UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section Section��14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x☒
Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
| Preliminary Proxy Statement | |||
| Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |||
| Definitive Proxy Statement | |||
| Definitive Additional Materials | |||
| Soliciting Material under Rule14a-12 |
THE WENDY’S COMPANY
Name of the Registrant as Specified In Its Charter
Payment of Filing Fee (Check the appropriate box):
| No fee required. | |||
| Fee computed on table below per Exchange Act Rules14a-6(i)(4) and0-11. | |||
1. | Title of each class of securities to which transaction applies:
| |||
2. | Aggregate number of securities to which transaction applies:
| |||
3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
4. | Proposed maximum aggregate value of transaction:
| |||
5. | Total fee paid:
|
| Fee paid previously with preliminary materials. | |||
| Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
1. | Amount Previously Paid:
| |||
2. | Form, Schedule or Registration Statement No.:
| |||
3. | Filing Party:
| |||
4. | Date Filed:
|
The Wendy’s Company®
Notice of 2018 annual meeting
of stockholders & proxy statement
The Wendy’s Company One Dave Thomas Boulevard Dublin, Ohio 43017 (614) 764-3100 |
April 11, 201620, 2018
Dear Fellow Stockholders:
It is our pleasureWe are pleased to invite you to join us at the 20162018 Annual Meeting of Stockholders (the “Annual Meeting”) of The Wendy’s Company (the “Company”), which will be held on Thursday, May 26, 2016,Tuesday, June 5, 2018 at 10:00 a.m. (EDT). The Annual Meeting will be held at the Thomas Conference Center located at the Company’s corporate offices at One Dave Thomas Boulevard, Dublin, Ohio 43017. The Board of Directors and management hope that you will be able to attend the Annual Meeting.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe the business to be conducted at the Annual Meeting. AtMeeting is described in the Notice of 2018 Annual Meeting we willof Stockholders and Proxy Statement. We also reviewlook forward to reporting on the Company’s 20152017 performance, plans for continued global growth and discuss our plans to continue deliveringdriving stockholder value to you, our stockholders.
The Company’s successful performance in 2015 built on a history of strong results and is a testament to the relevance of the Wendy’s® brand with today’s consumers, the customer-focused commitment of our restaurant teams and our exceptional base of growth-oriented franchisees. In 2015, we unlocked the strength of our core brand business and our rich food heritage, achieving an attractive balance between core menu items, premium LTOs and value offerings. Featuring favorites like Baconator®, innovative new items like the Jalapeño Fresco Spicy Chicken Sandwich and Ghost Pepper Fries and the launch of our 4 for $4 Meal, our marketing and operations initiatives drove 3.3% growth in North America system same restaurant sales and profitable customer count growth.
Our “Image Activation” restaurant reimaging program continues to transform the face of the brand at the restaurant level and is delivering in a highly effective way. In 2015, the Wendy’s North America system reimaged 450 restaurants and built 70 new restaurants. As of the end of 2015, the Wendy’s system was 22% reimaged, putting us well on track to reach our 2020 goals of opening 1,000 new restaurants and having at least 60% of system restaurants on our Image Activation design. We have an incredible partnership with our franchise community on Image Activation, new restaurant development and other brand initiatives. We are grateful for their steadfast commitment to investing in the Wendy’s brand and providing our customers with a Deliciously DifferentTM restaurant experience.
The combination of strong sales momentum and the acceleration of Image Activation has also contributed to significant growth in North America restaurant average unit volumes. In 2015, AUVs for system restaurants increased by 3.4% to anall-time high of $1.54 million, and we remain on track to achieve our 2020 goal of $2.0 million AUVs. Through our strong core business performance, we exceeded our financial goals for 2015, as Company restaurant margins improved 190 basis points, adjusted EBITDA increased 10% and adjusted earnings per share grew 14% from the prior year.corporate endeavors.
We also took substantial positive steps in 2015 to enhance our economic model and capital structure to support long-term income and growth for stockholders. We refinanced our long-term debt by completing a $2.275 billion whole business securitization and used the net proceeds to return $1.2 billion in cash to our stockholders through share repurchases and dividends. At the same time, we continued to invest in the reimaging of our restaurants, new restaurant development and technology initiatives to connect with our customers and drive productivity in our restaurants.
In 2015, we continued to strengthen the Wendy’s franchise system through our “System Optimization” initiative. We sold 327 Company-operated restaurants in the U.S. and Canada to strong franchise operators who are dedicated to people development, Image Activation and new restaurant growth. We believe System Optimization will continue to drive us towards a more predictable and sustainable earnings growth model as we transition to a 95% franchised system. In addition to the sale of Company-operated restaurants, we also played an active role in facilitating franchisee-to-franchisee restaurant transfers, as some franchisees move into retirement while others seek to grow. This ongoing System Optimization at the franchise level strengthens our brand and gives growth-oriented franchisees an opportunity to expand their presence within the Wendy’s system.
Beyond our strong business performance, the heart of the Wendy’s brand lies in our rich family culture and the core values left to us by our founder, Dave Thomas. We steadfastly support the Dave Thomas Foundation for Adoption® and its tireless efforts to find permanent, loving homes for children waiting in the foster care system. We surpassed a milestone in 2015 by celebrating the adoption of the 5,000th child through the Wendy’s Wonderful Kids® program, but we recognize that so many more children need and deserve our help. We will continue to rely on the strength of the Wendy’s brand and the passionate advocacy of our franchisees, employees and suppliers to raise awareness and funds for children who are waiting to find their forever families. We encourage you to visitwww.davethomasfoundation.org orwww.aboutwendys.com to learn more about this worthy cause.
Finally, we encourage you to participate in the Annual Meeting by voting your shares – regardless ofMeeting. Please refer to the size of your holdings. Every vote is important,Proxy Statement for information regarding attendance and your participation enables us to listen and act on what matters to you as a stockholder. Accordingly,admission requirements. Also, whether or not you plan to attend, it is important that your shares be represented and voted at the Annual Meeting, pleaseMeeting. Please promptly completecast your vote by completing and returnreturning your proxy card in the enclosed envelope or submitto the address indicated on your proxy card or voting instruction form. You may also cast your vote by telephone or via the Internet as described in the instructions included with your proxy card.materials. If you attend the Annual Meeting and wish to vote your shares in person, you may revoke your previously submitted proxy as explained in the Proxy Statement.
We thankThank you for your continued support as a stockholder ofand investment in The Wendy’s Company, and we look forward to a fulfilling and successful 2016.Company.
Sincerely,
| ||
TODD A. PENEGOR | ||
President and Chief Executive Officer |
| |
NOTICE OF 20162018 ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 26, 2016,Tuesday, June 5, 2018, 10:00 a.m. (EDT)
The 20162018 Annual Meeting of Stockholders (the “Annual Meeting”) of The Wendy’s Company (the “Company”) will be held on Thursday, May 26, 2016,Tuesday, June 5, 2018 at 10:00 a.m. (EDT) at the Thomas Conference Center located at the Company’s corporate offices at One Dave Thomas Boulevard, Dublin, Ohio 43017.
ITEMSOF BUSINESS |
At the Annual Meeting, you will be asked to: |
(1) | Elect 11 directors to hold office until the Company’s next annual meeting of stockholders; |
|
Ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for |
(3) | Vote on an advisory resolution to approve executive compensation; and |
(4) | Transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
RECORD DATE |
The record date for the Annual Meeting is March 28, 2016. All
The record date for the Annual Meeting is April 9, 2018. Only holders of record of shares of the Company’s common stock at the close of business on the record date are entitled to vote on all business transacted at the Annual Meeting or any adjournment or postponement thereof. |
VOTING Y |
Your vote is important! Stockholders are cordially invited to attend the Annual Meeting. Whether or not you plan to attend, please promptly complete and return your proxy card in the enclosed envelope, or submit your proxy by telephone or via the Internet as described in the instructions included with your proxy card. You may vote in person if you attend the Annual Meeting. |
ANNUAL MEETING ADMISSION |
For your comfort and security, admission
Admission to |
By Order of the Board of Directors:
DANA KLEIN
E. J. WUNSCH
AssistantChief Legal Officer and Secretary
April 11, 201620, 2018
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on and the
|
Page | ||||
1 | ||||
1 | ||||
1 | ||||
2 | ||||
| 3 | |||
5 | ||||
5 | ||||
5 | ||||
5 | ||||
6 | ||||
Director Nominee Qualifications and Biographical Information | ||||
24 | ||||
Compensation Committee and Performance Compensation Subcommittee | ||||
| ||||
25 | ||||
26 | ||||
Role of Compensation Consultants | ||||
Management’s Role | 27 | |||
27 | ||||
28 | ||||
28 | ||||
28 | ||||
28 | ||||
29 | ||||
Code of Business Conduct and Ethics and Related Governance Policies | 30 | |||
30 | ||||
31 | ||||
| ||||
| ||||
39 | ||||
40 |
The Wendy’s Company 20162018 Proxy Statement i
ii The Wendy’s Company 20162018 Proxy Statement
| The Wendy’s Company One Dave Thomas Boulevard Dublin, Ohio 43017 (614) 764-3100 |
PROXY STATEMENT FOR 20162018 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT SUMMARYPROXY STATEMENT SUMMARY
This summary highlights information about The Wendy’s Company (“Wendy’s” or the “Company”) and certain information contained elsewhere in this Proxy Statement for the Company’s 20162018 Annual Meeting of Stockholders to be held on Thursday, May 26, 2016,Tuesday, June 5, 2018 at 10:00 a.m. (EDT), and any adjournment or postponement thereof (the “Annual Meeting”). This summary does not contain all of the information that you should consider in voting your shares, and you should read the entire Proxy Statement carefully before voting. For more complete information regarding the Company’s 20152017 performance, please review the Company’s Annual Report on Form10-K for the fiscal year ended January 3, 2016December 31, 2017 (the “2015“2017 Form10-K”). References in this Proxy Statement to “2015,“2017,” “2014,“2016,” “2013”“2015” and other years meanrefer to the Company’s fiscal yearsyear for the periodsrespective period indicated.
Even if you plan to attend the Annual Meeting in person, please cast your vote as soon as possible in one of the following ways:
Internet | Telephone | |||||
Visit |
| Call (800)690-6903. You will need the16-digit number included in your proxy card, voting instruction form or Notice of Internet |
Complete, sign and date your proxy card or voting instruction form and return it in the envelope provided or to the address indicated on your proxy card or voting instruction form. |
If you
|
| BOARD VOTE | PAGE REFERENCE (FOR MORE DETAIL) | ||||||
Proposal 1: |
Election of 11 |
FOR |
9 | |||||
| ||||||||
Proposal 2: |
| |||||||
| Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | FOR | 76 | |||||
Proposal 3: | Advisory resolution to approve executive compensation. | FOR | 78 |
The Wendy’s Company 20162018 Proxy Statement 1
The following table provides summary information about the 11 director nominees. Additional information about each nominee’s experience, qualifications, attributes and skills can be found beginning on page 11.under the caption “Proposal 1—Election of Directors—Director Nominee Qualifications and Biographical Information.”
NAME
| AGE
|
DIRECTOR SINCE
| OCCUPATION
| INDEPENDENT
|
CURRENT BOARD COMMITTEES (1)(2)
|
OTHER PUBLIC BOARDS
| AGE | DIRECTOR SINCE | OCCUPATION | INDEPENDENT | CURRENT BOARD COMMITTEES (1)(2) | OTHER PUBLIC BOARDS | ||||||||||||||||||
Nelson Peltz | 73 | 1993 | Chief Executive Officer and founding partner of Trian Fund Management, L.P. | CSR*, Executive* | 3 | 75 | 1993 (3) | Chief Executive Officer and Founding Partner of Trian Fund Management, L.P. | CSR*, Executive* | 3 | ||||||||||||||||||||
Peter W. May | 73 | 1993 | President and founding partner of Trian Fund Management, L.P. | C&I*, CSR, Executive | 1 | 75 | 1993 (3) | President and Founding Partner of Trian Fund Management, L.P. | ✓ | CI*, Compensation, CSR, Executive, Tech* | 1 | |||||||||||||||||||
Emil J. Brolick | 68 | 2011 | Chief Executive Officer of The Wendy’s Company | C&I, Executive | — | |||||||||||||||||||||||||
Janet Hill | 68 | 2008 | Principal at Hill Family Advisors | ü | Compensation | 2 | ||||||||||||||||||||||||
Kristin A. Dolan | 52 | 2017 | Chief Executive Officer and Founder of 605 LLC | ✓ | Tech | 4 | ||||||||||||||||||||||||
Kenneth W. Gilbert | 67 | 2017 | Former Chief Marketing Officer of VOSS of Norway ASA | ✓ | CSR, Tech | — | ||||||||||||||||||||||||
Dennis M. Kass | 65 | 2015 | Former Chairman and Chief Executive Officer of Jennison Associates, LLC | ü | — | 1 | 67 | 2015 | Former Chairman and Chief Executive Officer of Jennison Associates, LLC | ✓ | Audit, Compensation | — | ||||||||||||||||||
Joseph A. Levato | 75 | 1996 | Former Executive Vice President and Chief Financial Officer of Triarc Companies, Inc. (predecessor to The Wendy’s Company) | ü | Audit*, B&I, Compensation, CSR | — | 77 | 1996 (3) | Former Executive Vice President and Chief Financial Officer of Triarc Companies, Inc. (predecessor to The Wendy’s Company) | ✓ | Audit, Compensation, Executive, NCG | — | ||||||||||||||||||
Michelle “Mich” J. Mathews-Spradlin | 49 | 2015 | Former Chief Marketing Officer and Senior Vice President of Microsoft Corporation | ü | Compensation | — | 51 | 2015 | Former Chief Marketing Officer and Senior Vice President of Microsoft Corporation | ✓ | Compensation, CSR, Tech | — | ||||||||||||||||||
Matthew H. Peltz | 33 | 2015 | Partner of Trian Fund Management, L.P. | — | — | 35 | 2015 | Senior Analyst and Partner of Trian Fund Management, L.P. | CI, CSR, Tech | — (4) | ||||||||||||||||||||
Todd A. Penegor | 50 | — | President and Chief Financial Officer of The Wendy’s Company | — | — | 52 | 2016 | President and Chief Executive Officer of The Wendy’s Company | CI, Executive | — | ||||||||||||||||||||
Peter H. Rothschild | 60 | 2010 | Managing Member of Daroth Capital LLC | ü | Audit, N&CG | — | 62 | 2010 | Managing Member of Daroth Capital LLC | ✓ | Audit, Compensation*, NCG* | — | ||||||||||||||||||
Arthur B. Winkleblack | 58 | — | Former Executive Vice President and Chief Financial Officer of H. J. Heinz Company | ü | — | 2 | 60 | 2016 | Former Executive Vice President and Chief Financial Officer of H. J. Heinz Company | ✓ | Audit*, NCG | 2 |
(1) | CI: Capital and Investment; | CSR: Corporate Social Responsibility; | ||||||||||||||||||
(2) | It is anticipated that the Board of Directors will determine committee assignments at the Board’s organizational meeting immediately following the Annual Meeting. | |||||||||||||||||||
(3) | Messrs. N. Peltz, May and Levato have been directors of the Company since September 2008, when the Company commenced its current business—the ownership and franchising of the Wendy’s restaurant system. Messrs. Peltz and May served as directors of the Company’s predecessor companies from April 1993, and Mr. Levato from June 1996, until September 2008 when Wendy’s International, Inc. merged with Triarc Companies, Inc., the predecessor to The Wendy’s Company. | |||||||||||||||||||
(4) | Following the separation of the water and electrical businesses of Pentair plc into two independent publicly traded companies, which is targeted to occur on April 30, 2018, Mr. Peltz will become a member of the board of directors of Pentair plc.
|
2 The Wendy’s Company 2018 Proxy Statement
The Company is committed to maintaining strong corporate governance practices as a critical component of driving sustained stockholder value. Our Board of Directors (the “Board of Directors” or the “Board”) continually monitors emerging best practices in corporate governance to serve the interests of our stockholders. Highlights of our current governance practices are set forth below.
BOARDOF DIRECTORS
| STOCKHOLDER INTERESTS
| EXECUTIVE COMPENSATION
| ||||||
• Annual election of • Majority voting for directors in uncontested elections with director resignation • Separation of our Board Chairman and Chief Executive • Majority independent • Fully independent key Board • • Over • Active Board and committee oversight of risk • ComprehensiveCorporate Governance Guidelines andCode of Business Conduct and Ethics. • Annual limit on cash and equity awards granted tonon-employee | • No stockholder rights plan or “poison • Stockholders have the ability to act by written • Stockholders have the ability to call special • No supermajority voting • No exclusive forum selection • Certificate of Incorporation provides stockholders with a “proxy access” right. • No
| • Annual • Strongpay-for-performance philosophy with emphasis onat-risk • Multiple performance metrics in annual and long-term incentive plans. • Limited perquisites and benefits. • Engage independent outside compensation •
• No speculative trading or hedging • “Double trigger” required for change in control equity • Significant stock ownership and retention |
2 The Wendy’s Company 2016 Proxy Statement
|
During 2015,
During 2017, the Company achieved strong operating and financial results and continued delivering on the Wendy’s® brand promise to Delight Every Customer™ and execute every element of The Wendy’s Way by investing in the quality of our food and providing great value, exceptional service and an elevated restaurant experience. Led by President and Chief Executive Officer Todd Penegor and our senior leadership team, the Company drove significant improvements in the corporate and restaurant-level economic model, continued to strengthen the Wendy’s franchise system and created significant value for stockholders. We achieved significant year-over-year improvements in our key operating and financial metrics, persisted in transforming our brand through global restaurant development and image activation, completed our transition to a predominantly franchised business model and returned $196 million in cash to stockholders through dividends and share repurchases. Through our strong operating results and execution of our strategic initiatives, we delivered cumulative total stockholder return of 24% in 2017, 96% on a three-year basis and 289% on a five-year basis. Our executive compensation program is designed to support the Company’s business objectives by linking executive pay to individual performance, the Company’s attainment of annual and multi-year operating and financial goals and the creation of long-term stockholder value. In accordance with ourpay-for-performance philosophy, variable (i.e.,at-risk) incentives constituted the most significant portion of total direct compensation for 2017 for our Chief Executive Officer (83%) and other Named Executive Officers as a group (71%). (Our Named Executive Officers (“NEOs”) are identified under the caption “Compensation Discussion and Analysis—Named Executive Officers.”) |
The Wendy’s Company achieved strong operating and financial results and continued to delight our customers by delivering “A Cut Above” restaurant experience. Led by Chief Executive Officer Emil J. Brolick, Chief Financial Officer Todd A. Penegor and the rest of our senior leadership team, the Company drove significant improvements in the corporate and restaurant-level economic model, accelerated the transformation of the Wendy’s® brand and continued to strengthen the Wendy’s franchise system. We achieved significant year-over-year improvements in our key operating and financial metrics, sustained our strong momentum with new restaurant development and our “Image Activation” restaurant reimaging program, continued our transition towards a predominantly franchised business model and returned $1.2 billion in cash to stockholders through dividends and share repurchases. Through our strong operating results and execution of our strategic initiatives, we delivered total stockholder return of 21% in 2015 and 144% on a 3-year basis.2018 Proxy Statement 3
2015 was also highlighted by the implementation of thoughtful succession planning, as the Company announced that Mr. Brolick planned to retire from management duties with the Company in May 2016. As part of the succession plan, Mr. Penegor was appointed President of the Company effective January 4, 2016, and Mr. Penegor is expected to succeed Mr. Brolick in the Chief Executive Officer role after a transition period that began in the first quarter of 2016. Mr. Brolick is expected to continue to serve on the Board of Directors upon his retirement to ensure continuity of leadership and strategic focus for the Company.
Our executive compensation program is designed to support the Company’s business objectives by linking executive pay to individual performance, the Company’s attainment of annual and multi-year operating and financial goals and the creation of long-term stockholder value. In accordance with our pay-for-performance philosophy, variable (“at-risk”) incentives constituted the most significant portion of total direct compensation for 2015 for our Chief Executive Officer (82%) and other named executive officers as a group (69%).
The primary components of our 20152017 executive compensation program are summarized in the table below and are further described in the “Compensation Discussion and Analysis” beginning on page 30.in this Proxy Statement.
ELEMENT | AT-RISK | FORM | METRICS | PURPOSE | ||||
Base Salary | No | Cash | — | Attract and retain | ||||
Annual Incentives | Yes | Cash | • Adjusted EBITDA
(North America) (40%) | Align executive pay with | ||||
Long-Term Equity Incentives | Yes | Equity • Stock Options • Performance Units | Share Price • Adjusted EPS (50%) • Relative TSR (50%) | Align the interests of executives with the interests of stockholders and retain |
Consistent with our executive compensation philosophy, the base salaries, target total cash compensation and target total direct compensation of our senior executives for 2015, on average,2017 fell within thea competitive range of market median.median, in the aggregate. The Company’s strong salesoperating and financial performance in 20152017 supported an annual cash incentive payout at 152.6%109.0% of target, prior to adjustment for individual performance.
The Wendy’s Company 2016 Proxy Statement 3
Summary compensation informationperformance for our named executive officers for 2015 is summarized inexecutives other than the following table (excluding Darrell G. van Ligten and Craig S. Bahner, who left the Company prior to the end of 2015). These amounts are presented in accordance with accounting assumptions and Securities and Exchange Commission (“SEC”) rules, and the amounts that executives actually receive may vary substantially from what is reported in the equity awards columns of the table.Chief Executive Officer.
NAMEAND PRINCIPAL POSITION
| SALARY (S)
| BONUS ($)
| STOCK AWARDS ($)
| OPTION ($)
|
NON-EQUITY INCENTIVE PLAN ($)
| ALL OTHER ($)
| TOTAL ($)
| |||||||||||||||||
Emil J. Brolick Chief Executive Officer | 1,168,904 | — | 1,499,991 | 2,249,998 | 3,290,438 | 68,915 | 8,278,246 | |||||||||||||||||
Todd A. Penegor President and Chief Financial Officer | 679,863 | — | 399,993 | 599,998 | 965,672 | 30,200 | 2,675,726 | |||||||||||||||||
Robert D. Wright Executive Vice President, Chief Operations Officer | 490,479 | — | 359,992 | 539,999 | 638,345 | 30,200 | 2,059,015 | |||||||||||||||||
R. Scott Toop Former Senior Vice President, General Counsel and Secretary | 491,822 | — | 263,986 | 395,998 | 560,805 | 30,200 | 1,742,811 | |||||||||||||||||
Scott A. Weisberg Chief People Officer | 419,329 | — | 219,992 | 330,000 | 546,213 | 30,200 | 1,545,734 |
We encourage you to read the “Compensation Discussion and Analysis” beginning on page 30in this Proxy Statement for a detailed discussion of how our executive compensation program was designed and implemented in 20152017 to achieve our overall compensation objectives. Stockholders should also review the “2015“2017 Summary Compensation Table” on page 42, as well as theand other related compensation tables, notes and narrative,narratives in this Proxy Statement, which provide detailed information regarding the compensation of our named executive officersNEOs for 2015.
4 The Wendy’s Company 20162018 Proxy Statement
Annual Meeting DetailsANNUAL MEETING DETAILS
The accompanying proxy is being solicited by the Board of Directors of The Wendy’s Company in connection with the Company’s 20162018 Annual Meeting of Stockholders to be held on Thursday, May 26, 2016,Tuesday, June 5, 2018 at 10:00 a.m. (EDT) at the Thomas Conference Center located at the Company’s corporate offices at One Dave Thomas Boulevard, Dublin, Ohio 43017, and any adjournment or postponement thereof. Directions to the Annual Meeting are available on the Company’sour website atwww.aboutwendys.comwww.wendys.com/who-we-are. This Proxy Statement and an accompanying proxy card will first be mailed to stockholders, or made available to stockholders electronically via the Internet, on or about April [13], 2016.23, 2018.
Voting Your ProxyVOTING YOUR PROXY
When a stockholder returns a proxy card that is properly signed and dated, the shares represented by the proxy card will be voted by the persons named as proxies in the proxy card in accordance with the stockholder’s instructions. Stockholders may specify their choices by marking the appropriate boxes on their proxy card. If a proxy card is signed, dated and returned by a stockholder without specifying choices, the shares represented by the proxy card will be voted as recommended by the Board of Directors. The Company does not have cumulative voting.
Pursuant to the Company’s Amended and Restated Certificate of Incorporation (as amended and restated, the “Certificate of Incorporation”) andBy-Laws (as amended and restated, the “By-Laws”“By-Laws”), business transacted at the Annual Meeting is limited to the purposes stated in the Notice of Annual Meeting of Stockholders and any other matters that may properly come before the Annual Meeting. Except for the proposals described in this Proxy Statement, no other matters currently are intended to be brought before the Annual Meeting by the Company or, to the Company’s knowledge, any other person. The proxy being solicited by the Board does, however, convey discretionary authority to the persons named as proxies in the accompanying proxy card to vote on any other matters that may properly come before the Annual Meeting. A proxy may be revoked by a stockholder at any time prior to the time it is voted by giving notice of revocation either personally or in writing to the Corporate Secretary of the Company at our corporate offices at the Company’s principal executive offices.address provided under the caption “Contacting the Secretary and Corporate Offices.”
Annual Meeting AdmissionANNUAL MEETING ADMISSION
Only holders of shares of the Company’s common stock, par value $0.10 per share (the “Common Stock”), at the close of business on March 28, 2016,April 9, 2018, their authorized representatives and invited guests of the Company will be able to attend the Annual Meeting. For your comfort and security, admission to the Annual Meeting will be by admission ticket only, and packages and bags may be inspected and required to be checked in at the registration desk. Youyou will also will be required to present a valid government-issued photo identification.identification and valid proof of stock ownership as of the April 9, 2018 record date (such as a bank or brokerage account statement or a letter from the bank or broker verifying that you were the beneficial owner of the shares on the record date). In addition, if you are a beneficial owner (i.e., your shares are held in the name of a broker, bank or other nominee), you must also provide a legal proxy from the record holder to vote your shares in person at the Annual Meeting.
If you are a registered stockholder (i.e., your shares are held in your name) and plan to attend the Annual Meeting, your admission ticket is either your notice regarding theNotice of Internet availabilityAvailability of proxy materialsProxy Materials (the “Notice of Internet Availability”) or the top portion of your proxy card, whichever you have received. If you are a beneficial owner (i.e., your shares are held in the name of a broker, bank or other holder of record) and plan to attend the Annual Meeting, your admission ticket is either your notice regarding theNotice of Internet availability of proxy materialsAvailability or the top portion of your voting instruction form, whichever you have received. In addition, you can
You may also obtain an admission ticket in advance of the Annual Meeting by sending a written request to the Corporate Secretary of the Company at the Company’s principal executive offices. Please be sure toaddress of our corporate offices provided under the caption “Contacting the Secretary and Corporate Offices.” With your written request, you must enclose valid proof of stock ownership such as a bank or brokerage account statement or a letter from the bank or broker verifying that you were the beneficial owner of the shares on March 28, 2016.record date and a copy of your admission ticket, as described above. Stockholders who do not obtain admission tickets in advance ofbut plan to attend the Annual Meeting may obtain them upon verification of ownership atmust satisfy the registration desk on the day of the Annual Meeting.admission requirements described above. The Company may issue admission tickets to persons other than stockholders in itsthe Company’s sole discretion.
Stockholders who hold shares of our Common Stock in a joint account may be admitted to the Annual Meeting if they provide valid proof of joint stock ownership as of the record date and both stockholders satisfy the other admission requirements described above.
If you are the representative of a corporation, limited liability company, partnership or other legal entity that holds shares of our Common Stock, you must bring acceptable evidence of your authority to represent that legal entity at the Annual Meeting. Please note that only one representative may attend the Annual Meeting on behalf of each legal entity that holds shares of our Common Stock.
The Wendy’s Company 20162018 Proxy Statement 5
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Q: | Who is soliciting my proxy? |
A: |
|
Q: | What should I do with these materials? |
A: | Please carefully read and consider the information contained in this Proxy Statement, and then vote your shares as soon as possible to ensure that your shares will be represented at the Annual Meeting. You may vote your shares prior to the Annual Meeting even if you plan to attend the Annual Meeting in person. |
Q: | What am I being asked to vote on? |
A: | You are being asked to vote on the following |
(1) | To elect 11 directors to hold office until the Company’s next annual meeting of stockholders; |
(2) | To |
|
To approve an advisory resolution to approve executive compensation. |
Q: | How do I vote? |
A: | You may vote your shares prior to the Annual Meeting in any of the following ways: |
• | Visit the website shown on your |
• | Use the toll-free telephone number shown on your |
• | Complete, sign, date and return the enclosed proxy card or voting instruction form in the enclosed postage-paid envelope if you have requested and received our proxy materials by mail. |
If you are a registered stockholder, you may also vote your shares in person at the Annual Meeting. If you are a beneficial owner and hold your shares in street name, then you must obtain a “legal proxy”legal proxy from the broker, bank or other nominee who holds the shares on your behalf in order to vote those shares in person at the Annual Meeting.
Q: | Who is entitled to vote? |
A: | All holders of record of our Common Stock at the close of business on |
Q: | What is the deadline for submitting a proxy? |
A: | In order to be counted, proxies submitted by telephone or via the Internet must be received by 11:59 p.m. (EDT) on |
Q: | What is the difference between a registered stockholder and a “street name” holder? |
A: | If your shares are registered directly in your name with American Stock Transfer & Trust Company, LLC, our stock transfer agent, you are considered a stockholder of record, or a registered stockholder, of those shares. |
If your shares are held by a broker, bank or other nominee, you are considered the beneficial owner of those shares, and your shares are said to be held in “street name.” Your broker, bank or other nominee should have enclosed, or should provide you with, a notice regarding theNotice of Internet availability of proxy materialsAvailability or a voting instruction form for you to use in directing it on how to vote your shares.
6 The Wendy’s Company 2016 Proxy Statement
Q: | What constitutes a quorum? |
A: | At the close of business on |
6 The Wendy’s Company 2018 Proxy Statement
matter properly brought before the Annual Meeting. The presence, in person or by proxy, of stockholders entitled to cast at least a majority of the votes that all stockholders are entitled to cast at the Annual Meeting will constitute a quorum. Abstentions and “brokernon-votes” (described below) will be included for purposes of determining whether a quorum is present at the Annual Meeting. |
Q: | What are abstentions and brokernon-votes and how do they affect voting? |
A: | Abstentions.If you specify on your proxy card that you “abstain” from voting on an item, your shares will be counted as present and entitled to vote for the purpose of establishing a quorum. Abstentions will be the equivalent of an “against” vote on proposals that require the affirmative vote of a majority of the shares of Common Stock |
BrokerNon-Votes.Under the rules of The NASDAQ Stock Market (“NASDAQ”), if your shares are held in street name, then your broker has discretion to vote your shares without instructions from you on certain “routine” proposals, such as the ratification of the appointment of the Company’s independent registered public accounting firm (Proposal 3)2). Your broker does not, however, have such discretion on the election of directors (Proposal 1), the approval of amendments to the Certificate of Incorporation (Proposal 2) or the advisory resolution to approve executive compensation (Proposal 4)3). If you do not provide your broker with voting instructions for these proposals, then your broker will be unable to vote on these proposals and will report your shares as “brokernon-votes” on these proposals. Like abstentions, brokernon-votes are counted as present for the purpose of establishing a quorum, but, unlike abstentions, they are not counted for the purpose of determining the number of shares present (in person or by proxy) and entitled to vote on particular proposals. As a result, brokernon-votes will not be included in the tabulation of voting results for proposals that require the affirmative vote of a majority of the votes cast (Proposal 1) or the affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Annual Meeting (Proposal 4), and broker non-votes will be the equivalent of votes “against” proposals that require the affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote at the Annual Meeting (Proposal 2)3). Because brokers are entitled to vote on Proposal 3,2, we do not anticipate any brokernon-votes with regard to that proposal.
Q: | What vote is needed to elect the 11 director nominees (Proposal 1)? |
A: | Pursuant to ourBy-Laws, each of the 11 director nominees must receive the affirmative vote of a majority of the votes cast with respect to that nominee’s election in order to be elected as a director at the Annual Meeting. |
|
|
Q: | What vote is needed to ratify the appointment of the Company’s independent registered public accounting firm (Proposal |
A: | The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Annual Meeting is required to ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for |
The Wendy’s Company 2016 Proxy Statement 7
Q: | What vote is needed to approve the advisory resolution to approve executive compensation (Proposal |
A: | The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Annual Meeting is required to approve the advisory resolution to approve the 2017 executive compensation of our NEOs (Proposal |
Q: | How do Nelson Peltz and Peter |
A: | The Company has been informed that the shares of Common Stock beneficially owned as of the record date by Nelson Peltz and Peter |
Q: | If I deliver my signed proxy card or voting instruction form but do not indicate how I want to vote on the proposals, how will my shares be voted? |
A: | If you submit your proxy card or voting instruction form but do not indicate how you want to vote on the proposals, your proxy will be counted as a vote in accordance with the recommendations of the Board of DirectorsFOR the election of each of the 11 director nominees named in Proposal 1 andFOR Proposals 2 |
The Wendy’s Company 2018 Proxy Statement 7
Q: | Can I change my vote after I have delivered my proxy card or voting instruction form? |
A: | Yes. You can change your vote at any time before your proxy is voted at the Annual Meeting by revoking your proxy. You can revoke your proxy by giving notice of revocation either personally or in writing to the Secretary of the Company at the address of our corporate offices provided under the caption “Contacting the Secretary and Corporate Offices.” You also can revoke your proxy by submitting a later-dated proxy by mail, by telephone, via the Internet or by attending and voting in person at the Annual Meeting. Your attendance at the Annual Meeting by itself will not revoke a previously submitted proxy. |
You can revoke your proxy by giving notice of revocation either personally or in writing to the Corporate Secretary of the Company at the Company’s principal executive offices. You also can revoke your proxy by submitting alater-dated proxy by mail, by telephone, via the Internet or by attending and voting in person at the Annual Meeting. Your attendance at the Annual Meeting alone will not revoke a previously-submitted proxy.
If your shares are held in an account with a broker, bank or other nominee, you should contact your broker, bank or other nominee if you wish to change your vote or revoke your proxy.
Q: | Why did I receive a |
A: | As permitted by SEC rules, we are making our proxy materials available to stockholders electronically via the Internet atwww.proxyvote.com. On or about April |
Q: | What does it mean if I receive more than one |
A: | If you receive more than one |
Q: | Who will bear the expenses of this solicitation? |
A: | The Company will pay the costs and expenses of this solicitation. In addition to soliciting proxies by mailing our proxy materials to stockholders and by making our proxy materials available to stockholders electronically via the Internet, proxies may be solicited by our directors, officers and employees by personal contact, telephone, mail,e-mail or other means without additional compensation. Solicitation of proxies will also be made by employees of Innisfree M&A Incorporated, our proxy solicitation firm, who will be paid a fee of $20,000, plus reasonableout-of-pocket expenses. As is customary, we will also reimburse banks, brokers, custodians, nominees and fiduciaries for their reasonable costs and expenses incurred in forwarding our proxy materials to beneficial owners of our Common Stock. |
8 The Wendy’s Company 2016 Proxy Statement
Q: | Where can I find the voting results of the Annual Meeting? |
A: | We intend to announce preliminary voting results at the Annual Meeting and publish final voting results in a Current Report on Form8-K filed with the SEC within four business days of the Annual Meeting. After the Form8-K has been filed, you may obtain a copy by visiting the SEC’s website atwww.sec.gov or by visiting our Company website at |
Q: | Whom should I call with questions? |
A: | Please call Innisfree M&A Incorporated, the Company’s proxy solicitor, toll-free at (888)750-5834 with any questions about the Annual Meeting. Banks, brokers and other nominees may call collect at (212)750-5833. |
8 The Wendy’s Company 20162018 Proxy Statement 9
ELECTION OF DIRECTORS
(Item 1 on the Company’s Proxy Card)
As of the date of this Proxy Statement, there are 1112 members of our Board of Directors.
TwoOne of the Company’s current directors, –Emil J. Randolph Lewis and David E. Schwab II – will not seek re-election andBrolick, will conclude theirhis service on the Board when their terms expirehis term expires at the Annual Meeting. Mr. Lewis is retiring from the BoardMeeting, after having served as a directormember of our Board since September 2011 when he joined the Company for eight yearsas our President and as a director of Wendy’s International, Inc. (“Wendy’s International”) for four years prior to its merger with the Company in 2008, andChief Executive Officer. Mr. Schwab is retiring from the Board after havingBrolick served as a director of the Company for 22 years. The Company has benefitted greatly from the distinguished serviceour President until January 2016 and outstanding contributions of Messrs. Lewis and Schwab during their Board tenure.
The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated Todd A. Penegor and Arthur B. Winkleblack for election as directors of the Company at the Annual Meeting to fill the vacancies resulting from the retirement of Messrs. Lewis and Schwab.
In October 2015, the Company announced that Emil J. Brolick, our Chief Executive Officer planned to retireuntil his retirement from management duties with the Company in May 2016, and that Mr. Penegor, our Chief Financial Officer, was expected to succeed Mr. Brolick in the President and Chief Executive Officer role after a transition period beginning in the first quarter of 2016. As part of the succession plan, Mr. Penegor was appointed President of the Company effective January 4, 2016, and the Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated Mr. Penegor for election as a director of the Company at the Annual Meeting. Mr. Brolick is expected to continueHe continued to serve on the Board of Directors upon his retirement to ensure continuity of leadership and strategic focus for the Company.
Company, and we are grateful for Mr. Winkleblack was recommended toBrolick’s many contributions, outstanding service and distinguished leadership during his executive and Board tenure. The Board has determined that the Nominating and Corporate Governance Committee by onesize of ournon-management directors, in consultation with our Chief Executive Officer, Chief Financial Officer and other members of senior management. The Nominating and Corporate Governance Committee, after reviewing Mr. Winkleblack’s qualifications, making a determination as to his independence and considering the Board will be reduced from 12 to 11 members upon the expiration of Director’s needs, recommended to the Board that Mr. Winkleblack be nominated for election as a director of the CompanyBrolick’s term at the Annual Meeting.
The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the 11 persons named below for election as directors of the Company at the Annual Meeting. Other than Messrs. Penegor and Winkleblack, eachEach of the other nominees is presently serving as a director of the Company, and each of the other nominees was elected as a director at the Company’s 20152017 annual meeting of stockholders, except for Dennis M. Kass and Matthew H. Peltz.Kristin Dolan.
Mr. KassMs. Dolan joined the Board of Directors in December 2015July 2017 when the Board, upon the recommendation of the Nominating and Corporate Governance Committee, increased the size of the Board from 1011 to 1112 members and elected Mr. KassMs. Dolan to serve as a director of the Company for a term expiring at the Annual Meeting.
Mr. Peltz also joined the Board of Directors in December 2015 when the Board, upon the recommendation of the Nominating and Corporate Governance Committee, filled the vacancy resulting from Edward P. Garden’s resignation from the Board by electing Mr. Peltz to serve as a director of the Company for a term expiring at the Annual Meeting.
Each of Messrs. Kass and Peltz Ms. Dolan was recommended to the Nominating and Corporate Governance Committee by one of ournon-management directors in consultationafter consulting with our Chief Executive Officer, Chief Financial Officer and other members of senior management. The Nominating and Corporate Governance Committee, after reviewing Messrs. Kass’s and Peltz’sMs. Dolan’s qualifications, making a determination as to theirher independence and considering the needs of the Board of Director’s needs,Directors, recommended to the Board that Messrs. Kass and PeltzMs. Dolan be elected to serve as directorsa director of the Company.
The Board of Directors recommends that the 11 nominees named below be elected as directors of the Company at the Annual Meeting. If elected, each of the nominees will hold office until the Company’s next annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal. The persons named as proxies in the accompanying proxy card will voteFOR the election of each of the 11 nominees unless a stockholder directs otherwise.
10 The Wendy’s Company 2016 Proxy Statement
Each nominee has consented to be named and to continue to serve as a director if elected at the Annual Meeting. The Company is unaware of any reason why any nominee would be unwilling or unable to serve as a director if elected. Should, however, any nominee be unwilling or unable to serve as a director at the time of the Annual Meeting, the persons named as proxies in the accompanying proxy card will vote for the election of such substitute person for such directorship as the Board of Directors may recommend.
The Wendy’s Company 2018 Proxy Statement 9
Director Nominee Qualifications and Biographical InformationDIRECTOR NOMINEE QUALIFICATIONSAND BIOGRAPHICAL INFORMATION
NELSON PELTZ (CHAIRMAN) | ||||||
Mr. Peltz has been a director of the Company since September 2008 when the Company commenced its current business, the ownership and franchising of the Wendy’s restaurant system. He served as a director of the Company’s predecessor companies from April 1993
Mr. Peltz has also served as a director of
Mr. Peltz is actively involved with various civic organizations and serves as HonoraryCo-Chairman of the board of trustees and Chairman of the board of governors of the Simon Wiesenthal Center, a member of the honorary board of directors of the
Mr. Peltz is the father of Matthew H. Peltz, a director of the Company. | Qualifications:
Age:
Director Since:
Current Board Committees: Corporate Social Responsibility (Chair) Executive (Chair)
|
10 The Wendy’s Company 20162018 Proxy Statement 11
PETER W. MAY (VICE CHAIRMAN) | ||||||
Mr. May has been a director of the Company since September 2008 when the Company commenced its current business, the ownership and franchising of the Wendy’s restaurant system. He served as a director of the Company’s predecessor companies from April 1993
Mr. May has served as a director of Mondelēz International, Inc. since March 2018. He previously served as a director of Tiffany & Co.
Mr. May is actively involved with various civic organizations and serves as Chairman of the board of trustees of | Qualifications: Mr. May has more than 40 years of business and investment experience, has served as the president and chief operating officer of public companies for over 20 years and, since 2005, has served as President of Trian Partners. Throughout his professional career, he has developed extensive experience working with management teams and boards of directors, as well as in acquiring, investing in and building companies and implementing operational improvements at the companies with which he has been involved. Mr. May also brings to the Board financial sophistication by virtue of his prior professional experience as a certified public accountant. As a result, Mr. May has strong operating experience and strategic planning skills, valuable leadership and corporate governance experience and has strong relationships with institutional investors, investment banking/capital markets advisors and others that can be drawn upon for the Company’s benefit. We believe that Mr. May’s overall experience and knowledge benefit and contribute to the collective qualifications, skills and experience of our Board of Directors.
Age:
Director Since:
Current Board Committees: Capital and Investment (Chair) Compensation Corporate Social Responsibility Executive Technology (Chair)
|
The Wendy’s Company 2018 Proxy Statement 11
| ||||||
Ms. Dolan has also served as a director of AMC Networks Inc. since June 2011, The Madison Square Garden Company since September | Qualifications:
Age:
Director Since:
Current Board Committees:
|
12 The Wendy’s Company 20162018 Proxy Statement
| ||||||
Mr. Gilbert also serves as
| Qualifications:
Age:
Director Since:
Current Board Committees:
Technology
|
The Wendy’s Company 2018 Proxy Statement 13
DENNIS M. KASS | ||||||
Mr. Kass
Mr. Kass Mr. Kass also Mr. Kass serves as a member of the Lockheed Martin investment management company advisory board | Qualifications: Mr. Kass has significant knowledge and expertise in financial and asset management, accounting processes, corporate governance and public policy that is derived from his diverse professional and public service experiences. He also has notable experience with the implementation and oversight of investment product lines, retail and institutional distribution capabilities and overall business operations. Mr. Kass brings to our Board valuable leadership experience in working with management teams and boards of directors, as well as extensive knowledge and insight in finance, mergers and acquisitions, capital management, governance and regulatory matters relevant to public company audit, compensation and benefits committees. Mr. Kass has also acquired financial sophistication by virtue of his business experience and professional background, including his past service as Chief Executive Officer and Chief Fiduciary Officer of two different companies. We believe that Mr. Kass’ overall experience and knowledge benefit and contribute to the collective qualifications, skills and experience of our Board of Directors.
Age:
Director Since:
Current Board Committees:
Compensation
|
14 The Wendy’s Company 20162018 Proxy Statement 13
JOSEPH A. LEVATO | ||||||
Mr. Levato has been a director of the Company since September 2008 when the Company commenced its current business, the ownership and franchising of the Wendy’s restaurant system. He served as a director of the Company’s predecessor companies from June | Qualifications: Mr. Levato has significant knowledge of industrial, financial and consumer-related businesses that is derived from his professional experiences, including several years of senior management and leadership experience with the Company. Mr. Levato brings to our Board an intimate knowledge of governance and regulatory matters relevant to public company audit and compensation committees. Mr. Levato has acquired financial sophistication by virtue of his business experience and background, including his past service as Chief Financial Officer of three different companies, and the Board of Directors has determined that Mr. Levato qualifies as an
Age:
Director Since:
Current Board Committees: Audit
Compensation Executive Nominating and Corporate
|
The Wendy’s Company 2018 Proxy Statement 15
MICHELLE “MICH” J. MATHEWS-SPRADLIN | ||||||
Ms. Mathews-Spradlin has been a director of the Company since February 2015. From 1993 until her retirement in 2011, Ms. Mathews-Spradlin worked at Microsoft Corporation, where she served as Chief Marketing Officer and
Ms. Mathews-Spradlin also serves as a board member | Qualifications: Ms. Mathews-Spradlin possesses extensive experience in global brand management and a deep understanding of the technology industry attributable to her background as a senior executive at Microsoft Corporation, one of the world’s largest technology companies. In her role as Chief Marketing Officer, she oversaw the company’s global marketing function, managed a multi-billion dollar marketing budget and an organization of several thousand people, and built demand for the company’s technology brands, including Windows, Office, Xbox, Bing and Internet Explorer. Ms. Mathews-Spradlin provides the Board with substantial and unique insights into digital media and marketing strategies, as well as anin-depth understanding of consumer-facing technology, all of which are important to the Company’s business. We believe that Ms. Mathews-Spradlin’s overall experience and knowledge benefit and contribute to the collective qualifications, skills and experience of our Board of Directors.
Age:
Director Since:
Current Board Committees: Compensation Corporate Social Responsibility Technology
|
1416 The Wendy’s Company 20162018 Proxy Statement
MATTHEW H. PELTZ | ||||||
Mr. Peltz
Following the separation of the water and electrical businesses of Pentair plc into two independent publicly traded companies, which is targeted to occur on April 30, 2018, Mr. Peltz
Mr. Peltz is the son of Nelson Peltz, thenon-executive Chairman and a director of the Company. | Qualifications: Mr. Peltz’s qualifications to serve on our Board include his breadth of knowledge and experience in corporate finance, mergers and acquisitions, capital allocation and operational improvements attributable to his professional background, including his service as a senior member of Trian Partners’ Investment
Age:
Director Since:
Current Board Committees:
Corporate Social Responsibility Technology |
The Wendy’s Company 2018 Proxy Statement 17
TODD A. PENEGOR | ||||||
Mr. Penegor has been a director of the Company since May 2016. He joined the Company in June 2013 and has served as our President and Chief Executive Officer since May 2016. Prior to that, he served as our President and Chief Financial Officer
Mr. Penegor | Qualifications: In addition to serving as our President and Chief
Age:
Director Since:
Current Board Committees: Capital and Investment Executive |
18 The Wendy’s Company 20162018 Proxy Statement 15
PETER H. ROTHSCHILD | ||||||
Mr. Rothschild has been a director of the Company since May 2010. He served as a director of Wendy’s International from March 2006 until its merger with the Company in September 2008. Mr. Rothschild has been the Managing Member of Daroth Capital LLC, a financial services company, since its founding in 2001 and the President and CEO of itswholly-owned subsidiary, Daroth Capital Advisors LLC, a securities broker-dealer, since 2002. Prior to founding Daroth Capital LLC, Mr. Rothschild was a Managing Director and
Mr. Rothschild previously served as a director of Deerfield Capital Corp., predecessor to CIFC Corp., from December 2004 to April 2011 and as Interim Chairman of Deerfield Capital’s board of directors from April 2007 to April 2011.
Mr. Rothschild is also actively involved with various civic organizations and serves a member of The Mount Sinai Medical Center Samuel Bronfman Department of Medicine advisory board, the Tufts University School of Engineering board of advisors and the Tufts University Gordon Institute Entrepreneurial Leadership Program advisory board. | Qualifications: Mr. Rothschild has been employed as an investment banker since 1981. He has served on the board of directors of numerous companies, including Wendy’s International and Deerfield Capital, where he served as Interim Chairman. As a result of his professional background, Mr. Rothschild brings to our Board a deep understanding of corporate governance principles and extensive knowledge and experience in finance, mergers and acquisitions, capital management, corporate restructurings and the quick-service restaurant industry, all of which are important to the Company’s business. We believe that Mr. Rothschild’s overall experience and knowledge benefit and contribute to the collective qualifications, skills and experience of our Board of Directors.
Age:
Director Since:
Current Board Committees: Audit Compensation (Chair) Nominating and Corporate Governance (Chair)
|
The Wendy’s Company 2018 Proxy Statement 19
ARTHUR B. WINKLEBLACK | ||||||
Mr. Winkleblack has been a director of the Company since May 2016. Mr. Winkleblack provides financial, strategic planning and capital markets consulting services for Ritchie Bros. Auctioneers, a global leader in asset management and disposition and the world’s largest industrial auctioneer, where he has served as Senior Advisor to the CEO since June 2014. He retired in June 2013 as Executive Vice President and Chief Financial Officer of H. J. Heinz Company, a global packaged food manufacturer, where he had been employed since 2002. From 1999 to 2001, Mr. Winkleblack worked at Indigo Capital as Acting Chief Operating Officer of Perform.com and Chief Executive Officer of Freeride.com. Prior to that, he served as Executive Vice President and Chief Financial Officer of C. Dean Metropoulos Group from 1998 to 1999, as Vice President and Chief Financial Officer of Six Flags Entertainment Corporation from 1996 to 1998 and as Vice President and Chief Financial Officer of Commercial Avionics Systems, a division of AlliedSignal, Inc., from 1994 to 1996. Previously, he held various finance, strategy and business planning roles at PepsiCo, Inc. from 1982 to 1994.
Mr. Winkleblack has served as a director of Church & Dwight Co., Inc. since January 2008 and Performance Food Group Company since March 2015. He previously served as a director of RTI International Metals, Inc. from December 2013 | Qualifications: Mr. Winkleblack has substantial experience as a senior executive and director across a broad range of industries, giving him knowledgeable perspectives on
Age:
Director Since:
Current Board Committees: Audit (Chair) Nominating and Corporate Governance
|
16 The Wendy’s Company 2016 Proxy Statement
Required VoteREQUIRED VOTE
The affirmative vote of a majority of the votes cast with respect to the election of a director nominee is required to elect such nominee as a director at the Annual Meeting. Abstentions and brokernon-votes will not be included in the tabulation of voting results for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTEFOR
THE ELECTION OF EACH OF THE 11 DIRECTOR NOMINEES.
20 The Wendy’s Company 20162018 Proxy Statement 17
Board Leadership StructureBOARD LEADERSHIP STRUCTURE
The Board of Directors is currently led by Nelson Peltz, the Company’snon-executive Chairman, and Mr. May, the Company’snon-executive Vice Chairman. Mr. Brolick,Penegor, the Company’s Chief Executive Officer, also serves as a member of the Board. Meetings of the Board of Directors are called to order and led by the Chairman or, in his absence, the Vice Chairman, or in the absence of both, the Chief Executive Officer. In the absence of the Chairman, Vice Chairman and Chief Executive Officer, a majority of the directors present may elect any director present as chairman of the meeting.Non-management directors generally meet in executive session without management present after each regularregularly scheduled Board meeting.
The Board of Directors separated the positions of Chairman and Chief Executive Officer in June 2007 when Mr. Peltz, after serving as Chairman and Chief Executive Officer of the predecessor of the Company from 1993 to June 2007, became ournon-executive Chairman. The positions of Chairman and Chief Executive Officer have remained separate since that time, with Mr. Peltz currently serving as ournon-executive Chairman and Mr. BrolickPenegor currently serving as our Chief Executive Officer.
The Board believes that separating these two positions allows our Chief Executive Officer to focus on developing and implementing the Company’s business strategies and objectives and supervising the Company’s day-to-day business operations, and allowsenables our Chairman to lead the Board of Directors in its oversight and advisory roles.roles and allows our Chief Executive Officer to focus on supervising the Company’sday-to-day business operations and developing and implementing the Company’s business strategies and objectives. Because of the many responsibilities of the Board of Directors and the significant time and effort required by each of the Chairman and the Chief Executive Officer to perform their respective duties, the Board believes that having separate persons in these roles enhances the ability of each to discharge those duties effectively and, as a result, enhances the Company’s prospects for success. The Board also believes that having theseparate positions of Chairman and Chief Executive Officer separated provides a clear delineation of responsibilities for each position and fosters greater accountability of management.
The Board of Directors has carefully considered and approved its current leadership structure and believes that this structure is appropriate and in the best interests of the Company and our stockholders, who benefit from the combined leadership, judgment, knowledge and experience of our Chairman, Mr. Peltz, and our Chief Executive Officer, Mr. Brolick.Penegor.
Board Membership CriteriaBOARD MEMBERSHIP CRITERIAAND DIRECTOR NOMINATIONS
The Board of Directors has adopted general Board membership criteria, which are set forth in the Company’sCorporate Governance Guidelines (the “Corporate Governance Guidelines”). The.The Board seeks members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. The Board’s assessment of potential director candidates includes an individual’s qualification as independent, as well as consideration of diversity, age, educational background, other board experience and commitments, business and professional achievements, and skills and experience in the context of the needs of the Board. The Company does not have a stated policy regarding the diversity of nominees or Board members; rather, the Nominating and Corporate Governance Committee and the Board view diversity (whether based on concepts such as gender, race and national origin, or broader principles such as differences in backgrounds, skills, experiences and viewpoints) as one of many elements to be considered when evaluating a particular candidate for Board membership.
The Nominating and Corporate Governance Committee considers recommendations regarding possible director candidates from any source, including stockholders. Stockholders may recommend director candidates for consideration by the Nominating and Corporate Governance Committee by giving written notice of the recommendation to the Chair of the Nominating and Corporate Governance Committee, in care of the Corporate Secretary of the Company at our corporate offices at the Company’s principal executive offices.address provided under the caption “Contacting the Secretary and Corporate Offices.” The notice must: (i) include the candidate’s name, age, business address, residence address and principal occupation; (ii) describe the qualifications, attributes, skills or other qualities possessed by the candidate; and (iii) be accompanied by a written statement from the candidate consenting to serve as a director, if elected. Candidates who have been recommended by stockholders will be evaluated by the Nominating and Corporate Governance Committee in the same manner as other potential candidates. Stockholders who wish to formally nominate a candidate for election to the Board may do so provided they comply with the applicable eligibility, notice, content, stock ownership and other proceduresrequirements set forth in our Certificate of Incorporation andBy-Laws, which are described below under the caption “Other Matters—Stockholder Proposals for 20172019 Annual Meeting of Stockholders.”
18 The Wendy’s Company 20162018 Proxy Statement 21
Director IndependenceDIRECTOR INDEPENDENCE
Under the rules and listing standards of NASDAQ, the Board of Directors must have a majority of directors who meet the criteria for independence required by NASDAQ. Pursuant to the ourCorporate Governance Guidelines, the Board is required to determine whether each director satisfies the criteria for independence based on all relevant facts and circumstances. No director qualifies as independent unless the Board of Directors affirmatively determines that such director has no relationship which,that, in the opinion of the Board, would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director.
In accordance with theCorporate Governance Guidelines, the Board has adopted director independence categorical standardstheDirector Independence Categorical Standards (the “Independence Standards”“Independence Standards”) to assist the Board in determining the independence of the Company’s directors. Copies of theCorporate Governance Guidelines and theIndependence Standards are available on the Company’sour website atwww.aboutwendys.comwww.wendys.com/who-we-are. Pursuant to theIndependence Standards, the following relationships will preclude a director from qualifying as independent:
• | The director is, or at any time during the past three years was, an employee of the Company, or an immediate family member of the director is, or at any time during the past three years was, an executive officer of the Company; |
• | The director or an immediate family member of the director accepted, during any12-month period within the past three years, more than $120,000 in direct or indirect compensation from the Company, other |
• | The director or an immediate family member of the director (i) is a current partner of the Company’s outside auditor or (ii) was a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during the past three years; |
• | The director or an immediate family member of the director is employed as an executive officer of another entity where at any time during the past three years any of the Company’s executive officers served on the compensation committee of such other entity; or |
• | The director or an immediate family member of the director is a partner in, or a controlling |
In applying these objective disqualifiers, the Board of Directors will take into account any commentary, interpretations or other guidance provided by NASDAQ with respect to NASDAQ Listing Rule 5605. Under theIndependence Standards, any relationships or transactions not described above will preclude a director from qualifying as independent only if:
• | The director has a “direct or indirect material interest” in such relationship or transaction within the meaning of Item 404(a) of SEC RegulationS-K and the material terms of the relationship or transaction are materially more favorable to the director than those that would be offered at the time and in comparable circumstances to unaffiliated persons; or |
• | The Board of Directors, in exercising its judgment in light of all relevant facts and circumstances, determines that the relationship or transaction interferes with the director’s exercise of independent judgment in carrying out the responsibilities of a director. |
TheIndependence Standards provide that a relationship between the Company and an entity for which a director serves solely as anon-management director is not by itself material.
In February 2016, theThe Nominating and Corporate Governance Committee and the Board of Directors considered and reviewed certain transactions and relationships identified through responses to annual questionnaires completed by the Company’s directors, as well as other information presented by management related to transactions and relationships during the past three years between the Company, on the one hand, and the directors (including their immediate family members and business, charitable and other affiliates), on the other hand. As a result of this review, in February 2016,these reviews, the Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, affirmatively determined that Mses. Hill and Mathews-Spradlin and Messrs. Kass, Levato, Lewis, Rothschild and Schwab qualified as independent directors under applicable NASDAQ rules and theIndependence Standards.
22 The Wendy’s Company 20162018 Proxy Statement 19
In March 2016, the Nominating and Corporate Governance Committee and the Board of Directors considered the independence of Mr. Winkleblack in connection with his nomination for election as a director of the Company at the Annual Meeting. After reviewing all relevant information, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, affirmatively determined that, if elected to the Board, Mr. Winkleblack will qualify as an independent director under applicable NASDAQ rules and the Independence Standards.
In making its independence determinations with respect to Ms.Mses. Dolan and Mathews-Spradlin and Messrs. Gilbert, Kass, Levato Lewis,and Rothschild, and Schwab, the Board noted that these directors did not have any transactions or relationships with the Company during the past three years. In making its independence determinationdeterminations with respect to Ms. Hill and Messrs. KassMay and Winkleblack, the Board of Directors considered the following transactions and relationships, each of which was deemed by the Board not to interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director:
• |
|
|
|
Mr. |
• | Mr. Winkleblack serves as anon-management director of Performance Food Group Company, a leading marketer and distributor of food and food-related products across the United States. |
One of the Company’s former directors, Jack G. Wasserman,Janet Hill, served on the Board of Directors until June 2015May 2017 when hisher term expired at the Company’s 20152017 annual meeting of stockholders. In February 2015,2017, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, affirmatively determined that Mr. WassermanMs. Hill qualified as an independent director under applicable NASDAQ rules and theIndependence Standards.Standards.
The Board of Directors held six meetings during 2015. Each director attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by the Board committees on which he or she served (in each case, held during the period such director served). In accordance with the Corporate Governance Guidelines, directors are expected to attend the Company’s annual meetings of stockholders. All of the Company’s directors who were then serving on the Board attended the Company’s 2015 annual meeting of stockholders.
Board CommitteesBOARD COMMITTEESAND RELATED MATTERS
The Board has a standing Audit Committee, Compensation Committee, Performance Compensation Subcommittee and Nominating and Corporate Governance Committee. Copies of the Charter of the Audit Committee, Joint Charter of the Compensation Committee and of the Performance Compensation Subcommittee and Charter of the Nominating and Corporate Governance Committee are available on the Company’sour website atwww.aboutwendys.comwww.wendys.com/who-we-are and are available in print, free of charge, to any stockholder who requests them. The Board also has a standing Benefits and Investment Committee, Capital and Investment Committee, Corporate Social Responsibility Committee, Executive Committee and ExecutiveTechnology Committee.
20 The Wendy’s Company 2016 Proxy Statement
The current members of each Board committee are identified in the table below. It is anticipated that, at the Board’s organizational meeting immediately following the Annual Meeting, the Board will designate the directors to serve on each of its committees until the Company’s next annual meeting of stockholders.
NAME | AUDIT | COMPENSATION | NOMINATING AND CORPORATE GOVERNANCE | CAPITALAND INVESTMENT | CORPORATE SOCIAL | EXECUTIVE | TECHNOLOGY | ||||||||||||||||||||||||||||||||||||||||
Nelson Peltz | Chair | Chair | |||||||||||||||||||||||||||||||||||||||||||||
Peter W. May* | ✓ | Chair | ✓ | ✓ | Chair | ||||||||||||||||||||||||||||||||||||||||||
Emil J. Brolick | ✓ | ||||||||||||||||||||||||||||||||||||||||||||||
Kristin A. Dolan* |
|
|
|
|
| ✓
|
| ||||||||||||||||||||||||||||||||||||||||
Kenneth W. Gilbert* | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||
Dennis M. Kass* | ✓ | ✓ (1) | |||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Levato* | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||
Michelle J. Mathews-Spradlin* | ✓ (1) | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||||||||
Matthew H. Peltz
|
| ✓
| |||||||||||||||||||||||||||||||||||||||||||||
Todd A. Penegor | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||
Peter H. Rothschild* | ✓ | Chair (1) | Chair | ||||||||||||||||||||||||||||||||||||||||||||
Arthur B. Winkleblack*
| Chair
|
| |||||||||||||||||||||||||||||||||||||||||||||
|
* | |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||
| Independent Director. |
|
(1) | Also serves as a member of the Performance Compensation Subcommittee. |
|
The Wendy’s Company 2018 Proxy Statement 23
Committee Members: |
Dennis M. Kass
Joseph A. Levato*
Peter H. Rothschild
*Audit Committee Financial Expert
Number of
Number of Meetings in 2017:5
As more fully described in 2015: 11
Committee Functions: The Audit Committee oversees the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements, and assists the Board in fulfilling its charter, the Audit Committee oversees the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements. The Audit Committee also assists the Board in fulfilling the Board’s oversight responsibility relating to:
• | The integrity of the Company’s financial statements and financial reporting process, the Company’s systems of internal accounting and financial controls and other financial information provided by the Company; |
• | The performance of the Company’s internal audit function; |
• | The annual independent audit of the Company’s financial statements, the engagement of the Company’s independent registered public accounting firm and the evaluation of such firm’s qualifications, independence and performance; |
• | The Company’s compliance with legal and regulatory requirements, including the Company’s disclosure controls and procedures; and |
• | Discussing risk assessment and risk management policies, particularly those involving major financial risk exposures. |
Independence and Financial Literacy:. The Board has determined that each member of the Audit Committee satisfies the independence and financial literacy requirements of NASDAQ and the independence requirements of Rule10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board has also determined that at least one membertwo members of the Audit Committee, Mr.Messrs. Levato qualifiesand Winkleblack, each qualify as an “audit committee financial expert” under applicable SEC rules and regulations and as a “financially sophisticated” audit committee member under applicable NASDAQ rules.
Audit Committee Report:. The report of the Audit Committee with respect to 20152017 is provided below under the caption “Audit Committee Report.”
24 The Wendy’s Company 2018 Proxy Statement
COMPENSATION COMMITTEEAND PERFORMANCE COMPENSATION SUBCOMMITTEE
Committee Members: | Committee Functions: | |
Peter H. Rothschild* (Chair) Dennis M. Kass* Joseph A. Levato Michelle J. Mathews-Spradlin* Peter W. May *Subcommittee Member Number of Meetings in 2017: 4 joint meetings | As more fully described in its charter, the primary purpose of the Compensation Committee is to assist the Board of Directors in discharging the Board’s responsibilities relating to compensation of the Company’s directors and executive officers, including administering any salary, compensation and incentive plans that the Committee is designated by the Board to administer. In carrying out its duties, the Compensation Committee: • Reviews and approves the goals and objectives relevant to compensation of our Chief Executive Officer, evaluates the Chief Executive Officer’s performance in light of those goals and objectives and determines (or recommends to the Board for determination) the compensation of the Chief Executive Officer based on such evaluation; • Reviews and approves the compensation of our other executive officers, oversees an evaluation of the compensation program’s effectiveness for such officers and determines the compensation of such officers upon considering any other relevant matters, including any recommendations made by the Chief Executive Officer and the Compensation Committee’s independent outside compensation consultant; • Reviews and approves the overall compensation philosophy, policies and procedures for the Company’s executive officers, including the use of employment agreements, severance plans and arrangements, deferred compensation plans and other executive benefits and perquisites; • Reviews and advises the Board with respect to executive officer incentive programs, compensation plans and equity-based plans, and administers such plans as the Board designates, which includes the determination of awards to be granted to executive officers and other employees under such plans and evaluation of achievements of established plan goals and objectives; • Reviews the competitiveness and appropriateness of ournon-employee director compensation program and approves (or makes recommendations to the Board) with respect tonon-employee director compensation and perquisites; • Reviews and discusses the Compensation Discussion and Analysis prepared by management and determines whether to recommend to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s proxy statement and annual report; • Reviews and evaluates with management whether the Company’s compensation policies and practices for executive officers and other employees create risks that are reasonably likely to have a material adverse effect on the Company and reviews any related disclosure required by SEC rules and regulations to be included in the Company’s proxy statement; • Provides recommendations to the Board on compensation-related proposals to be considered at stockholder meetings (includingsay-on-pay andsay-on-frequency advisory votes), reviews the results of any stockholder advisory votes on executive compensation matters and considers whether to implement (or recommend to the Board the implementation of) any modifications to the Company’s compensation programs and policies in response to such voting results; • Performs certain settlor functions with respect to the Company’s 401(k) plan and other pension, profit sharing, thrift or other retirement plans and ERISA welfare benefit plans (collectively, the “ERISA Plans”); • Reviews, approves and adopts any new retirement plan, or any amendment to the Company’s 401(k) plan or other retirement plan, that would result in a material cost increase or material change in benefit levels, subject to applicable plan documents; • Appoints, monitors and removes (if necessary), members of the Investment Review Committee and Benefits Administrative Committee (two committees composed of Company employees responsible for oversight of our ERISA Plans), which includes conducting annual reviews of such committee and modifying such committees’ responsibilities as the Compensation Committee considers appropriate (such as the delegation of specific compliance monitoring, plan review or other ERISA plan-related responsibilities); and • Conducts an annual review of each ERISA Plan’s operations (except as otherwise specified in the applicable plan documents). |
The Wendy’s Company 20162018 Proxy Statement 2125
|
Number of Meetings in 2015Performance Compensation Subcommittee:. 6 joint meetings
Committee Functions: The Compensation Committee assists the Board in discharging its responsibility relating to compensation of the Company’s directors and executive officers, including administering any salary, compensation and incentive plans that the Committee is designated by the Board to administer.
The Performance Compensation Subcommittee (the “Subcommittee”) was also established by the Board in 1997 to administer the Company’s compensation plans that are intended to meet the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), including the Company’s 2010 Omnibus Award Plan, (asas amended the(the “2010 Omnibus Award Plan”), and any other salary, compensation and incentive plans that the Subcommittee is designated by the Board to administer.
The processes and procedures employed by the Compensation Committee and the Subcommittee in considering and determining executive and director compensation are described below under the caption “Compensation Committee—Responsibilities and Governance.
Independence:.The Board has determined that each member of the Compensation Committee and the Subcommittee satisfies the independence requirements of NASDAQ. In addition, each member of the Subcommittee is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code and a “non-employee“non-employee director” for purposes of Section 16 of the Exchange Act.
Compensation Committee Report:. The report of the Compensation Committee with respect to 20152017 is provided below under the caption “Compensation Committee Report.”
Additional information about the actions taken by the Compensation Committee and Subcommittee in 2017 with respect to the executive compensation of our NEOs is discussed in the “Compensation Discussion and Analysis” and under the caption “Compensation Committee Report.” The actions taken by the Compensation Committee in 2017 regarding the compensation of ournon-employee directors are discussed under the caption “Compensation of Directors.”
The Compensation Committee and the Subcommittee each may delegate authority to subcommittees composed of one or more of its members, and also may delegate authority to its Chair when it deems appropriate, subject to the terms of its charter. The Compensation Committee and the Subcommittee also may delegate to one or more directors or officers the authority to make grants of equity-based compensation to eligible employees who are not executive officers, subject to the terms of the Company’s compensation plans and applicable legal and regulatory requirements. Any director or officer to whom the Compensation Committee or the Subcommittee grants such authority must regularly report any grants so made, and the Committee or the Subcommittee may revoke any delegation of authority at any time.
Role of Compensation Consultants in the Executive Compensation Process
In carrying out its responsibilities, the Compensation Committee periodically reviews and evaluates the components and competitiveness of the Company’s executive compensation program, using information drawn from a variety of sources, including information provided by outside compensation consultants, legal counsel and other advisors, as well as the Committee’s own experience in recruiting, retaining and compensating executives. The Compensation Committee has the sole authority to retain and oversee the work of outside compensation consultants, legal counsel and other advisors in connection with discharging its responsibilities, including the sole authority to determine such consultants’ or advisors’ fees and other retention terms. The Company provides such funding as the Compensation Committee determines to be necessary or appropriate for payment of compensation to consultants and advisors retained by the Committee.
Since December 2009, the Compensation Committee has engaged Frederic W. Cook & Co., Inc. (“FW Cook”) to serve as its independent outside compensation consultant. Representatives from FW Cook regularly attend Compensation Committee meetings and provide advice to the Committee on a variety of compensation-related matters. The Compensation Committee seeks input from FW Cook on competitive market practices, including evolving trends and best practices. During 2017, FW Cook assisted the Compensation Committee with respect to the design of the Company’s executive compensation program and determination of targeted compensation levels thereunder, including base salary levels, the 2017 annual cash incentive and long-term equity incentive awards, and the overall mix of total direct compensation for the Chief Executive Officer and other senior executives. FW Cook also advised the Compensation Committee in connection with its review and approval of compensation packages offered to executives, as well as the design of and modifications to the executive compensation program for 2018. At the request of the Compensation Committee, FW Cook periodically reviews the compensation components and levels of the Company’s executive officers and advises the Committee on the appropriateness of the Company’s executive compensation program in the context of its overall compensation philosophy. Under the terms of its engagement, FW Cook does not provide any other services to the Company and works with management only on matters for which the Compensation Committee has oversight responsibility. The Compensation Committee has assessed the independence of FW Cook pursuant to applicable SEC and NASDAQ rules (including consideration of the six independence factors specified in NASDAQ Listing Rule 5605(d)(3)(D)) and concluded that no conflict of interest exists that would prevent FW Cook from serving as an independent compensation consultant to the Committee.
26 The Wendy’s Company 2018 Proxy Statement
Management provides information and makes recommendations to the Compensation Committee from time to time regarding the design of the Company’s executive compensation program. In formulating its recommendations, management reviews information from a variety of sources, including information provided by outside compensation consultants. During 2017, management engaged Willis Towers Watson to serve as management’s outside compensation consultant. Willis Towers Watson provided market data and other information to management in connection with the design of the Company’s executive compensation program, including a review of base salary, total cash compensation and total direct compensation levels for the Chief Executive Officer and other senior executives. Willis Towers Watson also advised management on potential voting recommendations by proxy advisory firms with respect to the Company’s executive compensation program. Certain of the market data and other information provided by Willis Towers Watson was also made available to the Compensation Committee and its independent outside compensation consultant, FW Cook.
Management’s Role in the Executive Compensation Process
The Company’s executive officers provide support and assistance to the Compensation Committee and the Subcommittee on a variety of compensation-related matters. Each year, the Chief Executive Officer and other senior executives provide input to the Subcommittee regarding the design of the Company’s annual cash incentive plan and annual long-term equity incentive plan, including proposed performance goals and objectives and a list of participants eligible to receive awards. The Subcommittee then determines the structure and components of the annual cash incentive and long-term equity incentive awards after considering management’s recommendations, as well as input from the Subcommittee’s independent outside compensation consultant. With respect to performance-based awards, following the completion of each performance period, the Chief Financial Officer provides the Subcommittee with a certification of the Company’s actual performance relative to the stated performance goals and the resulting payouts to participants based on such performance. Under the terms of the annual cash incentive plan, payouts to executives other than the Chief Executive Officer can be adjusted by the Subcommittee by up to+/-25% (subject to the maximum incentive award opportunities established by the Subcommittee for purposes of Section 162(m) of the Internal Revenue Code) at the recommendation of the Chief Executive Officer, based on his assessment of each executive’s individual performance. The Subcommittee then determines the actual incentive payouts to eligible participants after taking into account Company and individual performance and any other relevant facts and circumstances.
The Chief Executive Officer and other executives with expertise in compensation, benefits, tax, accounting and legal matters provide information and make recommendations to the Compensation Committee from time to time on compensation-related matters, including proposed employment, retention, relocation, severance and other compensatory arrangements, base salary levels, annual cash incentive plans, long-term equity incentive awards, annual compensation risk assessments and evolving trends and best practices in executive compensation. Executives also present information to the Compensation Committee regarding the Company’s business and financial performance, strategic initiatives, legal and regulatory developments and other relevant matters. In accordance with applicable NASDAQ rules, the Chief Executive Officer may not be present during any voting or deliberations by the Compensation Committee or Subcommittee with respect to his compensation.
Compensation Committee Interlocks and Insider Participation
Sixnon-management directors served on the Compensation Committee during 2017: Ms. Hill (until her retirement from the Board in May 2017), Ms. Mathews-Spradlin and Messrs. Kass, Levato, May (upon his appointment to the Compensation Committee in May 2017) and Rothschild.
During 2017: (i) no member of the Compensation Committee had ever served as an officer or employee of the Company, except that Mr. Levato served as the Company’s Executive Vice President and Chief Financial Officer from April 1993 to August 1996 and Mr. May served as President and Chief Operating Officer of the predecessor of the Company from April 1993 to June 2007; (ii) no member of the Compensation Committee was party to any related person transaction or other relationship requiring disclosure under Item 404 of SEC RegulationS-K, except that, as previously noted above, Mr. May is the President and a founding partner and Principal of Trian Partners, which is a significant and long-term stockholder of the Company and party to that certain agreement with the Company described under the caption “Certain Relationships and Related Person Transactions;” and (iii) none of the Company’s executive officers served as a member of the board of directors or the compensation committee, or a similar committee, of any other entity, one of whose executive officers served on the Board of Directors, the Compensation Committee or the Subcommittee.
The Wendy’s Company 2018 Proxy Statement 27
NOMINATINGAND CORPORATE GOVERNANCE COMMITTEE
Committee Members: |
|
Number of Meetings in 2015: 7
Committee Functions: The
Joseph A. Levato
Arthur B. Winkleblack
Number of
Meetings in 2017:12
As more fully described in its charter, the Nominating and Corporate Governance Committee assists the Board by:
• | Identifying individuals qualified to become members of the Board, consistent with any |
• | Considering and recommending director nominees for the Board to select in connection with each annual meeting of stockholders; |
• | Considering and recommending nominees for election to fill any vacancies on the Board and to address related matters; |
• | Recommending to the Board the committee assignments of directors; • Developing and recommending to the Board corporate governance principles applicable to the Company; and |
• | Overseeing an annual evaluation of the Board’s performance. |
Independence:. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee satisfies the independence requirements of NASDAQ.
Benefits and Investment Committee. The Benefits and Investment Committee (formerly known as the ERISA Committee) is the plan administrator of the Company’s 401(k) plan, and has general oversight responsibility with respect to the operation of the Company’s pension, profit sharing, thrift or other retirement plans and ERISA welfare benefit plans.
Capital and Investment Committee.The Capital and Investment Committee is responsible for approving the investment of the Company’s excess funds (i.e., funds not currently required for operations or acquisitions) and exercising approval authority for certain transactions (such as capital expenditures, acquisitions, dispositions and borrowings) within amounts specified by the Board.
Corporate Social Responsibility Committee.The Corporate Social Responsibility Committee meets at least once annually and oversees and reviews the Company’s various social responsibility initiatives, as well as related risks and opportunities. The Corporate Social Responsibility Committee is also responsible for reviewing and approving the Company’s charitable contributions (subject to review and approval by the Audit Committee of any proposed charitable contribution that would constitute a related person transaction) and recommending to the Board any changes to the maximum amount of charitable contributions that may be made by the Company in any fiscal year.
22 The Wendy’s Company 2016 Proxy Statement
Executive Committee.During intervals between meetings of the Board, the Executive Committee may exercise all of the powers and authority of the Board in the management of the business and affairs of the Company, including, without limitation, all such powers and authority as may be permitted under Section 141(c)(2) of the Delaware General Corporation Law.
Executive Sessions ofTechnology Committee.In November 2017, the Board established the Technology Committee to assist the Board in discharging the Board’s oversight responsibilities relating to information technology and cybersecurity matters involving the Company’s digital customer engagement initiatives, including restaurantpoint-of-sale systems, digital ordering tools (such as kiosks, online ordering capabilities and mobile ordering applications) and digital and mobile customer loyalty programs. To the extent practicable, the Technology Committee will also review with management any supply chain-related technology matters.
The Board of Directors holds regularly scheduled executive sessions in whichnon-management directors meet without any members of management present. The Chairman or, in his absence, the Vice Chairman, presides over these executive sessions. The Board also meets at least twice a year in executive session with only independent directors present. The ChairmanAnnually, the Chair of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee rotate presiding over these executive sessions, with Mr. SchwabRothschild presiding in 2015.2017.
Board’s Role in Risk OversightBOARD’S ROLEIN RISK OVERSIGHT
The Board of Directors provides oversight with respect to the Company’s risk assessment and risk management activities, which are designed to identify, prioritize, assess, monitor and mitigate material risks to the Company, including financial, operational, compliance and strategic risks. While the Board has primary responsibility for risk
28 The Wendy’s Company 2018 Proxy Statement
oversight, the Board’s standing committees support the Board by regularly addressing various risks in their respective areas of responsibility. The Audit Committee focuses on financial risks, including reviewing with management, the Company’s internal auditors and the Company’s independent registered public accounting firm the Company’s major risk exposures (with particular emphasis on financial risk exposures), the adequacy and effectiveness of the Company’s accounting and financial controls and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. The Compensation Committee considers risks presented by the Company’s compensation policies and practices for its executive officers and other employees, as discussed below under the caption “Compensation Risk Assessment.” The Nominating and Corporate Governance Committee reviews risks related to the Company’s corporate governance structure and processes, including director qualifications and independence, stockholder proposals related to governance, succession planning and the effectiveness of ourCorporate Governance Guidelines. TheGuidelines.The Board’s risk oversight function is also supported by a Risk Oversight Committee composed of members of senior management. The Risk Oversight Committee is exclusively devoted to prioritizing and assessing all categories of enterprise risk, including risks delegated by the Board of Directors to the Board committees, as well as other operational, compliance and strategic risks facing the Company. Each of these committees reports directly to the Board.
The Board believes that its current leadership structure supports the risk oversight function of the Board. Having the roles of Chief Executive Officer and Chairman of the Board filled by separate individuals allows the Chief Executive Officer to lead senior management in its supervision of the Company’sday-to-day business operations, including the identification, assessment and mitigation of material risks, and allows the Chairman to lead the Board in its oversight of the Company’s risk assessment and risk management activities.
Compensation Risk AssessmentCOMPENSATION RISK ASSESSMENT
As part of the Board’s risk oversight function, the Compensation Committee conducts an annual review ofcompensation-related risk. In February 2016,2018, the Compensation Committee and its independent advisors met with management to review management’s conclusion that the Company’s compensation policies and practices for its employees do not create risks that are reasonably likely to have a material adverse effect on the Company. Management reviewed with the Compensation Committee the various factors underlying management’s conclusion, including the performance objectives and target levels used in connection with the Company’s incentive awards, as well as the features of the Company’s compensation plans that are designed to mitigate compensation-related risk, including the following:
• | Plan and award metrics are tied directly to overall profitability; |
• | Various methods for delivering compensation are utilized, including cash-based and equity-based incentives with different time horizons that provide a balanced mix of both short-term and long-term incentives; |
• | Performance-based awards have fixed maximum payouts; |
• | The Company has the right to reduce or eliminate payouts under incentive awards through the use of negative discretion, including if a participant’s behavior is in conflict with the Company’sCode of Business Conduct and Ethics or any other Company policy or procedure; |
The Wendy’s Company 2016 Proxy Statement 23
• | Annual incentive payouts are not made until the Company’s financial statements are audited by the Company’s independent registered public accounting firm and plan results are certified by the Chief Financial Officer; and |
• | All incentive awards granted under the 2010 Omnibus Award Plan contain |
With respect to the Company’s compensation program for executive officers, the Compensation Committee believesconcluded that this program is appropriately designed to support the Company’s business objectives by linking executive compensation to individual performance, the Company’s attainment of annual and multi-year operating and financial goals and the creation of long-term stockholder value. The executive compensation program includes the following features whichthat are designed to prevent risk-taking that could have a material adverse effect on the Company:
• | Base salaries represent a sufficient component of executives’ total cash compensation so that excessive risk-taking that |
• | Performance goals and metrics under the Company’s annual cash incentive plan are based upon realistic operating levels that can be attained without taking inappropriate risks or deviating from normal operations or approved strategies; |
The Wendy’s Company 2018 Proxy Statement 29
• | Long-term equity incentive awards are based in part upon the Company’s performance over a multi-year period, which mitigates against the taking of short-term risk; |
• | Incentive compensation plan design allows for adjustment of performance metrics for |
• | Equity-based awards represent a significant portion of executives’ total compensation, which links executive compensation to the long-term value of our Common Stock; and |
• | The Board of Directors |
Code of Business Conduct and Ethics and Related Governance PoliciesCODEOF BUSINESS CONDUCTAND ETHICSAND RELATED GOVERNANCE POLICIES
The Board of Directors has adopted several governance policies to support its risk oversight function, including a ourCode of Business Conduct and Ethics (the “Code“Code of Ethics”Ethics”), a Securities Trading Policy and a Public Disclosure Policy.Policy.
Code of Ethics.TheCode of Ethics is designed to ensure that the Company’s business is conducted with integrity. TheCode of Ethics sets forth the Company’s standards and expectations regarding business relationships, franchisee relations, compliance with law, business conduct, conflicts of interest, use of Company assets, confidential information and recording and reporting information. The OurCode of Ethics applies to all of the Company’s directors, officers and employees, including the principal executive officer, principal financial officer and principal accounting officer. A copy of theCode of Ethics is available on the Company’sour website atwww.aboutwendys.comwww.wendys.com/who-we-are. Any amendments to or waivers from theCode of Ethics that are required to be disclosed by applicable SEC rules will also be posted on the Company’s website.
Securities Trading Policy.TheSecurities Trading Policy is intended to assist the Company and its directors, officers and employees in complying with federal and state securities laws and avoiding even the appearance of questionable or improper conduct in connection with securities transactions. Under the ourSecurities Trading Policy, covered persons:
• | May not trade in Company securities if they are aware of material nonpublic information; |
• | May not trade in the securities of another company if they are aware of material nonpublic information about that company which was obtained during the course of their employment with the Company; |
• | May not speculate in Company securities through engaging in puts, calls or short positions; |
• | May not engage in any other hedging transactions withoutpre-clearance from the Company’s legal department; |
• | May not share material nonpublic information with others or recommend to anyone the purchase or sale of any securities when they are aware of material, undisclosed information; and |
• | Must comply with certainpre-clearance and blackout procedures described in the policy. |
24 The Wendy’s Company 2016 Proxy Statement
Public Disclosure Policy.ThePublic Disclosure Policy is intended to support the Company’s commitment to providing timely, transparent, consistent and credible information to the investing public, consistent with legal and regulatory requirements, including the SEC’s Regulation FD (Fair Disclosure). Regulation FD prohibits the Company or persons acting on its behalf from disclosing material nonpublic information to securities market professionals or stockholders before disclosing the information to the general public. ThePublic Disclosure Policy covers all directors, officers and employees of the Company and sets forth certain procedures and requirements that are applicable to:
• | Disclosures in documents filed with the SEC; |
• | Statements made in annual, quarterly and current reports, press releases, communications with analysts, investors and the media, speeches and presentations; and |
• | Information contained on the Company’s website. |
Board’s Role in Succession PlanningBOARD’S ROLEIN SUCCESSION PLANNING
As reflected in ourCorporate Governance Guidelines, one of the key responsibilities of the Board of Directors is planning for Chief Executive Officer succession. Succession planning addresses both contingency planning for emergencies (such as death or disability) and succession in the ordinary course of business (such as retirement). The Board’s goal is to ensure senior leadership continuity by overseeing the development of executive talent and planning for the efficient succession of the Chief Executive Officer. The Board has delegated oversight responsibility for succession planning to the Nominating and Corporate Governance Committee, which periodically reviews succession plans and makes recommendations to the Board in the event of an emergency or the retirement of the Chief Executive Officer.
30 The Wendy’s Company 2018 Proxy Statement
The Board of Directors, with input from the Nominating and Corporate Governance Committee, conducts a periodic review of senior leadership succession plans. During this review, the Board discusses with the Chief Executive Officer and Chief People Officer organizational needs, competitive challenges, candidates for senior leadership positions, succession timing for those positions and development plans for high-potential candidates.
During 2015, the Board of Directors was actively engaged in succession planning. In October 2015, the Company announced that Mr. Brolick planned to retire from management duties with the Company in May 2016. As part of the succession plan approved by the Board, Mr. Penegor was appointed President of the Company effective January 4, 2016, and Mr. Penegor is expected to succeed Mr. Brolick in the Chief Executive Officer role after a transition period that began in the first quarter of 2016. Mr. Brolick is expected to continue to serve on the Board of Directors upon his retirement to ensure continuity of leadership and strategic focus for the Company.
Board and Committee EvaluationsBOARDAND COMMITTEE EVALUATIONS
Pursuant to ourCorporate Governance Guidelines, the Board of Directors and its committees conduct annualself-evaluations under the direction of the Nominating and Corporate Governance Committee. The evaluations are intended to provide the Board and its committees with an opportunity to evaluate their performance for the purpose of improving Board and committee processes and effectiveness. As part of the Board’s self-evaluation, directors consider and provide feedback on a range of issues, including interactions with and information flow from management, nature and scope of agenda items, adequacy and efficiency of meetings, Board structure and composition, committee composition and responsibilities, processes to ensure open communication and timely action, the effectiveness of executive sessions and consideration of stockholder value and interests. Committee self-evaluations are led by the committee chairs and include, among other topics, a review of the roleroles and responsibilities set forth in the committee charters, interactions with and information flow from management, nature and scope of agenda items, adequacy and efficiency of meetings, committee structure and composition, committee resources and the role of outside consultants and advisers.advisors. The results of the committee self-evaluations are discussed with the full Board.
The Wendy’s Company 20162018 Proxy Statement 2531
COMPENSATION COMMITTEE—RESPONSIBILITIES AND GOVERNANCE
Scope of Authority and Responsibilities
The primary purpose of the Compensation Committee is to assist the Board of Directors in discharging its responsibility relating to the compensation of the Company’s executive officers and directors. In carrying out its duties, the Compensation Committee:
|
|
|
|
|
|
|
|
Compensation of Executive Officers and Directors
The actions taken by the Compensation Committee and the Subcommittee during 2015 with respect to the compensation of the Company’s named executive officers are discussed below under the caption “Compensation Discussion and Analysis.” The actions taken by the Compensation Committee during 2015 with respect to the compensation of the Company’s non-management directors are discussed below under the caption “Compensation of Directors.”
The Compensation Committee and the Subcommittee each may delegate authority to subcommittees composed of one or more of its members, and also may delegate authority to its Chairman when it deems appropriate, subject to the terms of its charter. The Compensation Committee and the Subcommittee also may delegate to one or more directors or officers the authority to make grants of equity-based compensation to eligible employees who are not executive officers, subject to the terms of the Company’s compensation plans and applicable legal and regulatory requirements. Any director or officer to whom the Compensation Committee or the Subcommittee grants such authority must regularly report any grants so made, and the Committee or the Subcommittee may revoke any delegation of authority at any time.
26 The Wendy’s Company 2016 Proxy Statement
Role of Compensation Consultants and Other Advisers
In carrying out its responsibilities, the Compensation Committee periodically reviews and evaluates the components and competitiveness of the Company’s executive compensation program, using information drawn from a variety of sources, including information provided by outside compensation consultants, legal counsel and other advisers, as well as the Committee’s own experience in recruiting, retaining and compensating executives. The Compensation Committee has the sole authority to retain and oversee the work of outside compensation consultants, legal counsel and other advisers in connection with discharging its responsibilities, including the sole authority to determine such consultants’ or advisers’ fees and other retention terms. The Company provides such funding as the Compensation Committee determines to be necessary or appropriate for payment of compensation to consultants and advisers retained by the Committee.
Since December 2009, the Compensation Committee has engaged Frederic W. Cook & Co., Inc. (“Cook & Co.”) to serve as its independent outside compensation consultant. Representatives from Cook & Co. regularly attend Compensation Committee meetings and provide advice to the Committee on a variety of compensation-related matters. The Compensation Committee seeks input from Cook & Co. on competitive market practices, including evolving trends and best practices and external survey data. During 2015, Cook & Co. assisted the Compensation Committee with respect to the design of the Company’s executive compensation program, including base salary levels, the 2015 cash incentive plan and the 2015 long-term equity incentive awards for the Chief Executive Officer and other senior executives. Cook & Co. also advised the Compensation Committee in connection with its review and approval of compensation packages offered to new executives hired by the Company, one-time equity incentive awards granted to certain key executives, compensation decisions related to the transition of the President and Chief Executive Officer roles and enhancements to the executive compensation program for 2016. At the request of the Compensation Committee, Cook & Co. periodically reviews the compensation components and levels of the Company’s executive officers and advises the Committee on the appropriateness of the Company’s executive compensation program in the context of its overall compensation philosophy. Under the terms of its engagement, Cook & Co. does not provide any other services to the Company and works with management only on matters for which the Compensation Committee has oversight responsibility. The Compensation Committee has assessed the independence of Cook & Co. pursuant to applicable SEC and NASDAQ rules (including consideration of the six independence factors specified in NASDAQ Listing Rule 5605(d)(3)(D)) and concluded that no conflict of interest exists that would prevent Cook & Co. from serving as an independent compensation consultant to the Committee.
Management provides information and makes recommendations to the Compensation Committee from time to time regarding the design of the Company’s executive compensation program. In formulating its recommendations, management reviews information from a variety of sources, including information provided by outside compensation consultants. During 2015, management engaged Willis Towers Watson to serve as management’s outside compensation consultant. Willis Towers Watson provided market data and other information to management in connection with the design of the Company’s executive compensation program, including a review of base salary, total cash compensation and total direct compensation levels for the Chief Executive Officer and other senior executives. Willis Towers Watson also advised management on potential voting recommendations by proxy advisory firms with respect to the Company’s executive compensation program and amendments to the 2010 Omnibus Award Plan. Certain of the market data and other information provided by Towers Willis Watson was also made available to the Compensation Committee and its independent outside compensation consultant, Cook & Co.
The Company’s executive officers provide support and assistance to the Compensation Committee and the Subcommittee on a variety of compensation-related matters. Each year, the Chief Executive Officer and other senior executives provide input to the Subcommittee regarding the design of the Company’s annual cash incentive plan and annual long-term equity incentive plan, including proposed performance goals and objectives and a list of participants eligible to receive awards. The Subcommittee then determines the structure and components of the annual cash incentive and long-term equity incentive awards after considering management’s recommendations, as well as input from the Subcommittee’s independent outside compensation consultant. With respect to performance-based awards, following the completion of each performance period, the Chief Financial Officer provides the Subcommittee with a certification of the Company’s actual performance relative to the stated performance goals and the resulting payouts to participants based on such performance. Under the terms of the annual cash incentive plan, payouts to executives other than the Chief Executive Officer can be adjusted by the Subcommittee by up to +/-25% (subject to the maximum incentive award opportunities established by the Subcommittee for purposes of Section 162(m) of the Internal Revenue Code) at the recommendation of the Chief Executive Officer, based on his assessment of each executive’s individual performance. The Subcommittee then determines the actual incentive payouts to eligible participants after taking into account Company and individual performance and any other relevant facts and circumstances.
The Wendy’s Company 2016 Proxy Statement 27
The Chief Executive Officer and other executives with expertise in compensation, benefits, tax, accounting and legal matters provide information and make recommendations to the Compensation Committee from time to time on compensation-related matters, including proposed employment, retention, relocation, severance and other compensatory arrangements, base salary levels, annual cash incentive plans, long-term equity incentive awards, annual compensation risk assessments and evolving trends and best practices in executive compensation. Executives also present information to the Compensation Committee regarding the Company’s business and financial performance, strategic initiatives, legal and regulatory developments and other relevant matters. In accordance with applicable NASDAQ rules, the Chief Executive Officer may not be present during any voting or deliberations by the Compensation Committee or Subcommittee with respect to his compensation.
Compensation Committee Interlocks and Insider Participation
Five non-management directors served on the Compensation Committee during 2015: Mr. Schwab (Chair), Ms. Hill, Mr. Levato, Ms. Mathews-Spradlin (upon her appointment to the Committee on June 1, 2015) and Mr. Wasserman (until his retirement from the Board on June 1, 2015).
During 2015: (i) no member of the Compensation Committee had ever served as an officer or employee of the Company, except that, from 1993 to 1996, Mr. Levato served as the Company’s Executive Vice President and Chief Financial Officer; (ii) no member of the Compensation Committee was party to any related person transaction or other relationship requiring disclosure under Item 404 of SEC Regulation S-K; and (iii) none of the Company’s executive officers served as a member of the board of directors or the compensation committee, or a similar committee, of any other entity, one of whose executive officers served on the Board of Directors, the Compensation Committee or the Subcommittee.
28 The Wendy’s Company 2016 Proxy Statement
COMPENSATION COMMITTEE REPORT*
The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with the Company’s management and, based on such review and discussions, has 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 Form10-K for the fiscal year ended January 3, 2016.December 31, 2017.
The Compensation Committee:
David E. Schwab II,Peter H. Rothschild, Chair
Janet HillDennis M. Kass
Joseph A. Levato
Michelle J. Mathews-Spradlin
Peter W. May
* | This Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Compensation Committee Report by reference into such other filing. |
32 The Wendy’s Company 20162018 Proxy Statement 29
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes the Company’s executive compensation objectives, philosophy and practices and discusses the compensation that was awarded during 20152017 to the individuals identified below (collectively, the “named executive officers” or “NEOs”as our Named Executive Officers.
NAMED EXECUTIVE OFFICERS (NEOS).
NAME | POSITION | |||
|
| |||
Todd A. Penegor
|
President and Chief Executive Officer | |||
Gunther Plosch | Chief Financial Officer
| |||
Robert D. Wright
|
Executive Vice President, Chief Operations Officer and International
| |||
|
| |||
|
Chief
| |||
|
| |||
|
|
Compensation Discussion2017 EXECUTIVE SUMMARY
In 2017, the Company reported another year of strong performance and Analysis – At a Glance
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
By nearly every measure, 2015 wasglobal growth, with our North America and International restaurants contributing to our continued strategic and financial progress. We achieved 20 consecutive quarters of positive North America same-restaurant sales, global systemwide sales eclipsed $10 billion for the first time in Company history, North America average unit volumes reached an extraordinary year for Wendy’s, being both a periodall-time high of transformative change$1.61 million, and senior leadership transition.we recorded our highest global net new restaurant growth since 2004. The Company achieved strongsignificantly increased cash flows, and our overall operating and financial results demonstrate the vitality of the Wendy’s brand and continuedvalidate our successful transition to execute our brand vision to Delight Every CustomerTM by providing a Deliciously DifferentTM restaurant experience.predominantly franchised business model. During 2015, the Company2017, we drove significant improvements in both our corporate and restaurant-level economic model, accelerated the transformation of the Wendy’s brand, continued to strengthen the Wendy’s franchise system and created significant value for stockholders. Looking forward, the Company is poised to achieve our 2020 global growth goals by building upon the Company’s current operating momentum, growing the customer base of our restaurants, expanding brand access, enhancing restaurant-level profitability and achieving savings through continued execution of our general and administrative cost savings plan.
The Company’s key operating and financial results for 20152017, along with a summary of key strategic achievements, are highlighted below.Please refer toAnnex A for a reconciliation of thenon-GAAP financial measures (adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per share and free cash flow) referred to below and in this Compensation Discussion and Analysis.
• | Improving the Core Economic Model |
Generated $406.2 million of adjusted EBITDA, a 3.7% increase year-over-year, despite the loss of approximately $57.0 million of adjusted EBITDA attributed to the ownership of 295 fewer Company-operated restaurants. An increase in franchise net rental income, royalties and fees and significant general and administrative cost savings contributed to the improvement. |
➣ | Improved adjusted EBITDA margin1 by 590 basis points to 33.2%. |
➣ | Achieved North America system same-restaurant sales growth of 2.0% (3.6% on atwo-year basis). |
➣ | Improved cash flows from operations by 33.2% to $251.6 million. |
➣ | Attained positive year-over-year free cash flow2 of $169.9 million, with year-over-year growth of $131.0 million. |
➣ | Delivered |
1 | The Company calculates adjusted EBITDA margin by dividing adjusted EBITDA by total revenues. (SeeAnnex A for the calculation of adjusted EBITDA margin for 2017.) |
2 | The Company defines “free cash flow” as cash flows from operations minus capital expenditures, both as reported under GAAP. Free cash flow is a non-GAAP financial measure that is used by the Company as an internal measure of liquidity. (SeeAnnex A for a reconciliation of non-GAAP financial |
|
|
|
|
30 The Wendy’s Company 20162018 Proxy Statement 33
• | Transforming the Wendy’s Brand through |
|
|
|
➣ | Achieved 1.5% global net new restaurant growth, our highest growth rate since 2004, with North America contributing 0.5% and International contributing 14.8% net new restaurant growth in 2017. We opened 174 total new restaurants and 97 net new restaurants globally in 2017. |
➣ | Accelerated the enhancement of the Wendy’s brand image by reimaging 551 North America restaurants in 2017, an increase from the 521 reimages completed in 2016. At the end of 2017, 43% of Wendy’s global system restaurants were image activated, ahead of prior Company expectations. |
• | Strengthening the Wendy’s System |
|
|
|
• | Creating Significant Value for Stockholders |
Returned |
Deliveredone-, three- and five-year total stockholder return of 24%, 96% and 289%, respectively. |
➣ | Increased our quarterly dividend rate by |
|
The following graph below illustrates our total stockholder return over the past three years relative to the S&P MidCap 400® index, assuming an initial investment of $100 and reinvestment of all dividends when received.
2015 was also highlighted by the implementation of thoughtful succession planning, as the Company announced that Mr. Brolick planned to retire from management duties with the Company in May 2016. As part of the succession plan, Mr. Penegor was appointed President of the Company effective January 4, 2016, and Mr. Penegor is expected to succeed Mr. Brolick in the Chief Executive Officer role after a transition period that began in the first quarter of 2016. Mr. Brolick is expected to continue to serve on the Board of Directors upon his retirement to ensure continuity of leadership and strategic focus for the Company.
34 The Wendy’s Company 20162018 Proxy Statement 31
TOTAL STOCKHOLDER RETURN The Wendy’s Company vs. S&P Midcap 400®
The Company’s strongfavorable performance in 20152017 was reflected in the compensation delivered to our senior executives, as described in this CD&ACompensation Discussion and Analysis and set forth inunder the “2015“2017 Summary Compensation Table” and the related compensation tables, notes and narrativesnarrative that follow. Our significant year-over-year improvements in same restaurantNorth America system same-restaurant sales and adjusted EBITDA supportedperformance resulted in an annual cash incentive payout at 152.6%109.0% of target, prior to adjustment for individual performance.performance (other than for the Chief Executive Officer). In addition, performance unit awards that were granted to senior executives in 2012 vested at 157% of targetFebruary 2015 were based on the Company’stwo equally weighted performance measures, relative total stockholder return of 169% forand the Company’s cumulative adjusted earnings per share performance over the three-year performance period that began on July 2, 2012beginning December 29, 2014 and ended on June 28, 2015.ending December 31, 2017, and resulted in an overall weighted attainment of 167.9% of target.
Notwithstanding strong stockholderOur stockholders expressed positive support of our compensation governance through their 2017 annual “say-on-pay”say-on-pay advisory vote, and the Compensation Committee continued to evaluate ways to further strengthen our commitmentremains committed to best practices in compensation governance. For 2016, we increased the weighting ofgovernance consistent with our key growth metric – same restaurant sales – in our annual cash incentive compensation plan and eliminated the individual performance multiplier for the Chief Executive Officer. We also increased the weighting of the performance unit component of our long-term equity incentive compensation plan from 40% to 50%, with a corresponding decrease in the stock option component.pay-for-performance philosophy. The following table below highlights key features of our executive compensation program that demonstrate the Company’s ongoing commitment to protecting stockholder interests through sound compensation governance practices.
WHAT WE DO
|
WHAT WE DO NOT DO
| |||||
| Hold an annual |
| ||||
| Use an appropriate mix of cash andnon-cash compensation, | |||||
✓ | Engage independent outside compensation consultants and utilize market and industry data to ensure we compensate fairly and competitively, but not | |||||
| Set meaningful performance goals at the beginning of annual | |||||
✓ | Balance short-term and long-term compensation to discourage short-term risk taking at the expense of long-term | |||||
|
| |||||
| Mitigate undue | |||||
|
| |||||
| Limit accelerated vesting of equity awards by requiring a | |||||
| Set significant stock ownership and retention guidelines for the Chief Executive Officer and other
|
A Philosophy of Pay for PerformancePHILOSOPHYOF PAY-FOR-PERFORMANCE
Objectives of the Executive Compensation Program
The compensation program for the Company’s senior executives is designed to support the Company’s business objectives by linking executive compensation to individual performance, the Company’s attainment of annual andmulti-year operating and financial goals and the creation of long-term stockholder value. The primary objectives of the executive compensation program are to:
• |
|
• |
|
• | Align the interests of executives with those of the |
Emphasis on Variable Compensation
The Compensation Committee believes that a substantial portion of the total compensation for senior executives should be variable (i.e., “at risk”)at-risk) and tied to Company performance. Variable compensation is dependent on our financial and operational success and the achievement of strategic business objectives that create value for our stockholders. Thispay-for-performance philosophy aligns executive pay with the Company’s business objectives and ensures that executives are responsive and accountable to stockholder interests.
32 The Wendy’s Company 20162018 Proxy Statement 35
Total direct compensation for senior executives is composed of three elements: (i) base salary; (ii) annual cash incentive compensation;incentives; and (iii) long-term equity incentive compensation.incentives. The charts below illustrate how base salary, annual cash incentive awards (at targeted levels of performance) and long-term equity incentive awardsthese three components (at targeted levels of performance) were allocated for 20152017 to create the overall pay mix for the Chief Executive Officer and the other NEOs as a group (excluding Messrs. van Ligten and Bahner, who left the Company during 2015 and did not receive a full-year equity award).group.
As reflected by the charts, performance-based incentives constitute the most significant portion of total direct compensation for senior executives, consistent with the Company’spay-for-performance philosophy. By utilizing a high proportion ofat-risk compensation, the executive compensation program offers senior executives an opportunity for increased compensation in the event of successful Company performance, matched with the prospect of reduced compensation in the event Company performance goals are not achieved.
Strong Pay-for-Performance Alignment of CEO Compensation and Company Performance
The chart below illustrates our pay-for-performance alignment by comparingOur annual cash incentives and long-term equity incentives are designed to motivate and reward executive performance based on the Company’s sales and financial results to Mr. Brolick’s total reported compensation overachievements under the past three years. As reflected by the chart, from 2013 to 2015, the Company achieved significant improvements in itsfour key performance metrics – North America Company-operated same restaurant sales growth, adjusted EBITDAof our 2017 annual and adjusted earnings per share – that outpacedlong-term incentive plans.3 Highlighting the increase in Mr. Brolick’salignment between our executive pay and Company performance, the charts below show the total reporteddirect compensation over that time. The increase in Mr. Brolick’s compensation from 2014of our Chief Executive Officer as compared to 2015 was driven by the Company’s improved same restaurant sales and adjusted EBITDA performance which resulted in an above-target cash incentive payout for 2015, compared to a below-target cash incentive payout for 2014.
under these four metrics.
CEO COMPENSATION This chart indicates the total direct compensation of our Chief Executive Officer for each of 2015, 2016 and 2017, as reported in the “2017 Summary Compensation Table.” Mr. Brolick’s compensation is shown for 2015 when he served as our Chief Executive Officer, and the amounts shown for 2016 and 2017 reflect only Mr. Penegor’s compensation. (Mr. Brolick retired from management duties in May 2016. As part of the Chief Executive Officer succession plan, Mr. Penegor became our President in January 2016 and then succeeded Mr. Brolick as Chief Executive Officer effective in May 2016.) |
SeeAnnex A for a reconciliation of non-GAAP financial measures. The Company’s |
36 The Wendy’s Company 2018 Proxy Statement
CEO Pay Mix Performance-Based (At Risk) Compensation: 83% Other NEO Pay Mix Performance-Based (At Risk) Compensation: 71% CEO Compensation
SAME-RESTAURANT SALES On aone- andtwo-year basis, the Company experienced positive same-restaurant sales growth that was achieved by our focus on driving profitable customer counts supported by a balanced marketing strategy. As a result of our efforts, in fourth quarter 2017, we recorded 20 consecutive quarters of positive same-restaurant sales in North America. | ||
ADJUSTED EBITDA The Company’s continued brand transformation and aim to generate higher quality of earnings resulted in a favorable increase in adjusted EBITDA margin from 21.0% in 2015 to 33.2% in 2017. Our adjusted EBITDA remained resilient and increased from $392 million in 2015 to $406 million in 2017, despite a significant reduction in ownership of Company-operated restaurants during that three-year period. | ||
ADJUSTED EARNINGSPER SHARE The strength of the Company’s business model has generated consistent adjusted earnings per share accretion that creates value for our stockholders, as demonstrated by the increase in our adjusted earnings per share from $0.29 at the end of 2014 to $0.43 at the end of 2017, a 48% increase over this three-year period. | ||
TOTAL STOCKHOLDER RETURN Our stockholders were rewarded by the Company’s continued growth in our stock price and dividends, including an increase in the market price of our stock from $8.92 on the last trading day of 2014 to $16.42 on the last trading day of 2017, an 84% increase over this three-year period. We also increased our quarterly cash dividend rate from 5.5 cents per share in first quarter 2015 to 7.0 cents per share in fourth quarter 2017, which was a 27.3% increase over this three-year period. |
The Wendy’s Company 20162018 Proxy Statement 3337
Same-Restaurant Sales Growth 20 Consecutive Quarters of Positive SRS in North America Adjusted EBITDA Strong Earnings and Adjusted EBITDA Margin Growth Adjusted EBITDA Adjusted EBITDA Margin Adjusted Earnings Per Share Solid and Consistent Earnings Growth Total Stockholder Return Delivered Significant 3-Year TSR of 96%
As discussed under the “Emphasis on Variable Compensation” caption above, a substantial portion of our NEO compensation isat-risk compensation. This correlation between executive compensation and Company performance and business results is an important component of our executive compensation strategy, which has been effective in establishing a strong alignment between the Company’s executive compensation and the interests of our stockholders, as well as our ability to attract, motivate and retain executive talent. Thispay-for-performance strategy has resulted in Chief Executive Officer compensation that is reasonable and directly aligned with the Company’s business objectives.
Elements of Executive CompensationELEMENTSOF EXECUTIVE COMPENSATION
The primary components of the executive compensation program are described in the table below.following table.
COMPONENT | PURPOSE | |||||
Base Salary | • Attract and retain | |||||
Annual Cash | • Align executive pay with | |||||
Long-Term Equity | • Align the interests of executives with the interests of stockholders and retain
• Create a direct link between executive pay and the long-term performance of our Common | |||||
Perquisites and Benefits | • Provide limited perquisites and benefits, consistent with competitive market |
How Executive Compensation is DeterminedHOW EXECUTIVE COMPENSATIONIS DETERMINED
On an annual basis, the Compensation Committee reviews the effectiveness of our executive compensation philosophy, evaluates the performance of our senior executives and establishes the executive compensation program for the currentthen-current year. In determining the appropriate compensation package for senior executives, the Compensation Committee, in consultation with its independent outside compensation consultant, FW Cook, & Co., considers a number of factors, including: (i) individual and Company performance; (ii) scope of responsibilities and relative importance of each role; (iii) qualifications and experience; (iv) competitive market practice; (v) internal pay equity; (vi) alignment with stockholder interests; and (vii) creation of long-term stockholder value.
For 2015,2017, consistent with prior years, the Compensation Committee utilized the following approach to guide the Committee in making executive compensation decisions:
• | Targeted Compensation Levels.Compensation levels |
• | Competitive Market |
38 The Wendy’s Company 2018 Proxy Statement
Also, data from theChain Restaurant Total Rewards Association Executive and Management Compensation Survey Report (“Restaurant Industry Data”) is used as a secondary reference for relevant positions. |
• | Annual Cash |
• | Long-Term Equity |
The Compensation Committee believes this approach continues to be effective in maintaining a strong link between executive compensation and Company performance, as reflected by the Company’s strong earnings and sales growth in 2015,2017, the continued acceleration in the transformation of the Wendy’s brand and the Company’s ability to attract and retain a highly-qualifiedhighly qualified and motivated leadership team.
Incentive Compensation Performance Metrics
In determining the appropriate incentive compensation award levels for our senior executives, the Subcommittee (i.e., the Performance Compensation Subcommittee) considers the Company’s achievement ofpre-established performance targets focused on a balanced mix of value-driving performance metrics. For the 2017 incentive compensation program, the Subcommittee approved four key performance metrics to measure earnings, growth, stockholder value creation and market performance for purposes of calculating components of our incentive compensation, as shown in the following table.
INCENTIVE COMPENSATION COMPONENT | PERFORMANCE METRICS (MEASURES) | |||||
Annual Cash Incentives | • Adjusted EBITDA (earnings). • North America Same-Restaurant Sales (growth). | |||||
Performance Units— | • Adjusted Earnings per Share, Cumulative Three-Year (stockholder value creation). • Total Stockholder Return Relative to S&P MidCap 400 (market performance). |
These four performance metrics and the framework of our executive compensation program are further discussed below under the caption “Compensation Decisions for 2017.” The Subcommittee determined that for 2017, the performance metrics were appropriate and consistent with our executive compensation philosophy because the metrics (i) align with earnings and growth expectations of our stockholders, (ii) serve as key indicators of our business operating performance, growth and profitability and (iii) hold our executives accountable for growth results and operational, relative total stockholder return and market performance against annual and long-term business objectives. The key performance metrics of our 2018 executive compensation program are further discussed below under the caption “Changes to the Executive Compensation Program for 2018.”
With respect to the Compensation Committee’s review of General Industry Data (approximately |
34 The Wendy’s Company 20162018 Proxy Statement 39
2017Non-GAAP Financial Measures
The Company used adjusted EBITDA and adjusted earnings per share for the 2017 key performance metrics, each of which arenon-GAAP financial measures, as internal measures of the Company’s business operating performance and as performance measures for benchmarking against our peers and competitors (seeAnnex A for a reconciliation ofnon-GAAP financial measures). The Compensation Decisions for 2015Committee determined that using these measures (i) provides our stockholders with a meaningful perspective of how our executive incentive compensation links to the underlying operating performance of our current business and (ii) enables our stockholders to better understand and evaluate our historical and prospective operating performance as it relates to executive incentive compensation awards. The Compensation Committee believes that adjusted EBITDA and adjusted earnings per share are important supplemental measures of the Company’s operating performance because these metrics eliminate items that vary from period to period without correlation to our core operating performance, as well as highlight trends in our business that might not otherwise be apparent when relying solely on GAAP financial measures.
COMPENSATION DECISIONSFOR 2017
In February 2015,2017, the Compensation Committee reviewed the base salaries for the Company’s senior executives, taking into account individual and Company performance and the other factors described above under the caption “How Executive Compensation is Determined.” After consulting with its independent outside compensation consultant, FW Cook, & Co., and considering recommendations from the Chief Executive Officer with respect to the other members of the senior executive leadership team, the Compensation Committee approved base salary increases for certain executives, including Mr. Penegor ($30,000), Mr. Plosch ($25,000), Mr. Wright ($10,000)22,000), Mr. ToopKane ($25,000)15,000) and Mr. WeisbergWunsch ($10,000). In approving these increases, the Compensation Committee noted that the base salaries of the senior executives remained within thea competitive range of market median, on average,in the aggregate, consistent with the Company’s executive compensation philosophy. Mr. Brolick’s base salary was established in June 2014 as part of an amendment to his employment agreement,
Guiding Principles for Annual and remained unchanged for 2015.
Annual CashLong-Term Incentive CompensationPlans
In February 2015,2017, the Subcommittee approved the 20152017 annual cash incentive and long-term equity incentive compensation framework for senior executives. Consistent with prior years,The design of the 20152017 annual and long-term incentive plans was guided by four key principles:
• | Growth must be achieved for any payment.Growth over the prior year is required for incentive payouts, even at threshold levels of performance. |
• | Reward executives consistent with external stockholder guidance.Target payout levels were designed to motivate and reward performance that is equal to or greater than the Company’s external stockholder guidance range to align executives’ interests with those of our stockholders. |
• | Align executive compensation with Company performance relative to restaurant industry competitors.Performance goals werepre-established taking into consideration the historic performance of the Company’s peers as well as stockholder expectations. |
• | Establish challenging and appropriate incentive performance goals.Incentive design and payouts should support achievement of the Company’s growth goals and align with the Company’s annual operating plan, with achievement of performance targets resulting in target incentive payouts and outperformance of business goals providing for additional compensation opportunities. |
Annual Cash Incentive Compensation
The 2017 annual incentive plan was based on the achievement of two key performance metrics – metrics—adjusted EBITDA and same restaurantsame-restaurant sales. Adjusted EBITDA is a keymeasures earnings metric thatand reflects the Company’s focus on increasing operating profitability, while same restaurantsame-restaurant sales is a keymeasures growth metric thatand represents a fundamental operating performance measure for the Company’s business. In selecting these metrics, the Subcommittee noted that adjusted EBITDA and same restaurantsame-restaurant sales are prevalent restaurant industry measures, and management’s ability to attain thepre-established goals for these metrics was critical to achieving the Company’s operating and financial goalsbusiness objectives for 20152017 and driving long-term stockholder value.
40 The design of the 2015 executive incentive plan was guided by four key principles:Wendy’s Company 2018 Proxy Statement
|
|
|
|
The following table below identifies the performance metrics, incentive opportunities and actual results achieved under the 2015 executive2017 annual incentive plan.
Design of 2015 Executive Incentive Plan (Corporate Incentive Grid)DESIGNOF 2017 ANNUAL INCENTIVE PLAN
PERFORMANCE METRIC | WEIGHT | THRESHOLD (50% PAYOUT) | TARGET (100% PAYOUT) | MAXIMUM (200% PAYOUT) | 2015 ACTUAL ACHIEVEMENT | 2015 ACTUAL PAYOUT % | WEIGHTED PAYOUT % | |||||||||||||||||||
Adjusted EBITDA3 | 70% | $372M | $391M | $415M | $408.5M | 172.9% | 121.0% | |||||||||||||||||||
Same Restaurant Sales4 | 30% | +0.5% | +2.5% | +3.5% | +2.6% | 105.2% | 31.6% | |||||||||||||||||||
|
| |||||||||||||||||||||||||
2015 Total Payout % | 152.6% | |||||||||||||||||||||||||
|
|
PERFORMANCE METRIC
| WEIGHT
| THRESHOLD (50% PAYOUT)
| TARGET (100% PAYOUT)
| MAXIMUM (200% PAYOUT)
| 2017 ACTUAL ACHIEVEMENT
| 2017 ACTUAL PAYOUT %
| WEIGHTED PAYOUT %
| |||||||||
Adjusted EBITDA5
| 60%
| $375.0M
| $400.0M
| $430.0M
| $406.2M
| 121.0%
|
| 72.6%
|
| |||||||
Same-Restaurant Sales6 | 40% | +0.50% | +2.30% | +4.25% | +2.02% | 91.0% | 36.4% | |||||||||
|
| |||||||||||||||
2017 Total Payout % |
|
109.0% |
| |||||||||||||
|
|
The following table shows the target opportunities and actual payouts for the NEOs under the 2017 annual incentive plan. The target payout levels are expressed as a percentage of base salary in effect as of the end of 2017. Annual cash incentive payouts can be adjusted upward or downward by 25% based on an assessment of each executive’s individual performance for all NEOs other than the Chief Executive Officer. In no event may an executive’s payout exceed the maximum incentive award opportunity established for that individual. Our Chief Executive Officer is not eligible for individual performance adjustments because the Compensation Committee determined that Chief Executive Officer performance is reflected in the aggregate results of our senior executive leadership team and the Company’s overall short- and long-term financial results. In approving the target payout levels, the Subcommittee noted that the 2017 target total cash compensation for the Company’s senior executives fell within a competitive range of market median, in the aggregate, consistent with the Company’s executive compensation philosophy. The actual payouts for the NEOs were approved by the Subcommittee in February 2018 based on the Company’s 2017 adjusted EBITDA and same-restaurant sales results and the application of individual performance multipliers for each NEO other than our Chief Executive Officer.
TARGET PAYOUT LEVELSAND ACTUAL PAYOUTSUNDER 2017 ANNUAL INCENTIVE PLAN7
PARTICIPANT
| ANNUAL SALARY ($)
| INCENTIVE TARGET AS
| ANNUAL INCENTIVE TARGET ($)
| WEIGHTED PAYOUT % ACHIEVED FOR 2017
|
INDIVIDUAL PERFORMANCE MULTIPLIER
| TOTAL 2017 ANNUAL INCENTIVE PAYOUT ($)
| ||||||||||||||||||||||||
Todd A. Penegor
|
| 930,000
|
| 125%
|
| 1,162,500
|
| 109%
| —
|
| 1,267,125
|
| ||||||||||||||||||
Gunther Plosch
|
| 500,000
|
| 75%
|
| 375,000
|
| 109%
| 115%
|
| 470,000
|
| ||||||||||||||||||
Robert D. Wright
|
| 552,000
|
| 75%
|
| 414,000
|
| 109%
| 109%
|
| 490,000
|
| ||||||||||||||||||
Kurt A. Kane
|
| 450,000
|
| 75%
|
| 337,500
|
| 109%
| 110%
|
| 405,000
|
| ||||||||||||||||||
E. J. Wunsch
|
| 410,000
|
| 75%
|
| 307,500
|
| 109%
| 112%
|
| 375,000
|
|
The individual performance multipliers for Messrs. Plosch, Wright, Kane and Wunsch reflect Mr. Penegor’s assessment of each executive’s performance during 2017 as measured againstpre-established performance goals set at the beginning of
“Adjusted |
|
7 | In conjunction with establishing the 2017 annual incentive plan, the Subcommittee approved an Internal Revenue Code Section 162(m)-compliant plan with a threshold performance goal for 2017 of net operating profit (before taxes) of $180.5 million, excluding: (i) all asset write-downs (including asset impairment and goodwill impairment charges); (ii) reorganization and realignment costs; and (iii) “System optimization gains, net” as reported by the Company on its financial statements. Achievement of this performance goal (which was $20.8 million higher than the 2016 performance goal) allowed for the funding of an annual incentive pool with maximum incentive award opportunities for eligible participants. Based on 2017 results, the Subcommittee certified that the Company satisfied such threshold performance goal. The Subcommittee then approved incentive payouts to senior executives under the 2017 annual incentive plan based on the Company’s achievement of the performance metrics under that plan (i.e., adjusted EBITDA and same-restaurant sales), as adjusted for individual performance, which resulted in payouts below the maximum incentive award opportunities established for purposes of Section 162(m). |
The Wendy’s Company 20162018 Proxy Statement 3541
The table below shows the target annual cash incentive opportunities and actual payouts for the NEOs under the 2015 executive incentive plan. The target payout levels were established as part of the NEOs’ overall employment terms with the Company, and are expressed as a percentage of base salary in effect as of the end of 2015. In approving the target payout levels, the Subcommittee noted that the 2015 target total cash compensation for the Company’s senior executives fell within the competitive range of market median, on average, consistent with the Company’s executive compensation philosophy. The actual payouts for the NEOs were approved by the Compensation Committee in February 2016 based on the Company’s adjusted EBITDA and same restaurant sales results and the application of individual performance multipliers.
Target Payout Levels and Actual Payouts under 2015 Executive Incentive Plan5
PARTICIPANT | ANNUAL SALARY ($) | INCENTIVE TARGET AS %OF SALARY | ANNUAL INCENTIVE TARGET ($) | WEIGHTED PAYOUT % ACHIEVEDFOR2015 | INDIVIDUAL PERFORMANCE MULTIPLIER | TOTAL 2015 ANNUAL INCENTIVE PAYOUT ($)6 | ||||||||||||||||||
Emil J. Brolick | 1,150,000 | 150 | % | 1,725,000 | 152.6 | % | 125 | % | 3,290,438 | |||||||||||||||
Todd A. Penegor | 675,000 | 75 | % | 506,250 | 152.6 | % | 125 | % | 965,672 | |||||||||||||||
Robert D. Wright | 485,000 | 75 | % | 363,750 | 152.6 | % | 115 | % | 638,345 | |||||||||||||||
R. Scott Toop | 490,000 | 75 | % | 367,500 | 152.6 | % | N/A | 560,805 | ||||||||||||||||
Scott A. Weisberg | 415,000 | 75 | % | 311,250 | 152.6 | % | 115 | % | 546,213 | |||||||||||||||
Darrell G. van Ligten | 425,000 | 75 | % | 318,750 | 85.8 | %7 | N/A | 119,136 | ||||||||||||||||
Craig S. Bahner | 475,000 | 75 | % | 356,250 | 152.6 | % | N/A | 137,026 |
The Subcommittee determined the individual performance multiplier for Mr. Brolick based on his performance during 2015 in consideration of: (i) the Company’s strong operating and financial results, including year-over-year growth in same restaurant sales, average unit sales volumes, restaurant margins, adjusted EBITDA and adjusted earnings per share; (ii) the accelerated transformation of the Wendy’s brand through new restaurant development, Image Activation reimaging and investment in consumer-facing technology; (iii) the continued execution of the Company’s System Optimization initiative, along with the strategic disposition of the Company’s bakery operations; and (iv) the significant value created for stockholders through the Company’s debt refinancing, share repurchase programs and increased dividends. The Subcommittee also took into account Mr. Brolick’s leadership and commitment to investing in and growing the Wendy’s brand, building a highly-qualified executive team, implementing senior leadership succession plans and delivering “A Cut Above” restaurant experience to our customers.
The individual performance multipliers for Messrs. Penegor, Wright and Weisberg reflect Mr. Brolick’s assessment of each executive’s performance during 2015.fiscal year. The Subcommittee determined that positive adjustments were appropriate to reward these executives’ contributions to the Company’s strong financial performance and successful execution of itsour strategic initiatives in 2015.2017.
|
|
|
36 The Wendy’s Company 2016 Proxy Statement
Long-Term Equity Incentive Compensation
In February 2015,2017, the Subcommittee approved the 20152017 long-term equity incentive compensation framework for senior executives. Consistent with the prior years, the 2015year, 2017 long-term equity incentive awards were comprised of equally weighted performance units and stock options, as summarized in the table below.following table.
Design of 2015 Long-Term Equity Incentive AwardsDESIGNOF 2017 LONG-TERM INCENTIVE PLAN
COMPONENT | WEIGHT | VESTING | TIMINGOF GRANT8 | RATIONALE | ||||
Performance Units |
|
• Performance metrics are | • Value is dependent on the Company’s achievement ofmulti-year strategic business objectives and the price of our Common
• Cliff vesting requires executives to remain with the Company through the | |||||
Stock |
|
• Consistent with historical practice and the timing of long-term equity awards to other eligible | • Delivers value only if the price of our Common Stock
• Aligns the interests of executives with the long-term interests of |
Payout2017 Performance Unit Awards.The extent of the 2015vesting and payout of the 2017 performance unit awards is based on the Company’s achievement of the performance goals under two equally-weighted performance metrics – cumulative adjusted earnings per share and relative total stockholder return – over a three-year performance period (December 29, 2014(January 2, 2017 through December 31, 2017)29, 2019), as described in the table below.following table.
Performance Metrics for 2015 Performance Unit AwardsPERFORMANCE METRICSFOR 2017 PERFORMANCE UNIT AWARDS
PERFORMANCE METRIC | THRESHOLD (37.5%PAYOUT) | TARGET (100%PAYOUT) | MAXIMUM (200%PAYOUT) | RATIONALE | ||||
Adjusted Earnings Per Share9
(Compounded Annual Growth Rate) | 5% | 10% | 20% | • Motivates executives to achieve consistent, long-term earnings growth
• Rewards executives based on an internal operating measure with clear line of sight | ||||
Relative Total Stockholder Return
(Ranking vs. S&P MidCap 400) | 25th Percentile | 50th Percentile | ³ 90th Percentile | • Motivates executives to drive superior, long-term growth in share price and dividends
• Rewards executives based on the Company’s relative performance compared to a broad market index |
In selecting the performance metrics for the 2015 performance units, the Subcommittee considered that the 2014 performance unit awards had been based on a single performance metric – adjusted earnings per share. For 2015, the Subcommittee, in consultation with its independent outside compensation consultant, Cook & Co., decided to add a second performance metric – relative total stockholder return – to the performance unit awards. The Subcommittee added this second metric in recognition of evolving marketplace trends to utilize multiple performance metrics in incentive plan design and because the Subcommittee believes that relative total stockholder return is an important indicator of the Company’s financial performance compared to the market. The Subcommittee concluded that the design of the 2015 performance units was consistent with market and industry practice and intended to align with stockholder interests and the creation of long-term stockholder value.
PERFORMANCE METRIC | THRESHOLD (37.5% PAYOUT) | TARGET (100% PAYOUT) | MAXIMUM (200% PAYOUT) | RATIONALE | ||||
Adjusted Earnings Per Share, Cumulative Three-Year9 | $1.40 | $1.54 | $1.90 | • Motivates executives to achieve consistent, long-term earnings growth. | ||||
(Compounded Annual Growth Rate) | 8% | 13% | 25% | • Rewards executives based on an internal operating measure with clear line of sight.
| ||||
Relative Total Stockholder Return (Ranking vs. S&P MidCap 400) | 25th Percentile | 50th Percentile | ³ 90th Percentile | • Motivates executives to drive superior, long-term growth in share price and dividends.
• Rewards executives based on the Company’s relative performance compared to a broad market index.
|
8 | The Subcommittee has not adopted any formal policy to time the grant of equity awards with the release ofnon-public information and retains discretion to determine the grant dates for annual and special equity awards taking into account all relevant factors. All of the performance unit awards and stock options granted to senior executives during |
9 | “Adjusted |
42 The Wendy’s Company 20162018 Proxy Statement 37
The Subcommittee considered both cumulative adjusted earnings per share and relative total stockholder return to be important indicators of Company performance compared to the market. Further, the Subcommittee selected these two performance metrics in recognition of compensation governance best practices and marketplace trends to utilize multiple performance metrics in long-term incentive plan design. The Subcommittee concluded that the design of the 2017 performance unit awards was consistent with market and industry practice and intended to align with stockholder interests and the creation of long-term stockholder value.
Following the end of the performance period, the Subcommittee will review the extent to which the performance metrics have been achieved under the 2017 long-term incentive plan and will determine the number of shares of Common Stock that are issuable to each participant. Under the terms of the awards, there is no vesting of performance units if actual performance falls below threshold levels of performance. Consistent with prior year awards, the performance units include dividend equivalent rights, representing the right to receive additional performance units in lieu of cash dividends paid with respect to the shares of Common Stock actually earned, if any, at the completion of the performance period.
Grant Date Target Value of 2017 Long-Term Equity Incentive Awards.The Subcommittee determined the grant date target value of the 20152017 long-term equity incentive awards for senior executives by assessing the impact of the value of these awards on each executive’s target total target direct compensation, competitive market practices and considering the performance of the Company and each executive during 2014.executive.
In determining the grant date target value of Mr. Brolick’s 2015Penegor’s 2017 long-term equity incentive award, the Subcommittee discussed Mr. Penegor’s 2017 performance objectives and 2016 performance results, including certain quantitative and qualitative measures, and gave particular consideration to Mr. Brolick’sPenegor’s leadership role in driving improved Company performance during 2014, including: (i) enhancing stockholder value by returning $374 million2016 and his contributions to stockholders through dividends and share repurchases; (ii) transforming the Wendy’s brand and contemporizing the restaurant experience through new restaurant development, Image Activation reimaging and investment in consumer-facing technology; (iii) improving the quality of earnings by selling over 250 Company-operated restaurants to franchisees as part of System Optimization, resulting in a more predictable earnings stream from a higher percentage of royalty and rental income; and (iv) strengthening the Company’s economic model through reductionssuccess since he became Chief Executive Officer in general and administrative expense, improvements in restaurant margins and growth in same restaurant sales, average unit sales volumes, adjusted EBITDA and adjusted earnings per share. After considering all relevant factors, includingMay 2016. The Subcommittee also discussed competitive market compensation data and information provided by itsthe Subcommittee’s independent outside compensation consultant, Cook & Co.,FW Cook. After considering the foregoing and all other relevant factors, the Subcommittee determined that a 20152017 long-term equity incentive award valued at $3,750,000with a grant date target value of $3,250,000 (which placed Mr. Brolick’sPenegor’s target total direct compensation for 20152017 at approximately the high-endlower end of thea competitive range of market median) was appropriate in light of Mr. Brolick’sPenegor’s recent promotion to Chief Executive Officer in May 2016 and experience relative to the market. This compares to his 2016 long-term equity incentive award with a grant date target value of $2,750,000, with the increase reflective of competitive practice, as well as Mr. Penegor’s exceptional leadership and the continued momentum in the Company’s performance, strategic direction and brand relevance and strategic direction.economic relevance.
The values of the 20152017 long-term equity incentive awards for Messrs. Penegor,Plosch, Wright, ToopKane and WeisbergWunsch were determined by the Subcommittee after consideration of several factors, including individual and Company performance, the value of prior year awards, competitive market practice, internal pay equity, the terms of individual employment agreementsarrangements (if applicable) and recommendations from Mr. Brolick.Penegor. In approving these awards, the Subcommittee noted that the 20152017 target total direct compensation for senior executives other than Mr. Brolick fell within thea competitive range of market median, on average,in the aggregate, consistent with the Company’s executive compensation philosophy.
Retention Long-Term Equity Incentive Award for Mr. Kane.To reinforce the retention and engagement of Mr. Kane in his current leadership role, in August 2017, the Compensation Committee approved aone-time retention long-term equity incentive award for Mr. Kane. This retention award was provided in addition to the equity incentive award granted to Mr. Kane under our 2017 long-term incentive plan for senior executives. The retention award was valued at $250,000, consisted of restricted stock units and is subject to a three-year cliff vesting period that requires Mr. Kane to remain with the Company until the vesting date to realize the full value of the award.
Additional Compensation DecisionsADDITIONAL COMPENSATION DECISIONS
Vesting of 20122014 Performance Unit Awards
In July 2012,February 2014, the Subcommittee awarded performance units to the Company’s senior executives, including Messrs. Brolick, ToopPenegor and Weisberg,Wright, as part of the Company’s 20122014 executive compensation program. The performance units vested atand became payable upon the endconclusion of athe three-year performance period that began on July 2, 2012 and ended on June 28, 2015,(December 30, 2013 through January 1, 2017), based on the Company’s total stockholder return compared to a peer groupachievement of 19 restaurant companies, asadjusted earnings per share growth over such performance period. The performance goal, actual achievement and payout levels are described in the table below.following table.
|
|
| ||
| ||||
| ||||
| ||||
| ||||
|
The Wendy’s Company 2018 Proxy Statement 43
ADJUSTED EARNINGS PER SHARE10 | ||||||
PERFORMANCE
| VALUE
|
COMPOUNDED GROWTH RATE
|
PAYOUT AS % OF TARGET
| |||
Below Threshold Level
| < $0.32
| —
| 0.0%
| |||
Threshold Level
| $0.32
| 2.0%
| 37.5%
| |||
Above Threshold
| $0.35
| 5.0%
| 75.0%
| |||
Target Level
| $0.40
| 10.0%
| 100.0%
| |||
Above Target
| $0.45
| 14.0%
| 150.0%
| |||
Maximum Level
| $0.50
| 19.0%
| 200.0%
| |||
Actual Achievement
| $0.41
| 10.8%
| 110.0%
|
In July 2015,February 2017, the Subcommittee certified the Company’s achievement of the relative total stockholder returnadjusted earnings per share performance goal, determined the number of shares of Common Stock that were issuable in respect of outstanding awardsgoals and approved share payouts equal to 110% of the performance unit awards to Mr. Brolick (419,155 shares), Mr. Toop (83,827Penegor (53,206 shares) and Mr. Weisberg (69,856 shares)Wright (19,346) without exercising negative discretion.
38 The Wendy’s Company 2016 Proxy Statement
Transition of President and Chief Executive Officer Roles
In October 2015, the Company announced that Mr. Brolick, our Chief Executive Officer, planned to retire from management duties with the Company in May 2016, and that Mr. Penegor, our Chief Financial Officer, was expected to succeed Mr. Brolick in the President and Chief Executive Officer role after a transition period beginning in the first quarter of 2016. As part of the succession plan, Mr. Penegor was appointed President of the Company effective January 4, 2016.
In December 2015, the Compensation Committee and Subcommittee, in consultation with their independent outside compensation consultant, Cook & Co., discussed the transition plan and approved the following changes to Mr. Penegor’s compensation effective upon his assumption of the duties of President: (i) an annual base salary of $900,000; (ii) an annual target cash incentive opportunity beginning in 2016 of 125% of his annual base salary; and (iii) a long-term equity incentive compensation award value for 2016 within the range of $2,200,000 to $3,500,000. In approving these changes, the Compensation Committee and Subcommittee reviewed all components of Mr. Penegor’s compensation, discussed Mr. Penegor’s performance and contributions to the Company’s strong financial results and stockholder returns, considered the compensation paid in prior years to Mr. Brolick as the Company’s President and Chief Executive Officer and noted that Mr. Penegor’s target total direct compensation for 2016 fell within the competitive range of market median.
Changes to the Executive Compensation Program for 20162018
In December 2015,2017, the Compensation Committee conducted its annual review of the Company’s executive compensation philosophy. As part of that review, the Compensation Committeephilosophy and determined that the executive compensation program hadhas been effective in attracting and retaining top talent, wasis strongly aligned with the interests of stockholders and providedprovides a significant linkagelink between executive paycompensation and Company performance. Following discussionsAccordingly, the Compensation Committee, after consultation with their independent outsideFW Cook, decided to continue the current executive compensation consultant, Cook & Co., and management,program, subject to certain enhancements as approved by the Compensation Committee and Subcommittee approved certain enhancements todescribed in the following table. The Compensation Committee determined that the framework of the 2018 executive compensation program for 2016, as described inreinforces ourpay-for-performance philosophy and aligns with the table below.Company’s business strategies and our stockholders’ interests.
|
|
| ||||
| • Maintained a 40% weighting and focus on growth metrics: ¡ Introduced global systemwide sales, weighted at 20%, as an additional key growth performance metric. ¡ With the addition of the new global systemwide sales measure, decreased the weighting of the same-restaurant sales key growth performance metric from 40% to 20%. • Retained adjusted EBITDA, weighted at 60%, as a key earnings performance metric. | • Consistent with the Company’s objectives to drive global unit growth and organic growth of existing restaurants through increased sales and customer visits. • Recognizes the Company’s transition to a predominantly franchised business model. |
(Table continued on the following page.)
10 | With respect to the 2014 performance unit awards only, “adjusted earnings per share” was defined as diluted net income (loss) per share (after taxes) attributable to The Wendy’s Company as reported on the Company’s Consolidated Statements of Operations appearing in the Company’s annual report to stockholders for the applicable fiscal year, as adjusted to exclude the after-tax impact of certain adjustments detailed in the performance unit award agreement. In |
44 The Wendy’s Company 2018 Proxy Statement
2018 EXECUTIVE COMPENSATION PROGRAM | RATIONALE | |||||
Performance Units —Long-Term | • Added cumulative three-year free cash flow, weighted at 50%, as a key earnings performance metric, which replaced cumulative three-year adjusted earnings per share, weighted at 50%. • Retained relative total stockholder return, weighted at 50%, as a key market performance metric. | • Aligns with the Company’s long-term business goals and increased investor focus on free cash flow. • Reinforces the strong link between executive compensation • Further aligns our executive compensation program with our long-term growth strategies and strengthens ourpay-for-performance philosophy. | ||||
Peer Group Utilization | • The Compensation Committee will continue utilizing General Industry Data for all NEOs and restaurant industry survey data for all NEOs other than the Chief Executive Officer and Chief Financial Officer. • For Chief Executive Officer and Chief Financial Officer compensation, the Compensation Committee will
| • Aligns with recommended best practice and provides a more meaningful market comparison for senior executive | ||||
|
|
| ||||
|
|
|
2018Non-GAAP Financial Measures.The Wendy’s Company 2016 Proxy Statement 39will use adjusted EBITDA, global systemwide sales and free cash flow for the 2018 key performance metrics, each of which arenon-GAAP financial measures, as internal measures of the Company’s business operating performance and as performance measures for benchmarking against our peers and competitors (seeAnnex A for a reconciliation of 2017non-GAAP financial measures). The Compensation Committee determined that utilization of adjusted EBITDA and global systemwide sales (i) provides our stockholders with a meaningful perspective of how our executive incentive compensation links to the underlying operating performance of our current business and (ii) enables our stockholders to better understand and evaluate our historical and prospective operating performance as it relates to executive incentive compensation awards. The Compensation Committee also determined that free cash flow, which we define as cash flows from operations minus capital expenditures (both as reported under GAAP), is an important liquidity measure that communicates how much cash flow is available for working capital needs or for repurchasing shares, paying dividends, repaying or refinancing debt, financing possible acquisitions or investments, or other uses of cash. Furthermore, the Compensation Committee considers these threenon-GAAP measures to be important supplemental measures of the Company’s operating performance because these metrics eliminate items that vary from period to period without correlation to our core operating performance, as well as highlight trends in our business that might not otherwise be apparent when relying solely on GAAP financial measures.
Compensation Governance MattersCOMPENSATION GOVERNANCE MATTERS
Clawback Provisions in Equity Awards
All of the equity awards granted to senior executives and other eligible participants during 20152017 contain “clawback”clawback provisions in favor of the Company, as described below.
• | In the event of a material restatement of the Company’s financial statements, the Compensation Committee will review the facts and circumstances underlying the restatement (including any potential wrongdoing by the participant) and may, in its sole discretion, direct the Company to recover all or a portion of the award or any gain realized on the vesting, exercise or settlement of the award. |
• | If a court determines that a participant has engaged in any “detrimental activity” (as defined in the 2010 Omnibus Award Plan), the Company may cancel the award and require the participant to return the award or any gain realized on the vesting, exercise or settlement of the award. |
• | If the Company is required by law to include an additional clawback or forfeiture provision in an outstanding award, then such provision will apply to the award as if it had been included in the award on its grant date. |
Stock Ownership and Retention Guidelines
The Board of Directors has adopted theStock Ownership and Retention Guidelines for Executive Officers and Directors (the “Stock Ownership and Retention Guidelines”) that require executive officers and directors to own a specified number of shares of Common Stock based on the executive’s annual base salary or the director’s annual cash retainer for serving
The Wendy’s Company 2018 Proxy Statement 45
on the Board. The guidelines, which are described below under the caption “Stock Ownership and Retention Guidelines for Executive Officers and Directors,” are intended to encourage executives and directors to maintain a long-term equity stake in the Company, align the interests of executives and directors with the interests of stockholders and promote the Company’s commitment to sound corporate governance.
The Board of Directors has adopted a Securities Trading Policy to assist the Company’s employees and directors in complying with securities laws and avoiding even the appearance of improper conduct. Under this policy, executives and directors are prohibited from engaging in speculative transactions or transactions that are intended to hedge or offset the value of Company securities they already own. Specifically, executives and directors: (i) may not sell Company securities that are not then owned; (ii) may not engage in transactions in publicly traded options of Company securities; (iii) may not engage in any other hedging transactions withoutpre-clearance from the Company’s legal department; (iv) may not sell Company securities within six months of their purchase; and (v) are discouraged from pledging or hypothecating Company securities. AsFurthermore, Company securities held in a margin account or otherwise pledged as collateral for a loan do not count toward satisfaction of the applicable Common Stock ownership requirement under the Company’sStock Ownership and Retention Guidelines.As of the date of this Proxy Statement, none of the Company’s executive officers or directors has pledged any shares of Common Stock.
Tax and Accounting Considerations
Repeal of Section 162(m) Performance-Based Compensation Exemption.In evaluating our executive compensation program for 2017, the Compensation Committee and Subcommittee considered the potential impact on the Company of Section 162(m) of the Internal Revenue Code imposesCode. As effective in 2017, Section 162(m) imposed a $1.0 million limit on the deduction thatamount the Company may claimcould deduct for compensation paid in any tax year with respect to compensation paid to the Chief Executive Officer and the three most-highly compensated executive officers other than the Chief Executive Officer and the Chief Financial Officer. CertainOfficer (“covered executives”). At the time the Compensation Committee and Subcommittee made its compensation decisions with respect to the compensation awarded to covered executives in 2017, certain types of “performance-based compensation” arewere exempt from the $1$1.0 million limit including(including income from stock options, performance-based restricted stock and certain formula-driven compensation that meets the requirements of Section 162(m).) if, among other requirements, such compensation was subject to certain performance goals under a plan established by the Subcommittee and approved by our stockholders.
TheIn making executive compensation decisions in 2017 and prior years, the Compensation Committee and Subcommittee seeksought to structure Section 162(m) compliant incentive compensation for seniorcovered executives in a manner that complies with Section 162(m) in order to maximize the deductibility of such compensation. At the same time, the Compensation Committee and Subcommittee believed that it was important to retain discretion and maximum flexibility in designing appropriate executive compensation programs and establishing compensation levels that were in the best interests of the Company and our stockholders, as there may bemight have been circumstances in which the Compensation Committee or Subcommittee determines,determined, in the exercise of its independent judgment and after its review of all relevant factors,to the extent consistent with our executive compensation philosophy, that it iswas in the best interests of the Company and our stockholders to provideapprove compensation to one or more executives that maywas not befully deductible. With respect to the compensation awarded to the NEOs during 2015,2017, all of the cash incentive awards, stock options and performance unit awards were designed to satisfy thethen-applicable requirements for deductible compensation.
In recognitionThe “performance-based compensation” exemption from Section 162(m) was repealed in the Tax Cuts and Jobs Act of the limitation imposed by Section 162(m), the Company’s employment agreement with Mr. Brolick requires2017, effective for tax years beginning after December 31, 2017, such that all amounts of base salarycompensation paid to our covered executives in excess of $1.0 million will not be deferred underdeductible unless the termscompensation qualifies for transition relief applicable to certain arrangements in place as of a special executive deferredNovember 2, 2017. The Company cannot give any assurance that any annual and long-term incentive awards outstanding after December 31, 2017 that the Compensation Committee and Subcommittee intended to satisfy the Section 162(m) “performance-based compensation” exemption requirements will in fact do so because of uncertainties regarding the application and interpretation of Section 162(m) and related issued regulations, including the uncertain scope of the abovementioned transition relief. Our Compensation Committee and Subcommittee reserve the right to modify compensation plan. The terms of Mr. Brolick’s deferred compensation planthat was initially intended to be exempt from Section 162(m) if the Compensation Committee or Subcommittee determines that such modifications are described inconsistent with the “2015Non-Qualified Deferred Compensation” table below.
40 The Wendy’s Company 2016 Proxy Statement
Accounting Costs Related to Long-Term Equity Awards.The Compensation Committee and Subcommittee also take into consideration the accounting costs associated with long-term equity incentive awards granted to senior executives and other eligible employees. Under U.S. Generally Accepted Accounting Principles (“GAAP”), grants of stock options, performance units and other share-based awards result in an accounting charge for the Company. In designing the
46 The Wendy’s Company 2018 Proxy Statement
executive compensation program, the Compensation Committee and Subcommittee consider the accounting implications of equity awards, including the estimated cost for financial reporting purposes and the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.
Effective January 1, 2017, the Company introduced the Wendy’s International, LLC Deferred Compensation Plan (the “Deferred Compensation Plan”). We offer participation in the Deferred Compensation Plan to key managerial and highly compensated employees because their 401(k) plan contributions are limited under federal income tax rules applicable to highly compensated employees. Our Deferred Compensation Plan provides these key leaders with similar means of saving for retirement by contributing additional amounts on atax-deferred basis, subject to the provisions of the Deferred Compensation Plan. The Deferred Compensation Plan provisions also allow the Company to make discretionary contribution credits for a plan year; however, to date, we have elected not to make any such contributions. Although each NEO is eligible for participation, none of our NEOs participated in our Deferred Compensation Plan in 2017.
Consideration and Frequency of Annual StockholderSay-on-Pay Vote
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Company provides stockholders with the opportunity to cast an annual advisory vote to approve the compensation of the NEOs (i.e., an annual “say-on-pay”“say-on-pay” vote)., as discussed under the caption “Proposal 3—Advisory Resolution to Approve Executive Compensation.” At the Company’s 20152017 annual meeting of stockholders, approximately 85%96% of the votes cast on thesay-on-pay resolution were voted in favor of the compensation of theour named executive officers for fiscal 20142016, as disclosed in the Company’s 20152017 proxy statement. In July 2015,August 2017, the Compensation Committee considered those voting results and believes that our stockholders generally support our executive compensation program and therefore determined that no changes to the Company’s executive compensation program were warranted at that time. In December 2015,2017, the Compensation Committee conducted its annual review of the Company’s executive compensation philosophy and approved certain modifications tothe existing framework for the executive compensation program for 2016, as2018, subject to the modifications described above under the caption “—Additional“Additional Compensation Decisions—Changes to the Executive Compensation Program for 2016.2018.”
Pursuant to the Dodd-Frank Act, the Company also asked stockholders to vote on whether future advisorysay-on-pay votes on executive compensation should occur every year, every two years or every three years (i.e., a“say-on-frequency” vote). In February 2017, after careful consideration, our Board, upon the recommendation of the Compensation Committee, determined that holding asay-on-pay vote every year is appropriate and allows our stockholders to express their collective views and provide timely, direct input on the Company’s executive compensation program and practices. At the 2017 Annual Meeting of Stockholders, approximately 91% of the votes cast on thesay-on-frequency resolution were voted in favor of holding annualsay-on-pay votes. We have conducted an annualsay-on-pay vote every year since 2011, consistent with the Board’s recommendations and the preferences expressed by our stockholders.
The Compensation Committee will continue to review the design of the executive compensation program in light of future “say-on-pay”say-on-pay votes, developments in executive compensation and the Company’spay-for-performance philosophy to ensure that the executive compensation program continues to serve the best interests of the Company and its stockholders.
The Wendy’s Company 20162018 Proxy Statement 4147
20152017 SUMMARY COMPENSATION TABLE
The 2015This 2017 Summary Compensation Table sets forth the salary, bonus, equitycash incentive awards, cashequity incentive awards and all other compensation that was earned by, or paid or awarded to, the following individuals (collectively, the “named executive officers” or “NEOs”)NEOs for 2015, 20142017, 2016 and 2013:2015:
• | The Company’s President and Chief Executive Officer, |
• | The Company’s |
• | The Company’s three most highly compensated executive officers during |
O | Robert D. Wright, Executive Vice President, Chief Operations |
O |
|
O |
|
|
|
|
NAMEAND PRINCIPAL POSITION | YEAR | SALARY ($) (1) | BONUS ($) | STOCK AWARDS ($) (2) | OPTION AWARDS ($) (3) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($) (4) | ALL OTHER COMPENSATION ($) (5) | TOTAL ($) | ||||||||||||||||||||||||
Emil J. Brolick (CEO) | 2015 | 1,168,904 | — | 1,499,991 | 2,249,998 | 3,290,438 | 68,915 | 8,278,246 | ||||||||||||||||||||||||
2014 | 1,137,500 | — | 1,799,992 | 2,699,998 | 1,435,000 | 91,708 | 7,164,198 | |||||||||||||||||||||||||
2013 | 1,100,000 | — | 1,399,993 | 2,186,124 | 2,854,500 | 66,613 | 7,607,230 | |||||||||||||||||||||||||
Todd A. Penegor (President and CFO) | 2015 | 679,863 | — | 399,993 | 599,998 | 965,672 | 30,200 | 2,675,726 | ||||||||||||||||||||||||
2014 | 643,750 | — | 1,439,988 | 659,999 | 395,000 | 30,359 | 3,169,096 | |||||||||||||||||||||||||
2013 | 360,577 | 250,000 | 1,649,981 | 723,375 | 725,000 | 87,857 | 3,796,790 | |||||||||||||||||||||||||
Robert D. Wright (6) (EVP, COO) | 2015 | 490,479 | — | 359,992 | 539,999 | 638,345 | 30,200 | 2,059,015 | ||||||||||||||||||||||||
2014 | 385,962 | 200,000 | 1,159,990 | 239,998 | 285,000 | 30,000 | 2,300,950 | |||||||||||||||||||||||||
R. Scott Toop (7) (Former SVP, GC and Secretary) | 2015 | 491,822 | — | 263,986 | 395,998 | 560,805 | 30,200 | 1,742,811 | ||||||||||||||||||||||||
2014 | 460,000 | — | 275,997 | 414,000 | 300,000 | 27,200 | 1,477,197 | |||||||||||||||||||||||||
2013 | 440,000 | — | 259,993 | 405,993 | 520,000 | 144,225 | 1,770,210 | |||||||||||||||||||||||||
Scott A. Weisberg (8) (CPO) | 2015 | 419,329 | — | 219,992 | 330,000 | 546,213 | 30,200 | 1,545,734 | ||||||||||||||||||||||||
Darrell G. van Ligten (9) (Former SVP – President, Int’l) | 2015 | 188,630 | — | 1,081,701 | 708,024 | 119,136 | 1,690,379 | 3,787,870 | ||||||||||||||||||||||||
Craig S. Bahner (10) (Former CMO) | 2015 | 123,630 | — | 835,063 | 807,112 | 137,026 | 469,139 | 2,371,970 | ||||||||||||||||||||||||
2014 | 471,250 | — | 285,995 | 428,999 | 257,569 | 42,847 | 1,486,660 | |||||||||||||||||||||||||
2013 | 431,058 | 15,000 | 259,993 | 405,993 | 530,000 | 27,000 | 1,669,043 |
NAMEAND PRINCIPAL POSITION | YEAR | SALARY ($) | BONUS ($) | STOCK AWARDS ($) (1) | OPTION AWARDS ($) (2) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($) (3) | ALL OTHER COMPENSATION ($) (4) | TOTAL ($) | ||||||||||||||||||||||||||||||||
Todd A. Penegor (President and CEO) |
|
2017 |
|
|
919,973 |
|
|
— |
|
|
1,624,988 |
|
|
1,624,997 |
|
|
1,267,125 |
|
|
35,910 |
|
|
5,472,993 |
| ||||||||||||||||
|
2016 |
|
|
897,534 |
|
|
— |
|
|
1,374,993 |
|
|
1,374,998 |
|
|
1,395,000 |
|
|
75,259 |
|
|
5,117,784 |
| |||||||||||||||||
|
2015
|
|
|
679,863
|
|
|
—
|
|
|
399,993
|
|
|
599,998
|
|
|
965,672
|
|
|
30,200
|
|
|
2,675,726
|
| |||||||||||||||||
Gunther Plosch (5) (CFO) |
|
2017 |
|
|
492,397 |
|
|
— |
|
|
387,488 |
|
|
387,497 |
|
|
470,000 |
|
|
27,600 |
|
|
1,764,982 |
| ||||||||||||||||
|
2016
|
|
|
318,836
|
|
|
150,000
|
|
|
974,997
|
|
|
374,998
|
|
|
323,950
|
|
|
122,483
|
|
|
2,265,264
|
| |||||||||||||||||
Robert D. Wright (EVP, COO and Int’l) |
|
2017
|
|
|
545,003
|
|
|
—
|
|
|
487,486
|
|
|
487,497
|
|
|
490,000
|
|
|
30,610
|
|
|
2,040,596
|
| ||||||||||||||||
|
2016
|
|
|
513,493
|
|
|
—
|
|
|
449,993
|
|
|
524,999
|
|
|
566,835
|
|
|
30,200
|
|
|
2,085,520
|
| |||||||||||||||||
|
2015
|
|
|
490,479
|
|
|
—
|
|
|
359,992
|
|
|
539,999
|
|
|
638,345
|
|
|
30,200
|
|
|
2,059,015
|
| |||||||||||||||||
Kurt A. Kane (6) (CCMO) |
|
2017 |
|
|
445,027 |
|
|
— |
|
|
599,983 |
|
|
349,998 |
|
|
405,000 |
|
|
30,400 |
|
|
1,830,408 |
| ||||||||||||||||
|
2016
|
|
|
431,315
|
|
|
—
|
|
| 324,987
|
|
| 325,000
|
|
| 424,778
|
|
| 30,200
|
|
| 1,536,279
|
| |||||||||||||||||
E. J. Wunsch (7) (CLO and Secretary)
|
|
2017
|
|
|
406,384
|
|
|
—
|
|
|
274,983
|
|
|
274,997
|
|
|
375,000
|
|
|
152,458
|
|
|
1,483,822
|
|
(1) |
|
The amounts shown represent the aggregate grant date fair value of stock awards made to the NEOs in the year shown, computed in accordance with FASB ASC Topic 718, disregarding any estimates of forfeitures related to performance-based vesting conditions. See Note |
The amounts shown for |
42 The Wendy’s Company 2016 Proxy Statement
beginning |
The 2017 amount shown for Mr. Kane also reflects a restricted stock unit award granted on August 11, 2017 under the 2010 Omnibus Award Plan to reinforce the retention and engagement of Mr. Kane in his current leadership role. The restricted stock units will vest in full on the third anniversary of the grant date, subject to Mr. Kane’s continued employment with the Company on the vesting date. The restricted stock units include dividend equivalent rights, representing the right to receive additional restricted stock units in lieu of cash dividends paid with respect to the shares of Common Stock underlying the award (if and when the award vests). |
48 The Wendy’s Company 2018 Proxy Statement
(2) | The amounts shown represent the aggregate grant date fair value of stock option awards made to the NEOs in the year shown, computed in accordance with FASB ASC Topic 718. See Note |
The amounts shown represent the annual cash incentive payouts earned by the NEOs under the 2010 Omnibus Award Plan for the year shown based on the Company’s achievement of annual performance goals established by the Subcommittee, as adjusted for individual performance. For more information regarding the performance goals and potential payouts with respect to the |
The following table sets forth the details of the “All Other Compensation” paid to the NEOs for |
NAME | COMPANY TO 401(K) PLAN ($) (a) | AUTOMOBILE ($) | USE OF AIRCRAFT ($) (b) | PAYMENTS/ACCRUALS IN CONNECTIONWITH ($) (c) | OTHER OR PERSONAL BENEFITS ($) (d) | TOTAL ($) | ||||||||||||||||||
Emil J. Brolick | 10,600 | 19,200 | 35,945 | — | 3,170 | 68,915 | ||||||||||||||||||
Todd A. Penegor | 10,600 | 16,800 | — | — | 2,800 | 30,200 | ||||||||||||||||||
Robert D. Wright | 10,600 | 16,800 | — | — | 2,800 | 30,200 | ||||||||||||||||||
R. Scott Toop | 10,600 | 16,800 | — | — | 2,800 | 30,200 | ||||||||||||||||||
Scott A. Weisberg | 10,600 | 16,800 | — | — | 2,800 | 30,200 | ||||||||||||||||||
Darrell G. van Ligten | 10,600 | 7,754 | — | 1,671,136 | 889 | 1,690,379 | ||||||||||||||||||
Craig S. Bahner | 10,600 | 4,846 | — | 453,693 | — | 469,139 |
NAME | COMPANY CONTRIBUTIONS TO 401(K) PLAN ($) (a) | AUTOMOBILE ALLOWANCE ($) | RELOCATION REIMBURSEMENTS ($) (b) | OTHER PERQUISITES OR PERSONAL BENEFITS ($) (c) | TOTAL ($) | |||||
Todd A. Penegor
|
10,800
|
19,200
|
—
|
5,910
|
35,910
| |||||
Gunther Plosch
|
10,800
|
16,800
|
—
|
—
|
27,600
| |||||
Robert D. Wright
|
10,800
|
16,800
|
—
|
3,010
|
30,610
| |||||
Kurt A. Kane
|
10,800
|
16,800
|
—
|
2,800
|
30,400
| |||||
E. J. Wunsch
|
10,800
|
16,800
|
121,781
|
3,077
|
152,458
|
(a) | The amounts shown reflect matching contributions made by the Company to the NEOs’ respective 401(k) plan accounts. |
(b) |
|
The amount shown for Mr. |
|
(c) | The amounts shown |
The Wendy’s Company 2016 Proxy Statement 43
|
The amounts shown for Messrs. Penegor, Wright and Wunsch also include the Company’s reimbursement of commercial travel expenses for each individual’s respective spouse. On certain occasions, an executive officer’s spouse may accompany the executive on a trip for a specific business-related purpose. In those cases, the executive officer is reimbursed for their spouse’s commercial travel expenses only with the prior permission of our Chief Executive Officer. |
The amount shown for Mr. |
The Wendy’s Company 2018 Proxy Statement 49
(5) | Mr. Plosch was not a Named Executive Officer in 2015 and, therefore, his compensation information for that year has not been provided. |
(6) | Mr. |
(7) | Mr. |
|
|
|
4450 The Wendy’s Company 20162018 Proxy Statement
20152017 GRANTS OF PLAN-BASED AWARDS
The following table provides information concerning the annual cash incentive awards and long-term equity incentive awards granted to the named executive officersNEOs in 2015.2017.
NAME | GRANT DATE | APPROVAL DATE |
ESTIMATED POSSIBLE |
ESTIMATED FUTURE PAYOUTS UNDER EQUITY | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#) (3) | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) (4) | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/Sh) | CLOSING MARKET PRICE ON DATE OF GRANT ($/Sh) | GRANT DATE FAIR VALUEOF STOCK AND OPTION AWARDS ($) (5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Emil J. Brolick | 862,500 | 1,725,000 | 3,450,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/15 | 2/18/15 | 41,692 | 111,181 | 222,362 | 1,499,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/7/15 | 7/30/15 | 989,271 | 9.86 | 9.82 | 2,249,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Todd A. Penegor | 253,125 | 506,250 | 1,012,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/15 | 2/18/15 | 11,118 | 29,648 | 59,296 | 399,993 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/7/15 | 7/30/15 | 263,805 | 9.86 | 9.82 | 599,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert D. Wright | 181,875 | 363,750 | 727,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/15 | 2/18/15 | 10,006 | 26,683 | 53,366 | 359,992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/7/15 | 7/30/15 | 237,425 | 9.86 | 9.82 | 539,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Scott Toop | 183,750 | 367,500 | 735,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/15 | 2/18/15 | 7,337 | 19,567 | 39,134 | 263,986 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/7/15 | 7/30/15 | 174,111 | 9.86 | 9.82 | 395,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scott A. Weisberg | 155,500 | 311,000 | 622,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/15 | 2/18/15 | 6,114 | 16,306 | 32,612 | 219,992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/7/15 | 7/30/15 | 145,093 | 9.86 | 9.82 | 330,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Darrell G. van Ligten | 159,375 | 318,750 | 637,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/18/15 | 2/18/15 | 6,114 | 16,306 | 32,612 | 219,992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 3,379 | 4.68 | 11.28 | 21,575 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 80,372 | 7.92 | 11.28 | 259,907 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 143,207 | 8.22 | 11.28 | 426,542 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 44,665 | 503,149 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 20,106 | 226,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 9,860 | 111,073 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/8/15 | 12/11/14 | 1,863 | 20,992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Craig S. Bahner | 178,125 | 356,250 | 712,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/2/15 | 12/11/14 | 99,508 | 7.92 | 10.93 | 289,021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/2/15 | 12/11/14 | 195,035 | 8.22 | 10.93 | 518,091 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/2/15 | 12/11/14 | 42,192 | 460,098 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/2/15 | 12/11/14 | 22,633 | 246,817 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/2/15 | 12/11/14 | 11,751 | 128,147 |
NAME |
ESTIMATED POSSIBLE |
ESTIMATED FUTURE PAYOUTS UNDER EQUITY |
ALL OTHER STOCK AWARDS: NUMBER OF SHARESOF STOCK OR UNITS (#) (3) | ALL OTHER AWARDS: (#) (4) | EXERCISE OR AWARDS ($/Sh) | CLOSING PRICE ON DATEOF GRANT ($/Sh) | GRANT ($) (5) | |||||||||||||||||||||||||||||||||||||||||||||||||
GRANT
| APPROVAL
| THRESHOLD
| TARGET
| MAXIMUM
| THRESHOLD
| TARGET
| MAXIMUM
| |||||||||||||||||||||||||||||||||||||||||||||||||
Todd A. Penegor
|
| 581,250
|
|
| 1,162,500
|
|
| 2,325,000
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/17
|
|
| 40,103
|
|
| 106,942
|
|
| 213,884
|
|
| 1,624,988
|
| ||||||||||||||||||||||||||||||||||||||||||
| 8/11/17
|
|
| 8/3/17
|
|
| 520,099
|
|
| 15.355
|
|
| 15.39
|
|
| 1,624,997
|
| |||||||||||||||||||||||||||||||||||||||
Gunther Plosch
|
| 187,500
|
|
| 375,000
|
|
| 750,000
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/17
|
|
| 9,562
|
|
| 25,501
|
|
| 51,002
|
|
| 387,488
|
| ||||||||||||||||||||||||||||||||||||||||||
| 8/11/17
|
|
| 8/3/17
|
|
| 124,023
|
|
| 15.355
|
|
| 15.39
|
|
| 387,497
|
| |||||||||||||||||||||||||||||||||||||||
Robert D. Wright
|
| 207,000
|
|
| 414,000
|
|
| 828,000
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/17
|
|
| 12,030
|
|
| 32,082
|
|
| 64,164
|
|
| 487,486
|
| ||||||||||||||||||||||||||||||||||||||||||
| 8/11/17
|
|
| 8/3/17
|
|
| 156,029
|
|
| 15.355
|
|
| 15.39
|
|
| 487,497
|
| |||||||||||||||||||||||||||||||||||||||
Kurt A. Kane
|
| 168,750
|
|
| 337,500
|
|
| 675,000
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/17
|
|
| 8,637
|
|
| 23,033
|
|
| 46,066
|
|
| 349,988
|
| ||||||||||||||||||||||||||||||||||||||||||
| 8/11/17
|
|
| 8/3/17
|
|
| 112,021
|
|
| 15.355
|
|
| 15.39
|
|
| 349,998
|
| |||||||||||||||||||||||||||||||||||||||
| 8/11/17
|
|
| 8/3/17
|
| 16,281 | 249,995 | |||||||||||||||||||||||||||||||||||||||||||||||||
E. J. Wunsch
|
| 153,750
|
|
| 307,500
|
|
| 615,000
|
| |||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/17
|
|
| 6,786
|
|
| 18,097
|
|
| 36,194
|
|
| 274,983
|
| ||||||||||||||||||||||||||||||||||||||||||
| 8/11/17
|
|
| 8/3/17
|
|
| 88,016
|
|
| 15.355
|
|
| 15.39
|
|
| 274,997
|
|
(1) | Represents threshold, target and maximum payout levels based on |
Such amounts are included in the |
(2) | Represents threshold, target and maximum payout levels based on Company performance over a three-year period for performance unit awards granted to the NEOs under the 2010 Omnibus Award Plan. For more information regarding the performance goals and potential payouts with respect to such awards, see “Compensation Discussion and Analysis—Compensation Decisions for |
The Wendy’s Company 2016 Proxy Statement 45
(3) | For Mr. |
For Mr. Bahner, reflects shares of Common Stock received upon the accelerated vesting of outstanding performance unit awards held by Mr. Bahner on April 2, 2015, his last day of employment. The Subcommittee approved the vesting schedule applicable to Mr. Bahner’s outstanding equity awards on December 11, 2014 as part of his overall severance terms.
(4) |
|
The Wendy’s Company 2018 Proxy Statement 51
options vest and become exercisable in three equal installments on the first, second and third anniversaries of the grant date, subject to the executive’s continued employment on the applicable vesting date. |
For Mr. van Ligten, reflects the accelerated vesting of outstanding stock option awards held by Mr. van Ligten on June 8, 2015, his last day of employment. The Subcommittee approved the vesting schedule applicable to Mr. van Ligten’s outstanding equity awards on December 11, 2014 as part of his overall severance terms.
For Mr. Bahner, reflects the accelerated vesting of outstanding stock option awards held by Mr. Bahner on April 2, 2015, his last day of employment. The Subcommittee approved the vesting schedule applicable to Mr. Bahner’s outstanding equity awards on December 11, 2014 as part of his overall severance terms.
(5) | Represents the grant date fair value of equity awards granted to the NEOs, computed in accordance with FASB ASC Topic 718, disregarding any estimates of forfeitures related to performance-based vesting conditions. The grant date fair value of the performance unit awards granted to Messrs. Penegor, Plosch, Wright, Kane and Wunsch on February |
For Messrs. van Ligten and Bahner, also includes the incremental fair value associated with the accelerated vesting of outstanding performance unit awards and stock option awards held by Messrs. van Ligten and Bahner on their last day of employment, computed in accordance with FASB ASC Topic 718.
4652 The Wendy’s Company 20162018 Proxy Statement
OUTSTANDING EQUITY AWARDS AT 2015 2017YEAR-END
The following table provides information concerning the unexercised stock options and unvested restricted stock unit and performance unit awards held by the named executive officersNEOs as of the end of 2015.2017.
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||||||||
NAME | NUMBER OF (#) EXERCISABLE | NUMBER OF (#) UNEXERCISABLE (1) | OPTION EXERCISE PRICE ($) | OPTION EXPIRATION DATE (2) | NUMBER OF SHARES OR VESTED (#) | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) (3) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF OTHER RIGHTS (#) | EQUITY INCENTIVE MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE ($) (3) | ||||||||||||||||||||||||||||||||
Emil J. Brolick | 540,540 | — | 4.82 | 9/12/21 | ||||||||||||||||||||||||||||||||||||
833,333 | — | 4.68 | 7/2/22 | |||||||||||||||||||||||||||||||||||||
535,814 | 267,908 | 7.92 | 8/9/23 | |||||||||||||||||||||||||||||||||||||
294,985 | 589,970 | 8.22 | 8/11/24 | |||||||||||||||||||||||||||||||||||||
— | 989,271 | 9.86 | 8/7/25 | |||||||||||||||||||||||||||||||||||||
374,198 | (4) | 4,030,112 | ||||||||||||||||||||||||||||||||||||||
193,482 | (5) | 2,083,801 | ||||||||||||||||||||||||||||||||||||||
227,202 | (6) | 2,446,966 | ||||||||||||||||||||||||||||||||||||||
Todd A. Penegor | 43,720 | 21,860 | 5.91 | 6/3/23 | ||||||||||||||||||||||||||||||||||||
145,435 | 72,718 | 7.92 | 8/9/23 | |||||||||||||||||||||||||||||||||||||
100,018 | 200,036 | 8.22 | 8/11/24 | |||||||||||||||||||||||||||||||||||||
— | 263,805 | 9.86 | 8/7/25 | |||||||||||||||||||||||||||||||||||||
77,017 (7) | 829,473 | |||||||||||||||||||||||||||||||||||||||
119,400 (8) | 1,285,938 | |||||||||||||||||||||||||||||||||||||||
101,562 | (4) | 1,093,823 | ||||||||||||||||||||||||||||||||||||||
47,295 | (5) | 509,367 | ||||||||||||||||||||||||||||||||||||||
60,586 | (6) | 652,511 | ||||||||||||||||||||||||||||||||||||||
Robert D. Wright | 36,370 | 72,740 | 8.22 | 8/11/24 | ||||||||||||||||||||||||||||||||||||
— | 237,425 | 9.86 | 8/7/25 | |||||||||||||||||||||||||||||||||||||
119,400 (8) | 1,285,938 | |||||||||||||||||||||||||||||||||||||||
17,198 | (5) | 185,222 | ||||||||||||||||||||||||||||||||||||||
54,526 | (6) | 587,245 | ||||||||||||||||||||||||||||||||||||||
R. Scott Toop | 140,000 | — | 5.35 | 1/17/22 | ||||||||||||||||||||||||||||||||||||
166,666 | — | 4.68 | 7/2/22 | |||||||||||||||||||||||||||||||||||||
99,508 | 49,754 | 7.92 | 8/9/23 | |||||||||||||||||||||||||||||||||||||
62,738 | 125,478 | 8.22 | 8/11/24 | |||||||||||||||||||||||||||||||||||||
— | 174,111 | 9.86 | 8/7/25 | |||||||||||||||||||||||||||||||||||||
69,490 | (4) | 748,407 | ||||||||||||||||||||||||||||||||||||||
29,667 | (5) | 319,514 | ||||||||||||||||||||||||||||||||||||||
39,984 | (6) | 430,628 | ||||||||||||||||||||||||||||||||||||||
Scott A. Weisberg | 80,372 | 40,186 | 7.92 | 8/9/23 | ||||||||||||||||||||||||||||||||||||
50,009 | 100,018 | 8.22 | 8/11/24 | |||||||||||||||||||||||||||||||||||||
— | 145,093 | 9.86 | 8/7/25 | |||||||||||||||||||||||||||||||||||||
56,128 | (4) | 604,499 | ||||||||||||||||||||||||||||||||||||||
23,647 | (5) | 254,678 | ||||||||||||||||||||||||||||||||||||||
33,320 | (6) | 358,856 | ||||||||||||||||||||||||||||||||||||||
Darrell G. van Ligten | ||||||||||||||||||||||||||||||||||||||||
Craig S. Bahner |
|
OPTION AWARDS
|
|
| STOCK AWARDS
|
| |||||||||||||||||||||||||||||||
NAME | | NUMBEROF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE |
| | NUMBEROF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE (1) |
| | OPTION EXERCISE PRICE ($) |
| | OPTION EXPIRATION DATE (2) |
| | NUMBER OF SHARESOR UNITSOF STOCK THAT (#) |
| | MARKET VALUEOF SHARESOR UNITSOF STOCK THAT ($) (3) |
| | EQUITY INCENTIVE PLAN AWARDS: NUMBEROF NOT VESTED (#) |
|
|
EQUITY INCENTIVE MARKETOR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) (3) |
| ||||||||||||
Todd A. Penegor | 65,580 | — | 5.9050 | 6/3/23 | ||||||||||||||||||||||||||||||||
|
218,153 |
| — | 7.9225 | 8/9/23 | |||||||||||||||||||||||||||||||
|
300,054 |
| — | 8.2225 | 8/11/24 | |||||||||||||||||||||||||||||||
|
175,870 |
| 87,935 | 9.8575 | 8/7/25 | |||||||||||||||||||||||||||||||
|
216,542 |
| 433,084 | 10.0875 | 8/12/26 | |||||||||||||||||||||||||||||||
|
— |
| 520,099 | 15.3550 | 8/11/27 | |||||||||||||||||||||||||||||||
|
62,212 (7) |
| 1,021,521 | |||||||||||||||||||||||||||||||||
|
63,134 (4) |
| 1,036,660 | |||||||||||||||||||||||||||||||||
|
291,550 (5) |
| 4,787,251 | |||||||||||||||||||||||||||||||||
|
217,924 (6)
|
|
| 3,578,312
|
| |||||||||||||||||||||||||||||||
Gunther Plosch | 59,056 | 118,114 | 10.0875 | 8/12/26 | ||||||||||||||||||||||||||||||||
|
— |
| 124,023 | 15.3550 | 8/11/27 | |||||||||||||||||||||||||||||||
|
90,858 (8) |
| 1,491,888 | |||||||||||||||||||||||||||||||||
|
51,964 (6)
|
|
| 853,249
|
| |||||||||||||||||||||||||||||||
Robert D. Wright | 109,110 | — | 8.2225 | 8/11/24 | ||||||||||||||||||||||||||||||||
|
158,283 |
| 79,142 | 9.8575 | 8/7/25 | |||||||||||||||||||||||||||||||
|
82,679 |
| 165,360 | 10.0875 | 8/12/26 | |||||||||||||||||||||||||||||||
|
— |
| 156,029 | 15.3550 | 8/11/27 | |||||||||||||||||||||||||||||||
|
62,212 (7) |
| 1,021,521 | |||||||||||||||||||||||||||||||||
|
56,820 (4) |
| 932,984 | |||||||||||||||||||||||||||||||||
|
95,414 (5) |
| 1,566,698 | |||||||||||||||||||||||||||||||||
|
65,376 (6)
|
|
| 1,073,474
|
| |||||||||||||||||||||||||||||||
Kurt A. Kane | 102,590 | 51,296 | 9.8575 | 8/7/25 | ||||||||||||||||||||||||||||||||
|
51,182 |
| 102,366 | 10.0875 | 8/12/26 | |||||||||||||||||||||||||||||||
|
— |
| 112,021 | 15.3550 | 8/11/27 | |||||||||||||||||||||||||||||||
|
25,607 (9) |
| 420,467 | |||||||||||||||||||||||||||||||||
|
16,426 (10) |
| 269,715 | |||||||||||||||||||||||||||||||||
|
68,906 (5) |
| 1,131,437 | |||||||||||||||||||||||||||||||||
|
46,934 (6)
|
|
| 770,656
|
| |||||||||||||||||||||||||||||||
E. J. Wunsch | — | 88,016 | 15.3550 | 8/11/27 | ||||||||||||||||||||||||||||||||
|
47,514 (11) |
| 780,180 | |||||||||||||||||||||||||||||||||
|
36,876 (6)
|
|
| 605,504
|
|
(1) | All stock options vest and become exercisable in three equal installments on the first, second and third anniversaries of the grant date, subject to the executive’s continued employment on the applicable vesting date. |
The Wendy’s Company 2016 Proxy Statement 47
(2) | All stock options expire ten years from the grant date, unless sooner exercised or forfeited. |
The Wendy’s Company 2018 Proxy Statement 53
(3) | Based on |
(4) |
|
|
Represents payout levels based on achieving maximum performance levels over a three-year period (December 29, 2014 through December 31, 2017) for performance unit awards granted on February 18, 2015 under the 2010 Omnibus Award Plan, plus dividends accrued thereon as of the end of |
|
Represents payout levels based on achieving target performance levels over a three-year period (January 2, 2017 through December 29, 2019) for performance unit awards granted on February 28, 2017 under the 2010 Omnibus Award Plan, plus dividends accrued thereon as of the end of 2017. Each performance unit represents the right to receive one share of Common Stock subject to the Company’s achievement of a performance goal based on adjusted earnings per share during the performance period. For more information regarding the performance goal and potential payouts with respect to such awards, see “Compensation Discussion and Analysis—Compensation Decisions for 2017—Long-Term Equity Incentive Compensation” above. |
(7) | Reflects unvested restricted stock units granted to Messrs. Penegor and Wright on December 17, 2014 under the 2010 Omnibus Award |
(8) | Reflects unvested restricted stock units granted to Mr. Plosch on May 2, 2016 under the 2010 Omnibus Award Plan, plus dividends accrued thereon as of the end of 2017. The restricted stock units vest on May 2, 2019, subject to Mr. Plosch’s continued employment on the vesting date. |
(9) | Reflects unvested restricted stock units granted to Mr. Kane on May 4, 2015 under the 2010 Omnibus Award Plan, plus dividends accrued thereon as of the end of 2017. The restricted stock units vest on May 4, 2018, subject to Mr. Kane’s continued employment on the vesting date. |
(10) | Reflects unvested restricted stock units granted to Mr. Kane on August 11, 2017 under the 2010 Omnibus Award Plan, plus dividends accrued thereon as of the end of 2017, to reinforce the retention and engagement of Mr. Kane in his current leadership role. The restricted stock units vest on August 11, 2020, subject to Mr. Kane’s continued employment on the vesting date. |
(11) | Reflects unvested restricted stock units granted to Mr. Wunsch on October 3, 2016 under the 2010 Omnibus Award Plan, plus dividends accrued thereon as of the end of 2017. The restricted stock units vest in three equal installments on the first, second and third anniversaries of the grant date, subject to Mr. Wunsch’s continued employment on the applicable vesting date. The first installment (including the related dividend equivalent units) vested in full on October 3, 2017. |
4854 The Wendy’s Company 20162018 Proxy Statement
OPTION EXERCISES AND STOCK VESTED DURING 20152017
The following table provides information for 20152017 concerning the exercise of stock options and vesting of stock awards granted to the named executive officersNEOs in prior years.
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||
NAME | NUMBER OF SHARES (#) | VALUE REALIZED ON EXERCISE ($) (1) | NUMBER OF SHARES (#) | VALUE REALIZED ON VESTING ($) (2) | ||||||||||||||
Emil J. Brolick �� |
| —
|
|
| —
|
|
| 419,155
| (3)
|
| 4,306,818
|
| ||||||
Todd A. Penegor
|
| —
|
|
| —
|
| 75,389 | (4) |
| 867,916
|
| |||||||
Robert D. Wright
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| ||||||
R. Scott Toop
|
| —
|
|
| —
|
|
| 83,827
| (3)
|
| 861,322
|
| ||||||
Scott A. Weisberg
|
| 138,888
|
|
| 825,689
|
|
| 69,856
| (3)
|
| 717,770
|
| ||||||
Darrell G. van Ligten (5)
|
| 756,321
|
|
| 4,165,296
|
|
| 81,304
|
|
| 915,751
|
| ||||||
Craig S. Bahner (6)
|
| 544,297
|
|
| 2,394,485
|
|
| 80,801
|
|
| 880,731
|
|
OPTION AWARDS | STOCK AWARDS | |||||||||||
NAME | NUMBEROF SHARES (#) | VALUE REALIZED ON EXERCISE ($) (1) | NUMBEROF SHARES (#) | VALUE REALIZED ON VESTING ($) (2) | ||||||||
Todd A. Penegor | — | — | 115,417 (3) | 1,705,238 | ||||||||
Gunther Plosch | — | — | — | — | ||||||||
Robert D. Wright | — | — | 81,557 (3) | 1,235,769 | ||||||||
Kurt A. Kane | — | — | — | — | ||||||||
E. J. Wunsch | — | — | 23,650 (4) | 363,146 |
(1) | Based on the difference between the exercise price of the stock options and the market price of our Common Stock at the time of exercise. |
(2) | Based on the average of the high and low per share sales price of our Common Stock on the applicable vesting date. |
(3) |
|
This number also includes the number of shares of Common Stock received on |
(4) | Representsone-third of the restricted stock units (plus dividends accrued thereon) granted on October 3, 2016 and which vested on October 3, 2017. The number of shares of Common Stock actually received |
|
|
The Wendy’s Company 20162018 Proxy Statement 4955
2015 NON-QUALIFIED DEFERRED COMPENSATION
Pursuant to the terms of his employment agreement with the Company, Mr. Brolick is required to defer all amounts of base salary in excess of $1,000,000 under a special executive deferred compensation plan established by the Company. The following table provides information concerning Mr. Brolick’s account under the deferred compensation plan for 2015. Except for Mr. Brolick’s deferred compensation plan, the Company did not maintain any nonqualified deferred compensation or defined contribution plans for the named executive officers during 2015.
NAME | EXECUTIVE ($) | REGISTRANT ($) | AGGREGATE ($) | AGGREGATE DISTRIBUTIONS ($) | AGGREGATE ($) | |||||||||||||||
Emil J. Brolick
|
| 168,904
| (1)
|
| —
|
|
| 13,580
| (2)
|
| —
|
|
| 537,213
| (3)
| |||||
Todd A. Penegor
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
Robert D. Wright
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
R. Scott Toop
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
Scott A. Weisberg
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
Darrell G. van Ligten
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
| |||||
Craig S. Bahner
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
|
|
|
All amounts deferred by Mr. Brolick under the deferred compensation plan will: (i) be vested and nonforfeitable at all times; (ii) be distributed to Mr. Brolick in a single lump-sum payment on the first day of the seventh month following his retirement, subject to applicable legal and regulatory requirements; and (iii) bear interest (compounded quarterly) at a rate equal to the three-month LIBOR, plus 500 basis points, not to exceed 120% of the applicable U.S. federal long-term rate. For 2015, interest was credited to Mr. Brolick’s account on a quarterly basis using the following interest rates: 3.17% for the first quarter; 2.93% for the second quarter; 3.52% for the third quarter; and 3.06% for the fourth quarter.
50 The Wendy’s Company 2016 Proxy Statement
EMPLOYMENT AGREEMENTSARRANGEMENTS AND
A summary of the key terms and provisions of the named executive officers’ employment agreements with the Company is set forth below. This summary is qualified in its entirety by reference to the complete text of the employment agreements, copies of which have been filed with the SEC. The severance and termination provisions included in the employment agreements for Messrs. Brolick, Penegor, Wright and Weisberg are described below under the caption “Potential Payments upon Termination or Change in Control.”
|
Effective September 12, 2011, the Company entered into an employment agreement with Mr. Brolick, as the Company’s President and Chief Executive Officer. The employment agreement provided that Mr. Brolick was to be appointed to the Board of Directors as of his date of hire, and the Company will cause Mr. Brolick to be nominated for re-election to the Board each year during his term of employment. The employment agreement stated that the term of Mr. Brolick’s employment would run through September 12, 2014, provided that the parties could agree to a one-year extension of the term on mutually satisfactory terms. On June 2, 2014, the Company and Mr. Brolick entered into an amendment to the employment agreement which extended the term of Mr. Brolick’s employment to September 12, 2015, subject to automatic renewal for additional one-year periods unless either party gives notice of non-renewal at least 90 days prior to the expiration of thethen-current term. Under the employment agreement, as amended, Mr. Brolick’s annual base salary was set at $1,150,000, with all amounts in excess of $1,000,000 to be deferred under a special executive deferred compensation plan. Mr. Brolick’s annual target cash incentive opportunity was set at 150% of his base salary and his annual maximum cash incentive opportunity was set at 300% of his base salary. The employment agreement, as amended, provides that Mr. Brolick will be eligible to receive equity awards under the Company’s annual long-term equity incentive award program in effect for other senior executives, with an aggregate guideline award value of $3,000,000. The actual grant date value of Mr. Brolick’s equity awards may be above or below the $3,000,000 guideline, as determined by the Compensation Committee in its discretion after taking into account the Company’s and Mr. Brolick’s performance and other relevant factors.
In October 2015, the Company announced that Mr. Brolick planned to retire from management duties with the Company in May 2016, and that Mr. Penegor was expected to succeed Mr. Brolick in the President and Chief Executive Officer role after a transition period beginning in the first quarter of 2016. As part of the succession plan, Mr. Penegor assumed the role of President effective January 4, 2016. Mr. Brolick is expected to continue as Chief Executive Officer until the transition of Mr. Penegor’s duties as Chief Financial Officer has occurred, which is expected by May 2016.
|
The Company and Mr. Penegor entered into an employment letter dated May 8, 2013 pursuant to which Mr. Penegor joined the Company on June 3, 2013 and assumed the position of Senior Vice President and Chief Financial Officer effective September 1, 2013. Mr. Penegor was promoted to Executive Vice President, Chief Financial Officer and International effective December 17, 2014. Under the employment letter, Mr. Penegor’s initial annual base salary was set at $625,000 and his annual target cash incentive opportunity was set at 75% of his base salary. The employment letter also provides that Mr. Penegor will be eligible to receive equity awards under the Company’s annual long-term incentive award program in effect for other senior executives.
Effective January 4, 2016, Mr. Penegor was promoted to President and Chief Financial Officer as part of the Company’s succession plan. Mr. Penegor is expected to succeed Mr. Brolick as Chief Executive Officer once the transition of Mr. Penegor’s duties as Chief Financial Officer has occurred, which is expected to occur by May 2016. Upon assuming the role of President, Mr. Penegor’s annual base salary was set at $900,000, his annual target cash incentive opportunity was set at 125% of his base salary and his long-term equity incentive compensation award for 2016 will be within a range of $2,200,000 to $3,500,000, as determined by the Compensation Committee in its discretion after taking into account the Company’s and Mr. Penegor’s performance and other relevant factors.
|
The Company and Mr. Wright entered into an employment letter dated November 1, 2013 pursuant to which Mr. Wright joined the Company on December 2, 2013 and assumed the position of Chief Operations Officer effective March 10, 2014. Mr. Wright was promoted to Executive Vice President, Chief Operations Officer effective December 17, 2014. Under the employment letter, Mr. Wright’s initial base salary was set at $375,000 (currently set at $485,000) and his annual target cash incentive opportunity was set at 75% of his base salary. The employment letter also provides that Mr. Wright will be eligible to receive equity awards under the Company’s annual long-term incentive award program in effect for other senior executives.
The Wendy’s Company 2016 Proxy Statement 51
|
Effective April 30, 2012, the Company entered into an employment agreement with Mr. Weisberg, as the Company’s Chief People Officer. The employment agreement stated that the term of Mr. Weisberg’s employment would run through April 30, 2014, subject to automatic renewal for additional one-year periods unless either party provides a notice of non-renewal at least 120 days prior to the expiration of the then-current term. Under the employment agreement, Mr. Weisberg’s initial annual base salary was set at $375,000 (currently set at $415,000) and his annual target cash incentive opportunity was set at 75% of his base salary. The employment agreement also provides that Mr. Weisberg will be eligible to receive equity awards under the Company’s annual long-term incentive award program in effect for other senior executives.
|
Effective January 17, 2012, the Company entered into an employment agreement with Mr. Toop, as the Company’s Senior Vice President, General Counsel and Secretary. The employment agreement stated that the term of Mr. Toop’s employment would run through January 17, 2014, subject to automatic renewal for additional one-year periods unless either party gave notice of non-renewal at least 120 days prior to the expiration of the then-current term. Under the employment agreement, Mr. Toop’s initial annual base salary was set at $425,000 (set at $490,000 at the time of his retirement from the Company) and his annual target cash incentive opportunity was set at 75% of his base salary. The employment agreement also provided that Mr. Toop would be eligible to receive equity awards under the Company’s annual long-term incentive award program in effect for other senior executives.
Mr. Toop retired from the Company on January 17, 2016 following the expiration of the employment term under his employment agreement. In connection with his retirement, Mr. Toop received (or became entitled to receive) the following payments and benefits:
|
|
|
|
The value shown above with respect to the vesting of Mr. Toop’s stock options was estimated assuming the immediate exercise and sale of all vested stock options, based on the closing price of our Common Stock on January 15, 2016 ($9.63). The value shown above with respect to the vesting of Mr. Toop’s 2013 performance units was estimated assuming the immediate sale of all vested performance units, based on the closing price of our Common Stock on February 25, 2016 ($9.40).
Prior to receiving any of the severance payments and benefits described above, Mr. Toop was required to sign a general release and covenant not to sue in favor of the Company. In addition, Mr. Toop remains subject to certain(i) non-compete and non-solicitation covenants for 12 months following his retirement and (ii) confidentiality andnon-disparagement covenants for four years following his retirement.
|
Effective February 2, 2009, the Company entered into an employment agreement with Mr. van Ligten, as the Company’s Senior Vice President – Strategic Development. The employment agreement stated that the term of Mr. van Ligten’s employment would run through February 2, 2011, subject to automatic renewal for additional one-year periods unless either party gave notice of non-renewal at least 120 days prior to the expiration of the then-current term. Under the employment agreement, Mr. van Ligten’s initial annual base salary was set at $325,000 (set at $425,000 at the time of his departure from the Company) and his annual target cash incentive opportunity was set at 75% of his base salary. On March 23, 2012, the Company and Mr. van Ligten entered into a letter agreement pursuant to which Mr. van Ligten agreed to remain employed by the Company following the relocation of his position from Atlanta, Georgia to the Company’s headquarters in Dublin, Ohio, notwithstanding the occurrence of certain “triggering events” under the terms of his employment agreement. Effective May 23, 2013, Mr. van Ligten was appointed Senior Vice President – President, International.
52 The Wendy’s Company 2016 Proxy Statement
Mr. van Ligten left the Company on June 8, 2015. In connection with his departure, Mr. van Ligten received (or became entitled to receive) the following payments and benefits:
|
|
|
|
|
|
|
The Company and Mr. van Ligten entered into a consulting agreement dated June 9, 2015 pursuant to which Mr. van Ligten provided consulting services to the Company through December 4, 2015. In consideration for his services, Mr. van Ligten received a monthly consulting fee of $70,000 ($437,500).
The values shown above with respect to the vesting of Mr. van Ligten’s equity awards were estimated assuming the immediate exercise and sale of all vested stock options and the immediate sale of all vested performance units and restricted stock units, in each case based on the closing price of our Common Stock on June 8, 2015 ($11.28).
Prior to receiving any of the severance payments and benefits described above, Mr. van Ligten was required to sign a general release and covenant not to sue in favor of the Company. In addition, Mr. van Ligten remains subject to certain (i) non-compete and non-solicitation covenants for 12 months following his departure and (ii) confidentiality andnon-disparagement covenants for four years following his departure.
|
Effective April 2, 2012, the Company entered into an employment agreement with Mr. Bahner, as the Company’s Chief Marketing Officer. The employment agreement provided that the term of Mr. Bahner’s employment would run through April 2, 2014, subject to automatic renewal for additional one-year periods unless either party gave notice ofnon-renewal at least 120 days prior to the expiration of the then-current term. Under the employment agreement, Mr. Bahner’s initial annual base salary was set at $425,000 (set at $475,000 at the time of his departure from the Company) and his annual target cash incentive opportunity was set at 75% of his base salary. The employment agreement also provided that Mr. Bahner would be eligible to receive equity awards under the Company’s annuallong-term incentive award program in effect for other senior executives.
Mr. Bahner left the Company on April 2, 2015 following the expiration of the employment term under his employment agreement. In connection with his departure, Mr. Bahner received the following payments and benefits:
|
|
|
|
The values shown above with respect to the vesting of Mr. Bahner’s equity awards were estimated assuming the immediate exercise and sale of all vested stock options and the immediate sale of all vested performance units, in each case based on the closing price of our Common Stock on April 2, 2015 ($10.93).
Prior to receiving any of the severance payments and benefits described above, Mr. Bahner was required to sign a general release and covenant not to sue in favor of the Company. In addition, Mr. Bahner was subject to certainnon-compete and non-solicitation covenants for eight months following his departure, and he remains subject to certain confidentiality and non-disparagement covenants for four years following his departure.
The Wendy’s Company 2016 Proxy Statement 53
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Following careful consideration and consultation with its executive compensation advisors, beginning in 2013, the Company adopted a philosophy to discontinue the use of formal employment agreements. The Company believes this practice is a responsible approach aligned with stockholder interests and best practice. Employment arrangements for our NEOs are governed by the terms of their individual employment offers, as well as anExecutive Severance Pay Policy adopted by the Compensation Committee in December 2015 (the “Executive Severance Policy”). The key provisions related to termination of employment for the NEOs are summarized in the tables below.
The named executive officers are parties to employment agreements with the Company that provide for certain severance payments and benefits upon a qualifying termination event. The named executive officersNEOs also have received equity awards under the 2010 Omnibus Award Plan, which provides for the accelerated vesting of certain awards in connection with a qualifying termination event. Awards granted under the 2010 Omnibus Award Plan are subject to “double-trigger” vesting requirements in connection with a “change in control” of the Company. This means that, in order for an outstanding award to be accelerated and become vested, a “change in control” must occur and the participant must be terminated without “cause” or for “good reason” following the change in control.
The Company considers these limited severance and change in control benefits to be an important part of the executive compensation program and consistent with competitive market practice. The Company believes that providing appropriate severance benefits helps to attract and retain highly-qualifiedhighly qualified executives by mitigating the risks associated with leaving a previous employer and accepting a new position with the Company, and by providing income continuity following an unexpected termination. These arrangements also allow the Company to protect its interests through corresponding confidentiality,non-compete and other restrictive covenants in the event of an executive’s termination.
A summary of the key severance provisions in effect as of the end of 20152017 for Messrs. Brolick, Penegor, Plosch, Wright, Kane and WeisbergWunsch is set forth below. This summary is qualified in its entirety by reference to the complete text of their respectivethe employment agreementsarrangement documents for the NEOs, theExecutive Severance Policy and the 2010 Omnibus Award Plan, copies of which have been filed with the SEC. The actual severance payments and benefits received by Messrs. Toop, van Ligten and Bahner in connection with their departure from the Company are described above under the caption “Employment Agreements.”
Employment Agreements – Key Severance ProvisionsEMPLOYMENT ARRANGEMENTS—KEY SEVERANCE PROVISIONS
| ||||
|
| |||
|
| |||
|
| |||
TODD A. PENEGORAND ROBERT D. WRIGHT | ||||
Termination event: |
• | Termination without | ||
Severance payments: | • | A cash payment equal to the sum of the executive’s then-current base salary and actual cash incentive award paid for | ||
• | A cash payment equal to the executive’s then-current base salary for an additional period of 12 months, payable in biweekly installments commencing 12 months after termination, offset by any compensation earned from subsequent employment (Mr. | |||
• | A lump sum cash payment of | |||
• | A pro rata portion of the executive’s annual cash incentive award for | |||
Treatment of equity awards: | • | In the event of a termination without “cause,” all outstanding stock options and restricted stock units will vest pro rata (on a monthly basis) through the date of termination (Mr. Wright, $1,957,465). |
54 The Wendy’s Company 2016 Proxy Statement
| ||||
Termination event: |
• | Termination without “cause” or termination due to a | ||
Severance payments: | • | If termination without “cause” occurs, a cash payment equal to the executive’s then-current base salary, payable in biweekly installments for a period of 18 months (Mr. Plosch, $750,000; Mr. Kane, $675,000; Mr. Wunsch, $615,000). |
56 The Wendy’s Company 2018 Proxy Statement
• | If termination without “cause” occurs within 12 months following a change in control, a cash payment equal to the sum of | |||
• | ||||
| ||||
| ||||
Treatment of equity awards: |
| |||
• | Continued vesting of all outstanding stock options during the18-month salary continuation period. Any unvested stock options remaining outstanding as of the conclusion of the18-month salary continuation period will | |||
|
| |||
• | Vesting of | |||
If termination without “cause” occurs within 12 months following a change in | ||||
• | Accelerated, full vesting of outstanding stock options as of the termination date (Mr. Plosch, $880,041; Mr. Kane, $1,104,165; Mr. Wunsch, $93,737). | |||
• | Accelerated, full vesting of outstanding restricted stock units as of the termination date (Mr. Plosch, $1,491,888; Mr. Kane, $690,182; Mr. Wunsch, $780,180). | |||
• | Accelerated vesting of outstanding performance units based on actual performance through the termination date, |
Employment Agreements – Restrictive CovenantsEMPLOYMENT ARRANGEMENTS—RESTRICTIVE COVENANTS
As a condition to receiving any of the severance payments and benefits described above, the named executive officersNEOs are required to comply with certain restrictive covenants set forth inunder their respective employment agreements,arrangements, including theExecutive Severance Policy, as described below.
NAME | GENERAL RELEASE/ COVENANT NOTTO SUE | NON-COMPETE/NON-SOLICITATION | CONFIDENTIALITY/ NON-DISPARAGEMENT | |||
Todd A. Penegor; Robert D. Wright | ✓ | 12 months (termination for “cause”) 24 months (termination without “cause”) | 4 years | |||
Gunther Plosch; E. J. Wunsch | ✓ | 12 months (termination for “cause”) 18 months (termination without “cause”) | Unlimited | |||
Kurt A. Kane | ✓ | 12 months (termination for “cause”) 24 months (termination without “cause”) | Unlimited |
The Wendy’s Company 2018 Proxy Statement 57
2010 OMNIBUS AWARD PLAN—KEY SEVERANCE PROVISIONS
|
|
|
| |||||||||||||||
|
|
| ||||||||||||||||
|
|
| ||||||||||||||||
|
|
| ||||||||||||||||
|
|
|
2010 Omnibus Award Plan – Key Severance Provisions
TYPE OF EQUITY AWARD | TERMINATION EVENT | IMPACTON OUTSTANDING EQUITY AWARDS | ||||||
Stock Options | Termination due to death or disability or termination without “cause” or for “good reason” within 12 months following a “change in
| All outstanding stock options will fully vest (Mr. | ||||||
Restricted Stock Units | Termination due to death or disability or termination without “cause” or for “good reason” within 12 months following a “change in
| All outstanding restricted stock units will fully vest (Mr.
| ||||||
Termination without “cause.” |
For Mr. Plosch, all outstanding restricted stock units granted on May 2, 2016 will vest pro rata ($1,491,888). For Mr. Kane, all outstanding restricted stock units granted on May 4, 2015 and August 11, 2017 will vest pro rata ($457,927). For Mr.
| |||||||
Performance Units | Termination due to death or disability or termination without “cause” or for “good reason” within 12 months following a “change in | All outstanding performance units will vest pro rata (on a daily basis) through the date of termination based on actual performance or, if actual performance cannot be reasonably assessed, then based on the assumed achievement of target performance (Mr. | ||||||
Termination without “cause.” | All outstanding performance units granted on February 25, 2016 and February 28, 2017 will vest pro rata (on a monthly basis) through the date of termination based on actual performance through the end of the performance period (Mr. Penegor, $2,653,590; Mr.
|
The Wendy’s Company 2016 Proxy Statement 55
Aggregate Potential Payments upon Termination or Change in ControlAGGREGATE POTENTIAL PAYMENTSUPON TERMINATIONOR CHANGEIN CONTROL
The estimated aggregate values of the severance payments and benefits that would be provided to the named executive officersNEOs in connection with the qualifying termination events described above pursuant to their respective employment agreementsarrangements, theExecutive Severance Policy and the 2010 Omnibus Award Plan are shown in the table below.
NAME | TERMINATION DUE TO DEATH OR DISABILITY | TERMINATION DUE ($) | TERMINATION WITHOUT TRIGGERING EVENT ($) | TERMINATION WITHOUT CAUSE OR CHANGE IN CONTROL ($) | TERMINATION DUE TO DEATHOR DISABILITY ($)
|
TERMINATION WITHOUT CAUSEOR DUETOA TRIGGERING EVENT ($)
| TERMINATION WITHOUT CAUSE FOLLOWED BY A CHANGE IN CONTROL ($)
| ||||||||||||||||||||||
Emil J. Brolick
| 7,465,648
|
| 3,290,438
| (1)
|
| —
|
|
| 13,070,926
|
| |||||||||||||||||||
Todd A. Penegor
| 4,308,762
|
| —
|
|
| 5,246,739
|
|
| 7,049,434
|
|
| $7,497,864
|
|
| $10,064,104
|
|
| $12,049,989
|
| ||||||||||
Gunther Plosch
|
| $2,498,184
|
|
| $3,263,975
|
|
| $4,093,184
|
| ||||||||||||||||||||
Robert D. Wright
| 1,888,612
|
| —
|
|
| 3,315,713
|
|
| 3,811,957
|
|
| $3,888,450
|
|
| $5,298,253
|
|
| $6,079,285
|
| ||||||||||
Scott A. Weisberg
| 1,108,957
|
| —
|
|
| 1,644,713
|
|
| 2,753,670
|
| |||||||||||||||||||
Kurt A. Kane
|
| $2,275,906
|
|
| $2,731,300
|
|
| $3,693,406
|
| ||||||||||||||||||||
E. J. Wunsch
|
| $963,513
|
|
| $1,506,486
|
|
| $2,261,013
|
|
|
Key Assumptions and Definitions58 The Wendy’s Company 2018 Proxy Statement
KEY ASSUMPTIONSAND DEFINITIONS
The following assumptions were made in calculating the value of the severance payments and benefits described in the tables above:
• | The triggering event took place on December |
• | The price of our Common Stock was |
• | No compensation offset for executives whose |
• | The immediate exercise and sale of all stock options and the immediate sale of all restricted stock units and performance units that vested as of the December |
• | Accelerated vesting of performance units is based on the assumed achievement of target performance; and |
• | Nosix-month delay in payment to any “specified employee” that would otherwise be required under Section 409A of the Internal Revenue Code. |
“Cause” is generally defined to include: (i) commission of any act of fraud or gross negligence that has a material adverse effect on the business or financial condition of the Company or its affiliates; (ii) willful material misrepresentation to the Company or the Board; (iii) willful failure or refusal to comply with any material obligations or any reasonable and lawful instructions of the President and Chief Executive Officer or the Board; (iv) engagement in any misconduct or commission of any act that is injurious or detrimental to the substantial interest of the Company or any of its affiliates; (v) indictment for any felony; (vi) failure to comply with any material written rules, regulations, policies or procedures of the Company; (vii) willful or negligent failure to comply with the Company’s policies regarding insider trading; or (viii) the executive’s death or disability.
“Triggering event” is generally defined to include: (i) material reduction in the executive’s authority, duties or responsibilities; (ii) requirement to report to any person other than the President and Chief Executive Officer or the Board; (iii) reduction in the executive’s base salary or target annual cash incentive opportunity percentage; or (iv) requirement to relocate to a work site outside of Columbus, Ohio.
“Good reason” is generally defined to include: (i) material reduction in the executive’s base salary or target annual cash incentive opportunity; or (ii) requirement to relocate to a work site more than 50 miles from the executive’s principal residence.
“Change in control” is generally defined to include: (i) acquisition by any person or group of beneficial ownership of 50% or more of the outstanding shares of our Common Stock or the combined voting power of the outstanding voting securities of the Company entitled to vote generally in the election of directors, subject to certain exceptions; (ii) during any period of 24 months, individuals who, at the beginning of such period, constitute the Board of Directors (i.e., “incumbent directors”) cease for any reason to constitute at least a majority of the Board, provided that any director whose election or nomination for election was approved by at leasttwo-thirds of the incumbent directors then on the Board is deemed an incumbent director; (iii) stockholder approval of a plan of complete dissolution or liquidation of the Company; (iv) sale, transfer or other disposition of all or substantially all of the business or assets of the Company; or (v) consummation of a reorganization, recapitalization, merger, consolidation, share exchange or similar transaction involving the Company that requires stockholder approval, subject to certain exceptions. Notwithstanding the foregoing, the acquisition of any portion of the combined voting power of the outstanding voting securities of the Company entitled to vote generally in the election of directors by, or the merger, consolidation or sale of assets of the Company with or to, Nelson Peltz or Peter W. May (or any person controlled by Messrs. Peltz or May) will not constitute a “change in control.”
56 The Wendy’s Company 20162018 Proxy Statement 59
As mandated by Section 953(b) of the Dodd-Frank Act and called for under Item 402(u) of SEC RegulationS-K, beginning with this Proxy Statement, we are required to annually disclose the ratio of the annual total compensation of our Chief Executive Officer (Mr. Penegor) to the annual total compensation of our median employee, pursuant to the calculation and disclosure requirements.
Approximately 90% of our employee population is comprised of restaurant team members who are paid hourly. Our restaurant roles provide flexible employment opportunities for Wendy’s team members who seek accommodating work schedules, supplemental income or social connection, although such flexible and part-time employment has the effect of lowering the annual total compensation for our median employee. We identified the median employee by examining the tax and payroll records of our employee population (including full-time, part-time, temporary and seasonal employees), excluding our Chief Executive Officer, on December 1, 2017. Other than Mr. Penegor and ournon-U.S. employees, all employees of the Company and its subsidiaries were considered in our identification of the median employee. We excluded 58non-U.S. employees, which represents approximately 0.5% of the Company’s total employee population of approximately 12,425 individuals as of December 1, 2017. Of the excluded employees, 44 are employed in Canada, four in Singapore, four in the United Arab Emirates and one in each of Brazil, Guatemala, Hungary, Japan, Philippines and Puerto Rico.
To determine the median employee, we used total cash compensation paid in 2017 as reported to the Internal Revenue Service on FormW-2, which includes base salary for salaried colleagues, base hourly compensation and overtime for hourly permanent employees, actual compensation for seasonal or temporary colleagues, and any cash incentive compensation. No cost of living adjustments were made to determine the median employee. We did not make any assumptions, adjustments or estimates with respect to total cash compensation, nor did we annualize the compensation for any employees who were not employed by us for all of 2017. We believe the use of such reported total cash compensation is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees.
Based on total cash compensation, our median employee was identified as a restaurant team member who in 2017 was paid on an hourly basis and worked 1,892 hours.
Upon identifying the median employee, such employee’s annual total compensation was calculated using the same methodology that we use to determine the annual total compensation of Mr. Penegor and our other Named Executive Officers as set forth in the “2017 Summary Compensation Table” in this Proxy Statement.
Based on the foregoing, our median employee’s 2017 annual total compensation was $18,573. Mr. Penegor’s 2017 annual total compensation was $5,472,993, as reported in the “2017 Summary Compensation Table” above. As a result, we estimate that for 2017, the ratio of Mr. Penegor’s annual total compensation to that of our median employee was approximately 295:1.
We believe our pay ratio is a reasonable estimate calculated in a manner consistent with applicable SEC rules, based on our employment and payroll records and the methodology described above. The SEC rules governing pay ratio disclosure allow companies to apply numerous different methodologies, exclusions and reasonable assumptions, adjustments and estimates that reflect their compensation practices. For that reason, the pay ratio reported above should not be used as a basis for comparison between companies, as other companies might have different employment and compensation practices and might use various methodologies, exclusions, assumptions, adjustments and estimates in calculating their own pay ratios. Previously, the Company was not required to provide pay ratio disclosures. Accordingly, our executive compensation process does not include an examination of our pay ratio. We have provided this pay ratio information for compliance purposes, and neither the Compensation Committee nor Company management have used the pay ratio measure to influence any compensation actions or decisions.
60 The Wendy’s Company 2018 Proxy Statement
The Company’s compensation program fornon-management directors is designed to:
• | Be competitive with companies against which the Company competes for director talent; |
• | Encourage and facilitate ownership of our Common Stock bynon-management directors; and |
• | Take into consideration stockholder views regarding director compensation. |
The Compensation Committee has responsibility for reviewing the competitiveness and appropriateness of the compensation program fornon-management directors and for approving or making recommendations to the Board of Directors with respect to director compensation. In carrying out its duties, the Compensation Committee has established a process to review on a bi-annual basis, the competitive positioning of the Company’s director compensation program. In December 2014,Such review was previously conducted on a biennial basis, and in May 2017, the Compensation Committee determined that the frequency of such review process should instead be conducted on an annual basis in order to maintain the competitiveness of our director compensation program based on evolving market trends. The Compensation Committee also requested that its independent outside compensation consultant, FW Cook, & Co., prepare a competitive analysis of the Company’s director compensation program to ensure that itsuch program was providing appropriate levels of compensation. The analysis, which compared the compensation of the Company’snon-management directors against a peer group of 2019 restaurant companies, confirmed that both the design and compensation levels of the Company’s director compensation program were reasonably aligned with market practice.
In June 2015,May 2017, the Compensation Committee considered and evaluated the market data and other elements presented in theguidance provided by FW Cook & Co. report and a number of other factors, including: (i) the Company’s performance since the director compensation program was last changed in May 2013;2016 and June 2015; (ii) the Company’s current initiatives and future growth strategies; (iii) the number of Board and Board committee meetings held; (iv) the increase in the complexity of matters addressed by directors; and (v) stockholder expectations regarding director compensation. After consulting with its independent outside compensation consultant,FW Cook, & Co., the Compensation Committee approved the following changes to the Company’s director compensation program to more closely align the program with market practice and to maintain the program’s competitiveness in attracting and retaining highly qualified directors: (a) an increase in the grant date fair value of the annual restricted stock award from $85,000 to $105,000; (b) an increase to the annual chair retainer amount for the Compensation Committee Chair from $10,000 to $12,500; and (c) for all members of the Nominating and Corporate Governance Committee, the elimination of the $2,000 per meeting fee and replacement with an annual retainer of $8,000. Based on guidance from FW Cook, the retainers aligned within the competitive range of market median.
|
|
|
The components of the Company’s current compensation program fornon-management directors, which reflectinclude the changes discussed above that were approved by the Compensation Committee in June 2015,May 2017, are described below.
Annual Retainers
• | Eachnon-management director receives an annual retainer for Board service of $67,500. |
• | Each member of the Audit Committee receives an annual retainer of $14,000, and the Audit Committee Chair receives an additional annual chair retainer of $15,000. |
• | Each member of the Compensation Committee receives an annual retainer of $10,500, and the Compensation Committee Chair receives an additional annual chair retainer of |
• | Each member of the Nominating and Corporate Governance Committee receives an annual retainer of $8,000, and the Nominating and Corporate Governance Committee Chair receives an additional annual chair retainer of $7,500. |
Meeting Fees
• | Except as otherwise specifically determined by the Compensation Committee, no meeting fees are paid to members of the Audit Committee, Compensation Committee, Subcommittee or |
Annual Restricted Stock Awards
• | Eachnon-management director receives a restricted stock award in connection with his or her initial election and annualre-election to the Board. Each restricted stock award has an annual grant date fair value of |
The Wendy’s Company 2018 Proxy Statement 61
Non-management directors may elect to receive all or a portion of their annual retainers and meeting fees in shares of Common Stock in lieu of cash. In addition, pursuant to the Company’s 2009 Directors’ Deferred Compensation Plan (the “2009 Directors’ Deferred Compensation Plan”),non-management directors may elect to defer a set percentage or amount of their annual retainers, meeting fees and restricted stock awards into restricted stock units. The restricted
The Wendy’s Company 2016 Proxy Statement 57
stock units represent a contingent right to receive shares of Common Stock and, in the case of a deferral of restricted stock awards, are subject to the same vesting schedule as the underlying restricted stock. Dividend equivalent units accrue on all amounts deferred under the 2009 Directors’ Deferred Compensation Plan. All deferred amounts are payable in shares of Common Stock in a lump sum on the earlier of the director’s termination of Board service, a fixed number of years or the director’s death, as elected by the director at the time of deferral.
2015 DIRECTOR COMPENSATION2017 DIRECTOR COMPENSATION
The table below summarizes the compensation earned by or paid to the Company’snon-management directors for their Board and Board committee service during 2015. Emil J. Brolick,2017. Todd Penegor, the Company’s Chief Executive Officer, did not receive any additional compensation during 20152017 for his service as a director.director and is therefore not included in the table. The compensation paid to Mr. BrolickPenegor during 20152017 for his service as an executive officer of the Company is set forth in the “2015“2017 Summary Compensation Table.”Table” above.
NAME | FEES EARNED OR PAID IN CASH ($) (1) | STOCK AWARDS ($) (2) | ALL OTHER COMPENSATION ($) | TOTAL ($) | FEES EARNED OR PAID IN CASH ($) (1) | STOCK AWARDS ($) (2) | ALL OTHER COMPENSATION ($) | TOTAL ($) | ||||||||||||||||||||||||||||
Nelson Peltz
|
| 69,500
|
|
| 85,000
|
|
| 482,871 (3)
|
|
| 637,371
|
| 69,500 | 105,000 | 500,000 | (3) | 674,500 | |||||||||||||||||||
Peter W. May
|
| 75,500
|
|
| 85,000
|
|
| —
|
|
| 160,500
|
| 76,750 | 105,000 | — | 181,750 | ||||||||||||||||||||
Edward P. Garden (4)
|
| 67,500
|
|
| 165,834
| (5)
|
| —
|
|
| 233,334
|
| ||||||||||||||||||||||||
Janet Hill
|
| 78,000
|
|
| 85,000
|
|
| —
|
|
| 163,000
|
| ||||||||||||||||||||||||
Emil J. Brolick | 69,500 | 105,000 | — | 174,500 | ||||||||||||||||||||||||||||||||
Kristin A. Dolan | 32,783 | 96,250 | — | 129,033 | ||||||||||||||||||||||||||||||||
Kenneth W. Gilbert | 45,352 | 105,000 | — | 150,352 | ||||||||||||||||||||||||||||||||
Janet Hill (4) | 30,428 | — | — | 30,428 | ||||||||||||||||||||||||||||||||
Dennis M. Kass
|
| 3,616
|
|
| 42,500
| (6)
|
| —
|
|
| 46,116
|
| 92,000 | 105,000 | — | 197,000 | ||||||||||||||||||||
Joseph A. Levato
|
| 114,500
|
|
| 85,000
|
|
| —
|
|
| 199,500
|
| 125,500 | 105,000 | — | 230,500 | ||||||||||||||||||||
J. Randolph Lewis
|
| 95,500
|
|
| 85,000
|
|
| —
|
|
| 180,500
|
| ||||||||||||||||||||||||
Michelle J. Mathews-Spradlin
|
| 63,107
|
|
| 103,750
| (7)
|
| —
|
|
| 166,857
|
| 82,000 | 105,000 | — | 187,000 | ||||||||||||||||||||
Matthew H. Peltz
|
| 3,616
|
|
| 42,500
| (6)
|
| —
|
|
| 46,116
|
| 71,500 | 105,000 | — | 176,500 | ||||||||||||||||||||
Peter H. Rothschild
|
| 101,500
|
|
| 85,000
|
|
| —
|
|
| 186,500
|
| 136,750 | 105,000 | — | 241,750 | ||||||||||||||||||||
David E. Schwab II
|
| 120,750
|
|
| 85,000
|
|
| —
|
|
| 205,750
|
| ||||||||||||||||||||||||
Jack G. Wasserman (8)
|
| 41,176
|
|
| —
|
|
| —
|
|
| 41,176
|
| ||||||||||||||||||||||||
Arthur B. Winkleblack | 115,000 | 105,000 | — | 220,000 |
(1) | Consists of the annual Board retainer, annual member retainers |
(2) | Unless otherwise indicated, |
(3) | In connection with Nelson Peltz’s service asnon-executive Chairman, |
|
(4) |
|
58 The Wendy’s Company 2016 Proxy Statement
|
|
62 The Wendy’s Company 2018 Proxy Statement
|
|
The following table shows, for eachnon-management director who served on our Board during 2017, the aggregate number of shares of restricted stock, restricted stock units and stock options outstanding as of the end of 2015.2017.
NAME | SHARESOF RESTRICTED STOCK | RESTRICTED STOCK UNITS OUTSTANDING AS OF 2015 FYE | STOCK OPTIONS OUTSTANDING AS OF 2015 FYE | SHARES OF RESTRICTED STOCK OUTSTANDING AS OF 2017 FYE (1) | RESTRICTED STOCK UNITS OUTSTANDING AS OF 2017 FYE (2) | STOCK OPTIONS OUTSTANDING AS OF 2017 FYE (3) | ||||||||||||||
Nelson Peltz
| 7,599
| —
| 12,000
|
6,510
|
—
|
12,000
| ||||||||||||||
Peter W. May
| 7,599
| —
| 12,000
|
6,510
|
—
|
12,000
| ||||||||||||||
Edward P. Garden
| —
| —
| 12,000
| |||||||||||||||||
Janet Hill
| 7,599
| —
| 45,000
| |||||||||||||||||
Emil J. Brolick
|
6,510
|
—
|
—
| |||||||||||||||||
Kristin A. Dolan
|
6,259
|
—
|
—
| |||||||||||||||||
Kenneth W. Gilbert
|
6,510
|
—
|
—
| |||||||||||||||||
Janet Hill (4)
|
—
|
—
|
—
| |||||||||||||||||
Dennis M. Kass
| 3,995
| —
| —
|
6,510
|
—
|
—
| ||||||||||||||
Joseph A. Levato
| —
| 104,718
| 36,000
|
—
|
124,189
|
12,000
| ||||||||||||||
J. Randolph Lewis
| 7,599
| —
| 45,000
| |||||||||||||||||
Michelle J. Mathews-Spradlin
| 7,599
| —
| —
|
6,510
|
—
|
—
| ||||||||||||||
Matthew H. Peltz
| 3,995
| —
| —
|
6,510
|
—
|
—
| ||||||||||||||
Peter H. Rothschild
| 7,599
| —
| —
|
6,510
|
—
|
—
| ||||||||||||||
David E. Schwab II
| —
| 104,718
| 36,000
| |||||||||||||||||
Jack G. Wasserman
| —
| —
| 24,000
| |||||||||||||||||
Arthur B. Winkleblack
|
6,510
|
—
|
—
|
(1) | Represents the aggregate number of shares of our Common Stock underlying the outstanding unvested restricted stock awards for eachnon-management director as of December 31, 2017. |
(2) | Represents annual retainer amounts, meeting fees and annual restricted stock awards that eachnon-management director elected to defer into restricted stock units under the 2009 Directors’ Deferred Compensation Plan. |
(3) | Represents the aggregate number of shares of our Common Stock underlying the outstanding stock option awards for eachnon-management director as of December 31, 2017. |
(4) | Ms. Hill retired from the Board on May 23, 2017 when her term expired at the Company’s 2017 annual meeting of stockholders. |
The Wendy’s Company 20162018 Proxy Statement 5963
The Company’s executive officers as of the date of this Proxy Statement are identified below.
|
| |||||
|
|
| ||||
Todd A. Penegor |
| 52 |
President and Chief | |||
|
| 47 |
| |||
Liliana M. Esposito |
| 43 |
Chief Communications Officer | |||
Kurt A. Kane |
| 46 |
Chief Concept | |||
|
|
| ||||
|
|
Chief People Officer | ||||
Gunther Plosch | 50 | Chief Financial Officer | ||||
Abigail E. Pringle | 44 | Chief Development Officer | ||||
David G. Trimm | 52 | Chief Information Officer | ||||
Robert D. Wright | 50 | Executive Vice President, Chief Operations Officer and International | ||||
E. J. Wunsch | 46 | Chief Legal Officer and Secretary |
Additional information concerning the executive officers is provided below, including their respective positions with the Company and prior business experience (other than Messrs. Brolick andMr. Penegor, for whom such information is provided above under the caption “Proposal 1—Election of Directors”). Executive officers are elected by the Board of Directors and hold office until the organizational meeting of the Board following the Company’s annual meeting of stockholders next succeeding their election and until their successors are elected and qualified, or until their earlier death, resignation, retirement or removal.
|
Mr. WrightMs. Burnside joined the Company in December 2013September 2004 and has served as our Executive Vice President, Chief OperationsAccounting Officer since December 2014. Mr. Wright previouslyAugust 14, 2017. She served as our Chief Operations OfficerVice President—Finance and Planning from March 2014September 2013 to December 2014.August 2017, Vice President—Strategic Financial Analysis from July 2011 to September 2013, Director of Strategic Financial Analysis from June 2009 to July 2011, Director of Financial Reporting from September 2006 to June 2009 and Director of External Reporting and Technical Compliance from September 2004 to September 2006. Prior to joiningher tenure with the Company, Mr. WrightMs. Burnside worked at L Brands, Inc. (formerly known as Limited Brands, Inc.), where she served as President, Chief Operating OfficerManager of Internal Audit from May 2004 to September 2004 and Interim Chief Executive Officer for Charley’s Grilled SubsManager of Financial Reporting from December 2010May 2001 to December 2013. Prior to that, heMay 2004. Previously, Ms. Burnside served as Executive Vice President of Company and Franchise Operations at Checkers Drive-In RestaurantsExternal Reporting Manager for Borden, Inc. from January 2008July 1999 to August 2010. Previously, Mr. Wright worked for ten years at Wendy’s InternationalMay 2001. Ms. Burnside’s corporate accounting and financial reporting, planning and analysis experience also includes her work in various corporate roles, including Vice President of Operationspublic accounting with Arthur Andersen LLP, where she served as Audit Manager from May 1997 to July 1999, and Training Integration from 2006 to 2008, President of Cafe Express, LLC from 2005 to 2006, Director of Area Operations from 2000 to 2005 and Franchise Area Director from 1998 to 2000. Prior to joining Wendy’s International, Mr. Wright worked aswith Coopers & Lybrand, where she was a Senior Franchise Consultant at Domino’s PizzaAssociate from 1993September 1994 to 1998. Mr. Wright also serves asMay 1997 and an Associate from September 1992 to September 1994. Ms. Burnside is a trustee of the Dave Thomas Foundation for Adoption.certified public accountant (inactive).
LILIANA M. ESPOSITO |
Ms. Esposito has served as our Chief Communications Officer since she joined the Company in June 2014. Prior to joining the Company,Previously, Ms. Esposito worked at Dean Foods Company, one of the leading food and beverage companies in the United States, where she served as Vice President of Corporate Communications and Public Affairs from January 2012 to March 2014 and Senior Director of Public Affairs from January 2010 to December 2011. Prior to that, Ms. Esposito worked at Mercury Public Affairs, a public strategy firm, where she served as Senior Vice President from January 2008 to January 2010 and Vice President from July 2005 to December 2007. Prior to joining Mercury Public Affairs, Ms. Esposito served as Public Affairs Manager at Mars, Inc., from July 2000 to July 2005. Previously, she served as a Senior Associate with Burson-Marsteller, a global public relations and communications firm. Ms. Esposito is a member of the board of directors of Quality Supply ChainCo-op, Inc. (“QSCC”), the independent purchasing cooperative for the Company and Wendy’s system. She also serves as a trustee of the Dave Thomas Foundation for Adoption.
64 The Wendy’s Company 2018 Proxy Statement
KURT A. KANE |
Mr. Kane joined the Company in May 2015 and has served as our Chief Concept and& Marketing Officer since October 2015. Mr. Kane previously served as our Chief Concept Officer from May 2015 to October 2015. Prior to joining the Company, Mr. Kane worked at Yum! Brands, Inc. for seven years, where he held several key leadership positions for the Pizza Hut brand, including Global Chief Marketing and Food Innovation Officer from January 2014 to March 2015, Chief Marketing Officer of Pizza Hut U.S. from February 2011 to December 2013 and Vice President of Brand Marketing and Communications of Pizza Hut U.S. from 2008 to 2010. Prior to joining Yum! Brands, Mr. Kane worked at Frito LayFrito-Lay, Inc. from 2005 to 2008, where he served as Marketing Director for New Products and Multipack Business and as Senior Brand Manager for the Doritos brand. Prior to that, he worked at Molson Coors Brewing Company from 2001 to 2005, where he was a Brand Manager and Brand Director for the Molson portfolio. Mr. Kane began his careerserved as an Air Defense Artillery platoon officer in the 4th Infantry Division of the U.S. Army. Following his military service, he began his business career at The Procter & Gamble Company, where he worked as an Assistant Brand Manager for the Sunny Delight brand from 1998 to 2001. Mr. Kane also serves as a trustee of the Dave Thomas Foundation for Adoption.
60 The Wendy’s Company 2016 Proxy Statement
|
Mr. KrissO’Brien joined the Company in June 2012May 2007 and haswas recently appointed Chief People Officer in March 2018. Previously, he served as our Senior Vice President – Chief Accounting and Tax Officer since November 2014. Mr. Kriss previously served as our Senior Vice President of TaxHuman Resources and Field Capability from June 2012August 2013 to November 2014.December 2017, Vice President of Training from April 2011 to July 2013 and National Director of Operations Training from May 2007 to March 2011. Prior to joininghis tenure with the Company, Mr. Kriss served as Tax Director – AmericasO’Brien worked at Sears Holdings Corporation for Bacardi-Martini, Inc., the largest privately held spirits company in the world, from December 2010 to May 2012. Prior to that,five years, where he served as Vice President – Tax and as a memberDirector of the Administration Committee at Tween Brands, Inc. from August 2008 to March 2010. Prior to joining Tween Brands, Mr. Kriss worked for 14 years at Limited Brands Inc. (now known as L Brands, Inc.) where he held various leadership positions, last serving as Vice President – TaxRetail Training from 2005 to 2008. Previously,2007 and as Manager of Curriculum Development for Sears University from 2002 to 2004. Before joining Sears Holdings Corporation, Mr. Kriss worked atO’Brien was employed from 1999 to 2002 as a Senior Consultant with Arthur Andersen from 1991 to 1994. Mr. Kriss isPerformance and Learning, a certified public accountant.corporate educational institution that developed performance improvement strategies and organizational development opportunities.
|
Mr. WeisbergPlosch has served as our Chief PeopleFinancial Officer since April 2012. Prior to joininghe joined the Company Mr. Weisberg served as Senior Vice President and Chief Human Resources Officer of SunEdison Inc. (formerly known as MEMC Electronic Materials, Inc.), a global leader of semiconductor and solar technology, from 2010 to 2011.in May 2016. Prior to that, heMr. Plosch worked for 1516 years at General Mills, Inc.,Kellogg Company, a preeminent global food products company, where he held several key leadership positions, including Vice President Human Resources for the U.S. Retail Organizationof Global Business Services from 2007December 2014 to April 2016, Vice President and Chief Financial Officer of Kellogg North America from January 2010 to November 2014, Vice President of Compensation, Benefits and StaffingFinance for Morning Foods from 2005October 2007 to 2007December 2009 and Vice President Human Resourcesof Corporate Planning from May 2005 to September 2007. He also served from May 2000 to April 2005 as the Finance Director of Kellogg Company’s United Kingdom/Republic of Ireland division. Previously, Mr. Plosch worked in Austria, Belgium and the United Kingdom for Supply ChainThe Procter & Gamble Company, where he held various positions in finance from 1991 to 2000.
ABIGAIL E. PRINGLE |
Ms. Pringle joined the Company in May 2002 and Technology.has served as our Chief Development Officer since December 2014. She served as our Senior Vice President of Restaurant Development and Growth Initiatives from July 2013 to December 2014, Senior Vice President of Strategic Initiatives and Planning from April 2012 to June 2013, Vice President of Strategic Initiatives and Planning from November 2008 to March 2012 and Director of Strategic Initiatives and Planning from May 2002 to November 2008. Prior to joining General Mills, her tenure with the Company, Ms. Pringle worked from August 1996 to May 2002 for Accenture plc, a global professional services company, where she served as a consultant in the areas of process reengineering, systems implementations, organizational design and change management.
DAVID G. TRIMM |
Mr. WeisbergTrimm has served as our Chief Information Officer since he joined the Company in July 2015. Prior to that, Mr. Trimm worked for 14 years at The Hertz Corporation, one of the largest worldwide airport general use car rental companies, where he held human resourcesseveral key leadership positions, including Executive Vice President and training positions with Nabisco, Inc.Chief Information Officer from 1993October 2013 to 1995January 2015, Senior Vice President—Business Transformation Projects and PepsiCoCustomer Loyalty from 1987August 2012 to 1993.
The Wendy’s Company 20162018 Proxy Statement 6165
Systems Development Director for Hilton Group Plc from July 1997 to June 2000, Business Systems Manager for Coca-Cola Schweppes Beverages Ltd. and then Coca-Cola Enterprises from April 1993 to July 1997 and as Business Systems Manager for C&J Clark Ltd (a United Kingdom-based footwear manufacturer and retailer) from 1989 to 1993.
ROBERT D. WRIGHT |
Mr. Wright joined the Company in December 2013 and has served as our Executive Vice President, Chief Operations Officer and International since May 2016. He served as our Executive Vice President, Chief Operations Officer from December 2014 to May 2016 and as Chief Operations Officer from March 2014 to December 2014. Prior to his tenure with the Company, Mr. Wright served as President, Chief Operating Officer and Interim Chief Executive Officer for Charleys Philly Steaks from December 2010 to December 2013. Prior to that, he served as Executive Vice President of Company and Franchise Operations at CheckersDrive-In Restaurants Inc. from January 2008 to August 2010. Previously, Mr. Wright worked for ten years at Wendy’s International in various corporate roles, including Vice President of Operations and Training Integration from 2006 to 2008, President of Café Express, LLC from 2005 to 2006, Director of Area Operations from 2000 to 2005 and Franchise Area Director from 1998 to 2000. Prior to joining Wendy’s International, Mr. Wright worked as a Senior Franchise Consultant at Domino’s Pizza from 1993 to 1998. Mr. Wright is a member of the board of directors of QSCC and also serves as a trustee of the Dave Thomas Foundation for Adoption.
E. J. WUNSCH |
Mr. Wunsch has served as our Chief Legal Officer and Secretary since he joined the Company in October 2016. Previously, Mr. Wunsch worked for 17 years at The Procter & Gamble Company, a global leader in providing branded consumer packaged goods, where he held several key leadership positions, including Vice President and General Counsel—North America andGo-To-Market and Global Practices from July 2015 to September 2016, Associate General Counsel—Global Baby, Feminine & Family Care and Asia Innovation, Commerce & Brand Equity from September 2013 to July 2015, Associate General Counsel—ASEAN, India, Australia/New Zealand & Asia Developing Markets from August 2011 to September 2013, Assistant Secretary and Associate General Counsel—Corporate, Securities & Employee Benefits from November 2006 to August 2011, and Associate Director and Senior Counsel—M&A/Licensing and Baby, Feminine & Family Care from April 2004 to November 2006, Senior Counsel and Counsel—Corporate, Securities & Employee Benefits from November 2000 to April 2004 and Counsel—Beauty Care from November 1999 to November 2000. Prior to joining The Procter & Gamble Company, Mr. Wunsch was an associate attorney with the Taft Stettinius & Hollister LLP law firm from 1997 to 1999 and a law clerk for the Honorable Richard F. Suhrheinrich from 1996 to 1997.
66 The Wendy’s Company 2018 Proxy Statement
STOCK OWNERSHIP AND RETENTION GUIDELINES
FOR EXECUTIVE OFFICERS AND DIRECTORS
The Board of Directors, upon the recommendation of the Compensation Committee, has adopted theStock Ownership and Retention Guidelines for Executive Officers and Directors (the “Stock Ownership and Retention Guidelines”), a copy of which is available on the Company’sour website atwww.aboutwendys.comwww.wendys.com/who-we-are.TheStock Ownership and Retention Guidelines were adopted by the Board to further align the interests of executive officers and directors with the interests of stockholders and to promote the Company’s commitment to sound corporate governance. A summary of theStock Ownership and Retention Guidelines is set forth below.
Stock Ownership and Retention Guidelines for Executive OfficersSTOCK OWNERSHIPAND RETENTION GUIDELINESFOR EXECUTIVE OFFICERS
The Chief Executive Officer must own an amount of Common Stock equal to at least five times his base salary, and each of the other executive officers must own an amount of Common Stock equal to at least three times his or her base salary. Until an executive officer satisfies the applicable ownership requirement, he or she is required to hold at least 75% of the net shares received upon the exercise of stock options, the vesting of restricted stock or restricted stock units and the payout of performance units. Once the ownership requirement is met, the executive officer must continue to hold at least that number of shares until leaving his or her position with the Company.
Stock Ownership and Retention Guidelines for Non-Management DirectorsSTOCK OWNERSHIPAND RETENTION GUIDELINESFOR NON-MANAGEMENT DIRECTORS
Eachnon-management member of the Board must own an amount of Common Stock equal to at least five times the annual cash retainer payable for Board service. Until a director satisfies the ownership requirement, he or she is required to hold at least 75% of the net shares received upon the exercise of stock options, the vesting of restricted stock or restricted stock units and the payout of performance units. Once the ownership requirement is met, the director must continue to hold at least that number of shares until leaving the Board.
General ProvisionsGENERAL PROVISIONS
Because executive officers and directors must retain at least 75% of the net shares received from any exercise of stock options, vesting of restricted stock or restricted stock units and payout of performance units until they satisfy the applicable ownership requirement, there is no set time period for initial satisfaction of theStock Ownership and Retention Guidelines. InGuidelines.In the case of financial hardship or other unusual situations, the ownership requirements may be waived upon the approval of the Compensation Committee and, in the case of executive officers, the Chief Executive Officer.
In August 2017, the Board, upon the recommendation of our Compensation Committee, approved a modification to the “net shares” definition to expand the meaning to encompass both withholding taxes and any other applicable taxes. Such modification provides our executive officers with the ability to sell additional shares as may be necessary to fund their anticipated tax liability based on their individual tax situation. For stock options, “net shares” means the number of shares of Common Stock received upon exercise of the option, net of any shares used to pay the exercise price andand/or applicable taxes.taxes upon such exercise. For restricted stock, restricted stock units and performance units, “net shares” means the number of shares received upon the vesting of the restricted stock or restricted stock units or the payout of the performance units, as applicable, net of any shares used to pay applicable taxes.taxes upon such vesting.
In addition to shares owned directly by an executive officer or a director, theStock Ownership and Retention Guidelines provide that shares held in a trust, shares held by immediate family members residing in the same household, shares held in qualified plans, vested shares or share units held in non-qualifiednonqualified plans and unvested time-based restricted stock or restricted stock units will be counted toward satisfaction of the applicable ownership requirement. Shares held by an executive officer or a director in a margin account or otherwise pledged by an executive officer or a director as collateral for a loan will not be counted toward satisfaction of the applicable ownership requirement. As of the date of this Proxy Statement, none of the Company’s executive officers or directors has pledged any shares of Common Stock.
62 The Wendy’s Company 20162018 Proxy Statement 67
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership as of March 28, 2016April 9, 2018 (except as otherwise indicated by footnote) by: (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of our Common Stock (constituting our only class of voting securities); (ii) each of the Company’s directors and director nominees; (iii) each of the Company’s named executive officersNEOs included in the “2015“2017 Summary Compensation Table;”Table” above; and (iv) all of the Company’s directors and executive officers as a group. The number of shares of Common Stock beneficially owned by our directors and executive officers includes shares that such persons hadhave the right to acquire within 60 days of March 28, 2016,April 9, 2018, including through the exercise of stock options as shown in the second table below. Except as otherwise indicated by footnote, each person has sole voting power and sole dispositive power with respect to the shares shown in the table.
NAMEAND ADDRESSOF BENEFICIAL OWNER | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | PERCENTOF CLASS BENEFICIALLY OWNED (1) | ||
Nelson Peltz (2) | 56,520,516 (3)(4)(5) | 21.0% | ||
Peter W. May (2) | 56,313,437 (3)(4)(5) | 21.0% | ||
Edward P. Garden (2) | 41,032,902 (4)(5) | 15.3% | ||
Trian Fund Management, L.P. (2) | 40,792,537 (5) | 15.2% | ||
Janus Capital Management LLC (6) | 20,276,348 (6) | 7.5% | ||
Dimensional Fund Advisors LP (7) | 18,448,528 (7) | 6.9% | ||
Horizon Kinetics LLC (8) | 15,425,904 (8) | 5.7% | ||
The Vanguard Group (9) | 14,812,071 (9) | 5.5% | ||
BlackRock, Inc. (10) | 14,699,579 (10) | 5.5% | ||
Emil J. Brolick | 2,788,374 | 1.0% | ||
Janet Hill | 222,361 (11) | * | ||
Dennis M. Kass | 3,995 (12) | * | ||
Joseph A. Levato | 157,258 (13) | * | ||
J. Randolph Lewis | 190,916 (14) | * | ||
Michelle J. Mathews-Spradlin | 9,349 (15) | * | ||
Matthew H. Peltz | 333,748 (16) | * | ||
Todd A. Penegor | 435,777 (17) | * | ||
Peter H. Rothschild | 101,480 (18) | * | ||
David E. Schwab II | 212,588 (19) | * | ||
Arthur B. Winkleblack | — | * | ||
Robert D. Wright | 36,370 (20) | * | ||
R. Scott Toop | 701,562 | * | ||
Scott A. Weisberg | 278,592 | * | ||
Darrell G. van Ligten | — | * | ||
Craig S. Bahner | — | * | ||
Directors and executive officers as a group (17 persons) | 61,869,503 | 22.7% |
NAMEAND ADDRESSOF BENEFICIAL OWNER |
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | PERCENT OF CLASS BENEFICIALLY OWNED (1) | |||||
Nelson Peltz (2)
| 49,818,107 (3)(4)(5)
| 20.8%
| |||||
Peter W. May (2)
| 49,611,028 (3)(4)(5)
| 20.7%
| |||||
Edward P. Garden (2)
| 34,276,286 (4)(5)
| 14.3%
| |||||
Trian Fund Management, L.P. (2)
| 34,035,921 (5)
| 14.2%
| |||||
The Vanguard Group (6)
| 15,060,913 (6)
| 6.3%
| |||||
BlackRock, Inc. (7)
| 14,682,416 (7)
| 6.1%
| |||||
Dimensional Fund Advisors LP (8)
| 12,720,505 (8)
| 5.3%
| |||||
Eminence Capital, LP (9)
| 12,101,840 (9)
| 5.0%
| |||||
Emil J. Brolick
| 3,510,746 (10)
| 1.4%
| |||||
Kristin A. Dolan
| 6,259 (11)
| *
| |||||
Kenneth W. Gilbert
| 6,510 (12)
| *
| |||||
Dennis M. Kass
| 18,682 (13)
| *
| |||||
Joseph A. Levato
| 149,356 (14)
| *
| |||||
Michelle J. Mathews-Spradlin
| 24,036 (15)
| *
| |||||
Matthew H. Peltz (2)
| 360,751 (16)
| *
| |||||
Todd A. Penegor
| 1,276,073 (17)
| *
| |||||
Peter H. Rothschild
| 116,167 (18)
| *
| |||||
Arthur B. Winkleblack
| 14,687 (19)
| *
| |||||
Kurt A. Kane
| 153,772 (20)
| *
| |||||
Gunther Plosch
| 84,056 (21)
| *
| |||||
Robert D. Wright
| 426,839 (22)
| *
| |||||
E. J. Wunsch
| 12,332 (23)
| *
| |||||
Directors and executive officers as a group (21 persons)
| 56,546,103
| 23.1%
|
* | Less than 1% of the outstanding shares of our Common Stock. |
(1) | All percentages are based upon the number of shares of our Common Stock that were outstanding on |
(2) | The principal business address of Nelson Peltz, Peter |
68 The Wendy’s Company 2018 Proxy Statement
(3) | In July 2004, Nelson Peltz and Peter |
The Wendy’s Company 2016 Proxy Statement 63
(4) | In the case of Nelson Peltz, includes: (i) |
In the case of Mr. May, includes: (i) 5,411,235 shares of Common stock held directly (including 6,510 restricted shares of Common Stock that may be voted by Mr. May); (ii) options held by Mr. May to purchase 12,000 shares of Common Stock; (iii) 32,910 shares of Common Stock owned by the May Family Foundation, anon-profit organization whose trustees are Mr. May, Mr. May’s spouse and their two adult children; (iv) 9,893,461 shares of Common Stock held directly by Mr. Peltz (including 6,510 restricted shares of Common Stock that may be voted by Mr. Peltz); (v) options held by Mr. Peltz to purchase 12,000 shares of Common Stock; (vi) 81,104 shares of Common Stock owned by Mr. Peltz’s minor children; (vii) 132,397 shares of Common Stock held by the Peltz 2009 Family Trust; and (viii) 34,035,921 shares of Common Stock owned by the Trian Entities identified in footnote (5) below. Mr. May disclaims beneficial ownership of the shares of Common Stock held by the May Family Foundation, Mr. Peltz, the Peltz 2009 Family Trust, Mr. Peltz’s minor children and the Trian Entities.
|
|
(5) | Based on: (i) information contained in a Schedule 13D/A filed with the SEC on |
|
|
64 The Wendy’s Company 2016 Proxy Statement
(6) | Based solely on information contained in a Schedule 13G/A filed with the SEC on February |
|
|
|
The Wendy’s Company 2018 Proxy Statement 69
Based solely on information contained in a Schedule |
Based solely on information contained in a Schedule 13G/A filed with the SEC on February 5, 2018 by Dimensional Fund Advisors LP. According to the Schedule 13G/A, Dimensional Fund Advisors LP has sole voting power over 12,211,900 shares of Common Stock and sole dispositive power over 12,720,505 shares of Common Stock. The principal business address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
(9) | Based solely on information contained in a Schedule 13G filed with the SEC on February 23, 2018 by Eminence Capital, LP. According to the Schedule 13G, Eminence Capital, LP has shared voting and dispositive power over 12,101,840 shares of Common Stock. The principal business address of Eminence Capital, LP is 65 East 55th Street, 25th Floor, New York, New York 10022. |
(10) | Includes |
(11) | Reflects 6,259 restricted shares of Common Stock that may be voted by Ms. |
(12) | Reflects 6,510 restricted shares of Common Stock that may be voted by Mr. Gilbert. |
(13) | Includes |
Includes |
|
(15) | Includes |
(16) | Includes: (i) |
(17) | Does not include |
(18) | Includes |
(19) | Includes |
(20) | Does not include 42,244 restricted stock units held by Mr. |
Does not include |
(22) | Does not include 62,524 restricted stock units held by Mr. Wright, each of which represents a contingent right to receive one share of Common Stock. |
(23) | Does not include 47,753 restricted stock units held by Mr. Wunsch, each of which represents a contingent right to receive one share of Common Stock. |
70 The Wendy’s Company 20162018 Proxy Statement 65
The beneficial ownership table above includes shares of Common Stock issuable upon the exercise of stock options that are exercisable as of, or will become exercisable within 60 days of, March 28, 2016April 9, 2018 by the persons identified in the table below.following table.
NAMEOF BENEFICIAL OWNER | NUMBER OF SHARES REPRESENTED BY OPTIONS | ||||
Nelson Peltz | 12,000 | ||||
Peter W. May | 12,000 | ||||
Emil J. Brolick | |||||
| | 2,348,191 | |||
Kristin A. Dolan | — | ||||
Kenneth W. Gilbert | — | ||||
Dennis M. Kass | — | ||||
Joseph A. Levato | |||||
| | — | |||
Michelle J. Mathews-Spradlin | — | ||||
Matthew H. Peltz | — | ||||
Todd A. Penegor | | 976,199 | |||
Peter H. Rothschild | |||||
| | — | |||
Arthur B. Winkleblack | — | ||||
Kurt A. Kane | 153,772 | ||||
Gunther Plosch | 59,056 | ||||
Robert D. Wright | |||||
| | ||||
350,072 | |||||
E. J. Wunsch | | ||||
— | |||||
| |||||
| |||||
Directors and executive officers as a group | | 4,661,608 |
SectionSECTION 16(a) Beneficial Ownership Reporting ComplianceBENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of our Common Stock, to report their beneficial ownership of our Common Stock, and any subsequent changes in their beneficial ownership, to the SEC. Specific due dates for these reports have been established by the SEC, and the Company is required to disclose in this Proxy Statement any late report or known failure to file a required report during the most recent fiscal year. The Company assists our directors and executive officers in completing and filing their reports. Based solely on a review of the reports furnished to the Company and written representations that no other reports were required, the Company believes that, during 2015,2017, all directors, executive officers and greater than 10% stockholders complied with all Section 16(a) filing requirements, except that a(i) on behalf of Ms. Pringle, an amendment to Form 43 reporting the issuancedirect beneficial ownership of quarterly dividend equivalent unitsCommon Stock held by Ms. Pringle was filed on March 19, 2015 (one day late) by the Company on June 6, 2017 and (ii) on behalf of eachMs. Burnside, an amendment to Form 3 reporting the direct beneficial ownership of Common Stock held by Ms. Esposito and Messrs. Kriss, Levato, Penegor, Schwab, van Ligten, Wasserman and Wright.
66 The Wendy’s Company 20162018 Proxy Statement 71
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information concerning the Company’s equity compensation plans as of the end of 2015.2017. The 2010 Omnibus Award Plan is currently the only equity compensation plan under which future equity awards may be granted.
PLAN CATEGORY | NUMBER OF SECURITIES TO BE (a) | WEIGHTED-AVERAGE (b) | NUMBER OF SECURITIES EQUITY COMPENSATION PLANS (c) | |||||||
Equity compensation plans approved by | 16,683,256 Options | $ | 7.76 | 41,563,973 | (2) | |||||
525,378 Performance Units (3) | — | |||||||||
746,820 Performance Units (4) | — | |||||||||
769,202 Performance Units (5) | — | |||||||||
Equity compensation plans not approved by
| 158,121 Options | $ | 4.46 | — | ||||||
Total | 16,841,377 Options | $ | 7.73 | 41,563,973 | (2) | |||||
525,378 Performance Units (3) | ||||||||||
746,820 Performance Units (4) | ||||||||||
769,202 Performance Units (5)
|
PLAN CATEGORY | NUMBEROF SECURITIESTOBE ISSUED UPON EXERCISEOF OUTSTANDING OPTIONS, WARRANTSAND RIGHTS (a) | WEIGHTED-AVERAGE EXERCISE PRICEOF (b) | NUMBEROF SECURITIES REMAINING AVAILABLEFOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS REFLECTEDIN COLUMN (a)) (c) | |||
Equity compensation plans approved by security holders (1) | 17,264,327 Options | $9.58 | 30,193,318 (2) | |||
614,840 Performance Units (3) | — | |||||
1,069,668 Performance Units (4) | — | |||||
518,892 Performance Units (5) | — | |||||
Equity compensation plans not approved by security holders (6) | 60,959 Options | $4.44 | — | |||
Total | 17,325,286 Options | $9.56 | 30,193,318 (2) | |||
614,840 Performance Units (3) | ||||||
1,069,668 Performance Units (4) | ||||||
518,892 Performance Units (5) |
(1) | Includes the 2010 Omnibus Award Plan and the Company’s Amended and Restated 2002 Equity Participation Plan (the “2002 Equity Plan”). |
The 2010 Omnibus Award Plan provides for the issuance of stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards and performance compensation awards to employees, officers andnon-employee directors of the Company and its subsidiaries and affiliates. The 2010 Omnibus Award Plan also permitsnon-employee directors to elect to receive all or a portion of their director fees in shares of Common Stock in lieu of cash. Under the terms of the 2010 Omnibus Award Plan, (i) shares of Common Stock subject to awards of stock options or stock appreciation rights are counted against the maximum share limit as one share of Common Stock for each share of Common Stock granted and (ii) shares of Common Stock subject to awards other than stock options or stock appreciation rights are counted against the maximum share limit as 2.5 shares of Common Stock for each share of Common Stock granted. |
The 2002 Equity Plan provided for the issuance of stock options, stock appreciation rights, restricted stock and restricted stock units to officers, employees andnon-employee directors of the Company and its subsidiaries and affiliates. The 2002 Equity Plan also permittednon-employee directors to elect to receive all or a portion of their director fees in shares of Common Stock in lieu of cash. As of |
(2) | Represents the aggregate number of shares available for future issuance under the 2010 Omnibus Award Plan. |
(3) | Each performance unit represents the right to receive one share of Common Stock subject to the Company’s achievement of two performance goals based on adjusted earnings per share and |
(4) | Each performance unit represents the right to receive one share of Common Stock subject to the Company’s achievement of two performance goals based on adjusted earnings per share and relative total stockholder return during a three-year performance period (January 4, 2016 through December 30, 2018). The number of shares shown as being issuable is based on achieving maximum levels of performance with respect to these awards. |
72 The Wendy’s Company 2018 Proxy Statement
(5) | Each performance unit represents the right to receive one share of Common Stock subject to the Company’s achievement of a performance goal based on adjusted earnings per share during a three-year performance period (December |
|
The Wendy’s Company 2016 Proxy Statement 67
(6) | Reflects awards issued under the Wendy’s International 2007 Stock Incentive Plan (the “Wendy’s 2007 Stock Plan”). In connection with the Company’s merger with Wendy’s International in September 2008, the Company assumed certain equity compensation plans of Wendy’s International, including the Wendy’s 2007 Stock Plan. The Wendy’s 2007 Stock Plan had been approved by the shareholders of Wendy’s International prior to the merger. The Wendy’s 2007 Stock Plan provided for the issuance of equity compensation awards in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalent rights, performance shares, performance units and share awards to eligible employees andnon-employee directors of Wendy’s International and its subsidiaries. As of |
68 The Wendy’s Company 20162018 Proxy Statement 73
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review and Approval of Related Person TransactionsREVIEWAND APPROVALOF RELATED PERSON TRANSACTIONS
Pursuant to its written charter, the Audit Committee has responsibility for the review and approval or ratification of all related person transactions involving more than $10,000, using appropriate counsel or other advisersadvisors as the Committee may deem necessary.
The Company has adopted a theRelated Person Transactions Policy (the “RPT Policy”“RPT Policy”) which sets forth in writing the procedures for the Audit Committee’s review, approval and ratification of related person transactions. TheRPT Policy defines a “related person transaction” as any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company or any of its subsidiaries was, is or will be a participant and in which any related person had, has or will have a direct or indirect interest and which involves more than $10,000. A “related person” is defined as any director, director nominee or officer of the Company, any person who is known to beneficially own more than 5% of the Company’s voting securities, any immediate family member of any of the foregoing persons and any entity in which any of the foregoing persons is employed, is a director, trustee, general partner or principal or holds a similar position or has a 10% or greater beneficial ownership interest. The Company’s legal department is primarily responsible for obtaining information from the applicable related person with respect to a proposed related person transaction and for determining, based on the relevant facts and circumstances, whether the transaction is subject to theRPT Policy. IfPolicy.If the transaction is subject to theRPT Policy, the legal department then presents information concerning the transaction to the Audit Committee for review and consideration.
In the course of its review of a proposed related person transaction, the Audit Committee will consider all relevant facts and circumstances, including: (i) the benefits of the transaction to the Company; (ii) the impact of the transaction on the independence of the Company’s directors; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; (v) the terms available to unrelated third parties or to employees generally; and (vi) other facts and circumstances that may bear on the materiality of the transaction under applicable legal and regulatory requirements. The Audit Committee may seek bids, quotes or independent valuations from third parties in connection with assessing any proposed related person transaction.
Pursuant to theRPT Policy, the Audit Committee will approve only those related person transactions that are in, or are not inconsistentconsistent with, the best interests of the Company and its stockholders, as the Committee determines in good faith. If a proposed related person transaction involves any member of the Audit Committee (or an immediate family member of any Audit Committee member), such member would not participate in the review, consideration, approval or ratification of the proposed transaction.
Certain Related Person Transactions Since the Beginning of 2015RELATED PERSON TRANSACTIONS
On June 2, 2015, the Company entered into a stock purchase agreement to repurchase shares of our Common Stock from Nelson Peltz, Peter W. May and Edward P. Garden and certain of their family members and affiliates, investment funds managed by Trian Partners, an investment management firm controlled by Messrs. Peltz, May and Garden, and the general partner of certain of those investment funds (together with Messrs. Peltz, May and Garden, certain of their family members and affiliates and Trian Partners, the “Trian Group”), who in the aggregate owned approximately 24.8% of our outstanding shares as of May 29, 2015. Pursuant to the agreement, the Trian Group agreed not to tender or sell any of its shares in the $639 million modified Dutch auction tender offer the Company commenced on June 3, 2015. Also pursuant to the agreement, the Company agreed, following completion of the tender offer, to purchase from the Trian Group a pro rata amount of its shares based on the number of shares the Company purchased in the tender offer, at the same price received by stockholders who participated in the tender offer. On July 17, 2015, after completion of the tender offer, the Company repurchased 18.4 million shares of our Common Stock from the Trian Group at the price paid in the tender offer of $11.45 per share, for an aggregate purchase price of $210.9 million.
On December 1, 2011, the Company entered into an agreement with Trian Partners and certain of its affiliates, including Nelson Peltz, Peter W. May and Edward P. Garden (collectively, the “Covered Persons”). Pursuant to the agreement, the Board of Directors, including a majority of the independent directors, approved, for purposes of Section 203 of the Delaware General Corporation Law, the Covered Persons becoming the owners of or acquiring an aggregate of up to 32.5% (subject to certain adjustments set forth in the agreement) of the outstanding shares of our Common Stock, such that no such persons would be subject to the restrictions set forth in Section 203 solely as a result of such ownership. Certain other provisions of the agreement terminated when the Covered Persons’ beneficial ownership (such approval,of the “Section 203 Approval”). The agreement (otherCompany’s Common Stock decreased to less than 25% of the provisions relating tooutstanding voting power of the Section 203 Approval and certain miscellaneous provisions) terminated pursuant to its termination provisions onCompany in January 15, 2014.
Each of theThe related person transactionstransaction described above was reviewed and approved by the Audit Committee in accordance with the terms of its written charter and theRPT Policy.
74 The Wendy’s Company 20162018 Proxy Statement 69
In accordance with its written charter, the Audit Committee oversees the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements, and assists the Board of Directors in its oversight of the accounting, audit and financial reporting practices of the Company. The Audit Committee is composed of four members who satisfy the independence and financial literacy requirements of NASDAQ and Section 10A of the Exchange Act. The Company’s management is responsible for the Company’s financial reporting process and for preparing the Company’s financial statements, and the Company’s outside auditors are responsible for performing an independent audit of such financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing a report thereon. The members of the Audit Committee are not professionally engaged in the practice of accounting or auditing. The Audit Committee relies, without independent verification, on the information provided to the Committee and on the representations made by management and the independent registered public accounting firm that the Company’s financial statements have been prepared in conformity with generally accepted accounting principles.U.S. Generally Accepted Accounting Principles.
In performing its oversight function, the Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the fiscal year ended January 3, 2016December 31, 2017 with management and Deloitte & Touche LLP, the Company’s independent registered public accounting firm. The Audit Committee also discussed with Deloitte & Touche LLP all matters required to be discussed by PCAOB Auditing Standard No. 16,Communications with Audit Committees. In.In addition, the Audit Committee, with and without management present, reviewed and discussed the results of Deloitte & Touche LLP’s examination of the Company’s financial statements.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, management is required to prepare a report as to its assessment of the effectiveness of the Company’s internal control over financial reporting as of January 3, 2016,December 31, 2017, and Deloitte & Touche LLP is required to prepare an attestation report with respect to the effectiveness of the Company’s internal control over financial reporting. The Audit Committee reviewed and discussed with management its report regarding its assessment of the effectiveness of the Company’s internal control over financial reporting as of January 3, 2016,December 31, 2017, and reviewed and discussed with Deloitte & Touche LLP its report as to the effectiveness of the Company’s internal control over financial reporting. Management’s report and Deloitte & Touche LLP’s report are each included in the Company’s Annual Report on Form10-K for the fiscal year ended January 3, 2016.December 31, 2017.
The Audit Committee received from Deloitte & Touche LLP a written statement regarding all relationships between Deloitte & Touche LLP and the Company that might bear on Deloitte & Touche LLP’s independence, consistent with applicable requirements of the Public Company Accounting Oversight Board regarding an independent accountant’s communications with the Audit Committee concerning independence. The Audit Committee discussed with Deloitte & Touche LLP any relationships that may have an impact on their objectivity and independence and satisfied itself as to Deloitte & Touche LLP’s independence. The Audit Committee also considered whether the provision of services by Deloitte & Touche LLP to the Company not related to the audit of the Company’s annual financial statements referred to above or to the reviews of the interim financial statements included in the Company’s quarterly reports on FormForm 10-Q is compatible with maintaining Deloitte & Touche LLP’s independence.
Based on the above-mentioned review and discussions with management and Deloitte & Touche LLP, and subject to the limitations on the role of the Audit Committee and the Audit Committee’s responsibilities described above and in the Audit Committee’s written charter, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended January 3, 2016.December 31, 2017.
The Audit Committee:
Arthur B. Winkleblack, Chair
Dennis M. Kass
Joseph A. Levato Chair
J. Randolph Lewis
Peter H. Rothschild
David E. Schwab II
* | This Audit Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Audit Committee Report by reference into such other filing. |
70 The Wendy’s Company 2016 Proxy Statement
APPROVAL OF AMENDMENTS TO THE COMPANY’S CERTIFICATE OF INCORPORATION
TO PROVIDE STOCKHOLDERS WITH A “PROXY ACCESS” RIGHT
(Item 2 on the Company’s Proxy Card)
In March 2015, in response to a proxy access stockholder proposal submitted by the City of Philadelphia Public Employees Retirement System (“PPERS”) and after consultation with PPERS and other stockholders, the Company agreed to adopt, subject to stockholder approval, procedures that would permit a stockholder, or a group of up to 25 stockholders, owning 3% or more of our outstanding Common Stock continuously for at least three years, to nominate and include in our proxy materials director nominees constituting up to 20% of our Board (or 25% of our Board, if the number of directors on our Board is less than ten). In February 2016, after consultation with PPERs and other stockholders, and based on our commitment to strong corporate governance practices, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, reviewed and approved amendments to our Certificate of Incorporation to implement “proxy access” procedures. The amendments are set forth in our proposed Amended and Restated Certificate of Incorporation, which is attached to this Proxy Statement asAnnex B (the “Proxy Access Amendments”). The Board is now submitting the Proxy Access Amendments for stockholder approval as required by the Delaware General Corporation Law and our Certificate of Incorporation.
The Board of Directors believes that implementation of proxy access in the manner set forth in the Proxy Access Amendments will provide meaningful rights to our stockholders while ensuring that the rights are used in a responsible manner, and believes that the Proxy Access Amendments are in the best interests of the Company and our stockholders.
The Board recommends a voteFOR the approval of the Proxy Access Amendments.
If the Proxy Access Amendments are approved by our stockholders at the Annual Meeting, the Company will file our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware promptly after the Annual Meeting, and the Proxy Access Amendments will become effective upon such filing. If the Proxy Access Amendments are approved by our stockholders, proxy access will be available for use beginning with our 2017 annual meeting of stockholders.
Description of the Proxy Access Amendments
The following description is only a summary and is qualified in its entirety by reference to the complete text of the Proxy Access Amendments as set forth in our proposed Amended and Restated Certificate of Incorporation, which is attached to this Proxy Statement asAnnex B. We urge you to readAnnex B in its entirety before casting your vote.
Stockholder Eligibility to Nominate Proxy Access Nominees
Subject to certain conditions and procedures as set forth in more detail in the Proxy Access Amendments, a stockholder, or group of up to 25 stockholders, that has owned 3% or more of the voting power of all shares of our Common Stock issued and outstanding and entitled to vote in the election of directors continuously for at least three years would be permitted to include a specified number of director nominees and a supporting statement (up to 500 words in support of each nominee’s election) in our proxy materials for an annual meeting of stockholders. Two or more funds that are: (i) under common management and investment control; (ii) under common management and funded primarily by the same employer; or (iii) a group of investment companies (as defined under the Investment Company Act of 1940) will be counted as one stockholder for purposes of the 25-stockholder group limit. No person may be a member of more than one group of stockholders constituting an eligible stockholder with respect to any annual meeting of stockholders.
Calculation of Qualifying Ownership
To ensure that the interests of stockholders seeking to include proxy access nominees in our proxy materials are aligned with those of our other stockholders, a stockholder would be deemed to own only those shares of our Common Stock as to which the stockholder possesses both (i) the full voting and investment rights pertaining to such shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares. The following shares would not count as “owned” shares for purposes of determining whether the ownership threshold has been met:
|
|
The Wendy’s Company 20162018 Proxy Statement 7175
|
A stockholder will be deemed to “own” shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how such shares are voted with respect to the election of directors and the right to direct the disposition of such shares and possesses the full economic interest in such shares. A stockholder’s ownership of shares will also be deemed to continue during any period in which the stockholder has (i) delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement that is revocable at any time by the stockholder without condition or (ii) loaned such shares, provided that the stockholder has the power to recall such loaned shares on not more than five business days’ notice and has recalled such loan shares as of the date of the annual meeting of stockholders.
Maximum Permitted Number of Proxy Access Nominees
The maximum number of proxy access nominees submitted by all eligible stockholders that the Company would be required to include in our proxy materials with respect to an annual meeting of stockholders shall not exceed 20% (or 25%, if the number of directors serving on the Board is less than ten) of the number of directors in office as of the last day on which a notice of proxy access nomination may be delivered to the Company. This maximum permitted number of proxy access nominees will be reduced by the number of:
|
|
|
Further, the Company would not be required to include any proxy access nominees in its proxy materials for any annual meeting of stockholders for which the Secretary of the Corporation receives notice that a stockholder intends to nominate one or more persons for election to the Board pursuant to the Company’s advance notice provisions set forth in Section 6 of Article V of our Certificate of Incorporation.
Procedure for Selecting Proxy Access Nominees if Maximum Permitted Number is Exceeded
If the number of proxy access nominees submitted by eligible stockholders exceeds the maximum permitted number, each nominating stockholder will select one of its nominees for inclusion in our proxy materials until the maximum permitted number is reached, going in order of the number (largest to smallest) of shares of our Common Stock each stockholder disclosed as owned in its respective proxy access notice submitted to the Company. No substitute proxy access nominees will be allowed in place of any proxy access nominee who ceases to satisfy the eligibility requirements, withdraws his or her nomination or becomes unwilling to serve on the Board.
Deadline for Submitting Proxy Access Nominees
In order to provide adequate time for the Board to assess proxy access nominees, requests to include such nominees in our proxy materials must be received no earlier than 150 days and no later than 120 days before the first anniversary of the filing date of our definitive proxy statement for the prior year’s annual meeting of stockholders, subject to certain adjustments. If the Proxy Access Amendments are approved by our stockholders at the Annual Meeting, eligible stockholders may submit proxy access nominees for inclusion in our proxy materials for the 2017 annual meeting of stockholders no earlier than November 12, 2016 and no later than December 12, 2016.
72 The Wendy’s Company 2016 Proxy Statement
Information Required by All Nominating Stockholders
Each stockholder seeking to include a proxy access nominee in our proxy materials would be required to provide certain information to the Company, including, but not limited to the following:
|
|
|
|
|
|
Stockholders would also be required to make certain representations to and agreements with the Company, including, but not limited to:
|
|
|
|
Proxy access nominees would also be required to make certain representations to and agreements with the Company, including, but not limited to:
|
The Wendy’s Company 2016 Proxy Statement 73
|
|
Proxy Access Nominee Eligibility
The Company would not be required to include a proxy access nominee in our proxy materials if, among other things:
|
|
|
|
|
In addition, the Board or the chairman of the annual meeting will declare a proxy access nomination to be invalid, and such nomination will be disregarded, if: (i) the nominating stockholder or proxy access nominee breaches any of its agreements or representations or fails to comply with any of the requirements under the proxy access provisions of our Certificate of Incorporation; (ii) the proxy access nominee becomes ineligible for inclusion in our proxy materials or ineligible or unavailable for election at the applicable annual meeting; or (iii) the nominating stockholder fails to appear at the annual meeting of stockholders to present its nomination.
Restrictions on Re-Nominations
Any proxy access nominee who is included in our proxy materials but subsequently withdraws from or becomes ineligible or unavailable for election at the applicable annual meeting will be ineligible to be a proxy access nominee for the following two annual meetings.
Required Vote
The affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote at the Annual Meeting is required to approve this proposal. Abstentions and broker non-votes will be the equivalent of votes “against” this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENTS TO THE COMPANY’S CERTIFICATE OF INCORPORATION
TO PROVIDE STOCKHOLDERS WITH A “PROXY ACCESS” RIGHT.
74 The Wendy’s Company 2016 Proxy Statement
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Item 32 on the Company’s Proxy Card)
The Audit Committee has determined to appoint Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm to examine the consolidated financial statements of the Company and its subsidiaries for 2016.2018. The Company’s stockholders are being asked to ratify the appointment of Deloitte at the Annual Meeting. In accordance with its written charter, the Audit Committee assists the Board of Directors in fulfilling its responsibility relating to the engagement of the independent registered public accounting firm and the evaluation of such firm’s qualifications, independence and performance.
A representative of Deloitte is expected to be present at the Annual Meeting and will have the opportunity to make a statement and to respond to appropriate questions. If the appointment of Deloitte is not ratified at the Annual Meeting, the Audit Committee may consider, in its sole discretion, the selection of another accounting firm.
Independent Registered Public Accounting Firm FeesINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The following table shows the fees billed (or expected to be billed) for professional services rendered by Deloitte for the audit of the Company’s annual financial statements for the fiscal years ended December 31, 2017 and January 3, 2016 and December 28, 2014,1, 2017, and for other services rendered by Deloitte during 20152017 and 2014.2016.
2015 | 2014 | |||||||
Audit Fees (1) | $ | 2,757,065 | $ | 2,464,833 | ||||
Audit-Related Fees (2) | — | 20,000 | ||||||
Tax and Tax-Related Fees (3) | 39,905 | 60,706 | ||||||
All Other Fees (4) | 9,775 | 6,825 | ||||||
|
|
|
| |||||
Total | $ | 2,806,745 | $ | 2,552,364 | ||||
|
|
|
|
FEE CATEGORY
| 2017
| 2016
| ||||||
Audit Fees (1) |
$ |
2,628,116 |
|
$ |
2,470,735 |
| ||
Tax andTax-Related Fees (2) |
|
14,892 |
|
|
29,841 |
| ||
All Other Fees (3) |
|
4,074 |
|
|
4,085 |
| ||
|
|
|
| |||||
Total | $ | 2,647,082 | $ | 2,504,661 | ||||
|
|
|
|
(1) | For both |
(2) | For |
|
For both |
As discussed above under the caption “Audit Committee Report,” during 2015,2017, the Audit Committee: (i) discussed with Deloitte any relationships that may have an impact on Deloitte’s objectivity and independence; (ii) satisfied itself as to Deloitte’s independence; and (iii) considered whether the provision of services by Deloitte that were not related to the audit of the Company’s annual financial statements or to the reviews of the Company’s interim financial statements included in the Company’s quarterly reports on Form10-Q was compatible with maintaining Deloitte’s independence.
Audit Committee Pre-Approval Policies and ProceduresAUDIT COMMITTEE PRE-APPROVAL POLICIESAND PROCEDURES
The Audit Committee has adopted a thePolicy Relating toPre-Approval of Audit and PermittedNon-Audit Services (the “Pre-Approval Policy”“Pre-Approval Policy”) that requires the Committee topre-approve all services provided by the Company’s independent registered public accounting firm to the Company and its subsidiaries. In general, predictable and recurring covered services, together with the related fees, may be approved by the Audit Committee on an annual basis.Pre-approval in such circumstances will generally be by reference to classes of covered services, provided that thepre-approval is sufficiently detailed to identify the scope of serviceservices to be provided. ThePre-Approval Policy sets forth a list of covered services that may bepre-approved by class on an annual basis. Covered services that are notpre-approved by class must bepre-approved on an individual basis by the Audit Committee.
76 The Wendy’s Company 20162018 Proxy Statement 75
Under thePre-Approval Policy, any engagement of the independent registered public accounting firm to performpre-approved “tax” or “all other” services must be reported by management to the Audit Committee at its first scheduled meeting following the engagement. The total payments that may be made with respect to “tax” or “all other” services that have beenpre-approved by class may not exceed $200,000 per year. Once the $200,000 threshold has been met in any year, any additional “tax” or “all other” services (including any additional payments for “tax” or “all other” services that were previouslypre-approved) must bepre-approved on an individual basis unless otherwise authorized by the Audit Committee.
Pursuant to thePre-Approval Policy, the Audit Committee will establish fee levels or limits for covered services that arepre-approved on a class basis not less frequently than annually. Any covered services for which the estimated fees would cause the total fees for that class of services to exceed the applicable fee limit must be specifically approved by the Audit Committee. For services that are approved by the Audit Committee on an individual basis, the Committee will indicate an approval fee level or limit at the time of approval. The Audit Committee periodically reviews a schedule prepared by management showing the fees paid and estimated to be paid to the independent registered public accounting firm during the fiscal year for each covered service that was or is being provided by the firm.
ThePre-Approval Policy permits the Audit Committee to delegatepre-approval authority to one or more of its members, provided that (i) the aggregate estimated fees for any covered service approved by delegates may not exceed $100,000 for any applicable fiscal year and (ii) the aggregate estimated fees for all covered services approved by delegates during any fiscal year may not exceed $1,000,000.$1.0 million. Anypre-approval granted by delegates must be reported to the Audit Committee at its next scheduled meeting.
In considering whether to grantpre-approval, the Audit Committee considers the nature and scope of the proposed service in light of applicable legal and regulatory requirements, including the rules and regulations promulgated by the SEC and the PCAOBPublic Company Accounting Oversight Board with respect to auditor independence. The Audit Committee retains discretion to prohibit services that, in its view, may compromise, or appear to compromise, the independence and objectivity of the independent registered public accounting firm.
All of the services provided to the Company by Deloitte during 20152017 werepre-approved by the Audit Committee or its delegates in accordance with the terms of thePre-Approval Policy. Policy.
Required VoteREQUIRED VOTE
The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Annual Meeting is required to approve this proposal. Abstentions will have the same effect as votes “against” this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTEFOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2016.
76 The Wendy’s Company 20162018 Proxy Statement 77
ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION
(Item 43 on the Company’s Proxy Card)
In accordance with Section 14A of the Exchange Act, we provide our stockholders with the opportunity to cast an annual advisory vote to approve the compensation of our named executive officers.NEOs (also known as a“say-on-pay” vote). We encourage stockholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes in detail how our 20152017 executive compensation program was designed and implemented to achieve our overall compensation objectives. Stockholders also should review the “2015“2017 Summary Compensation Table” included in this Proxy Statement, as well as the related compensation tables, notes and narrative, which provide detailed information regarding the compensation of our named executive officersNEOs for 2015.2017.
Our executive compensation program is designed to support the Company’s business objectives by linking executive pay to individual performance, the Company’s attainment of annual and multi-year operating and financial goals and the creation of long-term stockholder value. The executive compensation program utilizes a variety of sound compensation governance practices that support the Company’s commitment to protecting stockholder interests.
The primary objectives of our executive compensation program are to:
• |
|
• |
|
• | Align the interests of executives with those of the |
Under our executive compensation program, a substantial portion of the total compensation for senior executives is variable (i.e., “at risk”)at-risk) and tied to Company performance. During 2015,2017, performance-based incentives constituted the most significant portion of total direct compensation for our Chief Executive Officer (82%(83%) and our other named executive officersNEOs as a group (69%(71%). This “pay-for-performance”pay-for-performance philosophy aligns executive pay with the Company’s business objectives and ensures that executives are responsive and accountable to stockholder interests.
The primary components of our executive compensation program are described in the table below.
COMPONENT | PURPOSE | |
Base Salary | • Attract and retain
| |
Annual Cash | • Align executive pay with
| |
Long-Term Equity | • Align the interests of executives with the interests of stockholders and retain • Create a direct link between executive pay and | |
Perquisites and Benefits | • Provide limited perquisites and benefits, consistent with competitive market practice.
|
TheDuring 2017, the Company achievedreported another year of strong performance and global growth, with our North America and International restaurants contributing to our continued strategic and financial progress, as discussed under the “Compensation Discussion and Analysis—2017 Executive Summary” caption in this Proxy Statement. Through our strong overall operating and financial results, in 2015 and continued to execute our brand vision to Delight Every CustomerTM by providing a Deliciously DifferentTM restaurant experience. During 2015, we drove significant improvements in both our corporate and restaurant-level economic model, accelerated the transformation of the Wendy’s brand, continued to strengthen the Wendy’s franchise system and created significant value for stockholders. Specifically, we achieved year-over-year improvements in our key operating and financial metrics, exceeded targets for new restaurant development and Image Activation restaurant reimaging, continued our transition to a predominantly franchised business model and returned $1.2 billion in cash to stockholders through dividends and share repurchases.
Through our strong operating results and execution of our strategic initiatives, we delivered total stockholder return of 21%24% in 2015 and 144%2017, 96% on a 3-yearthree-year basis and 289% on a five-year basis. At the same time, the overall compensation of our senior executives remained competitive with the market and the restaurant industry, consistent with our executive compensation philosophy.
Notwithstanding strong stockholder support of our executive compensation program, we continue to evaluate ways to further strengthen our commitment to best practices in compensation governance. For 2016, we made certain modifications to our executive compensation program design, including eliminating the individual performance multiplier2018, for our Chief Executive Officer’s annual cash incentive awardincentives, we retained adjusted EBITDA, weighted at 60%, as the key earnings performance metric and increasingmaintained the
78 The Wendy’s Company 2018 Proxy Statement
40% weighting and focus on key growth performance metrics by introducing global systemwide sales, weighted at 20%, as an additional key growth performance metric and by decreasing the weighting of the same-restaurant sales key growth performance metric from 40% to 20%. For our long-term equity incentives, we retained the equal weighting of the performance unit component of our long-term equity incentive plan, with a corresponding decrease to the weighting of theand stock option component.components at 50% of grant value for each. For the performance unit component, we also retained relative total stockholder return, weighted at 50%, as a key market performance metric and replaced cumulative three-year adjusted earnings per share, which was weighted at 50%, by adding cumulative three-year free cash flow, weighted as 50%, as a key earnings performance metric.
The Wendy’s Company 2016 Proxy Statement 77
We believe our strong results in 20152017 are a reflection of our “pay-for-performance”pay-for-performance philosophy and demonstrate that our executive compensation program is effectively designed and continues to serve the best interests of the Company and our stockholders.
After considering the foregoing information, together with the more detailed information regarding our executive compensation program set forth in this Proxy Statement, the Company proposes that stockholders approve the following resolution:
RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Company’s named executive officersNamed Executive Officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the “Compensation Discussion and Analysis,” the “2015“2017 Summary Compensation Table” and the related compensation tables, notes and narrative included in this Proxy Statement for the Company’s 20162018 Annual Meeting of Stockholders.
The vote on this resolution is advisory, which means that the vote is not binding on the Company, the Board of Directors or the Compensation Committee. However, the Board of Directors and Compensation Committee will carefully review the voting results and, to the extent there is a significant vote in favor of or against our executive compensation program as described in this Proxy Statement, the Compensation Committee will consider whether to implement, or recommend to the Board of Directors the implementation of, any modifications to the Company’s compensation programs and policies in response to such vote.
Required VoteREQUIRED VOTE
The affirmative vote of a majority of the shares of Common Stock present (in person or by proxy) and entitled to vote at the Annual Meeting is required to approve this proposal. Abstentions will have the same effect as votes “against” this proposal. Brokernon-votes will not be included in the tabulation of voting results for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTEFOR
APPROVAL OF THE ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION.
78 The Wendy’s Company 20162018 Proxy Statement 79
Other Matters to Come Before the Annual MeetingOTHER MATTERSTO COME BEFORETHE ANNUAL MEETING
The Company is not aware of any other matters that are intended to be brought before the Annual Meeting. The proxy being solicited by the Board of Directors does, however, convey discretionary authority to the persons named as proxies in the accompanying proxy card to vote on any other matters that may properly come before the Annual Meeting. If any other matter should properly come before the Annual Meeting, the persons named as proxies will vote the shares represented by properly submitted proxies in accordance with their best judgment, to the extent permitted by applicable legal and regulatory requirements.
Contacting DirectorsCONTACTING DIRECTORS
If you would like to contact the Board of Directors, thenon-management directors as a group or any individual director, you may send ane-mail tocorporate-secretary@wendys.com or write to the following address: The Wendy’sSecretary of the Company One Dave Thomas Boulevard, Dublin, Ohio 43017, Attention:at our corporate offices at the address provided under the caption “Contacting the Secretary and Corporate Secretary.Offices.” Your communication should specify the intended recipient or recipients, and will be forwarded by the Corporate Secretary to such recipient or recipients. Any communication that relates to the Company’s accounting, internal accounting controls or auditing matters will also be forwarded by the Corporate Secretary to the ChairmanChair of the Audit Committee.
Stockholder Proposals for 2017 Annual Meeting of StockholdersSTOCKHOLDER PROPOSALSFOR 2019 ANNUAL MEETINGOF STOCKHOLDERS
Our Certificate of Incorporation andBy-Laws provide that, except as otherwise provided by law, only business properly brought before an annual or special meeting of stockholders may be conducted at such meeting. To be properly brought before a meeting,do so, a stockholder proponent and stockholder proposal (including Rule14a-8 Proposals and Proxy Access Director Nominations) must be (i) submitted tosatisfy the Company for inclusionapplicable eligibility, notice, content, stock ownership and other requirements set forth in its proxy materials in compliance with Section 14our Certificate of Incorporation andBy-Laws. Rule14a-8 Proposals must additionally meet the applicable requirements of Rule14a-8 of the Exchange Act or (ii) specified in a written notice given by aAct.
All stockholder of record who is entitled to vote at such meeting and who complies with the notice and other provisions of our Certificate of Incorporation. The noticeproposals must be delivered personally to, or mailed to and received at, the principal executive offices of the Company,(i) addressed to the Secretary of the Company.
Our CertificateCompany and (ii) received by the Company at our corporate offices within the timeframes noted below (the address for our Secretary and corporate offices is provided below under the caption “Contacting the Secretary and Corporate Offices”). Please note that delivery of Incorporation specifiesany stockholder proposal must be made personally or by mail, and delivery bye-mail, facsimile or other means willnot satisfy the requirements applicable to a stockholder’s notice of proposed business. Those requirements, which are set forth in Sections 5, 6 and 7 of Article V of our Certificate of Incorporation. A stockholder who wishes to submit any business before the 2019 annual meeting of stockholders (the “2019 Annual Meeting”) is encouraged to seek independent counsel regarding the requirements under our Certificate of Incorporation andBy-Laws and SEC rules and regulations, and the Company reserves the right to forego consideration of any submitted business that is not timely or otherwise does not satisfy the appropriate requirements.
Bringing Stockholder Proposals Before the 2019 Annual Meeting
Stockholders may submit proposals (including director nominations) for consideration at the 2019 Annual Meeting that are summarized below.
|
|
|
|
|
|
|
|
|
The Wendy’s Company 2016 Proxy Statement 79
|
|
|
To be eligible to be a nomineeAccess Director Nominations and not otherwise intended for election as a director, a person must (i) consent to being namedinclusion in the Company’s proxy statement as a director nominee,materials for the 2019 Annual Meeting. To be timely and to serve as a director if elected, and (ii) timely deliver to the Secretary of the Company a written questionnaire with respect to such person’s background and qualifications, and the background of any other person or entity on whose behalf the nomination is being made, together with a written representation and agreement that such person is not and will not become a party to certain voting or compensation agreements and that such person, if elected, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Company.
If the Chairman presiding over the meeting determines that the proposed business (including director nominations) was not properly brought before the meeting in accordance with the applicable provisions of our Certificate of Incorporation, the Chairman shall so declare at the meeting, and the business will not2019 Annual Meeting, any such stockholder proposal must be transacted at the meeting. Additionally, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting to present the proposed business, the business will not be transacted at the meeting, regardless of whether proxies in respect of such business may have been received by the Company. Any questions relating toCompany not earlier than February 5, 2019 and not later than March 7, 2019. However, if the date of the 2019 Annual Meeting occurs more than 30 days before, or more than 60 days after, June 5, 2019, the Company must receive such stockholder proposals should be submitted(i) not earlier than 120 calendar days before the 2019 Annual Meeting date and (ii) not later than the later of (a) 90 calendar days before the 2019 Annual Meeting date or (b) the tenth day after the date on which we publicly disclose the 2019 Annual Meeting date by mail, in writing toa press release or in a document filed with the Corporate SecretarySEC.
Stockholder Proposals Intended for Inclusion in 2019 Proxy Materials
Stockholders may submit proposals (other than Proxy Access Director Nominations) under Rule14a-8 of the CompanyExchange Act for inclusion in our 2019 proxy materials and consideration at the Company’s principal executive offices.
Any stockholder proposal submitted pursuant2019 Annual Meeting (“Rule14a-8 Proposals”). Pursuant to Rule14a-8, under to be timely and properly brought before the Exchange Act2019 Annual Meeting, any Rule14a-8 Proposal must be received by the Company not later than the close of business on December [15], 2016 to be considered for inclusion in the Company’s proxy materials for the 2017 annual meeting of stockholders. Any stockholder proposal submitted outside the processes of Rule 14a-8 under the Exchange Act (including director nominations) must be received by the Company not earlier than January 26, 2017 and not later than February 25, 2017 to be properly brought before the 2017 annual meeting of stockholders. In each case, the proposal must be delivered personally to, or mailed to and received at, the principal executive offices of the Company, addressed to the Secretary of the Company.21, 2018. Please note that, delivery of stockholder proposals by e-mail, facsimile or other meansas the SEC rules make clear, simply submitting a Rule14a-8 Proposal does not guarantee that such proposal willnot satisfy the requirements of be included in our Certificate of Incorporation.2019 proxy materials.
At the Annual Meeting, the Board of Directors is recommending that
80 The Wendy’s Company 2018 Proxy Statement
Director Nominations Intended for Inclusion in 2019 Proxy Materials (Proxy Access)
In 2016, our stockholders approveapproved amendments to our Certificate of Incorporation to implement “proxy access” procedures. If the Proxy Access Amendments are approvedprocedures for director nominations submitted by our stockholders, proxy access will be available for use by eligible stockholders beginning with our 2017 annual meeting of stockholders. See “Proposal 2 – Approval of Amendments to the Company’sAs provided in more detail in our Certificate of Incorporation, proxy access permits a stockholder, or a group of up to Provide Stockholders with a ‘Proxy Access’ Right” above for a description25 stockholders, owning 3% or more of the Company’s outstanding Common Stock continuously for at least three years, to nominate and include in the Company’s proxy materials director nominees constituting up to 20% of our Board of Directors (or 25%, if the number of directors serving on the Board is less than ten) (“Proxy Access Amendments, including the deadline for submitting proxy access nominees to the CompanyDirector Nominations”).
Stockholders may submit Proxy Access Director Nominations for inclusion in our 2019 proxy materials for our 2017 annual meetingand consideration at the 2019 Annual Meeting. To be timely and brought before the 2019 Annual Meeting, any Proxy Access Director Nomination must be received by the Company not earlier than November 21, 2018 and not later than December 21, 2018. However, if the date of stockholders.
80 The Wendy’sthe 2019 Annual Meeting occurs more than 30 days before, or more than 60 days after, June 5, 2019, the Company 2016must receive Proxy StatementAccess Director Nominations (i) not earlier than 120 calendar days before the 2019 Annual Meeting date and (ii) not later than the later of (a) 90 calendar days before the 2019 Annual Meeting date or (b) the tenth day after the date on which we publicly disclose the 2019 Annual Meeting date by mail, in a press release or in a document filed with the SEC.
Householding of Annual Meeting MaterialsHOUSEHOLDINGOF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominees follow the practice of “householding” proxy materials. This means that multiple beneficial owners of our Common Stock who share the same address or household may not receive separate copies of this Proxy Statement, the notice regarding theNotice of Internet availability of proxy materials for the Annual Meeting,Availability or the Company’s 20152017 Annual Report to Stockholders. The Company will promptly deliver separate copies of such documents to stockholders who write or call the Corporate Secretary of the Company at the following addressour corporate offices and telephone number: The Wendy’s Company, One Dave Thomas Boulevard, Dublin, Ohio 43017, Attention:number provided under the caption “Contacting the Secretary and Corporate Secretary, Telephone: (614) 764-3100.Offices.”
Stockholders who wish to receive separate copies of the Company’s proxy materials in the future also may call or write to the Secretary of the Company at the above address and telephone number.number under the caption “Contacting the Secretary and Corporate Offices.” Alternatively, if you and other stockholders of record with whom you share an address currently receive multiple copies of the Company’s proxy materials, or if you hold stock in more than one account and, in either case, you wish to receive only one copy of the Company’s proxy materials for your household, you may contact the Secretary of the Company at the above address and telephone number.number under the caption “Contacting the Secretary and Corporate Offices.”
Annual Report on Form ANNUAL REPORTON FORM10-K
The Company’s Annual Report on Form10-K for the fiscal year ended January 3, 2016December 31, 2017 is included in the 20152017 Annual Report to Stockholders that is being delivered, or made available electronically via the Internet, to stockholders with this Proxy Statement. Additional copies of the 20152017 Form10-K may be obtained free of charge by sending a written request to the Secretary of the Company at the following address: The Wendy’s Company, One Dave Thomas Boulevard, Dublin, Ohio 43017, Attention:address provided under the caption “Contacting the Secretary and Corporate Secretary.Offices.” Copies of the 20152017 Form10-K are also available on the Company’sour website atwww.aboutwendys.comwww.wendys.com/who-we-are.
CONTACTINGTHE SECRETARYAND CORPORATE OFFICES
The Secretary of the Company is Mr. E. J. Wunsch. The mailing address and telephone number for our Secretary and corporate offices are: The Wendy’s Company Attention: Secretary of the Company One Dave Thomas Boulevard Dublin, Ohio 43017-5452 Telephone: (614)764-3100 By Order of the Board of Directors:
E. J. WUNSCH Chief Legal Officer and Secretary | ||
|
Dublin, Ohio
April 11, 2016
The Wendy’s Company 20162018 Proxy Statement 81
NON-GAAP RECONCILIATION AND CALCULATION TABLES
AND DISCLOSURE REGARDINGNON-GAAP FINANCIAL MEASURES
The table below shows the specific adjustments applied in calculating adjusted EBITDA for purposes of the Company’s 2015 executive2017 annual incentive plan from the Company’s reported financial results for the fiscal year ended January 3, 2016.December 31, 2017. Included in the table is a reconciliation of The Wendy’s Companynet income to adjusted EBITDA from continuing operations to The Wendy’s Company net income for fiscal 2015.2017.
Reconciliation of Net Income to Adjusted EBITDA (2015 Executive(2017 Annual Incentive Plan) to
The Wendy’s Company Net Income
Twelve Month Period Ended January 3, 2016December 31, 2017
(In Thousands; Unaudited)
Adjusted EBITDA (2015 Executive Incentive Plan) | $ | 408,497 | ||
Less: | ||||
Adjustment attributable to the sale of the Company’s bakery operations * | (16,021 | ) | ||
Impact from final bonus calculation | (53 | ) | ||
|
| |||
The Wendy’s Company adjusted EBITDA from continuing operations | 392,423 | |||
(Less) plus: | ||||
Depreciation and amortization | (145,051 | ) | ||
System optimization gains, net | 74,009 | |||
Reorganization and realignment costs | (21,910 | ) | ||
Impairment of long-lived assets | (25,001 | ) | ||
|
| |||
Operating profit | 274,470 | |||
Interest expense | (86,067 | ) | ||
Loss on early extinguishment of debt | (7,295 | ) | ||
Investment income, net | 52,214 | |||
Other income, net | 806 | |||
|
| |||
Income from continuing operations before income taxes | 234,128 | |||
Provision for income taxes | (94,149 | ) | ||
|
| |||
Income from continuing operations | 139,979 | |||
Discontinued operations: | ||||
Income from discontinued operations, net of income taxes | 10,494 | |||
Gain on disposal of discontinued operations, net of income taxes | 10,669 | |||
|
| |||
Net income from discontinued operations | 21,163 | |||
|
| |||
The Wendy’s Company net income | $ | 161,142 | ||
|
|
Net income | $194,029 | |||
Benefit from income taxes | (93,010 | ) | ||
Income before income taxes | 101,019 | |||
Other income, net | (1,617 | ) | ||
Investment income, net | (2,703 | ) | ||
Interest expense | 118,059 | |||
Operating profit | 214,758 | |||
Plus (less): | ||||
Depreciation and amortization | 125,687 | |||
System optimization losses, net | 39,076 | |||
Reorganization and realignment costs | 22,574 | |||
Impairment of long-lived assets | 4,097 | |||
Adjusted EBITDA | $406,192 | |||
Plus (less): | ||||
Impact from final bonus calculation | — | |||
Adjusted EBITDA (2017 Annual Incentive Plan) | $406,192 | |||
The table below shows the specific financial measures applied in calculating adjusted EBITDA margin from the Company’s reported financial results for the fiscal year ending December 31, 2017.
Calculation of Adjusted EBITDA Margin
Twelve Month Period Ended December 31, 2017
(In Thousands; Unaudited)
Adjusted EBITDA | $406,192 | |||
Total revenues | $1,223,408 | |||
Adjusted EBITDA margin | 33.2 | % |
The Wendy’s Company 20162018 Proxy Statement A-1
The table below provides a reconciliation of The Wendy’s Companynet income and diluted earnings per share to adjusted income and adjusted earnings per share from continuing operations to The Wendy’s Company net income and diluted earnings per share for fiscal 2015.2017.
Reconciliation of Adjusted Income and Adjusted Earnings Per Share from
Continuing Operations to Net Income and Diluted Earnings Per Share
To Adjusted Income and Adjusted Earnings Per Share
Twelve Month Period Ended January 3, 2016December 31, 2017
(In Thousands Except Per Share Amounts; Unaudited)
Per share | ||||||||
Adjusted income and adjusted earnings per share from continuing operations | $ | 109,821 | $ 0.33 | |||||
|
|
|
| |||||
Plus (less): | ||||||||
Dividend from Arby’s | 38,591 | 0.12 | ||||||
System optimization gains, net | 32,187 | 0.10 | ||||||
Impairment of long-lived assets | (15,396 | ) | (0.05 | ) | ||||
Reorganization and realignment costs | (13,492 | ) | (0.04 | ) | ||||
Depreciation of assets that will be replaced as part of the Image Activation initiative | (5,300 | ) | (0.02 | ) | ||||
Loss on early extinguishment of debt | (4,492 | ) | (0.01 | ) | ||||
Other than temporary loss on investment | (1,940 | ) | (0.00 | ) | ||||
|
|
|
| |||||
Total adjustments | 30,158 | 0.10 | ||||||
|
|
|
| |||||
Income from continuing operations | 139,979 | 0.43 | ||||||
Net income from discontinued operations | 21,163 | 0.06 | ||||||
|
|
|
| |||||
Net income | $ | 161,142 | $ 0.49 | |||||
|
|
|
|
Net income | $194,029 | |||
Plus (less): | ||||
Depreciation of assets that will be replaced as part of the Image Activation initiative | 630 | |||
System optimization losses, net | 39,076 | |||
Reorganization and realignment costs | 22,574 | |||
Impairment of long-lived assets | 4,097 | |||
Total adjustments | 66,377 | |||
Income tax impact on adjustments1 | (11,275 | ) | ||
Tax reform | (140,379 | ) | ||
Total adjustments, net of income taxes | (85,277 | ) | ||
Adjusted income | $108,752 | |||
Diluted earnings per share | $0.77 | |||
Total adjustments per share, net of income taxes | (0.34 | ) | ||
Adjusted earnings per share | $0.43 | |||
Disclosure Regarding Non-GAAP Financial Measures
AdjustedThe table below shows the specific financial measures applied in calculating free cash flow from the Company’s reported financial results for the fiscal years ending December 31, 2017 and January 1, 2017, respectively. Included in the table is a reconciliation of the Company’s net cash provided by operating activities to free cash flow for 2017 and 2016.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Twelve Month Periods Ended December 31, 2017 and January 1, 2017
(In Thousands; Unaudited)
2017
|
2016
| |||||||
|
|
|
| |||||
Net cash provided by operating activities
|
| $251,640
|
|
| 188,934
|
| ||
Less:
| ||||||||
Capital expenditures | 81,710 | 150,023 | ||||||
|
|
|
| |||||
Free cash flow | $169,930 | 38,911 | ||||||
|
|
|
|
DISCLOSURE REGARDING NON-GAAP FINANCIAL MEASURES
The Company uses adjusted EBITDA, adjusted EBITDA margin and adjusted earnings per share, which exclude certain expenses netand benefits, as internal measures of certain benefits, are used by the CompanyCompany’s business operating performance and as performance measures for benchmarking against the Company’s peers and competitors,competitors. Adjusted EBITDA, systemwide sales and as an internal measurefree cash flow are also used by the Company in establishing performance goals for purposes of business operating performance.executive compensation. For fiscal 2015,2017, adjusted EBITDA (with certain modifications approved by the Performance Compensation Subcommittee of the Company’s Board of Directors) was used as a performance metric for the Company’s annual cash incentive plancompensation for senior executives, and adjusted earnings per share was used as a performance metric for the
1 | The benefit from income taxes on “System optimization losses, net” was $598 for the twelve months ended December 31, 2017. The benefit from income taxes on “System optimization losses, net” includes the impact ofnon-deductible goodwill disposed of in connection with our system optimization initiative, adjustments related to prior year tax matters, changes to state deferred taxes and changes to valuation allowances on state net operating loss carryforwards. The benefit from income taxes on all other adjustments was calculated using an effective tax rate of 39.11% for the year ended December 31, 2017. |
A-2 The Wendy’s Company 2018 Proxy Statement
Company’s long-term equity incentive plancompensation for senior executives. The Company believes adjusted EBITDA, andadjusted EBITDA margin, adjusted earnings per share and systemwide sales provide a meaningful perspective of the underlying operating performance of the Company’s current business.business and enables investors to better understand and evaluate the Company’s historical and prospective operating performance. Free cash flow is anon-GAAP financial measure that is used by the Company as an internal measure of liquidity. The Company believes that free cash flow is an important liquidity measure because it communicates how much cash flow is available for working capital needs or to be used for repurchasing shares, paying dividends, repaying or refinancing debt, financing possible acquisitions or investments or other uses of cash. Adjusted EBITDA, andadjusted EBITDA margin, adjusted earnings per share, free cash flow and systemwide sales are not recognized terms under U.S. Generally Accepted Accounting Principles (“GAAP”).GAAP, and the Company’s presentation of thesenon-GAAP financial measures in this Proxy Statement does not replace the presentation of the Company’s financial results in accordance with GAAP. Because all companies do not calculate adjusted EBITDA, andadjusted EBITDA margin, adjusted earnings per share, free cash flow and systemwide sales (and similarly titled financial measures) in the same way, those measures as used by other companies may not be consistent with the way The Wendy’s Company calculates such measures. Adjusted EBITDA, adjusted EBITDA and adjusted earnings per share. The Company’s presentation of adjusted EBITDA andmargin, adjusted earnings per share, in this Proxy Statement doesfree cash flow and systemwide sales should not replace the presentationbe construed as substitutes for, or as better indicators of, the Company’s financial results in accordance with GAAP, and adjusted EBITDA and adjusted earnings per share should not be considered as alternative measures of net income or earnings per share.
A-2 The Wendy’s Company 2016 Proxy Statement
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE WENDY’S COMPANY
(Originally incorporated on May 6, 1994
under the name Triarc Merger Corporation).
ARTICLE I
NAME
The name of the corporation shall be The Wendy’s Company (the “Corporation”).
ARTICLE II
ADDRESS; REGISTERED AGENT
The address of the Corporation’s registered office is 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle, State of Delaware 19808; and its registered agent at such address is Corporation Service Company.
ARTICLE III
PURPOSES
The purpose of the Corporation is, either directly or through its subsidiaries, to engage in the restaurant business, including the ownership, operation and franchising of restaurants, and any reasonable extension or expansion thereof and any business, act or activity that is reasonably related, complementary, incidental or ancillary to the restaurant business, including the ownership, operation and franchising of restaurants, or any reasonable extension or expansion thereof (the “Restaurant Business”); provided, that the foregoing shall not prohibit the Corporation, either directly or through its subsidiaries, from (iA) acquiring, directly or indirectly, any person or entity that is engaged in activities otherperformance than the Restaurant Business so long as the Restaurant Business of such acquired person or entity, in each case together with its subsidiaries, generated a majority of the consolidated revenue, consolidated earnings before interest, taxes, depreciation and amortization or consolidated operating income of such person or entity, together with its subsidiaries, during thetwelve12-month period preceding such acquisition, (iiB) continuing to own or operate such acquired person or entity or its assets and business operations following the acquisition of such person or entity, provided that the Corporation shall use good faith efforts to divest itself of the portion of the acquired person not engaged in the Restaurant Business withintwenty four24 months of the closing of the acquisition, or (iiiC) continuing to own, manage and administer any assets that are not Restaurant Business assets that are owned by, or otherwise reflected on the books and records of the Corporation or its subsidiaries as of the effective date of thisamendment of theAmended and Restated Certificate of Incorporation (the “Certificate of Incorporation”).most directly comparable GAAP financial measures.
ARTICLE IV
CAPITALIZATION
SECTION 1. Capital Stock. The total number of shares of all classes of stock (the “Capital Stock”) which the Corporation shall have the authority to issue isone billion six hundred million (1,600,000,000) of which:
(aA) one billion five hundred million (1,500,000,000) shall be shares of Common Stock, par value ten cents ($.10) per share (the “Common Stock”); and
(bB) one hundred million (100,000,000) shall be shares of Preferred Stock, par value ten cents ($.10) per share (the “Preferred Stock”).
Subject to the provisions of this Certificate of Incorporation and except as otherwise provided by law, the stock of the Corporation, regardless of class, may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine.
A statement of the powers, preferences, and rights, and the qualifications, limitations or restrictions thereof, in respect of each class of stock is as set forth below:
A.SECTION 2. Voting Power of Common Stock. The holders of Common Stock shall possess voting power for the election of directors of the Corporation and for all other corporate purposes, each share of Common Stock being entitled to one vote on each matter properly submitted to the stockholders of the Corporation for their vote.
B. Preferred Stock.
The Wendy’s Company 20162018 Proxy Statement B-1A-3
SECTION13. Issuance in SeriesPreferred Stock. The shares of Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not cancelled of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with distinctive serial designations, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the issue of such shares of Preferred Stock from time to time adopted by the Board of Directors pursuant to authority so to do which is hereby vested in the Board of Directors. Each series of shares of Preferred Stock (aA) may have such voting powers, full or limited, or may be without voting powers; (bB) may be subject to redemption at such time or times and at such prices; (cC) may be entitled to receive dividends (which may be cumulative or non-cumulative) at such rate or rates, on such conditions and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock; (dD) may have such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; (eE) may be made convertible into or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of shares of the Corporation at such price or prices or at such rates of exchange and with such adjustments; (fF) may be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of such series in such amount or amounts; and (gG) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any Subsidiary, upon the issue of any additional shares (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Corporation or any Subsidiary of, any outstanding shares of the Corporation and may have such other relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof; all as shall be stated in said resolution or resolutions providing for the issue of such shares of Preferred Stock. The Corporation shall take all such actions as are necessary to cause shares of Preferred Stock of any series that have been redeemed (whether through the operation of a sinking fund or otherwise) or that if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes to have the status of authorized and unissued shares of Preferred Stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of shares of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of shares of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of shares of Preferred Stock. No Preferred Stock of any series may be issued to anyAffiliateaffiliate of the Corporation unless Preferred Stock of that series is offered ratably to all holders of Common Stock of the Corporation; provided that, the foregoing shall not apply if (i) the delay in complying with the obligation to offer the Preferred Stock ratably to the holders of the Common Stock would seriously jeopardize the financial viability of the Corporation and (ii) reliance by the Corporation on the exception in this proviso is expressly approved by the Audit Committee of the Board of Directors of the Corporation.
SECTION24. No Vote Unless Expressly Provided or Required by Law; Dividends. Subject to the provisions of any applicable law or of the by-laws of the Corporation (the“By-laws”), as from time to time amended, with respect to the closing of the stock transfer books or the fixing of a record date for the determination of stockholders entitled to vote and except as otherwise provided by law, in this Certificate of Incorporation or by the Certificate of Designation relating to the issue of any series of shares of Preferred Stock, the holders of outstanding shares of Preferred Stock shall not possess voting power for the election of directors or for any other purposes. Except as otherwise provided in the Certificate of Incorporation or by the Certificate of Designation relating to the issue of any series of shares of Preferred Stock, the holders of shares of Common Stock shall be entitled, to the exclusion of the holders of shares of Preferred Stock of any and all series, to receive such dividends as from time to time may be declared by the Board of Directors.
C.SECTION 5. Definitions. As used herein the following terms shall have the following meanings:
(aA) “Person” shall mean any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, governmental or regulatory body or other entity.
(bB) “Subsidiary” shall mean any corporation whose shares of capital stock having ordinary voting power to elect a majority of the directors of such corporation are owned, directly or indirectly, by the Corporation.
ARTICLE V
BOARD OF DIRECTORS; STOCKHOLDERS MEETINGS
SECTION 1. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
SECTION 2. The Board of Directors shall consist of not less than seven(7) nor more thanfifteen (15) persons, the exact number to be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority
B-2 The Wendy’s Company 2016 Proxy Statement
of directors then in office; provided, however, that such maximum number may be increased from time to time to reflect the rights of holders of Preferred Stock to elect directors in accordance with the terms of the Certificate of Incorporation or of the Certificate of Designation pursuant to which any class or series of Preferred Stock is issued or to the extent provided in any resolution or resolutions adopted by the Board of Directors providing for the issuance of any class or series of Preferred Stock pursuant to Article IV of this Certificate of Incorporation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all of the members of the Board of Directors or the committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Members of the Board of Directors or any committee thereof designated by the Board of Directors, may participate in a meeting of the Board of Directors, or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting in such a manner shall constitute presence in person at such meeting.
SECTION 3. Subject to the rights of the holders of any class or series of Preferred Stock, any vacancy in the Board of Directors caused by death, resignation, removal, retirement, disqualification or any other cause (including an increase in the number of directors) may be filled solely by resolution adopted by the affirmative vote of a majority of the directors then in office, whether or not such majority constitutes less than a quorum, or by a sole remaining director. Any new director elected to fill a vacancy on the Board of Directors will serve for the remainder of the full term of that director for which the vacancy occurred. No decrease in the size of the Board of Directors shall have the effect of shortening the term of any incumbent director.
SECTION 4. Except as otherwise provided by law or by this Certificate of Incorporation, a majority of the directors in office at the time of a duly assembled meeting shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of the directors present at such meeting shall be the act of the Board of Directors.
SECTION 5. Stockholder Business. (A) At an annual meeting of the stockholders, only business (other than business relating to the nomination or election of directors which is governed bySectionSections 6 and 7) that has been properly brought before the stockholder meeting in accordance with the procedures set forth in this Section 5 shall be conducted. To be properly brought before an annual meeting of stockholders, such business must be brought before the meeting (i) by or at the direction of the Board of Directors or any committee thereof or(ii) by a stockholder who (a) was a stockholder of record of the Corporation when the notice required by this Section 5 is delivered to the Secretary of the Corporation and at the time of the meeting, (b) is entitled to vote at the meeting and (c) complies with the notice and other provisions of this Section 5. Section 5(A)(ii) is the exclusive means by which a stockholder may bring business before an annual meeting of stockholders, except (x) with respect to nominations or elections of directors which is governed bySectionSections 6 and7 and (y) with respect to proposals where the stockholder proposing such business has notified the Corporation of such stockholder’s intent to present the proposals at an annual meeting in compliance with Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and such proposals have been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting, in which case the notice requirements of this Section 5 shall be deemed satisfied with respect to such proposals. Any business brought before a meeting in accordance with Section 5(A)(ii) is referred to as “Stockholder Business.”
(B) At any annual meeting of stockholders, all proposals of Stockholder Business must be made by timely written notice given by or on behalf of a stockholder of record of the Corporation (the “Notice of Business”) and must otherwise be a proper matter for stockholder action. To be timely, the Notice of Business must be delivered personally or mailed to, and received at the principal executive office of the Corporation (the “Office of the Corporation”), addressed to the Secretary of the Corporation, by no earlier than 120 days and no later than 90 days before the first anniversary of the date of the prior year’s annual meeting of stockholders; provided, however, that if (i) the annual meeting of stockholders is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the prior year’s annual meeting of stockholders or (ii) no annual meeting was held during the prior year (a) no earlier than 120 days before such annual meeting and (b) no later than the later of 90 days before such annual meeting and the tenth day after the day on which the notice of such annual meeting was made by mail or Public Disclosure. In no event shall an adjournment, postponement or deferral, or Public Disclosure of an adjournment, postponement or deferral, of a stockholder meeting commence a new time period (or extend any time period) for the giving of the Notice of Business.
(C) The Notice of Business must set forth:
(i) the name and record address of each stockholder proposing Stockholder Business (the “Proponent”), as they appear on the Corporation’s books;
(ii) the name and address of any Stockholder Associated Person;
The Wendy’s Company 2016 Proxy Statement B-3
(iii) as to each Proponent and any Stockholder Associated Person, (a) the class or series and number of shares of stock directly or indirectly held of record and beneficially by the Proponent or Stockholder Associated Person, (b) the date such shares of stock were acquired, (c) a description of any agreement, arrangement or understanding, direct or indirect, with respect to such Stockholder Business between or among the Proponent, any Stockholder Associated Person or any others (including their names) acting in concert with any of the foregoing, (d) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions and borrowed or loaned shares) that has been entered into, directly or indirectly, as of the date of the Proponent’s notice by, or on behalf of, the Proponent or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the Proponent or any Stockholder Associated Person with respect to shares of stock of the Corporation (a “Derivative”), (e) a description in reasonable detail of any proxy (including revocable proxies), contract, arrangement, understanding or other relationship pursuant to which the Proponent or Stockholder Associated Person has a right to vote any shares of stock of the Corporation, (f) any rights to dividends on the stock of the Corporation owned beneficially by the Proponent or Stockholder Associated Person that are separated or separable from the underlying stock of the Corporation, (g) any proportionate interest in stock of the Corporation or Derivatives held, directly or indirectly, by a general or limited partnership in which the Proponent or Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (h) any performance-related fees (other than an asset-based fee) that the Proponent or Stockholder Associated Person is entitled to based on any increase or decrease in the value of stock of the Corporation or Derivatives thereof, if any, as of the date of such notice. The information specified in Section 5(C)(i) to (iii) is referred to herein as “Stockholder Information”;
(iv) a representation that each Proponent is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such Stockholder Business;
(v) a brief description of the Stockholder Business desired to be brought before the annual meeting, the text of the proposal (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the By-laws, the language of the proposed amendment) and the reasons for conducting such Stockholder Business at the meeting;
(vi) any material interest of each Proponent and any Stockholder Associated Person in such Stockholder Business;
(vii) a representation as to whether the Proponent intends (a) to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt such Stockholder Business or (b) otherwise to solicit proxies from stockholders in support of such Stockholder Business;
(viii) all other information that would be required to be filed with the Securities and Exchange Commission (“SEC”) if the Proponents or Stockholder Associated Persons were participants in a solicitation subject to Section 14 of the Exchange Act; and
(ix) a representation that the Proponents shall provide any other information reasonably requested by the Corporation.
(D) The Proponents shall also provide any other information reasonably requested by the Corporation within ten business days after such request.
(E) In addition, the Proponent shall further update and supplement the information provided to the Corporation in the Notice of Business or upon the Corporation’s request pursuant to Section 5(D) as needed, so that such information shall be true and correct as of the record date for the meeting and as of the date that is the later of ten business days before the meeting or any adjournment or postponement thereof. Such update and supplement must be delivered personally or mailed to, and received at the Office of the Corporation, addressed to the Secretary of the Corporation, by no later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than seven business days before the date for the meeting (in the case of the update and supplement required to be made as of ten business days before the meeting or any adjournment or postponement thereof).
(F) The person presiding over the meeting shall, if the facts warrant, determine and declare to the meeting, that business was not properly brought before the meeting in accordance with the procedures set forth in this Section 5, and, if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
B-4 The Wendy’s Company 2016 Proxy Statement
(G) If the Proponent (or a qualified representative of the Proponent) does not appear at the meeting of stockholders to present the Stockholder Business such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 5, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(H) “Beneficial Ownership” shall be determined, and a Person shall be the “Beneficial Owner” of all securities which such Person is deemed to own beneficially, pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
(I) “Control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.
(J) “Public Disclosure” of any date or other information means disclosure thereof by a press release reported by the Dow Jones News Services, Associated Press or comparable U.S. national news service or in a document publicly filed by the Corporation with the SEC pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
(K) “Stockholder Associated Person” means with respect to any stockholder, (i) any other beneficial owner of stock of the Corporation that are owned by such stockholder and (ii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the stockholder or such beneficial owner.
(L) Nothing in this Section 5 shall be deemed to affect any rights of the holders of any series of Preferred Stock of the Corporation pursuant to any applicable provision of the Certificate of Incorporation.
SECTION 6. Director Nominations. (A) Only persons who are nominated in accordance with the procedures set forth in this Section 6or Section 7 of this Article V are eligible for election as directors.
(B) Nominations of persons for election to the Board of Directors may only be made at a meeting properly called for the election of directors and only (i) by or at the direction of the Board of Directors or any committee thereof or, (ii) by a stockholder who (a) was a stockholder of record of the Corporation when the notice required by this Section 6 is delivered to the Secretary of the Corporation and at the time of the meeting, (b) is entitled to vote for the election of directors at the meeting and (c) complies with the notice and other provisions of this Section 6 or (iii) in the case of stockholder nominations to be included in the Corporation’s proxy statement for an annual meeting of stockholders, by a stockholder or group of stockholders who meets the requirements of and complies with Section 7 of this Article V. Section 6(B)(ii)isand (iii) are the exclusive means by which a stockholder may nominate a person for election to the Board of Directors. Persons nominated in accordance with Section 6(B)(ii) are referred to as “Stockholder Nominees.” A stockholder nominatingpersonsStockholder Nominees for election to the Board of Directors is referred to as the “Nominating Stockholder.”
(C) All nominations of Stockholder Nominees must be made by timely written notice given by or on behalf of a stockholder of record of the Corporation (the “Notice of Nomination”). To be timely, the Notice of Nomination must be delivered personally or mailed to and received at the Office of the Corporation, addressed to the attention of the Secretary of the Corporation, by the following dates:
(i) in the case of the nomination of a Stockholder Nominee for election to the Board of Directors at an annual meeting of stockholders, no earlier than 120 days and no later than 90 days before the first anniversary of the date of the prior year’s annual meeting of stockholders; provided, however, that if (a) the annual meeting of stockholders is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the prior year’s annual meeting of stockholders or (b) no annual meeting was held during the prior year, notice by the stockholder to be timely must be received (1) no earlier than 120 days before such annual meeting and (2) no later than the later of 90 days before such annual meeting and the tenth day after the day on which the notice of such annual meeting was made by mail or Public Disclosure; and
(ii) in the case of the nomination of a Stockholder Nominee for election to the Board of Directors at a special meeting of stockholders, no earlier than 120 days before and no later than the later of 90 days before such special meeting and the tenth day after the day on which the notice of such special meeting was made by mail or Public Disclosure.
The Wendy’s Company 2016 Proxy Statement B-5
(D) Notwithstanding anything to the contrary, if the number of directors to be elected to the Board of Directors at a meeting of stockholders is increased and there is no Public Disclosure by the Corporation naming the nominees for the additional directorships at least 100 days before the first anniversary of the preceding year’s annual meeting, a Notice of Nomination shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered personally and received at the Office of the Corporation, addressed to the attention of the Secretary of the Corporation, no later than the close of business on the tenth day following the day on which such Public Disclosure is first made by the Corporation.
(E) InWith respect to the giving of notice in the time period required by Section 6(C) of this Article V, in no event shall an adjournment, postponement or deferral, or Public Disclosure of an adjournment, postponement or deferral, of an annual or special meeting commence a new time period (or extend any time period) for the giving of the Notice of Nomination.
(F) The Notice of Nomination shall set forth:
(i) the Stockholder Information with respect to each Nominating Stockholder and Stockholder Associated Person;
(ii) a representation that each stockholder nominating a Stockholder Nominee is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such nomination;
(iii) all information regarding each Stockholder Nominee and Stockholder Associated Person that would be required to be disclosed in a solicitation of proxies subject to Section 14 of the Exchange Act, the written consent of each Stockholder Nominee to being named in a proxy statement as a nominee and to serve if elected and a completed signed questionnaire, representation and agreement required by Section76(L);
(iv) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among a Nominating Stockholder, Stockholder Associated Person or their respective associates, or others acting in concert therewith, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Nominating Stockholder, Stockholder Associated Person or any person acting in concert therewith, were the “registrant” for purposes of such rule and the Stockholder Nominee were a director or executive of such registrant;
(v) a representation as to whether the Nominating Stockholder intends (a) to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve the nomination or (b) otherwise to solicit proxies from stockholders in support of such nomination;
(vi) all other information that would be required to be filed with the SEC if the Nominating Stockholder and Stockholder Associated Person were participants in a solicitation subject to Section 14 of the Exchange Act; and
(vii) a representation that the Nominating Stockholder shall provide any other information reasonably requested by the Corporation.
(G) The Nominating Stockholder shall also provide any other information reasonably requested by the Corporation within ten business days after such request.
(H) In addition, the Nominating Stockholder shall further update and supplement the information provided to the Corporation in the Notice of Nomination or upon the Corporation’s request pursuant to Section 6(G) as needed, so that such information shall be true and correct as of the record date for the meeting and as of the date that is ten business days before the meeting or any adjournment or postponement thereof. Such update and supplement must be delivered personally or mailed to, and received at the Office of the Corporation, addressed to the Secretary of the Corporation, by no later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than seven business days before the date for the meeting (in the case of the update and supplement required to be made as of ten business days before the meeting or any adjournment or postponement thereof).
(I) The person presiding over the meeting shall, if the facts warrant, determine and declare to the meeting, that the nominationof a Stockholder Nominee by the Nominating Stockholder was not made in accordance with the procedures set forth in this Section 6, and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.
B-6 The Wendy’s Company 2016 Proxy Statement
(J) If thestockholderNominating Stockholder (or a qualified representative of thestockholderNominating Stockholder) does not appear at the applicable stockholder meeting to nominate the Stockholder Nominees, such nomination shall be disregarded and such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 6, to be considered a qualified representative of thestockholderNominating Stockholder, a person must be a duly authorized officer, manager or partner of suchstockholderNominating Stockholder or must be authorized by a writing executed by suchstockholderNominating Stockholder or an electronic transmission delivered by suchstockholderNominating Stockholder to act for suchstockholderNominating Stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(K) Nothing in this Section 6 shall be deemed to affect any rights of the holders of any series of Preferred Stock of the Corporation pursuant to any applicable provision of the Certificate of Incorporation.
SECTION 7.(L)To be eligible to be anomineeStockholder Nominee for election or reelection as a director, a person must deliver (in accordance with the time periods prescribed for delivery of notice underthis Section 6) to the Secretary at the Office of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary of the Corporation upon written request) and awritten representation andagreement (in the form provided by the Secretary of the Corporation upon written request) that such person (A) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading and other policies and guidelines of the Corporation.
SECTION 7. Proxy Access for Director Nominations.
(A) Information to be Included in the Corporation’s Proxy. Subject to the provisions of this Section 7, for an annual meeting of stockholders, the Corporation shall include in its proxy statement and in its form of proxy for such annual meeting, in addition to any persons nominated for election by or at the direction of the Board of Directors (or any committee thereof), the name and the Required Information (as defined in Section 7(B) of this Article V) of any person nominated for election to the Board of Directors who satisfies the eligibility requirements in this Section 7 (a “Proxy Access Nominee”) and who is identified in a proper written notice (the “Proxy Access Notice”) that complies with, and is timely delivered pursuant to, this Section 7 by an Eligible Stockholder (as defined in Section 7(C) of this Article V), who expressly elects at the time of delivering the Proxy Access Notice to have such Proxy Access Nominee included in the Corporation’s proxy materials. Notwithstanding anything to the contrary contained in this Section 7, the Corporation may omit from its proxy materials any information or Supporting Statement (as defined in Section 7(I) of this Article V) that it, in good faith, believes would violate any applicable law or regulation.
(B) Definition of Required Information. For the purposes of this Section 7, the “Required Information” that the Corporation shall include in its proxy statement is (i) the information concerning the Proxy Access Nominee and the Eligible Stockholder that is required to be disclosed in the Corporation’s proxy statement by the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder and (ii) if the Eligible Stockholder so elects, a Supporting Statement. Nothing in this Section 7 shall limit the Corporation’s ability to solicit against or for, and include in its proxy materials its own statements relating to, any Eligible Stockholder or Proxy Access Nominee.
(C) Definition of Eligible Stockholder. For the purposes of this Section 7, an “Eligible Stockholder” is a stockholder or group of no more than 25 stockholders (counting as one stockholder, for this purpose, any two or more funds that are part of the sameQualifying Fund Group (as defined in Section 7(D) of this Article V)) that (i) has owned (as defined in Section 7(E) of this Article V) continuously for at least three years prior to the date the Proxy Access Notice is received at the Office of the Corporation (the “Minimum Holding Period”) a number of shares of stock of the Corporation that represents at least 3% of the voting power of all shares of stock of the Corporation issued and
The Wendy’s Company 2016 Proxy Statement B-7
outstanding and entitled to vote in the election of directors as of the most recent date for which such amount is set forth in any Public Disclosure made by the Corporation prior to the date the Proxy Access Notice is received at the Office of the Corporation (the “Required Shares”), (ii) continues to own the Required Shares through the date of the annual meeting of stockholders and (iii) satisfies all other requirements of, and complies with all applicable procedures set forth in, this Section 7. Whenever the Eligible Stockholder consists of a group of stockholders (including a group of funds that are part of the same Qualifying Fund Group), each provision in this Section 7 that requires the Eligible Stockholder to provide any written statements, representations, undertakings, agreements or other instruments or to meet any other conditions shall be deemed to require each such stockholder (including each individual fund) that is a member of such group to provide such statements, representations, undertakings, agreements or other instruments and to meet such other conditions (except that the members of such group may aggregate the shares that each member has owned continuously for the Minimum Holding Period in order to meet the 3% ownership requirement of the “Required Shares” definition). No person may be a member of more than one group of stockholders constituting an Eligible Stockholder with respect to any annual meeting of stockholders, and if any person purports to be a member of more than one group, it shall only be deemed to be a member of the group of stockholders that has the largest ownership position (as reflected in the applicable Proxy Access Notice). A record holder acting on behalf of a beneficial owner will not be counted separately as a stockholder with respect to the shares owned by beneficial owners on whose behalf such record holder has been directed in writing to act, but each such beneficial owner will be counted separately, subject to the other provisions of this Section 7(C), for purposes of determining the number of stockholders whose holdings may be considered part of an Eligible Stockholder’s holdings. For the avoidance of doubt, Required Shares will qualify as such, if and only if, the beneficial owner of such shares as of the date of the Proxy Access Notice has itself beneficially owned such shares continuously for the Minimum Holding Period and through the date of the annual meeting of stockholders (in addition to the other applicable requirements being met).
(D) Definition of Qualifying Fund Group. For the purposes of this Section 7, a “Qualifying Fund Group” means two or more funds that are (i) under common management and investment control, (ii) under common management and funded primarily by the same employer or (iii) a “group of investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended.
(E) Definition of Ownership. For the purposes of this Section 7, a stockholder shall be deemed to “own” only those outstanding shares of stock of the Corporation as to which the stockholder possesses both (i) the full voting and investment rights pertaining to such shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with the foregoing shall not include any shares (i) sold by such stockholder or any of itsaffiliates in any transaction that has not been settled or closed, (ii) borrowed by such stockholder or any of its affiliates for any purpose or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell or (iii) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (a) reducing in any manner, to any extent or at any time in the future, such stockholder’s or any of its affiliates’ full right to vote or direct the voting of any such shares, or (b) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such stockholder or any of its affiliates. A stockholder shall “own” shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and the right to direct the disposition thereof and possesses the full economic interest in the shares. A stockholder’s ownership of shares shall be deemed to continue during any period in which the stockholder has: (i) delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement that is revocable at any time by the stockholder without condition or (ii) loaned such shares; provided that the stockholder has the power to recall such loaned shares on not more than five business days’ notice and has recalled such loaned shares as of the date of the annual meeting of stockholders. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings. For the purposes of this Section 7, “affiliate” shall have the meaning ascribed thereto under the Exchange Act.
(F) Notice Period. To be timely under this Section 7, the Proxy Access Notice must be received by the Secretary at the Office of the Corporation no earlier than 150 days and no later than 120 days before the first anniversary of the filing date of the Corporation’s definitive proxy statement for the prior year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days after the first anniversary of the prior year’s annual meeting of stockholders, notice by the
B-8 The Wendy’s Company 2016 Proxy Statement
EligibleStockholder to be timely must be so delivered (i) no earlier than 120 days before such annual meeting and (ii) no later than the later of 90 days before such annual meeting and the tenth day after the day on which the notice of such annualmeeting was made by mail or Public Disclosure. In no event shall an adjournment, postponement or deferral, or Public Disclosure of an adjournment, postponement or deferral, of an annual meeting of stockholders commence a new time period (or extend any time period) for the giving of the Proxy Access Notice pursuant to this Section 7.
(G) Form of Notice. To be in proper written form, the Proxy Access Notice must include or be accompanied by the following:
(i) a written statement by the Eligible Stockholder certifying as to the number of shares it owns and has owned continuously for the Minimum Holding Period, and the Eligible Stockholder’s agreement to provide (a) within five business days following the later of the record date for the annual meeting of stockholders or the date on which notice of the record date is first publicly disclosed, a writtenstatement by the Eligible Stockholder certifying as to the number of shares it owns and has owned continuously through the record date and (b) prompt notice if the Eligible Stockholder ceases to own a number of shares at least equal to the Required Shares prior to the date of the annual meeting;
(ii) if the Eligible Stockholder is not a record holder of the Required Shares, proof that the Eligible Stockholder owns, and has owned continuously for the Minimum Holding Period, the Required Shares, in a form that would be deemed by the Corporation to be acceptable pursuant to Rule 14a-8(b)(2) under the Exchange Act (or any successor rule) for purposes of a shareholder proposal;
(iii) a copy of the Schedule 14N that has been or is concurrently being filed with the SEC as required by Rule 14a-18 under the Exchange Act;
(iv) a description of (a) any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions and borrowed or loaned shares) that has been entered into, directly or indirectly, by or on behalf the Eligible Stockholder the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the Eligible Stockholder with respect to shares of stock of the Corporation and (b) any proxy (including revocable proxies), contract, arrangement, understanding or other relationship pursuant to which the Eligible Stockholder has a right to vote any shares of stock of the Corporation;
(v) as to each Proxy Access Nominee, (a) an executed agreement, in a form deemed satisfactory by the Board of Directors or its designee (which form shall be provided by the Corporation reasonably promptly upon written request of a stockholder), pursuant to which such Proxy Access Nominee (1) consents to being named in the Corporation’s proxy statement and form of proxy (and agrees not to be named in any other person’s proxy statement or form of proxy) as a nominee and to serving as a director of the Corporation if elected, (2) represents and agrees that he or she is not and will not become a party to a Voting Commitment that has not been disclosed to the Corporation, (3) represents and agrees that he or she is not and will not become a party to a Voting Commitment that could reasonably be expected to limit or interfere with such person’s ability to comply, if elected as a director, with his or her fiduciary duties under applicable law, (4) represents and agrees that he or she is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation, and (5) represents and agrees that such Proxy Access Nominee would be in compliance, if elected as a director of the Corporation, and will comply with, applicable law and all applicable publicly disclosed corporate governance, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of the Corporation relating to such Proxy Access Nominee’s Board membership; (b) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during thepast three years, and any other material relationships, between or among the Eligible Stockholder, such Proxy Access Nominee or their respective associates, or others acting in concert therewith, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Eligible Stockholder or its affiliates or any person acting in concert therewith were the “registrant” for purposes of such rule and the person were a director or executive of such registrant; and (c) any other information relating to the Proxy Access Nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
The Wendy’s Company 2016 Proxy Statement B-9
(vi) an executed agreement, in a form deemed satisfactory by the Board of Directors or its designee (which form shall be provided by the Corporation reasonably promptly upon written request of a stockholder), pursuant to which the Eligible Stockholder (a) represents that it intends to continue to hold the Required Shares through the date of the annual meeting of stockholders; (b) represents that it acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control of the Corporation, and does not presently have such intent; (c) represents and agrees that it has not nominated and will not nominate for election to the Board of Directors at the annual meeting of stockholders any person other than the Proxy Access Nominee(s) it is nominating pursuant to this Section 7; (d) represents and agrees that it is not currently engaged as of the date of the agreement, and will not engage, in, and is not currently as of the date of the agreement, and will not be, a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the annual meeting other than its Proxy Access Nominee(s) or a nominee of the Board of Directors; (e) represents and agrees that it has not distributed and will not distribute to any stockholder of the Corporation any form of proxy for the annual meeting other than the form distributed by the Corporation; (f) represents and agrees that it is currently in compliance as of the date of the agreement, and will comply, with all laws and regulations (including, without limitation, Rule 14a-9(a) under the Exchange Act) applicable to solicitations and the use, if any, of soliciting material in connection with the annual meeting; (g) agrees to assume all liability stemming from any legal or regulatory violation arising out of the Eligible Stockholder’s communications with the stockholders of the Corporation or out of the information that the Eligible Stockholder provided to the Corporation, in each case, in connection with the nomination or election of Proxy Access Nominee(s) at the annual meeting; (h) agrees to indemnify and hold harmless the Corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of any legal or regulatory violation referenced in clause (g) above or any failure or alleged failure of the Eligible Stockholder or its Proxy Access Nominee(s) to comply with, or any breach or alleged breach by the Eligible Stockholder or its Proxy Access Nominee(s) of, therequirements of this Section 7; and (i) agrees to file with the SEC any written solicitation of the stockholders of the Corporation relating to the meeting at which its Proxy Access Nominee(s) will be nominated, regardless of whether any such filing is required under Regulation 14A of the Exchange Act or whether any exemption from filing is available for such solicitation or other communication under Regulation 14A of the Exchange Act;
(vii) in the case of a nomination by a group of stockholders together constituting an Eligible Stockholder, the designation by all group members of one member of the group that is authorized to receive communications, notices and inquiries from the Corporation and to act on behalf of all members of the group with respect to all matters relating to the nomination under this Section 7 (including withdrawal of the nomination); and
(viii) in the case of a nomination by a group of stockholders together constituting an Eligible Stockholder in which two or more funds that are part of the same Qualifying Fund Group are counted as one stockholder for purposes of qualifying as an Eligible Stockholder, documentation reasonably satisfactory to the Corporation that demonstrates that the funds are part of the same Qualifying Fund Group.
(H) Additional Required Information. In addition to the information required pursuant to Section 7(G) of this Article V or any other provision of this Certificate of Incorporation, (i) the Corporation may require any proposed Proxy Access Nominee to furnish any other information (a) that may reasonably be required by the Corporation to determine whether the Proxy Access Nominee would be independent under the Independence Standards (as defined in Section 7(L) of this Article V), (b) that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such Proxy Access Nominee, (c) that may reasonably be required by the Corporation to determine the eligibility of such Proxy Access Nominee to serve as a director of the Corporation or (d) as may otherwise be reasonably requested, and (ii) the Corporation may require the Eligible Stockholder to furnish any other information that may reasonably be required by the Corporation to verify the Eligible Stockholder’s continuous ownership of the Required Shares for the Minimum Holding Period or compliance with this Section 7.
(I) Supporting Statement. For each of its Proxy Access Nominees, the Eligible Stockholder may, at its option, provide to the Secretary of the Corporation, at the time the Proxy Access Notice is provided, one written statement, not to exceed 500 words, in support of such Proxy Access Nominee’s candidacy (a “Supporting Statement”). Only one Supporting Statement may be submitted by an Eligible Stockholder (including any group of stockholders together constituting an Eligible Stockholder) for each Proxy Access Nominee.
B-10 The Wendy’s Company 2016 Proxy Statement
(J) Permitted Number of Proxy Access Nominees.
(i) The maximum number of Proxy Access Nominees nominated by all Eligible Stockholders that will appear in the Corporation’s proxy materials with respect to an annual meeting of stockholders, shall not exceed 20%, or 25% (if the number of directors serving on the Board of Directors is less than ten), of the number of directors in office as of the last day on which a Proxy Access Notice may be delivered pursuant to this Section 7 with respect to the annual meeting, or if such amount is not a whole number, the closest whole number below 20% or 25%, as applicable (such number, as it may be adjusted pursuant to this Section 7(J), the “Permitted Number”); provided, however, that the Permitted Number shall be reduced by (a) the number of individuals who will be included in the Corporation’s proxy materials as nominees unopposed or recommended by the Board of Directors pursuant to an agreement, arrangement or other understanding with a stockholder or group of stockholders (other than any such agreement, arrangement or understanding entered into in connection with an acquisition of stock from the Corporation by such stockholder or group of stockholders), other than any such individual who at the time of the annual meeting shall have served as a director continuously as a nominee of the Board of Directors for at least two annual terms, (b) the number of individuals who were previously elected to the Board of Directors as Proxy Access Nominees at any of the preceding two annual meetings of stockholders pursuant to this Section 7 and who are re-nominated for election at such annual meeting by the Board of Directors and (c) the number of Proxy Access Nominees who were qualified for inclusion in the Corporation’s proxy materials for the current annual meeting of stockholders whom the Board of Directors decides to nominate for election to the Board of Directors.
(ii) If one or more vacancies on the Board of Directors for any reason occur after the deadline in Section 7(F) of this Article V for delivery of the Proxy Access Notice and the Board of Directors resolves to reduce the size of the Board of Directors in connection therewith, the maximum number of Proxy Access Nominees that may be nominated by all Eligible Stockholders pursuant to this Section 7 shall be calculated based on the number of directors in office so reduced. If the number of Proxy Access Nominees submitted by Eligible Stockholders pursuant to this Section 7 exceeds this maximum number, each Eligible Stockholder will select one Proxy Access Nominee for inclusion in the Corporation’s proxy materials until the maximum number is reached, going in order of the number (largest to smallest) of shares of the Corporation each Eligible Stockholder disclosed as owned in its respective Proxy Access Notice submitted to the Corporation. If the maximum number is not reached after each Eligible Stockholder has selected one Proxy Access Nominee, this selection process will continue as many times as necessary, following the same order each time, until the maximum number is reached. Following such determination, if any Proxy Access Nominee who satisfies the eligibility requirements in this Section 7 thereafter is nominated by the Board of Directors, ceases to satisfy the eligibility requirements in this Section 7, withdraws his or her nomination or becomes unwilling to serve on the Board, no other nominee or nominees shall be included in the Corporation’s proxy materials or otherwise submitted for director election in substitution thereof with respect to the annual meeting of stockholders.
(iii) Notwithstanding anything to the contrary contained in this Section 7, the Corporation shall not be required to include any Proxy Access Nominees in its proxy materials pursuant to this Section 7 for any annual meeting of stockholders for which the Secretary of the Corporation receives notice that a stockholder intends to nominate one or more persons for election to the Board of Directors pursuant to Section 6 of this Article V.
(K) Correction of Defects. No information or communication provided by an Eligible Stockholder or a Proxy Access Nominee to the Corporation or its stockholders in connection with the nomination or election of Proxy Access Nominee(s) at the annual meeting shall include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. If any such information or communications includes any such untrue statement or omission, such Eligible Stockholder or Proxy Access Nominee, as the case may be, shall promptly notify the Secretary of the Corporation of any defect in such previously provided information and of the information that is required to correct any such defect; it being understood that providing such notification shall not be deemed to limit the rights or remedies available to the Corporation relating to any such defect.
(L) Proxy Access Nominee Eligibility. Notwithstanding anything to the contrary contained in this Section 7, the Corporation shall not be required to include in its proxy materials, pursuant to this Section 7, any Proxy Access Nominee (i) who would not (a) be an independent director under the applicable rules and listing standards of the principal U.S. securities exchanges upon which the stock of the Corporation is listed or traded, any applicable rules of the SEC or any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s directors, (b) satisfy the audit, compensation or other board committee independence requirements under
The Wendy’s Company 2016 Proxy Statement B-11
the applicable rules and listing standards of the principal U.S. securities exchanges upon which the stock of the Corporation is listed or traded, any applicable rules of the SEC or any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s committee members, or (c) be a“non-employee director” under Exchange Act Rule 16b-3 or an “outside director” for the purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (or any successor provision) (collectively, the “Independence Standards”); (ii) whose election as a member of the Board of Directors would cause the Corporation to be in violation of this Certificate of Incorporation, the By-laws, the rules and listing standards of the principal U.S. securities exchanges upon which the stock of the Corporation is listed or traded, or any applicable state or federal law, rule or regulation; (iii) who is an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914; (iv) who is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in such a criminal proceeding within the past ten years; or (v) who is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended.
(M) Effect of Invalid Nominations. Notwithstanding anything to the contrary set forth herein, if (i) a Proxy Access Nominee or the applicable Eligible Stockholder breaches any of its agreements or representations or fails to comply with any of the requirements under this Section 7 in any material respect or (ii) a Proxy Access Nominee otherwise becomes ineligible for inclusion in the Corporation’s proxy materials pursuant to this Section 7 or dies, becomes disabled or otherwise becomes ineligible or unavailable for election at the annual meeting of stockholders, in each case as determined by the Board of Directors or the chairman of the annual meeting, (i) the Corporation may omit or, to the extent feasible, remove the information concerning such Proxy Access Nominee and the related Supporting Statement from its proxy materials and/or otherwise communicate to its stockholders that such Proxy Access Nominee will not be eligible for election at the annual meeting and shall not be required to include in its proxy materials any successor or replacement nominee proposed by the applicable Eligible Stockholder or any other Eligible Stockholder and (ii) the Board of Directors or the chairman of the meeting shall declare such nomination to be invalid and such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the Corporation. In addition, if the Eligible Stockholder (or a qualified representative thereof) does not appear at the annual meeting to present any nomination pursuant to this Section 7, such nomination shall be declared invalid and disregarded as provided in the foregoing sentence.
(N) Restrictions on Re-nominations. Any Proxy Access Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of stockholders but withdraws from or becomes ineligible or unavailable for election at the annual meeting will be ineligible to be a Proxy Access Nominee pursuant to this Section 7 for the next two annual meetings of stockholders.
(O) Board Determinations. The Board of Directors (or any other person or body duly authorized by the Board of Directors), at all times acting in good faith, shall have the power and authority to interpret this Section 7 and to make any and all determinations necessary or advisable pursuant to this Section 7.
(P) Exclusive Method. This Section 7 shall be the exclusive method for stockholders to include nominees for director election in the Corporation’s proxy materials.
SECTION 8. The annual meeting of stockholders of the Corporation for the election of directors and the transaction of such other business as may be brought before the meeting in accordance with this Certificate of Incorporation shall be held on the date and at the time fixed from time to time by the Board of Directors, by a resolution adopted by the affirmative vote of a majority of the Board of Directors.
SECTION 9. Except as otherwise provided by law, at any meeting of stockholders of the Corporation the presence in person or by proxy of the holders of a majority in voting power of the outstanding stock of the Corporation entitled to vote shall constitute a quorum for the transaction of business brought before the meeting in accordance with this Certificate of Incorporation and, a quorum being present, the affirmative vote of the holders of a majority in voting power present in person or represented by proxy and entitled to vote shall be required to effect action by stockholders; provided, however, that, subject to the provisions of any class or series of Preferred Stock, the vote required for the election of directors shall be set forth in, and governed by, the By-laws.
SECTION 10. At every meeting of stockholders, the Chairman or, in the absence of the Chairman, the Vice Chairman or, in the absence of both the Chairman and the Vice Chairman, the Chief Executive Officer or, in the absence of all such persons, such individual as shall have been designated by a resolution adopted by the affirmative vote of a majority of the Board of Directors, shall act as chairman of the meeting. The chairman of the meeting shall have sole authority to prescribe the agenda and rules of order for the conduct of such meeting of stockholders and to determine all questions arising thereat relating to the order of business and the conduct of the meeting, except as otherwise required by law.
B-12 The Wendy’s Company 2016 Proxy Statement
SECTION 11. Any class or series of Preferred Stock may exercise the special voting rights, if any, of such class or series to elect directors upon the occurrence of certain events specified in the Certificate of Designation pursuant to which any such class or series of Preferred Stock is issued or in this Certificate of Incorporation, as the case may be, in any manner now or hereafter permitted by this Certificate of Incorporation, Delaware law or the applicable Certificate of Designation for such class or series of Preferred Stock.
SECTION 12. The exercise by the Board of Directors of the powers conferred in this Article V shall at all times be subject to any statutory or other limitations upon such powers provided by the laws of the State of Delaware.
SECTION 13. Members of the Board of Directors may be elected either by written ballot or by voice vote.
SECTION 14. The Corporation may in itsby-lawsBy-laws confer powers upon its Board of Directors in addition to the foregoing, and in addition to the powers and authorities expressly conferred upon it by statute.
SECTION 15. (A) Special meetings of stockholders of the Corporation may be called only (i) at the direction of (a) a majority of the entire Board of Directors, (b) the Chairman of the Board of Directors, (c) the Vice Chairman of the Board of Directors or (d) the Chief Executive Officer or (ii) by the Secretary of the Corporation at the written request of holders of record of at least 20% in voting power (the “Required Percentage”) of the outstanding capital stock of the Corporation entitled to vote on the matter or matters to be brought before the proposed special meeting (“Voting Stock”) as of the record date fixed in accordance with this Section 15 to determine the stockholders entitled to deliver a written request to call such meeting, if such request complies with the requirements set forth in this Section 15. Notwithstanding any other provision of this Certificate of Incorporation, this Section 15 shall be the exclusive means by which a special meeting of stockholders may be called, including, without limitation, a special meeting called for the election of directors.
(B) Only a stockholder that is a holder of record of Voting Stock on the record date fixed to determine the stockholders entitled to request the call of a special meeting may submit a request to call a special meeting. Any stockholder seeking to call a special meeting to transact business shall, by written notice, signed by the stockholder or a duly authorized agent thereof, to the Secretary of the Corporation personally received at the Office of the Corporation, request that the Board of Directors fix a record date to determine the stockholders of the Corporation who are entitled to request the call of the special meeting. A written request to fix a record date shall include all of the information that must be included in a written request to call a special meeting from a stockholder, as set forth in the succeeding paragraph (C) of this Section 15. The Board of Directors may, within10ten days of the Secretary of the Corporation’s receipt at the Office of the Corporation of a valid request to fix a record date, fix a record date to determine the stockholders entitled to request the call of a special meeting, which date shall not precede, and shall not be more than10ten days after, the date upon which the resolution fixing the record date is adopted. If a record date is not fixed by the Board of Directors, and subject to applicable legal and regulatory requirements and the rules of any stock exchange upon which the Corporation’s securities are listed, the record date shall be the date that the first valid written request to call a special meeting is received by the Secretary of the Corporation at the Office of the Corporation with respect to the proposed business to be conducted at a special meeting. A special meeting shall be called at the request of stockholders if, and only if, written requests to call a special meeting from holders of the Required Percentage of Voting Stock are received by the Secretary of the Corporation within 60 days of the record date established as provided in this paragraph (B).
(C) Each written request to call a special meeting shall include the following: (i) the signature of the stockholder of record, or of a duly authorized agent thereof, signing such request and the date such request was signed; (ii) a brief description of the business desired to be brought before the meeting (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the By-laws, the language of the proposed amendment); and (iii) as to the stockholder signing such request, or on whose behalf such request was signed (such stockholder, the “party”), and any Stockholder Associated Person of such party (but excluding from this clause (iii) any Solicited Stockholder):
(1a) the name and address of such party and each Stockholder Associated Person;
(2b) as to each party and each Stockholder Associated Person, (a1) the class or series and number of shares of stock directly or indirectly held of record and beneficially by such party and each Stockholder Associated Person, (b2) the date such shares of stock were acquired, (c3) a description of any agreement, arrangement or understanding, direct or indirect, with respect to the business to be transacted at the special meeting between or among such party, any Stockholder Associated Person or any others (including their names) acting in concert with any of the foregoing, (d4) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions and borrowed or loaned shares) that has been entered into, directly or indirectly, as of the date of such party’s notice by, or on behalf of, such party or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase
The Wendy’s Company 2016 Proxy Statement B-13
or decrease the voting power of such party or any Stockholder Associated Person with respect to shares of stock of the Corporation (for purposes of this paragraph, a “Derivative”), (e5) a description in reasonable detail of any proxy (including revocable proxies), contract, arrangement, understanding or other relationship pursuant to which such party or Stockholder Associated Person has a right to vote any shares of stock of the Corporation, (f6) any rights to dividends on the stock of the Corporation owned beneficially by such party or Stockholder Associated Person that are separated or separable from the underlying stock of the Corporation, (g7) any proportionate interest in stock of the Corporation or Derivatives held, directly or indirectly, by a general or limited partnership in which such party or Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (h8) any performance-related fees (other than an asset-based fee) that such party or Stockholder Associated Person is entitled to based on any increase or decrease in the value of stock of the Corporation or Derivatives thereof, if any, as of the date of such written request;
(3c) all other information that would be required to be filed with the SEC if such party or any Stockholder Associated Person were a participant in a solicitation subject to Section 14 of the Exchange Act;
(4d) any material interest of such party and any Stockholder Associated Person in any of the business proposals to be transacted at the special meeting; and
(5e) a representation as to whether such party intends (a) to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt any of the business proposals to be transacted at the special meeting or (b) otherwise to solicit proxies from stockholders in support of any such proposal (for purposes of this Section 15, a “Solicitation Statement”).
The information set forth in a request to call a special meeting shall be supplemented by such party (other than a Solicited Stockholder) by providing such supplement to the Secretary of the Corporation received at the Office of the Corporation (i) not later than five(5) business days after the record date for determining the stockholders entitled to notice of such special meeting so that such information is accurate as of such record date and (ii) not later than seven(7) business days before such special meeting so that such information is accurate as of the tenth(10th) business day before such meeting. “Solicited Stockholder” means any stockholder or beneficial owner that has provided a request to call a special meeting in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A.
(D) A stockholder may revoke a request to call a special meeting by written revocation, signed by the stockholder or a duly authorized agent thereof, received by the Secretary of the Corporation at any time prior to the special meeting; provided, however, that if any such revocation is received by the Secretary of the Corporation after the end of the 60- day period described in the last sentence of paragraph (B) of this Section 15 and if the Secretary of the Corporation previously received unrevoked written requests from the holders of the Required Percentage of Voting Stock and, as a result of such revocation, there no longer are unrevoked requests from the Required Percentage of Voting Stock to call a special meeting, the Board of Directors shall have the discretion to determine whether or not to proceed with the special meeting. A business proposal shall not be presented for stockholder action at any special meeting if (i) any stockholder or Stockholder Associated Person who has provided a Solicitation Statement with respect to such proposal does not act in accordance with the representations set forth therein, (ii) the business proposal appeared in a written request submitted by a stockholder who did not provide the supplemental information required by the second to last sentence of Section 15(C), (iii) any stockholder or Stockholder Associated Person (other than a Solicited Stockholder) who delivered a written request, or directed that a written request be delivered, is not entitled to vote at the special meeting or does not beneficially own stock at the time of such meeting, (iv) any stockholder (other than a Solicited Stockholder) or a duly authorized agent thereof who delivered a written request, or directed that a written request be delivered, does not attend the special meeting in person or by proxy to present the business proposal to be transacted at such meeting, (v) any written request to call such meeting was made or solicited in a manner that the Board of Directors determines constituted a violation of Regulation 14A under the Exchange Act or other applicable law, or (vi) any stockholder or Stockholder Associated Person (other than a Solicited Stockholder) who delivered a written request, or directed that a written request be delivered, ceases to beneficially own, at any time after the delivery of such written request and before the special meeting is convened, at least the same number of shares of Voting Stock such stockholder or owner beneficially owned as of the record date for determining the stockholders entitled to deliver a request to call such meeting; provided, however, that the Board of Directors shall proceed with the special meeting if, despite any action or failure to act covered by clauses (ii), (iii), (iv) or (vi) of this paragraph (D), there are still in place valid requests from the Required Percentage of Voting Stock to call such special meeting.
(E) The Corporation shall not accept, and shall consider ineffective, a written request from a stockholder to call a special meeting: (i) that does not comply with the preceding provisions of this Section 15; (ii) that relates to an item of business that is not a proper subject for stockholder action under applicable law; (iii) if an identical or substantially
B-14 The Wendy’s Company 2016 Proxy Statement
similar item of business (such item, as determined in good faith by the Board of Directors, a “Similar Item”) will be submitted for stockholder approval at any stockholder meeting to be held on or before the 120th day after the Secretary of the Corporation receives such written request (whether such meeting is called for by the Board of Directors or otherwise); (iv) if such request is received by the Secretary of the Corporation during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders and ending on the date of the next annual meeting of stockholders; (v) if a Similar Item has been presented at the most recent annual meeting or at any special meeting held within one year prior to receipt by the Secretary of the Corporation of such request to call a special meeting; or (vi) if two or more special meetings have been called at the request of stockholders and convened within the 12-month period ending on the date of the receipt of such request by the Secretary of the Corporation. For purposes of this Section 15, the nomination, election or removal of directors shall be deemed to be a Similar Item with respect to all items of business involving the nomination, election or removal of directors, changing the size of the Board of Directors or filling vacancies or newly created directorships resulting from any increase in the authorized number of directors.
(F) The Board of Directors shall determine the place, and fix the date and time, of any special meeting called at the request of one or more stockholders in accordance with the provisions of this Section 15. The Board of Directors may submit its own proposal or proposals for consideration at a special meeting called at the request of one or more stockholders. The record date or record dates for a special meeting shall be fixed in accordance with Section 213 (or its successor provision) of the Delaware General Corporation Law. Business transacted at any special meeting shall be limited to the purposes stated in the notice of such meeting delivered by the Corporation.
ARTICLE VI
INDEMNIFICATION
SECTION 1. To the extent not prohibited by law, the Corporation shall indemnify any person who is or was made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (a “Proceeding”), whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director or officer of the Corporation, or is or was serving in any capacity at the request of the Corporation for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an “Other Entity”), against judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys’ fees and disbursements). Persons who are not directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board at any time specifies that such persons are entitled to the benefits of this Article VI.
SECTION 2. The Corporation shall, from time to time, reimburse or advance to any director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys’ fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if required by the Delaware General Corporation Law, such expenses incurred by or on behalf of any director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such director or officer (or other person indemnified hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such director, officer or other person is not entitled to be indemnified for such expenses.
SECTION 3. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VI shall not be deemed exclusive of any other rights to which a person seeking indemnification or reimbursement or advancement of expenses may have or hereafter be entitled under any statute, this Certificate of Incorporation, the By-laws, any agreement, any vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.
SECTION 4. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VI shall continue as to a person who has ceased to be a director or officer (or other person indemnified hereunder) and shall inure to the benefit of the executors, administrators, legatees and distributees of such person.
SECTION 5. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of an Other Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI, the By-laws or under Section 145 of the Delaware General Corporation Law or any other provision of law.
The Wendy’s Company 2016 Proxy Statement B-15
SECTION 6. The provisions of this Article VI shall be a contract between the Corporation, on the one hand, and each director and officer who serves in such capacity at any time while this Article VI is in effect and any other person indemnified hereunder, on the other hand, pursuant to which the Corporation and each such director, officer, or other person intend to be legally bound. No repeal or modification of this Article VI shall affect any rights or obligations with respect to any state of facts then or theretofore existing or thereafter arising or any Proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts.
SECTION 7. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VI shall be enforceable by any person entitled to such indemnification or reimbursement or advancement of expenses in any court of competent jurisdiction. The burden of proving that such indemnification or reimbursement or advancement of expenses is not appropriate shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that such indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) that such person is not entitled to such indemnification or reimbursement or advancement of expenses shall constitute a defense to the action or create a presumption that such person is not so entitled. Such a person shall also be indemnified for any expenses incurred in connection with successfully establishing his or her right to such indemnification or reimbursement or advancement of expenses, in whole or in part, in any such Proceeding.
SECTION 8. Any director or officer of the Corporation serving in any capacity (a) another corporation of which a majority of the shares entitled to vote in the election of its directors is held, directly or indirectly, by the Corporation or (b) any employee benefit plan of the Corporation or any corporation referred to in clause (a) shall be deemed to be doing so at the request of the Corporation.
SECTION 9. Any person entitled to be indemnified or to reimbursement or advancement of expenses as a matter of right pursuant to this Article VI may elect to have the right to indemnification or reimbursement or advancement of expenses interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the applicable Proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time such indemnification or reimbursement or advancement of expenses is sought. Such election shall be made, by a notice in writing to the Corporation, at the time indemnification or reimbursement or advancement of expenses is sought; provided, however, that if no such notice is given, the right to indemnification or reimbursement or advancement of expenses shall be determined by the law in effect at the time indemnification or reimbursement or advancement of expenses is sought.
ARTICLE VII
LIMITATION ON LIABILITY OF DIRECTORS
SECTION 1. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (iA) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (iiB) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iiiC) under Section 174 of the Delaware General Corporation Law, or (ivD) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article VII to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the Delaware General Corporation Law, as so amended.
SECTION 2. Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
ARTICLE VIII
ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS
The Board of Directors may from time to time (after adoption by the undersigned of the original By-laws) make, alter or repeal the By-laws by a vote of two-thirds of the entire Board of Directors that would be in office if no vacancy existed, whether or not present at a meeting; provided, however, that any By-laws made, amended or repealed by the Board of Directors may be amended or repealed, and any By-laws may be made, by the stockholders of the Corporation by vote of a majority of the holders of shares of stock of the Corporation entitled to vote in the election of directors of the Corporation. Notwithstanding the foregoing, the Board of Directors shall not have the power or authority to amend, alter or repeal Section 3 of Article I of the Corporation’s By-laws.
B-16 The Wendy’s Company 2016 Proxy Statement
THE WENDY’S COMPANY ONE DAVE THOMAS BOULEVARD DUBLIN, OHIO 43017
| VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions | |||
VOTE BY TELEPHONE -1-800-690-6903 | ||||
Use any touch-tone telephone to transmit your voting instructions | ||||
VOTE BY MAIL | ||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | ||||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||
If you would like to reduce the costs incurred by The Wendy’s Company |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
E45255-P06559 KEEP THIS PORTION FOR YOUR RECORDS | ||||
DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
THE WENDY’S COMPANY
| ||||||||||
The Board of Directors recommends that you voteFOR the election of each of the director nominees named below: |
1. | Election of Directors | |||||||||||
Nominees: | For | Against | Abstain | |||||||||
1a. | Nelson Peltz | |||||||||||
1b. | Peter W. May | |||||||||||
1c. |
| |||||||||||
1d. |
| |||||||||||
1e. | Dennis M. Kass | |||||||||||
1f. | Joseph A. Levato | |||||||||||
1g. | Michelle J. Mathews-Spradlin | |||||||||||
1h. | Matthew H. Peltz | |||||||||||
1i. | Todd A. Penegor | |||||||||||
1j. | Peter H. Rothschild | |||||||||||
1k. | Arthur B. Winkleblack | |||||||||||
|
The Board of Directors recommends that you voteFOR proposals 2 | For | Against | Abstain | |||||||||||||||||||
2. |
|
|
|
| ||||||||||||||||||
| Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | ☐ | ☐ | |||||||||||||||||||
| Advisory resolution to approve executive compensation. | ☐ | ☐ |
For address change and/or comments, please mark this box and write them on the reverse side where indicated. | ☐ | |||||||||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ | ||||||||||
Yes | No |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee, guardian or other fiduciary, please give full title as such. Joint owners must each sign. If shares are held by a corporation, partnership or other entity, please sign in full entity name by authorized officer.
|
Signature [PLEASE SIGN WITHIN BOX]
| Date
| Signature (Joint Owners)
| Date
|
ADMISSION TICKET
THE WENDY’S COMPANY
20162018 ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 26, 2016Tuesday, June 5, 2018
10:00 a.m. (EDT)
The Wendy’s Company
Thomas Conference Center
One Dave Thomas Boulevard
Dublin, Ohio 43017
This is your admission ticket to the meeting. If you plan to attend the meeting in person, you will be required to present this admission ticket and a valid government-issued photo identification. This ticket admits only the stockholder listed on the reverse side and is not transferable. FurtherAdditional admission requirements and instructions for attending the meeting are contained in the Proxy Statement.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice of Annual Meeting, Proxy Statement and Annual Report to Stockholders are available atwww.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
E05766-P77431
E45256-P06559
THE WENDY’S COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE WENDY’S COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
| ||||||||||||||
The undersigned hereby appoints
This proxy, if signed, dated and returned, will be voted as
All proxies previously given or executed by the undersigned with respect to the shares of common stock represented by this proxy are hereby revoked. The undersigned acknowledges receipt of the accompanying Notice of
IMPORTANT - This proxy must be signed and dated on the reverse side.
If you vote by telephone or via the Internet, please DO NOT mail back this proxy card. Proxies submitted by telephone or via the Internet must be received by 11:59 p.m. (EDT) on
| ||||||||||||||
Address change/comments: | ||||||||||||||
| ||||||||||||||
(If you provide any address change and/or comments above, please mark the corresponding box on the reverse side.)
Continued and to be signed on reverse side
|