Red Lobster 2015 Annual Report Download - page 60

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DARDEN
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, free cash flow and earnings metrics. Darden stock units granted under
the 2002 Plan generally vest over a five-year period, with no performance
vesting feature.
The Director Compensation Program provides for payments to
non-employee directors of: (a) an annual retainer; (b) an additional annual
retainer for the committee chairs and members; and (c) an annual equity
grant upon election or re-election to the Board, which will be paid 75 percent
in the form of RSUs and 25 percent in the form of stock options. The annual
cash retainers are due and paid quarterly, unless the director elects to defer
the payment. Directors may elect to receive, in lieu of their cash compensation,
RSUs to be of equal value to the foregone cash fees.
Stock-based compensation expense included in continuing operations
was as follows:
Fiscal Year
(in millions) 2015 2014 2013
Stock options $20.9 $19.3 $16.3
Restricted stock/restricted stock units 2.0 0.9 2.1
Darden stock units 13.3 12.3 13.6
Performance stock units (1) 14.5 2.5 4.7
Employee stock purchase plan 1.3 1.8 1.8
Director compensation program/other 1.7 1.9 1.5
$53.7 $38.7 $40.0
(1) The increase for fiscal 2015 is primarily attributable to the workforce reduction efforts
(see Note 7 – Workforce Reduction) and the impact of improved financial performance.