Exhibit 10(h)
Special Project Incentive Program - C5
Effective Date: May 27, 2002
Blaine Sweatt
Purpose
This Special Project is based on the development of C5, a new restaurant concept
by Darden Restaurants, Inc. (the "Company").
In recognition of the exceptional level of effort and commitment required of the
New Business team to effectively develop the new concept, and the potential to
significantly impact shareholder value, the New Business Development team will
be placed on a Special Project Incentive as provided for within the Darden
Restaurants, Inc. Management and Professional Incentive Plan ("MIP").
The Term of Special Project
The C5 project will be in effect for a defined period of four years, FY03
through FY06.
Components of the C5 Incentive Determination
1. During the project period, the participant's annual incentive will be
calculated according to the normal MIP formula (earned salary x NIP x
individual rating x company rating), based on the individual rating
assigned to the participant, and the unit rating for Darden.
2. Each participant is provided a one-time opportunity to elect their
participation level in the Special Project Incentive. The participant may
elect to invest, and place at risk, a percentage of the MIP annual
incentives paid during the period from June 2002 through July 2006, until
completion or termination of the C5 project. You may elect to invest 0%,
50%, or 100% of your annual MIP incentive.
3. Upon successful completion of the Special Project, the invested Special
Project Incentive will be recalculated using a 2.0 company rating. The
following shows the example calculation for a single year.
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Example : Blaine Sweatt None Mid Max
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A. Annual Salary $420,000 $420,000 $420,000
B. Annual Bonus @ 45% NIP x 1.2 x 1.4 $317,500 $317,500 $317,500
C. Elected Investment % 0% 50% 100%
D. Special Project Incentive Investment $0 $158,750 $317,500
Formula: B x C
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UPON SUCCESSFUL COMPLETION:
E. Recalculated Investment (company rating of 2.0) $0 $226,800 $453,600
Formula: D / 1.4 x 2.0
F. Special Project Payout (one year) $0 $453,600 $907,200
Formula: E x 2
G. Gain (payout versus actual investment) $0 $294,850 $589,700
Formula: F-D
H. Match % (payout versus actual investment) 0% 186% 186%
Formula: (F-D) / D
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4. Successful completion of the project will be determined solely by the Board
of Directors of Darden Restaurants through approval of the C5 concept for
expansion. The approval/ expansion decision is not subject to review by
arbitration or otherwise as to whether the decision is reasonable or based
on any other factor, e.g. overall performance of the company, capital
considerations, etc. The Compensation Committee of the Board of Directors
will conduct an initial review of the success of the project no later than
June 2006.
Special Project Incentive Program
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5. Upon successful completion of the project, as determined solely by the
Board of Directors approval of the C5 concept for expansion, the Special
Project Incentive Investments will be paid out at double the recalculated
invested amount.
6. If the C5 project is discontinued or terminated by the Company or the Board
of Directors of Darden Restaurants for issues related to the operating or
financial performance of the C5 project, all Special Project Incentive
Investments will be forfeited in their entirety.
7. If the C5 project is discontinued or terminated by the Company or the Board
of Directors and if operating performance of the C5 project is deemed to be
strong, the Compensation Committee may authorize that all Special Project
Incentive Investments will be returned, with 6% interest credited back to
the normal MIP payment date.
8. If the project is discontinued or terminated under extraordinary
circumstances not contemplated by this agreement, the Compensation
Committee may approve full or partial refund of participant investments.
9. If, at the end of the four-year project period, the C5 concept is not
determined to be ready for expansion and the Company or the Board of
Directors decides that more time is necessary for its determination, all
deferred amounts will remain held until the determination is made. In that
case, the Company may elect to extend the Special Project Incentive and
afford all participants an opportunity to continue their investment, or
return to the normal MIP plan provisions for the year FY07. If the Company
does not extend the Special Project Incentive, all participants will return
to the normal MIP plan provisions for the year FY07.
Acceleration Provision
If the C5 Special Project is successfully completed prior to FY06, in addition
to the Special Project Incentive payout based on investments made to date,
participants will receive an additional partial year award amount calculated as
follows: (Salary x NIP x 1.5 x 2.0) divided by 2.
Eligibility
To be eligible for the Special Project Incentive payout the participant must be
an active employee of, a retiree (i.e., age 55 or older with 5 or more years of
Company tenure) of, or have qualified for long-term disability status from,
Darden Restaurants, Inc. on the date of the project is declared to be
successfully completed. Participants have no vested rights to payments until the
Board of Directors declares the project successfully completed.
Participants will continue to be eligible for the C5 Special Project Incentive
bonus until the earliest of the following occurs:
>> The C5 bonus is paid to the participant; or
>> The C5 project is discontinued or terminated by the Company or the
Board of Directors for any reason; or
>> The end of FY06, or such later date as the project may be extended
pursuant to paragraph 7 above.
If a participant undertakes work on another Special Project, other than C5, and
is therefore simultaneously involved in two or more Special Project assignments,
the participant's opportunity under this program will be not reduced.
Special Project Incentive Program
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A participant who directly or indirectly, becomes an employee, officer,
director, manager, consultant or who otherwise becomes affiliated with or
provides services to any employer, entity, enterprise or company which directly
competes with the Company's restaurant business will forfeit the Special Project
Incentive.
Termination of Employment
If the participant is involuntarily terminated for the convenience of the
Company and for reasons other than cause, the Special Project Incentive
Investments will be refunded in full without interest.
FlexComp Awards
Earnable compensation defines the wages used for calculating the participant's
FlexComp awards. If the C5 Special Project Incentive is paid to the participant,
earnable compensation for the Special Project Incentive will be limited to the
amount of normal MIP bonus earned and invested. The FlexComp Award will be
calculated and paid in the fiscal year in which the incentive is ultimately
paid.
Restricted Stock Matching Awards
Each year, participants will be eligible for a Restricted Stock Matching Award
at their normal restricted stock percentage level, based on any MIP award
actually paid to the participant (calculated MIP award minus investment). If the
C5 Special Project Incentive is paid to the participant, the participant will be
eligible to receive a Restricted Stock Matching Award, based on their normal
restricted stock percentage level. The restricted stock matching provisions of
the MIP for the fiscal year in which such bonus is paid, including the personal
deposit share requirement, will govern this award. The Company reserves the
right to substitute cash, deferred compensation, stock equivalents, or other
form of compensation of comparable value for the Restricted Stock Matching
Awards.
Ownership of Concept
All ownership of the concept, including designs, trademarks and all intellectual
or other property, shall be vested in and owned by the company at all times,
whether or not the concept is determined to be successful or otherwise.
Additional Conditions
The terms and conditions stated in this document do not constitute a contract of
employment nor a guarantee of future benefits except as specifically stated. In
addition, this Special Project Incentive - C5 is subject to the terms,
conditions, and limitations of the MIP and is not intended to supercede such
terms, conditions, and limitations. Without limiting the generality of the
foregoing, no payment will be made under the terms of this Special Project
Incentive - C5 unless the requirements of Part (III)(C) of the MIP are met, as
certified by the Committee, and any such payment will be limited in accordance
with the terms of Part (III)(C) of the MIP. Any dispute or disagreement
concerning this agreement shall be governed by and construed in accordance with
the laws of the State of Florida, without regard to the conflicts of laws
provisions thereof, and will be subject to binding arbitration in Orlando,
Florida in accordance with the rules and regulations of the American Arbitration
Association.
/s/ Blaine Sweatt 8/16/02 /s/ Dan Lyons 8/26/02
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Blaine Sweatt Date Dan Lyons Date
President, New Business Division Senior Vice President, Human Resources
/s/ Jon Reiker 8/16/02
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Jon Reiker Date
Senior Vice President,
Compensation & Benefits