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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

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¨	Soliciting Material Pursuant to § 240.14a-12

Mondelēz International, Inc.

 

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				Irene B. Rosenfeld Chairman and Chief Executive Officer Three Parkway North Deerfield, IL 60015

April 3, 2013

Dear Fellow Shareholders:

I’m pleased to invite you to our 2013 Annual Meeting of Shareholders to be held at 9 a.m. CDT on Tuesday, May 21, 2013, at the North Shore Center for the Performing Arts in Skokie, Illinois. The center will open to shareholders at 8 a.m. If you wish to attend the meeting, we ask you to register in advance. The Proxy Statement contains registration instructions.

We have prepared the following materials for the meeting:

 

•

Notice of Annual Meeting of Shareholders;

 

•

Proxy Statement describing the proposals to be voted on at the Annual Meeting; and

 

•

Highlights of our 2012 financial and business performance.

Once again, we’re mailing to our shareholders a Notice of Internet Availability of Proxy Materials with instructions on how to access these materials and vote online. We believe electronic delivery expedites the receipt of materials, lowers costs and reduces the environmental impact of our Annual Meeting. If you receive a Notice of Internet Availability of Proxy Materials by mail, you won’t receive paper copies of these materials unless you specifically request them by following the instructions on the Notice.

Your vote is important, so we encourage you to vote promptly. The Notice contains instructions on how to vote via the Internet or by calling a toll-free number. If you receive paper copies of the proxy materials, you may also vote by signing, dating and mailing your proxy card or voting instruction form. You may also vote in person at the Annual Meeting.

Highlights of Our 2012 Financial and Business Performance

2012 was a transformational year for our company. During the first nine months, we intensely prepared for the spin-off of our North American grocery business. The separation of Kraft Foods Inc. into two world-class companies was a massive undertaking, culminating in a significant increase in shareholder value and the successful launch of both Mondelēz International and Kraft Foods Group on October 1.

What’s more, we executed all of this while delivering solid business results. The quality of our revenue and earnings growth in 2012 provides strong momentum as we enter 2013.

 

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Multiple Competitive Advantages

I’m truly excited about our future as we continue our journey as a more focused company. We now have all the ingredients in place for sustainable, profitable growth:

 

•      We have an advantaged geographic footprint with a significant presence in developing markets. With more than 40 percent of our sales from Latin America, Asia Pacific, Eastern Europe, the Middle East and Africa, we’re well-positioned to take advantage of GDP growth per capita in these markets. In developed markets, we also hold advantaged positions, with nearly 40 percent of revenue coming from Europe and about 20 percent from North America.

 

•

We’re focused on large, fast-growing snacks categories.

 

		Nearly three-quarters of our $35 billion in net revenue comes from snacks, and we’re a leader in each of our core categories. We’re No. 1 in Biscuits, Chocolate, Candy and Powdered Beverages, and a strong No. 2 in Gum and Coffee.2   In addition, growth in these categories remains robust. Globally, the Biscuits and Chocolate categories have each grown 6 percent annually since 2009. Gum and Candy grew 5 percent, while Coffee and Powdered Beverages were up 10 percent and 7 percent, respectively.2

 

 

 

(1)

In December 2012, we announced a reorganization of our management and reporting structure following the spin-off of Kraft Foods Group. Beginning in 2013, our operations, management and operating segments will reflect: Asia Pacific; Eastern Europe, Middle East & Africa (“EEMEA”); Europe; Latin America and North America. Accordingly, we will begin reporting on our new segment structure during the first quarter of 2013, including all historical periods we present. For purposes of this presentation the above pie chart reflects this structure based on our 2012 Net Revenues.

(2)	Source: Euromonitor.

 

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•

We have an unrivaled portfolio of beloved Power Brands and proven global innovation platforms.

Our portfolio features nine billion-dollar brands, including icons such as Cadbury, Cadbury Dairy Milk and Milka chocolate, Jacobs coffee, LU, Nabisco and Oreo biscuits, Tang powdered beverages and Trident gum. Our pantry includes another 52 brands that each generate annual revenues of more than $100 million.   We’re also building a robust pipeline of innovation platforms – including belVita and Barni biscuits, Bubbly and bite-sized chocolate as well as Tassimo and Millicano on-demand coffee – that can be expanded quickly across multiple markets to drive growth.

 

 

•

We’re building a sales execution powerhouse, leveraging strategic customer partnerships, advantaged routes to market and superior execution at the point of sale, to deliver snacking solutions anywhere, at any time.

We’re expanding distribution in traditional trade channels, particularly in markets like Brazil, India and China. And in modern grocery stores, we’re increasing penetration in immediate consumption channels and in the Hot Zone at the front of the stores.

In many places around the globe, we have tremendous opportunities to enter “white space” markets by leveraging our strong presence in one category to enter another. For example, in 2011, we introduced Oreo into India building on our strong chocolate infrastructure. Just last August, we introduced Stride gum in China, building on our substantial infrastructure in biscuits.

 

•

Bringing it all together, we have world-class leadership, talent and capabilities to execute our strategies.

Fueling the Virtuous Cycle to Drive Top-Tier Growth

Our strong track record of delivering results over the past few years has been driven by a virtuous growth cycle. This cycle is the framework we use to manage our company to ensure sustainable growth on both the top and bottom lines.

 

The virtuous cycle begins with a sharp focus on our Power Brands and the core categories that will drive top-tier growth in each region. In 2012, our Power Brands, which represent almost 60 percent of total revenue, continued to drive our top line. These brands were up 8 percent last year. That’s nearly twice the growth rate of the total company.

 

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At the same time, we expand gross margin through a combination of pricing to recover input costs, strong productivity and improving product mix. Last year, we increased our gross margin by 70 basis points and our adjusted gross margin³ by 50 basis points.

We’re also successfully leveraging overhead costs. Overheads as a percent of revenue declined 60 basis points in 2012, despite significant investments in sales. As a result, operating margins are also expanding. Our Adjusted Operating Income Margin⁴ was up 70 basis points last year and 110 basis points since 2010.

By keeping a firm grasp on overheads, together with higher gross margins, we generate the fuel needed to sustain our growth. We increased our spending on advertising and consumer support by 9 percent last year to 9.4 percent of revenue.

In addition, we delivered these strong results while successfully integrating Cadbury. We generated about $800 million of cost synergies through the end of 2012. This is above our original target of $750 million. The Cadbury acquisition is also delivering on its growth promise. To date, we’ve generated about $700 million in incremental revenue. All in all, we remain on track to reach our target of $1 billion in revenue synergies by the end of 2013, with roughly two-thirds coming from developing markets.

Generating Strong Cash Flow, Returning Cash to Shareholders, Improving ROIC

We expect to generate about $4 billion of free cash flow⁵ over the next two years. This will fund the cash impact of our 2012-2014 Restructuring Program as well as provide cash to pay dividends; leaving approximately $1 billion available for deployment over the next two years.

This is how we plan to use this cash:

 

•

Our first priority will be to reinvest in the business to drive top-tier growth. To support this growth, we plan to increase capital investments to approximately 5 percent of net revenues in 2013 and 2014, focusing on expanding capacity in developing markets.

 

•

Second, we’ll explore opportunities for tack-on acquisitions. In particular, we’ll look for opportunities in developing markets where we can gain additional scale in our categories or distribution capabilities.

 

•

Third, we’ll look to return capital to shareholders in the form of dividends and/or share buybacks. The current annual dividend of $0.52 per share will increase over time at a lower rate than EPS growth, but with a dividend payout ratio that would not fall below 30 percent. In March 2013, our board authorized a three-year share repurchase program to offset dilution from stock options.

 

•

Fourth, we’ll use our cash to pay down debt to maintain financial flexibility.

Finally, we’re committed to a steady improvement in return on invested capital, targeting an increase of 30 to 50 basis points per year. Double-digit earnings growth and tight management of working capital and capital expenditures will drive the improvement.

 

(3)	Please see discussion of non-GAAP financial measures on Exhibit A.

(4)	Reported Operating Income Margin was 7.9% in FY 2010; 9.8% in 2011; and 10.4% in FY 2012. Please see discussion of non-GAAP financial measures on Exhibit A.

(5)	Free Cash Flow: cash flow from operations less capital expenditures adding back cash payments (net of tax benefits) associated with 2012-2014 Restructuring Program expenditures

 

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Protecting the Well-Being of Our Planet

From investing in sustainable agriculture to eliminating waste and promoting healthy lifestyles, we continue to evolve the way we do business to reduce our environmental impact and enhance our contributions to society, while delivering outstanding financial performance.

 

Since October 2012, we’ve committed $600 million over 10 years through our Cocoa Life and Coffee Made Happy initiatives to build sustainable supplies and thriving communities to benefit millions of people in the developing world.
		Coffee Made Happy is designed to help the next generation of farmers – inspiring, training and building capacity to improve their livelihoods and attract new generations back to the small-scale farming sector. Through this initiative, we’ll invest a minimum of $200 million to empower one million farming entrepreneurs in Vietnam, Peru and other important coffee markets by 2020.

Cocoa Life is our largest, most comprehensive cocoa sustainability effort to date. As the world’s largest chocolate company, we’ll invest $400 million over the next 10 years to improve the livelihoods and living conditions of more 200,000 cocoa farmers and about one million people in cocoa-farming communities.

We also remain committed to building community partnerships that empower people with the healthy habits to achieve holistic well-being. Over the last 25 years, we’ve contributed more than $1 billion in cash and food to charitable organizations around the world. And, through our Mondelēz International Foundation, we’re completing our $180 million pledge to ramp up physical activity for children and their families, while securing more fresh foods through local agriculture and better nutrition education.

To make the biggest impact possible, we work with leading non-governmental organizations, such as INMED Partnerships for Children in Brazil, Charities Aid Federation in Russia and Klasse 2000 in Germany, as well as Helen Keller International and Save the Children in Southeast Asia.

 

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Bullish about the Future

In sum, we’re well-positioned for sustainable, profitable growth. We have an advantaged geographic footprint; an enviable portfolio of iconic brands; strong innovation platforms; a virtuous cycle in every geography; a long runway of future growth opportunities; and strong cash flow.

As a result, I’m bullish on the future and the ability of our 110,000 employees around the world to deliver top-tier financial results.

Thank you for your continuing support.

Best regards,

Forward-Looking Statements

This letter to shareholders contains a number of forward-looking statements. Words, and variations of words, such as “expect,” “goals,” “plans,” “continue,” “may,” “will,” and similar expressions are intended to identify our forward-looking statements, including but not limited to, sustainable and profitable growth; our ability to take advantage of growth opportunities; our products’ future revenues; our pipeline of innovation platforms; our routes to market; our ability to execute our strategies; Cadbury revenue synergies; future cash flows and uses of cash; improvement in return on invested capital; plans for protecting the well-being of our planet; and our being bullish on the future. These forward-looking statements involve risks and uncertainties, many of which are beyond our control, and important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, continued volatility of commodity and other input costs, pricing actions, increased competition, our ability to differentiate our products from retailer brands, increased costs of sales, regulatory or legal restrictions, actions or delays, a shift in our product mix to lower margin offerings, private label, risks from operating globally, continued consumer weakness, weakness in economic conditions, our labor force and tax law changes. For additional information on these and other factors that could affect our forward-looking statements, see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this letter to shareholders, except as required by applicable law or regulation.

 

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MONDELĒZ INTERNATIONAL, INC.

Three Parkway North

Deerfield, Illinois 60015

 

 

NOTICE OF 2013 ANNUAL MEETING OF SHAREHOLDERS

 

 

 

TIME AND DATE:

9:00 a.m. CDT on Tuesday, May 21, 2013.

 

PLACE:

North Shore Center for the Performing Arts in Skokie

9501 Skokie Boulevard

Skokie, Illinois 60077

 

ITEMS OF BUSINESS:

(1)

To elect the 11 directors named in the Proxy Statement;

 

(2)

To hold an advisory vote to approve executive compensation;

 

(3)

To ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending December 31, 2013;

 

(4)

To vote on two shareholder proposals if properly presented at the meeting; and

 

(5)

To transact any other business properly presented at the meeting.

 

WHO MAY VOTE:

Shareholders of record at the close of business on March 15, 2013.

 

DATE OF DISTRIBUTION:

We mailed our Notice of Internet Availability of Proxy Materials on or about April 3, 2013. For shareholders who previously elected to receive a paper copy of the proxy materials, we mailed the Proxy Statement, our Annual Report on Form 10-K for the year ended December 31, 2012 and the proxy card on or about April 3, 2013.

 

Carol J. Ward

Vice President and Corporate Secretary

April 3, 2013

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 21, 2013   Mondelēz International, Inc.’s Proxy Statement and Annual Report on Form 10-K are available at http://materials.proxyvote.com/609207.

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		Page
PROXY STATEMENT SUMMARY			1
Significant Company Events During 2012			3
ITEM 1. ELECTION OF DIRECTORS			4
Process for Nominating Directors			4
Director Nominees			6
CORPORATE GOVERNANCE			16
Corporate Governance Materials Available on Our Website			16
Governance Guidelines and Codes of Conduct			16
Key Corporate Governance Practices			17
Board Leadership Structure			17
Director Independence			19
Oversight of Risk Management			19
Review of Transactions with Related Persons			20
Section 16(a) Beneficial Ownership Reporting Compliance			21
Communications with the Board			22
BOARD COMMITTEES AND MEMBERSHIP			23
Committee Membership January 1 through May 23, 2012			23
Committee Membership May 23 through October 1, 2012			24
Current Committee Membership			24
Meeting Attendance			25
Audit Committee			25
Audit Committee Report for the Year Ended December 31, 2012			26
Pre-Approval Policies			27
Independent Auditors’ Fees			28
Governance, Membership and Public Affairs Committee			28
Human Resources and Compensation Committee			29
Human Resources and Compensation Committee Interlocks and Insider Participation			29
Responsibilities			30
The Compensation Committee’s Use of an Independent Compensation Consultant			30
Limited Role of Executive Officers in the Determination of Executive Compensation			31
Analysis of Risk in the Compensation Architecture			31
Human Resources and Compensation Committee Report for the Year Ended December 31, 2012			33
COMPENSATION OF NON-EMPLOYEE DIRECTORS			34
COMPENSATION DISCUSSION AND ANALYSIS			37
Executive Summary			37
Our Compensation Program Design			45
Elements of Executive Compensation			53
Compensation Paid to Named Executive Officers in 2012			67
Policy on Recoupment of Executive Incentive Compensation in the Event of Certain Restatements			72
Anti-Hedging Policy and Trading Restrictions			73
Anti-Pledging Policy			73
Policy with Respect to Qualifying Compensation for Tax Deductibility			73
EXECUTIVE COMPENSATION TABLES			75
2012 Summary Compensation Table			75
2012 Grants of Plan-Based Awards			78

 

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		Page
2012 Outstanding Equity Awards at Fiscal Year-End			80
2012 Stock Vested			83
2012 Pension Benefits			84
Retirement Benefit Plan Descriptions			85
2012 Non-Qualified Deferred Compensation Benefits			88
Potential Payments upon Termination or Change in Control			89
OWNERSHIP OF EQUITY SECURITIES			94
ITEM 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION			96
ITEM 3. RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS			98
SHAREHOLDER PROPOSALS			98
ITEM 4. Shareholder Proposal: Report on Extended Producer Responsibility			99
ITEM 5. Shareholder Proposal: Sustainability Report on Gender Equality in the Company’s Supply Chain			101
OTHER MATTERS THAT MAY BE PRESENTED AT THE ANNUAL MEETING			103
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING AND VOTING			103
2014 ANNUAL MEETING OF SHAREHOLDERS			111
Shareholder Nominations and Proposals for the 2014 Annual Meeting			111
EXHIBIT A: MONDELĒZ INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP INFORMATION			A-1
MAPS AND DIRECTIONS TO THE ANNUAL MEETING			Back Cover

 

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Significant Company Events During 2012

2012 was another transformational year for us. We began the year as Kraft Foods Inc., a company primarily comprised of two distinct businesses – a market leading North American grocery business and a faster-growing global snack foods business. To allow each business to focus on its specific strengths and objectives, on October 1, 2012, we spun-off Kraft Foods Group, Inc. (“Kraft Foods Group”), our North American grocery business, to our shareholders (the “Spin-Off”). As a result of the Spin-Off, Kraft Foods Group became an independent, publicly-traded company. In connection with the Spin-Off, we also changed our name from Kraft Foods Inc. to Mondelēz International, Inc. (“Mondelēz International” or the “Company”). The Spin-Off has allowed us to focus on our significant opportunities for growth as consumer demand for snacks increases around the world.

Over the past several years, we have transformed our Company, catalyzed by our acquisitions of the LU biscuits business on November 30, 2007 and the Cadbury business on February 2, 2010, and culminating with the Spin-Off, from a modestly growing grocery and snacks business into a faster-growing global snacks powerhouse. Over the last three years, we have been a top-tier performer in our industry as evidenced by our significant returns to shareholders. Our portfolio is comprised of fast-growing categories with a footprint across most major developed and developing markets. We have leading share positions globally in the Biscuits, Chocolate, Candy and Powdered Beverages categories, and number two share positions in the Gum and Coffee categories. With 74% of our revenue in 2012 generated in the fast-growing snacks categories, we are well positioned to deliver top-tier growth into the future.

Further, prior to the Spin-Off, on June 26, 2012, the Company transferred its stock exchange listing from the New York Stock Exchange to the NASDAQ Global Select Market (“NASDAQ”). The Company’s stock now trades on NASDAQ under the symbol “MDLZ,” and Kraft Foods Group trades under the symbol “KRFT.”

Like the Company, the Board of Directors underwent significant changes during 2012 in connection with the Spin-Off:

 

•

Myra M. Hart, Peter B. Henry, Terry J. Lundgren, Mackey J. McDonald and John C. Pope served as directors until they resigned as directors of the Company, effective immediately before the Spin-Off, to become directors of Kraft Foods Group;

 

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Lois D. Juliber, Mark D. Ketchum, Jorge S. Mesquita, Fredric G. Reynolds and Jean-François M.L. van Boxmeer continued as directors of the Company, and Irene B. Rosenfeld continued as Chief Executive Officer and Chairman of the Board of the Company;

 

•

Stephen F. Bollenbach, Lewis W.K. Booth and Ruth J. Simmons were appointed to the Company’s Board of Directors, effective immediately following the Spin-Off; and Patrick T. Siewert was appointed to the Company’s Board of Directors, effective October 23, 2012.

The Board currently consists of 10 members, all of whom have been nominated for election for a term of one year expiring at the 2014 Annual Meeting of Shareholders.

 

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ITEM 1. ELECTION OF DIRECTORS

Process for Nominating Directors

The Governance, Membership and Public Affairs Committee of our Board of Directors (the “Governance Committee”) is responsible for identifying, evaluating and recommending to the Board nominees for election at the 2013 Annual Meeting of Shareholders (and any adjournments or postponements of the meeting) (the “Annual Meeting”). The Governance Committee relies on nominee suggestions from the directors, shareholders, management and others. From time to time, the Governance Committee retains executive search and board advisory firms to assist in identifying and evaluating potential nominees. The Governance Committee retained Heidrick & Struggles to assist in the Committee’s recruitment of individuals to replace two directors who did not stand for re-election at the 2012 Annual Meeting of Shareholders (Ajaypal S. Banga and Richard A. Lerner) and the five individuals (Myra M. Hart, Peter B. Henry, Terry J. Lundgren, Mackey J. McDonald and John C. Pope) elected at the 2012 Annual Meeting of Shareholders whom the Board asked to serve on the board of Kraft Foods Group in connection with the Spin-Off. The Committee’s recruitment efforts focused on identifying individuals for the new Mondelēz International Board of Directors. These recruitment efforts resulted in the Board’s appointment of Stephen F. Bollenbach, Lewis W.K. Booth, Patrick T. Siewert and Ruth J. Simmons as new directors of Mondelēz International at or soon after the Spin-Off. These directors were all identified by Heidrick & Struggles and recommended to the Board as director nominees by the Governance Committee. Ratan N. Tata was recommended to the Board as a director nominee by the Chairman and Chief Executive Officer.

General Qualifications

The Board believes all directors should possess certain personal characteristics, including integrity, sound business judgment and vision, to serve on our Board. We believe these characteristics are necessary to establish a competent, ethical and well-functioning Board that best represents the interests of our business, shareholders, employees, business partners and consumers. Under our Corporate Governance Guidelines (the “Guidelines”), when evaluating the suitability of individuals for nomination, the Governance Committee takes into account many factors. These include the individual’s general understanding of the varied disciplines relevant to the success of a large, publicly traded company in a global business environment, understanding of our global businesses and markets, professional expertise and education. The Governance Committee also considers an individual’s ability to devote sufficient time and effort to fulfill his or her Mondelēz International responsibilities, taking into account the individual’s other commitments. In addition, the Board considers whether an individual meets various independence requirements, including whether his or her service on boards and committees of other organizations is consistent with our conflicts of interest policy.

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

In considering whether to nominate Mr. Tata, age 75, for election by the Company’s shareholders, both the Committee and Board reviewed Mr. Tata’s unique experience and expertise in leading a successful global enterprise; in Indian, Asian, and emerging markets business and cultural affairs; support for the development and promotion of innovative business practices; and insights into the continuing evolution of consumer products. They both determined that Mr. Tata would uniquely contribute to the Board’s work and the Corporation’s growth during the coming year.

An employee director must resign from the Board upon ceasing to be a Company officer.

 

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Diversity

The Guidelines provide that the Governance Committee will consider factors that promote diversity of views and experience when evaluating the suitability of individuals for nomination. While the Board has no formal written policy regarding what specific factors would create a diversity of views and experience, the Governance Committee recognizes the significant benefit diversity provides to the Board and Mondelēz International, as varying viewpoints contribute to a more informed and effective decision-making process. The Governance Committee seeks broad experience in relevant industries, professions and areas of expertise important to our operations, including global business, manufacturing, marketing, science, finance and accounting, academia, law and government. The Governance Committee also recognizes the importance of having directors with significant international experiences and backgrounds given our global, multicultural business.

As shown below, our director nominees have varied experiences, backgrounds and personal characteristics, which provide the Board with a diversity of viewpoints and enable it to effectively represent our business, shareholders, employees, business partners and consumers:

 

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6 director nominees are current or former presidents or chief executive officers of large, complex enterprises;

 

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9 director nominees currently hold or held key positions at major consumer products companies, including food and beverage companies;

 

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3 director nominees have significant financial and accounting backgrounds;

 

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1 director nominee is a professor at, and former president of, a leading university;

 

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3 director nominees are women, including the Chairman;

 

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7 director nominees are living and working or have lived and worked outside the United States;

 

•

the director nominees range in age from 51 – 75.

Individual Skills and Experience

The Governance Committee works with the Board to determine the appropriate mix of backgrounds and experiences that would establish and maintain a Board that is strong in its collective knowledge, allowing the Board to fulfill its responsibilities and best perpetuate our long-term success and represent our shareholders’ interests. Then, when evaluating potential director nominees, the Governance Committee considers each individual’s professional expertise and educational background in addition to the general qualifications. The Governance Committee evaluates each individual in the context of the Board as a whole. To help the Governance Committee determine whether director nominees qualify to serve on our Board and would contribute to the Board’s current and future needs, director nominees complete questionnaires regarding their backgrounds, qualifications, skills and potential conflicts of interest. Additionally, the Governance Committee annually conducts evaluations of the Board and the Board’s committees, and coordinates individual directors’ self-assessments, that assess the experience, skills, qualifications, diversity and contributions of each individual and of the group as a whole.

The Governance Committee regularly communicates with the Board to identify characteristics, professional experience and areas of expertise that are particularly desirable for our directors to possess to help meet specific Board needs, including:

 

•

industry knowledge, which is vital in understanding and reviewing our strategy, including the acquisition of businesses that offer complementary products or services;

 

•

significant operating experience as current or former executives of large for-profit or other large organizations, which gives directors specific insight into, and expertise that will foster active participation in, the development and implementation of our operating plan and business strategy;

 

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•

leadership experience, as directors who have served in significant leadership positions possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others;

 

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substantial global business experience, which is particularly important given our global presence;

 

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accounting and financial expertise, which enables directors to analyze our financial statements, capital structure and complex financial transactions and oversee our accounting and financial reporting processes;

 

•

product development and marketing experience in complementary industries, which contributes to our identification and development of new food and beverage products and implementation of marketing strategies that will improve our performance;

 

•

public company board and corporate governance experience at large publicly traded companies, which provides directors with a solid understanding of their extensive and complex oversight responsibilities and furthers our goals of greater transparency, accountability for management and the Board and protection of shareholder interests; and

 

•

academic and research experience, which brings to the Board strong critical thinking and verbal communications skills as well as a greater diversity of views and backgrounds.

Director Nominees

The Board believes that all the director nominees for election at the Annual Meeting are highly qualified. Each director nominee’s specific skills, knowledge and experience that the Governance Committee relied upon when determining whether to nominate the individual for election are described below in the nominee’s biography. (A particular nominee may possess other skills, knowledge or experience even though they are not indicated.) As their biographies indicate, the nominees have significant leadership, professional experience, knowledge and skills that qualify them for service on our Board. They represent diverse views, experiences and backgrounds. Each nominee other than the Chairman satisfies independence requirements under the NASDAQ Stock Market Listing Standards and the Board’s categorical standards of director independence. All director nominees satisfy the criteria set forth in our Guidelines and possess the personal characteristics that are essential for the proper and effective functioning of the Board.

All Board members are subject to annual election. Our Board currently has ten directors, all of whom are standing for election at the 2013 Annual Meeting. Shareholders elected six of the directors to one-year terms at the 2012 Annual Meeting. The Board appointed the other four directors – Messrs. Bollenbach, Booth, and Siewert and Dr. Simmons – in October 2012 in connection with the Spin-Off.

The Governance Committee recommended, and the Board nominated, each of the 11 director nominees listed below for election at the Annual Meeting. The terms of all directors elected at the 2013 Annual Meeting will end at the 2014 Annual Meeting or until the director’s successor has been duly elected and qualified. Each nominee has consented to his or her nomination for election to the Board.

The chart below presents information regarding each director nominee as of April 1, 2013, including information about each nominee’s professional experience, educational background and qualifications that led the Board to nominate him or her for election. It also includes information about all public company directorships each nominee currently holds and held during the past five years. In addition to the public company directorships listed below, the nominees also serve on the boards of various charitable, educational and cultural institutions.

The persons named as proxies on each shareholder’s proxy card will vote the shares represented by the proxy card FOR or AGAINST the director nominees or ABSTAIN from voting, as indicated in the shareholder’s voting instructions. If a director nominee should become unavailable to serve as a director, the persons named as proxies intend to vote the shares for a replacement nominee designated by the Board. In lieu of naming a substitute, the Board may reduce the number of directors on our Board.

 

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The Board recommends shareholders vote FOR the election of each of these nominees.

 

Stephen F. Bollenbach   Former Co-Chairman and CEO, Hilton Hotels Corporation   Director since October 2012   Current Committees: •     Governance, Membership and Public Affairs •     Human Resources and Compensation Committee   Age: 70		Professional Experience: Mr. Bollenbach served as Co-Chairman and Chief Executive Officer of Hilton Hotels Corporation, a global hospitality provider, from May 2004 until his retirement in October 2007, and as President and Chief Executive Officer from February 1996 to May 2004. Prior to that, he was Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company, an international family entertainment and media enterprise, from September 1995 to February 1996. Mr. Bollenbach spent the previous 30 years in various financial leadership positions, including Chief Financial Officer, in the hospitality, real estate and financial services industries.   Education: Mr. Bollenbach received a Bachelor of Science in Finance from the University of Southern California and a Master of Business Administration from California State University, Long Beach.   Public Company Boards: Mr. Bollenbach is a director of KB Home, Macy’s Inc. and Time Warner Inc.   Director Qualifications: •     Leadership, Product Development and Marketing, Operating and Global Business experience – former Co-Chairman, Chief Executive Officer and President of a global hospitality corporation. •     Accounting and Financial expertise – many years of experience in financial leadership positions, including ten years as Chief Financial Officer, including in the family entertainment, media, hospitality, real estate and financial services industries. •     Public Company Board and Corporate Governance experience – current director of three other public companies.

 

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Lewis W.K. Booth   Former Executive Vice President and Chief Financial Officer of the Ford Motor Company   Director since October 2012   Current Committees:   •  Audit   Age: 64		Professional Experience: Mr. Booth served as Executive Vice President and Chief Financial Officer of the Ford Motor Company, a global automobile manufacturer, from November 2008 until his retirement in April 2012. He was Executive Vice President, Ford of Europe, Volvo Car Corporation and Ford Export Operations and Global Growth Initiatives, and Executive Vice President of Ford’s Premier Automotive Group, from October 2005 to October 2008. Prior to that, Mr. Booth held various executive leadership positions with Ford including as Chairman and Chief Executive Officer of Ford of Europe, President of Mazda Motor Corporation and President of Ford Asia Pacific and Africa Operations. He was employed continuously by the Ford Motor Company, in positions of increasing responsibility, since 1978.   Mr. Booth is a qualified chartered management accountant.   Mr. Booth was appointed Commander of the Order of the British Empire in the Queen’s Birthday Honours list in June 2012, for his services to the automotive and manufacturing industries.   Education: Mr. Booth received a Bachelor of Science in Mechanical Engineering from the University of Liverpool.   Public Company Boards: Mr. Booth is a director of Gentherm Incorporated and Rolls-Royce Holdings plc.   Director Qualifications: •  Leadership, Product Development and Marketing, Operating and Global Business experience – many years of experience in executive leadership positions for major divisions of a global automobile manufacturer. •  Accounting and Financial expertise – former chief financial officer of a global automobile manufacturer. •  Public Company Board and Corporate Governance experience – current director of two other global public companies.

 

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Lois D. Juliber   Former Vice Chairman and Chief Operating Officer, Colgate-Palmolive Company   Director since November 2007   Current Committees:   •     Chair, Human Resources and Compensation •     Governance, Membership and Public Affairs   Age: 64		Professional Experience: Ms. Juliber served as a Vice Chairman of the Colgate-Palmolive Company, a global consumer products company, from July 2004 until her retirement in April 2005. She served as Colgate-Palmolive’s Chief Operating Officer from March 2000 to July 2004, Executive Vice President – North America and Europe from 1997 until March 2000 and President of Colgate North America from 1994 to 1997. Prior to joining Colgate-Palmolive, Ms. Juliber spent 15 years at Mondelēz International’s predecessor, General Foods Corporation, in a variety of key marketing and general management positions.   Education: Ms. Juliber received a Bachelor of Arts from Wellesley College and a Master of Business Administration from Harvard University.   Public Company Boards: Ms. Juliber is a director of E.I. du Pont De Nemours and Company. She was formerly a director of Goldman Sachs Group, Inc.   Director Qualifications: •  Leadership and Operating experience – former Vice Chairman and Chief Operating Officer of a global consumer products company. •  Industry Knowledge, Product Development and Marketing, and Global Business experience – 32 years working in the global consumer products industry. •  Public Company Board and Corporate Governance experience – current and former director of other global public companies.
Mark D. Ketchum   Former President and Chief Executive Officer, Newell Rubbermaid Inc.   Director since April 2007   Lead Director since January 2009   Current Committees:   •  Human Resources and Compensation •  Chair, Governance, Membership and Public Affairs   Age: 63		Professional Experience: Mr. Ketchum served as President and Chief Executive Officer of Newell Rubbermaid Inc., a global marketer of consumer and commercial products, from October 2005 to June 2011 and was a member of its board of directors from November 2004 to May 2012. From 1999 to 2004, Mr. Ketchum was President, Global Baby and Family Care of The Procter & Gamble Company, a global marketer of consumer products. Mr. Ketchum joined The Procter & Gamble Company in 1971, where he served in a variety of roles, including Vice President and General Manager – Tissue/Towel from 1990 to 1996 and President–North American Paper Sector from 1996 to 1999.   Education: Mr. Ketchum received a Bachelor of Science in Industrial Engineering and Operations Research from Cornell University.   Public Company Boards: Mr. Ketchum was formerly a director of Newell Rubbermaid Inc.   Director Qualifications: •     Leadership and Operating experience – former President and Chief Executive Officer of a global products company and former President of a division of a global consumer products company. •     Industry Knowledge, Product Development and Marketing and Global Business experience – held key roles at a global consumer products companies for four decades. •     Public Company Board and Corporate Governance experience – former director of another global public company.

 

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Jorge S. Mesquita   Group President – New Business Creation and Innovation and Pet Care, The Procter & Gamble Company   Director since May 2012   Current Committees:   • Audit   Age: 51		Professional Experience: Mr. Mesquita has served as Group President – New Business Creation and Innovation and Pet Care of The Procter & Gamble Company, a global marketer of consumer products, since March 14, 2012 and served as Group President — Special Assignment from January 1, 2012 until March 13, 2012. Prior to that, he served as Group President, Global Fabric Care from 2007 to 2011 and as President, Global Home Care from 2001 to 2007, also serving as President of Commercial Products and President of P&G Professional from 2006 to 2007. Mr. Mesquita has been employed continuously by The Procter & Gamble Company, in various marketing and leadership capacities, since 1984.   Education: Mr. Mesquita received a Bachelor of Science in Chemical Engineering from the Florida Institute of Technology.   Director Qualifications: • Leadership and Global Business experience – current Group President of a major division of a global marketer of consumer products. • Industry Knowledge and Marketing experience – former President of major divisions of a global consumer products company.
Fredric G. Reynolds   Former Executive Vice President and Chief Financial Officer, CBS Corporation   Director since December 2007   Current Committees:   • Chair, Audit   Age: 62		Professional Experience: Mr. Reynolds served as Executive Vice President and Chief Financial Officer of CBS Corporation, a mass media company, from January 2006 until his retirement in August 2009. From 2001 until 2006, Mr. Reynolds served as President and Chief Executive Officer of Viacom Television Stations Group and Executive Vice President and Chief Financial Officer of the businesses that comprised Viacom Inc. He also served as Executive Vice President and Chief Financial Officer of CBS Corporation and its predecessor, Westinghouse Electric Corporation, from 1994 to 2000. Prior to that, Mr. Reynolds served in various capacities with PepsiCo, Inc., a food and beverage company, for twelve years, including Chief Financial Officer or Financial Officer at Pizza Hut, Pepsi Cola International, Kentucky Fried Chicken Worldwide and Frito-Lay.   Education: Mr. Reynolds received a Bachelor of Business Administration in Finance from the University of Miami and is a certified public accountant.   Public Company Boards: Mr. Reynolds is a director of AOL, Inc.   Director Qualifications: • Leadership, Operating and Global Business experience – former President, Chief Executive Officer, Executive Vice President and Chief Financial Officer of global media companies and divisions of a global food and beverage company. • Industry Knowledge – twelve years in various positions, including key roles, at a global food and beverage company. • Accounting and Financial expertise – former Chief Financial Officer of a mass media company and divisions of a global food and beverage company, and Certified Public Accountant. • Public Company Board and Corporate Governance experience – current director of another global public company.

 

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Irene B. Rosenfeld   Chairman and Chief Executive Officer, Mondelēz International, Inc.   Director since June 2006   Age: 59		Professional Experience: Ms. Rosenfeld is our Chairman and Chief Executive. She was appointed Chief Executive Officer and Director in June 2006 and became Chairman of the Board in March 2007. Prior to that, she served as Chairman and Chief Executive Officer of Frito-Lay, a division of PepsiCo, Inc., a food and beverage company, from September 2004 to June 2006. Previous to that, Ms. Rosenfeld was employed continuously by Mondelēz International and its predecessor companies, in various capacities from 1981 until 2003, including President of Kraft Foods North America and President of Operations, Technology, Information Systems and Kraft Foods Canada, Mexico and Puerto Rico.   Education: Ms. Rosenfeld received a Bachelor of Arts in Psychology, a Master of Science in Business Administration and a Doctor of Philosophy in Marketing and Statistics from Cornell University.   Director Qualifications: • Leadership and Operating experience – current Chairman and Chief Executive Officer of Mondelēz International and former Chairman and Chief Executive Officer of a major business unit of another global food and beverage company. • Industry Knowledge, Product Development and Marketing and Global Business experience – long-time service in various positions, including key roles, at Mondelēz International and its predecessor companies and another global food and beverage company. • Public Company Board and Corporate Governance experience – former director of another public company.

 

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Patrick T. Siewert   Managing Director, The Carlyle Group Director since October 2012   Current Committees:   •   Audit   Age: 57		Professional Experience: Mr. Siewert has served as a Managing Director for the The Carlyle Group, a global alternative asset management firm, since April 2007. Since 2008, he has also served as Chairman of Eastern Broadcasting Company, one of Greater China’s largest television broadcast and media companies. Prior to that, he was a senior executive with The Coca-Cola Company from August 2001 to March 2007 in various positions including Group President and Chief Operating Officer, Asia and a member of the Global Executive Committee. Prior to that, he was with Eastman Kodak Company from 1974 to 2001, serving in a variety of executive and managerial and director roles, including Chief Operating Officer, Consumer Imaging and Senior Vice President and President of the Kodak Professional Division.   Education: Mr. Siewert received a Bachelor of Science from Elmhurst College and a Master of Science in Service Management from the Rochester Institute of Technology.   Public Company Boards: Mr. Siewert is a director of Avery Dennison Corporation.   Director Qualifications: •   Leadership, Operating and Global Business experience – former president of a major division of a global beverage company and a consumer products company. •   Industry Knowledge – six years in a key role at a global beverage company. •   Public Company Board and Corporate Governance experience – current director of another global public company.

 

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Ruth J. Simmons   President Emerita, Brown University   Director since October 2012   Current Committees:   •   Human Resources and Compensation •   Governance, Membership and Public Affairs   Age: 67		Professional Experience: Dr. Simmons is Professor of Comparative Literature and Africana Studies and President Emerita of Brown University, having served as President from 2001 to 2012. She has been Professor of Comparative Literature and Africana Studies at Brown since 2001. Prior to that, Dr. Simmons served as President, Smith College from 1995 to 2001 and Vice Provost of Princeton University from 1991 to 1995. She served in various administrative positions at colleges and universities since 1977, including the University of Southern California from 1979 to 1983, Princeton University from 1983 to 1989 (and again from 1991 to 1995) and Spelman College from 1989 to 1991.   Education: Dr. Simmons received a Bachelor of Arts in French from Dillard University and a Master of Arts and Doctor of Philosophy in Romance Languages and Literatures from Harvard University.   Public Company Boards: Dr. Simmons is a director of Chrysler Group LLC and Texas Instruments Incorporated and was formerly a director of The Goldman Sachs Group, Inc.   Director Qualifications: •   Leadership and Operating experience – former President of a major college and leading university with over 15 years of experience. •   Academic and Research experience – professor of literature and former administrator with over 36 years of experience. •   Public Company Board and Corporate Governance experience – former and current director of other global public companies.

 

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Ratan N. Tata   Former Chairman of Tata Sons Limited   Age: 75		Professional Experience: Mr. Tata is Chairman of the Tata Trusts, among the largest private sector philanthropic trusts in India.   Mr. Tata served as Chairman of Tata Sons Limited, the holding company of the Tata Group, one of India’s largest business conglomerates, from 1991 until December 28, 2012. Mr. Tata was also Chairman of the major Tata Group companies, including Tata Motors, Tata Steel, Tata Consultancy Services, Tata Global Beverages and several other Tata companies, until December 28, 2012. Mr. Tata joined the Tata Group in December 1962.   Education: Mr. Tata received a Bachelor of Architecture from Cornell University and completed the Advanced Management Program at Harvard Business School.   Public Company Boards: Mr. Tata is a director of Alcoa Inc. and was formerly a director of Bombay Dyeing and Manufacturing Company Ltd. and Fiat S.p.A.   Director Qualifications: •    Leadership and Operating experience – former Chairman of the holding company for one of India’s largest business conglomerates, with revenues in excess of $100 billion USD; former Chairman of major operating companies in various industries, including automotive, consulting, steel and beverages. •    Global Business experience – former Chairman of the holding company for one of India’s largest business conglomerates and former Chairman of multiple companies with international operations; serves on the United Kingdom Prime Minister’s Business Counsel for Britain; member of international advisory boards of Mitsubishi Corp., JPMorgan Chase, Rolls-Royce, Temasek Holdings and Monetary Authority of Singapore. •    Industry Knowledge and Marketing experience – former Chairman of an international beverage company. •    Public Company Board and Corporate Governance experience – current director of global public company; member of international advisory boards of Mitsubishi Corp., JPMorgan Chase, Rolls-Royce, Temasek Holdings and Monetary Authority of Singapore.

 

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Jean-François M. L. van Boxmeer   Chairman of the Executive Board and Chief Executive Officer of Heineken N.V.   Director since January 2010   Committees:   • Human Resources and Compensation • Governance, Membership and Public Affairs   Age: 51		Professional Experience: Mr. van Boxmeer has been Chairman of the Executive Board and Chief Executive Officer of Heineken N.V., a brewing company, since 2005 and a member of its Executive Board since 2001. He has been employed continuously by Heineken, in various capacities, since 1984, including General Manager of Heineken Italia from 2000 to 2001.   Education: Mr. van Boxmeer received a Master in Economics at les Faculté universitaires Notre Dame de la Paix S.J.   Director Qualifications: •   Leadership and Operating experience – Chairman and Chief Executive Officer of a global brewing company. •   Industry Knowledge, Product Development and Marketing and Global Business experience – over two decades in various positions, including key roles, at a global brewing company.

 

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CORPORATE GOVERNANCE

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

The Board reviewed our various corporate governance documents and practices in connection with the Company’s decision to delist its Class A Common Stock from the New York Stock Exchange and list the Class A Common Stock with NASDAQ beginning on June 26, 2012 and also in preparation for the Spin-Off to provide that they are consistent with Mondelēz International’s future governance needs and objectives.

Corporate Governance Materials Available on Our Website

We include the following documents in the Corporate Governance section of our website at www.mondelezinternational.com/investor/corporate-governance/index.aspx.

 

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our Articles of Incorporation,

 

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our By-Laws,

 

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our Corporate Governance Guidelines,

 

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our Board committee charters, and

 

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the Directors Ethics Code.

The information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings with the U.S. Securities and Exchange Commission (“SEC”).

Governance Guidelines and Codes of Conduct

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines (the “Guidelines”) that articulate our governance philosophy, practices and policies in a range of areas, including: the Board’s role and responsibilities; composition and structure of the Board; establishment and responsibilities of the committees of the Board; CEO and Board performance evaluations; and succession planning. At least annually, the Board’s Governance Committee reviews the Guidelines and recommends any changes to the Board. Shareholders and others can access the Guidelines on our website as described above. Please read “Key Corporate Governance Practices” beginning on page 17.

Code of Business Conduct and Ethics for Non-Employee Directors and Code of Conduct for Employees

We have adopted a Code of Business Conduct and Ethics for Non-Employee Directors (the “Directors Ethics Code”). It fosters a culture of honesty and integrity, focuses on areas of ethical risk, guides non-employee directors in recognizing and handling ethical issues and provides mechanisms to report unethical conduct. Annually, each non-employee director must acknowledge in writing that he or she has received, reviewed and understands the Directors Ethics Code.

We also have a Code of Conduct that applies to all of our employees. It includes a set of employee policies that cover ethical and legal practices for nearly every aspect of our business. The Code of Conduct reflects our values, the foremost being trust, and contains important rules our employees must follow when conducting business to promote compliance and integrity. The Code of Conduct is part of our global compliance and integrity program that provides support and training throughout

 

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our Company and encourages reporting of wrongdoing by offering anonymous reporting options and a non-retaliation policy. Shareholders and others can access our Code of Conduct on our website at www.mondelezinternational.com/DeliciousWorld/compliance-integrity/index.aspx.

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

Key Corporate Governance Practices

We design our corporate governance practices to enhance the Board’s independent leadership, accountability and oversight:

 

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Leadership Structure. As described further below under “Board Leadership Structure,” our Guidelines currently provide that the Chief Executive Officer (“CEO”) currently serves as Chairman of the Board and an independent director serves as Lead Director.

 

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Limitation on Management Directors. The Guidelines provide that the Board believes the Chairman and Chief Executive Officer generally should be the only member of management to serve as a director.

 

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Independent Committees. The Board determined that all Board committees should consist entirely of independent directors.

 

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Executive Sessions. At each Board meeting, our independent directors meet without the Chief Executive Officer or any other members of management present to discuss issues important to Mondelēz International, including matters concerning management. These sessions are chaired by the Lead Director.

 

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Special Meetings of the Board. Our By-Laws empower the Lead Director, in addition to the Chairman, to call special meetings of the Board.

 

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Annual Chairman and CEO Evaluation. The Human Resources and Compensation Committee annually evaluates the Chief Executive Officer’s performance. Additionally, the Governance Committee annually considers the Chief Executive Officer’s performance and suitability as Chairman when determining whether to nominate him or her for re-election.

 

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

 

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Majority Voting in Uncontested Director Elections. Our By-Laws provide that, in uncontested elections, director nominees must be elected by a majority of the votes cast.

 

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

 

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Stock Holding Requirements. Our Guidelines provide that directors are expected to hold Mondelēz International common stock in an amount equal to five times the annual Board retainer within five years of joining the Board. As of March 1, 2013 all directors who have served for five years have satisfied or exceeded this holding requirement. Directors must hold equity grants awarded in May 2010 or thereafter until six months after the director concludes service on the Board.

Board Leadership Structure

Our current Board leadership structure consists of:

 

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a combined Chairman and Chief Executive Officer;

 

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an independent Lead Director;

 

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all independent directors except the Chairman and CEO;

 

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independent Board committees; and

 

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governance practices that promote independent leadership and oversight.

 

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Combined Chairman and CEO

Our By-Laws provide the Board flexibility in determining its leadership structure, permitting one person to hold the offices of chief executive officer and chairman, and providing that the Board may appoint, and designate the duties of, a lead director. The Board periodically evaluates our leadership structure to determine whether the current structure is in our best interests based on circumstances existing at the time. When determining the leadership structure that will allow the Board to effectively carry out its responsibilities and best represent our shareholders’ interests, the Board considers various factors, including our specific business needs, our operating and financial performance, industry conditions, the economic and regulatory environment, Board and committee annual self-evaluations, advantages and disadvantages of alternative leadership structures and our corporate governance practices.

The Guidelines currently provide that the Chief Executive Officer serves as Chairman of the Board and an independent director serves as Lead Director. The Board believes that this leadership structure best meets our current and anticipated needs, as it has provided an effective balance of strong leadership and independent oversight during the last several years. Ms. Rosenfeld has served as our Chief Executive Officer and a director since June 2006. In 2007, the Board concluded that Ms. Rosenfeld should also serve as Chairman because of her extensive knowledge of the Company, the food industry and the competitive environment, her leadership experience and her dedication to working closely with the Lead Director and our other directors.

Having one individual serve as both Chief Executive Officer and Chairman benefits Mondelēz International and our shareholders by contributing to the Board’s efficiency and effectiveness. The Board believes that the Chief Executive Officer is generally in the best position to inform our independent directors about our global operations and issues important to Mondelēz International. Combining these roles also allows timely communication between management and the Board on critical business matters given the complexity and geographic reach of our business and ensures alignment of our business and strategic plans. At the same time, as described below under “Independent Director Leadership and Oversight,” we believe that our governance practices ensure that skilled and experienced independent directors provide independent leadership.

Independent Director Leadership and Oversight

Because the Board believes that independent Board leadership is important, it established the role of Lead Director for times when one individual serves as Chairman and Chief Executive Officer. The Lead Director is an independent director who serves as the principal liaison between the Chairman and the other independent directors and has similar responsibilities to those of the Chairman. The Board created the Lead Director position to increase the Board’s effectiveness and promote open communication among independent directors. The Lead Director works with the Chairman and other members of the Board to provide independent leadership of the Board’s affairs on behalf of our shareholders.

Under the Guidelines, the Lead Director, in consultation with the other independent directors, is responsible for:

 

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advising the Chairman as to an appropriate schedule of Board meetings;

 

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reviewing and providing the Chairman with input regarding the agendas and materials for the Board meetings;

 

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presiding at all Board meetings at which the Chairman is not present, including executive sessions of the non-employee directors, and, as appropriate, apprising the Chairman of the issues considered;

 

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being available for consultation and direct communication with our shareholders;

 

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serving as an unofficial member of all Board committees of which he or she is not a member; and

 

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performing such other duties as the Board may from time-to-time delegate.

 

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Our current Lead Director is Mark D. Ketchum, whom the Board appointed to that position in 2009. The Board believes that Mr. Ketchum is an effective Lead Director due to his independence, leadership and operating experience from formerly serving as President and Chief Executive Officer of a global consumer products company and his corporate governance experience acquired while serving on public company boards.

Director Independence

The Guidelines require that at least 75% of the directors on our Board meet the NASDAQ listing standards’ independence requirements and provide that the Chairman and Chief Executive Officer generally should be the only member of management to serve as a director. For a director to be considered independent, the Board must affirmatively determine, after reviewing all relevant information, that a director has no relationship with Mondelēz International or any of its subsidiaries that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To assist in this determination, the Board adopted categorical standards of director independence, including whether a director or a member of the director’s immediate family has any current or past employment or affiliation with Mondelēz International or our independent auditors. These categorical standards are listed as Annex A to the Guidelines, which are available on our website at www.mondelezinternational.com/investor/corporate-governance/index.aspx.

The Board determined that, under our categorical standards and NASDAQ’s listing standards, the following director nominees are independent: Stephen F. Bollenbach, Lewis W.K. Booth, Lois D. Juliber, Mark D. Ketchum, Jorge S. Mesquita, Fredric G. Reynolds, Patrick T. Siewert, Ruth J. Simmons, Ratan N. Tata, and Jean-François M.L. van Boxmeer. In addition, the Board previously determined that Myra M. Hart, Peter B. Henry, Terry J. Lundgren, Mackey J. McDonald and John C. Pope (who served on the Board until October 1, 2012) and Ajaypal S. Banga and Richard A. Lerner (who served on the Board until May 23, 2012) were independent directors. Irene B. Rosenfeld is not independent because she is an employee of Mondelēz International.

In making its determination that Mr. Tata is independent, the Board considered transactions that occurred since the beginning of 2010 between Mondelēz International and Tata Consultancy Services (“TCS”), a Tata Group company, relating to information technology services. Mr. Tata formerly served as Chairman of Tata Sons Limited (the holding company of the Tata Group), TCS and several other Tata Group companies and currently serves as Chairman of the Tata Trusts. The Board considered the fact that, as of December 28, 2012, Mr. Tata ceased serving as Chairman of TCS, as well as Tata Sons Limited and other Tata Group companies, and that the transactions between Mondelēz International and TCS constituted less than 0.3% of TCS’s annual revenues in each of the past three years. The Board further considered the fact that the Tata Trusts are a majority shareholder of Tata Sons Limited, but the Tata Trusts have no authority to exercise, and do not exercise, operational control of Tata Sons Limited or the Tata Group companies. Mr.  Tata owns less than 1% of the outstanding shares of Tata Sons Limited.

Oversight of Risk Management

Our business faces various risks, including strategic, financial, legal, regulatory, operational, accounting and reputational risks. Management is responsible for the day-to-day assessment, management and mitigation of risk. Identifying, managing and mitigating our exposure to these risks and effectively overseeing this process are critical to our operational decision-making and annual planning processes. Our Board has ultimate responsibility for risk oversight, but it has delegated primary responsibility for overseeing risk assessment and management to the Audit Committee. Pursuant to its charter, the Audit Committee reviews and discusses risk assessment and risk management guidelines, policies and processes utilized in our Enterprise Risk Management (“ERM”) approach. Our ERM approach is an ongoing process effected at all levels of our operations and across business units to identify, assess, monitor, manage and mitigate risk. Our ERM approach facilitates open communication between management and the Board to ensure that the Board and committees

 

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understand our risk management process, how it is functioning, the participants in the process, key risks to our business and performance and the information gathered through the approach. The Audit Committee annually reviews our ERM process, as well as the results of our annual ERM risk assessment, to assure the process continues to function effectively.

Annually, the Audit Committee reviews and approves management’s recommendation for allocating responsibility for reviewing and assessing key risk exposures and management’s response to those exposures to the full Board or retaining those responsibilities. Management provides reports to the Board and Audit Committee, in advance of meetings, regarding these key risks and the actions management has taken to monitor, control and mitigate these risks. Management also attends Board and Audit Committee meetings to discuss these reports and provide any updates. The Audit Committee reports key risk discussions to the Board following its meetings. Board members may also further discuss the risk management process directly with members of management.

In addition to our ERM approach, throughout the year, the Board and each committee review and assess risks related to our business and operations as follows:

 

Board		Audit		Governance, Membership and Public Affairs		Human Resources and Compensation(1)
Strategy (including health and wellness)   Operations   Food safety (including supply chain and food defense)   Competition (including private label and customer concentration)   Capital structure   Financial strategies and transactions (including economic trends)   Labor Relations (including Human Capital)		Financial statements   Financial reporting process   Accounting matters   Legal, compliance and regulatory matters   Business Continuity/Operations   Sovereign Risk   Financial risk management (including foreign exchange, commodities and interest rate exposure, income and other taxes)   Health, Safety and Environmental		Governance programs   Board organization, membership and structure   Related person transactions   Social accountability   Public policy   Mondelēz International’s public image and reputation		Compensation policies and practices for all employees (including executives)   Succession planning   Human resources policies and practices

 

(1)	For a discussion about risk oversight relating to our compensation programs, see “Human Resources and Compensation Committee – Analysis of Risk in the Compensation Architecture.”

The Board frequently discusses our strategic plans, issues and opportunities in light of circumstances in the food and beverage industry and the economic environment. Additionally, the Board devotes several days each year to a highly focused review of our strategic plans, which includes discussion of strategic and operational risks.

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

Review of Transactions with Related Persons

The Board has adopted a written policy regarding the review, approval or ratification of “related person transactions.” A related person transaction is one in which Mondelēz International is a participant, in which the amount involved exceeds $120,000 and in which any “related person” had, has or will have a

 

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

 

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the commercial reasonableness of the transaction;

 

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

 

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

 

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

 

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whether the transaction would violate any provision of our Directors Ethics Code or Code of Conduct or the Code of Conduct for Compliance and Integrity.

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

On January 30, 2013, BlackRock, Inc. (“BlackRock”), an investment management corporation, filed a Schedule 13G with the SEC notifying the Company that it became a greater than 5% shareholder as of December 31, 2012. During 2012, BlackRock acted as an investment manager with respect to certain investment options under 401(k) plans for our U.S. employees sponsored by our U.S. operating company, Mondelēz International Global LLC. BlackRock was selected as an investment manager for the 401(k) plans by the plans’ named fiduciary for investment, the Benefits Investment Committee (“BIC”). Participants in the 401(k) plans pay BlackRock’s investment management fees if they invest in investment options managed by BlackRock. During 2012, BlackRock received approximately $330,000 in connection with its investment management fees. The BIC’s selection of BlackRock for the investment management services it provides the plans’ was based on its fiduciary determination that BlackRock’s expertise met applicable fiduciary standards and that its fees were reasonable and appropriate. The Governance Committee reviewed our relationship with BlackRock and ratified these transactions.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to report to the SEC their ownership of our common stock and changes in that ownership. As a practical matter, our Office of the Corporate Secretary assists our directors and executive officers by monitoring their transactions and completing and filing Section 16(a) reports on their behalf.

We reviewed copies of reports filed pursuant to Section 16(a) of the Exchange Act and written representations from reporting persons that all reportable transactions were reported. Based solely on that review, we believe that during the fiscal year ended December 31, 2012, all required filings were timely made in accordance with the requirements of the Exchange Act, except as follows:

 

•

In May 2012, due to an administrative error, we filed a Form 3 on behalf of Mr. Mesquita underreporting his holdings of Mondelēz International stock by 6,500 shares. Upon discovering the error, we filed an amended Form 3 reporting these shares.

 

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•

In October 2012, due to an administrative error in connection with the Spin-Off, we filed a Form 3 on behalf of Tracey Belcourt, our Vice President, Strategy, underreporting her shares of Mondelēz International stock by 7,911 shares. Upon discovering the error, we filed an amended Form 3 reporting these shares.

Communications with the Board

Information for shareholders and other parties interested in communicating with the Lead Director, the Board or our independent directors, individually or as a group, is available on our website at www.mondelezinternational.com/Investor/corporate-governance/contact_bod.aspx. Our Corporate Secretary forwards communications relating to matters within the Board’s purview to the independent directors; communications relating to matters within a Board committee’s area of responsibility to the chair of the appropriate committee; and communications relating to ordinary business matters, such as suggestions, inquiries and consumer complaints, to the appropriate Mondelēz International executive or employee. Our Corporate Secretary does not forward solicitations, junk mail and obviously frivolous or inappropriate communications, but makes them available to any independent director who requests them.

 

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BOARD COMMITTEES AND MEMBERSHIP

The Governance Committee considers and makes recommendations to the Board regarding the Board’s committee structure and membership. Our Board then designates the committee members and chairs based on the Governance Committee’s recommendations.

The Board has adopted a written charter for each committee. The charters define each committee’s roles and responsibilities. All current standing committee charters are available on our website at www.mondelezinternational.com/Investor/corporate-governance/index.aspx.

As mentioned above, the Board of Directors underwent significant changes during 2012 in connection with the Spin-Off. In the following tables, we lay out committee structure and membership during the course of 2012 and indicate the number of times each committee met.

Through October 1, 2012, the Board had four standing committees: Audit, Finance, Human Resources and Compensation, and Governance. From January 1 through the 2012 Annual Meeting, the committee structure and membership was:

Committee Membership

January 1 through May 23, 2012

 

Name		Audit		Finance		Human Resources and Compensation		Governance, Membership and Public Affairs
Ajaypal S. Banga(1)				X		Chair		—
Myra M. Hart		X		—		—		Chair
Peter B. Henry		—		—		—		X
Lois D. Juliber		—		—		Vice Chair		X
Mark D. Ketchum		X		—		—		X
Richard A. Lerner, M.D.(1)		—		—		—		X
Mackey J. McDonald		X		X		—		—
John C. Pope		X		Chair		—		—
Fredric G. Reynolds		Chair		X		—		—
Jean-François M.L. van Boxmeer		—		—		X		X
Total Number of Meetings January 1 through May 22, 2012(2)		9		6		4		3

 

(1)

Mr. Banga and Dr. Lerner did not stand for re-election at the Company’s 2012 Annual Meeting of Shareholders. Their service on these committees ended at that time.

 

(2)

The Audit and Finance Committees held one joint meeting in May 2012; it is included in the Audit Committee meeting total.

 

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From the 2012 Annual Meeting through the Spin-Off, the committee structure and membership was:

Committee Membership

May 23 through October 1, 2012

 

Name		Audit		Finance		Human Resources and Compensation		Governance, Membership and Public Affairs
Myra M. Hart		X		—		—		Chair
Peter B. Henry		—		—		—		X
Lois D. Juliber		—		—		Chair		X
Mark D. Ketchum		X		—		—		X
Terry J. Lundgren(1)		—		—		X		—
Mackey J. McDonald		X		X		—		—
Jorge S. Mesquita(1)		X		—		—		—
John C. Pope		X		Chair		—		—
Fredric G. Reynolds		Chair		X		—		—
Jean-François M.L. van Boxmeer		—		—		X		X
Total Number of Meetings May 23 through October 1, 2012		2		3		2 (2)		1

 

(1)

Shareholders elected Messrs. Lundgren and Mesquita to the Board on May 23, 2012 after which the Board appointed them to committees.

 

(2)

The Human Resources and Compensation Committee acted twice by Written Consent between May 23 and October 1, 2012.

In anticipation of the Spin-Off, the Governance Committee and Board reviewed the committee structure. The Board decided to eliminate the Finance Committee effective with the Spin-Off and reallocate the Finance Committee’s responsibilities. The Finance Committee met a total of nine times from January 1 to October 1, 2012.

Current Committee Membership⁽¹⁾

 

Name		Audit		Human Resources and Compensation		Governance, Membership and Public Affairs
Stephen F. Bollenbach(2)		—		X		X
Lewis W.K. Booth(3)		X		—		—
Lois D. Juliber		—		Chair		X
Mark D. Ketchum		—		X		Chair
Jorge S. Mesquita		X		—		—
Fredric G. Reynolds		Chair		—		—
Patrick T. Siewert(4)		X		—		—
Ruth J. Simmons		—		X		X
Jean-François M.L. van Boxmeer		—		X		X
Total Number of Meetings October 2 through December 31, 2012		4		3		2
Total Number of Meetings During 2012		15		9(5)		6

 

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(1)

The Board periodically reviews and rotates committee memberships. Accordingly, the membership shown in this table may change during 2013.

 

(2)

Mr. Bollenbach was a member of the Audit Committee from October 2 through December 31, 2012 and became a member of the Human Resources and Compensation Committee on January 1, 2013.

 

(3)

Mr. Booth became a member of the Audit Committee on October 2, 2012.

 

(4)

Mr. Siewert became a member of the Audit Committee on January 1, 2013.

 

(5)

The Human Resources and Compensation Committee acted twice by written consent during 2012.

Meeting Attendance

We expect directors to attend all Board meetings, the Annual Meeting and all meetings of the committees on which they serve. We understand, however, that occasionally a director may be unable to attend a meeting. The Board held 11 meetings in 2012. All directors who served for some or all of 2012 attended at least 75% of the aggregate number of meetings of the Board and all committees on which they served (held during the period that they served). All nine then-incumbent directors attended the 2012 Annual Meeting.

Audit Committee

The Board established the Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board determined that all members of the Audit Committee are independent within the meaning of the NASDAQ listing standards and Rule 10A-3 of the Exchange Act. The Board also determined that all Audit Committee members are able to read and understand financial statements in accordance with NASDAQ listing standards and that Lewis W.K. Booth and Fredric G. Reynolds are “audit committee financial experts” within the meaning of SEC regulations and have financial sophistication in accordance with NASDAQ listing standards. No Audit Committee member received any payments in 2012 from us other than compensation for service as a director.

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

Among other duties, the Audit Committee also oversees:

 

•

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

 

•

our compliance with legal and regulatory requirements;

 

•

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

 

•

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

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

 

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Pre-Approval Policies

Our Audit Committee’s policy, which it reviews annually, is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other permissible non-audit services. The pre-approval authority details the particular service or category of service that the independent auditors will perform. The Audit Committe’s policy also requires management to report at committee meetings throughout the year on the actual fees charged by the independent auditors for each category of service.

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

During 2012, the Audit Committee pre-approved all audit and non-audit services provided by the independent auditors.

 

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Independent Auditors’ Fees

Aggregate fees billed for professional services rendered by our independent auditors, PricewaterhouseCoopers LLP, for 2012 and 2011 were:

 

		2012				2011
Audit Fees		$	18,142,000			$	20,827,000
Audit-Related Fees			617,000				478,000
Tax Fees			5,680,000				12,373,000
All Other Fees			77,000				9,000
Total		$	24,516,000			$	33,687,000

 

•

“Audit Fees” include (a) the integrated audit of our consolidated financial statements, including statutory audits of the financial statements of our affiliates, and our internal control over financial reporting and (b) the reviews of our unaudited condensed consolidated interim financial statements (quarterly financial statements). In 2012, audit fees include work related to the Spin-Off.

 

•

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

 

•

“Tax Fees” include professional services in connection with tax compliance and advice. The 2012 tax fees include work related to the Spin-Off.

 

•

“All Other Fees” include professional services in connection with benchmarking studies, seminars and web-site security reviews.

 

•

All fees above include out-of-pocket expenses.

Governance, Membership and Public Affairs Committee

The Board determined that all of the Governance Committee members are independent within the meaning of the NASDAQ listing standards.

The Governance Committee’s responsibilities include:

 

•

reviewing the qualifications of candidates for Board membership consistent with criteria approved by the Board;

 

•

considering the performance and suitability of incumbent directors in determining whether to nominate them for re-election;

 

•

recommending to the Board a director retirement age;

 

•

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

 

•

making recommendations to the Board concerning the function, composition and structure of the Board and its committees;

 

•

recommending to the Board a slate of nominees for election or re-election to the Board at each annual meeting of shareholders;

 

•

recommending to the Board candidates to be appointed to the Board as necessary to fill vacancies and newly created directorships;

 

•

evaluating any compensation committee interlocks among the Board members and executive officers;

 

 

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•

recommending to the Board the frequency and content of Board meetings;

 

•

recommending to the Board the membership of each Board committee, as well as candidates to fill vacancies on any committee;

 

•

monitoring directors’ compliance with our stock ownership guidelines;

 

•

reviewing and evaluating opportunities for Board members to engage in continuing education;

 

•

advising and making recommendations to the Board on corporate governance matters, including reviewing and recommending to the Board revisions to the Guidelines;

 

•

developing and recommending to the Board and overseeing an annual self-evaluation process for the Board and its committees;

 

•

administering and reviewing the Directors Ethics Code;

 

•

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

 

•

monitoring issues, trends, internal and external factors and relationships that may affect the public image and reputation of Mondelēz International and the food and beverage industry.

The Governance Committee will consider any candidate whom a shareholder properly presents for election to the Board in accordance with the procedures set forth in the By-Laws. The Governance Committee uses the same criteria set forth in the Guidelines to evaluate a candidate suggested by a shareholder as the Governance Committee uses to evaluate a candidate it identifies, as described above under “Item 1. Election of Directors – Process for Nominating Directors,” and makes a recommendation to the Board regarding the candidate’s appointment or nomination for election to the Board. After the Board’s consideration of the candidate suggested by a shareholder, our Corporate Secretary will notify that shareholder whether the Board decided to appoint or nominate the candidate.

For a description of how shareholders may nominate a candidate for election to the Board at an annual meeting of shareholders and have that nomination included in the proxy statement for that meeting, see “2014 Annual Meeting of Shareholders” in this Proxy Statement.

During 2011, the Governance Committee formed a subcommittee of the Governance Committee to assist in addressing director recruitment matters related to the Spin-Off. The directors who served on this subcommittee were: Myra M. Hart, Peter B. Henry and Lois D. Juliber. This subcommittee held one meeting in 2012.

Human Resources and Compensation Committee

Human Resources and Compensation Committee Interlocks and Insider Participation

The Board has determined that all of the directors who served on the Human Resources and Compensation Committee (“Compensation Committee”) during 2012 are independent within the meaning of the NASDAQ listing standards. None of the Compensation Committee’s members:

 

•

is or was an officer or employee of Mondelēz International;

 

•

is or was a participant in a “related person” transaction since the beginning of 2012 (for a description of our policy on related person transactions, see “Corporate Governance – Review of Transactions with Related Persons” in this Proxy Statement); or

 

•

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

 

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Responsibilities

The Compensation Committee’s responsibilities are set forth in its charter. The Compensation Committee’s responsibilities include, among other duties:

 

•

establishing our executive compensation philosophy;

 

•

determining the group of companies used to benchmark executive and director compensation;

 

•

assessing the appropriateness and competitiveness of our executive compensation programs;

 

•

reviewing and approving the Chief Executive Officer’s goals and objectives, evaluating her performance against these goals and objectives and, based upon its evaluation, determining both the elements and amounts of the Chief Executive Officer’s compensation;

 

•

reviewing and approving the compensation of the Chief Executive Officer’s direct reports and other officers subject to Section 16(a) of the Exchange Act;

 

•

determining annual incentive compensation, equity awards and other long-term incentive awards granted under our equity and long-term incentive plans to eligible participants;

 

•

determining our policies governing option and other stock grants;

 

•

making recommendations to the Board with respect to incentive plans requiring shareholder approval; and approving eligibility for and design of executive compensation programs implemented under shareholder-approved plans;

 

•

reviewing our compensation policies and practices for employees, including non-executive and executive officers, as they relate to our risk management practices and risk-taking incentives;

 

•

overseeing the management development and succession planning process (including succession planning for emergencies) for the Chief Executive Officer and her direct reports and, as appropriate, evaluating potential candidates;

 

•

reviewing periodically our key human resource policies and practices related to organizational engagement and effectiveness, talent sourcing strategies and employee development programs;

 

•

monitoring our policies, objectives and programs related to diversity and reviewing periodically our diversity performance against appropriate measures;

 

•

monitoring executive officers’ compliance with our stock ownership guidelines;

 

•

assessing the appropriateness of, and advising the Board regarding, the compensation of non-employee directors for service on the Board and its committees; and

 

•

reviewing and discussing with management the Compensation Discussion and Analysis and preparing and approving the Compensation Committee’s report to shareholders included in our annual Proxy Statement.

The Compensation Committee’s Use of an Independent Compensation Consultant

The Compensation Committee has retained Compensation Advisory Partners, LLC ("Compensation Advisory Partners") since September, 2009 as its independent compensation consultant to assist the Compensation Committee in evaluating executive compensation programs and to advise the Compensation Committee regarding the amount and form of executive and director compensation. The use of a consultant provides additional assurance that our executive and director compensation programs are reasonable, competitive and consistent with our objectives. The consultant is engaged directly by the Compensation Committee, regularly participates in Compensation Committee meetings, including executive sessions of the Compensation Committee that exclude management, and advises the Compensation Committee with respect to compensation trends and best practices, plan design and the reasonableness of compensation grants.

 

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During 2012, Compensation Advisory Partners provided the Compensation Committee advice and services, including:

 

•

participating in Compensation Committee meetings;

 

•

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

 

•

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

 

•

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

 

•

advising on compensation matters related to the Spin-Off; and

 

•

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

For the year ended December 31, 2012, Compensation Advisory Partners provided no services to Mondelēz International other than executive and director compensation consulting services to the Compensation Committee. The Compensation Committee determined that Compensation Advisory Partners is independent and that of Compensation Advisory Partners’ work did not raise any conflicts of interest.

At least annually, the Compensation Committee reviews the types of advice and services provided by Compensation Advisory Partners and the fees charged for those services. Compensation Advisory Partners reports directly to the Compensation Committee on all executive and director compensation matters; regularly meets separately with the Compensation Committee outside the presence of management; and speaks separately with the Compensation Committee chair and other members between meetings as necessary or desired.

Limited Role of Executive Officers in the Determination of Executive Compensation

Each year, the Chief Executive Officer presents her compensation recommendations for each of the other Named Executive Officers (as described under “Compensation Discussion and Analysis”), her remaining direct reports and other executive officers. The Compensation Committee reviews and discusses these recommendations with the Chief Executive Officer and has full discretion over all recommended compensation actions. The Chief Executive Officer does not make recommendations or participate in deliberations regarding her compensation. Executive officers do not play a role in determining or recommending the amount or form of director compensation.

Analysis of Risk in the Compensation Architecture

Each year, including 2012, the Compensation Committee evaluates whether our compensation designs, policies and practices operate to discourage our executive officers and employees from taking unnecessary or excessive risks. As described below under “Compensation Discussion and Analysis,” our compensation is designed to incentivize executives and employees to achieve the Company’s financial and strategic goals as well as individual performance goals that promote long-term shareholder returns. The compensation design discourages excessive risk-taking by executives and employees to obtain short-term benefits that may be harmful to the Company and our shareholders in the long term. The Compensation Committee uses various strategies to mitigate risk, including:

 

•

Balancing Corporate and Business Unit Performance Measure Weighting. Corporate and business unit performance measures are weighted in certain incentive plans to encourage

 

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participants to focus on overall corporate performance as well as business unit performance. This balanced approach discourages actions that may improve business unit performance but harm our overall corporate health.

 

•

Short-Term/Long-Term Incentive Mix. The balanced mix between short-term and long-term incentives discourages executives from focusing on short-term performance to the detriment of long-term performance. Our executive compensation is heavily weighted toward long-term incentive compensation to encourage sustainable shareholder value and ensure accountability for long-term results.

 

•

Award Caps. Our compensation plans provide for a limit on annual incentive awards to discourage short-term actions that may harm our long-term interests.

 

•

Multiple Performance Measures. In general, our incentive plans use multiple performance measures to discourage participants from focusing on achievement of one performance measure at the expense of another. Our incentive plans generally also include individual performance criteria to ensure that goals do not favor achievement without regard for risks taken.

 

•

Committee Discretion. In general, the Compensation Committee has discretion to reduce incentive awards based on unforeseen or unintended consequences.

 

•

Long-Term Incentive Mix. The Compensation Committee uses a number of long-term equity based incentives to motivate executives to achieve long-term financial goals and top-tier performance results. Multi-year vesting features and multi-year performance cycles of long-term incentive compensation promote sustainable shareholder value creation and long-term growth as well as encourage retention.

 

•

Stock Ownership Guidelines and Holding Requirements. The Compensation Committee imposes meaningful stock ownership guidelines on our top executives that are comparable to, or more stringent than, our Compensation Survey Group’s (as defined under “Compensation Discussion and Analysis” below) median and stock holding requirements to align our executives’ interests with our shareholders’ interests and ultimately focus our executives on attaining sustainable long-term shareholder returns.

 

•

Clawback and Anti-Hedging Policies. Our clawback policy allows the Company to recapture incentive compensation paid in the event of certain restatements of our financial statements, which discourages inappropriate risk-taking behavior. Our anti-hedging policies further align our executives’ interests with those of our shareholders.

 

•

Ethics and Compliance Programs. The Audit Committee oversees our ethics and compliance programs that educate executives and employees on appropriate behavior and the consequences of inappropriate actions. These programs use innovative and effective approaches to promote compliance and integrity and encourage employees and others to report concerns by providing multiple reporting avenues with a no retaliation policy.

 

•

Governance Practices. We have implemented good pay and governance practices that are critical to driving sustained shareholder value, including targeting pay at the median of our Compensation Survey Group, using quantitative results to determine incentive awards (with a qualitative overlay where appropriate), engaging an independent compensation consultant, communicating with our shareholders to understand their views and concerns and conducting annual risk assessments.

The Compensation Committee also analyzed our overall enterprise risks and whether our compensation programs could impact individual behavior so as to exacerbate these enterprise risks. The Compensation Committee collaborated with the Audit Committee in this analysis.

In addition to the Compensation Committee’s evaluation, Compensation Advisory Partners also reviewed our executive and broad-based incentive plans and noted similar terms in our incentive plans that mitigate risk.

 

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

 

 

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COMPENSATION OF NON-EMPLOYEE DIRECTORS

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

We strive to attract and retain highly qualified non-employee directors who will best represent our shareholders’ interests. In order to ensure that the compensation offered is sufficient to meet this objective, our Compensation Committee annually reviews non-employee director compensation. As in prior years, during 2012 the Compensation Committee used data provided by its independent compensation consultant to benchmark our non-employee director compensation against our Compensation Survey Group (discussed below in the “Compensation Discussion & Analysis”) and compensation paid to non-employee directors of Fortune 100 companies to consider the appropriateness of the form and amount of non-employee director compensation and to make recommendations to the Board concerning such compensation. Based on the benchmarking, the Compensation Committee determined that current total compensation levels are below median. The Compensation Committee indicated that it would reconsider compensation for non-employee directors in 2013.

Summary of Compensation Elements

The table below summarizes the compensation elements in effect during 2012 for our non-employee directors.

 

Compensation Elements
Annual Board Retainer		$	110,000
Annual Committee Chair Retainer		$	10,000
Annual Lead Director Retainer		$	30,000
Annual Stock Grant Value(1)		$	125,000

 

(1)

In 2012, non-employee directors, with the exception of Messrs. Pope and van Boxmeer, were awarded deferred share units (“DSUs”). Although the DSUs vested as of the award date, shares of Company stock are not distributed until six months following the date the non-employee director ceases to serve on our Board. When dividends are paid on our common stock, we accrue the value of the dividend paid and issue shares equal to the accrued value six months after the director’s departure. Messrs. Pope and van Boxmeer were awarded unrestricted shares; however, the shares are subject to an equity holding restriction which ends six months after they cease serving on our Board.

Cash Compensation

We pay our non-employee directors their cash retainers quarterly. Non-employee directors can defer 25%, 50%, 75% or 100% of their cash retainers into notional unfunded accounts that mirror the investment options under the Mondelēz Global LLC Thrift 401(k) Plan pursuant to the Mondelēz International, Inc. 2001 Compensation Plan for Non-Employee Directors. A non-employee director appointed by the Board during the year receives a prorated retainer based on the number of days remaining in the calendar year following the appointment.

Equity Compensation

In addition, annually at the Board meeting immediately following our annual meeting of shareholders, the Board grants our non-employee directors stock in the Company. A non-employee director appointed by the Board during the year receives a stock grant upon joining the Board in a prorated amount based on the following ratio: the number of months until the next annual meeting of shareholders over a denominator of twelve months. At the non-employee director’s election, he or she may receive the annual stock award in the form of (i) unrestricted shares of our common stock,

 

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subject to a holding period ending six months after the director no longer serves on our Board or (ii) vested DSUs where distribution of shares is deferred until six months after the director no longer serves on our Board. For those non-employee directors who receive DSUs, when dividends are paid, we accrue the value of the dividend paid and issue shares equal to the accrued value six months after the director’s departure.

Equity Holding Requirement

To align the interests of our shareholders and our non-employee directors further, we require that they hold shares of our common stock in an amount equal to five times the annual Board retainer (equivalent to $550,000) within five years of becoming a director. If a non-employee director does not meet the stock ownership requirement within the timeline, the Lead Director will consider the director’s particular situation and may take any further action as he deems appropriate. As of March 1, 2013, each director who has served for at least five years has met or exceeded this requirement.

Company Matching Charitable Donations at the Direction of a Director

Non-employee directors may also participate in the Mondelēz International Foundation Matching Gift Program on the same terms as our U.S. employees. Under the program, the Mondelēz International Foundation matches up to $15,000 of donations per director, per year, of contributions to 501(c)(3) non-profit organizations.

2012 Non-Employee Director Compensation Table

 

Name		Fees Earned(1) ($)				Stock Awards(2) ($)				All Other Compensation(3) ($)				Total ($)
Juliber, Lois			116,071				125,009				12,500				253,580
Ketchum, Mark			142,500				125,009				15,000				282,509
Mesquita, Jorge			66,786				125,009				—				191,795
Reynolds, Fredric			120,000				125,009				15,000				260,009
van Boxmeer, Jean-François			110,000				125,009				—				235,009
Banga, Ajaypal(4)			47,473				—				25,000	(5)			72,473
Lerner, Richard(4)			43,516				—				15,000				58,516
New to Mondelēz International, Inc. Board Effective at Spin-Off or Later:(6)
Bollenbach, Stephen			27,500				83,358				—				110,858
Booth, Lewis			27,500				83,358				—				110,858
Siewert, Patrick			20,924				83,349				—				104,273
Simmons, Ruth			27,500				83,358				—				110,858
Board Member Until Spin-Off (then became Board Member for Kraft Foods Group, Inc.:(7)
Hart, Myra			90,000				125,009				—				215,009
Henry, Peter			82,500				125,009				3,500				211,009
Lundgren, Terry			39,286				125,009				—				164,295
McDonald, Mackey			82,500				125,009				—				207,509
Pope, John			90,000				125,009				1,100				216,109

 

(1)

Includes all retainer fees paid in cash or deferred pursuant to the 2001 Compensation Plan for Non-Employee Directors. Non-employee directors do not receive meeting fees.

 

(2)

The amounts shown in this column represent the full grant date fair value of stock awards granted in 2012 as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The 2012 Non-Employee Director Stock Awards Table below provides further detail on the non-employee director grants made in 2012 and the number of stock awards and stock options outstanding as of December 31, 2012.

 

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(3)

Represents Foundation contributions made as part of the Foundation Matching Gift Program.

 

(4)

Messrs. Banga’s and Lerner’s terms of service on the Board ended on May 23, 2012.

 

(5)

Includes an additional amount of Foundation contributions made under the Foundation Matching Gift Program above the general $15,000 limit. In October 2011, we offered a two-for-one match promotion under which the Foundation contributed amounts over the general annual limit to non-profit organizations on the director’s behalf and Mr. Banga received this special promotion on a gift that was paid out in Q1 2012. This promotion was available to all our U.S. employees and directors on the same terms.

 

(6)

Messrs. Bollenbach and Booth and Ms. Simmons received their grants on October 2, 2012, and Mr. Siewert received his grant on October 23, 2012; therefore their DSU grants were prorated based on eight months to the next annual shareholders meeting and reflect the FMV on their respective grant dates.

 

(7)

Ms. Hart and Messrs. Henry, Lundgren, McDonald and Pope resigned from the Board effective as of October 1, 2012 in order to serve on the board of Kraft Foods Group in connection with the Spin-Off.

Non-Employee Director Stock Awards Table

 

		Stock Awards
Name		Number of Stock Awards Granted in 2012				Grant Date Fair Value Grant(1) ($)				Outstanding Stock Awards as of December 31, 2012
Juliber, Lois			3,239				125,009			21,955
Ketchum, Mark			3,239				125,009			26,165
Mesquita, Jorge			3,239				125,009			3,297
Reynolds, Fredric			3,239				125,009			21,955
van Boxmeer, Jean-François			3,239				125,009			8,254
Banga, Ajaypal(2)			—				—			—
Lerner, Richard(2)			—				—			31,679
New to Mondelēz International, Inc. Board Effective at Spin-Off or Later:(3)
Bollenbach, Stephen			2,984				83,358			2,984
Booth, Lewis			2,984				83,358			2,984
Siewert, Patrick			3,117				83,349			3,117
Simmons, Ruth			2,984				83,358			2,984
Board Member Until Spin-Off (then became Board Member for Kraft Foods Group, Inc.):
Hart, Myra			3,239				125,009			11,431
Henry, Peter			3,239				125,009			6,984
Lundgren, Terry			3,239				125,009			3,263
McDonald, Mackey			3,239				125,009			11,431
Pope, John			3,239				125,009			8,168

 

(1)

The amounts shown in this column represent the full grant date fair value of the stock awards granted in 2012 as computed in accordance with FASB ASC Topic 718.

(2)

Messrs. Banga and Lerner completed their terms on May 23, 2012 prior to the 2012 annual shareholders meeting.

(3)

Messrs. Bollenbach and Booth and Ms. Simmons received their grants on October 2, 2012, and Mr. Siewert received his grant on October 23, 2012; therefore their DSU grants were prorated based on eight months to the next annual shareholders meeting and reflect the FMV on their respective grant dates.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”):

 

•

Highlights our 2012 performance, our overall performance during 2010-2012 and our transformation into a global snacks powerhouse;

 

•

Summarizes the executive compensation philosophy of our Human Resources and Compensation Committee (referred to in this CD&A as the “Compensation Committee” or “Committee”);

 

•

Describes how the Committee designs our executive compensation programs; and

 

•

Shows the correlation between the Committee’s compensation-related decisions and how well the Company and each executive performed over the period based on standards established by the Committee.

 

 

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How the Committee Considered the Shareholder Advisory Vote on our 2011 Executive Compensation Program

At the 2012 Annual Meeting of Shareholders, we held our second shareholder advisory vote on NEO compensation. Our shareholders expressed strong support for our fiscal year 2011 executive compensation program — with 96.3% of votes cast voting to approve the compensation.

The Committee considered these voting results when designing the 2012 NEO compensation packages. The Committee concluded that the current compensation programs are effectively aligning pay and performance and are promoting long-term shareholder value and did not make any specific program changes as a result of the voting results. Consequently, apart from issuing one time equity grants to our CEO, CFO and one other NEO in connection with their leadership in successfully transforming the company and executing the Spin-Off, the Committee approved only modest design changes to our ongoing compensation programs during 2012. In fulfilling its role, the Committee will continue to consider the results of future shareholder advisory votes as well as shareholder views about our core compensation principles, objectives and program design.

 

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We Employ Sound Compensation Design Principles and Corporate Governance Practices

We believe that our executive compensation design principles and governance practices provide focus, a foundation for success, and clear alignment with shareholder interests. The chart below describes key principles and practices.

 

 

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Our NEOs

SEC rules require us to provide information regarding the following NEOs:

 

•

Each individual who served as CEO or Chief Financial Officer (“CFO”) at any time during the fiscal year that ended December 31, 2012. Those individuals are:

 

Name		Title
Irene Rosenfeld		Chairman and CEO
David Brearton		Executive Vice President and CFO

 

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•

The three other most highly compensated executive officers serving as executive officers of Mondelēz International at the end of fiscal 2012. Those three individuals are:

 

Name		Title
Timothy Cofer		Executive Vice President and President, Europe
Sanjay Khosla		Executive Vice President and President, Developing Markets
Mary Beth West		Executive Vice President, Chief Category and Marketing Officer

 

•

Up to two former executive officers who served as executive officers in 2012 and would have been among the three most highly compensated executive officers of Mondelēz International had they still served as executive officers at the end of 2012. Those two individuals are:

 

Name		Title
John Cahill		Former Executive Chairman, Kraft Foods North America. Coincident with the Spin-Off, Mr. Cahill became Executive Chairman of the Board of Kraft Foods Group, Inc.
W. Anthony Vernon		Former Executive Vice President and President, Kraft Foods North America. Coincident with the Spin-Off, Mr. Vernon became Chief Executive Officer of Kraft Foods Group, Inc.

Our Compensation Program Design

Compensation Philosophy

The Committee regularly evaluates its compensation philosophy and makes changes it believes are appropriate. As part of the 2012 review, the Committee considered whether changes would be desirable following the Spin-Off and concluded that no changes were necessary. The Committee also determined that the strategies designed to achieve its compensation objectives continue to be appropriate for the Company after the Spin-Off.

Our executive compensation program has four primary objectives:

 

1.

attract, retain and motivate talented executive officers and develop world-class business leaders;

 

2.

support business strategies that promote superior long-term shareholder returns;

 

3.

align pay and performance by making a significant portion of our NEOs’ and other executive officers’ compensation dependent on achieving financial and other critical strategic and individual goals; and

 

4.

align our executive officers’ and shareholders’ interests through stock ownership guidelines, equity-based incentive awards and other long-term incentive awards that link executive compensation to sustained and superior TSR.

We design our executive compensation program to achieve these objectives by following these principles and practices:

 

•

Pay competitively but not excessively. Each year, the Committee compares our target and actual compensation levels and pay-mix with our Compensation Survey Group (see “Composition and Purpose of Compensation Survey Group” below for definition of the Compensation Survey Group). The Committee uses this comparison to ensure that our executive compensation and benefits package is competitive with the Compensation Survey Group but not excessive. In addition, the Committee compares our financial and TSR performance against our Performance Peer Group. The Performance Peer Group comparison

 

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allows us to link long-term incentive compensation to the delivery of superior financial results relative to industry peers. In anticipation of the Spin-Off, the Committee made changes to the Compensation Survey Group, the Performance Peer Group and comparison methodology. See “Pay Competitively, But Not Excessively” below for additional details.

 

•

Use Fixed and Variable Compensation. The Committee uses a mix of fixed and variable compensation (heavily weighted to variable compensation for our NEOs) designed to attract, retain and motivate top-performing executives, as well as appropriately align compensation levels with achieving relevant financial and strategic goals;

 

•

Use Equity and Cash Incentives. The Committee uses a mix of equity and cash incentives heavily weighted toward equity to focus executive officers on achieving long-term TSR performance that is superior to our peers;

 

•

Compensate based on Individual Performance and Potential. The Committee makes incentive awards based in part on the individual’s performance and potential for advancement within the organization; and

 

•

Require executive officers to be significant shareholders. The Committee requires our executive officers, including our NEOs, to maintain specific levels of Company stock ownership in order to align their interests with those of our shareholders. Our compensation programs facilitate high levels of stock ownership. The Committee also requires our executive officers to hold for one year net shares received through the exercise of stock options, the vesting of restricted stock and the award of Company stock upon satisfaction of performance conditions. More information about stock ownership guidelines for executive officers can be found below under “Requiring Stock Ownership.”

Pay Competitively, But Not Excessively

Peer Group Approach

Each year, the Committee compares our compensation program with those companies in our Compensation Survey Group. The Committee also uses a Performance Peer Group to analyze the linkage between pay and performance and to determine the Company’s relative TSR ranking for the LTIP. As a result of the Spin-Off, the Committee reviewed our Compensation Survey Group and our Performance Peer Group and adjusted both based on the Company’s Post Spin-Off characteristics. For 2012, the Committee used the Post Spin-Off Compensation Survey Group to evaluate our pay practices including stock ownership guidelines and perquisites. Pay levels reflected in 2012 (as reported in the tables below) are based on the Pre Spin-Off and Post Spin-Off Compensation Survey Groups depending on timing of pay level decisions. For 2013, the Committee will use the Post Spin-Off Compensation Survey and Performance Peer Groups to evaluate all elements.

Composition and Purpose of the Compensation Survey Group

The Committee annually compares our compensation program with those companies in our Compensation Survey Group to ensure that our compensation program and our target compensation levels are consistent with market practice. This allows us to attract and retain the talent we need to drive superior long-term TSR performance.

 

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Prior to the Spin-Off, we used the following Compensation Survey Group:

 

Pre Spin-Off Compensation Survey Group
3M Company		Kimberly-Clark Corporation
Abbott Laboratories		McDonald’s Corporation
Bristol-Myers Squibb Company		Merck & Co., Inc.
The Coca-Cola Company		Nestlé S.A.
Colgate-Palmolive Company		PepsiCo, Inc.
ConAgra Foods, Inc.		Pfizer Inc.
Eli Lilly and Company		The Procter & Gamble Company
General Mills, Inc.		Sara Lee Corporation
H.J. Heinz Company		Unilever N.V.
Johnson & Johnson		The Walt Disney Company
Kellogg Company

The Committee used this peer group to analyze compensation levels for our named executive officers in 2012.

In anticipation of the Spin-Off, the Committee reviewed our Compensation Survey Group and determined it needed adjustment. In making the adjustments, the Committee sought to have the Compensation Survey Group represent our market competitors, based on the Company’s post Spin-Off characteristics. The Committee removed those companies with a primary focus similar to our North America grocery business, companies whose revenue significantly decreased following divestitures such that they were no longer good points of comparison, and pharmaceutical companies with significantly lower revenue than ours. The Committee added global, top-tier, high growth consumer products companies, global companies with manufacturing, and global consumer-facing companies.

Through this review process, the Committee developed a Post Spin-Off Compensation Survey Group. It consists of companies within the Consumer Products industry, selected based on the following attributes:

 

•

Similar revenue size

 

•

Similar market capitalization

 

•

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

 

•

Recognized for their industry leadership and brand recognition

 

•

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

 

•

Competitors for executive talent

 

•

Predominately global companies

As well as companies outside the Consumer Products industry, included for the following reasons:

 

•

Revenue above $35 billion

 

•

Strong global presence

 

•

World-class marketing capabilities specifically focused on the consumer

 

•

Preferably manufacturing companies

 

•

Multiple lines of business

 

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The Committee’s independent compensation consultant, Compensation Advisory Partners, provided independent analysis and advice regarding adjustments to our Compensation Survey Group. At the conclusion of its review, the Committee approved a Post Spin-Off, 21-company Compensation Survey Group (the “Post Spin-Off Compensation Survey Group”) with median revenues of $31.1 billion. Our revenue size places us above the median of the peer companies. The approved Post Spin-Off Compensation Survey Group is:

 

Post Spin-Off Compensation Survey Group
3M Company		Kimberly-Clark Corporation
Abbott Laboratories (post-split)		McDonald’s Corporation
The Coca-Cola Company		Nestlé S.A.
Colgate-Palmolive Company		Nike, Inc.
The Dow Chemical Company		PepsiCo, Inc.
E.I. DuPont de Numours and Company		Pfizer Inc.
General Mills, Inc.		Philip Morris International
Group Danone		The Procter & Gamble Company
H.J. Heinz Company		Unilever N.V.
Johnson & Johnson		United Parcel Service, Inc.
Kellogg Company

Competitive Positioning

Generally, in determining appropriate compensation levels for our NEOs, the Committee reviews compensation levels for similarly situated executives at companies in the Compensation Survey Group. Aon Hewitt provides that compensation data. At the request of the Committee, CAP reviews and evaluates the data that Aon Hewitt provides.

The Committee’s compensation philosophy is to target total direct compensation, including base salary and annual and long-term incentives, at or near the median of the Compensation Survey Group. Company performance and individual performance will determine whether actual pay received is above or below the Compensation Survey Group median. For 2012, the Committee, using the Pre Spin-Off Compensation Survey Group, targeted a size-adjusted median since the Company’s revenues were significantly greater than the median of our peer group. Following the Spin-Off, however, our revenues now approximate the median of the Post Spin-Off Compensation Survey Group and the Committee can therefore use the nominal median to position named executive officer compensation without size-adjusting the data. In general, the target total compensation for the Pre Spin-Off Compensation Survey Group does not differ significantly from the target total compensation for the Post Spin-Off Compensation Survey Group.

 

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Composition and Purpose of the Performance Peer Group

The Committee uses a performance peer group to analyze the linkage between pay and performance and to determine the Company’s relative TSR ranking for the LTIP (see discussion below under “Long-Term Incentives” for a description of how each outstanding performance cycle was treated upon the Spin-Off). Prior to the Spin-Off, the companies in our Performance Peer Group (the “Pre Spin-Off Performance Peer Group”) were considered to be our market competitors or had been selected primarily on the basis of industry. The Pre Spin-Off Performance Peer Group included the following companies:

 

Pre Spin-Off Performance Peer Group
Campbell Soup Company		The Hershey Company
The Coca-Cola Company		Kellogg Company
ConAgra Foods, Inc.		Nestlé S.A.
General Mills, Inc.		PepsiCo, Inc.
Groupe Danone		Sara Lee Corp.
H.J. Heinz Company		Unilever N.V.

In anticipation of the Spin-Off, the Committee reviewed our Pre Spin-Off Performance Peer Group and determined that adjustments were appropriate following the Spin-Off. The Committee removed those companies with a primary focus similar to our North America grocery business and companies whose revenue significantly decreased following divestitures such that they were no longer good points of comparison. The Committee added global, top-tier, high growth consumer products companies. The Committee then approved a new 12-company Performance Peer Group (the “Post Spin-Off Performance Peer Group”). The Committee’s independent compensation consultant, Compensation Advisory Partners, also provided independent analysis and advice regarding the Post Spin-Off Performance Peer Group. The historical P/E multiples and growth rates, on average, for the companies in the revised peer group are higher than the companies in the Pre Spin-Off Performance Peer Group and better reflecting our focus on high growth markets and categories.

There is substantial overlap (10 of the 12 companies) between the Post Spin-Off Performance Peer Group and the Post Spin-Off Compensation Survey Group. The main difference between them is that the Post Spin-Off Performance Peer Group companies are primarily food and non-alcoholic beverage companies (9 of the 12 companies in the Performance Peer Group versus 8 of the 21 companies in the Compensation Survey Group) and are included regardless of revenue size or market capitalization.

In considering performance measures for the LTIP, the Committee believes that our financial performance should be compared to a group of primarily food and non-alcoholic beverage companies as our shareholders are likely comparing our financial performance to a similar group of companies when making investment decisions. The Committee believes that this group is less relevant when comparing compensation levels for certain executive positions due to our larger size and complexity relative to several companies included in this group.

 

Post Spin-Off Performance Peer Group
Campbell Soup Company		The Hershey Company
The Coca-Cola Company		Kellogg Company
Colgate-Palmolive Company		Nestlé S.A.
General Mills, Inc.		PepsiCo, Inc.
Groupe Danone		The Procter & Gamble Company
H.J. Heinz Company		Unilever N.V.

 

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Overall Pay Mix

The chart below shows the total compensation mix, on average, for our CEO and other NEOs, based on target awards in 2012, compared with the average of the Compensation Survey Group. Our mix is well–aligned to the mix paid by companies in the Compensation Survey Group. In the case of our CEO, the incentive mix is slightly more weighted towards long-term incentives and less weighted in annual incentives compared to the Compensation Survey Group, consistent with our focus on delivering top-tier sustainable performance over the long-term.

 

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Overview of 2012 Compensation Program

The following table summarizes the elements and program objectives of our 2012 compensation program for executive officers, including NEOs.

 

Program		Description		Program Objective
Annual Cash Compensation
Base Salary		Ongoing cash compensation based on the executive officer’s role and responsibilities.		•   Retention and attraction •   Drive top-tier performance –    Individual contribution
Annual Cash Incentive Program		Annual incentive with target award amounts for each executive officer. Actual cash awards may be higher or lower than target, based on business and individual performance.		•   Drive top-tier performance –    Across entire organization –    Within business units –    Individual contribution
Long-Term/Stock-Based Incentive Compensation
Performance Shares or LTIP		•   Long-term incentive with target award amounts are established for each executive officer. Actual awards are linked to achievement of three-year Mondelēz International goals and can be 0% – 200% of target, based on our performance. Payout will be in Mondelēz International common stock following the end of the three-year program.   •   No dividends or dividend equivalents are paid or earned on unvested performance shares granted prior to 2013. For performance shares granted beginning with the 2013-2015 performance cycle, dividend equivalents will accrue during the performance period and be paid in cash only if and when shares are delivered (i.e., after performance criteria have been satisfied).		•   Drive top-tier performance –    Across entire organization –    Focus on long-term sustained success •   Stock ownership/alignment to shareholders •   Retention
Non-Qualified Stock Options		Each executive officer has a grant opportunity based upon 1) his or her role, long-term performance and 2) potential for advancement. Non-Qualified Stock Options vest one-third each year over three years.		•   Drive top-tier performance –    Long-term individual contribution –    Recognize advancement potential •   Stock ownership/alignment to shareholders •   Realized value linked entirely to stock price appreciation •   Retention

 

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Program		Description		Program Objective
Restricted Stock		Each executive officer has a grant opportunity based upon 1) his or her role, long-term performance and 2) potential for advancement. Restricted stock vests three years after the grant date.		•   Drive top-tier performance –    Long-term individual contribution –    Recognize advancement potential •   Stock ownership/alignment to shareholders •   Retention
Executive Benefits
Voluntary Non-Qualified Deferred Compensation Plan		Program that allows U.S. executive officers to defer, on a pre-tax basis, certain defined compensation elements with flexible distribution options to meet future financial goals.		•   Retention and attraction •   Provide opportunity for future financial security
Executive Perquisites		Market-consistent program that is generally limited to a car allowance, financial counseling, and, for the CEO only, personal use of Mondelēz International’s aircraft.		•   Retention and attraction •   Supports personal financial planning needs •   Security of CEO
Post-Termination Benefits
Defined Benefit Program (i.e. Pension)		Generally, provides for the continuation of a portion of total annual cash compensation (defined as base salary plus annual cash incentive award) at the conclusion of an executive officer’s career. This program is not offered to any U.S. employees hired on or after January 1, 2009 and for employees who are participating, no additional accruals will be made after 2019.		•   Retention •   Attraction •   Provide financial security to long-term service executive officers in retirement
Defined Contribution Program (i.e. 401(k) Savings)		Program under which U.S. executive officers’ contributions are matched up to a limit. Account balances are typically payable at the conclusion of an executive officer’s career. The Company enhanced this program for U.S. employees hired on or after January 1, 2009 who are not eligible for the defined benefit program described above.		•   Retention •   Attraction •   Provide opportunity for financial security in retirement •   Provide U.S. executive officers an additional opportunity to meet stock ownership requirements
Change in Control Plan		Executive separation program that provides for enhanced benefits in the event of an executive officer’s termination following a defined Mondelēz International change in control.		•   Retention •   Focus on delivering top-tier shareholder value in periods of uncertainty •   Supports effective transition

 

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Program		Description		Program Objective
Other Benefits
Other Benefits		Health, welfare and other benefits.		•   Retention •   Attraction •   Promote executive health

Elements of Executive Compensation

Each element of the compensation program is described below and individual compensation decisions are discussed under “Compensation Paid to Named Executive Officers in 2012.”

Base Salary

Base salary is the principal “fixed” element of executive compensation. In setting base salary levels for NEOs, the Committee generally targets base salary to be at or near the median of the Compensation Survey Group based on the corresponding executive role. The Committee does also consider a number of other factors when reviewing and setting base salaries for NEOs including: Company performance and the NEO’s individual performance, level of responsibility, potential to assume roles with greater responsibility, and experience. The Committee reviews salaries on an annual basis and considers merit increases, which are generally effective April 1, for all executive officers. Base salaries for NEOs for 2012 were generally at or below the median of comparable roles at companies comprising the Compensation Survey Group.

Annual Cash Incentive Program

Overview

The Annual Cash Incentive Program (“Program”) is designed to motivate our employees, including our NEOs, to help us reach our annual financial and strategy goals and to reward them for their contributions toward achieving those goals. The Committee determines each NEO’s target and maximum annual incentive opportunity at the beginning of the performance year, and the amount actually awarded under the Program is based on the financial results achieved during the year and the NEO’s contribution towards achieving those results.

 

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Program Award Formula

The formula shown below was used to determine actual awards under the Program for our employees, including our NEOs for 2012 performance. Other than base salary, which is discussed above, each element of this formula is discussed below.

 

Base Salary as of December 31, 2012

x

Target Annual Incentive Opportunity (% of Base Salary)

x

Business Unit Rating (0% - 180%)

x

Individual Performance Assessment (0% - 180%)

=

Actual Program Award (Maximum capped at 250% of target)

 

Award Formula Element		Explanation of Key Provisions
Target Annual Incentive Opportunity		•    Target percentage of base salary reflects the NEO’s role and responsibilities. •    Individual targets under the Program, as a percentage of base salary, for our NEOs for 2012 were as follows:
		Mondelēz International:

 

Ms. Rosenfeld		Mr. Brearton		Mr. Cofer		Mr. Khosla		Ms. West
150%		90%		80%		82.5%(1)		80%

 

(1)

80% effective 1/1/12 – 9/30/12 and 90% effective 10/1/12 – 12/31/12

 

		Former Executives:

 

Mr. Cahill		Mr. Vernon
100%		100%

 

2012 Business Unit Ratings		•    Ratings range from 0% to 180%.   •    The Committee approved the following financial measures to assess business performance:
				Measure		Weighting
				Organic Net Revenue Growth		40%
				Defined Operating Income		40%
				Defined Free Cash Flow		20%
		•    The Committee chose these measures because of their high correlation to TSR. These measures reinforce the importance of driving both top-line and bottom-line performance while generating positive cash flow.   •    In establishing the performance standards under the Program for 2012, the Committee determined that a business unit rating of 100% would result in target performance having been achieved. Where actual performance exceeds target performance, the actual business unit rating would exceed 100%, and where actual performance does not achieve target performance, the actual business unit rating would be less than 100%.

 

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Award Formula Element		Explanation of Key Provisions
		•   The Committee weighted the business unit ratings under the Program for Messrs. Khosla and Cofer for 2012 as follows: 30% of the business unit rating would be based on their respective business unit’s rating and 70% would be based on the weighted average Company’s Pre-Spin-Off/Post-Spin-Off rating. The Committee structured their performance standards in this manner to promote both “line-of-sight” accountability, as well as to reinforce the importance of collaboration across the enterprise. Business unit ratings for our other NEOs were aligned 100% to the weighted average the Company’s Pre-Spin-Off period and Post-Spin-Off period rating.
Individual Performance Ratings		•   Ratings range from 0% to 180%.   •   Ms. Rosenfeld provided the Committee with an individual performance assessment for each of her direct reports, including our other NEOs. The Committee reviewed and discussed her recommendations, taking into account the various factors within the criteria, to determine each direct report’s individual performance rating.   •   Specifically, in assessing individual performance in the context of making executive compensation decisions, Ms. Rosenfeld and the Committee considered the executive officer’s contributions to our overall performance and individual performance relative to individual objectives established at the beginning of the performance cycle.   •   Individual ratings and range of payouts for 2012 were:

 

Individual Performance Ratings		Incentive Payout Range as a Percent of Target
Outstanding		140% – 180%
Exceeded Expectations		115% – 135%
Achieved Expectations		90% – 110%
Partially Met Expectations		40% – 80%
Below Expectations		0%

 

		•   For its 2012 review, the Committee took into account the following factors in determining the individual performance assessments for our NEOs: contributions to the organization such as operational efficiency, leadership, quality of financial results, talent management and diversity of employees. These factors are described in greater detail below in “Compensation Paid to Named Executive Officers in 2012.”

2012 Business Unit Ratings

The 2012 Business Unit Rating for the Company under the Program was based on our performance both Pre Spin-Off and Post Spin-Off.

The following are our 2012 financial targets and actual results under the Program that the Committee considered in determining awards for our NEOs:

 

Key Financial Metrics		Weighting				Mondelēz International
						Threshold				Target				Maximum				2012 Actual				Performance Rating
Organic Net Revenue Growth		40%				2.8%				5.3%				7.8%				3.9%				72%
Defined Operating Income			40	%			$7,067				$7,439				$7,811				$7,197				66%
Defined Free Cash Flow			20	%			$1,964				$2,310				$2,888				$3,463				180%
Actual Rating																							91%

 

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The following are the targets, actual results and overall business unit ratings that the Committee considered in determining the 2012 awards for Mr. Cofer (responsible for our European operations) and Mr. Khosla (responsible for our Developing Market operations) under the Program:

 

Key Financial Metrics		Weighting		Europe						Developing Markets
				Target		2012 Actual		Performance Rating		Target		2012 Actual		Performance Rating
Organic Net Revenue Growth		40%		2.6%		2.3%		94%		12.0%		7.0%		0%
Defined Segment Operating Income		40%		$1,768		$1,748		84%		$2,466		$2,323		60%
Defined Free Cash Flow		20%		$949		$1,078		132%		$782		$1,244		180%
Actual Business Unit Rating								98%						60%

As discussed above, in evaluating our NEOs’ performance for 2012 to determine awards under the Program, the Committee used a performance rating methodology which considered our Pre Spin-Off and our Post Spin-Off performance targets and actual results. Because the business unit rating measures performance quantitatively against three key internal measures, the Committee retained discretionary authority to adjust the actual business rating (up or down) by as much as 25 percentage points to recognize factors which are more subjective and therefore less quantifiable—such as how well we performed based on innovation, portfolio management, talent management and the quality of our results. The Committee did not exercise its discretion to modify the business ratings in determining awards under the Program for 2012.

While we report our financial results in accordance with U.S. GAAP, our financial targets under our incentive programs, including the Program, are based on non-GAAP financial measures. The adjustments to the related GAAP measure and our reasons for using these measures are described in the chart below. (See Exhibit A on page A-1 for additional information.)

 

Measure		Definition/Adjustment to GAAP measure		Rationale
Organic Net Revenue Growth(1)		Net revenues, excluding the impact of acquisitions, divestitures, accounting calendar changes, Integration Program costs and currency rate fluctuations (calculated based on prior year rates). Integration Program costs are defined as the costs associated with combining Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition		Reflects the growth rates for the Company’s base business by eliminating the impact of certain disclosed one-time factors, facilitating comparisons to prior year(s)
Defined Operating Income(2)		Operating income, excluding the impact of divestitures (both operating income from divested businesses and the net gain/(loss) on divestitures), Integration Program costs, acquisition-related costs, costs incurred for the 2012-2014 Restructuring Program, Spin-Off Costs and currency rate fluctuations (calculated based on 2012 plan rates)		Indicator of overall business trends and performance, based on what business leaders can control
Defined Segment Operating Income(3)		Segment operating income,(4) excluding the operating income from divested businesses, Integration Program costs, acquisition-related costs, costs incurred for the 2012-2014 Restructuring Program, Spin-Off Costs and currency rate fluctuations (calculated based on 2012 plan rates)		Indicator of trends and performance for business segments, based on what business units can control

 

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Measure		Definition/Adjustment to GAAP measure		Rationale
Defined Free Cash Flow		Cash flow from operations less capital expenditures adding back voluntary pension contributions and cash payments (net of tax benefits) associated with Spin-Off Costs and 2012-2014 Restructuring Program expenditures		Reflects Mondelēz International’s financial liquidity, working capital efficiency and financial health

 

 

(1)

For Mondelēz International, we measure Organic Net Revenue Growth based on our reported results for the first nine months of 2012, including the Kraft Foods Group Discontinued Operation, and our reported results for the last three months of 2012, which reflect our results of continuing operations and exclude the results of Kraft Foods Group which was divested on October 1, 2012. For North America, we measure Organic Net Revenue growth based on our reported U.S. Snacks results for the first nine months of 2012 combined with the results of our North America region (including our snacks and foodservice businesses in the U.S. and Canada) for the last three months of 2012.

 

(2)

For Mondelēz International, we measure Defined Operating Income based on our reported results for the first nine months of 2012, including the Kraft Foods Group Discontinued Operation, and our reported results for the last three months of 2012 which reflect our results of continuing operations and exclude the results of Kraft Foods Group which was divested on October 1, 2012.

 

(3)

For North America, we measure Defined Segment Operating Income based on our reported U.S. Snacks results for the first nine months of 2012 combined with the results of our North America region (including our snacks and foodservice businesses in the U.S. and Canada) for the last three months of 2012.

 

(4)

Segment operating income is a measure of Operating Income by Segment and excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), certain components of our U.S. pension plan cost (which are a component of cost of sales and selling, general and administrative expenses), general corporate expenses (which are a component of selling, general and administrative expenses), net gain/(loss) on divestitures, acquisition-related costs (which are a component of selling, general and administrative expenses) and amortization of intangibles for all periods presented.

Long-Term Incentives

Long-term incentive equity grants are designed to align the interests of our executive officers with those of our shareholders. For 2012, the Committee determined that the appropriate mix of grants in our long-term incentive program for senior management, including our NEOs, was 50% performance shares, 25% non-qualified stock options and 25% restricted stock. The same mix has been used since 2008.

 

Equity Grants – Non-Qualified Stock Options and Restricted Stock

With the objective of aligning the interests of our executives and our shareholders, historically the Committee has granted non-qualified stock options (“NQSOs”) and restricted stock on an annual basis. In 2012, the Committee intended the value delivered in restricted stock be equal to the value delivered in NQSOs. To maintain this balance, based on Black-Scholes valuation, the Committee continued to use a ratio of restricted stock to NQSOs of one to six in 2012. The Committee

 

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maintained this equity mix because it balanced the retention value of restricted stock with the performance aspect of NQSOs. To help retain valued executives, restricted stock grants do not vest until three years after the grant date. The NQSOs vest one-third each year over three years. For non-U.S. employees, the Company grants deferred stock units instead of restricted stock, which have the same three year vesting schedule as restricted stock. Dividends are paid on unvested restricted stock and dividend equivalents are paid on deferred stock units at the same time and rate as dividends are paid on Mondelēz International common stock.

The Committee bases grant ranges on an analysis of competitive market practice, with the midpoint of the equity grant ranges, inclusive of the value of the target performance shares (see “LTIP—Performance Shares” discussion below), approximately equal to the total long-term incentive median of the Compensation Survey Group. The Committee bases its decision to grant an equity award above or below the midpoint on a qualitative review of the executive officer’s individual performance and an evaluation of such executive officer’s potential to assume roles with greater responsibility. Generally, grants are between 50% and 150% of the midpoint.

The table below shows the ranges of grant opportunities for our NEOs on the February 23, 2012 grant date.

 

Name		Grant Value Range (1)
		Threshold ($)		Midpoint ($)		Maximum ($)
Mondelēz International:
Ms. Rosenfeld		2,361,000		4,722,000		7,083,000
Mr. Brearton		550,000		1,100,000		1,650,000
Mr. Cofer		350,000		700,000		1,050,000
Mr. Khosla		550,000		1,100,000		1,650,000
Ms. West		350,000		700,000		1,050,000
Former Executives:
Mr. Cahill (2)		—		—		—
Mr. Vernon (3)		—		—		—

 

(1)

The ranges above include threshold to maximum grant values for these positions. The Committee may also make a grant below the threshold.

 

(2)

As Executive Chairman, Kraft Foods North America, Mr. Cahill was not eligible for the annual equity grant made on February 23, 2012. On his hire date, January 2, 2012, Mr. Cahill received $3,375,000 in restricted stock units vesting on January 2, 2015 and $1,125,000 in non-qualified stock options vesting 33% on January 2, 2013, 33% on January 2, 2014 and 34% on January 2, 2015.

 

(3)

Mr. Vernon’s award was granted in recognition of his future role as CEO of Kraft Foods Group.

All equity grants to our NEOs in 2012 approved by the Committee were within the respective ranges presented above.

Actual equity grants made in 2012 are presented in this Proxy Statement in the 2012 Grants of Plan-Based Awards Table under “Executive Compensation Tables.”

The date for annual restricted stock and NQSO grants is pre-set on the scheduled date of the Committee meeting immediately following the release of our annual financial results. The exercise price for NQSOs is determined on the date the Committee approves the grants and is the average of the high and low trading prices on that date.

Treatment of Restricted Stock and NQSOs upon Spin-Off

In connection with the Spin-Off, executives’ outstanding NQSOs and/or restricted shares were treated the same as Company shares with respect to the issuance of equivalent interests in Kraft Foods

 

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Group equity. All terms of the outstanding NQSOs and restricted shares, including all vesting requirements, remained the same.

Restricted Stock: For every three restricted shares held, executives received one Kraft Foods Group restricted share.

NQSOs: In addition to their Company NQSOs, executives received NQSOs for Kraft Foods Group intended to maintain the intrinsic value of their NQSOs as of the Spin-Off.

Special CEO Equity Grant

On December 19, 2012, the Committee granted Ms. Rosenfeld a special equity grant valued at approximately $10,000,000. The value of the award was based on the Committee’s review of other special awards granted to other chief executive officers after major corporate transformations. Although our Company’s transformation was unique to us, the special awards granted to other Chief Executive Officers were instructive in determining the amount and design of her grant. The number of restricted shares and performance-contingent restricted stock units granted was calculated based on the intended value of the grant and the Fair Market Value (average of the high and low stock price on the date of grant) of $25.935.

The Committee intended the grant to reward Ms. Rosenfeld for:

 

•

Delivering top-tier performance during her tenure as CEO since 2006,

 

•

Identifying and executing numerous transformational initiatives benefitting shareholders – including the 2012 Spin-Off of Kraft Foods Group to shareholders,

 

•

Positioning the Company to deliver sustainable top-tier shareholder returns into the future and

 

•

Continuing to lead the Company in the future.

With the advice of its independent consultant, the Committee structured the grant (in size and terms) to ensure that Ms. Rosenfeld continues as the Company’s CEO well into the future while further incenting her to continue delivering top-tier returns in the coming years. The award reflects the Board’s confidence in Ms. Rosenfeld’s ability to successfully lead the Company following the Spin-Off and ensure that a long-term management development and senior leadership succession plan is in place.

To accomplish these objectives; the grant has two component elements:

 

•

Time-Based Restricted stock—Valued at approximately $2,000,000 (20% of grant). The stock vests after three years.

 

•

Performance-contingent restricted stock units (“RSUs”)—Valued at approximately $8,000,000 (80% of grant). Specific numbers of units vest when the Company’s closing price maintains an average at or above the following thresholds for a minimum period of ten consecutive trading days. See chart below for additional detail.

 

% of Award Vesting		# of RSUs Vesting		% Stock Price Appreciation from FMV on Grant Date		Required Closing Price for Minimum of 10 Consecutive Trading Days
25%		77,116		20%		$31.12
37.5%		115,674		30%		$33.72
37.5%		115,674		40%		$36.31

Each unit represents a contingent right to receive one share of the Company’s common stock. Except in case of death, disability or change in control where Ms. Rosenfeld is not retained as CEO or Company shares are not convertible into the acquiring entity’s share, Ms. Rosenfeld will not receive any award of Company common stock in connection with the performance contingent grant prior to

 

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December 19, 2015 (the three-year anniversary of the grant date). Ms. Rosenfeld will forfeit the applicable portion of the RSUs if the share price hurdle for the applicable tranche of RSUs has not been satisfied prior to the earlier of: 1) December 19, 2018 (the six-year anniversary of the grant date) or, 2) one-year following Ms. Rosenfeld’s retirement as CEO. She will also forfeit any unvested units as of the date she is removed involuntarily as CEO. Further, Ms. Rosenfeld will forfeit any rights to Company stock in connection with this grant if she voluntarily leaves her position as CEO prior to December 31, 2014, even if share price hurdles have been satisfied for any portion of the RSUs. If the share price hurdle for the third tranche of RSUs is satisfied, Ms. Rosenfeld is required to hold the net shares awarded for at least one year following her leaving the role of CEO.

Special Equity Grant to Select Executives to Recognize Successful Execution of Spin-Off

On November 13, 2012, the Committee approved special one-time equity grants to certain select executives to recognize their leadership roles in the success of the Spin-Off. Two of our NEOs received special equity grants:

 

•

David Brearton received 28,970 shares of restricted stock

 

•

Mary Beth West received 19,310 shares of restricted stock

The restrictions on the shares lapse on November 13, 2014, as long as Ms. West and Mr. Brearton continue to be active employees of the Company.

Long-Term Incentive Plan – Performance Shares

The Committee designed the LTIP to motivate executive officers to achieve long-term financial goals and top-tier shareholder returns. The Committee sets performance goals for a three year period relating to a grant. The grant made in 2012 is for the three year period ending December 31, 2014. At the end of the three year period, the Committee will only award Company shares if we meet or exceed performance thresholds set at the beginning of the cycle. The number of shares awarded to an executive officer will depend on the achievement of key internal financial measures and total shareholder return results relative to our Performance Peer Group. No individual performance factor is used in the calculation, and no dividends or dividend equivalents are paid or earned on unvested performance shares for grants made prior to 2013. For the grant made in early 2013 for the 2013-2015 performance cycle, the Committee will award dividend equivalents on shares earned for the performance cycle. Any dividend equivalents will accrue during the performance period and be paid out in cash as of the award date for the performance cycle—which generally occurs in the first quarter following the end of the performance cycle, provided shares are awarded.

The Committee uses the following formula to determine actual awards for participants, including our NEOs. Other than base salary, each element of this formula is discussed below.

 

Base Salary at Beginning of Performance Cycle

x

Target Incentive Opportunity (% of Base Salary) (Target number of shares established)

x

Business Performance Rating (0% – 200% of target shares)

=

Actual LTIP Award (in shares)

Treatment of Performance Share Units upon Spin-Off

In order to avoid decreasing the value of participants’ LTIP performance share units solely as the result of the Spin-Off, the number of unvested target performance share units allocated to each LTIP participant for the 2010 – 2012, 2011 – 2013 and 2012 – 2014 performance cycles was adjusted by a conversion ratio of 1.5266. This adjustment reflects that participants did not receive any interest in Kraft Foods Group with respect to their performance share units in the LTIP.

 

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2012 – 2014 LTIP Performance Cycle

 

Award Formula Element		Explanation of Key Provisions
Target Incentive Opportunity		•   Each LTIP participant was assigned a target award as a percentage of his or her base salary at the beginning of the performance cycle. Target award levels for the NEOs as of January 1, 2012 were:
		Mondelēz International:

 

Ms. Rosenfeld		Mr. Brearton		Mr. Cofer		Mr. Khosla		Ms. West
325%		170%		130%		130%		130%

		Former Executives:

 

Mr. Cahill		Mr. Vernon
0%(1)		235%

 

(1)

As Executive Chairman, Kraft Foods North America, Mr. Cahill was not eligible for a LTIP performance share grant.

		•   Target amounts were converted to performance share units at the beginning of the cycle. Actual shares awarded can range from 0% to 200% of target shares at the end of the performance cycle based on the business performance rating.

 

Business Performance Rating		•   Rating ranges from 0% to 200%.   •   Performance measures are:
				Measure		Weighting
				Organic Net Revenue Growth(1)		25%
				Operating EPS Growth(2)		25%
				Annualized Relative Total Shareholder Return(3)		50%
		While we report our financial results in accordance with U.S. GAAP, financial targets under the LTIP are based on non-GAAP financial measures. The adjustments to the related GAAP measure and our reasons for using these measures are described below.

		Measure Definition		Adjustment to GAAP Measure		Rationale
		Organic Net Revenue Growth(1)		Net revenues, excluding the impact of acquisitions, divestitures, accounting calendar changes, Integration Program costs and currency rate fluctuations (calculated based on prior year rates). Integration Program costs are defined as the costs associated with combining Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition.		Reflects the growth rates for the Company’s base business by eliminating the impact of certain disclosed one-time factors, facilitating comparisons to prior year(s).

 

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Treatment of 2012-2014 Performance Cycle Upon Spin-Off: Any award made for the 2012 – 2014 performance cycle will be based on a weighted average performance rating that includes the Company’s performance during the Pre Spin Period (January 1, 2012 – September 30, 2012) and its performance during the Post Sppin Period (October 1, 2012 – December 31, 2014). The Committee also determined to continue using the same measures and weightings of operational goals and relative TSR goals. However, the targets have been adjusted to reflect our Post Spin-Off attributes. With regard to determining relative TSR performance, the Pre Spin-Off Performance Peer Group was used to assess results until the Spin-Off. For the Post Spin-Off Period, relative TSR performance will be assessed against the Post Spin-Off Performance Peer Group.

2011 – 2013 LTIP Performance Cycle

Treatment of 2011-2013 Performance Cycle Upon Spin-Off: Any award made for the 2011 – 2013 performance cycle will be based on a weighted average performance rating that includes the Company’s performance during the Pre Spin Period (January 1, 2011 – September 30, 2012) and its performance during the Post Spin Period (October 1, 2012 – December 31, 2013). The Committee also determined to continue using the same measures and weightings of operational goals and relative TSR goals. However, the targets have been adjusted to reflect our Post Spin-Off attributes. With regard to determining relative TSR performance, the pre-Spin-Off Performance Peer Group was used to assess results until the Spin-Off. For the Post Spin-Off Period, relative TSR performance will be assessed against the Post Spin-Off Performance Peer Group.

2010 – 2012 LTIP Performance Cycle

Each of our NEOs, with the exception of John Cahill, participated in the 2010 – 2012 LTIP. In 2010, the Committee set the performance cycle at three years; however, at the December 2011 Committee meeting, the period was shortened to 33 months (January 1, 2010 – September 30, 2012) due to the Spin-Off. Following the Spin-Off, the Committee determined that the LTIP rating for the Pre Spin-Off Period was 160%, and awarded shares based on this rating. Because the performance period was set to end within three months of the Spin-Off, the Committee truncated the performance cycle so that the award would be based solely on the Company’s performance during the 33-month Pre Spin-Off Period. The Committee applied time-based vesting for the remaining period.

 

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Business Performance Rating and Awards for 2010-2012 Performance Cycle

The following chart reflects the key financial measures, weightings and performance standards that the Committee set for the 2010 – 2012 performance cycle. It also reflects our actual performance for the cycle and the resulting performance rating that the Committee approved for determining the final awards for the cycle.

 

Key Financial Measures		Weighting		2010-2012 LTIP Results
				Threshold		Target		Maximum		Actual		Performance Rating
Organic Net Revenue Growth(1)		25%		3%		4%		8%		4.7%		117%
Operating EPS Growth(2)		25%		4%		8%		13%		9.1%		122%
Annualized Relative Total Shareholder Return(3)		50%		25th percentile		At median		90th percentile		93rd percentile		200%
Actual Business Performance Rating												160%

 

(1)	For 2010, the Committee used Combined Organic Net Revenue Growth (which captured the impact of the Cadbury acquisition). For 2011 and 2012, the Committee used Organic Net Revenue Growth.

 

(2)	For 2010, 2011 and 2012, the Committee modified the EPS Growth measure from Ongoing to Operating to align with the Company’s publicly communicated EPS targets.

 

(3)	Annualized Relative TSR is based on the Company’s pre-Spin-Off Performance Peer Group. TSR is through September 30, 2012.

In evaluating our performance for the cycle, the Committee determined that we exceeded our targets for Organic Net Revenue Growth and Operating EPS Growth. Our TSR for the performance cycle significantly exceeded our target. Because the Committee determined that the performance rating for the performance cycle comported with its overall evaluation of our performance and economic conditions, the Committee did not exercise its discretion to adjust the final performance ratings.

Based on target awards as a percent of salary and the business performance rating of 160% of target, the chart below shows the share awards (before taxes) for each of our NEOs.

 

Name		Target Award				Actual  Award (MDLZ Shares(1))				Award Value  (2) ($)
Ms. Rosenfeld			310% of salary				407,381				11,011,508
Mr. Brearton			85% of salary				37,250				1,006,868
Mr. Cofer			85% of salary				30,410				821,982
Mr. Khosla			130% of salary				83,684				2,261,979
Ms. West			85% of salary				34,196				924,318

(1)  Represents converted number of shares as discussed under “Treatment of Performance Shares upon Spin-Off.”
(2)  Award value is based on the $27.03 closing stock price on the vest date.

As Executive Chairman, Kraft Foods North America and due to the date of his hiring, Mr. Cahill was not eligible for a LTIP performance share award.

Mr. Vernon is no longer employed by the Company following the Spin-Off, and therefore, did not receive an award under our 2010-2012 LTIP.

 

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Requiring Stock Ownership

To further align the interests of our senior management (approximately 150 executives), including our NEOs, with those of our shareholders, and to incent the executives to focus on shareholder interests, the Committee requires each executive to acquire and hold a significant amount of our common stock. The following chart summarizes our stock ownership and holding requirements. Our stock ownership requirements are comparable to, or are more stringent than, stock ownership requirements than the majority of our Compensation Survey Group, and we monitor compliance with these levels regularly.

 

Stock Ownership/Holding Requirement		Explanation of Key Provisions
Ownership Requirement		•     Eight times salary for CEO; four times salary for other NEOs.   •     All Named Executive Officers who were executive officers as of March 1, 2013 satisfy these requirements.
Time to Meet Requirements		•     Five years from employment date or three years from promotion to executive level subject to requirements.   •     Given dilution in ownership levels of Mondelēz International as a result of the Spin-Off, executives will have a period of no less than three additional years from October 1, 2012, to attain the required stock ownership level in Mondelēz International.   •     CEO may take further action as she deems appropriate if an executive does not meet the required ownership.
Shares Included As Ownership		•     Mondelēz International common stock, including sole ownership, direct purchase plan shares, restricted shares and accounts over which the executive has direct or indirect ownership or control.   •     Excludes unexercised Mondelēz International stock options and performance-based share units.
Holding Requirements		•     Our NEOs are required to hold 100% of all shares acquired from stock option exercises and restricted stock and performance shares awarded, net of shares withheld for taxes or payment of exercise price, until they meet stock ownership guidelines.   •     Once an NEO meets stock ownership requirements, the NEO is required to hold 100% of the shares, net of shares withheld for taxes or payment of exercise price, for at least one year after the stock option exercise or restricted stock or LTIP performance share award vests.

Special Holding Requirements Following Spin-Off

For the first full year after the Spin-Off, our continuing NEOs have agreed to hold 100% of net Kraft Foods Group shares acquired through stock option exercises or the vesting of restricted stock awards.

Voluntary Non-Qualified Deferred Compensation

U.S. Deferred Compensation Plan

In 2012, certain U.S. senior management (approximately 80 employees), including our NEOs, were eligible for the Mondelēz Global LLC Executive Deferred Compensation Plan (“MEDCP”), a voluntary non-qualified deferred compensation plan. The program is similar to those provided to executive

 

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officers at many of the companies within the Compensation Survey Group and is provided for retention and recruitment purposes. The deferred compensation plan provides an opportunity for executives to defer, on a pre-tax basis, up to 50% of their salary and up to 100% of their award under the Annual Cash Incentive Program. The amounts deferred may be invested among eight notional investment options under the plan.

U.S. Supplemental Benefits Plan

We also provide an unfunded non-qualified plan, the Mondelēz Global LLC Supplemental Benefits Plan (“Supplemental Plan”), for eligible U.S. employees. The Supplemental Plan provides benefits which are not able to be provided under the tax-qualified Mondelēz Global LLC Retirement Plan (“Retirement Plan”) or Mondelēz Global LLC Thrift Plan (“Thrift Plan”) due to an employee’s compensation exceeding the tax-qualified plan compensation limit under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”), an employee’s election to defer compensation under the MEDCP or under the Supplemental Plan, or a Retirement Plan participant’s benefit exceeding the limits under Section 415 of the Code.

Perquisites

Our NEOs receive limited perquisites, including a car allowance, a financial counseling allowance and, for the CEO only, personal use of the corporate aircraft. For security and personal safety reasons, we require Ms. Rosenfeld to use the corporate aircraft for both business and personal travel. This allows Ms. Rosenfeld to be more productive and efficient when she travels. Taxes on all perquisites are the sole responsibility of the NEO. The types and total costs of perquisites we offer are similar to the types and costs offered within the Compensation Survey Group. The Committee believes that these perquisites are important for retention and recruitment purposes. Specific executive officer perquisites are listed in the footnotes to the 2012 Summary Compensation Table under “Executive Compensation Tables.”

Post-Termination Compensation

Post-termination compensation consists of both separation pay and retirement benefits. We do not have employment agreements with any of our NEOs as these individuals, including Ms. Rosenfeld, are “at will” employees.

Change in Control Plan

We have a Change in Control Plan (the “CIC Plan”) for senior executive officers. The provisions in the CIC Plan are consistent with similar plans maintained by companies in the Compensation Survey Group, including eligibility, severance benefit levels and treatment of cash and equity incentive compensation. The separation payments are structured to help assure that key personnel, including our NEOs, would be available to assist in the successful transition following a change in control and provide a competitive level of severance protection if the executive officer is involuntarily terminated without cause following a change in control. Under the CIC Plan, restricted stock and stock options only vest upon a change in control if the participant is terminated without cause or resigns for good reason within two years following the change in control or if the acquiring entity does not assume the awards (“double trigger”). In 2009, we eliminated the excise tax gross up for all executives who first become eligible to participate in the CIC Plan after December 31, 2009. In 2012, the CIC Plan was amended to eliminate excise tax gross-ups for all participants effective January 1, 2013—even those who had first become eligible to participate in the CIC Plan before January 1, 2010.

The Spin-Off did not constitute a Change in Control for purposes of any benefit plan maintained by the Company or any of our subsidiaries or affiliates.

The severance arrangements and other benefits provided under the CIC Plan (as well as the equity treatment upon certain separations in the event of a change in control) are described under “Executive Compensation Tables – Potential Payments upon Termination or Change in Control.”

 

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Non-Change in Control Severance Agreements

We do not have individual severance or employment agreements with any of our NEOs. We do maintain a broad-based severance plan in the United States that provides for certain severance payments in the event of job elimination or a workforce reduction. Similar plans are generally available in other countries where we have employees. The plans facilitate recruitment and retention, as most of the companies in the Compensation Survey Group offer similar benefits to their executives. The severance arrangements and other benefits provided for under these severance plans are described under “Executive Compensation Tables – Potential Payments upon Termination or Change in Control.”

Retirement Benefits

All of our NEOs are eligible for U.S. employee benefit plans. The sponsor of the employee benefits plans covering our NEOs is Mondelēz Global LLC, a wholly owned subsidiary of Mondelēz International, Inc. which is our operating company in the U.S. In the U.S., employees hired on or after January 1, 2009 are not eligible to participate in the Retirement Plan or the defined benefit portion of the Supplemental Plan. U.S. employees hired on or after January 1, 2009, are eligible to receive an enhanced defined contribution benefit under the Thrift Plan. Based on the significant cost volatility associated with continuing a defined benefit pension plan, the Retirement Plan was closed to new participants after December 31, 2008. In addition, accruals under the Retirement Plan for current participants will cease after 2019. We provide Ms. Rosenfeld with an enhanced pension benefit that credits her pension service for the period of time that she was not employed by us between 2004 and 2006. We provided this enhanced pension benefit to Ms. Rosenfeld because she forfeited her right to a pension benefit at her previous employer when she rejoined our employment. This benefit was part of a broader incentive program to help encourage her to return to become our CEO. Additional details of this benefit are presented in the 2012 Pension Benefits Table and the accompanying narrative to the table under “Executive Compensation Tables.”

The Committee believes that the U.S. tax-qualified Retirement Plan, Thrift Plan and the non-qualified Supplemental Plan are integral parts of our overall executive compensation program. The supplemental defined contribution program is important because it encourages executive officers, including our NEOs, to save for retirement. The Committee believes that our NEOs should be able to defer the same percentage of their compensation, and receive the corresponding notional matching contributions, as all other employees, without regard to the compensation limit established by the Code, for tax-qualified plan contributions.

Compensation Paid to Named Executive Officers in 2012

Overview

There are no material differences in compensation policies with respect to each NEO. We designed each of our NEO’s target compensation levels to be at or near the Compensation Survey Group’s size-adjusted median (or median in 2012). Actual compensation will be dependent on both business and individual performance in any given year.

Below are the specific compensation actions for each of our NEOs in 2012.

Ms. Rosenfeld

Base Salary Increase

Ms. Rosenfeld did not receive a base salary increase in 2012.

Actual Annual Cash Program Award

The Committee determined Ms. Rosenfeld’s annual cash incentive award for 2012 in accordance with the 2012 Annual Cash Incentive Program. Based on our performance relative to target (business unit rating of 91%) and Ms. Rosenfeld’s individual performance, Ms. Rosenfeld’s actual annual incentive

 

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award was 91% of her target in 2012. For 2012, the Committee considered the following factors in determining Ms. Rosenfeld’s individual performance assessment:

 

•

Delivered solid financial performance relative to peers and in aggregate slightly below targets in the Annual Cash Incentive Program. Financial performance was 91% relative to target as discussed under “– Elements of Executive Compensation – Annual Cash Incentive Program—2012 Business Unit Ratings” above.

 

•

Delivered above target performance on key strategic initiatives as evidenced by the following:

 

–

Operating Income margin improvement above peer average for second year in a row.

 

–

Improved our innovation pipeline. New product development represents 13% of revenue (increase from 12% in 2011).

 

–

Delivered Cadbury integration savings of approximately $800 million, exceeding the original $750 million target. On track to deliver $1 billion revenue synergies by the end of 2013.

 

–

Executed Spin-Off, including operational and system components, with two fully functioning, stand-alone organizations as of October 1, 2012.

 

•

Finalized two strong public company leadership teams for Mondelēz International and Kraft Foods Group.

 

•

Effectively collaborated with the Governance, Nominating and Public Affairs Committee and full Board to define the diverse skills and experience needed for the two new Boards (Kraft Foods Group, Inc. and Mondelēz International, Inc.); to identify, recruit and orient 11 outstanding new directors; to allocate the talent of our Pre Spin-Off independent directors between the two boards in a way as to provide both continuity and fresh perspectives; to develop and document committee and leadership structures appropriate to each company.

Equity Grant (Stock Options and Restricted Stock)

As part of our annual equity grant program, on February 23, 2012 the Committee granted Ms. Rosenfeld 87,000 shares of restricted stock and 521,950 non-qualified stock options (combined value on grant date of $6,611,000). This equity grant along with the 2012 – 2014 LTIP opportunity is above the size-adjusted median of our Pre Spin-Off Compensation Survey Group and above the median of our Post Spin-Off Compensation Survey Group. As discussed under “Long-Term Incentives”, on December 19, 2012 the Committee granted Ms. Rosenfeld a special equity award of 77,116 restricted stock shares and 308,464 performance-contingent restricted stock units.

2010-2012 LTIP

Applying the 160% rating for the 2010-2012 LTIP performance cycle, Ms. Rosenfeld was awarded 407,381 shares of Company common stock.

Defined Benefit Accrual

The present value of Ms. Rosenfeld’s retirement benefit increased as measured at the end of 2012. The factors leading to the increase over 2011 were/are as follows:

 

•

Decrease in applicable discount rate—$3.9 million;

 

•

Increase in final average pay calculation—$2.1 million; and

 

•

Increase due to additional service—$0.8 million.

There were no changes to the terms of the plan for Ms. Rosenfeld in 2012.

 

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Other Named Executive Officers

The chart below shows specific compensation actions for each of the other NEOs in 2012 followed by a description of these decisions:

 

		Salary Increase		New Salary ($)		2012 Annual Cash Incentive Program Award ($)		2012 Equity  Grant                                 (Shares)(1)		2010-2012  LTIP(2) (Shares)
Mr. Brearton		7.7%		700,000		946,000		February 23, 2012 grant		37,250
								15,800 shares of restricted stock
								94,750 non-qualified stock options
								November 13, 2012 grant
								28,970 shares of restricted stock
Mr. Cofer		33.3%		700,000		739,200		11,190 shares of deferred stock units		30,410
								67,110 non-qualified stock options
Mr. Khosla		9.3%		825,000		503,000		18,430 shares of restricted stock		83,684
								110,540 non-qualified stock options
Ms. West		0%		660,000		577,000		February 23, 2012 grant 11,850 shares of restricted stock 71,060 non-qualified stock options November 13, 2012 grant 19,310 shares of restricted stock		34,196

 

(1)	All shares, except those granted November 13, 2012, are Kraft Foods Inc. The November 13, 2012 shares are Mondelēz International.

 

(2)	Consistent with plan design, the Committee made no individual adjustments in determining the share payout.

Mr. Brearton

Base Salary Increase

Mr. Brearton’s salary increase was commensurate with Company guidelines for increases, taking into account his individual performance assessment and external market positioning. His salary is below the median of our Post Spin-Off Compensation Survey Group for chief financial executives.

Actual Annual Cash Program Award

In 2012, Mr. Brearton’s individual performance rating primarily related to his delivering solid financial results and his significant leadership role in successfully executing the Spin-Off while managing ongoing operations.

Equity Grant (Non-Qualified Stock Options and Restricted Stock)

Mr. Brearton received an annual equity grant on February 23, 2012. This equity grant, along with the 2012 – 2014 LTIP target opportunity, is below the median of our Post Spin-Off Compensation Survey Group. He received an additional equity grant on November 13, 2012 for his leadership in helping to execute the Spin-Off.

 

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Mr. Cofer

Base Salary Increase

Mr. Cofer’s received both a merit salary increase in April 2012 and an increase on the date of the Spin-Off (October 1, 2012) to improve his market positioning. His salary is below the median of our Post Spin-Off Compensation Survey Group.

Actual Annual Cash Incentive Program Award

In 2012, Mr. Cofer’s individual performance rating primarily related to his leadership in delivering solid business results across the European region, including top-tier organic net revenue growth culminating in our 12^th consecutive quarter of growth at the end of the year, despite tough European Union economic conditions.

Equity Grant (Non-Qualified Stock Options and Restricted Stock)

This equity grant, along with the 2012 – 2014 LTIP target opportunity, is below the median of our Post Spin-Off Compensation Survey Group.

International Assignment Payments

Mr. Cofer, as a U.S. expatriate, received payments in 2012 in conjunction with his international assignment based in Switzerland. These payments to Mr. Cofer were similar to the types of payments generally made to other employees who accept an international assignment with the Company. The payments are designed to facilitate the relocation of employees to positions in other countries by covering expenses over and above those that employees accepting assignments would have incurred had they remained in their home countries. These payments include housing expenses, cost of living adjustment, schooling and travel expenses. Similarly, the tax payments are made pursuant to our International Assignment Policy, which is designed to cover the additional taxes that an employee incurs due solely to the international assignment.

Mr. Khosla

Base Salary Increase

Mr. Khosla received both a merit salary increase in April 2012 and a promotional increase at the time he assumed the role of Executive Vice President and President, Developing Markets. His salary is above the median of our Post Spin-Off Compensation Survey Group.

Actual Annual Cash Incentive Program Award

In 2012, Mr. Khosla’s individual performance rating primarily related to Developing Markets’ slower revenue growth, which was hampered by executional issues in Brazil and Russia in the third quarter.

Equity Grant (Non-Qualified Stock Options and Restricted Stock)

This equity grant, along with the 2012 – 2014 LTIP target opportunity, is at the median of our Post Spin-Off Compensation Survey Group.

Retirement

Mr. Khosla retired from Mondelēz International effective April 1, 2013. The Company has engaged him as a consultant for the balance of 2013.

 

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On December 19, 2012, on terms approved by the Compensation Committee, we entered into an Agreement Upon Retirement and General Release (the “Agreement”) with Mr. Khosla to provide him with additional benefits following his retirement. Although we typically do not do so for similarly situated retiring employees, we provided additional benefits in consideration of Mr. Khosla’s agreement to certain restrictive covenants. Specifically, under the terms of the Agreement, Mr. Khosla receives a pro-rata 2013 Management Incentive Plan payment for the period from January 1, 2013 through March 31, 2013, based upon his individual target and the actual 2013 business unit rating. With regard to performance shares awarded under the LTIP, based upon the respective actual ratings determined by the HRCC, Mr. Khosla’s target performance shares will be adjusted to equal two-thirds of the original target shares granted for the 2011 – 2013 LTIP, and one-third of the original target shares granted for the 2012 – 2014 LTIP. Under the terms of the 2005 Mondelez International Amended and Restated Performance Incentive Plan, upon his retirement, Mr. Khosla will forfeit his unvested Mondelez International restricted stock awards, granted in 2011 and 2012. However, if Mr. Khosla complies with all of the restrictive covenants, the Company will replace the forfeited restricted stock awards with the equivalent value of deferred stock award units that vest in accordance with a specified vesting schedule. The Kraft Foods Group restricted stock awarded Mr. Khosla in 2011 and 2012 vested on March 31, 2013.

On December 19, 2012, the Company also entered into a Consulting Agreement with Mr. Khosla. Under the Consulting Agreement, Mr. Khosla will provide consulting services in the leadership development arena from April 1, 2013 to December 31, 2013. For 25 days of consulting services, we agreed to pay Mr. Khosla a monthly retainer of $13,888.89 from April 2013 to December 2013. If Mr. Khosla provides consulting services in excess of 25 days, we will pay him a daily rate of $5,000.00. We will reimburse Mr. Khosla for any reasonable expenses connected with his consulting services.

Ms. West

Base Salary Increase

Ms. West did not receive a salary increase in 2012. Her position did not have an appropriate match within the Post Spin-Off Compensation Survey Group; however, her salary is well-positioned based on her responsibilities, performance and tenure as well as other factors in comparison to her internal peers.

Actual Annual Cash Incentive Program Award

In 2012, Ms. West’s individual performance rating primarily related to her role in building stronger marketing capabilities, improving the innovation pipeline, advancing our global category model and strategies and being a key leader in forming the two new companies in connection with the Spin-Off.

Equity Grant (Non-Qualified Stock Options and Restricted Stock)

Ms. West received an annual equity grant on February 23, 2012. She received an additional equity grant on November 13, 2012 for her impact and effort in successfully executing the Spin-Off. Her position did not have an appropriate match within the Compensation Survey Group; however, her equity grants, along with the 2012-2014 LTIP target opportunity, are well-positioned based on her responsibilities, performance and tenure as well as other factors in comparison to her internal peers.

 

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Former Executives:

 

		Salary Increase				New Salary ($)				2012 Equity Grant (Shares) (2)
Mr. Cahill			N/A(1)				750,000			89,710 deferred stock units 179,400 non-qualified stock options
Mr. Vernon			18.3%				900,000			27,640 shares of restricted stock 165,800 non-qualified stock options

 

(1)	Due to his date of hire, Mr. Cahill was not eligible for a salary increase.

 

(2)

Equity grants were based on our share price on the grant date. With the Spin-Off, Mr. Vernon received Kraft Foods Group equity interests in addition to his existing grant based on the same Spin-Off conversion ratio that applied generally to our shareholders. Mr. Cahill’s entire equity grant was converted into a Kraft Foods Group equity grant as of the Spin-Off based on the respective values of our share price and Kraft Foods Group’s share price as of that date. There was no change to the intrinsic value of the grant based on the conversion.

Mr. Cahill

Mr. Cahill was hired in January 2012. His base salary, as a percent of competitive CEO base salaries, is consistent with market norms and competitive with other Executive Chairmen. Mr. Cahill’s long-term incentive grant is consistent with market norms and competitive with other Executive Chairmen. In order to provide Mr. Cahill with sufficient incentive to drive business results and the opportunity to meet his stock ownership guidelines, Mr. Cahill received $4,500,000 in an equity grant on his hire date in lieu of an annual equity grant.

Mr. Vernon

Base Salary Increase

Mr. Vernon received an 18.3% increase at the beginning of 2012 in recognition of his future Chief Executive Officer role at Kraft Foods Group. The Committee also approved a further base salary increase to be effective at the Spin-Off. His new annual base salary effective October 1, 2012 was $1 million.

Equity Grant (Non-Qualified Stock Options and Restricted Stock)

This equity grant, along with the 2012 – 2014 LTIP target opportunity, is below the size-adjusted median of our Pre-Spin-Off Compensation Survey Group.

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

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

 

•

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

 

•

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

 

•

canceling some or all of the executive officer’s restricted stock or deferred stock grants and outstanding stock options;

 

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•

adjusting the executive officer’s future compensation; or

 

•

terminating or initiating legal action against the executive officer.

Anti-Hedging Policy and Trading Restrictions

Our insider trading policy limits the timing and types of transactions in Mondelēz International securities by Section 16 officers, including our NEOs. Among other restrictions, the policy:

 

•

allows Section 16 officers to trade company securities only during window periods (following earnings releases) and only after they have pre-cleared transactions;

 

•

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

 

•

prohibits Section 16 officers (and any member of the Section 16 officer’s family sharing the same household) from entering into transactions in puts, calls or other derivatives on Mondelēz International securities on an exchange or in any other organized market, as well as any other derivative or hedging transactions on Mondelēz International securities.

Anti-Pledging Policy

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

Policy with Respect to Qualifying Compensation for Tax Deductibility

Section 162(m) of the Code limits our ability to deduct compensation paid to certain of our NEOs (the covered employees) for tax purposes to $1.0 million annually. Covered employees include our principal executive officer and our next three highest paid executive officers, other than our principal financial officer. This limitation does not apply to performance-based compensation, provided certain conditions are satisfied. For 2012, annual cash incentive program awards, stock options, restricted stock and performance shares awarded to covered employees were subject to, and made in accordance with, performance-based compensation arrangements previously implemented that were intended to qualify as tax-deductible. However, the application of Section 162(m) is complex and may change with time (with potentially retroactive effect).

We intend to qualify time-vested restricted stock awards granted to our covered employees using the performance-based compensation exemption. In February 2010, the Committee approved a formula to determine the maximum number of restricted shares awardable to the covered employees contingent upon the achievement of adjusted net earnings during a one-year performance period prior to the stock grant. Under the formula, the maximum number of restricted shares that could be granted under our 2012 annual restricted stock awards program was equal to 1.50% of our adjusted net earnings in 2011. We defined adjusted net earnings as net earnings before extraordinary items, discontinued operations and the cumulative effect of accounting changes and excluding certain other items designated by the Committee. In addition, our Amended and Restated 2005 Performance Incentive Plan limits individual annual restricted stock grants to 1.0 million shares. In February 2012, using the adjusted net earnings formula, the Committee determined the grant value pool for the 2012 restricted stock grant grants. The maximum grant available for grant to our CEO was equal to one-third of the pool. The remaining two-thirds of the pool was available for allocation among the remaining covered employees, subject in each instance to the maximum individual grant amount under our Amended and Restated 2005 Performance Incentive Plan.

 

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The Committee has retained the discretion to authorize payments that may not be tax-deductible, if it believes that such payments are in the best interest of shareholders. For example, the Committee decided, based on comparing salaries of other chief executive officers in the Compensation Survey Group, to pay Ms. Rosenfeld an annual base salary in excess of $1.0 million. Therefore, a portion of her salary was not tax-deductible in 2012. In addition, a portion of certain of the other covered employees’ income exceeded the $1.0 million tax deductibility limit in 2012 because of other elements of their annual compensation. Specifically, to the extent that a covered employee’s compensation from a combination of base salary, restricted stock vesting proceeds not intended to be performance-based, restricted stock dividends and certain taxable perquisites exceeded $1.0 million, the excess amount was not deductible in 2012.

 

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EXECUTIVE COMPENSATION TABLES

2012 Summary Compensation Table

 

																		Non-Equity Incentive Plan Compensation
Name and Principal Position		Year				Salary ($)				Stock Awards (1) ($)				Option Awards (2) ($)				Annual Incentive Awards(3) ($)				Change in Pension Value(4) ($)				All Other Compen- sation(5) ($)				Total Compen- sation ($)
Rosenfeld, Irene			2012				1,550,000				15,459,506				2,489,702				2,116,000				6,776,385				419,721				28,811,314
Chairman and Chief Executive Officer			2011   2010				1,540,712   1,503,231				7,754,472   7,394,668				1,933,709   2,095,203				4,232,000   2,130,810				6,207,428   5,812,189				276,373   351,882				21,944,694   19,287,983
Brearton, David			2012				686,539				2,477,480				451,958				946,000				1,285,510				86,825				5,934,312
Executive Vice President and Chief Financial Officer			2011				619,327				893,762				325,953				742,900				940,758				62,553				3,585,253
Cofer, Timothy			2012				590,384				1,121,230				320,115				739,200				670,573				664,455				4,105,957
Executive Vice President and President, Europe
Khosla, Sanjay			2012				793,654				1,701,370				527,276				503,000				682,960				104,834				4,313,094
Executive Vice President and President, Developing Markets			2011   2010				751,019   734,769				1,493,661   1,374,580				361,997   321,272				1,036,000   847,200				372,165   297,788				94,199   101,118				4,109,041   3,676,727
West, Mary Beth			2012				660,000				1,825,535				338,956				577,000				1,492,818				99,543				4,993,852
Executive Vice President, Chief Category and Marketing Officer			2011				657,346				1,297,769				307,699				1,050,000				819,804				71,403				4,204,021
Former Executives*
Cahill, John			2012				562,500				3,375,339				956,202				—				—				201,731				5,095,772
Former Executive Chairman, Kraft Foods North America
Vernon, W. Anthony			2012				689,635				3,207,448				790,866				—				—				183,747				4,871,696
Former Executive Vice President and President, Kraft Foods North America			2011   2010				758,081   743,462				2,016,702   1,900,236				506,803   491,266				1,167,000   409,450				—   —				133,055   113,413				4,581,641   3,657,827

 

*	Messrs. Cahill and Vernon left Mondelēz International as a result of the Spin-Off on October 1, 2012 and continue employment with Kraft Foods Group. Therefore, the 2012 information reflects earnings and awards from January 1, 2012 through September 30, 2012.

 

(1)

The stock awards column includes restricted stock or deferred stock units, performance shares and, in the case of Ms. Rosenfeld, performance-contingent restricted stock units. For restricted stock and deferred stock units, the amount shown in this column represent the full grant date fair value of the stock awards granted in each year as computed in accordance with FASB ASC Topic 718. For performance-contingent restricted stock units and performance shares, the amount shown is based on the probable outcome of the performance condition as of the grant date. Assumptions used in the calculation of these amounts are included in Note 11 to the consolidated financial statement contained in our Annual Report on Form 10K for the fiscal year ended December 31, 2012 (the “Form 10-K”). Below is a breakout of the 2012 – 2014, 2011 – 2013, and 2010 – 2012 performance share grant date fair values assuming target performance and maximum performance (in the case of maximum, based on the maximum number of shares multiplied by the stock price on the grant date). Also shown in the table below is the 2012 performance-contingent restricted stock units grant date fair value assuming performance conditions are satisfied, and the maximum value (in the case of the maximum value, the value shown is based on the maximum number of units multiplied by the stock price on the grant date).

 

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Name		Performance Cycle				Grant Date Fair Value ($)				Payment at Maximum Performance ($)
Rosenfeld, Irene			2012 Performance-Contingent Stock Units				5,106,330				8,000,014
			2012 - 2014				5,137,608				10,075,223
			2011 - 2013				5,083,400				9,847,733
			2010 - 2012				4,621,521				9,114,527
Brearton, David			2012 - 2014				1,126,981				2,210,093
			2011 - 2013				443,312				858,799
Cofer, Timothy			2012 - 2014				696,065				1,365,035
Khosla, Sanjay			2012 - 2014				1,001,122				1,963,273
			2011 - 2013				993,372				1,924,393
			2010 - 2012				949,354				1,872,309
West, Mary Beth			2012 - 2014				875,262				1,716,453
			2011 - 2013				872,587				1,690,405
Former Executives
Cahill, John			2012 - 2014				—				—
Vernon, W. Anthony			2012 - 2014				2,157,266				4,230,555
			2011 - 2013				1,316,552				2,550,469
			2010 - 2012				1,250,011				2,465,262

 

(2)

The option awards column includes option awards granted in 2012, 2011 and 2010. The amounts shown in this column represent the full grant date fair value of the option awards granted in each year as computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 11 to the consolidated financial statements contained in our Form 10-K.

 

(3)

The amounts shown in this column represent awards paid under our Annual Cash Incentive Program. Awards are paid in March of the following plan year.

 

(4)

The amounts shown in this column for Mses. Rosenfeld and West and Messrs. Brearton, Khosla and Cofer represent the aggregate increase in the actuarial present value of each Named Executive Officer’s benefits under our U.S. Tax-Qualified Pension Plan and other U.S. supplemental defined benefit pension plans. For Mr. Brearton, the amount includes benefits earned under the Canadian Pension Plan and Canadian Non Registered Pension Plan. U.S. employees hired on or after January 1, 2009, are not eligible to participate in the U.S. pension plans. Messrs. Cahill and Vernon were hired after December 31, 2008 and therefore are not eligible for a U.S. pension benefit.

 

(5)

The amounts shown in the “All Other Compensation” column for 2012 include the following:

 

																						Former Executives
		I. Rosenfeld ($)				D. Brearton ($)				T. Cofer ($)				S. Khosla ($)				M. West ($)				J. Cahill ($)				W. Vernon ($)
Personal use of company aircraft(a)			133,517				—				—				—				—				—				—
Car expenses			24,124				15,000				26,298				15,000				15,093				22,500				15,000
Financial counseling allowance			1,890				7,500				750				7,500				7,500				7,500				1,650
Employer match on defined contribution plans			260,190				64,325				50,570				82,334				76,950				46,731				167,097
Tax equalization payment(b)			—				—				251,806				—				—				—				—
Payments related to expatriate assignment(b)			—				—				335,031				—				—				—				—
Annual housing and transportation allowance(c)																							125,000
Total All Other Compensation			419,721				86,825				664,455				104,834				99,543				201,731				183,747

 

(a)

For reasons of security and personal safety, we require Ms. Rosenfeld to use our aircraft for all travel. The incremental cost of personal use of our aircraft includes the cost of trip-related crew hotels and meals, in-flight food and beverages, landing and ground handling fees, hourly maintenance contract costs, hangar or aircraft parking costs, fuel costs based on the average annual cost of fuel per hour flown, and other smaller variable costs. Fixed costs that would be incurred in any event to operate our aircraft (for example, aircraft purchase costs, maintenance not related to personal trips and flight crew salaries) are not included in the incremental cost of Ms. Rosenfeld’s use of our aircraft. Ms. Rosenfeld is responsible for taxes in connection with her personal use of our aircraft and is not reimbursed for such taxes.

 

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(b)

Mr. Cofer, as a U.S. expatriate, received payments in 2012 in conjunction with his international assignment based in Switzerland. These payments to Mr. Cofer were similar to the types of payments generally made to other employees who accept an international assignment with the Company. The payments are designed to facilitate the relocation of employees to positions in other countries by covering expenses over and above those that employees accepting assignments would have incurred had they remained in their home countries. These payments include housing expenses, cost of living adjustment, schooling and travel expenses. Similarly, the tax payments are made pursuant to our International Assignment Policy, which is designed to cover the additional taxes that an employee incurs due solely to the international assignment.

 

(c)

As part of Mr. Cahill’s offer agreement, he receives an annual allowance of $125,000 in lieu of relocation to cover housing and transportation expenses.

 

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2012 Grants of Plan-Based Awards

The following table summarizes grants of plan-based awards at the time of grant. The awards described in the following table do not reflect the conversion of awards granted prior to the Spin-Off effective October 1, 2012. See the table entitled “Outstanding Equity Awards at Fiscal Year End” for a description of the conversion of awards that were granted prior to the Spin-Off and the number of awards outstanding on December 31, 2012.

 

								Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1)								Estimated Future Payouts Under Equity Incentive Plan Awards(2)								All Other Stock Awards: Number of Shares of Stock or Units(3) (#)				All Other Option Awards: Number of Securities Underlying Options (#)				Exercise Price of Option Awards(4) ($/Share)				Grant Date Fair Value of Stock and Option Awards(5) ($)
Name		Grant Date				Grant Type		Target ($)				Maximum ($)				Target (#)				Maximum (#)
Rosenfeld, Irene			—			AIP			2,325,000				5,812,500				—				—				—				—				—				—
			01/02/2012			Performance Shares			—				—				133,890				267,780				—				—				—				5,137,608
			02/23/2012			Restricted Shares			—				—				—				—				87,000				—				—				3,305,565
			02/23/2012			Stock Options			—				—				—				—				—				521,950				37.995				2,489,702
			12/19/2012			Restricted Shares			—				—				—				—				77,116				—				—				2,000,003
			12/19/2012			Performance Contingent Restricted Stock Units											308,464				308,464																5,016,330
Brearton, David			—			AIP			630,000				1,575,000												—				—				—				—
			01/02/2012			Performance Shares			—				—				29,370				58,740				—				—				—				1,126,981
			02/23/2012			Restricted Shares			—				—				—				—				15,800				—				—				600,321
			02/23/2012			Stock Options			—				—				—				—				—				94,750				37.995				451,958
			11/13/2012			Restricted Shares			—				—				—				—				28,970				—				—				750,178
Cofer, Timothy			—			AIP			560,000				1,400,000				—				—				—				—				—				—
			01/02/2012			Performance Shares			—				—				18,140				36,280				—				—				—				696,065
			02/23/2012			Deferred Stock Units			—				—				—				—				11,190				—				—				425,164
			02/23/2012			Stock Options			—				—				—				—				—				67,110				37.995				320,115
Khosla, Sanjay			—			AIP			682,091				1,705,228				—				—				—				—				—				—
			01/02/2012			Performance Shares			—				—				26,090				52,180				—				—				—				1,001,122
			02/23/2012			Restricted Shares			—				—				—				—				18,430				—				—				700,248
			02/23/2012			Stock Options			—				—				—				—				—				110,540				37.995				527,276
West, Mary Beth			—			AIP			528,000				1,320,000				—				—				—				—				—				—
			01/02/2012			Performance Shares			—				—				22,810				45,620				—				—				—				875,262
			02/23/2012			Restricted Shares			—				—				—				—				11,850				—				—				450,241
			02/23/2012			Stock Options											—				—				—				71,060				37.995				338,956
			11/13/2012			Restricted Shares			—				—				—				—				19,310				—				—				500,032

 

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								Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1)								Estimated Future Payouts Under Equity Incentive Plan Awards(2)								All Other Stock Awards: Number of Shares of Stock or Units(3) (#)				All Other Option Awards: Number of Securities Underlying Options (#)				Exercise Price of Option Awards(4) ($/Share)				Grant Date Fair Value of Stock and Option Awards(5) ($)
Name		Grant Date				Grant Type		Target ($)				Maximum ($)				Target (#)				Maximum (#)
Former Executives:
Cahill, John			—			AIP			—				—				—				—				—				—				—				—
			01/03/2012			Restricted Stock Units			—				—				—				—				89,710				—				—				3,375,339
			01/03/2012			Stock Options			—				—				—				—				—				179,400				37.625				956,202
Vernon, W. Anthony			—			AIP			—				—				—				—				—				—				—				—
			01/02/2012			Performance Shares			—				—				56,220				112,440				—				—				—				2,157,266
			02/23/2012			Restricted Shares			—				—				—				—				27,640				—				—				1,050,182
			02/23/2012			Stock Options											—				—				—				165,800				37.995				790,866

 

(1)

The target amounts represent the potential cash payout if both business and individual performance are at target levels under our 2012 Annual Cash Incentive Program. Actual amounts under our 2012 Annual Cash Incentive Program were paid in March 2013 and are disclosed in the 2012 Summary Compensation Table. The maximum amounts are equal to 250% of target.