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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Appointment of Certain Officers
On December 15, 2020, the Board of Directors (the Board) of the Company made the following executive appointments, effective January 4, 2021:
•Eugene I. Lee, Jr., previously the Company’s President and Chief Executive Officer, was appointed Chairman and Chief Executive Officer.
•Ricardo Cardenas, previously the Company’s Senior Vice President, Chief Financial Officer, was appointed President and Chief Operating Officer.
Mr. Cardenas, age 52, had been our Senior Vice President, Chief Financial Officer since 2016. He was Senior Vice President, Chief Strategy Officer of the Company from 2015 to 2016, prior to which he served as Senior Vice President, Finance, Strategy and Technology from 2014 to 2015. He was Executive Vice President of Operations for LongHorn Steakhouse from 2013 to 2014 and Senior Vice President of Operations for LongHorn Steakhouse’s Philadelphia Division from 2012 to 2013. He served as Senior Vice President of Finance for Red Lobster, which the Company previously owned, from 2010 to 2012. Mr. Cardenas originally joined the Company in 1984 as an hourly employee and served in various positions of increasing responsibility, including Vice President of Finance for Olive Garden, prior to the positions described above.
As previously disclosed, on April 23, 2020, the Company completed a public underwritten offering of 9,000,000 shares of the Company’s common stock. Mr. Cardenas purchased $175,000 in purchase price of the Company’s shares from the underwriters at the same price as the public, $58.50 per share. The pricing and certain other terms of the offering were approved by an Equity Pricing Committee created by the Board for the offering and comprised of only disinterested directors who did not have or intend to have a financial interest in the offering and were determined by the Board to be “qualified directors” under the Florida Business Corporation Act.
•Rajesh Vennam was appointed Senior Vice President, Chief Financial Officer and Treasurer.
Mr. Vennam, age 46, had been our Senior Vice President, Corporate Finance and Treasurer since September 2020, prior to which he was Senior Vice President, Finance and Analytics since 2016. From 2014 to 2016, he served as Vice President, Financial Planning and Analysis and Investor Relations for The Fresh Market, Inc., a specialty grocery retailer which during the period of Mr. Vennam’s service was publicly traded. From 2013 to 2014, Mr. Vennam served in a variety of roles at Red Lobster, ultimately serving as Senior Vice President of Financial Planning and Analysis and Treasury of Red Lobster Hospitality, LLC, the entity to which the Company sold its Red Lobster restaurants in 2014. From 2010 through 2013, he served as Director of Financial Planning and Analysis for LongHorn Steakhouse. Mr. Vennam joined the Company in 2003 and served in a variety of positions of increasing responsibility, including as a Manager of Treasury, prior to the positions described above.
Additional information about these appointments is included in the Company’s news release dated December 18, 2020 entitled “Darden Board of Directors Elects CEO Eugene I. Lee, Jr. as Chair; Darden Names Ricardo Cardenas as President and
Chief Operating Officer; Rajesh Vennam Named Chief Financial Officer,” a copy of which is filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
Compensation Arrangements for President and Chief Operating Officer
On December 15, 2020, in connection with his appointment as President and Chief Operating Officer described above, the Compensation Committee of the Board approved new compensation arrangements for Mr. Cardenas effective January 4, 2021. Mr. Cardenas’ base salary will be $775,000. Mr. Cardenas’ target annual bonus under the Company’s annual cash incentive program will be unchanged at 100% of his annual base salary. Mr. Cardenas’ target annual equity grant under the Company’s long-term incentive program will have an aggregate value of $1,750,000.
Compensation Arrangements for Senior Vice President, Chief Financial Officer and Treasurer
On December 15, 2020, in connection with his appointment as Senior Vice President, Chief Financial Officer and Treasurer described above, the Compensation Committee of the Board approved new compensation arrangements for Mr. Vennam effective January 4, 2021. Mr. Vennam’s base salary will be $500,000. Mr. Vennam’s target annual bonus under the Company’s annual cash incentive program will be 75% of his annual base salary. Mr. Vennam’s target annual equity grant under the Company’s long-term incentive program will have an aggregate value of $750,000.
Fiscal 2021 Annual Incentive Plan
As previously disclosed, on June 23, 2020, the Compensation Committee of the Board approved a methodology for the annual incentive plan for the fiscal year ended May 30, 2021 for each of our named executive officers except for our Chief Executive Officer (CEO). On June 24, 2020, the Board approved the same methodology for the fiscal 2021 annual incentive plan for our CEO. In light of the continued uncertainty at that time surrounding the timing of and conditions under which our restaurants would be able to fully re-open, the Compensation Committee deferred the final determination of financial performance measures and other performance criteria to be used in the fiscal 2021 annual incentive plan to a later date. On August 25, 2020, the Company adopted the Darden Restaurants, Inc. Annual Incentive Plan (AIP) document effective as of June 1, 2020 and set forth the performance objectives for incentive awards with respect to fiscal 2021, subject to rules as to how the Compensation Committee would measure performance with respect to one or more of those performance objectives.
On December 15, 2020, the Compensation Committee established rules to measure fiscal 2021 performance results for the annual incentive plan for each of our named executive officers except for our CEO. The Compensation Committee determined that performance for the second half of the fiscal year will be determined using a single performance measure, Adjusted Diluted Net Earnings Per Share (Adjusted EPS), and established threshold, target and maximum performance goals for Adjusted EPS. The performance results for the second half of the year may be adjusted up or down by no more than 20% of target amount based on performance results with respect to the first half of fiscal 2021 as determined by the Compensation Committee based on the subjective performance criteria established in the AIP document for fiscal 2021. Pursuant to the Board’s previous action on June 24, 2020, these same rules for measuring fiscal 2021 performance results apply with respect to our CEO.
As previously disclosed, this methodology will result in any payouts under the fiscal 2021 annual incentive plan continuing to be based on financial results against pre-determined goals, but with (a) those goals being set now that there is more visibility into performance expectations and (b) the ability to modify payouts based on an assessment of management’s performance in the first half of fiscal 2021 positioning the Company for success in the second half of the fiscal year and in the long-term.