<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 Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
1999 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
DARDEN RESTAURANTS, INC.
5900 LAKE ELLENOR DRIVE, ORLANDO, FL 32809
August 10, 1999
To Our Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders,
which will be held at the Orlando Science Center, 777 East Princeton Street,
Orlando, Florida, on Thursday, September 23, 1999, at 4:00 p.m. Eastern Daylight
Savings Time. All holders of the Company's outstanding common stock as of July
26, 1999 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 5:00 p.m.
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 either follow the enclosed telephonic proxy instructions
OR 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 23, 1999
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Darden
Restaurants, Inc. will be held on Thursday, September 23, 1999, at 4:00 p.m.,
Eastern Daylight Savings Time, at the Orlando Science Center, 777 East Princeton
Street, Orlando, Florida, for the following purposes:
1. To elect eleven directors;
2. To approve the appointment of KPMG LLP to audit the consolidated
financial statements of Darden Restaurants, Inc. for the fiscal year
beginning May 31, 1999;
3. To consider and approve the Darden Restaurants, Inc. Amended and
Restated Stock Option and Long-Term Incentive Plan of 1995; and
4. To act upon any other business which may properly be brought before the
meeting.
The close of business on July 26, 1999 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/ Paula J. Shives
------------------------------
Paula J. Shives
SECRETARY
August 10, 1999
<PAGE>
DARDEN RESTAURANTS, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, SEPTEMBER 23, 1999
VOTING PROCEDURES
This Proxy Statement is being sent to holders of record at the close of
business on July 26, 1999, 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 26, 1999 are entitled
to vote at the Annual Meeting of Stockholders on September 23, 1999. This Proxy
Statement is designed to furnish information relating to the business to be
transacted at the meeting.
As of July 26, 1999, there were 132,717,134 shares of Common Stock
outstanding, excluding 32,625,961 shares held in the Company's Treasury
("Treasury Shares"). Each share of Common Stock entitles the holder to one vote.
The 32,625,961 Treasury Shares 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, 1999.
A proxy card is enclosed for your use. The proxy card contains instructions
for responding either by telephone or by mail. YOU ARE SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS TO EITHER FOLLOW THE INSTRUCTIONS ON THE PROXY CARD FOR
TELEPHONIC RESPONSE OR SIGN, DATE AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE, which is postage-paid if mailed in the United States or Canada. IF YOU
DIRECT YOUR VOTE BY TELEPHONE, PLEASE DO NOT RETURN THE PROXY CARD BY MAIL.
Whether you respond by telephone or mail, please also indicate if you intend to
attend the Annual Meeting of Stockholders on September 23, 1999.
You have three choices on each matter to be voted upon at the Annual
Meeting. For the election of directors, 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 specifically identify. See "General Information" under Item No. 1.
Concerning the other items, 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 properly given and received prior to
the close of the meeting will be voted as indicated. If the Company receives a
proxy for which specific instructions are not provided, the proxy will be voted
FOR the election of all directors as nominated, FOR the approval of the
appointment of KPMG LLP as independent auditors, and FOR the approval of the
Darden Restaurants, Inc. Amended and Restated Stock Option and Long-Term
Incentive Plan of 1995.
If a telephonic proxy or an executed proxy card is received 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 a proxy is received from 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
1
<PAGE>
Common Stock, represented at the Annual Meeting in person or by proxy, will
constitute a quorum. The affirmative vote of a majority of the shares of Common
Stock, present in person or by proxy at the Annual Meeting and entitled to vote,
will be necessary for the election of directors and the approval of the other
matters submitted to the stockholders 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 1999 Annual Report to Stockholders, which includes the
consolidated financial statements of the Company as of and for the fiscal year
ended May 30, 1999, 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
407-245-6565 (collect) and a copy will be sent 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.
2
<PAGE>
CERTAIN OWNERS OF COMMON STOCK
As of May 30, 1999, 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 1999, are as
follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER CLASS OWNERSHIP PERCENT
- -------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
The Prudential Insurance Company of America
751 Broad Street
Newark, New Jersey 07102...................................... 17,837,734(1) 12.95%
American Express Retirement Services
733 Marquette Avenue
Minneapolis, Minnesota 55402.................................. 12,217,397(2) 7.42%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109................................... 12,106,079(3) 8.79%
BZW Barclays Global Investors, N.A.
45 Fremont Street
San Francisco, California 94105............................... 7,077,882(4) 5.14%
</TABLE>
- ------------------------
(1) Amount and percent of ownership by this holder are reported as of March 31,
1999. As of December 31, 1998, this holder owned 17,723,217 shares or 12.75%
of the Common Stock of the Company. Of this amount, 62,000 shares were held
for the benefit of the holder's general account, and 17,661,217 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. As of December 31, 1998, such holder had sole power
to vote 2,118,100 shares, shared voting power on 15,482,117 shares, sole
dispositive power on 2,118,100 shares, and shared dispositive power on
15,605,117 shares.
(2) As of May 30, 1999, 12,217,397 shares were held as trustee of the DSP. Such
holder had shared voting power and shared dispositive power on all such
shares.
(3) Amount and percent of ownership by this holder are reported as of March 31,
1999. As of December 31, 1998, this holder owned 10,834,369 shares or 7.796%
of the Common Stock of the Company. Of this amount, all 10,834,369 shares
were beneficially owned by FMR Corp., or certain of its affiliates and
wholly-owned subsidiaries, as investment advisor to various investment
company mutual funds or as investment manager of various institutional
accounts. Such entities had sole power to vote 754,079 shares and sole
dispositive power on all 10,834,369 shares.
(4) Amount and percent of ownership by this holder are reported as of March 31,
1999.
3
<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
proxies received will be voted for such substitute nominees unless an
instruction to the contrary is included with the proxy.
INFORMATION CONCERNING NOMINEES
<TABLE>
<S> <C>
Bradley D. Blum.............. Bradley D. Blum, age 45, is President of Olive Garden and an
Director since 1997 Executive Vice President of Darden Restaurants, Inc. Mr.
Blum joined General Mills, Inc. in 1978. He was named a
Director of Marketing in 1984 and became a Vice President 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 Olive
Garden and was named President of 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, at which time he was also
elected to the Board of Directors.
Daniel B. Burke.............. Daniel B. Burke, age 70, 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 Morgan Stanley Groups, Inc., C.F. Hathaway & Co.
and the Washington Post Company.
Odie C. Donald............... Odie C. Donald, age 49, is Chief Executive
Director since 1998 Officer--Caribbean and Atlantic Islands, Cable and Wireless
PLC. Previously, he was Group President--Customer Operations
for BellSouth Telecommunications, Inc., in Atlanta, GA. He
previously held other 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.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Julius Erving, II............ Julius Erving, II, age 49, is President of The Erving Group,
Director since 1998 Vice President of RDV Sports and Executive Vice President of
the Orlando Magic, a professional basketball team. Mr.
Erving spent 16 years as a player for the New York Nets and
the Philadelphia 76ers and was inducted into the Basketball
Hall of Fame in 1993. In 1985, he entered business with the
Philadelphia Coca-Cola Bottling Company. His entrepreneurial
initiatives have included sports commentary with the
National Broadcasting Company and ownership of
Washington/Erving Motor Sports in North Carolina. For his
civic work, Mr. Erving received the Jackie Robinson Award
for American Black Achievement. Mr. Erving currently serves
as a director of Converse, Inc., The Sports Authority, Inc.,
and Saks Incorporated.
Joe R. Lee................... Joe R. Lee, age 58, 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 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 52, was named President of Red
Director since 1997 Lobster Restaurants and Executive Vice President of Darden
Restaurants, Inc. in December 1997. Mr. Rivera began his
career with Steak and Ale Restaurants of America and has
held many leadership positions within the industry over the
past 25 years. 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 57, 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 Lodging Trust, Inc.,
ResortQuest International and Nextera Enterprises, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Hector de J. Ruiz............ Hector de J. Ruiz, age 54, is Executive Vice President of
Director since 1999 Motorola, Inc. and President of its Semiconductor Products
Sector, in Austin, Texas. Mr. Ruiz joined Motorola in 1977
as Operations Manager at the company's manufacturing
facility in East Kilbride, Scotland. In 1984, he was
promoted to Vice President and General Manager of the Memory
Products Division. He became Corporate Vice President and
General Manager of Integrated Circuit Wafer Manufacturing in
1987, and the Corporate Vice President and Assistant General
Manager of the Microprocessor Products Group in 1988. He was
promoted to Senior Vice President in 1989. In 1991, he
became Senior Vice President and General Manager of the
Paging Products Group. Mr. Ruiz serves on the board of
directors of White Oaks Semiconductor, the Semiconductor
Industry Association, the Texas R&D Coalition and the Austin
360 Technology Summit. He was elected to the Board of
Directors of Darden Restaurants, Inc. in June 1999.
Maria A. Sastre.............. Maria A. Sastre, age 44, is Vice President--Latin America
Director since 1998 and 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 64, is the past Chief Executive Officer
Director since 1995 and Chairman of the Board 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
Whitehall Jewelers, Inc., the National Sporting Goods
Association and Nova Southeastern University.
Blaine Sweatt, III........... Blaine Sweatt, III, age 51, 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 ELEVEN (11) 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.
6
<PAGE>
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 23, 1999, 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, or $1,000
for each committee meeting chaired. The non-employee directors' remuneration is
due and paid quarterly, unless payment is deferred. Each year, under the
Company's Compensation Plan for Non-Employee Directors, 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. A total of 50,000 shares of Common
Stock are authorized for issuance under the Compensation Plan for Non-Employee
Directors.
In addition to the cash remuneration, under the Company's Stock Plan for
Non-Employee Directors, each non-employee director receives 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 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. A total of 250,000 shares of Common Stock are
authorized for issuance under the Stock Plan for Non-Employee Directors.
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 30, 1999, the Board of Directors met or
took action four times and the various committees of the Board met or took
action a total of eight times. Attendance at Board meetings and all committee
meetings averaged 90%. 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. The committees of the Board and their membership as
of the close of fiscal 1999 are described below. Listed among the membership of
several committees, H. Brewster Atwater, Jr. will complete his Board service
prior to this year's annual meeting and is not standing for re-election.
AUDIT COMMITTEE. The Audit Committee consisted of four non-employee
directors: Jack A. Smith (Chair), H.B. Atwater, Jr., Odie C. Donald and Maria A.
Sastre. The Audit Committee met two times during fiscal 1999 and, again, on June
21, 1999 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 23, 1999. 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 Audit 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
to be carried on the Company's financial statements; and (v) the expenses of
senior executives. The Audit Committee has adopted a formal written charter,
which is attached as
7
<PAGE>
APPENDIX B. The Audit Committee fulfilled its responsibilities under and
remained in compliance with the charter during fiscal year 1999.
COMPENSATION COMMITTEE. The Compensation Committee consisted of five
non-employee directors: Michael D. Rose (Chair), H.B. Atwater, Jr., Daniel B.
Burke, Odie C. Donald and Jack A. Smith. The Compensation Committee met three
times during fiscal 1999. The Compensation 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
Compensation 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
Compensation Committee also recommends the establishment of policies dealing
with various compensation and employee benefit plans for the Company. See the
Compensation Committee's report on executive compensation and the section
entitled "Board Compensation and Benefits", which details compensation to be
paid to non-employee directors effective on their election on September 23,
1999, both contained in this Proxy Statement.
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 1999. 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), Daniel B. Burke, Michael D. Rose and Maria
A. Sastre. The Finance Committee met once during fiscal 1999. The Finance
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.
NOMINATING AND GOVERNANCE COMMITTEE. The Nominating and Governance
Committee consisted of four non-employee directors: Daniel B. Burke (Chair),
H.B. Atwater, Jr., Odie C. Donald, and Michael D. Rose. The Nominating and
Governance Committee met twice during fiscal 1999. In addition, the Nominating
and Governance Committee met on June 21, 1999 to nominate directors for election
at the Annual Meeting of Stockholders on September 23, 1999. The Nominating and
Governance Committee's duties include reviewing policies and procedures of the
Board of Directors, as well as 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. Aside from directors' fees and stock ownership, a
non-employee director may have no more than an insignificant financial
relationship with the Company, except that members of the Compensation and the
Nominating and Governance Committees may not 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: Odie C. Donald (Chair), Daniel B.
Burke, Maria A. Sastre and Jack A. Smith. The Public Responsibility Committee
did not meet in fiscal 1999, but met on June 21, 1999. The duties of the Public
Responsibility 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.
8
<PAGE>
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth in the following table is the beneficial ownership of Common Stock
as of May 30, 1999 for each director, each officer named in the Summary
Compensation Table that appears later in this Proxy Statement, and all directors
and 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
BENEFICIAL PERCENT OF COMMON STOCK
NAME OF BENEFICIAL OWNER OWNERSHIP(2) OUTSTANDING(1)
- --------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
H. B. Atwater................................ 1,305,496(3) *
Bradley D. Blum.............................. 350,520(4) *
Daniel B. Burke.............................. 28,895(3) *
Odie C. Donald............................... 3,012(3) *
Julius Erving, II............................ 3,000 *
Joe R. Lee................................... 1,403,499(5)(6) 1.06%
Robert W. Mock............................... 128,056(5) *
Richard E. Rivera............................ 287,319 *
Michael D. Rose.............................. 28,539(3) *
Hector de J. Ruiz............................ 3,000 *
Maria A. Sastre.............................. 2,986 *
Jack A. Smith................................ 20,750(3) *
Blaine Sweatt, III........................... 465,949(5) *
All Directors and Officers as a Group (19
persons)..................................... 4,527,463 3.43%
</TABLE>
- ------------------------
(1) As of May 30, 1999, no director or named officer, except Joe R. Lee,
beneficially owned more than one percent of the outstanding Common Stock of
the Company.
(2) Includes the following shares subject to options exercisable within 60 days
of May 30, 1999: H. B. Atwater, 769,229 shares; Bradley D. Blum, 188,466
shares; Daniel B. Burke, 12,157 shares; Joe R. Lee, 967,906 shares; Robert
W. Mock, 84,361 shares; Richard E. Rivera, 160,000 shares; Michael D. Rose,
12,666 shares; Maria A. Sastre, 986 shares; Blaine Sweatt, III, 347,395
shares; and all Directors and Officers as a group, 2,864,773 shares. Also
includes restricted stock as of May 30, 1999 and the fiscal 1999 restricted
awards granted June 22, 1999: Bradley D. Blum, 90,503 shares; Julius Erving,
II, 3,000 shares; Joe R. Lee, 38,223 shares; Robert W. Mock, 28,692 shares;
Richard E. Rivera, 83,986 shares; Hector de J. Ruiz, 3,000 shares; Maria A.
Sastre, 2,000 shares; Jack A. Smith, 3,000 shares; and Blaine Sweatt, III,
44,431 shares.
(3) Includes the following shares held in the common stock fund of the
non-employee Director's deferred compensation plan: H. B. Atwater, 2,644
shares; Daniel B. Burke, 12 shares; Odie C. Donald, 12 shares; Jack A.
Smith, 7,750 shares; and Michael D. Rose, 919 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 30, 1999: Joe R. Lee, 957 shares; Robert W.
Mock, 1,535 shares; and Blaine Sweatt, III, 1,419 shares.
(6) Includes 800 shares owned by Joe R. Lee's wife.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1999, the Company employed the law firm of Baker &
Hostetler in which former director Betty Southard Murphy is a partner. Ms.
Murphy did not stand for re-election to the Company's Board of Directors at the
1998 Annual Meeting of Stockholders on September 24, 1998, and, therefore, was
not a director for most of fiscal year 1999. The fees paid by the Company to
Baker & Hostetler during fiscal year 1999 reflect competitive rates charged by
other law firms retained by the Company and are not considered material either
to the Company or to Baker & Hostetler.
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 LLP ("KPMG"), an independent certified public
accounting firm, to audit the consolidated financial statements of the Company
for the fiscal year beginning May 31, 1999. 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 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.
AMENDED AND RESTATED STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1995
HISTORICAL INFORMATION
The Stock Option and Long-Term Incentive Plan of 1995 (the "1995 Plan") was
approved and adopted by General Mills, Inc. ("General Mills") as the sole
stockholder of the Company on February 27, 1995, and became effective on the
distribution of all of the Common Stock of the Company to the stockholders of
General Mills on May 28, 1995 (the "Distribution"). The 1995 Plan was amended by
the Board of Directors of the Company effective May 23, 1996, June 17, 1997,
June 26, 1998, and May 24, 1999. In addition, pursuant to the Omnibus Budget
Reconciliation Act of 1993 (the "1993 Budget Act"), the 1995 Plan was submitted
to and approved by the Company's stockholders on September 19, 1996, at the
first annual meeting of stockholders following the Distribution. The 1993 Budget
Act and the corresponding Section 162(m) of the Internal Revenue Code (the
"Code") created new parameters affecting tax deductions by public corporations
for certain levels of executive compensation.
The Company uses the 1995 Plan to provide incentives and performance-based
stock awards to officers and other management personnel, including restaurant
managers and salaried employees meeting specified service requirements.
Presently, 15,000,000 shares of Common Stock are authorized for issuance under
the 1995 Plan. Of these shares, 3,000,000 are available solely for issuance as
Salary Replacement Options ("SRO's"), that is, stock options granted in lieu of
merit salary increases, other compensation or employee benefits. Subject to the
terms and conditions of the 1995 Plan, addressed in greater detail below,
vesting of stock options is established at the discretion of the Compensation
Committee. The 1995 Plan also allows for grants of restricted stock and
restricted stock units ("RSU's") for up to ten percent of the 15,000,000
authorized shares under the plan, or 1,500,000 shares.
10
<PAGE>
THE PROPOSED AMENDMENTS
On June 21, 1999, the Compensation Committee (the "Committee") recommended
and, subject to approval at the Annual Meeting of Stockholders on September 23,
1999, the Board of Directors approved several additional amendments to the 1995
Plan. These amendments, if approved by the Company's stockholders, would (1)
extend the term of the 1995 Plan for four additional years to September 30,
2004, (2) authorize an additional 7,200,000 shares of Common Stock available for
stock option awards (excluding SRO's) under the 1995 Plan, (3) change the limit
on potential option grants to an individual from 10% of the total number of
shares of Common Stock which may be issued under the 1995 Plan to 300,000 shares
(exclusive of SRO's) in each of the 1995 Plan's last four fiscal years,
determined on a prospective and retroactive cumulative basis, and (4) limit
grants of restricted stock and RSU's to an aggregate of 1,500,000 shares of
Common Stock. No other changes to the 1995 Plan are being proposed or
recommended.
These amendments are addressed in more detail below. In addition, a more
detailed description of the purpose and content of the 1995 Plan is included at
the end of this item and in the section entitled "Stock-Based Compensation" in
the Report of the Compensation Committee on Executive Compensation, appearing
later in this Proxy Statement. The 1995 Plan, showing the proposed amendments,
is attached in APPENDIX A to this Proxy Statement as the Amended and Restated
Stock Option and Long-Term Incentive Plan of 1995. Your vote in favor of the
approval of the Amended and Restated Stock Option and Long-Term Incentive Plan
of 1995 will authorize the adoption of each of the following proposed
amendments.
1. EXTENSION OF THE 1995 PLAN
The 1995 Plan is scheduled to expire on September 30, 2000. The proposed
amendments extend the 1995 Plan for an additional four years to September 30,
2004. As discussed in the section entitled "Stock-Based Compensation" later in
this Proxy Statement, the 1995 Plan is utilized by the Company to attract and
retain able employees through performance-based awards of stock options,
restricted stock and RSU's.
2. AUTHORIZATION OF ADDITIONAL SHARES
Presently, 15,000,000 shares of Common Stock are authorized for issuance
under the 1995 Plan. This is the pool of Common Stock from which stock options,
SRO's, restricted stock and RSU's may be awarded to employees of the Company
pursuant to the 1995 Plan. The proposed amendments authorize an additional
7,200,000 shares of Common Stock for issuance under the 1995 Plan as stock
options. No addition is being made to the 3,000,000 shares presently authorized
for issuance as SRO's. Consequently, if the proposed amendments are approved, a
total of 22,200,000 shares of Common Stock would be authorized and available for
issuance under the 1995 Plan.
3. LIMITATION ON STOCK OPTIONS TO AN INDIVIDUAL
The 1995 Plan presently provides that no individual may receive stock
options on more than 10% of the total number of shares of Common Stock which may
be issued under the 1995 Plan. Presently, this limit would be 1,500,000 shares
subject to stock options. The proposed amendments replace this provision with
one that limits the number of shares of Common Stock subject to stock options,
excluding SRO's, granted under the 1995 Plan to any single employee, to 300,000
shares annually in each of the last four fiscal years of the 1995 Plan,
determined on a prospective and retroactive cumulative basis.
4. LIMITATION ON NUMBER OF GRANTS OF RESTRICTED STOCK AND RESTRICTED STOCK
UNITS ("RSU'S")
The 1995 Plan provides that grants of restricted stock and RSU's may not
exceed 10% of the total number of shares of Common Stock that may be issued
under the 1995 Plan. As the number of shares presently authorized for issuance
under the 1995 Plan is 15,000,000, the maximum number of shares of
11
<PAGE>
restricted stock and RSU's that may be issued is 1,500,000. The proposed
amendment would continue to limit grants of restricted stock and RSU's to an
aggregate of 1,500,000 shares, rather than increase the limit to 10% of the new
total of 22,200,000 shares now being recommended for authorization, as more
fully described under proposed amendment 2, above ("Authorization of Additional
Shares").
ADDITIONAL BACKGROUND INFORMATION AND PROVISIONS OF THE 1995 PLAN
Presently, the number of shares of Common Stock for which stock options,
SRO's, restricted stock and RSU's (available to employees of foreign operations
only) may be granted under the 1995 Plan is 15,000,000, of which 12,000,000
shares are available for regular option grants, restricted stock and RSU's
(subject to limitations on the maximum number of restricted stock and RSU's that
may be issued), and 3,000,000 shares are designated exclusively for use as
SRO's. The proposed amendments would increase the aggregate number of shares of
Common Stock authorized for awards under the 1995 Plan to 22,200,000, of which
19,200,000 would be available for regular option grants, restricted stock and
RSU's (subject to the previously described limitation of 1,500,000 shares of
restricted stock and RSU's) and 3,000,000 would continue to be exclusively for
use as SRO's. The increased number of authorized shares is necessary to permit
the Company to continue to utilize the 1995 Plan as a means of compensating its
employees through the proposed extension of the 1995 Plan to September 30, 2004.
As previously indicated, a copy of the 1995 Plan with the proposed amendments is
attached as APPENDIX A.
Shares of Common Stock to be issued under the 1995 Plan may be made
available from the Company's authorized but unissued Common Stock, from shares
of Common Stock held in the treasury, or from shares purchased on the open
market. In the event of a stock split or stock dividend, reorganization,
recapitalization or other similar event affecting the price of Common Stock, or
when appropriate to prevent dilution or prevent enlargement of the benefits
under the 1995 Plan, then the number of shares subject to the 1995 Plan, the
number of shares then subject to awards and the price per share payable on
exercise of stock options may be appropriately adjusted by the Committee.
STOCK OPTIONS. The term of the stock options granted under the 1995 Plan
may not exceed ten years after the date of grant, and the term may be for
shorter periods at the discretion of the Committee. Options will terminate three
months after the termination of employment except in the event of the
Participant's death or retirement. A stock option may be exercised at such times
as may be set by the Committee at the time of grant, provided that an award of
stock options, other than SRO's, may become exercisable no sooner than one-third
after two years, one-third after three years, and one-third after four years
from the date of grant. The exercise price of a stock option may not be less
than 100 percent of the fair market value of the Common Stock on the grant date.
Stock options issued under the 1995 Plan are not transferable by a
participant except by his or her last will and testament, by the laws of descent
and distribution, or by the gift of an executive officer eligible for retirement
to his or her family member. Otherwise, all stock options may be exercised
during the participant's lifetime only by the participant or his or her guardian
or legal representative.
If a participant should die while in the employ of the Company, any stock
option previously granted to the participant under the 1995 Plan may be
exercised by the person designated in such participant's last will and testament
or, in the absence of such designation, by the participant's estate, to the full
extent that such stock option could have been exercised by such deceased
participant immediately prior to the participant's death. In addition, a
pro-rata portion of stock options not exercisable as of the date of death (based
on the number of months of employment completed during the full vesting period)
will become exercisable.
Upon retirement, the participant may thereafter exercise a stock option,
subject to the original term of the stock option, in such manner as determined
by the Committee at the grant date.
12
<PAGE>
A stock option may only be exercised upon full payment to the Company of the
option price. Payments can be made (i) in cash, (ii) through the delivery of
shares of Common Stock owned by the participant, or (iii) by a combination of
cash and Common Stock. The Common Stock so delivered will have a value for
determining payment equal to the mean of the high and low price of the Common
Stock on the New York Stock Exchange on the exercise date.
As of July 26, 1999, the number of stock options (excluding SRO's,
restricted stock and RSU's) that have been issued under the 1995 Plan totals
10,473,535, of which 10,393,484 remain outstanding. Consequently, as of such
date, 651,407 shares remain available for future stock option grants (excluding
SRO's, restricted stock and RSU's) under the 1995 Plan. As 875,058 shares of
restricted stock and RSU's have been granted under the 1995 Plan as of July 26,
1999, no more than 624,942 shares may be used for future grants of restricted
stock and RSU's under the proposed amendment. An additional 5,244,751 shares are
represented by outstanding stock options under the Stock Option and Long-Term
Incentive Conversion Plan (the "Conversion Plan"), under which General Mills'
stock option awards were converted at the time of the Distribution. The weighted
average exercise prices for outstanding options under the 1995 Plan and the
Conversion Plan as of July 26, 1999, are $14.29 and $10.38, respectively.
SALARY REPLACEMENT STOCK OPTIONS. Under the 1995 Plan, the Committee also
may grant SRO's to key employees of the Company and its subsidiaries as a
replacement for Company-provided benefits, as an alternative to eligibility for
a merit increase in salary, or in lieu of other compensation such as an earned
bonus. An SRO grant in lieu of an earned bonus is based on the dollar amount of
the bonus multiplied by the value of each stock option as determined by the
Committee, which, for grants in fiscal 1999 and all prior years, equaled
approximately 30% of the current market price of the Common Stock. In addition,
SRO's may be granted to key operations personnel, such as restaurant managers
and regional operations directors, for a value determined by the Committee.
SRO's may be vested and may be exercised as determined by the Committee, at its
discretion. All other terms of the 1995 Plan also govern SRO's.
As of July 26, 1999, the number of SRO's that have been issued totals
1,081,154, of which 1,046,403 remain outstanding. Consequently, as of such date,
out of a total of 3,000,000 shares which may be granted as SRO's under the 1995
Plan, 1,918,846 shares remain available for future SRO grants.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS ("RSU'S"). The 1995 Plan
authorizes the Committee to make awards of restricted stock and, to employees of
foreign operations, RSU's, and to determine the number of shares to be awarded
(subject to the aggregate limits set forth in the 1995 Plan and proposed
amendment number 4 previously described in this Proxy Statement). A portion of
the restricted stock and RSU's awarded from the 1995 Plan will be granted as
part of the incentive stock matching program, which requires that the
participant place on deposit with the Company one share of personally-owned
Common Stock for each share of restricted stock or each RSU awarded.
The 1995 Plan also authorizes the Committee to establish 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 in respect of such awards.
Regular dividends are paid on restricted stock and dividend equivalents are paid
with respect to the RSU's. Restricted stock and RSU's may vest (in whole or on a
pro-rata basis) prior to the completion of the restricted period in the event of
a retirement, death, change of control or certain terminations of employment, as
described in the 1995 Plan. Restricted stock and RSU's may not be sold,
exchanged, transferred or pledged during the restricted period.
As of July 26, 1999, the aggregate numbers of shares of restricted stock and
RSU's awarded under the 1995 Plan total 867,543 and 7,515, respectively, for an
aggregate of 875,058 shares of restricted stock and RSU's. Of these, as of July
26, 1999, 695,649 shares of restricted stock and 6,060 RSU shares have not yet
vested.
ADMINISTRATION. The 1995 Plan is administered by the Committee, appointed
from time to time by the Board of Directors and composed of non-employee,
independent members of the Board who are
13
<PAGE>
ineligible to receive awards under the 1995 Plan (see the description of the
Compensation Committee in this Proxy Statement). Subject to the terms and
conditions of the 1995 Plan, the Committee may prescribe, amend and rescind
rules and regulations relating to the 1995 Plan, select the employees to whom
awards will be made, determine the number of shares to be optioned or awarded
and interpret, construe and implement the provisions of the 1995 Plan. The
Committee may delegate its duties to the Chief Executive Officer and other
members of senior management, subject to the requirement that awards to
executive officers shall be made solely by the Committee and subject to
compliance with Rule 16b-3 of the Securities Exchange Act of 1934. The Board of
Directors may terminate, modify or amend the 1995 Plan, and, subject to the
approval of the Board of Directors, the Committee may terminate, modify or
suspend the operation of the 1995 Plan, provided that no such modification
without the approval of the stockholders shall (i) materially increase the
number of shares which may be issued under the 1995 Plan; (ii) materially
increase the benefits accruing to participants under the 1995 Plan; or (iii)
materially modify the requirements as to eligibility for participating in the
1995 Plan.
TAX CONSEQUENCES. Stock option grants under the 1995 Plan will be
non-qualified stock options governed by Section 83 of the Code. Generally, no
federal income tax is payable by a participant upon the grant of a stock option.
Under current tax law, if a participant exercises a non-qualified stock
option, he or she will be taxed on the difference between the fair market value
of the Common Stock on the exercise date and the option price. The Company,
subject to Section 162(m) of the Code, will be entitled to a corresponding
deduction on its income tax return.
Unless a participant elects otherwise under the Code, participants will be
taxed on the fair market value of restricted stock and RSU's on the date the
restrictions lapse or when the shares are otherwise not subject to substantial
risk of forfeiture. The Company, subject to Section 162(m) of the Code, will be
entitled to a corresponding deduction on its income tax return.
Participants are responsible for the payment of all federal, state, local
and foreign withholding and income taxes in respect of the exercise of a stock
option or the vesting of restricted stock or RSU's, and to the extent permitted
by law and Committee rules, participants may authorize the Company to withhold
shares to be issued from a restricted stock award or a stock option exercise in
satisfaction of the withholding obligation.
CHANGE OF CONTROL. All outstanding stock options become fully exercisable
for six months and restricted stock and RSU's become immediately vested
following a Change of Control as defined in the 1995 Plan. Also, if a
participant is terminated within two years after such an event, that person's
outstanding stock options at the date of termination shall become fully
exercisable for three months.
14
<PAGE>
AWARDS. Awards of stock options, SRO's and restricted stock for fiscal 1999
to the five most highly compensated executive officers are set forth on the
Summary Compensation Table contained in this Proxy Statement. Awards were made
to the following groups during fiscal 1999 under the 1995 Plan:
<TABLE>
<CAPTION>
STOCK OPTIONS SRO'S RESTRICTED STOCK RSU'S
------------- ----------------------- ----------------------- ---------------------
(#) (#) ($)(2) (#) ($)(3) (#) ($)(3)
------------- --------- ------------ --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
All current executive officers, as
a group.......................... 938,966 5,261 $ 33,342 160,556 $ 2,581,525 0 $ 0
All current non-employee directors,
as a group(1).................... 43,000 8,929 $ 48,602 8,000 $ 140,657 12,000 $ 208,876
All employees who are not executive
officers, as a group............. 1,671,936 220,462 $ 1,232,642 189,377 $ 3,150,270 1,594 $ 24,956
</TABLE>
- ------------------------
(1) All stock options and restricted stock awarded to non-employee directors
were granted under the Company's Stock Plan for Non-Employee Directors (see
the section entitled "Board Compensation and Benefits").
(2) The values of SRO's are based on 30% of the fair market value of the Common
Stock on the date of grant.
(3) The values of Restricted Stock and RSU's are based on the fair market value
of the Common Stock on the date of grant.
The closing price of the Company's Common Stock on the New York Stock
Exchange on July 26, 1999 was $21.125.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE PROPOSED AMENDMENTS TO
THE 1995 PLAN BY ADOPTING THE AMENDED AND RESTATED STOCK OPTION AND LONG-TERM
INCENTIVE PLAN OF 1995, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY
OTHERWISE.
15
<PAGE>
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the Annual
Meeting other than that which is explained in this Proxy Statement. In the event
that any other business calling for a vote of the stockholders is properly
presented at the meeting, the holders of the proxies will vote your shares in
accordance with their best judgment.
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation and certain other
components of compensation for the last three fiscal years of the Chief
Executive Officer and the Company's four other most highly compensated executive
officers.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION OTHER RESTRICTED
---------------------------- ANNUAL STOCK ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2)(3) (#)(4)(5)(6) ($)(7)
- ---------------------------- ---- ------- --------- ------------ ---------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. R. LEE................... 1999 693,750 1,005,900 27,500 251,475 275,000 489,629
Chairman of the Board and 1998 599,038 449,300(5) 467 224,650 390,766 396,516
Chief Executive Officer 1997 575,000 0 0 0 0 178,755
B. D. BLUM.................. 1999 438,845 526,600 830 131,650 124,480 139,829
President, 1998 348,076 399,000 243 1,195,691(8) 103,332 94,274
Olive Garden 1997 261,537 134,500 0 33,625 0 40,083
R. E. RIVERA................ 1999 504,326 459,500 43,688 114,875 100,000 109,400
President, 1998 234,890 234,900 445 1,258,725(9) 429,166(10) 236,066(11)
Red Lobster N/A(13)
B. SWEATT, III.............. 1999 366,826 396,200 0 99,050 110,000 186,291
President, 1998 339,422 1,788,200 137 303,964(12) 103,332(12) 192,817(12)
New Business Division 1997 266,153 32,500 0 8,125 0 45,409
R. W. MOCK.................. 1999 295,960 274,700 2,306 68,675 60,000 91,155
Executive Vice President, N/A(14)
Operations, Olive Garden N/A(14)
</TABLE>
- --------------------------
(1) Except where noted, the amounts for 1998 and 1999 relate to tax gross-ups
for commissions paid by the Company for the 1998 Stock Purchase/Loan
Program. For R. E. Rivera, this amount in 1999 relates to tax gross-ups for
relocation expenses and non-deductible moving expenses. For J. R. Lee, this
amount in 1999 relates to vacation cash-in.
(2) Amounts under this column for fiscal 1999 are based on the fair market value
($21.9375) of Common Stock as of June 22, 1999, 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 vests 100% at three years, provided the
participant's share remains 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. The
number and aggregate value of restricted stock holdings, including the 1999
award (valued at the fair market value of $21.9375 as of June 22, 1999) and
all other awards (valued at the fair market value of $21.125 as of May 30,
1999) total: J. R. Lee--38,223 shares ($816,775); B. D. Blum--90,503 shares
($1,916,752); R. E. Rivera--83,986 shares ($1,778,459); B. Sweatt,
III--44,431 shares ($942,273); and R. W. Mock--28,692 shares ($608,662).
(3) Amounts for fiscal 1998 are based on the value ($15.6563) of Common Stock as
of June 23, 1998, 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.
16
<PAGE>
(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.
(5) J. R. Lee elected to receive a portion of his 1998 bonus in SRO's. As a
result, he received 96,044 options in lieu of 50% of his bonus.
(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 received 44,722 options; B. D. Blum received 23,332 options; R. E.
Rivera received 29,166 options; B. Sweatt, III received 23,332 options; R.
W. Mock received 9,138 options. In 1999, B. D. Blum received an additional
4,480 options as a result of an increase to his ownership guidelines.
(7) These amounts for fiscal 1999 include allocations relating to FlexComp, the
Company's nonqualified deferred compensation plan. For the following
officers, the amounts for these allocations are: J. R. Lee--$489,629; B. D.
Blum--$139,829; R. E. Rivera--$109,400; B. Sweatt, III--$186,291; and R. W.
Mock--$91,155.
(8) 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.
(9) 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 period of four years.
(10) For R. E. Rivera, an award of 400,000 SRO's was granted in lieu of an
additional employment bonus on the date of hire (December 12, 1997). The
options fully vest over a period of four years.
(11) 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.
(12) Pursuant to a performance agreement based on 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 ($15.6563) of the Company's stock
on the date of grant, June 23, 1998. During the development period of four
years, his MIP bonus had been reduced by 65%.
(13) R. E. Rivera became an executive officer of the Company in fiscal year
1998.
(14) R. W. Mock became an executive officer of the Company in fiscal year 1999.
17
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes awards of stock options in fiscal 1999 to the
executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED STOCK PRICE APPRECIATION
UNDERLYING TO EMPLOYEES EXERCISE FOR OPTION TERM ($)(2)
OPTIONS IN FISCAL PRICE EXPIRATION --------------------------
NAME GRANTED(#) YEAR ($/SHARE) DATE 5%($) 10%($)
- ---------------------------------- ----------- ------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
J. R. LEE......................... 275,000(3) 9.52% 15.6563 6/23/08 $ 2,707,679 $ 6,861,819
B. D. BLUM........................ 4,480(4) 0.16% 15.6250 6/01/08 $ 44,022 $ 111,561
120,000(3) 4.15% 15.6563 6/23/08 $ 1,181,532 $ 2,994,248
R. E. RIVERA...................... 100,000(3) 3.46% 15.6563 6/23/08 $ 984,610 $ 2,495,207
B. SWEATT, III.................... 110,000(3) 3.81% 15.6563 6/23/08 $ 1,083,071 $ 2,744,727
R. W. MOCK........................ 60,000(3) 2.08% 15.6563 6/23/08 $ 590,766 $ 1,497,124
</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 23, 2001, and 50% on June 23, 2002,
except for R. W. Mock, for whom the vesting schedule is 33 1/3% on June 23,
2000, 33 1/3% on June 23, 2001, and 33 1/3% on June 23, 2002.
(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 (see the
section entitled "Stock Ownership Guidelines and Stock Purchase/Loan
Opportunity" later in this Proxy Statement). The officer received two
options for each share of the Company's stock purchased. The options become
exercisable 50% on June 1, 2001, and 50% on June 1, 2002.
18
<PAGE>
STOCK OPTIONS
The following table summarizes the stock option exercises by the executive
officers named in the Summary Compensation Table during fiscal year 1999 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>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS
AT FISCAL YEAR END (#)
---------------------------------------------------------
SHARES
ACQUIRED ON VALUE CONVERSION PLAN(1) 1995 PLAN(2)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. R. Lee......... 67,041 $842,987 738,892 97,730 135,902 1,069,722
B. D. Blum........ 36,915 $497,290 142,475 29,069 19,920 352,792
R. E. Rivera...... -- -- -- -- 160,000 369,166
B. Sweatt, III.... 51,227 $644,863 288,950 41,770 21,200 378,632
R. W. Mock........ 23,325 $163,999 49,753 14,898 -- 199,138
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
FISCAL YEAR END ($)(3)
---------------------------
NAME EXERCISABLE UNEXERCISABLE
- ------------------ ----------- -------------
<S> <C> <C>
J. R. Lee......... $9,577,895 $11,287,485
B. D. Blum........ $1,812,954 $ 3,536,862
R. E. Rivera...... $1,460,000 $ 3,003,009
B. Sweatt, III.... $3,615,200 $ 4,013,224
R. W. Mock........ $ 538,650 $ 2,030,354
</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 28,
1999 ($21.125) of the shares underlying in-the-money options, less the
exercise price, times the number of in-the-money options outstanding.
CHANGE IN CONTROL ARRANGEMENTS
As of June 21, 1999, the Company had management continuity agreements with
thirteen of its executive officers, including those named in the Summary
Compensation Table, 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, FlexComp 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.
19
<PAGE>
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
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 30, 1999, 62
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 221,379 shares by Company officers.
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 the section entitled
"Committees of the Board" in this Proxy Statement). 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 contained in this Proxy Statement, 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 a possible incentive bonus under the Management Incentive
Plan. If individual, as well as corporate 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.
20
<PAGE>
The compensation peer group is a broader group than the S&P Restaurant Index
used in the Total Shareholder Return performance graph at the end of this Proxy
Statement. 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 the executive's pay relative to the compensation peer group. The
budgeted salary increase for all employees is also considered in determining
base salary increases for executive officers.
MANAGEMENT INCENTIVE PLAN
Annual cash incentive awards are granted by the Committee to executive
officers under the Management Incentive Plan ("MIP") based on the following
factors: corporate performance, business unit performance and individual
performance. Awards to key executives are 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 for fiscal 1999 with the goal of achieving
a significant continued improvement over fiscal 1998 performance, with a target
set at over 19% diluted earnings per share ("EPS") growth. Pursuant to the terms
and conditions of the MIP, the Committee met on June 21, 1999, to evaluate and
determine a corporate rating for the Company. This rating is based upon diluted
EPS growth and return on average capital ("ROC") for the 1999 fiscal year
compared to targets established by the Committee at the inception of the fiscal
year. For fiscal 1999, the corporate ratings could range from 0 to 2.0 with
target performance represented by a 1.30 rating. With an EPS growth before
restructuring credit of 43% (diluted) and ROC of 9.8%, the Company exceeded the
target and met the required level of performance for a 2.0 corporate rating.
For fiscal 2000, the Compensation Committee has set a target to continue the
momentum of significant improvement achieved in fiscal 1999. Achievement of that
target would represent a 1.30 corporate rating and would result in an increase
of approximately 18% in diluted 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
1999, approximately 22.6% 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. Awards
are made to employees, including most restaurant managers and salaried personnel
meeting certain service requirements, 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 employee's level of responsibility in the
21
<PAGE>
organization) and on their individual performance. A total of 66 officers were
granted options under this program in fiscal 1999, and on June 22, 1999, options
were granted to an additional 3,229 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,
hospitality and retail 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 a grant of
additional stock options, referred to as SRO's. 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 SRO's.
The 1995 Plan also authorizes the Committee to make awards to selected
employees of restricted stock and RSU's of up to 10% of the 15,000,000 shares
presently 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.
The majority of restricted shares have been and will be granted as part of
the stock matching program for participants in the MIP, 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) 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 in this Proxy Statement summarizes the
options and restricted stock awards granted in fiscal 1999 to the five most
highly compensated executive officers. Included in the totals are options
granted as SRO's. See Item 3 of this Proxy Statement for a discussion of
proposed amendments to the 1995 Plan.
FLEXCOMP BENEFITS
None of the Company's executive officers presently participate in a defined
contribution or defined benefit 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 in this
Proxy Statement.
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. During fiscal year 1999, the Committee increased
the Chief Executive Officer's base salary to $715,000 based on performance and
an assessment of competitive market compensation practices for Chief Executive
Officers. The Committee also approved a fiscal 1999 annual grant of 275,000
stock options for Mr. Lee.
22
<PAGE>
The Committee met on June 21, 1999, to evaluate the Chief Executive
Officer's performance for fiscal 1999 and their evaluation was reported to the
independent directors of the Board. For fiscal 1999, the Compensation Committee
rating for J. R. Lee resulted in a bonus of $1,005,900. The rating and resulting
bonus for Mr. Lee are based on achievement of stated financial targets (i.e.,
EPS, ROC, Return on Sales, Adjusted Debt to Adjusted Capital Ratio, Fixed Charge
Coverage Ratio, and growth in operating profit), success in strengthening the
organizational structure and depth of management talent, and success in
positioning the organization for growth.
LOANS TO EXECUTIVE OFFICERS
Each of the following executives listed in the Summary Compensation Table
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, described in this Proxy Statement under the section
entitled "Stock Ownership Guidelines and Stock Purchase/Loan Opportunity." As of
May 30, 1999, the outstanding principal balances of loans under this program for
the executive officers named in the Summary Compensation Table are as follows:
J. R. Lee, $154,291; B. D. Blum, $114,909; R. E. Rivera, $135,870; B. Sweatt,
III, $58,229; and R. W. Mock, $30,128. The outstanding principal balances of
loans for all participants of the program totalled $1,687,031 as of the end of
fiscal year 1999.
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 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
H. B. Atwater, Jr.
Daniel B. Burke
Odie C. Donald
Jack A. Smith
23
<PAGE>
COMPARISON OF FOUR-YEAR TOTAL RETURN
BASED ON A $100 INVESTMENT ON THE DISTRIBUTION DATE (5/29/95)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN INDEX DARDEN RESTAURANTS, INC. S&P 500 S&P RESTAURANT INDEX
<S> <C> <C> <C>
May-95 $100.00 $100.00 $100.00
Nov-95 $103.81 $115.93 $119.33
May-96 $108.75 $132.61 $132.12
Nov-96 $79.04 $147.93 $128.37
May-97 $77.15 $169.01 $137.87
Nov-97 $104.93 $193.79 $133.42
May-98 $145.16 $221.27 $172.05
Nov-98 $152.09 $243.67 $192.10
May-99 $201.41 $267.80 $213.98
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN INDEX MAY-95 NOV-95 MAY-96 NOV-96 MAY-97 NOV-97 MAY-98 NOV-98
- ------------------------------ ----------- --------- ----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Darden Restaurants, Inc....... 100.00 103.81 108.75 79.04 77.15 104.93 145.16 152.09
S&P 500....................... 100.00 115.93 132.51 147.93 169.01 193.79 221.27 243.67
S&P Restaurant Index.......... 100.00 119.33 132.12 128.37 137.87 133.42 172.05 192.10
<CAPTION>
TOTAL RETURN INDEX MAY-99
- ------------------------------ -----------
<S> <C>
Darden Restaurants, Inc....... 201.41
S&P 500....................... 267.80
S&P Restaurant Index.......... 213.98
</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. The Company notes that H.B. Atwater,
Jr. inadvertently failed to report the sale of 80,000 shares of the Company's
Common Stock in November 1998. The transaction was subsequently reported. To the
Company's knowledge, all other required reports were filed on a timely basis
during fiscal 1999.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Any stockholder proposal intended to be presented for consideration at the
2000 Annual Meeting of Stockholders 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, 2000. Proposals should be sent to the
attention of the Secretary.
YOUR VOTE IS IMPORTANT!
Please follow the enclosed telephonic proxy instructions or sign and
promptly return your proxy card in the enclosed envelope.
24
<PAGE>
- --------------------------------------------------------------------------------
FOR EDGAR FILING, LANGUAGE THAT WILL BE ADDED IS PRECEDED BY A "<*>" AND
FOLLOWED BY A "</*>". LANGUAGE THAT WILL BE ELIMINATED IS PRECEDED BY A "<#>"
AND FOLLOWED BY A "</#>".
- --------------------------------------------------------------------------------
APPENDIX A
DARDEN RESTAURANTS, INC.
<*>AMENDED AND RESTATED</*>STOCK OPTION AND LONG-TERM INCENTIVE PLAN OF 1995
<#>DARDEN RESTAURANTS, INC.</#>
<#>STOCK OPTION AND LONG TERM INCENTIVE PLAN OF 1995</#>
<#>(AS AMENDED MAY 23, 1996, JUNE 17, 1997, JUNE 26, 1998, AND MAY 24, 1999)</#>
1. PURPOSE OF THE PLAN
The purpose of the Darden Restaurants, Inc. <*>Amended and Restated</*>
Stock Option and Long-Term Incentive Plan of 1995 (the "Plan") is to attract
and retain able employees by rewarding employees of Darden Restaurants,
Inc., its subsidiaries and affiliates (defined as entities in which Darden
Restaurants, Inc. owns an equity interest of 25% or more) (collectively, the
"Company") who are responsible for the growth and sound development of the
business of the Company, and to align the interests of all employees with
those of the stockholders of the Company and to compensate certain
management employees of the Company by granting stock options in lieu of
salary increases or other compensation or employee benefits.
2. EFFECTIVE DATE, DURATION AND SUMMARY OF PLAN
A. Effective Date and Duration
This Plan shall become effective as of the effective date of the
distribution of Darden Restaurants, Inc. Common Stock to the holders of
General Mills, Inc. common stock. Awards may be made under the Plan until
<#>September 30, 2000</#> <*>September 30, 2004</*>.
B. Summary of Option Provisions for Participants
The stock option that will be awarded to employees under this Plan gives
a right to an employee to purchase at a future date shares of Darden
Restaurants, Inc. Common Stock at a fixed price. As an employee, you will
receive an "option agreement" in your own name, which will contain the
term and other conditions of the option grant. In general, each option
agreement will state the number of shares of Darden Restaurants, Inc.
Common Stock that you can purchase from the Company, the price at which
you can purchase the shares, and the last date you can make your
purchase. You will not have any taxable income when you receive the
option agreement.
The price at which you may buy the Darden Restaurants, Inc. shares will
be equal to the market price of the Company shares on the New York Stock
Exchange as of the day the option was awarded to you. If after the period
that you must hold the option before you can exercise such option the
price of Darden Restaurants, Inc. Common Stock has risen, you will be
able to make a gain on exercising the option equal to the difference
between the exercise price of the option and the market price of Darden
Restaurants, Inc. shares on the date you use your option to buy shares
under the terms of the option certificate. This gain will be taxable to
you.
You will never be obligated to buy shares of the Company if you do not
wish to do so. After the required holding period before you can exercise
the option, you can continue to hold the option as an employee for the
remaining years of the option before making the decision whether or not
to buy shares of the Company. Thereafter, the rights under the option
will lapse and cannot be used by the employee.
Generally you cannot sell or assign the option to any other person and
the specific provisions which cover your rights in the option are covered
in the full text of the Plan.
A-1
<PAGE>
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee (the
"Committee"). The Committee shall be comprised solely of non-employee,
independent members of the Board of Directors (the "Board") appointed in
accordance with the Company's Articles of Incorporation. Subject to the
provisions of Section 14, the Committee shall have authority to adopt rules
and regulations for carrying out the purpose of the Plan, select the
employees to whom Awards will be made ("Participants"), determine the number
of shares to be awarded and the other terms and conditions of Awards in
accordance with the Plan provisions and interpret, construe and implement
the provisions of the Plan; provided that if at any time Rule 16b-3 or any
successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), so permits, without adversely affecting the
ability of the Plan to comply with the conditions for exemption from Section
16 of the 1934 Act (or any successor provisions) provided by Rule 16b-3, the
Committee may delegate its duties under the Plan in whole or in part, on
such terms and conditions, to the Chief Executive Officer and to other
senior officers of the Company; provided further, that only the Committee
may select and make other decisions as to Awards to Participants who are
subject to Section 16 of the 1934 Act and to other executives of the
Company. The Committee (or its permitted delegate) may correct any defect or
supply any omission or reconcile any inconsistency in any agreement relating
to any Award under the Plan in the manner and to the extent it deems
necessary. Decisions of the Committee (or its permitted delegate) shall be
final, conclusive and binding upon all parties, including the Company,
stockholders and Participants.
4. COMMON STOCK SUBJECT TO THE PLAN
The shares of common stock of the Company (without par value) ("Common
Stock") to be issued upon exercise of a Stock Option, awarded as Restricted
Stock, or issued upon expiration of the restricted period for Restricted
Stock Units, may be made available from the authorized but unissued Common
Stock, shares of Common Stock held in the Company's treasury, or Common
Stock purchased by the Company on the open market or otherwise. Approval of
the Plan by the sole shareholder of the Company shall constitute
authorization to use such shares for the Plan.
The Committee, in its discretion, may require as a condition to the grant of
Stock Options, Restricted Stock or Restricted Stock Units (collectively,
"Awards"), the deposit of Common Stock owned by the Participant receiving
such grant, and the forfeiture of such Awards, if such deposit is not made
or maintained during the required holding period or the applicable
restricted period. Such shares of deposited Common Stock may not be
otherwise sold, pledged or disposed of during the applicable holding period
or restricted period. The Committee may also determine whether any shares
issued upon exercise of a Stock Option shall be restricted in any manner.
The maximum aggregate number of shares of Common Stock authorized under the
Plan for which Awards may be granted under the Plan is <#>15,000,000</#>
<*>22,200,000</*>. Upon the expiration, forfeiture, termination or
cancellation, in whole or in part, of unexercised Stock Options, or
forfeiture of Restricted Stock or Restricted Stock Units on which no
dividends or dividend equivalents have been paid, the shares of Common Stock
subject thereto shall again be available for Awards under the Plan.
The number of shares subject to the Plan, the outstanding Awards and the
exercise price per share of outstanding Stock Options may be appropriately
adjusted by the Committee in the event that:
(i) the number of outstanding shares of Common Stock shall be changed by
reason of split-ups, spin-offs, combinations or reclassifications of
shares;
(ii) any stock dividends are distributed to the holders of Common Stock;
A-2
<PAGE>
(iii) the Common Stock is converted into or exchanged for other shares as a
result of any merger or consolidation (including a sale of assets) or
other recapitalization, or other similar events occur which affect the
value of the Common Stock; or
(iv) the Committee determines such adjustments are appropriate to prevent
dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
5. ELIGIBLE PERSONS
Only persons who are employees of the Company shall be eligible to receive
Awards under the Plan ("Participants"). No Award shall be made to any member
of the Committee or any other non-employee director of the Company.
6. PURCHASE PRICE OF STOCK OPTIONS
The purchase price for each share of Common Stock issuable under a Stock
Option shall not be less than 100% of the Fair Market Value of the shares of
Common Stock on the date of grant. "Fair Market Value" as used in the Plan
shall equal the mean of the high and low price of the Common Stock on the
New York Stock Exchange on the applicable date.
7. STOCK OPTION TERM AND TYPE
The term of any Stock Option as determined by the Committee shall not exceed
10 years from the date of grant and shall expire as of the close of business
on the last day of the designated term, unless terminated earlier under the
provisions of the Plan. All Stock Option grants under the Plan shall be
non-qualified stock options governed by Section 83 of the Internal Revenue
Code of 1986, as amended (the "Code").
8. EXERCISE OF STOCK OPTIONS
A. Of the <#>15,000,000</#> <*>22,200,000</*> shares of Common Stock
authorized for issuance hereunder, not less than 3,000,000 shall be
issued only as salary replacement Stock Options ("SRO's") in lieu of
salary increases, compensation or other employee benefits, subject that
SRO's granted to directors pursuant to the Stock Plan for Directors (as
amended) shall also be included within such 3,000,000 shares of Common
Stock. Except as provided in Sections 12 and 13, each Stock Option issued
as an SRO may be exercised as determined by the Committee in its
discretion.
B. Except as provided in Sections 12 and 13 (Change of Control and
Termination of Employment), each Stock Option, other than an SRO, may be
exercised from the date of grant no sooner than in increments of
one-third after two years, one-third after three years and one-third
after four years, subject to the Participant's continued employment with
the Company and in accordance with other terms and conditions prescribed
by the Committee which may specify a longer period before an option may
be exercised.
C. The number of shares of Common Stock subject to Stock Options<*>,
excluding SRO's,</*> granted under the Plan to any single Participant
shall not exceed <#>10% of the total number of shares of Common Stock
which may be issued under this Plan</#> <*>300,000 shares in each of the
last four fiscal years of the Plan determined on a prospective and
retroactive cumulative basis</*>.
D. A Participant exercising a Stock Option shall give notice to the Company
of such exercise and of the number of shares elected to be purchased
prior to 5:00 P.M. EST/EDT on the day of exercise, which must be a
business day at the executive offices of the Company. At the time of
purchase, the Participant shall tender the full purchase price of the
shares purchased. Until such payment has been made and a certificate or
certificates for the shares purchased has been issued in the
Participant's name, the Participant shall possess no stockholder rights
with respect to such shares.
A-3
<PAGE>
Payment of such purchase price shall be made to the Company, subject to
any applicable rule or regulation adopted by the Committee:
(i) in cash (including check, draft, money order or wire transfer made
payable to the order of the Company);
(ii) through the delivery of shares of Common Stock owned by the
Participant; or
(iii) by a combination of (i) and (ii) above.
For determining the amount of the payment, Common Stock delivered pursuant
to (ii) or (iii) shall have a value equal to the Fair Market Value of the
Common Stock on the date of exercise.
9. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
With respect to Awards of Restricted Stock and Restricted Stock Units, the
Committee shall:
(i) select Participants to whom Awards will be made, provided that
Restricted Stock Units may only be awarded to those employees of the
Company who are employed in a country other than the United States;
(ii) determine the number of shares of Restricted Stock or the number of
Restricted Stock Units to be awarded;
(iii) determine the length of the restricted period, which shall be no less
than one year;
(iv) determine the purchase price, if any, to be paid by the Participant for
Restricted Stock or Restricted Stock Units; and
(v) determine any restrictions other than those set forth in this Section 9.
Any shares of Restricted Stock granted under the Plan may be evidenced in
such manner as the Committee deems appropriate, including, without
limitation, book-entry registration or issuance of stock certificates, and
may be held in escrow.
Subject to the restrictions set forth in this Section 9, each Participant
who receives Restricted Stock shall have all rights as a stockholder with
respect to such shares, including the right to vote the shares and receive
dividends and other distributions.
Each Participant who receives Restricted Stock Units shall be eligible to
receive, at the expiration of the applicable restricted period, one share of
Common Stock for each Restricted Stock Unit awarded, and the Company shall
issue to and register in the name of each such Participant a certificate for
that number of shares of Common Stock. Participants who receive Restricted
Stock Units shall have no rights as stockholders with respect to such
Restricted Stock Units until such time as share certificates for Common
Stock are issued to the Participants; provided, however, that quarterly
during the applicable restricted period for all Restricted Stock Units
awarded hereunder, the Company shall pay to each such Participant an amount
equal to the sum of all dividends and other distributions paid by the
Company during the prior quarter on that equivalent number of shares of
Common Stock.
Subject to the provisions of Section 12, for awards of Restricted Stock or
Restricted Stock Units which have a deposit requirement, a Participant will
be eligible to vest only in those shares of Restricted Stock or Restricted
Stock Units for which personally-owned shares are on deposit with the
Company as of the date the Participant's employment with the Company
terminates.
The total number of shares of Common Stock issued upon vesting of Restricted
Stock or Restricted Stock Units granted under the Plan shall not exceed
<#>10%</#> <*>1,500,000</*> of the total number of shares of Common Stock
which may be issued under this Plan, and no single Participant shall receive
under the
A-4
<PAGE>
Plan Restricted Stock or Restricted Stock Units which, upon vesting, would
exceed 2% of the total number of shares of Common Stock which may be issued
under the Plan.
10. NON-TRANSFERABILITY
Except as otherwise provided in Section 9, no shares of Restricted Stock and
no Restricted Stock Units shall be sold, exchanged, transferred, pledged, or
otherwise disposed of during the restricted period. No Stock Options granted
under this Plan shall be transferable by a Participant otherwise than (i) by
the Participant's last will and testament or (ii) by the applicable laws of
descent and distribution, or (iii) by gift by a Participant who is subject
to Section 16 of the 1934 Act and is eligible for retirement (age 55 with 10
years of service) to a "family member" defined by the Committee. Such Stock
Options shall be exercised during the Participant's lifetime only by the
Participant or his or her guardian or legal representative or the donee
family member. After death, such Stock Option may be exercised in accordance
with Section 13B. Other than as set forth herein, no Award under the Plan
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to do so shall be void.
11. WITHHOLDING TAXES
It shall be a condition to the obligation of the Company to deliver shares
upon the exercise of a Stock Option, the vesting of Restricted Stock or
Restricted Stock Units and the corresponding issuance of shares of
unrestricted Common Stock, that the Participant pay to the Company cash in
an amount equal to all federal, state, local and foreign withholding taxes
required to be collected in respect thereof.
Notwithstanding the foregoing, to the extent permitted by law and pursuant
to such rules as the Committee may adopt, a Participant may authorize the
Company to satisfy any such withholding requirement by directing the Company
to withhold from any shares of Common Stock to be issued, all or a portion
of such number of shares as shall be sufficient to satisfy the withholding
obligation.
12. CHANGE OF CONTROL
Each outstanding Stock Option shall become immediately and fully exercisable
for a period of 6 months following the date of the following occurrences,
each constituting a "Change of Control":
(i) if any person (including a group as defined in Section 13(d)(3) of the
1934 Act) becomes, directly or indirectly, the beneficial owner of 20%
or more of the shares of the Company entitled to vote for the election
of directors;
(ii) as a result of or in connection with any cash tender offer, exchange
offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who
were directors of the Company just prior to such event cease to
constitute a majority of the Company's Board of Directors; or
(iii) the stockholders of the Company approve an agreement providing for a
transaction in which the Company will cease to be an independent
publicly-owned corporation or a sale or other disposition of all or
substantially all of the assets of the Company occurs.
After such 6-month period the normal option exercise provisions of the Plan
shall govern. In the event a Participant is terminated as an employee of the
Company within 2 years after any of the events specified in (i), (ii) or
(iii), his or her outstanding Stock Options at that date of termination
shall become immediately exercisable for a period of 3 months.
With respect to Stock Option grants outstanding as of the date of any such
Change of Control which require the deposit of owned Common Stock as a
condition to obtaining rights: (a) said deposit
A-5
<PAGE>
requirement shall be terminated as of the date of the Change of Control and
any such deposited stock shall be promptly returned to the Participant; and
(b) any restrictions on the sale of shares issued in respect of any such
Stock Option shall lapse.
In the event of a Change of Control, a Participant shall vest in all shares
of Restricted Stock and Restricted Stock Units, effective as of the date of
such Change of Control, and any deposited shares of Common Stock shall be
promptly returned to the Participant.
13. TERMINATION OF EMPLOYMENT
A. Termination of Employment
If the Participant's employment by the Company terminates for any reason
other than as specified herein or in subsections B, C or D, the
Participant's Stock Options shall terminate 3 months after such
termination and all shares of Restricted Stock and all Restricted Stock
Units which are subject to restriction as of said termination date shall
be forfeited by the Participant to the Company. In the event a
Participant's employment with the Company is terminated for the
convenience of the Company, as determined by the Committee, the
Committee, in its sole discretion, may vest such Participant in all or
any portion of outstanding Stock Options (which shall become exercisable)
and/or shares of Restricted Stock or Restricted Stock Units awarded to
such Participant, effective as of the date of such termination.
B. Death
If a Participant should die while employed by the Company, any Stock
Option previously granted under this Plan may be exercised (i) by the
person designated in such Participant's last will and testament or, (ii)
in the absence of such designation, by the Participant's estate, or (iii)
by the donee of a Stock Option made pursuant to Section 10 (iii), to the
full extent that such Stock Option could have been exercised by such
Participant immediately prior to death. Further, with respect to
outstanding Stock Option grants which, as of the date of death, are not
yet exercisable, any such option grant shall vest and become exercisable
in a pro-rata amount, based on the full months of employment completed
during the full vesting period of the Stock Option from the date of grant
to the date of death.
With respect to Stock Option grants which require the deposit of owned
Common Stock as a condition to obtaining exercise rights, in the event a
Participant should die while employed by the Company, said Stock Options
may be exercised as provided in the first paragraph of this Section 13B,
subject to the following special conditions:
(i) any restrictions on the sale of shares issued in respect of any such
Stock Option shall cease; and
(ii) any owned Common Stock deposited by the Participant pursuant to
said grant shall be promptly returned to the person designated in
such Participant's last will and testament or, in the absence of
such designation, to the Participant's estate, and all requirements
regarding deposit by the Participant shall be terminated.
A Participant who dies during any applicable restricted period shall vest
in a proportionate number of shares of Restricted Stock or Restricted
Stock Units, effective as of the date of death. Such proportionate
vesting shall be pro-rata, based on the number of full months of
employment completed during the restricted period prior to the date of
death, as a percentage of the applicable restricted period.
A-6
<PAGE>
C. Retirement
The Committee shall determine, at the time of grant, the treatment of the
Stock Option upon the retirement of the Participant. Unless other terms
are specified in the original Stock Option grant, if the termination of
employment is due to a Participant's retirement on or after age 55 with
10 years of service with the Company, the Participant may exercise a
Stock Option, subject to the original terms and conditions of the Stock
Option. With respect to Stock Option grants which require the deposit of
owned Common Stock as a condition to obtaining rights, any restrictions
on the sale of shares issued in respect of any such Stock Option shall
lapse at the date of any such retirement.
A Participant who retires on or after the date he or she attains age 65
shall fully vest in all shares of Restricted Stock or Restricted Stock
Units, effective as of the date of retirement (unless any such award
specifically provides otherwise).
A Participant who takes early retirement (after age 55, but prior to age
65) during any applicable restricted period may elect either of the
following alternatives with respect to Restricted Stock or Restricted
Stock Units (unless any such award specifically provides otherwise):
(a) Leave owned shares on deposit with the Company and vest in all shares
of Restricted Stock or Restricted Stock Units, effective as of the
earlier of the date the Participant attains age 65 or the termination
date of the applicable restricted period; or
(b) Withdraw owned shares and vest in a proportionate number of shares of
Restricted Stock or Restricted Stock Units, effective as of the date
the shares on deposit are withdrawn. Such proportionate vesting shall
be pro-rata, based on the number of full months of employment
completed during the restricted period prior to the date of early
retirement, as a percentage of the applicable restricted period.
D. Spin-offs
If the termination of employment is due to the cessation, transfer, or
spin-off of a complete line of business of the Company, the Committee, in
its sole discretion, shall determine the treatment of all outstanding
Awards under the Plan.
14. AMENDMENTS OF THE PLAN
The Plan may be terminated, modified, or amended by the Board of Directors
of the Company. The Committee may from time to time prescribe, amend and
rescind rules and regulations relating to the Plan. Subject to the approval
of the Board of Directors, the Committee may at any time terminate, modify,
or suspend the operation of the Plan, provided that no action shall be taken
by the Board of Directors or the Committee without the approval of the
stockholders of the Company which would:
(i) materially increase the number of shares which may be issued under the
Plan;
(ii) materially increase the benefits accruing to Participants under the
Plan; or
(iii) materially modify the requirements as to eligibility for participating
in the Plan.
The Board of Directors shall have authority to cause the Company to take any
action related to the Plan which may be required to comply with the
provisions of the Securities Act of 1933, as amended, the 1934 Act, and the
rules and regulations prescribed by the Securities and Exchange Commission.
Any such action shall be at the expense of the Company.
No termination, modification, suspension, or amendment of the Plan shall
alter or impair the rights of any Participant pursuant to a prior Award
without the consent of the Participant. There is no obligation for
uniformity of treatment of Participants under the Plan.
A-7
<PAGE>
15. FOREIGN JURISDICTIONS
The Committee may adopt, amend, and terminate such arrangements, not
inconsistent with the intent of the Plan, as it may deem necessary or
desirable to make available tax or other benefits of the laws of any foreign
jurisdiction, to employees of the Company who are subject to such laws and
who receive Awards under the Plan.
16. NOTICE
All notices to the Company regarding the Plan shall be in writing, effective
as of actual receipt by the Company, and shall be sent to:
Darden Restaurants, Inc.
5900 Lake Ellenor Dr.
Orlando, FL 32809
Attn: General Counsel
Effective May 28, 1995<*>; Restated as of September 23, 1999</*>
A-8
<PAGE>
APPENDIX B
CHARTER
DARDEN RESTAURANTS, INC. AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
RESOLVED, that the Committee, known as the Audit Committee, established by the
Board of Directors on June 1, 1995, shall henceforth consist of no less than
two, nor more than seven members of the Board of Directors. The members shall
not be officers or employees of the Company or of any of its subsidiaries. They
will be independent of management and free from material business relationships
that might interfere with the exercise of independent judgment as committee
members. The members of the Audit Committee shall be appointed by the Chairman
of the Board subject to ratification by the Board of Directors.
Acting as a Committee of the Board of Directors, and meeting at least
semi-annually, the broad functions of the Audit Committee are:
1. To ensure the Company's internal controls, audits, and the overall control
environment are sufficient to protect the stockholder's resources. To
oversee the quality, integrity, objectivity, accuracy, and security of the
Company's financial reporting and data processing.
2. To serve as an informed voice on the Board of Directors in support of the
accounting and auditing groups of the Company in their responsibilities
for the control and reporting of all financial transactions.
3. To provide a direct channel of communication to the Board for the
independent auditors, internal auditors, Senior Vice President, Corporate
Controller and Business Information Systems, and other concerned
individuals.
Specific duties of the Audit Committee include:
1. To recommend the independent auditors for the annual audit of the Company.
Nomination of the independent auditors shall be by the Board of Directors
and approved by the stockholders at the annual meeting. To review and
approve management plans for any significant engagements of the
independent auditors for management consulting services.
2. To review with independent auditors and the internal auditors the scope of
their respective audits. The Committee may request supplemental review or
other audit procedures as the Committee deems necessary.
3. To review the Company's standards for business conduct, internal controls,
internal audit procedures, the process for assessing risk of fraudulent
financial reporting, detection of major control weaknesses, and related
corrective actions with senior management and when necessary, with the
Board of Directors.
4. To review scope, coverage and results of pension plan audits with senior
management. Pension plan controls will be reviewed to ensure any
weaknesses receive appropriate follow-up and corrective actions.
5. To meet at least annually, without management present, with the Company's
independent auditors to discuss the Company's cooperation with the
independent auditors and other matters as deemed appropriate.
6. To approve any proposed significant changes in accounting methods to be
used by the Company.
B-1
<PAGE>
7. To review the amounts of goodwill and other intangibles to be carried on
the Company's financial statements and make appropriate recommendations to
the Board of Directors.
8. To review the expenses and perquisites of Company officers and directors
who constitute the insider group for SEC reporting.
9. To review, in conjunction with the full Board, the financial statements,
footnotes, and statistics of the Annual Report.
10. To periodically review the quality and depth of staffing in the Company's
auditing, accounting, information services, and financial departments.
11. To review the fees charged for services performed by the independent
auditors.
12. To issue reports, at least annually, covering the findings and
recommendations of the Committee to the Board of Directors and to the
stockholders.
13. To review summaries of the independent auditors' management letters.
14. To carry out any specific assignment or investigation designated by the
Board of Directors or the Chief Executive Officer.
B-2
<PAGE>
DARDEN RESTAURANTS, INC.
ANNUAL MEETING OF STOCKHOLDERS
ORLANDO SCIENCE CENTER
777 EAST PRINCETON STREET
ORLANDO, FLORIDA
4:00 P.M. EASTERN DAYLIGHT SAVINGS TIME
THURSDAY, SEPTEMBER 23, 1999
----------------------------------------------------------------------------
**VOTING OPTIONS**
YOU MAY VOTE BY TOLL-FREE TELEPHONE
(OR COMPLETE THE PROXY CARD BELOW AND RETURN IT BY MAIL IN THE POSTAGE PAID
ENVELOPE ENCLOSED)
If voting by proxy, you may vote either by mail or by telephone. Your telephone
vote authorizes the named proxies to vote your shares in the same manner as if
you marked, signed, and returned your proxy card by mail. To vote by telephone,
please read the accompanying proxy statement and then follow these steps:
YOUR CONTROL NUMBER
---------------------
---------------------
TO VOTE BY PHONE:
- ----------------------------------------------------------------------------
CALL TOLL FREE 1-888-216-1297 ANY TIME ON A TOUCH-TONE TELPHONE. THERE IS NO
CHARGE TO YOU FOR THE CALL. PLEASE HAVE THIS FORM AVAILABLE WHEN YOU CALL THE
TOLL-FREE NUMBER.
Enter the 7-digit control number located above, FOLLOWED BY THE #SIGN.
Option #1: To vote as the Board of Directors recommends on ALL proposals: PRESS
1
When asked, please confirm your vote by pressing 1
Option #2: If you choose to vote on each proposal separately: PRESS 2 and follow
the recorded instructions.
----------------------------------------------------------------------------
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT MAIL BACK THE PROXY CARD.
THANK YOU FOR VOTING!
FOLD AND DETACH HERE
The undersigned hereby appoints J.R. Lee, Clarence Otis, Jr. and Linda J.
Dimopoulos, 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 4:00
p.m. EDT on September 23, 1999 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.
Date: _______________________________, 1999
___________________________________________
___________________________________________
(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.
<PAGE>
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
<TABLE>
<S> <C> <C>
1. Election of Directors: (01) Bradley D. Blum; (02) Daniel B. Burke; (03) Odie C. Donald; (04) Julius Erving, II;
(05) Joe R. Lee; (06) Richard E. Rivera; (07) Michael D. Rose; (08) Hector de J. Ruiz;
(09) Maria A. Sastre; (10) Jack A. Smith; (11) Blaine Sweatt
/ / 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(s), write the name of such nominee(s) in the space provided.): --------------------------
2. Approval of appointment of KPMG LLP as independent auditor
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of the Amended and Restated Stock Option and Long-Term Incentive Plan of 1995
/ / FOR / / AGAINST / / ABSTAIN
Please indicate whether you will attend the Annual Meeting of Stockholders in Orlando on September 23, 1999.
/ / I plan to attend the Annual Meeting / / I do not plan to attend the Annual Meeting
</TABLE>
