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Form DEF 14A SYSCO CORP For: Nov 18

October 6, 2022 5:02 PM EDT

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UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, DC 20549

 

SCHEDULE 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

 

  Filed by the Registrant   Filed by a Party other than the Registrant

 

Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(E)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material under §240.14a-12

 

SYSCO CORPORATION

 

 

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check all boxes that apply):
No fee required.
Fee paid previously with preliminary materials.
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
 

 

TABLE OF CONTENTS

 

LETTER FROM OUR CEO AND CHAIRMAN 3
   
PROXY STATEMENT SUMMARY 6
Meeting Agenda 6
Business Highlights 6
Director Nominees 7
Executive Compensation Highlights 9
   
SUSTAINABILITY HIGHLIGHTS 11
   
CORPORATE GOVERNANCE 12
Board Leadership Structure 14
Director Independence 14
Board Committees 15
Board Meetings 18
Annual Board Self-Evaluation 18
Risk Oversight 19
   
BOARD OF DIRECTORS MATTERS 20
Board Refreshment and Director Orientation and Education 20
Election of Directors 21
Nominees for Election as Directors at the Annual Meeting: 26
   
DIRECTOR COMPENSATION 32
Overview of Non-Employee Director Compensation 32
Directors Deferred Compensation Plan 32
Equity-Based Awards to Non-Employee Directors 32
Stock Ownership Guidelines 33
Fiscal 2022 Director Compensation 34
Certain Relationships and Related Person Transactions 36
   
CORPORATE SOCIAL RESPONSIBILITY 37
2021 Shareholder Proposal – Greenhouse Gas Targets 37
Code Of Conduct 37
   
EXECUTIVE OFFICERS 38
Management Development and Succession Planning 40
   
STOCK OWNERSHIP 41
Security Ownership of Officers and Directors 41
Security Ownership of Certain Beneficial Owners 42
Delinquent Section 16(a) Reports 42
   
EQUITY COMPENSATION PLAN INFORMATION 43

 

SYSCO CORPORATION // 2022 Proxy Statement

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ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (ITEM 2) 43
   
COMPENSATION DISCUSSION AND ANALYSIS 44
Executive Summary 44
Philosophy of Our Executive Compensation Program 47
How Executive Pay is Established 47
What We Paid 49
Compensation Risk Analysis 58
Stock-Related Policies 59
Executive Compensation Governance and Other Information 60
Report of the Compensation and Leadership Development Committee 63
   
EXECUTIVE COMPENSATION 64
Summary Compensation Table 64
Grant of Plan-Based Awards 66
Outstanding Equity Awards at Year-End 67
Option Exercises and Stock Vested 68
Fiscal 2022 Nonqualified Deferred Compensation 69
Pension Benefits 70
CEO Pay Ratio 71
Quantification of Termination/Change in Control Payments 72
   
REPORT OF THE AUDIT COMMITTEE 75
   
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 76
Pre-Approval Policy 76
   
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS SYSCO’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 3) 77
Required Vote 77
   
STOCKHOLDER PROPOSAL (ITEM 4) 78
Board of Directors’ Statement in Opposition of the Proposal 78
Required Vote 79
   
STOCKHOLDER PROPOSAL (ITEM 5) 80
Board of Directors’ Statement in Opposition of the Proposal 80
Required Vote 81
   
STOCKHOLDER PROPOSAL (ITEM 6) 82
Board of Directors’ Statement on the Proposal 82
Required Vote 82
   
STOCKHOLDER PROPOSALS 83
Presenting Business or Nominating Directors for Election 83
Meeting Date Changes 83
   
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING 84
   
ANNEX I - NON-GAAP RECONCILIATIONS 88

 

SYSCO CORPORATION // 2022 Proxy Statement

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LETTER FROM OUR
CEO AND CHAIRMAN

 

                                                                                              Kevin Hourican Ed Shirley                                         
  President and Chief Executive Officer Chairman  

 

Dear Sysco Stockholder,

 

Sysco delivered strong financial performance in fiscal year 2022, successfully navigating yet another dynamic year in our industry. The company grew profitably and won new customers due to our Recipe for Growth strategy and the strength of our supply chain. Our network of distribution centers was better in stock, and our supply chain associates were better equipped, to ensure we delivered on time and in full to our customers. While the year was not without challenges, we are proud of the success of our business and thank our associates for their dedication to our customers. I’m grateful for the resilience and dedication of our 71,000 strong team that fuels Sysco’s ability to remain the leader in our industry. Connecting the world to share food and care for one another—that is our purpose. It is a galvanizing force at Sysco that connects all of our associates to our mission. Our purpose also calibrates the decisions we make and motivates the commitment Sysco has displayed to our communities and our climate.

 

As we exited FY22, we’re operating from a position of strength. New digital pricing capabilities implemented during the year, designed to ensure we offer customers the right product at the right price, have enhanced our ability to effectively manage inflation rates that spiked to historic levels. Through robust hiring efforts, staffing levels now exceed 2019 levels, and we launched new training programs for our frontline associates that will help maintain our momentum. That strength will enable Sysco to win new customers and better serve our existing customers. Efforts by our merchant team have helped to mitigate product availability challenges, and Sysco’s supplier relationships have been further strengthened through these experiences.

 

Our Performance in Fiscal 2022

 

Sysco’s total sales were more than $68 billion in fiscal 2022, demonstrating a robust return of consumer demand and a Recipe for Growth strategy that enabled Sysco to grow 1.3 times the industry at large in the US. We recorded a gross profit increase of 31.7% to $12.3 billion. Operating income increased 62.7% to $2.3 billion, and adjusted¹ operating income increased 80.3% to $2.6 billion. We delivered earnings per share growth of 158.8% to $2.64, and adjusted1 earnings per share growth of 125.7% to $3.25. Through purposeful investments in working capital to drive increased sales and profitability, including making significant investments in inventory, in fiscal 2022 our cash flow from operations increased to $1.8 billion. We also reduced debt by $450 million and returned nearly $1.5 billion to our shareholders through our quarterly dividends and $500 million in share repurchases. As a result, we ended the year at 2.9x net debt to Adjusted EBITDA1.

 

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

 

SYSCO CORPORATION // 2022 Proxy Statement

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Sysco’s Recipe for Growth Strategy

 

We think of Sysco as being, in equal measure, a food sales and marketing company and a food supply chain company. To be successful in our industry, we must be equally capable of leading in both arenas. Our Recipe for Growth strategy is advancing our capabilities in supply chain and sales, further enabling our position as the global leader in food distribution. FY22 highlights include:

 

Implementing an intelligent, data-driven pricing system to improve our ability to be “right on price” at the customer and item level.
Enhancing Shop, our digital shopping platform, by personalizing our customers’ experience and improving search navigation, making it even easier to re-order essentials, and introducing product recommendation engines that increase customer basket size.
Transforming our supply chain to a six-day service week across our U.S. sites, while also converting most of our associates to a four-day schedule. This change will enable Sysco to grow profitably for years to come by better leveraging our physical assets, setting the industry standard for increased service to our customers and improving work-life balance for our associates.
Launching new training programs for our frontline associates, including our Sysco Driver Academy and a CDL training program to help source new drivers from within Sysco and provide new career opportunities to our associates.
Advancing our specialty cuisine platforms through addition and integration of new companies. We are scaling our Italian platform through our Greco and Sons business, introducing top-selling items to most geographies and improving team selling across businesses. We also advanced our capabilities in the fast-growing and profitable produce category by adding two acquisitions to FreshPoint, our specialty produce company.

 

Leading our Industry Toward a Sustainable Future

 

Sysco is committed to being a sustainability leader. To ensure steady progress toward our stated goals, we’ve taken important steps to drive accountability at the highest levels of the company. Our sustainability strategy is an integral part of our Recipe for Growth business strategy, driving alignment across the organization on the importance of reaching our goals. In addition, we recently established that a portion of Sysco leaders’ incentive awards in FY23 will be tied to key initiatives related to gender representation, diverse recruiting and carbon reduction.

 

Sysco is defining the future of foodservice through its industry leading commitment to a science-based target to reduce our greenhouse gas emissions, announced in November 2021. We also announced our plan to purchase nearly 800 electric trucks and are piloting an electric refrigerated trailer. Together, we expect these initiatives will ultimately result in our ability to make deliveries to our customers in fully electric vehicles, reducing both carbon and noise pollution.

 

Progress toward reaching our Global Good Goal to donate $500 million worth of goods and services across our global communities by 2025 also advanced this year. We launched a global volunteer recognition program, donated millions of meals to support the global communities where we operate and, through our Nourishing Neighbors program, we pledged to donate $1 million to Feeding America.

 

We continue to prioritize our efforts to advance diversity, equity and inclusion at Sysco. During FY22, we added three new members to our Board of Directors. In total, 36% of our Board is gender or ethnically diverse. Our Global DEI Council finalized our DEI framework and key initial priorities for FY23, and we also launched new efforts to increase our purchases from diverse suppliers, including developing a diverse supplier mentorship program.

 

While we are closely monitoring macroeconomic pressures across the globe, we’re upbeat about our business and prepared to navigate another dynamic year ahead, so that we can deliver market share gains and profitable growth in FY23.

 

On behalf of our Board of Directors and all our Sysco associates, thank you for your continued trust and support in Sysco.

 

   
Kevin Hourican Ed Shirley
President and Chief Executive Officer Chairman

 

SYSCO CORPORATION // 2022 Proxy Statement

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NOTICE

OF ANNUAL MEETING
OF STOCKHOLDERS

 

1390 Enclave Parkway
Houston, Texas 77077-2099


November 18, 2022
10:00 A.M. (Central Time)

 

The Annual Meeting of Stockholders (the “Annual Meeting”) of Sysco Corporation, a Delaware corporation, will be held on Friday, November 18, 2022, at 10:00 a.m. (Central Time). We are holding the Annual Meeting in a virtual-only meeting format. You will not be able to attend the Annual Meeting at a physical location. We believe a virtual meeting will provide all stockholders a consistent experience and allow you to participate in the Annual Meeting, regardless of your location. You will be able to submit questions during the meeting using online tools, providing the opportunity for meaningful engagement with the Company. For more information about the virtual-only meeting format, please see Question 5, “How do I attend the Annual Meeting?” on page 85 of the accompanying proxy statement.

 

RECORD DATE

 

The record date for the Annual Meeting is September 19, 2022. Only stockholders of record of the Company’s common stock (“Common Stock”) at the close of business on the record date will be entitled to receive notice of and to vote during the Annual Meeting or any adjournment or postponement thereof.

 

VOTING YOUR PROXY

 

For instructions on voting, please refer to the notice you received in the mail or, if you requested a hard copy of the proxy statement, on your enclosed proxy card. To cast your vote during the Annual Meeting, you will need to enter the 16-digit control number found on the notice or proxy card, as applicable, at the time you log in to the meeting at virtualshareholdermeeting.com/SYY2022. You may inspect a list of stockholders of record at the Company’s headquarters during regular business hours within the 10-day period before the Annual Meeting or during the Annual Meeting when you log in at virtualshareholdermeeting.com/SYY2022.

ITEMS OF BUSINESS

 

During the Annual Meeting, you will be asked to:

 

1. Elect as directors the eleven nominees named in the accompanying proxy statement to serve until the Annual Meeting of Stockholders in 2023;
2. Approve an advisory resolution regarding the compensation paid to Sysco’s named executive officers;
3. Ratify the appointment of Ernst & Young LLP as Sysco’s independent registered public accounting firm for fiscal 2023;
4. Consider a stockholder proposal, if properly presented at the meeting, related to a third party civil rights audit;
5. Consider a stockholder proposal, if properly presented at the meeting, related to third party assessments of supply chain risks;
6. Consider a stockholder proposal, if properly presented at the meeting, related to a report on the reduction of plastic packaging use; and
7. Transact any other business as may properly be brought before the meeting or any adjournment or postponement thereof.

 

We encourage you to vote your proxy in advance of the Annual Meeting, even if you plan to attend, to ensure that your shares are represented. There are three convenient ways to vote right now:

 

By telephone
By Internet
By mail
See the instructions at www.ProxyVote.com.
See the instructions at www.ProxyVote.com.
If you requested a paper copy of the proxy statement, complete the enclosed proxy card, including your signature and the date, and return in the enclosed postage-paid envelope.

 

Dated and first mailed to stockholders on or about October 6, 2022 Houston, Texas

 

By Order of the Board of Directors
Eve M. McFadden
Senior Vice President, Legal,
General Counsel and Corporate Secretary


 

Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to be Held on November 18, 2022
 
The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K
for the fiscal year ended July 2, 2022, are available at www.proxyvote.com.

 

SYSCO CORPORATION // 2022 Proxy Statement

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PROXY STATEMENT SUMMARY

 

This summary highlights information contained in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. For complete information about Sysco’s performance, please see our Annual Report on Form 10-K for the fiscal year ended July 2, 2022.

 

WHEN WHERE RECORD DATE
Friday, November 18, 2022, The meeting will be held virtually at September 19, 2022
at 10:00 a.m. (Central) virtualshareholdermeeting.com/SYY2022  

 

At the close of business on the Record Date, there were 506,757,911 shares of Sysco Corporation Common Stock outstanding and entitled to vote at the Annual Meeting. Each stockholder is entitled to one vote for each share owned on the Record Date on each matter presented at the Annual Meeting.

 

MEETING AGENDA

 

The matters we will act upon at the Annual Meeting are:

 

    Board voting   Where to find
Proposal   recommendation   more information
Elect eleven directors for a one-year term   FOR each nominee   Page 20
Approve, on an advisory basis, the compensation paid to our named executive officers   FOR   Page 43
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2023   FOR   Page 77
Consider a stockholder proposal related to a third-party civil rights audit (if properly presented)   AGAINST   Page 78
Consider a stockholder proposal related to third-party assessments of supply chain risks (if properly presented)   AGAINST   Page 80
Consider a stockholder proposal related to a report on the reduction of plastic packaging use (if properly presented)   NONE   Page 82

 

BUSINESS HIGHLIGHTS

 

 

 

(1) Adjusted EBITDA represents a non-GAAP measure; see reconciliation in Annex I - Non-GAAP Reconciliations.

 

SYSCO CORPORATION // 2022 Proxy Statement

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DIRECTOR NOMINEES

 

  Name Age Director since Experience Independent Committee
Memberships(1)
Other Public
Company Boards
Daniel J. Brutto 66 September 2016 Former President, UPS International and Senior Vice President, United Parcel Service, Inc. Yes CGN
CSR*
Executive
   Illinois Tool Works Inc.
Ali Dibadj 47 January 2022 Chief Executive Officer Janus Henderson Group plc Yes Audit
CSR
   Janus Henderson plc
Larry C. Glasscock 74 September 2010 Former Chairman of the Board of Directors, CEO and President of WellPoint, Inc. Yes CLD
CGN*
Executive
   Simon Property Group, Inc.
Jill M. Golder 60 January 2022 Former Senior Vice President and Chief Financial Officer Cracker Barrell Old Country Store, Inc. Yes Audit
Technology
   ABM Industries, Inc.
Bradley M. Halverson 62 September 2016 Former Group President, Financial Products and Corporate Services and Chief Financial Officer of Caterpillar Inc. Yes Audit*
CLD
Executive

   Constellation Energy Corporation

   Lear Corporation

   Satellogic, Inc.

John M. Hinshaw 52 April 2018 GMD Chief Operating Officer, HSBC Group Management Services, Ltd. Yes Audit
CLD
Technology
 
Kevin P. Hourican 49 February 2020 President and Chief Executive Officer, Sysco Corporation No Executive  
  Hans-Joachim Koerber 76 January 2008 Former Chairman and CEO of METRO Group (Germany) Yes Audit
CSR
   Eurocash SA
Alison Kenney Paul 64 January 2022 Managing Director, Global Alliances Google, Inc. Yes CGN
CLD
 
Edward D. Shirley 65 September 2016 Chairman of the Board, Sysco Corporation Yes CGN
CSR
Executive*
 
Sheila G. Talton 69 September 2017 President and Chief Executive Officer of Gray Matter Analytics Yes CGN
CSR
Technology*
   Deere & Company
   OGE Energy Corp.

 

(1) Full committee names are as follows:
  “Audit” – Audit Committee | “CGN” – Corporate Governance and Nominating Committee | “Executive” – Executive Committee
  “CLD” – Compensation and Leadership Development Committee | “CSR” – Corporate Social Responsibility Committee | “Technology” – Technology Committee
* Denotes committee chairperson

 

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Diversity of Director Tenure, Age and Gender

 

INDEPENDENT DIRECTOR NOMINEE TENURE   INDEPENDENT DIRECTOR NOMINEE DIVERSITY
     
 

 

Director Qualifications

 

The Board believes every director should have one or more of the following qualifications because they are particularly relevant to the Company’s strategic priorities. These qualifications were all considered by the Board in connection with this year’s director nomination process:

 

 

 

Corporate Governance Facts

 

Separate Chairman of the Board and CEO   Independent directors meet regularly without management present
15-year limit on director tenure   Proxy access right
Annual Board and committee self-evaluations   Stockholder right to call a special meeting
Periodic 360-degree individual director performance evaluations   Significant stock ownership requirements for all directors and executive officers
91% of the Board of Directors is independent   Single class of voting stock
Annual election of all directors   Regular engagement with stockholders
No director may serve on more than four other boards and no audit committee member may serve on more than two other audit committees   Majority voting standard

 

SYSCO CORPORATION // 2022 Proxy Statement

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EXECUTIVE COMPENSATION HIGHLIGHTS

 

Core Principles

 

 

 

Fiscal 2023 Compensation Design

 

In response to economic uncertainty during the COVID-19 pandemic, we adjusted our incentive programs to set realistic performance targets for our NEO’s. Fiscal 2022 marked a transition back to our pre-COVID-19 pandemic compensation practices, with a heavy emphasis on pre-determined, quantifiable financial measures. For fiscal 2023, we will return to our core practices, including a full-year performance period for the short-term incentive program. Fiscal 2023 will also introduce ESG metrics in our Strategic Business Objectives that measure actions we need to take to advance our 2025 ESG goals.

 

 

Our executive compensation plans directly link a substantial portion of annual executive compensation to Sysco’s performance relative to pre-established metrics. These plans are designed to deliver highly competitive compensation for superior Company performance. Likewise, when Company performance falls short of expectations, our variable incentive programs deliver lower levels of compensation. The Compensation and Leadership Development Committee (the “CLD Committee”) tries to balance pay-for-performance objectives with retention considerations, so that, even during temporary downturns in the economy and the foodservice industry, the programs continue to ensure that qualified, successful, performance-driven employees stay committed to increasing Sysco’s long-term value. Furthermore, to attract and retain highly skilled management, our compensation program must remain competitive with those of comparable employers that compete with us for talent.

 

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We use the following key principles as the cornerstone of Sysco’s executive compensation philosophy to attract, develop and retain business leaders to drive financial and strategic growth and build long-term stockholder value:

 

Pay for Performance: Provide base salaries that reflect each NEO’s background, experience and performance, combined with variable incentive compensation that rewards executives at higher levels than at peer companies when superior performance is achieved, while below median performance results in compensation that is below the median pay of peer companies;
Competitiveness and Retention: Provide a competitive pay opportunity that attracts and retains the highest quality professionals;
Accountability for Short- and Long-Term Performance: Strike an appropriate balance between achieving both short-term and long-term interests of the business through short-term and long-term compensation; and
Alignment with Stockholders’ Interests: Link the interests of our executive officers with those of our stockholders through significant at-risk, equity-based compensation.

 

The fiscal 2023 compensation design included the following short and long-term pay components:

 

Annual Incentive Program: an annual incentive progam tied primarilty to financial metrics; and
Long-Term Incentive Program: Included a mix of (i) performance share units with a three-year performance period; (ii) stock options; and (iii) restricted stock units.

 

Elements of Executive Compensation

 

The elements of target total direct compensation for fiscal 2023 are presented below.

 

Element of Compensation Objective of Each Element
Base Salary Provide each NEO with a fixed compensation component that reflects his or her position and responsibilities.
Annual Incentive Incentivize the near-term achievement of key transformational initiatives and financial goals. Promote pay for performance and provide variable rewards within a competitive range of total cash compensation.
Restricted Stock Units Provide a retention incentive over relevant time periods to help ensure consistency and execution of long-term strategies.
Stock Options Closely align the executives’ interests with those of our stockholders, with realized value based on post-grant share price appreciation.
Performance Share Units Closely align the NEO’s interests with those of our stockholders, with realized value based in part on post-grant share price appreciation. Enhance performance and compensation alignment by linking payouts to the achievement of Sysco’s financial goals and objectives.

 

Our Executive Compensation Practices

 

WHAT WE DO
Pay for Performance
Annual “Say on Pay”
Risk Assessment
Independent Compensation Consultant
Clawback Policy
Double Trigger Change in Control
Stock Ownership Guidelines
Review Share Utilization
Limited Trading Windows
WHAT WE DON’T DO
No Stock Option Reloading
No Repricing of Underwater Stock Options
No Excise Tax Gross-ups upon a Change in Control
No Excessive Perquisites
No Unearned Dividends Paid
No Hedging by our Executive Officers, Directors or Other Specified “Insiders”


 

SYSCO CORPORATION // 2022 Proxy Statement

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SUSTAINABILITY HIGHLIGHTS

 

Sysco is committed to caring for people, sourcing products responsibly, and protecting the planet. Program highlights from the last fiscal year include:

 

PEOPLE

 

  Donated millions of meals to support communities globally in need and continued to progress against our global good goal to generate $500 million worth of good by 2025.
  Enhanced the Company’s supplier diversity program by establishing five new partnerships with leading supplier diveristy councils and hosting Sysco’s first Supplier Diveristy Summit to identify and faciliate relationships with qualified suppliers.

 

PRODUCT

 

  Awarded ten grants to invest in community-led sustainable grazing and wildlife habitats through the Company’s public-private partnership with the National Fish and Wildlife Foundation and Cargill. These grants will serve to increase the grasslands’ ability to store carbon and support efforts to address climate change.
  Successfully piloted an indoor agriculture program in our FreshPoint business, which reduced distribution-based emissions, reduced water consumption and runoff and required less space than field-grown alternatives.


PLANET

 

  Became the first U.S. Foodservice distributor to announce a science-based climate goal in line with the Paris Agreement to reduce emissions in our direct operations and across the Company’s value chain.
  Advanced the Company’s fleet electrification program by signing a letter of intent to deploy up to nearly 800 battery electric Class 8 tractors by 2026 and piloting a zero-emissions solution for commercial trailers.


For further discussion of Sysco’s sustainability (“sustainability”) strategy and long-term goals, see our website at www.sysco.com in the “Sustainability” section.

 

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CORPORATE GOVERNANCE

 

We believe good corporate governance is critical to achieving business success. To provide a general framework for the management of the Company and reflect our commitment to sound governance practices, the Board has adopted certain policies and other documents, collectively referred to in this proxy statement as our “Governance Documents.” Our Governance Documents include the following:

 

Amended and Restated Bylaws;
Corporate Governance Guidelines;
the Charters of the Board’s six standing committees; and
the Global Code of Conduct.

 

The Governance Documents outline the functions of the Board and each Board committee, director responsibilities, and various processes and procedures designed to ensure effective and responsive governance.

 

The Corporate Governance and Nominating Committee (the “Governance Committee”) regularly reviews the Governance Documents and recommends revisions, as needed, to the Board to reflect developments in the law and corporate governance practices.

 

The Governance Documents are available to view or download from our website at www.sysco.com under “Investors—Corporate Governance.” These documents will also be provided without charge to any stockholder, upon written request to the Corporate Secretary at Sysco Corporation, 1390 Enclave Parkway, Houston, Texas 77077. The information on any website referenced in this proxy statement, including www.sysco.com, is not deemed to be part of or incorporated by reference into this proxy statement.

 

SYSCO CORPORATION // 2022 Proxy Statement

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Governance Highlights

 

BOARD COMPOSITION AND ACCOUNTABILITY:
     
Board Leadership  

  Mr. Shirley leads the Board of Directors as independent Chairman

  Each Board committee has an independent chair

     
Board Refreshment & Director Tenure Policy  

  Non-employee directors may not serve on the Board for more than 15 years

  Five of our current independent directors have joined the Board in the past five years

  Average tenure of the independent director nominees is five years

     
Board Evaluations  

  Annual Board and committee self-evaluations aim to increase Board effectiveness and inform future Board refreshment efforts

  Periodic 360-degree performance evaluations of individual directors

     
Director Independence  

  At least a majority of our directors must meet the New York Stock Exchange (“NYSE”) criteria for independence, as well as the additional criteria set forth in our Corporate Governance Guidelines

All members of the Audit, Compensation and Leadership Development (“CLD”), and Governance Committees must be independent under the applicable NYSE and SEC standards

Our Board has determined that all director nominees, other than the CEO, are independent (representing 91% of the Board)

     
Annual Elections  

  All of our directors are elected annually

     
Overboarding Policy  

Non-employee directors should generally not serve on more than four additional public-company boards of directors (two additional for directors who are employed full time)

Members of the Audit Committee may not serve on more than two other public company audit committees

     
Risk Oversight  

 The Board works through its committees and senior management to exercise oversight of the enterprise risk management process

     
STOCKHOLDER RIGHTS:
     
Proxy Access  

Stockholders who have beneficially owned 3% or more of our outstanding Common Stock continuously for at least 3 years may nominate a number of director nominees equal to the greater of 2 or 20% (rounded down) of the total number of directors constituting our Board, subject to applicable limitations and procedural requirements

     
Right to Call Special Meeting  

Stockholders holding at least 25% of our outstanding Common Stock have the right to call a special meeting of stockholders, subject to applicable limitations and procedural requirements

     
Action by Written Consent  

Stockholders having at least the minimum voting power required to take a corporate action may do so by a written consent in lieu of calling a stockholders meeting

     
Majority Voting Standard  

Each of our directors is elected by a majority of the votes cast in an uncontested election

Any incumbent director who fails to receive more “for” than “against” votes must tender an offer to resign to the Board

     
Single Voting Class  

We have only one class of stock, Common Stock, that is entitled to vote on the election of directors and other matters submitted to a vote of stockholders

     
Stockholder Engagement  

We prioritize a program of regular engagement with our stockholders regarding matters of corporate governance, executive compensation and corporate social responsibility

     
   

Board leaders, including our Chairman, the Chair of our CLD Committee, the Chair of our Governance Committee and Chair of our Corporate Social Responsibility Committee, participate in stockholder engagement initiatives

     
No Poison Pill  

  We do not have a poison pill or similar stockholder rights plan

 

SYSCO CORPORATION // 2022 Proxy Statement

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BOARD LEADERSHIP STRUCTURE

 

The Corporate Governance Guidelines provide that the roles of Chairman and CEO may be separated or combined, and the Board exercises its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances. The Board currently believes that separating the roles of Chairman and CEO is in the best interests of Sysco and its stockholders and represents the most effective leadership structure for the Company.

 

Mr. Shirley has served as the Board’s independent Chairman since November 20, 2020. In his role as Chair, Mr. Shirley’s responsibilities include:

 

reviewing meeting agendas and schedules for meetings of the Board with the CEO;
overseeing and approving information and materials sent to the Board, serving as the primary liaison between the independent directors and the CEO, and presiding at meetings of the non-employee and independent directors;
being available for consultation and director communication;
reviewing with the CEO the nature and content of director communications in response to inquiries from outside parties; and
in consultation with the CEO, reviewing written communications between directors and officers or employees of the Company.

 

The Board regularly reviews its leadership structure, including during the Board’s annual evaluation process, to determine the most appropriate arrangement. Since the Company was founded in 1969, the Board has established a variety of Board leadership structures, including independent Board Chairs, Executive Chairs, and combined CEO/Chairs. The Board believes that the current leadership structure best enables the Board to provide effective, independent oversight of the Company.

 

DIRECTOR INDEPENDENCE

 

Our Corporate Governance Guidelines require that at least a majority of our directors meet the criteria for independence that the NYSE has established for continued listing, as well as the additional criteria set forth in the Guidelines. Additionally, we require that all members of the Audit Committee, the CLD Committee, and the Governance Committee be independent, that all members of the Audit Committee satisfy the additional requirements of the NYSE and SEC rules, and that all members of the CLD Committee satisfy the additional requirements of the NYSE.

 

Under the NYSE listing standards, to consider a director independent, our Board must determine that he or she has no material relationship with Sysco, other than as a director. The standards specify the criteria the Board must use to determine whether directors are independent and contain guidelines regarding directors and their immediate family members with respect to employment or affiliation with Sysco or its independent registered public accounting firm.

 

To assist the Board in determining director independence, our Corporate Governance Guidelines provide that the following relationships will not impair a director’s independence:

 

if a Sysco director is an executive officer of another company that does business with Sysco and the annual sales to, or purchases from, Sysco are less than two percent of the annual revenues of that other company;
if a Sysco director is an executive officer of another company that is indebted to Sysco, or to which Sysco is indebted, and the total amount of either company’s indebtedness to the other is less than two percent of the total consolidated assets of the other company, so long as payments made or received by Sysco as a result of such indebtedness do not exceed the greater of $1 million or two percent of such other company’s consolidated gross revenues; and
if a Sysco director serves as an officer, director or trustee of a tax-exempt charitable organization, and Sysco’s discretionary charitable contributions to the organization, without reference to Sysco’s automatic matching of employee charitable contributions, are less than two percent of that organization’s total annual charitable receipts.

 

The Board has reviewed all relevant relationships between those individuals who served as a director at any time during fiscal 2022 (and those who are nominated for election at the Annual Meeting) and Sysco. The relationships reviewed included any described below under “Certain Relationships and Related Person Transactions,” and several relationships that did not automatically impair independence under the NYSE standards or our Corporate Governance Guidelines, either because of the type of affiliation between the director and the other entity or because the amounts involved did not meet the applicable thresholds.

 

These additional relationships included the following, which were considered by the Board at the time it made its independence determinations: (for purposes of this section, the terms “Sysco,”“we,”“us” and “our” include our operating companies.)

 

Mr. Cassaday’s service as a director of one of our suppliers;
Mr. Dibadj’s service as Chief Executive Officer of an asset management company that owns less than 5% of Sysco’s outstanding Common Stock based on its most recent public disclosure;
Mr. Frank’s service as a Partner of Trian Fund Management, L.P. (“Trian”), which owned approximately 1.74% of Sysco’s outstanding Common Stock based on Trian’s most recent public disclosure;
Ms. Golder’s service as a director of one of our customers;
Mr. Halverson’s former service as Treasurer of a charitable organization that is one of our customers;
Mr. Hinshaw’s former service as a director of one of our suppliers and his service as an executive officer of a banking and financial services organization that provides commercial lending services to Sysco and that has received from Sysco, in each of the past three fiscal years, an aggregate amount significantly less than the maximum amount permitted under the NYSE listing standards for director independence (i.e., 2% of the other entity’s consolidated gross revenues);

 

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Ms. Lundquist’s former service as an executive officer of a Sysco customer and supplier that has paid to Sysco, and received from Sysco, in each of the past three fiscal years, an aggregate amount significantly less than the maximum amount permitted under the NYSE listing standards for director independence (i.e., 2% of the other entity’s consolidated gross revenues);
Ms. Paul’s service as an executive officer of a Sysco customer and supplier that has paid to Sysco, and received from Sysco, in each of the past three fiscal years, an aggregate amount significantly less than the maximum amount permitted under the NYSE listing standards for director independence (i.e., 2% of the other entity’s consolidated gross revenues);
Mr. Peltz’s service as (i) Chief Executive Officer and a Founding Partner of Trian, which owned approximately 1.74% of Sysco’s outstanding Common Stock based on Trian’s most recent public disclosure, and (ii) a director of one Sysco customer; and
Mr. Shirley’s service as a director of one of our customers.

 

After reviewing this information, the Board has determined that no Board nominee, other than Mr. Hourican, has a material relationship with Sysco and that all nominees, other than Mr. Hourican, are independent under the NYSE standards and the categorical standards set forth in our Corporate Governance Guidelines.

 

The Board also determined that Mr. Cassaday, who will retire from Board effective November 18, 2022, Messrs. Frank and Peltz, who resigned from the Board effective August 20, 2021, and Ms. Lundquist, who resigned from the Board effective February 28, 2022, were independent during the time they served.

 

The Board has also determined that each member of the Audit Committee, CLD Committee and Governance Committee is independent. Our Corporate Governance Guidelines also provide that no independent director who is a member of the Audit, CLD or Governance Committees may receive any compensation from Sysco, other than in his or her capacity as a non-employee director or committee member. The Board has determined that no non-employee director received any compensation from Sysco at any time since the beginning of fiscal 2022, other than in his or her capacity as a non-employee director, committee member, committee chairman or Chairman of the Board.

 

BOARD COMMITTEES

 

The Board has six standing committees: Audit Committee, Compensation and Leadership Development Committee (the “CLD Committee”), Corporate Governance and Nominating Committee (the “Governance Committee”), Corporate Social Responsibility Committee (the “CSR Committee”), Technology Committee, and Executive Committee. The written charters for all six committees are published on our website (www.sysco.com) under “Investors — Corporate Governance.” The current membership and primary responsibilities of the committees are summarized below.

 

Audit Committee Primary Responsibilities Fiscal 2022
Meetings

Mr. Halverson (Chair)

Mr. Dibadj

Ms. Golder

Mr. Hinshaw

Dr. Koerber

Oversees and reports to the Board with respect to various auditing and accounting matters, including the selection of the independent public accountants, the scope of audit procedures, the nature of all audit and non-audit services to be performed by the independent public accountants, the fees to be paid to the independent public accountants, and the performance of the independent public accountants

Oversees and reports to the Board with respect to Sysco’s accounting practices and policies

Oversees and reports to the Board with respect to certain treasury/finance matters, including the Company’s policies governing capital structure, debt limits, dividends, and liquidity, and reviews and recommends to the Board the issuance and repurchase of Company securities

Assists the Board with its oversight and monitoring of the Company’s risk assessment and risk management policies and processes

Oversees and reports to the Board with respect to compliance with legal and regulatory requirements, corporate accounting, reporting practices, and the integrity of the Company’s financial statements

 

The Board has determined that each member of the Audit Committee is independent, as defined in the NYSE’s listing standards, Section 10A of the Securities Exchange Act of 1934 and the Company’s Corporate Governance Guidelines. The Board has determined that each member of the Audit Committee is financially literate and that each of Messrs. Dibadj and Halverson and Ms. Golder meets the definition of an audit committee financial expert as defined in SEC rules. No Audit Committee member serves on the audit committees of more than two other public companies.

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Compensation and
Leadership
Development
Committee
Primary Responsibilities Fiscal 2022
Meetings

Mr. Cassaday (Chair)

Mr. Glasscock

Mr. Halverson

Mr. Hinshaw

Ms. Paul

Establishes executive compensation philosophies, policies, plans, and programs to ensure that compensation actions link pay and performance, provide a competitive pay opportunity to attract and retain key executive talent, provide accountability for short- and long-term performance, and align the interests of Sysco’s senior officers with the interests of stockholders

Establishes and approves all compensation, including the corporate goals on which compensation is based, of the CEO and the other senior officers, including the named executive officers

Oversees the process for the evaluation of management, including the CEO

Reviews and approves any clawback policy allowing the recoupment of compensation paid to associates, including the senior officers

Reviews and determines equity awards for the senior officers, and oversees management’s exercise of its previously delegated equity grant authority

Reviews, approves, recommends the establishment or amendment of any compensation or retirement program (i) in which any senior officer will participate, (ii) that requires stockholder approval, or (iii) that could reasonably be expected to have a material cost impact

Reviews and discusses with the CEO the Company’s leadership development programs and succession planning for the other senior officers

Reviews the Company’s human capital policies and strategies

 

Except for decisions that impact the compensation of Sysco’s CEO, the CLD Committee is generally authorized to delegate any decisions it deems appropriate to a subcommittee. In such a case, the subcommittee must promptly report any action that it takes to the full CLD Committee. In addition, the CLD Committee may delegate to any one or more members of the Board its full equity grant authority (other than for grants made to Sysco’s senior officers). The CLD Committee has delegated such authority to the CEO with respect to certain non-executive employees, subject to specified limitations. In carrying out its duties, the CLD Committee also may delegate its oversight of Sysco’s employee and executive benefit plans to any administrative committees of the respective plans or to such officers or employees of Sysco as the CLD Committee deems appropriate, except that it may not delegate its powers to amend, establish, or terminate any benefit plan that is maintained primarily for the benefit of Sysco’s senior officers, resolve claims under a benefit plan with respect to any senior officer, or modify the compensation of any senior officer as provided under any nonqualified or executive incentive compensation plan. For a detailed description of the CLD Committee’s processes and procedures for determining executive compensation, see the “Compensation Discussion and Analysis” section of this proxy statement below.

 

The Board has determined that each member of the CLD Committee is independent as defined in the NYSE’s listing standards and the Company’s Corporate Governance Guidelines.

 

COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

No member of our CLD Committee is, or has at any time during the past year been, an officer or employee of Sysco or had any relationship requiring disclosure by Sysco under Item 404 of Regulation S-K. During fiscal year 2022, there were no situations where an executive officer of Sysco served on the compensation committee or board of another corporation that had an executive officer serving on Sysco’s Board of Directors or the CLD Committee.

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Corporate Governance
and Nominating
Committee
Primary Responsibilities Fiscal 2022
Meetings

Mr. Glasscock (Chair)

Mr. Brutto

Ms. Paul

Mr. Shirley

Ms. Talton 

Proposes directors, committee members, and officers to the Board for election or reelection

Establishes the process for reviewing the performance of the members of the Board and its committees

Recommends to the Board the annual compensation of non-employee directors

Reviews related person transactions and reviews and makes recommendations regarding changes to Sysco’s Related Person Transaction Policy

Reviews and makes recommendations regarding the organization and effectiveness of the Board and its committees, the establishment of corporate governance principles, the conduct of meetings, succession planning, and Sysco’s Governance Documents

Reviews and makes recommendations regarding changes to Sysco’s Global Code of Conduct, periodically reviews overall compliance with the Code, and approves any waivers to the Code given to Sysco’s executive officers and directors

Monitors compliance with and approves waivers to Sysco’s Policy on Trading in Company Securities

 

The Board has determined that each member of the Governance Committee is independent as defined in the NYSE’s listing standards and the Company’s Corporate Governance Guidelines.

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Corporate Social
Responsibility
Committee
Primary Responsibilities Fiscal 2022
Meetings

Mr. Brutto (Chair)

Mr. Dibadj

Dr. Koerber

Mr. Shirley

Ms. Talton

 

Reviews and acts in an advisory capacity to the Board and management with respect to policies and strategies that affect Sysco’s role as a socially responsible organization

Reviews, evaluates, and provides input on the development and implementation of Sysco’s corporate social responsibility (“CSR”) strategy and on the implementation of any CSR goals previously established by the Board

Reviews philanthropic giving, agriculture programs, and warehouse and transportation initiatives designed to improve the Company’s environmental impact

2

 

Technology Committee Primary Responsibilities Fiscal 2022
Meetings

Ms. Talton (Chair)

Ms. Golder

Mr. Hinshaw

 

 

Reviews significant information technology (“IT”) projects and technology architecture decisions

Assesses whether and to what extent Sysco’s IT programs effectively support the Company’s business and strategic objectives

Advises the Board with regard to significant IT matters

Supports the Board in its oversight of cybersecurity risk management efforts

4

 

Executive Committee Primary Responsibilities Fiscal 2022
Meetings
Mr. Shirley (Chair)
Mr. Brutto
Mr. Cassaday
Mr. Glasscock
Mr. Halverson
Mr. Hourican
Ms. Talton

Exercises all of the powers of the Board when necessary, to the extent permitted by applicable law

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BOARD MEETINGS

 

During fiscal 2022, the Board held seven meetings, including four regular meetings and three special meetings, and committees of the Board held a total of 30 meetings. Overall attendance at such meetings was approximately 97.2%. Each director attended at least 75% of the aggregate of all meetings of the Board and the committees on which he or she served during fiscal 2022.

 

The independent directors meet regularly in executive session without the CEO or any other member of management present. In fiscal 2022, the independent directors met in executive session four times. Mr. Shirley presided over these sessions.

 

It is the Board’s policy that directors attend the Annual Meeting, to the extent practicable. Nine directors, representing 90% of the full Board, attended the 2021 Annual Meeting of Stockholders.

 

ANNUAL BOARD SELF-EVALUATION

 

Every year, the Board conducts a self-evaluation to determine whether the Board and its committees are functioning effectively. The Chairman of the Board and the Chairman of the Governance Committee led a discussion of the Board’s performance in executive session.

 

In addition, each Board committee conducts a self-evaluation of its performance, focused on the committee’s key responsibilities. As part of the evaluation process, each director completes a committee self-evaluation questionnaire developed by the Governance Committee. This year, the questionnaire responses were compiled and reviewed by internal legal counsel. Each committee chairperson received a summary of the responses, without attribution. The committees all reviewed feedback from their self-evaluations, as did the full Board. Key learnings from the Board and committee self-evaluations play an important role in informing the Board’s approach to refreshment and succession planning.

 

For the past five years, the Board’s self-evaluation process has been enhanced to include periodic “360 degree” individual director performance reviews, which involve a confidential evaluation of the performance of directors selected by the Governance Committee by each of the other directors, key members of senior management, and representatives of certain independent, third-party firms that routinely interact with the directors assessed. An independent, third-party corporate governance firm compiles and communicates to the directors assessed the feedback from these reviews.

 

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RISK OVERSIGHT

 

BOARD OF DIRECTORS

 

•  Oversees Sysco’s enterprise risk management process to ensure the process is consistent with the Company’s short- and long-term goals.

•  Considers enterprise risk in evaluating the Company’s strategy, including specific strategic and emerging risks.

•  Monitors any specific enterprise risks for which it has chosen to retain oversight, such as risks related to competitive threats, senior leadership succession planning, and business continuity.

 

The Board’s committees help oversee the enterprise risk management process within their respective areas of authority.

 

Audit Committee

•  Reviews the process by which management assesses and manages the Company’s exposure to enterprise risk.

•  Makes recommendations with respect to the process by which members of the Board and relevant committees will be made aware of the Company’s significant risks, including recommendations regarding what committee would be appropriate to oversee management with respect to the Company’s most material risks.

•  Primarily responsible for hiring and evaluating our independent registered public accounting firm, reviewing our internal controls, overseeing our internal audit function, overseeing customer credit risk, and reviewing contingent liabilities that may be material to the Company.

•  Oversees risks related to legal and compliance matters, including fraud and ethics as well as signficant regulatory issues.

 

Technology Committee

•  Oversees risks related to cybersecurity and data protection, receiving comprehensive updates from management at least quarterly regarding the Company’s business technology and cybersecurity programs.

 

CLD Committee

•  Responsible for ensuring that our executive compensation policies and practices do not incentivize excessive or inappropriate risk-taking by employees.

•  Oversees risks related to the Company’s human capital strategies, including   succession planning, leadership development, pay equity, culture, and diversity, equity, and inclusion.

 

Governance Committee

•  Ensures proper corporate governance standards are maintained, that the Board consists of qualified directors, and that qualified individuals are chosen as senior officers.

•  Monitors compliance with the Company’s   Policy on Trading in Company Securities and oversees signficant related party transactions.

 

CSR Committee

•  Oversees risks related to environmental and social issues, jointly with the full Board.

 

MANAGEMENT

 

•  Identifies, manages, and mitigates enterprise risks, and reports directly to the Audit Committee and the Board on a regular basis with respect to enterprise risk management.

•  On an annual basis, reviews with the Board the Board-level enterprise risks that have been identified, such as strategic, operational, financial, external/regulatory and reputation risks, as well as management’s process and resources needed for addressing and mitigating the potential effects of such risks.

•  Frequent discussion and prioritization of enterprise-level risk issues by the executive management team, assignment of risk owners responsible for ensuring a risk remains within management’s risk tolerance, and tracking and monitoring of risk information.

 

The Chairman of the Board coordinates the flow of information regarding enterprise risk oversight from each committee to the independent directors and participates in the review of the agenda for each Board and committee meeting. As the areas of oversight among committees sometimes overlap, committees may hold joint meetings when appropriate and address certain enterprise risk oversight issues at the full Board level. The Board considers enterprise risk in evaluating the Company’s strategy, including specific strategic and emerging risks. The Board also monitors any specific enterprise risks for which it has chosen to retain oversight, such as risks related to competitive threats, senior leadership succession planning, and business continuity.

 

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BOARD OF DIRECTORS MATTERS

 

BOARD REFRESHMENT AND DIRECTOR ORIENTATION AND EDUCATION

 

Our Board recognizes the importance of consistent, deliberate Board refreshment and succession planning to ensure that the directors collectively have the skills, experience, and qualifications necessary for the Board to successfully establish and oversee management’s execution of the Company’s strategic priorities. In order to promote thoughtful Board refreshment, in 2016 our Board adopted a Board refreshment plan, pursuant to which the Board has elected most of the current independent, non-employee directors. The Governance Committee is responsible for developing a succession plan for the Board and making recommendations to the Board regarding director succession.

 

Director Recruitment

 

Since the adoption of our Board refreshment plan in 2016, our Board has periodically engaged the services of third-party search firms to assist with identifying and recruiting appropriate director candidates. In 2021, the Governance Committee again engaged the services of a third-party search firm to identify candidates possessing the skills, experience and other qualifications in the context of the Board’s composition and the Company’s strategic priorities. Following consideration of the candidates presented, and in each case upon the unanimous recommendation of the Governance Committee, the Board appointed three new independent, non-employee directors, effective January 1, 2022: Mses. Golder and Paul and Mr. Dibadj. As our incumbent directors retire from the Board from time to time, we will continue our director recruitment efforts to help ensure that the size of the Board may be maintained at an appropriate level.

 

Director Tenure Policy

 

Our director tenure policy provides that no non-employee director who will have served on the Board for 15 years as of the date of a Board election can be nominated for election or re-election. Since we adopted this policy in 2016, the average tenure of our independent directors has declined from 9 years to 5 years.

 

Director Orientation and Continuing Education

 

All new directors participate in the Company’s Orientation Program, which is conducted within six months of the meeting at which new directors are elected. This orientation includes presentations by senior management that familiarize new directors with the Company’s strategic plans, its significant financial, accounting and risk management issues, its ethics and compliance program, its Global Code of Conduct, its principal officers, and its internal and independent auditors. In addition, the Orientation Program includes visits to Company’s headquarters and to at least one of the Company’s significant operating companies.

 

The Company may develop continuing education programs sponsored by the Company from time to time, including programs addressing legal, financial, regulatory and industry specific topics. In addition, we encourage directors to attend director education seminars at the Company’s expense. The Board recommends that directors use their reasonable best efforts to complete eight hours of director education seminars every two years.

 

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ELECTION OF DIRECTORS

 

Election Requirements

 

The Company’s bylaws provide for majority voting in uncontested director elections, meaning that, the number of shares voted “for” a director must exceed the number of shares voted “against” that director. The Company does not permit cumulative voting. Any incumbent director who is not re-elected in an uncontested election is required to tender a resignation to the Governance Committee. The Governance Committee will consider the tendered resignation and recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken. The Board must act on the recommendation within 120 days following certification of the stockholders’ vote and will promptly disclose its decision regarding whether to accept the director’s resignation offer. The director who tenders a resignation may not participate in these deliberations of the Governance Committee or the Board. In contested elections, where there are more nominees than seats on the Board, directors are elected by a plurality vote, meaning that the nominees who receive the most votes of all the votes cast for directors will be elected.

 

How We Select Directors

 

The Governance Committee is responsible for identifying and evaluating candidates for election to Sysco’s Board of Directors.

 

Director Candidates Identified by the Board and Management

 

In identifying candidates for election to the Board, the Governance Committee will determine which of the incumbent directors has an interest in being nominated for re-election at the next annual meeting of stockholders. The Governance Committee will also identify and evaluate new candidates for election to the Board for the purpose of filling vacancies. To that end, the Governance Committee generally engages a professional search firm to assist in identifying qualified candidates and may solicit recommendations for nominees from people that the Governance Committee believes are likely to be familiar with qualified candidates, including current members of the Board and Sysco’s management. When engaging a search firm, the Governance Committee will determine its fees and scope of engagement.

 

Director Candidates Recommended by Stockholders

 

The Governance Committee will consider candidates recommended by stockholders, and will evaluate such candidates using the same criteria it uses to evaluate other candidates from other sources. Stockholders can recommend individuals for consideration by the Governance Committee by writing to the Corporate Secretary, 1390 Enclave Parkway, Houston, Texas 77077, and including the following information:

 

the name and address of the stockholder;
the name and address of the person to be nominated;
a representation that the stockholder is a holder of the Sysco stock entitled to vote at the meeting to which the director recommendation relates;
a statement in support of the stockholder’s recommendation, including a description of the candidate’s qualifications;
information regarding the candidate as would be required to be included in a proxy statement; and
the candidate’s written, signed consent to serve if elected.

 

The Governance Committee will consider, in advance of Sysco’s next annual meeting of stockholders, all director candidate recommendations submitted by May 1, 2023.

 

In addition, if we receive by June 8, 2023, a recommendation of a director candidate from one or more stockholders who have beneficially owned at least 5% of our outstanding Common Stock for at least one year, then we will disclose in our next proxy materials relating to the election of directors the identity of the candidate, the identity of the nominating stockholder(s) and whether the Governance Committee determined to nominate such candidate for election to the Board. However, we will not provide this disclosure without first obtaining written consent from both the nominating stockholder and the proposed candidate. The Governance Committee has not received any recommendations for director nominees for election at the Annual Meeting from any Sysco stockholders beneficially owning at least 5% of Sysco’s outstanding Common Stock.

 

Proxy Access Director Candidates

 

Our “proxy access” bylaw provisions permit an eligible stockholder (or a group of up to 20 eligible stockholders), who have continuously owned, for a period of three years, at least 3% of the aggregate of our outstanding Common Stock, to nominate a number of director nominees equal to the greater of 20% (rounded down) of the total number of directors constituting our Board or two directors. These nominees will be included in our proxy statement for the relevant annual stockholders meeting if the nominating stockholder(s) and the respective nominee(s) comply with all applicable eligibility, procedural and disclosure requirements set forth in our bylaws.

 

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How We Evaluate Director Candidates

 

In evaluating all incumbent and new director candidate’s that the Governance Committee determines merit consideration, the Governance Committee will:

 

cause to be assembled information concerning the candidates background and qualifications, including information required to be disclosed in a proxy statement, and any relationship between the candidate and the person or people recommending the candidate;
determine if the candidate demonstrates the characteristics that we require of all directors, described below;
consider the candidate’s skills, experience and qualifications in the context of the composition of the Board as a whole and the Company’s strategic priorites;
consider the absence or presence of material relationships with Sysco that might impact the candidate’s independence;
consider the contribution the candidate can be expected to make to the overall functioning of the Board;
consider the candidate’s capacity to be an effective director in light of the time required by the candidate’s primary occupation and service on other boards;
consider the extent to which the membership of the candidate on the Board will promote diversity among the directors; and
consider, with respect to an incumbent director, whether the director satisfactorily performed his or her duties as a director during the preceding term, including attendance and participation at Board and committee meetings, and made other contributions as a director.

 

In its discretion, the Governance Committee may designate one or more of its members, or the entire Governance Committee, to interview any proposed candidate. Based on all available information and relevant considerations, the Governance Committee will recommend to the full Board for nomination those candidates who, in the judgment of the Governance Committee, are most appropriate for membership on the Board based on each candidate’s characteristics, skills and qualifications.

 

Diversity

 

Sysco aspires to create a global culture that is decidedly diverse, equitable and inclusive – one where we foster belonging as we care for one another and connect the world through food and trusted partnerships. We believe in the tangible, measurable benefits of diversity, equity and inclusion (“DEI”), and we are committed to embedding these principles into all facets of our business. Consistent with this commitment, the Board values all dimensions of diversity among nominees. We know that differences in background and professional and life experiences yield innovation, enhanced perspective, and higher-quality decision-making. With this in mind, three of our Board nominees are women, two are ethnic minorities, and one is from outside the United States.

 

DEI Highlights

 

While diversity, equity and inclusion are not new concepts at Sysco, we have intentionally and thoughtfully accelerated our focus on these principles.

Highlights from the last fiscal year include:

 

WORKFORCE WORKPLACE MARKETPLACE

 

Achieved 62% gender and ethnically diverse U.S. workforce ahead of 2025 goal

 

Finalized 3-year DEI roadmap with assistance from Global DEI Advisory Council and began socializing strategic priorities with key stakeholders

Expanded the role of our Chief Diversity Officer to include responsibility for Culture & Engagement and Associate Relations, in addition to DEI

Implemented DEI scorecards for all Executive Leadership Team members, linking DEI-related efforts to compensation

Hosted our inaugural Global ARG (Associate Resource Group) Day

Raised Pride flags at all sites across the U.S. and Canada

 

Hosted our inaugural Supplier Diversity Summit

Established formal relationships with the five major councils certifying diverse suppliers

Named to Seramount’s 2022 list of Best Companies for Multicultural Women

 

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Director Qualifications and Board Succession

 

The Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite characteristics, skills and qualifications that directors and director candidates should possess individually and in the broader context of the Board’s overall composition and the Company’s business and structure. This review includes consideration of diversity, skills, experience, time available and the number of other boards for which the individual serves as a director, and such other criteria as the Governance Committee determines to be relevant at the time. The Governance Committee is responsible for developing a succession plan for the Board and making recommendations to the Board regarding director succession.

 

Key Characteristics of All Nominees

 

Each director nominee should demonstrate and possess all of the following characteristics:

 

Integrity and accountability: Directors must have demonstrated high ethical standards and integrity in their personal and professional dealings, and must be willing to act on – and remain accountable for – their boardroom decisions.
Intelligence, wisdom and judgment: Directors must be able to provide wise, thoughtful counsel on a broad range of issues and possess high intelligence, practical wisdom and mature judgment.
Financial literacy: Directors must be financially literate and capable of understanding a balance sheet, an income statement and a cash flow statement, and capable of using financial ratios and other indices to evaluate a company’s financial performance.
Teamwork: Directors must possess a willingness to challenge management and other directors while working collaboratively as part of a team in an environment that encourages open, candid discussion.
Diversity: A director’s membership on the Board must promote diversity among the directors, including diversity of experience, views, gender, race, ethnicity and age.
High performance standards: Directors must have achieved prominence in their respective business, governmental, or professional activities, including a history of achievements reflecting high standards of performance.
Representing stockholder interests: Directors must have demonstrated their willingness and ability to effectively, consistently and appropriately represent the best interests of the Company’s stockholders.
Commitment: Directors must have the ability and willingness, in light of their principal occupation and other obligations, to commit the time and energy necessary to be fully prepared for, and to participate in, meetings and consultations on Company matters.
Conflicts: Directors must not have an interest in any agreement, arrangement or understanding with any person or entity that might limit or interfere with their ability to comply with their fiduciary duties to the Company and its stockholders.
Company policies: Directors must recognize and affirm their obligation to comply with the Company’s Global Code of Conduct, Corporate Governance Guidelines and other policies and guidelines of the Company applicable to them.

 

Director Qualifications

 

The Board, as recommended by the Governance Committee, has determined that the qualifications described below are the qualifications most significant for the Board to possess, collectively, to guide management in the achievement of the Company’s strategic priorities.

 

Accounting/Audit/Financial Reporting: An understanding of accounting, audit and financial reporting processes is important for our directors to establish appropriate financial performance objectives for the Company and senior management in the context of Sysco’s strategic priorities, and to evaluate financial performance as compared to those objectives.
Business Operations: Directors who have served in leadership positions with responsibility for managing or overseeing the operations of a company or business unit gain extensive experience in maximizing productivity and efficiency while managing expenses, which is valuable to Sysco’s operating plan and strategy. In particular, such directors can provide guidance and oversight to management in connection with its efforts to reduce administrative costs and leverage supply chain costs.
Distribution/Supply Chain: Directors who have experience in distribution logistics and supply chain management, including experience in the design, planning, execution, control and monitoring of supply chain activities, can provide and oversight to management in connection with its efforts to maximize the efficiencies and reduce the costs associated with Sysco’s acquisition of products and services from suppliers.
Executive Leadership/Management: Experience as a senior executive in a large and complex public, private, government or academic organization enables a director to better oversee the Company management. Such individuals also bring perspective in analyzing, shaping and overseeing the execution of important operational and policy issues at a senior level, and tend to demonstrate a practical understanding of organizations, strategy, risk management and methods to drive change and growth. Finally, directors with experience in significant leadership positions generally have the ability to identify and develop leadership qualities in others, including members of our management team.
Finance: Directors with an understanding of financial markets and financing and funding operations can provide valuable advice and insights to the Board with respect to the establishment of a successful capital strategy for the Company and the evaluation of proposed capital transactions in light of that strategy.
Foodservice Industry Experience: Experience serving as an executive, director or in another leadership position with a company in the foodservice industry enables a director to oversee more effectively our operations and to provide advice and guidance on issues impacting our business. In addition, as the foodservice market

 

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  continues to mature, directors with industry experience can provide valuable insights as we focus on ways Sysco can grow organically by identifying and developing new markets.
HR/Human Capital Management/Large Workforce: Directors with human resources experience can offer guidance on Sysco’s talent management strategy, particularly in connection with recruiting, assessing, incentivizing and rewarding corporate executives and other senior leadership.
International/Global: Sysco continues to pursue opportunities to grow our global capabilities in, and source products directly from, international markets. We benefit from the experience and insight of directors with a global business perspective, as we identify the best strategic manner in which to continue to expand our operations outside of North America. As Sysco’s reach becomes increasingly global, directors with international business experience can assist us in navigating the business, political, and regulatory environments in countries in which we do or seek to do, business.
M&A/Integration: Sysco continues to pursue opportunities to expand our business through acquisitions. Directors with a background in managing significant acquisitions or other business combinations can provide valuable guidance on how to develop and implement strategies for growing our business. Relevant experience includes assessing “build or buy” decisions, analyzing the “fit” of a proposed acquisition target with a company’s strategy and culture, accurately valuing transactions and evaluating operational integration plans.
Marketing/Sales/Merchandising: Experience with marketing, brand management and/or consumer sales.
Public Company Board Service: Directors who have served on other public company boards can offer advice and insights with regard to the dynamics and operation of the Board, board practices of other public companies and the relationship between the Board and the management team. Most public company directors also have corporate governance experience to support our goals of Board and management accountability, greater transparency, legal and regulatory compliance and the protection of stockholder interests.
Risk Oversight/Management: The Board oversees management’s efforts to understand and evaluate the types of risks facing Sysco and its business, evaluate the magnitude of the exposure, and enhance risk management practices. Directors with risk management experience can provide valuable insights as Sysco seeks to strike an appropriate balance between enhancing profits and managing risk.
Strategy Development: Directors who have served as a senior executive for large and complex public, private, governmental or academic organizations with responsibility for strategic planning and development are particularly well suited to advise and oversee management in establishing and executing the Company’s key strategic initiatives, as well as in evaluating the success of those initiatives.
Sustainability/ESG: Experience with sustainability and/or corporate social responsibility issues and related efforts of a large and complex public, private, governmental or academic organization to address such issues.
Digital Technology/Cybersecurity: We use technology in substantially all aspects of our business operations, and we are continuing to implement business technology initiatives in furtherance of our strategic priorities. Directors with experience in technology and e-commerce, including current knowledge of digital technology/new innovations and related issues, such as cybersecurity, privacy and data management, are well suited to oversee management’s execution of our business technology initiatives.

 

The table below shows how these qualifications are distributed among our current directors. The priorities and emphasis of the Governance Committee and of the Board with regard to these qualifications will change from time to time as the Company’s strategic priorities and the composition of the Board evolve.

 

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Director Qualifications Mr.
Brutto
Mr.
Dibadj
Mr.
Glasscock
Ms.
Golder
Mr.
Halverson
Mr.
Hinshaw
Mr.
Hourican
Dr.
Koerber
Ms.
Paul
Mr.
Shirley
Ms.
Talton
Accounting/Audit/Financial Reporting      
Business Operations  
Distribution/Supply Chain        
Executive Leadership/Management
Finance    
Foodservice Industry Experience              
HR/Human Capital Management/Large Workforce  
International/Global      
M&A/Integration    
Marketing/Sales/Merchandising      
Public Company Board Service    
Risk Oversight/Management  
Strategy Development
Sustainability/ESG                
Digital Technology/Cybersecurity            

 

Nominees

 

The Board of Directors has nominated the eleven individuals identified below for election as directors to serve for one-year terms or until their successors are elected and qualified. Each of the nominees is currently serving as a director of Sysco and has consented to serve another term if elected. The Board believes the nominees’ combined qualifications, skills, and experience contribute to an effective and well-functioning Board.

 

Although management does not contemplate the possibility, if any nominee becomes unable to serve as a director before the Annual Meeting, the proxies will vote for any nominee designated by the present Board fill the vacancy.

 

Board Recommendation

 

 The Board of Directors unanimously recommends a vote “FOR” each of the nominees.

 

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NOMINEES FOR ELECTION AS DIRECTORS AT THE ANNUAL MEETING:

 

Age: 66

Director since:

September 2016

Committees:

•  Corporate Governance & Nominating Committee

•  Corporate Social Responsibility Committee (Chair)

•  Executive Committee

  DANIEL J. BRUTTO

Key Director Qualifications:

Mr. Brutto earned a Bachelor of Business Administration in Accounting degree from Loyola University in 1978, followed by a Master of Business Administration degree from Keller Graduate School of Management in 1982. Mr. Brutto served as President of UPS International and Senior Vice President of United Parcel Service, Inc. (“UPS”), a global package delivery, supply chain management and freight forwarding company, from January 2008 until his retirement in June 2013. Previously, he served as President, Global Freight Forwarding, for UPS from 2006 to 2007, and corporate controller from 2004 to 2006. Mr. Brutto’s more than 38-year career at UPS, during which he served in various capacities with increasing levels of responsibility, provided him with extensive experience in the following areas: executive leadership/management, strategy development, business operations, finance, information systems, mergers & acquisitions, marketing and international/global. He also has public company board experience, having served as a director of Illinois Tool Works Inc. since February 2012. Additionally, Mr. Brutto served as Executive Chairman of Radial, Inc. from 2016 to 2017, a privately held global fulfillment, customer care and technology company, and he also served on the board of UNICEF from 2009 until 2020. In the past, he has served on the board of the US-China Business Council, the Guangdong Economic Council, and the Turkey Economic Advisory Council. He was also a delegate to the World Economic Forum, Davos, Switzerland, from 2009 to 2013.

 

Primary Occupation:

•  Mr. Brutto served as President of UPS International and Senior Vice President of United Parcel Service, Inc. from January 2008 until his retirement in June 2013.

Other Boards:

•  Mr. Brutto has served as a director of Illinois Tool Works Inc. since February 2012.

 

Age: 47

Director since:

January 2022

Committees:

•  Audit Committee

•  Corporate Social Responsibility Committee

  ALI DIBADJ

Key Director Qualifications:

Mr. Dibadj is currently the Chief Executive Officer (CEO) of Janus Henderson Group plc June 2022. Previously, served as the Chief Financial Officer (CFO) and Head of Strategy at AllianceBernstein Holding L.P. (AB) from February 2021 until June 2022, served as AB’s Head of Finance and Head of Strategy from April 2020 to February 2021, and in 2019, Mr. Dibadj co-led AB’s Strategy Committee to help senior management chart the strategic vision and course of action for the firm. He joined AB in 2006 as a Senior Research Analyst, where he was ranked #1 twelve times for his coverage of consumer companies. Prior to that, he spent almost a decade in management consulting, including at McKinsey & Company. Over his nearly 25-year career, Mr. Dibadj has gained substantial experience in finance and accounting, leadership, communications, investor relations, risk management, mergers and acquisitions and strategy development.

 

Primary Occupation:

Mr. Dibadj has served as Chief Executive Officer of Janus Henderson Group plc since June 2022.

 

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Age:  74

Director since:

September 2010

Committees:

•  Corporate Governance and Nominating Committee (Chair)

•  Compensation and Leadership Development Committee

•  Executive Committee

  LARRY C. GLASSCOCK

Key Director Qualifications:

Mr. Glasscock attended Cleveland State University, where he received a bachelor’s degree in business administration. He later studied at the School of International Banking, participated in the American Bankers Association Conference of Executive Officers, and completed the Commercial Bank Management Program at Columbia University. Mr. Glasscock has developed significant leadership and corporate strategy expertise through over 30 years of business experience, including former service as Chairman of WellPoint, Inc. (now Elevance Health, Inc.), a healthcare insurance company, from 2005 to March 2010, President and CEO of WellPoint, Inc. from 2004 to 2007, Chairman, President and CEO of Anthem, Inc. (now Elevance Health, Inc.) from 2003 to 2004, and President and CEO of Anthem, Inc. (now Elevance Health, Inc.) from 2001 to 2003, as well as his service as COO of CareFirst, Inc., President and CEO of Group Hospitalization and Medical Services, Inc., President and COO of First American Bank, N.A., and President and CEO of Essex Holdings, Inc. During his tenure at WellPoint, Inc. (now Elevance, Inc.), he played a major role in transforming the company from a regional health insurer into a national healthcare leader and championed company efforts to improve quality and customer service. Throughout his career, Mr. Glasscock has developed expertise in the successful completion and integration of mergers and team building and human capital development. His knowledge and experience in team building and human capital development are also extremely valuable to Sysco, as management development and succession planning remain top priorities of executive management and the Board. Mr. Glasscock also has considerable financial experience, as he has supervised the chief financial officers of major corporations. Earlier in his career he served as a bank officer lending to major corporations and supervised assessments of companies’ creditworthiness. Mr. Glasscock also has significant experience as a public company director and as a member of various committees related to important board functions, including audit, finance, governance and compensation. Mr. Glasscock was recognized by The National Association of Corporate Directors in 2019 as among the most influential people in the boardroom community.

 

Primary Occupation:

•  In March 2010, Mr. Glasscock retired from his position as Chairman of the Board of Directors of WellPoint, Inc. (now Elevance, Inc.) after serving in the role since November 2005.

Other Boards:

•  Mr. Glasscock has served as a director of Simon Property Group, Inc. since March 2010, where he is currently the lead independent director, and served as a director from August 2001 until May 2021 and non-executive Chairman of the Board from May 2013 until May 2021 of Zimmer Biomet Holdings, Inc.

 

Age: 60

Director since:

January 2022

Committees:

•  Audit Committee

•  Technology Committee

  JILL M. GOLDER

Key Director Qualifications:

Ms. Golder most recently served as Senior Vice President and CFO of Cracker Barrel Old Country Store, Inc. from June 2016 to December 2020. Previously, she served in finance leadership roles at Ruby Tuesday, Inc., including as Executive Vice President and CFO from June 2014 to April 2016. Prior to that, Ms. Golder spent 23 years at Darden Restaurants, Inc., where she served in finance positions of increasing responsibility for several Darden brands, including Senior Vice President of Finance for Olive Garden, Smokey Bones, Specialty Restaurant Group and Red Lobster. Ms. Golder is a skilled foodservice finance executive with deep expertise in the areas of accounting, audit, financial reporting, communications, investor relations, distribution, supply chain and risk management.

 

Primary Occupation:

•  Ms. Golder served as Senior Vice President and Chief Financial Officer of Cracker Barrel Old Country Store, Inc. from June 2016 until her retirement in December 2020.

Other Boards:

•  Ms. Golder has served as a director of ABM Industries, Inc. since September 2019.

 

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Age: 62

Lead Director since:

January 2020

Committees:

•  Audit Committee (Chair)

•  Compensation and Leadership Development Committee

•  Executive Committee

  BRADLEY M. HALVERSON

Key Director Qualifications:

Mr. Halverson attended the University of Illinois, where he received a Bachelor of Science degree in Accounting in 1982 and an Executive Master of Business Administration degree in 1996. He is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. Mr. Halverson served as Group President, Financial Products and Corporate Services and Chief Financial Officer of Caterpillar Inc. (“Caterpillar”), the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel - electric locomotives until his retirement in May 2018. He was responsible for Caterpillar’s Finance Services Division, Human Services Division, Global Information Services Division, Financial Products Division, as well as Corporate Auditing. He joined Caterpillar in 1988, serving in budgeting, forecasting and financial analysis roles of increasing responsibility. In 1993, Mr. Halverson moved to Geneva, Switzerland, to become a strategy and planning consultant with Caterpillar Overseas, S.A. He went on to become controller in Europe, responsible for Caterpillar’s financial reporting in Europe, Africa and the Middle East, returning to the U.S. in 1996 to manage general accounting and financial systems. From 1998 until 2012, Mr. Halverson served in various leadership roles at Caterpillar, including Corporate Controller (2007-2010) and Vice President, Financial Services Division (2010-2012). During the course of his nearly 30 year career with Caterpillar, together with his prior service with PricewaterhouseCoopers LLP, Mr. Halverson has developed deep expertise in accounting, financial reporting and corporate finance, and has leadership experience in the areas of executive leadership and management, corporate strategy development, mergers and acquisitions, risk management, information technology systems oversight and international business. Mr. Halverson currently serves as a member of the Board of Trustees (and previously served as Treasurer) of the Easterseals Central Illinois Foundation, served as Chairman of the Board of Directors of Easterseals Central Illinois, and served on the OSF St. Francis Medical Center Community Foundation Board. He was a board member of Custom Truck One Source, a privately held company. He is also a past member of the Executive Committee of the U.S. Chamber of Commerce.

 

Primary Occupation:

•  Mr. Halverson served as the Group President, Financial Products and Corporate Services and Chief Financial Officer of Caterpillar from January 2013 to May 2018.

Other Boards:

•  Mr. Halverson has served as a director of Lear Corporation since June 2020, Satellogic, Inc. since December 2021 and Constellation Energy Corporation since February 2022.

 

Age: 52

Director since:

April 2018

Committee:

•  Audit Committee

•  Compensation and Leadership Development Committee

•  Technology Committee

  JOHN M. HINSHAW

Key Director Qualifications:

Mr. Hinshaw attended James Madison University where he earned a B.B.A. in Computer Information Systems and Decision Support Sciences in 1992. Mr. Hinshaw serves as Group Chief Operating Officer of HSBC Group Management Services, Ltd. Previously, Mr. Hinshaw served as the Executive Vice President, Technology and Operations, of Hewlett Packard Company (an industry leading technology company) from November 2011 to November 2015, at which time he joined Hewlett Packard Enterprise Company (spun-off from Hewlett Packard) as the Executive Vice President, Technology and Operations and Chief Customer Officer, serving in such capacity until October 2016. Prior to joining Hewlett-Packard Company, Mr. Hinshaw served as Vice President and General Manager for Boeing Information Solutions at The Boeing Company (one of the world’s major aerospace firms) from 2010 to 2011. Before that, he served as Boeing’s Chief Information Officer from 2007 to 2010, leading Boeing’s companywide corporate initiative on information management and information security. Mr. Hinshaw also spent 14 years at Verizon Communications (one of the world’s leading providers of communications, information and entertainment products and services) where, among several senior roles of increasing responsibility, he served as Senior Vice President and Chief Information Officer of Verizon Wireless, overseeing the IT function of the wireless carrier. Mr. Hinshaw’s service in these leadership roles with significant public companies in a variety of different industries deeply rooted in technology provided him experience in the operations of large, complex organizations and expertise in both information technology and management, enabling him to effectively oversee Sysco management, especially with regard to the execution of business technology initiatives. Mr. Hinshaw also gained extensive public company board experience in enterprise risk management and information technology through his service as a member of the board of directors of The Bank of New York Mellon Corporation from September 2014 to December 2019. Mr. Hinshaw was also a board member of DocuSign, Inc. (a provider of electronic signature transaction management) from December 2014 to May 2020. Mr. Hinshaw is currently a member of the board of directors of Illumio, Inc. (a cyber security company) and is also the Proprietor of Blackbird Vineyards LLC (a wine company).

 

Primary Occupation:

•  Mr. Hinshaw has served as GMD Chief Operating Officer of HSBC Group Management Services Ltd. since February 2020.

Other Boards:

•  In the last five years, Mr. Hinshaw served as a director of The Bank of New York Mellon Corporation and DocuSign, Inc.

 

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Age: 49

Director since:

February 2020

Committee:

•  Executive Committee

  KEVIN P. HOURICAN

Key Director Qualifications:

Mr. Hourican earned an undergraduate degree in economics and a master’s degree in supply chain management from The Pennsylvania State University. He has served as Sysco’s President and Chief Executive Officer and as a member of the Board of Directors since February 1, 2020. Kevin is leading Sysco’s large-scale, customer-focused and growth-related transformation, aimed at further improving the way Sysco supports its customers and accelerating profitable sales growth. During an unprecedented year such as 2020, Sysco is not just successfully managing the pandemic crisis, the Company under Mr. Hourican’s leadership is leveraging it as an opportunity to fuel transformation and growth. Prior to Sysco, he served as Executive Vice President of CVS Health Corporation, a premier health innovation company, and President of CVS Pharmacy from April 2018 to January 2020, overseeing CVS Health’s $85 billion retail business, including 9,900 retail stores and over 200,000 employees, as well as merchandising, marketing, supply chain, real estate, front store operations, pharmacy growth, pharmacy clinical care and pharmacy operations. He previously held the roles of Executive Vice President, Retail Pharmacy and Supply Chain from June 2016 to March 2018, CVS Health’s pharmacy operations, professional services and retail pharmacy product innovation and development functions, as well as the company’s supply chain organization, and Senior Vice President, Field Operations and Supply Chain of CVS Pharmacy from June 2014 to May 2016. Prior to joining CVS Health, Mr. Hourican held executive leadership roles at Macy’s, most recently serving as Senior Vice President, Regional Director of Stores, responsible for the management of 110 department stores in the Mid-Atlantic region. Through these various operations and management positions within CVS and Macy’s, Mr. Hourican has acquired extensive experience and knowledge in the areas of executive leadership and management, corporate strategy development, distribution and supply chain management, merchandising and marketing. Further, the Corporate Governance and Nominating Committee and the Board believe that it is appropriate and beneficial to Sysco to have its Chief Executive Officer serve as management’s voice on the Board.

 

Primary Occupation:

•  Mr. Hourican has served as Sysco’s President and Chief Executive Officer since February 2020.

 

Age: 76

Director since:

January 2008

Committees:

•  Audit Committee

•  Corporate Social Responsibility Committee

  HANS-JOACHIM KOERBER

Key Director Qualifications:

Dr. Koerber earned a degree as a Master Brewer in Brewing Technology and a Ph.D. in Business Management from the Technical University of Berlin. Dr. Koerber began his career in the beverage industry, including management positions in which he was responsible for finance and accounting, information technology, purchasing and personnel. He first became involved with the company that would eventually become METRO AG when he joined the predecessor company’s cash-and-carry, self-service wholesale company in charge of finance and accounting, controlling, logistics and information technology. His responsibilities continued to expand to include international cash-and-carry activities in six countries. When METRO AG was formed in 1996, Dr. Koerber became part of the METRO management board. His responsibilities included corporate development, corporate communications and investor relations and he became chairman and chief executive officer in 1999. Dr. Koerber introduced a new management style, streamlined the company to focus on four of the original 16 business divisions in order to remain competitive and achieve profitability, adopted international accounting standards and rapidly developed METRO’s international presence, including hands-on experience in expanding METRO into Eastern Europe and Asia, including China and India. These efforts helped make METRO Germany’s largest retailer, operating wholesale cash & carry stores, supermarkets, hypermarkets, department stores and consumer electronics shops throughout the world. Throughout his career, Dr. Koerber developed experience and qualifications in the areas of leadership, corporate strategy and development, the foodservice industry, distribution and supply chains, marketing and risk management. Dr. Koerber’s insights on running and expanding a foodservice business with international operations have been, and will continue to be, particularly helpful to Sysco. Dr. Koerber’s career at METRO AG, combined with his 10 years of service on the Board of Skandinaviska Enskilda Banken AB (the parent company of the SEB Group, a North European banking concern catering to corporations, institutions, and private individuals) and the Board of Directors of several other international companies, has provided him with financial expertise, particularly with regard to international financial accounting standards. His service on the Board of Air Berlin PLC (Germany’s second largest airline) has deepened his experience in marketing.

 

Primary Occupation:

•  Dr. Koerber served as the chairman and chief executive officer of METRO Group from 1999 until his retirement in October 2007.

Other Boards:

•  Dr. Koerber has served as a director of Eurocash SA since May 2013; he also serves as a director of several private European companies, including Klüh Service management GmbH, WEPA Industrieholding SE and DAW SE.

 

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Age: 64

Director since:

January 2022

Committees:

•  Compensation and Leadership Development Committee

•  Corporate Governance & Nominating Committee

  ALISON KENNEY PAUL

Key Director Qualifications:

Ms. Paul has served as Managing Director, Global Alliances of Google Inc. since August 2021, leading a cross-functional team and go-to-market strategy for Alphabet’s Google Cloud business unit. Previously, she served Deloitte as Vice Chairman and U.S. Leader of the U.S. Retail and Wholesale Distribution practice from August 2008 to June 2021, and as a Senior Manager in the Consumer and Retail Industry focusing on Strategy and Operations from 2002 to August 2008. Throughout her career at both corporations and professional services firms, as well as early- and mid-stage startups, Ms. Paul has developed extensive experience in the areas of executive leadership, finance, human resources, talent management, global operations, marketing, sales and merchandising, strategy development and digital technology and cybersecurity.

 

Primary Occupation:

Ms. Paul has served as Managing Director, Global Alliances of Google, Inc. since August 2021.

 

Age: 65

Chairman of the Board since: November 2020

Committees:

•  Corporate Governance & Nominating Committee

•  Corporate Social Responsibility Committee

•  Executive Committee

  EDWARD D. SHIRLEY

Key Director Qualifications:

Mr. Shirley attended the University of Massachusetts, where he received a Bachelor of Business Administration, Accounting degree in 1978. Mr. Shirley served as the President and Chief Executive Officer of Bacardi Limited, a global beverage and spirits company, from March 2012 to April 2014. Prior to that, he served as Vice Chairman of Global Beauty and Grooming, a business unit of The Procter & Gamble Company (“Procter & Gamble”), a consumer goods company, from July 2008 through June 2011, and as Vice Chair on Special Assignment from July 2011 through December 2011. Prior to that, he served as Group President, North America of Procter & Gamble from April 2006 and held several senior executive positions during his 27 years with The Gillette Company, a consumer goods company that was acquired by Procter & Gamble in 2005. Mr. Shirley has substantial experience in the areas of executive leadership, strategy development, marketing/brand development and business operations developed in his various senior executive positions with large consumer products companies, including during more than 30 years as a senior executive at global personal care companies like Procter & Gamble and The Gillette Company. He also has public company board experience, having served as a member of the Elizabeth Arden, Inc. board of directors until December 2015, including as Chair of its Compensation Committee, and as a member of the board of directors of Time Warner Cable Inc. from 2009 to 2016. Mr. Shirley is currently a director of New York Life Insurance Company and serves on the Talent, Diversity and Compensation Committees.

 

Primary Occupation:

•  Mr. Shirley served as Sysco’s Executive Chairman of the Board on an interim basis from January 2020 until November 2020.

 

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Age: 69

Director since:

September 2017

Committees:

•  Corporate Governance and Nominating Committee

•  Corporate Social Responsibility Committee

•  Executive Committee

•  Technology Committee (Chair)

  SHEILA G. TALTON

Key Director Qualifications:

Ms. Talton attended Northern Illinois University, where she earned a Bachelor of Science degree in Marketing and Speech Communication in 1980, and Harvard Business School’s Executive Program. Ms. Talton currently serves as the President and Chief Executive Officer of Gray Matter Analytics, a firm focused on data analytics consulting services in the healthcare industry. Previously, she served as President and Chief Executive Officer of SGT Ltd., a firm that provides strategy and technology consulting services in the financial services, healthcare and technology business sectors, from 2011 to 2013. From 2008 to 2011, Ms. Talton served as Vice President, Office of Globalization, for Cisco Systems, Inc., a leading global manufacturer of networking, switching and server/virtualization technology products related to the communication and information technology industries. Prior to that time, she held other leadership positions at Cisco Systems, Inc., Electronic Data Systems Corporation and Ernst & Young, LLP. Ms. Talton’s service in leadership roles with a variety of global technology and consulting firms provided her with extensive knowledge of and experience in information technology systems and cybersecurity, enabling her to effectively oversee management’s execution of Sysco’s business technology initiatives and its approach to privacy and cyber security risks. Ms. Talton has also gained extensive public company board experience in compensation, corporate governance, risk management and audit/finance issues through her service on the boards of directors of Deere & Company since 2015 (member of audit review and finance committees) and OGE Energy Corp. since 2013 (member of compensation and governance committees). From 2012 to 2019, she also served on the board of directors of Wintrust Financial Corporation. Additionally, from 2010 to 2015, she also served on the board of directors of ACCO Brands Corporation. Ms. Talton has been a Congressional appointee on the U.S. White House Women’s Business Council. She also has been recognized as one of the “Top 10 Women in Technology” by Enterprising Women and as “Entrepreneur of the Year” by the National Federation of Black Women Business Owners. She serves on the boards of several nonprofit organizations, including Chicago’s Northwestern Hospital Foundation, the Chicago Shakespeare Theater and the Chicago Urban League. Ms. Talton was recognized by The National Association of Corporate Directors in 2018 as among the most influential people in the boardroom community.

 

Primary Occupation:

•  Ms. Talton has served as President and Chief Executive Officer of Gray Matter Analytics since March 2013.

Other Boards:

•  Ms. Talton has served as a director of Deere & Company since May 2015 and OGE Energy Corp. since September 2013. In the last five years, Ms. Talton served as a director of Wintrust Financial Corporation.

 

How to Contact the Board

 

Stockholders and other interested parties may communicate with the Chairman of the Board, the independent directors as a group, and the other individual members of the Board by confidential online submission or by mail. All appropriate correspondence will be delivered to the parties to whom they are addressed. Items unrelated to the duties and responsibilities of the Board, such as product inquiries and complaints, job inquiries, business solicitations, and junk mail will not be forwarded. You may access the form to communicate by confidential online submission on Sysco’s website (www.sysco.com) under “Investors — Corporate Governance — Contact the Board.” You can contact any of our directors by mail in care of the Corporate Secretary, Sysco Corporation, 1390 Enclave Parkway, Houston, Texas 77077.

 

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DIRECTOR COMPENSATION

 

Overview of Non-Employee Director Compensation

 

Semler Brossy Consulting Group LLC (“Semler Brossy”) advised the Governance Committee with respect to non-employee director compensation. At the Governance Committee’s request, Semler Brossy provided data regarding the amounts and types of compensation paid to non-employee directors at the companies in Sysco’s peer group and identified trends in director compensation. All decisions regarding non-employee director compensation are recommended by the Governance Committee and approved by the Board. In addition to providing background information and written materials, Semler Brossy representatives attended meetings when the Chair of the Governance Committee believed their expertise would be beneficial to the committee’s discussions.

 

Sysco uses a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board. Directors who are also Sysco employees, such as Mr. Hourican, do not receive additional compensation for serving on the Board or any of its committees.

 

Non-employee directors receive the following amounts:

 

Annual cash retainer — $100,000, paid in quarterly installments
Additional cash retainer for committee chairs (paid in quarterly installments):
  Audit Committee — $25,000
  Compensation and Leadership Development Committee — $20,000
  Corporate Governance and Nominating Committee — $20,000
  Corporate Social Responsibility Committee — $15,000
  Technology Committee — $15,000
Annual grant of restricted stock — valued at $185,000 and vests in full on the first anniversary of the grant date
Chairman of the Board additional cash retainer — $500,000 (paid in quarterly installments)

 

See “Equity-Based Awards to Non-Employee Directors” below for a description of the plan under which the restricted stock was granted, and the “Fiscal 2022 Director Compensation” table below for detailed compensation information for fiscal 2022 for each person who served as a non-employee director.

 

Reimbursement of Expenses

 

Non-employee directors are entitled to reimbursement of expenses related to their service as a director, including committee participation or special assignments. Travel reimbursements may include reimbursement of a portion of the cost of non-commercial air travel in connection with Sysco business, subject to specified maximums. Non-employee directors may not be reimbursed for amounts related to the purchase price of an aircraft or fractional interest in an aircraft, and any portion of the reimbursement that relates to insurance, maintenance and other non-incremental costs is subject to an annual cap. Non-employee directors also receive discounts on products carried by the Company and its subsidiaries comparable to the discounts offered to all Sysco employees.

 

Directors Deferred Compensation Plan

 

Non-employee directors may defer all or a portion of their annual retainer, including additional fees paid to committee chairpersons and the Chairman of the Board, under the Directors Deferred Compensation Plan. Non-employee directors may choose from several investment options. We credit such deferred amounts with investment gains or losses until the non-employee director retires from the Board or until the occurrence of certain other events.

 

Equity-Based Awards to Non-Employee Directors

 

As of September 19, 2022, the non-employee directors held shares of restricted stock and elected shares (as described below), all of which were issued under the Sysco Corporation 2018 Omnibus Incentive Plan, which we refer to as the “2018 Omnibus Incentive Plan.” Below is a description of the relevant provisions of the 2018 Omnibus Incentive Plan.

 

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Election to Receive a Portion of the Annual Retainer in Common Stock

 

Under the 2018 Omnibus Incentive Plan, a non-employee director may elect to receive between 10% and 100% (in 10% increments) of his or her annual retainer fee, including any additional retainer paid to the Chairman of the Board and the committee chairpersons, in Common Stock rather than in cash. During fiscal 2022, if a director made this election, on the date that we made each quarterly payment of the annual retainer fees, we credited the director’s stock account with the number of shares of Common Stock that the director could have purchased with the portion of the cash retainer that the director chose to receive in stock, assuming a purchase price equal to the closing price of a share of Common Stock on the last business day before that date. We refer to the shares credited in this manner as “elected shares.” The elected shares vest as soon as they are credited to the director’s account, but we do not issue them until the end of the calendar year.

 

Annual Awards of Restricted Stock

 

Pursuant to the 2018 Omnibus Incentive Plan, the Board may grant to non-employee directors, among other things, shares of restricted stock, in the amounts and on such terms as it determines, but no such grant may vest earlier than one year following the grant date. A restricted stock award is denominated in shares of Common Stock and is subject to transfer restrictions and the possibility of forfeiture. The equity grant to the non-employee directors for fiscal 2022 was issued in November 2021.

 

If a director leaves the Board after serving his or her term, or for any reason after reaching age 71, his or her restricted stock will remain outstanding and continue to vest as originally scheduled. All unvested restricted stock will automatically vest upon a director’s death. A director who ceases to serve as a director of Sysco under any other circumstances will forfeit his or her unvested restricted stock.

 

Deferral of Shares

 

A non-employee director may elect to defer receipt of any or all shares of Common Stock issued under the 2018 Omnibus Incentive Plan, whether such shares are to be issued as a grant of restricted stock or as elected shares. Generally, the receipt of Common Stock may be deferred until the earliest to occur of the death of the non-employee director, the date on which the non-employee director ceases to be a director of the Company, or a change of control of Sysco. All such deferral elections must be made in accordance with the terms and conditions set forth in Sysco’s 2009 Board of Directors Stock Deferral Plan.

 

Change in Control

 

Under the 2018 Omnibus Incentive Plan and the applicable grant agreements, any unvested awards of restricted stock will vest immediately upon the occurrence of certain terminations of service within the 24-month period following a specified change in control.

 

Stock Ownership Guidelines

 

To align the interests of our directors with those of our stockholders, the Board concluded that our directors should have a significant financial stake in Common Stock. To further that goal, we maintain stock ownership guidelines for members of the Board.

 

The Corporate Governance Guidelines provide that a non-employee director who has served for five years is expected to have attained and, thereafter, to continuously maintain, minimum ownership of Common Stock equal in value to five times the annual base retainer. The shares counted towards this ownership requirement include (i) elected shares, (ii) vested Share Units (as defined in the 2009 Board of Directors Stock Deferral Plan) held by a non-employee director through the 2009 Board of Directors Stock Deferral Plan (or any successor plan thereto), (iii) shares of restricted stock held by a non-employee director that may be subject to transfer restrictions or potential clawbacks, and (iv) shares owned directly by an entity (such as a corporation or foundation) over which a non-employee director shares voting power or investment power. Shares underlying all other outstanding securities exercisable for, or convertible into, Common Stock (including options and RSUs) are not counted toward the ownership requirement.

 

Management provides the Board with the status of the directors’ stock ownership at all regularly-scheduled meetings to ensure compliance with these holding requirements. As of September 19, 2022, each non-employee director was in compliance with the applicable stock ownership guidelines.

 

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Fiscal 2022 Director Compensation

 

The following table provides compensation information for fiscal 2022 for each of our directors who served for any part of the fiscal year, other than Mr. Hourican, whose compensation for services as an officer is disclosed in the Summary Compensation Table on page 64:

 

Name   Fees Earned or
Paid in Cash
($)(1)
  Stock
Awards
($)(2)(3)(4)
  Non-Qualified
Deferred
Compensation
Earnings
($)(5)
  Other
Compensation
($)(6)
  Total
($)
Daniel J. Brutto   115,000   185,002       300,002
John M. Cassaday(7)   120,000   185,002       305,002
Ali Dibadj(8)   50,000         50,000
Joshua D. Frank(9)   25,000         25,000
Larry C. Glasscock   120,000   185,002       305,002
Jill M. Golder(10)   50,000         50,000
Bradley M. Halverson   125,000   185,002       310,002
John M. Hinshaw   100,000   185,002       285,002
Hans-Joachim Koerber   100,000   185,002       285,002
Stephanie A. Lundquist(11)   75,000   185,002       260,002
Alison Kenny Paul(12)   50,000         50,000
Nelson Peltz(13)   25,000         25,000
Edward D. Shirley   600,000   185,002       785,002
Sheila G. Talton   115,000   185,002       300,002

 

(1) Includes retainer fees, including any retainer fees for which the non-employee director has elected to receive shares of Common Stock in lieu of cash and fees for the fourth quarter of fiscal 2022 that were paid at the beginning of fiscal 2023. Although we credit shares to a director’s account each quarter, the elected shares are not actually issued until the end of the calendar year, unless the director’s service as a member of the Board terminates earlier. The number of shares of Common Stock actually credited to each non-employee director’s account in lieu of cash during fiscal 2022, which are reported in the column entitled “Stock Awards” above, was as follows: 747 shares for Mr. Brutto; 731 shares for Mr. Cassaday; 594 shares for Mr. Dibadj; 853 shares for Mr. Glasscock; 305 shares for Mr. Halverson; 610 shares for Dr. Koerber; 628 shares for Ms. Lundquist; 594 shares for Ms. Paul; and 1,222 shares for Mr. Shirley. Messrs. Frank, Hinshaw and Peltz and Mses. Golder and Talton did not elect to receive any shares in lieu of their cash retainer fees. Directors may choose to defer receipt of the elected shares described in this footnote under the Sysco Corporation 2009 Board of Directors Stock Deferral Plan. The number of elected shares of Common Stock deferred by each non-employee director during fiscal 2022 (which are included in the elected shares described above) was as follows: Mr. Glasscock (853 shares) and Ms. Lundquist (628 shares). To the extent that cash dividends are paid on our Common Stock, each non-employee director also receives the equivalent amount of the cash dividend credited to his or her account with respect to all elected shares that are deferred. If the director has chosen to defer the receipt of any shares, such shares will be credited to the director’s account and issued on the earliest to occur of the “in-service” distribution date elected by the director (which will be at least one year following the end of the plan year in which the shares would otherwise have been distributed to the director), the death of the director, the date on which the director ceases to be a director of the Company, a change of control of Sysco, or the date on which the director applies and qualifies for a hardship withdrawal.
   
(2) For fiscal 2022, the Board, upon the recommendation of the Governance Committee, determined that it would grant approximately $185,000 in equity incentives to each of the non-employee directors. Therefore, on November 19, 2021, the Board granted to each of the non-employee directors 2,469 shares of restricted stock valued at $74.93 per share, the closing price of Sysco Common Stock on the NYSE on November 18, 2021. These awards were granted under the 2018 Omnibus Incentive Plan and vest in full on the first anniversary of the grant date. The amounts in this column reflect the grant date fair value of the awards computed in accordance with ASC 718, “Compensation — Stock Compensation”. See Note 18 of the consolidated financial statements in Sysco’s Annual Report on Form 10-K for the fiscal year ended July 2, 2022, regarding assumptions underlying valuation of equity awards. The value of any elected shares is included in the column entitled “Fees Earned or Paid in Cash,” as described in footnote (1) above. See “—Equity-Based Awards to Non-Employee Directors” above for a more detailed description. Although we credit elected shares to a director’s account each quarter, the shares are not actually issued until the end of the calendar year, unless the director’s service as a member of the Board of Directors terminates. Pursuant to the Sysco Corporation 2009 Board of Directors Stock Deferral Plan, non-employee directors may choose to defer receipt of the shares to be issued in connection with the annual restricted stock award. Mr. Glasscock and Mr. Hinshaw deferred receipt of the 2,469 shares of restricted stock. Ms. Lundquist deferred receipt of the 2,469 shares but forfeited this amount upon her departure from the Board on February 28, 2022. To the extent that cash dividends are paid on our Common Stock, each non-employee director also receives the equivalent amount of the cash dividend credited to his or her account with respect to all deferred restricted stock awards in the form of stock units. A director may elect an “in-service” distribution date for deferrals that is at least one year following the end of the plan year in which the shares would otherwise have been distributed to the director. Otherwise, distributions occur upon the earlier of the death of the director, the date on which the director ceases to be a director of the Company, or a change of control of Sysco, unless the director applies for and qualifies for a hardship withdrawal.

 

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(3) The aggregate number of options and unvested stock awards held by each director listed in the table above, as of July 2, 2022, was as follows:

 

              Aggregate Unvested Stock
Awards Outstanding as of
July 2, 2022
  Aggregate Options
Outstanding as of
July 2, 2022
  Daniel J. Brutto   2,469  
  John M. Cassaday   2,469  
  Ali Dibadj    
  Joshua D. Frank    
  Larry C. Glasscock   2,469  
  Jill M. Golder    
  Bradley M. Halverson   2,469  
  John M. Hinshaw   2,469  
  Hans-Joachim Koerber   2,469  
  Stephanie A. Lundquist    
  Alison Kenny Paul    
  Nelson Peltz    
  Edward D. Shirley   2,469  
  Sheila G. Talton   2,469  

The unvested stock awards for each non-employee director listed in the table immediately above relate to restricted stock awards granted in November 2021 that vest in November 2022.

 

(4) None of the directors shown in the table received option grants with respect to his or her service as an independent director during fiscal 2022.
(5) We do not provide a pension plan for the non-employee directors.
(6) The total value of all perquisites and personal benefits received by each of the non-employee directors was less than $10,000.
(7) Mr. Cassaday will retire from the Board at the conclusion of Sysco’s Annual Stockholders Meeting.
(8) Mr. Dibadj was appointed to the Board effective January 1, 2022.
(9) Mr. Frank resigned from the Board on August 20, 2021. All of Mr. Frank’s unvested stock awards reported in the table above were forfeited upon his resignation.
(10) Ms. Golder was appointed to the Board effective January 1, 2022.
(11) Ms. Lundquist resigned from the Board on February 28, 2022. All of Ms. Lindquist’s unvested stock awards were forfeited upon her resignation.
(12) Ms. Paul was appointed to the Board effective January 1, 2022.
(13) Mr. Peltz resigned from the Board on August 20, 2021. All of Mr. Peltz’s unvested stock awards were forfeited upon his resignation.

 

Mr. Hourican did not receive any compensation for his fiscal 2022 Board service, other than the compensation for services as an employee that is disclosed elsewhere in this proxy statement. See “Executive Compensation – Summary Compensation Table” for details regarding the executive officer compensation earned by Mr. Hourican for fiscal 2022.

 

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Certain Relationships and Related Person Transactions

 

Related Person Transactions Policies and Procedures

 

The Board has adopted written policies and procedures for review and approval or ratification of transactions with related persons. These policies apply to Sysco directors, director nominees, executive officers, beneficial owners of more than five percent of our stock, and any immediate family members of any of these persons.

 

We follow the policies and procedures below for any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships, in which Sysco was or is to be a participant, the amount involved exceeds $100,000, and a related person had or will have a direct or indirect material interest. Among other situations, these policies specifically apply to purchases of goods or services by or from a related person or an entity in which a related person has a material interest, indebtedness, guarantees of indebtedness, and employment by Sysco of a related person. The Board has determined that the following do not create a material direct or indirect interest on behalf of the related person, and are therefore not related person transactions to which these policies and procedures apply:

 

Interests arising only from the related person’s position as a director of another corporation or organization that is a party to the transaction;
Interests arising only from the direct or indirect ownership by the related person and all other related persons in the aggregate of less than a 10% equity interest, other than a general partnership interest, in another entity that is a party to the transaction;
Interests arising from both the position and ownership level described in the two bullet points above;
Interests arising solely from the ownership of a class of Sysco’s equity securities if all holders of that class of equity securities receive the same benefit on a pro rata basis, such as dividends;
A transaction that involves compensation to an executive officer if the compensation has been approved by the CLD Committee, the Board, or a group of independent directors of Sysco performing a similar function; or
A transaction that involves compensation to a director for services as a director of Sysco if such compensation will be reported pursuant to Item 402(k) of Regulation S-K.

 

Any of our employees, officers, or directors who have knowledge of a proposed related person transaction must report the transaction to our chief legal officer. Whenever practicable, before the transaction becomes effective or is consummated, the proposed transaction will be reviewed and approved by the Board or, pursuant to authority delegated by the Board, by the Chair of the Governance Committee, if the aggregate amount involved is expected to be less than $200,000, or the entire Governance Committee, if the aggregate amount involved is expected to be less than $500,000. If a potential related person transaction is entered into without such prior approval, the Governance Committee will review and recommend to the Board, and the Board will determine, in its discretion, whether to ratify the transaction.

 

During the first quarter of each fiscal year, the Governance Committee and the Board will review any related person transaction that was previously approved and is ongoing to:

 

ensure that such transaction has been conducted in accordance with the previous approval;
ensure that Sysco makes all required disclosures regarding the transaction; and
determine if Sysco should continue, modify, or terminate the transaction.

 

Our Related Persons Transaction Policy sets forth the process for reviewing proposed transactions, the information that must be considered, and the standard for approval or ratification.

 

Transactions with Related Persons

 

The Governance Committee and the Board reviewed all transactions since July 4, 2021 involving a “related person” identified in the annual questionnaire responses or otherwise known to the Board or the Company and determined that none of the transactions was required to be disclosed as a related person transaction pursuant to the SEC’s rules.

 

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CORPORATE SOCIAL RESPONSIBILITY

 

2021 Shareholder Proposal – Greenhouse gas Targets

 

At our 2021 annual meetings, our stockholders approved a proposal requesting that Sysco “issue a report within a year, and annually thereafter, at reasonable expense and excluding confidential information, disclosing short, medium, and long term greenhouse gas targets aligned with the Paris Agreement’s goal of maintaining global temperature rise at 1.5 degrees Celsius, and progress made in achieving them. This reporting should cover the Company’s full scope of operational and product related emissions.” Consistent with our commitment in the Company’s 2021 proxy statement, Sysco has substantially implemented this proposal through its announcement in November 2021 of an ambitious, industry-leading climate goal to reduce emissions across its global operations and the company’s entire value chain. Sysco’s science-based emissions reduction target aims to reduce its Scope 1 and 2 emissions by 27.5% by 2030 and to ensure that suppliers covering 67% of Sysco’s Scope 3 emissions establish science-based targets by 2026.

 

As a demonstration of the continued importance of this space, the Company added Environmental, Social, and Governance (ESG) metrics to executive compensation for FY2023.

 

For further discussion of Sysco’s sustainability (“sustainability”) strategy and long-term goals, see our website at www.sysco.com in the “Sustainability” section.

 

Code Of Conduct

 

Our Global Code of Conduct (the “Code”) is guided by our values and expectations which we believe are important to delivering exceptional service with the highest degree of integrity. We require all of our directors, officers and associates, including our principal executive officer, principal financial officer, principal accounting officer and controller, to understand and abide by the Code, as it represents our commitment to continuously deliver excellence with integrity by conducting our business in accordance with the highest standards of moral and ethical behavior in accordance with our values: Integrity, Excellence, Teamwork, Inclusiveness, Responsibility.

 

Our Global Code of Conduct addresses the following, among other topics:

 

fraud;
anti-corruption and anti-bribery;
export/import laws and trade sanctions;
human rights;
diversity and inclusion;
workplace safety;
antitrust;
competition and fair dealing;
professional conduct, including customer relationships, equal opportunity, and receipt of payments or gifts;
political contributions;
conflicts of interest;
insider trading;
financial disclosure;
intellectual property; and
confidential information.

 

Our Code, which is reviewed periodically by our Governance Committee, requires strict adherence to all laws and regulations applicable to our business and requires employees to report any violations or suspected violations of the Code. We have published the Code on our website in the Overview section under “Investors—Corporate Governance” at www.sysco.com. We intend to disclose any future amendments to or waivers of our Code on our website at www.sysco.com under the heading “Investors—Corporate Governance.”

 

Reporting a Concern or Violation

 

Our Code explains that there are multiple channels for an employee to report a concern, including to an associate’s manager, a human resource professional, our Legal or Ethics and Compliance department, or to the Sysco Ethics Line. Our Ethics Line is available 24 hours a day, seven days a week, 365 days a year, worldwide, to receive calls or web submissions from anyone wishing to report a concern or complaint, anonymous or otherwise. Our Ethics Line contact information can be found on our website at www.sysco.com under the heading “About Sysco – The Sysco Story – Sysco Global Code of Conduct.”

 

Any report to any one of our multiple channels for reporting concerns that raises a concern or allegation of impropriety relating to our accounting, internal controls or other financial or audit matters is forwarded to our Senior Vice President, Legal, General Counsel and Corporate Secretary, who is then responsible for reporting such matters to the Chair of our Audit Committee. All such matters are investigated and responded to in accordance with the procedures established by the Audit Committee to ensure compliance with the Sarbanes-Oxley Act of 2002.

 

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EXECUTIVE OFFICERS

 

The following individuals, other than Mr. Ørting, currently serve as executive officers of Sysco. Additional biographical information concerning these officers is provided below (other than Mr. Hourican, whose biographical information is provided under “Board of Directors Matters—Board Composition” above).

 

Name Title Age
Kevin P. Hourican* President and Chief Executive Officer 49
Aaron E. Alt* Executive Vice President and Chief Financial Officer 51
Greg D. Bertrand* Executive Vice President, U.S. Foodservice Operations 58
J. Chris Jasper Senior Vice President and President, U.S. Broadline Foodservice Operations 50
Eve M. McFadden Senior Vice President, Legal, General Counsel and Corporate Secretary 46
Tim Ørting Jørgensen Former Executive Vice President and President, Foodservice Operations, International 57
Thomas R. Peck, Jr.* Executive Vice President, Chief Information and Digital Officer 55
Paulo Peereboom Executive Vice President and President, Foodservices Operations, International 52
Ronald L. Phillips Executive Vice President and Chief Human Resources Officer 57
Cathy Marie Robinson Executive Vice President and Chief Supply Chain Officer 55
Judith S. Sansone* Executive Vice President and Chief Commercial Officer 62
Scott B. Stone Vice President, Financial Reporting and Interim Chief Accounting Officer 50

 

* Named Executive Officer.

 

Age: 51

Executive Officer since: December 2020

  AARON E. ALT
 

Biography:

Mr. Alt has served as Sysco’s Executive Vice President and Chief Financial Officer since December 2020. Previously, he served as Senior Vice President and Chief Financial Officer of Sally Beauty Holdings (“SBH”), an international specialty retailer and distributor of professional beauty supplies, and President of Sally Beauty Supply, the world’s largest retailer of professional beauty supplies, since October 2018. Mr. Alt previously served as SBH’s Senior Vice President, Chief Financial Officer and Chief Administrative Officer from May 2018 to October 2018. Prior to joining SBH, Mr. Alt served in various executive leadership roles of increasing responsibility at Target Corporation the second-largest discount retailer in the U.S., including Senior Vice President, Operations from March 2017 to May 2018; Senior Vice President Grocery Transformation from January 2016 to March 2017; Chief Executive Officer, Target Canada Co. from January 2015 to May 2018; Senior Vice President, Finance from August 2015 to January 2016; Senior Vice President, Tax and Treasurer from March 2015 to August 2015; Senior Vice President, Business Development, Risk Management, Tax and Treasurer from October 2013 to March 2015; and Senior Vice President, Business Development and Treasurer from September 2012 to October 2013. Prior to joining Target Corporation, Mr. Alt held several senior level positions with Sara Lee Corporation from 2004 to 2012. Mr. Alt was an associate and then a partner at the law firm of Kirkland & Ellis in London from 1998 to 2004. Mr. Alt holds a J.D. from Harvard Law School, an M.B.A. from J.L. Kellogg School of Management at Northwestern University and a B.A. in History and Political Science from Northwestern University.

     

Age: 58

Executive Officer since: July 2016

  GREG D. BERTRAND
 


Biography:

Mr. Bertrand has served as Sysco’s Executive Vice President, U.S. Foodservice Operations since July 2018. Previously, he served as Senior Vice President, U.S. Foodservice Operations from July 2016 to July 2017, Senior Vice President, Foodservice Operations (West) from August 2015 to July 2016, Senior Vice President, Merger Integration Deployment from November 2014 to August 2015, and Senior Vice President, Business Process Integration from March 2014 to November 2014. Mr. Bertrand began his Sysco career in 1991 as a Marketing Associate at Sysco Chicago, where he advanced through several sales leadership positions before becoming Vice President-Sales in 1997 and Senior Vice President-Sales in 1998. He was promoted to Executive Vice President in 1999. In 2005, he was named President-Sysco Eastern Wisconsin. He became President-Sysco Chicago in 2008 and took on the added responsibilities of leading Sysco Eastern Wisconsin and Sysco Baraboo in 2009. He was promoted to Market Vice President-Midwest in 2010 and then to Senior Vice President – Foodservice Operations (West) in July 2012.

 

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Age: 50

Executive Officer since: March 2020

  J. CHRIS JASPER












Biography:

Mr. Jasper has served as Senior Vice President and President, U.S. Broadline Foodservice Operations since March 2020. Previously, he served as Market President, Midwest from April 2018 to March 2020, President, Sysco Arizona from 2013 to April 2018, and Executive Vice President of Sysco Kansas City from 2012 to 2013. Mr. Jasper joined Sysco Arizona in 1995 as a marketing associate and then advanced through leadership positions of increasing responsibility, including District Sales Manager, Regional Sales Manager, and Vice President, Sales, before being promoted to Vice President, Sales and Marketing in 2011. He holds an undergraduate degree in Political Science from Arizona State University.

     

Age: 46

Executive Officer since: February 2019

  EVE M. MCFADDEN
 











Biography:

Ms. McFadden serves as Sysco’s Senior Vice President, Legal, General Counsel & Corporate Secretary with responsibility over the company’s legal, compliance, ethics, enterprise risk management, and environmental health and safety functions. Ms. McFadden began her career at Sysco as Corporate Counsel – Employment and held various positions in the legal department prior to her promotion to VP, Legal, General Counsel & Corporate Secretary in February 2019. From December 2007 to December 2008, Ms. McFadden worked for ABM Industries Incorporated, a facility management company, as Assistant General Counsel. Ms. McFadden also worked as an Associate for the law firm Littler Mendelson, P.C. from October 2003 to December 2007 and began her law career as an Associate for Karr Tuttle Campbell in Seattle, Washington. Ms. McFadden graduated with honors from the University of Texas School of Law and holds an undergraduate degree in Political Science from the University of Washington.

     

Age: 57

  TIM ØRTING JØRGENSEN
 










Biography:

Mr. Ørting served as Sysco’s Executive Vice President and President – International Foodservice Operations from January 2021 until May 2022. Prior to joining Sysco, Mr. Ørting served as Executive Vice President International for Arla Foods from July 2016 to December 2020. Mr. Ørting began his career at Arla Foods in 1991, serving in roles of increasing responsibility, including as Executive Vice President CCE Consumer Central Europe from January 2012 to July 2016, Executive Vice President and Head of Business Group Consumer International from May 2007 to January 2012, and Divisional Director of Arla Foods Denmark from October 2005 to May 2007. Mr. Ørting attended Copenhagen Business School, where he earned a Masters of Science in Business Administration, specializing in international strategy and marketing, and he studied at the Camara de Comercio de Madrid and the London Business School. In addition, Mr. Ørting served as a Lieutenant in the Danish Army.

     

Age: 55

Executive Officer since: January 2021

  THOMAS R. PECK, JR.
 











Biography:

Mr. Peck has served as Sysco’s Executive Vice President & Chief Information and Digital Officer since January 2021. Prior to joining Sysco, Mr. Peck served as Executive Vice President, Chief Information and Digital Officer for Ingram Micro Inc. from March 2018 to December 2020. He previously served as Senior Vice President and Global Chief Information Officer of AECOM, a global infrastructure consulting firm, from September 2012 to March 2018 and Global Leader Procurement and Travel of AECOM from May 2014 to March 2017. Prior to joining AECOM, Mr. Peck held several senior level positions with Levi Strauss & Company from September 2008 to September 2012, MGM Resorts (formerly MGM MIRAGE) from March 2006 to August 2008 and General Electric Company from August 1998 to March 2006. Mr. Peck began his career as an officer of the United States Marine Corps. Mr. Peck holds a Master of Science in Management from the Naval Postgraduate School and a Bachelor of Science in Economics from the United States Naval Academy. In addition, Mr. Peck was inducted into the CIO Hall of Fame in 2015.

     

Age: 52

Executive Officer since: August 2022

  PAULO PEEREBOOM
 













Biography:

Mr. Peereboom has served as Sysco’s Executive Vice President, Foodservice Operations – International since August 2022. Previously, he served as Chief Executive Officer of Makro Cash & Carry The Netherlands B.V., a subsidiary of Metro AG, a leading international wholesale company with food and non-food assortments, since January 2018. Mr. Peereboom previously served as Chief Operating Officer, Chief Supply Chain Officer, Chief Merchandise Officer and Executive Board Member for Pick n Pay Retailers, a sub-Saharan Food & Fashion Retailer, from January 2014 to January 2018. Prior to his appointment with PnP, Mr. Peereboom served in various executive leadership roles of increasing responsibility at Koninklijke Ahold Delhaize N.V. (“Royal Ahold”), a Dutch multinational retail and wholesaling company, including Senior Vice President Simplicity, from September 2012 to January 2014 and Senior Vice President Store Operations from March 2011 to January 2014, Vice President, Commerce from September 2008 to March 2011, General Manager from February 2006 to September 2008 and Vice President Central Sourcing/Logistics & Supply Chain Baltics from September 2003 to February 2006. He also served as Marketing Logistics Manager with Mars Inc from June 2002 to September 2003. Mr. Peereboom began his career with Jerónimo Martins, a subsidiary of Royal Ahold, as Supply Chain Director from February 2000 to May 2002 and Senior Supply Chain Manager from March 1998 to February 2000. Mr. Peereboom holds a business administration degree from the University Institute of Lisbon and a business informatics degree from the Hogeschool voor Economische Studies in Amsterdam (Amsterdam Business School).

 

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Age: 57

Executive Officer since: May 2021

 

  RONALD L. PHILLIPS
 













Biography:

Mr. Phillips has served as Sysco’s Executive Vice President and Chief Human Resources Officer since May 2021. Prior to joining Sysco, Mr. Phillips served as Senior Vice President, Human Resources, Retail, Omnicare and Enterprise Modernization for CVS Health Corporation, a premier health innovation company, from October 2018 to April 2021. He previously served as Chief People Officer for Carnival Cruise Line from October 2015 to October 2018 and Chief Human Resources Officer for New York Presbyterian Hospital System from September 2013 to September 2015. Prior to joining New York Presbyterian, Mr. Phillips joined Comcast Corporation and served in various roles of increasing responsibility, including as Senior Vice President of Human Resources from October 2009 to November 2012, Divisional Vice President of Human Resources from March 2007 to October 2009, and Regional Vice President of Human Resources from September 2004 to March 2007. He also served as Senior Human Resources Manager with Ryder System, Inc. from July 2003 to September 2004 and began his career as a Division Director of Human Resources at McDonald’s Corporation from May 1997 to July 2003. Mr. Phillips earned a Bachelor of Arts degree in Sociology and Administration of Justice from Virginia State University and a J.D. from the University of Richmond School of Law.

     

Age: 55

Executive Officer since: March 2020

  CATHY MARIE ROBINSON
 












Biography:

Ms. Robinson has served as Sysco’s Executive Vice President and Chief Supply Chain Officer since March 2020. Previously she served as Senior Vice President, Chief Operations and Transformation Officer with Capri Holding Limited, the parent holding company of Michael Kors, Versace and Jimmy Choo and from May 2014 to December 2018 served as Senior Vice President, Corporate Strategy & COO for Michael Kors Holdings Limited. Ms. Robinson’s previous roles include Senior Vice President, Chief Logistics Officer at ToysRUs from April 2012 to April 2014; Senior Vice President, Supply, Logistics and Customer Experience at The Great Atlantic & Pacific Tea Company from December 2010 to March 2012; Senior Vice President, Supply Chain at Smart & Final Stores, LLC from July 2005 to November 2010; Regional Director at ToysRUs from July 2003 to June 2005; and Regional Vice President, Logistics at Wal-Mart Stores, Inc. from January 1993 to April 2003. She began her career as a Logistics Officer for the U.S. Army and holds an undergraduate degree in communications from the University of Alabama and a masters degree in leadership and organizational studies from Azusa Pacific University.

     

Age: 62

Executive Officer since: October 2020

  JUDITH S. SANSONE
 











Biography:

Ms. Sansone has served as Sysco’s Executive Vice President and Chief Commercial Officer since October 2020. She also owned Consultgenix, LLC, a consulting firm, and served as a consultant for Sysco from May 2020 until October 2020. Previously, she served as Senior Vice President, Front Store Business/Chief Merchant for CVS Health Corporation (CVS Health) from September 2012 to May 2020, responsible for strategy and business development of the Retail Business, Front Store Merchandising, Pricing and Promotion, Loyalty and Personalization, Store Formats and Design, Store Brands and Health Services. Ms. Sansone joined CVS Pharmacy, a subsidiary of CVS Health, in 1977, serving in a variety of retail and merchandising roles of increasing responsibility, culminating with her role as Chief Merchandising at CVS Health. Ms. Sansone holds an associate degree from Holyoke Community College.

     

Age: 50

Executive Officer since: September 2022

  SCOTT B. STONE
 









Biography:

Mr. Stone has served as Sysco’s Vice President, Financial Reporting since July 2011 and as Interim Chief Accounting Officer since September 2022. He oversees the Company’s Financial Reporting, Financial Policies and Internal Controls, and Shared Service Accounting teams. Prior to joining Sysco in April 2006, Mr. Stone had served as a Senior Manager of Deloitte & Touche, LLP, a public accounting firm, from September 1996 to March 2006, where he oversaw multiple audit teams of public companies. Mr. Stone holds a Bachelor’s of Business Administration and a Master of Science in Accounting from Texas A&M University and is a Certified Public Accountant licensed in the State of Texas.

 

Management Development and Succession Planning

 

On an ongoing basis, the Board plans for succession to the position of CEO and other key management positions. The Governance Committee is responsible for reviewing and recommending to the Board all key management appointments at or above senior vice president. To assist the Board, the CEO periodically assesses the senior executives and their potential to succeed to the position of CEO, and provides the Board with an assessment of potential successors to other key positions. On an annual basis, the Board and the CLD Committee engage in discussions with management regarding increasing the diversity of Sysco’s executive management team. Management development and succession planning remained top priorities of executive management and the Board during fiscal 2022.

 

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STOCK OWNERSHIP

 

Security Ownership of Officers and Directors

 

The following table sets forth certain information with respect to the beneficial ownership of Sysco’s Common Stock, as of September 19, 2022, by (i) each current director and director nominee, (ii) each NEO (as defined under “Compensation Discussion and Analysis”), and (iii) all current directors and executive officers as a group. Unless otherwise indicated, each stockholder identified in the table has sole voting and investment power with respect to his or her shares. Fractional shares have been rounded to the nearest whole share.

 

   Shares of
Common
Stock Owned
Directly
   Shares of
Common
Stock Owned
Indirectly
   Shares of
Common
Stock
Underlying
Options(1) 
   Shares of
Common Stock
Underlying
Restricted Stock
Units(2)
   Total Shares of
Common Stock
Beneficially
Owned(1)(2)
   Percent of
Outstanding
Shares(3)
 
Aaron E. Alt   22,474        28,410    4,544    55,428    * 
Greg D. Bertrand   40,665    5,066(5)    321,107    6,953    373,791    * 
Daniel J. Brutto   25,573(4)                25,573    * 
Ali Dibadj   594(4)                594    * 
Larry C. Glasscock   79,276(4)                79,276    * 
Jill M. Golder                       * 
Bradley M. Halverson   20,600(4)                20,600    * 
John M. Hinshaw   14,074(4)                14,074    * 
Kevin P. Hourican   249,085        818,744    31,238    1,099,067    * 
Hans-Joachim Koerber   60,770(4)                60,770    * 
Tim Ørting Jørgensen                       * 
Alison Kenney Paul   594(4)                    * 
Thomas R. Peck, Jr.   16,127        2,254    3,465    21,846    * 
Judith S. Sansone   18,012        32,954    3,634    54,600    * 
Edward D. Shirley   20,999(4)        23,766    3,388    48,153    * 
Sheila G. Talton   12,021(4)                12,021    * 
All Directors and Executive Officers as a Group (22) Persons)   679,774(6)    9,254(7)    1,417,154(8)    71,408(9)    2,177,590(6)(7)(8)(9)    0.43% 

 

(*) Less than 1% of outstanding shares.
(1) Includes shares underlying options that are presently exercisable or will become exercisable within 60 days after September 19, 2022. Shares subject to options that are presently exercisable or will become exercisable within 60 days after September 19, 2022 are deemed outstanding for purposes of computing the percentage ownership of the person holding such options, but are not deemed outstanding for purposes of computing the percentage ownership of any other persons.
(2) Shares underlying RSUs will vest and settle within 60 days after September 19, 2022 and are deemed outstanding for purposes of computing the percentage ownership of the person holding such RSUs, but are not deemed outstanding for purposes of computing the percentage ownership of any other persons. It is expected that approximately one-third of the shares underlying these RSUs will be withheld to pay taxes related to the RSUs as they vest and settle.
(3) Applicable percentage of beneficial ownership at September 19, 2022 is based on 506,757,911 shares outstanding.
(4) Includes shares that were elected to be received in lieu of non-employee director retainer fees during the first half of calendar 2022 under the Sysco Corporation 2018 Omnibus Incentive Plan. For Mr. Brutto, this includes 339 shares; for Mr. Dibadj this includes 594 shares; for Mr. Glasscock, this includes 414 shares; for Mr. Halverson, this includes 148 shares; for Dr. Koerber, this includes 296 shares; for Ms. Paul this includes 594 shares; and for Mr. Shirley, this includes 594 shares. Unless the director has chosen to defer the shares under the Sysco Corporation 2009 Board of Directors Stock Deferral Plan, these shares will be issued on December 31, 2022 or within 60 days after a non-employee director ceases to be a director, whichever occurs first. Directors may choose to defer receipt of these shares related to director retainer fees, as well as shares awarded pursuant to restricted stock grants, and these deferred amounts are also included in this line item. To the extent cash dividends are paid on our Common Stock, each non-employee director also receives the equivalent amount of the cash dividend credited to his or her account with respect to all deferred restricted stock awards, and all elected shares that are deferred. The number of shares in each non-employee director’s deferred stock account, including related dividend equivalents, is as follows: Mr. Brutto (5,918, Mr. Dibadj (none); Mr. Glasscock (78,820); Ms. Golder (none); Mr. Halverson (none), Mr. Hinshaw (14,044), Dr. Koerber (2,469), Ms. Paul (none); Mr. Shirley (none), and Ms. Talton (12,021). If the director has chosen to defer the receipt of any shares, such shares will be credited to the director’s account under the 2009 Board of Directors Stock Deferral Plan and issued on the earliest to occur of the “in-service” distribution date elected by the director (which will be at least one year following the end of the plan year in which the shares would otherwise have been distributed to the director), the death of the director, the date on which the director ceases to be a director of the Company, a change of control of Sysco, or the date on which the director applies and qualifies for a hardship withdrawal. Deferred shares are deemed outstanding for purposes of computing the percentage ownership of the persons holding such shares, but are not deemed outstanding for purposes of computing the percentage ownership of any other persons.

 

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(5) These shares are held by Mr. Bertrand’s children.
(6) Includes an aggregate of 98,910 shares directly owned by the current executive officers other than the named executive officers.
(7) Includes 4,188 shares indirectly owned by the current executive officers other than the named executive officers.
(8) Includes an aggregate of 189,919 shares underlying options that are presently exercisable or will become exercisable within 60 days after September 19, 2022 held by the current executive officers other than the named executive officers.
(9) Includes an aggregate of 18,186 shares underlying restricted stock units that are presently exercisable or will become exercisable within 60 days after September 19, 2022 held by the current executive officers other than the named executive officers.

 

Security Ownership of Certain Beneficial Owners

 

The following table sets forth information concerning beneficial ownership of our Common Stock by persons or groups known to us to be beneficial owners of more than 5% of our Common Stock outstanding as of September 19, 2022. The applicable percentage of beneficial ownership is based on 506,757,911 shares outstanding as of September 19, 2022.

 

   Total Shares of
Common Stock
Beneficially Owned
       Percent of
Outstanding Shares
 
The Vanguard Group and certain affiliates(1)   44,993,172    8.88%
Wellington Management Group and certain affiliates(2)   31,914,930    6.30%
BlackRock, Inc. and certain affiliates(3)   31,519,869    6.22%

 

(1) This information is based on a Schedule 13G/A filed on February 10, 2022 by The Vanguard Group (“Vanguard”). According to the Schedule 13G/A, Vanguard has the sole power to vote, or to direct the vote of, 0 shares of Common Stock, the sole power to dispose, or to direct the disposition of 42,830,619 shares of Common Stock, the shared power to vote, or to direct the vote of, 869,711 shares of Common Stock, and the shared power to dispose, or to direct the disposition of, 2,162,553 shares of Common Stock. The address for Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
(2) This information is based on a Schedule 13G/A filed on February 4, 2022 by Wellington Group Holdings LLP (“Wellington”). According to the Schedule 13G/A, Wellington has the shared power to vote, or to direct the vote of, 29,774,465 shares of Common Stock, and the shared power to dispose, or to direct the disposition of, 31,914,930 shares of Common Stock. The address for Wellington is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.
(3) This information is based on a Schedule 13G/A filed on February 1, 2022 by BlackRock, Inc. (“BlackRock”). According to the Schedule 13G/A, BlackRock has the sole power to vote, or to direct the vote of, 26,841,940 shares of Common Stock, and the sole power to dispose, or to direct the disposition of, all 31,519,869 shares of Common Stock reported in the table above. The address for BlackRock is BlackRock, Inc. 55 East 52nd Street, New York, NY 10055.

 

Delinquent Section 16(a) Reports

 

Pursuant to Section 16(a) of the Exchange Act and the rules issued thereunder, our executive officers and directors and any persons holding more than 10% of our Common Stock are required to file with the SEC and the NYSE reports of initial ownership and changes in ownership of our Common Stock. To our knowledge, no person beneficially owns more than 10% of our Common Stock. Copies of the Section 16 reports filed by our directors and executive officers are required to be furnished to us. Based solely on our review of the copies of the reports furnished to us, or written representations that no reports were required, we believe that, during fiscal 2022, all of our executive officers and directors complied with the Section 16(a) requirements, except that, due to an inadvertent administrative error on the part of our stock plan administrator, a late Form 4 was filed on behalf of Cathy Marie Robinson to report a purchase of Sysco’s Common Stock on December 16, 2021 and January 19, 2022 and a late Form 4 was filed on behalf of Judith S. Sansone to report shares withheld for the payment of taxes upon vesting of her restricted stock units on December 1, 2021.

 

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EQUITY COMPENSATION PLAN INFORMATION

 

The following table sets forth certain information regarding equity compensation plans as of July 2, 2022.

 

Plan Category      Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
       Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
($)
       Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding Securities
Reflected in First Column)
 
Equity compensation plans approved by security holders   9,634,493    $62.74    45,243,729(1) 
Equity compensation plans not approved by security holders            
TOTAL   9,634,493    $62.74    45,243,729(1) 

 

(1) Includes 41,785,243 shares issuable pursuant to our 2018 Omnibus Incentive Plan, of which 13,254,023 shares are eligible to be granted as full value awards, and 3,458,486 shares issuable pursuant to our Employee Stock Purchase Plan as of July 2, 2022. The amount does not reflect the issuance of 206,783 shares in June 2022 pursuant to the completion of the quarterly purchase under our Employee Stock Purchase Plan.

 

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (ITEM 2)

 

We are seeking a non-binding, advisory vote approving the compensation of our named executive officers, as disclosed in this Proxy Statement, as required by Section 14A and Rule 14a-21(a) of the Securities Exchange Act of 1934. This is commonly referred to as a “Say on Pay” vote because it gives shareholders an opportunity to provide their input regarding our pay practices, and we view this vote as a meaningful opportunity to gauge shareholder approval on an annual basis of our executive compensation programs.

 

Our executive compensation programs are designed to attract, retain, and incentivize highly talented individuals who are committed to driving Sysco’s vision and strategy. We strive to link executives’ pay to their performance and their advancement of Sysco’s overall performance and business strategies, while also aligning executives’ interests with those of our stockholders. We also aim to encourage high-performing executives to drive long-term results and to remain with Sysco over the course of their careers. We believe the amount of compensation for each named executive officer reflects their extensive management experience, continued high performance, and exceptional service to Sysco and our stockholders.

 

Regardless of the outcome of this “Say on Pay” vote, Sysco welcomes input from its stockholders regarding executive compensation and other matters related to our success. Given the information provided in this proxy statement, the Board of Directors asks you to approve the following advisory resolution:

 

RESOLVED, that the compensation paid to our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED.

 

Board Recommendation

 

The Board of Directors unanimously recommends a vote “FOR” the approval of the compensation paid to Sysco’s named executive officers.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

COMPENSATION DISCUSSION AND ANALYSIS 44
   
Executive Summary 44
   
Philosophy of Our Executive Compensation Program 47
   
How Executive Pay is Established 47
   
What We Paid 49
   
Compensation Risk Analysis 58
   
Stock-Related Policies 59
   
Executive Compensation Governance and Other Information 60
   
Report of the Compensation and Leadership Development Committee 63

 

This Compensation Discussion and Analysis focuses on how our executive officers listed in the Summary Compensation Table (our “NEOs”) were compensated for fiscal year 2022 (July 4, 2021 through July 2, 2022) and how their fiscal year 2022 compensation aligned with our pay for performance philosophy. For fiscal year 2022, our NEOs were:

 

         
Kevin P. Hourican     Aaron E. Alt     Greg D. Bertrand     Tim Ørting Jørgensen*     Thomas R. Peck, Jr.     Judith S. Sansone
President and Chief
Executive Officer
  Executive Vice
President and Chief
Financial Officer
  Executive Vice
President, U.S.
Foodservice
Operations
  Former Executive Vice
President and President,
Foodservice Operations,
International
  Executive Vice
President, Chief
Information and
Digital Officer
  Executive Vice
President and Chief
Commercial Officer

 

* Mr. Ørting resigned effective May 3, 2022.

 

EXECUTIVE SUMMARY

 

The primary objective of our executive compensation programs is to link executives’ pay to their performance and their advancement of our annual and long-term business strategies. We also believe the amount of compensation paid to the NEOs reflects their extensive management experience, high performance, and exceptional service to Sysco and our stockholders. We believe our compensation strategies have been effective in attracting executive talent and promoting performance and retention.

 

Key Business Results

 

Our fiscal year 2022 financial results were strong, reflecting growth in sales, effective management of inflation and improved profitability. We are proud to have been able to achieve these financial results even though there have been a number of unanticipated challenges, including a shortage of qualified labor and increases in labor costs, continued economic uncertainty from the COVID-19 pandemic, increases in fuel costs, and changes in consumer eating habits.

 

We achieved an all-time record for annual sales of $68.6 billion and grew our business more than 1.3 times the industry, which exceeded our stated goal of 1.2 times the industry. We continue to benefit from the scale of our operations, our diversification as the industry leader across customer types, product categories and geographies and our strong balance sheet. While investing heavily against our long-term growth through organic and inorganic efforts, we also returned $1.5 billion to shareholders, through $500 million of share repurchases and $959 million of dividend payments.

 

 

(1) Adjusted EBITDA represents a non-GAAP measure, see reconciliation in Annex I - Non-GAAP Reconciliations.

 

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Say on Pay – Stockholder Feedback

 

At last year’s Annual Meeting, 61.55% of the shares that voted with respect to our “Say on Pay” proposal (excluding abstentions) voted “FOR” the proposal. This was a disappointing outcome after several years of substantial stockholder support of our pay for performance philosophy.

 

Historical Say on Pay Votes

 

 

 

During fiscal year 2022, we continued our stockholder engagement and met with stockholders that represented approximately 43% of our outstanding shares. Our discussions primarily centered around feedback on “Say on Pay,” but included collaborative discussions about our executive compensation programs, human capital management and Board composition. Specifically, the stockholders shared their preference for clear, quantifiable pre-established metrics tied to our stated financial goals and were focused on our intention to incorporate ESG metrics into our executive compensation programs. Stockholders did not share any lingering concerns following our 2021 “Say on Pay” vote. We are committed to continuing the dialogue with stockholders regarding our compensation philosophy and practices and considered the Say on Pay vote results and investor feedback in the context of designing our executive compensation programs for fiscal year 2023.

 

The key changes made to fiscal year 2023 executive compensation programs, are as follows:

 

The Compensation and Leadership Development Committee of the Board of Directors of Sysco Corporation (the “CLD Committee”) does not intend to make special (one-time) awards to our NEOs outside of our ongoing annual incentive programs except in connection with new hires and promotions
Return to an annual cash-based incentive plan (‘AIP”) from our bifurcated short-term incentive plan (“STIP”)
Increase prevalence of financial measures representing 60% of the AIP opportunity
Removal of operational measures from the AIP
Inclusion of an ESG metric, including gender representation, diverse recruiting and carbon reduction representing 10% of the AIP opportunity

 

 

In addition to our annual “Say on Pay” vote and our stockholder engagement efforts, stockholders are invited to express their views to the CLD Committee as described above under the heading “Board Composition—How to Contact the Board.”

 

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Our Executive Compensation Best Practices

 

We have strong executive compensation practices that are regularly reviewed as a result of stockholder engagement, recommendations by our independent compensation consultant and evolving pay for performance best practices.

 

WHAT WE DO
Pay for performance – Link a significant percentage of total compensation to individual and company-wide performance—aligning annual and long-term incentive (“LTI”) awards with performance-based metrics.
Annual “Say on Pay” – Seek an advisory vote from stockholders on our executive compensation programs on an annual basis.
Risk assessment – A risk assessment of our executive compensation programs is performed on an annual basis to identify plans or practices that may encourage employees to take unnecessary or excessive risk.
Independent compensation consultant – The CLD Committee selects and engages its own independent compensation consultant to advise on our executive compensation practices.
Clawback policy – The CLD Committee has authority to recoup or cancel annual and LTI awards, paid or payable, to NEOs for financial restatement or misconduct as described in the “Executive Compensation Clawbacks” section below.
Double trigger change-in-control – LTI awards include a double-trigger that requires both a change in control and an involuntary termination within 24 months for awards to vest.
Stock ownership guidelines – Require stock ownership equal to 7x base salary for CEO, 4x base salary for executive vice presidents, 2x base salary for senior vice presidents and 5x annual cash retainer for our directors.
Review share utilization – Evaluate overhang levels (i.e., the dilutive impact of equity compensation on our stockholders) and annual run rates (i.e., the aggregate shares awarded as a percentage of total outstanding shares).
Limited trading windows – Require our NEOs to conduct all transactions in shares of Sysco Common Stock through pre-approved Rule 10b5-1 trading plans.
Seek Stockholder Input – Regularly communicate with our stockholders and consider their input when designing and implementing executive compensation programs.
   
WHAT WE DON’T DO
No stock option reloading.
No repricing of underwater stock options.
No tax gross-ups for financial planning or loss on sale of home in connection with a relocation.
No excise tax gross-ups upon a change in control.
No unearned dividends paid. Pay dividend equivalents on our Performance Share Units (‘PSUs”) and Restricted Stock Units (“RSUs”) only if and when the underlying awards are earned and delivered.
No excessive perqusites.
No stock hedging or pledging by our NEOs, directors, or other specified “insiders.”

 

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PHILOSOPHY OF OUR EXECUTIVE COMPENSATION PROGRAM

 

Our executive compensation philosophy is focused on attracting, retaining, and incentivizing highly talented individuals who are committed to driving Sysco’s vision and strategy. Our executive compensation programs are designed to directly link executives’ pay to their performance and to align executives’ interests with those of our stockholders. These programs deliver highly competitive compensation for superior company performance. Likewise, when our performance falls short of expectations, the executive compensation programs deliver lower levels of compensation. However, the CLD Committee tries to balance pay-for-performance objectives with retention considerations, so that, even during temporary downturns in the economy and the foodservice industry, the programs continue to ensure that qualified, successful, performance-driven employees stay committed to increasing our long-term value. Furthermore, to attract, retain, and incentivize highly skilled management, our executive compensation programs must remain competitive with those of comparable employers who compete with us for talent.

 

Pay for Performance – Fiscal Year 2022

 

In July 2021, the CLD Committee established the executive compensation program for fiscal year 2022. The continuing uncertainties in our business arising from the impact of the COVID-19 pandemic made it impracticable to establish realistic financial goals for a full 12-month period. In light of these extraordinary circumstances, the CLD Committee adopted a transitional approach to executive compensation for fiscal year 2022, similar to the approach used in fiscal year 2021, recognizing that Sysco’s historical management incentive pay practices were ill-suited to the uncertain market environment, especially for the STIP.

 

Short-Term Incentive Program: The STIP for fiscal year 2022, was divided into two, six-month performance periods. A portion of the incentive opportunity for each six-month performance period was tied to financial, operational, and strategic business objectives (“SBOs”), which differed from the annual incentives awarded in previous fiscal years.

 

Long-Term Incentive Program: LTI awards included a mix of: (i) PSUs with a three-year performance period aligned with the achievement of targeted market share growth in U.S. markets (measured by total U.S. sales) and earnings per share; (ii) stock options; and (iii) RSUs.

 

Semler Brossy, the independent compensation consultant engaged by the CLD Committee, confirmed that a transitional approach was reasonable in light of (i) the continued uncertainty in our markets during fiscal year 2022 and (ii) the use of largely objective measures to evaluate non-financial operational performance and SBOs during the fiscal year.

 

Pay Element   Description   FY2022 Performance Process
Base Salary   Cash   A fixed, competitive base of cash compensation
Short-Term
Incentive
Program
  1H22 Cash award
50% of STIP opportunity
  50% Performance Objectives
50% Recipe for Growth SBOs
  2H22 Cash award
50% of STIP opportunity
  60% Performance Objectives
40% Recipe for Growth SBOs
Long-Term
Incentive
Program
  Performance Share Units
 50% of LTI opportunity
  50% Market Share Growth
50% Earnings per Share
+/- 25% TSR modifier vs. S&P 500
  Stock Options
30% of LTI opportunity
  Options only have value if operating performance results in stock price appreciation
  Restricted Stock Units
20% of LTI opportunity
  Strengthens retention over relevant time periods to help ensure consistency and execution of long-term strategies

 

HOW EXECUTIVE PAY IS ESTABLISHED

 

The CLD Committee, in consultation with Semler Brossy, focuses on ensuring that our executive compensation programs reinforce our pay for performance philosophy and enhance stockholder value. The CLD Committee has determined that Semler Brossy is independent from Sysco and that no conflicts of interest exist related to their services provided to the CLD Committee. Other than with respect to Semler Brossy’s role in advising the CLD Committee and advising the Governance Committee with respect to non-employee director compensation, Semler Brossy did not perform any other services for Sysco. Semler Brossy is an independent consultant with responsibility for reporting directly and exclusively to the CLD Committee and the Governance Committee. Additionally, Semler Brossy has policies and procedures in place to prevent conflicts of interest. The fees Semler Brossy received from Sysco during fiscal year 2022 represented less than 2% of their total revenues.

 

In developing Sysco’s pay for performance policies, the CLD Committee, in collaboration with Semler Brossy and members of our Human Resources Department, evaluate base salaries, annual bonuses and long-term incentive awards compared to an executive compensation peer group, as discussed below.

 

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CLD Committee Oversight

 

The CLD Committee, consisting solely of independent directors, has been delegated broad authority to oversee our executive compensation programs. The CLD Committee determines and approves all compensation of the CEO and other senior officers, including the NEOs. The CLD Committee is authorized to approve all grants of cash and equity awards under the Sysco Corporation 2018 Omnibus Incentive Plan. Further information regarding the CLD Committee’s responsibilities is found under “Corporate Governance – Board Committees” and in the CLD Committee’s Charter, available on the Sysco website at www.sysco. com under “Investors — Corporate Governance — Board of Directors & Committee Composition.”

 

As summarized below, the CLD Committee has several resources it considers in making decisions related to executive compensation.

 

CLD Committee Resources
Independent Committee Consultant  

Semler Brossy provides the CLD Committee with independent advice in evaluating our executive compensation programs and policies, and, where appropriate, assists with the redesign and enhancement of elements of the programs. Representatives from Semler Brossy attended five CLD Committee meetings during fiscal year 2022. The CLD Committee consulted Semler Brossy for all executive compensation decisions made for fiscal year 2022 and fiscal year 2023, including peer group composition, short-term and long-term incentive plan designs, and Semler Brossy provided market data on CEO and other NEO compensation.

More specifically, Semler Brossy:

Reviewed the continuing appropriateness of the peer group described below under “Executive Compensation Peer Group;”

 

Prepared executive compensation studies in June 2021 and June 2022, which included a comparison of base salaries and estimated total direct compensation for the NEOs relative to the peer group;

 

Conducted a pay-for-performance analysis, comparing the relationship between actual realizable pay for the NEOs and our total shareholder return to that of the peer group; and

 

Compared our aggregate equity usage to the peer group.
Sysco’s Human Resources Department  

Sysco’s Executive Vice President and Chief Human Resources Officer and the Human Resources Department (“HR”) provide additional analysis and guidance related to NEO compensation, as requested by the CLD Committee, including the following:

 

Assisting the CEO in making preliminary recommendations of base salary ranges, short-term and long-term incentive program design, and target award levels for the NEOs and eligible employees;

 

Providing the CLD Committee with anticipated payment levels of annual and long-term incentive awards throughout the fiscal year based on projections relative to the performance measures; and

 

Furnishing comparison data on the internal equity of the compensation awarded within Sysco.
CEO   The CEO makes recommendations to the CLD Committee of base salary and annual and long-term incentive award opportunities for the NEOs. The CEO also provides initial recommendations on metrics and goals for the AIP performance targets for the CLD Committee to consider. The CLD Committee reviews, discusses, modifies and approves, as appropriate, these compensation recommendations. The CEO has no role in determining his own compensation.

 

Determining NEO Compensation

 

In developing NEO compensation recommendations for the CLD Committee, Semler Brossy conducts a benchmarking analysis and aligns its recommendations with the philosophy and core principles of our executive compensation programs. With input from Semler Brossy, HR and the CEO, the CLD Committee determines each element of compensation for the NEOs, except the CEO.

 

The CLD Committee, in executive session, with input from Semler Brossy, annually determines and approves each element of compensation for the CEO. The CEO is not involved in, nor present, during discussions related to his own compensation.

 

Executive Compensation Peer Group

 

The CLD Committee concluded, with input from Semler Brossy, that comparable companies with respect to executive compensation, include: (i) two U.S. public company foodservice distribution competitors, and (ii) companies in other industries whose business size and complexity are similar to ours and with which we compete for top executive talent. In particular, we look at companies in the logistics and distribution, consumer products, and retail sectors.

 

The CLD Committee regularly evaluates the peer group for appropriateness, applying revenue, market capitalization, and earnings before interest and taxes as the primary criteria. Following this evaluation, the CLD Committee determined that the following companies would constitute the peer group for benchmarking executive compensation decisions for fiscal year 2022 and fiscal year 2023. We refer to these companies as our “peer group” throughout this proxy statement.

 

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Fiscal Year 2022 and Fiscal Year 2023 Peer Group            
Aramark   Dollar Tree, Inc.   Lowe’s Cos. Inc.   United Parcel Service Inc.
Archer Daniels Midland Company   FedEx Corp.   Performance Food Group   US Foods Holding Corp.
Bunge Limited   Kimberly-Clark Corporation   Target Corp.   Walgreens Boots Alliance, Inc.
Costco Wholesale Corp.   The Kroger Co.   Tyson Foods, Inc.      

 

The CLD Committee references the median of the peer group when making executive compensation decisions, but does not target any specific positioning relative to market for any element of compensation. Rather, the CLD Committee considers each NEO’s role, experience, and current and expected contributions, among other factors, when determining target performance levels for each element of compensation, as well as total compensation.

 

WHAT WE PAID

 

Base Salary

 

Base salaries are generally set at or below market-rate levels, but they may be adjusted because of merit, job responsibilities, management experience, internal pay equity, individual contributions, and/or current base salary. The table below shows the annualized salaries of each NEO for fiscal years 2021, 2022, and 2023, respectively.

 

Named Executive Officer(1)  FY21
 Base Salary(2)
   FY22
 Base Salary(3)
   FY23
 Base Salary(4)
 
Kevin P. Hourican    $1,300,000      $1,300,000      $1,300,000 
Aaron E. Alt   775,000    794,400    818,206 
Greg D. Bertrand   678,300    702,000    760,000 
Thomas R. Peck, Jr.   650,000    666,300    682,906 
Judith S. Sansone   650,000    666,300    686,238 
(1) The table omits Mr. Ørting, who resigned effective May 3, 2022.
(2) Base salary effective September 1, 2020.
(3) Base salary effective August 29, 2021.
(4) Base salary effective August 28, 2022. The base salary increase for Mr. Bertrand for fiscal year 2023 reflects his expanded responsibilities.

 

Short-Term Incentive Plan

 

We believe in a pay for performance philosophy, and desire to implement a performance-based culture. Pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan, the CLD Committee Is authorized to approve incentive awards to NEOs and other employees to motivate them in achieving key performance-based metrics. The short-term, cash-based incentive program for fiscal year 2022 (the “FY22 STIP”), was designed to provide an opportunity to receive cash compensation tied to pre-established financial measures, operational measures and certain SBOs to encourage teamwork and create an environment where employees are rewarded if Sysco achieves or exceeds pre-determined performance criteria. The operational measures and SBOs aligned to our Recipe for Growth strategic commitments and milestones. The incentive ranges (as a percentage of base salary) are designed to provide market competitive payouts for the achievement of threshold, target and maximum performance goals. The FY22 STIP was also designed to reward employees for achieving and exceeding individual performance criteria.

 

On account of the rapidly changing business climate due to the impact of the COVID-19 pandemic on the foodservice industry, we divided the FY22 STIP into two performance periods: July 4, 2021, to January 1, 2022 (“1H22”) and January 2, 2022, to July 2, 2022 (“2H22”), which was necessary given that financial performance metrics had become less predictable. Each performance period was independent of the other period, so that if Sysco performed extremely well (or poorly) in one performance period, the other performance period would not be affected. This gave the CLD Committee the ability to set performance goals for 2H22 depending on the state of the COVID-19 pandemic and to shift the focus to financial metrics if we were able to predict realistic and achievable goals, which we did.

 

Each participating NEO’s FY22 STIP incentive opportunity was targeted at a percentage of his or her annual base salary, as shown below, and the resulting incentive payout for an NEO could have been reduced to zero or increased by up to 20% (not to exceed 180% of the STIP target opportunity) based on the NEO’s individual performance during fiscal year 2022.

 

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Named Executive Officer(1)  STIP Target
(% of Base Salary)
   STIP Target
Opportunity(2)
 
Kevin P. Hourican   150%    $1,950,000 
Aaron E. Alt   100%    791,394 
Greg D. Bertrand   125%    872,985 
Timothy R. Peck Jr.   100%    663,750 
Judith S. Sansone   100%    663,750 
(1) The table omits Mr. Ørting, who resigned effective May 3, 2022.
(2) The FY22 STIP Target bonus amounts reflect the target bonus percentage multiplied by the NEOs base salary, pro-rated for merit, as applicable.

 

STIP Plan Design and Results – 1H22

 

In July 2021, the CLD Committee established the following 1H22 financial and operational measures and SBOs. For fiscal year 2022, financial measures were reintroduced as an important component of our STIP, and also included key growth and operational measures. The STIP opportunity for 1H22 was based 50% on financial and operational measures and 50% on SBOs. Each metric for 1H22 had a possible payout between 0% and 150%, depending on Sysco’s actual performance relative to the pre-established performance targets. Consequently, in the aggregate, the maximum 1H22 incentive opportunity under the STIP was 150% of an NEO’s target opportunity. If performance with respect to any component did not meet the threshold level, a participant did not receive any payment with respect to that component.

 

Measure   Metric   Weight

Financial Measures

  Sales revenue   15%
  Operating income   15%

Operational Measures

  Increase in new accounts in the U.S. broadline (“USBL”) markets   5%
  Increase in the number of lines sold to existing USBL accounts   5%
  Manage our variable operations labor costs (“VOLC”)   5%
  Performance against pre-established operational targets in selected non-U.S. markets   5%

SBOs

 

  Performance with regard to the pre-established SBOs aligned to Recipe for Growth   50%
       

 

Financial Measures

 

The CLD Committee determined that sales revenue and operating income would each represent an equal portion for 1H22. Primarily, sales revenue was selected as the first financial metric since it is the key performance indicator in benchmarking growth and making long-term strategic decisions, including pricing strategies and growth projections. We also decided to use operating income as the second financial metric since it measures the profitability of our business operations and excludes “non-operating” income and expense items that are not part of our core business operations. Below sets out the achievement of threshold, target and maximum performance goals, along with our actual performance. Our results for 1H22 were mixed, but fueled by six months of exceptional market share gains, as our supply chain strength and Recipe for Growth strategy enabled us to prioritize both top-line growth and profitability improvement, while efficiently managing elevated inflation. While we exceeded target performance for sales revenue, we were below target performance for operating income.

 

Financial Measures(1)   Weight   Threshold
(50% payout)
  Target
(100% payout)
  Maximum
(150% payout)
  Results   Payout
Sales Revenue     $25.4   $29.8   $34.3   $32.77   133.4%
Operating Income     $1.08   $1.27   $1.46   $ 1.18   78.4%
(1) Measured in billions of dollars
(2) Operating income (which is calculated for the STIP on an adjusted basis) represents a non-GAAP measure; see reconciliation in Annex I - Non-GAAP Reconciliations.

 

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Operational Measures

 

The CLD Committee, after extensive discussions, determined that the 1H22 operational metrics would focus on: (1) new accounts in USBL markets and the volume of sales to those new USBL accounts; (2) number of lines sold to existing USBL accounts; (3) USBL operations productivity measured by the variable operations labor cost (“VOLC”) per piece; and (4) our performance against various pre-established operational targets in selected non-U.S. markets. The CLD Committee believed at the time it established these operational metrics that they were challenging, but reasonably attainable.

 

Operational Measures Weight Threshold
(50% payout)
  Target
(100% payout)
  Maximum
(150% payout)
Results Payout
New accounts in the USBL markets and the volume of sales to those new USBL accounts(1) 9.2   10.8   12.4 12.37 145.1%
Number of lines sold to existing USBL accounts 31.9   34.5   37.1 32.75 66.8%
USBL operations productivity measured by the VOLC per piece 90% of Target   100%   110% of Target 85.1% 0%
International Operations     See footnote (2) below   75%
(1) Measured in millions of accounts.
(2) The 1H22 STIP opportunity with respect to the international operations metric was weighted across our international business units based on the relative sales revenues, and the payout was determined by comparing the performance of each such business unit to its pre-established targets primarily tied to sales volume and/or revenue, selected labor cost measures and other operational efficiency measures.

 

Strategic Business Objectives

 

The CLD Committee established the five SBOs based on our Recipe for Growth. Each SBO represented 10% of the STIP opportunity and was based on our highest strategic and transformational initiatives. The CLD Committee believed that the use of individual SBOs further promoted our pay for performance philosophy, as they were directly linked to our Recipe for Growth strategy.

 

Recipe for Growth SBO Key initiatives Weight Payout

Digital

Enabling digital channel migration through improved eCommerce utilization, new customer acquisition and onboarding, and enhancing the shopping experience.

Personalization

•  Achieve targeted sales and profit for 1H22

  Achieve milestones for the launch of personalization engine and the pilot of Sysco Perks! loyalty program

SHOP Transformation

  Achieve targeted percentage for customer orders placed through our digital shopping platform (“SHOP”)

  Deliver roadmap of high impact improvements and deliverables for SHOP

  Achieve milestones for international implementation of SHOP

130%

Products and Solutions

Offering customer focused marketing and Merchandising solutions to increase sales. Introducing cuisine focused go-to-market approach.

Pricing

•  Achieve budgeted sales lift and gross profit for Territory Street

  Roll out Periscope pricing system to all USBL regions

Sysco Brand Development

  Achieve targeted performance USBL share of market (local customers)

  Develop international strategy and timing for implementation

115%

Supply Chain

Serving customers efficiently and consistently with the products they need, when and how they need them. Improved delivery performance and omnichannel inventory management.

Enhanced Delivery Experience

  Pilot Sysco Perks! loyalty program in certain regions

  Expand Sysco Your Way service model to targeted percentage of locations

International

  Achieve target units per hour by end of 1H22 

90%

 

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Customer Teams

Team based selling that leverages Sysco’s expertise in specialty categories with a focus on important cuisine segments.

Sales Transformation

•  Deployment of performance management tools

  Retain targeted percentage of sales consultants

International

  Develop sales plan in Brakes business: sales force model, compensation, hiring goals, systems support, etc.

85%

Future Horizons

Cultivating new channels, segments and capabilities, while being responsible stewards of the company and the planet and funding the investments through cost-out efforts.

Cost Savings

•  Achieve targeted sales cost projections

Mergers and Acquisitions

•  Retain targeted percentage of Greco customer accounts after acquisition

Future Growth

•  Prioritize strategy, including timing of acquisitions

140%

 

STIP Plan Design and Results – 2H22

 

In November 2021, the CLD Committee established the 2H22 STIP performance objectives. The CLD Committee for 2H22 put more emphasis on financial measures increasing their weight from 30% to 40% and decreasing SBOs from 50% to 40%, while the operational measures were maintained at 20%.

 

Measure Metric Weight

Financial Measures

Sales revenue 20%
Operating income 20%

Operational Measures

Increase in new accounts in the USBL markets 5%
USBL Sysco Brand 5%
USBL Pieces Per Labor Hour 5%
Performance against pre-established operational targets in selected non-U.S. markets 5%

SBOs

Performance with regard to the pre-established SBOs aligned to Recipe for Growth 40%

 

Financial Measures

 

We experienced significant sales revenue that exceeded target performance, but operating income was again below target performance.

 

Financial Measures(1) Weight Threshold
(50% payout)
Target
(100% payout)
Maximum
(150% payout)
Results Payout
Sales Revenue $26.85 $31.58 $36.32 $35.86 145.1%
Operating Income(2) $1.29 $ 1.53 $1.75 $1.45 84.1%
(1) Measured in billions of dollars.
(2) Operating income (which is calculated for the STIP on an adjusted basis) represents a non-GAAP measure; see reconciliation in Annex I - Non-GAAP Reconciliations.

 

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Operational Measures

 

The CLD Committee determined that the 2H22 operational measures would focus on: (1) new accounts in USBL markets and the volume of sales to those new USBL accounts; (2) USBL Sysco brand penetration; (3) USBL pieces per labor hour (“PPLH”); and (4) our performance against various pre-established operational targets in selected non-U.S. markets. The CLD Committee believed at the time it established these operational metrics that they were challenging, but reasonably attainable.

 

We consider Sysco brand penetration to be an important measure that provides useful information to management and stockholders in evaluating the gross profit performance of USBL operations. We offer an assortment of Sysco-branded products that can be differentiated from privately branded products, which enables us to achieve higher gross margin by administering and leveraging a consolidated product procurement program for quality food and non-food products.

 

Operational Measures Weight Threshold
(50% payout)
Target
(100% payout)
Maximum
(150% payout)
Results Payout
New accounts in the USBL markets and the volume of sales to those new USBL accounts(1) 22.84 26.87 30.90 30.28 142.2%
USBL Sysco brand penetration 51.86% 52.86% 53.86% 53.13% 113.6%
USBL pieces per labor hour 28.18 33.15 38.13 28.68 55.0%
International Operations   See footnote (2) below   82.7%
(1) Measured in millions of accounts.
(2) The 2H22 STIP opportunity with respect to the international operations metric was weighted across our international business units based on the relative sales revenues, and the payout was determined by comparing the performance of each such business unit to its pre-established targets primarily tied to sales volume and/or revenue, selected labor cost measures and other operational efficiency measures.

 

Strategic Business Objectives

 

The CLD Committee continued using the SBOs based on our Recipe for Growth with each SBO representing 8% of the STIP opportunity in 2H22 compared to 10% each in 1H22.

 

Recipe for Growth SBO Key Initiatives Weight Payout

Digital

Enable digital channel migration through improved eCommerce utilization, new customer acquisition and onboarding, and enhancing the shopping experience.

Personalization

  Achieve targeted sales and profit for 2H22

  Achieve milestones for the launch of personalization engine and the pilot of Sysco Perks! loyalty program

SHOP Transformation

  Achieve targeted percentage for customer orders placed through SHOP

  Achieve milestones for international implementation of SHOP

125%

Products and Solutions

Offering customer focused marketing and Merchandising solutions to increase sales. Introducing cuisine focused go-to- market approach.

Pricing

  Achieve budgeted sales lift and gross profit for Territory Street

Sysco Brand Development

  Achieve targeted cost of goods sold/margin improvement

115%

Supply Chain

Serving customers efficiently and consistently with the products they need, when and how they need them. Improved delivery performance and omnichannel inventory management.

Enhanced Delivery Experience

  Graduate first class of drivers in Sysco Driver Academy training program

  Pilot six day work week operations model and ‘playbook’

International

  Develop fulfillment strategy to support local independent business expansion

  Improve cases per labor hour productivity

105%

 

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Customer Teams

Team based selling that leverages Sysco’s expertise in specialty categories with a focus on important cuisine segments.

Sales Transformation

  Deployment of performance management tools

  Retain targeted percentage of sales consultants

International

  Complete rollout of Greco common assortment worldwide

110%

Future Horizons

Cultivating new channels, segments and capabilities, while being responsible stewards of the company and the planet and funding the investments through cost-out efforts.

Cost Savings

  Achieve targeted sales cost projections

Mergers and Acquisitions

  Successful acquisition of The Coastal Companies

International

  Finalize the investment requirements to scale the International Food Group business model to Europe

105%

 

Summary of FY22 STIP Results

 

The total annual incentive award payment for each NEO under the 2022 STIP was calculated as indicated in the table below.

 

  1H22 Achievement
(50% Weighting)
  2H22 Achievement
(50% Weighting)
FY22 STIP
Achievement
Measures Weight Weighted
Achievement
  Weight Weighted
Achievement
Achievement
Financial Measures 31.8%   45.8% 38.8%
Operational Measures 14.3%   19.7% 17.0%
SBOs 56.0%   44.8% 50.4%
TOTALS   102.1%     110.3% 106.2%

 

The FY22 STIP payment for each of the above measures was calculated based on performance as compared to the performance target(s), and paid independently of the other measures. Further, the aggregate payments, if any, earned by an NEO for 1H22 and 2H22 were subject to adjustment based on each NEO’s performance with regard to his or her pre-established individual performance objectives for fiscal year 2022.

 

These adjustments, if any, were determined by the CLD Committee, and ranged from reducing the FY22 STIP payout to zero (for performance significantly below target) to increasing the aggregate payout by 20% (for performance significantly above target). The aggregate adjusted incentive payments for the FY22 STIP are shown below.

 

Named Executive Officer(1) Base Salary Incentive
Target
FY22
Achievement
Individual
Modifier
FY22
Bonus Payout
Kevin P. Hourican $ 1,300,000 150% 106.2% 1.00   $   2,070,900
Aaron E. Alt   791,400 100% 106.2% 1.00   840.583
Greg D. Bertrand   698,400 125% 106.2% 1.00   927,297
Thomas R. Peck Jr.   663,750 100% 106.2% 1.00   705,005
Judith S. Sansone   663,750 100% 106.2% 1.10 (2) 775,506
(1) The table omits Mr. Ørting, who resigned effective May 3, 2022.
(2) Ms. Sansone received a 1.10x individual modifier based on her delivering financial results under selected initiatives that were significantly above target and advancing our category strategy development and strategic pricing efforts.

 

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Long-term Incentive Plan

 

Fiscal 2022 LTI Awards

 

We deliver a majority of targeted incentive compensation opportunities to NEOs in the form of long-term stock-based incentive compensation to ensure that short-term performance is not rewarded at the expense of long-term performance. This effectively balances the motivation to improve short-term results with the motivation to enhance stockholder value over longer periods of time. The CLD Committee approved long-term incentives under the Sysco Corporation 2018 Omnibus Incentive Plan to certain key employees, including the NEOs (the “Fiscal 2022 LTI”). These long-term incentives were designed to provide competitive, longer-term incentive opportunities that were consistent with our peer group and reflected our overall compensation philosophy of aligning the largest component of their pay with performance and the interests of our stockholders. The Fiscal 2022 LTI consisted of RSUs (20% of target), stock options (30% of target), and PSUs (50% of target) with the target dollar values shown below.

 

 

 

    Target LTI Award    Target LTI Award
(% of base salary)
    Target RSUs    Target Stock
Options
    Target PSUs
Kevin P. Hourican  $10,000,000    769%   $2,000,000   $3,000,000   $5,000,000
Aaron E. Alt   2,581,719    325%    516,344    774,516    1,290,859
Greg D. Bertrand   2,281,632    325%    456,326    684,489    1,140,816
Thomas R. Peck Jr.   1,998,750    300%    399,750    599,625    999,375
Judith S. Sansone   1,998,750    300%    399,750    599,625    999,375

 

(1) The table omits Mr. Ørting, who resigned effective May 3, 2022.

 

The Black-Scholes pricing model was applied to determine the number of options to be awarded to the NEOs in connection with the Fiscal 2022 LTI grant, initially valuing the options awarded in August 2021 at $16.55 per option. The PSUs and RSUs were granted based on a price of $77.04 per share, representing the ten-trading-day average closing price of Sysco Common Stock immediately preceding the grant date.

 

PSUs

 

The PSUs provide the opportunity for NEOs to receive shares of Sysco Common Stock based on performance in each year of the three-year performance period with respect to two equally-weighted performance metrics. Performance goals were established at the beginning of the three year performance period and progress under the PSU performance metrics will be measured and “banked” each year during the three-year performance period, which helps the PSU program limit volatility. Therefore, each fiscal year is independent of the other period, so that if Sysco performs extremely well (or poorly) in one fiscal year, the other fiscal years will not be affected.

 

Market Share Growth: the achievement of targeted market share growth in U.S. markets (measured by total U.S. sales).
Earnings Per Share: the achievement of targeted incremental growth in Sysco’s earnings per share.

 

The CLD Committee established threshold, target, and maximum goals for each performance metric.

 

 

 

The number of shares, if any, earned with respect to each of the performance metrics will be calculated based on our performance (as compared to such pre-determined goals) and awarded to NEOs independently from the other metric. Further, the total number of shares earned by each NEO as a result of our performance with regard to these

 

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performance metrics will be subject to adjustment based on Sysco’s total shareholder return (“TSR”) during the performance period as compared to the S&P 500 companies. This adjustment will be applied to the target number of shares granted to each NEO and will range from decreasing the total number of shares received by 25% of target (for relative TSR below expectations) to increasing the total number of shares received by 25% of target (for superior relative TSR) based on the table below.

 

    Below Expectations   Target   Superior
Relative TSR Percentile Rank Versus S&P 500   35th Percentile   50-55th Percentile   75th Percentile
Payout Modifier   -25%   0% (no modifier)   +25%

 

The number of shares of Sysco Common Stock to be earned with respect to a participant’s PSUs will be determined at the end of the three-year performance period, and could range from 0% to 200% of the target number of PSUs granted. Dividend equivalents will accrue during the performance period and be paid either in shares or in cash, in the discretion of the CLD Committee, based on the number of PSUs earned following certification of our performance. In addition, NEOs must generally remain continuously employed through the end of the performance period in order to earn any PSUs.

 

Stock Options

 

The stock options have a 10-year term and vest in three equal, annual installments beginning on the first anniversary of the grant date, subject to the participant’s continued employment with Sysco through the applicable vesting date. The exercise price for the stock options, $76.94, is the closing price of the Sysco Common Stock on August 18, 2021, the business day prior to the grant date.

 

RSUs

 

Each RSU represents the right to receive one share of Sysco Common Stock. The RSUs vest in three equal installments commencing on the first day of the calendar month immediately following each of the first three anniversaries of the grant date, subject to the NEOs continued employment with Sysco through the applicable vesting date. Dividend equivalents are paid in cash, if and when the underlying RSUs vest.

 

No Payout under Fiscal Year 2020 PSU Awards

 

In August 2019, the CLD Committee approved PSU awards to eligible NEOs pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan. Each of these PSUs granted represented the right to receive one share of Sysco Common Stock, at target levels, but the ultimate number of shares of Sysco Common Stock earned was determined at the end of the three-year performance period (i.e., fiscal year 2019 through fiscal year 2021) and could have ranged from 0% to 200% of the target number of PSUs awarded to the NEOs based on the pre-established financial targets.

 

The financial performance targets for the fiscal 2020 PSU awards were Sysco’s adjusted EPS Compound Annual Growth Rate (“CAGR”) representing two-thirds of the LTI opportunity, and Sysco’s average adjusted Return on Invested Capital (“ROIC”) representing one-third of the LTI opportunity. Dividend equivalents accrued during the performance period and would have been paid in shares of Sysco Common Stock, in the discretion of the CLD Committee, if PSUs had been earned following certification of our financial performance.

 

The CLD Committee established the adjusted EPS CAGR and adjusted average ROIC targets for the performance period at the time the PSU awards were granted, and calculations were adjusted for certain extraordinary or non-recurring items.

 

For the three-year performance period, the Company’s adjusted EPS CAGR performance was below the threshold of 4.8%, yielding no payout for this component, and our adjusted average ROIC performance was below the threshold of 24%, yielding no payout for this component. Consequently, the NEOs holding fiscal year 2020 PSU awards received no payout with respect to those awards.

 

PSU Measures(1)   Weight   Threshold
(50% payout)
  Target
(100% payout)
  Maximum
(200% payout)
  Results   Payout
EPS CAGR   67%   <4.8%   8.8%   13.8%   -2.9%   0%
Average ROIC   33%   <24%   28%   30.5%   14.6%   0%

 

(1) Represent non-GAAP measures; see reconciliations in Annex I - Non-GAAP Reconciliations.

 

Payout under Fiscal Year 2021 PSU Awards

 

In light of the impact of the COVID-19 pandemic on our financial results and that two consecutive PSU grants were forecasted to result in a zero payout, the CLD Committee considered an alternative LTI approach for fiscal year 2021, taking into account internal and external stakeholder perspectives. Also, our CEO joined Sysco in February 2020 and wanted to set realistic performance targets and placed greater emphasis on becoming a more customer-focused and growth-oriented company that included three PSU measures (i.e., cost reduction, market share growth, and digital commerce growth).

 

In July 2020, the CLD Committee approved PSU awards to eligible NEOs pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan. Each of these PSUs granted to participants represented the right to receive

 

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one share of Sysco Common Stock, at target levels, but the number of shares of Sysco Common Stock earned was determined at the end of the two-year performance period (i.e., fiscal year 2021 through fiscal year 2022) and could have ranged from 0% to 175% of the target number of PSUs awarded to the NEO based on the pre-established financial targets. This transitional model accounted for the fact that certain significant and substantial performance objectives that were critical for Sysco’s longer-term growth did not appropriately extend beyond two years. Further, the total number of shares earned by each NEO as a result of our performance with regard to these performance targets would be subject to adjustment based on Sysco’s TSR during the performance period as compared to the S&P 500 companies. This adjustment was applied to the target number of shares granted to each NEO and had a range from decreasing the total number of shares received by 25% of target (for relative TSR below expectations) to increasing the total number of shares received by 25% of target (for superior relative TSR) based on the table below.

 

    Below Expectations   Target   Superior
Relative TSR Percentile Rank Versus S&P 500   35th Percentile   55th Percentile   75th Percentile
Payout Modifier   -25%   0% (No modifier)   +25%

 

The performance targets for the fiscal year 2021 PSU awards were:

 

Cost Reduction: the achievement of targeted annualized structural cost reductions through the successful deployment of selected strategic initiatives, representing 50% of the target PSU opportunity;
Market Share Growth: the achievement of targeted market share growth in U.S. markets (measured by total U.S. sales) through the completion of selected strategic initiatives, representing 30% of the target PSU opportunity; and
Digital Commerce: the achievement of targeted incremental growth in the volume of USBL orders utilizing Sysco’s digital ordering platform through the implementation of platform enhancements and the accomplishment of other related initiatives, representing 20% of the target PSU opportunity.

 

For the performance period, the sum of these three payouts with the relative TSR modifier yielded an aggregate PSU payout of 153.1% of the number of PSUs held by the NEOs.

 

Measure   Weight   2 Year Target   Results(1)   Payout
Cost Reduction       $500 million in structural cost reductions (pipeline for additional $250 million)   Significantly Above Target   150%
Market Share Growth       20% greater U.S. market share growth over Technomic market growth average (adj. for mix)   Significantly Above Target   130%
Digital Commerce       65% USBL TRX customer adoption of SHOP   Above Target   120%
Relative TSR Modifier       55th percentile of S&P 500 or greater       15.1%
TOTAL               153.1%
   
(1) Results were: Significantly Below Target 0% payout; Below Target 25-85% payout; On Target 90-110% payout; Above Target 115-125% payout; and Significantly Above Target 130-150% payout.

 

Fiscal Year 2023 Executive Compensation Programs

 

As the uncertainty of the COVID-19 pandemic subsides and after a strong financial performance in fiscal year 2022, we turn our focal point to setting financial measures of performance and target payout levels that demonstrate an appropriate pay for performance linkage. For fiscal year 2023, the CLD Committee reinstated many of the features of our pre-pandemic incentive programs.

 

Annual Incentive Plan

 

On July 29, 2022, the CLD Committee approved the AIP for fiscal year 2023. This will be a return to our core practice of utilizing a full-year performance period after two fiscal years of using two, six month performance periods. Also, we are removing operational measures and placing greater emphasis on financial measures, which is consistent with the CLD Committee’s historical incentive practices. The AIP will also incorporate ESG metrics in our SBOs that measure actions we need to take to advance our 2025 ESG goals.

 

Incentive payments earned under the AIP will be based on the following components: (i) 60% on financial measures (i.e., 30% tied to sales revenue and 30% tied to operating income); (ii) 30% on SBOs aligned to the highest priority initiatives under our Recipe for Growth; and (iii) 10% on ESG SBOs. The ESG SBOs are tied to key ESG initiatives involving gender representation, diverse recruiting and carbon reduction.

 

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The financial measures have a possible payout between 0% and 200% and the SBOs have a possible payout of between 0% and 150%, depending on the actual performance relative to the pre-established targets. Consequently, in the aggregate, the maximum fiscal year 2023 incentive opportunity under the AIP would be 180% of an NEO’s target opportunity.

 

The AIP payment, if any, for each of the above components will be calculated based on performance (as compared to the applicable performance target(s)) and calculated independently from the other components. If any component does not meet the threshold level, an NEO will not receive any payment with respect to that component. Further, the aggregate will be subject to adjustment based on each NEO’s performance with regard to his or her individual performance objectives for fiscal year 2023. This adjustment, which will be determined by the CLD Committee, will range from reducing the AIP payout to zero for performance significantly below target to increasing the aggregate payout by 20% for performance significantly above target (not to exceed 180% of the AIP opportunity). The aggregate adjusted incentive payment for the AIP will be paid following the conclusion of fiscal year 2023.

 

Long-Term Incentive Plan

 

The CLD Committee also approved our fiscal year 2023 long-term incentive (“LTI”) awards to be issued to the NEOs, pursuant to the Sysco Corporation 2018 Omnibus Incentive Plan. The fiscal year 2023 LTI awards will consist of PSUs, stock options and RSUs. The PSUs with a three-year performance period beginning in fiscal year 2023 will represent 50% of the target LTI opportunity, with stock options representing 30% and RSUs representing the remaining 20% of the target LTI opportunity.

 

PSUs. The PSUs provide the opportunity for the NEO to receive shares of Sysco Common Stock based on performance in each year of the three fiscal year performance period with respect to the following strategic performance targets established by the Committee, subject to a modifier tied to the Company’s TSR:

 

Market Share Growth: the achievement of targeted market share growth representing 50% of the target PSU opportunity; and
Adjusted Earnings Per Share: the achievement of targeted incremental growth in Sysco’s adjusted earnings per share, representing 50% of the target PSU opportunity.

 

The number of shares, if any, earned with respect to each of the strategic performance targets will be calculated based on our performance (as compared to such target) and awarded to the NEO independently from the other targets. Further, the total number of shares earned by each NEO will be subject to adjustment based on Sysco’s TSR during the performance period as compared to the S&P 500 companies. This adjustment will be applied to the target number of shares granted to each participant and will range from decreasing the total number of shares received by 25% of target (for relative TSR below expectations) to increasing the total number of shares received by 25% of target (for superior relative TSR).

 

Each PSU granted represents the right to receive one share of Sysco Common Stock based on target performance, but the number of shares of Sysco Common Stock to be earned with respect to a participant’s PSUs will be determined at the end of the three-year performance period and could range from 0% to 200% of the target number of PSUs. Dividend equivalents accrue during the performance period and are paid either in shares or in cash, in the discretion of the CLD Committee, based on the number of PSUs earned following certification of Sysco’s performance.

 

Stock Options. The stock options have a 10-year term and vest in three equal, annual installments.

 

RSUs. Each RSU represents the right to receive one share of Sysco Common Stock, and the RSUs vest in three equal, annual installments commencing on the first day of the calendar month immediately following each of the first three anniversaries of the grant date.

 

Compensation Risk Analysis

 

The CLD Committee reviews the compensation programs across Sysco to monitor whether the program components encourage or otherwise promote the taking of inappropriate or unacceptable risks that could threaten our long-term value. In September 2022, at the CLD Committee’s request, Semler Brossy reviewed management’s assessment of our fiscal 2022 compensation programs and the associated risks. Management’s assessment placed particular emphasis on identifying employees who could pose a significant compensation risk because of the variability of their compensation and their ability to expose Sysco to significant business risk. The CLD Committee primarily focused on compensation for the senior executives, as these are the employees whose actions have the greatest potential to expose Sysco to significant business risk. Nevertheless, the review addressed all forms and levels of variable and other compensation applicable to the broader employee population that the CLD Committee believed could reasonably provide employees with incentives to engage in risky behavior. Having completed this review, the CLD Committee concluded that Sysco’s long-standing practices are designed to effectively promote the creation of long-term value, discourage behavior that leads to excessive risk, and mitigate the material risks associated with executive and other compensation programs.

 

These practices with respect to fiscal year 2022 included the following:

 

Sysco’s executive compensation programs include a mix of elements so that compensation is not overly focused on either short-term or long-term incentives.
Sysco’s executive short-term incentive award program was based on objective performance metrics and strategic bonus objectives based on Sysco’s key strategic and transformational initiatives. The CLD Committee attempts to set ranges for these measures that encourage success without encouraging excessive risk-taking to achieve short-term results.

 

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The CLD Committee had the absolute discretion to remove any and all participants from the short-term incentive award program before the end of the one-year performance period, and to reduce the amount of the incentive award opportunity payout, based on any factor(s) it deemed relevant.
Sysco’s incentive programs do not allow for unlimited payments, and caps on short-term incentive award opportunities limit the ability of employees to potentially profit by taking on excessive risk.
The CLD Committee’s selection of three different types of long-term incentives (stock options, PSUs, and RSUs) for executives helped to minimize the risk that recipients will take actions that could cause harm to the Company and its stockholders. The value of stock options and RSUs is primarily based on stock price appreciation, which is determined by how the market values our Common Stock, and the value of the PSUs is based on objective financial and operational metrics that drive long-term stockholder value.
The three-year performance or vesting periods for the equity awards granted in fiscal 2022 encourage executives to attain sustained performance and seek long-term appreciation in equity values.
Our stock ownership guidelines align the interests of our executive officers with the long-term interests of our stockholders and encourage our executives to execute our strategic priorities in a prudent manner.
Our clawback policy reduces the risk that executives will engage in improper financial activity or misconduct causing material financial or reputational harm to the Company.

 

Management and the CLD Committee do not believe Sysco’s compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.

 

Stock-Related Policies

 

Stock Ownership Guidelines

 

To align the interests of our management with those of our stockholders, the Board concluded that our senior officers should have a significant financial stake in Sysco Common Stock. To further that goal, we have maintained stock ownership guidelines for our NEOs.

 

Pursuant to these guidelines, by the fifth anniversary of the date a senior officer is hired, promoted, or otherwise becomes subject to the stock ownership guidelines, the senior officer is expected to own a minimum number of shares of Sysco Common Stock equal in value to a multiple of his or her annual base salary, as shown in the following table.

 

Position Minimum Ownership Requirement
(Multiple of base salary)
CEO 7x
Executive Vice Presidents 4x
Senior Vice Presidents 2x

 

If a senior officer is promoted to a position that requires the ownership of a greater amount of Sysco Common Stock than his or her prior position, the five-year compliance period for the higher ownership requirement will begin on the effective date of the promotion, but the senior officer may not fall below the ownership requirements applicable to his or her prior position during that time period. We anticipate that equity-based incentive awards will provide all senior officers with the opportunity to satisfy these requirements within the specified time frame.

 

The shares counted towards the minimum ownership requirements include: (i) shares of Sysco Common Stock owned directly by the senior officer, including shares of vested restricted stock that may be subject to cancelation, transfer restrictions and/or clawbacks; (ii) shares owned indirectly by the senior officer through our employee stock purchase plan; (iii) two-thirds of the shares underlying a senior officer’s unvested RSUs; (iv) two-thirds of the shares of unvested restricted stock held by the senior officer; and (v) one-quarter of the target number of shares underlying PSUs held by the senior officer, rounded down to the nearest whole share. Shares held through any other form of indirect beneficial ownership and shares underlying unexercised options are not counted.

 

Senior officers who have not attained the requisite ownership level are required to retain 25% of the net shares they acquire upon the exercise of stock options and 100% of the net shares they acquire pursuant to the vesting of RSUs and PSUs. For these purposes, “net shares” means the shares remaining after disposition of shares necessary to pay the related tax liability and, if applicable, exercise price.

 

These stock ownership requirements are set at levels we believe are reasonable given the senior officers’ respective salaries and responsibility levels. In addition, Semler Brossy has reviewed our ownership guidelines and confirmed that we are a leader among our peer group.

 

The Board is provided with the status of the senior officers’ stock ownership at all regularly-scheduled meetings to ensure compliance with these holding requirements. As of September 19, 2022, each of the NEOs was in compliance with the applicable minimum stock ownership guidelines.

 

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Stock Trading Restrictions

 

An NEO may only purchase and sell Sysco Common Stock and exercise stock options pursuant to a Rule 10b5-1 trading plan adopted during an approved quarterly trading window, subject to limited exceptions, including “net exercises” of stock options that do not involve an open market sale of shares and hardship exemptions. Quarterly trading windows generally open two business days after we issue our quarterly earnings release and close approximately seven weeks later.

 

The adoption of a Rule 10b5-1 trading plan or other transaction in Sysco Common Stock by an NEO must be pre-approved by a committee that includes the Chairman of the Board, the Chair of the Governance Committee, the Chief Executive Officer, and the Company’s Chief Legal Officer. These individuals will review the amount and timing of the proposed transaction and confirm that the NEO does not possess any material inside information about Sysco at the time. Trades under a Rule 10b5-1 trading plan may not commence until 30 days after the plan is adopted.

 

Hedging Restrictions

 

Under Sysco’s Policy on Trading in Company Securities, (i) all members of the Board, (ii) all officers elected by the Board, (iii) any other employee designated by the President and CEO, any Executive Vice President, or the Chief Legal Officer, (iv) any family member of any of the foregoing individuals who shares the same household, and (v) any entity whose investment decisions are made by (or shared with) any of the foregoing individuals (“Insiders”) are prohibited at all times from trading in publicly traded options, puts, calls, straddles, or similar derivative securities of Sysco, whether issued directly by Sysco or by any exchange, and from effecting short sales of Company Securities (as defined in the policy) or purchasing financial instruments that are designed to hedge or offset any decrease in the market value of Company Securities. Prohibited hedging transactions include prepaid variable forward contracts, equity swaps, collars, and exchange funds.

 

EXECUTIVE COMPENSATION GOVERNANCE AND OTHER INFORMATION

 

Employment and Severance Agreements

 

Consistent with our approach of rewarding performance, employment is not guaranteed, and either Sysco or the NEO may terminate the employment relationship at any time. Under certain termination scenarios, however, the NEOs are entitled to severance benefits.

 

Mr. Hourican

 

Pursuant to the letter agreement dated January 10, 2020, between Sysco and Mr. Hourican (the “CEO Offer Letter”), Mr. Hourican will be eligible to receive the following severance payments and benefits upon a termination of his employment by Sysco without “Cause” or upon his resignation for “Good Reason” (as such terms are defined in the CEO Offer Letter):

 

Non-Change in Control Termination. If the termination of employment does not occur upon, or within two years following, the effectiveness of a “Change in Control” (as defined in the Sysco Corporation 2018 Omnibus Incentive Plan), Mr. Hourican will receive:

 

  An amount equal to two times the sum of his annual base salary and his target annual or short-term management incentive plan opportunity;
  A pro-rata award under the annual or short-term management incentive plan covering the performance period in which the termination is effective, based on actual attainment of applicable Sysco performance goals for such performance period and payable at the time such incentives are paid to other Sysco executives; and
  Health, dental, and vision coverage continuation at active employee rates for 24 months following his termination date.

 

Change in Control Termination. If the termination of employment occurs upon, or within two years following, the effectiveness of a Change in Control, Mr. Hourican will receive:

 

  An amount equal to three times the sum of his annual base salary and his target annual or short-term management incentive plan opportunity;
  A pro-rata award under the annual or short-term management incentive plan covering the performance period in which the termination is effective, based on actual attainment of applicable Sysco performance goals for such performance period and payable at the time such incentives are paid to other Sysco executives; and
  Health, dental, and vision coverage continuation at active employee rates for 36 months following his termination date.

 

These severance benefits will be provided to Mr. Hourican only if he executes (and does not revoke) a legally enforceable general release and waiver of claims in favor of Sysco and complies with the covenants in the accompanying Protective Covenants Agreement (as defined below in “Protective Covenants”), including confidentiality, non-disparagement, and restrictions on competition and solicitation of Sysco employees, vendors, and customers for a period of two years after employment.

 

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Messrs. Alt, Bertrand, and Peck and Ms. Sansone

 

The CLD Committee reviewed its historical severance practices for senior executives and approved and adopted, effective July 2020, a market-competitive form of severance letter agreement (the “Severance Agreement”) to specify the benefits to which each of the NEOs (other than Mr. Hourican and Mr. Ørting) would be entitled upon the occurrence of the termination events described below.

 

Non-Change in Control Termination. If Sysco terminates an NEO’s employment without “Cause” or the NEO resigns for “Good Reason” (as such terms are defined in the Severance Agreement), and the termination does not constitute a “Change in Control Termination” (as described below), then the NEO will be entitled to the following:

 

  An amount equal to two times the NEO’s annual base salary;
  A pro-rata award under the annual or short-term management incentive plan covering the performance period in which the termination is effective, based on actual attainment of applicable Sysco performance goals for such performance period and payable at the time such incentives are paid to other Sysco executives;
  Reimbursement for the amounts of any premiums or other fees paid by the NEO under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) in excess of the applicable active employee rates to maintain the NEO’s health benefits under Sysco’s group health plans for a period of 18 months following the termination date; and
  Outplacement services for a period of up to 12 months.

 

Change in Control Termination. If the termination of employment occurs upon, or within two years following, the effectiveness of a Change in Control (as defined in the Sysco Corporation 2018 Omnibus Incentive Plan), the NEO will receive:

 

  An amount equal to two times the sum of the NEO’s annual base salary and the NEO’s target annual or short-term incentive opportunity;
  A pro-rata award under the annual or short-term management incentive plan covering the performance period in which the termination is effective, based on the NEO’s target incentive opportunity and payable at the time such incentives are paid to other Sysco executives;
  Reimbursement for the amounts of any premiums or other fees paid by the NEO under COBRA in excess of the applicable active employee rates to maintain the NEO’s health benefits under the Company’s group health plans for a period of 18 months following the termination date; and
  Outplacement services for a period of up to 12 months.

 

These severance benefits will be provided to the NEO only if he or she executes (and does not revoke) a legally enforceable general release and waiver of claims in favor of the Company and complies with the covenants in the Severance Agreement and the accompanying Protective Covenants Agreement, including confidentiality, non-disparagement, and restrictions on competition and solicitation of Sysco employees, vendors, and customers for a period of two years after employment.

 

Mr. Ørting

 

Mr. Ørting’s employment agreement provided for an initial term of three years expiring in January 2024, but he resigned from Sysco effective May 3, 2022.

 

Benefits Following Change in Control

 

We currently have no separate severance or similar agreements that would cause an immediate or “single trigger” cash payment obligation solely as a result of a change in control of Sysco. We have included change in control provisions in several of Sysco’s benefit plans and agreements, including in the Severance Agreements described above, as well as in the various agreements governing our equity-based awards. See “Executive Compensation—Quantification of Termination/Change in Control Payments” for a detailed explanation of potential benefits under the various provisions.

 

For our equity-based awards, the CLD Committee has established “double-trigger” accelerated vesting under certain change in control scenarios. Specifically, the vesting of equity-based awards is only accelerated upon a change in control if, during the period commencing 12 months prior to the change in control and ending 24 months after such change in control, the participant’s employment is terminated without “cause” or the participant terminates his or her employment for “good reason” (as such terms are defined in the applicable award agreement).

 

The CLD Committee continues to believe these provisions will preserve executive morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in control of Sysco. The CLD Committee has balanced the impact of these acceleration provisions with corresponding provisions in the Management Savings Plan (“MSP”), the Supplemental Executive Retirement Plan (“SERP”), and the Executive Deferred Compensation Plan (“EDCP”) that provide for a reduction in benefits to the extent they are not deductible under Section 280G of the Internal Revenue Code.

 

Relocation Expenses

 

Consistent with the CLD Committee’s desire that Sysco follow best corporate governance and compensation practices, in October 2010 the CLD Committee adopted an executive relocation expense reimbursement policy that applies to all of the NEOs. The reimbursement policy prohibits Sysco from reimbursing any executive for any loss on the sale of the executive’s house sold in connection with the executive’s relocation. The reimbursement policy also provides that only certain pre-approved relocation expenses will be eligible for increased payments to

 

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cover all applicable taxes on the reimbursed amounts. In addition, the reimbursement policy requires relocation agreements with any NEO to include a recoupment provision that requires the executive to reimburse Sysco for all or a part of the reimbursement if his or her employment is terminated for any reason other than death, disability, change in control of Sysco, or termination without cause or for good reason, within a specified amount of time after receiving the reimbursement.

 

Retirement Plans

 

We maintain a broad-based tax-qualified 401(k) retirement savings plan, which is offered to all eligible employees, including the NEOs. Employees who are eligible to contribute do so a pre-tax basis. Their contributions and earnings on those contributions are not taxed until distribution. We contribute 3% of an employee’s eligible earnings regardless of whether an employee makes their own contributions, and we match $0.50 per dollar on the first 6% of eligible earnings contributed by the employee. Also, we maintain a pension plan that ceased all non-union participant accruals effective December 31, 2012. Mr. Bertrand is the only NEO who is a participant in the pension plan.

 

Executive Perquisites

 

Like all employees, our NEOs are generally eligible to participate in our employee benefit programs, which include a 401(k) plan for U.S. residents, an employee stock purchase plan, group life insurance, and other group health and welfare benefit plans. Although the NEOs are eligible to participate in our group health and welfare plans, we adjust employees’ contributions towards the monthly cost of our medical plans according to salary level. As a result, the NEOs pay a higher employee contribution to participate than do non-executive employees.

 

We also provide the NEOs with additional life insurance and accidental death and dismemberment insurance benefits; long-term disability coverage, including disability income coverage; long-term care insurance; and reimbursement for an annual comprehensive wellness examination by a physician of their choice.

 

All employees, including our NEOs, as well as members of our Board, are entitled to receive discounts on all products carried by Sysco and its subsidiaries.

 

Mr. Hourican is entitled to receive certain additional benefits, including tax and financial planning reimbursement and security monitoring services, under the terms of his offer letter.

 

Executive Compensation Clawbacks

 

The CLD Committee has the authority, subject to applicable law, to cancel incentive compensation that has not yet been paid, clawback incentive compensation that has already been paid or reduce future incentive compensation if the CLD Committee, in its sole discretion, determines that:

 

there has been a restatement of our financial results, other than a restatement due to a change in accounting policy, and incentive compensation paid to an NEO within the prior 36 months would have been a lower amount had the award been calculated based on the restated results; or
an NEO engaged in misconduct that contributes to the need for a financial restatement or causes the Company material financial or reputational harm.

 

“Misconduct” refers to conduct that constitutes: (A) an intentional violation of (i) applicable law, (ii) the Company’s Global Code of Conduct, or (iii) another significant ethics or compliance policy of the Company, or (B) a material failure by the NEO to exercise his or her responsibility to supervise subordinates.

 

Compensation that is subject to cancellation, clawback or reduction, include:

 

All cash-based incentive compensation;
All outstanding equity and equity-based awards, whether vested, unvested, or deferred; and
All payments or contributions made by the Company to (or for the benefit of) an NEO pursuant to the SERP, the EDCP, or the MSP.

 

The clawback right arising from misconduct is applicable only to incentive compensation awarded to our NEOs after the adoption of an expanded clawback policy in September 2020.

 

Protective Covenants

 

Certain equity-based awards require each NEO to have entered into an agreement (the “Protective Covenants Agreement”) protecting Sysco’s interests and confidential information by restricting certain behavior during, and following termination of, employment. The Protective Covenants Agreement includes, among other things, restrictions on unfair post-employment competitive activities, improper solicitation of Sysco employees and customers, and the misuse of confidential information.

 

An NEO who violates any of the restrictive covenants in the Protective Covenants Agreement would forfeit the benefits and proceeds of the related equity awards. In addition to the Protective Covenants Agreements, the terms of the MSP, the SERP, and the EDCP provide for the forfeiture of certain payments in the event of prohibited conduct following termination of employment with Sysco.

 

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Tax Deductibility of Incentive Compensation

 

Section 162(m) of the Internal Revenue Code sets a limit of $1 million on the amount of compensation that Sysco may deduct for federal income tax purposes in any given year with respect to the compensation of each of the NEOs. The CLD Committee believes that the tax deduction limitation should not be permitted to compromise its ability to design and maintain executive compensation programs that will attract and retain the executive talent Sysco needs to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that, in certain cases, is not deductible for federal income tax purposes.

 

Section 409A of the Internal Revenue Code

 

Section 409A of the Internal Revenue Code (“Section 409A”) deals specifically with non-qualified deferred compensation plans. Although Sysco makes no guarantees with respect to exemption from, or compliance with, Section 409A, we have designed all of our executive compensation programs with the intention that they are exempt from, or otherwise comply with, the requirements of Section 409A.

 

REPORT OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE

 

The CLD Committee has evaluated the performance of and determined the compensation for the CEO and approved the compensation of the NEOs. The CLD Committee reviewed and discussed the foregoing Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the CLD Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K and this Proxy Statement.

 

COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE

 

John M. Cassaday, Chairman

Larry C. Glasscock

Bradley M. Halverson

John M. Hinshaw

Alison Kenney Paul

 

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EXECUTIVE COMPENSATION

 

SUMMARY COMPENSATION TABLE

 

The following table sets forth information with respect to compensation for each of the NEOs for fiscal 2022.

 

 

Name and
Principal Position
    Fiscal
Year
   

Salary

($)(1)

    Bonus
($)
    Stock
Awards
($)(2)
      Option
Awards
($)(3)
    Non-Equity
Incentive Plan
Compensation
($)(4)
    Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)(5)
    All Other
Compensation
($)(6)
    Total
($)
Kevin P. Hourican
President and Chief Executive Officer
  2022   1,296,438     6,990,845     3,146,812   2,070,900     151,511   13,656,506
  2021   1,321,370     16,130,478     3,024,753   2,272,725     419,168   23,168,494
  2020   527,123   3,638,100   13,305,225     7,666,660   276,195     486,245   25,899,548
Aaron E. Alt(7)
Executive Vice President and Chief Financial Officer
  2022   789,247     1,804,782     812,413   840,583     75,568   4,322,593
  2021   443,767   365,000   1,894,801     748,694   404,163     71,637   3,928,062
Greg D. Bertrand
Executive Vice President, US Foodservice Operations
  2022   696,441     3,792,142 (8)   717,975   927,297   12,157   143,689   6,289,701
  2021   689,450     1,517,979     666,799   988,199   135,948   81,989   4,080,364
  2020   674,146     1,234,615     788,143   249,275   525,596   117,364   3,589,139
Tim Ørting Jørgensen
Former Executive Vice President and President, Foodservice Operations, International
  2022   684,474       1,377,688     620,169         3,535,882   6,218,213
  2021   412,326   1,255,824   2,190,505       490,642     308,596   4,657,893
                                     
                                     
Thomas R. Peck, Jr.(7)
Executive Vice President, Chief Information and Digital Officer
  2022   661,974     1,397,230     628,970   705,005     86,184   3,479,363
  2021   322,329   850,000   1,386,586     579,192   338,975     46,791   3,523,873
                                     
Judith S. Sansone(7)
Executive Vice President and Chief Supply Chain Officer
  2022   661,974     1,397,230     628,970   775,506     70,276   3,533,956
                                     
                                     
(1) The salary amounts reflect the actual base salary payments earned by the NEOs in the applicable fiscal year. The base salary for Mr. Ørting was paid in British pounds sterling and converted to US dollars (using the average exchange rate for each fiscal month in the period from July 2021 to May 2022 as reported by Reuters, which ranged from 1 USD/0.7163 GBP to 1 USD/0.8028 GBP).
(2) The amounts in this column represent the sum of restricted stock units and performance share units awarded at a grant date fair value of $76.94, in each case computed in accordance with ASC 718. All stock awards were granted on August 19, 2021. The values reflected in the table above include the grant date fair value of restricted stock units and the grant date fair value of the performance share units at target performance. The grant date fair values of restricted stock units granted in fiscal 2022 and of performance share units granted in 2022 if target performance and maximum performance is achieved are as follows:

 

      Annual Performance Share Units
  Restricted Stock Units
($)
  Target
($)
  Maximum
($)
Hourican 1,997,362   4,993,483   9,986,966
Alt 515,652   1,289,130   2,578,260
Bertrand 455,716   3,336,426   6,672,852
Ørting 393,625   984,063   1,968,126
Peck 399,165   998,066   1,996,132
Sansone 399,165   998,066   1,996,132
   
  The fair value of these performance share units is determined based on the closing price of our common stock on the last business day before the grant date. Compensation expense is recognized over the period an NEO is required to provide service based on the estimated vesting of the performance share units granted. See the Grants of Plan-Based Awards table below for more information on the stock awards granted in fiscal 2022.
(3) The amounts in this column represent the aggregate grant date fair value of stock options granted during each year. We estimated the fair value of each stock option award using a Black-Scholes pricing model, modified for dividends and using the following assumptions: risk-free interest rate of 0.99%; expected dividend yield of 2.51%; expected share price volatility of 30.10%; and expected term of 6.6 years. We did not assume any option exercises or risk of forfeiture during the expected option life in determining the valuation of the option awards. Had we done so, such assumptions could have reduced the reported grant date value. The actual value, if any, an NEO may realize upon exercise of options will depend on the excess of the stock price over the exercise price on the date the option is exercised. Consequently, the value realized, if any, may not be at or near the value estimated by the Black-Scholes model.

 

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(4) The amounts in this column with respect to fiscal year 2022 reflect cash awards to the eligible NEOs pursuant to awards under the STIP in fiscal 2022, which were determined by the CLD Committee at its July 29, 2022 meeting and, to the extent not deferred by the NEO, paid shortly thereafter.
(5) The amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column reflect above-market interest on amounts in the EDCP and the MSP, and the actuarial change in the present value of the NEOs’ benefits under all pension plans established and maintained by Sysco, determined using interest rate and mortality rate assumptions consistent with those used in Sysco’s financial statements. The pension plan amounts, some of which may not be currently vested, include: (i) changes in pension plan value; and (ii) changes in the value of benefits under the SERP. Active service-based accruals under the pension plan and the SERP ceased when each of those programs was frozen. Therefore, any subsequent changes in the actuarial present value of an NEO’s accumulated benefit under the pension plan and/or the SERP would likely be attributable, primarily, to variations in the discount rate or modifications to the actuarial assumptions. To the extent that any such aggregate change in the actuarial present value of an NEO’s accumulated benefit under the pension plan and/or the SERP was a decrease, this decrease is not reflected in the amounts shown in the “All Other Compensation” column above or the “Total” column in the table below.
  The following table shows, for Mr. Bertrand, the only NEO participant, the change in the actuarial present value for the pension plan and for the SERP, as well as the above-market interest on amounts in the EDCP and MSP for fiscal 2022:

 

Name Change in Pension Plan
Value

($)
     Change in SERP Value
($)
  Above-Market Interest on Deferred
Compensation
($)
  Total
($)
Bertrand (149,441)   (670,624)   12,157   12,157

 

(6) Fiscal 2022 amounts reported in the “All Other Compensation” column include the following:

 

Name   Perquisites, Other
Personal Benefits
and Tax
Reimbursement
($)(a)
  401(k) Plan
Employer
Contribution
($)(b)
  MSP Employer
Contribution
($)(c)
  Payment In Lieu
Of Notice
($)(d)
  Total All Other
Compensation
($)
Kevin P. Hourican   35,629   17,850   98,032       151,511
Aaron E. Alt   4,584   19,065   51,919       75,568
Greg D. Bertrand   6,691   17,611   119,387       143,689
Tim Ørting Jørgensen   67,926       3,467,956   3,535,882
Thomas R. Peck, Jr.   17,909   21,356   46,919       86,184
Judith S. Sansone   4,764   16,234   49,278       70,276
(a) The amount shown in column (a) consists of $13,033 paid for the car allowance for Mr. Orting, $1,998 paid for annual private medical insurance for Mr. Orting, $52,895 paid for a pension supplement for Mr. Orting, relocation assistance in the amount of $13,213 for Mr. Peck, an executive physical for Mr. Bertrand in the amount of $2,150, a COVID-19 vaccine incentive in the amount of $200 and related tax gross-up in the amount of $130 for Mr. Hourican, $64 for Mr. Alt, $83 for Mr. Bertrand, $64 for Ms. Sansone, and $130 for Mr. Peck.
(b) The amount shown for each individual reflects amounts contributed by us to the Sysco 401(k) plan during fiscal 2022.
(c) The amount shown for each individual reflects amounts contributed by us to the Sysco MSP during fiscal 2022.
(d) The amount shown for Mr. Orting reflects the payment he received in lieu of notice as disclosed in the Form 8-K filed on May 3, 2022.

 

(7) Messrs. Alt and Peck became NEOs in 2021, the Summary Compensation Table includes only two years of their compensation. Ms. Sansone became an NEO in 2022, the Summary Compensation Table includes only one year of her compensation.
(8) Includes 28,556 additional PSUs granted or awarded to Mr. Bertrand to enhance his retention as disclosed in the Form 8-K filed on July 30, 2021.

 

SYSCO CORPORATION // 2022 Proxy Statement

65

 

GRANTS OF PLAN-BASED AWARDS

 

The following table provides information on annual incentive award opportunities, PSUs, and stock options under our 2018 Omnibus Incentive Plan granted to the NEOs during fiscal year 2022.

 

      Number
of Shares,

Units or

Other
Rights
  Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
  Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
   All Other
Stock
Awards:
Number 
of Shares
of Stock
or Units
(#)(3)
    All Other
Option
Awards:
Number of
Securities

Underlying
Options
(#)(4)
    Exercise
or Base
Price of
Option
Awards
($)(5)
    Closing
Market
Price On
the Date
of Grant
($)
    Grant
Date Fair
Value
of Stock
and
Option
Awards
($)(6)
Name Grant Date         Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
($)
    Target
($)
    Maximum
($)
         
Kevin P.      8/19/21   64,901               16,225   64,901   129,802                   4,993,483
Hourican   8/19/21                               25,960               1,997,362
    8/19/21                                   181,268   76.94   75.55   3,146,812
    8/19/21       975,000   1,950,000   3,510,000                                
Aaron E.   8/19/21   16,755               4,189   16,755   33,510                   1,289,130
Alt   8/19/21                               6,702               515,652
    8/19/21                                   46,798   76.94   75.55   812,413
    8/19/21       395,697   791,394   1,424,510                                
Greg D.   8/19/21   43,364               10,841   43,364   86,728                   3,336,426
Bertrand   8/19/21                               5,923               455,716
    8/19/21                                   41,358   76.94   75.55   717,975
    8/19/21       436,493   872,985   1,571,373                                
Tim Ørting   8/19/21   12,790               3,198   12,790   25,580                   984,063
Jørgensen   8/19/21                               5,116               393,625
    8/19/21                                   35,724   76.94   75.55   620,169
    8/19/21                                                
Thomas R.   8/19/21   12,972               3,243   12,972   25,944                   998,066
Peck, Jr.   8/19/21                               5,188               399,165
    8/19/21                                   36,231   76.94   75.55   628,970
    8/19/21       331,875   663,750   1,194,750                                
Judith S.   8/19/21   12,972               3,243   12,972   25,944                   998,066
Sansone   8/19/21                               5,188               399,165
    8/19/21                                   36,231   76.94   75.55   628,970
    8/19/21       331,875   663,750   1,194,750                                

 

(1) The amounts shown to which no grant date applies reflect the total of the threshold payment levels for each element under our STIP. This amount is 50% of the target amounts shown in column (e). The maximum amounts shown are 180% of such target amounts for each named executive officers. These amounts are based on the individual’s base salary as in effect at the end of each performance period, and pro-rated for merit as applicable.
(2) The amounts shown as having been granted on August 19, 2021 reflect the total of the threshold payment levels for the performance share units granted in 2021 under the Sysco 2018 Omnibus Incentive Plan, which is 25% of the target amounts shown. The maximum amounts shown are 200% of such target amounts. Any amounts payable with respect to performance share units would be paid in August 2024 based on cumulative performance for the fiscal period 2021 to 2024.
(3) The amounts shown reflect the number of restricted stock units granted to each named executive officer in 2021 under the Sysco 2018 Omnibus Incentive Plan.
(4) The amounts shown reflect the number of options to purchase ordinary shares granted to each named executive officer in 2021 under the Sysco 2018 Omnibus Incentive Plan.
(5) The exercise price for these options was set at the “Fair Market Value” on the date of the grant, which is defined as the closing sale price during regular trading hours of the stock on the immediately preceding date on the principal securities market in which shares of stock is then traded, or, if there were no trades on that date, the closing sale price during regular trading hours of the stock on the first trading day prior to that date. Pursuant to our 2018 Omnibus Incentive Plan, under which these options were granted, the exercise price of all options may not be less than the Fair Market Value.
(6) We determined the following estimated grant date fair values for the options reported in the table above using a Black-Scholes pricing model: (i) options issued on August 19, 2021 of $17.36 per option The assumptions underlying these option valuations are listed below:

 

  Volatility     Risk-Free Rate of Return        Dividend Yield at the Date of Grant      Expected Option Life
August 2021 30.10%   0.99%   2.51%   6.6 years

 

We did not assume any option exercises or risk of forfeiture during the expected option life in determining the valuation of the option awards. Had we done so, such assumptions could have reduced the reported grant date value. The actual value, if any, an executive may realize upon exercise of options will depend on the excess of the stock price over the exercise price on the date the option is exercised. Consequently, the value realized, if any, may not be at or near the value estimated by the Black-Scholes model. We determined the estimated grant date fair value of the PSUs granted on August 19, 2021 to be $76.94 per PSU, being the closing price of our Common Stock on the last business day before the grant date, and assuming the target number of shares would be earned at the end of the three-year performance period. Grants of PSUs are reflected at target since actual shares to be received, if any, will be determined after the three-year performance period ending on June 29, 2024. The estimated grant date fair value of each of the RSUs reported in the table above is equal to the grant date fair value of the corresponding PSUs awarded on the same date and indicated in this footnote (6) above, in each case being the closing price of our Common Stock on the last business day before the grant date.

 

SYSCO CORPORATION // 2022 Proxy Statement

66

 

OUTSTANDING EQUITY AWARDS AT YEAR-END

 

Option grants prior to fiscal 2017 have generally vested and become exercisable in five equal annual installments, beginning one year after the grant date. The option grants since fiscal 2017 vest and become exercisable in three equal, annual installments, beginning one year after the grant date. The RSUs that were granted generally vest one-third per year over three years. The PSUs issued beginning in fiscal 2017 under the 2018 Omnibus Incentive Plan and its predecessor, the 2013 Long-Term Incentive Plan, are subject to cliff vesting following a two- or three-year performance period.

 

The exercise price of options may not be less than the fair market value on the date of the grant. For this purpose, fair market value means the closing sale price during regular trading hours of the stock on the immediately preceding date on the principal securities market in which shares of our Common Stock are then traded, or, if there were no trades on that date, the closing sale price during regular trading hours of the Common Stock on the first trading day prior to that date. Sysco is specifically prohibited from repricing outstanding grants without stockholder approval.

 

The CLD Committee generally makes equity grants during open “trading” windows under our Policy on Trading in Company Securities, at a time when we have publicly disseminated all material information likely to affect the trading price of Sysco’s Common Stock. The CLD Committee will generally not make grants during a period preceding an anticipated event, such as an earnings release, that is likely to cause a substantial change in the trading price of Sysco’s Common Stock.

 

The following table provides information on the stock option, RSU, and PSU grants held by each NEO as of July 2, 2022.

 

    Option Awards        Stock Awards
Name     Date Granted     Number of
Securities
Underlying
Unexercised
Options Exercisable
(#)
    Number of
Securities
Underlying
Unexercised Options
Unexercisable
(#)
      Option
Exercise
Price
($)
    Option
Expiration
Date
    Number of Shares
or Units of Stock
That Have Not
Vested
(#)
      Market Value of
Shares or Units of
Stock That Have
Not Vested
($)(1)
Kevin P. Hourican   August 2021             66,034     5,700,055
  August 2021     181,268     76.94   08/18/2031      
  August 2021             25,960     2,240,867
  August 2020     150,038 (2)   58.08