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This excerpt taken from the GIS DEF 14A filed Aug 10, 2009. Executive
Summary
This Compensation Discussion and Analysis describes the key
principles and approaches used to determine the compensation of
the named executive officers listed in the Summary Compensation
Table and should be read in conjunction with the tables and
narrative included in the rest of the Executive Compensation
section of this proxy statement. All compensation paid to the
named executive officers other than the Chief Executive Officer
is determined by the compensation committee of the board of
directors, which is composed solely of independent non-employee
directors who meet regularly each fiscal year. For the Chief
Executive Officer, compensation actions are approved by the
independent non-employee members of the full board based on a
recommendation of the compensation committee.
For fiscal 2009, the compensation committee retained Watson
Wyatt & Company as its independent compensation
consultant. At its May 2009 meeting, the compensation committee
decided to retain a compensation consulting firm that does no
other work for General Mills. Frederic W. Cook & Co.,
Inc. was selected to be the new consultant to the compensation
committee for fiscal 2010, due to its independence and industry
experience. This firm advises the committee on director and
executive compensation issues. The change in the consulting
relationship allows the company to continue to use Watson Wyatt
for broad-based benefits and compensation consulting. For more
information on the independent compensation consultant’s
role in advising the compensation committee on executive
compensation matters, see “Determining Executive
Compensation” in the Corporate Governance section of this
proxy statement.
General Mills strives to achieve financial performance that
consistently ranks in the top tier of results from our consumer
products industry peer group. The indicators utilized to
determine whether the company meets this objective are the four
key corporate performance measures that, taken together,
correlate most highly with the creation of total enterprise
value in major consumer food companies: net sales growth,
segment operating profit growth, earnings per share growth and
improvement in return on average total capital. When combined
with an attractive dividend yield, we believe that the
achievement of consistently superior performance versus these
four measures of corporate performance will continue to result
in strong total returns for General Mills stockholders.
The compensation committee designs the company’s
compensation programs for executive officers to place a heavy
emphasis on performance. As a result, approximately 80% of the
total compensation of the named executive officers varies with
annual company performance, with the only fixed compensation
elements being base salary and certain employee benefits.
The annual Corporate Performance Rating, which the compensation
committee uses to determine the size of both annual incentive
and long-term incentive awards for the named executive officers,
is based on specific targets approved by the compensation
committee at the start of the fiscal year for the four key
corporate
Table of Contents
performance measures outlined above, which are equally weighted
(25%). Performance targets align with General Mills’
publicly stated long-term performance goals of low single-digit
net sales growth, mid single-digit segment operating profit
growth and high single-digit earnings per share growth. In
determining the specific incentive targets each year, the
compensation committee generally utilizes two-year and five-year
compound growth rates for performance peer group companies for
each measure.
Corporate Performance Ratings can vary from 0 to 1.80, and
targets are set such that, when General Mills’ performance
is at the median of the performance peer group (Corporate
Performance Ratings of 1.30 to 1.50), General Mills’ total
compensation for executive officers is targeted to be at
approximately the median compensation paid by the same group of
companies. When General Mills’ performance is superior to
that of the performance peer group (Corporate Performance
Ratings between 1.51 and 1.80), executive officer compensation
is targeted to be well above the peer group median. When General
Mills’ performance is below that of the performance peer
group (Corporate Performance Ratings below 1.30), executive
officer compensation is targeted to be well below the median of
that paid by peer group companies.
The annual Corporate Performance Ratings vary significantly
based on the company’s performance in the fiscal year. One
way to look at how difficult or likely it would be for the
company to achieve the incentive targets would be to look at
historical results. In the past 10 years (fiscal years 2000
through 2009), Corporate Performance Ratings have ranged from a
low of 1.16 to a high of 1.80. In the past 20 years (fiscal
years 1990 through 2009), Corporate Performance Ratings have
ranged from 0 to 1.80. Over this
20-year
period, annual Corporate Performance Ratings have averaged 1.49,
which is at the high end of the 1.30 to 1.50 “On
Target” rating range of the incentive rating schedule. The
company’s total stockholder return has consistently
exceeded the return of broad market indexes (Dow Jones
Industrial Average, S&P 500), as well as industry
comparisons including the S&P Packaged Food index and the
median of our performance peer group. This performance has been
delivered over the short (one- and three-year), medium
(five-year) and long term time horizons (10- and
20-year).
The difference in total direct compensation (base salary, annual
incentive and long-term incentive) when a 1.80 Corporate
Performance Rating is achieved versus that of a 1.00 Corporate
Performance Rating for most executive officers is approximately
80%.
The compensation committee believes that the company’s
executive compensation programs have been effective at incenting
the achievement of superior results, appropriately aligning pay
and performance, creating an ownership culture in which company
managers think and act like stockholders, and in enabling
General Mills to attract and retain some of the most talented
executives in the global consumer products industry.
This excerpt taken from the GIS DEF 14A filed Aug 12, 2008. Executive
Summary
This Compensation Discussion and Analysis describes the key
principles and approaches used to determine the compensation of
the named executive officers listed in the Summary Compensation
Table and should be read in conjunction with the tables and
narrative included in the rest of the Executive Compensation
section of this proxy statement. All compensation paid to the
named executive officers is determined by the compensation
committee of the board of directors, which is composed solely of
independent non-employee directors who meet regularly each
fiscal year. The compensation committee has retained Watson
Wyatt & Company as its outside compensation
consultant. For more information on Watson Wyatt’s role in
advising the compensation committee on executive compensation
matters, see Determining Executive Compensation in the Corporate
Governance section of this proxy statement.
General Mills strives to achieve financial performance that is
consistently superior to that of our consumer products industry
peer group. The indicators utilized to determine whether the
company meets this objective are the four key corporate
performance measures that, taken together, correlate most highly
with the creation of total enterprise value in major consumer
food companies: net sales growth, segment operating profit
growth,
earnings-per-share
growth and improvement in return on capital. When combined with
an attractive dividend yield, we believe that the achievement of
consistently superior performance versus these four measures of
corporate performance will continue to result in strong total
returns for General Mills stockholders.
The compensation committee designs the company’s
compensation programs for executive officers to place a heavy
emphasis on performance. As a result, approximately
80 percent of the total compensation of the named executive
officers varies with annual company performance, with the only
fixed compensation elements being base salary and certain
employee benefits.
The annual Corporate Performance Rating, which the compensation
committee uses to determine the size of both annual incentive
and long-term incentive awards for the named executive officers,
is based on specific targets approved by the compensation
committee at the start of the fiscal year for the four key
corporate performance measures outlined above, which are equally
weighted (25 percent). In determining the specific
incentive targets each year, the compensation committee utilizes
two-year and five-year compound growth rates for performance
peer group companies for each measure. Corporate Performance
Ratings can vary from 0 to 1.80, and targets are set such that,
when General Mills’ performance is at the median of the
performance peer group (Corporate Performance Ratings of 1.30 to
1.50), General Mills’ total compensation for executive
officers is targeted to be at approximately the median
compensation paid by the same group of companies. When General
Mills’ performance is superior to that of the performance
peer group (Corporate Performance Ratings between 1.50 and
1.80), executive officer compensation is targeted to be well
above the peer group median. When General Mills’
performance is below that of the performance peer group
(Corporate Performance Ratings below 1.30), executive officer
compensation is targeted to be well below the median of that
paid by peer group companies.
Table of Contents
The annual Corporate Performance Ratings vary significantly
based on the company’s performance in the fiscal year. One
way to look at how difficult or likely it would be for the
company to achieve the incentive targets would be to look at
historical results. In the past 10 years (fiscal years 1999
through 2008), Corporate Performance Ratings have ranged from a
low of 1.16 to a high of 1.80. In the past 20 years (fiscal
years 1989 through 2008), Corporate Performance Ratings have
ranged from 0 to 1.80. Over this
20-year
period, annual Corporate Performance Ratings have averaged 1.49,
which is at the high end of the 1.30 to 1.50 “On
Target” rating range of the incentive rating schedule. Over
the same
20-year
period, the company’s total stockholder return has outpaced
the returns of our performance peer group. The difference in
total direct compensation (base salary, annual incentive and
long-term incentive) when a 1.80 Corporate Performance Rating is
achieved versus that of a 1.00 Corporate Performance Rating for
most executive officers is approximately 80 percent.
In fiscal 2008, the compensation committee assigned a Corporate
Performance Rating of 1.80. They based this rating on the
company far exceeding the highest performance targets for three
of the four corporate performance measures and approaching the
highest performance target on the fourth measure, segment
operating profit growth. The committee also considered
U.S. retail market share gains, which represented a
significant fiscal 2008 achievement. Financial performance in
fiscal 2008 was another significant
step-up in
results from those achieved in fiscal 2007, with net sales and
earnings per share growing at significantly higher rates than
the strong growth rates achieved in fiscal 2007. In measuring
earnings-per-share
and return on capital, we excluded net gains from mark-to-market
valuation of certain commodity positions for fiscal 2008.
Additionally, the company achieved results that exceeded the
compound growth rate trends for our performance peer group on
all four measures.
The compensation committee believes that the company’s
executive compensation programs have been effective at incenting
the achievement of superior results, appropriately aligning pay
and performance, creating an ownership culture in which company
managers think and act like stockholders, and in enabling
General Mills to attract and retain some of the most talented
executives in the global consumer products industry.
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