Red Lobster 2010 Annual Report Download - page 65

made in an amount equal to 50 percent of the first 5 percent of employee
compensation contributed, resulting in a maximum annual company contribution
of 2.5 percent of employee compensation. For fiscal 2010 and 2009, we
incurred expense under the RARE Plan of $0.0 million.
Effective January 1, 2000, RARE implemented the Supplemental Deferred
Compensation Plan (Supplemental Plan), a non-qualified plan which allowed
officers and highly compensated employees to defer receipt of a portion of
their compensation and contribute such amounts to one or more investment
funds. The maximum aggregate amount deferred under the Supplemental
Plan and the RARE Plan could not exceed the lesser of 20 per cent of annual
compensation or $50,000. Quarterly matching contributions were made in an
amount equal to 50 percent of the first 5 percent of employee compensation
contributed, with a maximum annual company contribution of the lesser of
2.5 percent of employee compensation or $5,750. For fiscal 2010 and 2009,
we incurred expense under the Supplemental Plan of $0.0 million. Upon
the acquisition of RARE, all unvested Company contributions to both the
RARE฀Plan฀and฀the฀Supplemental฀Plan฀were฀immediately฀vested;฀however,฀
contributions subsequent to the date of acquisition vest according to the
plans’ provisions. Company contributions vest at a rate of 20 percent each
year beginning after the employee’s first year of service and are made in the
form of cash. Participants’ accounts are comprised of their contributions, the
company’s matching contributions and each participant’s share of earnings
or losses in the Supplemental Plan.
NOTE 18
STOCK-BASED COMPENSATION
We maintain two active stock option and stock grant plans under which new
awards may still be issued, known as the Darden Restaurants, Inc. 2002 Stock
Incentive Plan (2002 Plan) and the RARE Hospitality International, Inc. Amended
and Restated 2002 Long-Term Incentive Plan (RARE Plan). We also have three
other stock option and stock grant plans under which we no longer can grant
new awards, although awards outstanding under the plans may still vest and
be exercised in accordance with their terms: the Stock Plan for Directors
(Director Stock Plan), the Stock Option and Long-Term Incentive Plan of 1995
(1995 Plan) and the Restaurant Management and Employee Stock Plan of 2000
(2000 Plan). All of the plans are administered by the Compensation Committee
of the Board of Directors. The 2002 Plan provides for the issuance of up to
9.55 million common shares in connection with the granting of non-qualified
stock options, incentive stock options, stock appreciation rights, restricted
stock, restricted stock units (RSUs), stock awards and other stock-based
awards to key employees and non-employee directors. The RARE Plan provides
for the issuance of up to 3.9 million common shares in connection with the
granting of non-qualified stock options, incentive stock options and restricted
stock to employees. Awards under the RARE Plan are only permitted to be
granted to employees who were employed by RARE as of the date of acquisition
and continued their employment with the Company. The Director Stock Plan
provided for the issuance of up to 0.375 million common shares out of our
treasury in connection with the granting of non-qualified stock options, restricted
stock and RSUs to non-employee directors. No new awards could be granted
under the Director Stock Plan after September 30, 2000. The Director
Compensation Plan provided for the issuance of 0.1 million common shares
out of our treasury to non-employee directors of the Board. No new awards
may be granted under the Director Compensation Plan after September 30,
2005. The 1995 Plan provided for the issuance of up to 33.3 million common
shares in connection with the granting of non-qualified stock options, restricted
stock or RSUs to key employees. The 2000 Plan provided for the issuance of
up to 5.4 million shares of common stock out of our treasury as non-qualified
stock options, restricted stock or RSUs. Under all of these plans, stock options
are granted at a price equal to the fair value of the shares at the date of grant
for terms not exceeding ten years and have various vesting periods at the
discretion of the Compensation Committee. Outstanding options generally
vest over one to four years. Restricted stock and RSUs granted under the
1995 Plan, the 2000 Plan and the 2002 Plan generally vest over periods
ranging from three to five years and no sooner than one year from the date
of grant. The restricted period for certain grants may be accelerated based
on performance goals established by the Compensation Committee.
On June 20, 2008, the Board of Directors adopted amendments to the 2002
Plan, which were approved by our shareholders at the September 2008 annual
meeting of shareholders. The amendments, among other things, increased
the maximum number of shares authorized for issuance under the 2002 Plan
from 9.55 million to 12.70 million. On June 19, 2008, the Compensation
Committee of the Board of Directors approved amendments to the RARE Plan,
to provide a “fungible share pool” approach to manage authorized shares under
the RARE Plan. On June 16, 2006, the Board of Directors adopted amendments
to the 2002 Plan, which were approved by our shareholders at the September
2006 annual meeting of shareholders. The amendments, among other things,
implemented a “fungible share pool” approach to manage authorized shares
in order to improve the flexibility of awards going forward, and eliminated the
limits on the number of restricted stock and RSU awards and the number of
awards to non-employee directors, and provided that, in determining the
number of shares available for grant, a formula will be applied such that all
future awards other than stock options and stock appreciation rights will be
counted as double the number of shares covered by such award.
On December 15, 2005, the Board of Directors approved the Director
Compensation Program, effective as of October 1, 2005, for Non-Employee
Directors. The Director Compensation Program provides for payments to
non-employee directors of: (a) an annual retainer and meeting fees for regular
or฀special฀Board฀meetings฀and฀committee฀meetings;฀(b)฀an฀initial฀award฀of฀
non-qualified stock options to purchase 12.5 thousand shares of common stock
upon฀becoming฀a฀director฀of฀the฀Company฀for฀the฀first฀time;฀(c)฀an฀additional฀
award of non-qualified stock options to purchase 3.0 thousand shares of
common฀stock฀annually฀upon฀election฀or฀re-election฀to฀the฀Board;฀and฀(d)฀an฀
annual award of common stock with a fair market value of $0.1 million on the
date of grant. Directors may elect to have their cash compensation paid in any
combination of current or deferred cash, common stock or salary replacement
options. Deferred cash compensation may be invested on a tax-deferred
basis in the same manner as deferrals under our non-qualified deferred
compensation plan. Prior to the date of grant, directors may elect to have
their annual stock award paid in the form of common stock or cash, or a
combination thereof, or deferred. To the extent directors elect to receive cash
or cash settled awards, the value of the awards are carried as a liability on
our consolidated balance sheet at fair value until such time as it is settled.
All stock options and other stock or stock-based awards that are part of the
compensation paid or deferred pursuant to the Director Compensation
Program are awarded under the 2002 Plan.
DARDEN RESTAURANTS, INC. | 2010 ANNUAL REPORT 63
Notes to Consolidated Financial Statements
Darden