EXHIBIT 10(h)
MANAGEMENT INCENTIVE PLAN
EXHIBIT 10(h)
DARDEN RESTAURANTS, INC.
MANAGEMENT INCENTIVE PLAN
(as amended to June 21, 1999)
PART I
GENERAL PROVISIONS
A. OBJECTIVE OF THE PLAN
It is the intent of Darden Restaurants, Inc. (the "Company") to provide
financial rewards to key executives in recognition of individual
contributions to the success of the Company under the provisions of this
Management Incentive Plan (the "Plan").
Participant awards shall be based on the comparative impact of the position
to the overall corporate results as measured by the position level, salary
of the Participant, and the degree to which the individual is able to
affect division/subsidiary, group and corporate results.
B. ELIGIBILITY
Any active key management employee of the Company or any of its
subsidiaries, including such members of the Board and the Chairman as are
actively employed by the Company or its subsidiaries, shall be eligible to
participate in the Plan. Eligibility shall not carry any rights to
participation nor to any fixed awards under the Plan.
Employees on a commission basis, those who are members of any other company
incentive compensation plan, except the Stock Option and Long-Term
Incentive Plans of the Company, and persons acting in a consulting capacity
shall not be eligible.
C. PARTICIPATION
As early as possible in each fiscal year (the "Plan Year"), management
shall recommend from those eligible a list of proposed Participants in the
Plan, and the Compensation Committee of the Board of Directors (the
"Committee") thereupon shall determine and cause to be notified those who
have been selected as Participants for the current Plan Year. Participants
shall be those persons holding positions which most significantly affect
operating results and provide the greatest opportunity to contribute to
current earnings and the future success of the Company. During the year,
other Participants may be added because of promotion or for other reasons
warranting their inclusion, or Participants may be excluded from active
participation because of demotion or other reasons warranting their
exclusion.
PART II
BASE CASH AWARDS
The size of a Participant's base cash incentive award ("Base Cash Award")
under this Plan shall be preliminarily determined by the following formula:
(Eligible Base Salary Earnings) x (Target Incentive Percent) x
(Individual Performance Rating) x (Corporate/Unit Composite Rating) =
(Base Cash Award)
A. ELIGIBLE BASE SALARY EARNINGS
The Eligible Base Salary Earnings is the total amount of regular base pay
actually paid to a Plan Participant during the portion of the year the
Participant is covered by the Plan.
B. TARGET INCENTIVE PERCENT
The Target Incentive Percent shall be determined by the Senior Vice
President-Human Resources using the following guidelines:
The Target Incentive Percent will be determined based on job level at the
time participation in the Plan commences. Persons transferred to a higher
or lower job level during a Plan Year will have their Target Incentive
Percent revised as of the effective date of the change in position.
C. INDIVIDUAL PERFORMANCE RATING
Individual performance for the Plan Year will be determined as follows:
1. At the beginning of each Plan Year, each Participant will develop
written objectives for the year which are directly related to specific
job accountabilities.
2. The individual objectives will be reviewed with each Participant's
supervisor for acceptance and will become the primary basis for
establishing the Individual Performance Rating for the year. For the
Chief Executive Officer, such objectives will be reviewed and approved
by the Committee.
3. Near the end of each Plan Year, each Participant will submit to his or
her supervisor, a Summary of Accomplishments related to individual
performance during the year. Based on this information and other
information related to individual performance or job accountabilities,
the supervisor will assign an individual rating from the following
range:
0.00 - .55 Unsatisfactory Performance
.60 - .85 Needs Improvement
.90 - 1.15 Successful Performance
1.20 - 1.45 Highly Successful Performance
- 1.50 Exceptional Performance
D. UNIT/CORPORATE PERFORMANCE RATING
1. Unit Rating
Near the end of the Plan Year, each Participant will submit to his or
her supervisor, a Unit Achievement Summary, which outlines the
performance of his or her respective unit during the Plan Year and
relates directly to annual program, the Company's long-range plans and
other key operating objectives. This Unit Achievement Summary will be
used, along with other information related to unit performance, in
establishing a unit rating with a range of .0 (Unsatisfactory) to 2.0
(Outstanding and Exceptional Performance) in the same manner or
ratings for Individual Performance Ratings.
2. Corporate Rating
At the beginning of each Plan Year, the Committee shall establish a
rating schedule based upon the Company's growth in Earnings Per Share
(Pre-LIFO) and the Company's Return on Capital for the Plan Year.
Based on this schedule, the Committee will, at the end of each Plan
Year, establish a corporate rating for the year. Individual and unit
ratings will be recommended by the Participant's manager and reviewed
by one additional level of management. All individual and unit ratings
for Plan Participants will be submitted to the Company's Incentive
Committee for review and approval.
3. Special Projects
The Committee, pursuant to the provision of this Plan, may also
designate a Participant as a member of a Special Project and the
minimum and maximum ratings for such a Special Project. If so
designated, such a Participant may be allowed or required to defer up
to 100% of each Plan Year's incentive award during the term of the
Special Project, such deferred percentage being within a range set by
management. This deferred amount shall be increased or decreased at
the completion or termination of the project by a final Special
Project multiplier of between 0.0 and 4.0 as determined by the
Committee.
4. Unit/Corporate Weightings
The ratings established in 1., 2. and 3. above shall be weighted based
on job level according to the following schedule:
Corporate Unit
Portion Portion
Senior Corporate Officers 100% 0%
Vice Chairman 100% 0%
Restaurant Concept Presidents 20% 80%
Restaurant Senior Officer 10% 90%
Restaurant Concept Officers 0% 100%
Corporate Staff Officers 100% 0%
Special Projects 0% (to*) 100%
* Percentage to be set by Committee action for each project.
E. REVIEW AND APPROVAL OF RATINGS
All individual and unit ratings will be determined by the Participant's
manager and reviewed and approved by one additional level of management. In
addition, the Incentive Committee shall review and approve all ratings
prior to their submissions to the Committee.
The final ratings and incentive award amounts shall be reviewed and
approved by the Committee which shall have full authority and discretion to
set all final Base Cash Awards.
PART III
STOCK MATCHING PROVISIONS
A. ALTERNATIVES FOR PARTICIPATION IN STOCK MATCHING
Subject to the provisions set forth below (the "Stock Matching
Provisions"), Participants under age 55 are eligible to receive additional
incentive compensation in the form of common stock of the Company ("Common
Stock") contributed by the Company ("Stock Matching") under the terms of
the Company's Stock Option and Long-Term Incentive Plans, and Participants
age 55 or over may elect to receive all or a portion of their additional
incentive compensation in the form of Stock Matching and/or an "Additional
Cash Award."
1. Participants under age 55 as of the last day of the Plan Year are
eligible to participate in the Stock Matching Provisions of the Plan
by depositing shares of Common Stock with a Fair Market Value equal to
either 15% or 25% of their Base Cash Award, depending on job level.
2. Participants age 55 or over as of the last day of the Plan Year may
elect full, partial, or no participation in the Stock Matching
Provisions according to the following schedule:
25% Match 15% Match
------------------------------------- ------------------------------------
Fair Market Value of Fair Market Value of
Level of Stock Shares to be Shares to be
Matching Deposited as % of Additional Deposited as % of Additional
Participation Base Cash Award Cash Award Base Cash Award Cash Award
------------- -------------------- ---------- -------------------- ----------
Full Participation 25% 0% 15% 0%
Partial 15% 6% 9% 3%
Participation 10% 9% 6% 5%
5% 12% 3% 7%
No Participation
in Stock Matching 0% 15% 0% 9%
3. On or before the December 31 immediately preceding the end of the Plan
Year, Participants must notify the Company in writing of the
applicable participation alternatives elected under the Stock Matching
Provisions. Elections regarding Stock Matching participation are
effective for the current Plan Year.
B. PARTICIPATION IN STOCK MATCHING
1. The Company shall notify each Participant who participates in the
Stock Matching Provisions of the maximum number of shares of Common
Stock which they are permitted to deposit under the Plan, and
Participants may choose to deposit all or any portion of the number of
shares so permitted to be deposited (the "Original Deposit").
Participants can make their Original Deposit at any time after they
receive their Base Cash Award, but Participants must deposit such
shares with the Company (the "Agent") no later than the December 31
immediately following the end of the Plan Year.
2. Any Participant who dies, retires on or after age 65, elects early
retirement after age 55, or is permanently disabled and unable to work
as determined by the Committee, either during a Plan Year or prior to
the final date for depositing the Original Deposit shares for such
Plan Year (December 31), shall not be eligible to participate in the
Stock Matching Provisions, but instead, such Participant, or the
Participant's legal representative, shall receive an Additional Cash
Award for the Plan Year in an amount equal to fifteen percent (15%) or
twenty-five percent (25%) of any Base Cash Award paid or payable for
that Plan Year.
C. DISTRIBUTIONS AND WITHDRAWALS
1. Restricted Stock
As soon as practical following the Original Deposit by a Participant,
the Company shall, under the terms of the Company's Stock Option and
Long Term Incentive Plans, match these shares and either deposit with
the Agent for the Participant's account one share of Common Stock for
each share of the Original Deposit or evidence issuance of one share
of Common Stock for each share of the Original Deposit in book entry
form as reflected on the master stockholder records of the Company.
The Company matching shares (the "Restricted Stock") shall vest and be
delivered to the Participant in accordance with the terms of the plan
under which they are issued and as determined by the Committee.
2. Temporary Withdrawal for Option Exercise
A Participant may temporarily withdraw all or a portion of the shares
on deposit for all Plan Years (other than Restricted Stock) in order
to exercise Company stock options, subject to an equal number of
shares of Common Stock being promptly redeposited with the Agent after
such exercise.
D. DEFINITION OF PLAN YEAR
For stock matching purposes, the Plan Year shall be defined as the
Company's fiscal year.
PART IV
DEFERRAL OF PAYMENT OF CASH INCENTIVE AWARDS
Subject to rules adopted by the Committee, a Participant may elect to defer all
or a portion of a Base Cash Award and any additional cash award received
(collectively "Cash Award") during each calendar year in accordance with the
terms and conditions of the Company's FlexComp Plan.
In order to defer all or a portion of the Cash Award for a particular calendar
year, a Participant must make a valid election by executing and filing a
Deferral Election Form with the Company on or before the December 31 immediately
preceding the end of the Plan Year.
PART V
PLAN ADMINISTRATION
This Plan shall be effective in each fiscal year of the Company and shall be
administered by the Committee and the Committee shall have full authority to
interpret the Plan. Such interpretations of the Committee shall be final and
binding on all parties, including the Participants, survivors of the
Participant, and the Company.
The Committee shall have the authority to delegate the duties and
responsibilities of administering the Plan, maintaining records, issuing such
rules and regulations as it deems appropriate, and making the payments hereunder
to such employees or agents of the Company as it deems proper.
The Board, or if specifically delegated, its delegate, may amend, modify or
terminate the Plan at any time, provided, however, that no such amendment,
modification or termination shall adversely affect any accrued benefit under the
Plan to which a Participant, or the Participant's beneficiary, is entitled prior
to the date of such amendment or termination, unless the Participant, or the
Participant's beneficiary, becomes entitled to an amount equal to the value of
such benefit under another plan, program or practice adopted by the Company.
Notwithstanding the above, no amendment, modification, or termination which
would affect benefits accrued under this Plan prior to such amendment,
modification or termination may occur after a Change of Control without the
written consent of a majority of the Participants determined as of the day
before such Change of Control.
A Change of Control shall mean the occurrence of any of the following events:
(a) any person (including a group as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) becoming, directly or indirectly, the
beneficial owner of twenty percent (20%) or more of the shares of
stock of the Company entitled to vote for the election of directors;
(b) as a result of or in connection with any cash tender offer, exchange
offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who
were directors of the Company just prior to such event shall cease to
constitute a majority of the Company's Board of Directors; or
(c) the stockholders of the Company approve an agreement providing for a
transaction in which the Company will cease to be an independent
publicly-owned corporation or a sale or other disposition of all or
substantially all of the assets of the Company occurs.
In the event the Company shall effect one or more changes, split-ups or
combinations of shares of Common Stock or one or more other like transactions,
the Board or the Committee may make such adjustment, upward or downward, in the
number of shares of Common Stock to be deposited by the Participants as shall
appropriately reflect the effect of such transactions.
In the event the Company shall distribute shares of a subsidiary of the Company
to its stockholders in a spin-off transaction, the shares of stock of the
subsidiary distributed to Participants which are attributable to Restricted
Stock shall be vested and delivered to the Participants subject to any specific
instructions of the Committee.
Neither any benefit payable hereunder nor the right to receive any future
benefit under the Plan may be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process, and
if any attempt is made to do so, or a person eligible for any benefits becomes
bankrupt, the interest under the Plan of the person affected may be terminated
by the Committee which, in its sole discretion, may cause the same to be held or
applied for the benefit of one or more of the dependents of such person or make
any other disposition of such benefits that it deems appropriate.
All questions pertaining to the construction, validity and effect of the Plan
shall be determined in accordance with the laws of the United States and the
laws of the State of Florida.
Effective as of June 21, 1999.