KFT » Topics » Ms. Rosenfeld

This excerpt taken from the KFT DEF 14A filed Mar 31, 2009.

Ms. Rosenfeld

Base Salary Increase. In early 2008, the Committee approved a base salary increase for Ms. Rosenfeld primarily to recognize her individual performance in 2007 and to better align her salary with the size-adjusted median of the Compensation Survey Group. As discussed above, neither Ms. Rosenfeld, nor any of the other named executive officers, will receive a base salary increase in 2009. Her salary is below the size-adjusted median of the Compensation Survey Group.

Actual Annual Incentive. The Committee determined Ms. Rosenfeld’s annual incentive for 2008 in accordance with the plan mechanics. The Committee assessed Ms. Rosenfeld’s individual performance in accordance with the plan. Based on the strong quality financial and strategic results discussed below, the Committee set Ms. Rosenfeld’s individual performance assessment at 130% of target.

For 2008, the Committee considered the following performance in determining the individual performance assessment element of her annual incentive award in the context of the second year of the three-year turnaround:

 

   

Delivered strong financial performance as evidenced by the following:

  Led Kraft Foods in achieving the key financial goals with results, in some cases, being at the highest level since Kraft Foods became a publicly traded company in 2001;
  Ongoing Earnings Per Share of $1.88, in line with guidance and analyst expectations;
  Operating Income Margin expansion, excluding a one-time accounting item, despite unprecedented commodity cost increases; and
  Stable, full-year U.S. market share performance, despite aggressive pricing, enabled by continued brand investment.

 

   

Improved talent and capabilities in key management positions:

  Expanded the talent pipeline in support of a long-term succession approach for the Chief Executive Officer;
  Actively sourced many marketing and general management executives from high performing companies; and
  Significantly upgraded marketing capabilities through assessments and training.

 

   

Continued to transform Kraft Foods to drive top-tier business performance:

  Delivered solid new product offerings worldwide with increased focus in our growth categories with fewer and larger launches;

 

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  Completed the exit of the Post cereals business resulting in a tax-advantaged gain on sale of $937 million; and
  Continued to integrate the LU Biscuit business with the acquisition being accretive to 2008 earnings; synergies ahead of our business case; integration complete in all developing markets; and a new category structure announced in Kraft Foods Europe to accelerate and expand synergy opportunities.

Stock Awards. As part of the annual stock award program in 2008, the Committee granted Ms. Rosenfeld a restricted stock award of 131,000 shares and a non-qualified stock option award of 524,000 options. The Committee granted an award above the median of the Compensation Survey Group in recognition of her performance on strategic initiatives in 2007.

This excerpt taken from the KFT DEF 14A filed Mar 26, 2008.

Ms. Rosenfeld

Base Salary Increase. In 2007, the Committee approved a base salary increase for Ms. Rosenfeld primarily to recognize her individual performance in 2006 and to better align her salary with the size-adjusted median of the Compensation Survey Group. In 2006, the Committee considered the progress Ms. Rosenfeld made in developing and implementing her long-term strategy to bring Kraft back to sustainable superior performance.

Actual Annual Incentive. In determining Ms. Rosenfeld’s annual incentive for 2007, the Committee considered her performance relative to her financial and strategic guidelines for the year. Similar to our approach with respect to business unit ratings, individual performance measures are used merely as guidelines in the Committee’s exercise of discretion regarding Ms. Rosenfeld’s annual incentive award.

 

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For 2007, the guidelines were as follows:

 

Key Financial Metrics

  

2007 Guideline

   Actual Performance    

Organic Revenue Growth(1):

   High end of 3 - 4% growth range    5.1%  

Ongoing Earnings Per Share(2):

   Above the $1.75 - $1.80 guidance provided to analysts    $1.82  

Diluted Earnings Per Share:

   Above the $1.50 - $1.55 guidance provided to analysts    $1.62  

Discretionary Cash Flow(3):

   $2.4 billion    $2.3 billion  
  (1) Organic revenue growth is a non-GAAP financial measure and is equal to net revenue, excluding the impact of currency, acquisitions and divestitures.

 

  (2) Ongoing earnings per share is a non-GAAP financial measure and is equal to diluted earnings per share, excluding items.

 

  (3) Discretionary cash flow is a non-GAAP financial measure and is equal to operating cash flow less capital expenditures.

 

In addition, the Committee considered operating income margin and market share performance in their assessment. In 2007, Kraft’s results fell short of these two additional guidelines set by the Committee, which factored into the Committee’s overall assessment of Ms. Rosenfeld’s 2007 performance. The shortfall on operating income growth and margin was primarily driven by the unprecedented record-high commodity costs, particularly dairy costs.

In addition, in its assessment of Ms. Rosenfeld’s 2007 performance, the Committee considered the following key strategic objectives, which were consistent with the goals that she discussed with investors at the beginning of 2007.

 

Key Strategic Objectives

  

Assessment

Upgrade talent in key management positions    Introduced new leadership in key positions including Chief Financial Officer, Chief Marketing Officer, President Kraft International, and Executive Vice President Operations and Business Services.
Develop a three-year product pipeline to deliver growth targets   

Introduced significant new products in 2007 including DiGiorno Ultimate pizza, Oreo Cakesters, Easy Mac Cups, Oscar Mayer Deli Creations sandwiches, LiveActive snacking and cottage cheeses, Jacobs Sinnfonie, and Milka Tendres Moments, which helped deliver a 30% increase in new product revenue.

 

Ten new product platforms are currently in development.

Transform the portfolio for sustainable growth   

Strengthened the portfolio with the acquisition of Groupe Danone’s global biscuit business, which closed on November 30, 2007.

 

Divested non-core businesses to improve business focus. Businesses divested included Cream of Wheat and Veryfine/Fruit2O. Also announced the Post cereals transaction.

Modify organizational structure/culture to deliver top-tier performance   

Began implementation of new operating structure, effective January 2008, to transition to self-contained business units with accountability for total business results, shared services and a streamlined headquarters staff.

 

Complete transition to a free-standing company   

Managed share “flow back” effectively as measured by the following:

 

•     Share price declined less than expected immediately following the spin-off from Altria, despite 1.5 billion new shares being distributed from Altria to their shareholders and 87% share turnover (1.4 billion shares) in the first three months following our spin-off.

 

•     Executed on $3.5 billion of a $5.0 billion board-authorized share repurchase program.

 

•     Repurchased 105.7 million shares at an average price of $33.13 as compared to an average price during the repurchase period of $33.50.

 

Enhanced our leverage by issuing $6.5 billion of new long-term debt in two separate issuances with proceeds to be used to fund maturing long-term debt, share repurchases and a portion of the acquisition of Groupe Danone’s global biscuit business.

 

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As a result of this assessment and the factors identified above, Ms. Rosenfeld was awarded an annual incentive award of $2,625,000, which reflects an amount above her target under the plan.

Stock Awards. Ms. Rosenfeld received two stock award grants in 2007.

As part of the annual stock award program, the Committee granted Ms. Rosenfeld a restricted stock award of 144,280 shares. The grant value of this award was in-line with the size-adjusted median of the Compensation Survey Group. On May 3, 2007, the Committee also granted her a non-qualified, performance-contingent stock option award concurrent with her appointment to the additional position of Chairman. She was granted an option to purchase 300,000 shares of our common stock. The number of shares granted was determined by the Committee based on market-competitive information. The combined grant value of these two awards was between the 50th and 75th percentile of the Compensation Survey Group. This type of award was granted to provide additional incentive for Ms. Rosenfeld to increase shareholder value as the vesting of the award will only occur if certain stock price hurdles are achieved. One-half of the shares under this performance-contingent stock option will vest only if the stock price maintains a trading price of $38.11 for at least 10 trading days. The remaining one-half of the award will vest only if the stock price maintains a trading price of $41.43 for at least 10 trading days.

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