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Section 1: DEF 14A (DEF 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ý
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))
ý
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material Pursuant to § 240.14a-11(c) or §240.14a-12


KELLOGG COMPANY
(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 the appropriate box):
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No fee required
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1)
Title of each class of securities to which transaction applies:
 
(2)
Aggregate number of securities to which transaction applies:
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
(4)
Proposed maximum aggregate value of transaction:
 
(5)
Total fee paid:
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Fee paid previously with preliminary materials
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1)
Amount Previously Paid:
 
(2)
Form, Schedule or Registration Statement No.:
 
(3)
Filing Party:
 
(4)
Date Filed:



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KELLOGG COMPANY, BATTLE CREEK, MICHIGAN 49017-3534
Dear Shareowner:
On behalf of the Board of Directors, it is our pleasure to invite you to attend the 2020 Annual Meeting of Shareowners of Kellogg Company. The meeting will be held at 1:00 p.m. Eastern Time on April 24, 2020 at the Kool Family Community Center, 200 W. Michigan Avenue, Battle Creek, Michigan.
The following pages contain the formal Notice of the Annual Meeting and the Proxy Statement. Please review this material for information concerning the business to be conducted at the meeting and the nominees for election as Directors.
We are pleased to take advantage of the Securities and Exchange Commission rules that allow companies to furnish proxy materials to their shareowners on the Internet. We believe these rules allow us to provide our Shareowners with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting.
Attendance at the Annual Meeting will be limited to Shareowners only. Please note that if you plan to attend the meeting you must request an admission ticket. You can obtain an admission ticket by registering online via www.proxyvote.com and following the instructions provided. You will need the 16-digit control number included on your proxy card, voter instruction form, or notice. Seating at the annual meeting location is limited and requests for tickets will be processed in the order in which they are received. If you do not pre-register for the meeting, a seat cannot be guaranteed. If seating is available, you will be issued an admission ticket at the on-site registration table by showing proof of Kellogg stock ownership. In any event, you must register if you wish to attend the annual meeting.
If any Shareowner needs special assistance at the meeting, please contact Shareowner Services at (269) 961-2800 or by email at [email protected]
Your vote is important. Whether or not you plan to attend the meeting, we urge you to vote your shares as soon as possible. You may vote your shares via a toll-free telephone number or over the Internet. If you received a paper copy of the proxy or voting instruction card by mail, you may sign, date and mail the card in the envelope provided.
Sincerely,         
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Steve Cahillane
Chairman and Chief Executive Officer

March 10, 2020



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KELLOGG COMPANY
One Kellogg Square
Battle Creek, Michigan 49017-3534
NOTICE OF THE ANNUAL MEETING OF SHAREOWNERS
TO BE HELD
APRIL 24, 2020

TO OUR SHAREOWNERS:
The 2020 Annual Meeting of Shareowners of Kellogg Company, a Delaware corporation, will be held at 1:00 p.m. Eastern Time on April 24, 2020 at the Kool Family Community Center, 200 W. Michigan Avenue, Battle Creek, Michigan, for the following purposes:
1.
To elect four Directors for a three-year term to expire at the 2023 Annual Meeting of Shareowners;
2.
To vote on an advisory resolution to approve executive compensation;
3.
To ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP for our 2020 fiscal year;
4.
To approve the amendment and restatement of the Kellogg Company 2002 Employee Stock Purchase Plan;
5.
To consider and act upon a management proposal to declassify our Board of Directors;
6.
To consider and act upon a Shareowner proposal to adopt a simple majority vote, if properly presented at the meeting; and
7.
To take action upon any other matters that may properly come before the meeting, or any adjournments thereof.
Only Shareowners of record at the close of business on February 28, 2020 will receive notice of and be entitled to vote at the meeting or any adjournments. We look forward to seeing you there.
By Order of the Board of Directors,
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Gary Pilnick
Vice Chairman, Corporate Development, Chief Legal Officer, and Secretary

March 10, 2020  


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PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON FRIDAY, APRIL 24, 2020

ABOUT THE MEETING
Information About this Proxy Statement.
Why You Received this Proxy Statement.    You have received these proxy materials because our Board of Directors, which we refer to as the Board, is soliciting your proxy to vote your shares at the 2020 Annual Meeting of Shareowners of Kellogg to be held at 1:00 p.m. Eastern Time at the Kool Family Community Center, 200 W. Michigan Avenue, in Battle Creek, Michigan, on Friday, April 24, 2020, or any adjournments thereof. This proxy statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (the “SEC”) and that is designed to assist you in voting your shares. On March 10, 2020, we began to mail to our Shareowners of record as of the close of business on February 28, 2020, either a notice containing instructions on how to access this proxy statement and our annual report online or a printed copy of these proxy materials. If you own our common stock in more than one account, such as individually and also jointly with your spouse, you may receive more than one notice or set of these proxy materials. To assist us in saving money and to serve you more efficiently, we encourage you to have all your accounts registered in the same name and address by contacting our transfer agent, Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342, Brentwood, NY 11717; phone number: (877) 910-5385 or e-mail: [email protected]
Notice of Electronic Availability of Proxy Statement and Annual Report.    As permitted by SEC rules, we are making this proxy statement and our annual report available to our Shareowners electronically via the Internet. The notice of electronic availability contains instructions on how to access this proxy statement and our annual report and vote online. If you received a notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access and review all of the important information contained in the proxy statement and annual report. The notice also instructs you on how you may submit your proxy over the Internet or by telephone. If you received a notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the notice.
Summary Processing.    The SEC’s rules permit us to print an individual’s multiple accounts on a single notice or set of annual meeting materials. This printing method is referred to as “summary processing” and may result in cost savings. To take advantage of this opportunity, we have summarized on one notice or set of annual meeting materials all of the accounts registered with the same tax identification number or duplicate name and address, unless we received contrary instructions from the impacted Shareowner prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the notice or annual meeting materials, as requested, to any Shareowner to which a single copy of those documents was delivered. If you prefer to receive separate copies of the notice or annual meeting materials, contact Broadridge Financial Solutions, Inc. at (800) 542-1061 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you are currently a Shareowner sharing an address with another Shareowner and wish to receive only one copy of future notices or annual meeting materials for your household, please contact Broadridge at the above phone number or address.
Who Can Vote — Record Date.    The record date for determining Shareowners entitled to vote at the Annual Meeting is February 28, 2020. Each of the approximately 342,498,620 shares of Kellogg common stock issued and outstanding on that date is entitled to one vote at the Annual Meeting.
How to Vote — Proxy Instructions.    If you received a notice of electronic availability, you cannot vote your shares by filling out and returning the notice. The notice, however, provides instructions on how to vote by Internet, by telephone or by requesting and returning a paper proxy card or voting instruction card.
If your shares are registered directly in your name with our transfer agent, you are considered, with respect to those shares, the shareowner of record. As the shareowner of record, you have the right to vote in person at the

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meeting. If your shares are held in a brokerage account or by another nominee or trustee, you are considered the beneficial owner of shares held in “street name.” As the beneficial owner, you are also invited to attend the meeting. Since a beneficial owner is not the shareowner of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from your broker, nominee or trustee that holds your shares, giving you the right to vote the shares at the meeting.
Whether you hold shares directly as a registered shareowner of record or beneficially in street name, you may vote without attending the meeting. You may vote by granting a proxy or, for shares held beneficially in street name, by submitting voting instructions to your broker, nominee or trustee. In most cases, you will be able to do this by telephone, by using the Internet or by mail if you received a printed set of the proxy materials.
By Telephone or Internet — You may submit your proxy by following the instructions provided in the notice of electronic availability, or if you received a printed version of the proxy materials by mail, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card. The telephone and Internet voting procedures have been set up for your convenience and have been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly. The deadline for voting by telephone or via the Internet is 11:59 p.m. Eastern Time on Thursday, April 23, 2020.
By Mail — If you received printed proxy materials, you may submit your proxy by mail by signing your proxy card if your shares are registered or, for shares held beneficially in street name, by following the voting instructions included by your broker, nominee or trustee, and mailing it in the enclosed envelope.
If you wish to vote using the proxy card, complete, sign, and date your proxy card and return it to us by April 23, 2020.
Whether you vote by telephone, over the Internet or by mail, you may specify: whether you approve, disapprove or abstain from voting on: each of the nominees for Director (Proposal 1); the advisory resolution to approve Kellogg’s executive compensation (Proposal 2); the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2020 (Proposal 3); the proposal to approve the amendment and restatement of the Kellogg Company 2002 Employee Stock Purchase Plan (Proposal 4); the management proposal to declassify the Board of Directors (Proposal 5); and the Shareowner Proposal, if properly presented at the meeting (Proposal 6).
When a properly executed proxy is received, the shares represented thereby, including shares held under our Dividend Reinvestment Plan, will be voted by the persons named as the proxy according to each Shareowner’s directions. Proxies will also be considered to be voting instructions to the applicable Trustee with respect to shares held in accounts under our Savings & Investment Plans and other applicable employee benefit plans.
If the proxy is properly executed but you do not specify how you want to vote your shares on your proxy card or voting instruction card, or voting by telephone or over the Internet, we will vote them “For” the election of all nominees for Director as set forth under Proposal 1 - Election of Directors below, “For” Proposals 2 through 5, and “Against Proposal 6, or otherwise at the discretion of the persons named in the proxy card.
Revocation of Proxies.    If you are a shareowner of record, you may revoke your proxy at any time before it is exercised in any of three ways:
by submitting written notice of revocation to our Secretary;
by submitting another proxy by telephone, via the Internet or by mail that is later dated and, if by mail, that is properly signed; or
by voting in person at the meeting.
If your shares are held in street name, you must contact your broker, nominee or trustee to revoke and vote your proxy.
Quorum.    A quorum of Shareowners is necessary to hold a valid meeting. A quorum will exist if the holders representing a majority of the votes entitled to be cast by the Shareowners at the Annual Meeting are present, in person or by proxy. Broker “non-votes” and abstentions are counted as present at the Annual Meeting for purposes of

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determining whether a quorum exists. A broker “non-vote” occurs when a nominee, such as a bank or broker, holding shares for a beneficial owner, does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Under current New York Stock Exchange rules, nominees would have discretionary voting power for ratification of PricewaterhouseCoopers LLP (Proposal 3), but not for voting on the election of Directors (Proposal 1), the advisory resolution to approve Kellogg’s executive compensation (Proposal 2), the approval of the amendment and restatement of the Kellogg Company 2002 Employee Stock Purchase Plan (Proposal 4), the management proposal to declassify our Board of Directors (Proposal 5), or the Shareowner Proposal (Proposal 6).
Required Vote.    Our bylaws contain a majority voting standard for the election of Directors in an uncontested election, such as this election. This means that, in order to be elected in an uncontested election, a Director nominee must receive a greater number of votes cast “for” such Director nominee than votes cast “against” such Director nominee (excluding abstentions). In addition, our Board has adopted a policy governing what will occur in the event that a Director nominee does not receive the required vote for a nominee’s election. No Director will be nominated for election or otherwise be eligible for service on the Board unless and until the candidate has delivered an irrevocable resignation to the Nominating and Corporate Governance Committee that would be effective upon (i) the Director’s failure to receive the required vote in an election of Directors and (ii) the Board’s acceptance of his or her resignation. If any nominee is unable or declines to serve, proxies will be voted for the balance of those named and for the person designated by the Board to replace any nominee. However, the Board does not anticipate that this will occur. For more information about this policy, see “Corporate Governance — Majority Voting for Directors; Director Resignation Policy.”
The affirmative vote of the holders representing a majority of the shares present and entitled to vote at the Annual Meeting is necessary to approve the advisory resolution on Kellogg’s executive compensation (Proposal 2), to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal 2020 (Proposal 3), to approve the amendment and restatement of the Kellogg Company 2002 Employee Stock Purchase Plan (Proposal 4), and to approve the Shareowner Proposal (Proposal 6). The affirmative vote of holders representing at least two-thirds of the voting power of our outstanding common stock is necessary for approval of the amendment to the Certificate of Incorporation to declassify the Board of Directors (Proposal 5).
Shares present but not voted because of abstention will have the effect of a “no” vote on Proposals 2 through 6. If you do not provide your broker or other nominee with instructions on how to vote your “street name” shares, your broker or nominee will not be permitted to vote them on non-routine matters (a broker “non-vote”) such as Proposals 1, 2, 4, 5 and 6. Shares subject to a broker “non-vote” will not be considered entitled to vote with respect to Proposals 1, 2, 4, 5 and 6, and will have no effect on the outcome of Proposals 1, 2, 4, and 6, but will have the effect of a "no" vote on Proposal 5. Please note that brokers may not vote your shares on the election of directors in the absence of your specific instructions as to how to vote. We encourage you to provide instructions to your broker regarding the voting of your shares.
Other Business.    We do not intend to bring any business before the meeting other than that set forth in the Notice of the Annual Meeting and described in this proxy statement. However, if any other business should properly come before the meeting, the persons named in the proxy card intend to vote in accordance with their best judgment on that business and on any matters dealing with the conduct of the meeting pursuant to the discretionary authority granted in the proxy.
Costs.    We pay for the preparation and mailing of the Notice of the Annual Meeting and proxy statement. We have also made arrangements with brokerage firms and other custodians, nominees, and fiduciaries for forwarding proxy-soliciting materials to the beneficial owners of the Kellogg common stock at our expense. In addition, we have retained D.F. King & Co., Inc. to aid in the solicitation of proxies by mail, telephone, facsimile, e-mail and personal solicitation. For these services, we will pay D.F. King & Co., Inc. a fee of $16,000, plus reasonable expenses.
Directions to Annual Meeting.    To obtain directions to attend the Annual Meeting and vote in person, please contact Investor Relations at (269) 961-2800 or at [email protected]

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SECURITY OWNERSHIP
Five Percent Holders.    The following table shows each person who, based upon their most recent filings or correspondence with the SEC, beneficially owns more than 5% of our common stock.
Beneficial Owner/Address
 
Shares Beneficially Owned
 
Percent of Class on December 31, 2019
W.K. Kellogg Foundation Trust(1)
c/o Northern Trust Corporation
50 South LaSalle Street
Chicago, IL 60603
 
66,114,831
(2)
 
19.4%
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
 
27,118,644
(3)
 
7.9%
Gordon Gund
14 Nassau Street
Princeton, NJ 08542-4523
 
24,171,780

(4)
 
7.1%
KeyCorp
127 Public Square
Cleveland, OH 44114-1306
 
24,128,733
(5)
 
7.1%
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
 
20,547,572
(6)
 
6.0%
(1)
According to a Schedule 13G/A filed with the SEC on February 12, 2020, the W.K. Kellogg Foundation Trust (the “Kellogg Trust”) shares voting and investment power with the W.K. Kellogg Foundation (the “Kellogg Foundation”) and the trustees of the Kellogg Trust with respect to 62,731,838 shares of Kellogg Company, or 18.4% of our outstanding shares on December 31, 2019. As of that date, the trustees of the Kellogg Trust were Steve Cahillane, Ramón Murguía, La June Montgomery Tabron and Northern Trust Company. The Kellogg Foundation, a Michigan charitable corporation, is the sole beneficiary of the Kellogg Trust. Under the agreement governing the Kellogg Trust (the “Agreement”), at least one trustee of the Kellogg Trust must be a member of the Kellogg Foundation’s Board, and one member of our Board must be a trustee of the Kellogg Trust. The Agreement provides if a majority of the trustees of the Kellogg Trust (which majority must include the corporate trustee) cannot agree on how to vote the Kellogg stock, the Kellogg Foundation has the power to direct the voting of such stock. With certain limitations, the Agreement also provides that the Kellogg Foundation has the power to approve successor trustees, and to remove any trustee of the Kellogg Trust. The shares of Kellogg Company owned directly by Mr. Cahillane and Ms. Montgomery Tabron are reflected in the Officer and Director Stock Ownership table below.
(2)
According to a Schedule 13G/A filed with the SEC on February 12, 2020, Northern Trust Corporation has sole voting power for 442,330 shares, shared voting power for 65,660,489 shares (including those shares beneficially owned by the Kellogg Trust), sole investment power for 1,838,819 shares and shared investment power for 63,856,611 shares (including those shares beneficially owned by the Kellogg Trust). Northern Trust Corporation, as parent holding company for The Northern Trust Company, as trustee of the Kellogg Trust, shares voting and investment power with the other three trustees with respect to the 62,731,838 shares owned by the Kellogg Trust, which shares are reflected in Northern Trust Corporation’s totals above. The remaining shares not owned by the Kellogg Trust that are disclosed in the table above represent shares beneficially owned by Northern Trust Corporation and The Northern Trust Company unrelated to the Kellogg Trust.
(3)
According to a Schedule 13G/A filed with the SEC on February 5, 2020, BlackRock, Inc. has sole voting power for 24,404,490 shares and sole investment power for 27,118,644 shares.
(4)
According to a Schedule 13G/A filed with the SEC on February 7, 2020, Gordon Gund has sole voting power for 23,979,911 shares, shared voting power for 191,869 shares, sole investment power for 0 shares and shared

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investment power for 191,869 shares. The shares over which Gordon Gund has sole voting power are held by various trusts for the benefit of certain members of the Gund family, as to which shares Gordon Gund disclaims beneficial ownership.
(5)
According to a Schedule 13G/A filed with the SEC on January 10, 2020, KeyCorp, as trustee for certain Gund family trusts, including the trusts discussed under (4) below, as well as other trusts, has sole voting power for 53,212 shares, shared voting power for 5,349 shares, sole investment power for 24,100,613 shares and shared investment power for 25,050 shares.
(6)
According to a Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group has sole voting power for 380,188 shares, shared voting power for 108,537 shares, sole investment power for 20,083,600 shares and shared investment power for 463,972 shares.
Officer and Director Stock Ownership.    The following table shows the number of shares of Kellogg common stock beneficially owned as of January 15, 2020, by each Director, each executive officer named in the Summary Compensation Table and all Directors and executive officers as a group.
Name
 
Shares(1)
 
Options(2)
 
Deferred Stock
Units(3)
 
Total Beneficial
Ownership(4)
 
Percentage
Non-NEO Directors
 
 
 
 
 
 
 
 
 
 
Stephanie Burns
 
16,092
 
0
 
5,552
 
21,644
 
*
Carter Cast
 
7,475
 
0
 
0
 
7,475
 
*
Richard Dreiling
 
9,792
 
0
 
6,031
 
15,823
 
*
Rod Gillum
 
3,245
 
0
 
1,601
 
4,846
 
 
Zachary Gund (5)
 
1,645,758
 
0
 
9,545
 
1,655,303
 
*
Jim Jenness
 
39,162
 
0
 
13,392
 
52,554
 
*
Donald Knauss
 
37,663
 

 
0
 
37,663
 
*
Mary Laschinger
 
20,260
 
0
 
13,423
 
33,683
 
*
Erica Mann
 
3,245
 
0
 
0
 
3,245
 
*
La June Montgomery Tabron (6)
 
16,092
 
0
 
0
 
16,092
 
*
Carolyn Tastad
 
11,196
 
0
 
0
 
11,196
 
*
Named Executive Officers
 
 
 
 
 
 
 
 
 
 
Steve Cahillane (6)
 
33,755
 
237,703
 
8,074
 
279,532
 
*
Amit Banati (7)
 
34,303
 
132,726
 
0
 
167,029
 
*
Chris Hood
 
21,689
 
264,246
 
0
 
285,935
 
*
Gary Pilnick
 
52,707
 
345,553
 
0
 
398,260
 
*
Alistair Hirst
 
36,961
 
264,926
 
0
 
301,887
 
*
Fareed Khan (8)
 
9,880
 
165,483
 
0
 
175,363
 
*
All Directors and executive officers as a group (23 persons)(9)
 
2,030,933
 
1,604,043
 
57,617
 
3,692,593
 
1.1
*
Less than 1%.
(1)
Represents the number of shares beneficially owned, excluding shares which may be acquired through exercise of stock options and units held under our deferred compensation plans. Includes (i) restricted stock units that vested within 60 days of January 15, 2020; and (ii) the following number of shares held in Kellogg’s Grantor Trust for Directors and Executives related to the annual grants of deferred shares for Non-Employee Directors, which shares are subject to restrictions on voting and investment: Dr. Burns, 16,092 shares; Mr. Cast, 7,475 shares; Mr. Dreiling, 9,764 shares, Mr. Gillum, 3,245 shares; Mr. Zachary Gund, 13,901 shares; Mr. Jenness, 26,735 shares; Mr. Knauss, 37,578 shares; Ms. Laschinger, 20,260 shares; Ms. Mann, 3,245 shares; Ms. Montgomery Tabron, 16,092 shares; Ms. Tastad 11,196 shares; and all Directors as a group, 165,583 shares.

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(2)
Represents options that were exercisable on January 15, 2020 and options that become exercisable within 60 days of January 15, 2020.
(3)
Represents the number of common stock units held under our deferred compensation plans as of January 15, 2020. For additional information, refer to “2019 Director Compensation and Benefits — Elective Deferral Program” and “Compensation Discussion and Analysis — Compensation Policies — Deductibility of Compensation and Other Related Issues” for a description of these plans.
(4)
None of the shares listed have been pledged as collateral.
(5)
Includes: (i) 3,657 shares held by a trust for the benefit of Mr. Zachary Gund and certain members of his family, of which Mr. Zachary Gund is one of several trustees; (ii) 9,200 shares held in a trust for the benefit of certain members of Mr. Zachary Gund’s family, of which a family member of Mr. Zachary Gund’s is the trustee; and (iii) 1,619,000 shares held in family partnerships, the partners of which include a trust for the benefit of Mr. Zachary Gund and he serves as a manager of these partnerships. As a result of these relationships, Mr. Zachary Gund may have voting and dispositive power over all such shares. Mr. Zachary Gund disclaims beneficial ownership of these shares except to the extent of his pecuniary interest.
(6)
Does not include shares owned by the Kellogg Trust, as to which Mr. Cahillane and Ms. Montgomery Tabron, as trustees of the Kellogg Trust as of the date of this table, hold voting and investment power, or shares as to which the Kellogg Trust or the Kellogg Foundation have a current beneficial interest.
(7)
Mr. Banati was appointed our CFO effective July 1, 2019.
(8)
Mr. Khan departed Kellogg effective June 30, 2019.
(9)
Includes 3,657 shares held by a trust for the benefit of the applicable Director and certain family members, of which the applicable Director disclaims beneficial ownership except to the extent of the applicable Director’s pecuniary interest; 9,200 shares held in a trust for the benefit of certain family members of the applicable Director, of which the applicable Director disclaims beneficial ownership except to the extent of the applicable Director’s pecuniary interest; 1,619,000 shares held in family partnerships, of which the applicable Director disclaims beneficial ownership except to the extent of the applicable Director’s pecuniary interest; 85 shares held in a trust, of which the applicable Director and his wife share voting and investment power; and 1,021 shares held in our Savings & Investment Plans.

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CORPORATE GOVERNANCE
Board-Adopted Corporate Governance Guidelines.    We operate under corporate governance principles and practices (the “Corporate Governance Guidelines”) that are designed to maximize long-term Shareowner value, align the interests of the Board and management with those of our Shareowners and promote high ethical conduct among our Directors and employees. The Corporate Governance Guidelines include the following:
A majority of the Directors, and all of the members of the Audit Committee, Compensation and Talent Management Committee (“C&T Committee”), and Nominating and Governance Committee, are required to meet the independence requirements of the New York Stock Exchange and the SEC.
One of the Directors is designated a Lead Director, who chairs and may call executive session meetings of the independent, non-employee Directors, approves proposed meeting agendas and schedules, and establishes a method for Shareowners and other interested parties to communicate with the Board.
The Board reviews CEO succession planning at least once per year.
The Board and each Board committee have the power to hire independent legal, financial or other advisors as they may deem necessary, at our expense.
The Corporate Governance Guidelines provide that non-employee Directors meet in executive session at least three times annually. As a general practice, the non-employee Directors meet in executive session at each in-person Board meeting, and did so in 2019. The non-employee Directors also meet in executive session at most in-person Committee meetings.
The Board and Board committees conduct annual performance evaluations to assess whether the Board, its committees, and the Directors are functioning effectively.
The independent members of the Board use the recommendations from the Nominating and Governance Committee and C&T Committee to conduct an annual review of the CEO’s performance and determine the CEO’s compensation.
Non-employee Directors who change their principal responsibility or occupation from that held when they were elected shall offer his or her resignation for the Board to consider the continued appropriateness of Board membership under the circumstances.
Directors have direct and regular access to officers and employees of the Company and can initiate contact or meetings directly or through the CEO or Secretary.
Continuing education is provided to Directors consistent with our Board education policy.
No Director may be nominated for a new term if he or she would attain the age limit of seventy-two or older at the time of election, unless the Board determines that it is in the best interest of Kellogg to re-nominate the independent Director for additional terms due to his or her unique capabilities or special circumstances.
No Director shall serve as a director, officer or employee of a competitor.
No Director should serve on more than four other public company boards, in addition to Kellogg.
All Directors are expected to comply with stock ownership guidelines for Directors, under which they are generally expected to hold at least five times their annual cash retainer in stock and stock equivalents.
Board Leadership Structure; Communication with the Board.    The following section describes Kellogg’s Board leadership structure, the reasons why the structure is in place at this time, the roles of various positions, and related key governance practices. The mix of experienced independent and management Directors that make up our Board, along with the independent role of our Lead Director and our independent Board Committee composition, benefits Kellogg and its Shareowners.

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Independence; Board Mix. Our Board has an effective mix of independent and management directors. It is composed of ten independent Directors, Mr. Cahillane, our CEO, and Mr. Jenness (who was our Chairman until June 2014).
Independence; Committee Structure. In 2019, the Board had six standing Committees: (i) Audit, (ii) C&T, (iii) Nominating and Governance, (iv) Manufacturing, (v) Social Responsibility and Public Policy, and (vi) Executive. The Audit, C&T, and Nominating and Governance committees are composed solely of independent Directors, each with a different independent Director serving as committee chair.
Lead Director. The Board believes that it is beneficial to Kellogg and its Shareowners to designate one of the Directors as a Lead Director. The Lead Director serves a variety of roles, including reviewing and approving Board agendas, meeting materials and schedules to confirm the appropriate Board and committee topics are reviewed and sufficient time is allocated to each; liaising between the Chairman and CEO and non-management Directors if and when necessary and appropriate (that said, each Director has direct and regular access to the Chairman and CEO); presiding at the executive sessions of independent Directors and at all other meetings of the Board of Directors at which the Chairman of the Board is not present; calling an executive session of independent Directors at any time consistent with the Corporate Governance Guidelines; managing the annual evaluation process; and facilitating succession planning for the Board, including by having the Nominating and Governance Committee and the independent Directors regularly discuss and evaluate CEO succession plans. Don Knauss, an independent Director and the Chairman of the Nominating and Governance Committee, is currently our Lead Director. Mr. Knauss is an effective Lead Director for Kellogg due to, among other things, his independence, his board leadership experience as CEO, Chairman and Executive Chairman of The Clorox Company, strong strategic and financial acumen, commitment to ethics, extensive knowledge of the retail environment and branded consumer products, and deep understanding of Kellogg and its business obtained while serving as a Kellogg Director. Mr. Knauss may be contacted at [email protected] Any communications which Shareowners or interested parties may wish to send to the Board may be directly sent to Mr. Knauss at this e-mail address.
Chairman / CEO. With respect to the roles of Chairman and CEO, the Corporate Governance Guidelines provide that the roles 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. Upon Mr. Cahillane’s appointment as CEO on October 2, 2017, and John Bryant’s continuation of the role of Chairman, the roles were separated. Upon Mr. Bryant’s retirement from the Board on March 15, 2018, and Mr. Cahillane’s succession to the role of Chairman, the roles were again combined. At this time, the Board believes that combining the roles of Chairman and CEO, together with the separate, independent role of our Lead Director, is the most effective leadership structure for Kellogg for many reasons. In particular, the Board believes the combined role is appropriate because (a) Mr. Cahillane’s extensive knowledge and experience in a variety of areas, including strategy and strategic planning, branded consumer products and consumer dynamics, and innovation and research and development acquired as a result of his professional and other experiences, gives him the insight necessary to combine the responsibilities of strategic development and execution along with management of day-to-day operations, and (b) Mr. Cahillane’s knowledge of our business, operations and risks acquired in his role as CEO gives him the insight necessary to combine the responsibilities of strategic development along with management of day-to-day operations and execution. As stated in the Corporate Governance Guidelines, the Board believes that the combination or separation of these offices should continue to be considered as part of the succession planning process.
Self Evaluation. Our Board conducts an annual performance evaluation to determine whether the Board, its committees, and the Directors are functioning effectively. This includes survey materials as well as individual, private conversations between each Director and the Lead Director. The survey materials solicit feedback on organizational issues, business strategy and financial matters, board structure and meeting administration. The Directors use their private discussions with the Lead Director to provide feedback, identify themes for the Board to consider, suggest specific action steps and review Board agendas. The Board evaluation occurs during the first half of each year, between February and April. In addition, focus areas identified through the evaluation are incorporated into the Board’s agenda for the following year. In December, the Nominating and Governance Committee reviews progress against focus areas identified in the self-evaluation. Each Committee also conducts its own annual self-evaluation to assess the functioning of the committee and the effectiveness of the Committee members, including the Committee chair.

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Our Corporate Governance Guidelines provide the flexibility for our Board to modify our leadership structure in the future as appropriate. We believe that Kellogg, like many U.S.-based companies, has been well-served by this flexible leadership structure.
Company Strategy. Strategic planning and oversight of the Company’s business strategy is a key responsibility of the Board, and the Board has deep experience and expertise in the areas of strategy and strategic development. The Board believes that overseeing and monitoring strategy is a continuous process and takes a multi-step approach in exercising its responsibilities. Our entire Board discusses the strategic priorities of the Company, taking into consideration global economic, consumer and other significant trends, as well as changes in the food industry and regulatory initiatives. The Board reviews the Company’s strategy periodically during the year, and dedicates at least one meeting each year to focus on a strategic review, including key elements of our strategy, such as innovation, expansion and strategic investments.  Topics are also embedded in the work of Committees.
While the Board and its committees oversee strategy and strategic planning, management is charged with executing the business strategy. To monitor performance against the Company’s strategic goals, the Board receives regular updates and actively engages in dialogue with our Company’s senior leaders.  The Board’s discussions are enhanced with first-hand experiences, such as visits to specific markets and interaction with key retailers, which provide Directors an opportunity to see strategy execution first hand.
The Board’s oversight and management’s execution of business strategy are intended to help promote the creation of long-term shareowner value in a sustainable manner, with a focus on assessing both opportunities available to us and risks that we may encounter.
Board Oversight of Enterprise Risk.    The Board utilizes our Enterprise Risk Management (“ERM”) process to assist in fulfilling its oversight of our risks. Management, who is responsible for day-to-day risk management, conducts a formal risk assessment of Kellogg’s business annually. The risk assessment process is global in nature and has been developed to identify and assess Kellogg’s current and emerging risks, including the nature of the risk, as well as to identify steps to mitigate and manage each risk (including how ERM is integrated into the Company’s internal audit plan). Over a hundred of our key business leaders, functional heads and other managers are surveyed and/or interviewed in a targeted and strategic manner to develop the Company’s holistic views on enterprise risks.
While risk oversight is a full Board responsibility, the responsibility for monitoring the ERM process has been delegated to the Audit Committee. As such, one of the leaders of the ERM process is the Vice President, Internal Audit, who reports to the Chair of the Audit Committee. The Audit Committee and the full Board at each of their regularly scheduled meetings receive an update on the key enterprise risks, including current status and action items.
The results of the risk assessment are reviewed with the Audit Committee and the full Board. The centerpiece of the assessment is the discussion of key risks which includes the potential magnitude and likelihood of each risk. As part of the process for assessing each risk, management identifies the nature of the risk, the senior executive responsible for managing the risk, the potential impact of the risk, management’s initiatives to manage the risk, the most recent Board or Committee update, and the timing of the next scheduled Board or Committee review.
The results of the risk assessment are then integrated into the Board’s processes. Oversight responsibility for each risk is allocated among the full Board and its Committees, and specific Board and Committee agendas are developed accordingly. Each Committee chair works directly with Kellogg’s key senior executive responsible for the matters allocated to the Committee to develop agenda topics, review materials to be discussed with the Committee, and otherwise discuss those topics relating to the particular Committee. Through this process, each key risk is reviewed at least annually, with many topics reviewed on several occasions throughout the year.
Due to the dynamic nature of risk and the business environment generally, at every Audit Committee meeting, the Company provides a status report on key enterprise risks, and regularly provides a more in depth report on select topics, such as cybersecurity. The Board and the Audit Committee are particularly focused on cybersecurity risk oversight, including response planning, disaster recovery and business continuity considerations. In addition, adjustments are made to Board and Committee agendas throughout the year so that enterprise risks are reviewed at the relevant times. This process facilitates the Board’s ability to fulfill its oversight responsibilities of Kellogg’s risks in a timely and effective manner.

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Majority Voting for Directors; Director Resignation Policy.  Our bylaws contain a majority voting standard for the election of Directors in an uncontested election (that is, an election where the number of nominees is equal to the number of seats open). In an uncontested election, each nominee must be elected by the vote of a majority of the votes cast. A “majority of the votes cast” means the number of votes cast “for” a director’s election must exceed the number of votes cast “against” (excluding abstentions). No Director will be nominated for election or otherwise be eligible for service on the Board unless and until such candidate has delivered an irrevocable resignation to the Nominating and Corporate Governance Committee that would be effective upon (i) such Director’s failure to receive the required vote in an election of Directors and (ii) the Board’s acceptance of the resignation.
If a Director fails to achieve the required vote in an uncontested election, the Nominating and Governance Committee would promptly consider the resignation and recommend to the Board the action to be taken on the offered resignation.
The Board would act on the Nominating and Governance Committee’s recommendation no later than 90 days following the date of the Shareowners’ meeting where the election occurred. The Director whose resignation is under consideration shall not participate in the recommendation of the Nominating and Governance Committee or deliberations of the Board with respect to his or her nomination. Following the Board’s decision, Kellogg would promptly disclose in a current report on Form 8-K the decision whether to accept the resignation as tendered.
To the extent that a resignation is accepted, the Nominating and Governance Committee would recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the Board.
Director Independence.    The Board has determined that all current Directors (other than Mr. Cahillane and Mr. Jenness) are independent based on the following standards: (a) no entity (other than a charitable entity) of which such a Director is an employee in any position or any immediate family member (as defined) is an executive officer, made payments to, or received payments from, Kellogg and its subsidiaries in any of the 2019, 2018, or 2017 fiscal years in excess of the greater of (1) $1,000,000 or (2) two percent of that entity’s annual consolidated gross revenues; (b) no such Director, or any immediate family member employed as an executive officer of Kellogg or its subsidiaries, received in any twelve month period within the last three years more than $120,000 per year in direct compensation from Kellogg or its subsidiaries, other than Director and committee fees and pension or other forms of deferred compensation for prior service not contingent in any way on continued service; (c) Kellogg did not employ such Director in any position, or any immediate family member as an executive officer, during the past three years; (d) no such Director was a current partner or employee of a firm that is Kellogg’s internal or external auditor (“Auditor”), no immediate family member of such Director was a current partner of the Auditor or an employee of the Auditor who personally worked on our audit, and no Director or immediate family member of such Director was during the past three years a partner or employee of the Auditor and personally worked on our audit within that time; (e) no such Director or immediate family member served as an executive officer of another company during the past three years at the same time as a current executive officer of Kellogg served on the compensation committee of such company; and (f) no other material relationship exists between any such Director and Kellogg or our subsidiaries.
The Board also considers from time to time commercial ordinary-course transactions as it assesses independence status, including transactions relating to selling product and marketing arrangements. The Board has concluded that these transactions did not impair Director independence for a variety of reasons including that the amounts in question were considerably under the thresholds set forth in our independence standards and the relationships were not deemed material.
Shareowner Recommendations for Director Nominees.    The Nominating and Governance Committee will consider Shareowner nominations for membership on the Board. For the 2021 Annual Meeting of Shareowners, nominations may be submitted to the Office of the Secretary, Kellogg Company, One Kellogg Square, Battle Creek, Michigan 49017, which will forward them to the Chairman of the Nominating and Governance Committee. Recommendations must be in writing and we must receive the recommendation not earlier than November 10, 2020 and not later than December 10, 2020. Recommendations must also include certain other requirements specified in our bylaws.
When filling a vacancy on the Board, the Nominating and Governance Committee identifies the desired skills and experience of a new Director and nominates individuals who it believes can strengthen the Board’s capabilities and further diversify the collective experience represented by the then-current Directors. The Nominating and

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Governance Committee may, as it has done in the past, engage third parties to assist in the search and provide recommendations. Also, Directors are generally asked to recommend candidates for the position. The candidates would be evaluated based on the process outlined in the Corporate Governance Guidelines and the Nominating and Governance Committee charter, and the same process would be used for all candidates, including candidates recommended by Shareowners. For more information, see “Board and Committee Membership-Nominating and Governance Committee.”
Shareowner Nomination of Director Candidates for Inclusion in Proxy Statement for Annual Meeting. Our bylaws permit a Shareowner, or a group of up to 20 Shareowners, owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in our proxy materials director candidates constituting up to the greater of two individuals or 20% of the Board, provided that the Shareowner(s) and the nominee(s) satisfy the requirements specified in the bylaws. For the 2021 Annual Meeting of Shareowners, nominations may be submitted to the Office of the Secretary, Kellogg Company, One Kellogg Square, Battle Creek, Michigan 49017-3534. Any such nomination must be received by us not earlier than October 11, 2020 and not later than November 10, 2020. Any such nomination must meet the other requirements set forth in our bylaws.
Attendance at Annual Meetings.    All incumbent Directors are expected to attend the Annual Meeting of Shareowners. All of our Directors attended the 2019 Annual Meeting of Shareowners.
Code of Conduct/Ethics.    We have adopted the Code of Conduct for Kellogg Company Directors and Global Code of Ethics for Kellogg Company employees (including the CEO, CFO, other named executive officers, and corporate controller). Any amendments to, or waivers of, the Global Code of Ethics applicable to our CEO, CFO or corporate controller will be posted on www.kelloggcompany.com. There were no amendments to or waivers of the Global Code of Ethics in 2019.
Availability of Corporate Governance Documents.    Copies of the Corporate Governance Guidelines, the Charters of the Audit, C&T, and Nominating and Governance Committees of the Board, the Code of Conduct for Kellogg Company Directors, and Global Code of Ethics for Kellogg Company employees can be found on the Kellogg Company website at www.kelloggcompany.com under “Investor Relations,” then “Corporate Governance.” Shareowners may also request a free copy of these documents from: Kellogg Company Consumer Affairs, P.O. Box CAMB, Battle Creek, Michigan 49016 (phone: (800) 962-1413), the Investor Relations Department at that same address (phone: (269) 961-2800) or [email protected]


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BOARD AND COMMITTEE MEMBERSHIP
The Board routinely reviews Board composition to ensure that it has the right balance of skills to fulfill its oversight obligations for Shareowners. As part of that process, the Nominating and Governance Committee and the Board consider current tenure and potential retirements.
The Board had the following standing committees in 2019: (i) Audit; (ii) C&T; (iii) Nominating and Governance; (iv) Manufacturing; (v) Social Responsibility and Public Policy; and (vi) Executive.
The Board held eight meetings in 2019. All of the incumbent Directors attended at least 75% of the total number of meetings of the Board and of all Board committees of which the Directors were members during 2019 that were held while such Directors were on the Board.
The table below provides 2019 membership and meeting information for each Board Committee as of December 28, 2019 (last day of fiscal year):
Name (4)
 
Audit
 
Compensation and Talent Management
 
Nominating and Governance
 
 Manufacturing
 
Social Responsibility and Public Policy
 
Executive
Stephanie Burns
 
Chair
 
 
 
ü
 
 
 
 
 
ü
Steve Cahillane (1)
 
 
 
 
 
 
 
 
 
 
 
Chair
Carter Cast
 
ü
 
 
 
 
 
 
 
ü
 
 
Richard Dreiling
 
ü
 
ü

 
 
 
 
 
 
 
 
Rod Gillum (2)
 
 
 
 
 
 
 
ü

 
ü

 
 
Zachary Gund
 
 
 
ü
 
ü
 
Chair
 
 
 
ü
Jim Jenness
 
 
 
 
 
 
 
ü
 
ü
 
 
Don Knauss
 
ü
 
ü
 
Chair
 
 
 
 
 
ü
Mary Laschinger
 
 
 
Chair
 
ü
 
 
 
 
 
ü
Erica Mann (3)
 
ü

 
 
 
 
 
 
 
 
 
 
La June Montgomery Tabron
 
 
 
 
 
 
 
ü
 
Chair
 
ü
Carolyn Tastad
 
 
 
ü
 
 
 
ü
 
 
 
 
2019 Meetings Held
 
5
 
5
 
3
 
4
 
3
 
 
(1)
Mr. Cahillane is not a formal member of any Committee (other than Executive) and attends meetings for each committee.
(2)
Mr. Gillum was elected as Director and his initial term commenced on February 21, 2019. Mr. Gillum was re-elected to a three-year term at the 2019 Annual Shareowners' Meeting.
(3)
Ms. Mann was elected as Director and her initial term commenced on February 21, 2019. Ms. Mann was re-elected to a three-year term at the 2019 Annual Shareowners' Meeting.
(4)
Ms. Cynthia Milligan retired from the Board in 2019. Consequently, she is not included in the table above because she was not a member of the Board of Directors as of December 28, 2019. During 2019, Ms. Milligan served on the Manufacturing and Executive Committees and was the Chair of the Social Responsibility and Public Policy Committee
Audit Committee.    Pursuant to a written charter, the Audit Committee, among other things, assists the Board in monitoring (a) the integrity of the financial statements of the Company; (b) the independence and performance of the Company’s independent registered public accounting firm; (c) the performance of the Company’s internal audit function; (d) the Company’s ERM process and key risks; (e) compliance by the Company with legal and regulatory requirements; and (f) other related matters. The Audit Committee, or its Chair, also pre-approves all audit, audit-related, internal control-related and permitted non-audit engagements and services by the independent registered public accounting firm and their affiliates. It also discusses and/or reviews specified matters with, and receives specified information or assurances from, Kellogg management and the independent registered public accounting

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firm. The Committee also has the sole authority to appoint, subject to Shareowner ratification, or replace the independent registered public accounting firm, which directly reports to the Audit Committee, and is directly responsible for the compensation and oversight of the independent registered public accounting firm. As part of the annual auditor engagement process, the Audit Committee considers whether to rotate the independent registered public accounting firm. PricewaterhouseCoopers LLP rotates its lead audit engagement partner every five years and the Audit Committee had direct and meaningful involvement in the selection of the lead engagement partner. Ms. Burns, the Chair of the Audit Committee, and Mr. Knauss have each been determined by the Board to be an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of SEC Regulation S-K.  The Board has determined that each member of the Audit Committee meets the definition of independence under our Corporate Governance Guidelines and the requirements of the New York Stock Exchange.
Compensation and Talent Management Committee.    Pursuant to a written charter, the C&T Committee, among other things: (a) reviews and approves the compensation philosophy and principles for senior executives; (b) reviews and makes recommendations for the compensation of senior management personnel and monitors overall compensation for senior executives, including reviewing risks arising from Kellogg’s compensation policies and practices; (c) reviews and recommends the compensation of the CEO; (d) has sole authority to retain or terminate any compensation consultant or other advisor used to evaluate senior executive compensation; (e) oversees and administers employee benefit plans to the extent provided in those plans; (f) reviews with management employment and employment-related matters and employment programs; (g) reviews trends in management compensation; (h) reviews talent development; and (i) reviews the Company’s diversity and inclusion programs and policies. The Committee may form and delegate authority to subcommittees or the Chair when appropriate.
The C&T Committee, or its Chair, also approves all engagements and services to be performed by any consultants or advisors to the Committee. To assist the Committee in discharging its responsibilities, the Committee has retained an independent compensation consultant — Frederic W. Cook (“FW Cook”). The consultant reports directly to the C&T Committee. Prior to retaining any such consultant, or other advisor, the Committee must consider whether the work of such consultant or other advisor would raise a conflict of interest according to the independence factors enumerated by the New York Stock Exchange, as well as any other factors the Committee determines to be relevant. Other than the work it performs for the C&T Committee and the Board, FW Cook does not provide any consulting services to Kellogg or its executive officers. For additional information about the independence of the Committee’s consultant, refer to “Compensation Discussion and Analysis — Compensation Approach — Independence.”
The Board has determined that each member of the C&T Committee meets the definition of independence under our Corporate Governance Guidelines and the requirements of the New York Stock Exchange and further qualifies as a non-employee Director for purposes of Rule 16b-3 under the Securities Exchange Act of 1934. The members of the Committee are not current or former employees of Kellogg, are not eligible to participate in any of our executive compensation programs, do not receive compensation that would impair their ability to make independent judgments about executive compensation, and are not “affiliates” of the Company, as defined under Rule 10c-1 under the Securities Exchange Act of 1934.
The C&T Committee is charged with overseeing the review and assessment of risks arising from Kellogg’s compensation policies and practices. This includes the Committee’s annual review of our compensation program for design features considered to encourage excessive risk taking and Kellogg’s approach to those features. As part of its review, the Committee also assesses perspectives from independent experts and regulators. Kellogg uses a number of approaches to mitigate excessive risk taking, including significant weighting towards long-term incentive compensation, emphasizing qualitative goals in addition to a variety of quantitative metrics, equity ownership guidelines and clawback policies. As a result of this review, together with input from the independent compensation consultant, the C&T Committee determined that the risks arising from Kellogg’s compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on Kellogg.
For additional information about the C&T Committee’s processes for establishing and overseeing executive compensation, refer to “Compensation Discussion and Analysis — Compensation Approach.”
Manufacturing Committee. Pursuant to a written charter, the Manufacturing Committee, among other things, assists the Board in discharging its oversight responsibilities, with the primary focus on Kellogg’s food quality and safety, manufacturing facility operations, and people and labor strategies. As it deems appropriate, the Committee

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reviews policies, programs and practices, and provide strategic advice and counsel concerning the matters set forth above including, but not limited to, food safety, employee health and safety, capacity utilization and planning, contingency planning, productivity programs, commodity purchasing and hedging programs, people utilization and union and non-union strategies. The Committee also regularly reviews global food safety and people safety performance reports, including results of regulatory audits, as well as supply chain financial performance.
Nominating and Governance Committee. Pursuant to a written charter, the Nominating and Governance Committee, among other things, assists the Board by (a) identifying and reviewing the qualifications of candidates for Director and in determining the criteria for new Directors; (b) recommending nominees for Director to the Board; (c) recommending committee assignments; (d) reviewing annually the Board’s compliance with the Corporate Governance Guidelines; (e) reviewing annually the Corporate Governance Guidelines and recommending changes to the Board; (f) monitoring the performance of Directors and conducting performance evaluations of each Director before the Director’s re-nomination to the Board; (g) administering the annual evaluation of the Board; (h) providing annually an evaluation of CEO performance used by the independent members of the Board in their annual review of CEO performance; (i) considering and evaluating potential waivers of the Code of Conduct for Directors and Global Code of Ethics for senior officers (for which there were none in 2019); (j) making a report to the Board on CEO succession planning at least annually; (k) providing an annual review of the independence of Directors to the Board; (l) reviewing and recommending to the Board responses to Shareowner proposals; and (m) reviewing Director compensation. The Chair of the Nominating and Governance Committee, as Lead Director, also presides at executive sessions of independent Directors of the Board. Each of the Nominating and Governance Committee members meets the independence requirements of the New York Stock Exchange.
Social Responsibility and Public Policy Committee. Pursuant to a written charter, the Social Responsibility and Public Policy Committee, among other things, assists the Board in discharging its oversight responsibilities with respect to certain social and public policy issues. The Committee also reviews the Company’s (a) policies, programs and practices concerning public policy; (b) government relations; (c) regulatory matters; (d) philanthropic activities/charitable contributions; and (e) related topics. The Committee is particularly focused on the intersection of philanthropy, public policy, sustainability and the Company’s goals.  The Committee also oversees the Company’s sustainability efforts and climate policy.  At the executive level, environmental and social issues in our supply chain are overseen by our Chief Sustainability Officer, who regularly discusses and reviews specified matters with the Committee.  The work of the Chief Sustainability Officer and the Committee is aligned with and included in parallel work streams within internal audit and our Audit Committee.  Policies and strategies overseen by the Committee are aligned with our lobbying, advocacy, and membership efforts.   
Executive Committee.    Pursuant to a written charter, the Executive Committee is generally empowered to act on behalf of the Board between meetings of the Board, with some exceptions.

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PROPOSAL 1 — ELECTION OF DIRECTORS
For more than 110 years, consumers have counted on Kellogg for great-tasting, high-quality and nutritious foods. Kellogg is the world’s leading producer of cereal, second largest producer of crackers, and a leading producer of savory snacks and frozen foods. Additional product offerings include toaster pastries, cereal bars, and veggie foods. Kellogg products are manufactured and marketed globally. As such, we believe that in order for our Board to effectively guide Kellogg to long-term sustainable, dependable performance, it should be composed of individuals with sophistication and experience in the many disciplines that impact our business. In order to best serve Kellogg and our Shareowners, we seek to have a Board, as a whole, that is competent in key corporate disciplines, including accounting and financial acumen, business judgment, crisis management, governance, leadership, people management, risk management, social responsibility and reputational issues, strategy and strategic planning. In addition, the Board desires to have specific knowledge related to Kellogg’s industry, such as expertise in branded consumer products and consumer dynamics, health and nutrition, innovation / research and development, international markets, manufacturing and supply chain, marketing, regulatory and government affairs, the retail environment, and sales and distribution.
The Nominating and Governance Committee believes that all Directors must, at a minimum, meet the criteria set forth in the Board’s Code of Conduct and the Corporate Governance Guidelines, which specify, among other things, that the Nominating and Governance Committee will consider criteria such as independence, diversity, age, skills and experience in the context of the needs of the Board. In addressing issues of diversity in particular, the Nominating and Governance Committee considers a nominee’s differences in viewpoint, professional experience, background, education, skill, age, race, gender and national origin. The Nominating and Governance Committee believes that diversity of backgrounds and viewpoints is a key attribute for a director nominee. The Committee seeks a diverse Board that is representative of our global business, Shareowners, consumers, customers, and employees. While the Nominating and Governance Committee carefully considers diversity when determining Board composition, it has not established a formal policy regarding diversity. The Nominating and Governance Committee also will consider a combination of factors for each director, including whether the nominee (1) has the ability to represent all Shareowners without a conflict of interest; (2) has the ability to work in and promote a productive environment; (3) has sufficient time and willingness to fulfill the substantial duties and responsibilities of a Director; (4) has demonstrated the high level of character and integrity that we expect; (5) possesses the broad professional and leadership experience and skills necessary to effectively respond to the complex issues encountered by a multi-national, publicly-traded company; and (6) has the ability to apply sound and independent business judgment.
The Nominating and Governance Committee has determined that all of our Directors meet the criteria and qualifications set forth in the Board’s Code of Conduct, the Corporate Governance Guidelines and the criteria set forth above for director nominees. Moreover, each Director possesses the following critical personal qualities and attributes that we believe are essential for the proper functioning of the Board to allow it to fulfill its duties for our Shareowners: accountability, ethical leadership, governance, integrity, risk management, and sound business judgment. In addition, our Directors have the mature confidence to assess and challenge the way things are done and recommend alternative solutions, a keen awareness of the business and social realities of the global environment in which Kellogg operates, the independence and high performance standards necessary to fulfill the Board’s oversight function, and the humility, professional maturity, and style to interface openly and constructively with other Directors. Finally, the Director biographies below include a non-exclusive list of other key experiences and qualifications that further qualify the individual to serve on the Board. These collective qualities, skills, experiences and attributes are essential to our Board’s ability to exercise its oversight function for Kellogg and its Shareowners, and guide the long-term sustainable, dependable performance of Kellogg.
Our amended and restated certificate of incorporation and bylaws provide that the Board shall be composed of not less than seven and no more than fifteen Directors divided into three classes as nearly equal in number as possible, and that each Director shall be elected for a term of three years with the term of one class expiring each year. The Board prefers approximately twelve members, but expands the Board in order to add outstanding candidates or to prepare for an orderly transition with respect to departures of Directors.

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Four Directors have been nominated for re-election at the 2020 Annual Meeting to serve for a term ending at the 2023 Annual Meeting of Shareowners, and the proxies cannot be voted for a greater number of persons than the number of nominees named. There are currently twelve members of the Board.
The Board recommends that the Shareowners vote “FOR” the following nominees: Stephanie Burns, Ph.D., Steve Cahillane, Richard Dreiling and La June Montgomery Tabron. Each nominee was recommended for re-election by the Nominating and Governance Committee for consideration by the Board and proposal to the Shareowners. If, before the Annual Meeting, any nominee becomes unable to serve, or chooses not to serve, the Board may nominate a substitute. If that happens, the persons named as proxies on the proxy card will vote for the substitute. Alternatively, the Board may either let the vacancy stay unfilled until an appropriate candidate is identified or reduce the size of the Board to eliminate the unfilled seat.
We have a balanced Board which individually possesses the leadership and character commensurate with the role of director, and which collectively possesses the mix of skills necessary to provide appropriate oversight of a company the size and complexity of Kellogg. In addition, the Board possesses a strong mix of experienced and newer directors. The following skills have been identified by the Board as core competencies:
Accounting and Financial Acumen
Branded Consumer Products / Consumer Dynamics
Crisis Management
Health and Nutrition
Innovation / Research and Development
International and Emerging Markets
People Management
Manufacturing and Supply Chain
Marketing / Brand Building
Regulatory / Government
Retail Environment
Risk Management
Sales and Distribution
Social Responsibility
Strategy / Strategic Planning
Our Directors possess many of these competencies. For purposes of this Proxy Statement, the Director biographies highlight five of these competencies that each Director possesses.

Nominees for Election for a Three-Year Term Expiring at the 2023 Annual Meeting.

 
403243002_burnssa04.jpg
STEPHANIE BURNS, Ph.D.  Dr. Burns, age 65, has served as a Kellogg Director since February 2014. Dr. Burns served as Chief Executive Officer of Dow Corning Corporation from 2004 to 2011 and its Chairman from 2006 through 2011. She began her career with Dow Corning in 1983 and later became Dow Corning’s first director of women’s health. Dr. Burns was elected to the Dow Corning Board of Directors in 2001 and elected as President in 2003. Dr. Burns is a director of Corning Incorporated and HP Inc., and within the past five years, Dr. Burns has also served as a director of GlaxoSmithKline plc.

As a result of these professional and other experiences, Dr. Burns has been determined to be an “Audit Committee Financial Expert” under the SEC’s rules and regulations, possesses particular knowledge and experience in a variety of areas, including accounting and financial acumen, risk management, crisis management, innovation / research and development, regulatory and government affairs, and public company board experience (including specific experience in compensation, corporate relations, manufacturing, and social responsibility oversight) that strengthens the Board’s collective knowledge, capabilities and experience.
 
 
 
 
 
 
 
 



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STEVE CAHILLANE. Mr. Cahillane, 54, has been Chairman of the Board of Kellogg Company since March 2018, and President and Chief Executive Officer since October 2017. He has also served as a Kellogg Director since October 2017. Prior to joining Kellogg, Mr. Cahillane served as Chief Executive Officer and President, and as member of the board of directors, of Alphabet Holding Company, Inc., and its wholly-owned operating subsidiary, The Nature’s Bounty Co. from September 2014. Prior to that, Mr. Cahillane served as Executive Vice President of The Coca-Cola Company from February 2013 to February 2014 and President of Coca-Cola Americas, the global beverage maker’s largest business, with $25 billion in annual sales at that time, from January 2013 to February 2014. Mr. Cahillane served as President of various Coca-Cola operating groups from 2007 to 2012. He has also been a trustee of the W. K. Kellogg Foundation Trust since 2018.

As a result of these professional and other experiences, Mr. Cahillane possesses particular knowledge and experience in a variety of areas, including strategy and strategic planning, marketing / brand building, sales and distribution, innovation / research and development, branded consumer products and consumer dynamics, health and nutrition, and international and emerging markets that strengthens the Board’s collective knowledge, capabilities and experience.
 
 
 
 
 
 
 
 

 
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RICHARD DREILING. Mr. Dreiling, age 66, has served as a Kellogg Director since June 2016. Mr. Dreiling is Chairman of the Board of Lowe’s Companies Inc. He previously served as Chief Executive Officer of Dollar General Corporation until his retirement in June 2015. He was also Chairman of Dollar General from December 2008 to January 2016, and served as Senior Advisor from June 2015 to January 2016. Mr. Dreiling has more than 40 years of diverse retail industry experience in consumer discount, drug store and grocery sectors. He spent 34 years with Safeway, Inc. in roles spanning marketing, manufacturing, distribution, merchandising and retail operations. Mr. Dreiling is also a director of Aramark and PulteGroup Inc.

As a result of these and other experiences, Mr. Dreiling possesses particular knowledge and experience in a variety of areas, including accounting and financial acumen, risk management, people management, strategy and strategic planning the retail environment, and public company board experience that strengthens the Board’s collective knowledge, capabilities and experience.
 
 
 
 
 
 
 
 

 
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LA JUNE MONTGOMERY TABRON. Ms. Montgomery Tabron, age 57, has served as a Kellogg Director since February 2014. Ms. Montgomery Tabron was elected President and CEO of the W.K. Kellogg Foundation effective January 2014. She is also a member of the Board of Trustees of the W.K. Kellogg Foundation since January 2014. During her 31 years with the W.K. Kellogg Foundation, she held various positions in finance, including Executive Vice President of Operations and Treasurer from March 2012 to December 2013, COO and Treasurer from January 2010 to February 2012, Vice President of Finance and Treasurer from September 2000 to December 2009, Assistant Vice President of Finance and Assistant Treasurer from September 1997 to September 2000, and Controller from May 1987 to September 1997. Ms. Montgomery Tabron has also been a trustee of the W.K. Kellogg Foundation Trust since 2014.

As a result of these professional and other experiences, Ms. Montgomery Tabron possesses particular knowledge and experience in a variety of areas, including crisis management, strategy and strategic planning, social responsibility, health and nutrition, regulatory and government, and private company board experience (including specific experience in social responsibility oversight) that strengthens the Board’s collective knowledge, capabilities and experience. She also has a unique sense of shareowner perspectives.
 
 
 
 
 
 
 
 


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Continuing Directors to Serve Until the 2022 Annual Meeting.

 
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ROD GILLUM.  Mr. Gillum, age 69, has served as a Kellogg Director since February 2019. He has served as a member of the Board of Trustees of the W.K. Kellogg Foundation since December 2006. He also served as board chair in 2012-2013 and co-trustee of the W.K. Kellogg Foundation Trust from March 2017 to February 2019. Mr. Gillum is a Principal in the Detroit law office of Jackson Lewis P.C. and co-leads the Firm’s Automotive Industry Team. His practice concentrates on corporate strategies related to crisis management, labor relations and legal risk avoidance. Prior to joining Jackson Lewis, Mr. Gillum was a senior leader at General Motors (GM), where he rose to become Secretary to the GM board of directors, and later Vice President, Corporate Responsibility & Diversity. As a co-leader of the Public Policy Center, based in North America, Europe, Asia, and Latin America, Mr. Gillum developed and coordinated global policy positions on safety, trade and government relations. He also chaired the General Motors Foundation.

As a result of these and other experiences, Mr. Gillum possesses particular knowledge and experience in a variety of areas, including in risk management, crisis management, strategy and strategic management, social responsibility, and regulatory and government that strengthens the Board’s collective knowledge, capabilities and experience.
 
 
 
 
 
 
 
 

 
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MARY LASCHINGER.  Ms. Laschinger, age 59, has served as a Kellogg Director since October 2012. She is Chairman of the Board and CEO of Veritiv Corporation. Previously, Ms. Laschinger served as Senior Vice President of International Paper Company from 2007 to June 2014, and as President of the xpedx, International Paper’s former distribution business, from January 2010 to June 2014. She also served as President of the Europe, Middle East, Africa and Russia business at International Paper, Vice President and General Manager of International Paper’s Wood Products and Pulp businesses, as well as in other senior management roles in sales, marketing, manufacturing and supply chain at International Paper.

As a result of these professional and other experiences, Ms. Laschinger possesses particular knowledge and experience in a variety of areas, including crisis management, people management, sales and distribution, branded consumer products and consumer dynamics, international and emerging markets, and has public company board experience that strengthens the Board’s collective knowledge, capabilities and experience.

 
 
 
 
 
 
 
 

 
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ERICA MANN. Ms. Mann, age 61, has served as a Kellogg Director since February 2019. Ms. Mann previously served as a member of the Board of Management of Bayer AG from January 2016 to March 2018, and Bayer AG CH from January 2016 to March 2018. She was also President Consumer Health, Bayer Healthcare LLC from March 2011 to December 2015. Before joining Bayer HealthCare, Ms. Mann was President and General Manager of Pfizer Nutritional Health, a global business unit with operations in more than 80 countries, and served as a member of the Pfizer Senior Management Team from 2008 to 2011. Ms. Mann joined Pfizer upon its acquisition of Wyeth, where as Senior Vice President of Nutrition, she helped establish the shape and strategic direction of the new nutrition business unit. She also has significant experience at other Fortune 500 companies, including Ely Lilly & Company and Johnson & Johnson, and has held leadership positions in South Africa, Australia, New Zealand, Germany, Switzerland and the United States. Ms. Mann is a director of Perrigo Company plc and DSM, a global Nutrition, Health and Sustainable Living company.

As a result of these and other experiences, Ms. Mann possesses particular knowledge and experience in a variety of areas, including risk management, accounting and financial acumen, strategy and strategic planning, health and nutrition, social responsibility, and international and emerging markets that strengthens the Board's collective knowledge, capabilities and experience.

 
 
 
 
 
 
 
 


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CAROLYN TASTAD. Ms. Tastad, age 58, has served as a Kellogg Director since December 2015. She is currently Group President, Procter & Gamble, North America. Ms. Tastad has worked at Procter & Gamble (“P&G”) since 1983, and has significant acquisition integration experience and business model reinvention. She has led large multi-category regional businesses and smaller entrepreneurial global businesses, including responsibility for leading P&G’s selling organization across all sectors and all regions. Ms. Tastad is executive sponsor of P&G’s Gender Equality citizenship effort and leads P&G’s Corporate Women’s Leadership Team. Ms. Tastad previously served in executive roles in the U.S., Canada, and Switzerland.

As a result of these professional and other experiences, Ms. Tastad possesses particular knowledge and experience in a variety of areas, including people management, marketing, sales and distribution, branded consumer products and consumer dynamics, and international and emerging markets that strengthens the Board’s collective knowledge, capabilities and experience.
 
 
 
 
 
 
 
 

Continuing Directors to Serve Until the 2021 Annual Meeting.

 
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CARTER CAST. Mr. Cast, age 56, has served as a Kellogg Director since June 2017. Mr. Cast is currently a venture partner at Pritzker Group Venture Capital and is on faculty at Northwestern University’s Kellogg School of Management, where he is a clinical professor teaching entrepreneurship, innovation and marketing. Mr. Cast served as CEO of the online retail company, Hayneedle, Inc., from September 2007 until June 2011. Mr. Cast brings vast experience in the digital arena, previously helping to build and then lead Walmart.com, as its CEO. Prior to 2000, he led the launch of the Blue Nile brand, the leading online jewelry retailer and also served as the Chief Marketing Officer at eBay. He also has previously served as the Vice President of Product Marketing and Marketing Communications at Electronic Arts. Mr. Cast has significant leadership experience as well at other Fortune 500 companies, including PepsiCo where he was a marketing executive, and Frito-Lay where he managed its $1.5 billion tortilla chip category.

As a result of these professional and other experiences, Mr. Cast possesses particular knowledge and experience in a variety of areas, including accounting and financial acumen, risk management, branded consumer products and consumer dynamics, social responsibility, and the retail environment (including the e-commerce channel / business model) that strengthens the Board’s collective knowledge, capabilities and experience.
 
 
 
 
 
 
 
 
 

 
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ZACHARY GUND. Mr. Zachary Gund, age 49, has served as a Kellogg Director since December 2014. He is currently a Managing Partner of Coppermine Capital, LLC, a private investment firm he founded in 2001. Mr. Gund makes investment decisions and oversees several portfolio companies across many different sectors. His work has spanned both the manufacturing and service industries, including food manufacturing.

As a result of these professional and other experiences, Mr. Gund possesses particular knowledge and experience in a variety of areas, including accounting and financial acumen, crisis management, people management, the retail environment, and manufacturing and supply chain that strengthens the Board’s collective knowledge, capabilities and experience. He also has a unique sense of shareowner perspectives. Mr. Zachary Gund is the son of Mr. Gordon Gund.
 
 
 
 
 
 
 
 


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JIM JENNESS.  Mr. Jenness, age 73, has served as a Kellogg Director since July 2000. He was our Executive Chairman from February 2005 until June 2014, and served as our CEO from February 2005 through December 30, 2006. He also served as CEO of Integrated Merchandising Systems, LLC, a leader in outsource management of retail promotion and branded merchandising, from 1997 to December 2004. Before joining Integrated Merchandising Systems, Mr. Jenness served as Vice Chairman and COO of the Leo Burnett Company from 1996 to 1997 and, before that, as Global Vice Chairman North America and Latin America from 1993 to 1996. He is a director of Prestige Consumer Healthcare, Inc. and within the past five years, he also served as a director of Kimberly-Clark Corporation. Mr. Jenness also served as a trustee of the W.K. Kellogg Foundation Trust from 2005 to 2015.

As a result of these professional and other experiences, Mr. Jenness possesses particular knowledge and experience in a variety of areas, including social responsibility, marketing, innovation / research and development, manufacturing and supply chain, health and nutrition, and has public company board experience that strengthens the Board’s collective knowledge, capabilities and experience. As a former CEO, he has unique insights into the operations of the Company’s global business.
 
 
 
 
 
 
 
 

 
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DON KNAUSS. Mr. Knauss, age 69, has served as a Kellogg Director since December 2007. Mr. Knauss retired as Executive Chairman of the Board of The Clorox Company in July 2015. He had served as Chairman and CEO of The Clorox Company from 2006 to 2014. He was Executive Vice President of The Coca-Cola Company and President and COO for Coca-Cola North America from February 2004 until September 2006. Previously, he was President of the Retail Division of Coca-Cola North America from January 2003 through February 2004 and President and CEO of The Minute Maid Company, a division of The Coca-Cola Company, from January 2000 until January 2003 and President of Coca-Cola Southern Africa from March 1998 until January 2000. Prior to that, he held various positions in marketing and sales with PepsiCo, Inc. and Procter & Gamble, and served as an officer in the United States Marine Corps. In addition, Mr. Knauss is a director of McKesson Corporation and Target Corporation.

As a result of these professional and other experiences, Mr. Knauss has been determined to be an “Audit Committee Financial Expert” under the SEC’s rules and regulations, possesses particular knowledge and experience in a variety of areas, including accounting and financial acumen, risk management, crisis management, people management, the retail environment, and has public company board experience (including specific experience in auditing, manufacturing, and marketing oversight) that strengthens the Board’s collective knowledge, capabilities and experience.



 
 
 
 
 
 
 
 



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2019 DIRECTOR COMPENSATION AND BENEFITS
Only non-employee Directors receive compensation for their services as Directors. For information about the compensation of Mr. Cahillane, refer to “Executive Compensation” beginning on page 41.
Our 2019 compensation for non-employee Directors was comprised of annual retainers and equity-based grants. The annual pay is designed to attract and retain diverse, highly-qualified, seasoned, and independent professionals to represent all of our Shareowners, and is targeted against the median of our Compensation Peer Group. Refer to “Compensation Discussion and Analysis — Compensation Approach” for a description of the companies that make up our Compensation Peer Group. The Nominating and Governance Committee reviews our Director compensation program on an annual basis with FW Cook, the independent compensation consultant. FW Cook provides counsel to the Committee in a variety of ways, including an in-depth study that reports and analyzes the director compensation programs in the Compensation Peer Group in an effort to ensure that our program is competitive, consistent with market practice, and designed to attract qualified directors. Although the Nominating and Governance Committee conducts this review on an annual basis, it generally considers adjustments to Director compensation every other year.
Our compensation is designed to create alignment between our non-employee Directors and our Shareowners through the use of equity-based grants. In 2019, approximately 60% of non-employee Director pay was in equity and approximately 40% was in cash, exclusive of Lead Director and Committee Chair retainers.
Compensation as of December 28, 2019 (end of fiscal year), for non-employee Directors consisted of the following:
Type of Compensation
 
Value
Annual Cash Retainer (paid in quarterly installments)
 
$105,000
Annual Stock Awards Retainer (issued on May 6, 2019)
 
$155,000
Annual Cash Retainer for Lead Director / Committee Chair:
 
 
Lead Director
 
$30,000
Audit Committee
 
$20,000
C&T Committee
 
$20,000
Nominating and Governance Committee
 
$20,000
All Other Committees (other than Executive Committee where no retainer is paid)
 
$15,000
Actual annual pay varies somewhat among non-employee Directors based primarily on committee chair responsibilities. To the extent the dollar value of the Annual Stock Awards Retainer exceeds $155,000 at the time of the grant, the excess amount is deducted from the Annual Cash Retainer payments.
Stock Awards.    Stock awards are granted in early May and for non-employee Directors are automatically deferred pursuant to the Kellogg Company Grantor Trust for Non-Employee Directors. Under the terms of the Grantor Trust, shares are available to a Director only upon termination of service on the Board.
Business Expenses.    Kellogg pays for the business expenses related to Directors attending Kellogg meetings, including room, meals and transportation to and from Board and Committee meetings. Directors are also eligible to be reimbursed for attendance at qualified Director education programs.
Director and Officer Liability Insurance and Travel Accident Insurance.    Director and officer liability insurance (“D&O Insurance”) insures our Directors and officers against certain losses that they are legally required to pay as a result of their actions while performing duties on our behalf. Our D&O Insurance policy does not identify the premium for Directors versus officers and, therefore, a dollar amount cannot be assigned for individual Directors. Travel accident insurance provides benefits to each Director in the event of death or disability (permanent and total) during travel on Kellogg chartered and/or commercial aircraft. Our travel accident insurance policy also covers employees and others while traveling on Kellogg chartered and/or commercial aircraft and, therefore, a dollar amount cannot be assigned for individual Directors.

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Elective Deferral Program.    Under the Deferred Compensation Plan for Non-Employee Directors, non-employee Directors may each year irrevocably elect to defer all or a portion of their Board annual cash retainer payable for the following year. The amount deferred is credited to an account in the form of units equivalent to the fair market value of our common stock. If the Board declares dividends, a fractional unit representing the dividend is credited to the account of each participating Director. A participant’s account balance is paid in stock upon termination of service as a Director. The balance is paid in a lump sum or in up to ten annual installments at the election of the Director. In the case of annual installments, dividend equivalents are earned and credited to the participant’s unpaid balance on the date earned until the account is distributed in full.
Minimum Stock Ownership Requirement.    All non-employee Directors are expected to comply with stock ownership guidelines, under which they are expected to hold at least five times the annual cash retainer ($525,000 — five times the $105,000 cash retainer) in stock or stock equivalents, subject to a five-year phase-in period for newly-elected Directors. As of December 28, 2019, all of the non-employee Directors exceeded or were on track to meet this requirement. Mr. Cahillane is expected to comply with the stock ownership guidelines described in “Compensation Discussion and Analysis — Compensation Policies — Executive Stock Ownership Guidelines,” which is at least six times annual base salary. Mr. Cahillane is on track to meet this requirement.



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Directors’ Compensation Table
The individual components of the total compensation calculation reflected in the table below are as follows:
Fees and Retainers.    The amounts shown under the heading “Fees Earned or Paid in Cash” consist of annual retainers earned by or paid in cash to our non-employee Directors in 2019.
Stock Awards.    The amounts disclosed under the heading “Stock Awards” consist of the annual grant of deferred shares of common stock, which are placed in the Kellogg Company Grantor Trust for Non-Employee Directors. The dollar amounts for the awards represent the grant-date fair value calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 (Compensation — Stock Compensation).
Name
 
Fees Earned or Paid in Cash
($)(1)
 
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
($)
 
Total
($)
 
Stephanie A. Burns
 
124,963
 
155,037

 

 

 

 

 
280,000
 
Carter Cast
 
104,963
 
155,037

 

 

 

 

 
260,000
 
Richard Dreiling
 
104,963
 
155,037

 

 

 

 

 
260,000
 
Rod Gillum (6)
 
96,704
 
181,269

 
 
 
 
 
 
 
 
 
277,973
 
Zachary Gund
 
119,963
 
155,037

 

 

 

 

 
275,000
 
Jim Jenness
 
104,963
 
155,037

 

 

 

 

 
260,000
 
Donald Knauss
 
154,963
 
155,037

 

 

 

 

 
310,000
 
Mary Laschinger
 
124,963
 
155,037

 

 

 

 

 
280,000
 
Erica Mann (7)
 
96,704
 
181,269

 

 

 

 

 
277,973
 
La June Montgomery Tabron
 
119,963
 
155,037

 

 

 

 

 
275,000
 
Carolyn Tastad
 
104,963
 
155,037

 

 

 

 

 
260,000
 
Cynthia Milligan (8)
 
26,250
 

 

 

 

 

 
26,250
 
(1)
The amount reflects the aggregate dollar amount of all fees earned or paid in cash for services as a non-employee Director. Differences reflect time on the Board during 2019, timing of quarterly payments, and cash retainers paid to Committee Chairs and the Lead Director.
(2)
The amount reflects the grant-date fair value calculated in accordance with FASB ASC Topic 718 for the annual grant of 2,701 deferred shares of common stock. Refer to Notes 1 and 9 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019. The grant-date fair value of the stock-based awards will likely vary from the actual value the Director receives. The actual value the Director receives will depend on the number of shares and the price of our common stock when the shares or their cash equivalent are distributed. The number of shares of common stock held by each of our Directors is shown under “Security Ownership — Officer and Director Stock Ownership” on page 5 of this proxy statement.
(3)
Kellogg does not grant stock options to non-employee Directors.
(4)
Kellogg does not have a non-equity incentive plan for non-employee Directors.
(5)
Kellogg does not have a pension plan for non-employee Directors and does not pay above-market or preferential rates on non-qualified deferred compensation for non-employee Directors.
(6)
Mr. Gillum began his initial term on February 21, 2019. The amount reflects the prorated portion of the stock awards granted for his service as a Director prior to the 2019 Annual Meeting of Shareowners. This grant was an addition to the stock awards granted in May 2019 to all of the then-current non-executive Directors for service after the 2019 Annual Meeting of Shareowners.

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(7)
Ms. Mann began her initial term on February 21, 2019. The amount reflects the prorated portion of the stock awards granted for her service as a Director prior to the 2019 Annual Meeting of Shareowners. This grant was an addition to the stock awards granted in May 2019 to all of the then-current non-executive Directors for service after the 2019 Annual Meeting of Shareowner.
(8)
Ms. Milligan retired as a Director at the 2019 Annual Meeting of Shareowners. The amount reflects compensation she received for her service as Director until the 2019 Annual Meeting of Shareowners.


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COMPENSATION DISCUSSION AND ANALYSIS
In order to present Kellogg’s executive compensation program in a simple and understandable manner, the Compensation Discussion and Analysis (“CD&A”) has been organized into the following sections:
A.
Key Decisions Summary – an overview of compensation decisions and program updates.
B.
Core Principles – the fundamental tenets upon which our compensation program is built, such as “pay for performance.”
C.
Compensation Approach – the process used to develop plan design, set compensation, and verify that actual pay is consistent with our Core Principles.
D.
Compensation Plans and Design – the specific elements of the compensation program and 2019 pay.
E.
Compensation Policies – key policies that govern the operation of the plans.
It is important to read this section in conjunction with the detailed tables and narrative descriptions under “Executive Compensation” beginning on page 41 of this proxy statement.
In this proxy statement, we refer to our CEO, CFO, former CFO, and the other three individuals as our “named executive officers” or “NEOs.”
A.    Key Decisions Summary. The C&T Committee took the following key actions:
2019 Annual Incentive Plan (“AIP”) Payouts (Pay for Performance). For our 2019 AIP, the formulaic result of the Company’s 2019 performance for corporate employees, including a majority of our NEOs, is 95% of target. In exercising its judgment-based methodology to ensure pay is consistent with the Company’s performance, the C&T Committee considered a number of factors for corporate employees, including: (i) actual performance that was slightly below the 2019 AIP financial targets for net sales and operating profit growth; (ii) the Company’s improved organic net sales performance that was the highest since 2012 and grew in each region of the business, including strong growth in Europe, Latin America and Asia Pacific, Middle East, Africa (“AMEA”), and was slightly higher than the median of our Performance Peer Group; (iii) continuing the Company’s Deploy for Growth Strategy; (iv) progress against the Company’s 2019 priorities, particularly the divestiture of selected cookies, fruit and fruit-flavored snacks, pie crusts, and ice cream cone businesses (the "Divestiture"); (v) operating profit performance within external guidance, which was delivered despite challenging reorganizations in North America and Europe, and a separate reorganization to extract stranded costs resulting from the Divestiture; and (vi) operating cash flow performance within external guidance which along with Divestiture proceeds enabled us to reduce debt meaningfully. As further described below, the AIP of two of our NEO's, Mr, Banati and Mr. Hood, is based partially on the formulaic corporate AIP financial targets and partially on the performance of the regions they served as president. Our NEOs received payouts ranging from 81-100% of target, which also factors in regional performance for Mr. Hood and Mr. Banati, before consideration for individual performance. For more information about the AIP and actual payouts for each NEO, see “Annual Incentives” beginning on page 32 of this proxy statement.
2017-2019 Executive Performance Plan (“EPP”) Payouts (Pay for Performance). For the 2017-2019 EPP, the Company delivered adjusted operating margins ("EPP Operating Margin") of 15.6%, which is below the 17-19% target. EPP Operating Margin excludes certain impacts not contemplated on the grant date; the adoption of new pension accounting rules and the consolidation of Multipro, both in 2018. With respect to relative TSR, the Company was at the 39th percentile of the TSR Peer Group. Those factors, if unadjusted, would have resulted in a payout up to 100% of the share target amount. After exercising its judgment-based methodology, the Committee utilized its reasonable discretion to reduce the payout to 90% of target which was appropriate for the Company’s performance during this period after considering the financial performance as well as (i) net sales growth in line with our peer group median; (ii) historical benchmarking data relating to the performance and commensurate payout of our peer groups; and (iii) a shift in focus with establishment of the Deploy for Growth Strategy in 2018 with the goal of accelerating top-line growth.    

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2019 Chief Financial Officer Transition. On May 2, 2019, we announced that Fareed Khan, our prior CFO, would be leaving Kellogg effective June 30, 2019.  The Board appointed Amit Banati as our new CFO, effective July 1, 2019. Prior to that date, Mr. Banati was serving as Senior Vice President and President, AMEA.
To assist the Board in determining the appropriate compensation level of Mr. Banati, we benchmarked ourselves against our compensation peer group to ensure that our CFO compensation is competitive in the marketplace; the components of his executive compensation package were targeted at the 50th percentile of our compensation peer group.
In connection with Mr. Banati’s appointment as CFO, the independent members of the Board approved Mr. Banati’s compensation, effective on July 1, 2019, of an annual base salary of $750,000, and a 2019 AIP target award of 100% of his annual base salary (calculated on a pro-rated basis for actual performance as CFO).  Mr. Banati’s compensation for the first half of 2019 is based on his salary and AIP in his prior role as Senior Vice President and President, AMEA. The independent members of the Board also approved a one-time award of 24,300 restricted stock units with 3-year cliff vesting as part of his promotion.      
B.    Core Principles.   We operate in a robust and challenging industry, where competitive compensation is central to business performance. We believe that our executive compensation program for our NEOs should be designed to:
provide a competitive level of total compensation necessary to attract and retain key talent to help deliver successful business performance;
appropriately motivate our NEOs to contribute to our near-and long-term success; and
help drive long-term total return for our Shareowners.
Accordingly, our compensation program is based on the following core principles — each of which is more fully described below.
Pay for Performance,
Shareowner Alignment,
Values-Based, and
Mitigating Risk.
In addition to our executive compensation programs, for our broad employee population, we regularly review our compensation practices for compliance and fairness.
Pay for Performance.   The fundamental principle underlying our compensation programs is pay for performance. That is, linking the amount of actual pay to the performance of Kellogg and each NEO. We accomplish this in several ways, including ensuring that target pay levels are market based, utilizing “performance-based” pay, and limiting perquisites (each of which is more fully described below).
Market Driven Compensation.    All components of our executive compensation package are targeted at the median of the market of our Compensation Peer Group to ensure that our executives are appropriately compensated, and we are able to recruit and retain the right talent for the organization. Compensation opportunities vary based on time in position, criticality of retention, and sustained performance, as well as other factors. Actual incentive compensation payouts may be above or below the median of our Compensation Peer Group based on performance against pre-determined goals that are designed to drive sustainable results and increase Shareowner value.
Performance-Based Compensation. A significant portion of our senior executive’s target compensation is “performance-based” pay, tied to both short-term performance (AIP awards) and long-term performance (EPP awards and stock options). The annual compensation package for our CEO, Mr. Cahillane, has approximately 88% of target annual compensation (salary, annual incentives and long-term incentives) linked to performance-based incentives. The annual compensation package for our other NEOs averaged approximately 78% of target annual compensation linked to performance-based incentives.

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Limited Perquisites.    To further ensure pay for performance, executives receive limited perquisites, as shown on page 42. For additional information about perquisites, refer to “Executive Compensation — Summary Compensation Table — footnote ‘6’.”
Shareowner Alignment.   Aligning the interests of our executives with Shareowners is an important way to drive behaviors that will generate long-term Shareowner value. We align these interests by using equity awards that have a long-term focus and by maintaining robust stock ownership guidelines (each of which is more fully described below). Equity-based incentives are an effective method of facilitating stock ownership and further aligning the interests of executives with those of our Shareowners. Consequently, a significant portion of our NEO’s total target compensation is comprised of equity-based incentives (approximately 69% of our CEO’s annual target compensation, and an average of approximately 56% of our other NEO's annual target compensation).
At the 2019 Annual Meeting of Shareowners, our Shareowners expressed strong support for the Company’s compensation program with approximately 95% of votes cast in favor of Kellogg’s “Say-on-Pay” proposal. In addition, during the course of 2019, the Company continued regularly engaging with our Shareowners about various corporate governance topics, including executive compensation. When setting compensation, and in determining compensation policies and practices like changing long-term incentives mix and the performance metrics, the C&T Committee took into account feedback from Shareowners received through the Company’s Shareowner outreach program, as well as the results of the 2019 Shareowner advisory resolution to approve executive compensation.
Longer-Term Focus.   Our EPP is a stock-based, pay for performance, multi-year incentive plan intended to focus senior management on achieving critical goals over three-year periods. We think this approach provides the right balance of focusing senior management on important operational and financial goals and providing a direct link to shareowner interests.  Specifically, for the 2017-2019 EPP, these goals were tied to currency-neutral adjusted operating profit margin and TSR. For the 2019-2021 EPP, the metrics are organic net sales growth and TSR. Restricted stock units granted in 2019 are subject to three-year cliff vesting. In addition, stock options granted in 2019 vest in three equal annual installments in 2020, 2021, and 2022.
Stock Ownership Guidelines.    Kellogg has established robust share ownership guidelines to strengthen the ongoing and continued link between the interests of NEOs and Shareowners. The CEO is expected to own shares equal to at least six times his base salary. The other NEOs are expected to own shares equal to at least three times their base salary. The Company has a holding period which requires that all of our NEOs hold all shares received from option or stock awards until their respective ownership guideline is met. Our NEOs currently exceed or are on track to meet their ownership guidelines.
Values-Based.   Kellogg’s compensation program is designed to reward an executive’s performance and contribution to Kellogg’s objectives. Each NEO is evaluated on their specific contributions (the “what”), as well as the behaviors they exhibit as they drive results (the “how”). The shared behaviors (what we call our “K Values”) that Kellogg expects and believes are essential to achieving long-term dependable and sustainable growth and increased value for Shareowners are as follows:
acting with integrity and showing respect;
being accountable for our actions and results;
being passionate about our business, our brands and our food;
having the humility and hunger to learn;
striving for simplicity; and
loving success.
Mitigating Risk.   The compensation program is designed so that it does not encourage taking unreasonable risks relating to our business. Kellogg’s compensation programs mitigate risk by balancing short-term and rolling multi-year incentives which use various financial metrics to encourage the business to grow in a balanced, sustainable manner. In addition, the use of clawback provisions further drives risk mitigation by creating appropriate remedies under certain circumstances.

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In 2019, the Board of Directors and the C&T Committee reviewed our compensation program to identify any design features that could reasonably be considered to encourage excessive risk taking and Kellogg’s approach to those features. As a result of this review, and together with input from the independent compensation consultant, the Board of Directors and the C&T Committee determined that the risks arising from Kellogg’s compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on Kellogg.
Clawback Policies.   We maintain clawback provisions in each of our AIP, stock options, restricted stock units, and EPP programs which give the Company the ability to recover (“clawback”) previously granted payments. The provisions allow Kellogg to recoup performance-based gains by executive officers (and other program participants) for fraud or misconduct causing a financial restatement. Beginning in 2018, we expanded our provisions in all equity awards to require clawback after vesting or exercise (and forfeiture of awards before vesting) if an executive violates the non-compete or non-solicitation provisions of the awards or an executive engages in any activity that is contrary or harmful to Kellogg’s interest.
C.Compensation Approach.   Our compensation approach is based on (a) driving independent decision-making, (b) utilizing Compensation Peer Group data to appropriately benchmark compensation, (c) following a consistent, rigorous compensation target setting process, and (d) utilizing verification tools to ensure appropriate decisions are being made. Each is described more fully below.
Independence.   Our C&T Committee is responsible for administering the compensation program for executive officers of Kellogg. The members of the Committee are fully independent, none of the Committee members are current or former employees of Kellogg, and they are not eligible to participate in any of our executive compensation programs. For more information, see “Board and Committee Membership — Compensation and Talent Management Committee.” In addition, the Committee has utilized an independent compensation consultant for many years, and engaged FW Cook, as its independent compensation consultant for 2019.
FW Cook works directly for the C&T Committee, and, pursuant to Company policy, is prohibited from providing any consulting or other services to Kellogg or our executive officers other than the work performed on behalf of the Committee or the Board. The Committee has considered the independence of FW Cook in light of SEC rules and NYSE listing standards. In connection with this process, the Committee has reviewed, among other items, a letter from FW Cook addressing the independence of FW Cook and the members of the consulting team serving the Committee, including the following factors: (i) services provided to Kellogg by FW Cook, (ii) fees paid by Kellogg as a percentage of FW Cook’s total revenue, (iii) policies or procedures of FW Cook that are designed to prevent conflicts of interest, (iv) any business or personal relationships between the senior advisor of the consulting team with a member of the Committee, (v) any Company stock owned by the senior advisor or any member of his immediate family, and (vi) any business or personal relationships between our executive officers and the senior advisor. The Committee discussed these considerations and concluded that the work performed by FW Cook and its senior advisor involved in the engagement did not raise any conflict of interest.
Peer Groups and Competitive Positioning.  We use peer groups to benchmark our compensation against comparable companies and for different components of our overall compensation program as follows:

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Peer Group
Overview/Selection Criteria
Primary Purpose
Compensation Peer Group
Consists of companies which we generally compete with for talent, of similar size and relevant industry. This group is reviewed on an annual basis for appropriateness.
Establish target compensation (Base Salary, AIP and LTI).
Performance Peer Group
Generally consists of the food companies in the broader Compensation Peer Group. Companies were chosen because they most closely compete with Kellogg in the consumer marketplace and for investors’ dollars, and face similar business dynamics and challenges. Annual incentive compensation payouts will depend largely upon Kellogg’s performance versus our operating plan budgets and in part upon our performance relative to our Performance Peer Group.
Assess relative company performance and assess incentive payouts
TSR Peer Group
Consists of S&P 500 “Food, Beverage, & Tobacco” excluding Beverage and Tobacco. Relative TSR is calculated during each performance period over the three-years. It is locked to new entrants once the performance period has begun.
Measure relative performance for the Executive Performance Plan (EPP)
The “Compensation Peer Group” is used to ensure that our executive officer compensation is competitive in the marketplace. Consequently, we benchmark our executive compensation to that of the Compensation Peer Group. The C&T Committee uses peer group data to benchmark base salary, target annual and long-term incentives and total compensation. For 2019 compensation decisions, our Compensation Peer Group was comprised of the following branded consumer products companies:
Campbell Soup Co.
Hormel Foods Corporation
McDonald’s Corporation
The Clorox Company
The J.M. Smucker Company
Mondelēz International, Inc.
Colgate-Palmolive Co.
Keurig Dr. Pepper Inc.
Nike, Inc.
ConAgra Brands, Inc.
The Kraft Heinz Company
Whirlpool Corporation
The Estee Lauder Cos., Inc.
Kimberly-Clark Corporation
YUM! Brands, Inc.
General Mills, Inc.
Mattel, Inc.
 
The Hershey Company
McCormick & Company, Inc.
 
The Committee reviews at least annually the Compensation Peer Group to confirm that it continues to be an appropriate benchmark. The Committee determines the Compensation Peer Group, taking into account input from the independent compensation consultant whose viewpoints are based on objective screening criteria for a variety of factors and considers a variety of criteria, including companies that (i) are in the same or similar lines of business, (ii) compete for the same customers with similar products and services, (iii) have comparable financial characteristics that investors view similarly, (iv) consider Kellogg a peer, (v) proxy advisory firms consider Kellogg’s peers, and (vi) are within a reasonable range in terms of percentile rank of Kellogg for key financial metrics such as revenue, pre-tax income, total assets, total equity, total employees, market capitalization, and composite percentile rank.
While we believe that our Compensation Peer Group is representative of the market in which we compete for talent, the composition of our Compensation Peer Group has changed over time based on market events such as mergers and divestitures.


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The “Performance Peer Group” is used to assess our incentive plan payouts and performance relative to the performance of these direct competitors. This group includes many of the food companies in the broader Compensation Peer Group. The Performance Peer Group companies were chosen because they most closely compete with Kellogg in the consumer marketplace and for investors’ dollars, and face similar business dynamics and challenges.
The Performance Peer Group is comprised of the following companies:
Campbell Soup Co.
The J.M. Smucker Company
Nestlé S.A.
ConAgra Brands, Inc.
The Kraft Heinz Company
PepsiCo Inc.
The Hershey Company
McCormick & Company, Inc.
Unilever N.V
General Mills, Inc.
Mondelēz International, Inc.
 
The “TSR Peer Group” is used to measure the Company’s relative performance for the Executive Performance Plan. This Group consists of the S&P 500 “Food, Beverage & Tobacco” excluding Tobacco and Beverage (except Pepsico which remains included). TSR is calculated during each performance period using companies that comprise the comparison group at the start of the performance period with subsequent entrants to the group disregarded and companies that are removed are no longer included. The 2019 - 2021 TSR peer group is comprised of the following companies:
Archer-Daniels Midland Co.
Hormel Foods Corporation
Mondelēz International, Inc.
Campbell Soup Co.
The J.M. Smucker Company
Pepsico
ConAgra Brands, Inc.
The Kraft Heinz Company
Tyson Foods Co.
General Mills, Inc.
Lamb Weston Holdings, Inc.
 
The Hershey Company
McCormick & Company, Inc.
 
Our total compensation package is targeted at the median of our Compensation Peer Group. Actual incentive compensation payouts will depend largely upon Kellogg’s performance versus our operating plan budgets and in part upon our performance relative to our Performance Peer Group. Again, the design drives pay for performance. We believe this approach allows Kellogg to recruit the best talent for the organization and pay for performance, while controlling compensation expense.
Process.   Each year, the C&T Committee follows a consistent, rigorous process to determine compensation for the NEOs:
The independent compensation consultant presents the Committee with relevant compensation information such as a market assessment, Compensation Peer Group benchmarking data, information about other relevant market practices, and emerging trends.
This compensation information provides detailed information for both CEO compensation and the compensation for other NEOs.
The independent consultant makes recommendations to the Committee regarding target levels for each pay element for the CEO, and the CEO makes recommendations to the Committee regarding the performance and compensation for each NEO (other than himself).
Based on its review of performance versus our operating plan, performance against the Performance Peer Group, individual performance, input from the independent compensation consultant and other factors, the Committee makes recommendations to the independent members of the Board regarding the compensation for the CEO and the other NEOs.
The independent members of the Board determine the compensation of the CEO and the other NEOs.
Verification Tools.   The C&T Committee utilizes several tools to help verify that the design of our program is consistent with our Core Principles and that the amount of compensation is within appropriate competitive parameters. For example, each year, the Committee reviews “pay tallies,” which include a detailed analysis of each NEO’s target and actual annual cash compensation, equity awards, retirement benefits, perquisites, change-in-control

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and severance payments, and wealth accumulation. In connection with this review, no unintended consequences or other concerns of the compensation program design were discovered. In addition, the Committee concluded that the total compensation of the NEOs aligns pay with performance and is appropriate and reasonable. In addition, our Committee uses a key financial metric, TSR, as a tool to verify our pay for performance connection.
D.    Compensation Plans and Design.   NEO compensation includes a combination of annual cash and long-term incentive compensation. Annual cash compensation for NEOs is comprised of base salary and the AIP. Long-term incentives consist of stock option grants, three-year EPP awards and restricted stock units (except for the CEO, who does not receive any restricted stock units).
Total Compensation.  We apply the same Core Principles and Compensation Approach in determining the compensation for all of our NEOs, including the CEO. The Committee also exercises appropriate business judgment in how it applies the standard approaches to the facts and circumstances associated with each NEO.   
Key elements of our 2019 NEO compensation program are as follows.
Element
Performance / Vesting Period (yrs.)
Purpose
Characteristics
 
 
 
 
 
Fixed
Base Salaries

Compensates executives for their level of responsibility and sustained individual performance. Also, helps attract and retain strong talent.
Fixed component; evaluated annually.
Retirement Plans
Long-Term
In order to assist employees with savings for retirement, we provide both matching and fixed Company contributions based on employee deferrals and years of service, respectively.
Fixed component; however, contributions vary based on employee elections.
 
 
 
 
 
Performance - Based
Annual Incentives
(AIP)
1
Promotes achieving our annual corporate and business unit financial goals, as well as people safety, food safety and diversity and inclusion.
Performance-based cash opportunity; amount varies based on company and business results, and individual performance.
Long-Term Incentives
(EPP and Options)
3
Promotes (a) achieving our long-term corporate financial goals through the EPP and (b) stock price appreciation through stock options.
Performance-based equity opportunity; amounts earned/realized will vary from the targeted grant-date fair value based on actual financial and stock price performance.
Retention - Based
Long-Term Incentives (RSUs)
3
Creates a balanced long-term incentive program, helping to manage equity utilization while aligning to market practice.
Cliff vesting provides retention value; improved stock price performance enhances overall value of awards.
 
 
 
 
 
Other
Post-Termination
Compensation
Facilitates attracting and retaining high caliber executives in a competitive labor market in which formal severance plans are common.
Contingent component; only payable if the executive’s employment is terminated under certain circumstances.
Base Salaries.   The Committee considers a number of factors when determining NEO base salaries including experience, proficiency, individual contributions, job market conditions, sustained performance in role, and the individual’s current base salary compared with those of persons in similar positions at other companies in the

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Compensation Peer Group. Annually, the C&T Committee evaluates whether to award base salary increases, including considering changes in an NEO’s role and/or responsibility. In 2019, the NEOs received base salary increases that, in the Committee’s view, correctly positioned each NEO’s appropriately to the market. Additionally, Mr. Banati received a base salary increase in connection with his appointment as Chief Financial Officer.
Annual Incentives.   Annual incentive plan (“AIP”) awards to the NEOs are paid under the terms of the Kellogg Company 2017 Long-Term Incentive Plan (“LTIP”), which was approved by the Shareowners and is administered by the C&T Committee.
As part of its AIP methodology, at the beginning of fiscal 2019, the Committee established annual incentive opportunities for each NEO as a percentage of the executive’s base salary (“AIP Target”). Each year, the Committee sets performance ranges (which we refer to as “bandwidths”) centered on both financial and non-financial performance targets.  Our NEOs' AIP Target consisted of (a) financial metrics (90% weighting) consisting of net sales (“AIP Net Sales”) and operating profit (“AIP Operating Profit”), which are weighted at 50% each and (b) non-financial metrics (10% weighting) consisting of People Safety, Food Safety/Quality and Diversity & Inclusion. For NEOs (other than Mr. Banati and Mr. Hood), the financial and non-financial metrics are based on corporate targets. For our regional presidents, the 90% financial metrics are based on 70% regional targets and 20% corporate targets, and non-financial metrics are based on regional targets. Mr. Banati was our regional president of Asia Pacific, Middle East, Africa (“AMEA”), and Mr. Hood was our regional president of North America when the annual incentive opportunities were set. Consequently, their AIP metrics include regional targets. As Mr. Banati became our Chief Financial Officer effective July 1, 2019, his AIP is pro-rated based on his role as our regional president of AMEA for the first half of the year and as our Chief Financial Officer for the second half of the year.
The C&T Committee and management believe that by using the financial metrics of AIP Net Sales and AIP Operating Profit, Kellogg is encouraging profitable growth and cash generation for Shareowners. The Committee and management further believe that the financial metrics should measure comparable operating performance, as those measures provide a clearer view into the Company’s underlying performance. Consequently, the AIP financial measures for AIP Net Sales and AIP Operating Profit exclude the effect of foreign currency translation, restructuring programs, mark-to-market adjustments for pension plans (service cost, interest cost, expected return on plan assets, and other net periodic pension costs are not excluded), commodities and certain foreign currency contracts, multi-employer pension plan exit liabilities, the gain on the Divestiture, and other costs impacting comparability in our operating plan to facilitate year-to-year comparisons.
As a result of the budgeted assumptions, performance reported in our financial statements may differ from performance against our AIP performance targets. AIP Net Sales and AIP Operating Profit are non-GAAP measures, which will differ from the GAAP measures of net sales and operating profit growth.
The financial targets and bandwidths are based on our operating plan for the fiscal year and are designed to achieve our business objectives. Targets are then compared with the forecasted performance of the Performance Peer Group to ensure that our operating plan targets are reasonable and challenging. Operating plan targets generally fall within the median range of forecasted performance for the Performance Peer Group. The actual percent of the AIP Target paid to our NEOs each year can range from 0% to 200% of the target opportunity.
In addition to operating results, each NEO is held accountable for achieving annual goals set at the start of the fiscal year relating to driving the successful achievement of the Company’s strategy and related business priorities. Consistent with our commitment to a balanced approach between individual performance and adherence to our Core Principles, the NEOs are assessed both against their level of individual achievement against these agreed upon goals and the alignment of their behavior in achieving those goals with our core values.
2019 AIP Payouts. The 2019 AIP targets were established at the beginning of 2019. At that time, the Company did not have the certainty and/or know the timing of the Divestiture. As such, the targets included a full year of results for those businesses, and the terms of the AIP specifically provided for equitably adjusting the targets based on the ultimate impact of the proposed Divestiture. The Company completed the Divestiture on July 27, 2019, and the following adjustments were made to the targets to equitably adjust for the impact of the Divestiture. For corporate targets, AIP Net Sales growth was adjusted from 4.7% to 2.3%, and AIP Operating Profit growth was adjusted from 2.5% to (3.5)%. For North America targets, AIP Net Sales growth was adjusted from 2.0% to (1.8)%, and AIP Operating Profit growth was adjusted from 5.5% to (1.2)%.

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For our 2019 AIP, the formulaic result of the Company’s 2019 performance for corporate, the AMEA business (which is a component of Mr. Banati’s AIP) and the North America business (which is a component of Mr. Hood’s AIP) is 95%, 109% and 77%, respectively, of target. Our NEOs (other than Mr. Banati and Mr. Hood) received a payout of 95% of target, Mr. Banati received a payout of 100% of target, and Mr. Hood received a payout of 81% of target, in each case, before consideration for individual performance.
For 2019, the target performance goals and performance against those goals for corporate, AMEA and North America were:
Corporate net sales. Corporate AIP Net Sales growth was 1.9% against a target of 2.3%.
Corporate operating profit. Corporate AIP Operating Profit performance declined (4.9)% against a target of (3.5)%.
AMEA net sales. AMEA AIP Net Sales growth was 25.3% against a target of 23.3%.
AMEA operating profit. AMEA AIP Operating Profit growth was 13.8% against a target of 18.6%.
North America net sales. North America AIP Net Sales performance declined (3.3)% against a target of (1.8)%.
North America operating profit. North America AIP Operating Profit performance declined (4.9)% against a target of (1.2)%.
Overall, the AIP Net Sales and AIP Operating Profit for corporate were slightly below expectations, resulting in an AIP payout factor for the financial metrics of 92% of target. The AIP Net Sales for AMEA was above expectations but the AIP Operating Profit for AMEA was below expectations, resulting in an AIP payout factor for the financial metrics of 107% of target. The AIP Net Sales and AIP Operating Profit for North America were below expectations, resulting in an AIP payout factor for the financial metrics of 73% of target.
For the non-financial metrics, objective and challenging performance targets were set at the beginning of the fiscal year for:
Food safety and quality measures. The Company continues to drive strong programs across the network, and was above target for Corporate, AMEA and North America, with strong performance in plant audits and a significant reduction in consumer complaints.
Diversity and inclusion. The Company continues its focus on diversity and inclusion as an important enabler to its business. In 2019, the Company was above target for Corporate and AMEA but was slightly below target in North America, based on its results on hiring, promotions and turnover.
People safety. The Company was above target for Corporate, AMEA and North America on its people safety metrics, and improved upon 2018 actual results in total recordable incidents, loss time incidents, and hand injuries.
The AIP payout factor for the non-financial metrics was 120% for Corporate, 135% for AMEA and 115% for North America.
In exercising its judgment-based methodology to ensure appropriate pay for the Company’s performance, the C&T Committee considered a number of factors, including:
actual performance that was slightly below the targets for AIP Net Sales and AIP Operating Profits;
the Company’s improved organic net sales performance that was the highest since 2012 and grew in each region of the business, and was slightly higher than the median of our Performance Peer Group;
continuing the Company’s Deploy for Growth Strategy;
progress against the Company’s 2019 priorities, particularly the successful completion of the Divestiture;
operating profit performance within external guidance, delivered despite challenging reorganizations in North America and Europe, a separate reorganization to extract stranded costs resulting from the Divestiture, and start-ups of local production in Brazil, Nigeria and South Africa; and

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operating cash flow performance within external guidance which along with Divestiture proceeds enabled us to reduce debt meaningfully.
For these reasons, the Committee determined that our NEOs (other than Mr. Banati and Mr. Hood) should receive the formulaic payout of 95% of target, Mr. Banati should receive the formulaic payout of 100% of target, and Mr. Hood should receive the formulaic payout of 81% of target, in each case, before consideration for individual performance. The C&T Committee considered Mr. Banati, Mr. Hood and Mr. Pilnick’s individual performance in 2019, and awarded AIP payouts equal to 125%, 106% and 120% of their AIP Targets, respectively, consistent with the terms of the plan established at the beginning of the year.  The C&T Committee considered a number of factors in assessing Mr. Banati’s individual performance, including the strong growth in the AMEA region, and for the successful transition into his role as Senior Vice President and Chief Financial Officer.  The C&T Committee considered a number of factors in assessing Mr. Hood’s individual performance, including his leadership with the implementation of our reorganization to align with our customers and consumers, while at the same time successfully managing through the Divestiture and post-Divestiture North America organization.  The C&T Committee considered a number of factors in assessing Mr. Pilnick's individual performance, including his leadership of the successful transaction of the Divestiture and delivering related transition services, and his work on launching emerging brands through our venture capital program.

The chart below includes information about the 2019 AIP for each NEO.
 
 
AIP Target(1)
 
AIP Maximum 
 
2019 AIP Payout (Paid in March 2020) 
Name
 
% of Base
Salary
 
Amount($)
 
Amount($)
 
% of AIP
Target
 
Amount of AIP Payout ($)
Steve Cahillane
 
160
%
 
2,040,000

 
4,080,000

 
95
%
 
1,938,000

Amit Banati
 
95
%
(2)
712,808

 
1,425,616

 
125
%
 
892,190

Chris Hood
 
105
%
 
798,000

 
1,596,000

 
106
%
 
845,880

Gary Pilnick
 
95
%
 
733,875

 
1,467,750

 
120
%
 
880,650

Alistair Hirst
 
90
%
 
598,500

 
1,197,000

 
95
%
 
568,575

Fareed Khan
 
95
%
 
345,313

(3)
690,627

 
95
%
 
328,048

(1)
For AIP purposes, incentive opportunities are based on executives’ salary levels at the last day of the calendar year.
(2)
Mr. Banati's target reflects a 90% AIP target from January 1, 2019 through June 30, 2019, and a 100% AIP Target from July 1, 2019 through the end of 2019.
(3)
Pursuant to Mr. Khan's agreement with Kellogg, this information reflects that his 2019 bonus was pro-rated through June 30, 2019, his last day as our CFO, based on actual performance.
Long-Term Incentives.   Long-term incentives are provided to our executives under the 2017 Long-Term Incentive Plan (“LTIP”), which was approved by our Shareowners. These incentives are intended to promote achieving our long-term corporate financial goals and earnings growth. The LTIP allows for grants of stock options, stock appreciation rights, restricted shares and units and performance shares and units (such as EPP awards).
All of the 2019 long-term incentive opportunity for the NEOs was provided through stock-based awards, which the C&T Committee believes best achieves several of the Core Principles, including Pay for Performance and Shareowner Alignment. Long-term incentive awards for our NEOs are determined on a position-by-position basis using proxy and survey data for corresponding positions in our Compensation Peer Group. For 2019, the Committee determined that the NEOs, other than the CEO, would receive approximately 50% of their long-term incentive opportunity in performance shares (granted under the EPP), 40% in stock options, and the remaining 10% in Restricted Stock Units (“RSUs”). The Committee determined that the CEO would receive approximately 60% of his long-term incentive opportunity in performance shares (granted under the EPP) and the remaining 40% in stock

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options. The Committee established this mix of awards after considering our Core Principles, Compensation Peer Group practices and cost implications.
Executive Performance Plan.   The EPP is a stock-based, pay for performance, three-year incentive plan` intended to focus senior management on achieving critical three-year operational goals. The performance levels are based on our long-range operating plan to be challenging and drive sustainable growth. The EPP contemplates the use of various metrics, as determined by the C&T Committee from time to time.
2017-2019 EPP.  The payout for the 2017-2019 EPP is 90% of target. For the 2017-2019 EPP, the metrics were adjusted operating margin (“EPP Operating Margin”) and relative total shareowner return (“EPP TSR”), which were chosen to drive key business goals and increase Shareowner value. Vested EPP awards are paid in Kellogg common stock. EPP Operating Margin excludes certain impacts not contemplated on the grant date; the adoption of new pension accounting rules and the consolidation of Multipro, both in 2018.
The 2017-2019 EPP performance period ended on December 28, 2019 (the last day of fiscal 2019). In February 2020, after Kellogg’s 2019 annual audited financial statements were completed, the C&T Committee reviewed our performance versus the EPP Operating Margin target established in 2017 for purposes of Section 162(m). The Committee determined that the target set for purposes of Section 162(m) had been reached. The Committee then considered other aspects of company performance and used a judgment-based methodology in exercising its discretion to determine the actual payout for the NEOs.
For the 2017-2019 EPP, the Company delivered EPP Operating Margin of 15.6%, which is below the 17-19% target. With respect to relative TSR, the Company was at the 39th percentile of the TSR Peer Group. Those factors, if unadjusted, would have resulted in a payout up to 100% of the share target amount. The Committee concluded that a payout of 90% of target was appropriate for the Company’s performance during this period after considering the financial performance as well as (i) net sales growth in line with our peer group median; (ii) historical benchmarking data relating to the performance and commensurate payout of our peer groups; and (iii) a shift in focus with establishment of the Deploy for Growth Strategy in 2018 with the goal of accelerating top-line growth. The 2017-2019 EPP awards vested in February 2020.
2019-2021 EPP.   The C&T Committee reviews the EPP metrics annually and receives input on the metrics from FW Cook and through the Company’s Shareowner outreach program. For the 2019-2021 EPP, the metrics of organic net sales growth and relative TSR, which ties directly to the creation of Shareowner value, were maintained.
In 2019, the Committee also set each individual’s EPP target at 50% of their total long-term incentive opportunity (60% for the CEO). Participants in the EPP have the opportunity to earn between 0% and 200% of their EPP target. Beginning with the 2019-2021 EPP, dividend equivalents accrue and vest in accordance with the underlying EPP award. For the 2019-2021 EPP, the performance targets are organic net sales growth (excluding acquisitions and divestitures during the performance period, adjusted for changes in accounting rules) and TSR relative to the relevant peer group. The 2019-2021 EPP cycle began on December 30, 2018 (first day of fiscal 2019) and concludes on January 1, 2022 (last day of fiscal 2021). The 2019-2021 EPP award opportunities, presented in number of potential shares that can be earned, are included in the Grant of Plan-Based Awards Table on page 45 of this proxy statement.

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The chart below includes information about 2017-2019 EPP opportunities and actual payouts:
Name
 
EPP Target Share Amount (#)
 
EPP Maximum Share Amount (#)
 
2017-2019 EPP Payout
(Paid in February 2020) 
 
% of EPP Target
 
Share Amount (#)
 
Pre-tax Value Realized ($)(1)
Steve Cahillane
(2)

 

 
90
%
 

 

Amit Banati
 
6,600

 
13,200

 
90
%
 
5,940

 
389,189

Chris Hood
 
9,600

 
19,200

 
90
%
 
8,640

 
566,093

Gary Pilnick
 
12,200

 
24,400

 
90
%
 
10,980

 
719,410

Alistair Hirst
 
8,100

 
16,200

 
90
%
 
7,290

 
477,641

Fareed Khan
(3)
10,800

 
21,600

 
90
%
 
8,118

 
531,891

(1)
The payout is calculated by multiplying the earned shares by the closing price of our common stock on February 21, 2020, which was $65.52 per share.
(2)
Mr. Cahillane joined Kellogg as President and CEO in October 2017. Consequently, he did not participate in the 2017-2019 EPP.
(3)
Mr. Khan's 2017-2019 EPP award was pro-rated through July 1, 2019.

Stock Options.   The C&T Committee believes stock options align NEOs with Shareowners and are a strong pay for performance vehicle because the options provide value to the NEO only if our stock price increases after the grants are made. Individual awards at grant may vary from target levels based on the individual’s performance, ability to impact financial performance and future potential. The exercise price for the options is set at the closing trading price on the date of grant. The vesting period for stock option awards to our NEOs is three equal annual installments. Stock options are exercisable for ten years after grant, which further drives Shareowner alignment by encouraging a focus on long-term growth and stock performance. The per-share exercise price for options granted in 2019 is $56.73.
Restricted Stock Units. In 2019, the Company granted RSUs as part of the annual long-term incentive awards for NEOs, other than the CEO. We also award RSUs from time to time to select employees for a variety of reasons including performance, recruiting and retention. In connection with Mr. Banati's promotion to CFO in 2019, he received a one-time grant of 24,300 RSUs. The award will cliff vest on the third anniversary of the grant date.
In October 2017, Kellogg granted performance-based restricted stock units (“PBRSUs”) to Mr. Banati, Mr. Hood, Mr. Pilnick and Mr. Hirst in connection with the CEO succession and in recognition for their contributions to the Company and the importance of leadership continuity. Consistent with past practice, the award value of the PBRSUs granted to the senior executives was approximately equal to one times the base salary of the recipient. These awards were designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. The C&T Committee certified that the performance condition of exceeding a minimum comparable diluted earnings per share threshold measured on a cumulative basis commencing at the beginning of the fourth quarter of fiscal 2017 and ending at the end of the third quarter of fiscal 2019 had been met and the PBRSUs vested on October 17, 2019.
Other Compensation Elements.
Post-Termination Compensation.  The NEOs are covered by arrangements which specify payments in the event the executive’s employment is terminated. These severance benefits, which are competitive with the Compensation Peer Group and general industry practices, are payable if and only if the executive’s employment is terminated by the Company without cause. The Kellogg Severance Benefit Plan and the Change of Control Policy have been established primarily to attract and retain talented and experienced executives and further motivate them to contribute to our short- and long-term success for the benefit of our Shareowners. Kellogg’s severance program is consistent with market practices, and cash severance for our NEOs is payable in the amount of two times the current annual salary. The Change in Control Policy is also consistent with market practices, and cash compensation following a change in control for the continuing NEOs is payable in the amount of two times the current annual salary plus two times the current target annual

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incentive award.  For more information, please refer to “Potential Post-Employment Payments,” which begins on page 55 of this proxy statement.
Retirement Plans.  All NEO’s are eligible to participate in the Kellogg-provided defined contribution plan, which provides for both matching and fixed Company contributions based on employee deferrals and years of service, respectively. Prior to 2019, Mr. Hood participated in a separate Kellogg-provided defined contribution plan established for new employees of the Company due to the Pringles acquisition. The plan provided fixed Company contributions based on years of service and base salary to those salaried employees. As of December 31, 2018, benefits were no longer provided in this plan to salaried employees and covered employees began participating in the same defined contribution plans as all other salaried employees. Prior to 2019, Mr. Pilnick and Mr. Hirst were eligible to participate in Kellogg-provided defined benefit pension plans which provided benefits based on years of service and pay (salary plus annual incentive only) to a broad base of eligible employees. In September 2017, the Company amended salaried defined benefit pension plans in the U.S. and Canada to freeze the compensation and service periods used to calculate benefits. As of December 31, 2018, employees covered by those plans began participating in the same defined contribution plans as all other salaried employees.
Amounts earned under long-term incentive programs are not included when determining retirement benefits for any plan participants. In addition, we do not pay above-market interest rates on amounts deferred under either our qualified or non-qualified savings and investment plans. For more information, please refer to “Retirement and Non-Qualified Defined Contribution and Deferred Compensation Plans,” which begins on page 50 of this proxy statement.
Perquisites.  The Company provides limited perquisites to the NEOs. The Summary Compensation Table beginning on page 42 of this proxy statement contains itemized disclosure of all perquisites to our NEOs, regardless of amount.
Employee Stock Purchase Plan.  We have a tax-qualified employee stock purchase plan that is made available to substantially all U.S. employees, which allows participants to acquire Kellogg stock at a discounted price. The purpose of the plan is to encourage employees at all levels to purchase stock and become Shareowners. The plan allows participants to buy Kellogg stock at a 5% discount to the market price. Under applicable tax law, no plan participant may purchase more than $25,000 in market value, as defined in the plan, of Kellogg stock in any calendar year. The Board is requesting shareholder approval for an amendment to the Employee Stock Purchase Plan as embodied in Proposal 4. Proposal 4 requests an increase of 1,500,000 shares available for participants to purchase. The amendment would also provide flexibility in the plan by giving the C&T Committee discretion from time to time to revise the discount to market price at which participants can buy Kellogg stock, between a minimum of 5% to a maximum of 15%. For more information on the amendment, see Proposal 4, beginning on page 69 of this proxy.
E.
Compensation Policies.
Executive Stock Ownership Guidelines.   In order to preserve the linkage between the interests of senior executives and those of Shareowners, senior executives are expected to establish and maintain a significant level of direct stock ownership. This can be achieved in a variety of ways, including by retaining stock received upon exercise of options or the vesting of stock awards (including EPP awards), participating in the Employee Stock Purchase Plan and purchasing stock in the open market. Our current stock ownership guidelines (minimum requirements) are as follows:
Chief Executive Officer
6x annual base salary
Other Named Executive Officers
3x annual base salary
These executives have five years from the date they first become subject to a particular level of the guidelines or from the date of a material increase in their base salary to meet them. For purposes of complying with our guidelines, stock considered owned includes shares owned outright, shares acquired through the employee stock purchase plan, and 60% of unvested restricted stock and restricted stock units.

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The Company has a holding period which requires that all of our NEOs hold all shares received (net of tax) from option or stock awards (including EPP awards) until their respective ownership guideline is met. All of our NEOs currently meet or are on track to meet their ownership guideline. The C&T Committee reviews compliance with the guidelines on an annual basis.
Practices Regarding the Grant of Equity Awards.   The C&T Committee has generally followed a practice of making all option grants to executive officers on a single date each year. The Committee reviews and approves an overall stock option pool for all participating employees and recommendations for individual option grants to executives.
The Board grants these annual awards at its regularly-scheduled meeting in February. The February meeting usually occurs within a few weeks following our final earnings release for the previous fiscal year. We believe it is appropriate for annual awards to be made shortly after the time when material information regarding our performance for the preceding year has been disclosed. We do not otherwise have any program, plan or practice to time annual option grants to our executives in coordination with the release of material non-public information. EPP and annual RSU awards are granted at the same time as options.
While most of our option awards to NEOs have historically been made pursuant to our annual grant program, the Committee and Board retain the discretion to make additional awards of options or restricted stock to executives at other times for recruiting or retention purposes. We do not have any program, plan or practice to time “off-cycle” awards in coordination with the release of material non-public information.
All option awards made to our NEOs, or any of our other employees, are made pursuant to our LTIP. The exercise price of options under the LTIP is set at the closing trading price on the date of grant. We do not have any program, plan or practice of awarding options and setting the exercise price based on the closing stock price on a date other than the grant date, and we do not have a practice of determining the exercise price of option grants by using average prices (or lowest prices) of our common stock in a period preceding, surrounding or following the grant date. All grants to NEOs are made by the Board itself and not pursuant to delegated authority.
Securities Trading Policy.   Our securities trading policy prohibits our Directors, executives and other employees from engaging in any transaction in which they may profit from short-term speculative swings in the value of our securities. This includes “short sales” (selling borrowed securities which the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (selling owned, but not delivered securities), “put” and “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price or the like) and hedging transactions, such as zero-cost collars and forward sale contracts. Our NEOs and other officers may not pledge shares or enter into any risk hedging arrangements with respect to Kellogg stock. NEOs may not hold Kellogg stock in a margin account or pledge Kellogg stock as collateral for a loan. In addition, this policy is designed to ensure compliance with relevant SEC regulations, including insider trading rules.
Clawback Policies.   We maintain clawback provisions relating to stock options, and AIP, RSU and EPP awards. Under the clawback provisions for stock options, if an executive voluntarily leaves our employment to work for a competitor within one year after any option exercise, then the executive must repay to Kellogg any gains realized from such exercise (but reduced by any tax withholding or tax obligations). In the event of fraud or misconduct causing a financial restatement, any gains realized from the exercise of stock options are now subject to recoupment depending on the facts and circumstances of the event. Similarly, under our AIP, RSU and EPP terms and conditions, in the event of fraud or misconduct causing a financial restatement, the AIP, RSU or EPP awards for the plan year of the restatement are subject to recoupment depending on the facts and circumstances of the event. Beginning in 2018, we expanded our provisions in all equity awards to require forfeiture of awards before vesting and clawback after vesting or exercise if an executive violates the non-compete or non-solicitation provisions of the awards or an executive engages in any activity that is contrary or harmful to Kellogg’s interest.
Deductibility of Compensation and Other Related Issues.   Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the Company’s deductions for compensation paid to specified officers (“Covered Employees”). For taxable years beginning before January 1, 2018, the Covered Employees consisted of a corporation’s chief executive officer and up to three other highly compensated officers (other than the chief financial officer), and qualifying “performance-based compensation” was not subject to this limitation if specified

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requirements were met (e.g., compensation paid only if performance meets pre-established objective goals based on performance criteria approved by shareholders).
Pursuant to the Tax Cuts and Jobs Act of 2017, for taxable years beginning after December 31, 2017, (i) the remuneration of a public corporation’s chief financial officer is now also subject to the deduction limit, (ii) once an individual is considered a Covered Employee with respect to a taxable year, he or she will be considered a Covered Employee for all future years, including after termination of employment or death, and (iii) the exemption from the deduction limit for “performance-based compensation” is no longer available. These changes do not apply to remuneration provided under a binding written contract in effect on November 2, 2017, which is not materially modified after that date. Consequently, for taxable years beginning after December 31, 2017, no remuneration in excess of $1 million paid to a Covered Employee will be deductible unless such compensation is granted pursuant to a written binding contract that was in effect prior to November 2, 2017.
While we view preserving tax deductibility as an important objective, we believe the primary purpose of our compensation program is to support our strategy and the long-term interests of our Shareowners. In specific instances we have, and in the future may, authorize compensation arrangements that are not fully tax deductible but that promote other important objectives of Kellogg and of our executive compensation program. Further, the C&T Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with the objectives of Kellogg and of our executive compensation program.
In 2019, we required any executive base salary above $950,000 (after pre-tax deductions for benefits and similar items) to be deferred into deferred stock units under our Executive Deferral Program. The deferred amounts are credited to an account in the form of units that are equivalent to the fair market value of our common stock. The units are payable in stock upon the executive’s end of employment. The only NEO affected by this policy in 2019 was Mr. Cahillane, who deferred $248,781 of his salary. The Program will terminate at the end of fiscal year 2020.
The C&T Committee also reviews projections of the estimated accounting (pro forma expense) and tax impact of all material elements of the executive compensation program. Generally, accounting expense is accrued over the requisite service period of the particular pay element (generally equal to the performance period) and Kellogg realizes a tax deduction upon the approval of the payout or payment to the executive.

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COMPENSATION AND TALENT MANAGEMENT COMMITTEE REPORT
As detailed in its charter, the C&T Committee oversees our compensation program on behalf of the Board. In the performance of its oversight function, the Committee, among other things, reviewed and discussed with management the Compensation Discussion and Analysis set forth in this proxy statement.
Based upon the review and discussions referred to above, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and our proxy statement to be filed in connection with our 2020 Annual Meeting of Shareowners, each of which will be filed with the SEC.
COMPENSATION AND TALENT MANAGEMENT COMMITTEE
Mary Laschinger, Chair
Richard Dreiling
Zachary Gund
Don Knauss
Carolyn Tastad

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EXECUTIVE COMPENSATION
Summary Compensation Table.
The following narrative, tables and footnotes describe the “total compensation” earned by our NEOs during 2019, 2018 and 2017 (only 2019 for Mr. Banati and only 2018 and 2019 for Mr. Hirst, because they were not NEOs in the prior years). The total compensation presented below does not reflect the actual compensation received by our NEOs or the target compensation of our NEOs in 2019, 2018 and 2017. The actual value realized by our NEOs in 2019 from long-term incentives is presented in the Option Exercises and Stock Vested Table on page 49 of this proxy statement. Target annual and long-term incentive awards for 2019 are presented in the Grant of Plan-Based Awards Table on page 45 of this proxy statement.
The individual components of the total compensation calculation reflected in the Summary Compensation Table are broken out below:
Salary.   Base salary earned during 2019. Refer to “Compensation Discussion and Analysis — Compensation Plans and Design — Base Salaries.”
Bonus.   We did not pay any discretionary bonuses to any NEOs in 2019. Each NEO, earned an annual performance-based cash incentive under our AIP, as discussed below under “Non-Equity Incentive Plan Compensation.” Refer to “Compensation Discussion and Analysis — Compensation Plans and Design — Annual Incentives.”
Stock Awards.   The awards disclosed under the heading “Stock Awards” consist of EPP awards and restricted stock unit awards. The dollar amounts for the awards represent the grant-date fair value calculated in accordance with FASB ASC Topic 718 for each NEO. Refer to Notes 1 and 9 to the Consolidated Financial Statements included in our annual Report on Form 10-K for the fiscal year ended December 28, 2019. Details about the EPP awards granted in 2019 are included in the Grant of Plan-Based Awards Table below. Refer to “Compensation Discussion and Analysis —Compensation Plans and Design — Long-Term Incentives” for additional information. The grant-date fair value of the stock-based awards will likely vary from the actual amount the NEO receives. The actual value the NEO receives will depend on the number of shares earned and the price of our common stock when the shares vest.
Option Awards.   The awards disclosed under the heading “Option Awards” consist of annual option grants (each an “option”). The dollar amounts for the awards represent the grant-date fair value calculated in accordance with FASB ASC Topic 718 for each NEO. Refer to Notes 1 and 9 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019. Details about the option awards made during 2019 are included in the Grant of Plan-Based Awards Table below. Refer to “Compensation Discussion and Analysis —Compensation Plans and Design — Long-Term Incentives — Stock Options” for additional information. The grant-date fair value of the stock option awards will likely vary from the actual value the NEO receives. The actual value the NEO receives will depend on the number of shares exercised and the price of our common stock on the date exercised.
Non-Equity Incentive Plan Compensation.   The amount of Non-Equity Incentive Plan Compensation consists of the Kellogg Senior Executive AIP awards granted and earned in 2019, 2018 and in 2017. At the outset of each year, the C&T Committee grants AIP awards to the NEOs. Such awards are based on our performance each year and are paid in March following the completed year. For information on these awards refer to “Compensation Discussion and Analysis — Compensation Plans and Design — Annual Incentives.”
Change in Pension Value.   The amounts disclosed under the heading “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” represent the actuarial increase during 2019, 2018 and 2017 in the pension value provided under the pension plans. As of December 31, 2018, the Company's defined benefit pension plans were frozen so that impacted employees accrue no additional benefits under these plans after December 31, 2018. Kellogg does not pay above-market or preferential rates on non-qualified deferred compensation for employees, including the NEOs. A detailed narrative and tabular discussion about our pension plans and non-qualified deferred compensation plans, our contributions to our pension plans and the estimated actuarial increase in the value

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of our pension plans are presented under the heading “Retirement and Non-Qualified Defined Contribution and Deferred Compensation Plans.”
Director and Officer Liability, Travel Accident and Group Personal Excess Insurance. Director and officer liability insurance (“D&O Insurance”) insures our NEOs against certain losses that they are legally required to pay as a result of their actions while performing duties on our behalf. Travel accident insurance provides benefits to our NEOs in the event of death or disability (permanent and total) during travel on Kellogg chartered and/or commercial aircraft. Group personal excess insurance insures our NEOs for damages that an NEO is required to pay for personal injury or property damage in excess of damages covered by underlying insurance. Our D&O Insurance, travel accident insurance, and group personal excess insurance cover employees and others in addition to NEOs and do not break out the premium by covered individual or groups of individuals and, therefore, a dollar amount cannot be assigned for individual NEOs.
All Other Compensation.   Consistent with our emphasis on performance-based pay, perquisites and other compensation are limited in scope and in 2019 were primarily comprised of domestic and international relocation, Company retirement benefit contributions and the cost of death benefits. On certain occasions, an NEO’s spouse or other family member fly on chartered aircraft as additional passengers.  An NEO must fully reimburse the Company for any incremental cost of additional passengers.
Summary Compensation Table
It is important to note that the information required by the Summary Compensation Table does not necessarily reflect the target or actual compensation for our NEOs in 2019, 2018 and 2017.
Name and  Principal Position 
 
Year 
 
Salary
($) 
 
Bonus
($) (1)
 
Stock Awards
($)(2)(3) 
 
Option Awards
($)(4) 
 
Non-Equity Incentive Plan Compen-sation
($) 
 
Change in Pension Value and Non-Qualified Deferred Compen-sation Earnings
($)(5) 
 
All Other Compen- sation
($)(6)(7) 
 
Total ($) 
Steve Cahillane
 
2019
 
1,268,261

 

 
4,524,120

 
1,778,350

 
1,938,000

 

 
185,492

 
9,694,223

Chairman and Chief Executive Officer
 
2018
 
1,250,002

 

 
4,477,410

 
2,384,096

 
1,725,000

 

 
153,484

 
9,989,992

 
2017
 
288,462

 
1,500,000

 
2,666,752

 

 
468,750

 

 
23,640

 
4,947,604

Amit Banati
 
2019
 
686,249

 

 
2,467,783

 
382,661

 
892,190

 

 
943,136

 
5,372,019

Senior Vice President and Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chris Hood
 
2019
 
754,623

 

 
1,364,712

 
539,678

 
845,880

 

 
482,313

 
3,987,206

Senior Vice President, President, Kellogg North America
 
2018
 
663,925

 

 
922,446

 
500,160

 
664,200

 

 
1,216,132

 
3,966,863

 
2017
 
576,439

 

 
1,251,414

 
452,396

 
368,550

 

 
752,913

 
3,401,712

Gary Pilnick
 
2019
 
766,450

 

 
1,296,704

 
512,674

 
880,650

 
1,003,000

 
139,300

 
4,598,778

Vice Chairman, Corporate Development and Chief Legal Officer
 
2018
 
744,613

 

 
1,157,121

 
631,452

 
833,625

 
24,000

 
82,400

 
3,473,211

 
2017
 
727,307

 

 
1,578,511

 
571,837

 
797,525

 
1,075,000

 
86,905

 
4,837,085

Alistair Hirst
 
2019
 
658,268

 

 
955,526

 
377,789

 
568,575

 
1,374,000

 
143,111

 
4,077,269

Senior Vice President, Global Supply Chain
 
2018
 
632,451

 

 
965,034

 
524,126

 
673,920

 

(8)
72,633

 
2,868,164

Fareed Khan
(9)
2019
 
374,593

 

 
1,178,296

 
466,111

 
328,048

 

 
411,024

 
2,758,072

Former Senior Vice President & Chief Financial Officer
 
2018
 
705,131

 

 
1,121,778

 
612,696

 
621,152

 

 
41,060

 
3,101,817

 
2017
 
583,836

 
653,000

 
1,385,624

 
1,098,857

 
542,538

 

 
52,273

 
4,316,128

(1)
Represents one-time payments in connection with the commencement of employment.
(2)
Reflects the aggregate grant-date fair value of stock awards calculated in accordance with FASB ASC Topic 718 for each NEO. Refer to Notes 1 and 9 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 for a discussion of the relevant assumptions used in calculating the fair value. The table below presents separately the grant-date fair value for our EPP awards and restricted stock unit awards:

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Name
 
Year
 
EPP ($)
 
RSU ($)
 
Total ($)
Steve Cahillane
 
2019
 
4,524,120

 

 
4,524,120

 
 
2018
 
4,477,410

 

 
4,477,410

 
 
2017
 

 
2,666,752

 
2,666,752

Amit Banati
 
2019
 
811,250

 
1,656,533

 
2,467,783

Chris Hood
 
2019
 
1,144,600

 
220,112

 
1,364,712

 
 
2018
 
782,460

 
139,986

 
922,446

 
 
2017
 
643,872

 
607,542

 
1,251,414

Gary Pilnick
 
2019
 
1,087,370

 
209,334

 
1,296,704

 
 
2018
 
985,320

 
171,801

 
1,157,121

 
 
2017
 
818,254

 
760,257

 
1,578,511

Alistair Hirst
 
2019
 
801,220

 
154,306

 
955,526

 
 
2018
 
818,685

 
146,349

 
965,034

Fareed Khan
 
2019
 
988,250

 
190,046

 
1,178,296

 
 
2018
 
956,340

 
165,438

 
1,121,778

 
 
2017
 
724,356

 
661,268

 
1,385,624

(3)
The actual EPP payout can range from 0% to 200% of the target. If the highest level of performance conditions are achieved, then the grant-date fair value of the stock awards for each NEO is as follows, Mr. Cahillane $9,048,240 and $8,954,820 for 2019 and 2018 respectively; Mr. Banati: $1,622,500 for 2019; Mr. Hood: $2,289,200, $1,564,920, and $1,287,744, for 2019, 2018, and 2017 respectively; Mr. Pilnick: $2,174,740, $1,970,640, and $1,636,508 for 2019, 2018, and 2017, respectively; Mr. Hirst: $1,602,440 and $1,637,370 for 2019 and 2018 respectively; and Mr. Khan: $1,976,500, $1,912,680 and $1,448,712, for 2019, 2018, and 2017 respectively.
(4)
Represents the grant-date fair value calculated in accordance with FASB ASC Topic 718 for each NEO for stock option grants. Refer to Notes 1 and 9 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 for a discussion of the relevant assumptions used in calculating the grant-date fair value.
(5)
Represents the actuarial increase during 2019, 2018 and 2017 in the pension value provided under the U.S. Pension Plans for each NEO as we do not pay above-market or preferential earnings on non-qualified deferred compensation. As of December 31, 2018, the Company's defined benefit pension plans were frozen so that impacted employees accrue no additional benefits under these plans after December 31, 2018. The calculation of actuarial present value is generally consistent with the methodology and assumptions outlined in our audited financial statements, except that benefits are reflected as payable as of the date the executive is first entitled to full unreduced benefits (as opposed to the assumed retirement date) and without consideration of pre-retirement mortality. A variety of factors impact the actuarial increase in present value (pension value). In 2019, the primary factors impacting the pension value is changes in age, mortality assumption, and discount rate. Mr. Cahillane, Mr. Hood, Mr. Banati, and Mr. Khan are not participants in the defined benefit pension plans. Instead, Mr. Cahillane, Mr. Hood, and Mr. Banati participate in Kellogg-provided defined contribution plans. Mr. Khan was also a participant in the defined contribution plans through June 30, 2019, his last day as our CFO.
(6)
The table below presents an itemized account of “All Other Compensation” provided in 2019 to the NEOs. Consistent with our emphasis on performance-based pay, perquisites and other compensation are limited in scope.

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Name
 
Kellogg Contributions to S&I and Restoration Plans
(a) ($)
 
Company Paid Death Benefit (b) ($)
 
Financial Planning Assistance (c) ($)
 
Physical Exams
(d) ($)
 
Relocation and Assignment
(e) ($)
 
Severance Benefit
(f) ($)
 
Total
($)
Steve Cahillane
 
157,778

 
4,835

 
6,000

 
16,879

 

 

 
185,492

Amit Banati
 
97,199

 
2,844

 
1,022

 

 
842,071

 

 
943,136

Chris Hood
 
109,577

 
2,882

 
6,000

 

 
363,854

 

 
482,313

Gary Pilnick
 
102,326

 
23,075

 
6,000

 
7,899

 

 

 
139,300

Alistair Hirst
 
99,366

 
28,938

 
6,000

 
8,807

 

 

 
143,111

Fareed Khan
 
16,971

 
1,389

 
6,000

 

 

 
386,664

 
411,024

(a)
For information about our Savings & Investment Plan and Restoration Plan and the Pringles Savings & Investment Plan, refer to “Retirement and Non-Qualified Defined Contribution and Deferred Compensation Plans — Defined Contribution Plans” beginning on page 50. Kellogg contributions to the Restoration Plan for Mr. Banati include a contribution of $20,464 made in February 2020 for the 2019 Plan Year.
(b)
Annual cost for Kellogg-paid life insurance, Kellogg-paid accidental death and dismemberment, and Executive Survivor Income Plan (Kellogg funded death benefit provided to executive employees).
(c)
Reflects reimbursement for financial and tax planning assistance.
(d)
Actual cost of a physical health exam.
(e)
As a global organization, senior executives are located in key business centers around the world. To facilitate the assignment of experienced employees to support the business, we provide for the reimbursement of certain expenses incurred as a result of their international relocation and assignment. The objective of this program is to manage through disruption and ensure that the employees not be financially disadvantaged or advantaged in a meaningful way as a result of the relocation.
Mr. Banati was relocated to our offices in the United States in July 2019 to become our Chief Financial Officer. The payment of the following expenses is pursuant to our reimbursement policy on international relocation: relocation related payments ($380,997) to relocate Mr. Banati to the United States and finalize ongoing expatriate costs associated with his assignment in Singapore; and tax equalization payments ($461,074) to ensure that Mr. Banati’s tax burden for his service in Singapore prior to becoming our Chief Financial Officer was comparable to the amount of taxes he would have incurred if he did not relocate to the United States.
The payments related to Mr. Hood are pursuant to our reimbursement policy on relocation and temporary international assignment, applicable to eligible employees who relocate at the request of Kellogg. Mr. Hood was relocated to our offices in the United States in July 2018 to manage our Kellogg North America region. The payment of the following expenses is pursuant to our reimbursement policy on relocation and temporary international assignment: relocation related payments ($19,073) to relocate Mr. Hood back to the United States and finalize ongoing expatriate costs associated with his assignment in Switzerland; and tax equalization and other payments ($344,781) to ensure that Mr. Hood bears a tax burden that would be comparable to his U.S. tax burden on income that is not related to the international relocation and temporary assignment. Mr. Hood remains financially responsible for the amount of taxes he would have incurred if he had continued to live and work in the U.S.
(f)
Represents severance benefits from July 1 through December 28, 2019. See discussion within Potential Post Employment Payments section on page 55.
In addition to the foregoing compensation, the NEOs also participated in health and welfare benefit programs, including vacation and medical, dental, prescription drug and disability coverage. These programs are generally available and comparable to those programs provided to all U.S. salaried employees.
(7) We have updated the disclosure to reflect Mr. Hood's defined contribution amounts on an accrual basis.

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(8)
The actuarial value of pension for Mr. Hirst decreased by $77,000 for 2018 as a result of his continuing active employment despite his eligibility for an unreduced benefit.
(9)
Mr. Khan departed Kellogg effective June 30, 2019 and was succeeded by Mr. Banati. Mr. Khan's 2017-2019 EPP award was pro-rated through July 1, 2019, based on actual performance. Mr. Khan forfeited his 2018 - 2020 and 2019 - 2021 EPP awards, his 2019 RSU award, and one-third of his 2019 Option award.
Grant of Plan-Based Awards Table.
During 2019, we granted the following plan-based awards to our NEOs:
Stock Options;
2019 AIP grants (annual cash performance-based awards) paid in March 2020;
2019-2021 EPP grants (multi-year stock performance-based awards); and
Restricted stock unit grants.
Information with respect to each of these awards on a grant-by-grant basis is set forth in the table below. For a detailed discussion of each of these awards and their material terms, refer to “Executive Compensation — Summary Compensation Table” and “Compensation Discussion and Analysis — Compensation Plans and Design” above.
Name
 
Grant Date
 
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards
 
All  Other Stock Awards: Number of Shares of Stock or Units
(#)
 
All Other Option Awards: Number of Securities Under-lying Options
(#)
 
Exercise or Base Price of Option Awards
($/Sh)
 
Grant-date Fair Value of Stock and Option Awards
($)
 
 
Thres- hold
($)
 
Target
($)
 
Max- imum
($)
 
Thres- hold (#)
 
Target
(#)
 
Max- imum
(#)
 
Steve Cahillane
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
255,510
 
56.73

 
1,778,350
(2)
2019 AIP
 
 
 
 
2,040,000
 
4,080,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019-21 EPP
 
2/22/2019
 
 
 
 
 
 
 
 
76,680
 
153,360
 
 
 
 
 
 
 
4,524,120
(3)
Amit Banati
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54,980
 
56.73

 
382,661
(2)
2019 AIP
 
 
 
 
712,808
 
1,425,616
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019-21 EPP
 
2/22/2019
 
 
 
 
 
 
 
 
13,750
 
27,500
 
 
 
 
 
 
 
811,250
(3)
2019 RSU (4)
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
2,750
 
 
 
 
 
156,008
(6)
2019 RSU (5)
 
8/5/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
24,300
 
 
 
 
 
1,500,525
(6)
Chris Hood
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
77,540
 
56.73

 
539,678
(2)
2019 AIP
 
 
 
 
798,000
 
1,596,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019-21 EPP
 
2/22/2019
 
 
 
 
 
 
 
 
19,400
 
38,800
 
 
 
 
 
 
 
1,144,600
(3)
2019 RSU (4)
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
3,880
 
 
 
 
 
220,112
(6)
Gary Pilnick
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
73,660
 
56.73

 
512,674
(2)
2019 AIP
 
 
 
 
733,875
 
1,467,750
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019-21 EPP
 
2/22/2019
 
 
 
 
 
 
 
 
18,430
 
36,860
 
 
 
 
 
 
 
1,087,370
(3)
2019 RSU (4)
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
3,690
 
 
 
 
 
209,334
(6)
Alistair Hirst
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54,280
 
56.73

 
377,789
(2)
2019 AIP
 
 
 
 
598,500
 
1,197,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019-21 EPP
 
2/22/2019
 
 
 
 
 
 
 
 
13,580
 
27,160
 
 
 
 
 
 
 
801,220
(3)
2019 RSU (4)
 
2/22/2019
 
 
 
 
 
 
 
 
 
 
 
 
 
2,720
 
 
 
 
 
154,306
(6)
Fareed Khan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
2/22/2019