Burger King Holdings, Inc.
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
Filed by the Registrant þ
Filed by a Party other than the Registrant
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Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive Proxy
Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
Section 240.14a-12
BURGER KING HOLDINGS, INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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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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Title of each class of securities to which transaction applies:
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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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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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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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BURGER
KING HOLDINGS, INC.
5505 BLUE LAGOON DRIVE
MIAMI, FLORIDA 33126
NOTICE OF 2007 ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD NOVEMBER 29,
2007
The annual meeting of shareholders of Burger King Holdings,
Inc., a Delaware corporation (the “Company”), will be
held at the Hilton Miami Airport, 5101 Blue Lagoon Drive, Miami,
Florida 33126 on Thursday, November 29, 2007 at
9:00 a.m., Eastern Standard Time (“EST”).
The meeting will be held for the following purposes:
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To elect thirteen (13) directors for a term to expire at
the annual meeting of shareholders in 2008;
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To ratify the selection of KPMG LLP (“KPMG”) as the
independent registered public accounting firm for the Company
for the fiscal year ending June 30, 2008 (“fiscal
2008”); and
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To transact any other business that may properly come before the
meeting or any adjournments thereof.
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The Board of Directors has fixed the close of business on
October 2, 2007 as the record date for determining
shareholders entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Anne Chwat
General Counsel and Secretary
Miami,
Florida
October 22, 2007
YOUR VOTE
IS IMPORTANT
A proxy for the annual meeting is enclosed. Please promptly
vote by completing the enclosed proxy card and returning it in
the enclosed postage-paid envelope or submit your vote and proxy
by telephone or by Internet even if you plan to attend the
meeting in person. If you are present at the meeting and desire
to vote in person, your vote by proxy will not be used.
TABLE OF
CONTENTS
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A-1
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BURGER
KING HOLDINGS, INC.
5505
Blue Lagoon Drive
Miami, Florida 33126
PROXY
STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On November 29, 2007
ANNUAL
MEETING INFORMATION
This proxy statement contains information related to the annual
meeting of shareholders of Burger King Holdings, Inc.
(“Burger King Holdings” or the “Company”) to
be held on Thursday, November 29, 2007 at 9:00 a.m.
(EST) at the Hilton Miami Airport, 5101 Blue Lagoon Drive,
Miami, Florida 33126. This proxy statement was prepared under
the direction of our Board of Directors (the “Board of
Directors” or the “Board”) to solicit your proxy
for use at the annual meeting. It will be mailed to shareholders
on or about October 22, 2007.
Who
may attend the annual meeting?
All shareholders of record at the close of business on
October 2, 2007 (the “Record Date”), or their
duly appointed proxies, and our invited guests may attend the
meeting. Seating is limited and admission is on a first-come,
first-served basis. Please be prepared to present valid photo
identification for admission to the meeting.
If you hold shares in “street name” (that is, in a
brokerage account or through a bank or other nominee) and you
plan to vote in person at the annual meeting, you will need to
bring valid photo identification and a copy of a statement
reflecting your share ownership as of the Record Date, or a
legal proxy from your broker or nominee.
Shareholders of record will be verified against an official list
available in the registration area at the meeting. We reserve
the right to deny admittance to anyone who cannot adequately
show proof of share ownership as of the Record Date.
When
will the shareholders’ list be available for
examination?
A complete list of the shareholders of record as of the Record
Date will be available for examination by shareholders of record
beginning October 24, 2007 and will continue to be
available through and during the meeting.
Who
may vote?
You may vote if you owned our common stock as of the close of
business on the Record Date. Each share of our common stock is
entitled to one vote. As of the Record Date, there were
135,162,602 shares of common stock outstanding and entitled
to vote at the annual meeting.
What
will I be voting on?
You will be voting on the following:
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The election of thirteen (13) directors for a term to
expire at the annual meeting of shareholders in 2008; and
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The ratification of the selection of KPMG as our independent
registered public accounting firm for fiscal 2008.
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What
are the voting recommendations of the Board of
Directors?
The Board of Directors recommends that you vote your shares
“FOR” each of the nominees named in this proxy
statement for election to the Board and “FOR”
ratification of the selection of KPMG as our independent
registered public accounting firm for fiscal 2008.
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How do
I vote?
If you are a holder of record (that is, if your shares are
registered in your name with The Bank of New York Mellon, our
transfer agent (the “Transfer Agent”)), there are four
ways to vote:
Telephone Voting: You may vote by
calling the toll-free telephone number indicated on the enclosed
proxy card. Please follow the voice prompts that allow you to
vote your shares and confirm that your instructions have been
properly recorded.
Internet Voting: You may vote by
logging on to the website indicated on the enclosed proxy card.
Please follow the website prompts that allow you to vote your
shares and confirm that your instructions have been properly
recorded.
Return Your Proxy Card By Mail: You may
vote by completing, signing and returning the enclosed proxy
card in the postage-paid envelope provided with this proxy
statement. The proxy holders will vote your shares according to
your directions. If you sign and return your proxy card without
specifying choices, your shares will be voted by the persons
named in the proxy in accordance with the recommendations of the
Board of Directors as set forth in this proxy statement.
Vote at the Meeting: You may cast your
vote in person at the annual meeting. Written ballots will be
passed out to anyone who wants to vote in person at the meeting.
Even if you plan to attend the meeting, you are encouraged to
vote your shares by proxy. You may still vote your shares in
person at the meeting even if you have previously voted by
proxy. If you are present at the meeting and desire to vote in
person, your vote by proxy will not be used.
What
if I hold my shares in “street name”?
You should follow the voting directions provided by your broker
or nominee. You may complete and mail a voting instruction card
to your broker or nominee or, in most cases, submit voting
instructions by telephone or the Internet to your broker or
nominee. If you provide specific voting instructions by mail,
telephone or the Internet, your broker or nominee will vote your
shares as you have directed.
Can I
change my mind after I vote?
Yes. If you are a shareholder of record, you may change your
vote or revoke your proxy at any time before it is voted at the
annual meeting by:
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submitting a new proxy by telephone or via the Internet after
the date of the earlier voted proxy;
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signing another proxy card with a later date and returning it to
us prior to the meeting; or
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attending the annual meeting and voting in person.
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If you hold your shares in street name, you may submit new
voting instructions by contacting your broker, bank or other
nominee. You may also vote in person at the annual meeting if
you obtain a legal proxy from your broker, bank or other nominee.
Who
will count the votes?
A representative of our Transfer Agent will count the votes and
will serve as the independent inspector of elections.
What
does it mean if I receive more than one proxy
card?
It means that you have multiple accounts with brokers or the
Transfer Agent. Please vote all of these shares. We encourage
you to register all of your shares in the same name and address.
You may do this by contacting your broker or the Transfer Agent.
The Transfer Agent may be reached at
1-800-524-4458.
Will
my shares be voted if I do not provide my proxy?
If you are the shareholder of record and you do not vote or
provide a proxy, your shares will not be voted.
Your shares may be voted if they are held in street name, even
if you do not provide the brokerage firm with voting
instructions. Brokerage firms have the authority under New York
Stock Exchange (“NYSE”) rules to vote shares for which
their customers do not provide voting instructions on certain
“routine” matters.
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The election of directors and the proposal to ratify the
selection of KPMG as our independent registered public
accounting firm for fiscal 2008 are considered
“routine” matters for which brokerage firms may vote
unvoted shares. There are currently no other proposals to be
voted on at the annual meeting.
May
shareholders ask questions?
Yes. Our representatives will answer shareholders’
questions of general interest following the meeting. In order to
give a greater number of shareholders an opportunity to ask
questions, individuals or groups will be allowed to ask only one
question and no repetitive or
follow-up
questions will be permitted.
How
many votes must be present to hold the meeting?
A majority of the outstanding shares entitled to vote at the
annual meeting, represented in person or by proxy, will
constitute a quorum. Shares of common stock represented in
person or by proxy, including shares which abstain or do not
vote with respect to one or more of the matters presented for
shareholder approval, will be counted for purposes of
determining whether a quorum is present.
What
vote is required to approve each proposal?
In accordance with our bylaws, the nominees for director
receiving the highest number of votes cast in person or by proxy
at the annual meeting (also referred to as a plurality of the
votes cast) will be elected. If you mark your proxy to withhold
your vote for a particular nominee on your proxy card, your vote
will not count either “for” or “against” the
nominee. The ratification of the selection of KPMG as our
independent registered public accounting firm for fiscal 2008
requires the affirmative vote of a majority of the votes cast at
the annual meeting in order to be approved.
Shares that abstain from voting as to a particular matter will
not be counted as votes in favor of such matter, and also will
not be counted as votes cast or shares voting on such matter.
Accordingly, abstentions will not be included in vote totals and
will not affect the outcome of the voting for either proposal.
Are
there any shareholders who own a majority of our common
stock?
As of the Record Date, private equity funds controlled by TPG
Capital, Bain Capital Partners and the Goldman Sachs Funds (the
“Sponsors”) collectively own approximately 58% of our
outstanding common stock. The Sponsors have advised us that they
intend to be represented at the annual meeting either in person
or by proxy to vote their shares in favor of the nominees named
in this proxy statement for election to the Board and in favor
of ratification of the selection of KPMG as our independent
registered public accounting firm. Therefore, we expect to have
a quorum at the meeting and we expect the proposals to be
approved. For further information about the Sponsors, please see
“Stock Ownership Information” on pages
34-36.
Who
will pay for this proxy solicitation?
We will bear the cost of preparing, assembling and mailing the
proxy material and of reimbursing brokers, nominees, fiduciaries
and other custodians for out-of-pocket and clerical expenses of
transmitting copies of the proxy material to the beneficial
owners of our shares. A few of our officers and employees may
participate in the solicitation of proxies without additional
compensation.
Will
any other matters be voted on at the annual
meeting?
As of the date of this proxy statement, our management knows of
no other matter that will be presented for consideration at the
meeting other than those matters discussed in this proxy
statement. If any other matters properly come before the meeting
and call for a vote of shareholders, validly executed proxies in
the enclosed form returned to us will be voted in accordance
with the recommendation of the Board of Directors, or, in the
absence of such a recommendation, in accordance with the
judgment of the proxy holders.
What
is the Company’s website address?
Our website address is www.bk.com. We make this
proxy statement, our annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) available on our
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website in the Investor Relations-SEC Filings section, as soon
as reasonably practicable after electronically filing such
material with the United States Securities and Exchange
Commission (“SEC”).
This information is also available free of charge at the
SEC’s website located at www.sec.gov.
Shareholders may also read and copy any reports, statements
and other information filed by us with the SEC at the SEC public
reference room at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
or visit the SEC’s website for further information on its
public reference room. In addition, shareholders may obtain free
copies of the documents filed with the SEC by contacting our
Investor Relations department at
305-378-7696
or by sending a written request to Burger King Holdings, Inc.,
Investor Relations, 5505 Blue Lagoon Drive, Miami, Florida 33126.
The references to our website address and the SEC’s website
address do not constitute incorporation by reference of the
information contained in these websites and should not be
considered part of this document.
Our Corporate Governance Guidelines, Code of Business Ethics and
Conduct, Code of Ethics for Executive Officers, Code of Conduct
for Directors and Code of Business Ethics and Conduct for
Vendors are located in the Investor Relations —
Corporate Governance section of our website. These documents, as
well as our SEC filings, are available in print to any
shareholder who requests a copy at the phone number or address
listed above.
CORPORATE
GOVERNANCE PRINCIPLES, COMMITTEES AND DIRECTOR
INFORMATION
Controlled
Company Status & Director Independence
The private equity funds controlled by the Sponsors collectively
own approximately 58% of our outstanding common stock. As a
result, we are a “controlled company” under
Section 303A of the NYSE listing standards.
Section 303A exempts a controlled company (defined as a
company of which more than 50% of the voting power is held by an
individual, a group or another company) from the requirement
that a majority of its board of directors be independent and
that its compensation and nominating and corporate governance
committees be composed entirely of “independent
directors”. We rely on this exemption from the independence
requirements with regard to the Board of Directors, the
Compensation Committee and the Executive and Corporate
Governance Committee which acts as our nominating and corporate
governance committee. The “controlled company”
exception does not modify the independence requirements of the
Audit Committee, and as of May 7, 2007, we have complied
with the requirements of the Sarbanes-Oxley Act and the NYSE
rules, which require that the Audit Committee be composed
entirely of independent directors.
Under the NYSE listing standards, a director qualifies as
independent if the Board of Directors affirmatively determines
that the director has no material relationship with us. While
the focus of the inquiry is independence from management, the
Board is required to broadly consider all relevant facts and
circumstances in making an independence determination. The NYSE
listing standards permit the Board to adopt and disclose
standards to assist the Board in making determinations of
independence. Accordingly, our Board has adopted as a part of
our Corporate Governance Guidelines, director independence
standards (attached as Appendix A) to assist it in
determining whether or not a director has a material
relationship with us.
Our Board conducted an evaluation of the members of the Audit
Committee based on the NYSE listing standards, our director
independence standards and the independence standards mandated
by Section 301 of the Sarbanes-Oxley Act and set forth in
Rule 10A-3
of the Exchange Act, which we refer to as the Independence
Standards. Our Board also considered the recommendation of the
Executive and Corporate Governance Committee which reviewed
information disclosed by the members of the Audit Committee in
questionnaires submitted to the Board. As a result of this
evaluation and in consideration of the recommendation from our
Executive and Corporate Governance Committee, our Board
affirmatively determined that Messrs. Ronald M. Dykes,
Peter R. Formanek and Manuel A. Garcia are independent according
to the Independence Standards.
In making its determination, our Board (i) reviewed
information disclosed by the directors in the questionnaires
described above and (ii) considered lease payments paid by
our subsidiary Burger King Corporation to the estate of
Mrs. Clarita Garcia. Manuel A. Garcia, a current director
of the Company, is the son of the late Mrs. Garcia and
serves as executor of his mother’s estate. Our Board
determined that the receipt of lease payments by the estate of
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Mrs. Garcia does not constitute an indirect or direct
material relationship with us and that Mr. Garcia satisfies
all of the Independence Standards discussed in the above
paragraph.
Corporate
Governance Principles
Our Board of Directors adopted Corporate Governance Guidelines
(the “Guidelines”) to assist the Board in exercising
its responsibilities. The Guidelines are reviewed and revised by
the Board as it deems necessary and appropriate and were last
revised on May 31, 2007. The Guidelines and the charter for
each of the standing committees of the Board are posted on our
website at www.bk.com in the Investor
Relations — Corporate Governance section and are
available in print to any shareholder who requests a copy at the
phone number or address listed in this proxy statement.
The Guidelines and the charter for the Executive and Corporate
Governance Committee set forth our policies with respect to
Board composition, membership qualifications, responsibilities,
size, management oversight, committees and operations. The
Executive and Corporate Governance Committee considers the
following criteria when recommending nominees for director: high
personal and professional ethics, integrity and values;
expertise that is useful to us and complementary to the
background and experience of the other members of the Board;
ability to devote the time necessary for the diligent
performance of duties and responsibilities of Board membership;
willingness to represent the long term interests of all
shareholders and objectively appraise management’s
performance; possession of sound judgment to provide prudent
guidance with respect to the operations and interests of the
Company; and diversity and other relevant factors as the Board
may determine. The Executive and Corporate Governance Committee
considers possible candidates from many sources for nominees for
director, including from management, directors and shareholders.
The committee considers nominees recommended by shareholders,
provided that the shareholder complies with the procedure set
forth in our bylaws which is described in “Advance Notice
Requirements for Shareholder Submission of Nominations and
Proposals” in this proxy statement. Other than the
submission requirements set forth in our bylaws, there is no
difference in the manner in which the Executive and Corporate
Governance Committee evaluates a nominee for director
recommended by a shareholder.
We are subject to an amended and restated shareholders’
agreement with the private equity funds controlled by the
Sponsors (the “Shareholders’ Agreement”) that
currently gives each Sponsor the right to appoint two directors
to the Board of Directors and requires that, with respect to
each committee other than the Audit Committee, each of the
Sponsors has at least one seat, that Sponsor directors
constitute a majority, and that the chairman be a Sponsor
director. See “Certain Relationships and Related Person
Transactions” for more information on the
Shareholders’ Agreement, including the stock ownership
thresholds required to be maintained by a Sponsor in order for
it to retain these Board of Director and Board committee
appointment rights.
The non-management directors regularly schedule executive
sessions of the Board and each of the committees in which
management does not participate. The discussion leader for
executive sessions of the full Board is generally Brian T.
Swette, the Chairman of the Board. The Chairmen of the Audit,
Compensation and Executive and Corporate Governance Committees
lead executive session discussions on matters within the purview
of those committees.
Communication
with Directors
Any director may be contacted by writing to him in care of
Burger King Holdings, Inc., Attn: Anne Chwat, General Counsel
and Secretary, 5505 Blue Lagoon Drive, Miami, Florida 33126.
Although the General Counsel and Secretary may screen frivolous
or unlawful communications and commercial advertisements, she
will forward all other correspondence to the indicated director.
Board
and Committee Meeting Attendance and Annual Shareholders Meeting
Attendance
The Board held seven meetings during the fiscal year ended
June 30, 2007 (“fiscal 2007”). Each incumbent
director, except Mr. David Bonderman, attended at least 75%
of the aggregate of (a) the total number of meetings of the
Board during fiscal 2007, and (b) the total number of
meetings held by all committees of the Board on which the
director served during fiscal 2007. Mr. Bonderman does not
serve on any Board committees.
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Although we do not have a specific policy regarding director
attendance at our annual meeting of shareholders, all directors
are encouraged to attend. We do so by, among other things,
holding our annual meeting of shareholders on the same date as
one of the Board meetings. All of our directors attended the
2006 annual meeting of shareholders.
Board
Committees
The Board of Directors has established an Audit Committee, a
Compensation Committee and an Executive and Corporate Governance
Committee. The members of each committee are appointed by the
Board of Directors and serve one year terms. Each committee has
adopted a written charter which sets forth the committee’s
purpose, membership criteria, powers and responsibilities and
provides for the annual evaluation of the committee’s
performance. The Compensation Committee charter was last revised
on March 1, 2007, and the Audit and Executive and Corporate
Governance Committee charters were last revised on May 31,
2007. Copies of the Audit Committee charter, Compensation
Committee charter and Executive and Corporate Governance
Committee charter are available on our website at
www.bk.com in the Investor Relations —
Corporate Governance section and are available in print to any
shareholder who requests a copy at the phone number or address
listed above.
Audit
Committee
The Audit Committee assists the Board in its oversight of
(i) the integrity of our financial statements,
(ii) the qualifications, independence and performance of
our independent registered public accounting firm,
(iii) the performance of our internal audit function and
(iv) compliance by us with legal and regulatory
requirements. The Audit Committee is responsible for the
appointment, compensation, retention and oversight of the work
of our independent registered public accounting firm.
The members of the Audit Committee are Messrs. Ronald M.
Dykes (Chairman), Peter R. Formanek and
Manuel A. Garcia. The Board of Directors has
determined that (i) Messrs. Dykes, Formanek and Garcia
are independent directors within the requirements of the
Sarbanes-Oxley Act and the NYSE rules and (ii) all of the
members of the Audit Committee are “financially
literate” as defined by the NYSE rules. Mr. Formanek
served as Chairman of the Audit Committee until
September 13, 2007, when the Board appointed Mr. Dykes
as Chairman. Mr. Richard Boyce served on the Audit
Committee until May 7, 2007, when he was replaced by
Mr. Dykes. The Board of Directors also has determined that
Mr. Dykes possesses “financial management
expertise” under the NYSE rules and qualifies as an
“audit committee financial expert” as defined by the
applicable SEC regulations.
The Audit Committee held 11 meetings in fiscal 2007.
Compensation
Committee
The Compensation Committee: (i) sets our compensation
philosophy and oversees compensation and benefits policies;
(ii) oversees and sets the compensation and benefits
arrangements of our Chief Executive Officer and certain other
executives; (iii) provides a general review of, and makes
recommendations to, the Board of Directors or to our
shareholders with respect to our equity-based compensation
plans; (iv) reviews and approves all of our equity-based
compensation plans that are not otherwise subject to shareholder
approval; and (v) implements, administers, operates and
interprets all equity-based and similar compensation plans to
the extent provided under the terms of such plans.
The Compensation Committee has the authority under its charter
to engage the services of outside advisors, experts and others
to assist the Compensation Committee. In accordance with this
authority, the Compensation Committee has engaged Mercer Human
Resource Consulting, Inc. (“Mercer”), as an outside
compensation consultant, to advise the Compensation Committee on
matters related to executive compensation. Further details
regarding the nature and scope of Mercer’s engagement are
provided in the “CD&A” on page 15.
The Compensation Committee may delegate its authority to
subcommittees or the Chairman of the Compensation Committee when
it deems appropriate and in our best interests. Additionally,
the charter provides that the Compensation Committee may
delegate to one of our officers the authority to make grants
under our incentive compensation or other equity based plans to
any person other than the Chief Executive Officer, the CEO
Direct
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Reports (as defined in the CD&A) or anyone not then covered
by Section 16 of the Exchange Act. Further details are
provided in the CD&A on page 15.
The members of the Compensation Committee are
Messrs. Stephen G. Pagliuca (Chairman), Richard W. Boyce
and Sanjeev K. Mehra. Armando Codina, a former director, served
on the Compensation Committee from October 2006 until he
resigned from the Board and the Compensation Committee on
April 1, 2007.
The Compensation Committee held five meetings in fiscal 2007.
Executive
and Corporate Governance Committee
The Executive and Corporate Governance Committee acts for the
Board of Directors with respect to matters delegated to it by
the Board and also acts as our nominating and corporate
governance committee. The Board has delegated to this committee
the authority to identify and recommend potential candidates
qualified to become Board members and recommend directors for
appointment to Board committees.
The Executive and Corporate Governance Committee also exercises
general oversight with respect to the governance and performance
of the Board, as well as corporate governance matters applicable
to us and our employees and directors. In addition, this
committee has authority to take action on behalf of the Company
(except if prohibited by applicable law or regulation) if the
amount associated with such action does not exceed
$25 million.
The members of the Executive and Corporate Governance Committee
are Messrs. Sanjeev K. Mehra (Chairman), Richard W. Boyce,
John W. Chidsey and Stephen G. Pagliuca.
The Executive and Corporate Governance Committee held five
meetings in fiscal 2007.
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PROPOSAL 1.
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ELECTION
OF DIRECTORS
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Our Amended and Restated Certificate of Incorporation provides
that the number of directors constituting the Board of Directors
shall not be fewer than three nor more than 15, with the exact
number to be fixed by a resolution adopted by the affirmative
vote of a majority of the Board. The Board of Directors has
fixed the number of directors at 13. The term of office of each
director is one year, commencing at this annual meeting and
ending at the annual meeting of shareholders to be held in 2008.
Each director elected will continue in office until he resigns
or until a successor has been elected and qualified.
Andrew B. Balson, David Bonderman, Richard W. Boyce, David A.
Brandon, John W. Chidsey, Ronald M. Dykes, Peter R. Formanek,
Manuel A. Garcia, Adrian Jones, Sanjeev K. Mehra, Stephen G.
Pagliuca, Brian T. Swette and Kneeland C. Youngblood currently
serve as directors and are the proposed nominees for election as
directors to serve for a one-year term expiring at the 2008
annual meeting of shareholders. Messrs. Balson, Bonderman,
Boyce, Jones, Mehra and Pagliuca were appointed to the Board of
Directors pursuant to the Shareholders’ Agreement described
above under “Corporate Governance Principles”.
Each of the nominees has consented to serve if elected. If any
nominee should be unable to serve or will not serve for any
reason, the persons designated on the accompanying form of proxy
will vote in accordance with their judgment. We know of no
reason why the nominees would not be able to serve if elected.
NOMINEES
FOR ELECTION AT THIS MEETING
The following table sets forth the name, age and principal
occupation of each nominee for election as a director of the
Company:
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Andrew B. Balson
Director since 2002
Age 41
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Mr. Balson is a Managing Director of Bain Capital Partners,
where he has worked since 1996. Mr. Balson is a director of
Domino’s Pizza, Inc., OSI Restaurant Partners, Inc. and a
number of private companies.
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David Bonderman
Director since 2002
Age 64
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Mr. Bonderman is a Founding Partner of TPG Capital (formerly
known as Texas Pacific Group) and has served in that role since
1992. Mr. Bonderman is a director of CoStar Group, Inc.,
RyanAir Holdings, plc and Gemalto N.V.
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Richard W. Boyce
Director since 2002
Age 53
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Mr. Boyce has been a Partner of TPG Capital since January 1999.
Mr. Boyce is a director of ON Semiconductor and J. Crew
Group, Inc.
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David A. Brandon
Director since 2003
Age 55
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Mr. Brandon is Chairman and CEO of Domino’s Pizza, Inc. and
has served in that role since March 1999. From 1989 to 1998, Mr.
Brandon served as President and CEO of Valassis Communications,
Inc. (a marketing services company) and was Chairman of Valassis
from 1997 to 1998. Mr. Brandon is a director of Northwest
Airlines Corp., The TJX Companies, Domino’s Pizza, Inc. and
Kaydon Corporation.
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John W. Chidsey
Director since 2006
Age 45
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Mr. Chidsey has served as Chief Executive Officer and a member
of the Board since April 2006. From September 2005 until April
2006, he served as our President and Chief Financial Officer and
from June 2004 until September 2005, he was our President, North
America. Mr. Chidsey joined us as Executive Vice President,
Chief Administrative and Financial Officer in March 2004
and held that position until June 2004. From January 1996
to March 2003, Mr. Chidsey served in numerous positions at
Cendant Corporation, including Chief Executive Officer of the
Vehicle Services Division and the Financial Services Division.
Mr. Chidsey is a director of HealthSouth Corporation and is also
a member of the Board of Trustees of Davidson College.
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8
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Ronald M. Dykes
Director since 2007
Age 60
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Mr. Dykes has been a director since April 2007. Mr. Dykes most
recently served as Chief Financial Officer of BellSouth
Corporation, a position he retired from in 2005. Prior to his
retirement, Mr. Dykes worked for BellSouth Corporation and its
predecessor entities in various capacities for over
34 years. Mr. Dykes is a director of American Tower
Corporation (an operator of wireless communication towers), and
from October 2000 through December 31, 2005, also served as a
director of Cingular Wireless, most recently as Chairman of the
Board.
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Peter R. Formanek
Director since 2003
Age 64
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Mr. Formanek has been a private investor since May 1994. Mr.
Formanek is a co-founder and retired President of AutoZone, Inc.
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Manuel A. Garcia
Director since 2003
Age 64
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Mr. Garcia has served as President and Chief Executive Officer
of Atlantic Coast Management, Inc., an operator of various
restaurants in the Orlando, Florida area, since 1996. Mr. Garcia
is Chairman of the Board of Culinary Concepts, Inc.
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Adrian Jones
Director since 2002
Age 43
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Mr. Jones has been with Goldman, Sachs & Co. in New York
City and London since 1994, and has been a Managing Director
since November 2002. Mr. Jones is a director of Autocam
Corporation and Signature Hospital Holding, LLC.
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Sanjeev K. Mehra
Director since 2002
Age 48
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Mr. Mehra has been with Goldman, Sachs & Co. in New York
City since 1986, and has been a Managing Director since 1996.
Mr. Mehra is a director of the following private companies: Adam
Aircraft Industries, Inc., Aramark Holdings Corporation, Nalco
Company, SunGard Data Systems, Inc., ADESA, Inc. and Hawker
Beechcraft, Inc.
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Stephen G. Pagliuca
Director since 2002
Age 52
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Mr. Pagliuca has served as a Managing Director of Bain Capital
Partners since 1989. Mr. Pagliuca is a director of Gartner, Inc.
(an information technology research and advisory company) and
Warner Chilcott Limited (an international pharmaceutical
company).
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Brian T. Swette
Director since 2003
Age 53
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Mr. Swette became Non-Executive Chairman of the Board in April
2006. Mr. Swette served as Chief Operating Officer of eBay from
1998 to 2002 and has been a private investor since 2002. Mr.
Swette is a director of Jamba, Inc. (a chain of smoothie
restaurants).
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Kneeland C. Youngblood Director since 2004
Age 51
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Mr. Youngblood is a founding partner of Pharos Capital Group,
L.L.C., a private equity firm and has served as managing partner
since January 1998. Mr. Youngblood is Chairman of the Board of
the American Beacon Funds and is a director of Starwood Hotels
and Resorts Worldwide, Inc. and Gap Inc.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
THE ELECTION OF EACH OF THE ABOVE NOMINEES
9
The following table sets forth the name, age and positions of
each of our executive officers. Executive officers are those
officers designated by our Board as executive officers of the
Company pursuant to Section 16 of the Exchange Act.
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Name
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Age
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Position
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John W. Chidsey
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45
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Chief Executive Officer and Director
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Russell B. Klein
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50
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President, Global Marketing, Strategy and Innovation
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Ben K. Wells
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54
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Chief Financial Officer
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Julio A. Ramirez
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53
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Executive Vice President, Global Operations
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Peter C. Smith
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51
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Chief Human Resources Officer
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Anne Chwat
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48
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General Counsel and Secretary
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Charles M. Fallon, Jr.
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45
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President, North America
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Amy E. Wagner
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42
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Senior Vice President, Investor Relations and Global
Communications
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Christopher M. Anderson
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40
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Senior Vice President and Controller
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John W. Chidsey has served as our Chief Executive Officer
and a member of our board since April 2006. From September 2005
until April 2006, he was our President and Chief Financial
Officer and from June 2004 until September 2005, he was our
President of North America. Mr. Chidsey joined us as
Executive Vice President, Chief Administrative and Financial
Officer in March 2004 and held that position until June 2004.
From January 1996 to March 2003, Mr. Chidsey served in
numerous positions at Cendant Corporation, most recently as
Chief Executive Officer of the Vehicle Services Division and the
Financial Services Division.
Russell B. Klein has served as our President, Global
Marketing, Strategy and Innovation since June 2006. Previously,
he served as Chief Marketing Officer from June 2003 to June
2006. From August 2002 to May 2003, Mr. Klein served as
Chief Marketing Officer at 7-Eleven Inc. From January 1999 to
July 2002, Mr. Klein served as a Principal at Whisper
Capital.
Ben K. Wells has served as our Chief Financial Officer
since April 2006. From May 2005 to April 2006, Mr. Wells
served as our Senior Vice President, Treasurer. From June 2002
to May 2005, he was a Principal and Managing Director at BK
Wells & Co., a corporate treasury advisory firm in
Houston, Texas. From June 1987 to June 2002, he was at Compaq
Computer Corporation, most recently as Vice President, Corporate
Treasurer. Before joining Compaq, Mr. Wells held various
finance and treasury responsibilities over a
10-year
period at British Petroleum.
Julio Ramirez has served as our Executive Vice President,
Global Operations since September 2007. Mr. Ramirez has
worked for Burger King Corporation for over 20 years. From
January 2002 to September 2007, Mr. Ramirez served as our
President, Latin America. During his tenure, Mr. Ramirez
has held several positions, including Senior Vice President of
U.S. Franchise Operations and Development from February
2000 to December 2001 and President, Latin America from 1977
until 2000.
Peter C. Smith has served as our Chief Human Resources
Officer since December 2003. From September 1998 to November
2003, Mr. Smith served as Senior Vice President of Human
Resources at AutoNation.
Anne Chwat has served as our General Counsel and
Secretary since September 2004. From September 2000 to September
2004, Ms. Chwat served in various positions at BMG Music
(now SonyBMG Music Entertainment) including as Senior Vice
President, General Counsel and Chief Ethics and Compliance
Officer.
Charles M. Fallon, Jr. has served as our President,
North America since June 2006. From November 2002 to June 2006,
Mr. Fallon served as Executive Vice President of Revenue
Generation for Cendant Car Rental Group, Inc. Mr. Fallon
served in various positions with Cendant Corporation including
Executive Vice President of Sales for Avis
Rent-A-Car
from August 2001 to October 2002.
10
Amy E. Wagner has served as our Senior Vice President,
Investor Relations and Global Communications since June 2007.
Previously she served as Senior Vice President, Investor
Relations from April 2006 to June 2007. From February 1990 to
April 2006, Ms. Wagner served in various corporate finance
positions at Ryder System, Inc., including as Vice President,
Risk Management and Insurance Operations from January 2003 to
April 2006 and Group Director, Investor Relations from June 2001
to January 2003.
Christopher M. Anderson has served as our Senior Vice
President and Controller since July 2007. From February 2005
through June 2007, he served as our Vice President and
Controller. From May 2002 to February 2005, Mr. Anderson
served as Director of Finance and Controller for
Hewlett-Packard. From February 2000 to May 2002, he served
as Director of Finance and Controller for Compaq Computer
Corporation.
11
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PROPOSAL 2.
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RATIFICATION
OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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The Audit Committee has appointed KPMG to audit our financial
statements for fiscal 2008. A representative of KPMG is expected
to attend the annual meeting and will have an opportunity to
make a statement if he or she so desires. He or she will also be
available to respond to appropriate questions from our
shareholders. For additional information regarding our
relationship with KPMG, please see the “Audit Committee
Report” below.
Although it is not required to submit this proposal to the
shareholders for approval, the Board believes it is desirable
that an expression of shareholder opinion be solicited and
presents the selection of the independent registered public
accounting firm to the shareholders for ratification. Even if
the selection of KPMG is ratified by the shareholders, the Audit
Committee in its discretion could decide to terminate the
engagement of KPMG and engage another firm if the committee
determines that this is necessary or desirable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
THE RATIFICATION OF THE SELECTION OF KPMG LLP
The Audit Committee has: (i) reviewed and discussed the
audited consolidated financial statements of the Company with
management; (ii) discussed with KPMG, the independent
registered public accounting firm, the matters required to be
discussed by Statement on Auditing Standards 61 (Communication
with Audit Committees), as modified or supplemented;
(iii) received the written disclosures and the letter from
KPMG required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees); and
(iv) discussed with KPMG the firm’s independence.
Based on these reviews and discussions, 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 fiscal 2007 for filing with the SEC.
The Audit Committee considered whether the provision of
non-audit services by KPMG was compatible with maintaining such
firm’s independence. After reviewing the services provided
by KPMG, including all non-audit services, the Audit Committee,
in accordance with its charter, authorized the selection of KPMG
as the independent registered public accounting firm of the
Company for the fiscal year ending June 30, 2008.
Respectfully submitted,
THE AUDIT COMMITTEE
Ronald M. Dykes, Chairman
Peter R. Formanek
Manuel A. Garcia
September 12, 2007
12
The following table sets forth fees for professional services
rendered by KPMG for the annual audit of our financial
statements for the years ended June 30, 2007 and 2006 and
fees billed for other services rendered by KPMG for such years.
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Fiscal Year
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Fee Category
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2007
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2006
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(In thousands)
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(In thousands)
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Audit
Fees(1)
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$
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3,859
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$
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2,548
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Audit-Related
Fees(2)
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160
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230
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Tax
Fees(3)
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344
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480
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All Other
Fees(4)
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—
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32
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Total Fees
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$
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4,363
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$
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3,290
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(1) |
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Annual audit fees for the audits of
the consolidated financial statements and the review of the
interim condensed quarterly consolidated financial statements.
This category also includes fees for statutory audits required
by the tax authorities of various countries and accounting
consultations and research work necessary to comply with Public
Company Accounting Oversight Board standards. In fiscal 2007,
audit fees also included amounts related to the audit of the
effectiveness of internal controls over financial reporting and
attestation services, including the delivery of a comfort letter
associated with the secondary offering of common stock held by
private equity funds controlled by the Sponsors. In fiscal 2006,
audit fees included attestation services, including the delivery
of a comfort letter associated with our initial public offering.
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(2) |
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Audit-Related Fees primarily
consist of the fees for financial statement audits of our
employee benefit plans, marketing fund, gift card subsidiary and
joint venture.
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(3) |
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Tax Fees are fees for professional
services rendered for tax compliance, tax advice and tax
planning for various countries, including expatriate tax
services for certain employees, primarily members of our senior
management.
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(4) |
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All Other Fees are fees billed for
miscellaneous advisory services.
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Pre-approval
Policy
Pursuant to its written charter, the Audit Committee
pre-approves all audit services and permitted non-audit services
to be performed by our independent registered public accounting
firm. The Audit Committee has adopted a pre-approval policy
under which the Audit Committee has delegated to its chairman
the authority to approve services valued at up to $50,000 per
engagement. All decisions to pre-approve audit and permitted
non-audit services are presented to the full Audit Committee at
each of its scheduled meetings.
All audit and permitted non-audit services and all fees
associated with such services performed by our independent
registered public accounting firm in fiscal 2007 were approved
by the full Audit Committee or approved by the chairman of the
Audit Committee consistent with the policy described above.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis
(“CD&A”) describes our compensation philosophy,
how the Compensation Committee establishes executive
compensation, the objectives of the various compensation
programs and how performance metrics are selected and evaluated
for the various components of our compensation programs.
As used in this CD&A, the following terms have the
following meanings:
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“BKAP” is BK AsiaPac Pte. Ltd., a Singapore company;
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•
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“BKC” is Burger King Corporation, a Florida
corporation;
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•
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the “CEO” is our Chief Executive Officer;
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•
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the “CEO Direct Reports” are our employees who report
directly to the CEO. All of the NEOs (other than the CEO and
Mr. Brok) are CEO Direct Reports; and
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•
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the “NEOs” include the following executive officers:
John W. Chidsey, CEO, Ben K. Wells, Chief Financial Officer,
Russell B. Klein, President, Global Marketing,
Strategy & Innovation, Charles M. Fallon, Jr.,
President, North America and Anne Chwat, General Counsel and
Secretary. In addition, the NEOs this year
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13
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include two persons who, although not executive officers at the
end of our fiscal year, were executive officers for a portion of
the year; specifically, Peter Tan, our current President, Asia
Pacific, and Martin Brok, our former Senior Vice President,
Franchise Operations and Marketing, EMEA.
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Our
Compensation Philosophy and Objectives
We believe that compensation is an important tool in furthering
our long term goal of creating shareholder value. As such, our
compensation philosophy is based on pay-for-performance
principles. Our compensation programs are designed to support
our business strategy by (i) rewarding superior financial
and operational performance, (ii) placing a significant
portion of compensation at risk if performance goals are not
achieved, (iii) aligning the interests of the CEO and the
CEO Direct Reports with those of our shareholders and
(iv) enabling us to attract, retain and motivate top talent.
Our compensation policies are aligned with our business strategy
and designed to sustain and improve our financial and
operational performance. Our “Global Go Forward Plan”
defines the key objectives necessary to achieve our financial
and operational goals. These key objectives are: Grow
Profitably, Fund the Future,
Fire-Up the
Guest and Working Together. Our executive compensation program
for the CEO and each CEO Direct Report consists of base salary,
annual cash incentives, long term equity incentives and
executive benefits and perquisites. Annual cash and long term
equity incentive programs reward financial and operational
performance compared to goals established for the year. Each
year, the Compensation Committee approves worldwide and regional
financial goals for these programs. Additionally, individual
performance objectives are established at the beginning of each
fiscal year for all of our employees, including the CEO and each
CEO Direct Report, which are intended to support the Global Go
Forward Plan and against which the employee’s individual
performance is measured. The Compensation Committee recommends,
and the Board approves, individual performance objectives for
the CEO each fiscal year. The CEO then establishes individual
performance objectives for each CEO Direct Report based on the
objectives that the Board has set for the CEO. Performance
against these pre-established objectives is evaluated by the
Compensation Committee following the end of each fiscal year.
For fiscal 2008, the CEO’s and each CEO Direct
Report’s individual performance will be measured based upon
business objectives, which will be 2/3 of their overall
individual performance rating, and for the first time,
objectives relating to inclusion and people development, which
will be 1/3 of their overall individual performance rating. We
believe that people are our most valuable resource and that
bringing a diverse group of talented individuals into the
organization, creating an inclusive culture and growing and
developing our leadership talent from within are important
goals. The Compensation Committee decided that 1/3 was the
appropriate weight to reinforce these goals while not diluting
other important business objectives.
Special
Note Regarding Determination of NEOs
Messrs. Tan and Brok served as executive officers from
July 1, 2006 through August 29, 2006. Effective
August 30, 2006, our Board of Directors designated a new
slate of executive officers which did not include Mr. Tan
or Mr. Brok. Mr. Tan is employed by BKAP, which is our
primary operating subsidiary in the Asia Pacific region, and
until August 31, 2007, Mr. Brok was employed by Burger
King B.V., a Netherlands subsidiary of the Company.
Consequently, many of the benefits provided to Messrs. Tan
and Brok are governed by the laws
and/or
programs applicable to those local entities and differ from
benefits that we offer our
U.S.-based
executives.
Mr. Brok’s position with Burger King B.V. became
redundant during fiscal 2007. As a result, Mr. Brok and
Burger King B.V. entered into a Compromise Agreement dated
June 25, 2007 (the “Compromise Agreement”), in
which the parties agreed to terminate his employment effective
August 31, 2007 (the “Separation Date”).
Mr. Brok is an NEO solely as a result of the severance
payment to be made to him under the Compromise Agreement.
Mr. Brok’s separation from Burger King B.V. was
governed by Netherlands law, which provides significant benefits
to employees in a redundancy situation. The Compromise Agreement
provides for a lump sum severance payment to Mr. Brok in
the gross amount of $689,544. The Compromise Agreement also
provides for a lump sum repatriation payment in the gross amount
of $15,245 and the continuation of Mr. Brok’s health
care coverage through the Separation Date. As part of the
Compromise Agreement, Mr. Brok agreed not to compete with
us, not to solicit our employees or franchisees, and to maintain
the confidentiality of our information.
14
Oversight
of Executive Compensation Programs
Role of
Compensation Committee
The Compensation Committee is composed entirely of outside
directors and is responsible to the Board of Directors and our
shareholders for establishing and overseeing our compensation
philosophy and for overseeing our executive compensation
policies and programs generally. As part of this responsibility,
the Compensation Committee (i) administers our executive
compensation programs, (ii) evaluates the performance of
the CEO and the CEO Direct Reports, (iii) oversees and sets
compensation for the CEO and the CEO Direct Reports and
(iv) reviews our management succession plan. All decisions
relating to the issuance of equity to our executive officers are
subject to review and approval by the Board of Directors until
such time as the Compensation Committee meets the independence
requirements of
Rule 16b-3
of the Exchange Act. In addition, the Board of Directors
approves all compensation decisions relating to the CEO.
The Compensation Committee’s charter describes the
Compensation Committee’s responsibilities. The Compensation
Committee and the Board of Directors review the charter
annually. The charter was last revised on March 1, 2007.
The Compensation Committee recommends any revisions to the
charter to the Board of Directors for approval.
Role of
Compensation Consultant
The Compensation Committee has the authority under its charter
to engage the services of outside advisors, experts and others
to assist the Compensation Committee. In accordance with this
authority, the Compensation Committee has engaged Mercer as an
outside compensation consultant to advise the Compensation
Committee on matters related to executive compensation. The
Compensation Committee annually reviews the market intelligence
on compensation trends provided by Mercer as well as
Mercer’s general views on the specific compensation
programs designed by us. Key services provided by Mercer at the
request of the Compensation Committee include:
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Providing on an annual basis a competitive analysis of total
direct compensation against our peer group (described below) for
our CEO and the CEO Direct Reports;
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•
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Assisting in the design of our compensation programs; and
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•
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Reviewing the effectiveness of our compensation programs,
including our annual and long term incentive programs, against
performance of the peer group.
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In addition to providing services to the Compensation Committee,
Mercer also has been engaged by the Company to provide advice on
matters related to broad-based compensation and data on
compensation practices outside the United States.
Benchmarking
In order to establish total direct compensation levels for our
CEO and the CEO Direct Reports, we annually review compensation
practices and total direct compensation opportunities for
comparable positions at selected publicly-traded peer companies.
We review compensation opportunities at other selected
publicly-traded companies and consider data reported in various
compensation surveys. In making determinations about
compensation, the Compensation Committee also considers factors
specific to the relevant individual and his or her role,
including performance and long term potential, the nature and
scope of such individual’s responsibilities and his or her
effectiveness in supporting our long term goals.
In general, we establish the target total direct compensation of
our CEO and each CEO Direct Report at the median of the adjusted
target total direct compensation levels established by our peer
group for their equivalent or similarly positioned employees.
However, with exceptional performance, our executives have the
opportunity to earn total direct compensation in the upper 25%
of the peer group adjusted target total direct compensation
levels, as described below. In line with our benchmarking
practices, the total direct compensation of our CEO is
established by reference to the compensation of other chief
executive officers in our peer group and reflects the nature of
the CEO’s role and responsibilities as compared to the CEO
Direct Reports.
15
Our peer group is focused on other restaurant and franchise
companies; however, recognizing that we recruit executive talent
from a more diverse background and that we consider
international growth to be a key driver of our success, we also
include companies in the broader consumer products/services
industry and companies with a strong global footprint.
Additionally, as a highly franchised company, the complexity of
managing the overall BURGER
KING®
system may not be reflected in our actual revenue, so for peer
group purposes, we add 50% of the worldwide franchise sales of
our system to our total revenue numbers, thereby increasing our
annual revenue, for benchmarking purposes, to approximately
$7 billion. Taking into account this first adjustment, our
annual revenue is still less than the median of the peer group.
Consequently, in consultation with Mercer, we adjust the
compensation data from the peer group companies for differences
in revenue to provide comparable data for our analysis. We
review the peer group and make changes as we deem necessary on
an annual basis.
For the fiscal 2007 analysis, the companies comprising the peer
group and their respective industry groups were:
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Peer Group Company
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GICS Industry Description
|
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PepsiCo, Inc.
The
Coca-Cola
Company
McDonald’s Corp.
Anheuser-Busch Companies, Inc.
Nike, Inc.
Marriott International, Inc.
Yum! Brands, Inc.
Starbucks Corp.
Realogy Corp.
Starwood Hotels & Resorts Worldwide, Inc.
Darden Restaurants, Inc.
Brinker International, Inc.
Wyndham Worldwide Corp.
Wendy’s International, Inc.
Domino’s Pizza, Inc.
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Beverages
Beverages
Hotels, Restaurants & Leisure
Beverages
Textiles, Apparel & Luxury Goods
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
Real Estate Management & Development
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
Hotels, Restaurants & Leisure
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Role of
Executive Officers in Establishing Compensation
Our Chief Human Resources Officer administers our employee
profit sharing, severance and other benefit plans and trusts,
with oversight and supervision by the Compensation Committee. In
addition, our Chief Human Resources Officer makes
recommendations to the Compensation Committee with regard to job
leveling and grading for the CEO, the CEO Direct Reports and
other senior level employees. Our CEO and Compensation Committee
work together to review our management succession planning for
these employees.
The CEO annually reviews the individual performance of each of
the CEO Direct Reports and provides the Compensation Committee
with (i) evaluations of each CEO Direct Report, including
an evaluation of each person’s performance against his or
her individual performance objectives and
(ii) recommendations regarding any increase in each
person’s base salary level, the individual performance
rating for purposes of calculating his or her annual cash
incentive payment and the amount of any long term equity award
for each person.
The CEO, Chief Human Resources Officer, General Counsel and Vice
President of Total Rewards attend Compensation Committee
meetings, although they leave the meetings during discussions
and deliberations of individual compensation actions affecting
them personally and during the Compensation Committee’s
executive sessions.
Elements
of Compensation and Benefit Programs
To achieve our policy goals, the Compensation Committee has
utilized the following components of compensation: base salary,
annual cash incentives, long term equity incentives, benefits
and perquisites. Different elements of the total compensation
package serve different objectives. Competitive base salaries
and benefits are designed to attract and retain employees by
providing them with a stable source of income and security over
time. Annual cash incentives are performance-based and designed
to motivate and reward employees who make a positive impact on
our business and achieve their individual performance
objectives. Our grants of long term incentives also are
16
performance-based and linked directly to business objectives
and, for our CEO and each CEO Direct Report, to individual
objectives. The use of equity compensation supports the
objectives of encouraging stock ownership and aligning the
interests of the CEO and the CEO Direct Reports with those of
our shareholders, as they share in both the positive and
negative stock price returns experienced by other shareholders.
The only retirement programs we provide to our CEO and each CEO
Direct Report are the ability to participate in BKC’s
401(k) plan and Executive Retirement Program as described below.
The Compensation Committee uses total direct compensation as its
measurement when it determines the level and components of
compensation for the CEO and the CEO Direct Reports. The
Compensation Committee conducts a review of the total direct
compensation of the CEO and the CEO Direct Reports using data
provided by Mercer and Company management. For the CEO and the
CEO Direct Reports, the Compensation Committee places more
emphasis on the performance-based components of total direct
compensation. For fiscal 2007, the total target
performance-based pay for the NEOs (other than Mr. Brok)
ranged from 65% to 83% of their total compensation. For
Mr. Chidsey, the components of total direct compensation
were targeted to be allocated as
162/3%
base salary,
162/3%
annual cash incentive and
662/3%
long term compensation in the form of equity. For
Mr. Klein, the components of total direct compensation were
targeted to be allocated as 26% base salary, 21% annual cash
incentive and 53% long term equity. For Messrs. Wells and
Fallon and Ms. Chwat, the components of total direct
compensation were targeted to be allocated as 31% base salary,
22% annual cash incentive and 47% long term equity. For
Mr. Tan, the components of total direct compensation were
targeted to be allocated as 35% base salary, 21% annual cash
incentive and 44% long term equity. The CEO’s variable pay
as a percentage of total pay exceeds that of the CEO Direct
Reports due to the importance of aligning the interests of the
CEO with those of our shareholders and the nature of the
CEO’s role and responsibilities as compared to the CEO
Direct Reports.
Base
Salary
We provide base salaries to recognize the skills, competencies,
experience and individual performance that the CEO and each CEO
Direct Report brings to his or her position. The Compensation
Committee annually reviews and approves the base salary of the
CEO and each CEO Direct Report and submits the CEO’s base
salary to the Board of Directors for approval. The Compensation
Committee considers various factors such as the relevant
employment agreement, the executive’s performance and
responsibilities, leadership and years of experience,
competitive salaries within the marketplace for similar
positions, and his or her total compensation package. Upon
consideration of these factors, the Compensation Committee
decided that the base salaries for the CEO and each CEO Direct
Report, except Mr. Klein, were appropriately positioned and
therefore, for fiscal 2007, each NEO, except Mr. Klein,
received only a 3% salary increase, pro-rated for time in
position, if applicable, which was equal to the general salary
increase budget for all
U.S.-based
salaried employees in fiscal 2007. The Compensation Committee
also decided that Mr. Klein should receive a larger salary
increase for fiscal 2007 to bring his base salary into the
desired competitive range. The increase for all NEOs except
Mr. Klein was below general industry average.
For fiscal 2008, our NEOs decided to forego base salary
increases. Based on a review of executive compensation performed
by Mercer, the Compensation Committee determined that, despite
this decision, Mr. Wells should receive a base salary
increase for fiscal 2008 to bring his base salary into the
desired competitive range. Mr. Wells is the only NEO who
received a base salary increase for fiscal 2008.
Annual
Cash Incentive Program and Special Bonus
The CEO and the CEO Direct Reports are eligible to receive an
annual performance-based cash bonus based on the Company’s
performance and on their individual performance. The CEO, the
CEO Direct Reports and over 1,350 Company employees are eligible
to participate in this annual cash incentive program. For fiscal
2007, annual cash incentives were awarded under the BKC Fiscal
Year 2007 Restaurant Support Incentive Program (the
“RSIP”), which was implemented under our 2006 Omnibus
Incentive Plan. This annual cash incentive is calculated for
each eligible employee as a percentage of his or her base
salary, based on Company and individual performance, as set
17
forth below. The formula for determining an eligible
employee’s cash incentive under the RSIP (the “Payout
Amount”) is:
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Annual Base Salary
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X
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Target Bonus Percentage
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Overall Business Performance Factor
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Individual Performance Multiplier
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Payout Amount
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Target Bonus Percentage: The employment
agreement for each of the NEOs (other than Mr. Brok)
establishes the annual target cash bonus opportunity for the
NEO, expressed as a percentage of his or her then current base
salary. The target annual cash bonus opportunities for the NEOs,
other than Mr. Chidsey, range from 60% to 80% of base
salary and the target annual cash bonus opportunity for
Mr. Chidsey is equal to 100% of his base salary. Due to the
nature of the CEO’s role and responsibilities, the
CEO’s target cash bonus opportunity as a percentage of his
base salary is greater than that of the CEO Direct Reports.
Overall Business Performance Factor: The
Overall Business Performance Factor is based (i) 50% on
worldwide Company performance and (ii) 50% on the
Company’s performance in the employee’s geographic
area of responsibility, which is either worldwide or regional.
For fiscal 2007, adjusted EBITDA (earnings before interest,
taxes, depreciation and amortization) was the measure used to
determine the Overall Business Performance Factor. We establish
worldwide and regional adjusted EBITDA targets and minimum
threshold amounts which must be achieved in order for any
payments to be made under the RSIP. If we achieve (i) the
minimum “threshold” performance level, a 50% payout
may be earned, (ii) the “target” performance
level, a 100% payout may be earned, and (iii) the
“maximum” performance level, a 200% payout may be
earned. Given the roles and worldwide scope of responsibility of
Messrs. Chidsey, Klein, and Wells and Ms. Chwat, the
Overall Business Performance Factor for those NEOs was measured
on a 100% worldwide basis. The Overall Business Performance
Factor for Mr. Fallon and Mr. Tan, who have regional
responsibilities, was measured 50% on a worldwide basis and 50%
on a regional basis.
Our threshold, target and maximum performance goals under the
RSIP are based on our Board-approved budget and business plan
for the upcoming fiscal year. We consider our budget and
business plan, and accordingly our performance goals, to be
confidential and sensitive competitive information, particularly
to the extent that the target performance goals relate to
regional or business unit financial targets for which we do not
provide publicly announced guidance. With respect to our
Company-wide target performance goals as to which we currently
provide publicly announced guidance, the assumptions underlying
our budget and the assumptions underlying our publicly announced
guidance may differ based on confidential strategic or operating
plans or initiatives. To the extent that publicly announced
guidance differs from our budget or is expressed as a range, we
believe that disclosing a specific target performance goal that
differs from our publicly announced guidance would implicitly,
and inappropriately, disclose our confidential assessment of the
likelihood of the Company achieving results at one end or the
other of such disclosed range. Our target performance goals are
set at the beginning of each fiscal year with the intent of
being challenging, but achievable. Therefore, we anticipate that
the targets will be frequently, but not automatically, achieved,
while the achievement of maximum performance levels will be
reached only if we significantly exceed our budget.
Individual Performance Multiplier: For fiscal
2007, Individual Performance Multipliers ranged from 0 to 1.25,
based on an individual’s performance rating. Individual
performance ratings are determined for each employee at the end
of each fiscal year based on achievement of that person’s
individual performance objectives. Individual performance
ratings are given on a scale of between 1 and 5, with 5 being
the highest possible rating.
If the Company achieves the Overall Business Performance Factor
at the maximum performance level, and the NEOs achieve the
highest individual performance rating, the annual cash bonus
earned by each of the NEOs would be as follows (expressed as a
percentage of base salary): Mr. Chidsey, 250%;
Mr. Klein, 200%; Messrs. Wells and Fallon and
Ms. Chwat, 175%; Mr. Tan, 150%; and Mr. Brok, 98%.
For fiscal 2007, we exceeded our worldwide adjusted EBITDA
target portion of the Overall Business Performance Factor. In
making this determination, the Compensation Committee used
reported adjusted EBITDA for fiscal 2007 as a starting point,
and then excluded additional expense items that are one-time
non-recurring charges which the Compensation Committee
determined were not reflective of our overall financial
performance, including costs
18
associated with our secondary offering during fiscal 2007 and
restructurings in the EMEA and Asia Pacific regions. We also
exceeded our adjusted EBITDA target performance levels for the
North America, Latin America and Asia Pacific regions.
For fiscal 2007, the Compensation Committee evaluated the CEO
and reviewed the individual performance evaluations that the CEO
completed for each CEO Direct Report at the end of fiscal 2007.
All of the NEOs rated Individual Performance Multipliers equal
to or greater than 1.0. Taking into account business performance
and individual performance, the payouts to our NEOs, except
Mr. Brok, ranged between 93% and 132% of their base
salaries. The lump sum severance payment due to Mr. Brok
under the Compromise Agreement includes an estimate of his
fiscal 2007 cash bonus; therefore, Mr. Brok was not
eligible to receive a cash bonus under the RSIP for fiscal 2007.
The fiscal 2007 cash bonus payments for the CEO and the other
NEOs are set forth in the following table:
2007 RSIP
CASH BONUS
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Target Bonus
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Annual
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as Percentage
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Percentage Payout
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Payout
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Name
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Base Pay ($)
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of Base Salary
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(% of Base Salary)
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Amount ($)
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John W. Chidsey
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1,012,500
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100
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132
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1,336,500
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Ben K. Wells
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430,313
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70
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93
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398,698
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Russell B. Klein
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500,000
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80
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106
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529,447
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Charles M. Fallon, Jr.
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425,000
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70
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106
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451,094
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Anne Chwat
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450,883
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70
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93
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%
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417,757
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Peter Tan
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477,469
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60
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102
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484,775
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In fiscal 2007, we paid Mr. Klein a one-time cash bonus in
the amount of $300,000, in addition to the cash bonus he earned
under the RSIP, in recognition of extraordinary performance.
Long Term
Equity Incentives
We believe that long term compensation is a critical component
of our executive compensation program as a way to foster a long
term focus on our financial results. Long term compensation is
an incentive tool that we and the Compensation Committee use to
align the financial interests of executives to the creation of
sustained shareholder value. We believe that equity incentives
are preferable to cash in a long term plan design for the
following reasons: equity incentives are a common form of pay in
most publicly traded companies, and we use these incentives to
remain competitive in attracting and retaining executives; the
ultimate value is impacted by share price gains or losses,
linking executive returns to those of shareholders; once vested,
stock options provide flexibility for the executive in deciding
when to exercise their options and recognize income; and equity
incentives provide an opportunity for executives to increase
their stock ownership in us. The Compensation Committee has
adopted an Equity Grant Policy and the Board of Directors has
adopted Stock Ownership Guidelines. These policies are described
below in the “Additional Features of our Executive
Compensation Programs” section of this CD&A.
We award long term equity incentives annually to the CEO and
each CEO Direct Report. These awards represent the largest
component of the total direct compensation package for the CEO
and the CEO Direct Reports. Individual target awards were
established for fiscal 2007 based on the executive’s level,
base salary, and for all NEOs other than the CEO, on individual
performance during fiscal 2006. The CEO’s target award is
not subject to adjustment based on his individual performance.
For fiscal 2007, the target equity awards for the NEOs as
adjusted for individual performance and as a percentage of their
base salary were: Mr. Chidsey, 400%; Mr. Wells, 165%;
Mr. Klein, 220%; Mr. Fallon, 150%; Ms. Chwat,
150%; Mr. Tan, 138%; and Mr. Brok, 75%. Individual
target grants for fiscal 2007 were awarded on August 21,
2006.
Each year, the Compensation Committee decides the appropriate
types and mix of equity awards. For fiscal 2007, the
Compensation Committee decided to utilize 100% performance-based
restricted stock, rather than a mix of restricted stock and
options. This was because the CEO and several of the CEO Direct
Reports had previously received significant option grants, some
as recently as May of 2006, and the Compensation Committee
wanted to
19
move towards a more balanced portfolio of equity to be in a
position to reward, motivate and retain key talent as our stock
fluctuates in value. Additionally, due to these prior option
grants, fiscal 2007 long term equity incentives to the CEO and
the CEO Direct Reports were based upon 50% of their ordinary
target awards rather than 100%. The fiscal 2007 equity
incentives to each of Messrs. Klein, Wells and Tan were
increased from 50% to 55% of their target awards, in recognition
of their individual performance in fiscal 2006.
The fiscal 2007 performance-based restricted stock awards for
the CEO and the CEO Direct Reports other than Messrs. Tan
and Brok were subject to increase or decrease by up to 50%, and
for Messrs. Tan and Brok by up to 20%, at fiscal year end,
based upon the financial performance of the Company during
fiscal 2007. The measure of the Company’s performance for
this purpose for fiscal 2007 was profit before taxes
(“PBT”). The number of performance-based restricted
shares actually awarded for fiscal 2007, after adjustment for
Company performance and the resulting leverage factor, was as
follows: Mr. Chidsey, 160,142; Mr. Wells, 28,075;
Mr. Klein, 44,039; Mr. Fallon, 25,522; Ms. Chwat,
26,288; and Mr. Tan, 22,424. The performance-based
restricted shares awarded to Mr. Brok in fiscal 2007 were
forfeited as a result of the termination of his employment. As
discussed above, we consider our budget and business plan, and
accordingly our target PBT performance goals, to be confidential
and sensitive competitive information.
The fiscal 2007 grants of performance-based restricted stock to
Messrs. Wells, Klein, Fallon, and Tan will vest 100% after
three years, and the grants to Mr. Chidsey and
Ms. Chwat will vest 50% after three years and the remaining
50% after four years. The Compensation Committee considered the
equity holdings of the CEO and CEO Direct Reports, and based on
the existing vesting schedules for the outstanding equity of
these NEOs, determined that a delayed vesting of a portion of
the performance-based restricted stock award would further the
Company’s retention goals for Mr. Chidsey and
Ms. Chwat.
For fiscal 2008, the Company has granted the NEOs a combination
of equity grants, with 50% of the value earned in the form of
stock options and 50% of the value earned in the form of
performance-based restricted stock or performance-based
restricted stock units. The grant date was August 27, 2007.
The option awards will vest ratably over four years and the
performance-based restricted stock or performance-based
restricted stock units will have a one year performance period
ending June 30, 2008, and will vest 100% on the third
anniversary of the grant date. The Company performance factor of
PBT will continue to be used as the business objective measure
for long term equity incentive awards. For fiscal 2008, the
target equity awards for each NEO, as a percentage of his or her
base salary, are: Mr. Chidsey, 400%; Mr. Klein, 200%;
Messrs. Wells and Fallon and Ms. Chwat, 150%; and
Mr. Tan, 125%.
Executive
Benefits & Perquisites
In addition to base salary, annual cash bonuses and long term
equity incentives, we provide the following executive benefit
programs:
Executive
Retirement Program
The Executive Retirement Program (“ERP”) is a
non-qualified program available to senior-level employees in the
U.S. This program permits voluntary deferrals of up to 50%
of salary and 100% of cash bonus until retirement or termination
of employment. Amounts deferred, up to a maximum of 6% of base
salary, are matched by us on a dollar-for-dollar basis.
Depending on the level at which we achieve specified financial
performance goals, accounts under the plan also may be credited
with up to an additional 6% of base salary by us. The financial
performance goals for fiscal 2007 were based on adjusted EBITDA.
The financial performance goals for fiscal 2008 also will be
based on adjusted EBITDA. All amounts deferred by the executive,
or credited to his or her account by us, earned interest for the
first six months of fiscal 2007 at an annual rate of 8.5%, and
for the second six months of fiscal 2007 at an annual rate of
8.0%. For fiscal 2008, each participating employee will earn
interest at a rate that reflects the performance of investment
funds that he or she selects from a pool of funds. All of our
contributions vest ratably over the three-year period beginning
on the date the employee commences employment. Our
performance-based contribution for fiscal 2007 was 4.64% of base
salary for all participating employees. Further details for the
NEOs are provided in the 2007 All Other Compensation Table on
page 27 and the Nonqualified Deferred Compensation Table on
page 30.
20
Executive
Life Insurance Program
The Executive Life Insurance Program provides life insurance
coverage which is paid by us and allows
U.S.-based
executives to purchase additional life insurance coverage at
their own expense. Coverage for our
U.S.-based
NEOs, which is paid by us, is limited to the lesser of
$1.3 million or 2.75 times base salary. BKAP’s life
insurance program provides life insurance coverage which is paid
by BKAP. Under this program, employees receive coverage in an
amount equal to 24 times the employee’s monthly salary.
Further details are provided in the 2007 All Other Compensation
Table on page 27.
Executive
Health Plan
The Executive Health Plan is offered to our
U.S.-based
NEOs and serves as a fully insured supplement to the medical
plan provided to all BKC employees. Out-of-pocket costs and
expenses for deductibles, coinsurance, dental care, orthodontia,
vision care, prescription drugs, and preventative care are
reimbursed up to an annual maximum of $100,000. Further details
are provided in the 2007 All Other Compensation Table on
page 27.
Perquisites
Each NEO employed by BKC is provided with an annual perquisite
allowance to be used, at his or her election, in connection with
financial planning services, automobile allowance and additional
life and other insurance benefits. Currently, the annual
allowance amount is $50,000 for Mr. Chidsey and $35,000 for
Messrs. Wells, Klein and Fallon and Ms. Chwat.
Additional information regarding perquisites provided to the
NEOs is set forth in the 2007 Perquisites Table on pages 26.
Certain
Other Benefits
BKC also maintains a comprehensive benefits program consisting
of retirement income and health and welfare plans. The objective
of the program is to provide full time employees with reasonable
and competitive levels of financial support in the event of
retirement, death, disability or illness, which may interrupt
the eligible employee’s employment
and/or
income received as an active employee. BKC’s health and
welfare plans consist of life, disability and health insurance
benefit plans that are available to all full-time employees.
Employment
Agreements, including Change in Control and Severance
Arrangements
Employment
Agreement with Mr. Chidsey
On April 7, 2006, BKC entered into an employment agreement
with Mr. John W. Chidsey, BKC’s CEO. The term of the
agreement ends on April 6, 2009. At the end of the term,
the agreement automatically extends for additional three-year
periods, unless either party provides notice of non-renewal to
the other at least six months prior to the expiration of the
relevant period. Mr. Chidsey currently receives an annual
base salary of $1,012,500. The employment agreement provides
that Mr. Chidsey’s target annual cash bonus
opportunity is 100% of his base salary; however,
Mr. Chidsey has the opportunity to earn up to 250% of his
base salary if the Company achieves its financial objectives at
the maximum level and Mr. Chidsey receives the maximum
individual performance rating pursuant to the RSIP.
Mr. Chidsey may elect to receive up to 50% of his annual
cash bonus in such non-cash form as the Compensation Committee
makes available to members of our senior management team. On an
annual basis, Mr. Chidsey also is entitled to receive a
target annual performance-based equity grant (consisting of
restricted stock, stock options or any combination thereof as
determined by the Compensation Committee) with a grant date
value equal to 400% of his base salary as described in the
“Elements of Compensation and Benefit Programs”
section of this CD&A. Mr. Chidsey also is entitled to
receive an annual perquisite allowance of $50,000 and is
entitled to private charter jet usage for business travel (and
up to $100,000 per year for personal use).
If Mr. Chidsey’s employment is terminated without
cause or he terminates his employment with good reason or due to
his death or disability (as such terms are defined in the
employment agreement), he will be entitled to receive an amount
equal to two times his annual base salary and target annual cash
bonus (or three times, if his termination occurs after a change
in control). This severance amount will be payable over a period
of six months on our regular payroll dates, commencing on the
six month anniversary of the termination date and ending on the
one year
21
anniversary of the termination date. Mr. Chidsey also will
be entitled to continued coverage under BKC’s medical,
dental and life insurance plans for he and his eligible
dependents and payment of his perquisite allowance, each during
the two-year period following termination (or three-year period,
if his termination occurs after a change in control). If
Mr. Chidsey’s employment is terminated due to his
death or disability or during the
24-month
period after a change in control of the Company either without
cause or for good reason, all options and other equity awards
held by Mr. Chidsey will vest in full and he will have one
year to exercise such awards. Among other events, a resignation
for any reason within the
30-day
period immediately following the one-year anniversary of a
change in control involving a strategic buyer (as determined by
the Board) constitutes a termination by BKC without cause under
the employment agreement. If any payments due to
Mr. Chidsey in connection with a change in control would be
subject to an excise tax, we will provide Mr. Chidsey with
a related tax
gross-up
payment, unless a reduction in Mr. Chidsey’s payments
by up to 10% would avoid the excise tax.
Employment
Agreements with Messrs. Wells, Klein and Fallon and
Ms. Chwat
Mr. Ben K. Wells, Chief Financial Officer, Mr. Russell
B. Klein, President, Global Marketing, Strategy and Innovation,
Mr. Charles M. Fallon, Jr., President, North America,
and Ms. Anne Chwat, General Counsel and Secretary, are
subject to employment agreements with BKC. The term of each of
the agreements ends on June 30, 2008. At the end of the
term, each executive’s employment agreement automatically
extends for an additional one-year period and will continue to
be so extended unless BKC provides notice of non-renewal at
least 90 days prior to the expiration of the relevant
period. These NEOs currently receive annual base salaries of
$480,300 for Mr. Wells, $500,000 for Mr. Klein,
$425,000 for Mr. Fallon, and $450,883 for Ms. Chwat.
Messrs. Wells and Fallon and Ms. Chwat are eligible to
receive a performance-based annual cash bonus with a target
payment equal to 70% of his or her annual base salary if the
Company achieves the target financial objectives set by the
Compensation Committee for a particular fiscal year; however, he
or she is eligible to receive a performance-based annual cash
bonus of up to 175% of his or her base salary if the Company
achieves its financial objectives at the maximum level and he or
she receives the maximum individual performance rating pursuant
to the RSIP. Mr. Klein is eligible to receive a
performance-based annual cash bonus with a target payment equal
to 80% of his annual base salary if the Company achieves the
target financial objectives set by the Compensation Committee
for a particular fiscal year; however, he is eligible to receive
a performance-based annual cash bonus of up to 200% of his base
salary if the Company achieves its financial objectives at the
maximum level and he receives the maximum individual performance
rating pursuant to the RSIP. Each executive may elect to receive
up to 50% of his or her annual bonus in the form of restricted
stock units or in any other non-cash form that the Compensation
Committee makes available to members of BKC’s senior
management team. Each executive also is entitled to receive an
annual perquisite allowance of $35,000 and is eligible to
participate in our long term equity programs.
If BKC terminates the executive’s employment without cause
or if the executive terminates his or her employment with good
reason (as defined in the relevant agreement), the executive
will be entitled to receive his or her then current base salary
and perquisite allowance for one year, payable in equal
installments over one year beginning on the termination date, a
pro-rata bonus for the year of termination and continued
coverage for one year under BKC’s medical, dental and life
insurance plans for him or her and his or her eligible
dependents. Additionally, if the executive’s employment is
terminated at any time within 24 months after a change in
control of the Company either without cause or by the executive
for good reason, all options held by the executive will become
fully vested upon termination and he or she will have
90 days to exercise such options. See the 2007 Potential
Payments Upon Termination or Change in Control Table on pages
30-32 for a
description of accelerated vesting of other types of equity upon
termination of employment without cause or for good reason
following a change in control.
Employment
Agreement with Mr. Tan
Mr. Peter Tan, President, Asia Pacific, is subject to an
employment agreement with BKAP. The term of the agreement is not
specified; however, under the terms of the agreement, either
party may terminate the agreement with or without cause, in
accordance with the notice provisions set forth in the
agreement. Mr. Tan currently receives an annual base salary
of $477,469. Mr. Tan is eligible to receive a
performance-based annual cash bonus with a target payment equal
to 60% of his annual base salary if the Company achieves the
target financial objectives set by the Compensation Committee
for a particular fiscal year; however, he is eligible to receive
a performance-
22
based annual cash bonus of up to 150% of his base salary if the
Company achieves its financial objectives at the maximum level
and he receives the maximum individual performance rating
pursuant to the RSIP. Mr. Tan also is entitled to receive
an annual car allowance of $45,962 and is eligible to
participate in our long term equity programs.
If BKAP terminates Mr. Tan’s employment without cause,
he will be entitled to receive his then current base salary for
one year, payable in equal installments beginning on the
termination date, a pro-rata bonus for the year of termination
and continued coverage for one year under BKAP’s medical,
dental and life insurance plans for him and his eligible
dependents.
The potential payments and benefits to the NEOs in the event of
a termination of employment or change in control are described
below in the 2007 Potential Payments Upon Termination or Change
in Control Table on pages
30-32.
Non-Competition
and Confidentiality
Each of the CEO and the CEO Direct Reports has agreed in his or
her employment agreement: (i) not to compete with us during
the term of his or her employment and for one year after the
termination of employment; (ii) not to solicit our
employees or franchisees during the term of his or her
employment and for one year after termination; and (iii) to
maintain the confidentiality of our information. If the
executive breaches any of these covenants, we will cease
providing any severance and other benefits to the executive and
we may require the executive to repay any severance amounts
already paid to him or her. See the “Clawback Policy”
section of this CD&A for information about our right to
recoup economic gains from equity grants if an employee violates
any restrictive covenants contained in his or her employment or
separation agreement.
Additional
Features of our Executive Compensation
Programs
Deductibility
of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally limits the tax deductibility of annual
compensation paid by a publicly-held company to $1,000,000 for
the CEO and the next four highest compensated officers of the
Company. Because of our status as a newly public company, our
existing compensation programs are eligible for special relief
from this tax rule. Once this relief expires, the Compensation
Committee intends to utilize performance-based compensation
programs that meet the deductibility requirements under
Section 162(m). However, the Compensation Committee also
realizes that in order to attract and retain individuals with
superior talent, the possibility exists that individual
exceptions may occur.
Equity
Grant Policy
On February 28, 2007, the Compensation Committee adopted an
Equity Grant Policy governing the issuance of our equity. Under
the Equity Grant Policy, the Compensation Committee may delegate
to one of our officers the authority to make grants to any
person other than the CEO, the CEO Direct Reports or our
executive officers, except that until the Compensation Committee
meets the independence requirements of
Rule 16b-3
of the Exchange Act, all equity awards to the CEO, and other
executive officers are subject to review and approval by the
Board of Directors.
Under the Equity Grant Policy, our annual employee grants must
be made on
August 21st of
each year and our mid-year grants must be made on
March 21st of
each year. The Company, with the approval of the Compensation
Committee or pursuant to the delegation of authority described
above, also may make additional grants at its discretion. These
additional grants are generally made for purposes of recognition
and retention, and to newly hired executives, and are to be
awarded on the first day of the month following the date of
approval of the equity award, or at a later date designated by
the approving authority. No grants may be made on any of these
predetermined dates if the grant date would fall on or within
five days preceding our release of material non-public
information. In this event, the grant date must be postponed
until the first business day following the release.
Under the Equity Grant Policy, we set the exercise price of
options and the fair market value of other equity awards at the
closing price of our common stock on the NYSE on the date of the
grant, or, if there is no reported sale on the grant date, then
on the last preceding date on which any reported sale occurred.
23
Executive
Stock Ownership Guidelines
On September 13, 2007, the Board adopted Executive Stock
Ownership Guidelines (the “Guidelines”) establishing
minimum equity ownership requirements for our CEO, executive
vice presidents and senior vice presidents. The purpose of the
Guidelines is to align the interests of those executives with
the interests of shareholders and further promote our commitment
to sound corporate governance. The minimum required ownership is
determined as a multiple of the executive’s annual base
salary, based upon the executive’s level, as follows: 4
times base salary for our CEO, 2.5 times base salary for
Mr. Klein, 2 times base salary for all other executive vice
presidents, 1.75 times base salary for all regional presidents
and one times base salary for all other senior vice presidents.
The Guidelines identify the types of equity that may be
considered in determining whether an executive has met the
minimum ownership requirement. Executives will have between
three and five years to reach the minimum requirement, depending
upon the date they commenced employment with us. If an executive
does not meet his or her minimum required ownership within the
proscribed time period, then until he or she meets the
requirement, he or she must retain 100% of all net shares
received from the exercise or settlement of equity awards
granted under our incentive plans. Once an executive achieves
his or her minimum required ownership on or after the applicable
deadline, he or she must maintain the minimum required ownership
for as long as he or she is an employee.
Clawback
Policy
As described in our standard equity award agreements issued
after April 2006, the Compensation Committee may seek to recoup
economic gains realized during the preceding year from the
vesting, exercise or settlement of equity grants from an
employee who violates any post-employment restrictive covenant,
contained in his or her employment or separation agreement,
including non-compete and confidentiality obligations.
COMPENSATION
COMMITTEE REPORT
We have reviewed and discussed the foregoing Compensation
Discussion and Analysis with management. Based on our review and
discussions with management, we recommended to the Board of
Directors, and the Board of Directors has approved, that the
Compensation Discussion & Analysis be included in this
proxy statement.
THE
COMPENSATION COMMITTEE
Stephen G. Pagliuca, Chairman
Richard W. Boyce
Sanjeev K. Mehra
September 12, 2007
24
2007
SUMMARY COMPENSATION TABLE
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Salary(2)
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Bonus(3)
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Awards(4)
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Awards(4)
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Compensation(5)
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Earnings(6)
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Compensation(7)
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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John W. Chidsey
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2007
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1,009,135
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0
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1,140,693
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338,589
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1,336,500
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8,741
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313,423
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4,147,081
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Chief Executive Officer
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Ben K. Wells
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2007
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428,883
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0
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96,886
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373,184
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398,698
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589
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95,237
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1,393,477
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Chief Financial Officer
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Russell B. Klein
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2007
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500,000
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300,000
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151,978
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321,118
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529,447
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4,773
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110,845
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1,918,161
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President, Global Marketing, Strategy & Innovation
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Charles M. Fallon, Jr.
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2007
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425,000
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0
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300,840
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331,582
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451,094
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511
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314,592
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1,823,619
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President, North America
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Anne Chwat
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2007
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447,347
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0
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68,074
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63,794
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417,757
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6,512
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104,182
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1,107,666
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General Counsel and Secretary
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Peter
Tan(1)
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2007
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474,557
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0
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285,257
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106,375
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484,775
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0
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131,618
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1,482,582
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President, Asia Pacific
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Martin
Brok(1),
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2007
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382,776
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135
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30,612
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20,263
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0
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0
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1,683,733
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2,117,519
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Former Senior Vice President, Franchise Operations and
Marketing, EMEA
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(1)
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Messrs. Tan and Brok served as executive officers from
July 1, 2006 through August 29, 2006. Effective
August 30, 2006, we designated a new slate of executive
officers which did not include Mr. Tan or Mr. Brok.
All amounts included in these tables for Messrs. Tan and
Brok, except Mr. Tan’s medical premiums and relocation
expenses, are based upon exchange rates on June 29, 2007,
which was the last business day prior to the end of fiscal 2007.
The exchange rates on June 29, 2007 are based on the one
day average historical rate as found on OANDA.com, as follows:
0.6511 USD to 1 SGD for Mr. Tan and 1 Euro to 1.34608 USD
and 1 GBP to 2.00121 USD for Mr. Brok. Mr. Tan’s
medical premiums and relocation expenses are based upon exchange
rates on the date of the applicable payment or reimbursement.
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(2)
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These amounts are the actual base salaries paid to the NEOs
during fiscal 2007, and do not include the full 3% base salary
increase, prorated for time in position, which became effective
on or around September 29, 2006.
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(3)
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We paid a one-time bonus to Mr. Klein on March 19,
2007. This payment was approved by the Compensation Committee to
reward extraordinary performance.
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(4)
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Amounts shown in this column include (i) the accounting
expense recognized by us in fiscal 2007 related to the unvested
portion of stock option awards made after February 16, 2006
(the “Post-IPO Options”) and (ii) the accounting
expense that would have been recognized by us in fiscal 2007
relating to the unvested portion of stock option awards made
prior to February 16, 2006 (the “Pre-IPO
Options”) if these options had been subject to the
“modified prospective transition method” for public
companies. As discussed in Note 3 to our Consolidated
Financial Statements included in our
Form 10-K
for fiscal 2007, since we applied the minimum value method to
options granted prior to our becoming a public company, as
permitted under SFAS No. 123, to calculate the grant
date fair value of our Pre-IPO Options using the Black-Scholes
option pricing model for pro forma stock based compensation
disclosure, we did not recognize any expense associated with
Pre-IPO Options in our financial statements for fiscal 2007 and
will not in any future periods.
|
The assumptions and methodology used to calculate the accounting
expense recognized in fiscal 2007 for the Post-IPO Options are
set forth in Note 3 to our Consolidated Financial Statements
included in our
Form 10-K
for fiscal 2007. The assumptions and methodology used to
calculate the expense associated with the Pre-IPO Options for
purposes of this 2007 Summary Compensation Table are set forth
below:
Valuation and amortization method— We
determined the fair value of the Pre-IPO Options using the
Black-Scholes option-pricing formula. This fair value was then
amortized on a straight-line basis over the requisite service
periods of the awards, which is generally the vesting period.
The Pre-IPO Options expire 10 years from the grant date and
generally vest ratably over a five-year service period
commencing on the grant date.
Expected Term — The expected term represents
the period that our stock-based awards are expected to be
outstanding and was determined based on historical experience of
similar awards, giving consideration to contractual terms of the
awards, vesting schedules and expectations of future employee
behavior. We determined the expected term of the Pre-IPO Options
using the simplified method for “plain vanilla”
options as discussed in Section D, Certain Assumptions Used
in Valuation Methods, of SEC Staff Accounting
Bulletin No. 107. Based on the results of applying the
simplified method, we used five years as the expected term for
all Pre-IPO Options.
Expected Volatility— As we were not a publicly
traded company on the date that any of the Pre-IPO Options were
granted, we have elected to base our estimate of the expected
volatility of our common stock on the historical volatility of a
group of our peers whose historical share prices for the
relevant time frame are publicly available. The time frame used
was five years prior to grant date.
Expected Dividend Yield— We used historical
dividend yield trends as an estimate for future yields for all
Pre-IPO Options. As we did not declare dividends prior to
February 16, 2006, the dividend yield used for all Pre-IPO
Options was 0.00%.
25
Risk-Free Interest Rate — We based the
risk-free interest rate used in the Black-Scholes valuation
method at the time of the stock option grant on the yield to
maturity on zero-coupon U.S. government bonds having a
remaining life equal to the option’s expected term.
The following assumptions were used to estimate the fair value
of the Pre-IPO Options reflected in the 2007 Summary
Compensation Table:
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Pre-IPO Option Grant Date
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1/1/06-2/15/06
|
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2005
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2004
|
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2003
|
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Average expected term
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5 yrs.
|
|
5 yrs.
|
|
5 yrs.
|
|
5 yrs.
|
Expected volatility
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31.84%
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|
32.97% - 36.62%
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40.06% - 42.30%
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43.91% - 45.15%
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Weighted-average volatility
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31.84%
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33.28%
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|
39.94%
|
|
42.99%
|
Risk-free interest rate
|
|
4.78%
|
|
3.88% - 4.78%
|
|
3.48% - 3.98%
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3.88% - 3.98%
|
Expected dividend yield
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0.0%
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|
0.0%
|
|
0.0%
|
|
0.0%
|
Weighted-average fair value
|
|
$7.94
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|
$3.87
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|
$1.54
|
|
$1.53
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(5)
|
The amounts reported in this column reflect compensation earned
for fiscal 2007 performance under the RSIP. We pay cash
incentives under the RSIP in the fiscal year following the
fiscal year in which they were earned. On August 14, 2007,
the Compensation Committee determined that we had exceeded the
relevant worldwide adjusted EBITDA target and the relevant
adjusted EBITDA targets for the North America, Latin America and
Asia Pacific regions, and the Compensation Committee approved
the CEO’s and each CEO Direct Report’s individual
performance measures and cash incentive payment. The
Compensation Committee also submitted the CEO’s individual
performance measures and cash incentive payment for approval to
the Board of Directors. On August 20, 2007, the Board
approved the Compensation Committee’s recommendations.
Fiscal 2007 cash incentive payments were made in September 2007.
The lump sum severance payment due to Mr. Brok under the
Compromise Agreement includes an estimate of his fiscal 2007
cash bonus; therefore, Mr. Brok did not receive a cash
bonus under the RSIP for fiscal 2007.
|
(6)
|
The amounts reported reflect the “above market”
earnings, if any, on income previously earned and deferred by
each NEO under the ERP. The ERP is described in the
“Executive Benefits and Perquisites” section of the
CD&A on page 20.
|
(7)
|
This column includes the perquisites described below in the 2007
Perquisites Table. This column also includes expatriate benefits
and separation payments for Mr. Brok, executive medical
expenses for all NEOs, life insurance premiums, dividend
equivalents as described in Footnote 3 to the 2007 All Other
Compensation Table on page 27, and the Company’s
matching and performance-based contributions into the
Company’s 401(k) plan and ERP, as described in the 2007 All
Other Compensation Table. Messrs. Tan and Brok are not
eligible for participation in these
U.S.-based
programs.
|
2007
PERQUISITES TABLE
Our NEOs received the following perquisites during fiscal 2007:
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|
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Perquisite
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Personal
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Auto
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Executive
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Total
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Allowance(1)
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Travel
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Expenses(3)
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Relocation(4)
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Miscellaneous(5)
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Perquisites
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Name
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Year
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($)
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($)
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|
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($)
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|
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($)
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|
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($)
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|
|
($)
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John W. Chidsey
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2007
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50,000
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88,693
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(2)
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0
|
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0
|
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1,573
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140,266
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Ben K. Wells
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2007
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35,000
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0
|
|
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0
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1,529
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|
315
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36,844
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Russell B. Klein
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2007
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35,000
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0
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|
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0
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|
|
0
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|
1,017
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36,017
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Charles M. Fallon, Jr.
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2007
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35,538
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3,579
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|
|
|
8,517
|
|
|
|
209,763
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|
|
4,611
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|
|
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262,008
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Anne Chwat
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2007
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35,000
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|
0
|
|
|
|
0
|
|
|
|
0
|
|
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|
3,936
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38,936
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|
Peter Tan
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2007
|
|
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|
0
|
|
|
|
0
|
|
|
|
47,219
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|
|
|
66,841
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|
|
|
0
|
|
|
|
114,060
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|
Martin Brok
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2007
|
|
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|
0
|
|
|
|
0
|
|
|
|
22,013
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|
|
|
29,445
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|
|
|
338
|
|
|
|
51,796
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|
|
|
(1)
|
These perquisite allowances were paid to the NEOs in accordance
with their respective employment agreements. The perquisite
allowance for Mr. Fallon exceeds the amount set forth in
his employment agreement because it includes a retroactive
payment for fiscal 2006 in the amount of $538 that was made in
fiscal 2007. Each NEO uses the perquisite allowance, at his or
her election, in connection with financial planning services,
automobile allowance and additional life and other insurance
benefits.
|
(2)
|
Mr. Chidsey is entitled to private charter jet usage for
personal use of up to $100,000 per year, of which he used
$88,693 in fiscal 2007. Mr. Chidsey is fully responsible
for all taxes associated with his personal use of the Company
aircraft; however, the Company provides tax reimbursement for
required spousal travel on the Company aircraft when associated
with Mr. Chidsey’s business use of such aircraft. No
such spousal travel was required during fiscal 2007.
|
(3)
|
Included in this column are the costs paid by the Company for
personal use of a Company car by Mr. Fallon during fiscal
2007, $45,578 for Mr. Tan’s car allowance and $22,013
for Mr. Brok’s car allowance.
|
(4)
|
The amounts in this column for Messrs. Fallon and Tan
include the following relocation expenses paid in accordance
with our relocation policy: Mr. Fallon, $176,900, plus a
tax gross-up
of $32,863; and Mr. Tan, $66,841. The amounts in this
column for Mr. Brok represent repatriation expenses in the
amount of $29,445.
|
(5)
|
Represents miscellaneous gifts, event tickets, fees and services
paid or provided by the Company.
|
26
2007 ALL
OTHER COMPENSATION TABLE
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to Retirement
|
|
|
Dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Welfare
|
|
|
and
|
|
|
Equivalents
|
|
|
Expatriate
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
Plans(1)
|
|
|
401(k)
Plans(2)
|
|
|
Earned(3)
|
|
|
Benefits(4)
|
|
|
Severance(5)
|
|
|
|
|
Name
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Total ($)
|
|
|
John W. Chidsey
|
|
|
2007
|
|
|
|
140,266
|
|
|
|
10,951
|
|
|
|
107,528
|
|
|
|
54,678
|
|
|
|
0
|
|
|
|
0
|
|
|
|
313,423
|
|
Ben K. Wells
|
|
|
2007
|
|
|
|
36,844
|
|
|
|
18,475
|
|
|
|
36,799
|
|
|
|
3,119
|
|
|
|
0
|
|
|
|
0
|
|
|
|
95,237
|
|
Russell B. Klein
|
|
|
2007
|
|
|
|
36,017
|
|
|
|
24,970
|
|
|
|
38,200
|
|
|
|
11,658
|
|
|
|
0
|
|
|
|
0
|
|
|
|
110,845
|
|
Charles M. Fallon, Jr.
|
|
|
2007
|
|
|
|
262,008
|
|
|
|
4,022
|
|
|
|
44,239
|
|
|
|
4,323
|
|
|
|
0
|
|
|
|
0
|
|
|
|
314,592
|
|
Anne Chwat
|
|
|
2007
|
|
|
|
38,936
|
|
|
|
15,630
|
|
|
|
46,695
|
|
|
|
2,921
|
|
|
|
0
|
|
|
|
0
|
|
|
|
104,182
|
|
Peter Tan
|
|
|
2007
|
|
|
|
114,060
|
|
|
|
11,595
|
|
|
|
0
|
|
|
|
5,963
|
|
|
|
0
|
|
|
|
0
|
|
|
|
131,618
|
|
Martin Brok
|
|
|
2007
|
|
|
|
51,796
|
|
|
|
4,755
|
|
|
|
57,216
|
|
|
|
1,607
|
|
|
|
878,815
|
|
|
|
689,544
|
|
|
|
1,683,733
|
|
|
|
(1)
|
Amounts in this column reflect life insurance premiums paid by
us and payments made by us under the Executive Health Plan and
the health plans applicable to Messrs. Tan and Brok. The
amounts for each NEO are: Mr. Chidsey, $1,703 and $9,248,
respectively; Mr. Wells, $3,159 and $15,316, respectively;
Mr. Klein, $2,699 and $22,271, respectively;
Mr. Fallon, $1,621 and $2,401, respectively;
Ms. Chwat, $2,031 and $13,599, respectively; Mr. Tan,
$0 and $11,595, respectively; and Mr. Brok, $4,755 and $0,
respectively.
|
(2)
|
The amounts in this column for the CEO and the CEO Direct
Reports represent Company matching contributions to the 401(k)
plan and the ERP and the Company’s profit sharing
contribution to the ERP, as follows: Mr. Chidsey, $13,500,
$47,048 and $46,980, respectively; Mr. Wells, $16,832, $0
and $19,967, respectively; Mr. Klein, $13,385, $1,615 and
$23,200, respectively; Mr. Fallon, $0, $24,519 and $19,720,
respectively; and Ms. Chwat, $13,568, $12,206, and $20,921,
respectively. The amounts in this column for Mr. Brok
represent contributions to Mr. Brok’s employer’s
pension plan.
|
(3)
|
Quarterly dividends and dividend equivalents in the amount of
$0.0625 per share were paid by the Company to record owners of
shares, in the case of dividends, and to the holders of
restricted stock units and performance based restricted stock,
in the case of dividend equivalents, as of February 15,
2007 and June 11, 2007, respectively. The amounts in this
column represent accrued dividend equivalents on vested and
unvested restricted stock units and performance based restricted
stock.
|
(4)
|
This column represents expatriate benefits received by
Mr. Brok during fiscal 2007 in connection with his
temporary assignment from The Netherlands to the United Kingdom.
Included in the total number is (i) $620,816 paid by the
Company for Mr. Brok’s individual income taxes in The
Netherlands and the United Kingdom, a portion of which we
anticipate will be refunded upon the filing of
Mr. Brok’s future tax returns, and (ii) housing
assistance in the amount of $148,634.
|
(5)
|
Mr. Brok is scheduled to receive a lump sum severance
payment in October 2007, in the amount reflected in this column,
in accordance with the terms and conditions of the Compromise
Agreement.
|
2007
GRANTS OF PLAN-BASED AWARDS TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Estimated Potential Payouts
|
|
|
Estimated Potential Payouts
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive Plan
|
|
|
Under Equity Incentive Plan
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
Awards(2)
|
|
|
Awards(3)
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Approval
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
Date(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)(4)
|
|
|
John W. Chidsey
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
506,250
|
|
|
|
1,012,500
|
|
|
|
2,531,250
|
|
|
|
71,174
|
|
|
|
142,348
|
|
|
|
213,522
|
|
|
|
1,999,989
|
|
Ben K. Wells
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
150,610
|
|
|
|
301,219
|
|
|
|
753,048
|
|
|
|
12,478
|
|
|
|
24,955
|
|
|
|
37,433
|
|
|
|
350,618
|
|
Russell B. Klein
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
200,000
|
|
|
|
400,000
|
|
|
|
1,000,000
|
|
|
|
19,573
|
|
|
|
39,145
|
|
|
|
58,718
|
|
|
|
549,987
|
|
Charles M. Fallon, Jr.
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
148,750
|
|
|
|
297,500
|
|
|
|
743,750
|
|
|
|
11,343
|
|
|
|
22,686
|
|
|
|
34,029
|
|
|
|
318,738
|
|
Anne Chwat
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
157,809
|
|
|
|
315,618
|
|
|
|
789,045
|
|
|
|
11,684
|
|
|
|
23,367
|
|
|
|
35,051
|
|
|
|
328,306
|
|
Peter Tan
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
143,241
|
|
|
|
286,481
|
|
|
|
716,203
|
|
|
|
17,085
|
|
|
|
21,356
|
|
|
|
25,627
|
|
|
|
300,052
|
|
Martin Brok
|
|
|
8/21/06
|
|
|
|
8/09/06
|
|
|
|
86,014
|
|
|
|
172,028
|
|
|
|
376,311
|
|
|
|
7,248
|
|
|
|
9,060
|
|
|
|
10,872
|
|
|
|
127,293
|
|
|
|
(1)
|
The Compensation Committee recommended that the Board approve
the fiscal 2007 equity grants and the Board of Directors
approved the fiscal 2007 equity grants at meetings held on
August 8, 2006 and August 9, 2006, respectively;
however, the approvals required that the grants be made on
August 21, 2006 in accordance with the Company’s prior
practice. This practice is now reflected in the Company’s
Equity Grant Policy described in the CD&A on page 23.
|
(2)
|
The amounts reported in this column reflect potential payments
based on fiscal 2007 performance under the RSIP. The
“Maximum” estimated potential payout reflects what an
NEO would earn if the Company met or exceeded its financial
performance goals at the maximum level and the NEO received the
highest individual performance rating. A description of the RSIP
and our “Threshold,” “Target” and
“Maximum” payments, is included in the CD&A on
page 17-18.
Fiscal 2007 cash incentive payments were made in September 2007.
The actual amounts paid under the RSIP are the amounts reflected
in the Non-Equity Incentive Plan Compensation column of the 2007
Summary Compensation Table on page 27.
|
(3)
|
In August 2006, we granted each NEO performance based restricted
stock awards under our 2006 Omnibus Incentive Plan. The amount
of performance-based restricted shares granted to each NEO,
other than the CEO, was calculated as follows: the NEO’s
current salary,
|
27
|
|
|
multiplied by the individual
performance factor (which may result in an award of up to 20%
more or less than actual salary), divided by the closing stock
price on the grant date. For the CEO, the amount of performance
based restricted shares is calculated similarly; however, his
percentage is not subject to adjustment based on his individual
performance. The actual number of performance-based restricted
shares granted in August 2006 is reflected in the
“Target” column above. If the Company achieves its
target PBT, this is the amount of restricted shares that will be
earned at the end of the one-year performance period. The number
of performance-based restricted shares that will be earned by
the NEO at the end of the one-year performance period is then
subject to a decrease of up to 50% for all NEOs, other than
Mr. Tan who is subject to a decrease of up to 20%, if the
Company achieves PBT between the “Threshold” and
“Target” levels or up to a 50% increase for all NEOs,
other than Mr. Tan who is subject to an increase of up to
20%, if the Company achieves PBT between the “Target”
and “Maximum” levels. For fiscal 2007, PBT exceeded
the plan target, and the awards for all NEOs except Mr. Tan
were increased by 12.5%, which was the leverage factor for the
CEO and all executive vice presidents, and for Mr. Tan by
5%, which was the leverage factor for all senior vice
presidents. The actual number of shares granted for fiscal 2007,
taking the leverage factor into consideration, is described in
Footnote 4 below.
|
|
|
(4) |
The amounts reflected in this column represent the target
performance-based restricted stock award issued to each NEO on
August 21, 2006 (the grant date), not taking into account
the Company performance leverage factor described in Footnote 3
to this table. The leveraged amounts were determined in August
2007, based upon the Company’s actual PBT for fiscal 2007.
The actual amounts granted, after taking into account the
Company performance leverage factor and the corresponding values
using the closing price on the August 21, 2006 grant date,
are as follows: Mr. Chidsey, 160,142 and $2,249,995,
respectively; Mr. Wells, 28,075 and $394,454, respectively;
Mr. Klein, 44,039 and $618,748, respectively;
Mr. Fallon, 25,522 and $358,584, respectively;
Ms. Chwat, 26,288 and $369,346, respectively; and
Mr. Tan, 22,424 and $315,057, respectively.
Mr. Brok’s fiscal 2007 performance-based restricted
stock award was forfeited as a result of the termination of his
employment.
|
2007
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
|
|
Stock that
|
|
|
Stock that
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
|
|
|
Have not
|
|
|
Have not
|
|
|
|
Option
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Stock Award
|
|
|
Vested
|
|
|
Vested(6)
|
|
Name
|
|
Grant
Date(1)
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Grant Date
|
|
|
(#)
|
|
|
($)
|
|
|
John W. Chidsey
|
|
|
3/01/04
|
|
|
|
316,153
|
|
|
|
210,769
|
|
|
|
3.80
|
|
|
|
3/01/14
|
|
|
|
8/21/06
|
|
|
|
160,142
|
(2)
|
|
|
4,218,140
|
|
|
|
|
3/01/04
|
|
|
|
173,884
|
|
|
|
115,923
|
|
|
|
11.39
|
|
|
|
3/01/14
|
|
|
|
5/16/06
|
|
|
|
168,616
|
(3)
|
|
|
4,441,345
|
|
|
|
|
8/01/04
|
|
|
|
94,698
|
|
|
|
142,048
|
|
|
|
3.80
|
|
|
|
8/01/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/08/04
|
|
|
|
106,543
|
|
|
|
71,030
|
|
|
|
3.80
|
|
|
|
6/08/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/08/04
|
|
|
|
56,829
|
|
|
|
37,886
|
|
|
|
11.39
|
|
|
|
6/08/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ben K. Wells
|
|
|
8/21/05
|
|
|
|
10,538
|
|
|
|
42,155
|
|
|
|
10.25
|
|
|
|
8/21/15
|
|
|
|
8/21/06
|
|
|
|
28,075
|
(2)
|
|
|
739,496
|
|
|
|
|
2/14/06
|
|
|
|
26,346
|
|
|
|
105,385
|
|
|
|
21.64
|
|
|
|
2/14/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/17/06
|
|
|
|
15,807
|
|
|
|
63,232
|
|
|
|
17.00
|
|
|
|
5/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell B. Klein
|
|
|
8/21/03
|
|
|
|
0
|
|
|
|
118,379
|
|
|
|
3.80
|
|
|
|
8/21/13
|
|
|
|
8/21/06
|
|
|
|
44,039
|
(2)
|
|
|
1,159,987
|
|
|
|
|
8/21/05
|
|
|
|
0
|
|
|
|
16,167
|
|
|
|
10.25
|
|
|
|
8/21/15
|
|
|
|
9/01/05
|
|
|
|
15,018
|
(4)
|
|
|
395,574
|
|
|
|
|
5/17/06
|
|
|
|
26,346
|
|
|
|
105,385
|
|
|
|
17.00
|
|
|
|
5/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles M. Fallon, Jr.
|
|
|
5/17/06
|
|
|
|
0
|
|
|
|
210,769
|
|
|
|
17.00
|
|
|
|
5/16/16
|
|
|
|
8/21/06
|
|
|
|
25,522
|
(2)
|
|
|
672,249
|
|
|
|
|
6/02/06
|
|
|
|
0
|
|
|
|
29,007
|
|
|
|
18.91
|
|
|
|
6/01/16
|
|
|
|
6/02/06
|
|
|
|
7,933
|
(5)
|
|
|
208,955
|
|
Anne Chwat
|
|
|
9/27/04
|
|
|
|
31,615
|
|
|
|
94,847
|
|
|
|
3.80
|
|
|
|
9/27/14
|
|
|
|
8/21/06
|
|
|
|
26,288
|
(2)
|
|
|
692,426
|
|
|
|
|
1/01/05
|
|
|
|
10,538
|
|
|
|
31,616
|
|
|
|
3.80
|
|
|
|
1/01/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Tan
|
|
|
11/15/05
|
|
|
|
15,807
|
|
|
|
63,232
|
|
|
|
10.25
|
|
|
|
11/15/15
|
|
|
|
8/21/06
|
|
|
|
22,424
|
(2)
|
|
|
590,648
|
|
|
|
|
5/17/06
|
|
|
|
5,269
|
|
|
|
21,078
|
|
|
|
17.00
|
|
|
|
5/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Brok
|
|
|
8/21/03
|
|
|
|
1,185
|
|
|
|
791
|
|
|
|
3.80
|
|
|
|
8/21/13
|
|
|
|
9/01/05
|
|
|
|
1,897
|
(4)
|
|
|
49,967
|
|
|
|
|
4/21/04
|
|
|
|
17,784
|
|
|
|
11,856
|
|
|
|
3.80
|
|
|
|
4/21/14
|
|
|
|
8/21/06
|
|
|
|
9,060
|
(2)
|
|
|
238,640
|
|
|
|
|
1/01/05
|
|
|
|
13,700
|
|
|
|
20,550
|
|
|
|
3.80
|
|
|
|
1/01/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All stock options granted prior to August 21, 2006 vest 20%
per year on the anniversary date. All stock options granted on
August 21, 2006 and thereafter vest 25% per year on the
anniversary date.
|
(2)
|
These performance-based restricted stock awards vest 100% on the
third anniversary of the grant date with the following
exceptions: Mr. Chidsey’s and Ms. Chwat’s
awards vest 50% on the third anniversary of the grant date, and
50% on the fourth anniversary of the grant date.
|
(3)
|
These restricted stock unit awards vest in equal installments
over five years, on each anniversary date.
|
28
|
|
(4)
|
These restricted stock unit awards vested in equal installments
over two years. The award for Mr. Klein will settle on or
about January 3, 2008 pursuant to the terms and conditions
of his award agreement. The unvested portion of
Mr. Brok’s restricted stock units vested as a result
of the termination of his employment and settled on
August 2, 2007.
|
(5)
|
Fifty percent of these restricted stock unit awards vested on
December 2, 2006, and the remaining fifty percent will vest
on December 2, 2007.
|
(6)
|
The market value of unvested restricted stock unit awards and
unvested performance based restricted stock awards has been
established by multiplying the number of unvested shares by
$26.34, which was the closing price on June 29, 2007, the
last business day of the 2007 fiscal year.
|
2007
OPTION EXERCISES AND STOCK VESTED TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
of Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized
|
|
|
Acquired on
|
|
|
Realized
|
|
|
|
Exercise
|
|
|
on
Exercise(1)
|
|
|
Vesting
|
|
|
on
Vesting(2)(3)
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
John W. Chidsey
|
|
|
0
|
|
|
|
0
|
|
|
|
42,153
|
|
|
|
1,041,179
|
|
Ben K. Wells
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Russell B. Klein
|
|
|
59,194
|
|
|
|
750,580
|
|
|
|
15,017
|
|
|
|
216,545
|
|
|
|
|
4,041
|
|
|
|
25,175
|
|
|
|
0
|
|
|
|
0
|
|
Charles M. Fallon, Jr.
|
|
|
0
|
|
|
|
0
|
|
|
|
7,932
|
|
|
|
165,065
|
|
Anne Chwat
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Peter Tan
|
|
|
0
|
|
|
|
0
|
|
|
|
52,693
|
|
|
|
1,405,322
|
|
Martin Brok
|
|
|
0
|
|
|
|
0
|
|
|
|
1,897
|
|
|
|
27,355
|
|
|
|
(1) |
Values are based on the fair market value of a share of our
common stock at the time of exercise on the exercise dates which
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Market
|
|
|
|
|
|
|
Value on
|
NEO
|
|
Exercise Date
|
|
Exercise Price ($)
|
|
Exercise Date ($)
|
|
Russell B. Klein
|
|
|
October 27, 2006
|
|
|
|
3.80
|
|
|
|
16.48
|
|
Russell B. Klein
|
|
|
October 27, 2006
|
|
|
|
10.25
|
|
|
|
16.48
|
|
|
|
(2) |
Values are based on the closing market price on the vesting
date, or, if there is no reported sale on the vesting date, then
on the last preceding date on which any reported sale occurred.
The closing market prices were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Closing Market
|
|
|
|
|
|
Prices on Vesting
|
|
NEO
|
|
Vesting Date
|
|
Date ($)
|
|
|
John W. Chidsey
|
|
May 17, 2007
|
|
|
24.70
|
|
Russell B. Klein
|
|
September 1, 2006
|
|
|
14.42
|
|
Charles M. Fallon, Jr.
|
|
December 2, 2006
|
|
|
20.81
|
|
Peter Tan
|
|
June 4, 2007
|
|
|
26.67
|
|
Martin Brok
|
|
September 1, 2006
|
|
|
14.42
|
|
|
|
(3) |
The values contained in this column represent the value of
restricted stock units that vested during fiscal 2007, including
restricted stock units for Messrs. Klein and Brok that
vested but did not settle during fiscal 2007, pursuant to the
terms and conditions of the individual award agreements. The
amounts and vesting dates for the restricted stock units that
did not settle during fiscal 2007 are: Mr. Klein, 15,017
restricted stock units, vested September 1, 2006; and
Mr. Brok, 1,897 restricted stock units, vested
September 1, 2006.
|
2007
NONQUALIFIED DEFERRED COMPENSATION TABLE
(1)
This table reports the fiscal 2007 contributions by the NEOs and
the Company to the ERP and the aggregate account balances for
the NEOs. Details of the ERP are discussed in the CD&A on
page 20. Further details for the NEOs are provided in the
2007 All Other Compensation Table on page 27.
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Aggregate
|
|
|
|
|
|
Aggregate
|
|
|
|
Executive
|
|
|
Contributions in
|
|
|
Earnings
|
|
|
|
|
|
Balance at
|
|
|
|
Contributions in
|
|
|
Last Fiscal
|
|
|
in Last
|
|
|
Aggregate
|
|
|
Last Fiscal
|
|
|
|
Last Fiscal Year
|
|
|
Year
|
|
|
Fiscal
Year(1)
(2)
|
|
|
Withdrawals /
|
|
|
Year-End(3)
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Distributions ($)
|
|
|
($)
|
|
|
John W. Chidsey
|
|
|
47,048
|
|
|
|
94,028
|
|
|
|
31,787
|
|
|
|
0
|
|
|
|
508,839
|
|
Ben K. Wells
|
|
|
0
|
|
|
|
19,967
|
|
|
|
2,142
|
|
|
|
0
|
|
|
|
50,872
|
|
Russell B. Klein
|
|
|
1,808
|
|
|
|
24,815
|
|
|
|
17,356
|
|
|
|
0
|
|
|
|
252,176
|
|
Charles M. Fallon, Jr.
|
|
|
24,519
|
|
|
|
44,239
|
|
|
|
1,858
|
|
|
|
0
|
|
|
|
70,616
|
|
Anne Chwat
|
|
|
165,419
|
|
|
|
33,127
|
|
|
|
23,679
|
|
|
|
0
|
|
|
|
362,805
|
|
Peter
Tan(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Martin
Brok(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
(1)
|
All amounts deferred by the NEO or credited to his or her
account earned interest for the first six months of fiscal 2007
at an annual rate of 8.5%, and for the second six months of
fiscal 2007 at an annual rate of 8.0%.
|
(2)
|
The amounts in this column represent the dollar value of
interest earned on compensation deferred under the ERP. The
amounts earned in excess of 120% of the long term applicable
federal rate are: Mr. Chidsey, $8,741; Mr. Wells,
$589; Mr. Klein, $4,773; Mr. Fallon, $511; and
Ms. Chwat, $6,512. Messrs. Tan and Brok are not
eligible to participate in the ERP since they are not U.S.-based
employees. All amounts set forth in this column are included in
the “All Other Compensation” column of the 2007
Summary Compensation Table on page 25, except the above
market earnings described above in this Footnote, which are
included in the “Nonqualified Deferred Compensation
Earnings” column of the 2007 Summary Compensation Table.
|
(3)
|
The Company filed its first proxy statement last year, which
included compensation information for the Company’s 2005
and 2006 fiscal years. In last year’s Summary Compensation
Table, the Company reported the 2005 and 2006 Company match and
profit sharing contributions to the ERP for last year’s
NEOs. The Company did not report aggregate balances for last
year’s NEOs. For the NEOs, the Company reported the
following Company match and profit sharing contributions: fiscal
2006 - Mr. Chidsey, $108,874; Mr. Klein, $52,154; and
Ms. Chwat, $52,324; and fiscal 2005 - Mr. Chidsey,
$89,654; Mr. Klein, $48,000; and Ms Chwat, $37,760.
|
(4)
|
Messrs. Tan and Brok are not eligible for participation in
the ERP.
|
2007
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
TABLE
The potential payments and benefits that would be provided to
each NEO as a result of certain termination events are set forth
in the table below. Calculations for this table are based on the
assumption that the termination took place on June 30, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
for Good
|
|
|
|
|
|
|
|
|
Termination
|
|
|
w/o Cause
|
|
|
Reason
|
|
|
|
|
|
|
|
|
w/o Cause
|
|
|
After
|
|
|
After
|
|
|
|
|
|
|
|
|
or for
|
|
|
Change in
|
|
|
Change in
|
|
|
Death and
|
|
|
|
|
|
Good Reason
|
|
|
Control
|
|
|
Control
|
|
|
Disability
|
|
Name(1)
|
|
Benefit
|
|
($)(2)(3)
|
|
|
($)
(5)(6)(7)
|
|
|
($)(5)(6)(7)
|
|
|
($)(8)
|
|
|
John W. Chidsey
|
|
Severance(9)
|
|
|
2,025,000
|
|
|
|
3,037,500
|
|
|
|
3,037,500
|
|
|
|
2,025,000
|
|
|
|
Bonus
|
|
|
2,025,000
|
|
|
|
3,037,500
|
|
|
|
3,037,500
|
|
|
|
2,025,000
|
|
|
|
Accelerated
Vesting(10)
|
|
|
N/A
|
|
|
|
20,512,441
|
|
|
|
20,512,441
|
|
|
|
20,512,441
|
|
|
|
Value of Benefits
Continuation(11)
|
|
|
51,648
|
|
|
|
77,473
|
|
|
|
77,473
|
|
|
|
51,648
|
|
|
|
Perquisite
Allowance(12)
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
100,000
|
|
|
|
Tax
Gross-Up(13)
|
|
|
N/A
|
|
|
|
5,020,442
|
|
|
|
5,020,442
|
|
|
|
N/A
|
|
|
|
Outplacement Services
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,201,648
|
|
|
|
31,835,356
|
|
|
|
31,835,356
|
|
|
|
24,714,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ben K. Wells
|
|
Severance(9)
|
|
|
430,313
|
|
|
|
430,313
|
|
|
|
430,313
|
|
|
|
N/A
|
|
|
|
Bonus
|
|
|
301,219
|
|
|
|
301,219
|
|
|
|
301,219
|
|
|
|
301,219
|
|
|
|
Accelerated
Vesting(10)
|
|
|
N/A
|
|
|
|
2,503,666
|
|
|
|
2,503,666
|
|
|
|
N/A
|
|
|
|
Value of Benefits
Continuation(11)
|
|
|
26,705
|
|
|
|
26,705
|
|
|
|
26,705
|
|
|
|
N/A
|
|
|
|
Perquisite
Allowance(12)
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
N/A
|
|
|
|
Outplacement Services
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
821,737
|
|
|
|
3,325,403
|
|
|
|
3,325,403
|
|
|
|
301,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
for Good
|
|
|
|
|
|
|
|
|
Termination
|
|
|
w/o Cause
|
|
|
Reason
|
|
|
|
|
|
|
|
|
w/o Cause
|
|
|
After
|
|
|
After
|
|
|
|
|
|
|
|
|
or for
|
|
|
Change in
|
|
|
Change in
|
|
|
Death and
|
|
|
|
|
|
Good Reason
|
|
|
Control
|
|
|
Control
|
|
|
Disability
|
|
Name(1)
|
|
Benefit
|
|
($)(2)(3)
|
|
|
($)
(5)(6)(7)
|
|
|
($)(5)(6)(7)
|
|
|
($)(8)
|
|
|
Russell B. Klein
|
|
Severance(9)
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
N/A
|
|
|
|
Bonus
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
Accelerated
Vesting(10)
|
|
|
395,574
|
(14)
|
|
|
5,072,673
|
|
|
|
5,072,673
|
|
|
|
395,574
|
(14)
|
|
|
Value of Benefits
Continuation(11)
|
|
|
16,213
|
|
|
|
16,213
|
|
|
|
16,213
|
|
|
|
N/A
|
|
|
|
Perquisite
Allowance(12)
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
N/A
|
|
|
|
Outplacement Services
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,375,287
|
|
|
|
6,052,386
|
|
|
|
6,052,386
|
|
|
|
795,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles M. Fallon, Jr.
|
|
Severance(9)
|
|
|
425,000
|
|
|
|
425,000
|
|
|
|
425,000
|
|
|
|
N/A
|
|
|
|
Bonus
|
|
|
297,500
|
|
|
|
297,500
|
|
|
|
297,500
|
|
|
|
297,500
|
|
|
|
Accelerated
Vesting(10)
|
|
|
1,250,000
|
(4)
|
|
|
3,065,308
|
|
|
|
3,065,308
|
|
|
|
1,250,000
|
(4)
|
|
|
Value of Benefits
Continuation(11)
|
|
|
24,285
|
|
|
|
24,285
|
|
|
|
24,285
|
|
|
|
N/A
|
|
|
|
Perquisite
Allowance(12)
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
N/A
|
|
|
|
Outplacement Services
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,060,285
|
|
|
|
3,875,593
|
|
|
|
3,875,593
|
|
|
|
1,547,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anne Chwat
|
|
Severance(9)
|
|
|
450,883
|
|
|
|
450,883
|
|
|
|
450,883
|
|
|
|
N/A
|
|
|
|
Bonus
|
|
|
315,618
|
|
|
|
315,618
|
|
|
|
315,618
|
|
|
|
315,618
|
|
|
|
Accelerated
Vesting(10)
|
|
|
N/A
|
|
|
|
3,542,902
|
|
|
|
3,542,902
|
|
|
|
N/A
|
|
|
|
Value of Benefits
Continuation(11)
|
|
|
29,130
|
|
|
|
29,130
|
|
|
|
29,130
|
|
|
|
N/A
|
|
|
|
Perquisite
Allowance(12)
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
N/A
|
|
|
|
Outplacement Services
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
28,500
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
859,131
|
|
|
|
4,402,033
|
|
|
|
4,402,033
|
|
|
|
315,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Tan
|
|
Severance(9)
|
|
|
478,557
|
|
|
|
478,557
|
|
|
|
478,557
|
|
|
|
N/A
|
|
|
|
Bonus
|
|
|
287,134
|
|
|
|
287,134
|
|
|
|
287,134
|
|
|
|
287,134
|
|
|
|
Accelerated
Vesting(10)
|
|
|
N/A
|
|
|
|
1,804,920
|
|
|
|
590,648
|
|
|
|
N/A
|
|
|
|
Value of Benefits
Continuation(11)
|
|
|
14,654
|
|
|
|
14,654
|
|
|
|
14,654
|
|
|
|
N/A
|
|
|
|
Perquisite
Allowance(12)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Outplacement Services
|
|
|
28,996
|
|
|
|
28,996
|
|
|
|
28,996
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
809,341
|
|
|
|
2,614,261
|
|
|
|
809,341
|
|
|
|
287,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Brok is not included in
this table since he is no longer employed by Burger King B.V.
|
(2)
|
|
If Mr. Chidsey’s
employment is terminated without cause or for good reason or due
to his death or disability (as such terms are defined in his
employment agreement), he will be entitled to receive an amount
equal to two times his annual base salary and target annual
bonus, continued coverage under our medical, dental and life
insurance plans for him and his eligible dependents and payment
of his perquisite allowance, each during the two-year period
following termination.
|
(3)
|
|
If any of the NEOs, other than
Mr. Chidsey, is terminated without cause (as such term is
defined in the relevant employment agreement), he or she will be
entitled to receive his or her then current base salary and his
or her perquisite allowance for one year (except Mr. Tan,
who does not receive a perquisite allowance), a pro-rata bonus
for the year of termination and continued coverage for one year
under our medical, dental and life insurance plans for him or
her and his or her eligible dependents. Additionally, each of
the NEOs, except Mr. Tan, will receive these benefits if
his or her employment is terminated for good reason (as such
term is defined in the relevant employment agreement).
|
(4)
|
|
For Mr. Fallon, the two award
agreements granting all options held by him as of June 30,
2007 provide that in the event his employment is terminated
without cause or for good reason prior to May 17, 2008, or
upon his death or disability prior to such date, then we may
either (i) accelerate the options granted under either one
or both of the award agreements and/or (ii) compensate him,
either in cash or a combination of cash and the acceleration
provided above, for the difference between $1,250,000 and the
value of his then vested options. Since no options were vested
on June 30, 2007, we provided for the full value of this
benefit, which is $1,250,000.
|
31
|
|
|
(5)
|
|
A change in control, without a
termination of employment, will not in itself trigger any
severance payments or vesting of equity. Any payments or equity
due upon a change in control and subsequent termination of
employment, either without cause or for good reason (as defined
in the relevant employment agreement) are included in the
“Termination w/o Cause After Change in Control” and
the “Termination for Good Reason After Change in
Control” columns of this table.
|
(6)
|
|
If Mr. Chidsey’s
employment is terminated without cause or he terminates his
employment with good reason after a change in control (as
defined in his employment agreement), he will be entitled to
receive an amount equal to three times his annual base salary
and target annual bonus. He also will be entitled to continued
coverage under our medical, dental and life insurance plans for
him and his eligible dependents and payment of his perquisite
allowance, each during the three-year period following
termination. Additionally, if Mr. Chidsey’s employment
is terminated during the
24-month
period after a change in control of the Company either without
cause or for good reason, all options and other equity awards
held by him will vest in full. If Mr. Chidsey resigns for
any reason within the
30-day
period immediately following the one-year anniversary of a
change in control involving a strategic buyer (as determined by
the Board), his resignation constitutes a termination by us
without cause under his employment agreement.
|
(7)
|
|
All equity granted to
Messrs. Wells, Klein and Fallon and Ms. Chwat, will
fully vest upon termination if his or her employment is
terminated at any time within 24 months after a change in
control either without cause or by him or her for good reason.
|
(8)
|
|
If an NEO dies or becomes disabled
(as such term is defined in the relevant employment agreement),
the NEO is entitled to receive his or her target bonus, as if he
or she had been employed for the entire fiscal year. For
Mr. Chidsey, any severance payments made by BKC as a result
of his termination upon his death or disability will be reduced
by the value of any BKC paid life and disability benefits he or
his family are entitled to receive. The term
“disability” is defined in all NEO employment
agreements as a physical or mental disability that prevents or
would prevent the performance by the NEO of his or her duties
under the employment agreement for a continuous period of six
months or longer.
|
(9)
|
|
Severance benefits will be provided
only if the NEO signs a separation agreement and release in a
form approved by us. Mr. Chidsey, unlike the other NEOs, is
entitled to receive severance upon his death or disability. In
the case of his death, his estate must sign the release in order
to receive severance benefits.
|
(10)
|
|
The amounts in this table represent
the fair market value on June 30, 2007 of the unvested
portion of the NEO’s equity that would vest upon the
occurrence of a triggering event. The fair market value of the
Company’s common stock on June 30, 2007 was $26.34 per
share.
|
(11)
|
|
Messrs. Chidsey, Wells, Klein
and Fallon and Ms. Chwat are entitled to continued
participation in the Executive Health Plan for the relevant
severance period specified in Footnotes 2, 3 and 6 above.
|
(12)
|
|
The perquisites allowance will be
paid to the NEO during the relevant severance period.
|
(13)
|
|
Pursuant to Mr. Chidsey’s
employment agreement, if any payments due to Mr. Chidsey in
connection with a change in control would be subject to an
excise tax, we must provide Mr. Chidsey with a related tax
gross-up
payment unless a reduction in Mr. Chidsey’s payments
by up to 10% would avoid the excise tax. This amount represents
the excise tax and applicable
gross-up.
|
(14)
|
|
This represents the unvested
portion as of June 30, 2007 of the restricted stock units
that Mr. Klein purchased through a deferred compensation program
during fiscal 2005. These restricted stock units became fully
vested on September 1, 2007.
|
The Chairman of the Board receives an annual retainer of $80,000
and the other non-management directors receive an annual
retainer of $50,000. The chair of the Audit Committee receives
an additional $20,000 fee and each other committee chair
receives an additional $10,000 fee. Prior to January 1,
2007, the annual retainer and chair fees were payable only in
cash. Beginning January 1, 2007, directors have the option
to receive their annual retainer
and/or chair
fees either 100% in cash or 100% in shares of deferred stock.
Directors who elected to receive their 2007 calendar year annual
retainer
and/or chair
fees in deferred stock will receive these deferred stock awards
on November 29, 2007, which is the date of the fiscal
2007 shareholders’ meeting. The award will be fully
vested on the date of grant but will not settle until
termination of board service. In addition, the Chairman of the
Board is granted on an annual basis deferred stock with a fair
market value on the grant date of $120,000 and each other
non-management member of the Board receives a deferred stock
award with a grant date fair market value of $85,000. The grants
for fiscal year 2007 were made at the Company’s annual
shareholders’ meeting held on November 29, 2006, and
are fully vested. All deferred stock awarded to the directors
will be settled upon termination of Board service. No separate
committee meeting fees are paid and no compensation is paid to
management directors for Board or committee service. All
directors or their employers, in the case of the Sponsor
directors, are reimbursed for reasonable travel and lodging
expenses incurred by them in connection with attending Board and
committee meetings.
As of June 30, 2007, the stock awards outstanding for each
of the directors are set forth on the 2007 Director
Compensation Table below.
32
2007
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
Cash(1)
|
|
|
Stock
Awards(2)(3)
|
|
|
All Other
|
|
|
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Compensation
($)(4)
|
|
|
Total ($)
|
|
|
Andrew B. Balson
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
David Bonderman
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
Richard W. Boyce
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
David A. Brandon
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
Armando
Codina(5)
|
|
|
37,500
|
|
|
|
84,984
|
|
|
|
298
|
|
|
|
122,782
|
|
Ronald M.
Dykes(6)
|
|
|
12,500
|
|
|
|
42,055
|
|
|
|
122
|
|
|
|
54,677
|
|
Peter R. Formanek
|
|
|
70,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
155,580
|
|
Manuel A. Garcia
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
Adrian Jones
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
Sanjeev K. Mehra
|
|
|
60,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
145,580
|
|
Stephen G. Pagliuca
|
|
|
60,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
145,580
|
|
Brian T. Swette
|
|
|
80,000
|
|
|
|
120,000
|
|
|
|
842
|
|
|
|
200,842
|
|
Kneeland C. Youngblood
|
|
|
50,000
|
|
|
|
84,984
|
|
|
|
596
|
|
|
|
135,580
|
|
|
|
|
(1)
|
|
The following directors have
elected to defer their 2007 annual retainers: Andrew B.
Balson, David Bonderman, Richard W. Boyce, David A.
Brandon, Ronald M. Dykes, Adrian Jones, Stephen
G. Pagliuca and Brian T. Swette. Accordingly, each of
these directors except for Messrs. Dykes and Swette will
receive a grant of deferred stock with a fair market value of
$25,000 ($12,500 in the case of Mr. Dykes and $40,000 in
the case of Mr. Swette) based on the closing market price
of a share of our common stock on the grant date, which will be
November, 29 2007. Mr. Pagliuca also elected to defer his
2007 annual chair fee, and he will receive a grant of deferred
stock on November 29, 2007 with a fair market value of
$5,000 (determined as described above in this Footnote 1).
|
(2)
|
|
The grant date fair value of these
awards is based on the closing market price of a share of our
common stock on the November 29, 2006 grant date ($17.82
per share) for all directors except Mr. Dykes, as described
in Footnote 6 below, which is also the compensation cost for
this grant recognized for financial statement reporting purposes
in accordance with FAS 123R. The assumptions and
methodology used to calculate the compensation cost are set
forth in Note 3 to our Consolidated Financial Statements
included in our
Form 10-K
for fiscal 2007.
|
(3)
|
|
As of June 30, 2007,
Mr. Formanek was the only director to have options
outstanding. As of such date, Mr. Formanek held 75,587
vested options.
|
(4)
|
|
Quarterly dividends in the amount
of $0.0625 per share were paid by the Company to shareholders of
record as of February 15, 2007 and June 11, 2007,
respectively. The amounts reflected in this column represent
dividend equivalents paid on vested and unvested deferred stock
issued by the Company to the directors.
|
(5)
|
|
Mr. Codina resigned effective
April 1, 2007. Upon termination of service, his vested
deferred stock settled and the unvested portion was forfeited
and he received $12,500 in payment of his annual retainer for
service until April 1, 2007 in lieu of deferred stock. Upon
his resignation, we issued 2,384 shares of stock to
Mr. Codina in settlement of his vested deferred stock, and
the remaining 2,385 shares were forfeited.
|
(6)
|
|
Mr. Dykes joined the Board of
Directors effective April 1, 2007. The amount in the stock
awards column reflects the grant date fair value of this award
based on the closing market price of a share of our common stock
of $21.60 per share on March 31, 2007 (which is the last
date on which a reported sale occurred prior to the
April 1, 2007 grant date), which is also the compensation
cost for this grant recognized for financial statement reporting
purposes in accordance with FAS 123R The assumptions and
methodology used to calculate the compensation cost are set
forth in Note 3 to our Consolidated Financial Statements
included in our
Form 10-K
for fiscal 2007.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-management directors serve on the Compensation
Committee of the Board of Directors: Stephen G. Pagliuca
(Chairman), Richard W. Boyce and Sanjeev K. Mehra. Armando
Codina, a former director, served on the Compensation Committee
from October 2006 until he resigned from the Board and the
Compensation Committee on April 1, 2007. No directors on
the Compensation Committee are or have been officers or
employees of the Company or any of its subsidiaries. None of our
executive officers served on the board of directors or
compensation committee of another entity, one of whose executive
officers served on the Company’s Board of Directors or its
Compensation Committee.
33
STOCK
OWNERSHIP INFORMATION
Security
Ownership of Certain Beneficial Owners, Directors and
Management
The following table sets forth certain information as of
September 14, 2007, regarding the beneficial ownership of
our common stock by:
|
|
|
|
•
|
Each of our directors and NEOs;
|
|
|
•
|
All directors and executive officers as a group; and
|
|
|
•
|
Each person or entity who is known to us to be the beneficial
owner of more than 5% of our common stock.
|
As of September 14, 2007, our outstanding equity securities
consisted of 135,313,464 shares of common stock. The number
of shares beneficially owned by each stockholder is determined
under rules promulgated by the SEC and generally includes voting
or investment power over the shares. The information does not
necessarily indicate beneficial ownership for any other purpose.
Under the SEC rules, the number of shares of common stock deemed
outstanding includes shares issuable upon the conversion of
other securities, as well as the exercise of options or the
settlement of restricted stock units held by the respective
person or group that may be exercised or settled on or within
60 days of September 14, 2007. For purposes of
calculating each person’s or group’s percentage
ownership, shares of common stock issuable pursuant to stock
options and restricted stock units that may be exercised or
settled on or within 60 days of September 14, 2007 are
included as outstanding and beneficially owned by that person or
group but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person or group.
Unless otherwise indicated, the address for each listed
stockholder is:
c/o Burger
King Holdings, Inc., 5505 Blue Lagoon Drive, Miami, Florida
33126. To our knowledge, except as indicated in the footnotes to
this table and pursuant to applicable community property laws,
the persons named in the table have sole voting and investment
power with respect to all shares of common stock beneficially
owned by them.
34
|
|
|
|
|
|
|
|
|
|
|
Common Stock, Par Value
|
|
|
|
$.01 Per Share
|
|
Name and Address of Beneficial Owner
|
|
Number
|
|
|
Percentage of Class
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
John W.
Chidsey(1)
|
|
|
1,052,604
|
|
|
|
|
*
|
Ben K.
Wells(1)
|
|
|
73,230
|
|
|
|
|
*
|
Russell B.
Klein(1)
|
|
|
405,801
|
|
|
|
|
*
|
Charles M. Fallon,
Jr.(1)
|
|
|
15,949
|
|
|
|
|
*
|
Anne
Chwat(1)
|
|
|
138,718
|
|
|
|
|
*
|
Peter
Tan(1)
|
|
|
57,769
|
|
|
|
|
*
|
Martin
Brok(1)(2)
|
|
|
34,045
|
|
|
|
|
*
|
Andrew B.
Balson(1)(3)
|
|
|
4,769
|
|
|
|
|
*
|
David
Bonderman(1)(4)
|
|
|
28,438,266
|
|
|
|
21.02
|
%
|
Richard W.
Boyce(1)
|
|
|
4,769
|
|
|
|
|
*
|
David M.
Brandon(1)
|
|
|
14,769
|
|
|
|
|
*
|
Ronald M. Dykes
|
|
|
973
|
|
|
|
|
*
|
Peter R.
Formanek(1)
|
|
|
251,606
|
|
|
|
|
*
|
Manuel A.
Garcia(1)
|
|
|
90,832
|
|
|
|
|
*
|
Adrian
Jones(1)(5)
|
|
|
25,293,763
|
|
|
|
18.70
|
%
|
Sanjeev K.
Mehra(1)(5)
|
|
|
25,293,763
|
|
|
|
18.70
|
%
|
Stephen G.
Pagliuca(1)(3)
|
|
|
4,769
|
|
|
|
|
*
|
Brian T.
Swette(1)
|
|
|
107,359
|
|
|
|
|
*
|
Kneeland C.
Youngblood(1)
|
|
|
75,376
|
|
|
|
|
*
|
All Executive Officers and Directors as a group
(23 persons)(1)
|
|
|
56,419,647
|
|
|
|
41.20
|
%
|
5% Stockholders
|
|
|
|
|
|
|
|
|
AMVESCAP PLC AIM Advisors,
Inc.(6)
|
|
|
7,332,993
|
|
|
|
5.42
|
%
|
30 Finsbury Square
London EC2A 1AG
England
|
|
|
|
|
|
|
|
|
Investment funds affiliated with Bain Capital Investors,
LLC(7)
|
|
|
25,274,221
|
|
|
|
18.68
|
%
|
111 Huntington Avenue
Boston, MA 02199
|
|
|
|
|
|
|
|
|
The Goldman Sachs Group,
Inc.(8)
|
|
|
25,293,763
|
|
|
|
18.70
|
%
|
85 Broad Street
New York, NY 10004
|
|
|
|
|
|
|
|
|
TPG BK Holdco
LLC(9)
|
|
|
28,433,497
|
|
|
|
21.01
|
%
|
c/o TPG
Capital, L.P.
301 Commerce Street
Suite 3300
Fort Worth, Texas 76102
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Less than one percent (1%)
|
(1)
|
|
Includes beneficial ownership of
shares of common stock for which the following persons hold
options exercisable on or within 60 days of
September 14, 2007: Mr. Chidsey, 795,456 shares;
Mr. Wells, 63,230 shares; Mr. Klein,
89,577 shares; Ms. Chwat, 73,768 shares;
Mr. Tan, 21,076 shares; Mr. Brok,
21,769 shares; Mr. Formanek, 75,587 shares; and
all directors and executive officers as a group,
1,293,733 shares. Also includes beneficial ownership of
shares of common stock underlying restricted stock units held by
the following persons that have vested or will vest on or within
60 days of September 14, 2007: Mr. Chidsey,
105,385 shares; Mr. Klein, 54,116 shares; and all
directors and executive officers as a group,
290,882 shares. Also includes beneficial ownership of
shares of common stock underlying deferred stock units held by
the following persons that have vested or will vest on or within
60 days of September 14, 2007: each of
Messrs. Balson, Bonderman, Boyce, Brandon, Formanek,
Garcia, Pagliuca and Youngblood, 4,769 shares;
Mr. Dykes, 973 shares; Messrs. Jones and Mehra,
9,538 shares; and Mr. Swette, 6,734 shares; and
all directors and officers as a group, 55,397 shares. See
Footnote 5 below for more information regarding the deferred
stock held by Messrs. Jones and Mehra.
|
(2)
|
|
Mr. Brok is no longer employed
by us and therefore, this number is based solely on the
information known to us.
|
35
|
|
|
(3)
|
|
Mr. Balson and
Mr. Pagliuca are Managing Directors and Members of Bain
Capital Investors, LLC. Messrs. Balson and Pagliuca may be
deemed to share voting and dispositive power with respect to all
the shares of common stock held by each of the Bain Capital
investment funds referred to in Footnote 7 below. Each of
Messrs. Balson and Pagliuca disclaims beneficial ownership
of securities held by these investment funds except to the
extent of his pecuniary interest therein.
|
(4)
|
|
Includes 28,433,497 shares of
common stock held by TPG BK Holdco LLC, whose managing member is
TPG Partners III, LP, whose general partner is TPG GenPar III,
LP, whose general partner is TPG Advisors III, Inc.
Mr. Bonderman and James G. Coulter are the sole
shareholders of TPG Advisors III. Each of Messrs. Bonderman
and Coulter disclaims beneficial ownership of such securities.
Mr. Coulter is not affiliated with us.
|
(5)
|
|
Mr. Jones and Mr. Mehra
are managing directors of Goldman, Sachs & Co.
Messrs. Jones and Mehra and The Goldman Sachs Group, Inc.
each disclaims beneficial ownership of the shares of common
stock owned directly or indirectly by the Goldman Sachs Funds
and Goldman, Sachs & Co., except to the extent of his
or its pecuniary interest therein, if any. Goldman,
Sachs & Co. disclaims beneficial ownership of the
shares of common stock owned directly or indirectly by the
Goldman Sachs Funds, except to the extent of its pecuniary
interest therein, if any. Each of Messrs. Jones and Mehra
has an understanding with The Goldman Sachs Group, Inc. pursuant
to which he holds the deferred stock units he receives as a
director for the benefit of The Goldman Sachs Group, Inc. See
Footnote 8 below for information regarding The Goldman Sachs
Group, Inc.
|
(6)
|
|
The shares included in the table
consist of: (i) 6,788,081 shares of common stock held
by AIM Advisors, Inc.; (ii) 439,308 shares of common
stock held by AIM Capital Management, Inc.; and
(iii) 105,604 shares of common stock held by
PowerShares Capital Management LLC. The shares included in the
table are based solely on the Schedule 13G filed with the
SEC on February 14, 2007 by AMVESCAP PLC on behalf of
itself and certain of its subsidiaries.
|
(7)
|
|
The shares included in the table
consist of: (i) 19,573,261 shares of common stock
owned by Bain Capital Integral Investors, LLC, whose
administrative member is Bain Capital Investors, LLC
(“BCI”); (ii) 5,594,182 shares of common
stock owned by Bain Capital VII Coinvestment Fund, LLC, whose
sole member is Bain Capital Fund VII Coinvestment Fund,
L.P., whose general partner is Bain Capital Partners VII, L.P.,
whose general partner is BCI and (iii) 106,778 shares
of common stock owned by BCIP TCV, LLC, whose administrative
member is BCI. The shares included in the table are based solely
on the Form 4 filed with the SEC on March 27, 2007 by
BCI on behalf of itself and its reporting group.
|
(8)
|
|
The Goldman Sachs Group, Inc., and
certain affiliates, including, Goldman, Sachs & Co.,
may be deemed to directly or indirectly own the shares of common
stock which are owned directly or indirectly by investment
partnerships, which The Goldman Sachs Group, Inc. refers to as
the Goldman Sachs Funds, of which affiliates of The Goldman
Sachs Group, Inc. and Goldman Sachs & Co. are the
general partner, managing limited partner or the managing
partner. Goldman, Sachs & Co. is the investment
manager for certain of the Goldman Sachs Funds. Goldman,
Sachs & Co. is a direct and indirect, wholly owned
subsidiary of The Goldman Sachs Group, Inc. The Goldman Sachs
Group, Inc., Goldman, Sachs & Co. and the Goldman
Sachs Funds share voting and investment power with certain of
their respective affiliates. Shares beneficially owned by the
Goldman Sachs Funds consist of: (i) 13,205,404 shares
of common stock owned by GS Capital Partners 2000, L.P.;
(ii) 4,798,340 shares of common stock owned by GS
Capital Partners 2000 Offshore, L.P.;
(iii) 551,956 shares of common stock owned by GS
Capital Partners 2000 GmbH & Co. Beteiligungs KG;
(iv) 4,193,173 shares of common stock owned by GS
Capital Partners 2000 Employee Fund, L.P.;
(v) 194,258 shares of common stock owned by Bridge
Street Special Opportunities Fund 2000, L.P.;
(vi) 388,516 shares of common stock owned by Stone
Street Fund 2000, L.P.; (vii) 647,526 shares of
common stock owned by Goldman Sachs Direct Investment
Fund 2000, L.P.; (viii) 750,834 shares of common
stock owned by GS Private Equity Partners 2000, L.P.;
(ix) 258,091 shares of common stock owned by GS
Private Equity Partners 2000 Offshore Holdings, L.P.; and
(x) 286,127 shares of common stock owned by GS Private
Equity Partners
2000-Direct
Investment Fund, L.P.
|
|
|
|
Goldman, Sachs & Co.
beneficially owns directly and The Goldman Sachs Group, Inc. may
be deemed to beneficially own indirectly 10,000 shares of
common stock. Goldman, Sachs & Co. and The Goldman
Sachs Group, Inc. may each be deemed to beneficially own
indirectly, in the aggregate, 25,274,225 shares of common
stock through certain limited partnerships described in this
Footnote, of which affiliates of Goldman, Sachs & Co.
and The Goldman Sachs Group, Inc. are the general partner,
managing general partner, managing partner, managing member or
member. Goldman, Sachs & Co. is a direct and indirect
wholly-owned subsidiary of The Goldman Sachs Group, Inc.
Goldman, Sachs & Co. is the investment manager of
certain of the limited partnerships.
|
|
|
|
The Goldman Sachs Group, Inc. may
be deemed to beneficially own 9,538 shares of common stock
pursuant to the 2006 Omnibus Incentive Plan, consisting of 4,769
deferred shares granted to each of Sanjeev K. Mehra and Adrian
M. Jones, each a managing director of Goldman, Sachs &
Co. in their capacity as directors of the Company. Each of
Sanjeev K. Mehra and Adrian M. Jones has an understanding with
The Goldman Sachs Group, Inc. pursuant to which he holds such
deferred shares for the benefit of The Goldman Sachs Group, Inc.
Each grant of 4,769 deferred shares is fully vested. The
deferred shares will be settled upon termination of board
service. Each of Goldman, Sachs & Co. and The Goldman
Sachs Group, Inc. disclaims beneficial ownership of the deferred
shares of common stock except to the extent of its pecuniary
interest therein.
|
|
|
|
The shares included in the table
are based solely on the Form 4 filed with the SEC on
March 27, 2007 by Goldman Sachs Group, Inc. on behalf of
itself and its reporting group.
|
(9)
|
|
The shares included in the table
are directly held by TPG BK Holdco LLC. TPG Advisors III, Inc.,
a Delaware corporation (“Advisors III”), is the
general partner of TPG GenPar III, L.P., a Delaware limited
partnership, which in turn is the sole general partner of TPG
Partners III, L.P., a Delaware limited partnership which in turn
is the managing member of TPG BK Holdco LLC. David Bonderman and
James Coulter are the sole shareholders and directors of
Advisors III, and therefore, David Bonderman, James Coulter and
Advisors III may each be deemed to beneficially own the
shares directly held by TPG BK Holdco LLC. The shares included
in this table are based solely on the Form 4 filed with the
SEC on March 27, 2007 by Advisors III.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and beneficial owners of more than 10% of any
class of our equity securities to file reports of ownership and
changes in ownership of our common stock. To the best of our
knowledge, all required reports were filed on time and all
transactions by our directors, executive officers and beneficial
owners of more than 10% of any class of our equity securities
were reported on time except for the following failures to
timely report on Form 4: (i) the surrender on
March 12, 2007 and May 17, 2007 of
36
vested restricted stock units to us to satisfy tax withholding
obligations by Charles M. Fallon, Jr. and
John W. Chidsey, respectively; and (ii) grants of
deferred stock on November 29, 2006 to the following:
Andrew B. Balson, David Bonderman, David A. Brandon,
Richard W. Boyce, Armando Codina, Peter R. Formanek, Manuel
A. Garcia, Adrian Jones, Sanjeev K. Mehra, Stephen G. Pagliuca,
Brian T. Swette, Kneeland Youngblood and The Goldman Sachs
Group, Inc. and certain affiliates, including Goldman,
Sachs & Co. Each of Messrs. Jones and Mehra has
an understanding with The Goldman Sachs Group, Inc. pursuant to
which he holds the deferred stock for the benefit of The Goldman
Sachs Group, Inc. The failures to timely report were inadvertent
and, as soon as the oversights were discovered, the transactions
were promptly reported.
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Related
Person Transactions Policy
In May 2007, our Board of Directors adopted a written related
person transactions policy, which is administered by the Audit
Committee. This policy applies to any transaction or series of
related transactions or any material amendment to any such
transaction involving a related person and the Company or any
subsidiary of the Company. For the purposes of the policy,
“related persons” consist of executive officers,
directors, director nominees, any shareholder beneficially
owning more than 5% of the Company’s common stock, and
immediate family members of any such persons. In reviewing
related person transactions, the Audit Committee takes into
account all factors that it deems appropriate, including whether
the transaction is on terms no less favorable than terms
generally available to an unaffiliated third party under the
same or similar circumstances and the extent of the related
person’s interest in the transaction. No member of the
Audit Committee may participate in any review, consideration or
approval of any related person transaction in which the director
or any of his immediate family members is the related person.
The related person transactions discussed below were entered
into before the adoption of this written policy.
Shareholders’
Agreement
In connection with our acquisition of BKC, we entered into a
shareholders’ agreement dated June 27, 2003 with BKC
and the private equity funds controlled by the Sponsors, which
was amended and restated on May 17, 2006 (the
“Shareholders’ Agreement”). The
Shareholders’ Agreement provides for (i) the right of
each Sponsor to appoint two members to our Board, (ii) the
right of each Sponsor, with respect to each committee of the
Board other than the Audit Committee, to have at least one
Sponsor director on each committee, for Sponsor directors to
constitute a majority of the membership of each committee and
for the chairman of the committees to be Sponsor directors,
(iii) drag-along and tag-along rights and transfer
restrictions, (iv) shelf, demand and piggyback registration
rights and (v) the payment of expenses and the grant of
certain indemnities relating to those registration rights. A
Sponsor’s right to appoint directors will be reduced to one
director if the stock ownership of the private equity funds
controlled by that Sponsor drops to 10% or less of our
outstanding common stock, and will be eliminated if the stock
ownership of the private equity funds controlled by that Sponsor
drops to 2% or less of our outstanding common stock. The right
to appoint directors to board committees terminates if the
private equity funds controlled by the Sponsors no longer
collectively beneficially own 30% or more of our outstanding
common stock. Six of our current directors, Messrs. Balson,
Bonderman, Boyce, Jones, Mehra and Pagliuca, were appointed
pursuant to the Shareholders’ Agreement.
The Shareholders’ Agreement also includes customary
indemnification provisions against liabilities under the
Securities Act incurred in connection with the registration of
our debt or equity securities. We agreed to reimburse legal or
other expenses incurred in connection with investigating or
defending any such liability, action or proceeding, except that
we will not be required to indemnify or reimburse related legal
or other expenses if such loss or expense arises out of or is
based on any untrue statement or omission made in reliance upon
and in conformity with written information provided by these
persons.
Expense
Reimbursement to the Sponsors
We have reimbursed the Sponsors for certain travel-related
expenses of their employees who are members of our Board in
connection with meetings of the Board of Directors in amounts
that are consistent with amounts reimbursed to the non-Sponsor
directors.
37
Under the Shareholders’ Agreement, we paid on behalf of the
Sponsors approximately $90,000 in legal fees in connection with
our initial public offering in May 2006. We also paid
approximately $870,000 of expenses on behalf of the Sponsors in
connection with a secondary offering of our common stock held by
the private equity funds controlled by the Sponsors in February
2007, including registration and filing fees, printing fees,
accountants’ and attorneys’ fees and
“road-show” expenses.
Former
Proposed Global Headquarters
On May 7, 2007, BKC entered into an Agreement of
Termination and Cancellation of Lease (the “Termination
Agreement”), with CM LeJeune, LLLP (the
“Partnership”). BKC had planned to move its global
headquarters to an office building to be constructed in Coral
Gables, Florida and entered into a Lease dated May 10, 2005
with CM LeJeune, Inc., the predecessor in interest to the
Partnership (the “Coral Gables Lease”). Under the
Termination Agreement, the Partnership agreed to terminate the
Coral Gables Lease in exchange for a termination fee of
$5 million paid by BKC, which included reimbursement of the
Partnership’s expenses.
Armando Codina, a former member of the Board of Directors, is an
executive officer, director and a greater than 5% shareholder of
a company which, indirectly through other entities, is a partner
in the Partnership. Mr. Codina resigned from the Board
effective April 1, 2007, and the Board approved the
Termination Agreement after Mr. Codina’s resignation
from the Board.
Restaurant
Lease
The late Mrs. Clarita Garcia was the landlord under a lease
with BKC for a Burger King restaurant located in Orlando,
Florida. Manuel A. Garcia, a current director of the Company, is
the son of the late Mrs. Garcia and serves as executor of
his mother’s estate. BKC became the lessee in March 1996,
prior to Mr. Garcia being named a director of the Company.
The lease expires in February 2018. During fiscal 2007, BKC paid
approximately $131,063 (including taxes) in rent payments to the
estate of Mrs. Garcia.
The Board and management do not know of any other matters to be
presented at the annual meeting. If other matters do properly
come before the annual meeting, it is intended that the persons
named in the accompanying proxy vote the proxy with their best
judgment on such matters.
SHAREHOLDER
PROPOSALS AND NOMINATIONS FOR 2008 ANNUAL MEETING
Inclusion
of Proposals in the Company’s Proxy Statement and Proxy
Card under the SEC Rules
In order to be considered for inclusion in the proxy statement
distributed to shareholders prior to the annual meeting of
shareholders in 2008, a shareholder proposal pursuant to
Rule 14a-8
under the Exchange Act must be received by us no later than
June 28, 2008 and must comply with the requirements of SEC
Rule 14a-8.
Written requests for inclusion should be addressed to: Burger
King Holdings, Inc., 5505 Blue Lagoon Drive, Miami, Florida
33126, Attention: General Counsel and Secretary. We suggest that
you mail your proposal by certified mail, return receipt
requested.
Advance
Notice Requirements for Shareholder Submission of Nominations
and Proposals
A shareholder recommendation for nomination of a person for
election to the Board of Directors or a proposal for
consideration at the 2008 annual meeting of shareholders must be
submitted in accordance with the advance notice procedures and
other requirements in the Company’s bylaws. These
requirements are separate from, and in addition to, the
requirements discussed above to have the shareholder nomination
or other proposal included in our proxy statement and form of
proxy/voting instruction card pursuant to the SEC’s rules.
Our bylaws require that shareholder recommendations for nominees
to the Board must include the name of the nominee or nominees,
all information relating to such person that is required to be
disclosed in a proxy statement and a consent signed by the
nominee evidencing a willingness to serve as a director, if
elected. Our bylaws require that shareholder proposals include a
brief description of the business to be brought before the
meeting, the text of the
38
proposal or business, the reasons for conducting such business
at the meeting, and any material interest in such business of
such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made. Under the advance notice
requirements of our bylaws, the proposal or recommendation for
nomination must be received by the Company’s General
Counsel and Secretary no later than June 28, 2008, or if
the date of the 2008 annual meeting is more than 30 days
before or after November 29, 2008, not later than the close
of business on the 90th day prior to the date of the 2008
annual meeting or the 10th day following the day on which
notice of the date of the 2008 annual meeting is mailed or
publicly disclosed or such proposal will be considered untimely
pursuant to
Rule 14a-4
and 14a-5(e)
of the Exchange Act.
“Householding”
of Proxy Materials
The SEC has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements
for proxy statements and annual reports with respect to two or
more shareholders sharing the same address by delivering a
single proxy statement and annual report addressed to those
shareholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience
for shareholders and cost savings for companies. The Company and
some brokers household proxy materials, delivering a single
proxy statement and annual report to multiple shareholders
sharing an address unless contrary instructions have been
received from the affected shareholders.
Once you have received notice from your broker or us that each
of us will be householding materials to your address,
householding will continue until you are notified otherwise or
until you revoke your consent. If, at any time, you no longer
wish to participate in householding and would prefer to receive
a separate proxy statement and annual report, or if you are
receiving multiple copies of the proxy statement and annual
report and wish to receive only one, please notify your broker
if your shares are held in a brokerage account or the Company if
you hold registered shares. You can notify us by sending a
written request to Burger King Holdings, Inc., Investor
Relations, 5505 Blue Lagoon Drive, Miami, Florida 33126 or by
contacting the SVP, Investor Relations and Global Communications
at
(305) 378-7696.
Annual
Report
This proxy solicitation material has been mailed with the annual
report to shareholders for the fiscal year ended June 30,
2007; however, it is not intended that the annual report be a
part of the proxy statement or this solicitation of proxies.
Shareholders are respectfully urged to complete, sign, date and
return the accompanying form of proxy in the enclosed envelope.
By Order
of the Board of Directors
Anne Chwat
General Counsel and Secretary
October 22, 2007
39
APPENDIX A
DIRECTOR INDEPENDENCE STANDARDS
With respect to a determination of director independence, the
Board and the Executive and Corporate Governance Committee will
broadly consider all relevant facts and circumstances and will
apply the following standards:
(1) Consistent with the applicable listing standards of the
New York Stock Exchange, a director will not be considered
independent if, within the preceding three years:
(a) the director was an employee, or an immediate family
member of the director was an executive officer, of the Company;
(b) the director or an immediate family member of the
director received more than $100,000 per year in direct
compensation from the Company, other than director fees and
pension or other forms of deferred compensation for prior
service (provided that such compensation is not contingent in
any way on continued service with the Company); except that
compensation received by an immediate family member of the
director for services as a non-executive employee of the Company
need not be considered in determining independence under this
test;
(c) the director was affiliated with or employed by, or an
immediate family member of the director was affiliated with or
employed in a professional capacity by, a present or former
internal or external auditor of the Company (in applying this
test and consistent with the guidance provided by the New York
Stock Exchange, the term “professional capacity” shall
only cover those persons participating in the auditor’s
audit and assurance and tax compliance practices in non-support
roles, and any relationship with a person in a role other than
the audit assurance and tax compliance practice will not be
considered a material relationship that would impair a
director’s independence);
(d) the director, or an immediate family member of the
director, was employed as an executive officer of another
company where any of the Company’s present executives serve
on that company’s compensation committee; or
(e) the director was employed by another company (other
than a charitable organization) or an immediate family member of
the director was employed as an executive officer of such
company, that makes payments to, or receives payments from, the
Company for property or services in an amount which, in any
single fiscal year, exceeds the greater of $1 million or 2%
of such other company’s consolidated gross revenues (in
applying this test, both the payments and the consolidated gross
revenues to be measured will be those reported in the last
completed fiscal year, and this test applies solely to the
financial relationship between the Company and the
director’s (or immediate family member’s) current
employer — the former employment of the director or
immediate family member need not be considered).
(2) A director will only be appointed as a member of the
Audit Committee if he or she also satisfies the independence
criteria set forth in
Rule 10A-3
under the Securities and Exchange Act of 1934, as amended,
subject to the phase-in rules for companies listing securities
on the New York Stock Exchange.
(3) The following relationships will not be considered to
be material relationships with the Company that would impair a
director’s independence:
(a) If a director of the Company is an executive officer or
an employee, or the director’s immediate family member is
an executive officer, of another company that makes payments to,
or receives payments from, the Company for property or services
in an amount which, in any single fiscal year, does not exceed
the greater of $1 million or 2% of such other
company’s consolidated gross revenues;
(b) If a director of the Company is an executive officer or
employee of another company which is indebted to the Company, or
to which the Company is indebted, and the total amount of the
indebtedness is less than 2% of the consolidated assets of the
company wherein the director serves as an executive officer or
employee;
A-1
(c) If a director of the Company is an executive officer of
another company in which the Company owns an equity interest,
and the amount of the equity interest held by the Company is
less than 10% of the total shareholders’ equity of the
company at which the director serves as an executive
officer; or
(d) If a director of the Company serves as a director,
officer or trustee of a charitable organization, and the
Company’s contributions to the organization in the most
recently completed fiscal year are less than the greater of
$1 million or 2% of that organization’s gross revenues.
(4) For relationships not covered by paragraph
(3) above, or for relationships that are covered, but as to
which the Board believes a director may nevertheless be
independent, the determination of whether the relationship is
material or not, and therefore whether the director would be
independent, will be made by the Board of Directors.
(5) For the purposes of these standards, an “immediate
family member” includes a person’s spouse, parents,
children, siblings,
mothers-in-law,
fathers-in-law,
sons-in-law,
daughters-in law,
brothers-in-law,
sisters-in-law
and anyone (other than domestic employees) who shares such
person’s home; except that when applying the independence
tests described above, the Company need not consider individuals
who are no longer immediate family members as a result of legal
separation or divorce or those who have died or have become
incapacitated.
A-2
BURGER KING HOLDINGS, INC. |
YOUR VOTE IS IMPORTANT
VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK |
Proxies submitted by Internet must be received by 11:59 pm, Eastern Standard Time, November 28, 2007. OR |
https://www.proxypush.com/bkc |
• Go to the website address listedabove. |
• Have your proxy card ready. |
• Follow the simple instructions thatappear on your computer screen. |
Proxies submitted by telephone must
be received by 11:59 pm, Eastern
Standard Time, November 28, 2007. OR |
• Use any touch-tone telephone. |
• Have your proxy card ready. |
• Follow the simple recordedinstructions. |
Mark, sign and date your proxy card. |
• Detach your proxy card. |
• Return your proxy card in thepostage-paid envelope provided. |
~ FOLD AND DETACH HERE AND READ THE REVERSE SIDE |
Please vote and sign on this side and return promptly in the enclosed envelope. Do not forget to date your proxy. |
Votes must be indicated (x) in Black or Blue ink. |
The Board of Directors recommends a vote FOR the nominees and FOR ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm for fiscal 2008. |
Item 1. Election of DirectorsItem 2. Ratification of the selection of KPMG LLP as the Company’s independent registered public
FORWITHHOLD*EXCEPTIONaccounting firm for fiscal 2008
AllAll |
Nominees: 01 Andrew B. Balson, 02 David Bonderman, 03 Richard W. Boyce, 04 David A. Brandon, 05 John W. Chidsey, 06 Ronald M. Dykes, 07 Peter R. Formanek, 08 Manuel A. Garcia, 09 Adrian Jones,
10 Sanjeev K. Mehra, 11 Stephen G. Pagliuca, 12 Brian T. Swette, and 13 Kneeland C. Youngblood. |
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. I hereby revoke all proxies heretofore given by me to vote at said meeting or any adjournments thereof. |
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “Exceptions” box and write that nominee’s number in the space provided below). |
For address changes/comments, please check this box and write them on the back where indicated. |
This Proxy Card is only valid when signed and dated. |
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each such holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If signer is a corporation, please sign in full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BURGER KING HOLDINGS, INC. FOR THE 2007 ANNUAL MEETING
November 29, 2007 9:00 a.m. EST |
The undersigned hereby constitutes and appoints Anne Chwat and Ben K. Wells, and each of them, as their true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of Burger King Holdings, Inc. to be held at the Hilton Miami Airport Hotel, 5101 Blue Lagoon Drive, Miami, Florida 33126, on Thursday, November 29 and at any adjournments thereof, on all matters coming before said
meeting. |
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of Directors’ recommendations. The proxies cannot vote these shares unless you sign and return this card. |
This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted FOR the election of directors and FOR the ratification of the selection of KPMG LLP as the independent registered public accounting firm of the Company for the current fiscal year. |
Address Changes/Comments:
you no te any ress ange s/Commen ts above, please mark corresponding box on the reverse side.) |
Please indicate if you plan to attend this meeting YESNO |
BURGER KING HOLDINGS, INC. P.O. BOX 11418 NEW YORK, NY 10203-0418 |
(Continued and to be signed on the reverse side) |