Red Lobster 2014 Annual Report Download - page 52

Notes to Consolidated Financial Statements
Darden
50 Darden Restaurants, Inc.
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 four 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 Director Compensation 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 25.1 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
including performance stock units and Darden stock units 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. No new awards could 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 10 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. Performance Stock Units granted under
the 2002 Plan generally vest over a three-year period, and vested amounts
may range from 0.0 to 150.0 percent of targeted amounts depending on the
achievement of certain sales and diluted net earnings per share performance
measures. Darden stock units granted under the 2002 Plan generally vest
over a five-year period, with no performance vesting feature.
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
special Board meetings and committee meetings; (b) an additional annual
retainer for the Lead Director and committee chairs; and (c) an annual award
of common stock with a fair value of $0.1 million on the date of grant upon
election or re-election to the Board. 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.
Stock-based compensation expense included in continuing operations
was as follows:
Fiscal Year
(in millions) 2014 2013 2012
Stock options $19.3 $16.3 $16.6
Restricted stock/restricted stock units 0.9 2.1 3.8
Darden stock units 12.3 13.6 11.9
Performance stock units 2.5 4.7 11.3
Employee stock purchase plan 1.8 1.8 1.8
Director compensation program/other 1.9 1.5 1.3
$38.7 $40.0 $46.7