UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 15, 2011
ARAMARK CORPORATION
(Exact name of registrant as specified in charter)
Delaware | 001-04762 | 95-2051630 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
1101 Market Street Philadelphia, Pennsylvania |
19107 | |||
(Address of Principal Executive Offices) | Zip Code | |||
Registrants telephone, including area code: 215-238-3000 | ||||
N/A | ||||
(Former name and former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02. Departure of Directors or Certain Officers, Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Approval of Senior Executive Annual Performance Bonus Plan
The Board of Directors of ARAMARK Holdings Corporation (Holdings) approved, and the stockholders of Holdings adopted by written consent, a Senior Executive Annual Performance Bonus Plan (the Bonus Plan) on November 16, 2011 that is intended to provide for an annual performance bonus for the CEO and other designated executive officers of ARAMARK Corporation (the Company) that is intended to qualify as performance-based compensation under Section 162(m) of the Code. The Bonus Plan is the same as and replaces Holdings Senior Executive Annual Performance Bonus Plan that was approved in 2007.
The Compensation and Human Resources Committee of the Holdings Board of Directors (the Board) has been designated by the Board to administer the provisions of the Bonus Plan, and has delegated its authority to the Holdings Stock Committee (the Stock Committee) which is composed of directors who qualify as outside directors within the meaning of Section 162(m) of the Internal Revenue Code (the Code). Under the Bonus Plan, the committee administering the Bonus Plan is required generally to designate participants and, for each participant, to set one or more performance goals for a fiscal year not later than 90 days after the beginning of such fiscal year. For fiscal year 2012, the Stock Committee has designated Messrs. Neubauer and Sutherland and Ms. McKee as participants.
Under the Bonus Plan, the annual performance goals, which may differ for each participant, must be based on the attainment of target levels of or a targeted percentage increase in or, to the extent permitted under Section 162(m) of the Code, solely upon the achievement of, one or more of the following Holdings or business group criteria: earnings before interest and taxes, return on net assets, net income, after tax return on investment, sales, revenues, earnings per share, total shareholder return, return on equity, return on investment, total business return, return on gross investment, operating cash flow, free cash flow, stock price appreciation, operating income or pre-tax income. The measures may be based on absolute performance or performance relative to a peer group or other external measure of selected performance. The bonus amount may be a specified dollar amount, or may be equal to a specified share of a bonus pool that is based on a percentage of a specified performance goal. Performance goals under the Bonus Plan will be adjusted, upward or downward, to the extent permitted by Section 162(m) of the Code to reflect (a) a change in accounting standards or principles, (b) a significant acquisition or divestiture, (c) a significant capital transaction, (d) any other unusual, nonrecurring items that are separately identified and quantified in Holdings audited financial statements, (e) or any other extraordinary item or event, so long as such accounting change is required or such transaction or nonrecurring item occurs after the goals for the fiscal year are established, and such exclusions are stated at the time the performance goals are determined. Performance goals may be adjusted, upward or downward, to reflect any other extraordinary item or event, so long as any such item or event is separately identified as an item or event requiring adjustment of such goals at the time the performance goals are determined, and such item or event occurs after the goals for the fiscal year are established. Payment of bonuses under the Bonus Plan will only be made after the Stock Committee has certified the attainment of the relevant performance goals at year end. The maximum annual performance bonus that can be paid to any one participant in the Bonus Plan in respect of any fiscal year is $4,500,000.
The Bonus Plan will by its terms expire in 2016. A copy of the Bonus Plan is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Establishment of 2012 EBIT Target
Stock options granted under the Amended and Restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan (the Stock Incentive Plan) have been, and will in the future be, awarded pursuant to a Non-Qualified Stock Option Agreement (the Option Agreement). On November 15, 2011, the Compensation and Human Resources Committee of the Board established the annual and cumulative EBIT targets for performance based options under the Stock Incentive Plan. The fiscal 2012 annual EBIT target is $834.7 and the fiscal 2012 cumulative EBIT target is $1,583.2. Because the newly-approved 2012 annual EBIT target is less than the 2012 annual EBIT target for outstanding stock options granted prior to June 21, 2011, the EBIT target for such
outstanding options will be reduced to such lower EBIT target. Accordingly, on November 16, 2011, the Board approved a revised Schedule 1 to the form of Option Agreement that reflects the newly-established 2012 EBIT target and revised Schedule 1s to outstanding Option Agreements that reflect the newly-established annual and cumulative EBIT targets for 2012. The 2012 performance target is not a prediction of how Holdings will perform during the fiscal year 2012. The 2012 performance target , which is not a prediction of Holdings future performance, should not be viewed as guidance, or updating any prior guidance, of Holdings future performance with the disclosure of these performance targets. The new Schedule 1 to the form of Option Agreement and the revised Schedule 1s to the outstanding Option Agreements are attached hereto as Exhibits 10.2 and 10.3 and are incorporated by reference herein.
Amendment to Amended and Restated Savings Incentive Retirement Plan
An Amendment (the Amendment) to the ARAMARK Corporation Amended and Restated Savings Incentive Retirement Plan was approved by ARAMARKs Benefits Compliance Review Committee on November 16, 2011. The Amendment modifies the definition of compensation to include shift and overtime pay. A copy of the Amendment is filed as exhibit 10.4 and incorporated herein by reference.
Salary Increase for Named Executive Officers
On November 15, 2011, the Compensation and Human Resources Committee of the Board, approved an increase to the annual base salary, effective January 1, 2012, for the following Named Executive Officers of the Company:
Named Executive Officer |
2012 Base Salary | |
Joseph Neubauer |
$1,400,000 | |
L. Frederick Sutherland |
$800,000 | |
Lynn B. McKee |
$625,000 |
ITEM 9.01. Financial Statements and Exhibits
(d) | Exhibits. |
Number |
Description |
Method of Filing | ||
10.1 | Senior Executive Annual Performance Bonus Plan | Filed herewith | ||
10.2 | New Schedule 1 to Form of Non Qualified Stock Option Agreement. | Filed herewith | ||
10.3 | Revised Schedule 1s to outstanding Non-Qualified Stock Option Agreements. | Filed herewith | ||
10.4 | Amendment to Amended and Restated Savings Incentive Retirement Plan | Filed herewith |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ARAMARK CORPORATION | ||||||
Date: November 18, 2011 | By: | /s/ L. FREDERICK SUTHERLAND | ||||
Name: | L. Frederick Sutherland | |||||
Title: | Executive Vice President and Chief Financial Officer |
Index to Exhibits
Number |
Description |
Method of Filing | ||
10.1 | Senior Executive Annual Performance Bonus Plan | Filed herewith | ||
10.2 | New Schedule 1 to Form of Non Qualified Stock Option Agreement. | Filed herewith | ||
10.3 | Revised Schedule 1s to outstanding Non-Qualified Stock Option Agreements. | Filed herewith | ||
10.4 | Amendment to Amended and Restated Savings Incentive Retirement Plan | Filed herewith |
EXHIBIT 10.1
ARAMARK HOLDINGS CORPORATION
SENIOR EXECUTIVE ANNUAL PERFORMANCE BONUS PLAN
1. General. This Plan is intended to provide for an annual performance bonus for the Chairman and CEO and other designated Senior Executives upon the attainment of annual performance goals established by the Committee, which annual performance bonus will be excluded from the computation of compensation for purposes of the federal income tax deductibility limitation on executive officer compensation.
2. DEFINITIONS
ARAMARK means ARAMARK Holdings Corporation, a Delaware corporation, and any successor.
CEO means the Chairman and Chief Executive Officer of ARAMARK or the individual or individuals acting in that capacity.
Committee means the committee of those members of either the Compensation and Human Resources Committee or such other committee of the ARAMARK board of directors that may be delegated as a compensation committee for purposes of Section 162(m), consisting of two or more directors as may be delegated authority to administer this Plan, who are required to be, so long as ARAMARK is a corporation subject to Section 162(m), outside directors within the meaning of Section 162(m).
Company means ARAMARK Holdings Corporation, a Delaware corporation, and any successor.
Participant means the, CEO and the other Senior Executives designated to participate in this Plan.
Plan means this ARAMARK Senior Executive Annual Performance Bonus Plan.
Section 162(m) means Section 162(m) under the Internal Revenue Code of 1986, as amended, or any successor provision, and the regulations promulgated thereunder.
Senior Executive means the CEO and any other officer of ARAMARK or of any subsidiary of ARAMARK.
3. Participation. The CEO and the other Senior Executives shall be eligible to be designated as Participants in this Plan. This Plan shall apply only to the CEO and to those additional Senior Executives designated by the Committee, in writing, as Participants for each fiscal year of the Company.
4. Performance Measures. The annual (i.e., fiscal year) performance goals shall be based on attainment of target levels of, a targeted percentage increase in, or, to the extent permitted under Section 162(m), solely the achievement of, one or more of the following Company or business group measures (all capitalized terms not defined herein shall have the meanings contained in ARAMARKs audited financial statements for the relevant performance
period): (1) Earnings Before Interest and Taxes (EBIT), (2) Return on Net Assets (RONA), (3) Net Income, (4) After Tax Return on Investment (ATROI), (5) Sales, (6) Revenues, (7) Earnings Per Share, (8) Total Shareholder Return, (9) Return on Equity (ROE), (10) Return on Investment (ROI), (11) Total Business Return, (12) Return on Gross Investment (ROGI), (13) Operating Cash Flow, (14) Free Cash Flow, (15) Operating Income, (16) Pretax Income or (17) stock price appreciation. The measures may be based on absolute ARAMARK performance or ARAMARK performance relative to a peer group or other external measure of selected performance. In all events, the annual performance goals shall be established in a manner intended to comply with the requirements of Section 162(m).
5. Performance Period. The performance period shall be ARAMARKs fiscal year, or such shorter period as determined by the Committee.
6. Individual Maximum Amounts. The maximum annual performance bonus payable to any Participant in respect of any fiscal year under this Plan is $4,500,000 (disregarding any appreciation during any period of deferral under Section 7(e) below). For performance periods less than 12 months, the maximum award will be adjusted in proportion to the duration of the performance period.
7. ADMINISTRATION
(a) Committee. The Committee shall have the sole and exclusive authority to administer this Plan, including the interpretation of the terms hereof. The Committee shall be entitled to rely on information, opinions, reports and statements presented to the Committee by officers, employees and outside professionals and experts, including ARAMARKs financial statements. Any determination by the Committee hereunder shall be final and binding on all Participants, their beneficiaries and the Company.
(b) Setting of Annual Goals and Annual Bonus Amounts.
(i) The Committee shall, for each fiscal year, establish in writing the bonus amount and the performance goal or goals for each Participant based on one or more of the performance measures listed in Section 4 above, not later than 90 days after the beginning of such fiscal year (or prior to the expiration of 25% of the performance period, if the performance period is less than one year), so long as, at that time, the attainment of such performance goal or goals is substantially uncertain (within the meaning of Section 162(m)). The Committee may establish different performance measures and different individual maximum amounts for each Participant.
(ii) Subject at all times to Section 6 above, in connection with the foregoing, a Participants bonus amount may be equal to a specified share of a pre-established bonus pool. Such bonus pool may be a pre-established aggregate dollar amount, or may, to the extent in compliance with Section 162(m), be based on the percentage of a specified performance measure (e.g., a percentage of Pretax Income). In no event will the total amount of all specified shares of any bonus pool for any given performance period exceed 100% of such bonus pool.
(c) Adjustment for Extraordinary Items. The Committee shall adjust, upward or downward, to the extent permitted by Section 162(m), the performance goals to reflect (i) a change in accounting standards or principles, (ii) a significant acquisition or divestiture, (iii) a significant capital transaction, or (iv) any other unusual, nonrecurring items which are separately identified and quantified in ARAMARKs audited financial statements, so long as such accounting change is required or such transaction or nonrecurring item occurs after the goals
for the fiscal year are established, and such adjustments are stated at the time that the performance goals are determined. The Committee may also adjust, upward or downward, as applicable, the performance goals to reflect any other extraordinary item or event, so long as any such item or event is separately identified as an item or event requiring adjustment of such goals at the time the performance goals are determined, and such item or event occurs after the goals for the fiscal year are established. In all events, any adjustments to be made to the performance goals shall be disclosed in a manner intended to satisfy the requirements of Section 162(m).
(d) Negative Discretion. At the time the extent of attainment of the annual performance goals is determined by the Committee, the Committee at its sole discretion may reduce, but may not increase, the amount of the annual performance bonus that would be otherwise payable to a Participant under this Plan. The Committee may take into consideration any and all factors relating to ARAMARKs and the Participants performance for such fiscal year.
(e) Payment Only Upon Attainment or Performance Goals.
(i) An annual performance bonus shall be paid to a Participant under this Plan only in accordance with the terms of this Plan and only upon the attainment of the annual performance goals established, adjusted and applied by the Committee for such Participant. Except as explicitly provided in this Plan, no waiver or modification of the goals may be made. The Committee shall be the sole and exclusive arbiter of the extent, if any, to which the annual performance goals have been attained, and the amount of the annual performance bonus payable hereunder. Prior to the payment of any annual performance bonus to any Participant under this Plan, the Committee shall certify in writing the extent to which the annual performance goals for such Participant have been attained.
(ii) After Committee certification of the attainment of the performance goals, awards may be paid immediately (but in no event later than March 15 of the calendar year following the calendar year in which the performance period ends) or may be deferred; provided that (A) payment of any bonus award will only be made to Participants who were employed with the Company or one of its subsidiaries on the last day of the applicable performance period, and (B) the deferral of any bonus award may only be made if (I) the Participant irrevocably elects to defer his or her award on or before the date that is six months prior to the end of the applicable performance period in respect of which the award is payable; and (II) such Participant remains continuously employed by ARAMARK from the later of the beginning of the applicable performance period or the date the performance criteria are established in accordance with Section 7(b), through the date of such deferral election. Awards may be in the form of cash, common shares of ARAMARK stock, restricted stock units that are settled in common shares of ARAMARK stock or a combination thereof.
8. Additional Terms. Unless otherwise specifically provided by this Plan or by the Committee or unless not permitted by Section 162(m), the administrative terms of the ARAMARK Management Incentive Bonus Plan (as the same shall be in effect from time to time) (MIB) shall apply to bonus awards payable under this Plan, including by way of example terms relating to such matters as the ability to defer receipt of payment of an annual performance bonus; provided, however, that in the event of a conflict between this Plan and the MIB, this Plan shall govern.
9. Stockholder Approval. This Plan shall be effective upon its approval by the stockholders of ARAMARK.
10. Amendment. The Committee may, without further action by the stockholders, amend the Plan from time to time as it deems desirable; provided, that no such amendment may increase the group of employees who may receive compensation under the Plan identified in Section 3 above, change the permitted performance measures set forth in Section 4 above, increase the maximum bonus payable under the Plan as set forth in Section 6 above or make any other change requiring further stockholder approval under Section 162(m).
11. Duration and Termination. This Plan, unless earlier terminated, shall be effective through fiscal year 2016. The board of directors may, in its discretion, terminate this Plan at any time.
12. Compliance with IRC Section 409A. This Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (any related regulations and guidance promulgated thereunder) (Section 409A) and will be interpreted in a manner intended to comply with Section 409A. In furtherance thereof, no payments may be accelerated under this Plan other than to the extent permitted under Section 409A. To the extent that any provision of this Plan violates Section 409A such that amounts would be taxable to a Participant prior to payment or would otherwise subject a Participant to a penalty tax under Section 409A, such provision shall be automatically reformed or stricken to preserve the intent hereof. Notwithstanding anything herein to the contrary, (i) if at the time of a Participants termination of employment the Participant is a specified employee as defined in Section 409A and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A, then ARAMARK shall defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the participant) until the date that is six months following the Participants termination of employment (or the earliest date as is permitted under Section 409A) and (ii) if any other payments due to a Participant hereunder could cause the application of an accelerated or additional tax under Section 409A, such payments or other benefits shall be deferred if deferral will make such payment compliant under Section 409A, or otherwise such payment shall be restructured, to the extent possible, in a manner, determined by the Committee, that does not cause such an accelerated or additional tax. The Committee shall implement the provisions of this section in good faith; provided that neither ARAMARK, nor the Committee nor any of ARAMARKs or its subsidiaries employees or representatives shall have any liability to participants with respect to this section.
13. Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflicts of laws.
Approved: November 16, 2011
EXHIBIT 10.2
Schedule 1(to 2012 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||
2012 |
$834.7 | $ N/A | ||
2013 |
$ []* | $ []* | ||
2014 |
$ []* | $ []* | ||
2015 (the Final Fiscal Year) |
$ []* | $ []* |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
1. | Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP. |
2. | Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million. |
3. | Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles. |
4. | Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument. |
5. | Exclude any impairment charge or similar asset write off required by GAAP. |
6. | Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements. |
7. | Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction. |
8. | Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders. |
9. | Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets based on the 2011 Business Plan approved by the Board. |
10. | Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week fiscal year referenced in this Schedule. |
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
1. | For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a). |
2. | For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition. |
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* The Committee shall establish these targets in accordance with Section 4(b) of the Agreement to which this Schedule 1 is attached.
EXHIBIT 10.3
Schedule 1 (to 2009 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||
2009 |
$779.3 | N/A | ||
2010 |
$718.1 | $1,497.3 | ||
2011 |
$748.5* | $2,286.7* | ||
2012 (the Final Fiscal Year) |
$834.7* | $3,145.2 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board. 2012 and later EBIT Targets are based on the foreign currency translation rates used in the 2010 Business Plan approved by the Board.
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* If in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth above for any other grant of options to purchase common stock of the Company that might be made on or after June 17, 2011 and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth above, the EBIT Target for such Fiscal Year set forth on this Schedule 1 shall be deemed reduced to such lower EBIT Target. In addition, if the Board of Directors or the Committee establishes any Cumulative EBIT Target(s) for any other Option granted by the Company for any of the Fiscal Years beginning with 2012 or following, and such Cumulative EBIT Target(s) are achieved, any portion of the Performance Option that has not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year in which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year will become vested.
Schedule 1 (to 2010 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||
2010 |
$718.1 | N/A | ||
2011 |
$748.5* | $1,507.5* | ||
2012 |
$834.7* | $2,366.0* | ||
2013 (the Final Fiscal Year) |
$933.3* | $3,299.3 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board. 2012 and later EBIT Targets are based on the foreign currency translation rates used in the 2010 Business Plan approved by the Board.
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* If in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth above for any other grant of options to purchase common stock of the Company that might be made on or after June 17, 2011 and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth above, the EBIT Target for such Fiscal Year set forth on this Schedule 1 shall be deemed reduced to such lower EBIT Target. In addition, if the Board of Directors or the Committee establishes any Cumulative EBIT Target(s) for any other Option granted by the Company for any of the Fiscal Years beginning with 2012 or following, and such Cumulative EBIT Target(s) are achieved, any portion of the Performance Option that has not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year in which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year will become vested.
Schedule 1 (to 2011 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||
2011 |
$748.5* | N/A | ||
2012 |
$834.7* | $1,647.9* | ||
2013 |
$933.3* | $2,581.2* | ||
2014 (the Final Fiscal Year) |
$1,013.4* | $3,594.6 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board. 2012 and later EBIT Targets are based on the foreign currency translation rates used in the 2010 Business Plan approved by the Board.
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* If in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth above for any other grant of options to purchase common stock of the Company that might be made on or after June 17, 2011 and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth above, the EBIT Target for such Fiscal Year set forth on this Schedule 1 shall be deemed reduced to such lower EBIT Target. In addition, if the Board of Directors or the Committee establishes any Cumulative EBIT Target(s) for any other Option granted by the Company for any of the Fiscal Years beginning with 2012 or following, and such Cumulative EBIT Target(s) are achieved, any portion of the Performance Option that has not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year in which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year will become vested.
Schedule 1
(to 2011 Agreements between June 21, 2011 and June 30, 2011)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||
2011 |
$748.5 | $ N/A | ||
2012 |
$834.7 | $1,583.2 | ||
2013 |
$ []* | $ []* | ||
2014 (the Final Fiscal Year) |
$ []* | $ []* |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
11. | Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP. |
12. | Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million. |
13. | Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles. |
14. | Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument. |
15. | Exclude any impairment charge or similar asset write off required by GAAP. |
16. | Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements. |
17. | Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction. |
18. | Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders. |
19. | Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets based on the 2011 Business Plan approved by the Board. |
20. | Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week fiscal year referenced in this Schedule. |
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
3. | For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a). |
4. | For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition. |
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* The Committee shall establish these targets in accordance with Section 4(b) of the Agreement to which this Schedule 1 is attached.
Schedule 1(to 2012 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||
2012 |
$834.7 | $ N/A | ||
2013 |
$ []* | $ []* | ||
2014 |
$ []* | $ []* | ||
2015 (the Final Fiscal Year) |
$ []* | $ []* |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
21. | Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP. |
22. | Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million. |
23. | Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles. |
24. | Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument. |
25. | Exclude any impairment charge or similar asset write off required by GAAP. |
26. | Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements. |
27. | Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction. |
28. | Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders. |
29. | Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets based on the 2011 Business Plan approved by the Board. |
30. | Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week fiscal year referenced in this Schedule. |
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
5. | For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a). |
6. | For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition. |
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* The Committee shall establish these targets in accordance with Section 4(b) of the Agreement to which this Schedule 1 is attached.
EXHIBIT 10.4
AMENDMENT 2011-1
TO THE
AMENDED AND RESTATED
ARAMARK SAVINGS INCENTIVE RETIREMENT PLAN
AMENDMENT 2011-1 to the Amended and Restated ARAMARK Savings Incentive Retirement Plan (the Plan) by ARAMARK Corporation (the Company).
WHEREAS, the Company maintains the Plan for the benefit of its eligible employees and now wishes to amend the Plan.
NOW, THEREFORE, effective January 1, 2012, the Plan is hereby amended as follows:
Section 1.1 of the Plan is hereby amended to replace the definition of Compensation with the following:
Compensation means, for any Eligible Employee for any Plan Year, such Eligible Employees annual base salary, sales commissions, paid time off for vacations, holidays and sick leave, overtime and shift differentials and salary deferrals under the ARAMARK 2005 Deferred Compensation Plan (excluding pay allowances, deferred compensation, bonuses and related benefits) earned from the Company and paid to the Employee, computed before reduction of Salary Deferrals under Section 3.1 of this Plan.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date indicated below.
ARAMARK CORPORATION | ||
By: | /s/ VALERIE R. WANDLER | |
Date: | November 16, 2011 |