<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
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))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DARDEN RESTAURANTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DARDEN RESTAURANTS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
1998 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
DARDEN RESTAURANTS, INC.
5900 LAKE ELLENOR DRIVE, ORLANDO, FL 32809
August 10, 1998
To Our Stockholders:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders,
which will be held at the Hyatt Regency, Orlando International Airport, Orlando,
Florida, on Thursday, September 24, 1998, at 11:30 a.m. Eastern Daylight Savings
Time. All holders of the Company's outstanding common stock as of July 27, 1998
are entitled to vote at the Annual Meeting.
Time will be set aside for discussion of each item of business described in
the accompanying Notice of Annual Meeting and Proxy Statement, and stockholders
will have an opportunity to ask questions. We plan to adjourn the meeting at
approximately 12:30 p.m. A report of the Annual Meeting will be included in the
mid-year report that will be mailed to all stockholders in early 1999.
Should you decide to attend the Annual Meeting and need special assistance
because of a disability, please contact the Secretary of the Company at the
address above. Please complete, sign, date and return the proxy card in the
enclosed envelope in order to make certain that your shares will be represented
at the Annual Meeting.
Sincerely,
/s/ Joe R. Lee
Joe R. Lee
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
DARDEN RESTAURANTS, INC.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 24, 1998
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Darden
Restaurants, Inc. will be held on Thursday, September 24, 1998, at 11:30 a.m.,
Eastern Daylight Savings Time, at the Hyatt Regency, Orlando International
Airport, Orlando, Florida, for the following purposes:
1. To elect ten directors;
2. To approve the appointment of KPMG Peat Marwick LLP to audit the
consolidated financial statements of Darden Restaurants, Inc. for the
fiscal year beginning June 1, 1998;
3. To consider and approve the Darden Restaurants, Inc. Employee Stock
Purchase Plan; and
4. To act upon any other business which may properly be brought before the
meeting.
The close of business on July 27, 1998 has been fixed as the record date for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors
/s/ Clifford L. Whitehill
Clifford L. Whitehill
SECRETARY
August 10, 1998
<PAGE>
DARDEN RESTAURANTS, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, SEPTEMBER 24, 1998
VOTING PROCEDURES
This Proxy Statement is being sent to holders of record at the close of
business on July 27, 1998 of the common stock, no par value (the "Common
Stock"), of Darden Restaurants, Inc., 5900 Lake Ellenor Drive, Orlando, FL 32809
(the "Company"). All such stockholders of record on July 27, 1998 are entitled
to vote at the Annual Meeting of Stockholders on September 24, 1998. This Proxy
Statement is designed to furnish information relating to the business to be
transacted at the meeting.
As of July 27, 1998, there were 140,290,292 shares of Common Stock
outstanding (excluding 23,064,246 shares held in the Company's Treasury). Each
share of Common Stock entitles the holder to one vote. The 23,064,246 shares of
Common Stock held in the Company's Treasury will not be voted and will not be
considered present at the meeting for purposes of determining a quorum and for
purposes of calculating the vote.
This Proxy Statement and the accompanying form of proxy are being first
mailed or given to stockholders on or about August 10, 1998.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE, which is postage-paid if mailed in the United States or Canada. Please
indicate on the proxy card if you intend to attend the Annual Meeting of
Stockholders on September 24, 1998.
You have three choices on each matter to be voted upon at the Annual
Meeting. For the election of directors, by checking the appropriate box on your
proxy card, you may (i) vote for all of the director nominees as a group; (ii)
withhold authority to vote for all director nominees as a group; or (iii) vote
for all director nominees as a group except those nominees you identify on the
appropriate line. See "General Information" under Item No. 1. Concerning the
other items, by checking the appropriate box, you may (i) vote "FOR" the item;
(ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on the item.
You may revoke your proxy at any time before it is actually voted at the
Annual Meeting by delivering written notice of revocation to the Secretary of
the Company, by submitting a subsequently dated proxy, or by attending the
meeting and withdrawing the proxy. You may also be represented by another person
present at the meeting by executing a form of proxy designating such person to
act on your behalf. Each unrevoked proxy card properly executed and received
prior to the close of the meeting will be voted as indicated. Where specific
instructions are not indicated, the proxy will be voted FOR the election of all
directors as nominated, FOR the approval of the appointment of KPMG Peat Marwick
LLP as independent auditors, and FOR the approval of the Darden Restaurants,
Inc. Employee Stock Purchase Plan.
If an executed proxy card is returned and the stockholder has voted
"abstain" on any matter (or "withhold authority" as to the election of any
director), the shares represented by such proxy will be considered present at
the meeting for purposes of determining a quorum and for purposes of calculating
the vote, but will not be considered to have been voted in favor of such matter.
If an executed proxy is returned by a broker holding shares in street name which
indicates that the broker does not have discretionary authority as to certain
shares to vote on one or more matters, such shares will be considered present at
the meeting for purposes of determining a quorum, but will not be considered to
be represented at the meeting for purposes of calculating the vote with respect
to such matters. A majority of shares of Common Stock, represented at the Annual
Meeting in person or by proxy, will constitute a quorum. The
1
<PAGE>
affirmative vote of a majority of the shares of Common Stock entitled to vote,
present in person or by proxy at the Annual Meeting, will be necessary for the
election of directors and the approval of the other matters herein submitted to
the stockholders for approval at the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement will be
paid by the Company. The Company has engaged Georgeson & Company Inc. to assist
in the solicitation of proxies from stockholders at a fee of $8,500 plus
reimbursement of its out-of-pocket expenses. In addition to the use of the mail,
proxies may be solicited personally, by telephone or by facsimile by regular
employees of the Company without additional compensation, as well as by
employees of Georgeson & Company Inc. The Company will reimburse banks, brokers
and other custodians, nominees and fiduciaries for their costs in sending the
proxy materials to the beneficial owners of the Common Stock.
A copy of the 1998 Annual Report to Stockholders, which includes the
consolidated financial statements of the Company as of and for the fiscal year
ended May 31, 1998, is being included in the same mailing package as your proxy
material. If you did not receive the Annual Report, please call the Secretary at
407-245-5215 (collect) and a copy will be forwarded to you.
Shares of Common Stock credited to the accounts of participants in the
Darden Savings Plan, formerly called the Profit Sharing and Savings Plan of
Darden Restaurants, Inc. (the "DSP"), have been added to such persons' other
holdings on their proxy cards and, as to shares of Common Stock which have been
allocated to such person's account in the DSP, the proxy also serves as voting
instructions to the trustee of the DSP. The trustee of the DSP will vote
allocated shares of Common Stock for which it has not received direction, as
well as unallocated shares held by the trustee, in the same proportion as
directed shares are voted.
CERTAIN OWNERS OF COMMON STOCK
As of May 31, 1998, the only persons known to the Company to own
beneficially (as defined by the Securities and Exchange Commission for proxy
statement purposes) more than 5% of the outstanding Common Stock of the Company,
based on information received directly by the Company and on Schedule 13G
reports and subsequent amendments, if any, filed during fiscal 1998, are as
follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF CLASS
OF BENEFICIAL OWNER OWNERSHIP PERCENT
- --------------------------------------------------------------- ------------------ ---------
<S> <C> <C>
The Prudential Insurance Company of America
751 Broad Street
Newark, New Jersey 07102....................................... 18,065,674(1) 12.16%
American Express Retirement Services
733 Marquette Avenue
Minneapolis, Minnesota 55402................................... 12,487,891(2) 8.85%
</TABLE>
- ------------------------
(1) As of December 31, 1997, 244,700 shares were held for the benefit of
the holder's general account, and 17,820,974 shares were held for the
benefit of the holder's clients by its separate accounts, externally
managed accounts, registered investment companies, subsidiaries
and/or other affiliates. Such holder had sole power to vote 2,674,400
shares, shared voting power on 15,351,374 shares, sole dispositive
power on 2,674,400 shares, and shared dispositive power on 15,391,274
shares.
(2) As of May 31, 1998, 12,487,891 shares were held as trustee of the
DSP. Such holder had shared voting power and shared dispositive power
on all such shares.
2
<PAGE>
ITEM NO. 1
ELECTION OF DIRECTORS
GENERAL INFORMATION
Directors will hold office until the next Annual Meeting and until their
successors are duly chosen and qualify, or until their earlier resignation or
removal. The Nominating Committee of the Board of Directors has inquired of each
nominee, and each nominee has agreed to serve if elected. In the event that any
of these nominees should become unavailable for election, this Committee may
designate substitute nominees, in which event the shares represented by the
proxy cards returned will be voted for such substitute nominees unless an
instruction to the contrary is indicated on the proxy card.
INFORMATION CONCERNING NOMINEES
<TABLE>
<S> <C>
H. B. Atwater, Jr............ H. B. Atwater, Jr., age 67, retired on June 1, 1995 as
Director since 1995 Chairman and Chief Executive Officer and as a director of
General Mills, Inc., the former parent company of Darden
Restaurants, Inc. Mr. Atwater joined General Mills, Inc. in
1958 and he was elected President in 1977, Chief Executive
Officer in 1981, and Chairman of the Board in 1982. Mr.
Atwater is a director of Merck & Co., Inc. and is on the
board of the Mayo Foundation.
Bradley D. Blum.............. Bradley D. Blum, age 44, is President of The Olive Garden
Director since 1997 and an Executive Vice President of Darden Restaurants, Inc.
Mr. Blum joined General Mills in 1978. He was named Director
of Marketing in 1984, responsible for Big G Cereals, and he
became Vice President of Big G New Enterprises in 1989. In
1990, he was named Vice President of Marketing for Cereal
Partners Worldwide, General Mills' joint venture with
Nestle, headquartered in Switzerland. He joined the Company
in 1994 as Senior Vice President of Marketing for The Olive
Garden and was named President of The Olive Garden in
December of 1994. He was named Senior Vice President of the
Company in September of 1995 and Executive Vice President of
the Company in September of 1997.
Daniel B. Burke.............. Daniel B. Burke, age 69, retired in February, 1994 as
Director since 1995 President and Chief Executive Officer of Capital Cities/ABC,
Inc. (now ABC, Inc.), a broadcast and publishing company, a
position he had held since 1990. Mr. Burke joined Capital
Cities in 1961 as General Manager of WTEN-TV. He was elected
Executive Vice President and Director of Capital Cities in
1967 and served as President of the Publishing Division from
1969 until his election as President and Chief Operating
Officer of Capital Cities in 1972. Mr. Burke became
President and Chief Operating Officer of Capital Cities/ABC,
Inc. in 1986 when Capital Cities completed its acquisition
of American Broadcasting Companies, Inc. Mr. Burke is a
director of Consolidated Rail Corporation, Morgan Stanley
Groups, Inc., Rohm and Haas Company, C.F. Hathaway & Co. and
the Washington Post Company.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Odie C. Donald,.............. Odie C. Donald, age 48, is Group President-Customer
Director since 1998 Operations for BellSouth Telecommunications, Inc., in
Atlanta, GA. He previously held management positions in
various areas of BellSouth, and was honored by Black
Enterprise Magazine for his corporate achievements in 1993.
He is a director of the Atlanta Chamber of Commerce. Mr.
Donald also serves on the Citizens Trust Bank board of
directors and is on the board of trustees for the Woodruff
Arts Center.
Joe R. Lee................... Joe R. Lee, age 57, is Chief Executive Officer and Chairman
Director since 1995 of the Board of the Company. Mr. Lee joined Red Lobster in
1967 as a member of its opening management team, and was
named its President in 1975. He was elected a Vice President
of General Mills, Inc. in 1976, a Group Vice President in
1979, and an Executive Vice President in 1981, was named
Executive Vice President, Finance and International
Restaurants in 1991, and was elected a Vice Chairman in 1992
with responsibility for various consumer foods businesses
and corporate staff functions. Mr. Lee was elected a
director of General Mills, Inc. in 1985. He was named as the
Chief Executive Officer of the Company in December of 1994.
Mr. Lee serves on the board of directors of Tupperware
Corporation.
Richard E. Rivera,........... Richard E. Rivera, age 51, was named President of Red
Director since 1997 Lobster Restaurants and Executive Vice President of Darden
Restaurants, Inc. in December 1997. He is a veteran
restaurant industry leader with a career spanning more than
25 years. Mr. Rivera began his career with Steak and Ale
Restaurants of America and has held many leadership
positions within the industry. Prior to joining Red Lobster,
from 1994 to 1996, Mr. Rivera served as President and Chief
Executive Officer of RARE Hospitality International, Inc.,
owner of LongHorn Steakhouse restaurants. Mr. Rivera is a
director of Casa Ole Restaurants.
Michael D. Rose.............. Michael D. Rose, age 56, is retired Chairman of the Board of
Director since 1995 both Harrah's Entertainment, Inc. and Promus Hotel
Corporation. Promus Hotel Corporation was created when The
Promus Companies Incorporated split in 1995. Mr. Rose joined
Promus' predecessor company, Holiday Corporation, in 1975.
He was elected President in 1979 and held that position
until 1984. He was elected Chief Executive Officer in 1981
and held that position until 1994. He was elected Chairman
of the Board in 1984. In 1988, he resumed the position of
President, which he held until 1991. Mr. Rose is a director
of Ashland, Inc., First Tennessee National Corp., SteinMart,
Inc., General Mills, Inc., Felcor Suite Hotels, Inc., Resort
Quest International and Promus Hotel Corporation.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Maria A. Sastre.............. Maria A. Sastre, age 43, is Vice President-Latin America and
Nominee Miami for United Airlines. Ms. Sastre joined United Airlines
in 1992 as Director of Sales Planning-Latin America. In
1994, she was named Director of International Sales &
Marketing for Asia, Europe and Latin America. In June 1995,
Ms. Sastre was promoted to her current position. She
previously held managerial positions at both Continental
Airlines and Eastern Airlines. Ms. Sastre is a director of
the United Way of Dade County, the New World Symphony and
the Beacon Council. She also serves on the Greater Miami
Chamber of Commerce, and the Greater Miami and the Beaches
Visitor and Convention Bureau.
Jack A. Smith................ Jack A. Smith, age 63, is Chairman and Chief Executive
Director since 1995 Officer of The Sports Authority, Inc., a chain of sporting
goods stores, which he founded in 1987. He previously served
as Chief Operating Officer of Herman's Sporting Goods,
President and Chief Executive Officer of Diana Shops, a
national women's apparel chain, and held other management
positions with Sears, Roebuck & Co. and Montgomery Ward
Holding Corporation. He is a director of The Sports
Authority, Inc., Marks Brothers Jewelers, Inc., the National
Sporting Goods Association and Nova Southeastern University.
Blaine Sweatt, III........... Blaine Sweatt, III, age 50, is President, New Business
Director since 1995 Development and an Executive Vice President of the Company.
He joined the Red Lobster organization in 1976 and was named
Director of New Restaurant Concept Development in 1981. Mr.
Sweatt led the teams that developed The Olive Garden and
Bahama Breeze concepts, among others. He was named a Vice
President of General Mills, Inc. in 1985 and a Senior Vice
President in 1994.
</TABLE>
THESE TEN (10) PERSONS WILL BE PLACED IN NOMINATION FOR ELECTION TO THE
BOARD OF DIRECTORS. THE SHARES REPRESENTED BY THE PROXY CARDS RETURNED WILL BE
VOTED FOR THE ELECTION OF THESE NOMINEES UNLESS YOU SPECIFY OTHERWISE.
BOARD COMPENSATION AND BENEFITS
Employee directors do not receive additional compensation for serving on the
Board of Directors. Effective upon election at the Annual Meeting on September
24, 1998, each non-employee director will receive an annual retainer of $15,000
plus $1,000 for each Board meeting attended, $700 for each committee meeting
attended, and $1,000 for each committee meeting chaired. The non-employee
directors' remuneration is paid quarterly, unless payment is deferred. Under the
Company's Compensation Plan for Non-Employee Directors, which has a total of
50,000 shares of Common Stock authorized, each year the non-employee directors
may elect to receive all or a portion of their cash remuneration (i) in cash
payments; (ii) in cash payments deferred for any number of years through the
completion of Board service, with such amounts earning interest; (iii) in Common
Stock having a market value equal to the remuneration due; or (iv) in a
combination of the foregoing alternatives. In addition to the cash remuneration,
under the Company's Stock Plan for Non-Employee Directors, which has a total of
250,000 shares authorized, each such director will receive 3,000 shares of
restricted Common Stock annually upon election or re-election, which
restrictions lapse at the next year's annual meeting date or, at the direction
of each director, such shares will be delivered on a subsequent annual meeting
date or on completion of the director's Board service. One thousand shares of
the annual restricted stock award may be taken in cash. Each non-employee
director also receives a one-time stock option grant for 12,500 shares of Common
Stock upon election to the Board and an additional option to purchase 3,000
shares of Common Stock
5
<PAGE>
upon election or re-election to the Board. In addition, each director may choose
to receive options ("SRO's") determined to be of equal value to the cash
compensation for directors' fees. All such options have an exercise price equal
to the fair market value of the Common Stock on the date of grant and, except
for SRO's, are exercisable after three years. SRO's are exercisable after six
months. The Company also pays the premiums on directors' and officers' liability
and business travel accident insurance policies covering the directors.
COMMITTEES OF THE BOARD
During the fiscal year ended May 31, 1998, the Board of Directors met and/or
took action four times and the various committees of the Board met and/or took
action a total of nine (9) times. Attendance at Board meetings and all committee
meetings averaged 97.2%. Each incumbent director standing for election attended
a minimum of 75% of the Board meetings and the meetings of Board committees on
which the director served. Betty Southard Murphy will complete her Board service
prior to this year's annual meeting and, therefore, is not standing for
re-election The committees of the Board and their membership as of the close of
fiscal 1998 are described below.
AUDIT COMMITTEE. The Audit Committee consisted of four non-employee
directors: Jack A. Smith (Chair), H. B. Atwater, Jr., Michael D. Rose and Betty
Southard Murphy. The Audit Committee met twice during fiscal 1998 and, again, on
June 23, 1998 to determine, among other matters, the recommendation to the Board
of Directors regarding the nomination of an independent auditor for shareholder
vote at the Annual Meeting on September 24, 1998. The Audit Committee meets
separately with representatives of the Company's independent auditors and with
representatives of senior management and the internal auditors. In addition to
making recommendations to the Board regarding the nomination of an independent
auditor for the Company, the Committee reviews (i) the general scope of audit
coverages; (ii) the fees charged by the independent auditors; (iii) matters
relating to the internal control systems; (iv) the value of intangibles; and (v)
the expenses of senior executives.
COMPENSATION COMMITTEE. The Compensation Committee consisted of four
non-employee directors: Michael D. Rose (Chair), H. B. Atwater, Jr., Daniel B.
Burke and Jack A. Smith. The Compensation Committee met three (3) times during
fiscal 1998. The Committee administers the stock option and incentive plans of
the Company, and in this capacity it makes or reviews all option grants or
awards under these plans. In addition, the Committee makes recommendations to
the Board with respect to the compensation of the Chief Executive Officer and
other senior management serving on the Board, and reviews the compensation paid
to other corporate officers. The Committee also recommends the establishment of
policies dealing with various compensation and employee benefit plans for the
Company. See page 17 for the Committee's report on executive compensation. On
June 23, 1998, the Committee approved certain changes in directors'
compensation. See the section entitled "Board Compensation and Benefits" on
pages 5 and 6, which details compensation to be paid to non-employee directors
effective on their election on September 24, 1998.
EXECUTIVE COMMITTEE. The Executive Committee consists of five directors:
Joe R. Lee (Chair), H. B. Atwater, Jr., Daniel B. Burke, Michael D. Rose and
Jack A. Smith. The Executive Committee did not meet in fiscal 1998. Pursuant to
the Company's By-Laws, the Executive Committee has the authority to take all
actions that could be taken by the full Board of Directors. It may meet between
regularly scheduled Board meetings to take such action as is necessary for the
efficient operation of the Company.
FINANCE COMMITTEE. The Finance Committee consisted of four non-employee
directors: H.B. Atwater, Jr. (Chair), Betty Southard Murphy, Michael D. Rose and
Daniel B. Burke. The Finance Committee met twice during fiscal 1998. The
Committee reviews and makes recommendations relating to public offerings of debt
and equity securities, major borrowing commitments and other significant
financial transactions, including the dividend policy of the Company.
6
<PAGE>
NOMINATING COMMITTEE. The Nominating Committee consisted of three
non-employee directors: Daniel B. Burke (Chair), Jack A. Smith and Michael D.
Rose. The Nominating Committee met once during fiscal 1998. In addition, the
Nominating Committee met on June 22, 1998 to review and approve Governance
Policies for the Board of Directors and to nominate directors for election at
the annual meeting of shareholders on September 24, 1998. The Committee's duties
include proposing a slate of directors for election by the stockholders at each
annual meeting and proposing candidates to fill vacancies on the Board. It
conducts research to identify suitable candidates for Board membership and seeks
individuals who will make a substantial contribution to the Company. It will
consider candidates proposed by stockholders. Generally, candidates must be
highly qualified and have a sincere desire to serve on the Board. They should
represent the interests of all stockholders and not those of a special interest
group. An outside director may only have an insignificant financial relationship
with the Company (excluding directors' fees and stock ownership), except that no
member of the Compensation or Nominating Committees may have any such financial
relationship. A stockholder wishing to nominate a candidate should forward the
candidate's name and a detailed background of the candidate's qualifications to
the Secretary of the Company.
PUBLIC RESPONSIBILITY COMMITTEE. The Public Responsibility Committee
consisted of four non-employee directors: Betty Southard Murphy (Chair), H. B.
Atwater, Jr., Jack A. Smith and Daniel B. Burke. The Public Responsibility
Committee met once in fiscal 1998. The duties of the Committee are to review and
make recommendations regarding the Company's policies, programs and practices to
assure that they are consistent with social and legal obligations to employees,
consumers and society.
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth in the following table is the beneficial ownership of Common Stock
as of May 31, 1998 for each director, each executive officer named in the
Summary Compensation Table on page 12, and all directors and executive officers
as a group. Except as otherwise indicated, the named beneficial owner has sole
voting and investment power with respect to the shares held by such beneficial
owner.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNERSHIP
BENEFICIAL OWNER (1)(2)
- ------------------------------------------------------------------- -------------------------
<S> <C>
H. B. Atwater, Jr.................................................. 1,354,238(3)
Bradley D. Blum.................................................... 327,308(4)
Daniel B. Burke.................................................... 24,731
Odie C. Donald..................................................... 3,000
Joe R. Lee......................................................... 1,235,239(5)(6)
Betty Southard Murphy.............................................. 15,546(3)
Richard E. Rivera.................................................. 198,333
Michael D. Rose.................................................... 24,039
Jack A. Smith...................................................... 16,464(3)
Blaine Sweatt, III................................................. 440,752(5)
Clifford L. Whitehill.............................................. 162,551
All Directors and Officers as a Group (15 persons)................. 4,095,418
</TABLE>
- ------------------------
(1) As of May 31, 1998, no director or named officer beneficially owned more
than 1% of the outstanding Common Stock of the Company, and all directors
and executive officers as a group beneficially owned 2.90% of the
outstanding Common Stock.
(2) Includes the following shares subject to options exercisable within 60 days
of May 31, 1998: H. B. Atwater, 820,130 shares; Bradley D. Blum, 191,201
shares; Daniel B. Burke 8,880 shares; Joe R. Lee, 835,474 shares; Richard E.
Rivera, 80,000 shares; Michael D. Rose, 9,085 shares; Blaine Sweatt, III,
352,091 shares; Clifford L. Whitehill, 86,884 shares; and all Directors and
Officers as a group,
7
<PAGE>
2,611,394 shares. Also includes restricted stock as of May 31, 1998 and the
fiscal 1998 restricted awards granted June 23, 1998 as follows: H. B.
Atwater, 3,000 shares; Bradley D. Blum, 110,140 shares; Daniel B. Burke,
3,000 shares; Odie C. Donald, 3,000 shares; Joe R. Lee, 31,681 shares; Betty
Southard Murphy, 3,000 shares; Richard E. Rivera 103,750 shares; Michael D.
Rose, 3,000 shares; Jack A. Smith, 3,000 shares; Blaine Sweatt, III, 40,873
shares; and Clifford L. Whitehill, 4,027 shares.
(3) Includes the following shares held in the common stock fund of the
non-employee Director's deferred compensation plan: H. B. Atwater, 2,620
shares; Jack A. Smith, 6,464 shares; and Betty Southard Murphy, 3,352
shares. The director or named officer does not have voting power with
respect to the shares held by such beneficial owner.
(4) Includes 200 shares held in a trust for a family member.
(5) Includes the following shares allocated to the Darden Savings Plan accounts
of the named officer as of May 31, 1998: Joe R. Lee, 955 shares; and Blaine
Sweatt, III, 1,416 shares.
(6) Includes 800 shares owned by Joe R. Lee's wife.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1998, the Company employed the law firm of Baker &
Hostetler in which director Betty Southard Murphy is a partner. As noted above,
Ms. Murphy is not standing for re-election to the Company's Board of Directors.
In fiscal year 1998, the Company paid $113,917 in fees to Baker & Hostetler.
This amount is not considered material to the Company or to Baker & Hostetler
and reflects competitive rates charged by other law firms retained by the
Company.
ITEM NO. 2
APPROVAL OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The stockholders are asked to consider and approve the appointment by the
Board of Directors of KPMG Peat Marwick LLP ("KPMG"), an independent certified
public accounting firm, to audit the consolidated financial statements of the
Company for the fiscal year beginning June 1, 1998. KPMG has audited the
financial statements of the Company since 1995. Representatives of the firm will
attend the Annual Meeting, will have the opportunity to make a statement if they
desire, and will also be available to answer questions.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS THE INDEPENDENT AUDITORS AND YOUR PROXY WILL BE SO VOTED UNLESS
YOU SPECIFY OTHERWISE.
ITEM NO. 3
APPROVAL OF THE DARDEN RESTAURANTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
ADOPTION OF THE DARDEN RESTAURANTS, INC. EMPLOYEE STOCK PURCHASE PLAN BY THE
BOARD
On June 23, 1998, the Board of Directors adopted the Darden Restaurants,
Inc. Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
directed that the Employee Stock Purchase Plan be submitted to a vote of the
Company's stockholders at the Annual Meeting on September 24, 1998. If approved
by the stockholders, the Employee Stock Purchase Plan will become effective
January 1, 1999.
PURPOSE
The purpose of the Employee Stock Purchase Plan is to provide eligible
employees with an opportunity to acquire a proprietary interest in the Company
through the purchase of its Common Stock and, thus, to develop a stronger
incentive to work for the continued success of the Company. The Employee Stock
8
<PAGE>
Purchase Plan is an employee stock purchase plan under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code").
ADMINISTRATION
The Employee Stock Purchase Plan will be administered by the Company's
Compensation Committee (the "Committee"), except to the extent that the
Committee, in its discretion, selects a plan custodian (the "Custodian") other
than the Company. Subject to the provisions of the Employee Stock Purchase Plan,
the Committee is authorized to determine any questions arising in the
administration, interpretation and application of the Employee Stock Purchase
Plan, and to make such uniform rules as may be necessary to carry out its
provisions.
NUMBER OF SHARES AND ELIGIBILITY
One million four hundred thousand (1,400,000) shares of the Company's
authorized but unissued treasury common stock, no par value (the "Shares") will
be available for purchase under the Employee Stock Purchase Plan. However, the
number of Shares that may be issued under the Employee Stock Purchase Plan may
be equitably adjusted to reflect any stock dividend, stock split,
recapitalization, share combination, or similar change that occurs in the
capitalization of the Company.
Any employee of the Company or a designated subsidiary will be eligible to
participate in the Employee Stock Purchase Plan, provided that (1) the
employee's customary employment is more than 20 hours per week and five months
per calendar year, (2) the employee has been employed by the Company or a
designated subsidiary for one year or more, (3) the employee is not an officer
or director of the Company subject to Section 16(b) of the Securities Exchange
Act of 1934, and (4) immediately after the grant of the right to purchase Shares
under the Employee Stock Purchase Plan, the employee would not own (within the
meaning of Section 423(b)(3) of the Code) Shares (including shares which such
employee may purchase under the Employee Stock Purchase Plan or under any
outstanding option) having five percent or more of the total combined voting
power or value of all classes of capital stock of the Company or of any
subsidiary.
PARTICIPATION
Any eligible employee may become a participant ("Participant") of the
Employee Stock Purchase Plan by submitting to the Company's Benefit Services
Department ("Benefit Services") a properly completed and executed stock purchase
and payroll deduction agreement ("Purchase Agreement"). In his or her Purchase
Agreement, a Participant may authorize payroll deductions from his or her
compensation in an amount not to exceed $1,650 per calendar month and not less
than $10 per pay period. A Participant may increase or decrease the amount to be
deducted from his or her compensation by appropriate notice to Benefit Services
at least 30 days prior to the first day of the month in which the change is to
take effect. Participants may also make contributions to the Employee Stock
Purchase Plan by personal check or money order. Check or money order
contributions are subject to the $1,650 per calendar month contribution
limitation.
Notwithstanding the foregoing, no Participant may purchase Shares under the
Employee Stock Purchase Plan if such Shares, together with Common Stock
purchased by such Participant under all other "employee stock purchase plans,"
as defined in Section 423(b) of the Code, would have a fair market value in
excess of $25,000 per calendar year.
PURCHASE OF STOCK
On the last New York Stock Exchange trading day of each calendar month (the
"Purchase Date"), the Custodian will use the funds accumulated in each
Participant's account to purchase Shares. The purchase price of Shares will be
85 percent of the mean between the highest and lowest selling prices of a Share
on
9
<PAGE>
the Purchase Date, as quoted by the New York Stock Exchange. The Custodian will
purchase as many whole and fractional Shares at the Discount as may be purchased
with the amounts in the Participant's account as of the Purchase Date. Interest
(if any) earned on amounts in Participants' accounts will be used to defray the
expenses of administering the Employee Stock Purchase Plan. All purchases of
Shares will be made in the name of the Custodian or its nominee.
At any time following a purchase, a Participant may have any whole number of
Shares owned by the Participant transferred from the name of the Custodian into
his or her name, and a certificate evidencing such whole number of Shares will
be issued in the name of the Participant. Fractional Shares will remain in the
Participant's account. However, the Shares acquired under the Employee Stock
Purchase Plan may not be sold or otherwise disposed of for at least one year
after the date on which the Shares were acquired by the Custodian for the
account of the Participant, except in the case of termination of employment,
retirement, death or disability. Any stock certificates delivered to a
Participant prior to the expiration of the one-year period will contain a legend
to reflect this restriction.
Each Participant will retain the rights associated with his or her Shares
and customarily accruing to an owner of record, including the right to receive
dividends (whether paid in cash, Shares or otherwise) and the right to receive
notices of and vote at shareholders' meetings.
TERMINATION OF EMPLOYMENT, RETIREMENT, DEATH
Any Participant who for any reason ceases to be an eligible employee of the
Company or a subsidiary will be immediately withdrawn from the Employee Stock
Purchase Plan. In addition, any Participant may voluntarily withdraw from the
Employee Stock Purchase Plan on the first day of any month by delivering written
notice to Benefit Services at least 30 days in advance. In these cases, the
Participant will receive all whole Shares and cash in lieu of fractional Shares
held by the Custodian which have been allocated to his or her account together
with any cash in his or her account.
If a Participant's employment with the Company or any subsidiary terminates
because of his or her retirement or death, then amounts previously deducted from
payroll for his or her account will be used to purchase Shares in accordance
with the applicable provisions of the Employee Stock Purchase Plan.
TRANSFERABILITY
The right to purchase Shares under the Employee Stock Purchase Plan is not
assignable or transferable by the Participant and may be exercised only by the
Participant, except in the event of the Participant's death, as previously
provided. Participants may not in any manner assign or create a lien on any
funds or Shares held under the Employee Stock Purchase Plan.
EXPENSES
The Company will pay all costs of administering the Employee Stock Purchase
Plan, except commissions on sales and charges for certificate issuance on Share
withdrawals.
TERMINATION OR AMENDMENT OF THE EMPLOYEE STOCK PURCHASE PLAN
The Company may terminate the Employee Stock Purchase Plan at any time. The
Employee Stock Purchase Plan may be amended as may be necessary or appropriate
by the Committee, provided that shareholder approval will be required (1) to
change the class of individuals eligible to purchase Shares under the Employee
Stock Purchase Plan, (2) to increase the maximum number of Shares available for
purchase under the Employee Stock Purchase Plan (except for equitable
adjustments arising out of any stock dividend, stock split, recapitalization,
share combination, or similar change in the Company's capitalization), or (3) to
change the Discount at which Shares may be purchased.
10
<PAGE>
DARDEN RESTAURANTS, INC. CANADIAN EMPLOYEE STOCK PURCHASE PLAN
On June 23, 1998, the Company's Board of Directors also adopted and approved
the Darden Restaurants, Inc. Canadian Employee Stock Purchase Plan (the
"Canadian Plan"), conditioned on approval of the Employee Stock Purchase Plan by
the Company's stockholders at the Annual Meeting on September 24, 1998. The
Canadian Plan is not an "employee stock purchase plan" within the meaning of
Section 423(b) of the Code and is not intended to comply with Section 423 of the
Code. For this reason, the Canadian Plan does not require approval by the
Company's stockholders. However, the Board of Directors has conditioned the
adoption of the Canadian Plan on stockholder approval of the Employee Stock
Purchase Plan. The Canadian Plan extends rights similar to those granted by the
Employee Stock Purchase Plan, to employees of the Company's Canadian operating
entity, with the following exceptions.
1. One hundred thousand (100,000) Shares will be available for purchase
under the Canadian Plan, subject to adjustments for dividends, stock splits,
recapitalizations, share combinations and similar changes in the Company's
capitalization.
2. Participation in the Canadian Plan is limited to Canadian employees
of the Company or any designated subsidiary.
3. The contribution limitations under the Canadian Plan are $2,000
(Canadian dollars) maximum per calendar month, $10 (Canadian dollars)
minimum per pay period, and $25,001 (U.S. dollars) maximum per calendar
year.
Approval of the Employee Stock Purchase Plan by the Company's stockholders
at the Annual Meeting on September 24, 1998, will mean that both the Employee
Stock Purchase Plan and the Canadian Plan will become effective as of January 1,
1999.
COPIES OF EMPLOYEE STOCK PURCHASE PLAN AND CANADIAN PLAN
The full texts of the Employee Stock Purchase Plan and the Canadian Plan
appear in Appendix A and Appendix B, respectively, to which reference is made
for a complete statement of the terms of the plans.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPROVAL OF THE DARDEN
RESTAURANTS, INC. EMPLOYEE STOCK PURCHASE PLAN AND YOUR PROXY WILL BE SO VOTED
UNLESS YOU SPECIFY OTHERWISE.
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the Annual
Meeting other than that which is explained in this Proxy Statement. In the event
that any other business calling for a vote of the stockholders is properly
presented at the meeting, the holders of the proxies will vote your shares in
accordance with their best judgment.
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation and certain other
components of compensation for the last three fiscal years of the Chief
Executive Officer and the Company's four other most highly compensated executive
officers.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ ---------------------------
Other Restricted
Annual Stock All Other
Salary Bonus Compensation Awards Options Compensation
Name and Principal Position Year ($) ($) ($)(1) ($)(2)(3) (#)(4)(5)(6) ($)(7)
- ------------------------------ ---- ------- --------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. R. LEE..................... 1998 599,038 449,300(5) 467 224,650 390,766 396,516
Chairman of the Board and 1997 575,000 0 0 0 0 178,755
Chief Executive Officer 1996 575,000 140,500(8) 33,866 70,241 539,858 325,041
B. D. BLUM.................... 1998 348,076 399,000 243 1,195,691(9) 103,332 94,274
President, The Olive Garden 1997 261,537 134,500 0 33,625 0 40,083
1996 233,750 115,100 19,985 28,764 144,900 65,397
R. E. RIVERA.................. 1998 234,890 234,900 445 1,258,725(10) 429,166(11) 236,066(12)
President, Red Lobster N/A
N/A
B. SWEATT, III................ 1998 339,422 1,788,200(13) 137 303,964(13) 103,332 192,817
President, New Business 1997 266,153 32,500 0 8,125 0 45,409
Division 1996 256,538 41,200 0 10,293 186,500 71,054
C. L. WHITEHILL............... 1998 249,316 248,745(5) 104 0 50,065 124,923
Senior Vice President, General 1997 239,000 68,100 0 17,025 0 141,097
Counsel 1996 239,000 100,400 1,661 25,098 71,100 97,124
</TABLE>
- ------------------------
(1) The amounts for 1998 relate to tax gross-ups for commissions paid by the
Company for the 1998 Stock Purchase/Loan Program. For 1996, these amounts
relate to tax gross-ups for relocation expenses.
(2) Amounts under this column for fiscal 1998 are based on the fair market value
($15.6563) of Common Stock as of June 23, 1998, which determined the value
of restricted stock granted on that date under the Darden Restaurants
Management Incentive Plan (MIP). Under the MIP, participants must deposit
with the Company, one personally-owned share of common stock for each share
of restricted stock awarded, which vest 100% at three years, provided the
participant's shares remain on deposit until the end of the corresponding
restricted period. Regular dividends are paid on all restricted shares.
Restricted stock immediately vests in the event of a change of control. For
B. D. Blum and R. E. Rivera, the amount of restricted shares awarded from
the MIP in 1998 are 6,371 and 3,467, respectively. (See footnotes Nos. 9 and
10 for valuation of the other 1998 restricted shares). The number and value
of aggregate restricted stock holdings including the 1998 award (valued at
the fair market value of $15.6563 as of June 23, 1998) and all other awards
(valued at the fair market value of $15.5938 as of May 29, 1998) total: J.
R. Lee--31,681 shares ($494,924); B. D. Blum--110,140 shares ($1,722,274);
R. E. Rivera--103,750 shares ($1,618,091); B. Sweatt, III--40,873 shares
($638,579); and C. L. Whitehill--4,027 shares ($62,796).
(3) Amounts for fiscal 1996 are based on the value ($11.75) of Common Stock as
of May 23, 1996, and amounts for fiscal 1997 are based on the value ($9.00)
of Common Stock as of June 17, 1997, which determine the value of restricted
stock granted on that date under the MIP.
(4) The above named officers were awarded double their annual number of stock
options in fiscal 1996. As a result, these officers did not receive stock
option grants in fiscal 1997. For the following officers, the amounts shown
for fiscal 1996 also include the following salary replacement option grants;
B. D. Blum--24,900; C. L. Whitehill--11,100; and B. Sweatt, III--26,500. For
J. R. Lee, the amount shown includes a grant of 39,858 bonus replacement
options (see also footnote 8).
(5) The following officers elected to receive a portion of their 1998 bonus in
bonus replacement options. J. R. Lee received 96,044 options in lieu of 50%
of bonus; C. L. Whitehill received 5,065 options in lieu of 10% of bonus.
Also C. L. Whitehill elected to receive additional cash award ($35,535) in
lieu of a restricted stock match.
(6) The following officers participated in the 1998 Stock Purchase/Loan Program.
According to the terms of this program, the officer received two options for
every share of common stock purchased during a specified window period. J.R.
Lee--44,722 options; B. D. Blum--23,332 options; R. E. Rivera - 29,166
options; B. Sweatt, III--23,332 options, and C. L. Whitehill -10,000
options.
12
<PAGE>
(7) These amounts for fiscal 1998 include the following components: (a)
allocations relating to FlexComp, the Company's deferred compensation plan,
(b) reimbursement for unused vacation time, and (c) imputations for
commissions paid for the purchase of stock in the 1998 Stock Purchase/Loan
Program. For the following officers, the amounts for these components are:
Joe R. Lee-- $380,398 (a), $15,000 (b), $1,118 (c); B. D. Blum--$93,691 (a),
$583 (c); R. E. Rivera--$1,066 (c); B. Sweatt, III--$192,489 (a), $328 (c);
and C. L. Whitehill--$124,673 (a), $250 (c).
(8) The fiscal 1996 annual incentive for J. R. Lee was also reduced by 50% in
lieu of a grant of 39,858 bonus replacement options.
(9) For B. D. Blum, the Board approved a one-time award of 70,000 restricted
shares valued at $1,095,941 based on the fair market value ($15.6563) of
Darden stock on the date of grant, June 23, 1998. These shares vest 25% each
year over a four-year period.
(10) For R. E. Rivera, an award of 100,000 restricted shares was granted on the
date of hire. The amount of the award is based on the fair market value of
Common Stock ($12.00) on the date of grant (December 12, 1997). The
restricted shares vest 25% each year over a four-year period.
(11) For R. E. Rivera, an award of 400,000 bonus replacement options was granted
as an employment bonus on the date of hire (December 12, 1997). The options
were priced on the date of the grant ($12.00) and fully vest over a period
of four years.
(12) R. E. Rivera was hired on December 12, 1997. As part of his employment
offer, he received a sign-on bonus of $235,000 of which he deferred payment
of $100,000.
(13) In recognition of his successful efforts in developing the Bahama Breeze
concept, B. Sweatt, III received a special one-time bonus of $1,650,000 and
17,208 shares of restricted stock valued at $269,413 based on the fair
market value ($15.6563) of Darden stock on the date of grant, June 23, 1998.
During the development period, his MIP bonus had been reduced by 65%.
13
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes awards of stock options in fiscal 1998 to the
executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
---------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED STOCK PRICE APPRECIATION
UNDERLYING TO EMPLOYEES EXERCISE FOR OPTION TERM ($)(2)
OPTIONS IN FISCAL PRICE EXPIRATION ------------------------
NAME GRANTED (#) YEAR ($/SHARE) DATE 5%($) 10%($)
- -------------------------------------------- ----------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. R. Lee................................... 250,000(3) 7.50% 9.0000 6/17/07 $ 1,415,013 $ 3,585,921
44,722(4) 1.34% 9.0000 6/17/07 $ 253,129 $ 641,478
96,044(5) 2.88% 15.5938 5/29/08 $ 941,890 $ 2,386,934
B. D. Blum.................................. 80,000(3) 2.40% 9.0000 6/17/07 $ 452,804 $ 1,147,495
23,332(4) 0.70% 9.0000 6/17/07 $ 132,060 $ 334,667
R. E. Rivera................................ 400,000(6) 11.99% 12.0000 12/12/07 $ 3,018,694 $ 7,649,964
29,166(4) 0.87% 12.0000 12/12/07 $ 220,108 $ 557,797
B. Sweatt, III.............................. 80,000(3) 2.40% 9.0000 6/17/07 $ 452,804 $ 1,147,495
23,332(4) 0.70% 9.0000 6/17/07 $ 132,060 $ 334,667
C. L. Whitehill............................. 35,000(3) 1.05% 9.0000 6/17/07 $ 198,102 $ 502,029
10,000(4) 0.30% 9.0000 6/17/07 $ 56,601 $ 143,437
5,065(5) 0.15% 15.5938 5/29/08 $ 49,672 $ 125,878
</TABLE>
- ------------------------
(1) All options are granted at the fair market value of the Common Stock on the
grant date and generally expire 10 years from the grant date. All options
vest immediately in the event of a change of control.
(2) These assumed values result from certain prescribed rates of stock price
appreciation. The actual value of these option grants is dependent on future
performance of the Common Stock and overall stock market conditions. There
is no assurance that the values reflected in this table will be achieved.
(3) This stock option grant under the 1995 Plan becomes exercisable according to
the following schedule: 50% on June 17, 2000 and 50% on June 17, 2001.
(4) This stock option grant under the 1995 Plan, was awarded as a result of the
officer's participation in the 1998 Stock Purchase/ Loan Program. The
officer received two options for each share of Darden stock purchased. The
options become exercisable 50% on June 17, 2000, and 50% on June 17, 2001.
(5) This bonus replacement option, granted under the 1995 Plan, benefits the
Company by reducing the cash bonus of this officer (see footnote 5 of the
Summary Compensation Table). This option becomes exercisable on November 29,
1998.
(6) For R. E. Rivera, an award of 400,000 bonus replacement options was granted
as an employment bonus on the date of hire (December 12, 1997). The options
were priced on the date of the grant ($12.00) and fully vest over a period
of four years.
14
<PAGE>
STOCK OPTIONS
The following table summarizes the stock option exercises by the executive
officers named in the Summary Compensation Table during fiscal year 1998 and the
value of the stock options held by such officers at the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY
AT FISCAL YEAR END (#) OPTIONS
------------------------------------------------------------ AT FISCAL
SHARES 1995 PLAN (2)(7) YEAR END
ACQUIRED VALUE CONVERSION PLAN (1) -------------------------------- ($)(3)
ON REALIZED -------------------------- EXERCISABLE -----------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE (4)(5) UNEXERCISABLE EXERCISABLE
- ------------------------ ------------ ----------- ----------- ------------- ----------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
J. R. Lee............... 67,041 $ 373,452 795,616 108,047 39,858 890,766 $ 5,432,829
B. D. Blum.............. 5,000 $ 55,874 176,261 32,198 14,940 233,292 $ 1,233,504
R. E. Rivera............ -- $ 0 -- -- -- 429,166(6) $ 0
B. Sweatt, III.......... 23,051 $ 116,913 336,191 45,756 15,900 273,932 $ 2,422,342
C. L. Whitehill......... 145,563 $ 1,280,095 80,224 23,788 6,660 114,505 $ 359,336
<CAPTION>
NAME UNEXERCISABLE
- ------------------------ -------------
<S> <C>
J. R. Lee............... $ 4,905,880
B. D. Blum.............. $ 1,471,141
R. E. Rivera............ $ 1,542,336
B. Sweatt, III.......... $ 1,739,778
C. L. Whitehill......... $ 734,625
</TABLE>
- ------------------------
(1) These options were granted as a result of the conversion of General Mills
stock options granted to the named officers in 1995. General Mills options
were adjusted so that two-thirds of the aggregate economic value of each
stock option grant was retained in adjusted General Mills stock options
(both the price and number of options were adjusted). General Mills stock
options retained by the named officers are not reported in this table.
One-third of the aggregate economic value of each stock option grant was
converted into newly issued stock options for Company Common Stock. The
economic value at the date of conversion of each named officer's stock
option grants was neither increased nor decreased as a result of these
adjustments, other than small differences due to rounding of whole shares.
(2) These options were granted from the 1995 Plan.
(3) Value of all unexercised options equals the fair market value at May 29,
1998 ($15.5938) of the shares underlying in-the-money options, less the
exercise price, times the number of in-the-money options outstanding.
(4) Salary replacement options, granted under the 1995 Plan, benefit the Company
by reducing the future cash compensation paid to the named officers, with
corresponding reductions in cash bonuses and similar effects on benefits
which are tied to base salary. The amounts are: B. D. Blum, 9,960 shares; B.
Sweatt, III, 10,600 shares; and C. L. Whitehill, 4,440 shares.
(5) For J. R. Lee and C. L. Whitehill, the amounts shown represent bonus
replacement options granted in fiscal 1996 and fiscal 1998 (see footnote 5
of the Summary Compensation Table). For fiscal 1996, J. R. Lee received
39,858 options. For fiscal 1998, J. R. Lee received 96,044 options and C. L.
Whitehill received 5,065 options.
(6) For R. E. Rivera, 400,000 salary replacement options were granted from the
1995 Plan as part of his employment offer. A grant of 29,166 options was
awarded as a result of R. E. Rivera's participation in the 1998 Stock
Purchase/Loan Program.
(7) The following stock option grants were awarded as a result of the following
officer's participation in the 1998 Stock Purchase/ Loan Program: J. R. Lee,
44,722; B. D. Blum, 23,332; R. E. Rivera, 29,166; B. Sweatt, III, 23,332;
and C. L. Whitehill, 10,000.
15
<PAGE>
CHANGE IN CONTROL ARRANGEMENTS
At the end of fiscal 1998, the Company had management continuity agreements
with nine of its executive officers, including those named in the Summary
Compensation Table on page 12, providing for guaranteed severance payments equal
to three times the annual compensation of the officer (salary plus cash bonus
award) and continuation of health and similar benefits for a three-year period
if the officer is terminated without cause within two years after a change of
control. These agreements also provide that the severance payment shall be
reduced by an amount necessary to ensure that the foregoing payments are not
subject to any excise taxes that might otherwise be payable under Code Section
4999 of the Internal Revenue Code (the "Code") or any similar tax. The Company
also has entered into related trust agreements to provide for payment of amounts
under its non-qualified deferred compensation plans, including the directors'
compensation plans, the Management Incentive Plan and the management continuity
agreements. Full funding is required in the event of a change of control. To
date, only a nominal amount has been paid into each trust.
In addition, stock options, restricted stock and restricted stock units
issued under the Stock Option and Long-Term Incentive Plan of 1995 (the "1995
Plan") and the Stock Option and Long-Term Incentive Conversion Plan (the
"Conversion Plan") all immediately vest in full in the event of a change of
control, as defined in such plans.
STOCK OWNERSHIP GUIDELINES AND STOCK PURCHASE/LOAN OPPORTUNITY
In June 1997, the Company adopted stock ownership guidelines for executive
management. The guideline for the Chief Executive Officer is to own, after seven
years, Common Stock valued at a multiple of four times base salary. Other
officer guidelines range from a multiple of three times base salary to one-half
times base salary depending on the level of responsibility in the organization.
To assist the executive in meeting these guidelines, the Company implemented a
one-time stock purchase/loan program (the "1998 Stock Purchase/Loan Program")
under the 1995 Plan that matches two options for every new share purchased up to
a maximum total share value equal to a percentage of such executive's base
compensation. The loan is full recourse and interest bearing with a maximum loan
amount of 75% of the value of the stock purchased. All stock purchased is held
on deposit with the Company until the loan payment requirements are met. As of
May 1998, 56 officers have participated in the 1998 Stock Purchase/Loan Program,
receiving two options for every share purchased. The program has resulted in the
purchase of a total of 203,333 shares by Company officers.
16
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent outside directors (see page 6). The Committee
is responsible for setting and administering the policies that govern both
annual compensation and stock ownership programs. The Committee annually
certifies corporate performance objectives and evaluates the Company's corporate
performance for incentive plans.
From time to time the Committee will use outside, independent consultants to
provide it with background information in performing its duties. During fiscal
1996, the Committee engaged the services of two nationally known compensation
consulting firms to review and analyze the Company's pay program. Those firms
found that:
- The current program is sound in its focus on performance;
- The current program has a good mix of short and long-term incentives; and
- The current program places more emphasis on long-term incentives than the
pay programs of most of the Company's competitors, and as a result, has
strong alignment with stockholders.
A competitive analysis update conducted in fiscal 1998 supported the
findings of the 1996 study.
The Company uses cash and stock-based compensation for three purposes: (1)
to focus executives on short and long-term business strategy; (2) to reward
individual, business unit and corporate performance; and (3) to align
executives' interests with those of stockholders. Ultimately, the goal is to
maximize the success of the Company. As detailed in the Summary Compensation
Table (see page 12), a significant portion of the Company's pay for executives
is variable and is linked to performance.
CASH COMPENSATION
The Company's goal for cash compensation is to pay competitive base
salaries, coupled with an annual incentive plan (i.e., the Management Incentive
Plan). If individual, as well as corporate and/or unit performance, is above
average compared to the compensation peer group described below, then total cash
compensation also will be above average within that group. Conversely, if
performance is below average compared to the compensation peer group, then total
cash compensation will also be below average.
The peer group against which compensation and performance are compared is
publicly-traded chain restaurant companies with substantial capitalization.
Supplemental pay data is obtained from hospitality, retail and other general
industry companies.
The compensation peer group is a broader group than the S&P Restaurant Index
used in the Total Shareholder Return performance graph on page 21. The S&P
Restaurant Index is the only published index for purposes of such comparison,
but does not include all appropriate comparable companies for compensation
purposes.
The Company also encourages executives to exchange cash compensation for
stock-based compensation. This is discussed below in the section entitled
"Stock-Based Compensation".
BASE SALARY INCREASES
Base salary increases, if any, for executive officers are determined
annually by the Committee based on the individual performance of the executive
officer and where the executive's pay stands competitively compared to the
compensation peer group. The budgeted salary increase for all employees is also
considered in determining base salary increases for executive officers.
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MANAGEMENT INCENTIVE PLAN
Annual cash incentive awards are granted by the Committee to executive
officers under the Management Incentive Plan based on the following factors:
corporate performance, business unit performance and individual performance.
Awards to key executives shall be based on the comparative impact of the
individual's position to the overall corporate results as measured by the
position level, base salary of the individual and the degree to which such
individual is able to affect the division, group or overall corporate result.
Such awards to senior management serving on the Board are subject to Board
approval.
The Company set its business plan aggressively for fiscal 1998 with the goal
of achieving a significant improvement over fiscal 1997 performance, with our
target set at over 50% EPS growth. Pursuant to the terms and conditions of the
Management Incentive Plan, the Committee met on June 23, 1998, to evaluate and
determine a corporate rating for the Company. This rating is based upon earnings
per share growth and return on average capital for the 1998 fiscal year compared
to targets established by the Committee at the inception of the fiscal year. For
fiscal 1998, the corporate ratings could range from 0 to 2.0 with target
performance represented by a 1.45 rating. With an EPS growth of 91% (diluted)
and a ROC of 7.5%, the Company exceeded the target and met the required level of
performance for a 2.0 corporate rating.
For fiscal 1999, the Compensation Committee has set a target to continue the
momentum of significant improvement achieved in fiscal 1998. Achievement of that
target would represent a 1.3 corporate rating and would result in approximately
19% increase in EPS.
STOCK-BASED COMPENSATION
The Committee and management believe that broad and deep employee stock
ownership effectively motivates the building of stockholder wealth and aligns
the interests of employees with those of the stockholders. At the end of fiscal
1998, approximately 22% of the Company's outstanding shares were either owned by
the Employee Stock Ownership Plan, or employees and non-employee members of the
Board of Directors, or were under options granted to employees and non-employee
members of the Board of Directors.
The Committee uses the 1995 Plan to attract and retain able employees by the
awarding of stock options, restricted stock and restricted stock units. Such
employees are defined as those who are responsible for the growth and sound
development of the business of the Company. Awards under the 1995 Plan are
intended to align the interests of such employees with those of the
stockholders.
Regular stock options are granted by the Committee to the executive officers
and other employees based on their potential impact on corporate results (i.e.,
the person's level of responsibility in the organization) and on their
individual performance. A total of 60 officers were granted options under this
program in fiscal 1998, and on June 23, 1998, options were granted to 4,190
employees. The size of regular stock option grants to the Chief Executive
Officer and other executive officers is periodically reviewed against option
grants made by other large restaurant companies in the compensation peer group
previously described.
Under the provisions of the 1995 Plan, the Company allows executives to
exchange part of their annual cash incentive payout in return for an additional
stock option grant, referred to as a "bonus replacement option". The size of the
option grant is based on the amount of the foregone incentive payout and the
present value of the projected stock option value. Executive officers may elect
to reduce their annual cash incentive payout by a maximum of 50% for a grant of
bonus replacement options.
The 1995 Plan also authorizes the Committee to make awards to selected
employees of restricted stock of up to 10% of the shares authorized under the
plan and, in that connection, to determine the number of shares to be awarded,
the length of the restricted period, the purchase price, if any, to be paid by
the participant, and whether any other restrictions will be imposed with respect
to such awards.
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The majority of restricted shares have been and will be granted as part of
the stock matching program for participants in the Management Incentive Plan,
described on page 18, requiring the participant to place on deposit one share of
Common Stock owned for each share of restricted stock awarded. The size of each
restricted stock award in that program is equal in value to 15% or 25%
(depending on position level) as specified under the 1995 Plan of the
participant's annual cash incentive award. If the deposit shares are withdrawn
prior to the end of the three-year vesting period, then the unvested restricted
stock award is forfeited.
The Summary Compensation Table on page 12 summarizes the options and
restricted stock awards granted in fiscal 1998 to the five most highly
compensated executive officers. Included in the totals are options granted as
bonus replacement options.
FLEX COMP BENEFITS
None of the Company's executive officers presently participate in a
retirement plan qualified under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Instead, they participate in FlexComp, a
nonqualified deferred compensation arrangement. The Company's annual FlexComp
contribution equals from 1.5% to 6% (based on company performance) of the
executive's eligible annual earnings plus an additional percent of the
executive's eligible annual earnings based on the executive's age and years of
service with the Company during which the officer may have been a participant in
an ERISA qualified retirement plan. FlexComp participants elect to have their
FlexComp contributions credited with rates of return based on several investment
alternatives. Therefore, the plan does not have a guaranteed retirement benefit.
The annual FlexComp contributions made by the Company for the accounts of the
five most highly compensated executive officers are shown in the All Other
Compensation column of the Summary Compensation Table on page 12.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's base salary was established by the
Compensation Committee of General Mills at $575,000 in May, 1995. This rate
remained for fiscal 1996 and fiscal 1997. During fiscal 1998, the Committee
increased this amount to $650,000 to more closely reflect the competitive
size-adjusted market average. The Committee also approved a fiscal 1998 annual
grant of 250,000 stock options for Mr. Lee.
The Committee met on June 23, 1998, to evaluate the Chief Executive
Officer's performance for fiscal 1998 and their evaluation was reported to the
independent directors of the Board. For fiscal 1998, the Compensation Committee
rating for J. R. Lee resulted in a bonus of $499,300 and 96,044 Bonus
Replacement Options of an equal value.
LOANS TO EXECUTIVE OFFICERS
Each of the following executives listed in the Summary Compensation Table
(see page 12) received loans equaling up to 75% of the value of the stock he
purchased in connection with his participation in the 1998 Stock Purchase/Loan
Program. This program was designed to assist the executive in achieving the
Company's stock ownership guidelines (see page 16). As of May 1998 loans
outstanding under this program for the executive officers named in the Summary
Compensation Table are as follows: J. R Lee, $154,291; B. D. Blum, $79,839; C.
L. Whitehill, $34,189; R. E. Rivera, $135,869; and B. Sweatt, III, $58,229.
Loans for all participants of the program totalled $1,343,142.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Unless the conditions specified in the regulations under Section 162(m) of
the Internal Revenue Code are met, the Code limits the Company's ability to
deduct, for federal income tax purposes, certain compensation in excess of $1
million per year paid to persons named in the Summary Compensation Table. The
Company believes that it meets all requirements for deductibility of executive
compensation and will
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monitor whether its plans require any future amendments to continue to meet the
deductibility requirements of the tax law without compromising the flexibility
needed to design effective compensation plans that meet the Company's executive
compensation goals as described above.
SUMMARY
The Compensation Committee is satisfied that the compensation and long-term
incentive plans provided to the Chief Executive Officer and the other executive
officers of the Company are structured and operated so as to support the
Company's business strategy and to create strong linkage and alignment with the
long-term best interests of the Company and its stockholders. The Committee will
periodically reevaluate these programs to ensure they continue to do so.
COMPENSATION COMMITTEE
Michael D. Rose, Chair
Daniel B. Burke
Jack A. Smith
H. B. Atwater, Jr.
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF THREE-YEAR TOTAL RETURN
<S> <C> <C> <C>
Based on a $100 investment on the Distribution Date
(5/29/95)
Total Return Index
Darden Restaurants, Inc. S&P 500 S&P Restaurant Index
May-95 $100.00 $100.00 $100.00
Aug-95 $95.40 $107.56 $101.61
Nov-95 $103.81 $115.93 $119.33
Feb-96 $114.19 $128.06 $138.20
May-96 $108.75 $132.61 $132.12
Aug-96 $74.04 $131.07 $126.92
Nov-96 $79.04 $147.93 $128.37
Feb-97 $65.09 $159.17 $122.68
May-97 $77.15 $169.01 $137.87
Aug-97 $93.47 $185.05 $135.45
Nov-97 $104.93 $193.79 $133.42
Feb-98 $126.04 $208.92 $140.22
May-98 $145.16 $221.27 $172.05
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors and executive officers, and persons who beneficially
own more than ten percent of the Company's Common Stock, are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission and the New York Stock Exchange. To the Company's knowledge, all
required reports were filed on a timely basis during fiscal 1998.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Any stockholder proposal intended to be presented for consideration at the
1999 Annual Meeting and to be included in the Company's proxy statement must be
received at the principal executive offices of the Company by the close of
business on April 12, 1999. Proposals should be sent to the attention of the
Secretary.
YOUR VOTE IS IMPORTANT!
Please sign and promptly return your proxy in the enclosed envelope.
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APPENDIX A
DARDEN RESTAURANTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN. The purpose of the Darden Restaurants, Inc.
Employee Stock Purchase Plan (the "Plan") is to provide an opportunity for
eligible employees of Darden Restaurants, Inc. (the "Company") and designated
subsidiaries to obtain an ownership interest in the Company through purchases of
shares of the Company's authorized but unissued or treasury common shares, no
par value (such treasury shares and the Company's authorized and issued common
shares, no par value, being referred to herein as the "Shares"), as an incentive
to promote the profitable growth of the Company. The Plan is intended to be an
"employee stock purchase plan," within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and to comply with
Section 423 of the Code in all respects.
2. SUBSIDIARY. For purposes of the Plan, the term "subsidiary" shall mean
any corporation (whether or not in existence at the time the Plan is adopted)
which is a subsidiary of the Company under the definition of "subsidiary
corporation" contained in section 424(f) of the Code, or any similar provision
hereafter enacted. The term "designated subsidiary" is any subsidiary, as
defined in the preceding sentence, which is designated as a participating
subsidiary by the Minor Amendment Committee of the Compensation Committee of the
Board of Directors of the Company (the "Committee"). A list of designated
subsidiaries as of the date the Plan becomes effective is included in Appendix
One.
3. SHARES SUBJECT TO THE PLAN. There shall be available one million four
hundred thousand (1,400,000) Shares for purchase under the Plan, provided,
however, that the number of Shares which may be issued under the Plan shall be
equitably adjusted by the Board to reflect any stock dividend, stock split,
recapitalization, share combination, or similar change in the capitalization of
the Company.
4. CUSTODIAN. The Company shall be the Custodian for the Plan, unless the
Committee shall in its discretion select a third party to be the Custodian. Such
Custodian shall be known as the Custodian for the Employee Stock Purchase Plan
(the "Custodian").
5. ELIGIBILITY REQUIREMENTS AND JOINING THE PLAN.
a. Any employee of the Company or a designated subsidiary shall be
"eligible" to participate in the Plan, other than (i) employees whose
"customary employment" is twenty (20) hours or less per week, (ii) employees
whose customary employment is for not more than five (5) months in any
calendar year, (iii) employees who have been employed for less than one (1)
year, (iv) persons who are both highly compensated employees (within the
meaning of Section 414(q) of the Code) and subject to Section 16(b) of the
Securities Exchange Act of 1934, and (v) employees who, immediately after
the grant of the right to purchase Shares hereunder, would own (within the
meaning of Section 423(b)(3) of the Code) Shares (including shares which
such employee may purchase under the Plan or under any outstanding option)
possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company or of any
subsidiary. "Customary employment" of twenty (20) hours or less per week
shall be determined, after one year of employment, bi-annually, based on the
average of such hours during the preceding six month period.
b. Any eligible employee may join the Plan at any time provided he or
she submits to the Company's Benefit Services Department ("Benefit
Services") a properly completed and executed Stock Purchase and Payroll
Deduction Agreement ("Purchase Agreement"). Employees participating in the
Plan are referred to as "Participants."
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6. STOCK PURCHASE AND PAYROLL DEDUCTION AGREEMENT.
a. An employee wishing to purchase Shares pursuant to the Plan shall
complete and execute a Purchase Agreement. A Participant may specify as the
amount to be deducted from his compensation an amount that may not exceed
$1,650 per calendar month (the "Offering Period") and which may not be less
than $10 per pay period. A Participant may increase or decrease the amount
to be deducted from his compensation as of the first day of any month by
delivering to Benefit Services a written amendment to his or her Purchase
Agreement at least thirty (30) days prior to the first day of the month in
which the change is to take effect.
b. Participants may also make contributions via personal check or money
order for the purchase of Shares under the Plan. These check or money order
contributions are to be included in the $1,650 per calendar month
contribution limitation. In order to purchase Shares on the next Purchase
Date, the check or money order contributions must be received by Benefit
Services at least ten (10) business days before such Purchase Date.
Notwithstanding the foregoing, no Participant shall have the right to
purchase Shares under the Plan if such right would permit such employee to
purchase Shares under the Plan and all other "employee stock purchase plans," as
defined in Section 423(b) of the Code, of the Company and its subsidiaries at an
accrued rate exceeding $25,000 of the fair market value of such Shares
(determined as of the date such right to purchase is granted) for each calendar
year in which such right to purchase is outstanding at any time, as in
accordance with the provisions of Section 423(b)(8) of the Code and any
regulations promulgated thereunder.
7. PAYMENTS OF EMPLOYEES' CONTRIBUTIONS. The Company or designated
subsidiary by whom the Participant is employed will pay to Benefit Services for
each month, on behalf of each Participant, the total of all amounts withheld
from each Participant's compensation and contributed by the Participant for
investment under the Plan. Such payments shall be made to Benefit Services as
soon as practicable after the date on which such withholdings occurred or such
contributions were received.
8. DUTIES OF CUSTODIAN; STOCK PURCHASE ACCOUNTS. Benefit Services will
hold as Custodian all funds received by it under the Plan and, until delivery
thereof to the Participants hereunder, all of the Shares acquired by the
Custodian under the Plan. The Custodian shall establish and maintain an account
in the name of each Participant to which shall be credited all amounts deducted
from the Participant's compensation and otherwise contributed by the
Participant. All such amounts shall be segregated from the Company's assets and
deposited in a separate account. Interest (if any) earned on such amounts shall
not be credited to the accounts of Participants but shall be used to defray the
expenses of administering the Plan.
The Custodian may rely on all orders, requests, and instructions with
respect to the Plan given in writing and signed by the Secretary of the
Committee and the Custodian shall not be liable to any person for any action
taken in accordance therewith.
9. PURCHASE OF SHARES. On the last New York Stock Exchange trading day of
each calendar month (the "Purchase Date"), the Custodian shall apply the funds
accumulated in each Participant's account including contributions made under
Section 6.b. to the purchase of Shares. The Purchase Price of Shares as of the
Purchase Date shall be 85 percent (the "Discount") of the mean between the
highest and lowest selling prices of a Share on such date, as quoted by the New
York Stock Exchange on that date. The Custodian shall purchase as many whole
Shares and fractional Shares at the Discount as may be purchased with the
amounts accumulated in each Participant's account as of the Purchase Date.
Notwithstanding the foregoing, the Custodian shall have the right to defer
the purchase of Shares during periods of extreme market instability whenever the
Custodian determines that such a deferred purchase will protect the interests of
Participants. All purchases of Shares shall be made in the name of the Custodian
or its nominee.
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10. TRANSFER OF SHARES TO PARTICIPANTS.
a. A Participant at any time may request that all or part of the whole
number of Shares accumulated on his or her behalf under the Plan be
transferred from the name of the Custodian into the name of the Participant
and any fractional Shares shall remain in the Participant's account. Subject
to the proviso contained in the following paragraph b., a certificate
evidencing such whole number of Shares shall be issued in the name of and
delivered to the Participant.
b. Shares acquired under the Plan may not be sold or otherwise disposed
of for at least one (1) year after the date on which the Shares were
acquired by the Custodian for the account of the Participant, except in the
case of termination of employment, retirement, death, or disability. Any
stock certificates delivered to a Participant prior to the expiration of
such one-year period shall contain a legend to reflect such restriction.
11. SHARES RETAINED BY CUSTODIAN. All rights accruing to an owner of
record of Shares held by the Custodian shall belong to and be vested in the
Participant for whose account such Shares are being held, including the right to
receive any and all dividends payable in respect of such Shares whether in cash,
Shares, or otherwise, and the right to receive all notices of shareholders'
meetings and to vote thereat to the same extent as if such Shares were held in
the street name by a member firm of the New York Stock Exchange.
12. WITHDRAWAL FROM THE PLAN. Any Participant who for any reason ceases to
be an eligible employee of the Company or any designated subsidiary shall be
deemed to have withdrawn from the Plan on the date on which such Participant
ceases to be an eligible employee. In addition, any Participant may voluntarily
withdraw from the Plan and terminate his or her Purchase Agreement, effective as
of the first day of any month by delivery of written notice to Benefit Services
no later than thirty (30) days prior to the date on which the withdrawal is to
be effective.
Upon withdrawal from this Plan, a Participant, or a Beneficiary of the
Participant, as provided for herein, shall receive all whole Shares and cash in
lieu of fractional Shares held by the Custodian which have been allocated to his
or her account together with any cash in such account.
13. RETIREMENT AND DEATH. If employment with the Company or any designated
subsidiary of any Participant shall terminate prior to the end of any Offering
Period because of his or her retirement or death, then all further payroll
deductions shall cease and amounts theretofore deducted under this Plan for his
account shall be applied to purchase Shares in accordance with the applicable
provisions of this Plan. Upon completion of the Offering Period, either the
Participant, a Beneficiary of the Participant, or the estate of the Beneficiary,
as provided for herein, shall receive all Shares held by the Custodian which
have been allocated to his or her account together with any cash in such
account.
14. BENEFICIARY. A Participant may designate a person or persons, firm,
corporation, or other entity as the Participant's beneficiary by written
designation filed with the Company prior to death. The Participant's most recent
written designation shall apply at the time of death. If a Participant is
married at the time of his or her death, the designation of someone other than
the Participant's spouse shall be valid only if such spouse has formally
consented in writing to the designation of a different beneficiary, the consent
acknowledges the effect of such designation, and the consent is witnessed by two
persons of legal age and notarized by a notary public. If, at the time of the
Participant's death, there is no beneficiary designated or surviving, the
beneficiary shall be the Participant's estate. Determination of the beneficiary
in each case shall be made by the Custodian.
15. TRANSFERABILITY OF INTEREST IN THE PLAN. The right to purchase Shares
which is granted hereunder shall not be assignable or transferable by the
Participant and may be exercised only by the Participant. Participants may not
in any manner assign or create a lien on any funds or Shares held under the
Plan. Except as otherwise required by law, the Custodian will in no event
recognize or honor an attempted
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assignment of, or creation of a security interest in, or attachment by creditors
of, any funds or Shares held under the Plan.
16. ADMINISTRATION OF THE PLAN. Except to the extent that responsibilities
may be delegated to and assumed by a Custodian other than the Company, the Plan
shall be administered by the Committee. The Committee's determinations as to any
questions which may arise with respect to the interpretation of the Plan
provisions shall be final, and the Committee may prescribe such rules as the
Committee deems necessary to effectuate the provisions of the Plan.
The Committee shall receive no additional compensation for serving as
administrator of the Plan.
17. EXPENSES. The Company shall pay all costs of administering the Plan,
except commissions on sales and charges for certificate issuance on Share
withdrawals, both of which shall be paid by the Participant.
18. DIVIDENDS. All dividends and non-cash distributions paid on Shares
held in a Participant's account shall be paid to the Participant as soon as
practicable.
19. STATEMENT OF ACCOUNT. Not less frequently than quarterly, the
Custodian shall distribute to each Participant a statement of account. The
statement shall set forth (i) the total number of Shares purchased under the
Plan on behalf of the Participant, (ii) the dates such Shares were allocated to
the account of the Participant, and (iii) any cash balances in the account.
20. GOVERNMENT REGULATIONS. The obligation of the Company with respect to
rights under the Plan shall be subject to all applicable laws, rules, and
regulations and such approvals by any governmental agency as may be required,
including, without limitation, the effectiveness of any registration statement
required under the Securities Act of 1933, as amended, and the rules and
regulations of the New York Stock Exchange or any other securities exchange on
which the stock may be listed. The Plan shall be governed by and construed in
accordance with the laws of the State of Florida.
If any of the terms or provisions of the Plan conflict with the requirements
of Section 423 of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Section 423
of the Code. If the Plan does not contain any provision required to be included
herein under Section 423 of the Code, such provision shall be deemed to be
incorporated herein with the same force and effect as if such provision had been
set out at length herein.
21. SHAREHOLDER APPROVAL. The Plan was adopted and approved by the Board
of Directors of the Company on June 23, 1998 and is subject to the approval of
the holders of at least a majority of the outstanding Shares, which approval
shall be obtained on or before September 24, 1998. If so approved by the
shareholders, the Plan shall become effective on January 1, 1999. In the event
the shareholders shall not approve the Plan as aforesaid, the Plan shall not be
effective, and any and all actions taken prior thereto shall be null and void or
shall, if necessary, be deemed to have been fully rescinded.
22. TERMINATION OR AMENDMENT OF THE PLAN. The Company may terminate the
Plan at any time. The Plan may be amended as may be necessary or appropriate by
the Committee provided, however, that without the approval of the holders of at
least a majority of the outstanding Shares (i) the class of individuals eligible
to purchase Shares under the Plan shall not be changed, (ii) the maximum number
of Shares available for purchase under the Plan shall not be increased except as
permitted under Section 3 hereof, and (iii) the Discount at which Shares may be
purchased under the Plan shall not be changed, and, further provided, that no
such termination or amendment shall impair the rights of any Participant under
the Plan to receive any Shares which have been allocated to his account,
together with the amount of any payroll deductions and Participant contributions
which have not been applied to the purchase of Shares.
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APPENDIX ONE
DESIGNATED SUBSIDIARIES
As of January 1, 1999, the following companies were designated subsidiaries
under the Plan:
Darden Restaurants, Inc. and all of its subsidiaries in existence on
that date.
Darden Corporation and all of its subsidiaries in existence on that
date.
GMRI, Inc.
GMR Restaurants of Pennsylvania, Inc.
GMRI Texas L.P.
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APPENDIX B
DARDEN RESTAURANTS, INC.
CANADIAN EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THIS PLAN. The purpose of the Darden Restaurants, Inc.
Canadian Employee Stock Purchase Plan ("this Plan") is to provide an opportunity
for eligible Canadian employees of designated subsidiaries of Darden
Restaurants, Inc. (the "Company") to obtain an ownership interest in the Company
through purchases of shares of the Company's authorized but unissued or treasury
common shares, no par value (such treasury shares and the Company's authorized
and issued common shares, no par value, being referred to herein as the
"Shares"), as an incentive to promote the profitable growth of the Company.
2. SUBSIDIARY. For purposes of this Plan, the term "designated subsidiary"
shall mean any corporation (whether or not in existence at the time this Plan is
adopted) which is designated as a participating subsidiary by the Minor
Amendment Committee of the Compensation Committee of the Board of Directors of
the Company (the "Committee"). A list of designated subsidiaries as of the date
this Plan becomes effective is included in Appendix One.
3. SHARES SUBJECT TO THIS PLAN. There shall be available one hundred
thousand (100,000) Shares for purchase under this Plan, provided, however, that
the number of Shares which may be issued under this Plan shall be equitably
adjusted by the Board to reflect any stock dividend, stock split,
recapitalization, share combination, or similar change in the capitalization of
the Company.
4. CUSTODIAN. The Company shall be the Custodian for this Plan, unless the
Committee shall in its discretion select a third party to be the Custodian. Such
Custodian shall be known as the Custodian for the Canadian Employee Stock
Purchase Plan (the "Custodian").
5. ELIGIBILITY REQUIREMENTS AND JOINING THE PLAN.
a. Any employee of a designated subsidiary shall be "eligible" to
participate in the Plan, other than (i) employees whose "customary
employment" is twenty (20) hours or less per week, (ii) employees whose
customary employment is for not more than five (5) months in any calendar
year, (iii) employees who have been employed for less than one (1) year,
(iv) persons who are both highly compensated employees (within the meaning
of Section 414(q) of the Code) and subject to Section 16(b) of the
Securities Exchange Act of 1934, and (v) employees who, immediately after
the grant of the right to purchase Shares hereunder, would own (within the
meaning of Section 423(b)(3) of the Code) Shares (including shares which
such employee may purchase under the Plan or under any outstanding option)
possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company or of any
subsidiary. "Customary employment" of twenty (20) hours or less per week
shall be determined, after one year of employment, bi-annually, based on the
average of such hours during the preceding six month period.
b. Any eligible employee may join the Plan at any time provided he or
she submits to the Company's Benefit Services Department ("Benefit
Services") a properly completed and executed Stock Purchase and Payroll
Deduction Agreement ("Purchase Agreement"). Employees participating in the
Plan are referred to as "Participants."
6. STOCK PURCHASE AND PAYROLL DEDUCTION AGREEMENT.
a. An employee wishing to purchase Shares pursuant to this Plan shall
complete and execute a Purchase Agreement. A Participant may specify as the
amount to be deducted from his compensation an amount that may not exceed
$2,000 (Canadian dollars) per calendar month (the "Offering Period") and
which may not be less than $10 (Canadian dollars) per pay period. A
Participant may increase or decrease the amount to be deducted from his
compensation as of the first day of any month by
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delivering to Benefit Services a written amendment to his or her Purchase
Agreement at least thirty (30) days prior to the first day of the month in
which the change is to take effect.
b. Participants may also make contributions via personal check or money
order for the purchase of Shares under this Plan. These check or money order
contributions are to be included in the $2,000 (Canadian dollars) per
calendar month contribution limitation. In order to purchase Shares on the
next Purchase Date, the check or money order contributions must be received
by Benefit Services at least ten (10) business days before such Purchase
Date.
Notwithstanding the foregoing, no Participant shall have the right to
purchase Shares under this Plan if such right would permit such employee to
purchase Shares under this Plan and all other "employee stock purchase plans" of
the Company and its subsidiaries at an accrued rate exceeding $25,001 (U.S.
dollars) of the fair market value of such Shares (determined as of the date such
right to purchase is granted) for each calendar year in which such right to
purchase is outstanding at any time.
7. PAYMENTS OF EMPLOYEES' CONTRIBUTIONS. The designated subsidiary by whom
the Participant is employed will pay to Benefit Services for each month, on
behalf of each Participant, the total of all amounts withheld from each
Participant's compensation and contributed by the Participant for investment
under this Plan. Such payments shall be made to Benefit Services as soon as
practicable after the date on which such withholdings occurred or such
contributions were received.
8. DUTIES OF CUSTODIAN; STOCK PURCHASE ACCOUNTS. Benefit Services will
hold as Custodian all funds received by it under this Plan and, until delivery
thereof to the Participants hereunder, all of the Shares acquired by the
Custodian under this Plan. The Custodian shall establish and maintain an account
in the name of each Participant to which shall be credited all amounts deducted
from the Participant's compensation and otherwise contributed by the
Participant. All such amounts shall be segregated from the Company's assets and
deposited in a separate account. Interest (if any) earned on such amounts shall
not be credited to the accounts of Participants but shall be used to defray the
expenses of administering this Plan.
The Custodian may rely on all orders, requests, and instructions with
respect to this Plan given in writing and signed by the Committee and the
Custodian shall not be liable to any person for any action taken in accordance
therewith.
9. PURCHASE OF SHARES. On the last New York Stock Exchange trading day of
each calendar month (the "Purchase Date"), the Custodian shall apply the funds
accumulated in each Participant's account including contributions made under
Section 6.b. to the purchase of Shares. The Purchase Price of Shares as of the
Purchase Date shall be 85 percent (the "Discount") of the mean between the
highest and lowest selling prices of a Share on such date, as quoted by the New
York Stock Exchange on that date. The Custodian shall purchase as many whole
Shares and fractional Shares at the Discount as may be purchased with the
amounts accumulated in each Participant's account as of the Purchase Date.
Notwithstanding the foregoing, the Custodian shall have the right to defer
the purchase of Shares during periods of extreme market instability whenever the
Custodian determines that such a deferred purchase will protect the interests of
Participants. All purchases of Shares shall be made in the name of the Custodian
or its nominee.
10. TRANSFER OF SHARES TO PARTICIPANTS.
a. A Participant at any time may request that all or part of the whole
number of Shares accumulated on his or her behalf under this Plan be
transferred from the name of the Custodian into the name of the Participant
and any fractional Shares shall remain in the Participant's account. Subject
to the proviso contained in the following paragraph b., a certificate
evidencing such whole number of Shares shall be issued in the name of and
delivered to the Participant.
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b. Shares acquired under this Plan may not be sold or otherwise
disposed of for at least one (1) year after the date on which the Shares
were acquired by the Custodian for the account of the Participant, except in
the case of termination of employment, retirement, death, or disability. Any
stock certificates delivered to a Participant prior to the expiration of
such one-year period shall contain a legend to reflect such restriction.
11. SHARES RETAINED BY CUSTODIAN. All rights accruing to an owner of
record of Shares held by the Custodian shall belong to and be vested in the
Participant for whose account such Shares are being held, including the right to
receive any and all dividends payable in respect of such Shares whether in cash,
Shares, or otherwise, and the right to receive all notices of shareholders'
meetings and to vote thereat to the same extent as if such Shares were held in
the street name by a member firm of the New York Stock Exchange.
12. WITHDRAWAL FROM THIS PLAN. Any Participant who for any reason ceases
to be an eligible employee of any designated subsidiary shall be deemed to have
withdrawn from this Plan on the date on which such Participant ceases to be an
eligible employee. In addition, any Participant may voluntarily withdraw from
this Plan and terminate his or her Purchase Agreement, effective as of the first
day of any month by delivery of written notice to Benefit Services no later than
thirty (30) days prior to the date on which the withdrawal is to be effective.
Upon withdrawal from this Plan, a Participant, or a Beneficiary of the
Participant, as provided for herein, shall receive all whole Shares and cash in
lieu of fractional Shares held by the Custodian which have been allocated to his
or her account together with any cash in such account.
13. RETIREMENT AND DEATH. If employment with any designated subsidiary of
any Participant shall terminate prior to the end of any Offering Period because
of his or her retirement or death, then all further payroll deductions shall
cease and amounts theretofore deducted under this Plan for his account shall be
applied to purchase Shares in accordance with the applicable provisions of this
Plan. Upon completion of the Offering Period, either the Participant, a
Beneficiary of the Participant, or the estate of the Beneficiary, as provided
for herein, shall receive all Shares held by the Custodian which have been
allocated to his or her account together with any cash in such account.
14. BENEFICIARY. A Participant may designate a person or persons, firm,
corporation, or other entity as the Participant's beneficiary by written
designation filed with the Company prior to death. The Participant's most recent
written designation shall apply at the time of death. If a Participant is
married at the time of his or her death, the designation of someone other than
the Participant's spouse shall be valid only if such spouse has formally
consented in writing to the designation of a different beneficiary, the consent
acknowledges the effect of such designation, and the consent is witnessed by two
persons of legal age and notarized by a notary public. If, at the time of the
Participant's death, there is no beneficiary designated or surviving, the
beneficiary shall be the Participant's estate. Determination of the beneficiary
in each case shall be made by the Custodian.
15. TRANSFERABILITY OF INTEREST IN THIS PLAN. The right to purchase Shares
which is granted hereunder shall not be assignable or transferable by the
Participant and may be exercised only by the Participant. Participants may not
in any manner assign or create a lien on any funds or Shares held under this
Plan. Except as otherwise required by law, the Custodian will in no event
recognize or honor an attempted assignment of, or creation of a security
interest in, or attachment by creditors of, any funds or Shares held under this
Plan.
16. ADMINISTRATION OF THIS PLAN. Except to the extent that
responsibilities may be delegated to and assumed by a Custodian other than the
Company, this Plan shall be administered by the Committee. The Committee's
determinations as to any questions which may arise with respect to the
interpretation of this Plan provisions shall be final, and the Committee may
prescribe such rules as the Committee deems necessary to effectuate the
provisions of this Plan.
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The Committee shall receive no additional compensation for serving as
administrator of this Plan.
17. EXPENSES. The Company shall pay all costs of administering this Plan,
except commissions on sales and charges for certificate issuance on Share
withdrawals, both of which shall be paid by the Participant.
18. DIVIDENDS. All dividends and non-cash distributions paid on Shares
held in a Participant's account shall be paid to the Participant as soon as
practicable.
19. STATEMENT OF ACCOUNT. Not less frequently than quarterly, the
Custodian shall distribute to each Participant a statement of account. The
statement shall set forth (i) the total number of Shares purchased under this
Plan on behalf of the Participant, (ii) the dates such Shares were allocated to
the account of the Participant, and (iii) any cash balances in the account.
20. GOVERNMENT REGULATIONS. The obligation of the Company with respect to
rights under this Plan shall be subject to all applicable laws, rules, and
regulations and such approvals by any governmental agency as may be required,
including, without limitation, the effectiveness of any registration statement
required under the United States Securities Act of 1933, as amended, and the
rules and regulations of the New York Stock Exchange or any other securities
exchange on which the stock may be listed. This Plan shall be governed by and
construed in accordance with the laws of the State of Florida.
21. SHAREHOLDER APPROVAL. This Plan was adopted and approved by the Board
of Directors of the Company on June 23, 1998 and is subject to the approval of
the Darden Restaurants', Inc. Employee Stock Purchase Plan by the holders of at
least a majority of the outstanding Shares of the Company, which approval shall
be obtained on or before September 24, 1998. If the Darden Restaurants', Inc.
Employee Stock Purchase Plan is approved by the shareholders, this Plan shall
become effective on January 1, 1999. In the event the shareholders shall not
approve the Darden Restaurants', Inc. Employee Stock Purchase Plan, this Plan
shall not be effective, and any and all actions taken prior thereto shall be
null and void or shall, if necessary, be deemed to have been fully rescinded.
22. TERMINATION OR AMENDMENT OF THIS PLAN. The Company may terminate this
Plan at any time. This Plan may be amended as may be necessary or appropriate by
the Committee provided, however, that without the approval of the holders of at
least a majority of the outstanding Shares (i) the class of individuals eligible
to purchase Shares under this Plan shall not be changed, (ii) the maximum number
of Shares available for purchase under this Plan shall not be increased except
as permitted under Section 3 hereof, and (iii) the Discount at which Shares may
be purchased under this Plan shall not be changed, and, further provided, that
no such termination or amendment shall impair the rights of any Participant
under this Plan to receive any Shares which have been allocated to his account,
together with the amount of any payroll deductions and Participant contributions
which have not been applied to the purchase of Shares.
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APPENDIX ONE
DESIGNATED SUBSIDIARIES
As of January 1, 1999, the following companies were designated subsidiaries
under this Plan:
GMRI Canada, Inc.
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DARDEN RESTAURANTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy will be voted as directed. If no direction is made, it will be
voted "FOR" Items 1, 2 and 3.
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1, 2 AND 3
1. Election of Directors H. B. Atwater, Jr.; Bradley D. Blum; Daniel B. Burke;
Odie C. Donald; Joe R. Lee; Maria A. Sastre; Jack A. Smith; Blaine Sweatt;
Richard E. Rivera; Michael D. Rose
/ / FOR all listed nominees / / WITHHOLD AUTHORITY to vote for all listed
nominees
/ / LISTED NOMINEES except the following (Instruction: To withhold authority
to vote for any individual nominee, write the name of such nominee(s) in
the space provided.) ___________________________________________________
2. Approval of appointment of KPMG Peat Marwick LLP as independent auditor
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of the Darden Restaurants, Inc. Employee Stock Purchase
Plan / / FOR / / AGAINST / / ABSTAIN
Please indicate whether you will attend the Annual Meeting of Stockholders in
Orlando on September 24, 1998.
I / / plan// / do not plan to attend the Annual Meeting
<PAGE>
DARDEN RESTAURANTS, INC.
ANNUAL MEETING
HYATT REGENCY
ORLANDO INTERNATIONAL AIRPORT
ORLANDO, FLORIDA
SEPTEMBER 24, 1998
11:30 A.M. EASTERN DAYLIGHT SAVINGS TIME
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<S> <C>
The undersigned hereby appoints J.R. Lee, Clarence Otis,
Jr. and C.L. Whitehill, and each of them, as proxies
with full power of substitution, to vote all shares of
common stock which the undersigned has power to vote at
the Annual Meeting of Stockholders of Darden
Restaurants, Inc. to be held at 11:30 a.m. EDT on
September 24, 1998 at Orlando, Florida, and at any
adjournment thereof, in accordance with the instructions
set forth herein and with the same effect as though the
undersigned were present in person and voting such
shares. The proxies are authorized in their discretion
to vote upon such other business as may properly come
before the meeting.
Dated: , 1998
(Shareholders Sign Here)
Please sign exactly as name
appears. Joint owners
should each sign.
Executors, administrators,
trustees, etc. should so
indicate when signing. If
signer is a corporation,
please sign full name by
duly authorized officer.
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