold requirements for payment of each component of the annual incentive award in fiscal 2013 were Sysco’s achieving at least $1.91 adjusted fully diluted earnings per share, at least a 3% increase in sales, and at least a 12.15% adjusted return on invested capital, respectively. In addition, for fiscal 2013, a portion of each of the NEO’s earned annual incentive award was adjusted based on his performance with respect to SBOs.

Pay annual cash incentive bonuses based on Sysco performance on key metrics that support the company’s operating/profit plan.

Promote pay for performance in a competitive way so that exemplary performance rewards executives at higher levels than at peer companies.

Generally targeted at the median annual incentive ranges among companies in our peer group upon achieving target goals.

Long-Term Incentives

Cash Performance Units (CPUs)

Each NEO has an opportunity to receive cash incentive payments based on Sysco’s performance over a three-year performance period under Sysco’s CPU Plan. The payout on CPUs is based on Sysco’s actual performance over the three-year performance cycle, as compared to pre-established performance goals. The currently outstanding grants we made in 2011 and 2012 that may be paid in August 2014 and 2015 use three-year total shareholder return (TSR) as compared to the S&P 500 as the sole performance criterion. See “Executive Compensation – Cash Performance Unit Plan” for a description of the CPU Plan and outstanding grants thereunder.

Motivate executive officers to achieve specified longer term financial goals over a three-year period.

Align pay with the creation of stockholder value, as compared with the S&P 500 companies over each performance period.

Stock Options

Stock options granted to NEOs vest one-fifth per year beginning one year from the date of grant.

Closely align the executives’ interests with those of our stockholders.

Focus executives on activities that increase stockholder value.

Enhance retention through time vesting requirements.

Total long-term incentive opportunities are generally targeted between the median and the 75th percentile of the long-term incentives paid by companies in our peer group.

Restricted Stock Units (RSUs)

Restricted stock units (“RSUs”) granted to NEOs generally vest one-third per year beginning one year from the date of grant. Dividend equivalents are paid, if and when, the underlying RSUs vest.

Retirement,
other Benefit
Programs and
Perquisites

Non-Qualified Retirement Benefits and Deferred Compensation Plan

The new Management Savings Plan (the “MSP”), was adopted in November 2012 as a non-qualified plan. The MSP replaces the SERP and EDCP, which are now frozen to future accruals or contributions. The MSP allows participants to defer a portion of current cash compensation and employer contributions, plus applicable earnings, for payment on specified dates or upon certain specified events. All of the current NEOs are participants in the MSP. Messrs. DeLaney, Kreidler, Green, Hope, and Day are participants in the SERP and the EDCP. The SERP and EDCP have historically played a major role in our total compensation program for NEOs. The SERP was designed to provide annuity payments based on prior years’ compensation following a participant’s termination of service with Sysco. The EDCP allowed participants to defer a portion of current cash compensation and employer contributions, plus applicable earnings, for payment on specified dates or upon certain specified events.

Support executive performance and retention as a result of its vesting requirements, and forfeiture provisions applicable to, company contributions.

The MSP is a compliment to the Sysco 401(k) Plan and together serve as the primary retirement savings vehicles for executives. The MSP provides a competitive retirement savings opportunity for executives.

Other Benefits and Perquisites

Executive officers are eligible to participate in the same benefit programs that are offered to other salaried employees. Limited perquisites are provided to executives, including payment of accidental death and dismemberment insurance coverage, long-term care insurance coverage, reimbursement of costs for annual medical exams, payment of long-term disability coverage, payment of fees related to the preparation of foreign tax returns, and certain expenses related to spousal travel in connection with business events. See “—Executive Perquisites & Other Benefits– Detailed Information” below.

Provide market competitive benefits to protect employees’ and their covered dependents’ health and welfare and provide retirement benefits.

Facilitate strong performance on the job and enhance productivity.

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How Executive Pay Is Established

The Committee, in consultation with management and the Committee’s independent compensation consultant, Compensation Advisory Partners LLC, referred to herein as CAP, continues to focus on ensuring that our executive compensation programs reinforce our pay for performance philosophy and enhance stockholder value. CAP assisted the Committee in annual benchmarking of executive compensation at Sysco. After reviewing CAP competitive studies, the Committee determined that each named executive officer’s target compensation provided the executive with an appropriate compensation opportunity. The Committee later determined, based on the Company’s fiscal 2013 performance, that each named executive officer’s total 2013 compensation was generally appropriate in light of overall Company performance and the executive’s personal performance.

In developing our pay for performance policies, the Committee generally benchmarks elements of pay against a comparison peer group, discussed below. However, the Committee has not historically used an exact formula for allocating between fixed and variable, cash and non-cash, or short-term and longer-term compensation, allowing it to incorporate flexibility into our annual and longer-term compensation programs and adjust for the evolving business environment.

Committee Oversight

The Committee, which is comprised of all independent directors, is responsible for overseeing Sysco’s executive compensation program. The Committee determines and approves all compensation of the CEO and Sysco’s other senior officers, including the NEOs. Although the Committee meets jointly with the Corporate Governance and Nominating Committee to discuss both the CEO’s personal goals and his performance in achieving such goals in each fiscal year, the Committee solely approves all compensation awards and payout levels. The Committee develops and oversees programs designed to compensate our corporate officers, including the named executive officers, as well as the presidents and executive vice presidents of our operating companies. The Committee is also authorized to approve all grants of restricted stock, restricted stock units, stock options and other awards to NEOs under our equity-based incentive plans for Sysco employees. Further information regarding the Committee’s responsibilities is found under “Corporate Governance – Board Meetings and Committees” and in the Committee’s Charter, available on the Sysco website at www.sysco.com under “Investors — Corporate Governance — Committees.”

The Committee has several resources and analytical tools they consider in making decisions related to executive compensation. The table that follows discusses the key tools the Committee uses.

Committee Resources

Independent Committee Consultant – CAP

CAP attended five Committee meetings during fiscal 2013.

CAP advised on compensation matters, including peer group composition, annual and long term incentive plan designs, and market data on CEO and other NEO compensation.

CAP prepared Compensation Studies for NEOs:

For decisions made from May 2012 through April 2013, the Committee consulted a CAP study prepared in May 2012 that used the most current available peer group information and benchmarked 2012 base salary, estimated 2012 total cash compensation and total direct compensation, and target 2013 base salary, total cash compensation, long-term incentives, and total direct compensation of each of the named executive officers.

For all executive compensation decisions made from May 2013 through the date of this proxy statement, including base salary adjustments for fiscal 2014 and fiscal 2014 incentive awards, the Committee consulted a CAP study dated May 2013 that used updated peer group information and benchmarked 2012 base salary, estimated 2013 total cash compensation and total direct compensation, and target 2013 base salary, total cash compensation, long-term incentives, and total direct compensation of each of the named executive officers.

For purposes of the reports listed above, “target total cash compensation” was defined as proposed base salary plus target MIP bonus of 150% for Mr. DeLaney, 100% for Messrs. Kreidler, Shurts, Hope and Day and 125% for Mr. Green. For these purposes, “target total direct compensation” was defined as target total cash compensation plus the value of stock options, restricted stock units and cash performance units expected to be granted with respect to the year in question; stock options are valued using an estimated Black-Scholes calculation, restricted stock units are valued at the fair market value of Sysco stock on the date of grant and cash performance units are valued at $1.00 per unit, with assumed payout at the 100% target amount; and “actual amounts” are calculated similarly to the target amounts but use an estimated bonus payout and the actual amounts paid for all components other than the annual bonus.

The Committee has determined CAP to be independent from the company and that no conflicts of interest exist related to CAP’s services provided to the Committee. CAP is an independent consultant and reports directly, and exclusively, to the Committee. Other than services provided to the Committee, CAP does not perform any services for Sysco. Additionally, CAP has policies and procedures in place to prevent conflicts of interest. The fees received by CAP related to Sysco represented less than 3.5% of CAP’s 2012 total revenues. Neither CAP nor any adviser of CAP had a business or personal relationship with any member of the Committee or any executive officer of Sysco during fiscal 2013. No CAP adviser directly owns, or directly owned during fiscal 2013, any Sysco stock.

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Committee Resources

Sysco’s Human Resources Department

Sysco’s Senior Vice President, Human Resources and the Human Resources Department (“HR”) provides additional analysis and counsel as requested by the Committee related to NEO compensation:

Assisting the CEO and Senior Vice President of Human Resources in making preliminary recommendations of base salary structure, annual and long-term incentive plan design and target award levels for the NEOs and other participants in the MIP.

Providing scenario planning; HR provides the Committee with anticipated pay out levels throughout the year based on the Company’s projections relative to the performance measures.

Providing comparison data on the internal equity of the compensation awarded within the Sysco organization.

HR has retained the services of Towers Watson to provide assistance to HR and Sysco management in making recommendations to the Committee and the Board with respect to certain aspects of executive compensation. Towers Watson has provided advice directly to Sysco’s management team and has consulted directly with management and provided, among other things, reports based on their proprietary data and information regarding market benchmarks.

CEO

For other NEOs, the CEO makes individual recommendations to the Compensation Committee on base salary and annual and long-term incentive goals and award opportunities. The CEO also provides initial recommendations for MIP annual incentive award performance targets and individual SBOs for the Committee to consider. The CEO does not have a role in determining the compensation of the Executive Chairman.

The Committee reviews, discusses, modifies and approves as appropriate these compensation recommendations. The CEOs recommendations with respect to fiscal 2013 compensation and fiscal 2014 compensation to date were accepted by the Committee. No member of management, including the CEO, has a role in determining his or her own compensation.

Role of CEO and/or Other Executive Officers in Determining Executive Compensation

As described in the table above, our CEO, Mr. DeLaney, provides recommendations to the Committee for each element of compensation for each of the NEOs other than himself. In forming his recommendations, he is advised by HR as described above. HR assesses the design of, and makes recommendations related to, Sysco’s compensation and benefit programs. Mr. DeLaney also consults with other senior officers of the company for recommendations related to the appropriate financial and non-financial performance measures used in our incentive programs. Mr. DeLaney does not have a role in determining the compensation of the Executive Chairman, nor does HR provide assistance to the Committee with respect to the determination of Mr. Fernandez’ compensation in his role as Executive Chairman. In developing recommendations for the Committee, Mr. DeLaney and HR consult benchmarking and other market data from CAP and Towers Watson as described elsewhere in this proxy statement, and follow the philosophy and pursue the objectives described above under “—Philosophy of Executive Compensation Program.” The Committee, with input from CAP, determines each element of compensation for Mr. DeLaney. With input from CAP, HR and Mr. DeLaney, the Committee determines each element of compensation for the other NEOs. The Committee is under no obligation to utilize these recommendations. Executive officers and others may also attend Committee meetings when invited to do so.

Use of Peer Group and Survey Data

Sysco is the largest foodservice distributor in North America, and other companies in the foodservice industry are significantly smaller, with nearly all of such companies also being privately-held. We believe that these smaller businesses would not create a satisfactory comparison group due to the greater skill levels and abilities required to manage a public company of Sysco’s size. Absent a robust industry peer group, the Committee concluded that the most comparable companies with respect to executive pay are companies whose business size and complexity are similar to ours and with which we compete for top executive positions. Therefore, the peer group developed for the executive compensation analysis for all of the named executive officers is not the same peer group that is used in the stock performance graph included in our annual report to stockholders. The Committee evaluates the peer group periodically for appropriateness and made changes to the peer group in February 2013. The peer group utilized by the Committee for fiscal 2013 (beginning in February 2013) and fiscal 2014 (through the date of this proxy statement) executive compensation decisions was not the same peer group used for all decisions made during fiscal 2012 and in fiscal 2013 until February 2013.

The peer group utilized by the Committee for fiscal 2012 and until February 2013 executive compensation decisions and for executive pay and performance benchmarking include the following companies, referred to herein as the “2012 Peer Group”:

AmerisourceBergen Corporation

Best Buy Company, Inc.

Cardinal Health Inc.

Emerson Electric Company

Express Scripts Inc.

FedEx Corp.

McDonald’s Corp.

McKesson Corp.

Pepsico Inc.

Staples, Inc.

Target Corp.

United Parcel Service Inc.

Walgreen Company

After analysis and consultation with CAP, the Committee made changes to the peer group in fiscal 2013 so that, in the aggregate, the peer group more closely approximate the scope of Sysco’s business as measured by revenue and market capitalization. The companies in the peer group for executive pay and performance benchmarking for decisions made during fiscal 2013 and so far in fiscal 2014 include the following, and are referred to herein as the “2013 Peer Group”:

AmerisourceBergen Corporation

Best Buy Company, Inc.

ConAgra Foods Inc.

Costco Wholesale Corp

FedEx Corp.

Home Depot Inc. (The)

Kraft Foods Group Inc.

McDonald’s Corp.

Lowe’s Cos Inc.

Staples, Inc.

Target Corp.

United Parcel Service Inc.

Walgreen Company

YUM! Brands Inc.

SYSCO CORPORATION2013 Proxy Statement   45


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Based on the most recent fiscal year data available for each of the CAP studies described above in “—Committee Oversight,” the Committee determined the 2013 Peer Group revenue level, and thus the 2013 Peer Group, was a closer comparable group to Sysco. These groups had the median market capitalization and revenue levels shown below:

 

Market Capitalization

Revenue Level

2012 Peer Group:

2012: $28.9 billion as of March 31, 2012

2013: $35.0 billion as of December 31, 2012

2012: $53.1 billion as of most recent fiscal year end prior to May 2012

2013: $65.5 billion as of most recent fiscal year end prior to May 2013

2013 Peer Group :

2013: $32.5 billion as of December 31, 2012

2013: $47.8 billion as of most recent fiscal year end prior to May 2013

Sysco:

2013 : $20.0 billion

2013 : $44 billion

Peer group compensation data is limited to information that is publicly reported and, to the extent it deems appropriate, the Committee uses it to benchmark the major components of compensation for our named executive officers.

The CAP May 2013 compensation study compared Sysco’s actual pay (based on projected annual incentive payments) and projected fiscal 2013 financial performance to that of the peer companies, as well as benchmarking the target pay program. The following projected one-year and three-year performance measures were reviewed with respect to validating Sysco’s 2013 pay and performance alignment:

Revenue growth;

EPS growth;

Return on Invested Capital;

Net Income Margin; and

Total shareholder return (computed as of December 31, 2012).

For fiscal 2013, Sysco’s performance rank based on these one-year and three-year financial metrics varied by measure, yet on average, approximated, the peer group median overall for both periods. NEO pay, on average, was positioned below median, in part due to fiscal 2013 MIP annual incentive awards that were below target.

What We Paid and Why

Base Salary– Detailed Information

We pay base salaries to attract and retain talented executives and to provide a fixed base of cash compensation. The table below shows the salaries of each named executive officer at the beginning of fiscal 2012, 2013 and 2104:

Named Executive Officer

2012

Base Salary(1)

 

2013

Base Salary

 

2014
Base Salary

 

William J. DeLaney

$

1,150,000

 

$

1,175,000

(2)

$

1,198,500

(4)

Robert C. Kreidler

 

600,000

 

 

700,000

(3)

 

715,000

(4)

Michael W. Green

 

650,000

 

 

700,000

(3)

 

715,000

(4)

Wayne R. Shurts

 

n/a

(5)

 

575,000

(3)

 

587,000

(4)

William B. Day

 

500,000

 

 

510,000

(3)

 

520,000

(4)

James D. Hope

 

525,000

 

 

525,000

(3)

 

n/a

(5)

(1)

The Committee approved these base salaries on July 19, 2011, effective as of July 3, 2011.

(2)

The Committee approved these base salaries on August 23, 2012, effective as of September 1, 2012.

(3)

The Committee approved these base salaries on July 19, 2012, effective as of September 1, 2012.

(4)

The Committee approved these base salaries on July 18, 2013, effective as of September 1, 2013.

(5)

Mr. Shurts began his employment with Sysco on October 15, 2012. Mr. Hope employment ended effective July 29, 2013.

Base Salary – Analysis

Fiscal 2013 Base Salary

For base salary determinations for fiscal 2013, the Committee reviewed each executive’s job responsibilities, management experience, individual contributions, tenure in position and then-current salary. The Committee determined that it was appropriate to grant the salary increases for fiscal 2013 described in the chart above. Following a comprehensive review of Mr. DeLaney’s performance in fiscal 2012 by the Corporate Governance and Nominating Committee and the Committee, and Mr. DeLaney’s evaluation by the entire Board, the Compensation Committee approved a raise in Mr. DeLaney’s salary of $25,000, or 2.2%, reflecting the Company’s average increase. The Committee approved a salary adjustment upward of 16.67% for Mr. Kreidler for fiscal 2013, after considering input from the CEO on Mr. Kreidler’s individual contributions, as well as to adjust his relative position closer to the median of the peer group, to be more competitive, and to be better aligned with the Company’s pay philosophy. The Committee also approved a salary adjustment upward of 8.33% for Mr. Green for fiscal 2013, after considering input from the CEO on Mr. Green’s individual contributions and additional job responsibilities, as well as to keep his relative position at the median of the peer group. The Committee approved a raise in Mr. Day’s salary of 2%, reflecting his individual contributions. Mr. Hope’s salary did not change, as it was determined to be fully competitive. These changes placed the fiscal 2013 base salary of Messrs. DeLaney and Kreidler near the 25th percentile of the 2012 Peer Group, and that of Mr. Green between the 50th and 75th percentile of the 2012 Peer Group. Messrs. Day and Hope fiscal 2013 base salary stayed between the 25th and 50th percentile of the 2012 Peer Group. Mr. Shurts fiscal 2013 salary of $575,000 was offered to him based on his experience and for internal equity amongst the senior officers, and placed his fiscal 2013 base salary at the 50th percentile of the 2012 Peer Group.

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Fiscal 2014 Base Salary

For base salary determinations for fiscal 2014, the Committee once again reviewed each executive’s job responsibilities, management experience, individual contributions, tenure in his position and then-current salary. The Committee determined that it was appropriate to grant the salary increases for fiscal 2014 described in the chart above. Following a comprehensive review of Mr. DeLaney’s performance in fiscal 2013 by the Corporate Governance and Nominating Committee and the Committee, and Mr. DeLaney’s evaluation by the entire Board, the Committee approved a raise in Mr. DeLaney’s salary for fiscal 2014 of $23,500, or 2%, reflecting the Company’s average merit increase. The Committee approved salary adjustments for each of Messrs. Kreidler, Green, Shurts, and Day for fiscal 2014 of an approximate 2% increase, after considering input from the CEO on each of their individual contributions and additional job responsibilities. The Committee approved these salary increases for annual market adjustment as recommended by CAP and management. These changes and the changes to the peer group place the fiscal 2014 base salaries of Messrs. DeLaney and Kreidler between the 50th and 75th percentile of the 2013 Peer Group, that of Mr. Day at the 25th percentile, and that of Messrs. Green and Shurts between the 25th percentile and the median of the 2013 Peer Group. Mr. Hope’s employment ended at the end of fiscal 2013.

Annual Incentive Award – Detailed Information

The MIP annual incentive award is designed to offer opportunities for cash compensation tied directly to company performance. Under the terms of the MIP, we pay the annual incentive award in cash with payments made in the first quarter of the fiscal year for bonuses earned with respect to performance in the prior fiscal year. Each year the Committee approves the incentive award framework for each of the NEOs. In August 2012 and 2013, the Committee approved the incentive award framework for fiscal 2013 and 2014, respectively.

MIP Annual Incentive Award for Fiscal 2013

The NEOs’ fiscal 2013 annual incentive award calculation was based on the following corporate financial objectives, adjusted as described below. Each of the NEOs’ Business Performance Factor is further subject to the SBO review by the Committee as described below.

Calculating the Business Performance Factor

Performance Metric(1)

Potential Payout

Weighting

 

x

2013 Performance

 

=

Payout (% of target)

 

Adjusted Fully Diluted Earnings Per Share

0% - 150%

50

%

 

0

%

 

0

%

Adjusted Sales Growth

0% - 150%

30

%

 

73

%

 

21.9

%

Adjusted ROIC(2)

0% - 150%

20

%

 

98

%

 

19.6

%

TOTAL

0% - 150%

100

%

 

 

 

 

41.5

%

(1)

The calculation of the adjusted results with respect to each of the performance metrics excluded from each measure the following items, the financial returns from which we expected to be beyond fiscal 2013: the impact of major acquisitions and divestitures, withdrawals by Sysco operating companies from multi-employer pension plans, and restructuring charges, including but not limited to those relating to severance, facility closures and consolidations and asset write downs. The Committee had the discretion to include certain of these excluded items, except where such inclusion would have caused a named executive officer’s MIP bonus to become non-deductible for federal income tax purposes pursuant to Section 162(m) of the Internal Revenue Code; however, the Committee did not use such discretion.

(2)

ROIC is computed by dividing the company’s adjusted net after-tax earnings for fiscal 2013 by the company’s adjusted total invested capital for that year. Adjusted total invested capital is computed as the sum of (i) adjusted stockholder’s equity, computed as the average of adjusted stockholders’ equity at the beginning of the year and at the end of each fiscal quarter during the year; and (ii) adjusted long-term debt, computed as the average of the adjusted long-term debt at the beginning of the year and at the end of each fiscal quarter during the year.

The fiscal 2013 program provided for minimum bonus payouts upon achieving adjusted fully diluted earnings per share of at least $1.91, increases in adjusted sales of at least 3% and/or an adjusted return on invested capital of at least 12.15%. This was a change from the fiscal 2012 program, which provided for a threshold incentive payment upon an increase in fully diluted earnings per share of at least 4%, increases in adjusted sales of at least 4% and three-year average return on capital of at least 17.3%. Because Sysco did not meet the minimum levels of adjusted fully diluted earnings per share, but did achieve an approximately 4.38% increase in adjusted sales and 13.35% adjusted return on invested capital, we paid a fiscal 2013 MIP annual incentive award of approximately 41.5% of target. See Annex I for a reconciliation of these adjusted measures to the comparable GAAP measures. Acquisition expenses, acquisition debt, if any, and any gains or losses relating to or resulting from acquisitions with a purchase price in excess of $40 million are excluded from the determination of the relevant performance metrics to reflect the continuing operations of the company and because the returns from such acquisition expenses are generally expected to be outside fiscal 2013. During fiscal 2013, Sysco had three acquisitions with a purchase price over $40 million, which resulted in sales of $173.8 million that were excluded from the calculations determining the level of attainment of the performance metrics. The various levels of performance and the percentage of base salary they would have yielded as a bonus are set forth in a table under “Executive Compensation — Management Incentive Plan.”

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Fiscal 2013 Summary of Payments

NEO

Ending Base

Salary

Target Annual

Incentive (% of

Base Salary)

 

Sysco

Business

Performance

Factor

 

Award Funding

on Business

Performance

Factor

Funded Award

Not Subject to

SBO

(80%)

Individual

SBO

Performance

Factor(2)

 

Amount

of Award

Funded on

SBO

(20%)

Total Earned

Award

for FY13

Performance

DeLaney

$

1,175,000

150

%

41.5

%

$

731,437

$

585,150

97.5

%

$

142,630

$

727,780

Kreidler

$

700,000

100

%

41.5

%

$

290,500

$

232,400

110.0

%

$

63,910

$

296,310

Green

$

700,000

125

%

41.5

%

$

363,125

$

290,500

105.0

%

$

76,256

$

366,756

Shurts(1)

$

575,000

100

%

41.5

%

$

174,380

 

--

--

 

 

--

$

174,380

Day

$

510,000

100

%

41.5

%

$

211,650

$

169,320

105.0

%

$

44,446

$

213,766

Hope

$

525,000

100

%

41.5

%

$

217,875

$

174,300

80.0

%

$

34,860

$

209,160

(1)

Mr. Shurts received a prorated award based on the portion of the fiscal year he was employed.

(2)

The Committee had the discretion to adjust all NEO’s Annual Incentive Award, other than Mr. Shurts, pursuant to individual SBOs, as described below

In approving the MIP annual incentive award arrangements for fiscal 2013, the Committee provided for:

MIP annual incentive award payouts which, based upon varying levels of performance, could have varied between 0% and a maximum of 180% of target; and

Three bonus measures under the 2013 MIP annual incentive award program that are independent of each other, whereby one portion of the award could be earned even if the threshold performance level required for other measures was not achieved.

Each of the NEO’s fiscal 2013 annual incentive award was subject to an initial earned award amount based on financial performance (the Initial Business Performance Factor) equal to 41.5% of target award. The actual final earned MIP award, however, was also subject to further review by the Committee, whereby the Committee considers pre-established individual SBOs, and has the discretion to adjust 20% of any earned MIP incentive award based on factors determined by the Committee. These goals included, but were not limited to, performance against financial strategic goals and the NEO’s personal performance. The assessment on this award component resulted in an adjustment to the Business Performance Factor as described below. The Committee believes the use of individual SBOs further promotes the overall executive compensation pay philosophy to link individual pay to performance.

If the NEO’s performance with respect to the SBO performance goals had met the target levels established by the Committee, the NEO’s 2013 Award for FY13 Performance would have equaled 100% of the bonus determined by using the initial, unadjusted Business Performance Factor. If the NEO’s performance with respect to the goals had exceeded the target levels established by the Committee, the NEO’s 2013 Award for FY13 Performance would have equaled between 100% and 110% of the bonus determined by using the initial, unadjusted Business Performance Factor. If the NEO’s performance was below the target levels of performance established by the Committee, the NEO’s 2013 Award for FY13 Performance would have equaled between 80% and 100% of the bonus determined by using the initial, unadjusted Business Performance Factor.

For the reasons discussed in “—Annual Incentive Award – Analysis” below, the Committee adjusted the awards initially funded based on the Business Performance Factor and awarded (i) Mr. DeLaney a 2013 MIP annual incentive award equal to 99.5% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 41.3% of target, (ii) Mr. Kreidler a 2013 MIP annual incentive award equal to 102% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 42.3% of target, (iii) Mr. Green a 2013 MIP annual incentive award equal to 101% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 41.9% of target, (iv) Mr. Day a 2013 MIP annual incentive award equal to 101% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 41.9% of target, and (v) Mr. Hope a 2013 MIP annual incentive award equal to 96% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 39.8% of target. Mr. Shurts received a prorated award for the portion of the fiscal year he was employed at 41.5% of target and did not have SBOs in his first year of employment.

In no event could any NEO’s fiscal 2013 MIP annual incentive award have exceeded the maximum bonus amount set as part of the bonus pool amount discussed in “—Limit on Fiscal 2013 and Fiscal 2014 Maximum Annual Incentive Award Payouts” below. The fiscal 2013 awards are also subject to clawback provisions that provide that, subject to applicable law, all or a portion of the award paid pursuant to the 2013 awards may be recovered by Sysco if there is a restatement of our financial results, other than a restatement due to a change in accounting policy, within 36 months of the payment of the award and the restatement would result in the payment of a reduced award if the award was recalculated using the restated financial results. The Committee has the sole discretion to determine the form and timing of the repayment. See “— Executive Compensation Recoupment Policy.”

MIP Annual Incentive Award Potential for Fiscal 2014

In approving the annual incentive award opportunity for fiscal 2014, the Committee provided for:

Each named executive officer’s MIP bonus to be targeted at the following percentages of base salary: 150% for Mr. DeLaney, 125% for Mr. Green and 100% for Messrs. Kreidler, Shurts and Day;

Three bonus measures under the 2014 MIP annual incentive award program that are independent of each other, whereby one portion of the award can be earned even if the threshold level of one or both of the other measures is not achieved; and

Similar to the performance measures used in fiscal 2013, the fiscal 2014 performance measures are similar: (1) adjusted fully diluted earnings per share; (2) capital efficiency, as measured by adjusted return on invested capital; and (3) profitable sales growth. Earnings and capital efficiency are measured in the same manner as in 2013. The sales growth measure for fiscal 2014 is adjusted to be a matrix reflecting a combination of sales percentage increases and gross profit dollar growth. The three independent metrics retain the same relative weighting as in fiscal 2013.

The Committee may also consider pre-established individual SBOs to adjust any MIP incentive award based on factors determined by the Committee, including but not limited to, performance against financial strategic goals and the NEO’s personal performance. Based on each NEO’s performance with respect to the pre-established objectives, the Committee may adjust 40% of the NEO’s annual incentive award by zero to 150%, subject to the bonus pool maximum discussed below. The Committee will review each NEO’s performance against such goals and accordingly adjust the Business Performance Factor.

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Limit on Fiscal 2013 and Fiscal 2014 Maximum Annual Incentive Award Payouts

The Committee established a bonus pool limit for each of fiscal 2013 and fiscal 2014 for certain “covered employees” of Sysco, as defined in Section 162(m) of the Internal Revenue Code (the “Code”) to help ensure compliance with the deductibility requirements of Section 162(m) of the Code, as well as for Mr. Kreidler. The bonus pool limit was set to be equal to two percent (2%) of Sysco’s net earnings for each of fiscal 2013 and fiscal 2014 and in no event can the sum of the individual percentages of the bonus pool granted to the participants in the pool exceed one hundred percent (100%). The maximum award for each Participant, expressed as a percentage of the bonus pool for the Program Year, is set forth below and in no event can it exceed the individual award maximum set forth in the plan document:

Participant’s Title

Percent of Bonus Pool

Allocated to Participant

 

CEO

40

%

CFO

15

%

NEO 3

15

%

NEO 4

15

%

NEO 5

15

%

The umbrella structure of the bonus pool limit serves only to provide a ceiling on the maximum bonus amount that any NEO may receive, and the actual bonus paid to each NEO will be determined pursuant to the incentive award opportunity described above.

Annual Incentive Award – Analysis

Fiscal 2013

In August 2012, the Committee refined the MIP annual incentive award targets for fiscal 2013 to continue alignment with Sysco’s profit plan, to link incentive pay to the Company’s profit plan and to provide that the goals reflect market conditions, operating expectations and other relevant factors as contemplated in the profit plan. The Committee added the absolute maximums of the umbrella bonus pool in order to help ensure deductibility under Section 162(m) of the Code. CAP has informed the Committee that this approach reflects sound design practices. The decision to pay the annual incentive award for each performance component separately, regardless of whether the threshold for the others is achieved, was driven by market practice. The changes in the threshold and maximum annual incentive award levels were based on benchmarking of the peer group. The Committee excludes the extraordinary items described above because they represent items that generally involve current period costs that management and the Committee believe would not result in benefits until later periods, or vice versa. In light of the foregoing, Sysco’s executive management team prepared, and the Committee approved, the earnings per share, sales and return on capital measurements of the fiscal 2013 MIP annual incentive award. It was both management’s and the Committee’s intent to create an annual incentive award formula that was more likely to pay an annual incentive award in the event Sysco performed at the median level relative to its peers than may have been the case with respect to prior year bonus formulas. The Committee believes that the threshold and target levels of performance represented challenging, but reasonably obtainable, Sysco performance, while levels in excess of the target level represented exemplary and extremely challenging performance.

The Committee also set the target annual incentive award levels for each of the named executive officers to ensure that total cash compensation does not significantly exceed the median unless outstanding performance levels are achieved. The Committee maintained Mr. DeLaney’s target bonus level at 150% because it provided a target total cash compensation opportunity at approximately the median of the peer group. The Committee also asked CAP to validate that threshold, target and maximum performance expectations and associated payout levels under the fiscal 2013 program were aligned.

Based upon the CAP May 2012 report, target total cash compensation for fiscal 2013 for each of the named executive officers participating in the MIP compared as follows with respect to the comparable peer group position: Mr. DeLaney — near the median, Mr. Kreidler — near the 25th percentile, Mr. Green— between the median and 75th percentile, Messrs. Shurts, Hope and Day at the median. The Committee determined that these target opportunities were appropriate.

The Committee believes that individual goals are extremely important in evaluating the CEO’s and other NEO’s respective performance and that they should therefore also have an impact on each of their annual incentive opportunities. The Committee refined the MIP annual incentive award for the eligible NEOs by providing that the Committee may consider individual SBOs in order to further align the NEOs’ objectives with the key components of Sysco’s overall strategy. The Committee believes that consideration of individual SBOs further promotes the overall executive compensation pay philosophy by strengthening the link between executive pay and individual performance. Each individual’s SBOs for fiscal 2013 were pre-established by the Committee based on the critical components of Sysco’s overall strategy as set out by management and the Board. Mr. Shurts did not have individual SBOs for fiscal 2013 and his annual incentive award was not subject to the SBO adjustment factor.

Following the Committee’s evaluation in July 2013 of each NEO’s performance in fiscal 2013 with respect to these individual SBOs, the Committee adjusted the Business Performance Factor as described in the following table.

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NEO

SBOs

Committee’s Review and Determination

Delaney

1)

Effectively Carry Out All Key Aspects of Business Transformation

2)

Reduce Lost Business For Ex-CMU Customers and Increase the Ratio of New/Lost For the Same Customer Base

3)

Successfully Execute Board Approved Strategic Acquisitions and Continue to Achieve Growth Through Smaller Acquisitions

4)

Make Significant Progress Towards Our Strategic Goals For Leveraging Customer Insight, Enhancing and Expanding Channels, Growing Sysco Ventures and Implementing Category Management

5)

Communicate Broadly the Strategic Direction of the Corporation to All Key Stakeholders

6)

Make Continued Strides Toward Implementing an Effective Human Capital Plan – Including Enhanced Talent Management, Performance Management, Diversity Management and Filling Key New Leadership Positions

Awarded Mr. DeLaney a 2013 MIP annual incentive award equal to 99.5% of the earned Business Performance Factor, or 41.3% of target. The Committee adjusted the the Business Performance Factor downward due to the delay in the Business Transformation technology deployment.

Kreidler

1)

Effectively Carry Out All Key Aspects of Business Transformation

2)

Reduce Lost Business For Ex-CMU Customers and Increase the Ratio of New/Lost For the Same Customer Base

3)

Successfully Execute Board Approved Strategic Acquisitions and Continue to Achieve Growth Through Smaller Acquisitions

4)

Make Continued Strides toward Implementing an Effective Human Capital Plan – Including Enhanced Talent Management, Performance Management, Diversity Management and Filling Key New Leadership Positions

5)

Communicate Broadly the Strategic Direction of the Corporation to All Key Stakeholders

6)

Effectively Carry Out All Key Aspects of Financial Transformation

Awarded Mr. Kreidler a 2013 MIP annual incentive award equal to 102% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 42.3% of target. The Committee adjusted the Business Performance Factor upward because Mr. Kreidler met a majority of his goals and exceeded some of his goals.

Green

1)

Effectively Carry Out All Key Aspects of Business Transformation

2)

Reduce Lost Business For Ex-CMU Customers and Increase the Ratio of New/Lost For the Same Customer Base

3)

Successfully Execute Board Approved Strategic Acquisitions and Continue to Achieve Growth Through Smaller Acquisitions

4)

Make Significant Progress Towards Our Strategic Goals For Leveraging Customer Insight, Enhancing and Expanding Channels, Growing Sysco Ventures and Implementing Category Management

5)

Make Continued Strides Toward Implementing an Effective Human Capital Plan – Including Enhanced Talent Management, Performance Management, Diversity Management and Filling Key New Leadership Positions

Awarded Mr. Green a 2013 MIP annual incentive award equal to 101% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 41.9% of target. The Committee adjusted to the Business Performance Factor upward because Mr. Green met a majority of his goals and exceeded some of his goals.

Day

1)

Effectively Carry Out All Key Aspects of Business Transformation

2)

Reduce Lost Business For Ex-CMU Customers and Increase the Ratio of New/Lost For the Same Customer Base

3)

Make Significant Progress Towards Our Strategic Goals For Leveraging Customer Insight, Enhancing and Expanding Channels, Growing Sysco Ventures and Implementing Category Management

4)

Make Continued Strides Toward Implementing an Effective Human Capital Plan – Including Enhanced Talent Management, Performance Management, Diversity Management and Filling Key New Leadership Positions

5)

Communicate Broadly the Strategic Direction of the Corporation to All Key Stakeholders

6)

Deliver on Sourcing and Category Management Objectives for 2013 and Position the Organization to Achieve Fiscal 2014 and 2015 Objectives

Awarded Mr. Day a 2013 MIP annual incentive award equal to 101% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 41.9% of target. The Committee adjusted the Business Performance Factor upward because Mr. Day met a majority of his goals and exceeded some of his goals.

Hope

1)

Effectively Carry Out All Key Aspects of Business Transformation

2)

Reduce Lost Business For Ex-CMU Customers and Increase the Ratio of New/Lost For the Same Customer Base

3)

Make Continued Strides Toward Implementing an Effective Human Capital Plan – Including Enhanced Talent Management, Performance Management, Diversity Management and Filling Key New Leadership Positions

4)

Establish an effective Business Process Improvement Practice

Awarded Mr. Hope a 2013 MIP annual incentive award equal to 96% of the bonus that would have been paid using the initial, unadjusted Business Performance Factor, or 39.8% of target. The Committee adjusted the Business Performance Factor downward because Mr. Hope did not meet all of his goals due to the continued delay in the Business Transformation deployment.

Based upon the CAP May 2013 report, actual total cash compensation for fiscal 2013, using an annual incentive award payout estimate of 50% of target, for each of Messrs. DeLaney, Kreidler, Green, Shurts, and Day with respect to comparable peer group pay levels were generally between 25th percentile and median, and actual total direct compensation was between the 25th percentile and median for Messrs. DeLaney, Green, Shurts, and Day and between median and 75th percentile for Mr. Kreidler. The Committee was satisfied that these payout levels appropriately correlated to Sysco’s overall financial performance, which was between the 25th percentile and median relative to the peer group on select metrics.

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Fiscal 2014

In the first quarter of fiscal 2014, the Committee refined the MIP annual incentive award targets for fiscal 2014 to continue alignment with Sysco’s profit plan and to provide that the goals continue to reflect market conditions, operating expectations and other relevant factors. Similar to the performance measures used in fiscal 2013, the Committee has determined that fiscal 2014 performance measures are: (1) earnings, as measured by adjusted fully diluted earnings per share, (2) capital efficiency, as measured by adjusted return on invested capital and (3) profitable sales growth. The earnings and capital efficiency metrics are calculated in the same manner as fiscal 2013. The profitable sale growth metric for fiscal 2013 is adjusted to combine total sales percentage increase and gross profit dollars growth. The three independent metrics retain the same relative weighting as in fiscal 2013. The Committee continues to believe that the threshold and target levels of performance represent challenging, but reasonably obtainable, Sysco performance levels, while levels in excess of the target level represent exemplary and extremely challenging performance. The Committee increased the percentage of annual incentive award that is subject to adjustment from 20% to 40% based on satisfaction of SBOs in order to increase the Committee’s ability to reward or penalize an NEO for his or her individual performance, thus linking the annual incentive award more closely to individual performance. CAP has informed the Committee that this approach continues to be in line with the majority of Sysco’s peer group and reflective of sound design practices.

Long-term Incentives – Detailed Information

The Committee granted long-term incentives in November 2012 for the 2013 fiscal year (the “Annual LTI Grant”). These incentives consisted of stock options, RSUs and CPUs. The long-term incentives are designed to provide our NEOs competitive long-term incentive opportunities that align with our peer group and reflect our overall compensation philosophy. For more details regarding these grants see “Executive Compensation — Cash Performance Unit Plan,” “Executive Compensation — Outstanding Equity Awards at Fiscal Year-End,” and “Executive Compensation — Grants of Plan-Based Awards.”

In fiscal 2013, through the Annual LTI Grant, Messrs. DeLaney, Kreidler, Green, Shurts, Day and Hope received approximately 50% of the value of their long-term incentives in stock options, approximately 25% in grants of RSUs, and approximately 25% in CPUs, with the options valued using the greater of $4 per option or the Black-Scholes calculated value per option, each RSU valued at the average ten-day closing price of Sysco common stock before the grant date, and CPUs valued at the target level of $1 per unit. The Black-Scholes value of the options calculated based on standard assumptions was less than $4 per option, and the upward adjustment resulted in a grant of fewer options. See the footnotes to the Grants of Plan-Based Awards table below for detailed explanation of the Black-Scholes calculation for the options as of the date of grant. The targeted dollar value of the long-term incentive grants are set at 6x base salary for Mr. DeLaney, 3.5x base salary for Mr. Kreidler and 3.25x base salary for Messrs. Green and Shurts and 3x for Messrs. Day and Hope.

Transitional Compensation Opportunities for Projected Reductions in Non-Qualified Retirement Plan Benefits

During fiscal 2013, Sysco made significant changes to retirement benefits offered to employees, including the NEOs. We moved future retirement benefits from a defined benefit focus towards a defined contribution strategy. The transition to a defined contribution-based program further aligns Sysco with our peer group, increases flexibility, simplifies the benefit structure, retains key talent and reduces and stabilizes costs. Going forward, in addition to the defined contribution retirement program, wealth accumulation opportunities for NEOs at Sysco will be further focused on variable annual and long-term incentive plans, each of which are better aligned with stockholder interests and Sysco performance.

The retirement program changes, however, were expected to result in significant reductions in anticipated benefits for existing participants in the SERP and the EDCP. Amounts under these non-qualified plans are in addition to the broad-based pension plan discussed in “Executive Compensation – Pension Benefits.” In order to effect the new strategy while retaining key leaders, Sysco implemented a transition strategy to partially mitigate anticipated reductions in the expected value of benefits under the SERP and the EDCP. While some existing SERP participants experienced no projected adverse impact, others were forecast to experience reductions of up to 49%. To combat concerns over retention, the Committee developed a transition program around the key tenet that no impacted participant should experience an aggregate reduction of more than 15% - 20% (depending on an individual’s prior years of service) in the expected retirement benefits under the Company’s non-qualified plans as a result of the fiscal 2013 retirement strategy changes.

The change in anticipated value was measured by comparing the projected lump-sum value of an individual’s anticipated benefit at his or her earliest unreduced retirement age under both the prior and the revised strategies. Projection of lump-sum values were based on assumed increases in annual salary, investment earnings and elective deferrals in-line with historical averages. The impact of the projected change varied depending on a participant’s age, years of service and compensation. The NEOs’ projected reductions in non-qualified retirement benefits under the revised program, including consideration of any transitional contributions except for transitional RSU opportunities, were as follows: Mr. DeLaney (31%), Mr. Kreidler (44%), Mr. Green (4%), Mr. Day (19%) and Mr. Hope (6%). Mr. Shurts was not eligible for the SERP or the EDCP. To mitigate the loss in projected non-qualified retirement benefits, impacted individuals were eligible for a transitional compensation opportunity in the form of supplemental contributions to the MSP, a one-time transitional RSU grant, or a combination thereof.

Each transitional compensation opportunity is contingent on continued service to Sysco. Transitional RSUs vest in equal annual tranches over the 5-year period following grant. Supplemental contributions to the MSP are to be payable over up to each of the next 10 plan years and eligible individuals only receive the contribution for any given plan year if they remain employed with Sysco through December 31 of the applicable year, or have experienced a termination of employment by reason of death, disability or qualifying retirement during the plan year. The first transitional contribution to the MSP will be made in third quarter of fiscal 2014 for qualifying individuals that remain employed with Sysco through December 31, 2013.

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The amount and form of the transitional contribution available to each NEO resulted from Committee determination of the level of mitigation necessary to retain key talent during this significant transition in non-qualified retirement benefits. The transitional compensation opportunity for each of the impacted NEOs under the MSP is as follows: Mr. Kreidler (10%) and Mr. Day (2.5%). Messrs. DeLaney, Green and Shurts are not eligible for supplemental MSP contributions. Transitional, one-time RSU grants were issued on November 14, 2012, as to the following NEOs: Mr. DeLaney 63,855 RSUs, valued at $1,913,096 and Mr. Kreidler 41,036 RSUs, valued at $1,229,439. With respect to these RSU grants, we valued each RSU at $29.96 per share, being the closing price of our common stock on the first business day prior to the grant. Messrs. Green, Day, Hope and Shurts were not eligible for a transitional RSU grant. Including the transitional compensation opportunities discussed above, the projected reductions in the non-qualified retirement benefits under the revised program are as follows: Mr. DeLaney (15%); Mr. Kreidler (20%); Mr. Green (4%), and Mr. Day (19%).

Replacement RSU Grant to Mr. DeLaney

In fiscal 2012 and 2013, Mr. DeLaney was granted stock options on two separate occasions. On November 15, 2011, the Committee attempted to grant Mr. DeLaney 862,500 options to purchase shares of common stock; and on November 13, 2012, the Committee attempted to grant Mr. DeLaney 881,250 options to purchase shares of common stock. In the third quarter of fiscal 2013, we determined that a portion of each of the attempted grants of stock options during fiscal 2012 and 2013 was not validly granted in accordance with the terms of the 2007 Stock Incentive Plan because those attempted grants inadvertently exceeded the plan’s limits on the number of stock options that may be granted to any individual, 750,000, in a single year. Accordingly, a portion of each award was void ab initio and never, in fact, granted.

In order to avoid penalizing Mr. DeLaney because a portion of the attempted grant was ineffective, and in the interest of furthering our objective of motivating and retaining qualified executives as well as aligning executive pay with the business objectives and long-term growth of our company, the Committee determined in the third quarter of fiscal 2013 to approve compensation to Mr. DeLaney designed to replicate, but not exceed, the intended grant value of the void portion of the attempted awards at the time of the original grant, based on the current stock price at the time of the replacement grant. The replacement compensation consisted of a grant of 30,894 RSUs on February 12, 2013, valued at approximately $975,000. This one-time replacement RSU award was in addition to Mr. DeLaney’s regular, annual RSU grant.

Impact of Certain One-Time RSU Grants

The Committee recognizes that the one-time RSU grants, discussed above, contributed to the fact that Messrs. DeLaney and Kreidler’s fiscal 2013 total compensation appearing in the Fiscal 2013 Summary Compensation Table was noticeably greater than their fiscal 2012 total compensation. The Committee believes, however, that a simplistic, direct comparison between fiscal 2013 compensation and fiscal 2012 compensation, by itself, is not appropriate. The difference between total compensation between the years is in large part attributable to timing issues relating to the grant of the replacement RSUs to Mr. DeLaney and the grant of transitional RSUs to Messrs. DeLaney and Kreidler. Specifically, reported fiscal 2013 total compensation includes the value of a portion of the replacement RSU grant to Mr. DeLaney with a value of $450,000, which effectively replaces compensation opportunity intended to be granted to Mr. DeLaney in fiscal 2012. At the same time, because the excess stock options were ineffective, Mr. DeLaney’s fiscal 2012 total compensation reported herein excludes the accounting value of the excess options and thus does not include all of the stock-based compensation that we intended to grant him in fiscal 2012.

The fiscal 2013 total compensation table also included value associated with transitional grants to Messrs. DeLaney and Kreidler, valued at $1,913,096 and $1,229,439, respectively, with such amounts effectively replacing a portion of non-qualified retirement benefits that would have been expected to be accrued by them between fiscal 2013 and each individual’s earliest unreduced retirement age, based on the assumptions discussed above.

These factors taken together give the appearance of significantly greater compensation in fiscal 2013 than if these one-time grants had not been made; yet, as discussed above, the replacement compensation was designed merely to make Mr. Delaney whole for the excess options and to mitigate a portion of Messrs. DeLaney’s and Kreidler’s anticipated reduction in benefits due to the accrual freeze in the both the SERP and the EDCP. See the Alternative Summary Compensation Table that follows.

The Committee therefore believes that it is appropriate to compare fiscal 2012 and fiscal 2013 compensation without the one-time RSU grants to Messrs. DeLaney and Kreidler. The Committee believes that stockholders may find it useful to see how Mr. DeLaney’s and Mr. Kreidler’s fiscal 2012 and 2013 compensation would have appeared in the Fiscal 2013 Summary Compensation Table without the replacement compensation, and assuming that the full option value originally intended had been included in fiscal 2012. The Alternative Summary Compensation Table below has been revised as described above and does not comply with SEC rules for the Summary Compensation Table. Stockholders should not view this alternative table as a substitute for the Summary Compensation Table on page 59 and should review this Alternative Compensation Table together with the Summary Compensation Table and other compensation tables contained herein that have been prepared in accordance with SEC rules.

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Alternative Summary Compensation Table

Name and

Principal Position

Fiscal

Year

 

Salary

Bonus

Stock

Awards(1)

Option

Awards(2)

Non-Equity

Incentive Plan

Compensation

Change in Pension

Value and Nonqualified

Deferred Compensation

Earnings

All Other

Compensation

Total

William J. DeLaney

President and Chief Executive Officer

2013

$

1,170,833

0

2,248,839

2,400,000

1,470,280

1,227,127

5,800

8,522,879

2012

 

1,150,000

0

1,719,403

3,165,375

857,482

1,941,349

1,066

8,834,675

Robert C. Kreidler

Executive Vice President and

Chief Financial Officer

2013

$

683,333

0

599,050

980,000

530,198

165,874

6,437

2,964,892

2012

 

600,000

0

523,297

963,375

304,195

142,678

7,096

2,540,641

(1)

With respect to Mr. DeLaney, the fiscal 2013 amount (a) excludes 63,855 restricted stock units granted on November 14, 2012 to compensate him for lost non-qualified retirement benefits and 14,259 restricted stock units granted on February 12, 2013 to compensate him for the value of stock options earned in fiscal 2012 that were void ab initio because not allowed under the 2007 Stock Incentive Plan (although these options would have been required by SEC rules to be reported using a value equal to their Black-Scholes value of $3.67 per share, in originally awarding the options, the Committee valued them at the higher value of $4.00 per share, which resulted in a smaller option grant size; as a result, the Committee used this same $4.00 value in determining the size of the replacement restricted stock unit grant); and (b) includes 57,538 restricted stock units granted on November 13, 2012 as part of his normal long-term incentive program and 16,635 restricted stock units granted on February 12, 2013 to compensate him for the value of stock options earned in fiscal 2013 that were void ab initio because not allowed under the 2007 Stock Incentive Plan. With respect to Mr. Kreidler, the fiscal 2013 amount (a) excludes 41,036 restricted stock units granted on November 14, 2012 to compensate him for lost non-qualified retirement benefits, and (b) includes 19,995 restricted stock units granted on November 13, 2012 as part of his normal long-term incentive grant. With respect to fiscal 2013, we valued the restricted stock units granted in November at $29.96 per share, being the closing price of our common stock on the first business day prior to the November 13, 2012 grant date and the restricted stock units granted in February 2013 at $31.56 per share, being the closing price of our common stock on the first business day prior to the February 12, 2013 grant date.

(2)

The amounts in these columns reflect the grant date fair value of the awards. See Note 17 of the consolidated financial statements in Sysco’s Annual Report on Form 10-K for the year ended June 29, 2013, and Note 17 of the consolidated financial statements in Sysco’s Annual Report on Form 10-K for the year ended June 30, 2012 regarding assumptions underlying valuation of equity awards. With respect to Mr. DeLaney and as discussed above, the amount shown above for fiscal 2012, has been increased from $2,752,500 to $3,165,375 to reflect the value of the stock options earned in fiscal 2012 that were void ab initio because not allowed under the 2007 Stock Incentive Plan, since this was compensation earned by him in 2012.

Stock Options and Restricted Stock Units

Other than the one-time awards discussed above, the Committee approved the fiscal 2013 stock option and restricted stock unit grants to Messrs. DeLaney, Kreidler, Green, Shurts, Day and Hope in November 2012 under our 2007 Stock Incentive Plan, as amended. All fiscal 2013 grants are shown under “Executive Compensation— Grants of Plan-Based Awards.” The 2007 Stock Incentive Plan calls for options to be priced at the closing price of our common stock on the business day prior to the grant date, and the fiscal 2013 option grant agreement provides for ratable vesting over a five-year period. Other than as described above, the fiscal 2013 RSU grant agreements provide for vesting in three equal tranches over a three-year period following the date of grant. The Committee grants all stock options and RSUs pursuant to equity grant guidelines. These guidelines are more fully described under “Executive Compensation — Outstanding Equity Awards at Fiscal Year-End.”

Cash Performance Units

Under the Sysco Corporation 2008 Cash Performance Unit Plan, as amended, participants in the MIP have the opportunity to receive cash incentive payments based on Sysco’s performance over a specified three-year period. CPU grants are forward-looking and the grant of CPUs typically does not take into account prior Sysco or individual performance. CPU payouts are based on Sysco’s actual performance over the three-year performance cycle beginning with the fiscal year in which the CPU is granted. In November 2012, the Committee granted three-year cash performance units under the 2008 Cash Performance Unit Plan for the FY 2013-2015 performance period. In addition, the cash performance units that we issued in November 2009 and November 2010 under the 2008 Cash Performance Unit plan were paid out in August 2012 and August 2013, respectively (see below discussion). The 2008 Cash Performance Unit Plan expires November 30, 2014. If approved by shareholders, CPU awards after that date will be made pursuant to the 2013 Long-Term Incentive Plan.

The CPU grants that the Committee made in November of 2009 and November of 2010 related to the three-year performance period ending in fiscal 2012 and 2013, with payout possibilities ranging from 0% to 150% of the total value of the units granted. The November 2009 grant had a value of $35 per CPU; grants from November 2010 forward have a value of $1 per CPU. For each of Messrs. DeLaney, Kreidler, Green, Day and Hope, one-half of the payout was based on the average growth in diluted earnings per share and one-half of the payout was based on the average increase in sales. Achievement of the target performance goals would have yielded a 100% payout, while the minimum satisfaction of only one criterion would have yielded a 25% payout and maximum performance above target on both criteria would have provided a 150% payout. In order for generally accepted accounting principles to be applied consistently year-over-year, the performance measures for the CPUs may be calculated slightly differently from comparable measures in our financial statements.

Our adjusted sales growth over the three-year performance period ended on June 30, 2012 was 4.85% and our average growth in fully diluted earnings per share over the performance period was 2.54%, which resulted in a CPU payout of $12.04 per unit in August 2012. Our adjusted sales growth over the three-year performance period ended on June 29, 2013 was 6.76% and our average growth in fully diluted earnings per share over the performance period was negative 4.88%, which resulted in a CPU payout of $0.594 per unit in August 2013, which was approximately 59% of the aggregate target payout. See Annex I - Non-GAAP Reconciliations for a reconciliation of these adjusted measures to the comparable GAAP measures.

Beginning in November 2011, the Committee changed the performance metrics/goals associated with the CPUs so that they are based solely on three-year total shareholder return, as compared to that of the S&P 500 companies. Based upon Sysco’s total shareholder return relative to the other S&P 500 companies, CPUs will pay out from 0% to 150% of the target award value. The threshold payment (which is 50% of target) requires Sysco’s three-year total shareholder return to equal or exceed that of the 30th percentile of the S&P 500 companies, while the maximum payment is earned at the 75th percentile, with graduated payouts in between. The target payout is earned between the 45th and 55th percentile. These grants are subject to Sysco’s clawback policies. The terms of the CPU grants that the Committee made in November 2012 are identical to those of the November 2011 grants, and any grants made in fiscal 2014 are also expected to have identical terms. See “Executive Compensation— Cash Performance Unit Plan” for an explanation of the calculation of total shareholder return.

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The specific performance measures and related potential payouts for the November 2010, November 2011 and November 2012 CPU grants are shown under “Executive Compensation— Cash Performance Unit Plan.”

Long-term Incentives – Analysis

The Committee determined the mix of CPUs, stock options and RSUs for the FY 2013 Annual LTI Grant in order to continue to provide long-term incentives that are in line with those disclosed by the 2012 Peer Group and to provide further alignment of the executives’ interests with those of the stockholders based on vehicles with varying vesting and payout periods. As discussed above under “Long-term Incentives - Detailed Information,” this resulted in a mix of approximately 50% options, 25% RSUs, and 25% CPUs, based on values calculated as described above. With respect to target total direct compensation, these same values positioned Mr. DeLaney below the 25th percentile, Mr. Kreidler close to median, Mr. Green between median and 75%, and Messrs. Shurts, Day and Hope between the 25th percentile and the median of the 2012 Peer Group. These results were consistent with the Committee’s focus of providing competitive base salaries and competitive incentive opportunities such that target total direct compensation was closer to the median. Despite increases in the size and value of Mr. DeLaney’s longer-term incentive grants for fiscal 2013, his long-term incentive compensation and target total direct compensation are near the 25th percentile of the peer group.

The minimum, target and maximum performance goals and corresponding payouts for the CPU awards, as well as the decision to use the S&P 500 companies, were based on an analysis of our peer group’s practices, the Committee’s desire to use a broad market index, and because the Committee believes total shareholder return is the ultimate measure of stockholder value creation and long-term Company success.

The Committee believes that stock option and RSU awards help to ensure that long-term strategic initiatives are not compromised by having executives focus solely on short-term profitability through the annual incentive award. Such awards also help focus executives on strategies that increase long-term stockholder value. Existing executive equity ownership levels are not generally a factor in the Committee’s granting of stock options and RSUs. The Committee determined that the special one-time grants to Messrs. DeLaney and Kreidler to compensate them for changes in their retirement benefits were appropriate as part of the transition from a defined benefit retirement plan to a defined contribution retirement plan and to compensate them for sizable loss of future benefits. Further, the Committee determined these grants will vest ratably over five years to further retain and incentivize the executives. Also, the Committee determined that the one-time award to Mr. DeLaney to replace the value of stock options that were void ab initio would serve to appropriately compensate Mr. DeLaney despite an administrative error made at the time of the original grant. See “--Long-term Incentives - Detailed Information.”

The Committee determined that in fiscal 2014, the annual LTI grant will consist of approximately 40% stock options, 25% RSUs, and 35% CPUs. This will shift more of the NEO’s long-term incentive pay from stock options to CPUs, which the Committee believes will further link the NEO’s compensation and the Company’s relative total shareholder return.

Retirement/Career Benefits – Detailed Information

Retirement Plans - Supplemental Executive Retirement Plan

We historically have provided annual retirement benefits to all corporate employees and most of our non-union operating company employees under the tax-qualified Sysco Corporation Retirement Plan, a defined benefit program which we simply refer to as the “pension plan.” Beginning January 1, 2013, however, most employees no longer accrue additional retirement benefits under the pension plan. Effective January 1, 2013, the Sysco Corporation Employees’ 401(k) Plan, a tax-qualified, defined contribution program, will serve as the primary retirement vehicle for the Company. When the pension plan was the primary retirement vehicle, the Company maintained a Supplemental Executive Retirement Plan, or SERP, in order to retain loyalty and increased performance from certain employees. The Committee utilized the SERP to increase the retirement benefits available to officers whose benefits under the pension plan are limited by law. In fiscal 2013, Sysco offered the SERP to approximately 121 corporate and operating company officers. Each of the named executive officers other than Mr. Shurts participated in the SERP.

In May 2011, the SERP was amended in order to close the SERP to future participants. In November 2012, the SERP was further amended to freeze benefits and stop future accruals, effective June 29, 2013. Participants covered by the SERP as of June 29, 2013 were granted accelerated vesting. For those who retire and are not eligible for immediate commencement of their SERP benefit, they will be deemed 100% vested, with benefits payable upon reaching age 65. The earliest an executive can retire and receive any benefits under the SERP is age 55 with a minimum of 15 years of MIP service or age 60 with 10 years of Sysco service. Payments before the age of 65 are adjusted by an early retirement reduction factor. The SERP was designed to provide fully vested participants with post-retirement monthly payments, with annual benefits equaling up to 50% of a qualifying participant’s final average annual compensation, when combined with other retirement benefits, including other pension benefits, the company match under the 401(k) plan and social security payments. The participating named executive officers will receive a SERP benefit based on the greater of the accrued benefit determined as of the relevant separation date from service under the current provisions of the SERP, or the accrued benefit determined as of June 28, 2008 under the prior provisions of the SERP, but with vesting, benefit limits and eligibility for immediate benefit payments determined as of the relevant separation from service date. Annual retirement benefits from the SERP for a participant who is 100% vested in his accrued benefit were generally limited to approximately $2,393,832 in fiscal 2013, with such maximum limit adjusted for cost-of-living increases in future years. The terms of the SERP are more specifically described under “Executive Compensation — Pension Benefits — Supplemental Executive Retirement Plan.” The amounts accrued by each participating named executive officer under the pension plan and the SERP as of June 29, 2013 are set forth under “Executive Compensation — Pension Benefits.”

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SERP Analysis

In November 2012, the Committee amended the SERP to freeze benefits, stop future accruals and to provide for immediate (as of June 29, 2013) vesting of accrued benefits in order to achieve the following goals:

Bring the value of retirement benefits more in line with the practices of the peer group; and

Over the long-term, increase the proportion of long-term and performance-based compensation in the compensation mix, relative to fixed and retirement compensation such as the SERP and MSP.

In connection with the transition, the Committee approved a one-time grant of restricted stock units to Messrs. DeLaney and Kreider to mitigate the anticipated loss in future SERP benefits, as described above in “— Long-term Incentives Analysis.”

Nonqualified Executive Deferred Compensation Plan

Prior to December 31, 2012, Sysco offered an Executive Deferred Compensation Plan, or EDCP, to provide MIP participants, including the NEOs other than Mr. Shurts, the opportunity to save for retirement and accumulate wealth in a tax-efficient manner beyond savings opportunities under Sysco’s 401(k) retirement savings plan. Participants were able to defer up to 100% of their base salary and up to 40% of their MIP bonus, or any bonus paid in lieu of or as a replacement for the MIP bonus, to the EDCP. Sysco does not match any base salary deferrals into the EDCP and deferrals are no longer permitted. For participants who chose to defer a portion of their qualifying bonus, Sysco matched 15% of the first 20% deferred, making the maximum possible match to the EDCP 3% of the MIP bonus. This match generally vests in accordance with a graduated schedule after an executive has reached age fifty-five and has fifteen years of MIP service, but will vest in all events upon the earlier of (i) the tenth anniversary of the crediting date, (ii) the executive’s death, (iii) the executive’s disability, (iv) a change in control, or (v) the executive’s attaining age sixty. Participants who defer compensation under the EDCP may choose from a variety of investment options, including Moody’s Average Corporate Bond Yield, with respect to amounts deferred. Company matching contributions are credited with the Moody’s Average Corporate Bond Yield. The EDCP is described in further detail under “Executive Compensation — Executive Deferred Compensation Plan.”

EDCP Analysis

Currently, individual contributions to the 401(k) plan are limited by law to $17,500 per year. For many years, the EDCP served as a recruitment and retention tool for Sysco. In connection with the broader transition in retirement philosophy, beginning in fiscal 2013, a new deferred compensation plan, the MSP, has been utilized.

Management Savings Plan

On January 1, 2013, Sysco introduced a new non-qualified, defined contribution savings plan, the MSP. The MSP allows individual deferrals and employer contributions in excess of IRS 401(k) contribution and compensation limits. The MSP allows eligible participants to defer up to 50% of their base salary (for calendar years 2013 and thereafter) and up to 100% of their eligible bonus (for fiscal years 2014 and thereafter). In addition, in conjunction with freezing of the SERP, certain participants (who would otherwise have incurred a sizable loss of future benefits under the SERP) are eligible for transition contributions of between 2.5% - 10% of their eligible pay for a period not to exceed (i) ten years or (ii) the date of their departure from the Company. To the extent that any portion of an employer contribution to an eligible individual’s tax-qualified defined contribution savings plan are limited by IRS regulation, these contributions will be recorded to the MSP as well. The participants in the MSP direct the investment for both their individual contributions and the company match portion. The MSP is described in further detail under “Executive Compensation — Management Savings Plan.”

MSP Analysis

Currently, individual contributions to the 401(k) plan are limited by law to $17,500 per year. The Committee believes that the MSP motivates and assists in the retention of key employees by providing them with a supplemental retirement savings vehicle. The MSP is an important, and cost effective, recruitment and retention tool for Sysco, as the companies with which we compete for executive talent typically provide a similar plan to their senior employees.

Executive Perquisites & Other Benefits – Detailed Information

We provide benefits for executives that we believe are reasonable, particularly since the cost of these benefits constitutes a very small percentage of each named executive officer’s total compensation. Certain of these benefits are described below.

Sysco’s NEOs are generally eligible to participate in Sysco’s regular employee benefit programs, which include a 401(k) plan, an employee stock purchase plan, group life insurance and other group welfare benefit plans, and until the changes made to retirement benefits in fiscal 2013 included the defined benefit pension plan. We also provide MIP participants, including the NEOs, with additional life insurance benefits, long-term disability coverage, including disability income coverage, and long-term care insurance, as well as reimbursement for an annual comprehensive wellness examination by a physician of their choice. We believe many of these benefits are required to remain competitive with our competitors for executive talent. Although the executive officers are eligible to participate in Sysco’s group medical and dental coverage, we adjust employees’ contributions towards the monthly cost of the medical plan according to salary level; therefore, executives’ pay a higher employee contribution, than do non-executives, to participate in these welfare plans.

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MIP participants, including the NEOs, are encouraged to occasionally have their spouses accompany them at business dinners and other business functions in connection with some meetings of the Board of Directors, certain business meetings and other corporate-sponsored events, and Sysco pays, either directly or by reimbursement, all expenses associated with their spouses’ travel to and attendance at these business-related functions. Furthermore, Sysco owns fractional interests in private aircraft that are made available to members of the Board of Directors, executives and other members of management for business use, but these aircraft are not allowed to be used for personal matters. Spouses may occasionally accompany executive officers on such flights in connection with travel to and from business-related functions if there is space available on the aircraft.

All employees, including our NEOs, as well as members of our Board, are also entitled to receive discounts on all products carried by Sysco and its subsidiaries. Although Sysco does provide the NEOs with certain additional perquisites, we do not provide any of the NEOs with automobiles, security monitoring or split-dollar life insurance.

Executive Compensation Governance and Other Information

Severance and Employment Agreements

None of Sysco’s executive officers are currently parties to any severance or employment agreements providing for severance or other compensation upon termination. Consistent with our approach of rewarding performance, employment is not guaranteed, and either the Company or the NEO may terminate the employment relationship at any time. In some cases, the Committee or Board of Directors may agree to provide separation payments to departing executives upon their termination to obtain an extended non-compete, non-solicitation and non-disclosure agreement and a release of claims. In fiscal 2013, the Company and Committee determined that severance should be paid to Mr. Hope in return for extended non-compete, non-solicitation and non-disclosure agreement and a release of claims. The amount of this severance was based on his service with the company as well as his role and compensation at the time of his departure.

In fiscal 2013, the Company and Committee also structured a competitve offer and compensation package to attract and secure the employment of Mr. Shurts in the role of Executive Vice President, Chief Technology Officer. The Committee structured certain components of Mr. Shurts compensation to partially replace the value of certain compensation and other benefits forfeited upon his acceptance of employment with Sysco. Mr. Shurts’ compensation package is further described at “Executive Compensation -- Employment Arrangement with Mr. Shurts.”

Relocation Expenses

To address the Committee’s desire for Sysco to comply with best corporate governance and compensation practices, in October 2010, the Committee adopted an executive relocation expense reimbursement policy that applies to all of the NEOs. The reimbursement policy provides that Sysco will not reimburse any of such executives for any loss on the sale of the executive’s house sold in connection with the executive’s relocation. The reimbursement policy also provides that only certain pre-approved relocation expenses will be eligible for increased payments to cover all applicable taxes on the reimbursed amounts, such as state and federal income taxes, FICA, and Medicare taxes. The relocation expenses subject to such increased payments to cover applicable taxes will be limited to the cost of moving the executive’s household goods and vehicles; real estate fees incurred in selling the executive’s residence; closing costs associated with the purchase of a new residence, including cost of credit reports, mortgage and deed taxes, recording fees and title search, title insurance, surveys, if required, and reasonable attorney’s fees; and up to six months’ rental expense for a temporary residence in the area to which the executive has been asked to relocate. No other relocation expenses will be eligible for increased payments to cover applicable taxes. In addition, the reimbursement policy provides that all future relocation agreements with any named executive officer will include a clawback provision that requires the executive to reimburse Sysco for all or a part of the reimbursement if his employment is terminated for any reason other than death, disability or change of control of Sysco, or termination without cause or for good reason, within a specified amount of time after receiving the reimbursement.

The Committee approved a relocation package for Mr. Shurts in fiscal 2013 for $81,560, which is consistent with the executive relocation expense reimbursement policy discussed immediately above.

Benefits Following Change in Control

We currently have no separate severance or similar agreements that would cause an immediate or “single trigger” cash payment obligation solely as a result of a change in control of Sysco. We have included change of control provisions in several of Sysco’s benefit plans and agreements, including an immediate payout of CPUs at the target payout level for grants under the 2008 Cash Performance Unit Plan, and 100% vesting of EDCP benefits, options, restricted stock and restricted stock units upon a change in control. See “Executive Compensation — Quantification of Termination/Change in Control Payments” for a detailed explanation of potential benefits under the various provisions.

Also, as described below in “ Vote to Approve the Adoption of Sysco Corporation 2013 Long-Term Incentive Plan (Item 2)—The 2013 Long Term Incentive Plan-- Vesting for Certain Terminations of Employment in Connection to Change in Control ”, the Board has approved the concept of “double-trigger” acceleration of equity-award vesting for the Company’s senior executives. Upon approval of the 2013 Long-Term Incentive Plan by our stockholders, Sysco will move from single-trigger to double-trigger for accelerated vesting for future long-term incentive grants under certain change of control scenarios.

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The Committee continues to believe that these provisions will preserve executive morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in control of Sysco. The Committee has balanced the impact of these acceleration provisions with corresponding provisions in the MSP, SERP and the EDCP that provide for a reduction in benefits to the extent they are not deductible under Section 280G of the Internal Revenue Code.

Executive Compensation Recoupment Policy

In the event of a restatement of our financial results, other than a restatement due to a change in accounting policy, it is the Committee’s policy that it will review all incentive payments made to MIP participants, including the NEOs, within the 36 month period prior to the restatement on the basis of having met or exceeded specific performance targets in grants or awards made on or after May 14, 2009. If such incentive payments would have been lower had they been calculated based on the restated results, the Committee will, to the extent permitted by applicable law, seek to recoup any such excess payments for the benefit of Sysco. The MIP annual incentive awards and CPU grants made by the Committee for fiscal 2011 and later years contain a contractual provision binding the grantee to this recovery right, and the Committee anticipates that future grants will contain similar provisions. The Committee has the sole discretion, subject to applicable law, to determine the form and timing of the recoupment, which may include repayment from the MIP participant or an adjustment to the payout of a future incentive. In addition, the executives’ benefits under the SERP, EDCP and MSP may be subject to forfeiture or adjustment as a result of any such restatement of financial results. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.

Tax Impact on Compensation

Income Deduction Limitations

Section 162(m) of the Internal Revenue Code generally sets a limit of $1 million on the amount of non-performance-based compensation that Sysco may deduct for federal income tax purposes in any given year with respect to the compensation of each of the NEOs other than the chief financial officer. The Committee has adopted a general policy of structuring the performance-based compensation arrangements, including the MIP bonus and CPUs, in order to preserve deductibility to the extent feasible after taking into account all relevant considerations. However, the Committee also believes that Sysco needs flexibility to meet its pay objectives, even if Sysco may not deduct all of the compensation paid to the NEOs. The Committee structured its 2013 and 2014 incentive program for the NEOs, and intends to structure future annual incentive programs for the NEOs, under an umbrella plan program in order to obtain deductibility of the annual bonus under Section 162(m), generally, but maintains flexibility to pay compensation or make certain awards that may not be deductible under 162(m), if the Committee determines in its discretion that it is in the best interest of the Company.

Based on the factors discussed under “What We Paid and Why,” in fiscal 2013 Sysco paid, and in fiscal 2014 the Committee expects Sysco to pay, each of Messrs. DeLaney and Green a base salary that, when aggregated with anticipated vesting of restricted stock units, will exceed $1 million in value. The Committee believes that this compensation to each of Messrs. DeLaney and Green is necessary in order to maintain the competiveness of each of his total compensation package in light of peer compensation practices, and as a result, has determined that it is appropriate even though approximately $1,543,721 of Mr. DeLaney’s fiscal 2013 compensation and approximately $146,061 of Mr. Green’s fiscal 2013 compensation will not be deductible, and the excess of Messrs. DeLaney’s and Green’s anticipated salary plus the value of RSUs vesting in fiscal 2014 over $1 million, respectively, will not be deductible for federal income tax purposes.

Section 409A of the Internal Revenue Code

Section 409A of the Internal Revenue Code deals specifically with non-qualified deferred compensation plans. We have designed all of our executive benefit plans, including the SERP, EDCP, 2008 Cash Performance Unit Plan, and the 2007 Stock Incentive Plan, such that they are exempt from, or otherwise comply with, the requirements of Section 409A of the Internal Revenue Code.

Stock Ownership Guidelines for NEOs and Executive Chairman

We have adopted stringent stock ownership guidelines, and review and adjust the guidelines when appropriate in order to align the interests of our executives with those of our stockholders. In August 2013, the Committee, together with the Corporate Governance and Nominating Committee, upon the recommendation of management and following consultation with CAP amended our Corporate Governance Guidelines in order to increase the requirements applicable to the CEO and Executive Chairman positions, and to provide clarity to the stock ownership guidelines. The modifications included an increase in Mr. DeLaney’s ownership requirement to 225,000 shares and clarified the guidelines regarding the counting of RSUs and the retention requirements for officers still working toward meeting future holding requirements. These changes were recommended by the Corporate Governance and Nominating Committee and approved by the Board of Directors in order to bring Sysco’s policies more in line with its peer group and strengthen such guidelines. See “Stock Ownership— Stock Ownership Guidelines” for a description of our executive stock ownership guidelines and stock retention policies and these recent changes.

SYSCO CORPORATION2013 Proxy Statement   57


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Forward-Looking Statements

Statements made in this proxy statement that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. These statements include those regarding certain agreements and plans that will require us to provide compensation to our NEOs upon the occurrence of future events, such as the achievement of company and/or individual objectives and the termination of an individual’s employment or a change in control of the company, and those regarding expectations that certain performance targets for management will be attained. These future events may not occur as and when expected, if at all, and, together with the company’s business, are subject to various risks and uncertainties. These risks and uncertainties include that future compensation to our NEOs, and the events that could trigger such payments, vary materially from the descriptions described herein due to factors beyond our control, such as the timing during the year of a triggering event, the amount of future bonuses, the value of our stock on the date of a triggering event and the life expectancy of each of our executives and his spouse. Management’s and Sysco’s ability to attain certain performance targets could be affected by conditions in the economy and our industry and internal factors such as the ability to control expenses, including fuel costs. We have experienced delays in the implementation of our Business Transformation Project and the expected costs of our Business Transformation Project may be greater or less than currently expected, as we may encounter the need for changes in design or revisions of the project calendar and budget. Sysco’s future results could be affected by competitive price pressures, availability of supplies, work stoppages, success or failure of our strategic initiatives, successful integration of acquired companies, conditions in the economy and the industry, and internal factors such as the ability to control expenses.

For additional risks impacting the company’s business, see the Risk Factors section of the company’s Annual Report on Form 10-K for the year ended June 29, 2013, and the company’s subsequent Form 10-Q filings. The company does not undertake to update its forward-looking statements.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Board of Directors of Sysco Corporation has reviewed and discussed the foregoing Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K and this Proxy Statement.

COMPENSATION COMMITTEE

John M. Cassaday, Chairman

Judith B. Craven

Larry C. Glasscock

Jackie M. Ward

EXECUTIVE COMPENSATION

The following discussion, as well as the Compensation Discussion and Analysis contained herein, contains references to target performance levels for our long-term incentive compensation. These targets and goals are discussed in the limited context of Sysco’s compensation programs and should not be interpreted as management’s expectations or estimates of results or other guidance. We specifically caution stockholders not to apply these statements to other contexts.

SYSCO CORPORATION2013 Proxy Statement   58


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Summary Compensation Table

The following table sets forth information with respect to each of the NEOs — our Chief Executive Officer, our Chief Financial Officer, and the three most highly compensated of the other executive officers of Sysco and its subsidiaries employed at the end of fiscal 2013, as well as information with respect to James D. Hope. Mr. Hope would have been one of the three other most highly compensated executive officers had he been an executive officer at fiscal year end; however, he was not serving as an executive officer at the end of the fiscal year. In determining the most highly compensated executive officers, we excluded the amounts shown under “Change in Pension Value and Nonqualified Deferred Compensation Earnings.”

Name and

Principal Position

Fiscal

Year

Salary

($)(1)

Bonus

($)(2)

Stock

Awards

($)(3)

Option

Awards

($)(4)

Non-Equity

Incentive Plan

Compensation

($)(5)

Change in

Pension Value and

Nonqualified Deferred

Compensation

Earnings

($)(6)

All Other

Compensation

($)(7)

Total 

($)

William J. DeLaney

President and Chief Executive Officer

2013

$

1,170,833

$

4,611,949

2,400,000

$

1,470,280

$

1,227,127

$

5,800

$

10,885,989

2012

 

1,150,000

 

1,719,403

2,752,500

 

857,482

 

1,941,349

 

1,066

 

8,421,800

2011

 

1,000,000

686,000

 

1,250,071

1,990,000

 

0

 

790,155

 

9,275

 

5,725,501

Robert C. Kreidler

Executive Vice President and Chief Financial Officer

2013

 

683,333

 

1,828,489

980,000

 

530,198

 

165,874

 

6,437

 

4,194,331

2012

 

600,000

 

523,297

963,375

 

304,195

 

142,678

 

7,096

 

2,540,641

2011

 

525,000

367,500

 

395,519

626,850

 

0

 

16,956

 

694,694

 

2,626,519

Michael W. Green

Executive Vice President and President of Foodservice Operations

2013

 

691,667

 

556,267

910,000

 

611,781

 

273,109

 

5,575

 

3,048,399

2012

 

650,000

 

526,412

969,109

 

386,688

 

1,419,955

 

211,021

 

4,163,185

2011

 

550,000

385,000

 

412,841

656,700

 

0

 

686,125

 

5,476

 

2,696,142

Wayne Shurts(8)

Executive Vice President and

Chief Technology Officer

2013

 

407,292

150,000

 

945,987

747,501

 

174,379

 

12

 

85,619

 

2,510,790

2012

 

n/a

n/a

 

n/a

n/a

 

n/a

 

n/a

 

n/a

 

n/a

2011

 

n/a

n/a

 

n/a

n/a

 

n/a

 

n/a

 

n/a

 

n/a

William Day(9)

Executive Vice President, Merchandising

2013

 

508,333

 

374,111

612,000

 

390,111

 

130,969

 

4,920

 

2,020,444

2012

 

n/a

n/a

 

n/a

n/a

 

n/a

 

n/a

 

n/a

 

n/a

2011

 

n/a

n/a

 

n/a

n/a

 

n/a

 

n/a

 

n/a

 

n/a

James Hope(10)

Former Executive Vice President, Business Transformation

2013

 

525,000

 

385,106

630,000

 

394,785

 

0

 

55,200

 

1,990,091

2012

 

525,000

 

392,464

722,531

 

252,353

 

909,533

 

1,172

 

2,803,053

2011

 

500,000

350,000

 

314,683

497,500

 

0

 

440,254

 

5,471

 

2,107,908

(1)

The salary amounts reflect the actual base salary payments made to the NEOs. Mr. Shurts was hired on October 15, 2012 at an annual salary of $575,000; accordingly his reported salary reflects the pro-rated amount earned in 2013.

(2)

Mr. Shurts was paid a new hire bonus of $150,000 on his start date of October 15, 2012 to partially replace the value of certain compensation and other benefits forfeited upon his acceptance of employement with Sysco. The new hire bonus is subject to clawback provisions requiring Mr. Shurts to repay a pro-rated portion upon a voluntary termination or an involuntary termination for cause (as defined in the offer letter) prior to the first anniversary of his start date. The amounts reflected for fiscal 2011 relate to discretionary performance-based bonuses paid in August 2011 with respect to fiscal 2011. The bonus amounts were based on Sysco’s satisfying certain financial criteria and the NEOs achieving certain non-financial goals.

(3)

With respect to Messrs. DeLaney, Kreidler, Green, Hope and Day, these amounts relate to grants of restricted stock units made in fiscal 2013, 2012 and 2011. With respect to Mr. Shurts, the fiscal 2013 amount includes 16,323 restricted stock units granted on November 13, 2012 for compensation as part of his offer package to partially replace the value of certain compensation and other benefits forfeited upon his acceptance of employment with Sysco and 15,252 restricted stock units granted on November 13, 2012 as part of the 2013 MIP long-term incentive grant. Further, with respect to Mr. DeLaney, the fiscal 2013 amount includes 63,855 restricted stock units granted on November 14, 2012 for compensation as part of the changes to the executive retirement program, 57,538 restricted stock units granted on November 13, 2012 as part of his normal long-term incentive program, and 30,894 restricted stock units granted on February 12, 2013 to compensate him for the value of stock options earned in prior periods that were void ab initio because they were not allowed under the 2007 Stock Incentive Plan. With respect to Mr. Kreidler, the fiscal 2013 amount includes 41,036 restricted stock units granted on November 14, 2012 for compensation as part of the changes to the executive retirement program and 19,995 restricted stock units granted on November 13, 2012 as part of his normal long-term incentive grant. With respect to fiscal 2013, we valued the RSUs granted on November 13, 2012 at $29.96 per share, being the closing price of our common stock on the first business day prior to the November 13, 2012 grant date; the RSUs granted on November 14, 2012 at $29.96 per share, being the closing price of our common stock on the first business day prior to the November 14, 2012 grant date; and the restricted stock units granted on February 12, 2013 at $31.56 per share, being the closing price of our common stock on the first business day prior to the February 12, 2013 grant date. With respect to fiscal 2012, we valued the restricted stock units at $27.65, being the closing price of our common stock on the first business day prior to the November 15, 2011 grant date. With respect to fiscal 2011, we valued the restricted stock units at $28.87 per share, being the closing price of our common stock on the first business day prior to the November 11, 2010 grant date.

(4)

The amounts in these columns reflect the grant date fair value of the awards. See Note 17 of the consolidated financial statements in Sysco’s Annual Report on Form 10-K for the year ended June 29, 2013, Note 17 of the consolidated financial statements in Sysco’s Annual Report on Form 10-K for the year ended June 30, 2012, and Note 15 of the consolidated financial statements in Sysco’s Annual Report on Form 10-K for the year ended July 2, 2011 regarding assumptions underlying valuation of equity awards. With respect to Mr. DeLaney, the amount previously reported in fiscal 2012, was reduced from $3,165,375 to $2,752,500 because that portion of the initial grant was void ab initio because it was not allowed under the 2007 Stock Incentive Plan.

(5)

These amounts include the MIP annual incentive award paid in August 2013 with respect to fiscal 2013 and paid in August 2012 with respect to fiscal 2012. We did not pay a MIP annual incentive award for fiscal 2011 because Sysco did not achieve the required performance levels. The amounts shown also include payments made in August 2013 for the three-year performance period ending in fiscal 2013 and in August 2012 for the three-year performance period ending in fiscal 2012 with respect to the cash performance unit grants previously made under our 2008 Cash Performance Unit Plan. The cash performance unit grants for the three-year performance period ending in fiscal 2011 expired unpaid because the performance criteria were not met.

(6)

The amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column reflect above-market interest on amounts in the EDCP and MSP, and the actuarial increase in the present value of the NEOs’ benefits under all pension plans established and maintained by Sysco, determined using interest rate and mortality rate assumptions consistent with those used in Sysco’s financial statements. The pension plan amounts, some of which may not be currently vested, include:

increase in pension plan value; and

increase in Supplemental Executive Retirement Plan, or SERP, value.

To the extent that the aggregate change in the actuarial present value of the named executive officer’s accumulated benefit under the pension plan and the SERP was a decrease, this decrease is not included in the amounts shown in the column.

The following table shows, for each named executive officer, the change in the actuarial present value for each of the pension plan and the SERP and the above-market interest on amounts in the EDCP for fiscal 2013:

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Name

Change in

Pension Plan

Value

 

Change in SERP

Value

 

 

Above-Market

Interest on Deferred

Compensation

Total

 

DeLaney

$

(14,139

)

$

1,210,416

 

$

30,850

$

1,227,127

 

Kreidler

 

(4,684

)

 

168,422

 

 

2,136

 

165,874

 

Green

 

(18,954

)

 

292,035

 

 

28

 

273,109

 

Shurts

 

N/A

 

 

N/A

 

 

12

 

12

 

Day

 

(15,141

)

 

113,961

 

 

32,149

 

130,969

 

Hope

 

(18,006

)

 

(1,273,424

)

 

30,940

 

(1,260,490

)

(7)

Fiscal 2013 amounts include the following:

a.

the full amount paid for life insurance coverage for each individual (the excess coverage over the amounts paid for other employees is not determinable since the deductibles and coverages may be different);

b.

the amount of 401(k) Plan matching contributions with respect to the first half of the 2013 fiscal year; and

c.

the following perquisites and personal benefits (the aggregate value of all perquisites and personal benefits received by each NEO other than Mr. Shurts and Mr. Hope in fiscal 2013 was less than $10,000):

the amount paid for accidental death and dismemberment insurance coverage;

the amount paid for long-term care insurance;

the amount reimbursed to the individual for annual medical exams;

the amounts paid for long-term disability coverage under the company’s welfare benefit plan;

payment of fees by Sysco related to the preparation of foreign tax returns required to be filed by the executive for attendance at meetings or other travel related to Sysco business in foreign jurisdictions;

the amount paid for spousal travel in connection with business events, which amounts reflect only commercial travel; no incremental costs were incurred in connection with travel of spouses on the company plane with executive officers to and from business events;

the estimated amount paid for spousal meals in connection with business events;

with respect to Mr. Shurts, reimbursement of $81,560 for certain expenses in connection with his move to Houston, Texas; and

with respect to Mr. Hope, payment of $50,481 for earned by unused vacation days.

Except for the reimbursement of relocation expenses incurred by Mr. Shurts and earned but unused vacation payment made to Mr. Hope, no named executive officer received any single perquisite or personal benefit with respect to fiscal 2013 with a value greater than $25,000 and no named executive officer received any other item of compensation with respect to fiscal 2013 required to be disclosed in this column with a value of $10,000 or more.

(8)

Compensation for Mr. Shurts is provided only for fiscal 2013 because he was not an employee in fiscal 2012 or 2011.

(9)

Mr. Day was not a NEO for fiscal 2011 and 2012, and as a result only his 2013 compensation information is included.

(10)

Mr. Hope’s employment with Sysco terminated effective June 29, 2013. Upon separation from service to the Company, Mr. Hope received $1,575,000.

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Grants of Plan-Based Awards

The following table provides information on CPU grants, annual incentive award opportunities under the MIP, stock options, restricted stock and restricted stock units granted during fiscal 2013 to each of the NEOs.

Name

Grant Date

 

Number of

Shares, Units or

Other Rights

 

All Other

Stock Awards:

Number of

Shares of

Stock or Units

(#)(1)

All Other Option

Awards: Number

of Securities

Underlying

Options

(#)(2)

Exercise

or Base

Price of

Option

Awards

($/Sh)(3)

Closing

Market

Price on

the Date

Of Grant

($)

Grant Date

Fair Value

of Stock

and Option

Awards

($)(4)

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

Threshold

($)

Target

($)

Maximum

($)

DeLaney

11/13/12

(5)

1,762,500

$

881,250

$

1,762,500

$

2,643,750

 

 

 

 

 

 

 

 

11/13/12

 

 

 

 

 

 

 

 

&nb