UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Post Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
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December 10, 2018
Dear Fellow Shareholders:
You are cordially invited to attend our annual meeting of shareholders on Thursday, January 24, 2019. We will hold the meeting at 9:00 a.m., Central Time, at The Ritz-Carlton, St. Louis, 100 Carondelet Plaza, St. Louis, Missouri 63105.
In connection with the annual meeting, we have prepared a notice of the meeting, a proxy statement, a proxy card and our annual report to shareholders for the fiscal year ended September 30, 2018, which contain detailed information about us and our operating and financial performance. On or about December 10, 2018, we began mailing to our shareholders these materials or a Notice of Availability of Proxy Materials containing instructions on how to access these materials online.
Whether or not you plan to attend the meeting, we encourage you to vote your shares. You may vote by telephone or on the Internet, or if you received or requested to receive printed proxy materials, complete, sign and return the enclosed proxy card in the postage-paid envelope enclosed with the proxy materials. The prompt execution of your proxy will be greatly appreciated.
Sincerely, | ||
/s/ Robert V. Vitale | ||
Robert V. Vitale | ||
President and Chief Executive Officer | ||
Post Holdings, Inc.
2503 S. Hanley Road
St. Louis, Missouri 63144
December 10, 2018
Notice of Annual Meeting of Shareholders
Dear Shareholders:
The 2019 annual meeting of shareholders of Post Holdings, Inc. will be held at 9:00 a.m., Central Time, on Thursday, January 24, 2019, at The Ritz-Carlton, St. Louis, 100 Carondelet Plaza, St. Louis, Missouri 63105. At the annual meeting, shareholders will consider the following matters:
1. | the election of three nominees to the Company’s Board of Directors; |
2. | the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2019; |
3. | advisory approval of the Company’s executive compensation; |
4. | advisory approval on the frequency of the advisory approval of the Company’s executive compensation; |
5. | the approval of the Post Holdings, Inc. 2019 Long-Term Incentive Plan; and |
6. | any other business properly introduced at the annual meeting. |
The close of business on November 27, 2018 has been fixed as the record date for the determination of shareholders entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement thereof. This notice of the meeting and the proxy statement and proxy card are first being sent or made available to shareholders on or about December 10, 2018.
We are pleased to take advantage of Securities and Exchange Commission rules that allow us to furnish these proxy materials and our annual report to shareholders on the Internet. This means that most shareholders will not receive paper copies of our proxy materials and annual report to shareholders. We will instead send shareholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials and annual report to shareholders on the Internet. We believe that posting these materials on the Internet enables us to provide shareholders with the information that they need more quickly, while lowering our costs of printing and delivery and reducing the environmental impact of our 2019 annual meeting.
Your vote is important. Please note that if you hold your shares through a broker, your broker cannot vote your shares on any matter, except ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, in the absence of your specific instructions as to how to vote. In order for your vote to be counted, please make sure that you submit your vote to your broker.
By order of the Board of Directors,
/s/ Diedre J. Gray
Diedre J. Gray
Executive Vice President, General Counsel
and Chief Administrative Officer, Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JANUARY 24, 2019
This notice, the proxy statement attached to this notice and our annual report to shareholders for the fiscal year ended September 30, 2018 are available at www.envisionreports.com/POST and on our website at www.postholdings.com.
PROXY STATEMENT
Table of Contents
Page | |
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this proxy statement. This summary is not a complete description, and you should read the entire proxy statement carefully before voting.
ANNUAL MEETING
Time and Date: | 9:00 a.m., Central Time, on Thursday, January 24, 2019 | |
Place: | The Ritz-Carlton, St. Louis 100 Carondelet Plaza St. Louis, Missouri 63105 | |
Record Date: | November 27, 2018 | |
Voting: | Shareholders on the record date are entitled to one vote per share on each matter to be voted upon at the annual meeting. | |
VOTING ITEMS
Item | Board Recommendation | Page Reference | ||||
1 | Election of Three Directors | For all nominees | ||||
2 | Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending September 30, 2019 | For | ||||
3 | Advisory Approval of the Company’s Executive Compensation | For | ||||
4 | Advisory Approval on the Frequency of the Advisory Approval of the Company’s Executive Compensation | One Year | ||||
5 | Approval of the Post Holdings, Inc. 2019 Long-Term Incentive Plan | For | ||||
Transact any other business that properly comes before the meeting. | ||||||
BOARD OF DIRECTORS
The following table provides summary information about each director nominee as of November 12, 2018. At our annual meeting, shareholders will be asked to elect the three director nominees in Class I listed in the table below. The Board unanimously recommends a vote FOR each nominee.
Class I - Directors whose terms expire at the 2019 annual meeting of shareholders and who are nominees for terms expiring at the 2022 annual meeting
Name | Director Since | Occupation and Experience | Independent | Board Committees(1) | ||||||||
AC | CGCC | EC | SFOC | |||||||||
Gregory L. Curl | 2012 | President of Temasek Holdings | Yes | ü | ü | |||||||
Ellen F. Harshman | 2017 | Dean Emerita of the John Cook School of Business at Saint Louis University | Yes | ü | ||||||||
David P. Skarie | 2012 | Retired Executive | Yes | ü | ü | |||||||
(1) | AC - Audit Committee; CGCC - Corporate Governance and Compensation Committee; EC - Executive Committee; SFOC - Strategy and Financial Oversight Committee |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As a matter of good governance, we are asking our shareholders to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2019. The Board unanimously recommends a vote FOR ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm.
EXECUTIVE COMPENSATION
Our Board is asking that our shareholders vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement. This vote is not intended to address any specific item of our compensation programs, but rather addresses our overall approach to the compensation of our named executive officers. Please read Compensation Discussion and Analysis
beginning on page 17 and the executive compensation tables beginning on page 36 for additional details about our executive compensation programs. The Board unanimously recommends a vote FOR approval of the compensation of our named executive officers.
FREQUENCY OF THE ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION
Our Board is asking that our shareholders vote to approve, on an advisory (non-binding) basis, the frequency of the advisory approval of the compensation of our named executive officers as disclosed in this proxy statement. The Board unanimously recommends that our shareholders vote for a one-year interval for the advisory approval of executive compensation.
POST HOLDINGS, INC. 2019 LONG-TERM INCENTIVE PLAN
We are seeking shareholder approval of our 2019 Long-Term Incentive Plan, which will increase the number of shares authorized to fund awards under our long-term incentive compensation programs. The Board unanimously recommends a FOR vote because we believe that the ability to make equity awards to our executives, employees and directors is important to align their interests with those of our shareholders and to better attract and retain key personnel.
PROXY AND VOTING INFORMATION
Why am I receiving these materials?
Our Board of Directors is soliciting proxies for the 2019 annual meeting of shareholders. This proxy statement, the form of proxy and the Company’s 2018 annual report to shareholders will be available at www.envisionreports.com/POST beginning on December 10, 2018. On or about December 10, 2018, a Notice Regarding the Availability of Proxy Materials (the “Notice”) will be mailed to shareholders of record at the close of business on November 27, 2018. On the record date, there were 66,681,344 shares of our common stock outstanding.
How can I receive printed proxy materials?
We have elected to take advantage of the Securities and Exchange Commission (the “SEC”) rules that allow us to furnish proxy materials to you online. We believe electronic delivery will expedite shareholders’ receipt of materials, while lowering costs and reducing the environmental impact of our annual meeting by reducing printing and mailing of full sets of materials. On or about December 10, 2018, we mailed to many of our shareholders a Notice containing instructions on how to access our proxy statement and annual report to shareholders online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials, unless you specifically request one. However, the Notice contains instructions on how to receive a paper copy of the materials.
When and where is the annual meeting?
We will hold the annual meeting on Thursday, January 24, 2019, at 9:00 a.m., Central Time, at The Ritz-Carlton, St. Louis, 100 Carondelet Plaza, St. Louis, Missouri 63105.
What am I being asked to vote on at the meeting?
We are asking our shareholders to consider the following items:
1. | the election of the three nominees to our Board of Directors named in this proxy statement; |
2. | the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending September 30, 2019; |
3. | advisory approval of the Company’s executive compensation; |
4. | advisory approval on the frequency of the advisory approval of the Company’s executive compensation; |
5. | approval of the Post Holdings, Inc. 2019 Long-Term Incentive Plan; and |
6. | any other business properly introduced at the annual meeting. |
How many votes do I have?
You have one vote for each share of our common stock that you owned at the close of business on the record date. These shares include:
• | shares registered directly in your name with our transfer agent, for which you are considered the “shareholder of record;” |
• | shares held for you as the beneficial owner through a broker, bank or other nominee in “street name;” and |
• | shares credited to your account in our savings investment plan. |
What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner”?
If your shares are registered directly in your name with our transfer agent, you are considered the “shareholder of record” with respect to those shares. We have sent a Notice or proxy materials directly to you.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of the shares held in “street name.” Your broker, bank or other nominee who is considered the shareholder of record with respect to those shares has forwarded a Notice or proxy materials to you. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote your shares by using the voting instruction card included in the mailing or by following its instructions for voting by telephone or the Internet.
How can I vote my shares?
You can vote by proxy or in person.
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How do I vote by proxy?
Pursuant to rules adopted by the SEC, we are providing you access to our proxy materials over the Internet. Accordingly, we are sending a Notice to our shareholders of record. If you received a Notice by mail, you will not receive a printed copy of the proxy materials, including a printed proxy card, unless you request to receive these materials. The Notice will instruct you as to how you may access and review the proxy materials on the Internet on the website referred to in the Notice. The Notice also instructs you as to how you may vote on the Internet.
If you are a shareholder of record, you may vote by telephone, Internet or mail. Our telephone and Internet voting procedures are designed to authenticate shareholders by using individual control numbers that can be found on the Notice or proxy card mailed to you.
Registered Shares:
• | Voting by telephone: You can vote by calling 800-652-VOTE (8683) and following the instructions provided. Telephone voting is available 24 hours a day, 7 days a week, until 1:00 a.m., Central Time, on Thursday, January 24, 2019. |
• | Voting by Internet: You can vote via the Internet by accessing www.envisionreports.com/POST and following the instructions provided. Internet voting is available 24 hours a day, 7 days a week, until 1:00 a.m., Central Time, on Thursday, January 24, 2019. |
• | Voting by mail: If you choose to vote by mail (if you request printed copies of the proxy materials by mail), simply mark your proxy card, date and sign it, and return it in the postage-paid envelope provided. |
Street Name Shares: If you hold shares through a broker, bank or other nominee, you will receive materials from that person explaining how to vote.
If you submit your proxy using any of these methods, Jeff A. Zadoks or Diedre J. Gray, who have been appointed by our Board of Directors as the proxies for our shareholders for this meeting, will vote your shares in the manner you indicate. You may specify whether your shares should be voted for all, some or none of the nominees to our Board of Directors, for one year, two years or three years for the frequency of the advisory approval of the Company’s executive compensation, and for or against any other proposals properly introduced at the annual meeting. If you vote by telephone or Internet and choose to vote with the recommendation of our Board of Directors, or if you vote by mail, sign your proxy card, and do not indicate specific choices, your shares will be voted “FOR” the election of the three nominees to our Board of Directors; “FOR” ratification of the appointment of our independent registered public accounting firm; “FOR” the proposal regarding advisory approval of the Company’s executive compensation; “ONE YEAR” for the proposal regarding advisory approval on the frequency of the advisory approval of the Company’s executive compensation; and “FOR” the Post Holdings, Inc. 2019 Long-Term Incentive Plan.
If any other matter is presented at the meeting, your proxy will authorize Jeff A. Zadoks or Diedre J. Gray to vote your shares in accordance with their best judgment. At the time this proxy statement was printed, we knew of no matters to be considered at the annual meeting other than those referenced in this proxy statement.
If you wish to give a proxy to someone other than Jeff A. Zadoks or Diedre J. Gray, you may strike out their names on the proxy card and write in the name of any other person, sign the proxy and deliver it to the person whose name has been substituted.
How can I revoke my proxy?
You may revoke a proxy in any one of the following four ways:
• | submit a valid, later-dated proxy; |
• | vote again electronically after your original vote; |
• | notify our corporate secretary in writing before the annual meeting that you have revoked your proxy; or |
• | vote in person at the annual meeting. |
How do I vote in person?
If you are a shareholder of record, you will need to bring appropriate identification and you may cast your vote in person. If you hold shares in street name, then you will need to bring an account statement or letter from your broker, bank or other nominee indicating that you were the holder of your shares as of November 27, 2018.
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If I hold shares in street name, how can I vote my shares?
You can submit voting instructions to your broker, bank or other nominee. In most instances, you will be able to do this by telephone, over the Internet or by mail. Please refer to the materials you receive from your broker, bank or other nominee.
How do I vote my shares in the savings investment plan?
If you are both a shareholder and a participant in our savings investment plan, you will receive a single Notice or proxy card that covers shares of our common stock credited to your plan account as well as shares of record registered in exactly the same name. If your plan account is not carried in exactly the same name as your shares of record, you will receive separate Notices or proxy cards for individual and plan holdings. If you own shares through this plan and you do not return your proxy by 11:59 p.m., Eastern Time, on January 21, 2019, the trustee will vote your shares in the same proportion as the shares that are voted by the other participants in the plan. The trustee also will vote unallocated shares of our common stock held in the plan in direct proportion to the voting of allocated shares in the plan for which voting instructions have been received unless doing so would be inconsistent with the trustee’s duties.
Is my vote confidential?
Yes. Voting tabulations are confidential, except in extremely limited circumstances. Such limited circumstances include contested solicitation of proxies, when disclosure is required by law, to defend a claim against us or to assert a claim by us, and when a shareholder includes written comments on a proxy or other voting materials.
What “quorum” is required for the annual meeting?
In order to have a valid shareholder vote, a quorum must exist at the annual meeting. For us, a quorum exists when shareholders holding a majority of the outstanding shares entitled to vote at the meeting are present or represented at the meeting, provided that in no event shall a quorum consist of less than a majority of the outstanding shares entitled to vote.
What vote is required?
The election of each director nominee, the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2019, the advisory approval of the Company’s executive compensation and the approval of the Post Holdings, Inc. 2019 Long-Term Incentive Plan must be approved by a majority of the shares represented at the annual meeting in person or by proxy and entitled to vote on the matter.
The frequency of the advisory approval of the Company’s executive compensation receiving the greatest number of votes will be considered the frequency recommended by shareholders.
Although the approvals of the Company’s executive compensation and the frequency of the advisory approval of the Company’s executive compensation are advisory and not binding on the Company, the Board of Directors and the Corporate Governance and Compensation Committee, which is responsible for administering the Company’s executive compensation programs, are interested in the opinions expressed by our shareholders in their votes on these proposals and will consider the outcome of the votes when making future compensation decisions for our named executive officers and determining the frequency of advisory votes on executive compensation.
How are the voting results determined?
A vote of “withhold” for a nominee will not be voted for that nominee. A vote of “abstain” on a matter will be considered to be represented at the annual meeting, but not voted for these purposes. If a broker indicates on its proxy that it does not have authority to vote certain shares held in street name, the shares not voted are referred to as “broker non-votes.” Broker non-votes occur when brokers do not have discretionary voting authority to vote certain shares held in street name on particular proposals under the rules of the New York Stock Exchange (“NYSE”), and the beneficial owner of those shares has not instructed the broker to vote on those proposals. If you are a beneficial owner and you do not submit voting instructions to your broker, bank or other nominee, your broker, bank or other nominee is permitted to vote your shares only with regard to ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Shares registered in the name of a broker, bank or other nominee, for which proxies are voted on some, but not all, matters, will be considered to be represented at the annual meeting for purposes of determining a quorum and voted only as to those matters marked on the proxy card.
Is any other business expected at the meeting?
The Board of Directors does not intend to present any business at the annual meeting other than the proposals described in this proxy statement. However, if any other matter properly comes before the annual meeting, including any shareholder proposal omitted from the proxy statement and form of proxy pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), your proxies will act on such matter in their discretion.
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Where can I find the voting results?
We intend to announce preliminary voting results at the annual meeting. We will publish the final results in a Current Report on Form 8-K, which we expect to file on or before January 30, 2019. You can obtain a copy of the Form 8-K by logging on to our website at www.postholdings.com, by calling the SEC at 800-SEC-0330 for the location of the nearest public reference room, or through the EDGAR system at www.sec.gov. Information on our website does not constitute part of this proxy statement.
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CORPORATE GOVERNANCE
Overview
We are dedicated to creating long-term shareholder value. It is our policy to conduct our business with integrity and an unrelenting passion for providing value to our customers and consumers. All of our corporate governance materials, including our corporate governance guidelines, our code of conduct for directors, officers and employees, our Audit Committee charter and our Corporate Governance and Compensation Committee charter, are published under the Corporate Governance section within the Investor Relations portion of our website at www.postholdings.com. Information on our website does not constitute part of this proxy statement. Our Board of Directors regularly reviews these materials, Missouri law, the rules and listing standards of the NYSE and SEC rules and regulations, as well as best practices suggested by recognized governance authorities, and modifies our corporate governance materials as warranted.
Director Independence and Role of the Independent Lead Director
Our Board of Directors follows the categorical independence standards based on the NYSE listing standards and the SEC rules and regulations as described in our corporate governance guidelines. The guidelines contain categorical standards our Board uses to make its determination as to the materiality of the relationships of each of our directors. Our Board has determined, in its judgment, that all of our non-employee directors, except for Mr. Stiritz, our Chairman of the Board, are independent directors as defined in the NYSE listing standards and the SEC rules and regulations.
The independent members of the Board of Directors meet regularly in executive sessions without the presence of management. These sessions are normally held following or in conjunction with regular Board and committee meetings. The chairman of the Corporate Governance and Compensation Committee acts as the presiding director during an executive session of the Board, and the chairman of the committee then in session acts as the chairman during an executive session of that committee.
Our corporate governance guidelines provide that if the Chairman of the Board is not an independent director, then the chairman of our Corporate Governance and Compensation Committee will serve as our independent Lead Director. Our Lead Director has a number of important responsibilities that are described in our corporate governance guidelines, including (i) working with the Chief Executive Officer to develop Board and committee agendas, (ii) coordinating and chairing executive sessions of the Board’s independent directors and (iii) working with the Corporate Governance and Compensation Committee to identify for appointment the members of the various Board committees. Mr. Brown currently serves as our Lead Director and plays an active role in the Company. He serves as an independent liaison between the Chairman of the Board, the Chief Executive Officer, the other members of our Board and management of our Company. Mr. Brown has extensive knowledge about Post’s strategic objectives, the industry in which Post operates and the areas of strategic importance to Post. Our Chief Executive Officer confers regularly with Mr. Brown on a variety of topics, including updates on the Company’s business, merger and acquisition opportunities and other strategic matters. Mr. Brown also consults regularly with the Company’s independent compensation consultant, Aon Hewitt, and works closely with Aon Hewitt to develop proposals for the design of our executive compensation programs, which are then reviewed by our Corporate Governance and Compensation Committee.
Code of Conduct
Our code of conduct sets forth our expectations for the conduct of business by our directors, officers and employees. We intend to post amendments to or waivers from (to the extent applicable to one of our executive officers or directors) this document on our website.
Conflicts of Interest
Pursuant to our code of conduct, each director and officer has an obligation not to engage in any transaction that could be deemed a conflict of interest.
The Corporate Governance and Compensation Committee is responsible for approving and ratifying transactions in which one or more directors may have an interest. The Committee reviews the material facts of all interested party transactions that require the Committee’s approval and either approves or disapproves of the entry into the interested party transaction. In the event management, in the normal course of reviewing our records, determines an interested party transaction exists which was not approved by the Committee, management will present the transaction to the Committee for consideration.
The Committee has adopted standing pre-approval of certain transactions in which an officer or director may have an interest including (i) transactions involving competitive bids, (ii) certain charitable contributions and (iii) certain banking related services. The Committee believes these transactions are immaterial to us and to any director or officer. No director may participate in the approval of an interested party transaction for which he or she is a related party. If an interested party
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transaction will be ongoing, the Committee may establish guidelines for our management to follow in its ongoing dealings with the related party.
Structure of the Board of Directors
The Board of Directors is currently comprised of nine members. Our Amended and Restated Articles of Incorporation (as amended) and Amended and Restated Bylaws provide for a Board of Directors that is divided into three classes as equal in size as possible. The classes have three-year terms, and the term of one class expires each year in rotation at that year’s annual meeting of shareholders. The size of the Board of Directors can be changed by a vote of its members, and in the event of any increase or decrease in the number of directors, the directors in each class shall be adjusted as necessary so that all classes shall be as equal in number as reasonably possible. However, no reduction in the number of directors shall affect the term of office of any incumbent director. Vacancies on the Board of Directors may be filled by a majority vote of the remaining directors, and the Board of Directors determines the class to which any director shall be assigned. A director elected to fill a vacancy, or a new directorship created by an increase in the size of the Board of Directors, serves until the next meeting of shareholders at which directors in his or her assigned class are elected, at which time he or she may stand for election if nominated by the full Board.
Board Meetings and Committees
The Board of Directors has the following four committees: Audit; Corporate Governance and Compensation; Executive; and Strategy and Financial Oversight. The table below contains information concerning the membership of each of the committees and the number of times the Board of Directors and each committee met during fiscal year 2018. During fiscal year 2018, each director attended at least 75% of the total number of meetings of the Board of Directors and the committee(s) on which he or she serves. Because our annual meeting of shareholders is purely routine in nature, our corporate governance guidelines do not require the directors to attend the annual meeting of shareholders, and accordingly, two directors attended the 2018 annual meeting of shareholders. As of November 12, 2018, the Board and committee members were as follows:
Director | Board | Audit | Corporate Governance and Compensation | Executive | Strategy and Financial Oversight | |||||
William P. Stiritz | Δ | Δ | Δ | |||||||
Robert V. Vitale | • | • | • | |||||||
Jay W. Brown | • | Δ | • | |||||||
Edwin H. Callison | • | • | • | |||||||
Gregory L. Curl | • | • | • | |||||||
Robert E. Grote | • | • | ||||||||
Ellen F. Harshman | • | • | ||||||||
David W. Kemper | • | • | ||||||||
David P. Skarie | • | Δ | • | |||||||
Meetings held in fiscal year 2018 | 6 | 4 | 6 | 0 | 4 | |||||
Δ | – | Chair | • | – | Member |
Audit Committee
The Audit Committee’s primary responsibilities are to monitor and oversee (a) the quality and integrity of our financial statements and financial reporting, (b) the independence and qualifications of our independent registered public accounting firm, (c) the performance of our internal audit function and independent auditors, (d) our systems of internal accounting, financial controls and disclosure controls and (e) compliance with legal and regulatory requirements, codes of conduct and ethics programs.
The Board of Directors has determined, in its judgment, that the Audit Committee is comprised solely of independent directors as defined in the NYSE listing standards and Rule 10A-3 of the Exchange Act. The Committee operates under a written charter, adopted by the Board of Directors, which is available under the Corporate Governance section within the Investor Relations portion of our website at www.postholdings.com. The Board of Directors also has determined, in its judgment, that Mr. Skarie, the chair of our Audit Committee, and Mr. Callison qualify as “audit committee financial experts” as defined by SEC rules and that each member of the Audit Committee is “financially literate” as defined by the NYSE listing standards. Our corporate governance guidelines do not currently restrict the number of audit committees of public companies on which members of our Audit Committee may serve, however, the Board of Directors has determined that none of the members of the Audit Committee currently serves on the audit committees of more than three public companies. The report of the Audit Committee can be found on page 16 of this proxy statement.
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Corporate Governance and Compensation Committee
The Corporate Governance and Compensation Committee (a) determines the compensation level of our Section 16 officers, (b) reviews management’s Compensation Discussion and Analysis relating to our executive compensation programs and approves the inclusion of the same in our proxy statement and/or annual report to shareholders, (c) issues a report confirming the Committee’s review and approval of the Compensation Discussion and Analysis for inclusion in our proxy statement and/or annual report to shareholders, (d) administers and makes recommendations with respect to director compensation, incentive compensation plans and stock-based plans and (e) reviews and oversees risks arising from or in connection with our compensation policies and programs for all employees. The Corporate Governance and Compensation Committee also (i) reviews and revises, as necessary, our corporate governance guidelines, (ii) considers and evaluates transactions between the Company and any director, officer or affiliate of the Company and (iii) identifies individuals qualified to become members of our Board. The Committee has the authority to delegate any of its responsibilities to subcommittees as it deems appropriate, provided that any such subcommittees are composed entirely of independent directors.
The Board of Directors has determined, in its judgment, that the Corporate Governance and Compensation Committee is comprised solely of independent directors as defined in the NYSE listing standards. The Committee operates under a written charter, adopted by the Board of Directors, which is available under the Corporate Governance section within the Investor Relations portion of our website at www.postholdings.com. The report of the Corporate Governance and Compensation Committee can be found on page 55 of this proxy statement.
Executive Committee
The Executive Committee may exercise all Board authority in the intervals between Board meetings, to the extent such authority is in compliance with our corporate governance guidelines and does not infringe upon the duties and responsibilities of other Board committees.
Strategy and Financial Oversight Committee
The Strategy and Financial Oversight Committee periodically reviews financial and strategic matters with management in order to assist the Board of Directors in exercising its responsibilities regarding the financial condition, objectives and strategy of the Company.
Nomination Process for Election of Directors
The Corporate Governance and Compensation Committee has responsibility for assessing the need for new directors to address specific requirements or to fill a vacancy. The Committee may, from time to time, initiate a search for a new candidate, seeking input from our Chairman of the Board and from other directors. The Committee may retain an executive search firm to identify potential candidates. All candidates must meet the requirements specified in our corporate governance guidelines. Candidates who meet those requirements and otherwise qualify for membership on our Board of Directors are identified, and the Committee initiates contact with preferred candidates. The Committee regularly reports to the Board of Directors on the progress of the Committee’s efforts. The Committee meets to consider and approve final candidates who are then presented to the Board of Directors for consideration and approval. Our Chairman or the chairman of the Corporate Governance and Compensation Committee may extend an invitation to join the Board of Directors.
The Committee relies primarily on recommendations from management and members of the Board of Directors to identify director nominee candidates. However, the Committee will consider timely written suggestions from shareholders. Such suggestions and the nominee’s consent to being nominated, together with appropriate biographical information (including principal occupation for the previous five years and business and residential addresses) and other relevant information, as outlined in our Amended and Restated Bylaws, should be submitted in writing to our corporate secretary. Shareholders wishing to suggest a candidate for director nomination for the 2020 annual meeting should mail their suggestions to our principal executive offices at Post Holdings, Inc., 2503 S. Hanley Road, St. Louis, Missouri 63144, Attn: Corporate Secretary. Suggestions must be received by the corporate secretary no earlier than September 26, 2019 and no later than October 26, 2019.
Role of the Board in Risk Oversight
The Board of Directors is responsible for the oversight of risk, while management is responsible for the day-to-day management of risk. The Board of Directors, directly and through its committees, carries out its oversight role by regularly reviewing and discussing with management the risks inherent in the operation of our business and applicable risk mitigation efforts. Management meets regularly to discuss our business strategies, challenges, risks and opportunities and reviews those items with the Board of Directors at regularly scheduled meetings.
We do not believe that our compensation policies and practices encourage excessive and unnecessary risk-taking. The design of our compensation policies and practices encourages employees to remain focused on both short- and long-term financial and operational goals. For example, cash bonus plans measure performance on an annual basis but are subject to the
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Corporate Governance and Compensation Committee’s ultimate judgment and discretion. In addition, equity awards typically vest over a number of years, which we believe encourages employees to focus on sustained stock price appreciation over an extended period of time instead of on short-term financial results.
Board Leadership Structure
Our current Board leadership structure consists of:
• | separate Chairman of the Board and Chief Executive Officer roles; |
• | an independent Lead Director; |
• | all non-management directors except for the Chief Executive Officer; |
• | independent Audit and Corporate Governance and Compensation Committees; and |
• | governance practices that promote independent leadership and oversight. |
Separate Chairman and Chief Executive Officer
We do not have a formal policy with respect to separation of the offices of Chairman of the Board and Chief Executive Officer, and the Board of Directors believes that it should maintain flexibility to select our Chairman and Board leadership structure from time to time. William P. Stiritz serves as non-executive Chairman of the Board and Robert V. Vitale serves as our Chief Executive Officer. Mr. Vitale is also a member of the Board. The Board believes that this leadership structure, which separates the Chairman and Chief Executive Officer roles, is optimal at this time because it allows Mr. Vitale to focus on operating and managing our Company, while Mr. Stiritz can focus on leading our Board. In addition, an independent director serves as Lead Director. As described below, we believe our governance practices ensure that skilled and experienced independent directors provide independent guidance and leadership.
When determining the leadership structure that will allow the Board of Directors to effectively carry out its responsibilities and best represent our shareholders’ interests, the Board will consider various factors, including our specific business needs, our operating and financial performance, industry conditions, the economic and regulatory environment, Board and committee annual self-evaluations, advantages and disadvantages of alternative leadership structures and our corporate governance practices.
Independent Lead Director and Independent Directors
Pursuant to our corporate governance guidelines, the chairman of the Corporate Governance and Compensation Committee, currently Mr. Brown, acts in the role of our independent Lead Director. The Lead Director’s duties are described above under “Director Independence and Role of the Independent Lead Director.”
In addition to the Lead Director, the Board has a majority of independent directors. The Audit Committee and Corporate Governance and Compensation Committee are composed solely of independent directors. Consequently, independent directors directly oversee critical matters and appropriately monitor the Chief Executive Officer. Our independent directors have the opportunity to meet in executive session at the conclusion of each of our Board of Directors meetings.
Director Evaluations
On an annual basis, the Corporate Governance and Compensation Committee is expected to conduct an evaluation of the Board of Directors, the functioning of the committees and each individual member of the Board. In addition to this evaluation, and as a part of this process, the Board and each committee conducts a self-assessment. The Corporate Governance and Compensation Committee reviews the results of these self-assessments, shares the same with the Board and each committee, as appropriate, and makes any advisable recommendations based on this feedback.
Policy on Director Diversity
Although the Corporate Governance and Compensation Committee does not have a written policy regarding diversity in identifying new director candidates, the Committee takes diversity into account in looking for the best available candidates to serve on the Board of Directors. The Committee looks to establish diversity on the Board of Directors through a number of demographics, experience (including operational experience), skills and viewpoints, all with a view to identify candidates who can assist the Board with its decision making. The Committee also considers factors such as diversity on the basis of race, color, national origin, gender, religion, disability and sexual orientation.
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Communication with the Board
Shareholders and other parties interested in communicating directly with an individual director or with the non-management directors as a group may do so by writing to the individual director or group, c/o Post Holdings, Inc., 2503 S. Hanley Road, St. Louis, Missouri 63144, Attn: Corporate Secretary. The Board of Directors has directed our corporate secretary to forward shareholder communications to our Chairman and any other director to whom the communications are directed. In order to facilitate an efficient and reliable means for directors to receive all legitimate communications directed to them regarding our governance or operations, our corporate secretary will use her discretion to refrain from forwarding the following: sales literature; defamatory material regarding us and/or our directors; incoherent or inflammatory correspondence, particularly when such correspondence is repetitive or was addressed previously in some manner; and other correspondence unrelated to the Board of Directors’s corporate governance and oversight responsibilities.
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ELECTION OF DIRECTORS
(Proxy Item No. 1)
The terms of three current directors (Ms. Harshman and Messrs. Curl and Skarie) will expire at the 2019 annual meeting of shareholders. Our Board of Directors has nominated Ms. Harshman and Messrs. Curl and Skarie for election for a three-year term that will expire in 2022. The Board of Directors is not aware that any of these nominees will be unwilling or unable to serve as a director. Each nominee has consented to be named in the proxy statement and to serve if elected. If, however, a nominee is unavailable for election, your proxy authorizes the persons named on the proxy card to vote for a replacement nominee if the Board of Directors names one. As an alternative, the Board of Directors may reduce the number of directors to be elected at the meeting. Proxies may not be voted for a greater number of persons than the nominees presented.
Each nominee is currently a director. Messrs. Curl and Skarie were elected to the Board on February 3, 2012, immediately after the separation from Ralcorp Holdings, Inc. (“Ralcorp”) was completed. Ms. Harshman was elected to the Board effective October 1, 2017.
The persons named on the proxy card intend to vote the proxy representing your shares for the election of Ms. Harshman and Messrs. Curl and Skarie, unless you indicate on the proxy card that the vote should be withheld or you indicate contrary directions. If you deliver the proxy card without giving any direction, the persons named on the proxy card will vote the proxy representing your shares FOR the election of the nominees named on the proxy card.
The Board of Directors unanimously recommends a vote “FOR” each of these nominees.
Information about the Current Directors and Nominees for Election to the Board of Directors
Board Composition
We believe that our directors should possess the highest personal and professional integrity and values and be committed to representing the long-term interests of our shareholders. We further believe that the backgrounds and qualifications of our directors, considered as a group, should provide a blend of business experience and competence, and professional and personal abilities, that will allow the Board of Directors to fulfill its responsibilities. The Corporate Governance and Compensation Committee works with the Board to determine the appropriate mix of these backgrounds and qualifications that would establish and maintain a Board with strong collective abilities.
To fulfill these objectives, the Board of Directors has determined that it is important to nominate directors with the skills and experiences set forth below, among others. The experiences, qualifications and skills that the Board considered in each director’s re-nomination are included in their individual biographies.
• | Leadership Experience. We believe that directors with experience in significant leadership positions over an extended period generally possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others. They also generally possess a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth. |
• | Financial or Accounting Acumen. We believe that an understanding of finance and financial reporting processes enables our directors to evaluate and understand the impact of business decisions on our financial statements and capital structure. In addition, accurate financial reporting and robust auditing are critical to our ongoing success. |
• | Industry Experience. We seek directors with experience as executives or directors or in other leadership positions in industries relevant to our business, including consumer packaged goods, branded products, retail or consumer product manufacturing. |
• | Operational Experience. We believe that directors who are current or former executives with direct operational responsibilities bring valuable practical insight to helping to develop, implement and assess our operating plan and business strategy. Operational experience includes experience in areas such as marketing, supply chain, sustainability and commodity management. |
• | Public Company Experience. Directors with experience as executives or directors of other publicly traded companies generally are well prepared to fulfill the Board’s responsibilities of overseeing and providing insight and guidance to management, and help further our goals of greater transparency, accountability for management and the Board and protection of our shareholders’ interests. |
In addition, when evaluating the suitability of individuals for nomination, the Corporate Governance and Compensation Committee considers other appropriate factors, including whether the individual satisfies applicable independence requirements.
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The following information is furnished with respect to each nominee for election as a director and each continuing director. The ages of the directors are as of December 31, 2018.
NOMINEES FOR ELECTION
GREGORY L. CURL has served as a member of the Board of Directors since February 2012. Mr. Curl has been President of Temasek Holdings, an investment company owned by the Singapore government, since September 2010, following a banking career of over 35 years. From 1997 until January 2010, he served as vice chairman of corporate development and chief risk officer at Bank of America Corporation, retiring from Bank of America Corporation in March 2010. Prior to that, Mr. Curl served in a number of senior executive capacities. Mr. Curl has over 35 years of experience and background in the financial services industry, particularly in mergers and acquisitions. Age 70.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Public Company Experience. |
ELLEN F. HARSHMAN has served as a member of the Board of Directors since October 2017. Ms. Harshman is the Dean Emerita of the John Cook School of Business at Saint Louis University and served as the chief academic officer of Saint Louis University from 2013 to 2015. Since August 2015, Ms. Harshman has worked at the direction of the Saint Louis University president to lead and manage an institutional project to celebrate the university’s bicentennial. Ms. Harshman served as the dean of the John Cook School of Business at Saint Louis University from 2003 to 2013 and was the first female dean of a major business school in the St. Louis, Missouri area. Ms. Harshman also served as an associate professor of management. Ms. Harshman has expertise and background in legal affairs, human resources, employee relations, strategic planning and management. Age 73.
Director Qualifications
• | Leadership Experience, Operational Experience. |
DAVID P. SKARIE has served as a member of the Board of Directors since February 2012. Mr. Skarie previously served as co-chief executive officer and president of Ralcorp from September 2003 until his retirement in December 2011. Mr. Skarie also served on the board of directors of Ralcorp from 2003 until February 2012. Prior to serving as co-chief executive officer and president of Ralcorp, Mr. Skarie served as president of several other companies in the consumer food products industry, including Ralston Foods and The Carriage House Companies. Mr. Skarie also served on the board of advisors of Clement Pappas and Company, Inc. (which has since merged into Lassonde Industries), a private label juice company, from 2002 until 2010. Mr. Skarie has expertise and background in the consumer packaged goods industry, including as a chief executive officer. Age 72.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Experience. |
DIRECTORS CONTINUING IN SERVICE
WILLIAM P. STIRITZ has served as our Chairman of the Board of Directors since February 2012. Previously, Mr. Stiritz served as our chief executive officer from February 2012 until November 2014 and served as executive chairman of the Company from November 2014 until February 2016. Mr. Stiritz is a private equity investor and served as the chairman of the board of directors of Ralcorp from 1994 until February 2012. Since prior to 2005, Mr. Stiritz has been a partner at Westgate Group LLC, a consumer-oriented private equity firm. Mr. Stiritz was chairman emeritus of the board of directors of Energizer Holdings, Inc. from January 2007 to May 2008 and chairman of the board of directors of Energizer Holdings from 2000 to 2007. In addition, he served as a director of Vail Resorts, Inc. from 1997 to 2009. Mr. Stiritz has extensive managerial expertise, including as chairman of a number of public and private companies, and experience in financial operations, as well as diverse industry experience and expertise with large multinational corporations. Age 84.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Experience. |
JAY W. BROWN has served as a member of the Board of Directors since February 2012 and is a retired senior executive with a long general management career in large consumer-oriented businesses. Most recently, Mr. Brown was a partner at Westgate Equity Partners, LLC, a consumer-oriented private equity firm. At Westgate, Mr. Brown was responsible for operational management of portfolio companies. Prior to forming Westgate in 1998, Mr. Brown was a senior executive with Ralston Purina Company, running several divisions of the multi-dimensional food and agribusiness company, including serving
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as president and chief executive officer of Protein Technologies International, a leading supplier of soy-based proteins to the food and paper processing industries; Continental Baking Company, a subsidiary of Ralston Purina; and Tri-Union Seafoods (a/k/a Van Camp Seafood Company), a provider of stable seafood products. Mr. Brown served as a director and chairman of the compensation committee of Jack in the Box Inc. from 1997 to 2003 and as a director of Agribrands International, Inc. from 1998 to 2001. Mr. Brown has expertise and background in the food and consumer products industries, particularly in mergers and acquisitions, including as a chief executive officer, board member and investor. Age 73.
Director Qualifications
• | Leadership Experience, Industry Experience, Operational Experience, Public Company Experience. |
EDWIN H. CALLISON has served as a member of the Board of Directors since February 2012. Mr. Callison has been Executive Vice President of Corporate Development of Breakthru Beverage Group, LLC, a leading North American distributor of luxury and premium wine, spirits and beer brands, since January 2016. Previously, Mr. Callison served as executive vice president of Wirtz Beverage Group, which merged with Sunbelt Holdings to form Breakthru Beverage Group, since June 2012, and also served as senior vice president of Wirtz Beverage Group from June 2008 until June 2012. From 2003 to June 2008, he served as vice president and general manager for Judge & Dolph’s Spectrum division, an affiliate of the Wirtz Beverage Group. Prior to 2003, he spent more than 20 years in various leadership positions with Callison Distributing in Belleville, Illinois. Mr. Callison serves on the board of directors of the Wine and Spirits Wholesalers of America, Wirtz Corporation, Breakthru Beverage Group, LLC, First Security Trust & Savings Bank, Elmwood Park, IL and First National Bank of South Miami. Mr. Callison has expertise and background in sales, marketing, finance, operations and logistics. Age 63.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Operational Experience. |
ROBERT E. GROTE has served as a member of the Board of Directors since February 2012. Mr. Grote is, and has been for the past five years, a retired executive. Prior to 1998, Mr. Grote spent more than twenty years in management. He served in a number of executive positions at Washington Steel Corporation, an integrated, flat-rolled stainless steel producer, most recently as VP-Administration. He also served as general counsel for Washington Steel Corporation and on the company’s board of directors. Mr. Grote later ran two Pittsburgh, Pennsylvania non-profit organizations: Pittsburgh Center for the Arts and Central Blood Bank. Prior to joining Washington Steel, he practiced law in St. Louis, Missouri, and served for two years as an Assistant United States Attorney for the Eastern District of Missouri. Mr. Grote has expertise and background in legal affairs, human resources, employee relations, strategic planning and management. Age 75.
Director Qualifications
• | Leadership Experience, Operational Experience, Public Company Experience. |
DAVID W. KEMPER has served as a member of the Board of Directors since September 2015. Mr. Kemper became Executive Chairman of Commerce Bancshares, Inc. in August 2018, after serving as chairman and chief executive officer since 1991. Mr. Kemper is a director of Tower Properties Company and Enterprise Holdings, Inc. Mr. Kemper is a member of Civic Progress in St. Louis and previously served as president of the Federal Advisory Council to the Federal Reserve. Mr. Kemper also previously served on the board of directors of Ralcorp from 1994 to 2013. Mr. Kemper has extensive managerial expertise, including as a chief executive officer, experience in financial operations and expertise with large corporations. Age 68.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Experience. |
ROBERT V. VITALE has served as our President and Chief Executive Officer and a member of the Board of Directors since November 2014. Previously, Mr. Vitale served as our chief financial officer from October 2011 until November 2014. Mr. Vitale previously served as president and chief executive officer of AHM Financial Group, LLC, a diversified provider of insurance brokerage and wealth management services, from 2006 until 2011 and previously was a partner of Westgate Equity Partners, LLC, a consumer-oriented private equity firm. Mr. Vitale also serves on the board of directors of Energizer Holdings, Inc. Age 52.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Experience. |
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RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Proxy Item No. 2)
The Audit Committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2019, and the Board of Directors has directed that management submit the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for ratification by our shareholders at the annual meeting of shareholders. PricewaterhouseCoopers LLP has served as our independent registered public accounting firm since February 2012. A representative of that firm will be present at the annual meeting of shareholders, will have an opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions.
We are not required to obtain shareholder ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. However, we are submitting the appointment of PricewaterhouseCoopers LLP to shareholders for ratification as a matter of good corporate practice. If our shareholders fail to ratify the appointment, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time if it determines that such a change would be in our best interests and the best interests of our shareholders.
The following table sets forth an estimate of the fees that we expect to be billed for audit services during the fiscal year ended September 30, 2018 and for other services during that fiscal year, and the fees billed for audit services during the fiscal year ended September 30, 2017 and for other services during that fiscal year.
Year Ended September 30, | ||||||||||
2018 | 2017 | |||||||||
Audit fees(1) | $ | 7,117,900 | $ | 5,720,500 | ||||||
Audit-related fees | $ | — | $ | — | ||||||
Tax fees(2) | $ | 987,300 | $ | 149,300 | ||||||
All other fees(3) | $ | 2,700 | $ | 1,800 | ||||||
_________
(1) | Audit fees relate primarily to the audit of our financial statements, comfort letter consents and review of SEC registration statements. |
(2) | Tax fees include consulting and compliance services and preparation of tax returns in jurisdictions outside of the United States. |
(3) | All other fees include any fees for services rendered by PricewaterhouseCoopers LLP which are not included in any of the above categories. The other fees consist of licensing fees paid for accounting research software. |
With regard to the fees listed above, the Audit Committee has considered whether the provision by PricewaterhouseCoopers LLP of services other than audit services is compatible with its ability to maintain its independence. Regardless of the size or nature of the other services, if any, to be provided, it is the Audit Committee’s policy and practice to approve any services not under the heading “Audit Fees” before any such services are undertaken.
The Audit Committee has a formal policy concerning approval of all services to be provided by PricewaterhouseCoopers LLP, including audit, audit-related, tax and other services. The policy requires that all services PricewaterhouseCoopers LLP may provide to us must be pre-approved by the Audit Committee. The chairman of the Audit Committee has the authority to pre-approve permitted services that require action between regular Audit Committee meetings, provided that the chairman reports any pre-approval decisions to the Audit Committee at the next regular meeting. The Audit Committee approved all services provided by PricewaterhouseCoopers LLP during fiscal year 2018.
Our audit was staffed primarily by full-time, permanent employees of PricewaterhouseCoopers LLP.
The Board of Directors unanimously recommends a vote “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm.
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AUDIT COMMITTEE REPORT
The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. Management is responsible for our internal controls, financial reporting processes and compliance with laws and regulations and ethical business standards. PricewaterhouseCoopers LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements and our internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”) and issuing a report thereon. Our internal auditors assist the Audit Committee with its responsibility to monitor and oversee the financial reporting process and internal controls. The Audit Committee discusses with our internal auditors and independent registered public accounting firm the overall scopes and plans for their respective audits. The Audit Committee meets, at least quarterly, with the internal auditors and independent registered public accounting firm, and at the Committee’s discretion with and without management present, and discusses the results of their examinations, their evaluations of our internal controls and the overall quality of our financial reporting.
With respect to our audited financial statements for the fiscal year ended September 30, 2018, management has represented to the Audit Committee that the financial statements were prepared in accordance with United States generally accepted accounting principles (“GAAP”) and the Audit Committee has reviewed and discussed those financial statements with management. The Audit Committee also has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by PCAOB Auditing Standard No. 1301 (Communications with Audit Committees), as modified or supplemented.
The Audit Committee has received the written disclosures and letter from PricewaterhouseCoopers LLP required by PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), as modified or supplemented, and has discussed the independence of PricewaterhouseCoopers LLP with members of that firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements for the fiscal year ended September 30, 2018 be included in our Annual Report on Form 10-K filed with the SEC for that year.
Although the Audit Committee has the responsibilities and powers set forth in its charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that our financial statements are complete and accurate or are in accordance with GAAP. This is the responsibility of management and the independent registered public accounting firm.
David P. Skarie, Chairman
Edwin H. Callison
Gregory L. Curl
Ellen F. Harshman
David W. Kemper
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COMPENSATION OF OFFICERS AND DIRECTORS
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The following Compensation Discussion and Analysis (“CD&A”) describes our fiscal year 2018 executive compensation structure. This CD&A is intended to be read in conjunction with the tables beginning on page 36, which provide detailed compensation information for our following named executive officers (“NEOs”):
Name | Title |
Robert V. Vitale | President and Chief Executive Officer |
Jeff A. Zadoks | Executive Vice President and Chief Financial Officer |
Diedre J. Gray | Executive Vice President, General Counsel and Chief Administrative Officer |
Howard A. Friedman(1) | President & CEO, Post Consumer Brands |
Mark W. Westphal(2) | President, Michael Foods |
James E. Dwyer, Jr.(3) | President & CEO, 8th Avenue Food & Provisions, Inc. |
Christopher J. Neugent (3) | Executive Vice President, Strategy |
(1) | Mr. Friedman joined Post Holdings as an executive officer effective July 23, 2018. |
(2) | Mr. Westphal was promoted to the role of President, Michael Foods on January 12, 2018 and designated by our Board of Directors as a Section 16 officer and an executive officer, as defined under the Exchange Act rules, effective January 31, 2018. |
(3) | Mr. Dwyer and Mr. Neugent served as executive officers as defined under the Exchange Act rules until January 12, 2018 and July 23, 2018, respectively. |
Total Compensation Opportunity
Our executive compensation structure consists of three primary components: base salary, annual bonus (our Senior Management Bonus Program) and long-term incentives (equity awards). A fourth element of our compensation structure consists of traditional benefits programs (e.g., limited perquisites and benefits).
Executive Summary
Select Performance and Company Highlights for Fiscal Year 2018
We view the Company’s performance in two primary ways:
• | operating and financial performance; and |
• | return to shareholders over time, both on an absolute basis and relative to similar companies. |
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During fiscal year 2018, we achieved a number of strategic and financial accomplishments that we believe will benefit the Company and shareholders alike in the coming years:
Strategic and Financial Achievements |
• | We delivered on our financial commitments. |
◦ | In November 2017, the Company announced that management expected Adjusted EBITDA of between $1.14 - $1.18 billion. |
◦ | Ultimately, the Company delivered over $1.23 billion of Adjusted EBITDA, which was in line with the Company’s budget. |
• | Our closing stock price reached an all-time high of $100.65. |
• | Our stock price at the end of the fiscal year was $98.04, an increase of 11% from the start of the fiscal year and a compound annual growth rate of approximately 21.5% since our separation from Ralcorp in February 2012. |
• | We announced the separate capitalization of 8th Avenue Food & Provisions, Inc. (“8th Avenue”), comprised of our historical private brands business, with affiliates of Thomas H. Lee Partners, Inc., a private equity firm, through which the Company received total proceeds of $875 million, fully monetizing the net investment the Company made in the historical private brands business. The separate capitalization was completed on October 1, 2018, with the Company retaining approximately 60% of the common equity of 8th Avenue. |
• | We completed the acquisition of Bob Evans Farms on January 12, 2018, a highly strategic acquisition of a market leading business, with material cost savings synergies and significant opportunity for growth. |
• | We raised $1.0 billion in debt markets to fund a portion of the purchase price for Bob Evans Farms as well as to refinance existing debt. |
• | We opportunistically repurchased approximately 2.8 million shares at an average price of $76.19 (exclusive of broker commissions), representing an approximately 22% discount to trading levels of the Company’s stock as of September 30, 2018. |
• | We completed several strategic transactions to improve our capital structure, including (i) repricing our $2.2 billion term loan, reducing the interest rate by 25 basis points with annual interest savings of approximately $5 million, and (ii) repurchasing and retiring approximately $268 million in principal value of outstanding debt through repurchases of senior notes, at an average discount of approximately 2%. |
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Management Team Drives Performance and Creates Shareholder Value
We are a shareholder value driven organization and our compensation philosophy is designed to be aligned with shareholder interests. Management’s objective is to maximize total shareholder return (“TSR”), and compensation decisions are guided by the principle of creating shareholder value.
The following charts illustrate our superior long-term TSR against multiple company groupings:
• | Russell 1000 companies; |
• | our compensation peer group companies; and |
• | Russell 3000 Packaged Foods & Meats companies. |
Two long-term time frames are illustrated:
• | February 6, 2012, the date the Company first started trading on the NYSE after its separation from Ralcorp, through September 30, 2018, the date of our fiscal year end;(1) and |
• | the most recent three-year period of October 1, 2015 through September 30, 2018.(2) |
(1) | Calculated using a 250 trading day average for the Compensation Peer Group, Russell indices and Post Holdings except for Post Holdings in 2012, where prices including and after February 6, 2012, the date Post Holdings first started trading on the NYSE after its separation from Ralcorp, were used. |
(2) | Calculated using a 250 trading day average. |
2018 Say-on-Pay Vote
We received 89.1% support from shareholders for the compensation of our named executive officers at our 2018 annual meeting of shareholders. We regularly engage with our shareholders to discuss issues, including, but not limited to, the status/outlook for our business, the compensation arrangements used to support our business strategy and general governance topics.
We received low say-on-pay results at our 2017 annual meeting of shareholders, and in January of 2017, we met with investors representing approximately 37% of our outstanding shares of common stock to better understand their concerns and seek their advice. The meetings were led by Mr. Brown, our independent Lead Director and the chair of our Corporate Governance and Compensation Committee (the “Committee”), along with our Executive Vice President, General Counsel and Chief Administrative Officer. Feedback included incorporating more performance goals into our long-term equity compensation arrangements, refraining from large retention equity grants outside of the Company’s normal compensation practices, providing more complete information about the role of our independent Lead Director, and increasing the diversity of our Board of Directors.
In direct response to our ongoing shareholder engagement efforts, from a corporate governance perspective we disclosed more comprehensive information about the role of our independent Lead Director and appointed Ms. Ellen Harshman to our Board of Directors for her skill set and to diversify our Board’s perspectives. From a compensation structure perspective, in
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fiscal year 2018, we implemented new long-term performance awards based on our three-year TSR ranking versus companies in our specific industry sector. In fiscal year 2018, our only off-cycle restricted stock unit (“RSU”) grants were to Mr. Friedman upon his hiring and to Mr. Westphal in connection with his promotion to President, Michael Foods; both have long-term five-year cliff vesting.
Corporate Governance Highlights
What We Do (Best Practice) | What We Don’t Allow | |||
ü | Enforce strict insider trading policies - adopted an anti-hedging and anti-pledging policy and enforce blackout trading periods for executives and directors | û | No hedging or pledging of Company stock by executives or directors | |
ü | Utilize a clawback policy for performance-based compensation | û | No single-trigger or modified single-trigger change-in-control arrangements | |
ü | Set meaningful stock ownership guidelines for executives and directors | û | No change-in-control severance multiple in excess of three times salary and target bonus | |
ü | Disclose performance goals and performance results for our Senior Management Bonus Program | û | No excise tax gross-ups upon a change in control | |
ü | Set a maximum individual payout limit on our Senior Management Bonus Program and for our new performance restricted stock unit (“PRSU”) awards | û | No re-pricing or cash buyout of underwater stock options or SARs allowed | |
ü | In fiscal year 2018, approximately 88% of our Chief Executive Officer’s total pay opportunity is variable “at risk” compensation. Our other NEOs also have approximately 78% of their total compensation in variable “at risk” programs. | û | No enhanced retirement formulas | |
ü | Limited perquisites and other benefits | û | No guaranteed compensation either annually or multi-year | |
ü | Incorporate general severance and change-in-control provisions in our management continuity agreements and executive severance plan that are consistent with market practice, including double-trigger requirements for change-in-control protection | û | No market timing with granting of equity awards | |
ü | Retain an independent compensation consultant reporting directly to the Committee | |||
Our Compensation Philosophy
Our executive compensation programs are intended to attract and retain executive officers and to align the interests of our executive officers and our shareholders. The Committee’s objectives for our programs include, but are not limited to, the following:
• | reflecting industry standards, offering competitive total compensation opportunities and balancing the need for talent with reasonable compensation expense; |
• | enhancing shareholder value by focusing management on financial metrics that drive value; |
• | focusing on at-risk compensation versus fixed compensation; |
• | attracting, motivating and retaining executive talent willing to commit to long-term shareholder value creation; and |
• | aligning executive decision-making with business strategy and discouraging excessive risk taking. |
The Committee determines the type and amount of compensation opportunity for our officers based on a thorough review of a variety of factors, including competitive market data, the officer’s current responsibilities and value to the Company, future leadership potential and individual/corporate/business performance.
We believe that our executive compensation structure strikes a balance of incentive opportunities based on:
• | financial metrics in the Senior Management Bonus Program that directly impact our stock price and enhance longer-term shareholder value; |
• | stock price performance to focus our executive team on delivering superior long-term shareholder value; and |
• | total shareholder return against companies in our industry to focus on delivering superior shareholder value. |
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The following table outlines the elements of our executive pay programs and each element’s relationship with our ongoing annual executive compensation philosophy for NEOs:
Component | Purpose | Characteristics | Fixed or Performance-Based |
Base Salary | Attracts and retains executives through market-based pay | Compensates executives fairly and competitively for their roles | Fixed |
Annual Bonus (Senior Management Bonus Program) | Encourages achievement of financial performance metrics that drive short-term results | Based on achievement of predefined corporate and business financial performance objectives | Performance-Based |
Long-Term Incentives (“LTI”) | Align executives’ long-term compensation interests with shareholders’ investment interests | Value to the executive is based on long-term stock price performance | Performance-Based |
Stock Options | Motivate management behaviors to increase our stock price above the exercise price | Require stock price growth above the exercise price for our executives to recognize value | Performance-Based |
Performance Restricted Stock Units | Motivate corporate executives to provide superior TSR over the long term | Cumulative three-year TSR ranking versus Russell 3000 Packaged Foods & Meats companies | Performance-Based |
Restricted Stock Units | Provide basic retention value and reinforce management behaviors to increase stock price after the grant date | Require stock price growth for our executives to recognize increased value | Performance-Based |
Health/Welfare Plans and Retirement Benefits | Provide competitive benefits that promote employee health and productivity and support longer-term physical and fiscal security | Similar to benefits offered to other employees | Fixed |
Perquisites | Provide limited personal benefits that are consistent with our overall philosophy and objective to attract and retain superior executive talent | Limited personal use of the corporate aircraft, with pre-approved authorization of our President and Chief Executive Officer, and limited reimbursement for business club initial membership fees, as authorized by the Committee (see page 34) | Fixed |
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Special Compensation Items Due to Management Changes in Fiscal Year 2018 | |
NEO | Summary |
James E. Dwyer, Jr. (Role Transition) | Effective January 12, 2018, Mr. Dwyer transitioned from his role as President & CEO, Michael Foods Group, to a new role as the President & CEO of 8th Avenue, our historical private brands business which as of October 1, 2018 has been separately capitalized by Post and affiliates of a private equity firm, Thomas H. Lee Partners, L.P. As of January 12, 2018, Post determined that Mr. Dwyer was no longer a Section 16 officer or executive officer. Mr. Dwyer’s base salary did not change as a result of his role transition, however, his annual bonus was based on the performance of Michael Foods Group during the first quarter of fiscal year 2018, and the performance of 8th Avenue during the last three quarters of fiscal year 2018. |
Mark W. Westphal (Promotion) | Mr. Westphal was promoted effective January 12, 2018 to the role of President, Michael Foods. He received a promotion grant of 12,593 RSUs that vest on the fifth anniversary of the date of grant. The amount was determined based on a thorough review of competitive market data and internal alignment and consistency with other Post executive officers. |
Christopher J. Neugent (Role Transition) | Effective July 23, 2018, Mr. Neugent transitioned from his role as President & CEO, Post Consumer Brands to a new role as our corporate Executive Vice President, Strategy. In his new role, Mr. Neugent reports to Mr. Vitale and is responsible for the long-term successful execution and integration of recent major acquisitions and the long-term planning and identification of future acquisitions to enhance shareholder value. Compensation details of Mr. Neugent’s new role are as follows: l Base salary: $987,000, starting July 23, 2018 l Eligible for fiscal year 2018 bonus, not pro-rated l Continued vesting in outstanding equity awards l Not eligible for a future annual bonus or future equity grants beginning in fiscal year 2019 l Not eligible to participate in the Executive Severance Plan l Additional details are summarized in Employment Agreements - Letter of Understanding - Mr. Neugent on page 52 Effective July 23, 2018, Post determined that Mr. Neugent was no longer a Section 16 officer or executive officer. |
Howard A. Friedman (New Hire) | Mr. Friedman was hired effective July 23, 2018 to replace Mr. Neugent as President & CEO, Post Consumer Brands. His base salary is $700,000. He received a sign-on equity grant of 39,000 RSUs that vest on the fifth anniversary of the date of grant. The amount was determined based on a thorough review of competitive market data, forfeited compensation from his previous employer and internal alignment and consistency with other Post executive officers. |
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Fiscal Year 2018 NEO Target Compensation Structure Summary | |
Component | Summary(1) |
Base Salary | The following base salaries were approved for fiscal year 2018: l Mr. Vitale: $1,200,000; increased 20% to recognize the Company’s accelerated financial and stock price growth versus peers and the broader U.S. market (see charts on page 19) and Mr. Vitale’s superior performance in recognizing and executing transactions that enhance our shareholder value; represents his first salary increase in 24 months. l Mr. Zadoks: $570,000; increased 10.7% to the 50th percentile. l Ms. Gray: $500,000; increased 8.7% to be closer to the 50th percentile. l Mr. Friedman: Hired on July 23, 2018 at a $700,000 annual rate, based on market data and internal alignment. l Mr. Westphal: $525,000; promoted from his position as CFO, Michael Foods to President, Michael Foods effective January 12, 2018 when Mr. Dwyer transitioned from President & CEO, Michael Foods Group to President & CEO, 8th Avenue. His base salary did not change at the time of his promotion. l Mr. Dwyer: $675,000; his salary stayed flat as he moved from leading a larger business as President & CEO, Michael Foods Group to leading a smaller business as President & CEO, 8th Avenue. l Mr. Neugent: Increased 3.7% to $700,000 in November 2017. In July 2018, in conjunction with his transition to his new role as Executive Vice President, Strategy, Mr. Neugent’s base salary was increased to $987,000; however, he is no longer eligible for an annual bonus or equity grants after fiscal year 2018 (see the CD&A subsection entitled Special Compensation Items Due to Management Changes in Fiscal Year 2018 and Employment Agreements - Letter of Understanding - Mr. Neugent on page 52). |
Target Annual Bonus (Senior Management Bonus Program) | Our 2018 Senior Management Bonus Program was based on Corporate or Business Adjusted EBITDA, depending on the organizational level of the executive. The following target bonus opportunities were approved for fiscal year 2018: l Mr. Vitale: Increased from 120% to 150% of base salary, based both on competitive market data and the reasons summarized in the Base Salary subsection above. l Mr. Zadoks and Ms. Gray: 100% of base salary; no change. l Mr. Friedman: 100% of base salary; however, he was not eligible for an annual bonus in fiscal year 2018 as he joined the Company in the last quarter of the fiscal year. l Mr. Westphal: 100% of base salary. l Mr. Dwyer: 100% of base salary; no change; however, his annual bonus was based on the performance of Michael Foods Group during the first quarter of fiscal year 2018, and the performance of 8th Avenue during the last three quarters of fiscal year 2018. l Mr. Neugent: Increased from 100% to 110% of base salary while still in his role as President & CEO, Post Consumer Brands, based on competitive market data and internal alignment. Beginning in fiscal year 2019, in his new position as Executive Vice President, Strategy, he is no longer eligible for an annual bonus (see the CD&A subsection entitled Special Compensation Items Due to Management Changes in Fiscal Year 2018 and Employment Agreements - Letter of Understanding - Mr. Neugent on page 52). |
(1) | Fiscal year 2018 targeted compensation adjustments for our NEOs were based on competitive market data from the November 2017 total compensation study summarized in the CD&A subsection entitled Role of Peer Companies and Competitive Market Data. |
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Long-Term Incentives | We offer a balanced equity portfolio to ensure our executives’ opportunities are linked to increases in shareholder value beyond grant date. We believe using a combination of LTI programs and employing an LTI mix weighted more heavily on performance-based value (e.g., stock options and new long-term performance awards) accomplishes our objectives. l New long-term performance awards in fiscal year 2018: we implemented a PRSU award program based on the Company’s three-year TSR performance ranking versus the Russell 3000 Packaged Foods & Meats companies. Only corporate-level officers participate in this program because they have the strongest line-of-sight to our public company shareholder returns. l Value mix: Our philosophy is to grant more than half of total equity in the form of performance-based plans, such as stock options and our new PRSU award program: ü Mr. Vitale: Approximately 1/3 of value is apportioned to each of stock options, PRSUs and RSUs. ü Mr. Zadoks and Ms. Gray: Approximately 60% of value is apportioned to stock options, 20% to PRSUs and 20% to RSUs. ü Mr. Friedman: Eligible for his first grant under our annual equity structure in fiscal year 2019; upon his hiring in fiscal year 2018, he received a sign-on equity grant of 39,000 RSUs with a five-year cliff vesting schedule, based on the Committee’s thorough evaluation of competitive market data, forfeited compensation values from his previous employer and internal consistency and alignment with our other executive officers. ü Messrs. Westphal, Dwyer and Neugent: Approximately 60/40 stock option and RSU value; Mr. Westphal also received a promotion equity grant of 12,593 RSUs with a five-year cliff vesting schedule, based on the Committee’s thorough evaluation of competitive market data and internal consistency and alignment with our other executive officers. Beginning in fiscal year 2019, in his new position as Executive Vice President, Strategy, Mr. Neugent is no longer eligible for equity awards. |
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Total Compensation Mix
Our mix of total compensation, as illustrated by the below charts, is significantly skewed towards variable “at-risk” compensation. The Average of Other NEOs pie chart does not include Mr. Friedman’s RSU hiring grant or the promotional RSU portion of Mr. Westphal’s grant in fiscal year 2018.
 |  | |
Compensation Decision Process
Role of the Committee
The Committee is responsible to our Board of Directors for oversight of our executive compensation programs. The Committee consists of independent directors and is responsible for the review and approval of all aspects of our programs. Among its duties, the Committee is responsible for:
• | considering input from our shareholders; |
• | reviewing and assessing competitive market data; |
• | reviewing the chief executive officer’s performance and determining the chief executive officer’s compensation; |
• | reviewing and approving incentive plan goals, achievement levels, objectives and compensation recommendations for the NEOs and other executive officers; |
• | evaluating the competitiveness of each executive’s total compensation package to ensure we can attract and retain critical management talent; and |
• | approving any changes to the total compensation programs for the NEOs including, but not limited to, base salary, annual bonuses, long-term incentives and benefits. |
Following review and discussion, the Committee or the Board, as applicable, approves the executive compensation of our executive officers. The Committee is supported in its work by our Executive Vice President, General Counsel and Chief Administrative Officer and human resources and legal teams, as well as the Committee’s independent compensation consultant. In the event that an employee becomes an executive officer in the middle of the fiscal year, such as Mr. Westphal during fiscal year 2018, the Committee approves such executive officer’s compensation on a go-forward basis but does not retroactively approve any compensation or compensation targets previously set for such employee.
Role of Management
For executive officers other than the chief executive officer, our President and Chief Executive Officer makes pay recommendations to the Committee based on competitive market data and an assessment of individual performance. His recommendations to the Committee establish appropriate and market-competitive compensation opportunities for our NEOs, consistent with our overall pay philosophy. The Committee reviews and discusses the recommendations, in conjunction with the Committee’s independent compensation consultant, in making compensation decisions or recommendations to the full Board. No officer participates directly in the final deliberations or determinations regarding his or her own compensation package.
Role of the Independent Compensation Consultant
The Committee retains the services of Aon Hewitt (“Aon”), in accordance with the Committee’s charter. Aon reports directly to the Committee. The Committee retains sole authority to hire or terminate Aon, approves its professional fees,
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determines the nature and scope of its services and evaluates its performance. A representative of Aon attends Committee meetings, as requested, and communicates with the Committee chair between meetings. The Committee makes all final decisions regarding executive compensation.
Aon’s specific compensation consultation roles include, but are not limited to, the following:
• | advising the Committee on director and executive compensation trends and regulatory developments; |
• | developing a peer group of companies for determining competitive compensation rates; |
• | providing a total compensation study for executives against peer companies; |
• | providing advice to the Committee on corporate governance best practices, as well as any other areas of concern or risk; |
• | serving as a resource to the Committee chair for meeting agendas and supporting materials in advance of each meeting; |
• | reviewing and commenting on proxy statement disclosure items, including preparation of the CD&A; and |
• | advising the Committee on management’s pay recommendations. |
The Committee has assessed the independence of Aon as required by the NYSE listing standards. The Committee reviewed its relationship with Aon and considered all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act. Based on this review, the Committee concluded that there are no conflicts of interest raised by the work performed by Aon.
Role of Peer Companies and Competitive Market Data
Annually, the Committee reviews total compensation market data provided by Aon. The Committee reviews and approves the peer group used for comparisons prior to commencement of the pay study. Consistent with prior years, the following peer group development criteria was used to develop competitive market values to assist with fiscal year 2018 pay decisions:
• | Industry: similar to Post, based on the Global Industry Classification System (GICS) code of Packaged Foods & Meats; |
• | Company size: approximately 0.4 times to 3 times our annual revenues, with a secondary focus on market cap; |
• | Peers: companies using Post in their compensation peer group; |
• | Peers of peers: companies used in the peer groups of potential peer companies; and |
• | Competitors: companies that compete with Post for business and management talent. |
The peer group consisted of 17 companies with median and average annual revenues of approximately $6.2 billion and $6.1 billion, respectively. Post’s annual revenues for fiscal year 2017 were approximately $5.2 billion. The peer companies used to assist with pay decisions for fiscal year 2018 were:
l Campbell Soup Company l ConAgra Brands, Inc. l Cott Corporation l Dean Foods Company l Flowers Foods, Inc. l The Hain Celestial Group l The Hershey Company l Hormel Foods Corporation l Kellogg Company | l McCormick & Company l Mead Johnson Nutrition l Monster Beverage Corporation l Pilgrim’s Pride Corporation l Pinnacle Foods Inc. l The J.M. Smucker Company l TreeHouse Foods, Inc. l The WhiteWave Foods Company |
The peer companies used for fiscal year 2018 are consistent with the peer group for fiscal year 2017, except ConAgra Brands and Kellogg were added based on industry and size, and Snyder’s-Lance was removed due to falling outside of our desired revenue range.
The Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the Committee uses multiple reference points when establishing targeted compensation levels. The Committee does not benchmark specific
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compensation elements or total compensation to any specific percentile relative to the peer companies or the broader U.S. market. Instead, the Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company, business and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.
Timing of Compensation Decisions
Pay recommendations for our executives, including our executive officers, are typically made by the Committee at its first regularly scheduled meeting of the fiscal year, normally held in November. This meeting is typically held around the same time as we report our fourth quarter and annual financial results for the preceding fiscal year and provide our financial guidance for the upcoming fiscal year. This timing allows the Committee to have a complete financial performance picture prior to making compensation decisions.
Decisions with respect to prior fiscal year performance, as well as annual equity awards, base salary increases and target performance levels for the current fiscal year and beyond, also typically are made at this meeting. Further, any equity awards approved by the Committee at this meeting are dated as of the date of the Committee meeting. As such, the Committee does not time the grants of options or any other equity incentives to the release of material non-public information.
The exceptions to this timing are awards to executives who are promoted or hired from outside of the Company during the fiscal year. These executives may receive equity awards effective or dated, as applicable, as of the date of their promotion or hire or the next nearest scheduled Committee meeting.
Determination of CEO Compensation
At its first regularly scheduled meeting of the fiscal year, the Committee reviews and evaluates CEO performance, and determines performance achievement levels, for the prior fiscal year. The Committee also reviews competitive compensation data. Following review and discussion, the Committee or the Board, as applicable, approves the CEO’s executive compensation.
2018 Compensation Elements
Base Salary
Base salaries are designed to recognize and reward the skill, competency, experience and performance an executive brings to the position. Changes in salary will result primarily from a comparison against peer group market data, individual and Company performance, internal equity considerations, value to the organization, promotions and the executive’s specific responsibilities compared to market. The Committee reviews salaries for our executive officers annually.
Name | 2018 Base Salary (1) |
Robert V. Vitale | $1,200,000 |
Jeff A. Zadoks | $570,000 |
Diedre J. Gray | $500,000 |
Howard A. Friedman | $700,000 |
Mark W. Westphal | $525,000 |
James E. Dwyer, Jr. | $675,000 |
Christopher J. Neugent | $700,000 (2) |
(1) | See detailed comments in the CD&A subsection entitled Fiscal Year 2018 NEO Target Compensation Structure Summary. |
(2) | Increased to $987,000 effective July 23, 2018. See detailed comments in the CD&A subsection entitled Special Compensation Items Due to Management Changes in Fiscal Year 2018 and Employment Agreements - Letter of Understanding - Mr. Neugent on page 52. |
Annual Bonus (Senior Management Bonus Program)
Our NEOs are eligible to earn cash incentives based on fiscal year performance. The Senior Management Bonus Program is designed to reward our executives who attain superior annual performance in key areas that we believe create long-term value for shareholders. Performance is measured at both the corporate and business level.
For fiscal year 2018, the Committee approved Adjusted EBITDA as the primary performance metric for both corporate and business level executive officers. At the corporate level, Adjusted EBITDA was used rather than Adjusted Free Cash Flow (our fiscal year 2017 corporate metric). We believe Adjusted EBITDA is a better metric to use to measure the performance achievement levels of our corporate executive officers because it is more directly linked with driving shareholder return and so
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it incentivizes our executive officers to influence and drive increases in long-term shareholder value. In addition, Adjusted EBITDA is a clearer and more straight-forward metric that is already used to measure the performance of our other NEOs, thus aligning our performance measurement methodology across all of our NEOs.
Potential financial adjustments to determine performance achievement levels include items such as transaction costs and integration costs, provision for legal settlements, non-cash stock-based compensation and other items that the Company believes do not contribute to a meaningful evaluation of the Company’s current operating performance or comparisons of the Company’s operating performance to other fiscal periods. These adjustments are consistent with our announced results.
Performance measures: The following financial targets were included in the Senior Management Bonus Program:
(dollars in millions)
Measure(1) | Threshold(2) | Target(2) | Maximum(2) |
Corporate-Adjusted EBITDA | $1,096.3 | $1,154.0 | $1,211.7 |
Michael Foods-Adjusted EBITDA | $340.1 | $358.0 | $375.9 |
Post Consumer Brands-Adjusted EBITDA | $469.3 | $494.0 | $518.7 |
(1) See definitions of Corporate and Business Adjusted EBITDA in the footnotes to the Fiscal Year 2018 Performance Achievement table below.
(2) When evaluating financial goals/results, the Committee generally excludes non-recurring or extraordinary items.
Upon completion of the fiscal year, the Committee determines achievement levels versus the pre-approved financial targets. The Committee also performs a comprehensive review of the overall financial performance at the corporate and business levels. For performance achievement between the threshold, target and maximum performance levels, earned amounts are interpolated on a straight-line basis between points. Performance achievement below the threshold level will result in a lower bonus amount, to the extent discretion is exercised, or no bonus at all. The Committee retains flexibility to make adjustments as needed to incorporate the results of its comprehensive financial review.
Target award opportunities: The following target bonuses (as a percentage of base salary) were approved for fiscal year 2018:
Name | 2018 Target (1),(2) (% of Salary) |
Robert V. Vitale | 150% |
Jeff A. Zadoks | 100% |
Diedre J. Gray | 100% |
Howard A. Friedman | 0%(3) |
Mark W. Westphal | 100% |
James E. Dwyer, Jr. | 100% |
Christopher J. Neugent | 110% (4) |
(1) | See detailed comments in the CD&A subsection entitled Fiscal Year 2018 NEO Target Compensation Structure Summary. |
(2) | Participants may earn from 50% to 150% of target bonus based on performance achievement between threshold and maximum. Payout opportunities for performance between threshold, target and maximum are interpolated on a straight-line basis. Performance achievement below the threshold level will result in a lower bonus amount, to the extent discretion is exercised, or no bonus at all. |
(3) | Although Mr. Friedman’s target annual bonus is 100% of his base salary, he was not eligible for an annual bonus in fiscal year 2018 as he joined the Company in the last quarter of the fiscal year. |
(4) | See detailed comments in the CD&A subsections entitled Special Compensation Items Due to Management Changes in Fiscal Year 2018 and Fiscal Year 2018 NEO Target Compensation Structure Summary, as well as Employment Agreements - Letter of Understanding - Mr. Neugent on page 52. |
Actual Fiscal Year 2018 performance assessment and earned amounts: The following attainment levels were approved for Corporate and Business Adjusted EBITDA for fiscal year 2018:
(dollars in millions)
Fiscal Year 2018 Performance Achievement | Threshold | Target | Maximum | Actual |
Corporate-Adjusted EBITDA(1) | $1,096.3 | $1,154.0 | $1,211.7 | $1,230.7 |
Michael Foods-Adjusted EBITDA(2) | $340.1 | $358.0 | $375.9 | $377.9 |
Post Consumer Brands-Adjusted EBITDA(3) | $469.3 | $494.0 | $518.7 | $458.2 |
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(1) | Corporate-Adjusted EBITDA is a non-GAAP measure which represents the consolidated net earnings of the Company excluding income taxes, net interest expense, loss on extinguishment of debt, depreciation and amortization, non-cash stock-based compensation, restructuring and plant closure costs, transaction costs, integration costs, inventory valuation adjustments on acquired businesses, mark-to-market adjustments on commodity and foreign exchange hedges, mark-to-market adjustments and cash settlements on interest rate and cross-currency swaps, impairment of goodwill and other intangible assets, provisions for legal settlements, noncontrolling interests, equity method investments and foreign currency gains and losses on intercompany loans. |
(2) | Michael Foods-Adjusted EBITDA is a non-GAAP measure which represents the segment profit of the Refrigerated Food segment from the Company’s Annual Report on Form 10-K, excluding the impact of the acquisition of Bob Evans Farms, Inc. on the Refrigerated Food segment, depreciation and amortization, mark-to-market adjustments on commodity hedges, integration costs and provisions for legal settlements. |
(3) | Post Consumer Brands-Adjusted EBITDA is a non-GAAP measure which represents the segment profit of the Post Consumer Brands segment from the Company’s Annual Report on Form 10-K, excluding depreciation and amortization, mark-to-market adjustments on commodity hedges, inventory valuation adjustments on acquired businesses and integration costs. |
Based on the approved fiscal year 2018 performance results above, and the results of the Committee’s comprehensive financial review, the Committee approved the following bonus amounts:
Approved Fiscal Year 2018 Actual Bonuses | |||
Name | 2018 Target Bonus (% of Salary) | 2018 Actual Bonus Earned (% of Target) | 2018 Actual Bonus Earned |
Robert V. Vitale | 150% | 85% | $1,530,000 |
Jeff A. Zadoks | 100% | 85% | $484,500 |
Diedre J. Gray | 100% | 85% | $425,000 |
Howard A. Friedman(1) | — | — | — |
Mark W. Westphal | 100% | 150% | $787,500 |
(1) | Mr. Friedman received no annual bonus in fiscal year 2018 given that he joined the Company in the last quarter of the fiscal year. |
The Company exceeded its corporate Adjusted EBITDA target of $1,154.0 million, delivering $1,230.7 million of Adjusted EBITDA. However, when determining bonus amounts at the corporate holding company level, the Committee exercised reasonable downward discretion, resulting in the payout of bonuses to Messrs. Vitale and Zadoks and Ms. Gray at 85% of the target amount. In making its determination, the Committee considered that several business units did not meet their Adjusted EBITDA target for the fiscal year and paid out bonuses at below the target amount (or in some cases, no bonus was paid). More specifically, the Committee took into account that the weighted average bonus payout across all of the Company’s business units was approximately 85%. In addition, the payout of bonuses at a lower percentage of the target amount at the corporate holding company level allowed the Company to pay out discretionary bonuses at the business units. In light of these considerations, the Committee considered it appropriate to pay out bonuses at the corporate holding company level at 85% of the target amount.
The Michael Foods business exceeded its maximum Adjusted EBITDA target of $375.9 million, delivering $377.9 million of Adjusted EBITDA. Mr. Westphal, as the leader of the Michael Foods business, received a bonus payout at 150% of the target amount in line with the performance achievement of his business.
As Mr. Dwyer and Mr. Neugent were no longer Section 16 officers at the end of fiscal year 2018, the Committee did not determine and approve their bonuses. The Board has delegated to the Company’s President and Chief Executive Officer the authority to approve all compensation matters for Company employees other than Section 16 officers, including Mr. Dwyer’s and Mr. Neugent’s bonuses.
Mr. Dwyer’s bonus was determined based on (i) the performance of Michael Foods Group during the first quarter of fiscal year 2018, as he served as President & CEO, Michael Foods Group for the majority of that quarter, and which delivered Adjusted EBITDA at 100% of the target amount for that quarter, and (ii) the performance of 8th Avenue during the last three quarters of fiscal year 2018, as he served as the President & CEO of that business during those three quarters, and which paid out bonuses at 50% of the target amount. Although 8th Avenue did not meet its Adjusted EBITDA threshold level for fiscal year 2018, discretionary bonuses were paid out at 50% of the target amount in light of the additional work required during the fiscal year to form 8th Avenue and combine three historically separate operating companies into a single business, as well as to recognize the efforts to complete the transaction to bring in a private equity firm as a partner in the business. Thus, Mr. Dwyer received 100% of his target bonus for one quarter of the fiscal year and 50% of his target bonus for three quarters of the fiscal year, for a total fiscal year 2018 bonus of $421,875.
In accordance with the terms of Mr. Neugent’s letter of understanding, Mr. Neugent’s bonus was determined based on the performance results of Post Consumer Brands for fiscal year 2018. Post Consumer Brands did not meet the established Adjusted EBITDA threshold level of $469.3 million, delivering $458.2 million of Adjusted EBITDA in fiscal year 2018. When
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determining incentive plan payouts for fiscal year 2018, certain factors were considered in addition to Post Consumer Brands’ Adjusted EBITDA performance, including:
• | Post Consumer Brands’ delivery of market share gains, growing consumption and dollar market share to over 20%(1) for the first time since the combination of Post Foods, LLC and MOM Brands Company in 2015; |
• | significant cost increases beyond the control of the Post Consumer Brands management team, in particular freight and commodities; |
• | successful innovation of new cereal products; |
• | increased net sales year over year in a challenging category; and |
• | continued delivery of cost savings opportunities from the combination of Post Foods, LLC and Mom Brands Company. |
(1) Per ACNielsen xAOC, 52 weeks ended September 29, 2018.
In light of these additional considerations, Post Consumer Brands employees were paid discretionary bonuses at 35% of the target amount, which is approximately the amount of bonuses they would have received based on the amount of Adjusted EBITDA delivered by Post Consumer Brands without a cut-off at the threshold level of Adjusted EBITDA. In accordance with the terms of his letter of understanding, Mr. Neugent’s bonus also paid out at 35% of the target amount, equaling $269,500. See the CD&A subsections entitled Special Compensation Items Due to Management Changes in Fiscal Year 2018 and Fiscal Year 2018 NEO Target Compensation Structure Summary, as well as Employment Agreements - Letter of Understanding - Mr. Neugent on page 52.
Mr. Westphal also received a cash bonus award under the Post Holdings, Inc. Performance Reward Program for Fiscal Years 2016 - 2018 (the “PRP”) in his capacity as an employee for the Michael Foods business from fiscal year 2016 through fiscal year 2018. The PRP was a long-term incentive compensation program available to certain business-level employees. Each employee received a cash award with a target payout at the beginning of fiscal year 2016, and payout of the award was subject to the employee’s business achieving a designated three-year cumulative Adjusted EBITDA goal for a three year performance period from fiscal year 2016 through fiscal year 2018. Cash award payouts ranged from 50% to 150% of the cash award target based on performance against cumulative Adjusted EBITDA, assuming a performance threshold was met:
Threshold | Target | Maximum | |
Performance | 95% of Adjusted EBITDA goal | 100% of Adjusted EBITDA goal | 105% of Adjusted EBITDA goal |
Cash Payout Factor | 50% of Cash Award Target | 100% of Cash Award Target | 150% of Cash Award Target |
Upon completion of the three year performance period, the cumulative Adjusted EBITDA of the business, as approved by the Board of Directors, was used to calculate the cash award paid to each employee in the PRP. For performance achievement between the threshold, target and maximum performance levels, earned awards were interpolated on a straight-line basis between points.
Mr. Westphal received an award agreement under the PRP in November 2015 with a cash award target payout amount of $156,778.88. Michael Foods’ cumulative Adjusted EBITDA target for purposes of the PRP for the three year performance period was $900 million. The PRP’s cumulative Adjusted EBITDA achievement goals (at threshold, target and maximum), and actual achievement of cumulative Adjusted EBITDA, in each case for Michael Foods, was as follows:
(dollars in millions)
Performance Period Achievement | Threshold | Target | Maximum | Actual |
Michael Foods-Adjusted EBITDA(1) | $855 | $900 | $945 | $999 |
(1) | Michael Foods-Adjusted EBITDA is a non-GAAP measure which represents the segment profit of the Refrigerated Food segment from the Company’s Annual Reports on Form 10-K, excluding the impact of the acquisitions of Bob Evans Farms, Inc., National Pasteurized Eggs, Inc. and Willamette Egg Farms on the Refrigerated Food segment, depreciation and amortization, mark-to-market adjustments on commodity hedges, integration costs and provisions for legal settlements. |
Because Michael Foods surpassed the maximum Adjusted EBITDA target level, Mr. Westphal’s cash bonus award paid out under the PRP at 150% of the target amount, or $235,168.
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Long-Term Incentives - Structure and Annual Grants
The Committee believes in a balanced approach to long-term incentive compensation, with an emphasis on performance-based compensation. Our annual equity structure now consists of the following elements:
• | stock options; |
• | PRSUs; and |
• | RSUs. |
We weight our long-term incentive grant value as follows:
• | Mr. Vitale: Approximately 1/3 of value is apportioned to each of stock options, PRSUs and RSUs. |
• | Mr. Zadoks and Ms. Gray: Approximately 60% of value is apportioned to stock options, 20% to PRSUs and 20% to RSUs. |
• | Business executives: Approximately 60% of value is apportioned to stock options and 40% to RSUs. |
This weighting is consistent with our philosophy of granting a higher weight of performance-based value (stock options and/or PRSUs) to our corporate and business leaders.
Corporate executives receive PRSUs based on relative TSR performance because they have the strongest line-of-sight to that metric. In addition, we firmly believe stock options represent effective performance-based compensation.
The Committee uses competitive market data from our annual total compensation study to assist with targeted long-term incentive value. In addition, the Committee considers individual performance, potential future contributions to our business, internal equity and management’s recommendations.
Stock options: The value of stock options is based solely on stock price appreciation after the grant date. Stock option grants have a ten-year term and one-third of the grant vests on the first, second and third anniversaries of the grant date to enhance retention throughout the three-year period. The exercise price equals our closing stock price on the grant date.
PRSUs: The opportunity to earn shares is based on our three-year TSR ranking versus the Russell 3000 Packaged Foods & Meats companies (38 companies including Post Holdings as of October 1, 2017, the beginning of the three-year performance period). This plan focuses our corporate executives’ behaviors on long-term decision-making that enhances shareholder value. Shares as a percentage of target may be earned on a sliding scale as follows:
Post’s Relative 3-Year TSR Percentile Rank | Vesting (1) |
≥90th | 200% of target |
50th | 100% of target |
25th | 25% of target |
<25th | 0% of target |
(1) Performance between points is interpolated on a straight-line basis | |
The following bullets summarize the new PRSU award program design parameters:
• | Initial grant: November 13, 2017; covering October 1, 2017 through September 30, 2020. |
• | Maximum performance: Set at the 90th percentile to mandate exceptional shareholder returns before maximum opportunity is recognized. Our 90th percentile requirement is well-above the United States market norm of 75th percentile. |
• | Peer group: Russell 3000 Packaged Foods & Meats companies; closed at the start of the performance period (e.g., no additions during the performance period); acquired companies are removed from the rankings; bankruptcies are dropped to the bottom ranking. |
• | Beginning and ending values: Based on the average of the 250 trading days immediately prior to and including the first/last day of the performance period to mitigate any short-term swings in stock price on either end. |
• | Dividends: Re-invested on the ex-dividend date. |
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• | Negative three-year TSR: If Post has a negative three-year TSR, then payout is capped at 100% of target, regardless of ranking. |
• | Vesting: The number of PRSUs awarded in accordance with the sliding scale vesting table set forth above will vest following the end of the three-year performance period. No PRSUs will vest during the performance period, with limited exceptions in cases of death, disability or involuntary termination of employment associated with a change in control of the Company. |
RSUs: The value of RSUs provides a base level of retention value as well as incentive for increasing shareholder value after the grant date. Consistent with stock options, our RSUs generally vest one-third per year on the first, second and third anniversaries of the grant date, although RSUs with cliff vesting also have been awarded to our NEOs.
Value of Option Awards
We determine the fair value of stock option grants in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and the SEC’s Staff Accounting Bulletin Topic 14. Application of this guidance has historically caused our fair value estimates to be somewhat lower than those determined by external shareholder advisory firms, primarily due to differences in assumptions for the expected term of the options. For our standard three-year vesting awards, we have used the simplified method allowed under GAAP as we do not have sufficient historical share option exercise experience. This approach resulted in an expected term of 6.5 years. The advisory firms use a full ten-year expected term for their stock option valuations, regardless of the Company’s circumstances.
Other Compensation Policies
Stock Ownership Guidelines
We have stock ownership guidelines applicable to non-employee directors and Section 16 officers. Our Board of Directors believes it is in the best interests of the Company and our shareholders to align the financial interests of Section 16 officers and non-employee directors with those of our shareholders. Our guideline structure is as follows:
• | Non-Employee Directors - 5 times annual retainer |
• | Chief Executive Officer - 6 times base salary |
• | Section 16 Officers - 2 times base salary |
Participants are expected to comply with the ownership requirements within five years of an appointment to a qualified position. As of September 30, 2018, over 90% of participants were in compliance with the ownership requirements, and all who are not in compliance are still within the five-year timeframe for compliance. The categories of stock ownership that satisfy the ownership criteria include:
• | shares owned directly or indirectly (e.g. by spouse or trust); |
• | unvested time-vested or performance-based cash or stock-settled restricted stock or restricted stock units (with any awards subject to unsatisfied performance-based vesting conditions taken into account at the “target” level of performance); |
• | shares invested in the Post savings investment plan; and |
• | share equivalents under our deferred compensation plans. |
Unvested stock options, unexercised stock options and stock appreciation rights are not included when determining compliance with the guidelines. The Committee is responsible for monitoring the application of the stock ownership guidelines and may modify the guidelines in its discretion, including as a result of dramatic or unexpected changes in the market value of Post common stock. The Committee has the discretion to enforce these stock ownership guidelines on a case-by-case basis.
Recoupment (“Clawback”) Policy
We have an executive compensation “clawback” policy in connection with performance-based compensation. The clawback policy provides that in the event there is a restatement of the Company’s financial results, other than due to a change in applicable accounting methods, rules or interpretations, the Committee, to the extent allowable under applicable law, has the authority to recoup performance-based compensation paid to a director or Section 16 officer during the three-year period preceding the restatement if (i) the restatement would result in the payment of a reduced award if the award were recalculated based on the restated results and (ii) the director or Section 16 officer engaged in fraud or intentional illegal conduct which
32
materially contributed to the need for such restatement. The policy went into effect on May 4, 2015 and applies to all performance-based compensation granted, paid or credited after May 4, 2015.
Policy on Hedging and Pledging Company Stock
We have a policy that prohibits directors and executive officers from engaging in derivative or hedging transactions in the Company’s securities and a policy that prohibits pledging of shares by directors and executive officers. Specifically, the policy prohibits directors and executive officers from (i) purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of the Company’s common stock or other equity securities or (ii) pledging, hypothecating or otherwise encumbering shares of the Company’s common stock or other equity securities as collateral for indebtedness, including holding such shares in a margin account.
Compensation Risk Assessment
The Committee is responsible for overseeing the risks relating to compensation policies and practices affecting senior management on an ongoing basis. The Committee believes our governance policies and compensation structure result in a compensation system that is not reasonably likely to lead to management decisions that would have a material adverse effect on the Company. The following features of our programs mitigate this risk:
• | the Committee retains an independent compensation advisor to assist with annual compensation decisions; |
• | the Committee approves the Senior Management Bonus Program financial goals at the start of the fiscal year, and approves the performance achievement level and final payments earned at the end of the fiscal year; |
• | the Senior Management Bonus Program caps potential payouts at 150% of the target opportunity to mitigate potential windfalls; |
• | we utilize a mix of cash and equity incentive programs, and all equity awards are subject to multi-year vesting; |
• | we utilize a portfolio of equity award types; |
• | we utilize competitive general and change-in-control severance programs to help ensure executives continue to work towards our shareholders’ best interests in light of potential employment uncertainty; |
• | executives are subject to minimum stock ownership guidelines and limitations on trading in our securities, including prohibitions on hedging and pledging; and |
• | an incentive clawback policy permits the Company to recoup compensation paid on the basis of financial results that are subsequently restated. |
Limitations on Deductibility of Compensation
For fiscal year 2018, Section 162(m) of the Internal Revenue Code set a limit on deductible compensation of $1,000,000 per person, per year for the chief executive officer and the next three highest-paid executive officers (excluding the chief financial officer). However, the deduction limit does not apply if the compensation is strictly performance-based. In establishing total compensation for such officers, the Committee considers the effect of Section 162(m). However, corporate objectives may not always be consistent with the requirements for full deductibility. Therefore, deductibility is not the sole factor used in setting the appropriate compensation levels paid by the Company and decisions leading to future compensation levels may not be fully deductible under Section 162(m). We believe this flexibility enables us to respond to changing business conditions or to an executive’s exceptional individual performance.
Section 162(m) was recently amended under the Tax Cuts and Jobs Act and with limited exceptions, the performance-based exemption will not apply for future reporting periods. Beginning with fiscal year 2019, compensation above $1,000,000 will generally be non-deductible for any executive officer who was subject to Section 162(m) in fiscal year 2018 or, beginning with fiscal year 2019, has served as our chief executive officer or chief financial officer or has been one of our three highest-paid other executive officers.
Benefits and Perquisites
Retirement-Deferred Compensation
We maintain non-qualified deferred compensation plans for key employees. These plans provide executives with an opportunity to accumulate funds for retirement. The deferred compensation plan allows eligible employees to defer all or a portion of any eligible bonus earned on a pre-tax basis. The committee that administers the plan may determine that matching contributions may be made for any of Post’s fiscal years. We also maintain an executive savings investment plan which permits
33
eligible employees to make pre-tax deductions of between 1% and 75% of their base salaries. Income taxes on the amounts deferred and any investment gains are deferred until distributed. The plan does not provide for Company matching contributions. The plan does permit, if approved, a discretionary annual employer contribution, which vests at 25% of each year of service.
Deferred compensation under the plans may be hypothetically invested in Post common stock equivalents or in a number of funds operated by Vanguard Fund Group, Inc. with a variety of investment strategies and objectives. We do not guarantee the rate of return of any fund. Any matching contributions under the deferred compensation plan are deemed to be hypothetically invested in Post common stock equivalents. Under both plans, distributions of deferrals invested in common stock equivalents are generally made in shares of our common stock, and deferrals hypothetically invested in the Vanguard funds are made in cash. As with any deferred compensation plan, there are restrictions on deferral and distribution elections as well as potential financial exposure to changes in our financial health. See the section Non-Qualified Deferred Compensation on page 44 for further information.
Perquisites
We provide executives limited perquisites and other personal benefits that we believe are reasonable and consistent with our overall compensation philosophy. These benefits help retain and attract superior employees for key positions. The Committee reviews the levels of perquisites and other benefits periodically.
Except as noted below, currently the only perquisite provided is personal use of our corporate aircraft. Our executive officers may use the plane for personal use with prior authorization of the Chief Executive Officer. The Committee has the authority to grant tax gross-ups related to such use. The Committee can authorize tax gross-ups related to such use provided that they do not exceed $100,000 for any individual or $200,000 in the aggregate during any fiscal year. The Committee reviews the levels of perquisites and other benefits periodically. Personal use of the Company aircraft is discussed in the Summary Compensation Table below, where applicable.
The Committee also approved the reimbursement of an initial business club membership fee to Mr. Vitale, as reflected in the Summary Compensation Table below, where applicable.
Change in Control and Involuntary Termination Treatment
Management Continuity Agreements
Except as described below, each member of our senior management, including the NEOs whose compensation is discussed herein, has entered into a management continuity agreement and/or is a participant in our Executive Severance Plan described below. The management continuity agreements are intended to promote stability and continuity of senior management in the event of an actual or anticipated change in control of the Company. The Board of Directors authorized these agreements in recognition of the importance to us and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with rumored or actual fundamental corporate changes. Our Board of Directors is of the opinion that a properly designed change in control agreement protects shareholder interests by providing (i) incentives to remain with the Company despite uncertainties while a transaction is under consideration or pending and (ii) assurance of severance benefits for terminated employees.
Under the management continuity agreements, in the event of an involuntary termination in association with a change in control, a NEO who has executed a management continuity agreement may receive (i) a lump sum severance payment equal to the present value of three years of base salary plus the present value of the greater of three years of (A) the NEO’s target bonus for the year in which termination occurred and (B) the NEO’s last annual bonus preceding the termination or change in control (whichever is greater), (ii) a lump sum payout equal to the actuarial value of continued participation in certain welfare benefit plans or equivalent benefits, (iii) outplacement assistance and (iv) reimbursement for certain litigation expenses.
Executive Severance Plan
We adopted an Executive Severance Plan in fiscal year 2015 (which we amended in fiscal year 2016 and fiscal year 2017), which generally provides the following benefits in the event of a termination of employment by us without cause or by the executive for good reason:
• | a lump sum payment of two times the executive’s annual base salary and target bonus, plus $20,000; |
• | a prorated bonus for the year of termination; |
• | for any equity award with a time-based vesting schedule that is not pro rata, or with a vesting schedule that does not provide for any vesting on or before the first anniversary of the date of grant of the equity award, vesting of |
34
the equity award as if there was a three-year pro rata vesting schedule with vesting occurring on the first, second and third anniversaries of the date of grant (to the extent the equity award had not already vested at a greater percentage);
• | up to twelve weeks of COBRA subsidy at active employee rates upon timely election of COBRA; and |
• | outplacement services. |
The Executive Severance Plan also provides severance benefits in the event of an involuntary termination in association with a change of control of the Company to participating senior management employees who have not executed a management continuity agreement. These benefits are similar to those benefits provided for under the management continuity agreements. See Potential Payments Upon Termination of Employment or Change in Control on page 45 for further information.
Each of the NEOs participates in the Executive Severance Plan except for Mr. Neugent, whose participation ended when he was promoted to his new role of Executive Vice President, Strategy. See Employment Agreements - Letter of Understanding - Mr. Neugent on page 52 for further information about the benefits to which Mr. Neugent is entitled in the event of an involuntary termination of his employment. Mr. Neugent also has not executed a management continuity agreement.
We believe that the management continuity agreements and the Executive Severance Plan are fair to the executives and to our shareholders and, because the severance benefits are agreed to before a possible termination, they avoid the need for protracted negotiations at the termination date.
Equity Compensation
Generally, if a NEO ceases to be employed by the Company in the event of an involuntary termination in association with a change in control, each equity award held by such NEO vests. With some exceptions, if a NEO’s employment terminates other than due to death or disability outside of the context of a change of control, each unvested equity award held by such NEO is forfeited. See Potential Payments Upon Termination of Employment or Change in Control on page 45 for further information.
35
Summary Compensation Table
The following table shows information about the compensation of our Chief Executive Officer, our Chief Financial Officer, the three most highly compensated executive officers and two individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as executive officers at September 30, 2018:
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(5) | Option Awards ($)(6) | Non-Equity Incentive Plan Compensation ($)(7) | Changes in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(8) | All Other Compensation ($)(9) | Total ($) | |||||||||||||||||
Robert V. Vitale | 2018 | 1,175,000 | — | 4,577,821 | 2,067,240 | 1,530,000 | 93,655 | 424,793 | 9,868,509 | |||||||||||||||||
President & CEO | 2017 | 1,000,000 | — | 1,426,400 | 4,761,935 | 1,200,000 | 63,693 | 195,470 | 8,647,498 | |||||||||||||||||
2016 | 975,000 | — | 12,419,957 | 2,629,121 | 1,800,000 | 27,752 | 158,658 | 18,010,488 | ||||||||||||||||||
Jeff A. Zadoks | 2018 | 563,125 | — | 654,102 | 899,599 | 484,500 | 26,682 | 64,236 | 2,692,244 | |||||||||||||||||
EVP & CFO | 2017 | 510,000 | — | 463,580 | 595,242 | 515,000 | 27,432 | 72,805 | 2,184,059 | |||||||||||||||||
2016 | 462,500 | — | 605,000 | 404,480 | 712,500 | 14,645 | 58,604 | 2,257,729 | ||||||||||||||||||
Howard A. Friedman(1) | 2018 | 135,512 | — | 3,432,780 | — | — | — | 16,822 | 3,585,114 | |||||||||||||||||
President & CEO, | ||||||||||||||||||||||||||
Post Consumer Brands | ||||||||||||||||||||||||||
Diedre J. Gray | 2018 | 495,000 | — | 515,169 | 708,594 | 425,000 | 31,613 | 74,600 | 2,249,976 | |||||||||||||||||
EVP, General Counsel & Chief | 2017 | 455,625 | — | 463,580 | 520,837 | 460,000 | 26,784 | 76,906 | 2,003,732 | |||||||||||||||||
Administrative Officer, Secretary | 2016 | 415,625 | — | 605,000 | 303,360 | 637,500 | 11,394 | 62,772 | 2,035,651 | |||||||||||||||||
Mark W. Westphal(2) | 2018 | 522,171 | — | 1,375,602 | 582,864 | 1,022,668 | 6,233 | 40,112 | 3,549,650 | |||||||||||||||||
President, Michael Foods | ||||||||||||||||||||||||||
James E. Dwyer, Jr. (3) | 2018 | 675,000 | — | 666,127 | 1,016,680 | 421,875 | 1,750 | 54,800 | 2,836,232 | |||||||||||||||||
President & CEO, | 2017 | 673,269 | — | 570,560 | 1,066,475 | 337,500 | 708 | 56,576 | 2,705,088 | |||||||||||||||||
8th Avenue Food & Provisions | 2016 | 657,692 | — | 756,250 | 778,624 | 990,000 | — | 36,744 | 3,219,310 | |||||||||||||||||
Christopher J. Neugent (4) | 2018 | 751,149 | — | 738,823 | 1,127,596 | 269,500 | 8,502 | 89,889 | 2,985,459 | |||||||||||||||||
EVP, Strategy | 2017 | 668,750 | — | 570,560 | 1,066,475 | 675,000 | 3,583 | 121,990 | 3,106,358 | |||||||||||||||||
2016 | 619,988 | — | 756,250 | 778,624 | 937,500 | — | 38,752 | 3,131,114 | ||||||||||||||||||
_________
(1) | Mr. Friedman joined the Company effective July 23, 2018. |
(2) | Mr. Westphal was promoted to the role of President, Michael Foods effective January 12, 2018. |
(3) | Mr. Dwyer transitioned from his role as President & CEO, Michael Foods Group to the role of President & CEO, 8th Avenue Food & Provisions, Inc., effective January 12, 2018, and Post determined that he was no longer an executive officer as of such date. |
(4) | Mr. Neugent transitioned from his role as President & CEO, Post Consumer Brands to the role of Executive Vice President, Strategy effective July 23, 2018, and Post determined that he was no longer an executive officer as of such date. |
(5) | The amounts relate to awards of RSUs and PRSUs granted in the fiscal year. The awards reflect the aggregate grant date fair values computed in accordance with FASB ASC Topic 718, and do not correspond to the actual values that will be realized by the NEOs. See Note 19 to the Company’s fiscal year 2018 financial statements in the Company’s Annual Report on Form 10-K for a discussion of the determination of these amounts under FASB ASC Topic 718. The values of PRSUs assumes target performance over the performance period and is consistent with the estimate of aggregate compensation cost to be recognized over the performance period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For Messrs. Vitale and Zadoks and Ms. Gray, in fiscal year 2018 this amount includes a RSU award and a PRSU award; for all other NEOs, this amount reflects RSU awards. For Mr. Vitale, in fiscal year 2016 this amount includes two RSU awards: (i) an annual grant on November 16, 2015 and (ii) a grant on February 2, 2016 in recognition of his service as President and CEO. For Mr. Westphal, in fiscal year 2018 this amount includes two RSU awards: (i) an annual grant on December 1, 2017 and (ii) a grant on December 4, 2017 in connection with his promotion. |
The following table reflects the value at grant date of the fiscal year 2018 PRSU awards granted to Messrs. Vitale and Zadoks and Ms. Gray at minimum, threshold, target and maximum performance levels:
GRANT DATE VALUE OF FISCAL YEAR 2018 PRSUS
At Minimum 0% ($) | At Threshold 25% ($) | At Target 100% ($) | At Maximum 200% ($) | |||||
Robert V. Vitale | — | 628,859 | 2,515,241 | 5,030,482 | ||||
Jeff A. Zadoks | — | 89,823 | 359,390 | 718,780 | ||||
Diedre J. Gray | — | 70,764 | 283,055 | 566,110 | ||||
(6) | The amounts relate to option awards granted in the fiscal year and reflect the aggregate grant date fair values computed in accordance with FASB ASC Topic 718 and do not correspond to the actual amounts that will be realized upon exercise by the NEOs. See Note 19 to the Company’s fiscal year 2018 financial statements in the Company’s Annual Report on Form 10-K for a discussion of the determination of these amounts under FASB ASC Topic 718. |
(7) | The amounts reported in this column reflect bonuses earned by the NEOs during the fiscal year under our Senior Management Bonus Program, discussed above in Compensation Discussion and Analysis. For Mr. Westphal, this amount also reflects a $235,168 bonus earned under the Post Holdings, Inc. Performance Reward Program Fiscal Years 2016 - 2018, discussed above in Compensation Discussion and Analysis. |
(8) | The amounts reported in this column represent the aggregate earnings on the respective NEO’s account under our Executive Savings Investment Plan and Deferred Compensation Plan for Key Employees. These amounts are included in the Non-Qualified Deferred Compensation Plan table below. |
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(9) | Amounts shown in the “All Other Compensation” column include the following: |
Name | Year | Matching Contributions ($) | Life Insurance Premiums ($) | Personal Use of Aircraft ($) (a) | Tax Gross-Ups ($) (b) | Miscellaneous ($) | Total ($) | |||||||||||||
Robert V. Vitale | 2018 | 129,977 | 714 | 103,528 | 110,574 | 80,000 (c) | 424,793 | |||||||||||||
2017 | 163,120 | 714 | 20,030 | 11,606 | — | 195,470 | ||||||||||||||
2016 | 136,599 | 905 | 13,733 | 7,421 | — | 158,658 | ||||||||||||||
Jeff A. Zadoks | 2018 | 61,013 | 714 | — | 2,509 | — | 64,236 | |||||||||||||
2017 | 69,955 | 714 | — | 2,136 | — | 72,805 | ||||||||||||||
2016 | 57,699 | 905 | — | — | — | 58,604 | ||||||||||||||
Howard A. Friedman | 2018 | — | 119 | 15,038 | 1,665 | — | 16,822 | |||||||||||||
Diedre J. Gray | 2018 | 54,519 | 714 | 13,367 | 6,000 | — | 74,600 | |||||||||||||
2017 | 62,674 | 714 | 9,021 | 4,497 | — | 76,906 | ||||||||||||||
2016 | 53,911 | 905 | 4,659 | 3,297 | — | 62,772 | ||||||||||||||
Mark W. Westphal | 2018 | 39,398 | 714 | — | — | — | 40,112 | |||||||||||||
James E. Dwyer, Jr. | 2018 | 45,323 | 714 | 7,352 | 1,411 | — | 54,800 | |||||||||||||
2017 | 32,190 | 714 | 19,265 | 4,407 | — | 56,576 | ||||||||||||||
2016 | 15,900 | 905 | 16,553 | 3,386 | — | 36,744 | ||||||||||||||
Christopher J. Neugent | 2018 | 78,744 | 714 | 7,185 | 3,246 | — | 89,889 | |||||||||||||
2017 | 93,631 | 714 | 17,278 | 5,867 | 4,500 (d) | 121,990 | ||||||||||||||
2016 | 17,581 | 734 | — | — | 20,437 (e) | 38,752 | ||||||||||||||
_________
(a) | Amounts are based on the aggregate incremental cost to us of the NEO’s use of our aircraft. The incremental cost is calculated by dividing the total estimated variable costs (such as fuel, landing fees, contract pilot fees, on-board catering and flight crew expenses) by the total flight hours for such fiscal year and multiplying such amount by the individual’s total number of flight hours for non-business use for the fiscal year. Incremental costs do not include certain fixed costs that we incur by virtue of owning the aircraft, including depreciation, employed pilot salaries and benefits, hangar fees and maintenance. Spouses and guests of NEOs occasionally fly on the aircraft as additional passengers on business flights. In those cases, the aggregate incremental cost is a de minimis amount, and no amounts are therefore reported; however, these flights are treated as taxable under the Internal Revenue Service’s Standard Industry Fare Level (“SIFL”) formula for imputing taxable income for such use. |
(b) | Executive officers may use the aircraft for personal use (including for spouses and guests) so long as the value of such use is treated as taxable compensation to the individual. We report the SIFL rates for such use in each executive officer’s taxable wages. We reimburse our executive officers for amounts necessary to offset the impact of income taxes relating to such use. For Mr. Vitale, this figure also includes $76,709 in fiscal year 2018 to reimburse him for amounts necessary to offset the impact of income taxes related to the Company’s reimbursement of his business club initial membership fee. |
(c) | Amount consists of reimbursement for Mr. Vitale’s business club initial membership fee. |
(d) | Amount consists of Mr. Neugent’s car allowance. |
(e) | Amount includes Mr. Neugent’s car allowance ($12,000) and a one-time payment as a result of being unable to participate in the Company’s non-qualified deferred compensation plans ($8,437). |
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Supplemental Summary Compensation Table
The following table presents additional information on the compensation of our NEOs during fiscal year 2018 that differs from the Summary Compensation Table presented immediately above and is intended to illustrate the longer term nature of the equity awards granted to our NEOs. The above Summary Compensation Table was prepared in accordance with SEC requirements and shows, in the “Stock Awards” and “Option Awards” columns, the corresponding grant date fair value for the awards as reflected in our financial statements. The following table presents, in the “Stock Awards” column, the market value of shares underlying the RSUs and PRSUs which vested during the applicable fiscal year and, in the “Option Awards” column, the intrinsic value (the difference between the market value of the shares and the exercise price of the option) of stock options exercised during the applicable fiscal year. The other columns in the table are the same as those used in our Summary Compensation Table above.
This table is not intended to be a substitute for the Summary Compensation Table shown on page 36. However, we believe the table provides a useful comparison of the difference between the grant date fair value for an award under applicable accounting standards and the actual value a NEO received in the fiscal year ended September 30, 2018. Please see the table Outstanding Equity Awards at Fiscal Year End below for a list of each NEO’s outstanding equity awards and their vesting/exercisable schedules.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(5) | Option Awards ($)(6) | Non-Equity Incentive Plan Compensation ($)(7) | Changes in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(8) | All Other Compensation ($)(9) | Total ($) | |||||||||||||||||
Robert V. Vitale | 2018 | 1,175,000 | — | 2,350,127 | — | 1,530,000 | 93,655 | 424,793 | 5,573,575 | |||||||||||||||||
President & CEO | 2017 | 1,000,000 | — | 2,139,635 | — | 1,200,000 | 63,693 | 195,470 | 4,598,798 | |||||||||||||||||
2016 | 975,000 | — | 891,073 | — | 1,800,000 | 27,752 | 158,658 | 3,852,483 | ||||||||||||||||||
Jeff A. Zadoks | 2018 | 563,125 | — | 447,323 | — | 484,500 | 26,682 | 64,236 | 1,585,866 | |||||||||||||||||
EVP & CFO | 2017 | 510,000 | — | 707,499 | — | 515,000 | 27,432 | 72,805 | 1,832,736 | |||||||||||||||||
2016 | 462,500 | — | 461,310 | — | 712,500 | 14,645 | 58,604 | 1,709,559 | ||||||||||||||||||
Howard A. Friedman(1) | 2018 | 135,512 | — | — | — | — | — | 16,822 | 152,334 | |||||||||||||||||
President & CEO, | ||||||||||||||||||||||||||
Post Consumer Brands | ||||||||||||||||||||||||||
Diedre J. Gray | 2018 | 495,000 | — | 447,323 | — | 425,000 | 31,613 | 74,600 | 1,473,536 | |||||||||||||||||
EVP, General Counsel & Chief | 2017 | 455,625 | — | 707,499 | — | 460,000 | 26,784 | 76,906 | 1,726,814 | |||||||||||||||||
Administrative Officer, Secretary | 2016 | 415,625 | — | 461,310 | — | 637,500 | 11,394 | 62,772 | 1,588,601 | |||||||||||||||||
Mark W. Westphal(2) | 2018 | 522,171 | — | 280,800 | — | 1,022,668 | 6,233 | 40,112 | 1,871,984 | |||||||||||||||||
President, Michael Foods | ||||||||||||||||||||||||||
James E. Dwyer, Jr.(3) | 2018 | 675,000 | — | 672,605 | — | 421,875 | 1,750 | 54,800 | 1,826,030 | |||||||||||||||||
President & CEO, | 2017 | 673,269 | — | 836,503 | — | 337,500 | 708 | 56,576 | 1,904,556 | |||||||||||||||||
8th Avenue Food & Provisions | 2016 | 657,692 | — | 403,226 | — | 990,000 | — | 36,744 | 2,087,662 | |||||||||||||||||
Christopher J. Neugent (4) | 2018 | 751,149 | — | 555,897 | — | 269,500 | 8,502 | 89,889 | 1,674,937 | |||||||||||||||||
EVP, Strategy | 2017 | 668,750 | — | 303,410 | — | 675,000 | 3,583 | 121,990 | 1,772,733 | |||||||||||||||||
2016 | 619,988 | — | — | — | 937,500 | — | 38,752 | 1,596,240 | ||||||||||||||||||
_________
(1) | Mr. Friedman joined the Company effective July 23, 2018. |
(2) | Mr. Westphal was promoted to the role of President, Michael Foods effective January 12, 2018. |
(3) | Mr. Dwyer transitioned from his role as President & CEO, Michael Foods Group to the role of President & CEO, 8th Avenue Food & Provisions, Inc., effective January 12, 2018, and Post determined that he was no longer an executive officer as of such date. |
(4) | Mr. Neugent transitioned from his role as President & CEO, Post Consumer Brands to the role of Executive Vice President, Strategy effective July 23, 2018, and Post determined that he was no longer an executive officer as of such date. |
(5) | In this Supplemental Summary Compensation Table, the Company has shown the actual financial benefit to the NEOs from RSUs that vested during the applicable year. No PRSUs vested during any of the applicable years. |
(6) | In this Supplemental Summary Compensation Table, the Company has shown the actual financial benefit to the NEOs from options that were exercised during the applicable year. |
(7) | The amounts reported in this column reflect bonuses earned by the NEOs during the fiscal year under our Senior Management Bonus Program, discussed above in Compensation Discussion and Analysis. For Mr. Westphal, this amount also reflects a $235,168 bonus earned under the Post Holdings, Inc. Performance Reward Program Fiscal Years 2016 - 2018, discussed above in Compensation Discussion and Analysis. |
(8) | The amounts reported in this column represent the aggregate earnings on the respective NEO’s account under our Executive Savings Investment Plan and Deferred Compensation Plan for Key Employees. These amounts are included in the Non-Qualified Deferred Compensation Plan table below. |
(9) | Amounts shown in the “All Other Compensation” column include the following: |
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Name | Year | Matching Contributions ($) | Life Insurance Premiums ($) | Personal Use of Aircraft ($) (a) | Tax Gross-Ups ($) (b) | Miscellaneous ($) | Total ($) | |||||||||||||
Robert V. Vitale | 2018 | 129,977 | 714 | 103,528 | 110,574 | 80,000 (c) | 424,793 | |||||||||||||
2017 | 163,120 | 714 | 20,030 | 11,606 | — | 195,470 | ||||||||||||||
2016 | 136,599 | 905 | 13,733 | 7,421 | — | 158,658 | ||||||||||||||
Jeff A. Zadoks | 2018 | 61,013 | 714 | — | 2,509 | — | 64,236 | |||||||||||||
2017 | 69,955 | 714 | — | 2,136 | — | 72,805 | ||||||||||||||
2016 | 57,699 | 905 | — | — | — | 58,604 | ||||||||||||||
Howard A. Friedman | 2018 | — | 119 | 15,038 | 1,665 | — | 16,822 | |||||||||||||
Diedre J. Gray | 2018 | 54,519 | 714 | 13,367 | 6,000 | — | 74,600 | |||||||||||||
2017 | 62,674 | 714 | 9,021 | 4,497 | — | 76,906 | ||||||||||||||
2016 | 53,911 | 905 | 4,659 | 3,297 | — | 62,772 | ||||||||||||||
Mark W. Westphal | 2018 | 39,398 | 714 | — | — | — | 40,112 | |||||||||||||
James E. Dwyer, Jr. | 2018 | 45,323 | 714 | 7,352 | 1,411 | — | 54,800 | |||||||||||||
2017 | 32,190 | 714 | 19,265 | 4,407 | — | 56,576 | ||||||||||||||
2016 | 15,900 | 905 | 16,553 | 3,386 | — | 36,744 | ||||||||||||||
Christopher J. Neugent | 2018 | 78,744 | 714 | 7,185 | 3,246 | — | 89,889 | |||||||||||||
2017 | 93,631 | 714 | 17,278 | 5,867 | 4,500 (d) | 121,990 | ||||||||||||||
2016 | 17,581 | 734 | — | — | 20,437 (e) | 38,752 | ||||||||||||||
_________
(a) | Amounts are based on the aggregate incremental cost to us of the NEO’s use of our aircraft. The incremental cost is calculated by dividing the total estimated variable costs (such as fuel, landing fees, contract pilot fees, on-board catering and flight crew expenses) by the total flight hours for such fiscal year and multiplying such amount by the individual’s total number of flight hours for non-business use for the fiscal year. Incremental costs do not include certain fixed costs that we incur by virtue of owning the aircraft, including depreciation, employed pilot salaries and benefits, hangar fees and maintenance. Spouses and guests of NEOs occasionally fly on the aircraft as additional passengers on business flights. In those cases, the aggregate incremental cost is a de minimis amount, and no amounts are therefore reported; however, these flights are treated as taxable under the Internal Revenue Service’s Standard Industry Fare Level (“SIFL”) formula for imputing taxable income for such use. |
(b) | Executive officers may use the aircraft for personal use (including for spouses and guests) so long as the value of such use is treated as taxable compensation to the individual. We report the SIFL rates for such use in each executive officer’s taxable wages. We reimburse our executive officers for amounts necessary to offset the impact of income taxes relating to such use. For Mr. Vitale, this figure also includes $76,709 in fiscal year 2018 to reimburse him for amounts necessary to offset the impact of income taxes related to the Company’s reimbursement of his business club initial membership fee. |
(c) | Amount consists of reimbursement for Mr. Vitale’s business club initial membership fee. |
(d) | Amount consists of Mr. Neugent’s car allowance. |
(e) | Amount includes Mr. Neugent’s car allowance ($12,000) and a one-time payment as a result of being unable to participate in the Company’s non-qualified deferred compensation plans ($8,437). |
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Grants of Plan-Based Awards for the Fiscal Year Ended September 30, 2018
The following table provides, for each of the NEOs, information concerning cash awards under our annual incentive plan for fiscal year 2018 and grants of equity awards made during fiscal year 2018. Except as otherwise noted, the non-equity incentive plan awards disclosed below are part of the Post Holdings, Inc. Senior Management Bonus Program adopted on May 4, 2015. The plan has threshold, target and maximum payouts, as set forth below, based on achievement of personal and/or corporate or business performance measures; however, achievement below the threshold performance measures will result in a lower cash award payout (to the extent discretion is exercised) or no cash award payout at all. In November 2018, payments were made to each of the NEOs based on a combination of achievement of the corporate or business performance measures and personal performance measures in the amounts set forth in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” Awards of options, RSUs and PRSUs were made under the Post Holdings, Inc. 2016 Long-Term Incentive Plan. See Compensation Discussion and Analysis for further information about the awards listed below.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stock or Units (#) (4) | All Other Option Awards: Number of Securities Underlying Options (#) (5) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(6) | ||||||||||||||
Name | Grant Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||
Robert V. Vitale | Annual Incentive | 900,000 | 1,800,000 | 2,700,000 | |||||||||||||||
Options | 11/13/2017 | 72,427 | 80.15 | 2,067,240 | |||||||||||||||
PRSUs | 11/13/2017 | 6,434 | 25,734 | 51,468 | 2,515,241 | ||||||||||||||
RSUs | 11/13/2017 | 25,734 | 2,062,580 | ||||||||||||||||
Jeff A. Zadoks | Annual Incentive | 285,000 | 570,000 | 855,000 | |||||||||||||||
Options | 11/13/2017 | 31,518 | 80.15 | 899,599 | |||||||||||||||
PRSUs | 11/13/2017 | 919 | 3,677 | 7,354 | 359,390 | ||||||||||||||
RSUs | 11/13/2017 | 3,677 | 294,712 | ||||||||||||||||
Howard A. Friedman | Annual Incentive | — | — | — | |||||||||||||||
RSUs | 07/23/2018 | 39,000 | 3,432,780 | ||||||||||||||||
Diedre J. Gray | Annual Incentive | 250,000 | 500,000 | 750,000 | |||||||||||||||
Options | 11/13/2017 | 24,826 | 80.15 | 708,594 | |||||||||||||||
PRSUs | 11/13/2017 | 724 | 2,896 | 5,792 | 283,055 | ||||||||||||||
RSUs | 11/13/2017 | 2,896 | 232,114 | ||||||||||||||||
Mark W. Westphal | Annual Incentive | 262,500 | |||||||||||||||||