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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant ý |
Filed by a Party other than the Registrant o |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12
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Buffalo Wild Wings, Inc. |
(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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BUFFALO WILD WINGS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
May 7, 2015
TO THE SHAREHOLDERS OF BUFFALO WILD WINGS, INC.:
You
are cordially invited to attend our 2015 Annual Meeting of Shareholders, to be held at the Doubletree, Minneapolis Park Place, 1500 Park Place Boulevard, Minneapolis, MN 55416, at
9:00 a.m. Central Daylight Time on Thursday, May 7, 2015, for the following purposes:
- 1.
- To
elect members of the Board of Directors, thereby setting the number of members of the Board of Directors at eight.
- 2.
- To
advise in a non-binding vote to approve the compensation of our executive officers as disclosed in the attached proxy statement, or a "say- on-pay" vote.
- 3.
- To
ratify the appointment of our independent registered public accounting firm for fiscal year ending December 27, 2015.
- 4.
- To
take action on any other business that may properly come before the meeting or any adjournment thereof.
Accompanying
this Notice of Annual Meeting is a Proxy Statement, form of Proxy, and our Annual Report on Form 10-K for the year ended December 28, 2014.
Only
shareholders of record as shown on our books at the close of business on March 9, 2015 will be entitled to vote at our 2015 Annual Meeting or any adjournment thereof. Each
shareholder is entitled to one vote per share on all matters to be voted on at the meeting.
We
encourage you to attend the meeting, but whether or not you plan to attend the 2015 Annual Meeting, please submit your completed proxy via phone, mail or internet as soon as possible.
Proxies are revocable and will not affect your right to vote in person in the event you revoke the proxy and attend the meeting. The prompt return of proxies will help us avoid the unnecessary expense
of further requests for proxies.
Important Notice Regarding the Availability of Proxy Materials for the Meeting of Shareholders
to be held on May 7, 2015:
The Notice, Proxy Statement, Form of Proxy and Annual Report on Form 10-K are available at
http://www.cstproxy.com/buffalowildwings/2015
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BY ORDER OF THE BOARD OF DIRECTORS, |
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Dated: |
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March 27, 2015
Minneapolis, Minnesota |
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Sally J. Smith President and Chief Executive Officer |
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Table of Contents
BUFFALO WILD WINGS, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
to be held
May 7, 2015
Our Board of Directors is soliciting proxies from our shareholders to vote their shares of Common Stock at the Buffalo Wild Wings, Inc. 2015 Annual Meeting
of Shareholders to be held on Thursday, May 7, 2015, at the location and for the purposes set forth in the Notice of Annual Meeting, and at any adjournment thereof. Buffalo Wild
Wings, Inc. is referred to in this document as "we," "us," "our," and the "company."
The
cost of soliciting proxies, including the preparation, assembly, and mailing of the proxies and soliciting material, as well as the cost of forwarding such material to the beneficial
owners of stock, will be borne by us. Our directors, officers, and regular Team Members may, without compensation other than their regular remuneration, solicit proxies personally or by telephone.
Any
shareholder giving a proxy may revoke it any time prior to its use at the 2015 Annual Meeting by giving written notice of such revocation to the Secretary or any one of our other
officers or by filing a later dated written proxy with one of our officers. Personal attendance at the 2015 Annual Meeting is not, by itself, sufficient to revoke a proxy unless written notice of the
revocation or a later dated proxy is delivered to an officer before the revoked or superseded proxy is used at the 2015 Annual Meeting. Proxies will be voted as directed therein. Proxies which are
signed by shareholders, but which lack specific instruction with respect to any proposal, will be voted in favor of the number and slate of directors proposed by the Board of Directors and listed
herein, for the say-on-pay approval, and for the ratification of our independent registered accounting firm.
The
presence at the Annual Meeting in person or by proxy of the holders of a majority of our outstanding shares of Common Stock entitled to vote shall constitute a quorum for the
transaction of business. If a broker returns a "non-vote" proxy, indicating a lack of voting instructions by the beneficial holder of the shares and a lack of discretionary authority on the part of
the broker to vote on a particular matter, then the shares covered by such non-vote proxy shall be deemed present at the meeting for purposes of determining a quorum but shall not be deemed to be
represented at the meeting for purposes of calculating the vote required for approval of such matter. If a shareholder abstains from voting as to any matter, then the shares held by such shareholder
shall be deemed present at the meeting for purposes of determining a quorum and for purposes of calculating the vote with respect to such matter, but shall otherwise not be deemed to have been voted
on such matter. As a result, an abstention as to any proposal will have no effect on the outcome of any proposal, except it will have the same effect as a vote against the ratification of our
independent registered accounting firm.
The
mailing address of the principal executive office of Buffalo Wild Wings is 5500 Wayzata Boulevard, Suite 1600, Minneapolis, Minnesota 55416. We expect that this Proxy
Statement, the related Form of Proxy, and Notice of Annual Meeting will first be mailed to shareholders on or about March 27, 2015.
Important Notice Regarding the Availability of Proxy Materials
for the Meeting of Shareholders to be Held on May 7, 2015:
The Notice, Proxy Statement, Form of Proxy and Annual Report on Form 10-K are available at
http://www.cstproxy.com/buffalowildwings/2015
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OUTSTANDING SHARES AND VOTING RIGHTS
Our Board of Directors has fixed March 9, 2015 as the record date for determining shareholders entitled to vote at the 2015
Annual Meeting. Persons who were not shareholders on such date will not be allowed to vote. At the close of business on the record date, there were 18,942,193 shares of our Common Stock issued and
outstanding. The Common Stock is our only outstanding class of capital stock. Each share of Common Stock is entitled to one vote on each matter to be voted upon at the 2015 Annual Meeting. Holders of
Common Stock
are not entitled to cumulative voting rights. All references to shares and stock prices in this proxy statement have been adjusted as applicable to reflect our 2- for-1 stock split on June 15,
2007.
Under
applicable Minnesota law, the voting requirement for each proposal included in this proxy statement is as follows:
- (1)
- The
election of the nominees to the Board of Directors requires the affirmative vote of a plurality of the shares represented in person or by proxy at the
Annual Meeting with authority to vote on such matter;
- (2)
- The
say-on-pay proposal will be deemed to have received advisory approval if it receives more FOR votes than AGAINST votes from the shares represented in
person or by proxy at the Annual Meeting with authority to vote on such matter; and
- (3)
- The
ratification of the auditors requires the affirmative vote of a majority of the shares represented in person or by proxy at the Annual Meeting with
authority to vote on such matter, provided that such majority must be greater than 25% of our outstanding shares.
If
a shareholder indicates on their proxy that they wish to abstain from voting, including brokers holding their customers shares who cause abstentions to be recorded, these shares are
considered present and entitled to vote at the annual meeting and those shares will count toward determining whether or not a quorum is present at the meeting. However, these shares will not be taken
into account in determining the outcome of any of the proposals. A shareholder (including a broker) who does not give authority to vote, or withholds authority to vote, on a certain proposal will not
be considered present and entitled to vote on that proposal.
If
a shareholder who holds their shares through a broker does not give instructions to the broker as to how to vote the shares, the broker has authority under New York Stock Exchange
rules to vote those shares for or against "routine" proposals, such as the ratification of the auditors. Brokers cannot vote on their customers' behalf on "non-routine" proposals such as the election
of directors or approval of the compensation of our named executive officers. These rules apply to brokers holding our shares even though our common stock is traded on the NASDAQ Global Market. If a
broker votes shares that are unvoted by its customers for or against a "routine" proposal, these shares are counted for the purpose of establishing a quorum and also will be counted for the purpose of
determining the outcome of "routine" proposals. If a broker does not receive voting instructions as to a non-routine proposal, or chooses to leave shares unvoted on a routine proposal, a "broker
non-vote" occurs and those shares will be counted for the purpose of establishing a quorum, but not for determining the outcome of those proposals. Shares that are subject to broker non-votes are
considered not entitled to vote on the particular proposal, and effectively reduce the number of shares needed to approve that proposal.
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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table provides information as of the record date concerning the beneficial ownership of our Common Stock by
(i) the named executive officers in the Summary Compensation Table, (ii) each of our directors, (iii) all current directors and executive officers as a group, and (iv) each
shareholder who we know beneficially owns more than 5% of our outstanding Common Stock. Except as otherwise indicated, the persons named in the table have sole voting and investment power with respect
to all shares of Common Stock owned by them.
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Name or Identity of Group
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Number of Shares
Beneficially Owned(1) |
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Percent
of Class(1) |
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Sally J. Smith(2) |
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108,492 |
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* |
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James M. Schmidt(3) |
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54,314 |
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* |
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Mary J. Twinem(4) |
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51,344 |
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* |
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Judith A. Shoulak(5) |
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31,068 |
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* |
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Kathleen M. Benning(6) |
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28,233 |
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* |
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Dale M. Applequist |
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9,425 |
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* |
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Warren E. Mack |
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14,201 |
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* |
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J. Oliver Maggard |
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3,639 |
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* |
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Michael P. Johnson |
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14,303 |
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* |
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James M. Damian |
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2,989 |
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* |
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Jerry R. Rose |
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3,046 |
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* |
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Cynthia L. Davis |
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All Current Executive Officers and Directors as a Group (15 Individuals)(7) |
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348,152 |
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1.8 |
% |
BlackRock, Inc.(8) |
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1,615,346 |
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8.5 |
% |
40 East 52nd Street |
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New York, NY 10022 |
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FMR LLC(9) |
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2,730,285 |
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14.4 |
% |
245 Summer Street |
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Boston, MA 02210 |
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The Vanguard Group(10) |
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1,266,490 |
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6.7 |
% |
100 Vanguard Blvd. |
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Malvern, PA 19355 |
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- *
- Less
than 1% of the outstanding shares of Common Stock.
- (1)
- Under
the rules of the SEC, shares not actually outstanding are deemed to be beneficially owned by an individual if such individual has the right to acquire
the shares within 60 days. Pursuant to such SEC Rules, shares deemed beneficially owned by virtue of an individual's right to acquire them are also treated as outstanding when calculating the
percent of the class owned by such individual and when determining the percent owned by any group in which the individual is included. Percentages are based on 18,942,193 shares of our Common Stock
outstanding as of March 9, 2015.
- (2)
- Includes
37,635 shares which may be purchased by Ms. Smith upon exercise of currently exercisable options or options exercisable within
60 days of March 9, 2015. In addition, this total includes 11,234 shares issuable in settlement of restricted stock units that are scheduled to vest on March 12, 2015.
- (3)
- Includes
13,964 shares that may be purchased by Mr. Schmidt upon exercise of currently exercisable options or options exercisable within
60 days of March 9, 2015. Also includes 8,212 shares issuable in settlement of stock units credited to Mr. Schmidt's account under the company's Deferred Compensation Plan,
settlement of which may occur upon his separation from service. In addition, this total includes 2,808 shares issuable in settlement of restricted stock units that are scheduled to vest on
March 12, 2015.
- (4)
- Includes
11,492 shares that may be purchased by Ms. Twinem upon exercise of currently exercisable options or options exercisable within
60 days of March 9, 2015. Also includes 10,482 shares issuable in settlement of stock units credited to Ms. Twinem's account under the company's Deferred Compensation Plan,
settlement of which may occur upon her separation from service. In addition, this total includes 2,808 shares issuable in settlement of restricted stock units that are scheduled to vest on
March 12, 2015.
- (5)
- Includes
15,569 shares that may be purchased by Ms. Shoulak upon exercise of currently exercisable options or options exercisable within
60 days of March 9, 2015.
- (6)
- Includes
13,199 shares that may be purchased by Ms. Benning upon exercise of currently exercisable options or options exercisable within
60 days of March 9, 2015.
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- (7)
- Includes
100,789 shares that may be purchased by current executive officers and directors upon exercise of currently exercisable options or options
exercisable within 60 days of March 9, 2015.
- (8)
- Information
is based on a Schedule 13G/A filed with the SEC by BlackRock, Inc. ("BlackRock") on January 22, 2015. BlackRock is the
parent holding company of investment adviser subsidiaries that hold shares of our common stock: BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, , BlackRock Asset Management Canada
Limited, BlackRock Asset Management Ireland Limited, BlackRock Fund Advisors, BlackRock Fund Management Ireland Limited, BlackRock Institutional Trust Company, N.A., BlackRock International Limited,
BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd, and BlackRock Investment Management, LLC. BlackRock, Inc. reports having sole voting
with respect to 1,572,327 shares and sole dispositive power with respect to 1,615,346 shares.
- (9)
- Information
is based on a Schedule 13G/A filed with the SEC by FMR LLC on February 13, 2015. Fidelity Growth Company Fund reports
having sole voting power with respect to 1,025,500 shares. FMR LLC, through its control of Fidelity, has sole voting power with respect to 211,733 shares and sole dispositive power with respect
to 2,370,285 shares. Edward C. Johnson 3d, as chairman of FMR LLC, and Abigail P. Johnson each have sole dispositive power with respect to 2,370,285 shares. Neither FMR LLC nor Edward C.
Johnson has the power to vote or direct the voting of those shares. Edward C. Johnson 3d and FMR LLC, through its control of Pyramis Global Advisors Trust Company, each have sole voting and
dispositive power with respect to 28,325 shares. Fidelity carries out voting of the shares pursuant to written guidelines established by the Fidelity Funds' Boards of Trustees.
- (10)
- Information
is based on a Schedule 13G/A filed with the SEC by The Vanguard Group on February 10, 2015. In its capacity as investment
advisor, The Vanguard Group has sole voting power with respect to 25,530 shares, sole dispositive power with respect to 1,266,490 shares and shared dispositive power with respect to 25,530 shares.
CORPORATE GOVERNANCE
Our business affairs are conducted under the direction of the Board of Directors in accordance with the Minnesota Business Corporation
Act and our Articles of Incorporation and Bylaws. Members of the Board of Directors are informed of our business by discussing matters with management, reviewing materials provided to them, and
participating in meetings of the Board of Directors and its committees. The corporate governance practices that we follow are summarized below.
Independence
The Board has determined that a majority of its members are "independent directors" as defined by the listing standards of The Nasdaq
Stock Market, LLC ("NASDAQ"). The independent directors serving on the Board during fiscal year 2014 were Dale M. Applequist, James M. Damian, Cynthia L. Davis (joined the Board in November,
2014), Michael P. Johnson, Warren E. Mack, J. Oliver Maggard and Jerry R. Rose. In determining independence, the Board considered that Mr. Mack is an attorney with Fredrikson & Byron,
which provides legal services to us. It was determined that this relationship does not interfere with Mr. Mack's ability to exercise independent judgment in carrying out the responsibilities of
a director.
Code of Ethics & Business Conduct
The Board has approved a Code of Ethics & Business Conduct, which applies to all of our Team Members, directors, and officers,
and also a Code of Ethics ("Executive Code of Ethics"), which applies to our principal executive officer, principal financial officer, principal accounting officer, controller, executive and senior
vice presidents, and vice presidents. The Codes address such topics as protection and proper use of our assets, compliance with applicable laws and regulations, accuracy and preservation of records,
accounting and financial reporting, conflicts of interest, and insider trading. The Codes are available free of charge on our website at www.buffalowildwings.com and are available in print to any
shareholder who sends a request for a paper copy to Buffalo Wild Wings, Inc., Attn. Investor Relations, 5500 Wayzata Boulevard, Suite 1600, Minneapolis, Minnesota 55416. We intend to
include on our website any amendment to, or waiver from, a provision of our Executive Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting
officer, or controller and relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K.
Meeting Attendance
Board and Committee Meetings. During fiscal 2014, the Board held four meetings. Each director attended at least 75% of the
meetings of the Board and
the committees on which such director served.
Annual Meeting of Shareholders. Our policy is that all directors are expected to attend our annual meeting of shareholders. If a
director is unable
to attend an annual meeting, the director must send a written notice to our Secretary at least one week prior to the meeting. All of our directors attended our 2014 annual meeting of shareholders.
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Executive Sessions of the Board
An executive session of independent directors is generally held at the time of each regular Board meeting.
Board Leadership Structure
Our principles of corporate governance give the Board the authority to choose whether the roles of Chairman of the Board and Chief
Executive Officer are held by one person or two people. The principles also give the Board the authority to change this policy if it deems it best for the company at any time. Currently, two separate
people serve in the positions of Chief Executive Officer and Chairman of the Board of our company. We believe that our current leadership structure is appropriate for our company at this time.
Our
Chief Executive Officer and Chairman have an excellent relationship that has given the Chief Executive Officer the freedom to successfully manage the company under the strong and
insightful guidance of the Board. Our Board has seven independent members and one non-independent member, which is our Chief Executive Officer. We believe that the number of independent, experienced
directors that make up our Board, along with the independent oversight of the Board by the non-executive chairman, benefits our company and our shareholders. All our independent directors have
demonstrated leadership in other organizations and are familiar with Board processes.
Board's Role in Risk Oversight
While each of the committees of the Board evaluate risk in their respective areas of responsibility, our Governance Committee is
primarily responsible for overseeing the company's risk management processes on behalf of the full Board. We believe that employing a committee specifically focused on our company's risk profile is
beneficial, given the increased importance of monitoring risks in the current economic and business climate. We employ a risk management team that oversees day-to-day company risks as well as
enterprise and strategic risk management. The Governance Committee meets with the risk manager at every regular meeting to discuss the company's risk profile and hear a report on specific issues as
well as an enterprise risk assessment, and the risk manager is given the opportunity for an executive session with the Governance Committee. The Governance Committee reports to the full Board on the
most significant risk issues.
In
addition to the Governance Committee's role in enterprise risk management oversight, other committees also play a role in risk oversight. Our Compensation Committee is responsible for
the oversight of our talent and compensation risk. With respect to compensation-related risk, the Compensation Committee completes an annual review of the compensation plans for all Team Members in
order to determine whether any of the plans or policies are reasonably likely to have a material adverse effect on the company. To complete this review, we first considered all compensation policies
and practices for our Team Members, including the base salaries, annual/quarterly cash incentive and long-term equity incentive award plans of our executive officers, as well as the compensation plans
of our management-level Home Office Team Members, Field Leadership Team and Restaurant General Managers. This review was assisted by
our outside compensation consultant. As part of our review, we considered whether any of our compensation policies and practices varied significantly from the overall risk and reward structure of our
company and whether any of our compensation policies and practices incent individuals to take short-term risks that were inconsistent with our long-term goals. Upon completion of this review, our
Compensation Committee determined there were no risks arising from our company's compensation policies and practices that are reasonably likely to have a material adverse effect on our company.
Our
Audit Committee is responsible for the oversight of our internal control and financial reporting risk. Internal control and financial reporting risk relates to the reliability of our
financial reporting and compliance. Our Audit Committee receives regular updates from our legal department, which include updates on any risks arising from changes in government regulation to which we
are subject. Our Audit Committee and, when appropriate, the full Board provides input on data risk as the processes, procedures and internal controls we have established concerning our data privacy
and protection are integrally related to the internal controls we have established for financial reporting and compliance.
Our
Board is also responsible for the oversight of our competitive environment, brand damage and cyber security risk. Competitive environment risk is monitored by the full board through
the periodic review of our operating performance and strategic plan. Brand damage risk is the risk to our company's brand and reputation that may arise from a major incident or
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negative
comments in the media, including social media. Our board of directors receives periodic reports from management on potential incidents or media exposure that may cause damage to our brand and
the risks relating to such damage. The full board, and the Governance Committee in particular, regularly hear reports on management's work upgrading and maintaining its information technology and
systems to protect the company, to the greatest extent possible, against cyber risks and security breaches.
While
the Board and the Governance Committee oversee the company's risk management team, company management is ultimately responsible for day-to-day risk management activities. We
believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our Board leadership structure supports this approach.
Committees of the Board
Our Board of Directors has established the following committees: Audit Committee, Compensation Committee, Governance Committee,
Executive Committee, and Compliance Committee.
Audit Committee. The Audit Committee reviews, in consultation with our independent registered public accounting firm, our
financial statements,
accounting and other policies, accounting systems, internal audit reports, and the adequacy of internal controls for compliance with corporate policies and directives. The Audit Committee is
responsible for the engagement of our independent registered public accounting firm and reviews other matters relating to our relationship with our independent registered public accounting firm. The
Audit Committee also oversees the administration of our related party transactions policy, which is described in "Certain Relationships and Related Transactions" on page 40. The "Report of
Audit Committee" is included on page 41. The Audit Committee held eleven meetings during fiscal 2014.
The
current members of the Audit Committee are J. Oliver Maggard, Chair, James M. Damian, Cynthia L. Davis, and Jerry R. Rose. All members of the Audit Committee are "independent
directors" as defined by the listing standards of The Nasdaq Stock Market and meet the additional independence criteria for audit committee members set forth in the listing standards and SEC
Rule 10A-3. The Board has determined that J. Oliver Maggard and Jerry R. Rose are "audit committee financial experts" as defined by Item 407(d)(5) of Regulation S-K under the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We acknowledge that the designation of Mr. Maggard and Mr. Rose as audit
committee financial experts does not impose on Mr. Maggard or Mr. Rose any duties, obligations, or liability greater than the duties, obligations, and liability imposed on
Mr. Maggard or Mr. Rose as a member of the Audit Committee and the Board of Directors in the absence of such designation or identification.
Compensation Committee. The Compensation Committee develops and administers compensation policies and plans and is responsible
for producing the
"Compensation Committee Report," which is on page 30 of this Proxy Statement. The Compensation Committee designs and oversees our compensation programs for our Chief Executive Officer, Chief
Operating Officer, Executive Vice Presidents, and Senior Vice Presidents. Our independent directors are responsible for final approval of the Chief Executive Officer's compensation. The Compensation
Committee is vested with the same authority as the Board of Directors with respect to the granting of awards and the administration of our equity and non-equity plans. As part of its annual
performance review of the Chief Executive Officer, which is conducted in connection with recommending the Chief Executive Officer's compensation, the Compensation Committee may interview other
executive officers. In approving compensation for other executive officers, the Compensation Committee takes into account recommendations from the Chief Executive Officer, among other factors. The
Compensation Committee held six meetings during fiscal 2014.
The
current members of the Compensation Committee are Michael P. Johnson, Chair, Dale M. Applequist, J. Oliver Maggard, and James M. Damian. All members of the Compensation Committee are
"independent directors" as defined by the listing standards of NASDAQ; "non-employee directors" as defined by Rule 16b-3 of the Exchange Act; and "outside directors" as defined in
Section 162(m) of the Internal Revenue Code. All of the committee members also meet the additional independence criteria for compensation committee members set forth in the listing standards
and SEC Rule 10C-1 promulgated under the Exchange Act.
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In setting 2014 compensation, the Compensation Committee retained Frederic W. Cook & Co., Inc. ("Cook & Co.") as its
compensation consultant. Cook & Co. was retained by and reported directly to the Compensation Committee. The Compensation Committee consulted with Cook & Co. regarding the
company's compensation plans, policies, and annual programs, with Cook & Co. attending most of the Committee's meetings. Cook & Co. did not provide any other consulting
services to the company. We have concluded that the work of the compensation consultant in fiscal 2014 did not raise any conflict of interest.
Governance Committee. The Governance Committee, acting as a nominating committee, screens and recommends to the Board of
Directors candidates for
nomination. The Committee also recommends to the Board the members of various committees, addresses corporate governance matters and oversees enterprise risk management. The current members of the
Governance Committee are Dale M. Applequist, Chair, Cynthia L. Davis, Michael P. Johnson and Jerry R. Rose. All members of the Governance Committee are independent directors. The policies of the
Governance Committee are described more fully in the "Governance Committee Report" on page 9. The Governance Committee held seven meetings during fiscal 2014.
Executive Committee. During the intervals between meetings of the Board of Directors, the Executive Committee has all the powers
of the Board in the
management of our business, properties and affairs, including any authority to take action provided in our Bylaws to be taken by the Board, subject to applicable laws. The Executive Committee,
however, is not authorized to fill vacancies of the Board or its committees, declare any dividend or distribution or take any action which, pursuant to the Bylaws, is required to be taken by a vote of
a specified portion of the whole Board. The members of the Executive Committee are Warren E. Mack, Chair, Sally J. Smith, J. Oliver Maggard, and James M. Damian. The Executive Committee held two
meetings during fiscal 2014.
Compliance Committee. On December 4, 2008, to comply with Nevada gaming laws, the Board formed a Compliance Committee,
which is empowered to
exercise its best efforts to identify and evaluate situations arising in the course of our business that may adversely affect the objectives of gaming control. The Compliance Committee must have at
least three members and must include a director of the company and at least one person who is familiar with gaming regulatory laws and procedures and is independent of the company. The three members
of the Compliance Committee are Warren E. Mack, our Chief Operating Officer, and an outside independent member. Our Compliance Committee reports to our Board and advises our Board if any activities
are inappropriate, after investigation. It may use any of our resources and use whatever means it deems appropriate in conducting any such investigation. The Compliance Committee held four meetings
during fiscal 2014.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Governance
Committee |
|
Audit
Committee |
|
Compensation
Committee |
|
Executive
Committee |
|
Compliance
Committee |
Dale M. Applequist |
|
Chair |
|
|
|
Member |
|
|
|
|
James M. Damian |
|
|
|
Member |
|
Member |
|
Member |
|
|
Cynthia L. Davis |
|
Member |
|
Member |
|
|
|
|
|
|
Michael P. Johnson |
|
Member |
|
|
|
Chair |
|
|
|
|
Warren E. Mack |
|
|
|
|
|
|
|
Chair |
|
Member |
J. Oliver Maggard |
|
|
|
Chair |
|
Member |
|
Member |
|
|
Jerry R. Rose |
|
Member |
|
Member |
|
|
|
|
|
|
Communications with the Board
Shareholders may communicate directly with the Board of Directors. All communications should be directed to our Corporate Secretary at
the address below and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors or for non-management directors. If no specific director is named, the
communication will be forwarded
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to
the entire Board. The communication will not be opened before being forwarded to the intended recipient, but it will go through normal security procedures. Shareholder communications to the Board
should be sent to:
Emily
C. Decker SVP, General Counsel and Secretary
Buffalo Wild Wings, Inc.
5500 Wayzata Boulevard, Suite 1600
Minneapolis, MN 55416
Compensation to Non-Employee Directors
Cash Compensation. In addition to being reimbursed for out-of-pocket expenses incurred while attending Board or committee
meetings, the non-employee
directors received the following cash compensation in 2014. The director compensation is determined by the full Board, upon recommendation from the Governance Committee, and is effective at the May
meeting each year. The fees are paid at the quarterly Board meetings.
|
|
|
|
|
Board (non-chair) members |
|
$ |
50,000 |
|
Board chair |
|
$ |
75,000 |
|
Non-chair members of Audit, Compensation, Governance and Compliance Committees |
|
$ |
8,000 |
|
Non-chair members of Executive Committee |
|
$ |
4,000 |
|
Chairs of Audit and Compensation Committees |
|
$ |
16,000 |
|
Chair of Governance Committee |
|
$ |
10,000 |
|
Chair of Executive Committee |
|
$ |
5,000 |
|
Equity Compensation. The non-employee directors are entitled to an annual grant of fully-vested stock units for the number of
shares equal to
approximately $85,000. To determine the number of shares to grant, we divide $85,000 by the average of the twenty data points that represent the daily high and low stock price of the ten preceding
trading days. Because of this methodology, the value of the stock awards will not likely be exactly $85,000. In 2014, each of our outside directors received a grant of 596 shares, which shares were
issued to the directors on May 9, 2014. In 2015, the annual grants will be made May 8, 2015, which is the second day of the May Board Meeting.
Stock Ownership Guidelines. We require our non-employee directors to maintain a minimum level of stock ownership to strengthen
alignment with our
shareholders. Our current guidelines require non-employee directors to own stock equal to five times the annual cash retainer within six years of joining the Board. Additional details regarding our
stock ownership guidelines for non-employee directors and executives can be found on page 28 of this proxy statement.
Deferred Compensation. Our Deferred Compensation Plan permits the directors to defer up to 100% of compensation, including fees
and restricted stock
grants. Currently, no director has elected to defer any portion of compensation.
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Table of Contents
Director Compensation Table. The table below summarizes the compensation paid by us to our non-employee directors during fiscal
year 2014.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or Paid
in Cash ($)(1) |
|
Stock Awards
($)(2) |
|
Total
($) |
|
Dale M. Applequist |
|
$ |
65,500 |
|
$ |
85,139 |
|
$ |
150,639 |
|
James M. Damian |
|
$ |
91,250 |
|
$ |
85,139 |
|
$ |
176,389 |
|
Cynthia L. Davis |
|
|
|
|
|
|
|
|
|
|
Michael P. Johnson |
|
$ |
71,500 |
|
$ |
85,139 |
|
$ |
156,639 |
|
Warren E. Mack |
|
$ |
60,500 |
|
$ |
85,139 |
|
$ |
145,639 |
|
J. Oliver Maggard |
|
$ |
75,500 |
|
$ |
85,139 |
|
$ |
160,639 |
|
Jerry R. Rose |
|
$ |
63,500 |
|
$ |
85,139 |
|
$ |
148,639 |
|
- (1)
- The
amounts consist of the cash fees paid to the non- employee directors as described in "Cash Compensation" above. The annual cash compensation for
non-chair members increased from $40,000 to $50,000 effective in May, 2014. The annual cash compensation for the Board chair increased from $60,000 to $75,000 effective in May, 2014. The Board also
approved an increase in equity compensation from $70,000 to $85,000 in equity compensation for all Board members, effective in May, 2014.
- (2)
- The
amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, of restricted stock unit awards made under our 2012
Equity Incentive Plan. Assumptions used in the calculation of these amounts are included in footnote 1(w) to our audited financial statements included in our Annual Report on Form 10-K for the
fiscal year ended December 28, 2014 filed with the Securities and Exchange Commission.
2015 Director Compensation Actions. The Board approved the following compensation increases for 2015: the annual cash
compensation for non-chair
members will increase from $50,000 to $60,000 effective in May, 2015; the annual cash compensation for the Board chair will increase from $75,000 to $85,000 effective in May, 2015; and the annual
equity compensation will increase from $85,000 to $95,000 in equity compensation for all Board members, effective in May, 2015.
GOVERNANCE COMMITTEE REPORT
The Governance Committee is comprised of independent directors. In accordance with its written charter, as well as the principles of
corporate governance adopted by the Board of Directors and the nominating policies, the Governance Committee assists the Board of Directors with fulfilling its responsibilities regarding any matters
relating to corporate governance, including selection of candidates for our Board of Directors. Its duties include oversight of: the principles of corporate governance by which Buffalo Wild Wings and
the Board are governed; the codes of ethical conduct and legal compliance by which Buffalo Wild Wings and its directors, executive officers, Team Members, and agents are governed; policies for
evaluation of the Board and the chairperson; policies for election and reelection of directors; and policies for succession planning for the Chief Executive Officer, Board chairperson, and other Board
leaders. In addition, the Committee is responsible for annually reviewing the composition of the Board, focusing on the governance and business needs and requirements of the company, screening of
director candidates and recommending
nominees to the Board, evaluating the performance of directors, recommending director compensation to the Board and recommending the reelection of directors who are performing effectively and who
continue to provide a competency needed on the Board. Our principles of corporate governance provide that there should be at least seven directors on the Board, with a majority being independent.
Each
year, the Governance Committee oversees the evaluation process for the Board and Committees. Each director completes a written evaluation of the Board and their respective
Committees, and the Secretary also conducts a follow-up evaluation phone call, accompanied by the Board Chair and Governance Committee Chair.
The
Governance Committee will consider candidates for nomination as a director recommended by shareholders, directors, third-party search firms, and other sources. In evaluating director
nominees, a candidate should have certain minimum qualifications, including being able to read and understand basic financial statements, being familiar with our business
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and
industry, having high standards of personal ethics and mature judgment, being able to work collegially with others, having commitment to shareholder value and being willing to devote the necessary
time and energy to fulfilling the Board's responsibilities. Independent directors are not permitted to serve on more than three other boards of public companies, and management personnel are not
permitted to serve on more than one other board of a public company without approval from the Board. In addition, factors such as the following may be considered:
-
- appropriate size and diversity of the Board;
-
- needs of the Board with respect to particular talent and experience;
-
- the knowledge, skills and experience of nominees, including experience in the industry in which the company operates, business,
finance, management or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
-
- familiarity with domestic and international business affairs;
-
- legal and regulatory requirements;
-
- experience with accounting rules and practices;
-
- appreciation of the relationship of our business to the changing needs of society; and
-
- desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by a new member.
With
respect to the first bullet point above, the Governance Committee may consider a number of features in its evaluation of the Board's diversity, including geography, age, gender,
ethnicity, and business experience. Diversity is one of many factors in the total mix of information available to the Board for them to consider when evaluating director candidates.
Shareholders
who wish to recommend one or more persons as a director candidate must provide a written recommendation to our Secretary. Notice of a recommendation must include the
shareholder's name, address, and the number of Buffalo Wild Wings shares owned, along with information with respect to the person being recommended, i.e. name, age, business address, residence
address, current principal occupation, five-year employment history with employer names and a description of each employer's business, the number of shares beneficially owned by the prospective
nominee, whether such person can read and understand basic financial statements, and other board memberships, if any. The recommendation must be accompanied by a written consent of the prospective
nominee to stand for election if nominated by the Board of Directors and to serve if elected by the shareholders. We may require a nominee to furnish additional information that may be needed to
determine the eligibility of the nominee.
Shareholders
who wish to present a proposal at an annual meeting of shareholders must provide a written notice to our Secretary at the address below. For each proposal, the notice must
include a brief description of the matter to be brought before the meeting, the reasons to bring the matter before the meeting, the shareholder's name, address, and number of shares owned, and any
material interest that the shareholder may have in the proposal. The Secretary will forward the proposals and recommendations to the Governance Committee. See "Shareholder Proposals" on
page 42.
Emily
C. Decker, SVP, General Counsel and Secretary
Buffalo Wild Wings, Inc.
5500 Wayzata Boulevard, Suite 1600
Minneapolis, MN 55416
A
copy of the current Governance Committee Charter can be found on the Buffalo Wild Wings website at www.buffalowildwings.com.
|
|
|
|
|
Members of the Governance Committee
Dale M. Applequist, Chair
Cynthia L. Davis
Michael P. Johnson
Jerry R. Rose |
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Table of Contents
BUSINESS EXPERIENCE AND QUALIFICATIONS
|
|
|
|
|
|
|
|
|
Name
|
|
Age |
|
Director
Since |
|
Business Experience and Qualifications |
Dale M. Applequist |
|
|
67 |
|
|
1997 |
|
Dale M. Applequist served as CEO and co-founder of Cash Plus, Inc from 1978 through 1998. In that capacity he helped to launch and build multiple brands. He also was a partner and director of Campbell-Mithun Advertising,
LLC from 1990 to 1998. |
|
|
|
|
|
|
|
|
Mr. Applequist brings a wealth of advertising, marketing and brand building experience to our board for package goods, restaurants, hospitality and other retail brands. Mr. Applequist has a broad range of business experience both as an
owner and board member of privately-held companies. He is a resource for our research and marketing departments and has extensive institutional knowledge from his years acting as a director with our company. Mr. Applequist chairs our Governance
Committee and sits on our Compensation Committee. |
James M. Damian |
|
|
64 |
|
|
2006 |
|
James M. Damian served as Senior Vice President, Chief Design Officer of Best Buy's Customer Experience Design Group, from 1998 through 2010. Prior to that Mr. Damian has held various executive posts throughout the
retail industry including Harvey Nichols, a London- based luxury retailer; B.Altman & Co., a specialty department store; R.H. Macy &Co., as Group Vice-President of Store Design; and as President of Hindsgaul Mannequins
Worldwide, Copenhagen, London, Paris and New York. He also served as a Board Member of the Minnesota Orchestra from 2003 to 2013. Mr. Damian currently serves on the Boards of Century Park Capital Partners, a Los Angeles based Private Equity
Firm; Moss Inc., an Exhibition Design and manufacturing company based in Chicago; and Co-Founder and member of the Dotopia Foundation Board for Social Responsibility. |
|
|
|
|
|
|
|
|
While at Best Buy, Mr. Damian was responsible for reinventing the experience of shopping in mass specialty retail. He uses this experience to bring to our company the relentless pursuit of new concepts that go against the grain and challenge
the status quo. He also has expertise in concept development and guest experience and how these transfer to an international model that fits in other cultures. Mr. Damian is our Board Chairman and sits on our Compensation Committee, Audit
Committee and Executive Committee. |
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|
|
|
|
|
|
|
|
|
Name
|
|
Age |
|
Director
Since |
|
Business Experience and Qualifications |
Cynthia L. Davis |
|
|
53 |
|
|
2014 |
|
Cynthia L. Davis most recently served as an executive at Nike for 10 years. Most recently, she was Vice President of Nike Inc. and President of Nike Golf from 2008 to December, 2014. She also has been a member of
the Board of Directors for Kennametal Inc. since December 2012, where she serves on the Audit and Governance Committees. In her role with Nike she led the over $800 million global golf business, including all product, marketing, sports
marketing, sales, operations, finance, legal, and human resources responsibilities. Davis drove innovative profitable growth, and a team of athletes headlined by the two most iconic golf athletes. To that end, in 2013, she was recognized as one of
Sports Illustrated's "50 Most Powerful People in Sports." Prior to joining Nike in 2005, Davis was the Senior Vice President of Golf Sponsorships, Sports Marketing and New Media for the Golf Channel.
Leading up to that, she was the President and CEO of The Arnold Palmer Golf Company after serving as Vice President of the Ladies Professional Golf Association (LPGA). Davis is a former chairperson of the National Golf Foundation (NGF) and has served
on the Golf 20/20 Executive Committee. |
|
|
|
|
|
|
|
|
Through her business background, Ms. Davis brings to the Board significant global business leadership skills. She has experience in strategic planning, innovation and consumer initiatives, go-to-market growth plans, and expertise in the sports
industry. She also brings corporate governance experience to the Board, through her experience with other public companies. Ms. Davis sits on our Audit Committee and Governance Committee. |
Michael P. Johnson |
|
|
67 |
|
|
2006 |
|
Michael P. Johnson has served as President and CEO of J & A Group, LLC, a business and management consulting company, since June 2008. In March 2008, Mr. Johnson retired as Senior Vice President and Chief
Administrative Officer of The Williams Companies, a publicly-held energy company, having joined The Williams Companies in 1998. In this role, he was responsible for human resources, information technology, purchasing, real estate/facilities and
security, and he served as Chairman of the Board of the Williams Foundation. From 1991 to 1998, Mr. Johnson served in various officer- level positions for Amoco Corporation, most recently as Vice President of Human Resources, which included
domestic as well as international responsibilities. Mr. Johnson serves on the Board of Directors of CenterPoint Energy, Inc. and the QuikTrip Corporation, a privately-held retail gasoline, food and convenience store company.
Mr. Johnson also serves on the boards of several charitable organizations and foundations. |
|
|
|
|
|
|
|
|
Mr. Johnson brings to our Board significant experience in corporate and retail strategy development, human resources and organizational development. He has senior management experience in leading global shared services organizations through all
business cycles and large-scale organizational improvement, which has made him an important resource to our company. He also has significant public company corporate governance experience. Mr. Johnson chairs our Compensation Committee and sits
on our Governance Committee. |
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Table of Contents
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|
|
|
|
|
|
|
|
Name
|
|
Age |
|
Director
Since |
|
Business Experience and Qualifications |
Warren E. Mack |
|
|
70 |
|
|
1994 |
|
Warren E. Mack has been an attorney with the law firm of Fredrikson & Byron, P.A. since since graduating from the University of Chicago Law School in 1969, serving as its Chairman from 1999 to 2004 and its President
from 1985 to 1997. Fredrikson & Byron, P.A. provides legal services to us. Mr. Mack's law practice focused on representing investors, which gives him extensive corporate governance knowledge. |
|
|
|
|
|
|
|
|
Mr. Mack brings a shareholder's perspective and many years of experience working to create shareholder value on public and private company boards. In 2006 Mr. Mack was named one of Minnesota's Five Outstanding Directors by Twin Cities Business. Mr. Mack chairs the Board of Directors of the Minnesota Orchestra, is the past chair of the Board of Directors of Buena Vista University and is a member of the Board of Directors of North
Memorial Health Care. He sits on our Executive Committee and Compliance Committee. |
J. Oliver Maggard |
|
|
60 |
|
|
1999 |
|
J. Oliver Maggard has served as Managing Partner of Caymus Partners LLC, an investment banking firm, since October 2002, and as a Managing Partner of Caymus Equity Partners, LLC, a private equity firm, since its
founding in 2012. From January 1995 to October 2002, Mr. Maggard was a Managing Director and Partner of Regent Capital Management Corp., a private equity firm which he co-founded. Prior to founding Regent Capital, Mr. Maggard held various
positions with Bankers Trust Company, Kidder Peabody & Company, Inc., Drexel Burnham Lambert Incorporated, and E.F. Hutton & Co. Mr. Maggard also serves as a director of Phoenix Aromas & Essential Oils,
LLC and of three portfolio companies of Caymus Equity Partners, LLC, all privately-held companies. |
|
|
|
|
|
|
|
|
Mr. Maggard has significant financial experience and brings strong leadership to the Board and the Audit Committee. He understands the intricacies of restaurant-level financials as well as how they have an impact on the financials of the
overall company. Mr. Maggard chairs our Audit Committee and sits on our Compensation Committee and Executive Committee. |
Jerry R. Rose |
|
|
64 |
|
|
2010 |
|
Jerry R. Rose served as Corporate Vice President of Cargill, Inc. from 2004 to September 2012. He was a member of the Corporate Center and a platform leader for the Cargill Animal Nutrition, Animal Protein &
Salt Platform and the Cargill BioFuels, BioIndustrial & Emerging Business Platform. He joined Cargill in 1973 and had various accounting and executive positions with the company. He oversaw international investment activities and
acquisitions, as well as the Cargill Global Business Excellance Activity, which focused on developing high-performance businesses. |
|
|
|
|
|
|
|
|
Mr. Rose brings to the Board financial experience, as well as a wealth of knowledge on international business. He has senior management experience in a large global organization and is an important resource to the company as it expands both
domestically and internationally. He brings expertise in food production and processing, food manufacturing, financial markets, transportation and animal nutrition. Mr. Rose is a past Chairman of the Malcolm Baldrige Award Board of Overseers and
is a director for Daybreak Foods. Mr. Rose sits on our Audit Committee and Goverance Committee. |
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Table of Contents
|
|
|
|
|
|
|
|
|
Name
|
|
Age |
|
Director
Since |
|
Business Experience and Qualifications |
Sally J. Smith |
|
|
57 |
|
|
1996 |
|
Sally J. Smith has served as our Chief Executive Officer and President since July 1996. She served as our Chief Financial Officer from 1994 to 1996. Prior to joining Buffalo Wild Wings, she was the Chief Financial Officer of
Dahlberg, Inc., the manufacturer and franchisor of Miracle-Ear hearing aids, from 1983 to 1994. Ms. Smith began her career with KPMG LLP, an international accounting and auditing firm. Ms. Smith is a CPA. Ms. Smith serves on
the boards of Alerus Financial Corporation, Allina Health Systems and the National Restaurant Association, where she served as chairperson in 2011. |
|
|
|
|
|
|
|
|
Ms. Smith has led our company through significant growth and success. Her financial background gives her focus on the details of restaurant economics and her involvement in the National Restaurant Association exposes her to the current issues
in the restaurant industry. Her election as 2011 chairperson demonstrates that she is respected as an industry leader. Ms. Smith sits on our Executive Committee. |
ELECTION OF DIRECTORS (PROPOSAL #1)
Our Bylaws provide that the number of directors shall be the number set by the shareholders. The Bylaws require that we have at least
one director. In accordance with our principles of corporate governance, which require at least seven directors, and the recommendations of the Governance Committee, the Board set the number of
directors at eight and selected the persons listed below as nominees to be elected at the 2015 Annual Meeting of Shareholders. Unless otherwise instructed, the Proxies will be voted to elect the eight
nominees listed below, thereby setting the number of members of the Board at eight. The election of the nominees to the Board of Directors requires the affirmative vote of a plurality of the shares
represented in person or by proxy at the Annual Meeting with authority to vote on such matter. However, if an individual director does not receive enough votes to meet this plurality standard, our
Principles of Corporate Governance require that the director submit their resignation.
If
elected, the individuals listed below shall serve until the next annual meeting of shareholders and until their successors are duly elected and qualified. All of the nominees are
members of the current Board of Directors. If, prior to the 2015 Annual Meeting of Shareholders, it should become known that any one of the following individuals will be unwilling or unable to serve
as a director after the 2015 Annual Meeting by reason of resignation, death, incapacity, or other unexpected occurrence, the Proxies will be voted for such substitute nominee(s) as may be selected by
the Board
of Directors. Alternatively, the Proxies may, at the Board's discretion, be voted for such fewer number of nominees that may result from such resignation, death, incapacity, or other unexpected
occurrence. The Board of Directors has no reason to believe that any of the following nominees will withdraw or be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE DIRECTORS
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Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
INTRODUCTION AND EXECUTIVE SUMMARY
The Compensation Discussion and Analysis ("CD&A") describes our executive compensation program, including the objectives and elements
of compensation as well as determinations made by the Compensation Committee (the "Committee") regarding our named executive officers:
-
- Sally J. Smith, President and Chief Executive Officer
-
- James M. Schmidt, Chief Operating Officer
-
- Mary J. Twinem, Executive Vice President and Chief Financial Officer
-
- Judith A. Shoulak, Executive Vice President, President North America Buffalo Wild Wings
-
- Kathleen M. Benning, Executive Vice President, Chief Strategy Officer and Business Development
The
objective of our executive compensation program is to enable the company to recruit, retain and motivate a highly qualified management and leadership team by providing market-based
levels of compensation in a way that builds a strong leadership team as a model for the entire organization. Our overall executive compensation design philosophy reflects the Committee's desire to
align management's actions with the interests of our shareholders. Accordingly, a substantial percentage of the compensation for our named executive officers is at-risk and based primarily on company
performance. Our executives, as a team and individually, will benefit from larger rewards when performance objectives are exceeded and conversely will receive lower or no rewards when performance
falls below targeted levels.
Buffalo
Wild Wings is focused on profitable growth that builds shareholder value. To accomplish this goal, we attract, motivate, retain, and fairly reward executive talent with a total
competitive compensation plan composed of three main elements, which we collectively refer to as "total direct compensation": (1) base salaries; (2) annual cash incentive compensation;
and (3) equity incentive compensation in the form of performance-based restricted stock units ("PRSUs") and stock options. The Committee makes its compensation design decisions based on the
following principles: holding executives accountable for the company's goals, ensuring alignment with shareholder interests, encouraging team member engagement and optimizing results.
2014
was another successful year for Buffalo Wild Wings. We continued to deliver on our strategy to remain a category-leading, high-growth concept and deliver excellent shareholder
returns.
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COMPARISON OF 5 YEAR CUMULATIVE TOTAL
RETURN*
- *
- $100
invested on 12/27/09 in stock or 12/31/09 in index, including reinvestment of dividends.
Indexes
calculated on month-end basis.
Copyright@
2014 S&P, a division of The McGraw-Hill Companies Inc. All rights
COMPANY PERFORMANCE HIGHLIGHTS FOR 2014
-
- We achieved strong results in new and existing restaurants to deliver net earnings growth of 31.5%. We provided substantial value to
our shareholders with earnings per diluted share of $4.95 for the year.
-
- We increased our presence with 78 net additional Buffalo Wild Wings restaurants, ending the year with 1,071 locations in all 50
states, Canada and Mexico. We also have 11 restaurants open with our emerging brands concepts: 2 PizzaRev restaurants, 2 company-owned Rusty Taco restaurants and 7 franchised Rusty Taco
restaurants. Thus we ended the year with 1,082 total locations.
-
- We achieved company-owned same-store sales growth of 6.5% and franchised restaurant same-store sales growth of 5.6%.
-
- These increases and our unit growth helped to drive a 19.7% increase in revenue, which resulted in total revenue of
$1.52 billion for 2014. Revenue consists of sales at company-owned restaurants and royalties collected from sales at franchised restaurants.
-
- We kept our focus on long-term success by investing in technology and innovation at the restaurants and in the Home Office,
international expansion and emerging brands.
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Table of Contents
WHAT WE PAY AND WHY: ELEMENTS OF COMPENSATION
We have three elements of total direct compensation: base salary, annual cash incentive and long-term equity incentive compensation.
The vast majority of total direct compensation is performance-based and not guaranteed. We also provide various retirement and benefit programs and modest business-related perquisites. The dashboard
below provides a single snapshot of all elements of our executive compensation program, including our Committee's primary rationale for including each element. Additional information about the key
elements of our compensation programs is included below the dashboard.
COMPENSATION DASHBOARD
Key Elements of Compensation
Other Elements of Compensation
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Annual Meeting of Shareholders | 17
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2014 EXECUTIVE COMPENSATION SUMMARY
Performance-Based Pay. As a direct result of our success in 2014, actual performance on many of our performance metrics met or exceeded
the
corresponding targets. Performance related to each of these measures is explained further in this CD&A on pages 15 through 29. Our company performance for 2014 and the previous three years and
the individual performance of our executive officers served as key factors in determining compensation for 2014, including as follows:
-
- Annual Cash Incentive
Program: Net income, revenue, same-store sales, and restaurant openings are the key metrics in our named executive officers' annual cash
incentive program ("CIP"). Combined with the individual performance measurement, these metrics provide a balanced approach to evaluating annual company performance.
-
- The company achieved 128.0% of its net income target for 2014.
-
- The company achieved 101.8% of its revenue target for 2014.
-
- The company achieved 159.0% of its system-wide same-store sales growth target and achieved its goal for positive
same-store sales each quarter.
-
- The company opened 4 restaurants less than its enterprise (company-owned and franchised) restaurant openings target.
-
- Based on these results, which account for 80% of the payout, the annual cash incentive program payout for 2014 for the
named executive officers was 124.6% of the targeted CIP amount based directly on company performance.
-
- The remaining 20% of the annual cash incentive is attributable to individual performance. The average payout for the
individual performance was 150% of target. Payout determination was based on the CEO's evaluation of each executive officer's individual contribution (other than herself) and the Committee's
evaluation of the CEO's performance in 2014.
-
- Equity Incentive
Program: Our long-term equity incentive program ("EIP") consists of PRSUs and stock options. The PRSUs constitute 75% of the EIP and are
dependent on three-year cumulative net income growth. We chose cumulative net income growth because it aligns directly with total shareholder return. For the 3-year performance period that ended
December 28, 2014, the company's cumulative net income growth was between target and maximum performance; this result led to a payout at 151.7% of target.
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2014 EXECUTIVE COMPENSATION STRUCTURE AND ACTIONS
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ALLOCATION OF TARGET TOTAL DIRECT COMPENSATION
The
allocation of the components of target total direct compensation for 2014 was consistent with the Committee's philosophy that the majority of the compensation for the CEO and other
named executive officers should be at risk. The Committee also feels this allocation is appropriate because a greater proportion of each executive officer's at-risk compensation is based on long-term
goals.
EXECUTIVE COMPENSATION PROGRAM PRACTICES
Below we summarize some of our important executive compensation practices, including the practices we have implemented to drive
performance and some compensation practices we avoid because we do not believe they would serve our shareowners' long-term interests.
-
- The compensation of our named executive officers is reviewed and established annually by the Committee, the members of which are
independent directors, as defined by the SEC and NASDAQ. The CEO's compensation is approved by all the independent directors of the full Board.
-
- We believe that a substantial portion of the compensation for our executives should be at risk and received only to the extent Buffalo
Wild Wings and the executive accomplish goals approved by the Committee and the Board.
-
- The Committee engages an independent compensation consultant to advise on the compensation program design and provide comparison data.
-
- The Committee utilizes a peer group of retail and restaurant companies as one factor to determine executive compensation. This allows
the Committee to ensure competitiveness in the market. In May 2014, the Committee made adjustments to the peer group as three previous peers had been acquired and two peers were added.
-
- We believe the executives and directors should have an appropriate equity interest in order to align their interests with those of our
shareholders. Thus we have stock ownership guidelines and an anti-hedging policy in place for executive officers and directors.
-
- Each of our named executive officers is party to an employment agreement that provides for separation payments if the executive is
terminated without cause or if the executive resigns for good reason and for acceleration of these
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payments
if the separation occurs within one year of a change in control. The change of control feature is a "double trigger" arrangement, requiring both a change in control and a termination of
employment before payments are accelerated. Consistent with best practices, no tax gross-ups are provided to offset any tax liability for any change in control separation payments.
-
- The Committee performs a risk analysis of compensation programs for the executive officers as well as the other field and Home Office
Team Members, as more fully described on page 5.
-
- The company provides a deferred compensation program and the following limited perquisites, depending on the position of the officer:
a) executive physicals and enhanced insurance coverage; b) company cars; and c) personal financial planning services.
-
- Buffalo Wild Wings prepares and reviews with the Committee tally sheets summarizing the compensation of each named executive officer.
This information is used by the Committee to understand the implications of its decisions on compensation for the named executive officers.
-
- Executive officers are subject to a clawback policy under which the company will seek to recover or cancel cash or equity-based
incentive compensation previously provided to an executive if the executive's misconduct caused or contributed to the issuance of materially noncompliant financial statements that were used to
determine the amount of the compensation and were required to be restated.
TOTAL REWARDS PHILOSOPHY
As a long-term growth company, our total rewards philosophy strives to maximize the principles of accountability, alignment, engagement
and optimization among our Team Members. Our philosophy is to "pay for performance" by designing our compensation programs to reward Team Members for company and individual success.
Our
philosophy is supported by four specific Total Rewards Principles, which serve as the guiding framework to our specific compensation programs and approaches we use to drive
performance.
TOTAL REWARDS PRINCIPLES
|
|
|
|
|
Principle
|
|
Purpose |
Accountability |
|
|
|
Maintains a consistent link between performance, rewards and results |
|
|
|
|
Rewards quantitative and qualitative results |
Alignment |
|
|
|
Ensures that all compensation plans are appropriately aligned with the interests of shareholders and other Team Members and is tied into company strategy |
Engagement |
|
|
|
Promotes a high level of urgency, motivation and commitment |
|
|
|
|
Makes the link between pay and performance clear |
|
|
|
|
Promotes teamwork and collaboration |
Optimization |
|
|
|
Encourages Team Members and teams to achieve extraordinary results |
|
|
|
|
Rewards exceptional performance with exceptional pay |
Our
executive compensation program is structured so that our base salaries are positioned around the median of the competitive market. We set aggressive annual and long-term goals in
order to drive behaviors and results that will provide shareholder value that meets or exceeds expectations. Our annual cash incentive and long-term equity incentive programs are designed so that we
provide total rewards that are commensurate with actual results. We believe that a substantial portion of the compensation for our executives should be at risk and received only to the extent Buffalo
Wild Wings and the executive accomplish goals approved by the Committee and the Board. At-risk compensation comprises a greater percentage of target total direct compensation for our executives than
other Team Members.
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THE EXECUTIVE COMPENSATION PROCESS
The Role of the Compensation Committee
The Committee met six times during 2014. Throughout the year, the Committee focused on compensation issues, market data and trends and
compensation program analysis and design. Our CEO, COO and Senior Vice President of Talent Management attend the meetings on behalf of management, except when their own compensation is being
discussed.
The
Committee's responsibilities are described in the Committee Charter and include the following:
-
- Periodically review and approve the company's compensation philosophy, policies and programs that in the Committee's judgment support
the company's strategy and are consistent with the long-term interest of shareholders.
-
- Annually review each element of the program to ensure alignment with the philosophy and goals of the company.
-
- Monitor the compensation of the executive officers and adjust as necessary to align with the total rewards philosophy.
-
- Evaluate the CEO's performance against the company's goals and objectives and, based upon this evaluation, recommend to the
independent directors of the Board the CEO's compensation. The CEO is not included in any discussions or decisions related to her pay.
-
- Review the CEO's evaluations of the other executive officers' performance relative to their individual goals and objectives and her
recommendations for the compensation of the other executive officers, and approve the compensation of the other executive officers, including their employment agreements and special or supplemental
benefits.
-
- Review and approve the following compensation plans and any modifications subject to the rules of each plan: Equity Incentive Plan,
Cash Incentive Plan, Deferred Compensation Plan, ESPP Plan and 401K Plan. Make recommendations to the Board for shareholder approval of any new or amended equity-based compensation plans.
-
- Approve equity-based compensation for any team member subject to the requirements of Section 16 of the Exchange Act.
-
- Ensure the effectiveness of the leadership development process by reviewing annual development and succession plans with respect to
the CEO and other executive officers.
The Role of the Compensation Consultant
To assist in setting 2014 compensation, the Committee retained Frederic W. Cook and Co., Inc.
("Cook & Co.") as its independent compensation consultant. Cook & Co. reports directly to the Committee, independent of management. The Committee assessed the independence
of Cook & Co. and took into account related factors in accordance with SEC and NASDAQ rules and concluded that the work of Cook & Co. did not raise any conflict of interest
that would prevent them from independently advising the Committee. The Committee consults with Cook & Co. regarding the company's compensation plans, policies, and annual programs and
Cook & Co. provides recommendations based on compensation trends and regulatory/compliance developments. Cook & Co. does not provide any other consulting services to the
company.
The Role of the Chief Executive Officer
After the end of each fiscal year, the CEO completes a performance evaluation for each executive officer, which includes an evaluation
of performance against individual objectives. Based on these evaluations, the CEO makes a recommendation on the portion of the cash incentive tied to individual objectives that each executive officer
should receive as well as a recommendation for each executive officer's base salary and target payout opportunities under the Cash Incentive Plan and Equity Incentive Plan. The evaluations and
recommendations are then provided to and discussed with the Committee, which makes the final compensation determinations for each executive officer. The CEO does not make any recommendations in
relation to her own compensation.
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As noted earlier, key members of management also participate in the Committee meetings to discuss the company's measures and performance targets. The CEO also has
authority from the Committee to make compensation decisions for all Team Members below the executive officer level.
Outcome of the 2014 Shareholder Advisory Vote
We conduct an annual shareholder advisory vote on the compensation of the company's named executive officers. This vote is not binding
on the company; however, the Committee does take into account the outcome of the vote when making future compensation decisions.
Our
2014 Say-on-Pay proposal was supported by over 99% of our shareholders. Although the Committee always considers changes to the compensation programs to enhance effectiveness and
alignment, it did not make any significant changes to the executive compensation program for 2014 because it felt that the compensation program fairly motivated and compensated executive officers, and
because it believed the say-on-pay vote demonstrated the strong support of our shareholders for continuing the program in its existing form. For more information, see Proposal #2, ADVISORY VOTE ON
EXECUTIVE OFFICER COMPENSATION on page 29.
PEER GROUP
The Committee uses information gathered from our peer group as one of multiple factors in analyzing executive compensation. The
compensation consultant assists the company in determining which companies belong in our peer group. The Committee annually evaluates the composition of the peer group and makes appropriate changes to
the peer group to ensure that we maintain a group of restaurant and retail companies whose operations and size are similar to ours. Data from these peer group companies was used to inform decisions
regarding executive compensation for 2014. Three companies (CEC Entertainment, Inc., Jos. A. Bank Clothiers, Inc., and rue21, Inc.) that were peers were acquired in the last year
and have been eliminated from our peer group. Bloomin' Brands, Inc. and Domino's Pizza, Inc. were added to the peer group in 2014 which brought our peer group to the following 18
companies:
|
|
|
BJ's Restaurants, Inc. |
|
Domino's Pizza, Inc. |
Bloomin' Brands, Inc. |
|
Dunkin' Brands Group, Inc. |
Bob Evans Farms, Inc. |
|
Einstein Noah Restaurant Group, Inc. |
Brinker International, Inc. |
|
Hibbett Sports, Inc. |
Cheesecake Factory, Inc. |
|
Panera Bread Company |
Chico's FAS, Inc. |
|
Red Robin Gourmet Burgers, Inc. |
Chipotle Mexican Grill, Inc. |
|
Ruby Tuesday, Inc. |
Cracker Barrel Old Country Store |
|
Texas Roadhouse, Inc. |
DineEquity, Inc. |
|
Ulta Salon, Cosmetics and Fragrance, Inc. |
2014 EXECUTIVE COMPENSATION
Base Salary
Base salary is the foundation of the compensation program, in that most other major components of compensation are based on a
relationship to base salary. Base salaries are reviewed annually, with the review occurring during the first quarter with new salaries generally going into effect at the beginning of the second
quarter. The base salary for the CEO is determined by the Committee, with final approval by the independent directors, taking into consideration the results of a performance review, competitive market
data, and the current level of total compensation, as well as written feedback from other executive officers. With respect to the other executive officers, the Committee approves final base salary
amounts, taking into account the salary recommendations from the CEO, current level of total compensation, market median, individual contributions, changes in
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position
or responsibility, and internal pay equity considerations. Base salary increases reflect favorable performance in 2014 and the growth of the company as well as increased responsibilities of
the executive officers that accompany that growth.
|
|
|
|
|
|
|
|
|
|
|
Base Salaries |
|
|
|
2014 |
|
2013 |
|
Percentage Increase |
|
Sally J. Smith |
|
$ |
750,000 |
|
$ |
700,000 |
|
|
7.1 |
% |
James M. Schmidt |
|
$ |
503,250 |
|
$ |
475,000 |
|
|
5.9 |
% |
Mary J. Twinem |
|
$ |
440,000 |
|
$ |
417,500 |
|
|
5.4 |
% |
Judith A. Shoulak |
|
$ |
395,750 |
|
$ |
370,000 |
|
|
7.0 |
% |
Kathleen M. Benning |
|
$ |
348,250 |
|
$ |
325,000 |
|
|
7.2 |
% |
Annual Cash Incentive Compensation
The 2014 annual CIP for our CEO, COO, and Executive Vice Presidents, has similar terms to the 2013 program. The criteria for earning
incentive compensation under this program were the same for all executive officers, but the target annual cash incentive opportunity varied between the executive officers.
|
|
|
|
|
Target Annual Cash Incentive Opportunities as Percentage of Base Salary |
|
Chief Executive Officer |
|
|
100% |
|
Chief Operating Officer |
|
|
80% |
|
Executive Vice Presidents |
|
|
75% |
|
The
Committee believes that, as position and responsibility increase, a greater percentage of total compensation should be tied to company performance. The Committee selected and
weighted the specific elements of this program based on its judgment that these were key factors in creating shareholder value. In the aggregate, the officers can earn varying amounts as percentage of
base salary, but the officers were not guaranteed any cash incentive under this program. For instance, an officer would have received no cash incentive if none of the threshold levels were achieved
with respect to the performance goals and no amount was awarded for his or her performance against individual objectives. Conversely, if all performance goals were achieved at maximum levels, our
named executive officers could earn up to 186% of their targeted bonus opportunities.
The
program rewards executives for overall company performance in the following categories:
-
- Revenue;
-
- Net income;
-
- Positive same-store sales ("SSS") overall for the year and for each fiscal quarter; and
-
- Gross enterprise restaurant openings.
These
elements were chosen because they were key financial and operational elements that would indicate whether fiscal 2014 was successful. Revenue and net income are the key indicators
of operational success, and thus these elements are weighted more heavily than the other elements. In total, the company performance metrics make up 80% of the payout of the CIP.
The
program also offered the opportunity to earn cash incentives for achieving individual objectives. The Committee reviewed individual objectives for each executive when approving their
personal cash incentive. The individual objectives for our Chief Executive Officer are agreed on at the beginning of each year between our CEO and the Committee when the Committee reviews her
performance for the previous year. The individual objectives for the remaining executive officers are agreed upon by the CEO and the respective executive officers and are reviewed by the Committee.
The actual amount of cash incentive payable upon achievement of individual objectives is determined by the Committee based on achievement of pre-established goals. A description of the annual CIP is
set forth below in more detail.
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Annual Meeting of Shareholders
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Table of Contents
The
2014 annual CIP had the key objective performance criteria and corresponding payout opportunities summarized in the table below. Performance between any of the levels specified in
the table would result in a pro rata percentage payout between the corresponding CIP funding levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
CIP Funding |
Performance Metrics
|
|
Target
Performance |
|
Threshold
(% of Target
Payout) |
|
Target
Payout |
|
Maximum
(% of Target
Payout) |
Revenue |
|
$1.489 Billion |
|
50%(1) |
|
100% |
|
200% |
Net Income |
|
$72.53 Million |
|
50%(1) |
|
100% |
|
200% |
SSS (annual) |
|
3.75% |
|
0% |
|
100% |
|
200% |
SSS (quarterly) |
|
Pos. all qtrs. |
|
25%(1) |
|
100% |
|
100% |
Restaurant Openings (all Enterprise) |
|
98 |
|
Actual/Target |
|
100% |
|
Actual/Target |
Individual Performance |
|
Individual goals vary by executive |
|
0% |
|
100% |
|
200% |
- (1)
- Performance
below Threshold levels for these metrics results in no payout.
2014 Company Performance. Company performance accounts for 80% of the CIP outcome. The weightings for each of the metrics are
provided in the table
below. Based on performance related to each metric (described below), the weighted CIP payout is outlined in the following table:
|
|
|
|
|
|
|
|
|
|
|
Metric
|
|
Target
Performance |
|
Actual
Company
Performance |
|
Weight |
|
Payout
Based on
Company
Performance
(% of Target) |
|
Weighted
CIP Payout |
Revenue |
|
$1.489 Billion |
|
$1.516 Billion |
|
25% |
|
136% |
|
34.1% |
Net Income |
|
$75.53 Million |
|
$92.89 Million |
|
30% |
|
200% |
|
60.0% |
Same-store sales (annual) |
|
3.75% |
|
5.97% |
|
10% |
|
159% |
|
15.9% |
Same-store sales (quarterly) |
|
Positive all 4 quarters |
|
Positive all 4 quarters |
|
5% |
|
100% |
|
5.0% |
Restaurant Openings (all Enterprise) |
|
98 |
|
94 |
|
10% |
|
95.9% |
|
9.6% |
Total Company Funded |
|
|
|
|
|
80% |
|
|
|
124.6% |
Individual Objectives. In addition to the objective company performance goals identified above, the participants had the
opportunity to earn
compensation based on their individual performance against individual objectives. The individual objectives allow the company to recognize key initiatives and reward an individual's contributions.
These objectives include project implementations, Team Member engagement measurements and strategic development. The individual performance component of the CIP accounts for the remaining 20% of the
total weighting.
|
|
|
|
|
|
|
Named Executive Officer
|
|
Weight |
|
Payout
Based on
Indiv.
Performance
(% of target) |
|
Weighted
CIP Payout |
Sally J. Smith |
|
20% |
|
166.7% |
|
33.3% |
James M. Schmidt |
|
20% |
|
156.3% |
|
31.3% |
Mary J. Twinem |
|
20% |
|
133.3% |
|
26.7% |
Judith A. Shoulak |
|
20% |
|
166.7% |
|
33.3% |
Kathleen M. Benning |
|
20% |
|
133.3% |
|
26.7% |
2014 Total Earned Cash Incentive Compensation. The 2014 annual cash incentive earned by each named executive officer is
determined by adding the
actual payout percentages for that officer on each of the performance criteria and multiplying
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2015
Annual Meeting of Shareholders | 25
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Table of Contents
that
sum by the officer's 2014 base salary multiplied by the target CIP percentage. The annual cash incentive earned by each of the named executive officers during 2014 is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
2014
Base Salary |
|
Target CIP
(% of Salary) |
|
Weighted CIP
Funding
Based on
Company
Performance |
|
Weighted CIP
Funding
Based on
Individual
Objectives |
|
Total
CIP Funding |
|
Actual 2014
Earned
Cash Incentive
Compensation |
Sally J. Smith |
|
$750,000 |
|
|
100 |
% |
|
124.6 |
% |
|
33.3 |
% |
|
158.0 |
% |
$1,184,725 |
James M. Schmidt |
|
$503,250 |
|
|
80 |
% |
|
124.6 |
% |
|
31.3 |
% |
|
155.9 |
% |
$627,553 |
Mary J. Twinem |
|
$440,000 |
|
|
75 |
% |
|
124.6 |
% |
|
26.7 |
% |
|
151.3 |
% |
$499,268 |
Judith A. Shoulak |
|
$395,750 |
|
|
75 |
% |
|
124.6 |
% |
|
33.3 |
% |
|
158.0 |
% |
$468,845 |
Kathleen M. Benning |
|
$348,250 |
|
|
75 |
% |
|
124.6 |
% |
|
26.7 |
% |
|
151.3 |
% |
$395,159 |
Equity Incentive Compensation
The Committee believes equity is the most effective tool to align the executive team with the long-term interests of shareholders.
Therefore, our EIP is the most heavily-weighted component of pay for our named executive officers. The weight of each component in 2014 remained unchanged from 2013 (75% of the total grant date fair
value in PRSUs, 25% of the grant date fair value in stock options). We believe that this combination appropriately incentivizes management to focus on long-term profitable growth, while creating
ongoing alignment with shareholder value. Further, the Committee believes equity is an appropriate motivational tool and assists in the retention of critical senior leaders needed to drive our
long-term growth strategy. In limited circumstances, the Committee may utilize time-based restricted stock unit grants to recognize significant achievements or for retention purposes.
Target Equity Incentive Opportunities as Percentage of Base Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
PRSUs
(75% of total equity) |
|
Stock Options
(25% of total equity) |
|
Total Equity |
|
Chief Executive Officer |
|
|
187.50 |
% |
|
62.50 |
% |
|
250.00 |
% |
Chief Operating Officer |
|
|
105.00 |
% |
|
35.00 |
% |
|
140.00 |
% |
Chief Financial Officer |
|
|
90.00 |
% |
|
30.00 |
% |
|
120.00 |
% |
Other Executive Vice Presidents |
|
|
86.25 |
% |
|
28.75 |
% |
|
115.00 |
% |
PRSUs. Our named executive officers receive annual grants of PRSUs subject to certain vesting and performance conditions. The
performance criterion
for the PRSUs is three-year cumulative net income. This measurement was chosen because it is a long-term reflection of shareholder value.
The
threshold, target and maximum number of PRSUs awarded in 2014 that may be earned and vest based on the three-year performance period ending December 26, 2016 as a percentage
of base salary are:
Vesting Levels (as % of Salary)
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Chief Executive Officer |
|
|
140.60 |
% |
|
187.50 |
% |
|
375.00 |
% |
Chief Operating Officer |
|
|
78.75 |
% |
|
105.00 |
% |
|
210.00 |
% |
Chief Financial Officer |
|
|
67.50 |
% |
|
90.00 |
% |
|
180.00 |
% |
Other Executive Vice Presidents |
|
|
64.69 |
% |
|
86.25 |
% |
|
172.50 |
% |
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The
actual number of PRSUs granted to each executive officer in 2014, which represents the maximum number PRSUs that may be earned, was determined by the following equation:
The
Calculated Stock Price is the average of the twenty data points representing the high and low stock price on the ten trading days prior to grant. Grants are made on the first day of
the second quarter. For example, Sally Smith's 2014 base salary was $750,000, and the Calculated Stock Price for 2014 was $150.69 per share, which resulted in a grant of 18,664 restricted stock units
on March 31, 2014. If the company reaches its three-year cumulative net income threshold goal, 37.5% of these PRSUs will vest and be paid out in an equal number of shares. If the company
reaches its three-year cumulative net income target, 50% of the PRSUs will vest and be paid out in shares. 100% of the PRSUs will vest and be paid out in shares if the company reaches its three-year
cumulative net income maximum goal. If the company does not reach its threshold goal, no shares will vest.
For
the 3-year performance period that ended December 28, 2014, PRSUs were granted based on a three-year cumulative net income goal. The company achieved a net income of
$222.9 million, which was 104.8% of its target net income goal of $212.6 million, and the executive officers, therefore, earned 75.85% of the maximum number of shares under the program.
The threshold net income goal was $194.5 million and the maximum net income goal was $232.6 million. Payouts for the named executive officers for this performance period are summarized
in the "Option Exercises and Stock Vested" table on page 36.
For
the three year performance period that ends December 27, 2015 and the 3-year performance period that ends December 26, 2016, PRSUs were also granted on the basis of a
three-year cliff vest, based on a three-year cumulative net income goal. The shares will not vest until the end of the third fiscal year. Any PRSUs not earned at the end of the three-year performance
period are forfeited.
Stock Options. In 2014, our named executive officers received grants of seven-year stock options, which vest in four equal
installments on the last
day of each fiscal year starting with the year of grant. The grants were based on a percentage of the executive officer's base salary. The number of shares underlying stock options awarded to each
executive officer in 2014 was determined by the following equation:
Other Benefits
Deferred Compensation Program. We contribute a percentage of each executive officer's annual base salary to our nonqualified
deferred compensation
plan (the "Deferred Compensation Plan"). The Deferred Compensation Plan is an unfunded plan maintained to provide additional retirement benefits to the eligible team members as an executive retention
tool. We make contributions to the Deferred Compensation Plan in an aggregate annual amount equal to 12.5% of base pay for the named executive officers.
Participants
self-direct the investment of their contributions in funds that are similar to the funds offered by our 401(k) Plan. The earnings or losses represent the general market
earnings of investment elections made by each named executive officer.
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Annual Meeting of Shareholders | 27
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Company
contributions and earnings thereon under the Deferred Compensation Plan ordinarily vest ratably over five years from date of hire. However, if an executive terminates employment
with us and accepts employment with a competitor, the vested amount will be determined using a vesting schedule running ten years from the date of hire.
The
Deferred Compensation Plan permits participants to defer up to 100% of salary, cash incentive payments, and restricted stock unit payouts. In 2014, no named executive officers
elected to defer a portion of his or her compensation. The timing and form of distributions under the Deferred Compensation Plan are described below under the caption "Non-Qualified Deferred
Compensation."
Perquisites and Benefits. Consistent with our commitment to emphasize pay for performance, our executive officers receive very
few perquisites. We
believe the ones we provide are reasonable and comparable to other companies we compete with for executive talent. The Committee periodically reviews the levels of perquisites and other personal
benefits provided to our executive officers.
In
addition to benefits available to all Team Members under company-wide health, dental, retirement savings and life insurance plans, we provide executive officers the personal benefits
described below, which are quantified in the column "All Other Compensation" of the "Summary Compensation Table" on page 32.
-
- We provide the executive officers with executive physicals, individual disability insurance and supplemental life insurance. The
supplemental life insurance policies have a fixed value for the life of the policy, and will not be increased for subsequent salary adjustments. The supplemental disability insurance will provide
monthly income to that person until the earlier of their recovery or their sixty-fifth birthday.
-
- We also provide the executive officers with personal financial planning services.
-
- We provide and maintain a company-owned vehicle for the Chief Executive Officer and Chief Financial Officer. In March 2014, we
eliminated the annual vehicle allowance that was provided to other executive officers.
Stock Ownership Guidelines
We believe the executive officers and directors should have an appropriate equity interest in order to align their interests with those
of our shareholders. We encourage executive officers to own stock by providing opportunities for stock ownership through stock options, PRSUs, and an Employee Stock Purchase Plan. We grant
non-employee directors $85,000 worth of fully-vested stock units annually. We instituted stock ownership guidelines in May 2011, and the stock ownership guidelines are as follows:
|
|
|
Director/Officer
|
|
Amount of stock required |
Chief Executive Officer |
|
Five times base salary |
Chief Operating Officer |
|
Three times base salary |
Executive Vice Presidents |
|
Three times base salary |
Non-Employee Director |
|
Five times annual cash retainer |
Executive
officers and directors have six years to reach their stock ownership guidelines and the guidelines credit individuals for all stock held solely by the individual, including
shares held outright, fully vested restricted stock units, "vested, in the money" stock options (current, pre-tax value of vested stock options if they were exercised; only takes into account stock
options where current stock price is above grant price), stock purchased through the Employee Stock Purchase Plan, and share equivalents held in deferred compensation accounts. Each of the named
executive officers have met the ownership guidelines and all our directors have either met the guideline or are approaching the guideline in compliance with our phase-in period.
Anti-pledging/Anti-hedging Policies
Executive officers and directors are prohibited from using Buffalo Wild Wings stock as collateral for margin loans, whether for the
purchase of Buffalo Wild Wings stock or any other securities. Executive officers and directors also must not "sell short" or otherwise hedge their holdings of Buffalo Wild Wings stock.
28 | 2015
Annual Meeting of Shareholders
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Table of Contents
Separation and Change in Control Arrangements
The named executive officers, in accordance with the terms of their respective employment agreements and award agreements under equity
compensation plans, are eligible for benefits and payments upon
certain terminations of employment as described under "Potential Payments Upon Termination or Change in Control" on page 37.
Separation Benefits. Severance payments for named executive officers have been and continue to be triggered upon (i) the
company's failure to
renew an employment agreement, (ii) the executive's resignation with good reason, or (iii) the company's termination of executive's employment without cause. The Employment Agreements
provide for severance payments of base salary and medical benefits for 12 months if the executive has been employed by the company for less than five years and 18 months if the executive
has been employed by the company for 5 years or more. Regardless of the executive's length of service, the severance arrangements in the Employment Agreements also include payment of a
pro-rated annual cash incentive for the year of termination based on actual performance against established goals. Payment of severance amounts is accelerated if the executive resigns for good reason
or is terminated without cause within one year of a change in control. We believe that the severance arrangements are appropriate, given the service provided, the additional time that may be required
for higher-level Team Members to secure other employment, and the benefit to the company of obtaining twelve-month non-compete and non-solicitation commitments and a general release from each
executive.
Change in Control Separation. If a named executive officer's employment is terminated by the company without cause or by the
executive for good
reason within one year after a change in control in which outstanding equity awards are continued, assumed or replaced, then, in addition to the severance payments described in the previous paragraph,
the exercisability of all of the executive's outstanding stock options will be accelerated and a pro rata portion of any outstanding PRSUs, based on an assumed target level of performance will
immediately vest. The Committee believes the use of a "double trigger" arrangement, requiring both a change in control and a termination of employment before accelerating vesting and exercisability,
appropriately addresses several goals. It reflects the value to the company of avoiding the distraction and loss of key executives that may occur in connection with any potential or actual change in
control, without providing accelerated benefits to executives who continue to enjoy employment after such a transaction. At the same time, the arrangement is believed to be more attractive to
acquiring companies, who may place significant value on retaining members of the company's executive team. Consistent with best practices, no excise tax or income tax gross-ups are provided to offset
any tax liability for any Change in Control Separation payments.
Clawback Policy. The company has an Incentive Compensation Recovery Policy for all executive officers ("Covered Executives").
Under this Policy, the
company will seek to recover or cancel cash or equity-based incentive compensation previously provided to a Covered Executive if within three years from the date such incentive compensation was
provided, the company is required to prepare an accounting restatement due to material noncompliance with any then applicable financial reporting requirement under the securities laws and misconduct
by the Covered Executive caused or contributed to the noncompliance. The Committee believes that the officers who certify the company's financial reporting should not be unjustly enriched for prior
reporting periods in the event of such a restatement.
Say-on-Pay Frequency
At our Annual Shareholders' Meeting held on May 4, 2011, our shareholders supported our recommendation to perform an annual
say-on-pay vote. We will, therefore, hold an advisory vote on executive officer compensation each year. We expect to hold the next vote to determine the frequency of the compensation advisory vote at
our 2017 Annual Shareholders' Meeting.
ADVISORY VOTE ON EXECUTIVE OFFICER COMPENSATION
(PROPOSAL #2)
The company seeks a non-binding advisory vote from its shareholders to approve the compensation of our named executive officers as
described in this proxy statement under "Executive Compensation" and "Compensation Discussion and Analysis."
|
|
2015
Annual Meeting of Shareholders | 29
|
Table of Contents
This
proposal gives our shareholders the opportunity to express their views on the company's named executive officer compensation. Because your vote is advisory, it will not be binding
upon the Board of Directors. However, the Committee will take into account the outcome of the vote when making future named executive officer compensation decisions. Our 2013 compensation was
supported by over 99% of our shareholders, and the Committee did not make any significant changes to the compensation for 2014 because it felt that the compensation program fairly motivated and
compensated our named executive officers, which was demonstrated by the strong support of the shareholders.
Our
executive compensation program has been designed to pay base salaries targeted around the median of our peer group with the opportunity to earn above this level when the company's
performance warrants it. The Committee looks to implement a compensation program that promotes consistent strong long-term growth in shareholder value and provides balanced incentives to executives
and managers that reward a mix of annual and long-term financial performance.
As
we discuss under "Compensation Discussion and Analysis," we believe that under our compensation policies and decisions, our named executive officers should earn more than their base
salaries if performance goals are met and be rewarded for long-term sustained growth in company value. Base salaries are targeted around the median of the market range and the incentive programs are
designed so that named executive officers earn a meaningful amount of cash and equity if the company meets its annual and long-term goals. The key drivers of named executive officer compensation were
our fiscal 2014 performance, our performance for the previous three years and the individual performance of our named executive officers.
We
are presenting this proposal, which gives you as a shareholder the opportunity to approve our named executive officer compensation as disclosed in this proxy statement by voting for
or against the following resolution:
RESOLVED,
that the shareholders approve the compensation of the company's named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related
disclosure contained in the company's proxy statement for the annual meeting of shareholders to be held May 7, 2015.
THE BOARD OF DIRECTORS BELIEVES THAT THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS IS APPROPRIATE AND RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION AS DESCRIBED IN THE
COMPENSATION DISCUSSION AND ANALYSIS AND THE COMPENSATION TABLES AND
OTHERWISE IN THIS PROXY STATEMENT.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Committee was an officer or employee of the company during fiscal year 2014 or in any prior year, and no member of the
Committee had a relationship which would require disclosure under Item 404(a) of Regulation S-K. There were no compensation committee interlocks as described in Item 407(e)(4) of
Regulation S-K.
COMPENSATION COMMITTEE REPORT
The Committee evaluates and establishes compensation for executive officers and oversees the deferred compensation plan, the equity
plan, and other management incentive, benefit, and perquisite programs. Management has the primary responsibility for the company's financial statements and reporting process, including the disclosure
of executive compensation. With this in mind, the Committee has reviewed and discussed with management the "Compensation Discussion and Analysis" found on pages 15-29 of this Proxy Statement.
Based on the review and discussions with management, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing
with the Securities and Exchange Commission.
30 | 2015
Annual Meeting of Shareholders
|
|
|
Table of Contents
A
copy of the current Compensation Committee Charter can be found on the Buffalo Wild Wings website at www.buffalowildwings.com.
|
|
|
|
|
Members of the Compensation Committee
Michael P. Johnson, Chair
Dale M. Applequist
J. Oliver Maggard
James M. Damian |
|
|
2015
Annual Meeting of Shareholders | 31
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Table of Contents
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table sets forth certain information regarding compensation paid or accrued during our last three fiscal years
to the Chief Executive Officer, Chief Financial Officer and the other three highest paid executive officers based on total compensation that was earned or accrued for fiscal year 2014.
Any
discretionary compensation payments to the named executive officers were made pursuant to the annual cash incentive program and are included below in the Summary Compensation Table
under the heading "Non-Equity Incentive Plan Compensation."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year |
|
Salary ($) |
|
Stock
Awards
($)(1)(6) |
|
Option
Awards
($)(2) |
|
Non-Equity
Incentive Plan
Compensation
($)(3) |
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(4) |
|
All Other
Compensation
($)(5) |
|
Total ($) |
|
Sally J. Smith |
|
|
2014 |
|
$ |
750,000 |
|
$ |
1,376,657 |
(6) |
$ |
468,758 |
|
$ |
1,184,725 |
|
$ |
70,392 |
|
$ |
161,634 |
|
$ |
4,012,167 |
|
Chief Executive Officer and |
|
|
2013 |
|
$ |
700,000 |
|
$ |
1,339,297 |
(6) |
$ |
446,435 |
|
$ |
919,800 |
|
$ |
228,010 |
|
$ |
149,865 |
|
$ |
3,783,406 |
|
President |
|
|
2012 |
|
$ |
635,000 |
|
$ |
1,952,447 |
(6) |
$ |
317,497 |
|
$ |
671,735 |
|
$ |
205,533 |
|
$ |
139,755 |
|
$ |
3,921,967 |
|
James M. Schmidt |
|
|
2014 |
|
$ |
503,250 |
|
$ |
517,279 |
(6) |
$ |
176,140 |
|
$ |
627,553 |
|
$ |
300,140 |
|
$ |
98,164 |
|
$ |
2,222,525 |
|
Chief Operating Officer |
|
|
2013 |
|
$ |
475,000 |
|
$ |
454,412 |
(6) |
$ |
151,475 |
|
$ |
499,320 |
|
$ |
676,525 |
|
$ |
97,489 |
|
$ |
2,354,221 |
|
|
|
|
2012 |
|
$ |
450,000 |
|
$ |
587,444 |
(6) |
$ |
112,482 |
|
$ |
379,530 |
|
$ |
88,859 |
|
$ |
91,956 |
|
$ |
1,710,272 |
|
Mary J. Twinem |
|
|
2014 |
|
$ |
440,000 |
|
$ |
387,683 |
(6) |
$ |
131,981 |
|
$ |
499,268 |
|
$ |
438,023 |
|
$ |
97,481 |
|
$ |
1,994,435 |
|
Executive VP and Chief |
|
|
2013 |
|
$ |
417,500 |
|
$ |
351,477 |
(6) |
$ |
117,156 |
|
$ |
411,446 |
|
$ |
838,159 |
|
$ |
95,529 |
|
$ |
2,231,267 |
|
Financial Officer |
|
|
2012 |
|
$ |
405,000 |
|
$ |
553,689 |
(6) |
$ |
101,246 |
|
$ |
322,583 |
|
$ |
212,388 |
|
$ |
90,642 |
|
$ |
1,685,548 |
|
Judith A. Shoulak |
|
|
2014 |
|
$ |
395,750 |
|
$ |
334,133 |
(6) |
$ |
113,762 |
|
$ |
468,846 |
|
$ |
38,905 |
|
$ |
84,719 |
|
$ |
1,436,114 |
|
Executive VP, President North |
|
|
2013 |
|
$ |
370,000 |
|
$ |
311,476 |
(6) |
$ |
103,828 |
|
$ |
364,635 |
|
$ |
98,384 |
|
$ |
85,666 |
|
$ |
1,333,989 |
|
America Buffalo Wild Wings |
|
|
2012 |
|
$ |
355,000 |
|
$ |
266,264 |
(6) |
$ |
88,748 |
|
$ |
282,758 |
|
$ |
58,483 |
|
$ |
82,634 |
|
$ |
1,133,886 |
|
Kathleen M. Benning |
|
|
2014 |
|
$ |
348,250 |
|
$ |
294,081 |
(6) |
$ |
100,113 |
|
$ |
395,159 |
|
$ |
25,733 |
|
$ |
72,848 |
|
$ |
1,236,184 |
|
Executive VP, Chief Strategy |
|
|
2013 |
|
$ |
325,000 |
|
$ |
273,575 |
(6) |
$ |
91,190 |
|
$ |
320,288 |
|
$ |
63,072 |
|
$ |
73,717 |
|
$ |
1,146,841 |
|
Officer and Business Development |
|
|
2012 |
|
$ |
300,000 |
|
$ |
225,003 |
(6) |
$ |
74,988 |
|
$ |
238,950 |
|
$ |
45,517 |
|
$ |
70,060 |
|
$ |
954,517 |
|
- (1)
- The
amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 in each fiscal year for restricted stock unit awards
that we have made pursuant to our 2003 Equity Incentive Plan and 2012 Equity Incentive Plan. For a discussion of our valuation assumptions for 2014, see footnote 1(w) to our audited financial
statements included in our Annual Report on Form 10-K for the year ended December 28, 2014, filed with the Securities and Exchange Commission. See the "Option Exercises and Stock Vested"
table for shares and value realized by each named executive officer during 2014 from equity awards granted in earlier years, and the "Grants of Plan Based Awards" table for more information regarding
the restricted stock unit awards we granted in 2014. For a discussion of our valuation assumptions for 2013 and 2012, see footnote 1(w) to our consolidated financial statements included in our Annual
Report on Form 10-K for the years ended December 29, 2013 and December 30, 2012, respectively, filed with the Securities and Exchange Commission.
- (2)
- The
amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 in each fiscal year for stock option awards that we
have made pursuant to our 2003 Equity Incentive Plan and 2012 Equity Incentive Plan. For a discussion of our valuation assumptions for 2014, see footnote 1(w) to our audited financial statements
included in our Annual Report on Form 10-K for the year ended December 28, 2014, filed with the Securities and Exchange Commission. For a discussion of our valuation assumptions for 2013
and 2012, see footnote 1(w) to our consolidated financial statements included in our Annual Reports on Form 10-K for the years ended December 29, 2013 and December 30, 2012,
respectively, filed with the Securities and Exchange Commission.
- (3)
- The
amounts represent cash incentive awards made pursuant to our 2014, 2013, and 2012 annual cash incentive programs. Our 2014 annual cash incentive program
is discussed in further detail in the "Compensation Discussion and Analysis" under "Annual Cash Incentive Compensation" on page 24. Although the performance conditions for these awards were
satisfied in the year listed, pursuant to the terms of the annual cash incentive programs, executives did not receive payment until the following year. Therefore, the 2014 award was paid on
March 6, 2015, the 2013 award was paid on March 7, 2014 and the 2012 award was paid on March 8, 2013.
- (4)
- Amounts
shown for 2014, 2013 and 2012 reflect the total earnings on nonqualified deferred compensation under the Deferred Compensation Plan. Even though
earnings on contributions to the plan are calculated in the same manner and at the same rate as earnings on comparable investments in our 401(k) Plan and are therefore not deemed above-market, such
earnings are included here because this plan is not considered an "excess benefit plan." When total earnings are negative, they are not shown in this table. For further details, see "Deferred
Compensation Program" under "Other Benefits" on page 27 and the discussion on page 36 entitled "Nonqualified Deferred Compensation."
32 | 2015
Annual Meeting of Shareholders
|
|
|
Table of Contents
- (5)
- All
other annual compensation for fiscal year 2014 consists of the items set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Lease/
Allowance(a) |
|
Executive
Medical Plan |
|
Executive
Long-Term
Disability
Premiums |
|
Executive
Life Insurance
Premiums |
|
Contribution to
401(k) Plan |
|
Deferred
Compensation
Plan Accrual(b) |
|
Financial
Planning
Services |
|
Sally J. Smith |
|
$ |
25,856 |
|
|
|
|
$ |
4,330 |
|
$ |
5,671 |
|
$ |
10,200 |
|
$ |
92,188 |
|
$ |
23,390 |
|
James M. Schmidt |
|
$ |
1,500 |
|
$ |
1,075 |
|
$ |
4,196 |
|
$ |
1,634 |
|
$ |
10,200 |
|
$ |
62,023 |
|
$ |
17,535 |
|
Mary J. Twinem |
|
$ |
11,329 |
|
|
|
|
$ |
3,009 |
|
$ |
1,110 |
|
$ |
10,200 |
|
$ |
54,297 |
|
$ |
17,535 |
|
Judith A. Shoulak |
|
$ |
1,500 |
|
|
|
|
$ |
3,960 |
|
$ |
2,860 |
|
$ |
10,200 |
|
$ |
48,664 |
|
$ |
17,535 |
|
Kathleen M. Benning |
|
$ |
1,500 |
|
|
|
|
|
|
|
$ |
808 |
|
$ |
10,200 |
|
$ |
42,805 |
|
$ |
17,535 |
|
- (a)
- The
amounts shown for Ms. Smith and Ms. Twinem cover the lease of an automobile, insurance and maintenance of such automobile; the amounts
shown for all other named executive officers represent an automobile allowance that was eliminated in March 2014.
- (b)
- These
amounts were contributed by us for the officers' account and exclude investment earnings (losses) on individual deferred compensation investment
accounts. The deferred compensation vests on the basis of 20% for each year of service with Buffalo Wild Wings. Each of the named officers is fully vested.
- (6)
- For
performance-based restricted stock units granted in 2014, 2013, and 2012 under our 2003 Equity Incentive Plan and 2012 Equity Incentive Plan, 50% of the
PRSUs will vest if the company achieves target performance, and the remaining 50% will vest if the company performs at maximum. At the time of the grants, we deemed achievement of target performance
probable, and therefore the grant date fair values of the 2014, 2013, and 2012 PRSU awards as reflected in this column were calculated on that basis. If, instead, the PRSU amounts had been calculated
assuming the company would achieve maximum performance, the grant date fair values for the 2014 PRSU grants would have been as follows: Ms. Smith, $2,753,313; Mr. Schmidt, $1,034,558;
Ms. Twinem, $775,365; Ms. Shoulak, $668,266; Ms. Benning, $588,162. The grant date fair values for the 2013 PRSU grants would have been as follows: Ms. Smith, $2,678,593;
Mr. Schmidt, $908,824; Ms. Twinem, $702,953; Ms. Shoulak, $622,951; Ms. Benning, $547,150. The grant date fair values for the 2012 restricted stock unit grants (which
included both PRSUs and time-vested units for some individuals) would have been as follows: Ms. Smith, $2,904,956 (including $999,938 for a time-based grant); Mr. Schmidt, $924,949
(including $249,940 for a time-based grant); Ms. Twinem, $857,438 (including $249,940 for a time-based grant); Ms. Shoulak, $532,529; Ms. Benning, $450,006.
EMPLOYMENT AGREEMENTS
On September 16, 2008, we entered into amended and restated employment agreements with each of our then current executive
officers, including the named executive officers. The initial term of the agreements ended on December 27, 2009, the last day of our 2009 fiscal year. On May 11, 2012, we entered into
employment agreements with an additional two executive officers. The initial term of these agreements ended on December 30, 2012. All of these agreements provide for an automatic extension for
successive one-year periods, each ending on the last day of the fiscal year, unless the agreement is terminated earlier or either party gives the other a non-renewal notice, and the agreements have
thus been extended. The agreements provide for a base salary to be approved by the Board, or the Compensation Committee, on an annual basis. The base salaries for fiscal year 2014 are set forth in the
Summary Compensation Table above.
As
provided in the employment agreements, the officers agree to maintain confidentiality, not compete with us during employment and for one year following employment, and not hire or
solicit anyone affiliated with us in any way for one year following employment. The agreements provide for severance arrangements under certain terminations. See "Potential Payments Upon Termination
or Change in Control" on page 37 for further information with respect to these termination provisions.
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|
2015
Annual Meeting of Shareholders | 33
|
Table of Contents
GRANTS OF PLAN-BASED AWARDS DURING 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3) |
|
|
|
|
|
|
|
|
|
Estimated Payouts
Under Non-Equity
Incentive Plan Awards(1) |
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2) |
|
|
|
|
|
|
|
|
|
Exercise or
Base Price
of Option
Awards
($/Sh) |
|
Grant Date
Fair Value
of Stock
and Option
Awards ($)(4) |
|
Name
|
|
Grant
Date |
|
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
|
Threshold
(#) |
|
Target
(#) |
|
Maximum
(#) |
|
Sally J. Smith |
|
|
N/A |
|
$ |
216,390 |
|
$ |
750,000 |
|
$ |
1,395,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
6,999 |
|
|
9,332 |
|
|
18,664 |
|
|
|
|
|
|
|
$ |
1,376,657 |
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,590 |
|
$ |
147.52 |
|
$ |
468,758 |
|
James M. Schmidt |
|
|
N/A |
|
$ |
116,158 |
|
$ |
402,600 |
|
$ |
748,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
2,630 |
|
|
3,507 |
|
|
7,013 |
|
|
|
|
|
|
|
$ |
517,279 |
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,852 |
|
$ |
147.52 |
|
$ |
176,140 |
|
Mary J. Twinem |
|
|
N/A |
|
$ |
95,212 |
|
$ |
330,000 |
|
$ |
613,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
1,971 |
|
|
2,628 |
|
|
5,256 |
|
|
|
|
|
|
|
$ |
387,683 |
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,137 |
|
$ |
147.52 |
|
$ |
131,981 |
|
Judith A. Shoulak |
|
|
N/A |
|
$ |
85,636 |
|
$ |
296,813 |
|
$ |
552,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
1,699 |
|
|
2,265 |
|
|
4,530 |
|
|
|
|
|
|
|
$ |
334,133 |
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,842 |
|
$ |
147.52 |
|
$ |
113,762 |
|
Kathleen M. Benning |
|
|
N/A |
|
$ |
75,358 |
|
$ |
261,188 |
|
$ |
485,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
1,495 |
|
|
1,994 |
|
|
3,987 |
|
|
|
|
|
|
|
$ |
294,081 |
|
|
|
|
3/31/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,621 |
|
$ |
147.52 |
|
$ |
100,113 |
|
- (1)
- These
columns show the range of payouts for fiscal 2014 performance under our cash incentive program described in the section titled "Annual Cash Incentive
Compensation" in the "Compensation Discussion and Analysis" on page 24. The cash incentive payments for 2014 performance have been made based on the metrics described and are shown in the
column "Non- equity Incentive Plan Compensation" of the "Summary Compensation Table" on page 32.
- (2)
- Grants
made on March 31, 2014 reflect long-term equity incentive awards in the form of performance-based restricted stock units granted to each named
executive officer in accordance with our 2014 equity incentive program described in the "Compensation Discussion and Analysis" under "Equity Incentive Compensation" on page 26. Some or all of
these units are scheduled to vest on the third anniversary of the date of grant depending on the extent to which the company achieves a cumulative net income goal over the three-year performance
period ending December 26, 2016.
- (3)
- The
amounts represent stock options granted to each named executive officer on March 31, 2014 in accordance with our 2014 equity incentive program
described in the "Compensation Discussion and Analysis" under "Equity Incentive Compensation" on page 26. The options vest ratably over a four-year period, and they expire on
December 27, 2020.
- (4)
- The
amounts represent the grant date fair value of each of the long-term equity incentive awards computed in accordance with FASB ASC Topic 718. Assumptions
used in the calculation of these amounts are included in footnote 1(w) to our audited financial statements included in our annual report on Form 10-K for the fiscal year ended
December 28, 2014 filed with the Securities and Exchange Commission.
34 | 2015
Annual Meeting of Shareholders
|
|
|
Table of Contents
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1) |
|
Option
Exercise
Price ($) |
|
Option
Expiration
Date |
|
Number of
Shares of Units
of Stock
That Have Not
Vested (#)(2) |
|
Market Value
of Shares or
Units of Stock
That Have Not
Vested(3) |
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#)(4) |
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested ($)(3) |
|
Sally J. Smith |
|
|
8,359 |
|
|
|
|
$ |
31.00 |
|
|
12/27/15 |
|
|
11,234 |
|
$ |
2,056,721 |
|
|
49,266 |
|
$ |
9,019,619 |
|
|
|
|
8,207 |
|
|
|
|
$ |
48.35 |
|
|
12/25/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,175 |
|
|
|
|
$ |
53.75 |
|
|
12/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,849 |
|
|
1,950 |
|
$ |
94.42 |
|
|
12/30/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,147 |
|
|
6,146 |
|
$ |
87.53 |
|
|
12/29/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,898 |
|
|
5,692 |
|
$ |
147.52 |
|
|
12/27/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. Schmidt |
|
|
1,352 |
|
|
|
|
$ |
30.87 |
|
|
12/27/15 |
|
|
2,808 |
|
$ |
514,089 |
|
|
17,396 |
|
$ |
3,184,860 |
|
|
|
|
3,908 |
|
|
|
|
$ |
48.35 |
|
|
12/25/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,833 |
|
|
|
|
$ |
53.75 |
|
|
12/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,072 |
|
|
691 |
|
$ |
94.42 |
|
|
12/30/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,086 |
|
|
2,085 |
|
$ |
87.53 |
|
|
12/29/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
713 |
|
|
2,139 |
|
$ |
147.52 |
|
|
12/27/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary J. Twinem |
|
|
3,647 |
|
|
|
|
$ |
48.35 |
|
|
12/25/16 |
|
|
2,808 |
|
$ |
514,089 |
|
|
13,287 |
|
$ |
2,432,584 |
|
|
|
|
3,833 |
|
|
|
|
$ |
53.75 |
|
|
12/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,865 |
|
|
622 |
|
$ |
94.42 |
|
|
12/30/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,613 |
|
|
1,613 |
|
$ |
87.53 |
|
|
12/29/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534 |
|
|
1,603 |
|
$ |
147.52 |
|
|
12/27/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Judith A. Shoulak |
|
|
4,762 |
|
|
|
|
$ |
30.87 |
|
|
12/27/15 |
|
|
|
|
|
|
|
|
11,647 |
|
$ |
2,132,333 |
|
|
|
|
3,908 |
|
|
|
|
$ |
48.35 |
|
|
12/25/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,373 |
|
|
|
|
$ |
53.75 |
|
|
12/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,635 |
|
|
545 |
|
$ |
94.42 |
|
|
12/30/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,430 |
|
|
1,429 |
|
$ |
87.53 |
|
|
12/29/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
461 |
|
|
1,381 |
|
$ |
147.52 |
|
|
12/27/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathleen M. Benning |
|
|
4,068 |
|
|
|
|
$ |
30.87 |
|
|
12/27/15 |
|
|
|
|
|
|
|
|
10,238 |
|
$ |
1,874,373 |
|
|
|
|
3,175 |
|
|
|
|
$ |
48.35 |
|
|
12/25/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,913 |
|
|
|
|
$ |
53.75 |
|
|
12/31/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,382 |
|
|
460 |
|
$ |
94.42 |
|
|
12/30/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,256 |
|
|
1,255 |
|
$ |
87.53 |
|
|
12/29/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
405 |
|
|
1,216 |
|
$ |
147.52 |
|
|
12/27/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- The
total options that were granted in each year vest to the extent of 25% of the total granted shares on the last day of each fiscal year beginning with
the grant date year, which is six years prior to the applicable expiration date.
- (2)
- Represents
the number of shares of Common Stock that an officer would receive under the time-based restricted stock units awarded March 12, 2012.
These awards vested March 12, 2015.
- (3)
- The
amounts reflect the value as calculated based on the closing price of our Common Stock on December 28, 2014, of $183.08.
- (4)
- Represents
the maximum number of shares of Common Stock that an officer would receive under the performance-based restricted stock units awarded
April 1, 2013 and March 31, 2014, as follows:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date |
|
Vest
on 12/27/15(a)at
maximum |
|
Vest
on 12/25/16(a)at
maximum |
|
Sally J. Smith |
|
|
4/1/13 |
|
|
30,602 |
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
18,664 |
|
James M. Schmidt |
|
|
4/1/13 |
|
|
10,383 |
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
7,013 |
|
Mary J. Twinem |
|
|
4/1/13 |
|
|
8,031 |
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
5,256 |
|
Judith A. Shoulak |
|
|
4/1/13 |
|
|
7,117 |
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
4,530 |
|
Kathleen M. Benning |
|
|
4/1/13 |
|
|
6,251 |
|
|
|
|
|
|
|
3/31/14 |
|
|
|
|
|
3,987 |
|
- (a)
- The
vesting is subject to certain performance targets being attained; therefore, the number of shares vesting may be less. For more information on the
vesting conditions for the restricted stock unit awards, please see the discussion entitled "Equity Incentive Compensation" that is contained in the "Compensation Discussion and Analysis."
|
|
2015
Annual Meeting of Shareholders | 35
|
Table of Contents
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
Name
|
|
Number of Shares
Acquired
on Exercise (#) |
|
Value Realized
on Exercise ($)(1) |
|
Number of Shares
Acquired
on Vesting (#)(2) |
|
Value Realized
on Vesting ($)(2) |
|
Sally J. Smith |
|
|
|
|
|
|
|
|
15,303 |
|
$ |
2,801,673 |
|
James M. Schmidt |
|
|
5,135 |
|
$ |
572,441 |
|
|
5,423 |
|
$ |
992,843 |
|
Mary J. Twinem |
|
|
4,962 |
|
$ |
558,404 |
|
|
4,880 |
|
$ |
893,430 |
|
Judith A. Shoulak |
|
|
3,748 |
|
$ |
446,499 |
|
|
4,278 |
|
$ |
783,216 |
|
Kathleen M. Benning |
|
|
4,633 |
|
$ |
538,864 |
|
|
3,615 |
|
$ |
661,834 |
|
- (1)
- Amounts
reflect the difference between the exercise price of the stock option and the market price on the date of exercise.
- (2)
- The
value realized reflects the market value of the stock on the date that the PRSUs vested. These shares were issued in settlement of PRSU awards granted
on March 26, 2012 that were earned and became vested as of December 28, 2014. The price of our Common Stock on December 28, 2014 was $183.08 per share.
NON-QUALIFIED DEFERRED COMPENSATION
We contribute a percentage of the executive officers' annual base salary to our Deferred Compensation Plan. The amount of our
contribution for each executive is based on a percentage of base salary, which for 2014 was 12.5% for all of the named executive officers. The company's contributions under the Deferred Compensation
Plan, along with earnings thereon, ordinarily vest ratably over five years from date of hire, except that such amounts will vest in full upon a participant's death, disability or reaching the age of
65, or upon a change in control of the company. If, however, a participant terminates employment with us and accepts employment with a competitor, his or her vested amount will be determined using a
ratable vesting schedule running ten years from the date of hire.
The
Deferred Compensation Plan permits our named executive officer participants to defer up to 100% of compensation attributable to salary, bonus, and restricted stock unit payouts. All
such contributions and the earnings thereon are immediately vested.
The
options available for investment under the Deferred Compensation Plan and their rates of return for the calendar year ended December 28, 2014 were as follows:
|
|
|
|
|
|
|
Investment Advisor
|
|
Investment Option |
|
1 Year Rate of
Return |
|
Principal Global Investors |
|
Large Cap S&P 500 Index R3 Fund |
|
|
12.82 |
% |
Capital Research and Mgmt Co |
|
American Funds Growth Fund of America R3 Fund |
|
|
8.94 |
% |
Robert Baird / William Blair |
|
MidCap Growth III R3 Fund |
|
|
6.82 |
% |
Principal Global Investors |
|
SmallCap Blend R3 Fund |
|
|
4.41 |
% |
Principal Global Investors |
|
Diversified International R3 Fund |
|
|
3.55 |
% |
Russell Investment Group |
|
Russell LifePoints Conservative Strategy R5 Fund |
|
|
3.72 |
% |
Russell Investment Group |
|
Russell LifePoints Moderate Strategy R5 Fund |
|
|
4.42 |
% |
Russell Investment Group |
|
Russell LifePoints Balanced Strategy R5 Fund |
|
|
4.28 |
% |
Russell Investment Group |
|
Russell LifePoints Growth Strategy R5 Fund |
|
|
2.93 |
% |
Russell Investment Group |
|
Russell LifePoints Equity Growth Strategy R5 Fund |
|
|
3.33 |
% |
Multiple Sub-Advisors |
|
Principal LifeTime Strategic Income R3 Fund |
|
|
3.98 |
% |
Multiple Sub-Advisors |
|
Principal LifeTime 2010 R3 Fund |
|
|
4.27 |
% |
Multiple Sub-Advisors |
|
Principal LifeTime 2020 R3 Fund |
|
|
4.99 |
% |
Principal Global Investors |
|
Money Market Institutional Fund |
|
|
n/a |
|
Fidelity Management & Research |
|
Fidelity Advisor High Income Advantage T fund |
|
|
3.85 |
% |
PIMCO |
|
PIMCO Total Return R Fund |
|
|
4.03 |
% |
Principal Global Investors |
|
Bond & Mortgage Securities R3 Fund |
|
|
4.51 |
% |
36 | 2015
Annual Meeting of Shareholders
|
|
|
Table of Contents
An
executive may receive distributions of employer contributions and earnings thereon from the Deferred Compensation Plan as a lump sum payment in the event of his or her death, or in
annual installments over five years in the event of disability or a separation from service. Distributions of an executive's contributions and earnings thereon may be made in a lump sum in the event
of his or her death, a separation from service in connection with a change in control or his
or her disability, or in annual installments over five years in the event of his or her disability or separation from service other than in connection with a change in control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last FY
($) |
|
Registrant
Contributions
in Last FY
($)(1) |
|
Aggregate Earnings
in Last FY
($)(2) |
|
Aggregate
Withdrawals/
Distributions ($) |
|
Aggregate Balance
at Last FYE
($)(3) |
|
Sally J. Smith |
|
$ |
0 |
|
$ |
92,188 |
|
$ |
70,392 |
|
$ |
93,194 |
|
$ |
2,394,108 |
|
James M. Schmidt |
|
$ |
0 |
|
$ |
62,023 |
|
$ |
300,140 |
|
$ |
0 |
|
$ |
2,096,852 |
|
Mary J. Twinem |
|
$ |
0 |
|
$ |
54,297 |
|
$ |
438,023 |
|
$ |
0 |
|
$ |
3,673,063 |
|
Judith A. Shoulak |
|
$ |
0 |
|
$ |
48,664 |
|
$ |
38,905 |
|
$ |
0 |
|
$ |
719,026 |
|
Kathleen M. Benning |
|
$ |
0 |
|
$ |
42,805 |
|
$ |
25,733 |
|
$ |
0 |
|
$ |
564,637 |
|
- (1)
- Amounts
are also reported as compensation to the named executive officers in the "All Other Compensation" column of the "Summary Compensation Table" on
page 32.
- (2)
- Contributions
to the Deferred Compensation Plan are invested as directed by participants in funds similar to those offered by our 401(k) Plan. Because
earnings are calculated in a similar manner and at a similar rate as earnings on investments in our 401(k) Plan, such earnings are not deemed above market. Nevertheless, they are reported in the
column of the Summary Compensation Table entitled "Change in Pension Value and Non-Qualified Deferred Compensation Earnings" because the Deferred Compensation Plan is not considered an "excess benefit
plan".
- (3)
- The
balances in this column include the following amounts which have been reported in the 2014 Summary Compensation Table as
compensation:
|
|
|
|
|
Name
|
|
Aggregate Balance at 2013 FYE |
|
Sally J. Smith |
|
$ |
2,324,723 |
|
James M. Schmidt |
|
$ |
1,734,689 |
|
Mary J. Twinem |
|
$ |
3,180,743 |
|
Judith A. Shoulak |
|
$ |
631,457 |
|
Kathleen M. Benning |
|
$ |
496,100 |
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As set forth under "Employment Agreements" on page 33, in September 2008, we amended and restated the employment agreements with
each of our named executive officers. According to these employment agreements and our incentive plans, the named executive officers would be entitled to payments and benefits upon certain
terminations. The employment agreements provide that, during the term of the agreement and for one year following termination of employment, the executives will not compete with us or solicit any of
our team members or customers. Upon termination for "cause" (generally involving criminal conduct, gross misconduct, material violation of company policies or material breach of the employment
agreements) or resignation without "good reason" (generally involving a material diminution of salary or authority, duties or responsibilities, a relocation of 50 miles or more in executive's
principal office or material breach of the employment agreement), the named executive officers would not be entitled to any additional compensation or benefits, other than those earned or accrued but
not yet paid at the date of termination, pursuant to the employment agreements. The employment agreements provide for severance payments upon (i) the company's failure to renew the agreement,
(ii) resignation with "good reason," and (iii) termination "without cause" consisting of the following:
-
- Base salary at time of termination for 18 months (assuming the executive has been employed for five years or more);
-
- Cash incentive payment based on actual performance and pro-rated for year of termination (the portion relating to individual
objectives will be deemed to have been met at a level resulting in a payout of 50% of the award amount allocated to such individual objectives); and
|
|
2015
Annual Meeting of Shareholders | 37
|
Table of Contents
-
- Health insurance (employer's portion) for 18 months (assuming the executive has been employed for five years or more).
Severance
payments will be made in a lump sum in connection with a resignation or termination following a change of control; in all other instances of termination of employment, payments
will be paid according to normal payroll practices.
The
equity award agreements that we utilize call for accelerated or continued vesting and exercisability of awards under certain termination and change in control situations. Upon
termination of employment due to death or permanent disability, a pro rata portion of any outstanding performance share award under the 2003 Equity Incentive Plan will immediately vest based on
assumed target level of performance, while any portion of an outstanding performance share award under the 2012 Equity Incentive Plan that is scheduled to vest at the end of the fiscal year in which
the termination of employment occurred will vest at the scheduled vesting time based on the company's actual performance. Upon termination of employment due to death or permanent disability, any
outstanding stock options will be exercisable for one year to the extent such options were vested at the time of employment termination. With respect to performance share awards under the 2012 Equity
Incentive Plan, upon termination of employment due to retirement (defined as involving an team member aged 55 or older with at least 10 years of service to the company), a pro rata portion of
the PRSUs that are earned at the end of the performance period will vest at that time. Upon a change in control, if outstanding PRSUs are not continued, assumed or replaced, or if they are continued,
assumed or replaced and an executive's employment is involuntarily terminated without cause or is voluntarily terminated by the executive for good reason, then a pro rata portion of any outstanding
PRSUs will immediately vest based on an assumed target level of performance. Under the same circumstances in connection with a change in control, outstanding stock options will vest and become
exercisable in full. In addition, our deferred compensation plan provides that vesting of employer contributions and earnings thereon would accelerate to 100% upon a change in control; however, the
effect of this provision is limited because all of the current named executive officers are fully vested in such plan. The named executive officers would have the right to receive benefits or payments
under any plan to the extent vested upon any termination or resignation.
For
these purposes, "change in control" is generally defined as a merger or consolidation involving the company, a sale of all or substantially all of the company's assets, the
acquisition by a person or group of a 30% or greater beneficial ownership interest in the company, certain changes in the composition of the company's board of directors or shareholder approval of a
complete liquidation or dissolution of the company.
38 | 2015
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Table of Contents
Assuming
that the named executive officers' employment terminated at the close of business on December 28, 2014, the named executive officers would have been entitled to the
following payments and benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company's
failure to renew
agreement |
|
Resignation
without good
reason;
termination
for cause |
|
Resignation
with good
reason;
termination
without cause |
|
Death or
permanent
disability |
|
Change in
Control
plus
Equity
Awards
will not
continue
or be
replaced |
|
Within one year
following a Change in
Control with one of
the following:
resignation with good
reason, termination
without good reason
or company's failure
to renew employment
agreement |
|
Sally J. Smith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
$ |
1,125,000 |
|
|
|
|
$ |
1,125,000 |
|
|
|
|
|
|
|
$ |
1,125,000 |
|
Incentive(1) |
|
$ |
150,000 |
|
|
|
|
$ |
150,000 |
|
|
|
|
|
|
|
$ |
150,000 |
|
Unvested stock options(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
962,545 |
|
$ |
962,545 |
|
Unvested performance-based Restricted Stock
Units(3) |
|
$ |
2,061,221 |
|
$ |
2,061,221 |
|
$ |
2,061,221 |
|
|
|
|
$ |
2,061,221 |
|
$ |
2,061,221 |
|
Deferred compensation(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits(5) |
|
$ |
11,017 |
|
|
|
|
$ |
11,017 |
|
|
|
|
|
|
|
$ |
11,017 |
|
Totals |
|
$ |
3,347,239 |
|
$ |
2,061,221 |
|
$ |
3,347,239 |
|
|
|
|
$ |
3,023,766 |
|
$ |
4,309,783 |
|
James M. Schmidt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
$ |
754,875 |
|
|
|
|
$ |
754,875 |
|
|
|
|
|
|
|
$ |
754,875 |
|
Annual Incentive(1) |
|
$ |
100,650 |
|
|
|
|
$ |
100,650 |
|
|
|
|
|
|
|
$ |
100,650 |
|
Unvested stock options(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
336,549 |
|
$ |
336,549 |
|
Unvested performance-based Restricted Stock
Units(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
714,927 |
|
$ |
714,927 |
|
Deferred compensation(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits(5) |
|
$ |
11,017 |
|
|
|
|
$ |
11,017 |
|
|
|
|
|
|
|
$ |
11,017 |
|
Totals |
|
$ |
866,542 |
|
|
|
|
$ |
866,542 |
|
|
|
|
$ |
1,051,476 |
|
$ |
1,918,018 |
|
Mary J. Twinem |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
$ |
660,000 |
|
|
|
|
$ |
660,000 |
|
|
|
|
|
|
|
$ |
660,000 |
|
Annual Incentive(1) |
|
$ |
66,000 |
|
|
|
|
$ |
66,000 |
|
|
|
|
|
|
|
$ |
66,000 |
|
Unvested stock options(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
266,271 |
|
$ |
266,271 |
|
Unvested performance-based Restricted Stock
Units(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
549,126 |
|
$ |
549,126 |
|
Deferred compensation(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits(5) |
|
$ |
11,017 |
|
|
|
|
$ |
11,017 |
|
|
|
|
|
|
|
$ |
11,017 |
|
Totals |
|
$ |
737,017 |
|
|
|
|
$ |
737,017 |
|
|
|
|
$ |
815,397 |
|
$ |
1,552,414 |
|
Judith A. Shoulak |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
$ |
593,625 |
|
|
|
|
$ |
593,625 |
|
|
|
|
|
|
|
$ |
593,625 |
|
Annual Incentive(1) |
|
$ |
59,363 |
|
|
|
|
$ |
59,363 |
|
|
|
|
|
|
|
$ |
59,363 |
|
Unvested stock options(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
233,969 |
|
$ |
233,969 |
|
Unvested performance-based Restricted Stock
Units(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
483,705 |
|
$ |
483,705 |
|
Deferred compensation(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits(5) |
|
$ |
11,017 |
|
|
|
|
$ |
11,017 |
|
|
|
|
|
|
|
$ |
11,017 |
|
Totals |
|
$ |
664,005 |
|
|
|
|
$ |
664,005 |
|
|
|
|
$ |
717,674 |
|
$ |
1,381,679 |
|
Kathleen M. Benning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
$ |
522,375 |
|
|
|
|
$ |
522,375 |
|
|
|
|
|
|
|
$ |
522,375 |
|
Annual Incentive(1) |
|
$ |
52,238 |
|
|
|
|
$ |
52,238 |
|
|
|
|
|
|
|
$ |
52,238 |
|
Unvested stock options(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
203,940 |
|
$ |
203,940 |
|
Unvested performance-based Restricted Stock
Units(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
425,035 |
|
$ |
425,035 |
|
Deferred compensation(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health benefits(5) |
|
$ |
11,017 |
|
|
|
|
$ |
11,017 |
|
|
|
|
|
|
|
$ |
11,017 |
|
Totals |
|
$ |
585,630 |
|
|
|
|
$ |
530,628 |
|
|
|
|
$ |
628,975 |
|
$ |
1,214,605 |
|
- (1)
- The
amounts represent cash incentive awards made pursuant to our 2014 executive incentive program, which is discussed in further detail on page 24
under "Annual Cash Incentive Compensation" of the "Compensation Discussion and Analysis." For purposes of this presentation, it is assumed that the terminations occurred on the last day of the fiscal
year, which is the date the incentive compensation based on company performance is deemed earned and accrued. Since the earned bonus based on company performance would therefore be paid under all
terminations, the amount shown is only the amount paid via the individual portion of the company-based incentive program. For those situations which include a value, the amount shown is 50% of the
individual's maximum which is the amount that would be paid under these scenarios. The amount of the severance payment relating to incentive compensation would be the same regardless of whether the
resignation or termination occurred within one year of a change of control.
- (2)
- The
amount for each executive reflects the number of shares subject to the unvested portion of stock options that would have vested upon the applicable
triggering event multiplied by the difference between the December 28, 2014 closing market price of our stock and the exercise price for each of the respective options.
- (3)
- Executives
whose employment ends when they are at least 55 years old and have at least ten years of service are deemed to have retired under the
terms of their PRSU awards and receive a pro-rated vesting that is based on the time served in the performance period. The number of PRSUs subject to the pro rata vesting is based on actual company
performance (values shown are based on target performance). In a scenario where death or disability occurs during the last fiscal year of a PRSU performance period (as opposed to the assumption
reflected in the table that it occurs on the last day of the fiscal year when an award would be considered earned under any circumstances), the number of PRSUs that vest will be the same percentage of
the grant that vests for active Team Members. In both Change in Control scenarios displayed, executives receive a pro-rated vesting that is based on the time served in the performance period and the
actual number of PRSUs that are subject to pro-rata vesting is based on assumed target performance.
- (4)
- All
of the named executive officers are fully vested in the deferred compensation plan so no additional or accelerated payments would be triggered under any
of the termination scenarios.
- (5)
- The amounts represent the employer's portion of premiums for health insurance that would be paid if the executive
pays his or her portion.
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|
2015
Annual Meeting of Shareholders | 39
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Table of Contents
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes our equity compensation plan information as of December 28, 2014, our fiscal year end.
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights |
|
Weighted average
exercise price of
outstanding options,
warrants and rights |
|
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a)) |
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders |
|
|
500,087 |
(1) |
$ |
78.90 |
(2) |
|
1,417,374 |
(3) |
Equity compensation plans not approved by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
500,087 |
|
$ |
78.90 |
|
|
1,417,374 |
|
- (1)
- Includes
316,263 shares underlying restricted stock units that may be issued upon achievement of performance goals and 24,945 time-based restricted stock
units.
- (2)
- Weighted
average exercise price of outstanding options excludes restricted stock units.
- (3)
- Includes
204,268 shares available for issuance under our Employee Stock Purchase Plan.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent of a registered
class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished the company and written representations that no reports on Form 5 were required, to the best of our knowledge, during fiscal year 2014, all officers, directors, and greater
than ten-percent beneficial owners complied with the applicable filing requirements on a timely basis, except Kathleen Benning, Andrew Block, Emily Decker, Lee Patterson, James Schmidt, Judith
Shoulak, Sally Smith and Mary Twinem each filed one late report on Form 4 relating to the vesting of restricted stock units. James Damian filed one late report on Form 4 reporting a gift
to a trust in a prior year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our Board of Directors has adopted a written policy with respect to related party transactions, which policy sets out procedures
pursuant to which related party transactions are reviewed and approved.
The policy covers all transactions between us and any related party (including any transactions requiring disclosure under Item 404 of Regulation S-K), other than transactions generally
available to all team members and transactions involving less than five thousand dollars ($5,000) when aggregated with all similar transactions. The Audit Committee is generally responsible for
reviewing and assessing the adequacy of the policy and recommends to the Board revisions to such policy. The Audit Committee oversees administration of the policy. A related party transaction may be
consummated if it is either (a) ratified or approved by the Audit Committee and is on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party or
(b) it is approved by the disinterested members of the Board of Directors.
Since
the beginning of fiscal 2014, there have been no reportable transactions or business relationships, other than as may be disclosed herein, between us and our executive officers,
directors, director nominees, and affiliates.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL #3)
The Board of Directors recommends that the shareholders ratify the appointment of KPMG LLP as our independent registered public
accounting firm for the year ending December 27, 2015. KPMG LLP has served as our accountants since 1994. The Audit Committee may direct the appointment of new independent auditors at
any time during the year without notice to, or the consent of, the shareholders, and the Audit Committee would do so if it were in our best interest and the interest of our shareholders.
KPMG LLP provided services in connection with the audit of our financial statements for the year ended
40 | 2015
Annual Meeting of Shareholders
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|
|
Table of Contents
December 28,
2014, and consultation on matters relating to accounting and financial reporting. Representatives of KPMG LLP are expected to be present at the Annual Meeting and will be
given an opportunity to make a statement if so desired and to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 27, 2015.
AUDIT FEES
We paid the following fees to KPMG LLP for fiscal years 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
Audit Fees |
|
$ |
565,000 |
|
$ |
510,000 |
|
Audit-Related Fees |
|
$ |
31,100 |
|
$ |
30,400 |
|
Tax Fees |
|
|
|
|
|
|
|
All Other Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
596,100 |
|
$ |
540,400 |
|
Audit
fees consist of fees billed or estimated to be billed to KPMG LLP for the audit of the annual financial statements included in our Annual Report on Form 10-K, review
of financial statements included in the Quarterly Reports on Form 10-Q, and the audit of our internal control over financial reporting with the objective of obtaining reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects.
Audit-related
fees consist of fees billed for services in connection with the audit of financial statements of our team member benefit plans and national advertising fund as well as
other services that are related to the performance of the audit of our financial statements and are not reported under Audit Fees.
All
other fees consist of fees billed for consulting or special projects.
The
Audit Committee has considered whether provision of the above audit- related services is compatible with maintaining the registered public accounting firm's independence and has
determined that such services are compatible with maintaining registered public accounting firm's independence.
PRE-APPROVAL OF AUDIT FEES
Pursuant to its written charter, the Audit Committee is responsible for pre-approving all audit and permitted non-audit services to be
performed for Buffalo Wild Wings by its independent registered public accounting firm or any other auditing or accounting firm. 100% of the services provided by KPMG LLP for the company during
fiscal years 2013 and 2014 were pre-approved by the Audit Committee.
REPORT OF AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee comprised of three of our outside directors. The Audit Committee's current member
composition satisfies the NASDAQ rule that governs audit committees, Rule 5605(c), including the requirement that audit committee members all be "independent directors" as that term is defined
by applicable NASDAQ and SEC rules.
In
accordance with its written charter adopted by the Board of Directors, which is available on Buffalo Wild Wings' website at www.buffalowildwings.com, the Audit Committee assists the
Board of Directors with fulfilling its oversight
responsibility regarding the quality and integrity of our accounting, auditing and financial reporting practices. In performing its oversight responsibilities regarding the audit process, the Audit
Committee:
- (1)
- reviewed
and discussed the audited consolidated financial statements with management;
|
|
2015
Annual Meeting of Shareholders | 41
|
Table of Contents
- (2)
- discussed
with the independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61,
as amended; and
- (3)
- received
the written disclosures from the independent registered public accounting firm required by the applicable requirements of the Public Company
Accounting Oversight Board regarding the firm's communications with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm such firm's
independence.
Based
upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our
Annual Report on Form 10-K for the fiscal year ended December 28, 2014, as filed with the Securities and Exchange Commission.
|
|
|
|
|
Members of the Audit Committee |
|
|
J. Oliver Maggard, Chair
James M. Damian
Cynthia L. Davis
Jerry R. Rose
|
OTHER BUSINESS
Management knows of no other matters to be presented at the 2015 Annual Meeting. If any other matter properly comes before the 2015
Annual Meeting, the appointees named in the proxies will vote the proxies in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Shareholder proposals (other than director nominations) that are submitted for inclusion in our proxy materials relating to our 2016
Annual Meeting must provide proof of ownership and follow the procedures set forth in SEC Rule 14a-8 and our Bylaws. To be timely, such proposals must be received by us at our principal
executive office no later than November 28, 2015.
If
a shareholder desires to propose an item of business for consideration without inclusion in our proxy materials or to nominate persons for election as a director at our annual
meeting, then the shareholder must comply with all of the applicable requirements set forth in our Bylaws, including timely written notice of such proposal or nomination delivered to our Secretary at
our principal executive office. To be timely under our Bylaws for the 2016 annual meeting, we must receive such notice not earlier than the close of business on January 8, 2016 and not later
than the close of business on February 7, 2016.
ANNUAL REPORT ON FORM 10-K
Upon written request of any shareholder as of March 9, 2015, we will furnish, without charge, a copy of our annual report on
Form 10-K for the fiscal year ended December 28, 2014, including the financial statements and a list of exhibits to such Form 10-K. We will furnish to any such person any exhibit
described in the list accompanying the Form 10-K upon the advance payment of reasonable fees. Requests should be directed to Emily C. Decker, SVP, General Counsel and Secretary of Buffalo Wild
Wings, Inc., 5500 Wayzata Boulevard, Suite 1600,
Minneapolis, Minnesota 55416. In addition, you may review and print the Form 10-K and all exhibits from the SEC's website at www.sec.gov.
|
|
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
|
|
Dated: March 27, 2015 |
|
Sally J. Smith, President and Chief Executive Officer |
42 | 2015
Annual Meeting of Shareholders
|
|
|
|
YOUR VOTE IS
IMPORTANT. PLEASE VOTE TODAY. IMMEDIATE - 24 Hours a Day, 7 Days a Week or by
Mail Vote by Internet - QUICK . . . EASY BUFFALO WILD WINGS, INC.
INTERNET/MOBILE www.cstproxyvote.com Use the Internet to vote your proxy.
Have your proxy card available when you access the above website. Follow the
prompts to vote your shares. MAIL Mark, sign and date your proxy card and
return it in the postage-paid envelope provided. PLEASE DO NOT RETURN THE
PROXY CARD IF YOU ARE VOTING ELECTRONICALLY. . FOLD HERE DO NOT SEPARATE
INSERT IN ENVELOPE PROVIDED . PROXY THIS PROXY WILL BE VOTED AS DIRECTED, OR
IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR ALL PROPOSALS. THIS PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ALL PROPOSALS 1. Election of Directors 01. Sally J. Smith 02. J.
Oliver Maggard 03. James M. Damian 04. Dale M. Applequist 05. Warren E. Mack
06. Michael P. Johnson 07. Jerry R. Rose 08. Cynthia L. Davis 2. Advisory
vote relating to executive officer compensation as disclosed in the 2015
Proxy Statement. 3. Ratify the appointment of KPMG LLP. 4. In their
discretion, the proxies are authorized to vote upon such other business as
may properly come before the meeting. INSTRUCTION (To withhold authority to
vote for any individual nominee, mark an X in FOR and strike a line through
the nominees name in the list above) COMPANY ID: PROXY NUMBER: ACCOUNT
NUMBER: Signature______________________________________ Signature, if held
jointly______________________________________ Date_____________, 2015. Note:
Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee, guardian, or corporate off icer, please give title as such. Please
mark your votes like this X FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR
WITHHOLD AUTHORITY As a shareholder of Buffalo Wild Wings, Inc., you have the
option of voting your shares electronically through the Internet, eliminating
the need to return the proxy card. Your electronic vote authorizes the named
proxies to vote your shares in the same manner as if you marked, signed,
dated and returned the proxy card. Votes submitted electronically over the
Internet must be received by 7:00 p.m., Eastern Time, on May 6, 2015.
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. FOLD HERE
DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED . Important Notice Regarding
the Availability of Proxy Materials for The Annual Meeting of Shareholders:
The Notice, Proxy Statement and Annual Report on Form 10-K are Available at:
http//www.cstproxy.com/buffalowildwings/2015 BUFFALO WILD WINGS, INC. 5500
WAYZATA BOULEVARD, SUITE 1600 MINNEAPOLIS, MINNESOTA 55416 BUFFALO WILD
WINGS, INC. ANNUAL MEETING OF SHAREHOLDERS THURSDAY, MAY 7, 2015, 9 A.M.
CENTRAL DAYLIGHT TIME PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS The undersigned appoints Sally J. Smith and Mary J. Twinem and each
of them, as proxies, each with the power to appoint her substitute, and
authorizes each of them to represent and to vote, as designated on the
reverse hereof, all of the shares of common stock of Buffalo Wild Wings, Inc.
held of record by the undersigned at the close of business on March 9, 2015
at the Annual Meeting of Shareholders of Buffalo Wild Wings, Inc. to be held
at 9:00 a.m. CDT on May 7, 2015, or at any adjournment thereof, at the
Doubletree, Minneapolis Park Place, 1500 Park Place Blvd., Minneapolis, MN
55416. (Continued, and to be marked, dated and signed, on the other side)
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