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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.   )
Filed by the Registrant
x
 
Filed by a Party other than the Registrant
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Check the appropriate box:
 
 
 
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Preliminary Proxy Statement
 
 
 
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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 §240.14a-12
DARDEN RESTAURANTS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
 
No fee required.
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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 the transaction applies:
(2)
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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August 6, 2018

Dear Shareholders:

On behalf of your Board of Directors, it is our pleasure to invite you to attend the 2018 Annual Meeting of Shareholders of Darden Restaurants, Inc. We will hold the Annual Meeting on Wednesday, September 19, 2018, at 10:00 a.m., Eastern Time, at Rosen Shingle Creek, 9939 Universal Blvd., Orlando, Florida 32819. All holders of our outstanding common shares as of the close of business on July 25, 2018, are entitled to vote at the meeting.

We will furnish proxy materials to shareholders via the Internet, which allows us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting.

The notice of meeting and Proxy Statement contain details about the business to be conducted at the Annual Meeting. Please read these documents carefully. We will set aside time at the meeting for discussion of each item of business and provide you with the opportunity to ask questions. If you will need special assistance at the meeting because of a disability, please contact Matthew R. Broad, Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary, Darden Restaurants, Inc., 1000 Darden Center Drive, Orlando, Florida 32837, phone (407) 245-4043.

Whether or not you plan to attend, it is important that your shares be represented and voted at the meeting. Please refer to the proxy card or Notice of Availability of Proxy Materials for more information on how to vote your shares at the meeting.

Your vote is important. Thank you for your support.

 
 
Sincerely,
 
 
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Charles M. Sonsteby
 
 
Chairman of the Board of Directors
















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DARDEN RESTAURANTS, INC.
1000 Darden Center Drive
Orlando, Florida 32837
_________________________

NOTICE OF
2018 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 19, 2018

Time:
 
10:00 a.m., Eastern Time, on Wednesday, September 19, 2018
 
 
Place:
 
Rosen Shingle Creek, 9939 Universal Blvd., Orlando, Florida 32819
 
 
Items of Business:
 
1.    To elect a full Board of eight directors from the named director nominees to serve until the next annual meeting of shareholders and until their successors are elected and qualified;

2.    To obtain advisory approval of the Company’s executive compensation;

3.    To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 26, 2019;

4.    To vote on a shareholder proposal described in the accompanying Proxy Statement, if properly presented at the meeting; and

5.    To transact such other business, if any, as may properly come before the meeting and any adjournment.
 
 
Who Can Vote:
 
You can vote at the Annual Meeting and any adjournment if you were a holder of record of our common stock at the close of business on July 25, 2018.
 
 
Website:
 
Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on September 19, 2018:  The accompanying Proxy Statement and our 2018 Annual Report on Form 10-K are available at www.darden.com. In addition, you may access these materials at www.proxyvote.com. On August 6, 2018, we mailed a Notice of Internet Availability of Proxy Materials to certain shareholders, containing instructions for voting online and for requesting a paper copy of the Proxy Statement and 2018 Annual Report on Form 10-K.
 
 
Date of Mailing:
 
This Notice of the Annual Meeting of Shareholders and the Proxy Statement are first being distributed or otherwise furnished to shareholders on or about August 6, 2018.
 
 
By Order of the Board of Directors
 
 
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Matthew R. Broad
 
 
Senior Vice President, General Counsel,
Chief Compliance Officer and Corporate Secretary




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DARDEN RESTAURANTS, INC.
PROXY STATEMENT
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DARDEN RESTAURANTS, INC.

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER 19, 2018
____________________________

The Board of Directors (the Board) of Darden Restaurants, Inc. (Darden, the Company, we, us or our) is soliciting your proxy for use at the Annual Meeting of Shareholders to be held on September 19, 2018. This Proxy Statement summarizes information concerning the matters to be presented at the meeting and related information that will help you make an informed vote at the meeting. This Proxy Statement and the proxy card are first being distributed or otherwise furnished to shareholders on or about August 6, 2018. Capitalized terms used in this Proxy Statement that are not otherwise defined are defined in Appendix A to this document.

PROXY STATEMENT SUMMARY

This summary highlights certain information discussed in more detail in this Proxy Statement.

2018 Annual Meeting of Shareholders

Wednesday, September 19, 2018, 10:00 a.m., E.T.
Rosen Shingle Creek, 9939 Universal Blvd., Orlando, Florida 32819

Matters Presented for Vote at the Meeting

The matters to be voted upon at this meeting, along with the Board’s recommendation, are set forth below.
Proposals
Required Approval
Board Recommendation
Page Reference
1.    Election of Eight Directors from the Following Nominees:
- M. Shân Atkins
- James P. Fogarty
- Cynthia T. Jamison
- Eugene I. (Gene) Lee, Jr.
- Nana Mensah
- William S. Simon
- Charles M. (Chuck) Sonsteby
- Timothy J. Wilmott
Majority of Votes Cast
For Each Nominee
p. 8
2.    Advisory Approval of the Company’s Executive Compensation
Majority of Votes Cast
For
p. 11
3.    Ratification of Appointment of the Company’s Independent Registered Public Accounting Firm for the Fiscal Year Ending May 26, 2019
Majority of Votes Cast
For
p. 11
4.    Shareholder Proposal Requesting that the Company Issue a Report on the Feasibility of Adopting a Policy to Eliminate Use of Medically Important Antibiotics For Disease Prevention in its Supply Chain
Majority of Votes Cast
Against
p. 12



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Fiscal 2018 Performance Highlights

The Company delivered strong performance in fiscal 2018, as evidenced by these results, both of which serve as performance metrics under the Company’s compensation plans. (See pp. 28-29 for details on these measures and related compensation results.)
Consolidated Adjusted Diluted Net Earnings Per Share from Continuing Operations for fiscal 2018(1)
Darden Same-Restaurant Sales Growth(2)
$4.81
2.3% (from FY 2017)
(1) See p. 29 for a definition of Consolidated Adjusted Diluted Net Earnings Per Share from Continuing Operations.
(2) Same-Restaurant Sales Growth does not include Cheddar’s Scratch Kitchen.

Additional fiscal 2018 performance highlights:

Substantially completed integration of operations of Cheddar’s Scratch Kitchen into the Darden Restaurants operating system; and

Returned approximately $550 million to shareholders in dividends and share repurchases, and increased the quarterly dividend by 19 percent.

Corporate Governance Highlights

Our Board seeks to maintain the highest standards of corporate governance and ethical business conduct including the following highlights:

Independent Chairman of the Board, and seven of our eight nominees for the Board are independent;

All directors are elected annually and majority vote standard for uncontested elections;

All Board committees are composed of only independent directors;

The Board and committees conduct annual self-assessments;

Board met in executive session at each of its quarterly meetings during fiscal 2018;

Enacted proxy access in fiscal 2015;

Directors and executive officers are subject to robust stock ownership requirements;

10 percent of shareholders can call a special meeting; and

No supermajority voting requirements.

Executive Compensation Highlights

Our fiscal 2018 compensation programs were designed to create a strong alignment between pay and performance for our executives. Highlights of our executive compensation programs include:

At the Company’s 2017 Annual Meeting, approximately 97.2 percent of the votes cast were in favor of the advisory vote to approve executive compensation; and

Over 87 percent of our CEO’s and 72 percent of other Named Executive Officers’ target total direct compensation is tied to performance.

We have included a detailed Executive Summary in our Compensation Discussion and Analysis section on p. 24 in this Proxy Statement.


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CORPORATE GOVERNANCE AND BOARD ADMINISTRATION

Our Board is Committed to the Highest Standards of Corporate Governance and Ethical Business Conduct

Corporate governance guidelines, policies and practices are the foundation for the effective and ethical governance of all public companies. Our Board is committed to the highest standards of corporate governance and ethical business conduct, providing accurate information with transparency and complying fully with the laws and regulations applicable to our business. The Company’s corporate governance structure is designed to ensure that the Company’s policies and practices are aligned with shareholder interests and corporate governance best practices. Executive management supports the Board’s commitment to be transparent through shareholder outreach efforts. We offer our shareholders an opportunity to engage in dialogue with us about aspects of our corporate governance and discuss any areas of concern. Our corporate governance practices are governed by our Articles of Incorporation, Bylaws, Corporate Governance Guidelines, Board committee charters, Shareholder Communication Procedures, Codes of Business Conduct and Ethics and Insider Trading Policy. You can access these documents at www.darden.com under Investor Relations — Corporate Governance to learn more about the framework for our corporate governance practices. Copies are also available in print, free of charge, to any shareholders upon written request addressed to our Corporate Secretary.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines that specifically address the Company’s key governance practices and policies. The Nominating and Governance Committee of the Board oversees governance issues and recommends changes to the Company’s governance guidelines, policies and practices as appropriate. Our Corporate Governance Guidelines cover many important topics, including:

Director responsibilities;

Director qualification standards;

Director independence;

Director access to senior management and independent advisors;

Director compensation;

Director orientation and continuing education;

Codes of Business Conduct and Ethics;

Risk oversight;

Related party transactions;

Approval of CEO and senior management succession plans;

Annual compensation review of CEO and executive officers;

An annual evaluation in executive session of the CEO by the independent directors, led by the Chairman of the Compensation Committee; and

An annual performance evaluation of the Board and each of the Board committees, and an even more in-depth performance evaluation of the Board led by an outside consultant no less often than every two years.

The Corporate Governance Guidelines also include policies on certain specific subjects, including those that:

Require meetings at least four times annually of the independent directors in executive session without our CEO or other members of management present;

Require a letter of resignation from directors upon a significant change in their personal circumstances, including a change in or termination of their principal job responsibilities;


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Limit the number of other boards that directors may serve on;

Provide that no member of the Audit Committee may serve on the audit committee of more than three public companies, including the Company’s; and

Provide a mandatory retirement age for directors.

Director Independence

Our Corporate Governance Guidelines require that at least two-thirds of the Board be independent directors, as defined under the rules (the NYSE Rules) of the New York Stock Exchange (NYSE). The NYSE Rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act), include the additional requirements that members of the Audit Committee may not accept directly or indirectly any consulting, advisory or other compensatory fee from the Company other than their director compensation and may not be affiliated with the Company or its subsidiaries. The NYSE Rules and Rule 10C-1 under the Exchange Act provide that when determining the independence of members of the Compensation Committee, the Board must consider all factors specifically relevant to determining whether a director has a relationship to the Company which is material to the director’s ability to be independent from management in connection with Compensation Committee duties, including, but not limited to, consideration of the sources of compensation of Compensation Committee members, including any consulting, advisory or other compensatory fees paid by the Company, and whether any Compensation Committee member is affiliated with the Company or any of its subsidiaries or affiliates. Compliance by Audit Committee members and Compensation Committee members with these requirements is separately assessed by the Board.

The Board has reviewed, considered and discussed each current director’s and director nominee’s relationships, both direct and indirect, with the Company in order to determine whether such director or nominee meets the independence requirements of the applicable sections of the NYSE Rules. The Board has affirmatively determined that, other than Mr. Lee, who is employed by the Company, seven of the eight nominees (Mses. Atkins and Jamison and Messrs. Fogarty, Mensah, Simon, Sonsteby and Wilmott) have no direct or indirect material relationship with us (other than their service as directors with respect to the current directors) and qualify as independent under the NYSE Rules. The Board has also affirmatively determined that each member of the Audit Committee and the Compensation Committee meets the applicable requirements of the NYSE Rules and the Exchange Act.

In making independence determinations, the Board considers that in the ordinary course of business, transactions may occur between the Company, including its subsidiaries, and entities with which some of our nominees are or have been affiliated. The Board has concluded that any such transactions were immaterial in fiscal 2018.

Related Party Transactions

The Company’s Corporate Governance Guidelines include a policy pertaining to related party transactions in which Interested Transactions with a Related Party, as those terms are defined below, are prohibited without prior approval of the Board. The Board will review the material facts of the proposed transaction and will either approve or disapprove of the transaction. In making its determination, the Board considers whether the Interested Transaction is consistent with the best interests of the Company and its shareholders and whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, as well as the extent of the Related Party’s interest in the transaction. A director may not participate in any discussion or approval of an Interested Transaction for which he or she is a Related Party, except to provide all material information as requested. If an Interested Transaction will be ongoing, the Board may establish guidelines for the Company’s management to follow in its dealings with the Related Party.

An “Interested Transaction” as defined in the policy is any transaction, arrangement or relationship (or series of similar transactions, arrangements or relationships) in which (i) the amount involved exceeds $120,000 in any calendar year, (ii) the Company is a participant, and (iii) any Related Party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity), but does not include any salary or compensation paid by the Company to a director or for the employment of an executive officer that is required to be reported in the Company’s proxy statement.

A “Related Party” as defined in the policy is any (i) person who is or was since the beginning of the last fiscal year an executive officer, director or nominee for election as a director of the Company, (ii) beneficial owner of more than five percent of the Company’s common stock, or (iii) immediate family member of any of the foregoing.


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An “immediate family member” as defined in the policy is any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the person in question and any person (other than a tenant or employee) sharing the household of the person in question.

There are no Interested Transactions or other related party transactions or relationships required to be reported in this Proxy Statement under Item 404 of the SEC’s Regulation S-K.

Director Election Governance Practices

We do not have a “classified board” or other system where directors’ terms are staggered; instead our full Board is elected annually. The Company’s Bylaws provide that in an uncontested election, each director will be elected by a majority of the votes cast; provided that, if the election is contested, the directors will be elected by a plurality of the votes cast. In an uncontested election, if a nominee for director who is a director at the time of election does not receive the vote of at least the majority of the votes cast at any meeting for the election of directors at which a quorum is present, the director will promptly tender his or her resignation to the Board and remain a director until the Board appoints an individual to fill the office held by such director.

The Nominating and Governance Committee will recommend to the Board whether to accept or reject the tendered resignation or whether other action should be taken. The Board is required to act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, and publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision and the rationale within 90 days from the date of certification of the election results. If a director’s resignation is not accepted by the Board, such director will continue to serve until his or her successor is duly elected, or his or her earlier resignation or removal. If a director’s resignation is accepted by the Board, then the Board, in its sole discretion, may fill the vacancy or decrease the size of the Board. To be eligible to be a nominee for election or reelection as a director of the Company, a person must deliver to our Corporate Secretary a written agreement that he or she will abide by these requirements.

Under our Bylaws, the Board will consist of not less than three nor more than fifteen members as determined from time to time by resolution of the Board. On July 20, 2018, the Board increased the size of the Board to eight members effective September 19, 2018 and approved the nomination of Mr. Wilmott for election at the 2018 Annual Meeting of Shareholders.

Board Leadership Structure

The Company’s Corporate Governance Guidelines provide that the positions of Chairman of the Board and CEO be held by separate persons and that the position of Chairman be held by an independent director. The Board believes that separating the roles of Chairman and CEO allows for better alignment of corporate governance with shareholder interests and aids in the Board’s oversight of management and the Board’s ability to carry out its roles and responsibilities on behalf of the shareholders. The Board also believes that the separation of the roles of Chairman and CEO allows the CEO to focus more of his time and energy on operating and managing the Company and leverages the Chairman’s experience. Charles M. (Chuck) Sonsteby has served as Chairman since April 2016. As Chairman, Mr. Sonsteby, along with the other independent non-employee directors, brings experience, oversight and expertise from outside the Company and industry, while our CEO, Mr. Lee, brings company and industry-specific experience and expertise.

The Chairman will preside at all meetings of the Board, including the Board’s executive sessions of independent directors. The Chairman will approve Board meeting agendas, including approving meeting schedules to assure that there is sufficient time for discussion of all agenda items, and other information sent to the Board, advise the committee chairs with respect to agendas and information needs relating to committee meetings, and perform other duties as the Board may from time to time delegate to assist the Board in fulfilling its responsibilities. The independent directors may meet without management present at any other times as determined by the Chairman, as applicable.

Succession Planning

The Board is actively engaged and involved in talent management. The Board reviews the Company’s people strategy in support of its business strategy at least annually. This includes a detailed discussion of the Company’s leadership bench and succession plans with a focus on key positions at the senior leadership level. Annually, the CEO provides the Board with an assessment of senior executives and their potential to succeed him, and an assessment of persons considered successors to senior executives. The Nominating and Governance Committee also recommends policies regarding succession in the event of an emergency impacting the CEO or retirement of the CEO. Strong potential leaders are given exposure and visibility to Board


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members through formal presentations and informal events. More broadly, the Board is regularly updated on key talent indicators for the overall workforce, including diversity, recruiting and development programs.

Director Education

To foster our value of always learning – always teaching, the Corporate Governance Guidelines encourage director education. Upon initial election to the Board of Directors, the Company’s management conducts an orientation program of materials and briefing sessions to educate new directors about the Company’s business and other topics to assist them in carrying out their duties. Directors may also attend a variety of external continuing education programs of their own selection. In addition, the Board receives regular updates from management and external experts regarding new developments in corporate governance, legal developments or other appropriate topics from time to time.

Board Role in Oversight of Risk Management

The ultimate responsibility for risk oversight rests with the Board. The Board assesses major risks facing the Company and reviews options for their mitigation. Each Committee of the Board reviews the policies and practices developed and implemented by management to assess and manage risks relevant to the Committee’s responsibilities, and reports to the Board about its discussions.

The Audit Committee, among other responsibilities, oversees the Company’s financial reporting processes and internal controls, including the process for assessing risk of fraudulent financial reporting and significant financial risk exposures, and the steps management has taken to monitor and report those exposures. In addition to its other duties, the Audit Committee oversees the Company’s policies and procedures regarding compliance with applicable laws and regulations and the Company’s Codes of Business Conduct and Ethics. The Audit Committee also oversees the Company’s enterprise risk management (ERM) process and the comprehensive assessment of key financial, operational and regulatory risks identified by management, including cybersecurity and data protection risks. The Audit Committee discusses ERM with the full Board, which is ultimately responsible for oversight of this process.

The Compensation Committee (i) provides oversight of the risks associated with the Committee responsibilities in its charter; (ii) reviews our incentive and other compensation arrangements to confirm that compensation does not encourage unnecessary or excessive risk taking and reviews and discusses, at least annually, the relationship between risk management policies and practices, corporate strategy and executive compensation; and (iii) discusses with the Company’s management the results of its review and any disclosures required by Item 402(s) of Regulation S-K relating to the Company’s compensation risk management.

The Finance Committee oversees the Company’s major financial risk exposures and management’s monitoring, mitigation activities and policies in connection with financial risk, including: capital structure; investment portfolio, including employee benefit plan investments; financing arrangements, credit and liquidity; proposed major transactions, such as mergers, acquisitions, reorganizations and divestitures; share repurchase programs; hedging or use of derivatives; commodity risk management; cash investment; liquidity management; short-term borrowing programs; interest rate risk; foreign exchange risk; off balance sheet arrangements, if any; proposed material financially-related amendments to the Company’s indentures, bank borrowings and other instruments; and reputational risk to the extent such risk arises from the topics under discussion. The Finance Committee also reviews for adequacy the insurance coverage on the Company’s assets.

The Nominating and Governance Committee oversees risks related to the Company’s corporate governance; director succession planning; political and charitable contributions; insider trading; and reputational risk to the extent such risk arises from the topics under discussion.

Compliance and Ethics Office and Codes of Business Conduct and Ethics

Our Compliance and Ethics Office (Compliance Office), with the support of our management and Board, aims to ensure that all of our employees, business partners, franchisees and suppliers adhere to high ethical business standards, and is under the direction of our Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary. At the core of the Compliance Office is our Code of Conduct that applies to all Company employees (Employee Code of Conduct). We also have a Code of Ethics for CEO and Senior Financial Officers (CEO and Senior Financial Officer Code of Ethics) that addresses many topics and highlights specific responsibilities of our CEO and senior financial officers. We also have a Code of Business Conduct and Ethics for the members of our Board of Directors (the Board Code of Conduct, and together with the Employee Code of Conduct and the CEO and Senior Financial Officer Code of Ethics, our Codes of Business Conduct and Ethics). A major objective of the Compliance Office is to educate and raise awareness of our Employee Code of Conduct, applicable regulations, and related


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policies. Our Codes of Business Conduct and Ethics are posted on our website at www.darden.com under Investor Relations — Corporate Governance. We require all of our officers, director level employees, and certain other employees to complete an annual training course and certification regarding compliance with the Employee Code of Conduct and other Company policies. Any amendment to, or waiver of, the Codes of Business Conduct and Ethics as they relate to a member of the Board of Directors, the CEO, the Chief Financial Officer, any senior financial officer or any executive officer listed in the “Stock Ownership of Management” table on p. 22 will be disclosed promptly by posting such amendment or waiver on our website at www.darden.com under Investor Relations — Corporate Governance.

We promote ethical behavior by encouraging our employees to talk to supervisors or other personnel when in doubt about the best course of action in a particular situation. To encourage employees to raise questions and report possible violations of laws or our Codes of Business Conduct and Ethics, we will not allow retaliation for reports made in good faith. We are also committed to promoting compliance and ethical behavior by the third parties with whom we conduct business, and have implemented Codes of Business Conduct that are acknowledged by our international franchisees and certain suppliers.



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PROPOSALS TO BE VOTED ON

PROPOSAL 1 — ELECTION OF EIGHT DIRECTORS FROM THE NAMED
DIRECTOR NOMINEES

Our Board of Directors currently has seven members, and each director stands for election every year. On July 20, 2018, the Board increased the size of the Board from seven to eight members effective September 19, 2018 and approved the nomination of Mr. Wilmott for election and the nomination of the seven incumbent directors for re-election at the 2018 Annual Meeting of Shareholders.

The Nominating and Governance Committee believes that an eight member Board of Directors is currently appropriate for Darden. In keeping with good governance practices, the Board will continue to seek a diversity of talent and experience to draw upon and to ensure its ability to appropriately staff committees of the Board. The Board also will continue to self-evaluate and to consider various matters as to its size. As appropriate, the Board may determine to increase or decrease its size, including in order to accommodate the availability of an outstanding candidate.

The following eight director nominees are standing for election this year to hold office until the 2019 Annual Meeting of Shareholders or until their successors are elected and qualified. All were nominated at the recommendation of our Nominating and Governance Committee and all, except for Mr. Wilmott, have previously served on the Board. Each of the director nominees has consented to being named in this Proxy Statement and to serve as a director if elected. If a director nominee is not able to serve, proxies may be voted for a substitute nominated by the Board. However, we do not expect this to occur.

Your Board recommends that you vote FOR each of the nominees to the Board.

Board Nominees

The following information is as of the date of this Proxy Statement. Included is information provided by each nominee, such as his or her age, all positions currently held, principal occupation and business experience for the past five years, and the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years. In addition to the specific information presented below regarding the experience, qualifications, attributes and skills that led our Board to the conclusion that the nominee should serve as a director, we also believe that each of our director nominees has a reputation for integrity, honesty and adherence to high ethical standards. Darden’s mission is to be financially successful through great people consistently delivering outstanding food, drinks and service in an inviting atmosphere making every guest loyal. This mission is supported by our core values of integrity and fairness, respect and caring, diversity, always learning – always teaching, being “of service,” teamwork and excellence. As noted in our Corporate Governance Guidelines, our directors should reflect these core values, possess the highest personal and professional ethics, and be committed to representing the long-term interests of our shareholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment.

MARGARET SHÂN ATKINS
Director since 2014.

Ms. M. Shân Atkins, age 61, is a retired consumer and retail executive. She was most recently Co-Founder and Managing Director of Chetrum Capital LLC, a private investment firm, a position she held from 2001 through 2017.  Prior to founding Chetrum, she spent most of her executive career in the consumer/retail sector, including various positions with Sears, Roebuck & Co., a major North American retailer where she was promoted to Executive Vice President in 1999 and fourteen years with Bain & Company, an international management consultancy, where she was a leader in the global consumer and retail practice. She began her career as a public accountant at what is now PricewaterhouseCoopers LLP, a major accounting firm, and holds designations as a Chartered Professional Accountant and Chartered Accountant (Ontario) and as a Certified Public Accountant (Illinois). Ms. Atkins currently serves on the board of directors of SpartanNash Company, a national grocery wholesaler/retailer and distributor of food products to the worldwide U.S. military commissary system, SunOpta, Inc., a North American manufacturer of natural and organic food products, and LSC Communications, a leading provider of long and short-run printing services to the book, catalog and magazine publishing industries.  She previously served on the boards of directors of The Pep Boys - Manny, Moe & Jack, an operator of automotive parts and service stores from 2004 to 2015, Tim Hortons, a leading North American quick-serve restaurant chain from 2007 to 2014, Shoppers Drug Mart Corporation, a Canadian drugstore chain from 2005 to 2012, and Chapters, Inc., a Canadian bookstore chain from 1999 to 2001.



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The Nominating and Governance Committee concluded that Ms. Atkins is qualified and should serve, in part, because of her retail industry, operations, strategic planning and financial expertise, and public-company director experience.

JAMES P. FOGARTY
Director since 2014.

Mr. Fogarty, age 50, was the CEO and a director of Orchard Brands, a multi-channel marketer of apparel and home products, from November 2011 until its sale in July 2015, at which time he became a Senior Advisor to Bluestem Group Inc., the acquirer of Orchard Brands, through October 2015.  Prior to that, Mr. Fogarty was a private investor from November 2010 to November 2011.  From April 2009 until November 2010, Mr. Fogarty was President, CEO and director of Charming Shoppes, Inc., a multi-brand, specialty apparel retailer. Other prior executive positions held by Mr. Fogarty include Managing Director of Alvarez & Marsal, an independent global professional services firm, from August 1994 until April 2009, President and COO of Lehman Brothers Holdings (subsequent to its Chapter 11 bankruptcy filing) from September 2008 until April 2009, President and CEO of American Italian Pasta Company, the largest producer of dry pasta in North America from September 2005 through February 2008, CFO of Levi Strauss & Co., a brand-name apparel company from 2003 until 2005, and from December 2001 through September 2003, he served as Senior Vice President and CFO and for a period as a director of The Warnaco Group, a global apparel maker. Mr. Fogarty has also served as Chairman of the Board of Depomed Inc., a specialty pharmaceutical company, since October 2016. From October 2011 through September 2015, Mr. Fogarty served as a director of Regis Corporation, which owns, operates and franchises hair and retail product salons.

The Nominating and Governance Committee concluded that Mr. Fogarty is qualified and should serve, in part, because of his operational and turnaround experience, and his significant executive officer and director experience at a variety of public and private companies.

CYNTHIA T. JAMISON
Director since 2014.

Ms. Jamison, age 58, was the CFO of AquaSpy, Inc., a soil moisture monitoring irrigation company, from 2009 to 2012, when she retired.  From 1999 to 2009, she was a partner with Tatum, LLC, an executive services firm where she held various CFO or COO positions at both public and private companies.  Prior to joining Tatum, she served as CFO of Chart House Enterprises (later AM-CH, Inc.), a publicly traded restaurant company, from May 1998 until March 1999. She has also held executive positions at Allied Domecq Retailing USA, a spirits, wine and quick-service restaurant operator, Kraft General Foods, a food and beverage company, and Arthur Andersen LLP, a major accounting firm.  Since 2002, Ms. Jamison has served as a member of the board of directors for Tractor Supply Company, an operator of retail farm and ranch stores, where she currently serves as Non-Executive Chairman.  Ms. Jamison has also served as a director of Office Depot, Inc., a global supplier of office products and services, since August 2013, and Big Lots, Inc., a discount retailer, since May 2015.  Ms. Jamison’s experience includes her past service as a director of several other companies including: B&G Foods, Inc., a manufacturer of high quality, shelf-stable food and household products, Horizon Organic Holdings, an organic dairy producer and marketer, Cellu Tissue, Inc., a paper products producer, and Caribe Media, a communications company in the Dominican Republic.

The Nominating and Governance Committee concluded that Ms. Jamison is qualified and should serve, in part, because of her status as a financial expert and experienced audit committee member and chair, senior management, leadership, financial and strategic planning, corporate governance and public company executive compensation experience.

EUGENE I. (GENE) LEE, JR.
Director since 2015.

Mr. Lee, age 57, has been our President and CEO since February 2015.  Prior to that, Mr. Lee served as President and Interim CEO since October 2014, and as President and COO of the Company from September 2013 to October 2014.  He served as President, Specialty Restaurant Group from our acquisition of RARE in October 2007 to September 2013.  Prior to the acquisition, he served as RARE’s President and COO from January 2001 to October 2007.  From January 1999 until January 2001, he served as RARE’s Executive Vice President and COO.  Since November 2015, Mr. Lee has served as a director of Advance Auto Parts, Inc., a leading automotive aftermarket parts provider in North America.

The Nominating and Governance Committee concluded that Mr. Lee is qualified and should serve, in part, because of his extensive senior management and leadership experience with our Company.



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NANA MENSAH
Director since 2016.

Mr. Mensah, age 66, has been the Chairman and Chief Executive Officer of 'XPORTS, Inc., a privately held company that exports food packaging and food processing equipment to distributors and wholesalers outside of the United States, since January 2005, and previously served as Chief Executive Officer during 2003 and from 2000 through 2002. He has extensive experience as a restaurant operations executive including serving as the Chief Operating Officer of Church's Chicken, a division of AFC Enterprises, Inc. and one of the world's largest quick-service restaurant chains, from August 2003 to December 2004, and as President and Chief Operating Officer of Long John Silver's Restaurants, Inc., the world's largest chain of seafood quick-service restaurants, from 1997 until it was sold in October 1999. Additionally, Mr. Mensah has served as President, U.S. Tax Services of H&R Block Inc., a tax, mortgage and financial services company, from January 2003 until March 2003. Since 2004, Mr. Mensah has served on the board of directors of Reynolds American, Inc. (RAI), the parent company of R.J. Reynolds Tobacco Company, the second-largest U.S. tobacco company, and of other companies that manufacture or sell tobacco, smokeless tobacco, nicotine replacement therapy and digital vapor products. Mr. Mensah served on the board of directors of R.J. Reynolds Tobacco Holdings, Inc., a wholly owned subsidiary of RAI and formerly a publicly traded company, referred to as RJR, from June 1999 to July 2004.

The Nominating and Governance Committee concluded that Mr. Mensah is qualified and should serve, in part, because of his extensive experience in the restaurant industry, including operating, turnaround, international and mergers and acquisitions and his experience as a public company director.

WILLIAM S. SIMON
Director since 2014.

Mr. Simon, age 58, served as Executive Vice President of Wal-Mart Stores, Inc., a global retailer, and as President and CEO, Walmart U.S., the largest division of Wal-Mart Stores, Inc., which consists of retail department stores, from July 2010 to August 2014.  Previously, he served as Executive Vice President and COO of Walmart U.S. from March 2007 to June 2010 and Executive Vice President of Professional Services and New Business Development from March 2006 to March 2007.  Prior to joining Walmart, Mr. Simon held senior executive positions at Brinker International, Inc., a casual dining restaurant company, Diageo North America, Inc., a multinational alcoholic beverages company, and Cadbury Schweppes plc, a multinational confectionery company.  Mr. Simon also served as Secretary of the Florida Department of Management Services and served 25 years in the U.S. Navy and Naval Reserves.  Mr. Simon previously served on Darden’s Board of Directors from 2012 until 2014 and rejoined the Board of Directors in October 2014. He served on the board of directors for Agrium, Inc., an agricultural products manufacturer and retailer (now Nutrien, Ltd.), from February 2016 until May 2017.  Mr. Simon was elected to the board of directors for Chico’s FAS, an apparel retailer, in July 2016.

The Nominating and Governance Committee concluded that Mr. Simon is qualified and should serve, in part, because of his senior level executive experience in large, complex, retailing and global brand management companies and his extensive experience in retail operations, food service and restaurants, as well as consumer packaged goods.

CHARLES M. (CHUCK) SONSTEBY
Director since 2014.

Mr. Sonsteby, age 64, is currently Chairman of our Board.  He is the former Vice Chairman of The Michaels Companies, Inc., the largest arts and crafts specialty retailer in North America and parent company of Michaels Stores, Inc., a role he held from June 2016 until his retirement in October 2017. He had served as CFO and Chief Administrative Officer of that company and its predecessor from October 2010 to August 2016.  Prior to that, Mr. Sonsteby served as the CFO and Executive Vice President of Brinker International, Inc., a casual dining restaurant company, from May 2001 to October 2010.  He joined Brinker in 1990 as Director of the Tax, Treasury and Risk Management departments and thereafter served in various capacities, including as Senior Vice President of Finance from 1997 to 2001 and as Vice President and Treasurer from 1994 to 1997.  Mr. Sonsteby was elected to the board of directors of Valvoline, Inc., a producer and distributor of industrial and automotive lubricants and automotive chemicals, in September 2016. Mr. Sonsteby previously served on the board of directors of Zale Corporation, a specialty retailer of diamond and other jewelry products in North America, from November 2006 to February 2011.

The Nominating and Governance Committee concluded that Mr. Sonsteby is qualified and should serve, in part, because of his restaurant operations and executive leadership experience with several major brands, and his experience as a public company director.



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TIMOTHY J. WILMOTT
Nominee for election at this meeting.

Mr. Wilmott, age 60, has served as the Chief Executive Officer of Penn National Gaming, Inc., a leading operator and owner of gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment, since November 2013, and prior to that, as President and Chief Operating Office from February 2008 to November 2013. Mr. Wilmott has served on the Board of Directors of Penn National Gaming, Inc., since September 2014. In addition, Mr. Wilmott is Chairman of the American Gaming Association. Prior to joining Penn National Gaming, Mr. Wilmott served as Chief Operating Officer of Harrah’s Entertainment, Inc. (now Caesars Entertainment Corporation), from 2003 through 2007 and Division President, Eastern Division from 1997 to 2003. Prior to that, Mr. Wilmott held various management positions at Harrah’s properties from 1988 through 1997.

The Nominating and Governance Committee concluded that Mr. Wilmott is qualified and should serve, in part, because of his multi-unit entertainment business operations and executive leadership experience, including mergers and acquisitions and international business operations, and his experience as a public company director.

PROPOSAL 2 — ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION

In accordance with SEC rules, the Board asks shareholders for advisory approval of the Company’s executive compensation on an annual basis. Accordingly, we are asking our shareholders to provide an advisory, nonbinding vote to approve the compensation awarded to our NEOs, as we have described it in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement, beginning on pp. 24 and 36, respectively.

As described in detail in the “Compensation Discussion and Analysis” section beginning on p. 24, the Compensation Committee oversees the executive compensation program and compensation awarded, adopting changes to the program and awarding compensation as appropriate to reflect Darden’s circumstances and to promote the main objectives of the program. These objectives include: to help us attract, motivate, reward and retain superior leaders who are capable of creating sustained value for our shareholders, and to promote a performance-based culture that is intended to align the interests of our executives with those of our shareholders.

We are asking our shareholders to indicate their support for our NEO compensation. We believe that the information we have provided in this Proxy Statement demonstrates that our executive compensation program was designed appropriately and is working to ensure that management’s interests are aligned with our shareholders’ interests to support long-term value creation.

You may vote for or against the following resolution, or you may abstain. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and procedures described in this Proxy Statement.

Resolved, that the compensation awarded to Darden’s NEOs for fiscal 2018, as disclosed in this Proxy Statement pursuant to SEC rules, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion, is hereby APPROVED.

While this vote is advisory and not binding on our Company, the Board and the Compensation Committee expect to consider the outcome of the vote, along with other relevant factors, when considering future executive compensation decisions.

Your Board recommends that you vote FOR approval of the foregoing resolution.

PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board is responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm. The Audit Committee has appointed KPMG LLP (KPMG) as our independent registered public accounting firm for the fiscal year ending May 26, 2019. KPMG has served as our independent registered public accounting firm continuously since 1996.



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The Audit Committee annually reviews KPMG’s qualifications, performance, independence and fees in making its decision whether to engage KPMG. The focus of the process is to select and retain the most qualified firm to perform the annual audit. During the review and selection process, the Audit Committee considers a number of factors, including:

Recent and historical KPMG audit performance;

The relevant experience, expertise and capabilities of KPMG and our specific audit engagement team in relation to the nature and complexity of our business;

A review of KPMG’s independence and internal quality controls;

Any legal or regulatory proceedings that raise concerns about KPMG ’s qualifications or ability to continue to serve as our independent auditor, including reports, findings and recommendations of the Public Company Accounting Oversight Board (PCAOB);

The appropriateness of KPMG’s fees for audit and non-audit services; and

The length of time that KPMG has served as our independent auditor, the benefits of maintaining a long-term relationship and controls and policies for ensuring that KPMG remains independent.

In order to assure continuing auditor independence, in conjunction with the assessment above and the mandated rotation of the audit firm’s lead engagement partner, the Audit Committee and its chairperson are involved when the selection of a new lead engagement partner is required. In addition, the Audit Committee is responsible for the audit fee negotiations with KPMG.

Based on its annual review, the Audit Committee and the Board believe that the continued retention of KPMG to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders.

Shareholder approval of this appointment is not required, but the Board is submitting the selection of KPMG for ratification in order to obtain the views of our shareholders. If the appointment is not ratified, the Audit Committee will reconsider its selection. Even if the appointment is ratified, the Audit Committee, which is solely responsible for appointing and terminating our independent registered public accounting firm, may in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. Representatives of KPMG are expected to be present at the Annual Meeting and will be given an opportunity to make a statement and to respond to appropriate questions by shareholders.

Your Board recommends that you vote FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 26, 2019.

PROPOSAL 4 — SHAREHOLDER PROPOSAL REQUESTING THAT THE COMPANY ISSUE A REPORT ON THE FEASABILITY OF ADOPTING A POLICY TO ELIMINATE THE USE OF MEDICALLY IMPORTANT ANTIBIOTICS FOR DISEASE PREVENTION IN ITS SUPPLY CHAIN

Green Century Equity Fund, 114 State Street, Suite 200, Boston, MA 01209, beneficial owner of 2,927 of our common shares as of April 9, 2018, has notified us that it intends to present the following proposal for consideration at the Annual Meeting. In accordance with federal securities regulations, we have included the text of the proposal and supporting statement exactly as submitted by the proponent. We are not responsible for the content of the proposal or the supporting statement or any inaccuracies they may contain.

Shareholder Proposal and Supporting Statement

Whereas: Companies that are exposed to the routine use of medically important antibiotics through their supply chains may face a number of business risks including reputational damage, loss of market share, and regulatory risk due to increasing societal concerns surrounding the human health impacts related to excessive antibiotic use in animal agriculture.

The World Health Organization and the Centers for Disease Control and Prevention have determined that antibiotic resistance is a global public health crisis that threatens to overturn many of the medical advances made over the last century. Antibiotic resistance causes 2 million illnesses and 23,000 deaths annually in the U.S., costing the economy $35 billion.



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A major contributor to antibiotic resistance in humans is the misuse and overuse of medically important antibiotics in meat and poultry production. Over 70 percent of medically important antibiotics in the U.S. are sold for use in livestock. Rather than being used only to treat sick animals, these drugs are often deployed for routine uses, such as to promote faster growth and prevent disease in crowded, unsanitary farm conditions.

Darden Restaurants has complied with federal law by eliminating the use of medically important antibiotics for growth promotion. However, only 10-15% of antibiotics used in animal agriculture are for growth promotion. Nearly all public health experts have concluded that these efforts are not adequate to address the antibiotic resistance crisis and will have limited impact on total agricultural antibiotic use as they allow for the continued routine use of antibiotics for disease prevention.

Darden is lagging its peers, many of which have implemented antibiotic use policies that far exceed regulatory compliance. Fourteen of the top 25 U.S. restaurant chains, including McDonald’s, KFC, and Taco Bell have implemented antibiotic use policies that surpass Darden’s practices, leading Darden to score an ‘F’ in all three iterations of a highly publicized annual scorecard ranking restaurants’ antibiotic stewardship. Panera Bread, Chipotle and the Cheesecake Factory prohibit routine antibiotic use in all livestock supply chains. Major poultry producers including Tyson Foods and Perdue Farms have completely eliminated the use of antibiotics for retail chicken.

Investor pressure around antibiotic use in meat supply chains is growing. A similar shareholder proposal filed with Sanderson Farms, the third largest poultry producer in the U.S. and a known supplier to Darden Restaurants, received 43 percent support of votes cast in 2018, up from 30 percent in 2017.

Regulatory action may also create new pressure on laggard companies. In 2017, Maryland joined California in enacting a law to ban the routine use of antibiotics in the production of farm animals. Similar bills addressing routine antibiotic use have been introduced in Oregon, New York, Minnesota, New Jersey, and West Virginia.

Resolved: Shareholders request that Darden Restaurants issue a report to shareholders, at reasonable cost and omitting proprietary information, evaluating the feasibility of adopting a policy to eliminate the use of medically important antibiotics for disease prevention in its supply chain.

Board of Directors’ Response

The Board recommends a vote AGAINST this proposal. The Board has carefully considered the proposal and believes that the report requested by the proposal is unnecessary because:

Darden has a publicly available position on antibiotic use that reflects the need to balance animal well-being, food safety, supply chain security and broader health concerns;

In March 2016, we adopted Food Principles that address the Company’s commitment to the safety and sustainability of our supply chain, which were developed after extensive collaboration between our Company, its suppliers and other stakeholders; and

We believe that preparing the report requested by the shareholder proponent would not provide tangible benefits to shareholders or our restaurant guests because adopting such a policy could put us at a competitive disadvantage by creating the possibility of supply shortages for our key protein menu items or increased costs for our guests.

Darden Position on Antibiotic Use and Our Food Principles

Our ingredients are carefully sourced from suppliers who share Darden’s commitment to maintaining best-in-class food safety, quality, sustainability and ethical business conduct.

Antibiotic use in animals is a complex subject and we acknowledge that our guests want to understand more about where our ingredients come from and how they are produced. Darden continues to study the issue and believes that discussions regarding antibiotic use must reflect a variety of considerations, including an understanding that responsible use of antibiotics is one way farmers keep animals healthy and enhance food safety. The Company consulted extensively with its internal subject matter experts, suppliers and other stakeholders to develop the Darden Food Principles to demonstrate the Company’s commitment to providing our guests with great food that is safely and sustainably sourced. The full text of the Food Principles is posted on the Darden corporate website at https://www.darden.com/citizenship/plate/food-principles.



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The very first commitment Darden made under the Food Principles was a commitment to, by December 2016, phase out use of antibiotics for growth promotion in farm animals and require that all of our land-based protein suppliers only use shared-class antibiotics (i.e. those used for both humans and animals) to treat, prevent and control animal illness under the supervision of a veterinarian. Beginning January 1, 2017, our suppliers are prohibited by law from using antibiotics important to human medicine for growth promotion of farm animals and we monitor their compliance with laws and our Food Principles.

We also see this issue related to animal well-being, which we take very seriously. We have a responsibility to ensure that animals are treated with respect and care in the process of providing the nutritious food that is served in our restaurants. Our approach to animal well-being and auditing our suppliers is to ultimately ensure the ‘Five Freedoms’ of care throughout the life of farm animals. This guidance on humane animal treatment directs our practices as well as our selection of, and relationship with, sourcing partners.

In addition to the Food Principles, Darden maintains our Supplier Code of Conduct, which outlines our expectations for our suppliers in areas such as ethical business practices; human rights and labor laws; environmental, health and safety practices; and legal compliance.

We continue to engage with our suppliers on our Food Principles and commitments to our guests, and have reviewed these important values with them. As we make progress in these important areas, we will continue to share updates around antibiotic usage, partially-hydrogenated oils, and animal welfare, including cage-free eggs and gestation crate-free housing systems.

Adopting the Requested Policy Would Not Benefit Shareholders and May Put Us at a Competitive Disadvantage

We have carefully crafted these principles for food sourcing to ensure that we can maintain best-in-class food safety, quality, sustainability and animal well-being. The proposal asks the Company to focus on one small segment of one criteria — certain types of antibiotic use — when sourcing our meat products, without taking into consideration the effect that focusing on that criteria would have on the ability of the Company to continue to maintain best-in-class status in the other areas.

After reviewing the facts and considering (a) the discussions held with stakeholders when we developed our Food Principles, (b) food safety guidelines and (c) laws and regulations, we do not believe that preparing a feasibility report would benefit shareholders or our guests. Disrupting the balance of interests inherent in our best-in-class objectives as requested by this proposal would create risk to the safety and stability of our supply chain and increase costs for our protein products, thereby raising prices we must charge our guests and expending Company resources while providing no tangible benefit to shareholders.

We intend to provide periodic updates to stakeholders as we move forward with the implementation of the Food Principles and when we achieve the related commitments. We will continue to provide these updates to the public through ongoing reporting that we post to our website at https://www.darden.com/citizenship/plate/food-principles. We do not believe that a special report to shareholders is necessary or an efficient use of Company resources.

Accordingly, your Board recommends that you vote AGAINST this proposal.



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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES

Board of Directors

Meetings. At the 2017 Annual Meeting, the following eight directors were elected to the Company’s Board of Directors: Margaret Shân Atkins, Bradley D. Blum, James P. Fogarty, Cynthia T. Jamison, Eugene I. Lee, Jr., Nana Mensah, William S. Simon and Charles M. Sonsteby. Mr. Blum resigned from the Board on March 9, 2018.

During the fiscal year ended May 27, 2018, the Board met four times. For the period of his or her Board service in fiscal 2018, each incumbent director attended at least 75 percent of the aggregate of the total number of meetings of the Board and the standing committees on which the director served.

Communications with Board. We believe that communication between the Board, shareholders and other interested parties is an important part of our corporate governance process. To this end, the Board has adopted Shareholder Communication Procedures that are available at www.darden.com under Investor Relations — Corporate Governance. In general, shareholders and other interested parties may send communications to the attention of the Board, any individual director or the non-employee directors as a group, through the Chairman of the Board. Communications may be sent in writing or via email to: Charles M. Sonsteby, Chairman of the Board, Darden Restaurants, Inc., c/o Matthew R. Broad, Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary, 1000 Darden Center Drive, Orlando, Florida 32837, email: chairman@darden.com.

The Corporate Secretary will act as agent for the Chairman in facilitating direct communications to the Board. The Corporate Secretary will review, sort and summarize the communications. The Corporate Secretary will not, however, “filter out” any direct communications from being presented to the Chairman without instruction from the Chairman, and in such event, any communication that has been filtered out will be made available to any non-employee director who asks to review it. The Corporate Secretary will not make independent decisions with regard to what communications are forwarded to the Chairman. The Corporate Secretary will send a reply to the sender of each communication acknowledging receipt of the communication.

Identifying and Evaluating Director Nominees. Our Nominating and Governance Committee has adopted a Director Nomination Protocol that, together with our Bylaws, describes in detail the process we use to fill vacancies and add new members to the Board. The Protocol is available at www.darden.com under Investor Relations — Corporate Governance, as Appendix A to the Nominating and Governance Committee charter.

Under the Director Nomination Protocol, in general, while there are no specific minimum qualifications for nominees, any candidate for service on the Board should possess the highest personal and professional ethics and be committed to representing the long-term interests of our shareholders. Director candidates should be committed to our core values (integrity and fairness, respect and caring, diversity, always learning – always teaching, being “of service,” teamwork and excellence) and have an inquisitive and objective perspective, practical wisdom, mature judgment and a wide range of experience in the business world. We also will consider the candidate’s independence under applicable NYSE listing standards and our Corporate Governance Guidelines. In identifying and evaluating nominees for the Board, the Board assesses the background of each candidate in a number of different ways including a wide variety of qualifications, attributes and other factors and recognizes that diverse viewpoints and experiences enhance the Board’s effectiveness. When reviewing and making initial recommendations on new candidates, the Nominating and Governance Committee considers how each prospective member’s unique background, expertise and experience will contribute to the Board’s overall perspective and ability to govern. In identifying or selecting nominees for the Board, the Company’s Corporate Governance Guidelines and the Director Nomination Protocol provide that the Company seeks Board members who will bring to the Board a deep and wide range of experience in the business world and who have diverse problem-solving talents. We seek people who have demonstrated high achievement in business or another field, so as to enable them to provide strategic support and guidance for the Company. The Company strives to maintain a Board that reflects the gender, ethnic, racial and other diversity of our work force and restaurant guests, and also fosters diversity of thought. Recruiting, hiring and nurturing the careers of women and minorities and increasing the diversity of our suppliers are top priorities, and the Company also intends to maintain the diversity of its Board.

The Nominating and Governance Committee will identify potential candidates to recommend to the full Board and a search firm may be engaged to identify additional candidates and assist with initial screening. The Nominating and Governance Committee and the Chairman of the Board will perform the initial screening and review the credentials of all candidates to identify candidates that they feel are best qualified to serve. The Chairman of the Nominating and Governance Committee, working with the Chairman of the Board, will obtain background and reference information, as appropriate, for the candidates under consideration. The Nominating and Governance Committee will review all available information concerning the candidates’ qualifications and, in conjunction with the Chairman of the Board, will identify the candidate(s) they feel are best qualified to serve on the Company’s


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Board. The Chairman of the Nominating and Governance Committee, the CEO, and the Chairman of the Board (or the Chairman of the Board’s delegate from the Board) will meet with the leading candidates to further assess their qualifications and fitness, and to determine their interest in joining the Board. Following the meeting, the Board member participants and the Chairman of the Board will make a recommendation concerning the candidate to the Nominating and Governance Committee, which will consider whether to recommend the candidate to the full Board for election.

Director Candidates Recommended by Shareholders. The Nominating and Governance Committee will consider candidates recommended by shareholders. The procedures that shareholders should use to nominate directors are provided in our Bylaws. There are no differences in the manner of evaluation if the nominee is recommended by a shareholder.

Director Attendance at Annual Meeting of Shareholders. Our Corporate Governance Guidelines provide that directors are expected to attend all scheduled Board and committee meetings and the annual meeting of shareholders. Each of the directors standing for reelection this year who were then in office attended the 2017 Annual Meeting.

Board Committees and Their Functions

General. Our Board has four standing committees that operate under charters adopted by the Board: Audit, Compensation, Finance, and Nominating and Governance. Each charter is available at www.darden.com under Investor Relations — Corporate Governance. Copies are available in print free of charge to any shareholder upon written request addressed to our Corporate Secretary. Each member of every committee is an independent director as defined in our Corporate Governance Guidelines, the NYSE listing standards and the Exchange Act requirements. All Board committees have the authority to retain outside advisors. Unless otherwise required by applicable laws, regulations or listing standards, all major decisions are considered by the Board as a whole.

Audit Committee. Our Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee consists of three members: Ms. Jamison as the Chair, and Ms. Atkins and Mr. Simon as members.

The Board has determined that Mses. Atkins and Jamison and Mr. Simon are each an “audit committee financial expert” as such term is defined by SEC rules, and therefore possess financial management expertise as required of at least one Audit Committee member by the NYSE listing standards. In addition, the Board has determined that all members of the Audit Committee are financially literate under the NYSE listing standards. The Audit Committee met seven times during fiscal 2018 and has sole responsibility for appointing and terminating our independent registered public accounting firm. The Audit Committee’s primary purpose is to assist the Board in its oversight responsibilities to shareholders, specifically with respect to:

The integrity of our financial statements and our internal controls over financial reporting;

The qualifications and independence of our independent registered public accounting firm and internal auditing function;

The provision of a channel of communication among the Board, the independent auditor, internal audit function, management and other concerned individuals;

The assistance to the Board in meeting its fiduciary duties to shareholders and the Company;

The performance of our internal audit function and independent registered public accounting firm; and

The risks associated with the foregoing.

Some of the Audit Committee’s specific responsibilities include the following:

Review and discuss the Company’s unaudited quarterly and audited annual financial statements with management and the independent auditor prior to filing the Company’s Quarterly Reports on Form 10-Q or Annual Report on Form 10-K, respectively;

Review with management and the independent auditor the Company’s quarterly and year-end financial results prior to the public release of earnings;

Directly appoint, retain, compensate, oversee, evaluate and terminate the Company’s independent auditor;


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Pre-approve all non-audit services to be performed by the independent auditor, in accordance with the policy regarding such pre-approval adopted by the Audit Committee;

At least annual consider the independence of the independent auditor;

Oversee the Company’s enterprise risk management process and review and evaluate the policies and practices developed and implemented by management with respect to risk assessment and risk management; and

Establish procedures for receipt, retention and treatment of complaints received by the Company on accounting, internal controls over financial reporting or auditing matters, as well as for confidential, anonymous submissions by Company employees of concerns regarding accounting or auditing matters.

Another purpose of our Audit Committee is to furnish the report required by the SEC’s proxy rules that appears below in this Proxy Statement under the heading “Audit Committee Report.”

Compensation Committee. The Compensation Committee consists of three members: Mr. Fogarty as the Chair and Ms. Jamison and Mr. Mensah as members.

The Compensation Committee met six times during fiscal 2018. The primary responsibilities of our Compensation Committee include the following:

Annually review and approve corporate goals and objectives relevant to the CEO’s compensation, evaluate the CEO’s performance in light of those goals and objectives, and make recommendations to the other independent directors who will, together with the Compensation Committee, determine and approve the CEO’s compensation based on this evaluation (the CEO may not be present during any Compensation Committee deliberations or voting with respect to his compensation);

Make recommendations to the other independent directors who will, together with the Compensation Committee, review and approve the compensation for employee directors other than the CEO;

Periodically, as and when appropriate, recommend to the other independent directors who will, together with the Compensation Committee, review and approve the following as they affect the CEO and other employee directors: (a) any employment agreements and severance arrangements; (b) any change in control agreements and change in control provisions affecting any elements of compensation and benefits; and (c) any special or supplemental compensation and benefits, including supplemental retirement benefits and the perquisites provided during and after employment under a “plan” as defined under Item 402(a)(6)(ii) of the SEC’s Regulation S-K;

Review and approve the compensation of and compensation policy for the executive officers and such other employees of the Company and its subsidiaries as directed by the Board, other than the CEO and other employee directors, including but not limited to: (a) the annual base salary level, (b) the annual cash bonus incentive opportunity level under the applicable annual incentive bonus plan, and (c) the long-term incentive opportunity level under the applicable long-term incentive plan for each executive officer (other than the CEO and other employee directors);

Periodically, as and when appropriate, review and approve the following as they affect the executive officers other than the CEO and other employee directors: (a) any employment agreements and severance arrangements; (b) any change in control agreements and change in control provisions affecting any elements of compensation and benefits; and (c) any special or supplemental compensation and benefits, including supplemental retirement benefits and the perquisites provided during and after employment under a “plan” as defined under Item 402(a)(6)(ii) of the SEC’s Regulation S-K;

Annually review and approve the objective performance measures and the performance targets for executive officers participating in the Company’s annual incentive bonus plans and long-term incentive plans and certify the performance results under such measures and targets;

Determine, amend and monitor compliance with the stock ownership guidelines applicable to executive officers and take actions to address any violation of the stock ownership guidelines;



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Review and discuss with management the Compensation Discussion and Analysis required to be included in our Proxy Statement and Annual Report on Form 10-K and, based on such review and discussion, make a recommendation to the Board that the Compensation Discussion and Analysis be so included;

Prepare a Compensation Committee Report for inclusion in our Proxy Statement and/or annual Form 10-K;

Monitor the Company’s compliance with the requirements under the Sarbanes-Oxley Act of 2002 relating to the participation of directors and officers in the Company’s compensation and employee benefit plans or programs;

Oversee the Company’s compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and the frequency of such votes, and any applicable requirements under NYSE rules that shareholders approve equity compensation plans;

Provide recommendations to the Board of Directors on compensation-related proposals to be considered at the Company’s annual meeting, including the frequency of advisory votes on executive compensation;

Review and consider the results of any advisory vote on executive compensation and otherwise oversee the Company’s engagement with shareholders on the subject of executive compensation;

Review and make recommendations to the Board with respect to adopting, amending and overseeing the policies and practices related to the Company’s recoupment, or the forfeiture by employees, of incentive compensation;

Establish, terminate, amend or modify Company’s employee benefit plans or programs; and

Provide oversight of the risks associated with the foregoing.

The Compensation Committee may delegate its power under the Darden Restaurants, Inc. 2015 Omnibus Incentive Plan, as amended (the 2015 Plan), to one or more directors, including a director who is also a senior executive officer of Darden, except that the Compensation Committee may not delegate its powers under the 2015 Plan with regard to our executive officers or directors who are subject to Section 16 of the Exchange Act, or in such a manner as would cause the Plan to not comply with the requirements of Section 162(m) of the Internal Revenue Code. Under its charter, the Compensation Committee may delegate any of its administrative responsibilities under our compensation and benefit plans, subject to the applicable rules of the SEC, NYSE and the Internal Revenue Code, to any other person or persons, to the extent permitted by law.

See “Compensation Discussion and Analysis — Process for Determining Fiscal 2018 Executive Compensation — Independent Consultant” for information with regard to the role of consultant in the Compensation Committee’s decision making process.

Finance Committee. The Finance Committee consists of three members: Mr. Sonsteby as the Chair and Messrs. Fogarty and Mensah as members.

The Finance Committee met four times during fiscal 2018. The primary responsibilities of our Finance Committee are to:

Review financial policies and performance objectives developed by management pertaining to cash flow, capital spending and finance requirements; cash and debt balances, other key credit metrics, and credit ratings; dividend policy; investment criteria, including capital investment hurdle rates; and financial risk management strategies, including hedging and the use of derivatives;

Review significant changes to our capital structure, financial arrangements, capital spending and acquisition and disposition plans and making recommendations as needed to the Board regarding the financial structure, financial condition and financial strategy of the Company including the timing and maturity of debt, terms and interest rates of individual issues; common stock sales, repurchases or splits and any changes in dividends; proposed mergers, acquisitions, divestitures, joint ventures and strategic investments; any material diversification of the Company’s business; and authorization for any material prepayment, redemption or repurchase of debt for the purpose of satisfying sinking fund obligations;



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Review the Company’s proposed annual consolidated budget included in its business plan, recommending such budget to the full Board for approval, and periodically reviewing the Company’s performance against such budget as reasonably required or requested by the Board;

Review material banking relationships and lines of credit;

Reviewing for adequacy the insurance coverage on the Company’s assets;

Reviewing, to the extent material, the financial impact to the Company of existing and proposed compensation and employee benefit programs; and

Periodically assessing the effectiveness of the Company’s investor relations program and its interaction with the research analyst community.

Nominating and Governance Committee. The Nominating and Governance Committee consists of three members: Mr. Simon as the Chair and Mses. Atkins and Jamison as members.

The Nominating and Governance Committee met five times during fiscal 2018. The primary responsibilities of the Nominating and Governance Committee are to:

Identify individuals qualified to become Board members, consistent with criteria approved by the Board, and select, or recommend that the Board select, the director nominees for the next annual meeting of shareholders, or in the case of a vacancy on the Board, recommend an individual to fill such vacancy;

Review and recommend to the Board the appropriate organizational and board leadership structure;

Review the adequacy of our corporate governance principles on a regular basis;

Develop and recommend to the Board a set of corporate governance guidelines applicable to the Company;

Review the Company’s stock ownership guidelines for non-employee directors, recommend to the Board revisions to such guidelines as it deems desirable or appropriate, and monitor compliance with such guidelines;

Oversee the Board’s self-evaluation process, and provide the Board advice regarding Board succession;

Recommend to the Board membership for each Board committee and any changes to the Board’s committee structure as it deems advisable;

Review the Company’s compliance with SEC and NYSE rules and other applicable legal or regulatory requirements pertaining to corporate governance; and

Provide oversight of the risks associated with the foregoing.

Among the Nominating and Governance Committee’s other specific duties, it also is responsible for:

Reviewing resignations tendered by a director if, in an uncontested election, the director does not receive the vote of at least a majority of the votes cast at any meeting for the election of directors, and recommending to the Board whether to accept or reject the tendered resignation, or whether other action should be taken; and

Making recommendations to the other independent directors who will, together with the Nominating and Governance Committee, determine and approve the compensation for the non-employee independent directors.

The Nominating and Governance Committee has adopted a Director Nomination Protocol that, together with our Bylaws, describes the process by which we intend to fill vacancies and add new members to the Board. The Protocol is described in more detail above under the subheading “Board of Directors — Identifying and Evaluating Director Nominees.” The Nominating and Governance Committee also considers questions of possible conflicts of interest involving our directors and our senior executive officers and recommends to the Board those directors determined to satisfy the requirements for “independence” as set forth in our Corporate Governance Guidelines and the NYSE listing standards.


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DIRECTOR COMPENSATION

Compensation of Non-Employee Directors

The terms of the Director Compensation Program apply to all directors who are elected to the Board and are not employees of the Company or any of its subsidiaries. Directors who also are our employees do not receive additional compensation for serving on the Board. Shares for equity awards pursuant to the Director Compensation Program are drawn from our shareholder-approved equity compensation plan in effect at the time and pursuant to which we are authorized to grant shares of our common stock and share-based awards to directors. Currently, grants of common stock and share-based awards to directors are made from the 2015 Plan. All of our non-employee directors have been determined by the Board to be independent under applicable NYSE listings standards and our Corporate Governance Guidelines.

Our Nominating and Governance Committee periodically reviews our Director Compensation Program and recommends any changes to the Board for approval. The Nominating and Governance Committee acts with the assistance of Pearl Meyer and Partners, the Board’s independent compensation consultant. Pearl Meyer and Partners provides market data on director compensation programs at comparable companies, including companies in the peer groups described in the “Compensation Discussion and Analysis.”

Current Director Compensation Program

Our current Director Compensation Program, which has been in effect since September 2017, is as follows:

An annual cash retainer of $85,000 for all directors;

An annual cash retainer for the Chairman of the Board of $30,000;

An annual cash retainer for the Chairs of the Audit, Compensation, Finance and Nominating and Governance Committees of $30,000, $20,000, $15,000 and $15,000, respectively;

An annual cash retainer for the members of the Audit, Compensation, Finance and Nominating and Governance Committees of $15,000, $10,000, $7,500 and $7,500, respectively; and

An annual equity grant, which will be paid 100 percent in the form of restricted stock units (RSUs) and will have a fair market value of $130,000 at the date of grant.

The annual cash retainers are due and paid quarterly, in arrears, unless the director elects to defer the payment. Directors may elect to receive, in lieu of their cash compensation, RSUs of equal value to the foregone cash fees. If the director chooses to defer payment by receiving RSUs, he or she will receive dividend equivalents on such RSUs.

For the annual equity grant delivered in RSUs, the number of RSUs received equals the award value divided by the fair market value of our common stock on the date of grant. The RSUs vest on the earlier of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of shareholders. A director may elect to defer receipt of these RSUs until completion of Board service. Directors receive dividend equivalents on the RSUs to the extent the RSUs vest. The annual cash retainers and equity grants are pro-rated for directors who serve only a portion of the fiscal year.

Each of our directors is required to own the Company’s common shares with a value of at least five times the annual Board cash retainer, with a mandatory hold on all shares until the ownership guideline is achieved. However, the directors may sell enough shares to pay taxes in connection with their awards, even if the ownership guideline has not yet been achieved. As of May 27, 2018, all of the directors were in compliance with the stock ownership guidelines.

The Company reimburses directors for travel to Board meetings and related expenses, and for costs incurred in connection with attending continuing education programs. In addition, the Company provides a dining benefit to our directors because we believe it is important for our directors to experience dining in our restaurants in order to better perform their duties to our Company.



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Fiscal 2018 Compensation of Non-Employee Directors

The table below sets forth, for each person who served as a non-employee director during fiscal 2018, the amount of fees earned or paid in cash, the number of stock awards granted and all other compensation for his or her service in fiscal 2018. Fees earned that were paid in the form of RSUs are detailed in the notes to the table.
Name
 
Fees
Earned or
Paid in
Cash
($)(1)
 
Stock
Awards
($)(2)
 
Option
Awards
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
($)
 
All Other
Compensation
($)(3)
 
Total
($)
M. Shân Atkins
 
104,341

 
129,989

 

 

 

 

 
234,330

Bradley D. Blum
 
81,010

 
129,989

 

 

 

 

 
210,999

James P. Fogarty
 
109,341

 
129,989

 

 

 

 

 
239,330

Cynthia T. Jamison
 
123,242

 
129,989

 

 

 

 

 
253,231

Nana Mensah
 
99,341

 
129,989

 

 

 

 

 
229,330

William S. Simon
 
99,973

 
129,989

 

 

 

 

 
229,962

Charles M. Sonsteby
 
126,841

 
129,989

 

 

 

 

 
256,830


(1) 
Includes all fees earned, including annual Board retainer, Board and committee chair retainers and committee member retainers.

The annual retainers were payable pro rata at the end of each fiscal quarter and the amounts shown may have been delivered as cash or restricted stock units. The restricted stock units granted are immediately vested, however the settlement of the restricted stock units may be deferred. Amounts received as restricted stock units were as follows: Mr. Mensah, 1,146 units with a market value of $99,178; Mr. Sonsteby, 250 units with a market value of $20,920. The number of units delivered is based on the amount of compensation earned divided by the closing price for our common stock on the NYSE on the grant date.
    
(2) 
Amounts in this column represent the grant date fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASC Topic 718) for fiscal 2018. The stock award is delivered in restricted stock units which vest on the earlier of (i) the first anniversary of the grant date or (ii) the date of the next annual meeting of shareholders. Each of our directors received an annual restricted stock unit award of 1,565 units on September 21, 2017 with a fair market value of $129,989 based on the closing price of our common stock ($83.06) on the NYSE on September 21, 2017. Except for Messrs. Blum, Fogarty and Simon, all other directors chose to defer their stock award.

The aggregate number of shares subject to outstanding stock-based awards as of May 27, 2018 for each director is provided in the table below:
 
 
Outstanding Awards
Name
 
Stock
Options
Restricted Stock Units
M. Shân Atkins
 
3,123
5,893
Bradley D. Blum
 
3,123
James P. Fogarty
 
3,123
7,507
Cynthia T. Jamison
 
3,123
7,815
Nana Mensah
 
4,671
William S. Simon
 
2,418
1,565
Charles M. Sonsteby
 
3,123
10,461

(3) 
The Company provides a dining benefit to our directors to experience dining in our restaurants. This benefit does not appear in the Director Compensation Table because the value did not meet the minimum disclosure requirements established by the SEC.


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STOCK OWNERSHIP OF MANAGEMENT

This table shows the beneficial ownership of our common shares as of May 27, 2018 by our directors, director nominees, executive officers named in the Summary Compensation Table, and all of our directors and executive officers as a group. Under applicable SEC rules, the definition of beneficial ownership for purposes of this table includes shares over which a person has sole or shared voting power, or sole or shared power to invest or dispose of the shares, whether or not a person has any economic interest in the shares, and also includes shares for which the person has the right to acquire beneficial ownership within 60 days of May 27, 2018. Except as otherwise indicated, a person has sole voting and investment power with respect to the common shares beneficially owned by that person.
Name of Beneficial Owner
 
Amount and
Nature of
Beneficial
Ownership
of Common
Shares(1)
 
Common
Shares
Beneficially
Owned as
Percent of
Common
Shares
Outstanding(2)
M. Shân Atkins
 
9,733

 
*
Matthew R. Broad
 

 
*
Todd A. Burrowes
 
3,421

 
*
Ricardo Cardenas
 
81,276

 
*
James P. Fogarty
 
18,934

 
*
David C. George
 
270,495

 
*
Cynthia T. Jamison
 
9,793

 
*
Sarah H. King
 
1,326

 
*
Eugene I. Lee, Jr.
 
296,426

 
*
John W. Madonna
 
1,406

 
*
Nana Mensah
 
3,106

 
*
William S. Simon
 
12,666

 
*
Charles M. Sonsteby
 
18,019

 
*
Timothy J. Wilmott
 

 
*
All directors and executive officers as a group (14 persons)
 
805,267

 
*
 
*
Less than one percent.

(1) 
Includes common shares subject to stock options exercisable within 60 days of May 27, 2018, as follows: Ms. Atkins, 3,123; Mr. Cardenas, 72,013; Mr. Fogarty, 3,123; Mr. George, 236,258; Ms. Jamison, 3,123; Mr. Lee, 194,813; Mr. Simon, 2,418; Mr. Sonsteby, 3,123; and all directors and executive officers as a group, 592,967 shares.
    
Includes restricted stock units awarded to directors that will settle in stock and that are vested or will vest within 60 days of May 27, 2018, as follows: Ms. Atkins, 4,328; Mr. Fogarty, 5,942; Ms. Jamison, 6,250; Mr. Mensah, 3,106 and Mr. Sonsteby, 8,896.

(2) 
For any individual or group, the percentages are calculated by dividing (a) the number of shares beneficially owned by that individual or group, which includes shares underlying options exercisable within 60 days and restricted stock units settled in stock described in footnote 1 above, by (b) the sum of (i) the number of shares outstanding on May 27, 2018, plus (ii) the number of shares underlying options exercisable within 60 days and restricted stock units described in footnote 1 above held by just that individual or group.





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STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS

This table shows all shareholders that we know to beneficially own more than five percent of our outstanding common shares as of May 27, 2018. As indicated in the footnotes, we have based this information on reports filed by these shareholders with us and with the SEC.
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership(1)
Percent of Class(2)
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
12,763,943(3)
10.33%
BlackRock, Inc.
40 East 52nd Street
New York, NY 10022
11,647,312(4)
9.43%

(1) 
“Beneficial ownership” is defined under the SEC rules to mean more than ownership in the usual sense. Under applicable rules, you beneficially own our common shares not only if you hold them directly but also if you indirectly (such as through a relationship, a position as a director or trustee, or a contract or understanding) have or share the power to vote, sell or acquire them within 60 days.

(2) 
The figure reported is a percentage of the total of 123,540,453 common shares outstanding on May 27, 2018, excluding treasury shares.

(3) 
Based on a Schedule 13G/A filed February 9, 2018, as of December 31, 2017, The Vanguard Group, Inc. beneficially owned an aggregate of 12,763,943 shares, and had sole power to vote 174,997 shares, shared voting power to vote 32,497 shares, sole dispositive power over 12,555,620 shares, and shared dispositive power over 208,323 shares.

(4) 
Based on a Schedule 13G/A filed February 8, 2018, as of December 31, 2017, BlackRock, Inc. beneficially owned an aggregate of 11,647,312 shares, and had sole power to vote 10,436,320 shares and sole dispositive power over 11,647,312 shares.



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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

The Compensation Committee believes that our success depends in large measure on our ability to attract and retain highly qualified officers who are motivated to put forth maximum effort on our behalf and on behalf of our shareholders. We have a strong link between pay and performance: our compensation programs are designed to align the performance objectives of our executives with the interests of shareholders.

The strategy continues to work: the Company’s fiscal 2018 performance was strong, demonstrated by the financial results described below. This strong performance was a result of the focused and strategic leadership of the Board and the executive leadership team. Our “Back-to-Basics” operating philosophy remained the foundation for our fiscal 2018 strategic objectives: continuing to leverage our competitive advantages that we see as keys to unlocking sales growth and expanding margins. Because there were no material changes to the Company’s business strategy and performance expectations heading into fiscal 2018, the Compensation Committee made only modest changes to the executive compensation programs for fiscal 2018: changing only the mix of types of long-term awards granted.

Summary of Fiscal 2018 Performance and Pay Results

Darden achieved excellent results in fiscal 2018 and continued to implement a clear, long-term strategic vision introduced in fiscal 2015 to strengthen Darden’s position as the premier full-service restaurant company. Performance for fiscal 2018 was strong: both sales and profitability improved over fiscal 2017 results. In addition, the Company has substantially completed the integration of Cheddar’s Scratch Kitchen into the Company’s operational system. The Company returned approximately $550 million in total cash to shareholders with approximately $315 million in dividends and $235 million in share repurchases during fiscal 2018.

At the end of fiscal 2018, the Company achieved the following financial results, each related to performance measures under existing annual or long-term awards:

Consolidated Total Revenue of $8.1 billion;

Consolidated Adjusted Diluted Net EPS from Continuing Operations of $4.811;

Consolidated same-restaurant sales2 growth of 2.3 percent, excluding our recently-acquired brand, Cheddar’s Scratch Kitchen, exceeding the industry benchmark by 330 basis points3; and

Total Shareholder Return (TSR) of 34.6 percent, with three-year and five-year TSR of 120.0 percent and 123.4 percent respectively.

These strong performance results for 2018, after adjustments approved by the Compensation Committee as described in the “Performance and Pay Results for Fiscal 2018” section below, yielded strong executive compensation results for fiscal 2018, as evidenced by the following incentive compensation highlights:

Annual incentives tied to fiscal 2018 corporate performance metrics were earned at 135 percent of target;

Performance stock units tied to fiscal 2016-2018 performance related to corporate Return On Invested Capital (ROIC) were earned at 127 percent of target;

Performance stock units tied to fiscal 2016-2018 performance related to relative Total Shareholder Return (TSR) versus other publicly-traded restaurant companies were earned at 150 percent of target; and
1See p. 29 for a definition of Consolidated Adjusted Diluted Net Earnings Per Share from Continuing Operations.
2For annual incentive plan purposes for fiscal 2018, same-restaurant sales growth includes Cheddar’s Scratch Kitchen and was 1.9 percent.
3Industry benchmark means same-restaurant sales growth for the casual dining segment (excluding Darden concepts) for the twelve-month period ending May 2018, as reported by Knapp-Track.


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Stock options granted in July 2017 have accrued in-the-money value commensurate with the increase in Darden’s stock price, but remain unvested (50 percent vest three years from grant date and 50 percent vest four years from grant date).

The Compensation Committee believes that these financial results and pay outcomes are indicative of a sound strategy, excellent execution, and a strong linkage between pay and performance. The Committee also believes that the following demonstrates the Company’s commitment to sound overall governance of executive compensation:

What we do:
 
What we don’t do:
• Fully independent Compensation Committee
 
• No guaranteed bonuses
• Independent executive compensation consultant
 
• No excise tax gross ups
• Majority of our target pay opportunity for our NEOs is in the form of “at risk” incentives
 
• No option repricing
• Annual incentives have multiple performance measures and capped payouts to mitigate risk
 
• No dividends paid on unvested long-term incentives until vesting
• Long-term incentives granted in multiple award types to achieve multiple objectives
 
• No hedging, pledging or short sales of Company securities by officers or directors
• Clawback policy to allow us to recover incentive compensation in the event of a financial restatement due to fraud
 
• No excessive severance
• Robust executive officer and outside director stock ownership requirements with mandatory holding requirements
 
• No excessive perks or company aircraft
• Minimum three-year vesting period on annual equity awards
 
• No automatic single-trigger change in control payments
• Annual shareholder engagement process
 
 

Overview

This compensation discussion and analysis provides information about our fiscal 2018 compensation program for our fiscal 2018 named executive officers (NEOs).

Our NEOs for fiscal 2018 were the following five individuals, all of whom serve as executive officers of the Company as of the date of this Proxy Statement.
Name
 
Position with Company at Fiscal 2018 Year-End
Eugene I. Lee, Jr.
 
President and Chief Executive Officer
Ricardo Cardenas
 
Senior Vice President, Chief Financial Officer
David C. George
 
Executive Vice President and Chief Operating Officer
Todd A. Burrowes
 
President, LongHorn Steakhouse
Matthew R. Broad
 
Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary

Process for Determining Fiscal 2018 Executive Compensation

The Compensation Committee and Board are responsible for the Company’s executive compensation program. With respect to fiscal 2018 executive compensation, the Compensation Committee was primarily responsible for (a) the design of the executive compensation program; (b) approving goals and payouts under the Company’s fiscal 2018 annual incentives; and (c) approving performance results under outstanding performance stock units based upon performance over the three-year period ending with fiscal 2018. Company management also periodically solicits shareholder feedback through engagement meetings that the Compensation Committee considers when developing the compensation programs.

Independent Consultant

Pearl Meyer and Partners (Pearl Meyer) has served as the independent consultant to the Compensation Committee since fiscal 2015. In selecting Pearl Meyer, the Committee considered the independence factors prescribed by the SEC and the NYSE,


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and concluded that Pearl Meyer was independent and that its work did not raise any conflict of interest. In its role as independent consultant, Pearl Meyer reports to, and is directed by, the Compensation Committee. The primary services provided by the consultant are expected to include assisting with peer group review, periodic competitive market studies, periodic review and advice regarding variable pay program designs and executive compensation policies, updates on emerging practices and trends, and attendance at Compensation Committee meetings.

Compensation Peer Group
    
The Compensation Committee periodically reviews the pay levels and practices of peer companies in order to assess the competitive positioning of Darden’s pay levels and plan designs.

With respect to the compensation program for fiscal 2018, Pearl Meyer recommended, and the Committee approved, the following executive compensation peer group:
Dunkin’ Brands Group
The Wendy’s Company
Panera Bread Company
Brinker International, Inc.
Bloomin’ Brands, Inc.
Chipotle Mexican Grill, Inc.
Aramark Corporation
Cracker Barrel Old Country Store, Inc.
The Cheesecake Factory, Inc.
The Gap, Inc.
Nordstrom, Inc.
L Brands, Inc.
AutoZone, Inc.
Dick’s Sporting Goods, Inc.
Tractor Supply Company
O’Reilly Auto Parts
Foot Locker Retail, Inc.
Williams-Sonoma, Inc.

This peer group of 18 companies consists of companies in the restaurant and retail industries with financial characteristics within a tight range of the Company’s own characteristics. Our peer group reflects a median market capitalization of $7.7 billion and system-wide revenue of $7.7 billion, both as of November 2016.

The peer group extends beyond restaurant operators because there are a limited number of restaurant operators of comparable size to Darden and because the Company competes for talent with, and has some business model similarities to, companies in the retail industry.

During fiscal 2018, recognizing the continued growth of the Company both through performance and the acquisition of Cheddar’s Scratch Kitchen, the Compensation Committee reviewed the peer group for fiscal 2019 compensation programs, and upon the recommendation of Pearl Meyer, made the following changes:
Changes for FY 2019:
 
FY 2019 Peer Group
 
 
 
Deleted:
 
The Gap, Inc.
Panera Bread Company
 
Nordstrom, Inc.
Dunkin’ Brands Group
 
Aramark Corporation
The Wendy’s Company
 
L Brands, Inc.
Williams-Sonoma, Inc.
 
AutoZone, Inc.
 
 
Yum! Brands, Inc.
 
 
Restaurant Brands International, Inc.
Added:
 
O’Reilly Automotive, Inc.
Yum! Brands, Inc.
 
Dick’s Sporting Goods, Inc.
Restaurant Brands International, Inc.
 
Foot Locker Retail, Inc.
 
 
Tractor Supply Company
 
 
Bloomin’ Brands, Inc.
 
 
Brinker International, Inc.
 
 
Chipotle Mexican Grill, Inc.
 
 
Cracker Barrel Old Country Store, Inc.
 
 
The Cheesecake Factory, Inc.

The changes resulted in a peer group comprised of 50 percent restaurant and 50 percent retail companies. Our new peer group reflects a median market capitalization of $8.3 billion and system-wide revenue of $8.6 billion, both as of November 2017.


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Executive Compensation Philosophy and Strategy

Darden’s executive talent and Total Rewards philosophy continues to be focused on attracting, motivating and rewarding well-qualified executives for achieving business results and demonstrating leadership behaviors that drive our business. We are committed to a pay for performance culture that includes high standards of ethical behavior and corporate governance and we structure compensation programs with the following principles in mind:

Compensation Design Supports Our Business Strategy and Is Aligned with Shareholders’ Interests – We have designed our Total Rewards Program, and our incentive plans in particular, to meet our primary goal of aligning with shareholders; specifically, to drive strong and sustainable sales and earnings growth balanced with prudent capital management to maximize total shareholder return.

Incentive Compensation Is Aligned with Performance – Total direct compensation (salary, annual incentives and long-term incentives) for our NEOs is structured so that more than two-thirds of the total value at target is attributable to Company performance.

The target pay opportunities approved by the Compensation Committee reflect this pay for performance with 87 percent of our CEO's and 72 percent of the other Named Executive Officers’ target total direct compensation tied to performance:

Fiscal 2018 CEO and Other NEO Total Direct Compensation Mix at Target (1)  
chart-b3c2b1b09b3a53f5a9ca01.jpgchart-f1d23b4597835f6f8bda01.jpg
87% Performance-Based
72% Performance-Based
(1) Based on salary and incentive targets in place at fiscal 2018 year end. Excludes special equity grant made to CEO on June 29, 2017.
(2) Reflects the average of the NEOs as of the end of fiscal 2018, other than the CEO.

Executive Compensation Program Elements

Our Total Rewards program for NEOs is comprised of base salary, annual incentives, long-term incentives, modest perquisites and savings plans. Our NEOs also are eligible to participate in the health and benefits available to our U.S. salaried employees.

Base Salary

We provide competitive base salaries to our NEOs in recognition of their job responsibilities. In addition to external competitive market data (what our peer companies pay for similar positions), we consider individual work experience, leadership, knowledge and internal parity among those performing like jobs when setting salary levels. Annual salary increases are primarily driven by individual performance while also considering the relative position of the individual’s salary to market data.



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Annual Incentives

We provided annual cash incentive opportunities to our NEOs under the 2015 Plan for fiscal year 2018. The terms of the fiscal 2018 annual awards required that the Company have positive consolidated earnings from continuing operations for the fiscal year in order for awards to be made for that year. In addition to that condition, the Compensation Committee has the discretion to establish the elements used to determine individual annual incentive awards, if any, to be made, subject to certain limitations. Under the terms of the 2018 annual awards, the Compensation Committee established that the maximum award payable to an individual NEO under the 2015 Plan for the plan year may not exceed ten million dollars. The bonus amounts actually paid for fiscal 2018 to our NEOs were based solely on Company or Business Unit performance, per the following formula approved by the Compensation Committee:
Base Salary
x
Target Bonus Opportunity
x
Company Performance Rating

Company Performance Rating

The Company maintains a rigorous annual business planning and long-term strategic planning process that we consider to be one of our key competitive advantages. The core financial objective of these plans is to achieve long-term total shareholder returns for our shareholders of 10 to 15 percent, as reflected in our long-term value creation framework. The Company’s management creates the annual business plan in consultation with the Board of Directors and reports on progress with respect to the plan throughout the year. The annual business plan includes specific measurable goals for all of the key metrics that the Company and the Board believes are necessary to achieve in order to achieve that long-term objective and the Compensation Committee sets performance measures under the annual and long-term incentive plans based upon the goals set out in these business plans.

The annual performance measures that comprise the Company performance ratings for each of our NEOs vary depending upon the NEO’s role and responsibilities and are aligned with the sales and earnings growth metrics that we describe to investors in our long-term value creation framework. The Compensation Committee adopted same-restaurant sales growth as one of our annual performance metrics in fiscal 2015, after extensive shareholder engagement on the compensation program design. Same-restaurant sales growth is a year-over-year comparison of each period’s sales volumes for restaurants open at least 16 months, including recently acquired restaurants, regardless of when the restaurants were acquired. Same-restaurant sales growth is a key one-year indicator of performance in our industry (and does not take into account the sales from new restaurants opened during the fiscal year). The Company’s long-term value creation framework includes an annual target, over time, for same-restaurant sales growth of 1 to 3 percent. Our second and more heavily weighted annual performance measures is Adjusted EPS or business unit Adjusted OI. Earnings per share growth is one of the main components of total shareholder return, the ultimate objective of our long-term value creation framework.

The Company performance rating for each NEO is based solely on Darden results for NEOs other than Mr. Burrowes and Mr. George, whose Company performance ratings are based on business unit results (80 percent) and Darden results (20 percent). Company performance measures and weighting for fiscal 2018 were:
Performance Measure
Weighting
Corporate
 
Adjusted EPS
70%
Same-Restaurant Sales Growth
30%
Business Unit
 
Business Unit Adjusted Operating Income
70%
Business Unit Same-Restaurant Sales Growth
30%

The Compensation Committee establishes threshold, target and maximum performance goals for each measure each year, with potential payouts ranging from 0 to 200 percent of each participant’s target bonus opportunity.  The Compensation Committee sets these goals after reviewing the Company’s business plan for the fiscal year.  For the same-restaurant sales growth measure, the annual target for a given fiscal year varies based on a variety of factors that impact the business plan, including macroeconomic forces, consumer and industry trends, competitive forces, the Company’s strategic initiatives and other factors, and may be higher or lower than either the target or the actual result for the prior fiscal year. For the Adjusted EPS and business unit Adjusted OI measures, the Compensation Committee sets targets that reflect the Company’s business plan.  For fiscal 2018, after considering


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the Company’s business plan and relevant factors, the Compensation Committee set the annual same-restaurant sales growth target for the Darden awards at 1.7 percent and the Adjusted EPS target at $4.46 per share.

Performance and Pay Results for Fiscal 2018

The Committee certified the following Company performance results for fiscal 2018:
Performance Measure
Weight
Target
Actual
Total Payout (% of Target)
Darden
 
 
 
135%
Same-Restaurant Sales Growth(1)
30%
1.7%
1.9%
 
Adjusted EPS
70%
$4.46
$4.62
 
Olive Garden
 
 
 
137%
Same-Restaurant Sales Growth
30%
1.7%
2.4%
 
Adjusted OI ($ in millions)
70%
$523.2
$536.0
 
LongHorn
 
 
 
153%
Same-Restaurant Sales Growth
30%
1.7%
2.7%
 
Adjusted OI ($ in millions)
70%
$150.5
$157.5
 
(1) For incentive plan purposes for fiscal 2018, Darden same-restaurant sales growth includes Cheddar’s Scratch Kitchen.

Adjusted earnings per share (Adjusted EPS) for purposes of the annual incentive was derived from the publicly reported diluted net EPS for continuing operations, adjusted for annual incentive calculation purposes to exclude the impact of special items. For fiscal 2018, the adjustments included the special equity grant to our CEO described on p. 31, tax savings for fiscal 2018 resulting from the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act, on December 22, 2017 (Tax Act) and workforce investments not included in the original business plan for fiscal 2018.
Diluted Net EPS from Continuing Operations
$4.79
Cheddar’s Integration Costs
$0.10
Net Benefit of Deferred Tax Revaluation
-$0.62
Debt Retirement Costs
$0.54
Consolidated Adjusted Diluted Net EPS from Continuing Operations
$4.81
CEO Special Equity Grant
$0.01
Tax Act Savings
-$0.30
Workforce Investment
$0.10
Adjusted EPS for Annual Incentives
$4.62

Adjusted operating income (Adjusted OI) for a business unit, for purposes of the annual incentive, was derived from that brand’s component of reported operating income, adjusted to exclude the impact of special items. The adjustments in fiscal 2018 to Adjusted OI for the business units included workforce investments not included in the original business plan for fiscal 2018 and certain asset impairments.

The final individual annual incentive awards determined by the Compensation Committee are set forth below.
Named Executive Officer
Target
% of Salary
Business Weighting
Total Payout (As % of Target)
Actual
 Award(1)
Eugene I. Lee, Jr.
150%
Darden 100%
135%
$2,025,000
Ricardo Cardenas
90%
Darden 100%
135%
$745,707
David C. George(2)
100%
Olive Garden 80% /
Darden 20%
137%/ 135%
$950,289
Todd A. Burrowes
85%
LongHorn 80% / Darden 20%
153%/ 135%
$706,331
Matthew R. Broad
75%
Darden 100%
135%
$501,904
(1) Based on Company/business unit payout percentage.
(2) Mr. George served as President, Olive Garden and Executive Vice President, Darden Restaurants through January 22, 2018.


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Long-Term Incentives

The purpose of the long-term incentive program is to motivate and reward achievement of our long-term objectives of winning financially and creating long-term value for our shareholders. The long-term awards made in July 2017 for the fiscal 2018 grants were made under the 2015 Plan.

For fiscal 2018, the long-term incentive plan design linked pay and performance with a continued emphasis on performance stock units (PSUs), with one half of the grant in PSUs. The fiscal 2018 long-term incentive program provided 1/4 of the grant value in stock options, 1/4 in restricted stock units, and 1/2 of the grant value in performance stock units tied to relative TSR.

Stock Options (1/4 of the grant value):

Granted with an exercise price equal to the closing stock price on the grant date;

Vest 50 percent on the third anniversary of the grant date and 50 percent on the fourth anniversary of the grant date; and

Maximum term of 10 years.

Restricted Stock Units (1/4 of the grant value):

Share denominated units;

Vest 100 percent on the third anniversary of the grant date; and

Settled in stock.

Performance Stock Units - Relative TSR (1/2 of the grant value):

Share denominated units;

Vest 50 percent on the third anniversary of the grant date, and 50 percent on the fourth anniversary of the grant date; the portion that vests on the third anniversary of the grant date requires a mandatory one year holding period;

0 - 150 percent payout opportunity based upon relative TSR as compared to publicly-traded restaurant companies over the three-year performance period; the companies in our comparison group are listed below; and

Settled in stock.
Ark Restaurants Corp.
DineEquity, Inc.
Noodles & Company
BJ’s Restaurants, Inc.
Diversified Restaurant Holdings, Inc.
Papa John’s International Inc.
Bloomin’ Brands, Inc.
Domino’s Pizza, Inc.
Potbelly Corporation
Bob Evans Farms, Inc.
Dunkin’ Brands Group, Inc.
RAVE Restaurant Group, Inc.
Bravo Brio Restaurant Group, Inc.
Famous Dave’s of America Inc.
Red Robin Gourmet Burgers Inc.
Brinker International, Inc.
Fiesta Restaurant Group, Inc.
Ruby Tuesday, Inc.
Buffalo Wild Wings Inc.
Flanigan’s Enterprises Inc.
Ruth’s Hospitality Group Inc.
Carrols Restaurant Group, Inc.
Good Times Restaurants Inc.
Sonic Corp.
Chanticleer Holdings, Inc.
Jack in the Box Inc.
Starbucks Corporation
Chipotle Mexican Grill, Inc.
Jamba, Inc.
Texas Roadhouse, Inc.
Chuy’s Holdings, Inc.
Kona Grill Inc.
The Cheesecake Factory Incorporated
Cracker Barrel Old Country Store, Inc.
Luby’s, Inc.
The Wendy’s Company
Del Frisco’s Restaurant Group, Inc.
McDonald’s Corp.
Yum! Brands, Inc.
Denny’s Corporation
Nathan’s Famous Inc.
 


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Annual Grants

The Compensation Committee approved grants to the following NEOs, effective July 26, 2017 in accordance with the plan design, as detailed below:
Named Executive Officer
Target
Grant Value
Number of
Options(1)
Number of Restricted Stock Units(2)
Number of
PSUs (TSR)(2)
Eugene I. Lee, Jr
$
5,000,000

76,725

13,818

27,637

Ricardo Cardenas
$
1,250,000

19,181

3,455

6,909

David C. George
$
1,250,000

19,181

3,455

6,909

Todd A. Burrowes
$
900,000

13,811

2,487

4,975

Matthew R. Broad
$
600,000

9,207

1,658

3,316

(1) Number of options based on the Black-Scholes valuation on the first day of the fiscal year and the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made.
(2) Number of Restricted Stock Units and PSUs based on the average closing stock price on the NYSE for the fiscal month preceding the month in which the grant is made.

Special Grant to CEO

On June 22, 2017, the Board, upon the recommendation of the Compensation Committee, approved a special additional equity grant to Mr. Lee under the Company’s 2015 Plan. Effective June 29, 2017, Mr. Lee received a grant of 81,735 PSUs (Special PSUs) with an aggregate value of $7,500,000, vesting in three installments: 26.7 percent will vest on May 31, 2020, 33.3 percent will vest on May 30, 2021 and the remaining 40 percent will vest on May 29, 2022. The Special PSUs will pay out based upon achieving certain predetermined three-year, four-year and five-year adjusted EBITDA targets. 

The Committee recommended this grant as an element of the Board’s succession planning process. The Committee believed that this grant was an important factor to retaining Mr. Lee as our CEO, because he is retirement eligible, there is competition for executive talent in our industry and he has been critical in managing and growing the Company’s business, including completing the acquisition of Cheddar’s Scratch Kitchen in fiscal 2017.

Performance Results and Payouts from Prior Grants

Fiscal 2018 was the final year of the three-year period for PSUs that were granted at the beginning of fiscal 2016 for the performance period covering fiscal 2016-2018 (the 2016 grants). For the 2016 grants, made under our 2002 Plan and, with respect to Mr. Broad, our 2015 Plan, the PSUs are settled in stock, and the number of shares earned are based upon the results of a three-year performance period. The earned PSUs vest in two tranches: 50 percent of the earned PSUs vested on July 27, 2018 and the remaining earned PSUs will vest in July 2019. Each NEO was granted 50 percent of their target PSUs based on three-year average return on invested capital (ROIC) and 50 percent based upon relative total shareholder return (TSR). The terms of the plan required that the Company have positive consolidated earnings from continuing operations for the year in which the grant was made in order for any payouts under these PSUs. The 2002 Plan also limited the award payout for multi-year awards to the aggregate consolidated earnings from continuing operations and sales of the Company during the performance period, excluding years in which the Company had no positive earnings.

The Compensation Committee certified the performance results related to the PSUs (ROIC) component of the 2016 grants, as summarized in the table below. Based on the those results, the Compensation Committee approved an earned percentage of 127 percent times the initial granted number of shares for the PSUs (ROIC) for Messrs. Lee, Cardenas and Broad, whose earned percentage is based on Darden ROIC. Mr. George’s earned percentage was based on Olive Garden ROIC, resulting in an earned percentage of 150 percent. Mr. Burrowes’ earned percentage was based on LongHorn ROIC, resulting in an earned percentage of 118 percent.
ROIC FY 2016-2018
FY 2016
FY 2017
FY 2018
3 Year Average Result(1)
3 Year Average Target
Earned Percentage
Darden
15.1%
15.6%
16.8%
15.8%
15.0%
127%
Olive Garden
17.9%
18.8%
19.6%
18.8%
16.8%
150%
LongHorn
11.3%
11.9%
12.4%
11.8%
11.3%
118%
(1) Results adjusted from reported results for incentive calculation purposes.
 


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FY 2018 ROIC based on Diluted Net EPS from Continuing Operations
21.9
 %
Cheddar’s Integration Costs
0.3
 %
Net Benefit of Deferred Tax revaluation
(1.7
)%
Adjusted ROIC based on Adjusted Diluted Net EPS from Continuing Operations
20.5
 %
Deferred Income Tax Accounting Change
(0.4
)%
Real Estate Plan Implementation
(3.9
)%
Cheddar’s Performance
0.6
 %
Adjusted ROIC for Annual Incentives
16.8
 %

For purposes of these PSUs, “ROIC” for Darden means, with respect to the applicable fiscal year, after-tax EBITDA divided by the sum of average gross fixed assets, average net working capital (excluding cash) and average intangibles, as reported in the Company’s audited financial statements. For a business unit, “ROIC” means with respect to the applicable fiscal year, after-tax EBITDA for the business unit divided by the sum of average gross fixed assets and average intangibles attributable to the business unit. ROIC for Darden and the business units may be adjusted for certain events not considered when initially setting the performance targets.

The Compensation Committee certified that the Company’s three-year TSR performance ranked at the 82.5th percentile relative to a set of publicly-traded restaurant companies. As a result, the Compensation Committee approved an earned percentage equal to 150 percent times the initial number of shares granted for the PSUs (TSR), all as described in the tables below.
Metric and Targets
 
Darden Relative TSR Percentile Rank(1)
Earned Percentage
>75th
150%
75th
150%
50th
100%
 33rd
50%
<33rd
0%
(1) Full interpolation between 33rd and 75th percentiles.
Results
Target Percentile
Percentile Result
Earned Percentage
Total Shareholder Return FY 2016-18
50
82.5
150%
    
Although the final earned numbers of PSUs (ROIC) and PSUs (TSR) for the 2016 grants were determined in 2018, the 2016 grants vest in two tranches. 50 percent of the final earned PSUs vested on July 29, 2018 and the remaining earned PSUs will vest on July 29, 2019. See footnote 3 in the “Outstanding Equity Awards at Fiscal Year-End” table on p. 40 for the number of earned PSUs for each NEO.

Other Programs, Policies, and Practices

Perquisites

We provide limited perquisites to our NEOs that we believe are appropriate to enable business continuity and minimize work distractions. During fiscal 2018, these benefits included an allowance toward a company car, limited reimbursement for financial planning assistance and an annual executive physical.

Other Benefits

Our NEOs receive the same employee benefits provided to other salaried U.S. employees, but are not eligible to actively participate in Darden’s qualified savings plan (the Darden Savings Plan). Instead, our NEOs participate in the non-qualified FlexComp Plan. The FlexComp Plan allows participants (approximately 900) to defer receipt of up to 25 percent of their base


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salaries and up to 100 percent of their annual incentive compensation. We make contributions into the FlexComp Plan for our NEOs in place of benefits under our qualified savings plan.

Stock Ownership Guidelines

In keeping with our objective of aligning our executives’ interests with our shareholders’ interests, we require our executives to hold equity in the Company equal in value to a designated multiple of their salaries. Under the Company’s stock ownership policy, the Chief Executive Officer must hold 100 percent and any other officer must hold 50 percent of any net after tax shares issued to them until they achieve the required stock ownership level. The required ownership values vary based on the executive’s level of responsibility as follows:
Named Executive Officer
Required Ownership as a Multiple of Base Salary
Eugene I. Lee, Jr
6x
Ricardo Cardenas
4x
David C. George
4x
Todd A. Burrowes
4x
Matthew R. Broad
2x

The Compensation Committee monitors compliance with the ownership guidelines. All of the NEOs were in compliance with the ownership guidelines as of May 27, 2018.

Policy on Granting Equity Awards

Our equity awards policy provides that incentive equity grants to employees, including stock option grants, are made once per year and are effective on the last Wednesday in fiscal July. The Company may also grant equity awards for special purposes such as retention, recognition or promotion and such special awards are made effective on any date determined by the Compensation Committee, the Board or authorized individual approving the award. The grant date for equity awards is never a date prior to approval. The exercise price of stock options may not be less than the fair market value of our common stock on the date of the grant as measured by the closing sales price of our common stock on the NYSE.

Recoupment and Forfeiture of Compensation

We have adopted a clawback policy which provides that an executive officer is required to repay performance-based rewards to the Company if he or she knowingly participates in a fraud that requires the Company to restate its financial statements. Performance-based rewards include annual incentive awards and PSU awards under our 2015 Plan.

Change in Control Agreements

All of our executive officers are parties to Change in Control Agreements that reflect current market practices and governance best practices. The Change in Control Agreements provide for severance benefits (between 1.5 and 2.0 times base salary and target bonus) in the event of a termination of employment within 24 months of a change in control of the Company.

Compliance with Section 162(m) of the Internal Revenue Code

In designing our compensation programs, we take into account the various tax, accounting and disclosure rules. The Compensation Committee also reviews and considers the deductibility of executive compensation under section 162(m) of the Internal Revenue Code. The Tax Act repealed the performance-based exemption from Section 162(m)’s deduction limit for taxable years beginning after December 31, 2017, subject to certain transition rules that “grandfathered” certain awards and arrangements that were in effect prior to November 2, 2017, and expanded the population of executives to which the deduction limit applies. The Committee generally seeks to preserve tax deductions for executive compensation where available. Nonetheless, the Committee has awarded compensation that is not fully tax deductible when it believes such grants are in the best interests of our shareholders and reserves the right to do so in the future. There is no guarantee that compensation payable pursuant to any of the Company’s compensation programs will ultimately be deductible by the Company.



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Shareholder Engagement and Results of Say on Pay Advisory Vote

At the 2017 Annual Meeting of Shareholders, approximately 97.2 percent of the votes cast were in favor of the advisory vote to approve executive compensation. We believe that these vote results, together with the Company’s ongoing shareholder engagement, reflect that shareholders are pleased with the structure of the Company’s compensation programs put into place by the Compensation Committee for fiscal 2018. The Compensation Committee is not recommending any material changes to the Company’s compensation programs for fiscal 2019 as a result of these vote results, however, the Compensation Committee continuously evaluates plan design and considers adjustments to the Company’s compensation programs based on market and other considerations. The Compensation Committee and Board are committed to serving Darden’s shareholders, and plan to continue regular dialogue with shareholders as we move forward.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors reviewed and discussed the Compensation Discussion and Analysis with Darden’s management. Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended May 27, 2018.

Respectfully submitted,

The Compensation Committee
James P. Fogarty, Committee Chair
Cynthia T. Jamison
Nana Mensah


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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Mr. Fogarty as the Chair and Ms. Jamison and Mr. Mensah as members. During fiscal 2018, all members of the Compensation Committee were independent directors, and no member was an employee or former employee of the Company. In addition, none of the Company’s executive officers served on the board of directors or compensation committee (or other committee serving an equivalent function) of another entity whose executive officer served on the Company’s Board of Directors or Compensation Committee.

ASSESSMENT OF RISK OF COMPENSATION PROGRAMS

We believe that our compensation programs for executives and other employees are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and do not incent executives or other employees to take unnecessary or excessive risks. Specifically, we believe that the following features of our compensation programs (discussed in more detail in the Compensation Discussion and Analysis section above) help manage or mitigate risk:

The Company has allocated compensation among base salary and short-term and long-term compensation target opportunities for executives in such a way as to not encourage excessive risk taking. Incentive compensation is not overly weighted toward short-term incentives. In addition, both short-term and long-term incentives are subject to maximum payment amounts;

The mix of equity award instruments used under our long-term incentive program (a) includes full value awards; and (b) rewards different performance measures (currently, total shareholder return for stock options and, return on invested capital growth as well as total shareholder return relative to publicly traded restaurant companies for PSUs);

Our annual and long-term compensation plans are reviewed by the Compensation Committee and any risks embedded in those plans are discussed and evaluated for appropriateness. Our incentive opportunities are designed to drive strong, sustainable growth and shareholder return;

The multi-year vesting of our equity awards aligns incentive compensation with shareholders’ interests by rewarding long-term stock appreciation rather than short-term performance;

Our performance criteria and objectives balance performance and sustainability of performance by setting a variety of goals, including same-restaurant sales growth, earnings per share growth, return on invested capital;

Our Stock Ownership Guidelines encourage a focus on long-term growth in shareholder value; and

Our policies regarding recoupment and forfeiture of compensation discourage excessive or inappropriate risk taking.



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Table of Contents


EXECUTIVE COMPENSATION

Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of the NEOs for the fiscal years ended May 27, 2018, May 28, 2017, and May 29, 2016.
 
 
Salary ($)(1)
Bonus ($)(2)
Stock Awards ($)(3)
Option Awards ($)(3)
Non-Equity Incentive Plan Compensation ($)
Change in Pension Value and Non-Qualified Deferred Compensation Earnings
($)(4)
All Other Compensation ($)(5)
 
Name and Principal Position
Year
($)Total
Eugene I. Lee, Jr.
2018
1,000,000

 
11,192,404

1,122,487

2,025,000

 
430,260

15,770,151

President and
2017
1,000,000

2,391,994

1,124,576

1,525,000

320,206

6,361,776

Chief Executive Officer
2016
953,750

2,231,443

1,006,702

1,610,498

338,661

6,141,054

 
 
 
 
 
 
 
 
 


Ricardo Cardenas
2018
613,750

 
923,122

280,618

745,707

219,200

2,782,397

Senior Vice President and
2017
560,000

896,981

421,712

546,560

132,592

2,557,845

Chief Financial Officer
2016
474,539

359,917

162,371

530,046

144,690

1,671,563

 
 
 
 
 
 
 
 
 
 
David C. George
2018
695,673

923,122

280,618

950,289

256,700

3,106,402

Executive Vice President and
2017
625,000

1,897,014

421,712

727,500

188,821

3,860,047

Chief Operating Officer
2016
576,539

719,833

324,743

851,061

216,651

2,688,827

 
 
 
 
 
 
 
 
 


Todd A. Burrowes
2018
556,210

664,644

202,055

706,331

147,647

2,276,887

President, LongHorn Steakhouse
2017
535,833

478,402

224,912

447,528

102,107

1,788,782

 
2016
442,211

1,388,417

259,781

604,238

125,483

2,820,130

 
 
 
 
 
 
 
 
 
 
Matthew R. Broad
2018
495,708

443,034

134,698

501,904

131,391

1,706,735

Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary
2017
470,838

358,772

168,688

373,375

83,678

1,455,351


(1) 
Amounts reflect the actual base salary earned by the NEO in fiscal 2018, fiscal 2017 and fiscal 2016, including any deferred amounts reported in the Non-Qualified Deferred Compensation Table.

(2) 
The Company made variable incentive payments for fiscal 2018, fiscal 2017, and fiscal 2016 based on achieving performance metrics that were established under the Company’s MIP for fiscal year 2016 and the Company’s 2015 Plan for fiscal years 2018 and 2017. These incentive payments are reported in the “Non-Equity Incentive Plan Compensation” column of this table.

(3) 
Amounts in these columns represent the grant date fair value of awards computed in accordance with ASC Topic 718 for each of fiscal 2018, fiscal 2017 and fiscal 2016. The assumptions used in calculating these amounts in accordance with ASC Topic 718 are included in Note 1 (under the heading Stock-Based Compensation) to the Company’s audited financial statements included in the Company’s 2018 Annual Report on Form 10-K. For Mr. Lee, the PSUs granted during fiscal 2018 represent two separate awards. The first award vests in three installments: 26.7 percent will vest on May 31, 2020, 33.3 percent will vest on May 30, 2021 and the remaining 40 percent will vest on May 29, 2022. These PSUs will pay out based upon achieving certain three-year, four-year and five-year adjusted EBITDA targets. The grant value is shown at target payout; the award will not vest if the performance target is not achieved and will vest at target if the performance target is achieved. Mr. Lee’s second PSU award granted in fiscal 2018 and the PSU awards granted to all other NEOs in fiscal 2018 vest based on Relative TSR. After a three year performance period, the PSUs (TSR) granted in fiscal 2018 will vest 50 percent on the third anniversary of the grant date, and 50 percent on the fourth anniversary of the grant date. Actual awards may range from 0 percent to 150 percent of the targeted incentive. The grant value of PSUs is shown at target payout. For fiscal 2018, the following amounts represent the grant date fair value of PSU awards assuming achievement of maximum (150 percent) payout: Mr. Lee — $3,759,602.28; Mr. Cardenas — $939,868.80; Mr. George — $939,868.80; Mr. Burrowes — $676,777.11; Mr. Broad — $451,092.06. For fiscal 2017, the following amounts represent the grant date fair value of PSU awards assuming achievement of maximum (150 percent) payout: Mr. Lee — $3,587,991; Mr. Cardenas — $1,345,472; Mr. George — $1,345,472; Mr. Burrowes — $717,603; Mr. Broad — $538,158. For fiscal 2016, the following amounts represent the grant date fair value of PSU awards assuming achievement of maximum (150 percent) payout:


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Mr. Lee — $3,347,165; Mr. Cardenas — $539,875; Mr. George — $1,079,750; Mr. Burrowes — $863,881. These PSUs are described more fully under the heading “Compensation Discussion and Analysis — Fiscal 2018 Executive Compensation Program Elements — Long-Term Incentives.”

(4) 
Amounts deferred into the FlexComp Plan do not receive above market or preferential earnings, but rather receive notional rates of return that match the returns on the investment options available under the Darden Savings Plan as described under the subheading “Non-Qualified Deferred Compensation.”

(5) 
All Other Compensation for fiscal 2018 consists of the following amounts:
 
 
Perks and Other Personal Benefits
($)(a)
Company Contributions to Defined Contribution Plans
($)(b)
Insurance Premiums
($)(c)
Dividends or Earnings on Stock or Option Awards
($)(d)
Other
($)
Totals
($)
 
 
 
Eugene I. Lee, Jr.
31,374

288,283

10,233

100,370


430,260

 
Ricardo Cardenas
14,907

129,556

5,923

68,814


219,200

 
David C. George
17,720

156,860

14,222

67,898


256,700

 
Todd A. Burrowes
17,127

120,320

10,200



147,647

 
Matthew R. Broad
26,119

95,072

10,200



131,391


(a) 
Includes the aggregate incremental costs to the Company for personal use of a Company car or a limited car allowance, a discount on the price to purchase a company car, an annual executive physical, a reimbursement for financial counseling services, a discount on the purchase of Company gift cards and non-work related activities, gifts received and airfare for spousal attendance at Company events. None of these perquisites had a value exceeding the greater of $25,000 or 10 percent of total perquisites for an NEO.

(b) 
Amounts in this column represent Company contributions made in August 2018 for fiscal 2018 Company performance under the FlexComp Plan, our non-qualified deferred compensation plan. Company contributions are made under the provisions of the FlexComp Plan and are deferred in accordance with participants’ elections pursuant to the terms of the FlexComp Plan. Salary or bonus deferred by an NEO into the FlexComp Plan is reported in the “Salary” column or the “Non-Equity Incentive Plan Compensation” column.

(c) 
Represents the cost to the Company for providing life insurance and long-term disability insurance.

(d) 
Our NEOs do not receive dividends or dividend equivalents on unvested restricted stock, unvested restricted stock units or unvested PSUs, but rather accrue them for payment when the restricted stock, restricted stock units or PSUs are earned and vested and only on the number of shares of stock or units which actually vest.




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Grants of Plan-Based Awards for Fiscal 2018

The following table sets forth certain information with respect to equity and non-equity plan-based awards granted during fiscal 2018 under the 2015 Plan to each of the NEOs.
 
 
 
 
 
 
 
 
 
All Other Stock Awards: Number of Shares of Stock or Units (#) (4)
All Other Option Awards: Number of Securities Underlying Options (#) (5)
Exercise or Base Price of Option Awards($/Sh) (6)
Grant Date Fair Value of Stock and Option Awards ($) (7)
 
 
 
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2)
Estimated Future Payouts Under Equity Incentive Plan Awards (3)
Name
Grant Date
Approval Date (1)
Threshold($)
Target ($)
Maximum($)
Threshold(#)
Target (#)
Maximum(#)
Eugene I. Lee, Jr.
 
1,500,000
3,000,000
 
 
 
 
 
 
 
 
6/29/2017
6/22/2017
 
 
 
81,735
81,735
 
 
 
7,500,004

 
7/26/2017
6/22/2017
 
 
 
 
 
 
 
76,725
85.83
1,122,487

 
7/26/2017
6/22/2017
 
 
 
 
 
 
13,818
 
 
1,185,999

 
7/26/2017
6/22/2017
 
 
 
27,637
41,456
 
 
 
2,506,402

 
 
 
 
 
 
 
 
 
 
 
 
 
Ricardo Cardenas
 
552,375
1,104,750
 
 
 
 
 
 
 
 
7/26/2017
6/21/2017
 
 
 
 
 
 
 
19,181
85.83
280,618

 
7/26/2017
6/21/2017
 
 
 
 
 
 
3,455
 
 
296,543

 
7/26/2017
6/21/2017
 
 
 
6,909
10,364
 
 
 
626,579

 
 
 
 
 
 
 
 
 
 
 
 
 
David C. George
 
695,673
1,391,346
 
 
 
 
 
 
 
 
7/26/2017
6/21/2017
 
 
 
 
 
 
 
19,181
85.83
280,618

 
7/26/2017
6/21/2017
 
 
 
 
 
 
3,455
 
 
296,543

 
7/26/2017
6/21/2017
 
 
 
6,909
10,364
 
 
 
626,579

 
 
 
 
 
 
 
 
 
 
 
 
 
Todd A. Burrowes
 
472,778
945,556
 
 
 
 
 
 
 
 
7/26/2017
6/21/2017
 
 
 
 
 
 
 
13,811
85.83
202,055

 
7/26/2017
6/21/2017
 
 
 
 
 
 
2,487
 
 
213,459

 
7/26/2017
6/21/2017
 
 
 
4,975
7,463
 
 
 
451,185

 
 
 
 
 
 
 
 
 
 
 
 
 
Matthew R. Broad
 
371,781
743,562
 
 
 
 
 
 
 
 
7/26/2017
6/21/2017
 
 
 
 
 
 
 
9,207
85.83
134,698

 
7/26/2017
6/21/2017
 
 
 
 
 
 
1,658
 
 
142,306

 
7/26/2017
6/21/2017
 
 
 
3,316
4,974
 
 
 
300,728



(1) 
The column sets forth the date on which the Committee took action to grant the reported awards. The grants made to Mr. Lee were recommended by the Committee and approved by the independent members of the Board and the grants made to the other NEOs were approved by the Committee.

(2) 
The amounts in these columns represent the potential annual cash incentive that may be earned under the 2015 Plan by each NEO. The annual ranges are calculated with the actual salary earned during the fiscal year. Where the NEO’s target bonus opportunity increases during the fiscal year (for example, in the event of a promotion), the target bonus opportunity is based on a proration using the target bonus opportunity in effect for each portion of the fiscal year, and such proration is used in the actual bonus award calculation. Actual payouts to the NEOs based on fiscal 2018 performance are reported under the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.

(3) 
The NEOs received grants of PSUs under the 2015 Plan. For Mr. Lee, the PSUs granted represent two separate awards. The first award vests in three installments: 26.7 percent will vest on May 31, 2020, 33.3 percent will vest on May 30, 2021 and the remaining 40 percent will vest on May 29, 2022. The PSUs will pay out based upon achieving certain three-year, four-year and five-year adjusted EBITDA targets. The grant value is shown at target payout, the award will not vest if the performance target is not achieved and will vest at target if the performance target is achieved. Mr. Lee’s second PSU award and the PSU awards granted to all other NEOs are earned based on Relative TSR. After a three-year performance period, the PSUs (TSR) granted in fiscal 2018 will vest 50 percent on the third anniversary of the grant date, and 50 percent on the fourth anniversary of the grant date. Actual awards


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may range from 0 percent to 150 percent of the targeted incentive. These PSUs are described more fully under the heading “Compensation Discussion and Analysis — Fiscal 2018 Executive Compensation Program Elements — Long-Term Incentives.”

(4) 
The NEOs received grants of restricted stock units under the 2015 Plan. The grant vests on the third anniversary of the grant date.

(5) 
The NEOs received grants of non-qualified stock options under the 2015 Plan. These non-qualified stock options vest 50 percent on each of the third and fourth anniversaries of the grant date.

(6) 
All stock options are granted with an exercise price equal to the fair market value of our common stock on the date of grant. Fair market value under the 2015 Plan has been determined by the Committee to be the closing price of the common stock on the NYSE as reported in the consolidated transaction reporting system on the grant date or, if such exchange is not open for trading on such date, on the most recent preceding date when such exchange is open for trading.

(7) 
Assumptions used in the calculation of these amounts are included in Note 1 to the Company’s audited financial statements included in the Company’s 2018 Annual Report on Form 10-K.



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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the total outstanding equity awards as of May 27, 2018 for each of the NEOs. 
 
 
Option Awards (1)
 
Stock Awards
 
 
 
 
 
 
 
 
 
 
 
 
Restricted Stock
 
PSU Awards
Name
 
Grant
Date
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number
of
Shares
or Units
of Stock
Held
That
Have
Not
Vested
(#)(2)
 
Market
Value of
Shares or
Units of
Stock Held
That Have
Not Vested
($)(2)
 
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(3)
 
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)(3)
Eugene I. Lee, Jr.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7/24/2013
 
60,973

 

 
42.99

 
7/24/2023
 
 
 
 
 
 
 
 
 
 
9/25/2013
 
30,688

 

 
40.87

 
9/25/2023
 
 
 
 
 
 
 
 
 
 
7/23/2014
 
51,575

 
51,577

 
39.53

 
7/23/2024
 
 
 
 
 
 
 
 
 
 
7/29/2015
 

 
78,957

 
65.02

 
7/29/2025
 
 
 
 
 
 
 
 
 
 
7/27/2016
 

 
123,852

 
59.68

 
7/27/2026
 
 
 
 
 
 
 
 
 
 
7/26/2017
 

 
76,725

 
85.83

 
7/26/2027
 
13,818

 
1,214,325.84

 
183,314

 
16,109,634.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ricardo Cardenas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7/25/2012
 
10,666

 

 
43.58

 
7/25/2022
 
 
 
 
 
 
 
 
 
 
7/24/2013
 
14,128

 

 
42.99

 
7/24/2023
 
 
 
 
 
 
 
 
 
 
7/23/2014
 
12,813

 
6,603

 
39.53

 
7/23/2024
 
 
 
 
 
 
 
 
 
 
11/17/2014
 
27,803

 
27,805

 
49.25

 
11/17/2024
 
 
 
 
 
 
 
 
 
 
7/29/2015
 

 
12,735

 
65.02

 
7/29/2025
 
 
 
 
 
 
 
 
 
 
7/27/2016
 

 
46,444

 
59.68

 
7/27/2026
 
 
 
 
 
 
 
 
 
 
7/26/2017
 

 
19,181

 
85.83

 
7/26/2027
 
3,455

 
303,625.40

 
27,347

 
2,403,254.36

David C. George
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7/27/2011
 
47,309

 

 
45.54

 
7/27/2021
 
 
 
 
 
 
 
 
 
 
7/25/2012
 
51,984

 

 
43.58

 
7/25/2022
 
 
 
 
 
 
 
 
 
 
1/30/2013
 
11,515

 

 
41.40

 
1/30/2023
 
 
 
 
 
 
 
 
 
 
7/24/2013
 
55,671

 

 
42.99

 
7/24/2023
 
 
 
 
 
 
 
 
 
 
7/23/2014
 
34,889

 
34,890

 
39.53

 
7/23/2024
 
 
 
 
 
 
 
 
 
 
7/29/2015
 

 
25,470

 
65.02

 
7/29/2025
 
 
 
 
 
 
 
 
 
 
7/27/2016
 

 
46,444

 
59.68

 
7/27/2026
 
 
 
 
 
 
 
 
 
 
7/26/2017
 

 
19,181

 
85.83

 
7/26/2027
 
18,392

 
1,616,288.96

 
32,849

 
2,886,770.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Todd A. Burrowes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7/29/2015
 

 
20,375

 
65.02

 
7/29/2025
 
 
 
 
 
 
 
 
 
 
7/27/2016
 

 
24,770

 
59.68

 
7/27/2026
 
 
 
 
 
 
 
 
 
 
7/26/2017
 

 
13,811

 
85.83

 
7/26/2027
 
14,920

 
1,311,169.6

 
21,745

 
1,910,950.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Matthew R. Broad
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10/13/2015
 

 
12,516

 
59.01

 
10/13/2025
 
 
 
 
 
 
 
 
 
 
7/27/2016
 

 
18,578

 
59.68

 
7/27/2026
 
 
 
 
 
 
 
 
 
 
7/26/2017
 

 
9,207

 
85.83

 
7/26/2027
 
1,658

 
145,705.04

 
14,698

 
1,291,660.24


(1) 
All option awards are non-qualified stock options that expire ten years from the date of grant. Except where noted, the vesting schedule for the non-qualified stock options granted to NEOs is 50 percent on the third and fourth anniversaries of the grant date. For Mr. Cardenas, the non-qualified stock option grants made prior to November 17, 2014 vested in thirds on the second, third and fourth anniversaries of the grant date.

(2) 
The units reflected in this column represent awards of RSUs granted to all NEOs which vest fully on the third anniversary of the grant date with the exception of additional awards for Messrs. Burrowes and George. For Mr. Burrowes, 12,443 RSUs will vest on July 28, 2019. For Mr. George, 14,937 RSUs will vest on July 27, 2019. The market value of outstanding stock awards is based on a per share (or unit) value of $87.88, the closing market


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price of our common shares on the NYSE on May 25, 2018, the last trading day before the end of our fiscal year on May 27, 2018.

(3) 
All units reflected in this column represent PSU awards granted during fiscal 2016, 2017 and 2018. The terms of the PSU awards are more fully described in the Compensation Discussion and Analysis and the Grants of Plan-Based Awards tables of the Proxy Statement for the fiscal year in which they are granted. The Compensation Committee certified the performance results with respect to the PSUs granted in fiscal 2016 on June 19, 2018. Under this certification the PSUs earned with respect to the fiscal 2016 awards to each of the named executive officers were as follows:
Name
Type of PSU Award
Number of PSUs on Grant Date
Earned Percentage
Number of Earned PSUs
Eugene I. Lee, Jr.
FY16-18 ROIC
17,056

127
%
21,661

 
FY16-18 TSR
17,056

150
%
25,584

 
 
 
 
 
Ricardo Cardenas
FY16-18 ROIC
2,751

127
%
3,493

 
FY16-18 TSR
2,751

150
%
4,126

 
 
 
 
 
David C. George
FY16-18 ROIC
5,502

150
%
8,253

 
FY16-18 TSR
5,502

150
%
8,253

 
 
 
 
 
Todd A. Burrowes
FY16-18 ROIC
4,402

118
%
5,194

 
FY16-18 TSR
4,402

150
%
6,603

 
 
 
 
 
Matthew R. Broad
FY16-18 ROIC
2,704

127
%
3,434

 
FY16-18 TSR
2,704

150
%
4,056



Option Exercises and Stock Vested for Fiscal 2018

The following table summarizes the number of option awards exercised and restricted stock and restricted stock units that vested during fiscal 2018 for each of the NEOs.
 
 
Option Awards
 
Stock Awards
Name
 
Number of
Shares
Acquired on
Exercise (#)