GMCR (MM)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)

x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended September 26, 2015

OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from              to             

Commission file number 1-12340

KEURIG GREEN MOUNTAIN, INC.

(Exact name of registrant as specified in its charter)

33 Coffee Lane, Waterbury, Vermont 05676

(Address of principal executive offices) (zip code)

(802) 244-5621

(Registrants’ telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  x    No  o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  o    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x    No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x    Accelerated filer  o    Non-accelerated filer  o    Smaller Reporting Company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o    No  x

The aggregate market value of the voting stock of the registrant held by non-affiliates of the registrant on March 28, 2015 was approximately $17,377,984,000 based upon the closing price of such stock on March 27, 2015.

As of January 19, 2016, 149,480,058 shares of common stock of the registrant were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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EXPLANATORY NOTE

This Amendment No. 1 (this “Amendment”) amends our Annual Report on Form 10-K for the fiscal year ended September 26, 2015, which we filed with the Securities and Exchange Commission (“SEC”) on November 19, 2015, which we refer to as the “Original Filing.”  This Amendment is being filed solely for the purpose of including the information required in Part III (Items 10, 11, 12, 13 and 14) that was omitted from the Original Filing, and amends and restates the cover page on the Original Filing to remove the statement that information is being incorporated by reference from the Company’s definitive proxy statement.

Following the date of the Original Filing, Keurig entered into an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”) with Acorn Holdings B.V., a private limited liability company incorporated under the laws of the Netherlands (“Acorn”), and Maple Holdings Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Acorn (“Sub”). Subject to the terms and conditions of the Merger Agreement, Sub will be merged with and into Keurig (the “Merger”), with Keurig surviving the Merger as a wholly-owned subsidiary of Acorn. At a special meeting of stockholders scheduled to be held on February 24, 2016, Keurig will ask stockholders as of January 11, 2016, the applicable record date for such meeting, to, among other things, consider and vote on a proposal to adopt the Merger Agreement.

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are filed as exhibits to this Amendment under Item 15 of Part IV hereof. Accordingly, Item 15 of Part IV of the Original Filing has also been amended and restated in its entirety to include the currently dated certifications as exhibits as well as to include the Second Amendment to the Amended and Restated By-Laws of Keurig Green Mountain, Inc. as adopted on December 4, 2015 and the Merger Agreement.

Except as expressly set forth herein, this Amendment does not reflect events occurring after the date of the Original Filing and does not modify or update disclosures contained in the Original Filing.  Accordingly, this Amendment should be read in conjunction with the Original Filing and with our filings with the SEC made subsequent to the Original Filing.

Unless the context indicates otherwise, the terms “Keurig”, the “Company”, “we”, “our”, or “us” refers to Keurig Green Mountain, Inc., together with its subsidiaries.

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PART III

Item 10.             Directors, Executive Officers and Corporate Governance

Current Directors

Biographical information about our current directors, including their qualifications and experience, is provided below.

The following paragraphs provide information about each director, including all positions he or she holds, his or her principal occupation and business experience for the past five years, and the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years.  We believe that all of our directors display personal and professional integrity; satisfactory levels of education and/or business experience; broad-based business acumen; an appropriate level of understanding of our business and its industry and other industries relevant to our business; the ability and willingness to devote adequate time to the work of the Board and its committees; a fit of skills and personality with those of our other directors that helps build a board that is effective, collegial and responsive to the needs of our Company; strategic thinking and a willingness to share ideas; a diversity of experiences, expertise and background; and the ability to represent the interests of all of our stockholders.

Brian P. Kelley joined Keurig as President, Chief Executive Officer and Director in December 2012. From 2011 until November 2012, Mr. Kelley served as Chief Product Supply Officer, Coca Cola Refreshments. From 2010 to 2011 Mr. Kelley served as President of Coca-Cola’s North America Business Integration and from 2007 until 2010 Coca-Cola’s President and General Manager, Still Beverages and Supply Chain North America. Mr. Kelley originally joined Coca-Cola in 2007. Mr. Kelley’s qualifications to serve on the Board include his extensive consumer product and category knowledge and experience, including specifically in the consumer beverage industry, as well as his considerable operational and management experience, strong leadership skills and a personal approach to business that aligns with Keurig’s culture.

José Octavio Reyes Lagunes is the former Vice Chairman of The Coca-Cola Export Corporation, a position he held from 2012 until his retirement in April 2014. In that role he was responsible for mentoring system leaders around the globe and leading efforts to implement key initiatives of The Coca-Cola Company’s 2020 Vision. From 2002 until 2012 Mr. Reyes served as President of the Latin America Group of The Coca-Cola Company. Mr. Reyes began his career with The Coca-Cola Company in 1980. He currently serves on the boards of MasterCard Incorporated, and Coca-Cola Hellenic Bottling Co.  He previously served on the boards of Comex Paints and the Papalote Children’s Museum in Mexico City. Mr. Reyes’ qualifications to serve on the Board include his extensive knowledge of the consumer beverage industry which he gained from his over 30 years’ experience with The Coca-Cola Company in various roles of increasing responsibility, including several international positions, his prior leadership experience, his global perspective and experience and his experience serving on other public company boards.

Robert A. Steele is the former Vice Chairman, Healthcare Strategy for The Procter & Gamble Company. In his 35 years at Procter & Gamble he held several leadership positions including Vice Chairman, Global Health and Well-Being, with responsibility for oral care, feminine care, personal health care, pet care and snack brands; Group President, Household Care;

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Group President, North America; President, North America; and Vice President, North American Market Development Organization. He began his career in sales before moving to brand management. Mr. Steele currently serves on the board of Berry Plastics Group, Inc., and is an Adviser to CVC Capital Partners Ltd. He previously served on the boards of the Kellogg Company and Beam, Inc. Mr. Steele’s qualifications to serve on the Board include his substantial leadership experience with one of the largest global consumer products companies, his understanding of and experience in the branded consumer products industry and brand marketing, his experience in accounting and financial matters and his experience serving on other public company boards in the global food industry.

Barbara D. Carlini served as the Senior Vice President and Chief Information Officer of Dean Holding Company, the nation’s largest dairy company, from June 2009 until September 2013. Prior to that, Ms. Carlini served as Chief Information Officer of Motorola’s Mobile Devices Division from May 2006 to January 2008. From November 2001 through March 2006, Ms. Carlini was the Chief Information Officer of Diageo, NA (formerly Guinness North America). Ms. Carlini’s qualifications to serve on the Board include her diverse consumer products background, her substantial expertise in information technology and systems, her passion for corporate social responsibility and her overall organizational and leadership skills.

Susan S. Kilsby retired from Credit Suisse Group AG following a more than 30 year career as an investment banker providing advisory services to global corporations. Ms. Kilsby is currently Chairman of Shire plc, serves on the boards of BBA Aviation plc and Fortune Brands Home & Security, Inc. She is a member of the Committee of 200, where she was previously international chair, and was a founding Member of the Competitor Diversity Forum. She is a Visiting Fellow of the Cass Business School and is Chairman of the M+A Research Centre at Cass. From 2010-2014 Ms. Kilsby also served on the Advisory Board of the Yale School of Management and is currently a Member of the Business Leadership Council of Wellesley College. She previously served on the boards of L’Occitane S.A. and Coca-Cola HBC AG. Ms. Kilsby’s qualifications to serve on the Board include her high level of financial literacy and extensive experience over more than 30 years at a leading investment bank, her prior leadership experience, her global perspective and experience, her experience focusing on the consumer sector and her experience serving on other boards.

Hinda Miller has served as the President of Deforest Concepts, a consulting firm specializing in executive coaching, leadership and entrepreneurship for women since 1998. Ms. Miller also currently chairs an Advisory board for the newly established Sustainable Entrepreneurship MBA program at the University of Vermont. Ms. Miller previously served as a Vermont State Senator from 2003 to 2012. From 1977 to 1996, Ms. Miller was co-founder of Jogbra Inc., an athletic apparel company, and then President of Champion Jogbra, a division of Sara Lee Corporation (which acquired Jogbra Inc.). Ms. Miller’s qualifications to serve on the Board include her experience gained in establishing and operating her own company, her overall leadership skills as a legislator supporting economic development and entrepreneurship, her extensive knowledge of the Company’s business, as well as her comprehensive understanding of, and passion for, corporate social responsibility.

Norman H. Wesley is the former Chief Executive Officer and Chairman of Fortune Brands, Inc. Mr. Wesley joined Fortune Brands, Inc. in 1984. For more than ten years he led the office products unit, which Fortune Brands spun off to stockholders in 2005 before becoming the Chief Executive Officer of the home and hardware business of Fortune Brands, Inc. in 1997. He then became President and Chief Operating Officer of Fortune Brands in January 1999, and Chairman and Chief Executive Officer of Fortune Brands in December 1999. He served as Chief Executive Officer through December 2007, and remained Chairman until retiring in September 2008. Mr. Wesley began his career at Crown Zellerbach Corporation, where over a ten-year period he held various management positions, including Vice President and General Manager of the Office Products Group, before joining Fortune Brands. Mr. Wesley currently serves on the boards of Acuity Brands, Inc. and Fortune Brands Home & Security, Inc. Mr. Wesley previously served on the board of ACCO Brands Corporation. Mr. Wesley’s qualifications to serve on the Board include his experience as President, Chief Executive Officer and Chairman of Fortune Brands, a public consumer products company, his prior leadership experience, and his experience serving on other public company boards.

John D. Hayes has served as Executive Vice President of American Express since May 1995 and Chief Marketing Officer of American Express since August 2003. Prior to joining American Express, Mr. Hayes spent almost 20 years in the brand and advertising industry. He was President of Lowe & Partners and worked with clients including The Coca-Cola Company. He also has held senior positions at Geer DuBois Inc., Ammirati & Puris and Saatchi & Saatchi Compton. In addition, he has led the development of product position and global campaigns for Citibank, Aetna, Procter & Gamble, Prudential Insurance, RJR Nabisco, Mercedes-Benz and Reebok. Mr. Hayes is currently a member of the Board of Trustees of Save the Children and Board of Regents Seton Hall University. He was a previous Board Member of Yahoo! Inc., Fairfield Communities Inc., the Association of National Advertisers and The Tiger Woods Foundation. Mr. Hayes’ qualifications to serve on the Board include his extensive senior leadership and marketing experience over more than 20 years, his experience with numerous global consumer companies, particularly focusing on customer and brand engagement, and his experience serving on another public company board.

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A.D. David Mackay served as the Chief Executive Officer of Kellogg Company from December 31, 2006 through January 1, 2011 and as its President from August 2003 until retiring in January 2011. Prior to that experience, he served as the Chief Operating Officer of Kellogg from 2003 to 2006. He joined Kellogg Australia as Group Product Manager in 1985, serving in several positions with Kellogg USA, Kellogg Australia and Kellogg New Zealand before leaving Kellogg in 1992. He rejoined Kellogg Australia in 1998 as Managing Director and was appointed Managing Director of Kellogg United Kingdom and Republic of Ireland later in 1998. He was named Senior Vice President and President, Kellogg USA in July 2000, Executive Vice President in November 2000, and President and Chief Operating Officer in September 2003. Mr. Mackay currently serves as the Chair of McGrath Limited and on the board of Fortune Brands Home & Security, Inc.. He previously served on the boards of Kellogg Company, Fortune Brands, Inc., Beam, Inc. and Woolworths Ltd. Mr. Mackay’s qualifications to serve on the Board, in addition to his rich consumer product background and experience as a Chief Executive Officer, includes his significant international experience, derived from his roles at Kellogg Australia, United Kingdom and Republic of Ireland, as well as his role as Managing Director of Sara Lee Bakery in Australia.

Michael J. Mardy has served as the Executive Vice President and Chief Financial Officer of Tumi Holdings, Inc., a retailer of prestige luggage and business accessories, since July 2003 and a Director since November 2011. Mr. Mardy previously served as a Director of ModusLink Global Solutions, Inc. (formerly CMGI, Inc.), a supply chain technology company, where he also served as the Chairman of its Audit Committee and a member of its Nominating and Corporate Governance Committee. Mr. Mardy also currently serves on the board of the Eden Institute for Autism. Mr. Mardy’s qualifications to serve on the Board include his extensive financial and accounting expertise (including his membership in the American Institute of Certified Public Accountants and the Financial Executive Institute) and leadership, the experience he has gained through service on the board of other public companies, his consumer products experience in prior management positions and his overall leadership skills as a senior executive.

David E. Moran has been President of Marketing Driven Solutions, a marketing consulting firm focused on driving growth through innovation and brand building, since June 2005. Mr. Moran was Chief Executive Officer of Fusion5, a management consulting company, from July 1999 to June 2005. Mr. Moran’s qualifications to serve on the Board include his experience serving as a President and Chief Executive Officer, his extensive understanding of the Company’s business (including having spent four years at Maxwell House Coffee) and operations, and his wide-ranging and comprehensive expertise in brand building, marketing strategy and overall leadership skills as a senior executive.

Executive Officers

For information concerning the executive officers of the Company, see “Executive Officers of the Registrant” in Part I of the Original Filing.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’s officers and Directors and persons who own more than 10% of the Company’s Common Stock to file reports of ownership and changes in ownership with the SEC and NASDAQ. SEC rules require reporting persons to supply the Company with copies of these reports.

SEC regulations require us to identify in this Amendment anyone who filed a required report late during the most recent fiscal year. The Company notes that, due to a Company administrative error, Barbara Carlini, Michael J. Mardy, Hinda Miller, and David Moran each reported the respective March 22, 2015 vesting of 83 restricted stock units late on a Form 4 filed with the SEC on April 14, 2015. These transactions did not result in any liability under Section 16(b) of the Exchange Act. Based solely on our review of forms we received, or written representations from reporting persons stating that they were not required to file any other forms, we believe that during fiscal 2015 all reporting persons timely filed all Section 16(a) reports except as noted above.

Code of Conduct

The Company has adopted the Keurig Green Mountain Code of Conduct which is applicable to all directors, officers and employees of the Company. This code constitutes a “code of ethics” within the meaning of Item 406 of Regulation S-K promulgated under the Exchange Act. The current version of this code is posted on the Company’s website. The Company intends to make all required disclosures concerning amendments to, or waivers from, the code on the governance page of the Company’s website, http://investor.keuriggreenmountain.com/corporate-governance.cfm.

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Audit Committee

We have a separately designated audit and finance committee (the “Audit Committee”) established by the Board for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements.  Members of the committee are Susan S. Kilsby (chair), Barbara D. Carlini, Michael J. Mardy, and Robert A. Steele, each of whom is independent as defined by the applicable NASDAQ listing standards.  Mr. Mardy and Ms. Kilsby have both been deemed “audit committee financial experts” by the Audit Committee, and confirmed by the Board.

Item 11.             Executive Compensation

Compensation Committee Interlocks and Insider Participation

During fiscal 2015, at all times, all members of the Compensation and Organizational Development Committee were “independent”, none were employees or former employees of the Company, and none had a relationship requiring disclosure under Item 404 of Regulation S-K.  In fiscal 2015, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company.

Compensation Committee Report

The Compensation and Organizational Development Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Board approved our recommendation that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. This Compensation Discussion and Analysis focuses on the compensation of our named executive officers for fiscal 2015 (our “Named Executive Officers”), who were:

(1)Mr. Leemputte became the Chief Financial Officer and Treasurer effective August 17, 2015, succeeding Ms. Rathke who ceased to be Chief Financial Officer and Treasurer on that date to become Strategic Advisor to the Chief Executive Officer. Ms. Rathke departed from the Company on December 31, 2015.
(2)Mr. Whoriskey transitioned from the position of President — U.S. Sales and Marketing effective September 30, 2015 to become Executive Advisor to the Chief Executive Officer. Mr. Whoriskey departed from the Company on December 31, 2015.

Impact of the Merger Agreement

Following the date of the Original Filing, Keurig entered into the Merger Agreement with Acorn and Sub. Subject to the terms and conditions of the Merger Agreement, Sub will be merged with and into Keurig, with Keurig surviving the Merger as a wholly-owned subsidiary of Acorn. At the effective time of the Merger, each share of Keurig common stock issued and outstanding immediately prior to the effective time (other than (i) shares owned by Acorn, any subsidiary of Acorn, Sub or Keurig, in each case immediately prior to the effective time of the Merger, and (ii) shares held by stockholders who have not voted in favor of the Merger and who shall have properly and validly perfected their statutory rights of appraisal in respect of such shares in accordance with Section 262 of the Delaware General Corporation Law) will be cancelled, extinguished and automatically converted into the right to receive $92.00 per share in cash, without interest, subject to any applicable withholding taxes.

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The Merger Agreement provides that each option to purchase shares of Keurig common stock that is outstanding under any of Keurig’s stock plans will be accelerated in full and, as of the effective time of the Merger, will be cancelled and terminated, and each holder of each such stock option will cease to have any rights except the right to be paid at or promptly after the effective time of the Merger, subject to applicable tax withholding, an amount in cash (without interest) equal to the product of (i) the total number of shares of Keurig common stock subject to such stock option times (ii) the excess, if any, of the Merger consideration of $92.00 per share over the exercise price of such stock option.  Any stock options with an exercise price that equals or is in excess of the Merger consideration of $92.00 per share will be cancelled and terminated for no consideration.  The Merger Agreement also provides that each award of restricted stock units subject to specified vesting criteria (other than performance-based vesting criteria) that is outstanding under any of Keurig’s stock plans will become fully vested immediately prior to the effective time of the Merger, and each holder of each such restricted stock unit award will be paid at or promptly after the effective time of the Merger, subject to applicable tax withholding, an amount in cash (without interest) equal to the number of shares of Keurig common stock subject to such cancelled award multiplied by the Merger consideration of $92.00 per share; provided, that, with respect to any such award that constitutes nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), payment may be delayed to avoid a tax or penalty under Section 409A of the Code.  Each award of restricted stock units subject to specified performance-based vesting criteria that is outstanding under any of Keurig’s stock plans will become fully vested immediately prior to the effective time of the Merger and will be cancelled and terminated as of the effective time of the Merger, and each holder of each such award will be paid at or promptly after the effective time of the Merger, subject to applicable tax withholding, an amount in cash (without interest) equal to the number of shares of Keurig common stock subject to such cancelled award multiplied by the Merger consideration of $92.00 per share, with the total number of shares of Keurig common stock subject to a performance stock unit award determined as follows: (i) for performance stock unit awards with a performance period ending prior to the closing date of the Merger by their terms, based on actual performance through the end of such performance period and (ii) for performance stock unit awards with a performance period not ending prior to the closing date of the Merger by their terms, at 100% of target levels.

Following the completion of the Merger, shares of Keurig common stock will no longer be traded on NASDAQ or any other public market. In addition, the registration of shares of Keurig common stock under the Securities Exchange Act of 1934, as amended will be terminated.

The discussion that follows summarizes our compensation philosophies and practices for fiscal 2015. Except where specifically noted, these compensation philosophies and practices do not reflect the terms set forth in the Merger Agreement.

Executive Summary

Our compensation plans are designed with the following compensation philosophy—to support the achievement of the Company’s business strategies to be a leader in the beverage and beverage systems businesses, and to motivate, attract, develop and retain highly talented individuals to execute our business strategies. The Compensation Committee believes the Company’s executive compensation program reflects a strong pay-for-performance philosophy and is aligned with our stockholders’ long-term interests.

In this section, we highlight our fiscal 2015 financial results and business highlights, and the key actions taken by the Compensation & Organizational Development Committee of the Board (referred to in this Compensation Discussion and Analysis as the “Committee”) to further align the interests of our Named Executive Officers with those of our stockholders.

Select Business Highlights for Fiscal 2015

Financial Results

·                  Revenue of $4.5 billion decreased 4% from fiscal 2014

·                  Company diluted earnings per share (“EPS”) was $3.14 per share in fiscal 2015, as compared to $3.74 per share in fiscal 2014

·                  Gross margin decreased 300 basis points in fiscal 2015 to $1.6 billion, or 35.6% of net sales, from $1.8 billion, or 38.6% of net sales, in fiscal 2014

·                  Free cash flow of $344 million in fiscal 2015, compared to $381.6 million in fiscal 2014

Stockholder Value Creation

Fiscal 2015 was a challenging year for the Company.  Despite the pressures facing our business, in fiscal 2015 the Company maintained its commitment to delivering value to stockholders returning approximately $175.7 million to our stockholders in the form of cash dividends and repurchasing approximately 9.5 million shares for an aggregate purchase price

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of $1.0 billion. However, a volatile stock price in fiscal 2015 led to a disappointing total stockholder return of -57% (total stockholder return is calculated as the net price change in our common stock from the closing market price on the last business day of fiscal 2014 to the closing market price on the last trading day of fiscal 2015, including reinvestment of dividends).

Commercial Performance

In fiscal 2015, we continued to expand consumer choice in the Keurig® beverage system by entering into or extending a number of business relationships across multiple channels and geographies for use with Keurig® beverage systems. Expanded or new brands or partnerships announced in fiscal year 2015 included: the launch of Green Mountain Coffee® Organic, a new line of premium coffees that are certified as both organic and Fair Trade Certified™; a partnership with Community Coffee Company; an agreement to launch illy® brand to K-Cup® pods beginning in Fall 2015; the June 2015 launch of Laughing Man® brand, a new selection of  gourmet coffees offered in K-Cup® pods following our 2014 acquisition of the Laughing Man brand; an expanded ten year partnership with Caribou Coffee for the manufacturing, marketing, distribution, and sale of Caribou Coffee in Keurig® pod formats; and a multi-year manufacturing and distribution agreement with Reily Foods Company for New England® brand coffee, New Orleans Famous French Market Since 1890® brand coffee, and Luzianne® brand iced tea pods. In fiscal 2015, in partnership with the Campbell Soup Company, we also launched K-Cup® pods for Campbells® Fresh-Brewed Soup®.

During fiscal 2015, we continued to work towards commercializing the Keurig® Kold® beverage system, which we launched on a limited basis in the first quarter of fiscal 2016. We believe the Keurig® Kold® beverage system shares the same elements as the Keurig® hot beverage system: quality, convenience, choice and simplicity. The Keurig® Kold® beverage system mixes and dispenses a wide variety of cold still and carbonated beverages, in a countertop footprint, using a Kold® beverage pod. Kold® beverage brands include partner brands with The Coca-Cola Company and Dr Pepper Snapple Group, as well as our own brands. We expect to add additional beverage brands and new partners in the future.

Fiscal 2015 Performance and Impact on Compensation

We believe that our executive compensation program appropriately aligns pay with performance. Fiscal 2015 was a challenging year for the Company in which net sales declined.  As a result, as recommended by management and approved by the Compensation Committee, our Named Executive Officers received no annual incentive cash bonus. Further, our fiscal 2015 performance impacted the level of payout for performance stock units granted in fiscal 2014 (whose performance period ended at the end of fiscal 2015), with 0% of those awards becoming earned.

Annual Incentive Compensation

We began fiscal 2015 with high expectations for growth, which we ultimately fell short of achieving. Consistent with prior years, at the beginning of the year the Committee set challenging growth goals relating to net sales, operating profits and cash flow under our annual incentive compensation program for our Named Executive Officers. The Company pays its annual incentive cash bonus based on results of three separate performance goals: net sales, non-GAAP operating profit and free cash flow. In the event the Company’s actual fiscal 2015 capital expenditures were less than $482 million, the Committee retained discretion to reduce otherwise payable awards in connection with the free cash flow metric.  In addition, the Committee retained discretion to reduce otherwise payable awards in the event the Company’s Non-GAAP Operating Profit threshold performance level was not achieved.

In fiscal 2015 the overall weighted payout factor for financial performance under the fiscal 2015 short-term annual incentive plan was 40% of target, which reflected the Company’s shortfall in attaining the net sales and non-GAAP operating profit thresholds set by the Committee, offset by the Company exceeding the free cash flow maximum goal. However, despite the resulting 40% payout factor, in light of the Company’s overall level of performance in fiscal 2015, management recommended, and the Committee agreed, that our Named Executive Officers should receive no annual incentive cash bonus for fiscal 2015.

Equity-Based Compensation

In fiscal 2015, as in the prior fiscal year, the Committee continued its equity-based compensation strategy for its executive officers of granting a mix of performance stock units, restricted stock units and stock options. For a more detailed discussion of how the mix was determined, see the section entitled “Mix of Equity-Based Compensation” below.

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Performance Stock Units

For fiscal 2015, approximately 39% of the total value of our named executive officer’s annual equity award was made in the form of performance stock units, with 45% of our Chief Executive Officer’s annual equity award and 29% of our other Named Executive Officer’s annual equity award comprised of performance stock units.  With respect to performance stock units, the value in such awards is tied to growth in compounded annual non-GAAP EPS over a measurement period. The Committee includes performance stock units in the mix of equity-based compensation to tie the achievement of internal performance goals with an individual’s compensation, and more closely align the Company’s equity mix with those of our peer group. Performance stock units are performance-based and present significant upside potential for superior performance.

Fiscal 2014 Performance Stock Units

The performance period for the fiscal 2014 performance stock units began on the first date of fiscal 2014 and ended on the last day of fiscal 2015. For performance stock units granted in fiscal 2014, 0% of the performance stock units would be earned if the threshold level of performance (6% compounded annual growth rate (“CAGR”) in non-GAAP EPS) were achieved but not exceeded; 100% of the performance stock units would be earned if the target level of performance (14% CAGR in non-GAAP EPS) were achieved; and 200% of the performance stock units would be earned if the maximum level of performance (22% CAGR in non-GAAP EPS) were achieved (with actual results linear between the threshold, target, and maximum performance levels). As demonstration of our pay for performance alignment, no payout was achieved under the fiscal 2014 performance stock units as the Company’s non-GAAP EPS over the measurement period was $3.52 and did not meet the threshold level for payout of 6% CAGR.

Fiscal 2015 Performance Stock Units

The performance period for the fiscal 2015 performance stock units began on the first day of fiscal 2015 and will end on the last day of fiscal 2017. The Committee moved to a three-year performance period in order to achieve greater consistency with the results of peer and market surveys which suggested a three year performance period to be more common. To the extent earned, 100% of the performance stock units will vest at the end of the performance period.

The actual number of fiscal 2015 performance stock units that will be earned will be based on a three-step determination by the Committee. In the first step, at the conclusion of the three-year performance period if and only if the Company achieves a three-year cumulative earnings before interest, taxes, depreciation and amortization (“EBITDA”) goal of $2.5 billion (the “EBITDA Goal”), the fiscal 2015 performance stock units pool will be funded in an amount equal to 200% of the sum of the target awards (the “Maximum Funded Pool”). Our achievement of the EBITDA Goal does not ensure that that fiscal 2015 performance stock units will be earned at the maximum level of 200% because the Committee has retained “negative discretion” to reduce the level of payout based upon the achievement of non-GAAP EPS goals, in addition to the assessment of the Company’s overall business performance, as described in more detail below. If the EBITDA Goal is not achieved, then no fiscal 2015 performance stock units can be earned.

Assuming the maximum pool is funded at 200% upon achievement of the EBITDA Goal, in the second step the Committee will determine the initial payout between 0-200% based on the Company’s non-GAAP EPS CAGR achieved over the performance period based upon threshold, target and maximum non-GAAP EPS ranges established by the Committee. Following this initial payout determination based on non-GAAP EPS, the Committee has discretion to further adjust within these payout ranges based on internal or external factors that impact the non-GAAP EPS (such as a sharp volatility in commodity prices, restructuring or impairment adjustments).

Finally, in the third step the Committee retains ultimate discretion in determining the level of payout within the Maximum Funded Pool based on other factors that are largely immeasurable and do not directly impact the non-GAAP EPS (such as a material change in the economic or competitive landscape, or an unpredicted business disruption).

The design of the fiscal 2015 performance stock units is meant to provide the Committee with greater flexibility within a framework given the difficulties in projecting EPS over the next few years due to the ongoing development and launch of the Company’s cold beverage system. The design of the fiscal 2015 performance stock units was also intended to qualify such awards as “performance-based” under Section 162(m) of the Code.

Restricted Stock Units

For fiscal 2015, approximately 25% of the total value of each Named Executive Officer’s annual equity award was made in the form of restricted stock units, with 22% of our Chief Executive Officer’s annual equity award and 29% of our other Named Executive Officer’s annual equity award comprised of restricted stock units.  Restricted stock units are intended to

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retain executive officers and reward them for absolute long-term stock price appreciation while providing some value to the recipient even if the stock price declines. Restricted stock units also serve to balance the riskier nature of performance stock units and stock options, and provide a significant incentive to stay with the Company. Restricted stock unit awards granted to our Named Executive Officers in fiscal 2015 will vest in substantially equal installments over three years from the date of grant. The Committee moved to a three-year ratable vesting schedule (from its historical four-year vesting period) to align the vesting schedule of the restricted stock units with the three-year period chosen for the fiscal 2015 performance stock units.

Stock Options

For fiscal 2015, approximately 36% of the total value of each Named Executive Officer’s annual equity award was made in the form of stock options, with 33% of our Chief Executive Officer’s annual equity award and 42% of our other Named Executive Officer’s annual equity awards comprised of stock options.  Stock options’ future realizable value depends upon stock price appreciation above the exercise price set on the grant date, thus rewarding Named Executive Officers for absolute long-term stock price appreciation. Options granted to executive officers in December 2014 at an exercise price of $139.01 were out-of-the-money at fiscal year-end 2015. Options granted to Named Executive Officers in fiscal 2015 vest and become exercisable in substantially equal installments over three years from the date of grant. Similar to the restricted stock units the Committee moved to a three-year ratable vesting schedule (from its historical four-year vesting period) to align the vesting schedule of the options with the three-year period chosen for the fiscal 2015 performance stock units.

Mix of Equity-Based Compensation

When determining the appropriate mix of vehicles for the fiscal 2015 long-term equity incentive grants, the Committee considered a number of factors, including:

·                  Competitive practices among our peer group;

·                  Desire to provide a link between executive compensation and stockholder interests;

·                  Rewarding for performance against internal strategic and financial goals;

·                  Incentivizing retention and continued innovation; and

·                  The tax and accounting implications to the Company of various long-term incentive vehicles and practices.

As a result of this evaluation, as it had in prior years, for fiscal 2015 the Committee set a preliminary equity target mix for Named Executive Officers (other than the Chief Executive Officer) of 1/3 stock options, 1/3 restricted stock units and 1/3 performance stock units. For the Chief Executive Officer, the Committee set a preliminary equity target mix for fiscal 2015 of: 50% performance stock units, 25% restricted stock units, and 25% stock options.

In determining the number of restricted stock units and performance stock units to grant, the target award values for each of the components was divided by the closing price of the Company’s stock on the grant date. In determining the number of stock options to grant, a ratio of 3 options to 1 full value share was applied. The Committee determined that the 3:1 grant ratio was appropriate as it more closely aligned the Company’s option valuation with the long-term industry norm for option valuation in the range of 20%-30%.

The result of applying the option to full value share ratio of 3:1 described above, is that the adjusted equity target mix for Named Executive Officers other than the Chief Executive Officer shifted to 29% performance stock units, 29% restricted stock units, and 42% stock options (from the preliminary equity target mix described above of 1/3, 1/3, 1/3), and the Chief Executive Officer’s adjusted equity target mix shifted to 45% performance stock units, 22% restricted stock units and 33% stock options (from the preliminary equity target mix described above of 50% performance stock units, 25% restricted stock units and 25% stock options).

Throughout this Compensation Discussion and Analysis, including the Summary Compensation Tables, except as otherwise indicated, the grant date fair value of the options reflect the actual Black-Scholes ratio, computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). A comparison of the preliminary equity targets and the actual grant valuations is provided in the section entitled “Long-term Equity Incentive Compensation” below.

Principles of Our Executive Compensation Program

The Company’s compensation philosophy is designed to provide the proper incentive, with the right balance of variable performance-based pay, to support the achievement of the Company’s business strategies to be a leader in the beverage

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and brewer businesses, and to motivate, attract, develop and retain highly talented individuals to execute our business strategies.

Below we summarize certain executive compensation practices — both the practices we have implemented to drive performance, and the practices we have not implemented because we do not believe these practices support our stockholders’ long-term interests:

WHAT WE DO

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WHAT WE DON’T DO

Goals and Objectives of Our Executive Compensation Program

The Committee, along with management, has crafted the Company’s executive compensation program based on the following goals:

·                  Tie to stockholder value — the financial performance goals should be drivers of stockholder value over both the short-term and long-term. The annual performance goals have been tied to net sales growth, operating profit and free cash flow. The performance stock units’ vesting is tied to multi-year EPS, as described in more detail below.

·                  Be performance-based — a substantial portion of each executive’s total compensation opportunity should be variable performance-based pay dependent on the achievement of financial performance goals.

·                  Provide competitive pay opportunities — for target performance, use a competitive analysis approach both as to the amount and type of compensation we offer in order to motivate, attract and retain our executive talent (as described in more detail below under “How We Determined Executive Compensation for Fiscal 2015—2015 Competitive Positioning”).

Our executive compensation program is designed to support these goals by using the following principles:

Pay for Performance

The Committee strongly believes that executive compensation — both pay opportunities and pay actually realized — should be tied to Company performance. On average, over 74% of the total target compensation opportunity for our Named Executive Officers is variable performance-based pay. In fiscal 2015, of the total grant-date value provided in the form of long-term equity incentive awards to our Chief Executive Officer, 33% was in the form of stock options, 22% in restricted stock units and 45% in performance stock units. In fiscal 2015, of the total grant-date value provided in the form of long-term equity incentive awards to our Named Executive Officers other than the Chief Executive Officer, 42% was in the form of stock options, 29% in restricted stock units, and 29% in performance stock units.

With respect to stock option awards, no value is created for the executive unless the price of the Company’s stock increases between the date of grant and the date on which the executive exercises the option. With respect to performance stock units, the value in such awards is tied to growth in compounded annual non-GAAP EPS over a two or three-year performance period, with 0% of the performance stock units earned if the threshold level of performance is achieved; 100% of the performance stock units earned if the target level of performance is achieved; and 200% of the performance stock units earned if the maximum level of performance is achieved. With respect to the fiscal 2014 performance stock units, to the extent earned, 50% of the earned award vests following the end of the two-year performance period, and the remaining 50% of any earned award will vest the following year (the third year from grant). With respect to the fiscal 2015 performance stock units, to the extent earned, 100% of the earned award will vest following the end of the three-year performance period. In fiscal 2015, the Committee introduced an EBITDA Goal for the fiscal 2015 performance stock units which must be achieved in order for any amount under the award to be earned. See the section titled “Performance Stock Units — Fiscal 2015 Performance Stock Units” above for a more detailed discussion of the EBITDA Goal component of these awards. The Committee believes that target performance against the compounded annual non-GAAP EPS goals over the established performance period is attainable, yet provides appropriate incentives for the Named Executive Officers to meaningfully grow EPS.

The types and relative proportions of compensation of our Named Executive Officers are aligned with the types and relative proportions of compensation paid by companies in the peer group, which consists of a number of consumer products companies known for their industry leadership and brand recognition, many of which have similar revenue and market capitalization to the Company (described in more detail below).

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Providing Competitive Target Pay Opportunity

We annually benchmark our target and actual compensation levels and relative proportions of the types of compensation against our peer group. In addition, we supplement this information with published industry survey data of comparably-sized companies in the consumer products industry taken from the Towers Watson CDB General Industry Executive Compensation Survey (the “Published Survey Data”). For fiscal 2015, to identify comparably-sized companies we used data representative of companies with $5.0 billion in revenue in our industry. We use the Published Survey Data to ensure that our executive compensation opportunities are competitive with the companies against which we compete for talent, as described in more detail below. At the end of the fiscal year, the Committee analyzed company and individual performance against incentive goals to determine the actual amounts that were paid. More information about the peer group and the methodology for the relative size-adjusted levels can be found below under “How We Determined Executive Compensation for Fiscal 2015—Composition and Purpose of the Peer Group” and “How We Determined Executive Compensation for Fiscal 2015—2015 Competitive Positioning”. In addition the Committee, in consultation with the Chief Executive Officer, uses informed judgment in special cases in order to offer the compensation appropriate to attract and retain highly talented executives to enable our long-term growth.

Providing Fixed and Variable Compensation

We provide both fixed and variable compensation opportunities (heavily weighted towards variable compensation for our Named Executive Officers) that are designed to attract, retain and motivate top-performing executives, as well as appropriately align the realization of compensation opportunities with achieving relevant financial and strategic goals.

Providing Equity and Cash Incentives

We provide a combination of equity-based awards and cash incentives to focus executive officers on achieving performance results that drive both annual and long-term sustainable stockholder value.

Requiring Equity Ownership

Our executive officers, including our Named Executive Officers, are required to maintain or exceed specific levels of Company equity ownership in order to improve and maintain alignment of their interests with those of our stockholders. More information about equity ownership guidelines for executive officers can be found below under “Equity Ownership Guidelines for Our Named Executive Officers.”

Overview of Our Executive Compensation Program for Fiscal 2015

During fiscal 2015, the primary elements of compensation opportunities for each of our Named Executive Officers consisted of: base salary, a target annual incentive cash bonus, long-term equity-based incentive awards, and retirement and health and welfare benefits as applicable to employees in general.

The Committee reviews and approves each element of compensation separately and, if necessary, makes adjustments to individual elements of compensation to achieve a total targeted compensation opportunity that is competitive with the labor market in which we compete for executive talent. In its deliberations, the Committee annually reviews for each Named Executive Officer the elements of compensation set forth below, the total estimated payments upon retirement (valued including acceleration of in-the-money equity awards), and the total estimated payments upon involuntary termination from the Company (valued including acceleration of in-the-money equity awards).

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(1)         Mr. Kelley’s December 2014 long-term equity incentive grant was comprised of a stock option award valued at 33% of the total award, restricted stock units valued at 22% of the total award and performance stock units valued at 45% of the total award. The other Named Executive Officers’ December 2014 long-term equity incentive grants were comprised of stock option awards valued at 42% of their total awards, restricted stock units valued at 29% of their total awards and performance stock units valued at 29% of their total awards.

Compensation Program and Governance

The following is a summary of our compensation governance highlights to provide a better understanding of the Committee’s pay decisions relative to company performance in fiscal 2015. The framework of our executive compensation program includes the following governance features:

·                  The Committee is comprised solely of independent directors.

·                  The Committee engaged an independent compensation consultant, which in fiscal 2015 was Pay Governance LLC (“Pay Governance”).  Pay Governance was retained directly by the Committee and performed no consulting or other services for the Company or management.

·                  The Committee’s annual review and approval of our compensation strategy includes a review of compensation-related risk management. As more fully described below, the Committee does not believe that the compensation program creates risks that are reasonably likely to have a material adverse effect on the Company.

The Company’s compensation program and related governance features are complemented by several specific elements designed to align our executive compensation with long-term stockholder interests, including:

·                  Equity ownership guidelines for our executive officers, as described below;

·                  A maximum amount payable to executive officers under the annual performance-based incentive program; and

·                  Prohibitions on executive officers engaging in margin, hedging or other similar transactions in the Company’s securities.

Role of the Independent Compensation Consultant & Recommendations by the CEO

Independent Consultant

Pursuant to its charter, the Committee has the sole authority to retain and terminate the services of any outside compensation consultants to the Committee. During fiscal 2015, the Committee retained Pay Governance to provide advice to the Committee on general program design and best practices as well as to assist the Committee in determining the relationship between the program components and the levels of compensation paid to our executive officers and Directors to the peer group companies identified below. During fiscal 2015, Pay Governance made recommendations to the Committee on the forms and mix of compensation. Pay Governance reported directly to the Committee and did not provide any other services to the Company, its management or executive officers. While Pay Governance performed a general competitive review, as requested by the Committee, Pay Governance did not determine the amount or types of compensation awarded or paid with respect to the Company’s executive officers. Pay Governance has provided the Committee with appropriate assurances and confirmation of its independent status. After reviewing information provided by Pay Governance regarding its independence and considering the relevant independence factors pursuant to applicable SEC rules, the Committee believes that Pay Governance has been independent throughout its service to the Committee and that no conflict of interest existed in connection with Pay Governance’s services to the Committee during fiscal 2015.

Towers Watson’s survey data was made available to Pay Governance for use along with their peer group proxy analysis. Towers Watson did not provide any direct services to the Committee.

CEO Recommendations

The compensation of every employee of the Company, including each Named Executive Officer, is influenced in large part by the responsibilities of their position and the need to ensure that employees who have similar job responsibilities are paid equitably, with consideration given for individual performance. During fiscal 2015, Mr. Kelley provided recommendations to the Committee with respect to the total compensation opportunity (comprised of base salary and annual incentive and long-term equity incentive targets) for each Named Executive Officer (other than himself). These recommendations were based on the peer group data and the Published Survey Data reviewed by the Committee and Mr. Kelley’s assessment of the executive’s relative experience, overall performance and impact on the accomplishment of the Company’s financial goals and strategic

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objectives during the prior year. While the Committee took Mr. Kelley’s recommendations under advisement, it independently evaluated the pay recommendations for each executive and made all final compensation decisions in accordance with its formal responsibilities as defined in its charter. Decisions regarding the compensation of our Chief Executive Officer are made solely by the Committee in executive session, and then approved by the Board in executive session.

How We Determined Executive Compensation for Fiscal 2015

As noted above, the Committee administers the compensation program for the Company’s executive officers, including the Named Executive Officers. The Committee applies the executive compensation principles listed above to the compensation paid or awarded for each individual, and further applies discretion where appropriate to obtain highly talented individuals or to address performance and Company needs.

The Company determined fiscal 2015 compensation opportunities as follows:

·                  With respect to the executive officers, including the Named Executive Officers, Pay Governance compiled a total compensation study of a number of consumer products companies known for their industry leadership and brand recognition, many of which have similar revenue size and marketplace capitalization to the Company, as listed below (“peer group”), based on publicly available information.

·                  Pay Governance also analyzed the Published Survey Data provided by management as well as the peer group study and compiled a report. This report was then presented to and discussed by the Committee in its September 2014 meeting.

·                  Management reviewed and utilized the report by Pay Governance to develop competitive compensation ranges; these ranges were also presented to and discussed by the Committee in its September 2014 meeting.

·                  In November 2014, the Committee reviewed and approved the recommendations of Mr. Kelley regarding the total compensation opportunity for each Named Executive Officer (other than himself) for fiscal 2015 and reviewed and approved the performance metrics under our annual incentive and long-term equity incentive compensation programs.

·                  In November 2014 the Chairperson of the Committee presented to and discussed the Committee’s recommendation with the Board for the Chief Executive Officer’s total compensation opportunity, which the full Board approved.

Following the conclusion of fiscal 2015, in November 2015 the Committee reviewed the performance of the Company against the fiscal 2015 annual incentive plan goals and fiscal 2014 performance stock units’ metrics. As recommended by management and after applying the negative discretion which the Committee had reserved for itself with respect to payout levels in connection with the fiscal 2015 annual incentive plan, the Committee determined that no payouts would be made to the Named Executive Officers under the incentive plan. The Committee also certified that no fiscal 2014 performance stock units had been earned.

Results of 2014”Say-on-Pay” Advisory Vote to Approve Executive Compensation

At the 2014 Annual Meeting, approximately 98% of the votes cast were in favor of the advisory vote to approve executive compensation. This overwhelming level of support was consistent with the prior year’s advisory vote results. After considering this approval, the Committee concluded that no additional actions should be taken beyond those that were part of the normal recurring activity described in the CD&A.

Composition and Purpose of the Peer Group

As one factor used when reviewing appropriate compensation levels for our Named Executive Officers, the Committee examines the compensation data of individuals in similar positions at the peer group companies. The positions at peer group companies are similar in breadth, complexity and scope of responsibility and these companies compete with us for executive talent. The compensation data with respect to the companies in the peer group are compiled and analyzed by our outside compensation consultant on behalf of the Committee. This annual review is designed to ensure that our compensation program and target compensation opportunities are consistent with marketplace practice, which allows us to maintain our ability to attract and retain the level of talent we need to drive long-term, sustainable stockholder value.

When setting the fiscal 2015 target compensation, the peer group companies that the Committee examined consisted of:

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2015 Competitive Positioning

Our compensation philosophy is to set total compensation opportunities, including base salary, target annual incentives and long-term incentive grant levels, with reference to the Company’s size compared to that of our peer companies and survey data. In fiscal 2014, when determining pay levels for fiscal 2015, the Committee reviewed the 25th percentile, the median, and the 75th percentile data of both our peer group (as reported in their respective most recently filed proxy statements) as well as Towers Watson Survey data for companies with $5 billion in revenue (achieved through a regression analysis and tabular data to adjust the compensation data for the top executive positions in the survey participants from the non-durable goods industry to take account of differences in the total revenue of various companies compared to our total revenue). The Committee reviewed a wider range of data than prior years (the 25th percentile, median, and 75th percentile, rather than focusing on the median) to provide greater flexibility to the Committee when determining the appropriate level of target compensation for each role based on the strategic initiatives of the Company.

Based on this benchmarking, the total target compensation opportunity for each of our Named Executive Officers in fiscal 2015 was generally below the median of the peer group and the median of the Published Survey Data. As the Company continues to grow the Committee will continue to evaluate the appropriate level of the Company’s total compensation opportunities against our peer group and market data, in conjunction with Company performance, to continue to attract and retain the highly talented individuals necessary to enable our long-term growth.

Elements of Compensation of Our Named Executive Officers

We have three elements of total direct compensation: base salary, annual incentive and long-term equity compensation. The vast majority of total direct compensation is performance-based and not guaranteed. We also provide various retirement and benefit programs. A discussion about the key elements of our compensation program follows.

In fiscal 2015, 28% of total direct compensation for Named Executive Officers was comprised of base salary, 0% of total direct compensation for Named Executive Officers was comprised of the annual incentive and 72% of total direct compensation for Named Executive Officers was comprised of long-term equity compensation.

Base Salary

We pay a fixed base salary designed to be a secure base of cash compensation and sufficient to attract and retain highly talented individuals. We develop a salary range for each executive position based on the data mentioned above. These ranges are used as guidelines in determining individual salaries.

Base salaries for the Named Executive Officers are typically recommended by the Chief Executive Officer (other than for himself) and approved by the Committee after consideration of the above-referenced compensation marketplace data and performance factors.

For fiscal 2015 we provided an increase (effective on December 1, 2014) to base salary to the following Named Executive Officers in the following amounts:

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(1) Mr. Leemputte joined the Company as an Executive Advisor in June 2015 and became the Company’s Chief Financial Officer and Treasurer, effective August 17, 2015.

(2) Ms. Rathke stepped down as Chief Financial Officer and Treasurer on August 17, 2015 to become Strategic Advisor to the Chief Executive Officer.  Pursuant to the terms of her transition agreement, Ms. Rathke continued to receive her fiscal 2015 base salary upon becoming Strategic Advisor until her December 31, 2015 departure from the Company.

(3) Mr. Whoriskey transitioned from the position of President — U.S. Sales and Marketing effective September 30, 2015 to become Executive Advisor to the Chief Executive Officer until his December 31, 2015 departure from the Company.

The primary factors that were used in determining these base pay increases were (i) the roles and responsibilities of the executive, (ii) the qualifications, skills and experience level of the executive, (iii) the compensation paid for similar positions by companies in the peer group and Towers Watson’s published survey data, (iv) the compensation trends and conditions in the competitive landscape and (v) each executive’s performance and role in the future success of our business.

Annual Incentive

Our annual incentive is designed to drive the achievement of key business results on an annual basis. It is performance-based and not guaranteed. In fiscal 2015, each Named Executive Officer was entitled to receive an annual cash incentive opportunity under the Keurig Green Mountain, Inc. 2014 Omnibus Incentive Plan (the “2014 Plan”), under which we grant annual incentive awards. The amount of the annual incentive, if any, is based on the extent to which the specified performance goals, measured independently, are achieved. In fiscal 2015 each Named Executive Officer’s target bonus opportunity was expressed as a percent of base salary.  These target bonus opportunities are established annually for the Named Executive Officer after reviewing data from the peer group and Published Survey Data, as well as the anticipated contributions such Named Executive Officer is expected to make to our Company. In setting these percentages or amounts, the Committee balances the benefits of the program against the risks that it will cause participants to take actions that might involve unnecessary or excessive risk to the Company, while consistent with the achievement of the specified key business goals. The Committee believes that the current balance is appropriate. The focus of these targets is to achieve sustainable, balanced growth in net sales, operating income and free cash flow year over year.

Consistent with prior years, for fiscal 2015 the Committee selected challenging goals under the annual incentive plan of net sales (weighted at 20% allocation), non-GAAP operating income (weighted at 60% allocation) and free cash flow (weighted at 20% allocation). While these goals represented substantial increases from the prior year’s actual results, they were, nonetheless, recommended by management in order to align executives’ compensation with management’s business objectives. The amounts below are in millions:

*                 The Committee certified preliminary fiscal 2015 non GAAP operating profit of $860M (which represented a 15% decline over fiscal 2014 non GAAP operating profit). The final fiscal 2015 non GAAP operating profit is as set forth in the table above.

In order for any payments to be made to Named Executive Officers under the annual incentive plan for fiscal 2015 for a given financial metric, the Company had to achieve at least the threshold performance. In the event the Company’s actual fiscal 2015 capital expenditures were less than $482 million, the Committee retained discretion to reduce otherwise payable awards in connection with the free cash flow metric.  In addition, the Committee retained discretion to reduce otherwise payable awards in the event the Company’s Non-GAAP Operating Profit threshold performance level was not achieved.  Payouts are interpolated for achievement of performance between the threshold, target and maximum goals.

Since our net sales and non-GAAP operating profit were below the threshold goal, but free cash flow exceeded the

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maximum goal, the overall weighted average payout factor under our short term annual incentive plan was 40% of target. However, based on the overall results of the Company for fiscal 2015, management recommended, and the Committee agreed, to apply discretion to reduce the 40% payout to 0% for our Named Executive Officers. As a result, Named Executive Officers received no annual incentive bonus for fiscal 2015.

For fiscal 2015, the table below shows the target and maximum annual incentive opportunity and the actual annual cash incentive paid to the Named Executive Officers as a result of the Company’s performance.

(1)Mr. Leemputte joined the Company as an Executive Advisor in June 2015 and became the Company’s Chief Financial Officer and Treasurer effective August 17, 2015. Under the terms of his employment offer letter, Mr. Leemputte was not eligible for a fiscal 2015 short term annual cash incentive plan bonus.

Long-term Equity Incentive Compensation

Long-term equity compensation opportunities are provided to our Named Executive Officers to provide a link between compensation and stockholder value and to be a valuable retention tool.

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The Named Executive Officers are not guaranteed a grant of an equity-based award in any given year. However, the Committee expects that the Named Executive Officers will typically receive annual grants of equity-based awards provided that the performance of each of the Named Executive Officers is in line with the Board and Committee’s expectations (with respect to the Chief Executive Officer’s performance) and with both the Committee’s and the Chief Executive Officer’s expectations (with respect to the other Named Executive Officers’ performance). In determining the overall level of equity-based compensation granted in a given year, the Chief Executive Officer provides recommendations for all Named Executive Officers other than himself, based on a review of the factors under the heading “Compensation Program Philosophy and Governance.” These recommendations are then reviewed and discussed with the Committee, and if agreed, approved by the Committee. In determining the overall level of equity-based compensation granted in a given year for the Chief Executive Officer, the Committee provides its recommendation to the independent members of the Board, based on a review of those same factors. This recommendation is then reviewed and discussed with all independent members of the Board, and if agreed, approved by the Board in executive session.

The Committee has discretion under the 2014 Plan to grant different types of equity-based awards. In fiscal 2015, the Committee approved grants to all of the Named Executive Officers (other than Ms. Rathke who was not entitled to an equity award under the terms of her transition agreement, and Mr. Leemputte who received an equity award upon hire) comprised of a combination of stock options, restricted stock units and performance stock units (with the Chief Executive Officer’s grant approved by the full Board). Consistent with fiscal 2014, in fiscal 2015 the Committee determined that it would continue to include performance stock units in the mix of equity compensation for its executive officers to continue to align executive officers’ incentives with the financial performance of the Company.

For fiscal 2015, as discussed above under, “Mix of Equity-Based Compensation”, the Committee determined that other than for the Chief Executive Officer, the Named Executive Officer’s (other than Ms. Rathke and Mr. Leemputte) equity award would be delivered in a combination of 42% stock options, 29% restricted stock units and 29% performance stock units. For the Chief Executive Officer’s equity award, the Committee determined that it would grant him 33% stock options, 22% restricted stock units and 45% performance stock units, to place even more of Mr. Kelley’s compensation subject to the financial performance of the Company.

For fiscal 2015, stock options, restricted stock units and performance stock units were approved by the Committee in November 2014 and granted on December 1, 2014. In fiscal 2015, the Committee shifted to a three-year ratable vesting period for the stock options and restricted stock units that were granted as part of the annual long-term equity incentive awards, to align the vesting period of such vehicles with the performance period for the fiscal 2015 performance stock units.  To the extent earned based on performance, 100% of the performance stock units granted in fiscal 2015 will vest on the date the Committee certifies performance following the end of the three-year measurement period (which ends on September 30, 2017).

Based on the Company’s multi-year non-GAAP EPS, the performance stock units granted to our Named Executive Officers in fiscal 2014, and whose two-year measurement period ended on September 26, 2015, did not achieve the threshold level performance target of 6% CAGR in non-GAAP EPS during the measurement period.  As a result, 0% of the performance stock units granted in fiscal 2014 were earned.

The grant date value of each equity-based award is designed to deliver a targeted amount of compensation opportunity over the life of the award. This target amount is determined by the Committee (1) after a review of peer group and Published Survey Data previously described, (2) the duties and responsibilities of each Named Executive Officer, (3) the current vested and unvested gain (realized or unrealized) from previous awards and (4) the allocation between annual and long-term incentive payment opportunities.

Below is the annual equity compensation opportunity as a percent of base salary for each of the Named Executive Officers for fiscal 2015:

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(1) After application of the 3:1 option to full value share ratio described above under “Mix of Equity Based Compensation”.

(2) Omits a new hire award of restricted stock units with a grant date fair value of $560,000 granted to Mr. Leemputte on June 1, 2015. Under the terms of his employment offer letter, Mr. Leemputte was not eligible for a fiscal 2015 long-term annual equity compensation award.

(3) Pursuant to the terms of her transition agreement, Ms. Rathke was not eligible for a fiscal 2015 long-term annual equity compensation award.

Other Compensation:

Potential Payments upon a Termination

In fiscal 2015 the Committee amended and restated its change in control severance benefit plan (the “A&R Change in Control Plan”), which replaced the 2008 Change-in-Control Severance Benefit Plan, for certain designated executive officers and key employees. In fiscal 2015 the Committee also adopted a severance benefit plan (the “2015 Severance Benefit Plan”) for certain designated executive officers and key employees.  When making compensation decisions for the Named Executive Officers, the Committee generally does not consider the potential payments that may be made in the future to the Named Executive Officers in the event of a termination of employment, whether or not in connection with a change in control. The Committee believes the A&R Change in Control Plan and 2015 Severance Benefit Plan attract and retain high quality executives, and during a period in which a change in control is contemplated or pending is intended to keep them focused on their responsibilities. Ms. Rathke and Mr. Whoriskey each have a separate transition agreement under which certain payments upon termination are provided.

Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan that is currently available to all U.S. and Canadian employees who have completed 30 days of employment and whose customary employment is more than 20 hours a week. This plan allows each qualifying employee, through a payroll deduction, to purchase the Company’s common stock every six months at a price, discounted by 15%, from the lower of the closing price of such stock at the first or last day of each six-month period.

Defined Contribution Plans (401(k))

The Company’s 401(k) plan is a defined contribution plan available to all eligible U.S.-based employees. Each Named Executive Officer is eligible to participate in the plan applicable to him or her on the same basis as employees generally. These plans include a Company matching contribution to encourage employees to save additional funds for retirement. The Company matching contribution is provided on the same basis to the Named Executive Officers as all other participants in the applicable plan.

In September 2014 the Board approved the adoption of the Keurig Green Mountain Non-Qualified Plan, effective January 1, 2015, to retain and attract talent and improve the competitiveness of our benefits platform. The Non-Qualified Plan provides additional retirement benefits to select executives by providing for an annual deferred compensation benefit equal to 4% of the executive’s compensation that exceeds certain Internal Revenue Service limits applicable to the Company’s 401(k) plan.

Deferred Compensation Plan

The Company has adopted a deferred compensation plan to provide an opportunity for eligible persons to save for future financial needs out of their own compensation at little cost to the Company. To date the administrator of the plan has only designated Directors as eligible participants, although under the terms of the plan the administrator could also designate highly compensated or management employees. Accordingly, no Named Executive Officers deferred any compensation under the plan for fiscal 2015.

Perquisites

In fiscal 2015, the Company offered only nominal perquisites to certain Named Executive Officers that are not generally available to all employees.

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Welfare Plans

We offer a health care plan that provides medical, vision, dental and prescription drug coverage for all regular full-time and part-time (scheduled at least 20 hours per week) employees. We also offer group life insurance and short- and long-term disability plans that cover all regular full-time employees. We also offer a Wellness Reimbursement Program. The purpose of these plans is to provide competitive basic benefits to our employees and to help to attract and retain employees by offering a comprehensive package of benefits. The Named Executive Officers participate in these plans on the same basis as all other regular full-time employees.

Performance-Based Compensation and Risk

The Committee considers risk as well as motivation when establishing performance criteria. During fiscal 2015, the Committee reviewed all of the Company’s incentive compensation plans to determine whether the Company’s compensation policies and practices foster risk taking above the level of risk associated with the Company’s business model. In the course of its examination, the Committee evaluated:

·                  The balance of performance-based compensation and the quality and sustainability of performance;

·                  The relative proportions of annual and long-term incentives;

·                  The relationship between performance criteria for annual and long-term incentive awards;

·                  Competitive practices; and

·                  Equity retention requirements.

On the basis of this review, the Committee determined that the Company’s incentive compensation plans are appropriately structured and do not create risks that are reasonably likely to have a material adverse effect on the Company.

Performance-Based Compensation - Section 162(m)

Pursuant to Section 162(m) of the Code, compensation paid to certain executive officers, other than a company’s chief financial officer, in excess of $1,000,000 is not deductible unless it qualifies as “performance-based compensation.” The Committee annually reviews and considers the impact of Section 162(m) when designing the cash and equity incentive compensation programs for the Company’s executive officers. The Committee believes that the Company’s best interests are served by not restricting the Committee’s discretion and flexibility in designing the compensation programs, even if such programs may results in certain non-deductible compensation expenses.

Notwithstanding the Committee’s general philosophy of remaining flexible in designing our compensation programs, the compensation paid to our Named Executive Officers pursuant to our cash-based annual and our long-term equity incentive programs is generally designed to qualify as “performance-based compensation” for purposes of Section 162(m). Base salaries and time-based restricted stock units do not qualify as “performance-based compensation” pursuant to the requirements of Section 162(m). From time to time, the Committee may and has, and reserves the right to, award or approve compensation that is not deductible under Section 162(m). In addition, the application of Section 162(m) is complex and may change over time (with potentially retroactive effect) and, accordingly, there can be no guarantee that all compensation intended to qualify as performance-based compensation will so qualify.

Equity Ownership Guidelines for Our Named Executive Officers

We believe our executive officers should be invested in the success of the Company, and thus the Committee adopted equity ownership guidelines for executive officers, including our Named Executive Officers, in September 2011, which became effective in March 2012. In September 2013, the Committee reviewed our equity ownership guidelines as compared to those of the peer group companies and increased the equity ownership guideline for our Chief Executive Officer from five times his annual base salary to six times his annual base salary. In March 2014, the Committee again reviewed our equity ownership guidelines of our executive officers as compared to those of the peer group companies and increased the equity ownership guidelines for all executive officers that are direct reports to the Chief Executive Officer to three times their annual base salary. Our current equity ownership guidelines for our executive officers are as follows:

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Equity owned by an executive officer for purposes of these guidelines includes (1) Common Stock allocated to the officer’s 401(k) plan/Keurig Canada Retirement Savings Plan account, (2) other shares of Common Stock which are beneficially owned directly by the officer, (3) shares underlying unvested restricted stock units, and (4) shares underlying “earned” but unvested performance stock units. It excludes all options to purchase shares of Common Stock, whether in-the-money, vested, or unvested. All executive officers (other than Mr. Leemputte) have five years from the March 2014 re-set to meet these guidelines; Mr. Leemputte has five years from his August 2015 appointment as an executive officer to meet this guideline. Executive officers’ equity ownership is reviewed at least annually by the Committee. Based on the closing price of our Common Stock on January 11, 2016, all of our current Named Executive Officers satisfy the current guidelines or are within the five year grace period.

Summary Compensation Tables

The following tables provide information concerning compensation for the Company’s Chief Executive Officer, Chief Financial Officer and the other Named Executive Officers for fiscal 2015, 2014, and 2013, as applicable.  Fiscal 2015 ended on September 26, 2015.

(1)               Mr. Kelley received a one-time sign-on bonus of $600,000 in fiscal year 2013 related to the bonus opportunity forfeited as a result of his resignation from his prior employer, which was subject to repayment if Mr. Kelley resigned without good reason during his first year of employment. Mr. Leemputte received a one-time bonus of $400,000 in fiscal 2015 to be applied toward relocation expenses. Mr. Ostryniec received a one-time sign-on bonus of $150,000 in fiscal 2013 to be applied toward relocation expenses.

(2)               This column reflects the grant date fair value of the restricted stock units and performance stock units, determined in accordance with FASB ASC Topic 718 for all awards. Grants of performance stock units and restricted stock units on December 6, 2013 were made under the 2014 Plan, subject to stockholder approval of the underlying 2014 Plan. Stockholders approved the 2014 Plan on March 6, 2014. For purposes of the grant date fair value of the restricted stock

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units and performance stock units shown in this column that were granted on December 6, 2013 but subject to subsequent stockholder approval of the 2014 Plan, it reflects the grant date fair value of such awards as of the December 6, 2013 grant date, and not the March 6, 2014 date of stockholder approval. The closing price of a share of our Common Stock on December 6, 2013 was $71.30; on March 6, 2014 the closing price of a share of our Common Stock was $107.12. The underlying valuation assumptions for restricted stock units and performance stock units are further disclosed in notes 2 and 15 to our audited financial statements filed with our Annual Report on Forms 10-K for the fiscal year ended September 26, 2015, September 27, 2014, and September 28, 2013. Pursuant to SEC rules, the amounts shown exclude the impact of forfeitures related to service-based vesting conditions.  In fiscal 2014, the value of performance stock units awarded on the December 6, 2013 grant date, assuming the highest level of performance conditions were achieved, were as follows: Mr. Kelley: $3,999,930; Ms. Rathke: $484,983; Mr. Ostryniec: $733,392; Mr. Whoriskey: $283,346; Mr. Degnan: $249,978. In fiscal 2015, the value of performance stock units awarded on the December 1, 2014 grant date, assuming the highest level of performance conditions were achieved, were as follows: Mr. Kelley: $4,499,754; Mr. Ostryniec: $770,394; Mr. Whoriskey: $353,364; Mr. Degnan: $331,956.  Mr. Leemputte and Ms. Rathke did not receive an award of performance stock units in fiscal 2015.

(3)               This column represents the grant date fair value of option awards made during each of fiscal 2015, 2014 and 2013 as calculated pursuant to FASB ASC Topic 718 and using the Black-Scholes model. The underlying valuation assumptions for option awards are further disclosed in notes 2 and 15 to our audited financial statements filed with our Annual Report on Forms 10-K for the fiscal year ended September 26, 2015, September 27, 2014, and September 28, 2013. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(4)               Reflects the total amounts earned for the relevant fiscal year under the annual incentive plan. For fiscal 2014, it reflects annual incentive plan payouts at actual performance of 163.0% of target. For fiscal 2015, it reflects that no annual incentive plan payout (0%) was made to any of the Named Executive Officers.

(5)               The following table provides details for the “All Other Compensation” column in the table above for fiscal 2015:

(6)               Mr. Degnan became a Named Executive Officer in fiscal year 2014.

(7)               Mr. Kelley joined the Company as President and Chief Executive Officer effective December 3, 2012.

(8)               Mr. Leemputte joined the Company as an Executive Adviser on June 1, 2015, becoming the Chief Financial Officer and Treasurer on August 17, 2015.

(9)               Mr. Ostryniec joined the Company as Chief Product Supply Officer effective August 26, 2013.

(10)         Ms. Rathke transitioned from the position of Chief Financial Officer and Treasurer to become Strategic Advisor to the CEO on August 17, 2015. Ms. Rathke departed from the Company on December 31, 2015.

(11)         Mr. Whoriskey became a Named Executive Officer in fiscal year 2014. Mr. Whoriskey transitioned from the position of President, U.S. Sales and Marketing to become Executive Advisor to the CEO on September 30, 2015. Mr. Whoriskey departed from the Company on December 31, 2015.

(12)         Mr. Ostryniec was reimbursed $24,295 of relocation expenses in fiscal 2015.

Grants of Plan-Based Awards in Fiscal 2015

The following table provides information on potential payouts under our annual incentive plan and long-term equity-based awards (stock options, restricted stock units and performance stock units under the Amended and Restated Green Mountain Coffee Roasters, Inc. 2006 Incentive Plan (the “2006 Plan”) and 2014 Plan) to our Named Executive Officers with respect to awards or grants made in fiscal 2015.

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(1)       These figures represent threshold, target and maximum annual bonus opportunities under the annual incentive plan. There were no actual payout amounts earned by any Named Executive Officer for fiscal 2015. For a description of the performance targets relating to the annual bonuses, please refer to the section titled “Compensation Discussion and Analysis—Elements of Compensation of Our Named Executive Officers—Annual Cash Incentive Compensation” above.

(2)       All performance stock unit grants in fiscal 2015 were made under the 2014 Plan. These figures represent the threshold, target and maximum numbers of performance stock units that may be realized under the grant of performance stock units made to such Named Executive Officer in December 2014. To the extent earned, 100% of the performance stock units granted in fiscal 2015 are scheduled to vest following the three-year measurement period which ends on September 30, 2017 on the date the Compensation Committee certifies performance following the end of the measurement period (the “vesting date”).

(3)       All restricted stock unit grants in fiscal 2015 were made under the 2014 Plan. Restricted stock units are scheduled to vest, with the exception of the at-hire award granted to Mr. Leemputte in June 2015, one-third on each of the first three anniversaries of the grant date. One hundred percent (100%) of Mr. Leemputte’s June 1, 2015 at-hire restricted stock unit grant is scheduled to vest on the third anniversary of the grant date.

(4)       All option grants in fiscal 2015 were made under the 2014 Plan. Stock options are scheduled to vest and become exercisable ratably in three equal annual installments beginning on the first anniversary of the grant date. The options remain exercisable for 10 years from the grant date.

(5)       The exercise price of each option is the closing price of a share of common stock on the date the stock option was granted.

(6)       This column shows the grant date value of stock options as calculated pursuant to FASB ASC Topic 718 and using the Black-Scholes model (in the case of options) and the fair market value of a share of common stock on the grant date (in the case of restricted stock units and performance stock units).  For information on the valuation assumptions, please refer to

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notes 2 and 15 of the Company’s financial statements in the Form 10-K for the year ended September 26, 2015. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(7)       Ms. Rathke did not receive any equity grants during fiscal 2015 Ms. Rathke stepped down as Chief Financial Officer and Treasurer on August 17, 2015 to become Strategic Advisor to the Chief Executive Officer.

Outstanding Equity Awards at 2015 Fiscal Year-End

The following table provides information on the holdings of stock options, restricted stock units and performance stock units by the Named Executive Officers as of September 26, 2015, the last day of fiscal 2015.