2019 PROXY STATEMENT - Sysco

2019 PROX Y STATEMENT

Table of Contents

LETTER FROM OUR CHAIRMAN, PRESIDENT AND CEO AND INDEPENDENT LEAD DIRECTOR 4

Proxy Summary 8 ..........................................................................................................................................................................................................................................................................................................................

PROXY STATEMENT

12

CORPORATE GOVERNANCE

12

Board Leadership Structure 13 .................................................................................................................................................................................................................................................................................. Board Refreshment 13 ........................................................................................................................................................................................................................................................................................................... Stockholder Engagement 14 ......................................................................................................................................................................................................................................................................................... Board Meetings and Committees 14 ................................................................................................................................................................................................................................................................. Annual Board Self-Evaluation 16 .............................................................................................................................................................................................................................................................................. Director Independence 16 ................................................................................................................................................................................................................................................................................................. Certain Relationships and Related Person Transactions 17 .............................................................................................................................................................................................. Risk Oversight 18 ........................................................................................................................................................................................................................................................................................................................... Code of Conduct 19 .................................................................................................................................................................................................................................................................................................................. Compensation Consultants 20 ...................................................................................................................................................................................................................................................................................

BOARD OF DIRECTORS MATTERS

20

Election of Directors at 2019 Annual Meeting (Item 1) 20 ..................................................................................................................................................................................................... Board Composition 25 ...........................................................................................................................................................................................................................................................................................................

DIRECTOR COMPENSATION

32

Overview of Non-Employee Director Compensation 32 .......................................................................................................................................................................................................... Directors Deferred Compensation Plan 32 ................................................................................................................................................................................................................................................. Equity-Based Awards to Non-Employee Directors 32 ...............................................................................................................................................................................................................

EXECUTIVE OFFICERS

35

Management Development and Succession Planning 37 ....................................................................................................................................................................................................

STOCK OWNERSHIP

38

Security Ownership of Officers and Directors 38 ............................................................................................................................................................................................................................... Security Ownership of Certain Beneficial Owners 39 .................................................................................................................................................................................................................. Stock Ownership Guidelines 39 ................................................................................................................................................................................................................................................................................ Stock Trading Restrictions 40 ....................................................................................................................................................................................................................................................................................... Employee, Officer and Director Hedging 40 .............................................................................................................................................................................................................................................

DELINQUENT SECTION 16(a) REPORTS

40

EQUITY COMPENSATION PLAN INFORMATION

40

COMPENSATION DISCUSSION AND ANALYSIS

41

Executive Summary 41 .......................................................................................................................................................................................................................................................................................................... Philosophy of Executive Compensation Program 44 .................................................................................................................................................................................................................. How Executive Pay is Established 46 ................................................................................................................................................................................................................................................................ What We Paid and Why ? Compensation for NEOs 49 ........................................................................................................................................................................................................... Executive Compensation Governance and Other Information 59 .............................................................................................................................................................................

REPORT OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE

60

EXECUTIVE COMPENSATION

61

Summary Compensation Table 61 ........................................................................................................................................................................................................................................................................ Grants of Plan-Based Awards 63 ............................................................................................................................................................................................................................................................................ Outstanding Equity Awards at Year-End 64 .............................................................................................................................................................................................................................................. Option Exercises and Stock Vested 66 ........................................................................................................................................................................................................................................................... Fiscal 2019 Nonqualified Deferred Compensation 67 ................................................................................................................................................................................................................ Pension Benefits 69 .................................................................................................................................................................................................................................................................................................................... CEO Pay Ratio 72 ......................................................................................................................................................................................................................................................................................................................... Quantification of Termination/Change in Control Payments 73 ..................................................................................................................................................................................... Compensation Risk Analysis 76 ................................................................................................................................................................................................................................................................................

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (ITEM 2)

77

REPORT OF THE AUDIT COMMITTEE

78

FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

79

RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP

AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 3)

80

STOCKHOLDER PROPOSAL (ITEM 4)

80

BOARD OF DIRECTORS' STATEMENT IN OPPOSITION OF THE PROPOSAL

81

STOCKHOLDER PROPOSALS

82

Presenting Business/Nominating Directors for Election 82 ................................................................................................................................................................................................. Meeting Date Changes 82 .................................................................................................................................................................................................................................................................................................

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

83

ANNEX I ? NON-GAAP RECONCILIATIONS

88

LETTER FROM OUR CHAIRMAN, PRESIDENT AND CEO AND INDEPENDENT LEAD DIRECTOR

Dear Sysco Stockholder,

We are pleased to invite you to attend our 2019 Annual Meeting of Stockholders on Friday, November 15, 2019, at 10:00 a.m. Central Time. The meeting will be held at the Houstonian Hotel located at 111 North Post Oak Lane, Houston, Texas 77024. Our stockholder meeting is an opportunity for our Board of Directors and senior leadership to provide an update on key developments at Sysco over the past year and respond directly to your questions. By participating in our stockholder meeting, you play an active role in the future of your company. We encourage you to vote by telephone, internet, or by signing and mailing the attached proxy card.

Our Performance

Sysco saw improved year-over-year performance in fiscal 2019. We continue to focus on enriching the customer experience and are furthering the progress of our transformative initiatives, which we believe will increase the ease of doing business with Sysco and create value for our stockholders in fiscal 2020 and beyond. Our sales grew 2.4% to $60.1 billion, which is a significant milestone for the Company. Growth of Sysco-branded products, with the launch of Sysco Simply and Sysco Earth Plus, continued its positive trajectory, and the ongoing work with our suppliers around category management contributed to our gross profit improvement. We also realized good overall expense management throughout the year. From a Total Sysco perspective, operating income increased 0.7% to $2.3 billion and adjusted operating income increased 7.9% to $2.7 billion. Earnings per share increased $0.50 to $3.20 and adjusted earnings per share increased $0.41 to $3.55 for the year, up 13.1%.1 We continued to generate meaningful free cash flow as we achieved $1.7 billion for fiscal 2019, all while returning approximately $1.8 billion to shareholders through dividends and share buybacks. This strong performance reflects our ability to focus on our customers while creating value for our shareholders.

Continued Board Refreshment

Our Board is composed of highly qualified and committed individuals who bring a balance of tenures and wealth of expertise that is well aligned with the execution of our long-term strategy. The Board has undergone significant refreshment, with five of our 12 directors joining the Board since 2016. These new directors were deliberately selected for their deeply relevant skill sets and their ability to guide our strategy, provide management with oversight, and effectively represent shareholder interests. As a longstanding proponent of director diversity consistent with the Board's ongoing refreshment process, the Board considered a search pool consisting of highly qualified, experienced and diverse candidates and has nominated Ms. Lundquist for election at the Annual Meeting, in addition to the nomination of the incumbent directors for re-election. As a result of this new candidate, our Board size will increase by one to 13 directors following the Annual Meeting.

Thoughtful Leadership Structure and Succession

As part of the Board's oversight of the Company's long-term growth trajectory, the independent members of our Board engaged in a thoughtful, deliberate process of succession planning to support the Company's next phase of strategic growth. Our current leadership structure represents the culmination of that process, following the planned retirements of our former CEO, Mr. Bill DeLaney, in January 2018, and of our former Chairman of the Board, Ms. Jackie Ward, in November 2018, at which time the roles of Chairman and CEO were combined. The Board recognizes that CEO duality confers critical synergies facilitating clear, direct communication and management accountability. Equally mindful of the indispensability of robust, independent leadership, in November 2018 the Board concurrently elected an independent Lead Director. The Board firmly believes that a combined Chairman and CEO role, coupled with a robust independent Lead Director role, is presently the best structure to position Sysco for success as the Company executes an ambitious multi-year growth strategy. The Board will continue to re-evaluate our leadership structure at least annually to ensure that it continues to serve us optimally.

1 This statement contains non-GAAP financial measures, which are denoted as "adjusted." See pages 88 through 93 in the accompanying Proxy Statement for a reconciliation of these non-GAAP measures to the corresponding GAAP results and an explanation of the adjustments that we have made in order to calculate these adjusted measures.

4 SYSCO CORPORATION - 2019 Proxy Statement

LETTER FROM OUR CHAIRMAN, PRESIDENT AND CEO AND INDEPENDENT LEAD DIRECTOR Ongoing Commitment to Investor Engagement Maintaining an active, open dialogue with our shareholders continues to be a top priority of the Board. In fiscal 2019, members of our Board and management team had the pleasure of speaking with a sizable, diverse cross-section of our shareholder base collectively holding approximately 25% of our outstanding shares. Our discussions spanned a variety of issues encompassing alignment of our current governance, compensation, and sustainability practices as well as our current strategy for growth and long-term value creation. During our engagement, we also heard the feedback that many shareholders are supportive of the current combined Chairman and CEO position alongside a strong, independent Lead Director and robust corporate governance provisions. The input received during these meetings is an important contribution to the Board's decision-making, and we look forward to continuing this dialogue in service of our shareholders and the Company. Looking ahead to fiscal 2020, our 50th Anniversary year, we will be focused on improving execution as we celebrate our past and accelerate our focus on exceeding our customers' expectations of doing business with Sysco. We are committed to improving our customers' experience, operating the business with excellence, optimizing the way we work together and continuing to drive business transformation initiatives to ensure we are positioned well for future growth. On behalf of our Board of Directors and all 69,000 Sysco associates, thank you for your continued trust and support in Sysco.

Tom Ben?, Chairman, President and Chief Executive Officer Ed Shirley, Independent Lead Director

SYSCO CORPORATION - 2019 Proxy Statement 5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download