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  • SC 13D (Sep 27, 2017)
Mondelez International, Inc. DEF 14A 2016
DEF 14A
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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Table of Contents

 

LOGO    

Irene B. Rosenfeld

Chairman of the Board and

Chief Executive Officer

Three Parkway North

Deerfield, IL 60015

 

March 28, 2016

 

Dear Fellow Shareholders:

We launched Mondelēz International three-and-a-half years ago as a focused global snacking company.

Since that time, I’m proud that we’ve delivered industry-leading total shareholder returns that are well above the S&P 500 and our consumer staples peers, despite the highly volatile macroeconomic environment.

Our hard-working colleagues have delivered these results by focusing on what we can control and transforming our business to address the challenges head on.

We’re building the world’s best snacking company – one capable of winning long-term by delivering sustainable growth on both the top and bottom lines. That’s what sets us apart from our competitors!

As we prepare for our Annual Meeting of Shareholders, allow me to share a few thoughts on where we’ve been and where we’re going, while highlighting a few of our recent successes.

 

You’re Invited!

I’m pleased to invite you to our 2016 Annual Meeting of Shareholders. We will hold the meeting at 9 a.m. CDT on Wednesday, May 18, 2016, at NOAH’s Event Venue in Lincolnshire, Ill. The center will open to shareholders at 8 a.m. If you wish to attend the meeting, please register in advance by following the instructions included in the Proxy Statement.

All shareholders of record as of March 9, 2016, are entitled to vote. As in the past, we’re distributing proxy materials with instructions on how to access these materials and on how to vote. Even if you plan to attend the meeting in person, we encourage you to vote in advance in one of three ways:

 

LOGO

   Internet: Visit the website listed on your proxy card/voting instruction form to vote

LOGO

   Telephone: Call the telephone number on your proxy card/voting instruction form

LOGO

  

Mail: Sign, date and return your proxy card/voting instruction form in the enclosed envelope

 

MONDELĒZ INTERNATIONAL


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Leveraging Our Competitive Advantages

 

 

 

Sales by Category

Percentage of 2015

Pro Forma Adjusted Net Revenues1

 

LOGO

 

Sales by Geography

Percentage of 2015

Pro Forma Adjusted Net Revenues1

 

LOGO

Our global snacking powerhouse is built on a solid foundation with a strong set of competitive advantages:  
 

LOGO

   A portfolio focused on large, fast-growing snacks. Snacking is a $1.2 trillion market, and it’s growing around the world. Snacks typically carry higher margins than other food categories, and consumption is expandable.  
 

LOGO

   Leading share positions in our major markets. Globally, we’re No. 1 in biscuits, chocolate and candy, and No. 2 in gum.  
 

LOGO

   The world’s favorite snack brands. We have an unrivaled portfolio of iconic Power Brands in each of our categories, including Oreo in biscuits, Milka and Cadbury in chocolate, Trident in gum and Halls in candy. These are our largest, fastest-growing and highest-margin brands that account for nearly 70 percent1 of our revenue. We also have a number of proven global innovation platforms like belVita, Barni and Oreo Thins in biscuits as well as Bubbly and Marvellous Creations in chocolate.  
 

LOGO

   An advantaged geographic footprint. Nearly 40 percent1 of our revenue comes from emerging markets. Although these markets have recently slowed, they’re still growing considerably faster than developed markets.  
 

LOGO

   Strong routes to market with substantial barriers to entry for competitors.  
 

LOGO

   World-class talent with the leadership, capabilities and experience needed to win.  
Our long-term value creation algorithm is built on two key pillars:  
 

LOGO

   Growth: By building our Power Brands, driving innovation platforms and expanding our sales and distribution capabilities, we’re able to leverage our advantaged platform to grow revenue at or above the rate of our categories.  
 

LOGO

   Margin Expansion: At the same time, we expand margins by aggressively reducing our supply chain and overhead costs.  
      
As we execute this algorithm, our earnings and cash flow grow, translating into top-tier shareholder returns. With our advantaged platform, we’re one of the few industry players that can deliver best-in-class growth and margin improvement now, and over the long term.  

 

 

1  See Exhibit A for GAAP to Non-GAAP reconciliations. Pro forma results exclude Venezuela.

 

MONDELĒZ INTERNATIONAL


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Focusing on What We Can Control

While we remain optimistic in the long-term outlook, it’s no secret that the global economy has become more challenging and volatile since we launched the company in 2012. Growth in snacks categories and consumer demand in key emerging markets have slowed. At the same time, we’ve experienced significant increases in input costs and strong currency headwinds.

To address these issues, we took significant steps over the past couple of years to adjust to the environment and take control of what we can by transforming the business in the following ways:

 

 

LOGO

  

Focus our portfolio

We continue to focus our portfolio more firmly within our snacks categories. Last year, we combined our coffee business with D.E Master Blenders to create the Jacobs Douwe Egberts coffee venture – the largest focused coffee company in the world. We also strengthened our snacks business with two bolt-on acquisitions – Kinh Do biscuits in Vietnam and Enjoy Life Foods in the U.S. As a result, snacks now represent about 85 percent1 of our revenue, up from 75 percent in 2014. We also improved our revenue mix by eliminating underperforming products and optimizing our promotional spending.

 

LOGO

  

Reduce costs

We continue to improve our margins. We delivered record net productivity of more than 3.5 percent of cost of goods sold in 2015. We’ve begun to see the benefits of our supply chain reinvention, as we upgrade our manufacturing network and install more efficient and flexible lines of the future. In addition, we drove down our overhead costs through zero-based budgeting tools, and we’re simplifying and standardizing various scalable, transactional processes through global shared services.

   LOGO
 

LOGO

  

Invest for growth

We continue to make high-return investments to accelerate growth on our base business and address important consumer trends. Last year, we disproportionately supported our Power Brands and stepped up investments in sales and route-to-market capabilities in key emerging markets so that we’ll be well-positioned to capitalize on their long-term growth potential as the macroeconomic environment improves. We further focused our innovation efforts on key consumer needs, such as health & wellness and e-commerce. We intend to be the global leader in well-being snacks, representing half of our revenue by 2020. In addition, we’re building an industry-leading e-commerce snacks business, targeting $1 billion in revenue by 2020. We’re also broadening our portfolio beyond mainstream offerings to meet the needs of consumers both at the upper and lower ends of the economic spectrum.

 

 

1  See Exhibit A for GAAP to Non-GAAP reconciliations. Pro forma results exclude Venezuela.

 

MONDELĒZ INTERNATIONAL


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Delivering Strong Margin Expansion and Solid Earnings Growth

In 2015, we delivered another year of very strong results. Our aggressive cost-savings programs drove significant margin expansion, enabling us to increase our marketing investments, which accelerated organic revenue growth and improved our share performance as the year progressed.

 

 

LOGO

   Net revenues were $29.6 billion, down 13.5 percent. Pro Forma Organic Net Revenue1 increased 1.4 percent, driven by our pricing actions to recover higher commodity- and currency-driven input costs. Emerging markets grew nearly 5 percent despite weakening macroeconomic conditions. Our Power Brands, which were up 3 percent, continued to drive our top-line growth.
 

LOGO

   Operating income was $8.9 billion, up 174.4 percent. Pro Forma Adjusted Operating Income2 margin increased 150 basis points to 13.2 percent. We accomplished this by reducing our overhead costs as a percentage of revenue while also increasing advertising and consumer support for our brands.
 

LOGO

   Diluted EPS was $4.44, up 246.9 percent. Pro Forma Adjusted EPS1 increased 13.5 percent on a constant-currency basis, driven by our strong operating performance.
 

LOGO

   Pro Forma Free Cash Flow excluding items3 was $2 billion, doubling our target, primarily due to excellent working capital management.
 

LOGO

   We returned $4.6 billion of cash to our shareholders in the form of share repurchases and dividends.

Accelerating Action with Our 2020 Global Sustainability Goals

We believe that the growth of our business is inextricably linked to the well-being of the people who make and enjoy our products and the communities in which we live and work. Our Call For Well-being therefore focuses where we can make the greatest impact, in the areas of sustainability, mindful snacking, community partnerships and safety.

Last year, we continued to progress our well-being agenda. Working with leading organizations, we’re accelerating actions to address climate change through our new sustainability goals, which focus on reducing key end-to-end environmental impacts, from the field through distribution.

By 2020 (versus our 2013 baseline), we will have:

 

 

LOGO

   Reduced our carbon dioxide emissions from manufacturing by 15 percent
 

LOGO

   Cut our water footprint in manufacturing by 10 percent
 

LOGO

   Eliminated 65,000 tonnes of packaging waste
 

LOGO

   Reduced total manufacturing waste by 20 percent

 

1  See definition under “– Compensation Discussion and Analysis – Description of Individual Executive Compensation Program Elements – Financial Measure Definitions,” the GAAP to Non-GAAP reconciliation in Exhibit A and the section entitled “Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2015. Pro forma results exclude Venezuela. See Form 8-K dated February 3, 2016.
2  Exhibit A and the section entitled “Non-GAAP Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2015, for definition and GAAP to Non-GAAP reconciliation. Pro forma results exclude Venezuela. See Form 8-K dated February 3, 2016.
3  Exhibit A for definition and GAAP to Non-GAAP reconciliation. Pro forma results exclude Venezuela.

 

MONDELĒZ INTERNATIONAL


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Empowering Cocoa Life Farmers

 

In addition, we recently published the first progress report on Cocoa Life, our $400 million investment to empower 200,000 cocoa farmers and reach over one million community members by 2022.

 

The progress report highlighted the wide-ranging impact of our efforts to date across our six cocoa-growing origins: Ghana, Côte d’Ivoire, Indonesia, Dominican Republic, India and Brazil. Since the inception of Cocoa Life in 2012 through 2015, we have:

 

LOGO        Reached 76,700 farmers in over 795 communities, establishing a strong foundation and framework for the program

  LOGO
 

LOGO

   Sourced 21 percent of our cocoa sustainably
  LOGO    Contributed to the tripling of incomes of Cocoa Life farmers in Ghana since 2009, which were up 49 percent more than control communities
  LOGO    Contributed to a 37 percent increase in cocoa yields in Ghana versus control communities

As the world’s largest buyer of cocoa, we’re committed to a sustainable cocoa supply chain. Ultimately, our goal is to sustainably source all of our cocoa, and we’re on track to get there.

Building on Our Momentum

In closing, I’m proud of our progress made since the launch of our company and especially pleased with our strong 2015 results. Our success is a tribute to our world-class people, who have the passion, leadership, capabilities and experience to grow our business around the world.

While we expect global economic conditions, especially in emerging markets, to remain difficult in 2016, we’ll build on our 2015 momentum by focusing on what we can control to again accelerate revenue growth and expand margins. By executing our strategies, we’re well-positioned to continue delivering strong returns to our shareholders now and over the long-term.

On behalf of all of our Mondelēz International employees, I thank you for your continued support of our company.

Best regards,

 

LOGO

 

LOGO

 

MONDELĒZ INTERNATIONAL


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Forward-Looking Statements

This letter to shareholders contains a number of forward-looking statements. Words, and variations of words, such as “will,” “expect,” “intend,” “believe,” “positioned,” “target,” “outlook” and similar expressions are intended to identify our forward-looking statements, including, but not limited to, statements about: our future performance, including our future revenue growth, earnings per share, margins and cash flow; growth in emerging markets; macroeconomic conditions; our supply chain transformation; overheads; shareholder returns; our well-being portfolio and goals; revenues from e-commerce; and our 2020 global sustainability goals. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those indicated in our forward-looking statements. Such factors include, but are not limited to, risks from operating globally including in emerging markets; changes in currency exchange rates, controls and restrictions; continued volatility of commodity and other input costs; weakness in economic conditions; weakness in consumer spending; pricing actions; unanticipated disruptions to our business; competition; our global workforce; the restructuring program and our other transformation initiatives not yielding the anticipated benefits; changes in the assumptions on which the restructuring program is based; and tax law changes. Please also see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our most recently filed Annual Report on Form 10-K. Mondelēz International disclaims and does not undertake any obligation to update or revise any forward-looking statement in this letter to shareholders, except as required by applicable law or regulation.

 

MONDELĒZ INTERNATIONAL


Table of Contents

MONDELĒZ INTERNATIONAL, INC.

Three Parkway North

Deerfield, Illinois 60015

NOTICE OF 2016 ANNUAL MEETING OF SHAREHOLDERS

 

TIME AND DATE:

9:00 a.m. CDT on May 18, 2016

 

PLACE:

NOAH’S Event Venue

200 Barclay Boulevard

Lincolnshire, Illinois 60069

 

ITEMS OF BUSINESS:

(1)

To elect the 13 directors named in the Proxy Statement;

 

  (2) To approve, on an advisory basis, the Company’s executive compensation;

 

  (3) To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accountants for the fiscal year ending December 31, 2016;

 

  (4) To vote on three shareholder proposals if properly presented at the meeting; and

 

  (5) To transact any other business properly presented at the meeting and at any adjournments or postponements of the meeting.

 

WHO MAY VOTE:

Shareholders of record of Class A Common Stock at the close of business on March 9, 2016.

 

DATE OF DISTRIBUTION:

On or about March 28, 2016, we mailed/distributed our Notice of Internet Availability of Proxy Materials and made available our Proxy Statement, Proxy Card and Annual Report on Form 10-K for the year ended December 31, 2015 online at http://materials.proxyvote.com/609207.

 

  On or about March 30, 2016, we expect to mail our Proxy Statement, Proxy Card and Annual Report on Form 10-K for the year ended December 31, 2015 to shareholders who previously elected to receive a paper copy of the proxy materials.

 

  LOGO

 

  Carol J. Ward
  Vice President and Corporate Secretary

March 28, 2016

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 18, 2016

Mondelēz International, Inc.’s Proxy Statement and Annual Report on Form 10-K for the year ended

December 31, 2015 are available at http://materials.proxyvote.com/609207.

 

MONDELĒZ INTERNATIONAL


Table of Contents

Table of Contents

 

Proxy Statement Summary

     1   

ITEM 1. Election of Directors

     7   

Process for Nominating Directors

     7   

Director Nominees for Election at the Annual Meeting

     10   

Corporate Governance

     17   

Governance Guidelines

     17   

Key Corporate Governance Practices

     17   

Board Leadership Structure

     18   

Director Independence

     20   

Oversight of Risk Management

     20   

Codes of Conduct

     22   

Review of Transactions with Related Persons

     22   

Shareholder Engagement

     23   

Communications with the Board

     23   

Board Committees and Membership

     23   

Committee Membership

     24   

Meeting Attendance

     24   

Audit Committee

     24   

Audit Committee Report for the Year Ended December 31, 2015

     25   

Pre-Approval Policies

     26   

Independent Registered Public Accountants’ Fees

     27   

Finance Committee

     27   

Governance, Membership and Public Affairs Committee

     27   

Human Resources and Compensation Committee

     28   

Human Resources and Compensation Committee Independence, Interlocks and Insider Participation

     28   

Responsibilities

     28   

The Compensation Committee’s Use of an Independent Compensation Consultant

     29   

Limited Role of Executive Officers in the Determination of Executive Compensation and Non-Employee Director Compensation

     29   

How the Compensation Committee Manages Compensation-Related Risk

     30   

Compensation of Non-Employee Directors

     30   

Compensation Discussion and Analysis

     34   

Overview

     34   

 

i


Table of Contents

Our Executive Compensation Design Principles and Governance Practices

     37   

How We Design our Executive Compensation Program

     38   

Description of Individual Executive Compensation Program Elements

     43   

Compensation Paid to our Named Executive Officers in 2015

     54   

Policy Authorizing Recoupment of Executive Incentive Compensation in the Event of Certain Restatements

     57   

Trading Restrictions and Anti-Hedging Policy

     57   

Anti-Pledging Policy

     57   

Policy with Respect to Qualifying Compensation for Tax Deductibility

     57   

Executive Compensation Tables

     58   

2015 Summary Compensation Table

     58   

2015 Grants of Plan-Based Awards

     60   

2015 Outstanding Equity Awards at Fiscal Year-End

     61   

2015 Options Exercised and Stock Vested

     63   

2015 Pension Benefits

     63   

Retirement Benefit Plan Descriptions

     64   

2015 Non-Qualified Deferred Compensation Benefits

     65   

Potential Payments Upon Termination or Change-in-Control

     66   

Human Resources and Compensation Committee Report for the Year Ended December 31, 2015

     70   

Ownership of Equity Securities

     71   

Section 16(a) Beneficial Ownership Reporting Compliance

     72   

ITEM 2. Advisory Vote to Approve Executive Compensation

     72   

ITEM 3. Ratification of the Selection of Independent Registered Public Accountants for Fiscal Year 2016

     73   

Shareholder Proposals

     74   

ITEM 4. Shareholder Proposal: Report on Packaging

     75   

ITEM 5. Shareholder Proposal: Vesting of Equity Awards in a Change in Control

     78   

ITEM 6. Shareholder Proposal: Policy on Mediation

     81   

Other Matters that may be Presented at the Annual Meeting

     84   

Frequently Asked Questions About the Annual Meeting and Voting

     84   

2017 Annual Meeting of Shareholders

     90   

Shareholder Nominations and Proposals for the 2017 Annual Meeting

     90   

EXHIBIT A: GAAP to Non-GAAP Reconciliations

     A-1   

Maps and Directions to the 2016 Annual Meeting

     Back Cover   

 

ii


Table of Contents

Proxy Statement Summary

In this Proxy Statement Summary and throughout the Proxy Statement, “we,” “us,” “our,” “the Company,” and “Mondelēz International,” refer to Mondelēz International, Inc.

This summary highlights select information contained elsewhere in this Proxy Statement. You should read the entire Proxy Statement carefully before voting and consider all information in the Proxy Statement. For more complete information regarding the Company’s 2015 performance, please see our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”).

2016 Annual Meeting of Shareholders (the “Annual Meeting”)

 

Time and Date    9:00 a.m. CDT on May 18, 2016
Place   

NOAH’S Event Venue

200 Barclay Boulevard

Lincolnshire, Illinois 60069

Record Date    March 9, 2016
Voting    Each outstanding share of Class A Common Stock (“Common Stock”) is entitled to one vote on each matter to be voted upon at the Annual Meeting.
Admission    Shareholders should follow the advance registration instructions described in Question 23 on page 89 of this Proxy Statement. The deadline for advance registration is: 11: 59 p.m. EDT on May 15, 2016.

Advance Voting Methods (Page 87 of this Proxy Statement)

Even if you plan to register for and attend the Annual Meeting in person, please vote in advance of the meeting using one of the following voting methods (see page 87 of this Proxy Statement for additional details). Be sure to have your proxy card or voting instruction form (VIF) in hand and follow the instructions. You can vote in advance of the meeting in one of three ways:

 

LOGO   Visit the website listed on your proxy card/VIF to vote VIA THE INTERNET
LOGO   Call the telephone number on your proxy card/VIF to vote BY TELEPHONE
LOGO   Sign, date and return your proxy card/VIF in the enclosed envelope to vote BY MAIL

Voting Instructions to Proxies

At the Annual Meeting, the persons named as proxies on each shareholder’s proxy card will vote the shares represented by the proxy card FOR or AGAINST or ABSTAIN from voting on each proposal, as indicated in the shareholder’s voting instructions. If no indication is made on the properly executed proxy card, proxies will vote FOR each of the director nominees listed in proposal 1, FOR proposals 2 and 3, AGAINST proposals 4, 5 and 6 and in their discretion upon such other business as properly comes before the meeting.

 



 

MONDELĒZ INTERNATIONAL    1


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Voting at the Annual Meeting (Page 87 of this Proxy Statement)

All shareholders of record as of March 9, 2016 may vote in person at the meeting. Generally, beneficial owners may vote in person at the meeting if they have a legal proxy, as described in the response to Question 14 on page 87 of this Proxy Statement.

Attending the Annual Meeting – Important Note About Advance Registration Process and Admission Requirements (Page 89 of this Proxy Statement)

If you plan to attend the meeting in person, see the answer to Question 23 on page 89 of this Proxy Statement for important details on advance registration and admission requirements.

Frequently Asked Questions (Page 84 of this Proxy Statement)

We provide answers to many frequently asked questions about the meeting and voting, including how to vote shares held in brokerage accounts and employee benefit plans, in the FAQ section beginning on page 84 of this Proxy Statement.

Items of Business

 

Item   Board
Recommendation
  Page
Reference
Item 1 –   Election of 13 Directors   FOR ALL NOMINEES   7
             
Item 2 –   Advisory Vote to Approve Executive Compensation   FOR   72
             
Item 3 –   Ratification of the Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accountants for Fiscal Year 2016   FOR   73
             
Item 4 –   Shareholder Proposal: Report on Packaging   AGAINST   75
             
Item 5 –   Shareholder Proposal: Vesting of Equity Awards in a Change in Control   AGAINST   78
             
Item 6 –   Shareholder Proposal: Policy on Mediation   AGAINST   81
             
Transact any other business that properly comes before the meeting.        

 



 

MONDELĒZ INTERNATIONAL    2


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ITEM 1. Election of Directors – Nominees (Page 7 of this Proxy Statement)

 

Name   Age   Director
Since
  Primary Occupation   Independent   Board Committee
Membership
          Audit*   Finance*   GMPAC*   HRCC*
Stephen F. Bollenbach   73   Oct. 2012  

Former Co-Chairman and CEO,

Hilton Hotels Corporation

 

 

LOGO

 

 

X

           
                                 
Lewis W.K. Booth   67   Oct. 2012  

Former Executive Vice President and CFO,

Ford Motor Company

 

 

LOGO

     

 

X

     

 

X

                                 
Lois D. Juliber   67   Nov. 2007  

Former Vice Chairman and COO,

Colgate-Palmolive Company

 

 

LOGO

         

 

X

 

 

Chair

                                 

Mark D. Ketchum

(Lead Director)

  66   April 2007  

Former President and CEO,

Newell Rubbermaid Inc.

 

 

LOGO

 

 

+

 

 

+

 

 

Chair

 

 

+

                                 
Jorge S. Mesquita   54   May 2012  

Worldwide Chairman, Consumer,

Johnson & Johnson

 

 

LOGO

 

 

X

           
                                 
Joseph Neubauer   74   Nov. 2014  

Former Chairman of the Board,

ARAMARK

 

 

LOGO

     

 

X

 

 

X

   
                                 
Nelson Peltz   73   Jan. 2014  

CEO and Founding Partner,

Trian Fund Management, L.P.

 

 

LOGO

     

 

X

 

 

X

   
                                 
Fredric G. Reynolds   65   Dec. 2007  

Former Executive Vice President and CFO,

CBS Corporation

 

 

LOGO

 

 

Chair

           
                                 
Irene B. Rosenfeld   62   June 2006  

Chairman and CEO,

Mondelēz International, Inc.

                   
                                 
Christiana S. Shi++   56   Jan. 2016  

President, Direct-to-Consumer,

Nike, Inc.

 

 

LOGO

               
                                 
Patrick T. Siewert   60   Oct. 2012  

Managing Director,

The Carlyle Group, L.P.

 

 

LOGO

 

 

X

 

 

Chair

       
                                 
Ruth J. Simmons   70   Oct. 2012  

President Emerita,

Brown University

 

 

LOGO

         

 

X

 

 

X

                                 

Jean-François M. L.

van Boxmeer

  54   Jan. 2010  

Chairman of the Executive Board and CEO,

Heineken N.V.

 

 

LOGO

     

 

X

     

 

X

 

* Audit – Audit Committee; Finance – Finance Committee; GMPAC – Governance, Membership and Public Affairs Committee; HRCC – Human Resources and Compensation Committee.

 

+ Mr. Ketchum, as Lead Director, is an ex-officio non-voting member of all committees of the Board of Directors of which he is not a member.

 

++ The Board will make Ms. Shi’s committee assignments in due course.

Board Composition, Diversity, Tenure and Refreshment

Our 13 director nominees have significant relevant operating and leadership experience, global and diverse perspectives and financial expertise. Their varied experiences, backgrounds and personal characteristics, as summarized below, provide the Board of Directors (the “Board”) with a diversity of viewpoints and enable it to represent effectively our shareholders:

 

    12 have operating and general management experience at major companies, including food and beverage, consumer products and services, and manufacturing companies;

 

    All are current or former leaders of large, complex enterprises;

 

    5 have been chief financial officers of major public companies;

 

    11 have significant financial experience;

 

    1 was president of and a professor at a leading university;

 



 

MONDELĒZ INTERNATIONAL    3


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    7 are living and working or have lived and worked outside of his or her home country; and

 

    4 are women, including the Chairman and Chief Executive Officer (“CEO”).

As of March 9, 2016, directors ranged in age from 54 to 74. The tenure of our independent directors ranged from approximately 2 months to 9 years, with an average tenure of approximately 4 years.

Shareholders can find more information regarding our process for nominating directors and our director nominees beginning on page 7 of this Proxy Statement.

Corporate Governance Highlights (Pages 17 and 37 of this Proxy Statement)

We believe that a strong and balanced corporate governance framework is essential to our long-term success because it promotes the long-term interests of shareholders, accountability and trust in the Company. We highlight here key aspects of our corporate governance framework. Shareholders can find additional detail under “Corporate Governance” beginning on page 17 of this Proxy Statement and under “Our Executive Compensation Design Principles and Governance Practices” on page 37 of this Proxy Statement.

 

LOGO Annual Election of Directors

 

LOGO Proxy Access By-Law Provisions

 

LOGO Majority and Confidential Voting in Uncontested Director Elections with Director Resignation Policy

 

LOGO No Supermajority Voting

 

LOGO Special Meetings of Shareholders. Shareholders of at least 20% of the voting power of our outstanding stock may call a special meeting.

 

LOGO No “Poison Pill” (Shareholder Rights Plan)

 

LOGO Highly Independent Board. 12 of our 13 current directors are independent.

 

LOGO Limitation on Management Directors. Our Chairman and CEO is the only member of management to serve as a director.

 

LOGO Independent Lead Director Provides Independent Leadership of the Board’s Work. Annually, our independent directors select our Lead Director, who has broad substantive responsibilities and powers. Those include presiding at executive sessions of independent directors and approving board schedules, meeting agendas and materials.

 

LOGO Annual Board Review of Strategic Plan
LOGO Independent Committee Chairs and Members. All Board committees have independent chairs and are composed of independent directors.

 

LOGO Regular Executive Sessions of Independent Directors

 

LOGO Annual Board, Committee and Director Self-Assessments

 

LOGO Risk Oversight by the Board and Committees

 

LOGO Ongoing Shareholder Engagement

 

LOGO Pay for Performance Philosophy Drives Compensation Design and Decisions

 

LOGO Annual Chairman and CEO Evaluation. Annually, the appropriate Board committees evaluate the CEO’s performance and suitability to serve as Chairman of the Board.

 

LOGO Stock Ownership Guidelines and Stock Retention Policies for Both Directors and Executives

 

LOGO Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies for Directors and Executive Officers

 

LOGO Clawback Policy to Recoup Executive Compensation

 

LOGO Long-Standing Commitment to Sustainability
 

 



 

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ITEM 2. Advisory Vote to Approve Executive Compensation (Page 72 of this Proxy Statement)

Compensation Goals

Our Human Resources and Compensation Committee has four primary goals for our executive compensation program:

 

  1. Attract, retain and motivate talented executive officers and develop world-class business leaders;

 

  2. Support business strategies that promote superior long-term shareholder returns;

 

  3. Align pay and performance by making a significant portion of our Named Executive Officers’ (“NEOs”) compensation dependent on achieving financial and other critical strategic and individual goals; and

 

  4. Align our NEOs’ and shareholders’ interests through stock ownership and holding requirements and equity-based incentive grants that link executive compensation to sustained and superior Total Shareholder Return(1) (“TSR”).

Compensation Design

We design our executive compensation program to achieve these goals by:

 

    Linking pay to performance;

 

    Putting pay at risk based on short-term and long-term performance;

 

    Rewarding long-term sustainable performance;

 

    Targeting pay at the median of our peer group;

 

    Setting meaningful performance goals; and

 

    Requiring our executive officers to acquire and hold a significant amount of our Common Stock.

Our Executives’ 2015 Compensation Reflected Their and Our Performance

 

    Annual Cash Incentive Program: In 2015, we generated strong earnings growth and margin expansion in a challenging environment by driving record net productivity and aggressively reducing overheads. The awards our NEOs earned exceeded target performance.

 

    Performance Share Units (2013-2015 Performance Cycle): We performed significantly better than target on two of the three performance measures – Adjusted Earnings Per Share Growth and Annualized Relative TSR. Stock awards our NEOs earned exceeded target performance.

You can find detailed information about our compensation programs and decisions in our Compensation Discussion and Analysis beginning on page 34 of this Proxy Statement.

ITEM 3. Ratification of the Selection of PricewaterhouseCoopers LLP as Independent Registered Public

Accountants for Fiscal Year 2016 (Page 73 of this Proxy Statement)

As a matter of good governance, we are asking our shareholders to ratify the Audit Committee’s selection of PricewaterhouseCoopers LLP as our independent registered public accountants for the year ending December 31, 2016. We provide information on PricewaterhouseCoopers LLP’s fees in 2015 and 2014 on page 27 of this Proxy Statement.

 

(1) Total Shareholder Return reflects share price appreciation and dividends paid.

 



 

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ITEMS 4, 5 and 6. Shareholder Proposals (Page 75 of this Proxy Statement)

In accordance with U.S. Securities and Exchange Commission (“SEC”) rules, this Proxy Statement includes three shareholder proposals.

Other Matters

Other than Items 1 through 6 described in this Proxy Statement, we do not expect any matters to be presented for action at the Annual Meeting. The Chairman of the Annual Meeting may refuse to allow presentation of an improperly submitted proposal or a nomination for the Board at the Annual Meeting. We described the requirements for shareholders to properly submit proposals and nominations at the Annual Meeting in our 2015 Proxy Statement. Those requirements are similar to those described under “2017 Annual Meeting of Shareholders” in this Proxy Statement.

If any other matters properly come before the Annual Meeting, your proxy authorizes the designated proxies to vote on such matters in accordance with their best judgment.

 



 

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ITEM 1. Election of Directors

Process for Nominating Directors

The Governance, Membership and Public Affairs Committee of our Board (the “Governance Committee”) is responsible for identifying, evaluating and recommending to the Board director nominees for election at the Annual Meeting (and any adjournments or postponements of the meeting). The Governance Committee invites director nominee suggestions from the directors, shareholders, management and others. In addition, the Governance Committee from time to time retains third-party executive search firms to assist in identifying and evaluating potential director nominees based on the Board’s recruitment objectives.

General Qualifications

The Board believes all directors should possess certain personal characteristics, including integrity, sound business judgment and vision. The Board believes these characteristics are necessary to establish a competent, ethical and well-functioning Board that best represents the interests of our shareholders. Under our Corporate Governance Guidelines (the “Guidelines”), when evaluating the suitability of individuals for nomination, the Governance Committee takes into account many factors. These include the individual’s general understanding of the varied disciplines relevant to the success of a large, publicly traded company in today’s global business environment, understanding of our global businesses and markets, professional expertise and educational background, and other factors that promote diversity of views, knowledge and experience, including, among others, gender, race and national origin. The Governance Committee also considers an individual’s ability to devote sufficient time and effort to fulfill his or her responsibilities to the Company, given the individual’s other commitments. In addition, the Governance Committee considers whether an individual meets various independence requirements, including whether his or her service on boards and committees of other organizations is consistent with our conflicts of interest policy. The Governance Committee also evaluates each individual in the context of the Board as a whole, with the objective of recruiting and recommending a slate of director nominees who can best perpetuate the Company’s success and represent our shareholders’ interests through the exercise of sound judgment and informed decision-making.

In addition, under our Guidelines, the Governance Committee generally will not recommend, and the Board will not nominate an individual or re-nominate for election an independent director after he or she reaches age 75. However, the Governance Committee and Board may do so in extraordinary circumstances if nomination or re-nomination is in the shareholders’ best interests because the candidate is uniquely qualified to contribute to a specific dimension of the Board’s work and the Company’s growth in the subsequent year. If the Governance Committee determines that the individual’s nomination or re-nomination for election is in the shareholders’ best interests, the Governance Committee may recommend, and the Board may approve, that director’s nomination or re-nomination for up to three annual terms following the director’s 75th birthday.

A management director must resign from the Board upon ceasing to be a Company officer.

Individual Experience, Qualifications, Attributes and Skills

The Governance Committee works with the Board to determine the appropriate mix of characteristics, professional experience and areas of expertise that will result in a Board that is strong in its collective knowledge, allowing the Board to fulfill its responsibilities and best perpetuate our long-term success and represent all shareholders’ interests.

Under the leadership of the Lead Director and Chairman of the Governance Committee, the Governance Committee annually conducts evaluations of the Board and the Board’s committees. It also coordinates the directors’ self-assessments which the Governance Committee uses to assess the experience, qualifications, attributes, skills, diversity and contributions of each director and of the Board as a whole. Every year, the director nominees complete questionnaires to update and confirm their background, qualifications, skills and potential conflicts of interest.

 

 

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Based upon the Governance Committee’s discussions with the Board, the Governance Committee has identified the following key competencies and relevant professional experience and areas of expertise that are particularly desirable for our directors to possess in order to meet the Board’s current and future needs and obligations:

 

Key Competencies   Relevant Experience/Expertise
Industry Knowledge which is vital to understanding and reviewing our strategy, including the acquisition of businesses that offer complementary products or services  

       Food and Beverage

 

       Consumer Products

Significant Operating Experience as current or former executives of large global companies or other large organizations, which gives directors specific insight into, and expertise that will foster active participation in the development and implementation of our operating plan and business strategy  

       CEO/COO

 

       Best in Class – Manufacturing Operations

 

       Best in Class – Retail Operating

Leadership Experience which gives directors the ability to motivate, manage, identify and develop leadership qualities in others  

       CEO/COO or Other Leadership Positions at Complex Organizations

 

       M&A/Alliances/Partnerships

 

       Strategic Planning

 

       Talent Assessment and Development/Compensation

 

Substantial Global Business and other international experience which is particularly important given our global presence  

       Developed Markets

 

       Emerging Markets

 

       New Media/Digital Technology/ e-commerce

 

       Technology/IT Strategy

 

       Government Affairs/Regulatory

 

Accounting and Financial Expertise which enables directors to analyze our financial statements, capital structure and complex financial transactions and oversee our accounting and financial reporting processes  

       CFO

 

       M&A/Alliances/Partnerships

 

       Financial Acumen/Capital Markets

 

       Cost Management

Product Development and Marketing Experience in food and beverage as well as complementary industries, which contributes to our identification and development of new food and beverage products and implementation of marketing strategies that will improve our performance  

       Consumer Insights/Analytics

 

       Research & Development/Innovation

Public Company Board and Corporate Governance Experience at large publicly traded companies, which provides directors with a solid understanding of their extensive and complex oversight responsibilities and furthers our goals of greater transparency, accountability for management and the Board and protection of shareholder interests  

       CEO/COO/Other Governance Leadership Positions

 

       Government Affairs/Regulatory

Academic and Research Experience which provides strong critical thinking and verbal communication skills as well as a greater diversity of views and thought processes  

       Talent Assessment and Development/Compensation

 

       Research & Development/Innovation

The Governance Committee reviews individual professional expertise and educational background in addition to general qualifications and evaluates each individual in the context of the Board as a whole.

Tenure and Refreshment

The Board’s composition provides continuity as well as new experiences and fresh perspectives relevant to the Board’s work.

 

    Six of our director nominees served as our directors before we spun-off Kraft Foods Group, Inc. to shareholders on October 1, 2012. Seven joined the Board on or after October 1, 2012.

 

    The tenure of our independent directors ranged from approximately 2 months to 9 years, with an average tenure of approximately 4 years.

 

    Our director nominees range in age from 54 to 74.

 

 

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Board Composition and Diversity

As noted above, the Guidelines provide that the Governance Committee will consider factors including, among others, gender, race and national origin that promote diversity of views, knowledge and experience when evaluating the suitability of individuals for nomination. While the Board does not have a formal written policy regarding what specific factors would create such diversity, the Governance Committee recognizes and strives to promote the significant benefit diversity provides to the Board and Mondelēz International, as varying viewpoints contribute to a more informed and effective decision-making process. The Governance Committee seeks broad experience in relevant industries, professions and areas of expertise important to our operations. Among them are: industry knowledge; substantial global business and other international experience and backgrounds given our global, multicultural business; significant operating experience; leadership and people development experience; accounting and financial expertise; product development and marketing experience; and public company board and corporate governance experience. As part of its periodic assessment of the Board’s composition, the Governance Committee assesses the effectiveness of the Board’s diversity.

Our director nominees’ varied and relevant experiences, global and diverse perspectives, backgrounds and personal characteristics provide the Board with a diversity of viewpoints and enable it to represent effectively our shareholders:

 

    12 have operating and general management experience at major companies, including food and beverage, consumer products and services, and manufacturing companies;

 

    All are current or former leaders of large, complex enterprises;

 

    5 have been chief financial officers of major public companies;

 

    11 have significant financial experience;

 

    1 was president of and a professor at a leading university;

 

    7 are living and working or have lived and worked outside of his or her home country; and

 

    4 are women, including the Chairman and CEO.

Size of Board

Our Board currently has 13 directors. The Governance Committee recommended and the Board nominated each of the 13 incumbent directors listed below under “– Director Nominees for Election at the 2016 Annual Meeting” for election at the 2016 Annual Meeting. Each director nominee consented to his or her nomination for election to the Board and to serving on the Board, if elected.

Annual Elections

Shareholders elect all directors annually. Of the 13 directors standing for election, shareholders elected 12 to one-year terms at the 2015 Annual Meeting of Shareholders. Christiana Shi was recommended to the Governance Committee as a potential director by the Governance Committee’s consultant, Heidrick & Struggles, in connection with the Governance Committee’s search for a director with significant e-commerce and global business experience. On December 8, 2015, the Board appointed Ms. Shi, effective January 4, 2016.

The terms of all directors elected at the 2016 Annual Meeting will end at the 2017 Annual Meeting of Shareholders or when a director’s successor has been duly elected and qualified.

Shareholder Recommendations of Candidates for Election to the Board

The Governance Committee welcomes shareholder recommendations of candidates for election to the Board. To recommend a particular candidate for consideration, the shareholder should submit the required information to our Corporate Secretary, which information includes the name of the recommended candidate along with the same information required for a shareholder to nominate a candidate for election to the Board at an Annual Meeting and in the same manner as set forth in the advance notice provisions of the Company’s By-Laws. When evaluating a candidate recommended by a shareholder(s), the Governance Committee uses the same criteria set forth in the Guidelines, as described above in this section, as it uses to evaluate a candidate the Governance Committee

 

 

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identifies. It then makes a recommendation to the Board regarding the candidate’s appointment or nomination for election to the Board at an upcoming annual meeting. After the Board’s consideration of the Committee’s recommendation, our Corporate Secretary notifies that shareholder of the Board’s decision whether to appoint or nominate the candidate.

In addition, our By-Laws permit our shareholders to nominate a candidate for election directly at an Annual Meeting or for inclusion in our proxy materials, subject to certain terms and conditions. For details, see “2017 Annual Meeting of Shareholders – Shareholder Nominations and Proposals for the 2017 Annual Meeting” on page 90 of this Proxy Statement.

Director Nominees for Election at the Annual Meeting

Individual Nominees’ Experience, Qualifications, Attributes and Skills

The Board believes that each director nominee for election at the Annual Meeting is highly qualified. The director nominees’ biographies describe the specific experience, qualifications, including education and background, attributes and skills that the Governance Committee relied upon when determining to recommend the individual director nominees for election and led the Board to nominate him or her for election. A particular director nominee may possess skills, knowledge or experience in addition to those described below. As their biographies indicate, all the director nominees possess significant leadership and professional experience, knowledge, including industry knowledge, and skills that qualify them for service on our Board. Each director nominee other than Ms. Rosenfeld satisfies independence requirements under the NASDAQ listing standards and the Board’s categorical standards of director independence. All 13 director nominees satisfy the criteria stated in our Guidelines and possess the personal characteristics essential for the proper and effective functioning of the Board, including public board and corporate governance experience.

Their biographies also include information about current and past (covering the last five years) directorships at companies publicly listed in the U.S. and registered investment companies. The director nominees may also serve on the boards of various private companies, companies listed outside of the U.S. and charitable, educational and cultural institutions, not all of which are included in their biographies.

If a director nominee should become unavailable to serve as a director, the persons named as proxies intend to vote the shares for a replacement director nominee designated by the Board. In lieu of naming a substitute, the Board may reduce the number of directors on our Board.

 

 

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THE BOARD RECOMMENDS SHAREHOLDERS VOTE FOR THE ELECTION OF EACH OF THESE 13 DIRECTOR NOMINEES.

The following information regarding each director nominee is as of March 9, 2016.

 

   
LOGO     

STEPHEN F. BOLLENBACH

 

Former Co-Chairman and CEO, Hilton Hotels Corporation

 

Director Since October 2012; Independent

 

Committee: Audit

Mr. Bollenbach, 73, served as Co-Chairman and Chief Executive Officer of Hilton Hotels Corporation, a global hospitality provider, from May 2004 until his retirement in October 2007, and as President and Chief Executive Officer from February 1996 to May 2004. Prior to that, he was Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company, an international family entertainment and media enterprise, from September 1995 to February 1996. Mr. Bollenbach spent the previous 30 years in various financial leadership positions, including Chief Financial Officer, in the family entertainment, media, hospitality, real estate and financial services industries. Mr. Bollenbach is a director of KB Home, Macy’s Inc. and Time Warner Inc. and was formerly a director of Moelis & Company.

 

Director Qualifications:

     Leadership, Product Development and Marketing, Operating and Global Business experience – former Co-Chairman, Chief Executive Officer and President of a global hospitality corporation;

     Accounting and Financial expertise – many years of experience in financial leadership positions, including ten years as Chief Financial Officer, in the family entertainment, media, hospitality, real estate and financial services industries; and

     Public Company Board and Corporate Governance experience.

 

LOGO     

LEWIS W.K. BOOTH

 

Former Executive Vice President and Chief Financial Officer, Ford Motor Company

 

Director since October 2012; Independent

 

Committees: Finance

Human Resources and Compensation

Mr. Booth, 67, served as Executive Vice President and Chief Financial Officer of the Ford Motor Company, a global automobile manufacturer, from November 2008 until his retirement in April 2012. He was Executive Vice President of Ford of Europe, Volvo Car Corporation and Ford Export Operations and Global Growth Initiatives, and Executive Vice President of Ford’s Premier Automotive Group from October 2005 to October 2008. Prior to that, Mr. Booth held various executive leadership positions with Ford, including Chairman and Chief Executive Officer of Ford of Europe, President of Mazda Motor Corporation and President of Ford Asia Pacific and Africa Operations. He worked continuously for the Ford Motor Company, in positions of increasing responsibility, from 1978 to 2012. Mr. Booth was appointed Commander of the Order of the British Empire in June 2012 for his services to the United Kingdom’s automotive and manufacturing industries. Mr. Booth is a director of Gentherm Incorporated and Rolls-Royce Holdings plc.

 

Director Qualifications:

     Leadership, Product Development and Marketing, Operating and Global Business experience – many years of experience in executive leadership positions for major divisions of a global automobile manufacturer, during which he successfully implemented major business restructuring and return to profitability;

     Accounting and Financial expertise – former Chief Financial Officer of a global automobile manufacturer, where he participated in a restructuring of the balance sheet and a return to growth and profitability; and

     Public Company Board and Corporate Governance experience.

 

 

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LOGO     

 

 

LOIS D. JULIBER

 

Former Vice Chairman and Chief Operating Officer, Colgate-Palmolive Company

 

Director since November 2007; Independent

 

     Committees:  

Governance, Membership and Public Affairs

Chair, Human Resources and Compensation

 

Ms. Juliber, 67, served as Vice Chairman of the Colgate-Palmolive Company, a global consumer products company, from October 2004 until her retirement in April 2005. She served as Colgate-Palmolive’s Chief Operating Officer from February 2000 to October 2004, Executive Vice President – North America and Europe from 1997 until February 2000, President of Colgate North America from 1994 to 1997 and Chief Technology Officer from 1991 until 1994. Prior to joining Colgate-Palmolive, Ms. Juliber spent 15 years at Mondelēz International’s predecessor, General Foods Corporation, in a variety of key marketing and general management positions. Ms. Juliber is a director of E. I. du Pont de Nemours and Company. She was formerly a director of Goldman Sachs Group, Inc.

 

Director Qualifications:

     Leadership and Operating experience – former Vice Chairman and Chief Operating Officer of a global consumer products company, where she led the company’s turn-around in North America and expansion and growth in key emerging markets like India and China;

     Industry Knowledge, Manufacturing and Information Technology, Product Development, Research and Development and Marketing, and Global Business and Supply Chain experience – 32 years working in the global consumer products industry; and

     Public Company Board and Corporate Governance experience.

 

 

 

LOGO     

MARK D. KETCHUM

 

Former President and Chief Executive Officer, Newell Rubbermaid Inc.

 

Director since April 2007; Lead Director since January 2009; Independent

 

     Committee:  

Chair, Governance, Membership and Public Affairs and

as Lead Director, an ex-officio non-voting member of all committees of which he is not a member

 

Mr. Ketchum, 66, served as President and Chief Executive Officer of Newell Rubbermaid Inc., a global marketer of consumer and commercial products, from October 2005 until his retirement in June 2011 and was a member of its board of directors from November 2004 to May 2012. From 1971 to 2004, Mr. Ketchum served in a variety of roles of increasing responsibility at The Procter & Gamble Company, a global marketer of consumer products, including President, Global Baby and Family Care, from 1999 to 2004, President – North American Paper Sector from 1996 to 1999, and Vice President and General Manager – Tissue/Towel from 1990 to 1996. Mr. Ketchum was formerly a director of Newell Rubbermaid Inc.

 

Director Qualifications:

     Leadership and Operating experience – former President and Chief Executive Officer of a global consumer products company and former President of a division of another global consumer products company;

     Industry Knowledge, Product Development and Marketing and Global Business experience – held key roles in operations, marketing and general management at global consumer products companies for four decades; and

     Public Company Board and Corporate Governance experience.

 

 

 

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LOGO     

JORGE S. MESQUITA

 

Worldwide Chairman, Consumer of Johnson & Johnson

 

Director since May 2012; Independent

 

     Committee:   Audit
      

 

Mr. Mesquita, 54, has been Worldwide Chairman, Consumer of Johnson & Johnson, a global healthcare products company, since December 2014. Prior to that, he was continuously employed by The Procter & Gamble Company, a global marketer of consumer products, in various marketing and leadership capacities for 29 years from 1984 to 2013. He served as Group President – New Business Creation and Innovation from March 2012 until June 2013, Group President – Special Assignment from January 2012 until March 2012, Group President, Global Fabric Care from 2007 to 2011 and President, Global Home Care from 2001 to 2007, also serving as President of Commercial Products and President of P&G Professional from 2006 to 2007.

 

Director Qualifications:

     Leadership and Global Business experience – current worldwide Chairman of a consumer products division and former Group President of a major division of a global marketer of consumer products; and

     Industry Knowledge and Marketing experience.

 

 

LOGO     

JOSEPH NEUBAUER

 

Former Chairman of the Board, Aramark

 

Director since November 2014; Independent

 

     Committees:  

Finance

Governance, Membership and Public Affairs

 

Mr. Neubauer, 74, was Chairman of the Board of Aramark, a leading provider of professional services including food, hospitality, facility and uniform services, from April 1984 until February 2015. Mr. Neubauer joined Aramark in 1979 as Executive Vice President of Finance and Development, Chief Financial Officer and a member of the Board of Directors. He was elected President in 1981, Chief Executive Officer in 1983 and Chairman in 1984. He held the title of Chairman and CEO until May 2012. Mr. Neubauer is a director of Macy’s Inc. He was formerly a director of Aramark and Verizon Communications, Inc.

 

Director Qualifications:

     Leadership, Operating and Global Business experience – former Chairman and Chief Executive Officer of global provider of food, hospitality, facility and uniform services;

     Industry Knowledge – 36 years in various key positions at a global provider of food, facilities and uniform services company;

     Accounting and Financial expertise – former Chief Financial Officer of a global food service company; and

     Public Company Board and Corporate Governance experience.

 

 

 

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LOGO     

 

NELSON PELTZ

 

Chief Executive Officer and Founding Partner, Trian Fund Management, L.P.

 

Director since January 2014; Independent

 

     Committees:  

Finance

Governance, Membership and Public Affairs

 

Mr. Peltz, 73, has served as Chief Executive Officer and Founding Partner of Trian Fund Management, L.P., an alternative investment management firm, since November 2005. He also served as Chairman and CEO of Triarc Companies, Inc. (now known as The Wendy’s Company), a holding company for various consumer and industrial businesses, from April 1993 to June 2007, and has served as its non-executive Chairman since June 2007. Prior to that, Mr. Peltz served as Chairman and Chief Executive Officer of Trian Group, Limited Partnership, which provided investment banking and management services to entities controlled by Mr. Peltz and Peter May, from January 1989 to April 1993 and as Chairman and CEO of Triangle Industries, Inc., a manufacturer of packaging products, from 1983 to December 1988. The National Association of Corporate Directors (NACD) recognized Mr. Peltz in 2010, 2011 and 2012 as among the most influential people in the global corporate governance arena. Mr. Peltz is a director of The Madison Square Garden Company, SYSCO Corporation and The Wendy’s Company. He was formerly a director of H. J. Heinz Company, Legg Mason, Inc. and Ingersoll-Rand plc.

 

Director Qualifications:

     Leadership, Operating and Global Business experience – current Chief Executive Officer of an investment management firm, former Chairman and Chief Executive Officer of a consumer/industrial holding company and a global manufacturing company; and

     Public Company Board and Corporate Governance experience.

 

 

LOGO     

FREDRIC G. REYNOLDS

 

Former Executive Vice President and Chief Financial Officer, CBS Corporation

 

Director since December 2007; Independent

 

     Committee:   Chair, Audit
      

 

Mr. Reynolds, 65, served as Executive Vice President and Chief Financial Officer of CBS Corporation, a mass media company, from January 2006 until his retirement in August 2009. From September 2001 until December 2005, Mr. Reynolds served as President and Chief Executive Officer of Viacom Television Stations Group and as Executive Vice President and Chief Financial Officer of Viacom Inc., a mass media company, from May 2000 to September 2001. He also served as Executive Vice President and Chief Financial Officer of CBS Corporation and its predecessor, Westinghouse Electric Corporation, from 1994 to 2000. Prior to that, Mr. Reynolds served in various capacities at PepsiCo, Inc., a food and beverage company, for twelve years, including Chief Financial Officer or Financial Officer at Pizza Hut, Pepsi Cola International, Kentucky Fried Chicken Worldwide and Frito-Lay. Mr. Reynolds is a director of Hess Corporation and United Technologies Corporation. He was formerly a director of AOL, Inc.

 

Director Qualifications:

     Leadership, Operating and Global Business experience – former President, Chief Executive Officer, Executive Vice President and Chief Financial Officer of global media companies and divisions of a global food and beverage company;

     Industry Knowledge – twelve years in various positions, including key roles, at a global food and beverage company;

     Accounting and Financial expertise – former Chief Financial Officer or Financial Officer of a mass media company and divisions of a global food and beverage company, and a Certified Public Accountant; and

     Public Company Board and Corporate Governance experience.

 

 

 

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LOGO     

 

IRENE B. ROSENFELD

 

Chairman and Chief Executive Officer, Mondelēz International, Inc.

 

Director since June 2006

 

Ms. Rosenfeld, 62, was appointed Chief Executive Officer and a director of Mondelēz International in June 2006 and became Chairman of the Board in March 2007. Prior to that, she served as Chairman and Chief Executive Officer of Frito-Lay, a division of PepsiCo, Inc., a food and beverage company, from September 2004 to June 2006. Ms. Rosenfeld was employed continuously by Mondelēz International and its predecessor companies in various capacities from 1981 until 2003, including President of Kraft Foods North America and President of Operations, Technology, Information Systems and Kraft Foods, Canada, Mexico and Puerto Rico.

 

Director Qualifications:

     Leadership and Operating experience – current Chairman and Chief Executive Officer of Mondelēz International and former Chairman and Chief Executive Officer of a major business division of another global food and beverage company;

     Industry Knowledge, Product Development and Marketing, Sales and Global Business experience – long-time service in various positions, including key roles, at Mondelēz International and its predecessor companies and another global food and beverage company; and

     Public Company Board and Corporate Governance experience.

 

 

LOGO     

 

CHRISTIANA S. SHI

 

President, Direct-to-Consumer of Nike, Inc.

 

Director Since January 2016; Independent

 

Ms. Shi, 56, has served as President, Direct-to-Consumer of Nike, Inc., a global provider of athletic footwear and apparel, since July 2013. Ms. Shi joined Nike in October 2010 and served as Vice President and Chief Operating Officer, Global Direct-to-Consumer, from 2010 to 2012 and as Vice President and General Manager, Global Digital Commerce, from 2012 to 2013. Prior to joining Nike, Ms. Shi spent 24 years at McKinsey & Company, a global management consulting firm, in various roles of increasing responsibility. Previous to joining McKinsey & Company, Ms. Shi served in various trading, institutional sales and investment banking roles at Merrill Lynch & Company from July 1981 to July 1984. Ms. Shi is a director of West Marine, Inc.

 

Director Qualifications:

     Leadership and Global Business experience – current President and former Vice President and Chief Operating Officer of a division of a global consumer products company;

     Industry Knowledge and Marketing experience – leader of major divisions of global consumer products company; and

     Public Company Board and Corporate Governance experience.

 

 

 

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LOGO     

PATRICK T. SIEWERT

 

Managing Director, The Carlyle Group, L.P.

 

Director Since October 2012; Independent

    

Committees:

 

Audit

Chair, Finance

 

Mr. Siewert, 60, has served as a Managing Director for The Carlyle Group, L.P., a global alternative asset management firm, since April 2007. In that role, Mr. Siewert serves as a director of several public companies trading on the Hong Kong and Singapore stock exchanges. Formerly, he was a senior executive with The Coca-Cola Company, a global beverage company, from August 2001 to March 2007 in various positions including Group President and Chief Operating Officer, Asia and a member of the Global Executive Committee. Prior to that, he was with Eastman Kodak Company, a technology company focused on imaging products and services, from 1974 to 2001, serving in a variety of executive and managerial and director roles, including Chief Operating Officer, Consumer Imaging and Senior Vice President and President of the Kodak Professional Division. Mr. Siewert is a director of Avery Dennison Corporation.

 

Director Qualifications:

     Leadership, Operating and Global Business experience – former President of a major division of a global beverage company and a consumer products company, with an in-depth knowledge of consumer trends, routes to market and the opportunities and challenges in the Asian markets;

     Industry Knowledge – six years in key roles at a global beverage company; and

     Public Company Board and Corporate Governance experience.

 

 

LOGO     

RUTH J. SIMMONS

 

President Emerita, Brown University

 

Director since October 2012; Independent

 

     Committees:  

Governance, Membership and Public Affairs

Human Resources and Compensation

 

Dr. Simmons, 70, is President Emerita of Brown University, having served as President from 2001 to 2012. Prior to that, Dr. Simmons served as President of Smith College from 1995 to 2001 and Vice Provost of Princeton University from 1991 to 1995. She served in various administrative positions at colleges and universities beginning in 1977, including the University of Southern California from 1979 to 1983, Princeton University from 1983 to 1989 (and again from 1991 to 1995) and Spelman College from 1989 to 1991. Dr. Simmons was a Fulbright Scholar to France from 1967 to 1968 and is a Chevalier of the French Legion of Honor. Dr. Simmons is a director of Fiat Chrysler Automobiles NV, Square, Inc. and Texas Instruments Incorporated (from which she will retire in April 2016) and was formerly a director of Chrysler Group LLC.

 

Director Qualifications:

     Leadership and Operating experience – former President of a major college and a leading university with over 15 years of experience;

     Academic and Research experience – professor of literature and former administrator with over 36 years of experience; and

     Public Company Board and Corporate Governance experience.

 

 

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LOGO

    

JEAN-FRANÇOIS M. L. VAN BOXMEER

 

Chairman of the Executive Board and Chief Executive Officer, Heineken N.V.

 

Director since January 2010; Independent

 

     Committees:  

Finance

Human Resources and Compensation

 

Mr. van Boxmeer, 54, has been Chairman of the Executive Board and Chief Executive Officer of Heineken N.V., a global brewing company, since 2005 and a member of its Executive Board since 2001. He has been employed continuously by Heineken, in various capacities, in positions of increasing responsibility, since 1984. Mr. van Boxmeer is a Member of the Shareholders Committee of Henkel AG & Co. KGaA.

 

Director Qualifications:

     Leadership and Operating experience – current Chairman and Chief Executive Officer of a global brewing company, where he led the company’s significant global expansion, most notably in Asian markets;

     Industry Knowledge, Product Development and Marketing and Global Business experience – three decades in various positions, including key roles, at a global brewing company; and

     Public Company Board and Corporate Governance experience.

 

Corporate Governance

We believe that a strong corporate governance framework is essential to our long-term success. This section describes our governance policies, key governance practices and Board leadership structure and oversight functions.

Governance Guidelines

The Board adopted Guidelines articulating our governance philosophy, practices and policies in a range of areas, including: the Board’s role and responsibilities; Board composition and structure; responsibilities of the committees of the Board; CEO and Board performance evaluations; and succession planning. At least annually, the Governance Committee reviews the Guidelines and recommends any changes to the Board. The Guidelines are available on our website at www.mondelezinternational.com/investors/corporate-governance.

Key Corporate Governance Practices

At least annually, we review our corporate governance practices to support the Board’s independent leadership, accountability and oversight. Key aspects of our corporate governance framework include:

 

    Annual Election of Directors. Our By-Laws provide that our shareholders elect all directors annually.

 

    Proxy Access By-Law Provisions. Following consultation with numerous shareholders, the Board amended our By-Laws effective October 9, 2015 to provide for proxy access under the following key parameters:

 

    Minimum Ownership Threshold: 3%;

 

    Ownership Duration: 3 years;

 

    Maximum Nominations Permitted: greater of 20% or 2 directors; and

 

    Aggregation: no more than 20 shareholders may aggregate holdings to meet the minimum ownership threshold.

 

    Majority and Confidential Voting in Uncontested Director Elections with a Director Resignation Policy. Our By-Laws provide that, in an election in which the number of nominees for election equals the number of directors to be elected, director nominees must be elected by a majority of the votes cast.

 

    Special Meetings of Shareholders. Our By-Laws allow shareholders of record of at least twenty percent (20%) of the voting power of the outstanding stock to call a special meeting of shareholders.

 

 

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    Limitation on Management Directors. Our Guidelines provide that the Board believes the Chairman and CEO generally should be the only member of management to serve as a director. Currently, our Chairman and CEO is the only member of management serving on the Board.

 

    Independent Committees. All Board committees consist entirely of, and are chaired by, independent directors.

 

    Executive Sessions. At each in-person Board meeting, our independent directors meet without the CEO or any other members of management present to discuss substantive issues important to Mondelēz International, including matters concerning management. The Lead Director chairs these sessions. In some instances, a committee chair leads Board discussion of a topic relevant to that committee’s remit.

 

    Board, Committee and Director Self-Assessments. The Governance Committee establishes and oversees processes for annual Board and committee assessments and coordinates individual director self-assessments. The Board, committees and management use the results of these self-assessments in planning their work and subsequent governance decisions.

 

    Shareholder Engagement. As more fully described on page 23 of this Proxy Statement, we engage in ongoing dialogue with shareholders throughout the year.

 

    Strategic Planning. Every year, the Board devotes several days to review, discuss and challenge the Company’s Strategic Plan. During the meeting, the Board meets with management to understand the Strategic Plan’s short-term and long-term objectives before deciding to endorse the Strategic Plan. At its meetings during the balance of the year, the Board and management track progress against the Strategic Plan’s goals. The Company’s goals and executive compensation design are tied to a number of metrics critical to achieving the Strategic Plan and promoting long-term shareholder returns.

 

    Annual Chairman and CEO Evaluation. The Human Resources and Compensation Committee (the “Compensation Committee”) annually evaluates the Chairman and CEO’s performance. The Compensation Committee seeks input from the other directors regarding her performance before deciding her performance rating. The Governance Committee annually considers the CEO’s performance and suitability as Chairman when determining whether to nominate her for re-election.

 

    Stock Ownership Guidelines. To promote alignment of directors’ and shareholders’ interests, our Guidelines provide that we expect directors to hold Common Stock in an amount equal to five times the annual Board retainer within five years of joining the Board. As of March 9, 2016, all directors with at least five years of service on the Board met or exceeded this requirement.

Additionally, equity grants awarded in or after May 2010 to directors are made in the form of deferred stock units. Distribution of actual shares occurs six months after the director ends his or her service as a director.

 

    Leadership Structure. Our Guidelines currently provide for an independent Lead Director and that the CEO also serves as Chairman of the Board. See additional discussion below under “– Board Leadership Structure.”

 

    Special Meetings of the Board. Our By-Laws empower both the Lead Director and the Chairman to call special meetings of the Board.

Board Leadership Structure

Our By-Laws provide the Board flexibility in determining its leadership structure. The Board may appoint and designate the duties of a Lead Director and permit one person to hold the offices of both CEO and Chairman. Within that framework, the Board annually re-evaluates its leadership structure to determine the most appropriate leadership structure at that time. In considering which leadership structure will allow it to most effectively carry out its responsibilities and best represent shareholders’ interests, the Board takes into account various factors. Among them are our specific business needs, our operating and financial performance, industry conditions, economic and regulatory environments, results of Board and committee annual self-assessments, advantages and disadvantages of alternative leadership structures based on circumstances at that time and our corporate governance practices. In keeping with this principle, the Board may determine that the CEO also serve as Chairman, but if it does so, it also appoints an independent Lead Director with robust responsibilities.

 

 

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Current Leadership Structure

Currently, our Guidelines provide that:

 

    an independent director serves as Lead Director;

 

    independent directors chair the Board’s four standing committees; and

 

    the CEO serves as Chairman of the Board.

The Board believes that this leadership structure provides an effective balance of strong leadership and independent oversight and best meets our current circumstances and anticipated needs.

Independent Director Leadership and Oversight

The Board believes that robust independent Board leadership and oversight are very important. Therefore, it established the substantive position of independent Lead Director for times when one individual serves as both Chairman and CEO. Our independent directors annually select our Lead Director for a one-year term. The Board created the Lead Director position to provide independent leadership of the Board’s affairs on behalf of our shareholders, increase the Board’s effectiveness, promote open communication amongst the independent directors and serve as the principal liaison between the Chairman and the other independent directors.

Lead Director Role and Responsibilities

Under our Guidelines, the Lead Director, in consultation with the other independent directors, has the following duties and responsibilities:

 

    Serve as liaison between the independent directors and the Chairman and CEO;

 

    With respect to long-term meeting planning, seek input from the independent directors and advise the Chairman and CEO as to an appropriate annual schedule of and major agenda topics for regular Board meetings prior to Board review and approval;

 

    With respect to specific Board meetings, seek input from the independent directors regarding agenda items and the content of briefing materials. Add agenda items in his or her discretion. Review and approve meeting agenda as well as the content of Board briefing materials;

 

    With respect to regular Board and committee meetings, review and approve the allocation of time amongst the Board and committee meetings;

 

    Preside at all Board meetings at which the Chairman and CEO is not present, including executive sessions of the independent directors and, as appropriate, apprise the Chairman of the topics considered;

 

    Call meetings of the independent directors or of the Board as needed;

 

    Facilitate effective communication and interaction between the Board and management. To assist the Lead Director in fulfilling this responsibility, the Board may adopt more specific procedures designed to promote effective communication and interaction while minimizing disruption of the Company’s day-to-day activities;

 

    Serve as an ex-officio non-voting member of all Board committees of which he or she is not a member;

 

    Lead the annual Board and director self-assessments process, including meeting with each director to discuss the Board’s and that individual director’s performance;

 

    Working with the Governance Committee, develop recommendations for committee structure, membership, rotations and chairs;

 

    Be available for consultation and direct communication with the Company’s major shareholders; and

 

    Perform such other duties as the Board may from time to time delegate to the Lead Director.

Mark D. Ketchum is our current Lead Director. The independent directors first appointed him to that role in 2009 and have re-appointed him annually. The independent directors believe that he is an effective Lead Director due to his independence, leadership, global operating experience as former President and CEO of Newell Rubbermaid Inc. and a variety of roles during his 33 year career at The Procter & Gamble Company, and corporate governance experience, including his prior service as a director of Newell Rubbermaid Inc. and Hillenbrand Industries.

 

 

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Chairman and CEO Role and Responsibilities

Ms. Rosenfeld has served as our CEO and as a director since June 2006. In conjunction with our 2007 spin-off from Altria Group, Inc., the Board concluded that Ms. Rosenfeld should also serve as Chairman because of her extensive knowledge of the Company, the food industry and the competitive environment in which we operate, her leadership experience and her ability and dedication to working closely with the Lead Director and our other independent directors. Based on our current circumstances and anticipated needs, the Board continues to believe that having Ms. Rosenfeld serve as both CEO and Chairman serves our shareholders’ interests and contributes to the Board’s efficiency and effectiveness. The Board believes that she is generally in the best position to inform our independent directors about our global operations and critical business matters and ensure alignment of our business and strategic plans. Further, the Board believes that combining these roles also fosters expedient communication between Ms. Rosenfeld and the Board.

Director Independence

Our Guidelines require that at least 80% of our directors meet the NASDAQ listing standards’ independence requirements and provide that the Chairman and CEO generally should be the only member of management to serve as a director. In order to determine that a director is independent, the Board must affirmatively determine, after reviewing all relevant information, that a director has no relationship with Mondelēz International or any of its subsidiaries that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To assist in this determination, the Board adopted categorical standards of director independence, including whether a director or a member of the director’s immediate family has any current or past employment or affiliation with Mondelēz International or our independent registered public accountants. These standards are generally consistent with the NASDAQ listing standards’ independence requirements. Annex A to the Guidelines lists these categorical standards. It is available on our website at www.mondelezinternational.com/investors/corporate-governance.

The Board determined that, under our categorical standards and NASDAQ’s listing standards, the following directors are independent: Stephen F. Bollenbach, Lewis W.K. Booth, Lois D. Juliber, Mark D. Ketchum, Jorge S. Mesquita, Joseph Neubauer, Nelson Peltz, Fredric G. Reynolds, Christiana S. Shi, Patrick T. Siewert, Ruth J. Simmons and Jean-François M. L. van Boxmeer. In addition, Ratan N. Tata was independent during the portion of fiscal 2015 he served on the Board. Irene B. Rosenfeld is not independent because she is a Mondelēz International employee.

Oversight of Risk Management

Our business faces various risks, including strategic, financial, operational and compliance risks.

 

    Management is responsible for the day-to-day assessment, management and mitigation of risk. Identifying, managing and mitigating our exposure to these risks and effectively overseeing this process are critical to our operational decision-making and annual planning processes.

 

    Our Board has ultimate responsibility for risk oversight, but it has delegated primary responsibility for overseeing risk assessment and management to the Audit Committee. Pursuant to its charter, the Audit Committee reviews and discusses risk assessment and risk management guidelines, policies and processes utilized in our Enterprise Risk Management (“ERM”) process.

Our ERM process is ongoing and implemented at all levels of our operations and across business units to identify, assess, monitor, manage and mitigate risk. Our ERM process facilitates open communication between management and the Board so that the Board and committees understand key risks to our business and performance, our risk management process and how it is functioning, the participants in the process and the information gathered through the process. The Audit Committee annually reviews the functioning of our ERM process as well as the results of our annual ERM risk assessment.

Annually, the Audit Committee reviews and approves management’s recommendation for allocating to the full Board or retaining for itself responsibility for reviewing and assessing key risk exposures and management’s response to

 

 

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those exposures. Management provides reports to the Board and the appropriate committee in advance of meetings regarding key risks and the actions management has taken to monitor, control and mitigate these risks. Management also attends Board and committee meetings to discuss these reports and provide any updates. The committees report key risk discussions to the Board following their meetings. Board members may also further discuss the risk management process directly with members of management.

During 2015, the Board and committees reviewed and assessed risks related to our business and operations as follows (the Board annually reviews and sometimes reallocates responsibilities amongst committees. Accordingly, the allocation of responsibilities shown in this table may change during 2016):

 

Board   Audit  

Governance,

Membership and

Public Affairs

 

Human Resources

and Compensation(1)

  Finance

Strategy

 

Operations

 

Food safety (including supply chain and food defense)

 

Competition (including private label and customer concentration)

 

Capital structure

 

Financial strategies and transactions (including economic trends)

 

Labor relations (including human capital)

 

Transformation (including zero-based budgeting, supply chain reinvention and the coffee transaction)

 

Financial statements

 

Financial reporting process

 

Accounting matters

 

Legal, compliance and regulatory matters (including non-financial compliance risks)

 

Business continuity/operations

 

Sovereign risk

 

Financial risk management (including foreign exchange, commodities exposure, and income and other taxes)

 

Health, safety and environmental

 

Governance programs

 

Board organization, membership and structure

 

Related person transactions

 

Social responsibility

 

Public policy

 

Mondelēz International’s public image and reputation

 

Compensation policies and practices for all employees (including executives)

 

Succession planning

 

Human resources policies and practices

 

Interest rate exposure

 

Enterprise funding and liquidity

 

(1) For a discussion about risk oversight relating to our compensation programs, see “– Board Committees and Membership – Human Resources and Compensation Committee – How the Compensation Committee Manages Compensation-Related Risk.”

The Board frequently discusses our strategic plans, issues and opportunities in light of circumstances in the food and beverage industry and the economic environment. Additionally, the Board devotes several days each year to a highly-focused review of our strategic plans, including strategic and operational risks. More generally, the Board is responsible for oversight of strategy, broad corporate policy and overall performance of the Company through engaged oversight of management.

The Board believes our current leadership structure enhances its oversight of risk management because our CEO, who is ultimately responsible for our risk management process, is in the best position as Chairman to discuss with the Board these key risks and management’s responses to them.

 

 

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Codes of Conduct

Code of Business Conduct and Ethics for Non-Employee Directors

We have adopted a Code of Business Conduct and Ethics for Non-Employee Directors. It fosters a culture of honesty and integrity, focuses on areas of ethical risk, guides non-employee directors in recognizing and handling ethical issues and provides mechanisms to report unethical conduct. Annually, each non-employee director must acknowledge in writing that he or she has received, reviewed and understands the Code of Business Conduct and Ethics for Non-Employee Directors. Shareholders and others can access our Director Ethics Code on our website at www.mondelezinternational.com/investors/corporate-governance.

Code of Conduct for Employees

We have adopted a Code of Conduct for Employees that applies to all of our employees. It includes policies that cover ethical and legal practices for nearly every aspect of our business. The Code of Conduct for Employees reflects our values and contains important rules our employees must follow when conducting business. The Code of Conduct is part of our global compliance and integrity program. The program provides training throughout our Company and encourages reporting of wrongdoing by offering anonymous reporting options and a non-retaliation policy. Shareholders and others can access our Code of Conduct for Employees on our website at www.mondelezinternational.com/about-us/compliance-and-integrity.

We will disclose in the Corporate Governance section of our website any amendments to our Code of Business Conduct and Ethics for Non-Employee Directors or Code of Conduct for Employees and any waiver granted to an executive officer or director under these codes.

Review of Transactions with Related Persons

Related Persons Policy and Procedures

The Board has adopted a written policy regarding the review, approval or ratification of “related person transactions.” A related person transaction is one in which Mondelēz International is a participant, the amount involved exceeds $120,000 and any “related person” had, has or will have a direct or indirect material interest. In general, “related persons” are the following persons and their immediate family members: our directors, executive officers and shareholders beneficially owning more than 5% of our outstanding Common Stock. In accordance with this policy, the Governance Committee reviews transactions that might qualify as related person transactions. If the Governance Committee determines that a transaction qualifies as a related person transaction, then the Governance Committee reviews, and approves, disapproves or ratifies the related person transaction. The Governance Committee approves or ratifies only those related person transactions that are fair and reasonable to Mondelēz International and in our and our shareholders’ best interests. The chair of the Governance Committee reviews and approves or ratifies potential related person transactions when it is not practicable or desirable to delay review of a transaction until a committee meeting. The chair reports to the Governance Committee any transaction so approved or ratified. The Governance Committee, in the course of its review and approval or ratification of a related person transaction under this policy, considers, among other things:

 

    its commercial reasonableness;

 

    the materiality of the related person’s direct or indirect interest in it;

 

    whether it may involve an actual, or create the appearance of a, conflict of interest;

 

    its impact on the related person’s independence (as defined in our Guidelines and the NASDAQ listing standards); and

 

    whether it would violate any provision of our Code of Business Conduct and Ethics for Non-Employee Directors or Code of Conduct for Employees.

Any member of the Governance Committee who is a related person with respect to a transaction under review may not participate in the deliberations or decisions regarding the transaction.

 

 

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Review of Transactions

On February 10, 2016, BlackRock, Inc. (“BlackRock”), an investment management corporation, filed a Schedule 13G/A with the SEC reporting that it was a greater than 5% shareholder as of December 31, 2015. During 2015, BlackRock acted as an investment manager with respect to certain investment options under our U.S. retirement savings plans and Canadian, Irish and U.K. pension plans. BlackRock was selected as an investment manager for the retirement savings and pension plans by each plan’s designated authority for plan investments. BlackRock’s selection was based on the determination of each plan’s designated authority that the selection met applicable standards and that the fees were reasonable and appropriate. BlackRock’s fees, approximately $1.59 million during 2015, were paid from the plan assets of the specific plans for which it performed services. The plans expect to pay similar fees to BlackRock during 2016 for similar services. (Fees, based on plan asset value, are paid quarterly on a lagging basis.)

Shareholder Engagement

Consistent with our shareholder engagement philosophy, throughout 2015, our Lead Director, senior management, Investor Relations and the Corporate Secretary met with and sought feedback from many shareholders representing a significant portion of our outstanding shares on a wide range of topics including, among others, portfolio strategy, capital allocation, corporate governance including proxy access, sustainability and corporate social responsibilities. These meetings were candid and constructive. We will continue to engage with and consider our shareholders’ perspectives, and doing so benefits Mondelēz International and its registered, beneficial, retail and institutional investors. Our Lead Director is available for consultation and direct communication with major shareholders.

 

Mondelēz International’s

Shareholder Engagement Philosophy

Year round communications cycle with large and small shareholders   Committed to open, interactive dialogue   Places value on registered, retail and institutional shareholders   Feedback reflected at Board meetings

Communications with the Board

Information for shareholders and other parties interested in communicating with the Lead Director, the Board or our independent directors, individually or as a group, is available on our website at www.mondelezinternational.com/Investors/corporate-governance#contacts. Our Corporate Secretary:

 

    Forwards communications relating to matters within the Board’s purview to the Lead Director or appropriate independent director(s) and communications relating to matters within a Board committee’s area of responsibility to the chair of the appropriate committee.

 

    Forwards communications relating to ordinary business matters, such as suggestions, inquiries and consumer complaints, to the appropriate Mondelēz International executive or employee, but makes them available to any independent director who requests them.

 

    Does not forward or retain solicitations, junk mail and obviously frivolous or inappropriate communications.

Board Committees and Membership

The Governance Committee considers and makes recommendations to the Board regarding the Board’s committee structure and membership. Our Board designates the committee members and chairs following consideration of the Governance Committee’s recommendations. The Board has adopted a written charter for each standing committee. The charters define each committee’s roles and responsibilities. Charters for each committee are available on our website at www.mondelezinternational.com/investors/corporate-governance. Independent directors comprise 100% of the Audit, Compensation, Finance and Governance Committees. All committee chairs are independent. Each committee meets regularly in executive session without management. Committee Chairs approve agendas and materials for their committee meetings. In addition, committees may retain outside legal, financial and other advisors, at the Company’s expense.

 

 

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The Board has four standing committees: Audit, Finance, Governance, Membership and Public Affairs and Human Resources and Compensation. The committee structure and membership is as follows:

Committee Membership(1)

 

Director   Audit     Finance     Governance,
Membership and
Public Affairs
    Human
Resources and
Compensation
 
Stephen F. Bollenbach(2)     X                           
Lewis W.K. Booth(3)             X                X   
Lois D. Juliber                     X        Chair   
Mark D. Ketchum     +        +        Chair        +   
Jorge S. Mesquita     X                           
Joseph Neubauer             X        X           
Nelson Peltz             X        X           
Fredric G. Reynolds     Chair                           
Patrick T. Siewert     X        Chair                   
Ruth J. Simmons                     X        X   
Jean-François M. L. van Boxmeer             X                X   
Total Number of Committee Meetings During 2015     11        3(4)        6        7   

 

+ Mr. Ketchum, as Lead Director, is an ex-officio non-voting member of all committees of which he is not a member.
(1) The Board periodically reviews and rotates committee memberships. Accordingly, the membership shown in this table may change during 2016. Director Nominee Shi was appointed to the Board effective January 4, 2016 and will be appointed to committees in due course.
(2) Mr. Bollenbach was a member of the Compensation Committee and Governance Committee through January 25, 2015.
(3) Mr. Booth was a member of the Audit Committee through January 25, 2015.
(4) The Finance Committee acted once by unanimous written consent during 2015.

Meeting Attendance

We expect directors to attend all Board meetings, the Annual Meeting and all meetings of the committees on which they serve. We understand, however, that occasionally a director may be unable to attend a meeting. The Board held eight meetings during 2015 and acted twice by unanimous written consent.

 

    All incumbent directors who served for some or all of 2015 attended at least 75% of the aggregate number of meetings of the Board and all committees on which they served (held during the period that they served).

 

    During 2015, Mses. Juliber and Rosenfeld and Messrs. Bollenbach, Booth, Ketchum and Reynolds attended 100% and Ms. Simmons and Messrs. Mesquita, Neubauer, Peltz, Siewert and van Boxmeer attended at least 84% of meetings of the Board and all committees on which they served.

 

    All 12 of the then-incumbent directors attended the 2015 Annual Meeting of Shareholders.

Audit Committee

The Board established the Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). The Board has determined that all of the Audit Committee members are independent within the meaning of the NASDAQ listing standards and Rule 10A-3 of the Exchange Act. The Board also determined that all Audit Committee members are able to read and understand financial statements in accordance with NASDAQ listing standards and are financially literate in accordance with the New York Stock Exchange listing standards. The Board has determined that Stephen F. Bollenbach and Fredric G. Reynolds are audit committee financial experts” within the meaning of SEC regulations and have financial sophistication in accordance with NASDAQ listing standards. No Audit Committee member received any payments in 2015 from us other than compensation for service as a director.

 

 

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Under its charter, the Audit Committee is responsible for overseeing our accounting and financial reporting processes and audits of our financial statements. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accountants, including review of their qualifications, independence and performance.

Among other duties, the Audit Committee also oversees:

 

    the integrity of our financial statements, our accounting and financial reporting processes, and our systems of internal control over financial reporting and safeguarding our assets;

 

    our compliance with legal and regulatory requirements;

 

    the performance of our internal auditors and internal audit functions; and

 

    our guidelines and policies with respect to risk assessment and risk management.

The Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of any complaints we receive. We encourage employees and third-party individuals and organizations to report concerns about our accounting controls, auditing matters or anything else that appears to involve financial or other wrongdoing. To report such matters, please e-mail us at: compliance@mdlz.com.

 

Audit Committee Report for the Year Ended December 31, 2015

Management has primary responsibility for Mondelēz International’s financial statements and the reporting process, including the systems of internal control over financial reporting. Our role as the Audit Committee of the

Mondelēz International Board of Directors is to oversee Mondelēz International’s accounting and financial reporting processes and audits of its financial statements. In addition, in 2015 we assisted the Board in its oversight of:

 

    Mondelēz International’s compliance with legal and regulatory requirements;

 

    Mondelēz International’s independent registered public accountants’ qualifications, independence and performance;

 

    The performance of Mondelēz International’s internal auditor and the internal audit function; and

 

    Mondelēz International’s risk assessment and risk management guidelines and policies.

Our duties include overseeing Mondelēz International’s management, the internal audit department and the independent registered public accountants in their performance of the following functions, for which they are responsible:

Management

 

    Preparing Mondelēz International’s consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”);

 

    Assessing and establishing effective financial reporting systems and internal controls and procedures; and

 

    Reporting on the effectiveness of Mondelēz International’s internal control over financial reporting.

Internal Audit Department

 

    Assessing management’s system of internal controls and procedures; and

 

    Reporting on the effectiveness of that system.

Independent Registered Public Accountants

 

    Auditing Mondelēz International’s financial statements;

 

    Issuing an opinion about whether the financial statements conform with U.S. GAAP; and

 

    Annually auditing the effectiveness of Mondelēz International’s internal control over financial reporting.

 

 

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Periodically, we meet, both independently and collectively, with management, the internal auditor and the independent registered public accountants to, among other things:

 

    Discuss the quality of Mondelēz International’s accounting and financial reporting processes and the adequacy and effectiveness of its internal controls and procedures;

 

    Review significant audit findings prepared by each of the independent registered public accountants and internal audit department, together with management’s responses; and

 

    Review the overall scope and plans for the audits by the internal audit department and the independent registered public accountants.

Prior to Mondelēz International’s filing of its Annual Report on Form 10-K for the year ended December 31, 2015 with the SEC, we also:

 

    Reviewed and discussed the audited financial statements with management and the independent registered public accountants;

 

    Discussed with the independent registered public accountants the items the independent registered public accountants are required to communicate to the Audit Committee in accordance with the applicable requirements of the Public Company Accounting Oversight Board;

 

    Received from the independent registered public accountants the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accountants’ communications with us concerning independence; and

 

    Discussed with the independent registered public accountants their independence from Mondelēz International, including reviewing non-audit services and fees to assure compliance with (i) regulations prohibiting the independent registered public accountants from performing specified services that could impair their independence, and (ii) Mondelēz International’s and the Audit Committee’s policies.

Based upon the review and discussions described in this report and without other independent verification, and subject to the limitations of our role and responsibilities outlined in this report and in our written charter, we recommended to the Board, and the Board approved, that the audited consolidated financial statements be included in Mondelēz International’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the U. S. Securities and Exchange Commission on February 19, 2016.

Audit Committee:

Fredric G. Reynolds, Chair

Stephen F. Bollenbach

Jorge S. Mesquita

Patrick T. Siewert

Pre-Approval Policies

Our Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accountants. These services may include audit services, audit-related services, tax services and other permissible non-audit services. The pre-approval authority details the particular service or category of service that the independent registered public accountants will perform. Management reports to the Audit Committee on the actual fees charged by the independent registered public accountants for each category of service.

During the year, circumstances may arise when it becomes necessary to engage the independent registered public accountants for additional services not contemplated in the original pre-approval authority. In those instances, the committee approves the services before we engage the independent registered public accountants. In case approval is needed before a scheduled committee meeting, the committee has delegated pre-approval authority to its chair. The chair must report on such pre-approval decisions at the committee’s next regular meeting.

The Audit Committee pre-approved all 2015 audit and non-audit services provided by the independent registered public accountants.

 

 

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Independent Registered Public Accountants’ Fees

Aggregate fees for professional services rendered by our independent registered public accountants, PricewaterhouseCoopers LLP, for 2015 and 2014 were:

 

       2015        2014  
Audit Fees      $ 15,745,000         $ 15,971,000   
Audit-Related Fees        2,614,000           3,714,000   
Tax Fees        788,000           1,411,000   
All Other Fees        48,000           27,000   
    

 

 

      

 

 

 
Total      $ 19,195,000         $ 21,123,000   
    

 

 

      

 

 

 

Audit Fees include (a) the integrated audit of our consolidated financial statements, including statutory audits of the financial statements of our affiliates, and our internal control over financial reporting and (b) the reviews of our unaudited condensed consolidated interim financial statements (quarterly financial statements).

Audit-Related Fees include professional services in connection with employee benefit plan audits, due diligence related to acquisitions and divestitures and procedures related to various other audit and special reports.

Tax Fees include professional services in connection with tax compliance and advice.

All Other Fees include professional services in connection with seminars, compliance reviews and data protection compliance reviews.

All fees above include out-of-pocket expenses.

Finance Committee

The Board has determined that all of the Finance Committee members are independent within the meaning of the NASDAQ listing standards. The Finance Committee’s charter sets out its responsibilities, which include reviewing and making recommendations to the Board on significant financial matters, including:

 

    our long-term capital structure including financing plans, projected financial structure, funding requirements, target credit ratings and return on invested capital;

 

    authorization of issuances, sales or repurchases of equity and debt securities;

 

    our external dividend policy and dividend recommendations;

 

    proposed acquisitions, divestitures, joint ventures, investments, asset sales and purchase commitments for services in excess of $100 million; and

 

    Board authorization and delegation levels with respect to financing matters.

The Finance Committee also reviews and discusses with management:

 

    results of transactions such as acquisitions, divestitures, joint ventures, and investments in excess of $100 million; and

 

    the cash-flow impact of non-debt obligations including funding pension and other post-retirement benefit plans.

Governance, Membership and Public Affairs Committee

The Board has determined that all of the Governance Committee members are independent within the meaning of the NASDAQ listing standards. The Governance Committee’s charter sets out its responsibilities. Among its responsibilities are:

 

    review candidates’ qualifications for Board membership consistent with criteria determined by the Board;

 

 

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    consider the performance of and suitability of incumbent directors for re-election and recommend to the Board a slate of nominees for each annual meeting of shareholders and candidates to be appointed to the Board as necessary to fill vacancies and newly created directorships;

 

    make recommendations to the Board as to directors’ independence and related party transactions;

 

    make recommendations to the Board concerning the functions, composition and structure of the Board and its committees;

 

    recommend frequency of Board meetings and content of Board agendas;

 

    advise and make recommendations to the Board on corporate governance matters, including regarding our Guidelines and the annual self-assessments process for the Board, its committees, and its directors;

 

    administer the Code of Business Conduct and Ethics for Non-Employee Directors and monitor directors’ compliance with our stock ownership guidelines;

 

    oversee policies and programs related to corporate citizenship, social responsibility and public policy issues significant to Mondelēz International such as sustainability and environmental responsibility; food labeling, marketing and packaging; and philanthropic and political activities and contributions; and

 

    monitor issues, trends, internal and external factors and relationships that may affect Mondelēz International’s public image and reputation.

Human Resources and Compensation Committee

Human Resources and Compensation Committee Independence, Interlocks and Insider Participation

The Board has determined that all of the Compensation Committee members are independent within the meaning of the NASDAQ listing standards, including the heightened independence criteria for compensation committee members. None of the Compensation Committee’s members is or was:

 

    an officer or employee of Mondelēz International;

 

    a participant in a “related person” transaction during 2015 (for a description of our policy on related person transactions, see “Corporate Governance – Review of Transactions with Related Persons” above); or

 

    an executive officer of another entity at which one of our executive officers serves on the board of directors or the Compensation Committee.

Responsibilities

The Compensation Committee’s charter sets out its responsibilities. Among its responsibilities are to:

 

    establish our executive compensation philosophy;

 

    assess the appropriateness and competitiveness of our executive compensation programs;

 

    review and approve the CEO’s goals and objectives, evaluate the CEO’s performance against those goals and objectives, then, based upon its evaluation, determine both the elements and amounts of the CEO’s compensation;

 

    review and approve the compensation of the CEO’s direct reports and other officers subject to Section 16(a) of the Exchange Act;

 

    determine annual incentive compensation, equity grants and other long-term incentive grants and awards under our incentive plan;

 

    make recommendations to the Board regarding incentive plans requiring shareholder approval, and approve eligibility for and design of executive compensation programs implemented under those plans;

 

    review our compensation and benefits policies and practices as they relate to our risk management practices and risk-taking incentives and review proposed material changes to those policies and practices;

 

    oversee the management development and succession planning process (including emergency planning) for the CEO and direct reports;

 

 

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    review key human resource policies and practices, including our policies, objectives and programs related to diversity and periodically review our diversity performance;

 

    monitor executive officers’ compliance with our stock ownership guidelines;

 

    advise the Board regarding the compensation of independent directors;

 

    review and discuss with management the Compensation Discussion and Analysis, and prepare and approve the Compensation Committee’s report to shareholders included in our Proxy Statement; and

 

    assess the independence of the Compensation Committee’s outside advisors and at least annually assess whether the work of its compensation consultants has raised any conflict of interest that must be disclosed in our annual report and Proxy Statement.

The Compensation Committee has the authority to delegate any of its responsibilities to the committee’s Chair, another Compensation Committee member or a subcommittee of Compensation Committee members, unless prohibited by law, regulation or any NASDAQ listing standard.

The Compensation Committee’s Use of an Independent Compensation Consultant

The Compensation Committee retains an independent compensation consultant to assist it in evaluating executive compensation programs and advise it regarding the amount and form of executive and director compensation. It uses a consultant to provide additional assurance that our executive and director compensation programs are reasonable, competitive and consistent with our objectives. It directly engages the consultant under an engagement letter that the Compensation Committee reviews at least annually.

Since September 2009, the Compensation Committee has retained Compensation Advisory Partners, LLC (“CAP”) as its independent compensation consultant, and the Compensation Committee annually reviews CAP’s engagement. During 2015, CAP provided the Compensation Committee advice and services, including:

 

    regularly participating in Compensation Committee meetings including executive sessions that exclude management;

 

    consulting with the Compensation Committee chair and other members between committee meetings;

 

    providing competitive peer group compensation data for executive positions and evaluating how the compensation we pay our NEOs (as described under “Compensation Discussion and Analysis”) relates both to the Company’s performance and to how our peers compensate their executives;

 

    analyzing “best practices” and providing advice about design of our annual and long-term incentive plans, including selecting performance metrics;

 

    advising on the composition of our Compensation Survey Group and our Performance Peer Group (as described in the “Compensation Discussion and Analysis”) that we use for benchmarking pay and performance;

 

    updating the Compensation Committee on executive compensation trends, issues and regulatory developments; and

 

    assessing and recommending non-employee director compensation.

For the year ended December 31, 2015, CAP provided no services to Mondelēz International other than consulting services to the Compensation Committee regarding executive and non-employee director compensation.

The Compensation Committee regularly reviews the current engagements and the objectivity and independence of the advice that CAP provides to the Compensation Committee on executive and non-employee director compensation. The Compensation Committee considered the six specific independence factors adopted by the SEC and NASDAQ and determined that CAP is independent and that CAP’s work did not raise any conflicts of interest.

Limited Role of Executive Officers in the Determination of Executive Compensation and Non-Employee Director Compensation

 

    Each year, our CEO presents compensation recommendations for her direct reports and our other executive officers, including the NEOs. The Compensation Committee reviews and discusses these recommendations with the CEO, but retains full discretion over these compensation actions.

 

 

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    Our CEO does not make recommendations or participate in deliberations regarding her own compensation.

 

    Executive officers do not play a role in determining or recommending the amount or form of non-employee director compensation.

How the Compensation Committee Manages Compensation-Related Risk

As it does each year, in 2015, the Compensation Committee evaluated whether our compensation designs, policies and practices operate to discourage our executive officers and other employees from taking unnecessary or excessive risks. As described in the “Compensation Discussion and Analysis,” we design our compensation to incentivize executives and other employees to achieve the Company’s financial and strategic goals as well as individual performance goals that promote long-term shareholder returns. Our compensation design discourages our executives and other employees from taking excessive risks for short-term benefits that may harm the Company and our shareholders in the long-term. The Compensation Committee uses various strategies to mitigate risk, including:

 

    using both short-term and long-term performance-based compensation so that executives do not focus solely on short-term performance;

 

    weighting executive compensation heavily toward long-term incentives to encourage sustainable shareholder value and accountability for long-term results;

 

    using multiple relevant performance measures in our incentive plan designs so that executives do not place undue importance on one measure which could distort the results that we want to incent;

 

    weighting business and individual performance in our annual cash incentive program so that executives and employees do not have too narrow a focus;

 

    capping the amount of incentives that may be awarded or granted;

 

    retaining discretion to reduce incentive awards based on unforeseen or unintended consequences and clawback compensation in specified circumstances;

 

    requiring our top executives to hold a significant amount of their compensation in Company stock and prohibit them from hedging, pledging or engaging in short sales of their stock;

 

    not using employment contracts;

 

    not backdating or re-pricing option grants; and

 

    not paying severance benefits on change in control unless the affected executive is first involuntarily terminated without cause or terminates due to good reason.

In addition, our Audit Committee oversees our ethics and compliance programs that educate executives and other employees on appropriate behavior and the consequences of inappropriate actions. These programs not only drive compliance and integrity but also encourage employees with knowledge of bad behavior to report concerns by providing multiple reporting avenues while protecting reporting employees against retaliation.

CAP also reviewed the Compensation Committee’s risk analysis, including the underlying procedures, and confirmed the Compensation Committee’s conclusion below.

In light of these analyses, the Compensation Committee believes that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company.

Compensation of Non-Employee Directors

Any director who also is an employee of Mondelēz International receives no compensation for service as a director. Currently, Irene B. Rosenfeld is the only director who is an employee of the Company.

We strive to recruit and retain highly qualified non-employee directors who will best represent our shareholders’ interests. To ensure the compensation we offer is sufficient to meet our objective, our Compensation Committee periodically reviews non-employee director compensation. During 2015, the Compensation Committee used data

 

 

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provided by CAP to benchmark our non-employee director compensation against our Compensation Survey Group and compensation paid to non-employee directors of other Fortune 100 companies in order to assess the appropriateness of the form and amount of non-employee director compensation. Based upon that information, the Compensation Committee recommended and the Board approved changes to the non-employee compensation in 2015. Effective July 1, 2015:

 

    The annual retainer for the chairs of the Audit Committee and the Human Resources and Compensation Committee increased from $20,000 to $25,000; and

 

    The annual retainer for the chair of the Governance, Membership and Public Affairs Committee increased from $15,000 to $20,000.

Additionally, effective on May 20, 2015, the date of the 2015 Annual Meeting of Shareholders, the annual equity grant value increased from $145,000 to $160,000.

Summary of 2015 Compensation Elements

 

Annual Compensation Elements   Amount
($)
 
Board Retainer     110,000   
Lead Director Retainer     30,000   
Audit Committee Chair Retainer (effective July 1, 2015)     25,000   
Human Resources and Compensation Committee Chair Retainer (effective July 1, 2015)     25,000   
Governance, Membership and Public Affairs Committee Chair Retainer (effective July 1, 2015)     20,000   
Finance Committee Chair Retainer     15,000   
Annual Equity Grant Value (effective May 20, 2015)     160,000   

Cash Compensation – Board, Lead Director and Committee Chair Retainers

We pay our non-employee directors their cash retainers quarterly. Pursuant to the Mondelēz International, Inc. 2001 Compensation Plan for Non-Employee Directors, they can defer 25%, 50%, 75% or 100% of their cash retainers into notional unfunded accounts that mirror certain of the investment options under the Mondelēz Global LLC Thrift 401(k) Plan. If the Board appoints a non-employee director during the year (i.e., other than at the annual meeting of shareholders), we pay that director a prorated retainer based on the number of days remaining in the calendar year.

Equity Compensation – Annual Equity Grant

Annual equity grants are made following the annual meeting of shareholders.

If the Board appoints a non-employee director during the year (i.e., other than at the annual meeting of shareholders), the director receives a prorated equity grant upon appointment. We calculate the value of the prorated grant using this ratio: the number of months until the next annual meeting of shareholders over a denominator of twelve months.

Non-employee director annual equity grants are made in the form of vested deferred stock units. Distribution of actual shares occurs six months after the director ends his or her service as a director. When the Company pays a dividend on the Company’s common shares, we accrue the value of the dividends that the Company would have paid on the deferred stock units. Six months after the director ends his or her service as a director, we issue shares to the director equal to the accumulated accrued value.

Stock Ownership Guidelines

To align further our non-employee directors’ interests with our shareholders’ interests, we expect our non-employee directors to hold shares of our Common Stock in an amount equal to five times the annual Board retainer (i.e., $550,000) within five years of becoming a director. If a non-employee director does not meet the stock ownership guidelines within that timeframe, the Lead Director will consider the non-employee director’s particular situation and may take action, as he deems appropriate. As of March 9, 2016, each director who has served for at least five years met or exceeded this requirement.

 

 

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Company Match for Director Charitable Contributions

Non-employee directors are eligible to participate in a Mondelēz International Foundation (the “Foundation”) Matching Gift program. Each year, the Foundation will generally match up to $15,000 in contributions by a non-employee director to a 501(c)(3) non-profit organization(s).

2015 Non-Employee Director Compensation Table

 

Name   Fees
Earned
or Paid  in
Cash
(1)
($)
    Stock
Awards
(2)
($)
    All Other
Compensation
(3)
($)
    Total
($)
 
Bollenbach, Stephen F.     110,000        160,038               270,038   
Booth, Lewis W.K.     110,000        160,038        30,000        300,038   
Juliber, Lois D.     132,500        160,038        10,000        302,538   
Ketchum, Mark D.     157,500        160,038        25,000        342,538   
Mesquita, Jorge S.     110,000        160,038               270,038   
Neubauer, Joseph     110,000        160,038        15,000        285,038   
Peltz, Nelson     110,000        160,038               270,038   
Reynolds, Fredric G.     132,500        160,038        15,000        307,538   
Siewert, Patrick T.     123,958        160,038               283,996   
Simmons, Ruth J.     110,000        160,038               270,038   
Tata, Ratan N.(4)     42,610                      42,610   
van Boxmeer, Jean-François M. L.     110,000        160,038               270,038   

 

(1) Includes all retainer fees earned or deferred pursuant to the 2001 Compensation Plan for Non-Employee Directors. Non-employee directors do not receive meeting fees.
(2) The amounts shown in this column represent the full grant date fair value of the deferred stock unit grants in 2015 as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Assumptions used in the calculation of these amounts are included in Note 11 to the consolidated financial statements contained in our 2015 Form 10-K. The deferred shares are immediately vested, but receipt of the shares is deferred until six months after the director no longer serves on the Board. The 2015 Non-Employee Director Equity Awards Table below provides further detail on the non-employee director grants made in 2015 and the number of stock awards outstanding as of December 31, 2015.
(3) Represents Foundation contributions made as part of the Company’s Foundation Matching Gift Program. Annual match limits are based on gift date, not the match date by the Foundation. As such, the amounts reflected may represent gifts that directors made in 2014, but the Foundation did not match until 2015.
(4) Effective May 20, 2015, Mr. Tata concluded his service on the Board. His 2015 retainer payments were prorated based on the date his term ended, i.e., coincident with the 2015 Annual Meeting of Shareholders. He did not receive an annual equity grant during 2015.

 

 

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Non-Employee Director Equity Awards Table

 

Name  

All Stock Awards:
Number of
Shares of Stock
or Units

(#)

   

All Stock Awards:
Grant Date Fair
Value of Stock or
Units
(1)

($)

   

Outstanding
Stock
Awards as of
December 31,
2015

(#)

 
Bollenbach, Stephen F.     3,936        160,038        15,949   
Booth, Lewis W.K.     3,936        160,038        15,949   
Juliber, Lois D.     3,936        160,038        35,882   
Ketchum, Mark D.     3,936        160,038        40,305   
Mesquita, Jorge S.     3,936        160,038        16,279   
Neubauer, Jospeh     3,936        160,038        6,168   
Peltz, Nelson     3,936        160,038        9,715   
Reynolds, Fredric G.     3,936        160,038        24,951   
Siewert, Patrick T.     3,936        160,038        16,089   
Simmons, Ruth J.     3,936        160,038        15,949   
van Boxmeer, Jean-François M. L.     3,936        160,038        21,487   

 

(1) The amounts shown in this column represent the full grant date fair value of the deferred stock units granted in 2015 as computed in accordance with FASB ASC Topic 718.

 

 

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Compensation Discussion and Analysis

In the Overview section of this Compensation Discussion and Analysis (“CD&A”), we highlight:

 

    How our financial performance impacted our NEOs’ 2015 annual incentive award and performance share unit awards subject to the 2013-2015 performance cycle;

 

    Our 2015 Say on Pay shareholder advisory vote, which showed strong support for our executive compensation program;

 

    Our 2015 executive compensation program changes to refine the alignment with our strategies and objectives; and

 

    Our 2015 NEOs, including executive changes made during the year.

In the remainder of this CD&A, we describe:

 

    How our executive compensation design principles and governance practices align with our shareholders’ interests;

 

    Our rationale for our executive compensation program design;

 

    Our individual executive compensation program elements;

 

    Compensation paid to our NEOs in 2015; and

 

    Our clawback, trading restrictions and anti-hedging, anti-pledging and compensation deductibility policies.

Overview

How Our Financial Performance Impacted Our NEOs’ 2015 Annual Incentive Award and Performance Share Unit Awards Subject to the 2013-2015 Performance Cycle

2015 Annual Cash Incentive Program Awards

Our financial performance in 2015 was strong. Specifically, we delivered:

 

    Above target Defined Organic Net Revenue Growth,

 

    Very strong Defined Earnings Per Share (“EPS”), and

 

    Very strong Defined Free Cash Flow.

Because we satisfied our market share performance target, this measure did not impact our corporate rating.

Overall, we achieved an above target performance rating of 175% under the 2015 Annual Cash Incentive Program.

 

LOGO

See “– Description of Individual Executive Compensation Program Elements – Financial Measure Definitions” for definitions of these performance measures and “– Description of Individual Executive Compensation Program Elements – Annual Cash Incentive Program” for more information about our Annual Cash Incentive Program, including our performance targets under the program.

 

 

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Performance Share Unit Awards Subject to 2013-2015 Performance Cycle

During the 2013-2015 performance cycle, we delivered:

 

    Below threshold Organic Net Revenue Growth,

 

    Strong Adjusted EPS Growth, and

 

    Strong annualized TSR relative to the median of the applicable Performance Peer Group (“Annualized Relative TSR”).

Overall, we achieved an above target performance rating of 150% for our performance share unit awards subject to the 2013-2015 performance cycle.

 

LOGO

See “– Description of Individual Executive Compensation Program Elements – Financial Measure Definitions” for definitions of these performance measures and “– Description of Individual Executive Compensation Program Elements – Equity Program” for more information about our performance share units, including the performance targets.

Our 2015 Shareholder Say on Pay Vote Showed Strong Support for Our Executive Compensation Program

More than 96% of the votes cast in our 2015 shareholder advisory Say on Pay voted for our executive compensation program. As evidenced by this strong support, we believe our shareholders generally support our overall compensation principles, programs and practices. Therefore, we made no changes to our executive compensation program directly in response to the 2015 shareholder advisory Say on Pay vote.

Our 2015 Executive Compensation Program Changes to Refine the Alignment with Our Strategies and Objectives

Our Compensation Committee regularly assesses our executive compensation program in light of our strategy, market practices and shareholder input. In 2015, we made changes to our executive compensation program to refine the alignment with our strategies and objectives. We summarize the changes below.

2015 Annual Cash Incentive Program Changes

 

Item   Change   Rationale
Calculation of Financial and Individual Performance   Separated financial and individual performance. Financial performance now represents 60% of the annual incentive award while individual performance represents 40%. Prior to 2015, we multiplied the financial performance rating by the individual performance rating.   Rewards executives for the Company’s financial performance and provides a clear line of sight to executing on strategic individual goals.

 

 

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Item

  Change   Rationale

Performance

Measure Weightings

    Changed weightings for the financial performance rating as follows:   Slight shift further aligns weightings with the Company’s 2015 strategic objectives.
    Performance Measure   2014   2015      
    Defined Organic Net Revenue Growth   40%   35%      
    Defined EPS   40%   45%      
    Defined Free Cash Flow   20%   20%      
                           
Payment Cap        Decreased maximum payout from 250% to 200%
of target.
       Limits our NEOs’ maximum annual
incentive compensation while still
incentivizing strong financial and
individual performance.

2015 Equity Program Change

Historically, we allocated the total target annual equity grant value in the form of 50% performance share units, 25% non-qualified stock options, and 25% restricted stock/deferred stock units. We no longer grant time-based restricted stock or deferred stock units as part of our annual equity program to our executives, including the NEOs.

To further link pay to performance for our executives and align with our shareholders’ interests, beginning with grants made under our 2015 annual equity program, we allocate 75% of the total target annual equity grant value to performance share units and 25% to non-qualified stock options as illustrated here:

 

Equity Vehicle   2014 Equity Program Allocation     2015 Equity Program Allocation  

Performance Share Units

    50%        75%   

Non-Qualified Stock Options

    25%        25%   

Restricted Stock/ Deferred Stock Units

    25%        0%   

Our 2015 NEOs

Our 2015 NEOs are:

 

Name   Title(1)
Irene Rosenfeld   Chairman and CEO
Brian Gladden   Executive Vice President and Chief Financial Officer
Mark Clouse   Executive Vice President and Chief Growth Officer
Timothy Cofer   Executive Vice President and President, Asia Pacific and Eastern Europe, Middle East and Africa
Roberto Marques(2)   Executive Vice President and President, North America

 

(1) Reflects each NEO’s title as of December 31, 2015. Effective January 1, 2016, Mr. Clouse is our Executive Vice President and Chief Commercial Officer and Mr. Cofer is our Executive Vice President and Chief Growth Officer.

 

(2) Mr. Marques commenced employment with the Company on March 9, 2015. Prior to Mr. Marques joining the Company, Mr. Clouse was our Executive Vice President and Chief Growth Officer and President, North America.

 

 

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Our Executive Compensation Design Principles and Governance Practices

Our executive compensation design principles and compensation governance practices reflect best practices to protect and promote our shareholders’ interests.

Design Principles.

 

What we do:

  What we don’t do:

þ   Link pay to performance and put pay at risk. We reward our NEOs based upon the value they add. 85% of our CEO’s compensation and 74% of our other NEOs’ compensation is at-risk.

 

þ   Reward long-term sustainable performance. 71% of our CEO’s compensation and 58% of our other NEOs’ compensation is based on long-term performance.

 

þ   Target compensation at or near the median of our peer group. We compensate fairly and competitively.

 

þ    Set meaningful performance goals at the beginning of performance cycles.

 

þ    Intend that most performance-based compensation is tax deductible under Section 162(m) of the Code.

 

 

x    Incent short-term results to the detriment of long-term goals and results.

 

x    Incent excessively risky business strategies.

Governance Practices.

 

What we do:

  What we don’t do:

þ   Require significant stock ownership. Our stock ownership guidelines are generally comparable to, or more stringent than, those of our Compensation Survey Group companies.

 

þ   Require executives to retain equity compensation. We require our NEOs to hold for one year net shares awarded and net shares acquired upon the exercise of stock options.

 

þ   Provide for “clawbacks”. We can recoup incentive compensation upon certain financial restatements.

 

þ    Prohibit hedging, pledging and short sales.

 

þ   Retain an independent compensation consultant to the Compensation Committee. The consultant does no work for the Company other than advising the Compensation Committee.

 

 

x   Provide NEOs with tax gross-ups for perquisites or upon a change in control. Taxes are our NEOs’ responsibility.

 

x   Re-price underwater stock options. We do not re-price outstanding stock options, whether vested or unvested.

 

x   Pay dividends on unvested performance share units unless and until shares are earned. We do not pay accrued dividend equivalents unless and until the applicable performance targets are met and we award shares.

 

x   Enter into employment agreements with our NEOs. We neither enter into employment agreements with our NEOs, nor guarantee salary increases.

 

x   Provide separate, enhanced benefit plans for our NEOs. Our NEOs generally participate in the same retirement, health and welfare plans broadly available to salaried employees.

þ    Perform an annual compensation risk assessment.

 

þ   Engage with shareholders. Regularly engage shareholders through individual and small-group meetings and major investor conferences.

 

þ   Limit perquisites. We offer limited perquisites comparable to our Compensation Survey Group.

 

þ   Pay severance and vest equity upon a “double trigger” in the event of a change in control. “Double trigger” requires both a change in control and termination of the executive’s employment without either cause or for good reason.

 

 

 

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How We Design our Executive Compensation Program

In overseeing our executive compensation program, our Compensation Committee focuses on the following primary program goals:

 

  1. Attract, retain and motivate talented executives and develop world-class business leaders;

 

  2. Support business strategies that promote superior long-term shareholder returns;

 

  3. Align pay and performance by making a significant portion of our executives’ compensation dependent on achieving financial and other critical strategic and individual goals; and

 

  4. Align our executives’ and shareholders’ interests through equity-based incentive grants that link executive compensation to sustained and superior TSR and stock ownership guidelines.

We design our executive compensation program to achieve these goals by:

Using a Mix of Fixed and Variable Compensation. We heavily weight the mix toward variable compensation to attract, retain and motivate top-performing executives, as well as to appropriately align compensation levels with achieving relevant financial and strategic goals.

Using a Mix of Equity and Cash Incentives. We heavily weight the mix toward equity that vests over multiple years to focus executives on achieving long-term TSR that exceeds our peers’ median and to align the mix with the interests of our shareholders.

Compensating Based on Individual Performance. We consider an executive’s individual performance in making compensation decisions.

Requiring Our Executives to be Significant Shareholders. We require our executives to:

 

    Own specified levels of Company stock to align their interests with those of our shareholders; and

 

    Hold for one year net shares (after taxes and the payment of any exercise price) received upon the exercise of stock options, the removal of restrictions on restricted stock and deferred stock units and the award of shares related to performance share units.

Benchmarking our Compensation and Performance Against Relevant Comparators. We use two separate groups of companies to benchmark our executives’ compensation and assess our relative performance:

 

    Our Compensation Survey Group (global peers of similar size who are primarily consumer-facing); and

 

    Our Performance Peer Group (industry peers).

With CAP’s input, the Compensation Committee reviews the composition of these comparator groups to ensure the composition of each remains appropriate. See “– Composition and Purpose of our Compensation Survey Group” and “– Composition and Purpose of our Performance Peer Group” below for additional information.

Paying Competitively. Each year, we compare our compensation programs with those of our Compensation Survey Group. We assess whether our executive compensation and target compensation levels are consistent with market practice. In addition, we compare our financial and TSR performance against our Performance Peer Group. The Performance Peer Group comparison allows us to link long-term incentive compensation to the delivery of superior financial results relative to industry peers.

Composition and Purpose of our Compensation Survey Group

In constructing our Compensation Survey Group, our Compensation Committee considers global companies with the following attributes:

 

    Similar revenue size;

 

    Similar market capitalization;

 

    Primarily focused on food/beverage or consumer/household products or are consumer-facing companies;

 

 

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    Recognized for their industry leadership and brand recognition;

 

    Executive positions similar in breadth, complexity and/or scope of responsibility; and

 

    Competitors for executive talent.

The Compensation Committee also considers companies outside the consumer products industry based on the following criteria:

 

    Similar or higher revenue size;

 

    Strong global presence;

 

    World-class marketing capabilities specifically focused on the consumer;

 

    Manufacturing companies; and

 

    Multiple lines of business.

Based on these characteristics and input from CAP and management, our Compensation Committee selected the following companies for our 2015 Compensation Survey Group, which is unchanged from 2014. The median annual revenue of these companies at the time of our 2015 benchmarking was $33.6 billion, which was comparable to our revenue size at that time.

 

3M Company

  

Kimberly-Clark Corporation

Abbott Laboratories

  

McDonald’s Corporation

The Coca-Cola Company

  

Nestlé S.A.

Colgate-Palmolive Company

  

Nike, Inc.

Danone S.A.

  

PepsiCo, Inc.

The Dow Chemical Company

  

Pfizer Inc.

E. I. du Pont de Nemours and Company

  

Philip Morris International Inc.

General Mills, Inc.

  

The Procter & Gamble Company

Johnson & Johnson

  

Unilever plc

Kellogg Company

  

United Parcel Service, Inc.

Competitive Positioning

In determining appropriate compensation levels for our executives, our Compensation Committee reviews compensation levels for comparable roles at companies in our Compensation Survey Group. Aon Hewitt (“Aon”) provides the underlying compensation data. At the request of the Compensation Committee, CAP reviews and evaluates Aon’s data.

Our Compensation Committee’s compensation strategy is to benchmark total direct compensation (at target levels), including base salary and annual and long-term incentives, at or near the median of our Compensation Survey Group. Company and individual performance will determine whether actual compensation received is above or below the Compensation Survey Group median.

To further validate our compensation levels, using data provided by CAP, our Compensation Committee retrospectively evaluates how well we aligned pay-for-performance compared with our Compensation Survey Group.

Composition and Purpose of our Performance Peer Group

Companies primarily focused on the production and marketing of food and non-alcoholic beverages comprise our 2015 Performance Peer Group listed below. It is unchanged from 2014. We directly compete with these companies, so comparing our performance relative to the group’s performance provides a valuable measure of performance. Specifically, we compare our annualized TSR with the median annualized TSR of our Performance Peer Group to assess our results on the TSR performance measure for our performance share units. This group is less relevant when we compare compensation levels for certain executive positions because differences in size and complexity reduce comparability.

 

Campbell Soup Company

  

Kellogg Company

The Coca-Cola Company

  

Nestlé S.A.

Colgate-Palmolive Company

  

PepsiCo, Inc.

Danone S.A.

  

The Procter & Gamble Company

General Mills, Inc.

  

Unilever plc

The Hershey Company

  

 

 

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Our Performance Peer Group consists of 11 companies, 9 of which are also in our Compensation Survey Group. They slightly differ because companies in our Performance Peer Group are primarily in the food and non-alcoholic beverage industry. We include companies in our Performance Peer Group regardless of revenue size or market capitalization.

Overall Target Compensation Mix

These charts compare the 2015 total target compensation mix for our CEO and, on average, our other NEOs with the average of the companies in our Compensation Survey Group. The charts show that our target compensation mix aligns well with that of our Compensation Survey Group.

 

LOGO

LOGO

 

 

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Overview of 2015 Executive Compensation Program Elements

This table identifies and describes the specific elements of our 2015 executive compensation program for our NEOs, including each element’s program objectives. A more detailed discussion of these elements, including definitions of the financial measures used in our Annual Cash Incentive Program and performance share units grants, follows this table. We discuss individual compensation decisions for each NEO under “– Compensation Paid to our Named Executive Officers in 2015.”

 

Element   Description   Program Objectives

Annual Cash Compensation

       
Base Salary   Ongoing cash compensation based on the NEO’s role, responsibilities, market data and individual performance.  

       Attract and retain talent

 

       Drive top-tier performance through individual contribution

Annual Cash Incentive Program   Annual incentive with a target award for each NEO. Actual cash awards may be higher or lower than target, based on business and individual performance.  

       Attract and retain talent

 

       Drive top-tier performance

 

–       Across entire organization

 

–       Through individual contribution

         

Equity Program

       

Performance

Share Units

  Each NEO receives a grant of performance share units at the outset of a three-year performance cycle based upon the NEO’s role and long-term performance. Actual awards are determined once the performance cycle ends by evaluating performance against pre-determined performance targets. Awards range between 0% and 200% of target based on our performance. We deliver awards in Common Stock.  

       Attract and retain talent

 

       Drive top-tier performance

 

–       Across entire organization

 

–       Focus on long-term sustained success

 

      Enhance stock ownership/align with shareholders’ interests

Non-Qualified Stock Options  

Each NEO receives a grant of non-qualified stock options (“NQSOs”) based upon the NEO’s role, long-term performance and potential for advancement. The NQSOs vest:

 

–       33% on the first and second anniversary of the grant date, and

 

–       34% on the third anniversary of the grant date.

 

       Attract and retain talent

 

      Drive top-tier performance through long-term individual contribution

 

      Enhance stock ownership/align with shareholders’ interests

 

       Link realized value to stock appreciation

Restricted Stock/ Deferred Stock Units  

Beginning in 2015, neither restricted stock nor deferred stock units are part of the annual equity program for executives, including the NEOs. However, we continued to grant restricted stock and deferred stock units below the executive level and in specific new hire and retention situations.

 

Beginning in 2016, we only grant deferred stock units and no longer grant restricted stock to any employee under any circumstances.

 

       Attract and retain talent

 

      Drive top-tier performance through long-term individual contribution

 

      Enhance stock ownership/align with shareholders’ interests

         

Deferred Compensation and Executive Perquisites

   

Voluntary Non-Qualified

Deferred Compensation

Plan

  Allows U.S. NEOs to defer, on a pre-tax basis, certain defined compensation elements with flexible distribution options.  

       Attract and retain talent

 

      Provide opportunity to build future financial security

Executive Perquisites   Generally limited to executive physicals and car and financial counseling allowances for all NEOs and, for the CEO only, personal use of the Company’s aircraft.  

       Attract and retain talent

 

      Support personal financial planning needs

 

      Ensure CEO’s personal safety and facilitate CEO’s efficiency

 

 

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Element   Description   Program Objectives

Retirement and Separation Benefits

       
Defined Benefit Program (i.e., Pension Plan)   Generally, provides for the replacement of a portion of cash compensation (defined as base salary plus annual cash incentive award) after the NEO retires. We do not offer this program to any U.S. employees hired after 2008 and we will make no additional accruals after 2019 for current participants. In addition to the tax-qualified defined benefit program, we also provide a supplemental nonqualified defined benefit program to account for the qualified plan limits under the Code.  

       Retain talent

 

      Provide financial security to long-term service executives in retirement

Defined Contribution Program

(i.e., 401(k) Savings Plan)

  Program under which Company matches U.S. NEO contributions up to a limit. Account balances are typically payable after an NEO terminates employment. We enhanced this program for U.S. employees hired after 2008 who are not eligible for the defined benefit program described above. In addition to the tax-qualified defined contribution program, we also provide a supplemental defined contribution program to account for certain deferral and compensation limits applicable to qualified plans under the Code.  

       Attract and retain talent

 

      Provide opportunity for financial security in retirement

Change in Control Severance Plan   Provides for severance benefits in the event an NEO is terminated without cause or resigns for good reason within two years after a change in control.  

       Retain talent

 

      Focus on delivering top-tier shareholder value in periods of uncertainty

 

       Support effective transition

         

Other Benefits

       
Other Benefits   Health, welfare and other benefits.  

       Attract and retain talent

 

       Promote executive health

 

      Provide death benefits to executives’ beneficiaries

 

 

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Description of Individual Executive Compensation Program Elements

Base Salary

Base salary is the principal fixed element of executive compensation. In setting base salaries for our NEOs, our Compensation Committee generally targets base salary at or near the median of our Compensation Survey Group based on the executive’s comparable role. Our Compensation Committee also considers a number of other factors when setting base salaries for our NEOs, including Company and individual performance, level of responsibility, experience and potential to assume roles with greater responsibility. The Compensation Committee reviews our NEOs’ salaries annually (or more often if there is a notable change in an executive officer’s role and responsibilities during the course of the year) and considers whether any increases are warranted. If so, salary increases are generally effective April 1 for all executive officers.

Annual Cash Incentive Program

We design our Annual Cash Incentive Program to motivate our NEOs and to reward them for delivering results above the threshold performance of our annual financial and strategic goals. The Compensation Committee sets the formula and each NEO’s target and maximum annual incentive opportunity at the beginning of the year. The Compensation Committee bases actual awards made to an NEO on our annual financial results and the NEO’s individual performance.

Annual Cash Incentive Program Award Formula

As described above, we modified our Annual Cash Incentive Program in 2015 to establish financial and individual performance as stand-alone, separate metrics. The Compensation Committee used the formula below to determine awards made to NEOs under the 2015 Annual Cash Incentive Program. See “– Compensation Paid to our Named Executive Officers in 2015” for additional detail on the actual awards made to each NEO.

 

 

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This chart describes the Annual Cash Incentive Program elements, except for base salary (discussed above).

 

Annual Cash Incentive
Program Element
  Key Provisions

Target Annual Incentive

Opportunity

 

The 2015 target annual incentive opportunity below is a target percentage of base salary that reflects each NEO’s role and responsibilities:

 

       Ms. Rosenfeld: 150%

 

       Mr. Gladden: 100%

 

       All Other NEOs: 80%

     
2015 Corporate Rating Adjusted for Market Share Overlay (60% Weighting)  

All NEO financial performance ratings align 100% to the corporate rating to reinforce and reward enterprise-wide collaboration. Ratings range from 0% to 200%.

 

In early 2015, the Compensation Committee approved the following performance measures to assess financial performance in determining the corporate rating:

 

     Performance Measures   Weighting       
    Defined Organic Net Revenue Growth     35%       
    Defined EPS     45%       
    Defined Free Cash Flow     20%       
   

The Compensation Committee chose these performance measures to incent:

 

       top line growth,

 

       bottom line growth, and

 

       strong cash flow.

 

Additionally, we have a market share overlay to measure our performance against competitors in key markets and categories. Depending on actual performance, the market share overlay adjusts the corporate rating in one of three ways: no change, 10 percentage point (“pp”) increase, or 10 pp decrease.

 

    The Compensation Committee established the Annual Cash Incentive Program’s 2015 performance measures assuming a corporate rating of 100% if the Company met its targets. If performance exceeded or failed to meet the target performance measures, then correlating positive or negative adjustments would be made. See “– Financial Measure Definitions” below for definitions of these performance measures.
     
Individual Performance Ratings (40% Weighting)   The 2015 potential individual performance ratings and payout ranges were:
    

Individual

Performance Ratings

 

Incentive Payout Ranges

as a Percent of Target

    
    Outstanding   160% - 200%    
    Exceeded Expectations   120% - 155%    
    Achieved Expectations   85% - 115%    
    Partially Met Expectations   20% - 80%    
    Below Expectations   0%    
    The Compensation Committee determined Ms. Rosenfeld’s individual performance rating. Ms. Rosenfeld provided the Compensation Committee with an individual performance assessment and rating recommendation for each of the other NEOs. The Compensation Committee reviewed and discussed those recommendations before determining the individual performance rating for each of the other NEOs. In assessing individual performance, Ms. Rosenfeld and the Compensation Committee considered the NEO’s contributions, such as achievement of key strategic initiatives, operational efficiency, enterprise leadership, quality of financial results and talent management. See “– Compensation Paid to our Named Executive Officers in 2015” below for additional discussion about 2015 individual performance ratings.

 

 

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2015 Corporate Rating

To determine NEO awards, our Compensation Committee evaluated our 2015 results against our 2015 performance goals:

 

Performance Measures   Weighting     Performance Goals     Performance Results  
    Threshold     Target     Maximum     2015 Actual     Performance
Rating
 
Defined Organic Net Revenue Growth     35%        (0.7)%        1.3%        3.8%        1.9%        127%   
Defined EPS     45%        $ 1.71        $ 1.80        $ 1.89        $ 1.93        200%   
Defined Free Cash Flow*     20%        $ 2,050        $ 2,412        $ 3,015        $ 3,139        200%   
Market Share Overlay(1)                                    57.7%        No impact   
Final Corporate Rating                                             175%   

 

* U.S. dollars in millions.

 

(1) The market share overlay reflects our percent of net revenue holding or growing share and is based on available Nielsen Global Data through December 2015 for measured channels in key markets where the Company competes. Less than 50% of net revenue holding or growing share results in a 10 pp decrease to the performance rating, while more than 70% of net revenue holding or growing share results in a 10 pp increase to the performance rating. For 2015, our market share overlay resulted in 57.7% of our net revenue holding or growing share. Therefore, there was no change to our final corporate rating, as reflected in the table above.

The Compensation Committee retains discretionary authority to adjust the final corporate rating (up or down) by as much as 25 pp to recognize more subjective, less quantifiable factors – such as how well we performed based on compliance, diversity and the quality of our results. The Compensation Committee did not exercise its authority to adjust the 2015 rating.

Equity Program

We design our equity grants to align our executive officers’ and shareholders’ interests. For our 2015 equity program, to further link pay to performance for our executives and align with our shareholders, the Compensation Committee changed the mix to 75% performance share units and 25% NQSOs as discussed earlier under “– Overview – Our 2015 Executive Compensation Program Changes to Refine the Alignment with Our Strategies and Objectives – 2015 Equity Program Change”.

 

LOGO

The Compensation Committee bases equity grant value ranges for performance share units and NQSOs on an analysis of competitive market practice, with the midpoint of the equity grant value ranges, inclusive of the value of the target performance share units, approximately equal to the median total long-term incentives of our Compensation Survey Group. The Compensation Committee may make an equity grant to an NEO above or below the midpoint based on its qualitative review of the NEO’s individual performance. Generally, the equity grant value is between 50% and 150% of the midpoint. All annual equity grants made to our NEOs in 2015 fell within that range.

 

 

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The table below shows the NEO equity grant value ranges, inclusive of both performance share units and NQSOs, for the 2015 annual equity grant on February 18, 2015.

 

     Equity Grant Value Ranges(1)  
Name  

Threshold

($)

   

Midpoint

($)

   

Maximum

($)

 
Ms. Rosenfeld     4,869,500        9,739,000        14,608,500   
Mr. Gladden     2,350,000        4,700,000        7,050,000   
Mr. Clouse     850,000        1,700,000        2,550,000   
Mr. Cofer     850,000        1,700,000        2,550,000   
Mr. Marques(2)     850,000        1,700,000        2,550,000   

 

(1) The Compensation Committee may make an equity grant below the threshold.

 

(2) Since Mr. Marques commenced employment with the Company after the 2015 annual equity grant, he received his 2015 annual equity grant on his hire date, March 9, 2015. Mr. Marques also received sign-on equity grants in connection with his commencement of employment as discussed in “– Compensation Paid to our Named Executive Officers in 2015 – Mr. Marques” below.

We present the actual equity grants in the 2015 Grants of Plan-Based Awards table under “Executive Compensation Tables” in this Proxy Statement. Our annual grant date is pre-determined based on the scheduled date of the Compensation Committee meeting following the release of our annual financial results, and the exercise price for all NQSO grants equals the closing trading price on the grant date.

Performance Share Units

The Compensation Committee grants performance share units to motivate executives to achieve our long-term financial goals and deliver top-tier shareholder returns. The Compensation Committee sets performance targets for a three-year performance cycle. The grants made in 2015 are for the three-year performance cycle ending December 31, 2017. The 2015-2017 and 2013-2015 performance cycles are discussed in greater detail below. At the end of the three-year performance cycle, the Compensation Committee will only award shares if results meet or exceed the performance thresholds set at the beginning of the cycle. The number of shares awarded to an executive depends on the achievement of key financial measures and annualized TSR relative to the median of our Performance Peer Group. Share awards occur in the first quarter following the end of the performance cycle, provided the Compensation Committee certifies performance at or above threshold levels.

To address unforeseen or unintended consequences, the Compensation Committee retains discretion to adjust the final business performance rating for a performance cycle (up or down) by as much as 25 pp, allowing the Compensation Committee to factor in a subjective review of quality of financial results, portfolio management, innovation and talent development. The Compensation Committee did not exercise its authority to adjust the final business performance rating for the 2013-2015 performance cycle. The Compensation Committee does not consider an NEO’s individual contributions as the basis for an award; awards related to performance share units are based solely on how the Company performed against performance targets.

For grants made beginning in 2013, dividend equivalents accrue during the performance period and are paid out in cash in the first quarter following the award payout date based on the actual share award.

 

 

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The Compensation Committee uses the following formula to determine actual awards for participants, including our NEOs. Each element of this formula is discussed below.

 

LOGO

2015-2017 Performance Cycle

 

Award Formula Element    Explanation of Key Provisions

Target Incentive Opportunity

   Each NEO receiving a grant was assigned a target number of performance share units based on 75% of the total annual equity grant value.
    

 

Following the end of the performance cycle, the number of shares actually awarded may range from 0% to 200% of the target number of performance share units granted based on the final business performance rating for the performance cycle.

         

Business Performance Rating

 

 

Rating ranges from 0% to 200%.

 

Performance measures are:

 

   
     Measures   Weighting     
    Organic Net Revenue Growth   25%    
    Adjusted Return on Invested Capital (“ROIC”) Increase   25%    
    Annualized Relative TSR   50%    
   

 

See “– Financial Measure Definitions” below for definitions of the above measures.

 

For performance share units with a 2015-2017 performance cycle, the target objective set for Annualized Relative TSR is the median of the Performance Peer Group. We set our financial performance targets for Organic Net Revenue Growth and Adjusted ROIC Increase taking into consideration our long-term strategy. We do not publicly disclose specific financial performance targets on a prospective basis. Revealing these specific targets prospectively would provide competitors and other third parties with insights into our confidential planning process and strategies, thereby potentially harming us competitively. The financial performance targets are designed to be challenging, and there is a risk that no awards will be made or awards will be made at less than 100% of the target level.

We base cash awards under our Annual Cash Incentive Program and share awards for our performance share units in part on our Organic Net Revenue Growth. However, the Compensation Committee uses a different benchmark to measure performance for each. For the Annual Cash Incentive Program, the Compensation Committee measures Defined Organic Net Revenue Growth based on our annual operating targets. In contrast, when setting our Organic Net Revenue Growth target for the 2015-2017 performance cycle, the Compensation Committee considered our long-term strategy. The Compensation Committee believes the use of these different targets focuses our executives on critical internal drivers, both in the short- and long-term, and the different targets for each, when combined, closely correlate with shareholder value. Additionally, the majority of any cash award under our Annual Cash Incentive Program or share award for the 2015-2017 performance cycle is based on separate independent performance measures, as Defined Organic Net Revenue Growth is weighted 21% (35% of 60% weighting for financial performance) for our Annual Cash Incentive Program and Organic Net Revenue Growth is weighted 25% for our 2015-2017 performance cycle.

 

 

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2013-2015 Performance Cycle

Our Compensation Committee determined the share award for the 2013-2015 performance cycle based on a performance rating that included the Company’s performance on key financial goals (Organic Net Revenue Growth and Adjusted EPS Growth) and Annualized Relative TSR goals. With regard to determining our Annualized Relative TSR performance, we used our 2015 Performance Peer Group. See “– How We Design Our Executive Compensation Program – Paying Competitively – Composition and Purpose of our Performance Peer Group” above.

The following chart reflects the key financial measures, weightings and performance standards the Compensation Committee set for the 2013-2015 performance cycle. It also reflects our actual performance and the final business performance rating approved by the Compensation Committee.

 

           2013-2015 Performance Cycle Results  
Key Performance Measures   Weighting     Threshold     Target     Maximum     Actual     Performance
Rating
 
Organic Net Revenue Growth(1)     25%        4.0%        5.5%        8.0%        3.5%        0%   
Adjusted Earnings Per Share Growth(1)     25%        5.5%        7.5%        11.5%        18.6%        200%   
Annualized Relative TSR     50%        25th percentile        At median        90th percentile        100th percentile        200%   

Final Business Performance Rating

  

                                    150%   

 

(1) See definitions under “– Financial Measure Definitions” below.

Based on target awards as a percent of salary and the performance rating of 150% of target, the share award (before taxes) for each of our NEOs for the 2013-2015 performance cycle was as follows:

 

Name(1)   Target Award(2)     Share Award  
Ms. Rosenfeld     350% of base salary        310,185   
Mr. Clouse     130% of base salary        44,610   
Mr. Cofer     130% of base salary        52,035   

 

(1) Because Mr. Gladden was hired on October 13, 2014 and Mr. Marques was hired on March 9, 2015, they did not receive awards for the 2013-2015 performance cycle and therefore are excluded from the table above.

 

(2) Prior to the 2015-2017 performance cycle, the target award opportunity was based on a percentage of the NEO’s base salary at the beginning of the performance cycle.

2015 Retention Equity Grants

As described above, a primary goal of our executive compensation program is to retain and motivate talented executive officers and develop world-class business leaders. The CEO and Compensation Committee extensively review talent retention, including retention of executives with a demonstrated track-record of performance who are key to the future success of the Company. Based on this review, on October 30, 2015, the Compensation Committee awarded retention-based equity grants to Mr. Cofer and Mr. Clouse. Each grant had a fair market value on the grant date of $5,000,051 and consisted of deferred stock units that fully vest on the third anniversary of the grant date with the same terms and conditions as the 2015 annual equity grant to employees generally. The Committee determined this amount based on a review of Mr. Cofer’s and Mr. Clouse’s compensation and the value of outstanding equity grants for comparable positions at peer companies. These one-time grants will not affect any regular compensation arrangements for Mr. Cofer or Mr. Clouse.

 

 

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Requiring Stock Ownership

To further align our NEOs’ and our shareholders’ interests, and to incent our NEOs to focus on shareholders’ interests, the Compensation Committee requires each executive to hold a significant amount of our Common Stock. The following chart summarizes our stock ownership and holding requirements. We believe our stock ownership requirements are comparable to, or are more stringent than, stock ownership requirements of the majority of our Compensation Survey Group. We regularly monitor compliance with these levels. As of March 1, 2016, each of our NEOs who have met the applicable time requirements satisfied or exceeded the stock ownership requirements. All NEOs adhered to the holding requirements.

 

Key Provisions   Explanation of Key Provisions
Ownership Requirement  

       Eight times salary for our CEO.

 

       Four times salary for our other NEOs.

Time to Meet Requirements  

       Five years from employment date or three years following a promotion.

Shares Included As Ownership  

       Common Stock, including sole ownership, direct purchase plan shares, qualified savings plans, restricted stock, deferred stock units and accounts over which the executive has direct or indirect ownership or control.

 

       Excludes unexercised Mondelēz International stock options and unvested performance share units.

Holding Requirements  

       Until they meet stock ownership guidelines, our NEOs must hold 100% of all shares acquired under our equity program (including stock after the restrictions have lapsed, shares awarded for our vested deferred stock units, shares acquired upon exercise of a NQSO and shares awarded for our performance share units), net of shares withheld for taxes or payment of exercise price.

 

       Once an NEO meets the stock ownership requirements, he or she must hold 100% of the shares, net of shares withheld for taxes or payment of exercise price, for at least one year after the stock option exercise or receipt of shares awarded under our equity program.

Financial Measure Definitions

While we report our financial results in accordance with U.S. GAAP, we use non-GAAP financial measures in making financial, operating and planning decisions and in evaluating our performance. Therefore, we also base financial targets for our Annual Cash Incentive Program and performance share units on non-GAAP and other financial measures. The chart below describes adjustments to the related GAAP measure and our reasons for using these measures. (See our 2015 Form 10-K, for additional information on our Non-GAAP Financial Measures and definitions of terms used in the Definitions column below.)

 

Measures  

Definitions

(Including

Adjustment to GAAP Measure)

  Modifications    Rationale

Defined Organic Net Revenue Growth (Annual Cash Incentive Program)

 

Organic Net Revenue Growth (Performance Share Units)

 

Organic Net Revenue is defined as net revenues excluding the impacts of:

 

       acquisitions;

 

       divestitures(1);

 

       the historical global coffee business(2);

 

       Integration Program costs (defined as the costs associated with combining Mondelēz International and Cadbury businesses, and separate from those costs associated with the acquisition);

 

       accounting calendar changes; and

 

       currency rate fluctuations (calculated based on prior year rates).

 

Defined Organic Net Revenue Growth: Results were modified to include the historical coffee business for the first half of the year as we wholly owned and managed the coffee business through July 2, 2015. In addition, due to the deconsolidation of Venezuela at the end of 2015, Venezuela operations were excluded from the calculation of targets and results(3).

 

Organic Net Revenue Growth: Actual results calculated based on the definition of Organic Net Revenue Growth used for each year of the three-year performance cycle, except for 2015 results which included the historical coffee business for the first half of the year as we wholly owned and managed the coffee business through July 2, 2015.

   Reflects the growth rates for our base business by eliminating the impact of certain disclosed one-time factors, facilitating comparisons to prior year(s).

 

 

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Measures  

Definitions

(Including

Adjustment to GAAP Measure)

  Modifications    Rationale

Defined Earnings Per Share (Annual Cash Incentive Program)

 

Adjusted Earnings Per Share Growth (Performance Share Units)

 

Adjusted EPS is defined as diluted EPS attributable to Mondelēz International from continuing operations excluding the impacts of:

 

       Spin-Off Costs;

 

       the 2012-2014 Restructuring Program;

 

       the 2014-2018 Restructuring Program;

 

       the Integration Program and other acquisition integration costs;

 

       the Venezuela deconsolidation loss;

 

       the remeasurement of net monetary assets in Venezuela;

 

       the net benefit from the Cadbury acquisition-related indemnification resolution;

 

       losses on debt extinguishment and related expenses;

 

       the residual tax benefit impact from the resolution of the Starbucks arbitration;

 

       hedging gains/losses and incremental costs associated with the coffee transactions;

 

       impairment charges related to goodwill and intangible assets;

 

       gains or losses on interest swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans;

 

       gains or losses from divestitures(1) or acquisitions;

 

       gain on the coffee business transactions(2);

 

       divestiture-related costs;

 

       acquisition-related costs; and

 

       net earnings from divestitures(1);

 

And including:

 

       an adjustment to our equity method investment earnings for our proportionate share of unusual or infrequent items, such as acquisition and divestiture-related costs and restructuring program costs, recorded by our JDE equity method investee.

 

Defined Earnings Per Share: Defined as Adjusted EPS calculated at currency exchange rates utilized in our internal financial planning for 2015. In addition, due to the deconsolidation of Venezuela at the end of 2015, Venezuela operations were excluded from the calculation of targets and results(3).

 

Adjusted Earnings Per Share Growth: Actual Adjusted EPS results as calculated based on the definition of Adjusted EPS for each year of the three-year performance cycle. Each year’s growth is then measured based upon the prior year’s currency exchange rates.

   Indicator of overall business trends and performance, based on what business leaders can control.

 

 

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Measures   

Definitions

(Including Adjustment to GAAP Measure)

  Rationale
Defined Free Cash Flow (Annual Cash Incentive Program)   

Free Cash Flow (Net Cash Provided By Operating Activities less capital expenditures) excluding:

 

       cash payments made for accrued interest and other related fees associated with the debt tendered on March 20, 2015;

 

       cash payments (net of tax benefits) associated with Spin-Off Costs, 2012-2014 Restructuring Program expenditures, 2014-2018 Restructuring Program expenditures and incremental costs associated with the coffee business transactions;

 

       cash receipts (net of tax liabilities) related to hedging gains/losses associated with the coffee transactions; and

 

       cash payments (net of tax benefits) made for acquisition related costs including integration costs.

  Reflects financial liquidity, working capital efficiency and financial health.
Adjusted ROIC Increase (Performance Share Units)    Adjusted Net Operating Profit After Taxes (“NOPAT”) divided by Invested Capital, which are defined below   Reflects a metric used to evaluate the performance of capital deployment and stresses the importance of continued focus on asset and cash management.
    

NOPAT is defined as Operating Income less taxes plus Equity Method Investment Earnings excluding the impacts of:

 

       Spin-Off costs;

 

       the 2012-2014 Restructuring Program;

 

       the 2014-2018 Restructuring Program;

 

       the Integration Program and other acquisition integration costs;

 

       the Venezuela deconsolidation loss;

 

       the remeasurement of net monetary assets in Venezuela;

 

       the net benefit from the Cadbury acquisition-related indemnification resolution;

 

       incremental costs associated with the coffee business transactions;

 

       impairment charges related to goodwill and intangible assets;

 

       gains/losses from divestitures and acquisitions;

 

       divestiture-related costs;

 

       acquisition-related costs (incremental costs associated with acquisition);

 

       the operating results from divestitures(1);

 

       an adjustment to our equity method investment earnings for our proportionate share of unusual or infrequent items, such as acquisition and divestiture-related costs and restructuring program costs, recorded by our JDE equity method investee; and

 

       other extraordinary one-time benefits and expenses as defined.

  

Invested Capital is defined as:

 

       Current assets, excluding cash;

 

       Property, Plant and Equipment, net;

 

       Goodwill;

 

       Intangibles, net; and

 

       Other Assets.

 

Less:

 

       Current liabilities, excluding Debt;

 

       Deferred Taxes;

 

       Accrued Pension and Postretirement;

 

       Other Liabilities; and

 

       Non-Controlling Interest.

 

 

(1) Divestitures include businesses under sale agreements for which the Company has cleared significant sale-related conditions such that the pending sale is probable as of the end of the reporting period and exits of major product lines under a sale or licensing agreement.

 

 

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(2) In connection with the global coffee business transactions that closed on July 2, 2015, because we exchanged our coffee interests for similarly-sized coffee interests in Jacobs Douwe Egberts (“JDE”) (which, following the July 2, 2015 closing, was 43.5% of our historical and D.E. Master Blenders 1753 B.V.’s combined global coffee businesses), we have deconsolidated and not included our historical global coffee business results within divestitures in our non-GAAP financial measures. We continue to have an ongoing interest in the coffee business. Beginning in the third quarter of 2015, we have included the after-tax earnings of JDE and of our historical coffee business results within continuing results of operations. For Adjusted EPS, we have included these earnings in equity method investment earnings and have deconsolidated our historical coffee business results from Organic Net Revenue and Adjusted Operating Income to facilitate comparisons of past and future operating results.

 

(3) Effective as of the close of the 2015 fiscal year, we concluded that we no longer met the accounting criteria for consolidation of our Venezuela subsidiaries due to a loss of control over our Venezuelan operations and an other-than temporary lack of currency exchangeability. As of the close of the 2015 fiscal year, we deconsolidated and changed to the cost method of accounting for our Venezuelan operations.

Deferred Compensation

In 2015, our NEOs were eligible to participate in the Mondelēz Global LLC Executive Deferred Compensation Plan (“MEDCP”), a voluntary non-qualified deferred compensation plan. The program is similar to those provided to executive officers at many of the companies in our Compensation Survey Group and is provided for recruitment purposes and to assist executives in managing their future cash flow. The deferred compensation plan provides an opportunity for executives to defer, on a pre-tax basis, up to 50% of their salary and up to 100% of their award under the Annual Cash Incentive Program. Executives may invest deferred amounts in one or more notional investment options.

Executive Perquisites

We offer our NEOs executive physicals as well as car and financial allowances. Additionally, based on the findings of an independent, third-party security study, we require Ms. Rosenfeld to use the corporate aircraft for business and personal travel. This also allows Ms. Rosenfeld to be more productive and efficient when she travels, particularly considering we do business in approximately 165 countries. NEOs are solely responsible for all taxes on all perquisites. We do not provide tax gross ups. We offer limited perquisites similar to those offered by companies in our Compensation Survey Group and do so at comparable costs. The Compensation Committee believes these limited perquisites are important for retention and recruitment.

In 2015, the Compensation Committee approved reimbursement of a $45,000 filing fee incurred by Ms. Rosenfeld in connection with a required filing under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”). The filing was required because the dollar value of shares held by Ms. Rosenfeld exceeded thresholds established under HSR, due to share price appreciation and vesting in equity awards. The Compensation Committee considered it appropriate to reimburse Ms. Rosenfeld because the expense resulted from the operation of our equity compensation program and Ms. Rosenfeld is required to hold significant equity under our stock ownership and holding requirements. Ms. Rosenfeld is responsible for income taxes on the reimbursement and, in line with our policy described above, we did not provide any tax gross-up.

The footnotes to the Summary Compensation Table under “Executive Compensation Tables” list our NEOs’ 2015 perquisites.

Retirement and Separation Benefits

As described below, we offer our NEOs retirement and separation benefits. We do not have employment agreements with any of our NEOs. They are all “at will” employees, including Ms. Rosenfeld.

Retirement Benefits

Generally, our NEOs are eligible for broad-based U.S. employee benefit plans, including two tax-qualified plans – the Mondelēz Global LLC Retirement Plan (“Retirement Plan”) and the Mondelēz Global LLC Thrift Plan (“Thrift Plan”). U.S. employees hired after 2008 are not eligible to participate in the Retirement Plan or the defined benefit portion of the Supplemental Plan (as defined below). In addition, accruals under the Retirement Plan and the defined benefit portion of the Supplemental Plan will cease after 2019. U.S. employees hired after 2008 who are not eligible to participate in the Retirement Plan are eligible to receive an enhanced employer contribution under the Thrift Plan and the defined contribution portion of the Supplemental Plan.

 

 

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We also provide an unfunded non-qualified plan, the Mondelēz Global LLC Supplemental Benefits Plan (“Supplemental Plan”), for eligible U.S. employees. The Supplemental Plan provides benefits that are not provided under the Retirement Plan or Thrift Plan due to an employee’s compensation exceeding the tax-qualified plan compensation limit under Code Section 401(a)(17), an employee’s election to defer compensation under either the MEDCP or the Supplemental Plan, or a Retirement Plan participant’s benefit exceeding the limits under Section 415 of the Code.

We provide Ms. Rosenfeld with a non-qualified, enhanced pension benefit that credits her pension service for the period of time (2004-2006) that she was not employed by the Company. We provide this enhanced pension benefit to Ms. Rosenfeld because, when she rejoined the Company, she forfeited her right to a pension benefit at her previous employer. This benefit was part of a broader incentive program to help encourage her to return to the Company and become our CEO. The 2015 Pension Benefits table and the accompanying narrative to the table under “Executive Compensation Tables” provide additional details about this benefit.

The Compensation Committee believes the Retirement Plan, Thrift Plan and non-qualified Supplemental Plan are integral parts of our overall executive compensation program. The Compensation Committee believes our NEOs should receive the same defined benefit accruals, be able to defer the same percentage of their compensation and receive the same corresponding notional employer contributions as all other employees, without regard to the Code’s compensation limit applicable to tax-qualified plans or whether the NEO has elected to defer compensation.

Change in Control Severance Plan

We maintain a Change in Control Severance Plan (the “CIC Plan”) for senior executive officers. The CIC Plan is consistent with similar plans maintained by companies in our Compensation Survey Group, including eligibility and severance benefit levels. We structure separation payments to help assure that key executives, including our NEOs, would be available to assist in the successful transition following a change in control and provide a competitive level of severance protection if the executive is involuntarily terminated without cause or resigns for good reason within two years following a change in control (“double trigger”). In the event that a payment under the CIC Plan or otherwise triggers an excise tax under Code Section 4999, the payment will be the greater of the full benefit or a reduced benefit that does not trigger the excise tax as determined on an after-tax basis for each. We do not provide any tax gross ups for taxes payable on change in control benefits.

In 2015, we decreased the CEO’s severance multiple from 3 times base salary to 2.99 times base salary. We further describe the severance arrangements and other benefits provided under the CIC Plan (as well as the equity treatment upon certain separations in the event of a change in control) under “Executive Compensation Tables – Potential Payments upon Termination or Change in Control.”

Non-Change in Control Severance Agreements

Although we generally do not have individual severance or employment agreements with any of our NEOs, we would typically provide separation benefits as consideration for entering into an agreement protecting our interests. The severance payments and other benefits provided to a typical NEO are described under “Executive Compensation Tables – Potential Payments upon Termination or Change in Control.”

 

 

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Compensation Paid to our Named Executive Officers in 2015

Overview

The chart below shows specific 2015 compensation actions for each NEO. For the shares awarded under the 2013-2015 performance cycle, see “– Description of Individual Executive Compensation Program Elements – Equity Program – 2013-2015 Performance Cycle” above.

 

     Salary Increase
(%)
    2015 Annual Cash Incentive
Program Award ($)
    2015 Equity Grant(s)(1)
Ms. Rosenfeld     0.0        3,816,000     

418,760 NQSOs

251,260 performance share units

                     
Mr. Gladden     0.0        1,450,000     

159,050 NQSOs

95,430 performance share units

                     
Mr. Clouse     6.7        1,057,000     

76,140 NQSOs

45,690 performance share units

 

October 30, 2015

108,320 deferred stock units

                     
Mr. Cofer     6.7        1,099,000     

76,140 NQSOs

45,690 performance share units

 

October 30, 2015

108,320 deferred stock units

                     
Mr. Marques(2)     0.0        1,015,000     

March 9, 2015

730,600 NQSOs

45,690 performance share units

130,900 shares of restricted stock

 

(1) Unless otherwise noted, the grant date for the equity grants was February 18, 2015. Grants of performance share units are reflected at target.

 

(2) Mr. Marques commenced employment with Mondelēz International on March 9, 2015. Per Mr. Marques’ offer of employment, his annual cash incentive program award for 2015 reflects a full year award to offset forfeiture of his 2015 incentive at his previous employer. The equity grant on his hire date includes a one-time equity grant of 654,460 NQSOs and 130,900 shares of restricted stock in addition to his 2015 annual equity grant (76,140 NQSOs and 45,690 performance share units). See “– Mr. Marques” below for additional detail.

Ms. Rosenfeld

Base Salary

Ms. Rosenfeld did not receive a base salary increase in 2015.

2015 Annual Cash Incentive Program Award

The Compensation Committee determined Ms. Rosenfeld’s annual cash incentive award for 2015 in accordance with the 2015 Annual Cash Incentive Program and considered the following factors in determining Ms. Rosenfeld’s individual performance rating:

 

    Financial performance was 175% relative to target as discussed under “– Description of Individual Executive Compensation Program Elements – Annual Cash Incentive Program – 2015 Corporate Rating” above.

 

  ¡    Defined Organic Net Revenue Growth, Defined Earnings Per Share and Defined Free Cash Flow were significantly above our internal targets.

 

  ¡    Adjusted Operating Income Margin expansion was in line with our internal targets.

 

    Delivered above target performance on key strategic initiatives, including:

 

  ¡    Completed creation of Jacobs Douwe Egberts coffee venture,

 

  ¡    Strengthened our senior commercial talent and leadership in key markets and categories to align with our new operating model, and

 

 

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  ¡    Accelerated margin delivery through continued efficiencies in overhead savings.

2015 Equity Grant (Non-Qualified Stock Options and Performance Share Units)

Ms. Rosenfeld’s annual equity grant reflects her individual performance and external market positioning.

Defined Benefit Pension Present Value

As disclosed in the 2015 Summary Compensation Table under “Executive Compensation Tables,” the present value of Ms. Rosenfeld’s defined benefit pension increased $1,419,064 from the prior year. The primary driver of the present value increase is the change in mortality table assumptions used for purposes of the calculation, which resulted in a present value increase of approximately $1.2 million.

Mr. Gladden

Base Salary

Mr. Gladden did not receive a salary increase in 2015.

2015 Annual Cash Incentive Program Award

Mr. Gladden’s 2015 individual performance rating primarily reflects:

 

    Financial performance was 175% relative to target as discussed under “– Description of Individual Executive Compensation Program Elements – Annual Cash Incentive Program – 2015 Corporate Rating” above.

 

  ¡    Defined Organic Net Revenue Growth, Defined Earnings Per Share and Defined Free Cash Flow were significantly above our internal targets.

 

  ¡    Adjusted Operating Income Margin expansion was in line with our internal targets.

 

    Strong return of capital to our shareholders.

 

    Implementing our new shared services model.

2015 Equity Grant (Non-Qualified Stock Options and Performance Share Units)

Mr. Gladden’s annual equity grant reflects his individual performance and external market positioning.

Mr. Clouse

Base Salary

Mr. Clouse received a salary increase in April 2015 based on his individual performance assessment and internal and external market positioning.

2015 Annual Cash Incentive Program Award

Mr. Clouse’s 2015 individual performance rating primarily relates to the development and implementation of our five-year growth plan and successfully transitioning leadership of the North American business to Mr. Marques.

2015 Equity Grants (Non-Qualified Stock Options, Performance Share Units and Deferred Stock Units)

Mr. Clouse’s annual equity grant reflects his individual performance and external market positioning. Mr. Clouse also received a retention grant as described under “– Description of Individual Executive Compensation Program Elements – Equity Program – 2015 Retention Equity Grants”.

Mr. Cofer

Base Salary

Mr. Cofer received a salary increase in April 2015 based on his individual performance assessment and internal and external market positioning.

 

 

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2015 Annual Cash Incentive Program Award

Mr. Cofer’s 2015 individual performance rating primarily related to strong performance for the Asia Pacific and Eastern Europe, Middle East and Africa regions through delivery of solid financial results relative to target despite economic and political instability in certain areas. Mr. Cofer also led the successful implementation of restructuring changes across our Asia Pacific and Eastern Europe, Middle East and Africa regions.

2015 Equity Grants (Non-Qualified Stock Options and Performance Share Units and Deferred Stock Units)

Mr. Cofer’s annual equity grant reflects his individual performance and external market positioning. Mr. Cofer also received a retention grant as described under “– Description of Individual Executive Compensation Program Elements – Equity Program – 2015 Retention Equity Grants”.

International Assignment Payments

As a U.S. expatriate, Mr. Cofer received payments in 2015 in conjunction with his international assignment based in Singapore. These payments to Mr. Cofer were similar to the types of payments generally made to other employees who accept an international assignment with the Company under our International Assignment Policy. Our International Assignment Policy is designed to facilitate relocation of employees to positions in other countries by covering expenses over and above those that the employees would have incurred had they remained in their home countries. Such payments include housing expenses, cost of living adjustment, education and travel expenses. Similarly, our International Assignment Policy covers the additional taxes employees incur due solely to their international assignments.

Mr. Marques

Commencement of Employment

On March 9, 2015, Mr. Marques commenced employment as the Executive Vice President and President, North America. To offset the loss of certain long-term incentives and retirement benefits from his previous employer, incent him to join the Company, and immediately align his compensation with our key critical performance measures and the interests of shareholders, the Compensation Committee approved a one-time cash payment of $1,100,000, subject to full repayment if his employment with us terminates before March 9, 2017 (except for an involuntary termination without cause or termination due to death or disability), and a one-time equity grant of 130,900 shares of restricted stock and 654,460 NQSOs. The performance-based portion of the equity grant, approximately half of the total grant value, only rewards Mr. Marques if there is an increase in our share price (NQSOs). The shares of restricted stock ratably vest 30%, 30% and 40% annually on the anniversary of Mr. Marques’ date of hire and are subject to the same terms and conditions as the restricted stock grants made to other employees generally on February 18, 2015 with the exception that the shares of restricted stock vest upon an involuntary termination without cause. The NQSOs ratably vest 30%, 30% and 40% annually on the anniversary of Mr. Marques’ date of hire and are generally subject to the same terms as the grants made to the NEOs on February 18, 2015 with the exception that any outstanding stock options will vest with a one-year post-termination exercise period upon an involuntary termination without cause. Due to the timing of his hire, Mr. Marques received a 2015 annual equity grant of 76,140 NQSOs and 45,690 performance share units on March 9, 2015.

Target Total Direct Compensation

Mr. Marques’ target compensation levels are above the median of our Compensation Survey Group primarily because of his significant prior operating experience in the consumer products industry. Mr. Marques’ annual base salary of $875,000, his target annual incentive of 80% of his base salary and his 2015 annual equity grant generally reflect internal and external peer positioning. Mr. Marques’ 2015 individual performance rating reflects solid financial performance for our North American region in a challenging operating environment.

 

 

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Policy Authorizing Recoupment of Executive Incentive Compensation in the

Event of Certain Restatements

The Board or an appropriate committee of the Board may determine that, as a result of a restatement of our financial statements, an executive officer received more compensation than the executive officer would have received absent the incorrect financial statements. The Board or committee, in its discretion, may then take such actions as it deems necessary or appropriate to address the events that gave rise to the restatement and to prevent its recurrence. Such actions may include, to the extent permitted by applicable law:

 

    requiring the executive officer to repay some or all of any bonus or other incentive compensation paid;

 

    requiring the executive officer to repay any gains realized on the exercise of stock options or on the open-market sale of vested shares;

 

    canceling some or all of the executive officer’s restricted stock or deferred stock unit grants, performance share units and outstanding stock options;

 

    adjusting the executive officer’s future compensation; or

 

    terminating or initiating legal action against the executive officer.

Trading Restrictions and Anti-Hedging Policy

Our insider trading policy limits the timing and types of transactions in Mondelēz International securities by Section 16 officers, including our NEOs (and any member of the Section 16 officer’s family sharing the same household). Among other restrictions, the policy:

 

    allows Section 16 officers to trade company securities only during open window periods and only after they have pre-cleared transactions;

 

    prohibits Section 16 officers from short-selling company securities or “selling against the box” (failing to deliver sold securities); and

 

    prohibits Section 16 officers from entering into transactions in puts, calls or other derivatives on Mondelēz International securities on an exchange or in any other organized market, as well as any other derivative or hedging transactions on Mondelēz International securities.

Anti-Pledging Policy

Our insider trading policy prohibits our directors, executive officers and certain additional executives from holding Mondelēz International securities in a margin account or pledging Mondelēz International securities as collateral for a loan.

Policy with Respect to Qualifying Compensation for Tax Deductibility

Code Section 162(m) limits our ability to deduct compensation paid to certain NEOs (the “covered employees”) to $1.0 million annually. Covered employees under Code Section 162(m) include our principal executive officer and our next three highest paid executive officers, other than our principal financial officer. This limitation does not apply to performance-based compensation, provided certain conditions are satisfied. The Company generally intends that the Annual Cash Incentive Program awards and awards under our equity program qualify as performance-based compensation and are thus tax-deductible under Code Section 162(m). However, the application of Section 162(m) is complex and may change with time (with a potentially retroactive effect) and thus there can be no guarantee that all of these awards will actually qualify as performance-based compensation under Section 162(m).

Additionally, the Compensation Committee retains the discretion to authorize payments that may not be tax-deductible if it believes such payments are in the best interest of shareholders. For example, the Compensation Committee decided, based on benchmarking salaries of other chief executive officers in the Compensation Survey Group, to pay Ms. Rosenfeld an annual base salary in excess of $1.0 million. Therefore, a portion of her salary was not tax-deductible in 2015. In addition, a portion of certain of the other covered employees’ income exceeded the $1.0 million tax deductibility limit for 2015 because of other elements of their annual compensation.

 

 

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Executive Compensation Tables

2015 Summary Compensation Table

 

Name and

Principal

Position

  Year     Salary
($)
   

Bonus

($)

    Stock
Awards
(1)
($)
    Option
Awards
(2)
($)
   

Non-Equity
Incentive Plan
Compensation
Annual
Incentive
Awards
(3)

($)

    Change in
Pension
Value
(4)
($)
    All Other
Compensation
(5)
($)
    Total
Compensation
($)
 
Rosenfeld, Irene     2015        1,600,000               9,750,685        2,562,811        3,816,000        1,419,064        526,252        19,674,812   

Chairman and CEO

    2014        1,600,000               8,185,127        2,211,924        3,600,000        5,120,402        322,493        21,039,946   
    2013        1,587,500               8,314,229        2,093,477        1,663,000        0        336,574        13,994,780   
                                                                         
Gladden, Brian     2015        900,000               3,703,366        973,386        1,450,000               166,987        7,193,739