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Share Name | Share Symbol | Market | Type |
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Supervalu Inc. (delisted) | NYSE:SVU | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.49 | 0.00 | 01:00:00 |
Filed by the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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SUPERVALU INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule, or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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1)
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to elect eleven directors;
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2)
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to ratify the appointment of KPMG LLP as the independent registered public accounting firm;
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to hold an advisory vote on executive compensation;
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to approve an amendment to the SUPERVALU INC. 2012 Stock Plan;
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to consider a stockholder proposal regarding stockholder proxy access, if properly presented at the Annual Meeting; and
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6)
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to transact such other business as may properly come before the meeting.
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BY ORDER OF THE BOARD OF DIRECTORS
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Karla C. Robertson
Executive Vice President, General Counsel and
Corporate Secretary |
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Doors open at 9:00 a.m. Central Time
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Meeting starts at 9:30 a.m. Central Time
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You do not need to attend the meeting to vote if you submitted your proxy in advance of the meeting
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The use of cameras and recording devices is prohibited
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Proposal
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Vote Required
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Board Recommendation
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Broker Discretionary Voting Allowed
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Impact of Abstention
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Impact of Broker Non-Vote
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Proposal 1—Election of eleven directors
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Majority of votes cast
(1)
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For
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No
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None
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None
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Proposal 2—Ratification of the appointment of KPMG LLP as the independent registered public accounting firm
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Majority of the shares present and entitled to vote
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For
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Yes
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Against
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N/A
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Proposal 3—Advisory vote on executive compensation
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We will consider our stockholders to have approved our executive compensation if the number of votes FOR exceeds the number of votes AGAINST
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For
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No
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None
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None
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Proposal 4—Approve an amendment to the SUPERVALU INC. 2012 Stock Plan
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Majority of the shares present and entitled to vote
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For
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No
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Against
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None
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Proposal 5—Stockholder proposal regarding stockholder proxy access
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We will consider our stockholders to have approved this stockholder proposal if the number of votes FOR exceeds the number of votes AGAINST
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Against
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No
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Against
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None
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(1)
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If the number of nominees exceeds the number of directors to be elected (a situation we do not anticipate), the directors shall be elected by a plurality of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors. A plurality means that the eleven director nominees who receive the highest number of votes cast will be elected.
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Voting by Mail.
If you wish to vote by mail, please sign, date and return the enclosed proxy card promptly in the postage-paid envelope provided.
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Voting by Telephone and the Internet.
If you wish to vote by telephone or the Internet, please follow the instructions on the enclosed proxy card. If you vote by telephone or the Internet, you do not need to return the proxy card.
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Shares Held in Street Name.
If your shares are held in the name of a bank, broker or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares. Telephone and Internet voting are also available to stockholders owning stock through most major banks and brokers.
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Revoking Your Proxy.
You may revoke your proxy at any time before your shares are voted by sending a written statement to the Corporate Secretary, or by submitting another proxy with a later date. You may also revoke your proxy by voting at the meeting in person.
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Record Stockholders.
If you are a record stockholder (i.e., a person who owns shares registered directly in his or her name with SUPERVALU’s transfer agent) and plan to attend the meeting, please indicate this when voting, either by marking the attendance box on the proxy card or responding affirmatively when prompted during telephone or Internet voting.
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Owners of Shares Held in Street Name.
Beneficial owners of SUPERVALU common stock held in street name by a broker, bank or other nominee will need proof of ownership to be admitted to the meeting. A recent brokerage statement or letter from the broker, bank or other nominee are examples of proof of ownership. If your shares are held in street name and you want to vote in person at the meeting, you must obtain a written proxy from the broker, bank or other nominee holding your shares.
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Name and Address of Beneficial Owner
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Amount and Nature of Beneficial Ownership
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Percent of Class
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(1)
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BlackRock, Inc., 55 East 52nd Street, New York, NY 10055
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36,306,868
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13.66%
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The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355
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25,023,129
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9.41%
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North Tide Capital, 500 Boylston Street, Suite 1860, Boston, MA 02116
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18,000,000
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6.77%
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(4)
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Glenhill Advisors, LLC, 600 Fifth Avenue, 11
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Floor, New York, NY 10020
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14,373,757
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5.41%
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(5)
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LSV Asset Management, 155 N. Wacker Dr., Suite 4600, Chicago, IL 60606
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13,597,372
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5.12%
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(1)
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Share ownership is as of December 31, 2015, as set forth in a Schedule 13G/A (Amendment No. 4) filed with the Securities and Exchange Commission (the “SEC”) on January 8, 2016. According to that filing, BlackRock, Inc., a parent holding company, is deemed to beneficially own 36,306,868 shares of SUPERVALU common stock, with sole dispositive power as to all of such shares and sole voting power as to 34,424,663 shares.
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Share ownership is as of December 31, 2015, as set forth in a Schedule 13G/A (Amendment No. 1) filed with the SEC on February 10, 2016. According to that filing, The Vanguard Group (“Vanguard”) is deemed to beneficially own 25,023,129 shares of SUPERVALU common stock. Vanguard reported sole voting power with respect to 330,490 shares, shared voting power with respect to 13,900 shares, sole dispositive power with respect to 24,691,439 shares and shared dispositive power with respect to 331,690 shares. The filing reports that Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., has beneficial ownership of 317,790 shares as a result of its serving as investment manager of collective trust accounts, and that Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., has beneficial ownership of 26,600 shares as a result of its serving as investment manager of Australian investment offerings.
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Share ownership is as of December 31, 2015, as set forth in a Schedule 13G/A (Amendment No. 1) filed with the SEC on February 16, 2016. According to that filing, each of North Tide Capital, LLC (“North Tide”) and Conan Laughlin is deemed to beneficially own 18,000,000 shares of SUPERVALU common stock, and each has shared voting power and shared dispositive power with respect to all of such shares. North Tide Capital Master, LP (the “Master Fund”) is deemed to beneficially own 16,350,000 shares of SUPERVALU common stock and has shared voting power and shared dispositive power with respect to all of such shares. None of North Tide, Mr. Laughlin or the Master Fund has sole voting power or sole dispositive power with respect to any shares. Shares reported for North Tide represent shares that are beneficially owned by the Master Fund, as reported, and that are beneficially owned by a managed account client (the “Account”). North Tide serves as investment manager to both the Master Fund and the Account. Shares reported for Mr. Laughlin represent the above-referenced shares beneficially owned by the Master Fund and the Account. Mr. Laughlin serves as the Manager of North Tide. Each of the reporting persons disclaims beneficial ownership of the shares except to the extent of its or his pecuniary interest therein.
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Share ownership is as of February 22, 2016, as set forth in a Schedule 13G filed with the SEC on March 3, 2016. According to that filing, (i) each of Glenhill Advisors, LLC and Glenn J. Krevlin is deemed to beneficially own 14,373,757 shares of SUPERVALU common stock, with sole dispositive power as to all of such shares, sole voting power as to 11,093,666 shares and shared voting power as to 3,280,091 shares; (ii) Glenhill Capital Advisors, LLC is deemed to beneficially own 14,373,757 shares of SUPERVALU common stock, with sole dispositive power and sole voting power as to none of such shares and shared voting power and shared dispositive power as to all of such shares; and (iii) Greenhill Capital Management, LLC is deemed to beneficially own 11,093,666 shares of SUPERVALU common stock, with sole dispositive power and sole voting power as to none of such shares and shared voting power and shared dispositive power as to all of such shares. Glenn J. Krevlin is the managing member and control person of Glenhill Advisors, LLC and is the sole shareholder of Krevlin Management, Inc. Krevlin Management, Inc. is the managing member of Glenhill Capital Advisors, LLC, which is the investment manager of Glenhill Capital Overseas Master Fund, LP and Glenhill Long Fund, LP, each a security holder of SUPERVALU. Glenhill Advisors, LLC is the managing member of Glenhill Capital Management, LLC. Glenhill Capital Management, LLC is the managing member of Glenhill Long GP, LLC, and is sole shareholder of Glenhill Capital Overseas GP, Ltd. Glenhill Capital Overseas GP, Ltd. is general partner of Glenhill Capital Overseas Master Fund, LP. Glenhill Long GP, LLC is the general partner of Glenhill Long Fund, LP. Glenhill Capital Advisors, LLC is also the investment manager for certain third party accounts for which SUPERVALU shares are held and managed by one or more of the reporting persons for the benefit of such third parties. Such reporting persons have dispositive power and share certain voting power with respect to such shares, and receive management fees and performance-related fees in connection therewith. As of March 3, 2016, there are 3,280,091 shares of SUPERVALU common stock held in such third party managed accounts.
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Share ownership is as of December 31, 2015, as set forth in a Schedule 13G filed with the SEC on February 12, 2016. According to that filing, LSV Asset Management is deemed to beneficially own 13,597,372 shares of SUPERVALU common stock, with sole dispositive power as to all of such shares and sole voting power as to 6,999,291 shares.
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Name of Beneficial Owner
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Amount and Nature of
Beneficial Ownership (1)(2) |
Percent of Class
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Donald R. Chappel
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242,820
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Irwin S. Cohen
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213,071
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Philip L. Francis
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169,639
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Eric G. Johnson
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76,793
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Mathew M. Pendo
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28,736
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Matthew E. Rubel
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164,539
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Francesca Ruiz de Luzuriaga
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18,143
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Wayne C. Sales
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347,278
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Frank A. Savage
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54,754
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Gerald L. Storch
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106,382
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Mary A. Winston
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4,809
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Mark Gross
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—
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Bruce H. Besanko
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687,453
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Susan S. Grafton
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193,933
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Mark L. Van Buskirk
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276,699
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Ritchie L. Casteel
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225,551
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Michele A. Murphy
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466,687
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Sam Duncan
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1,942,466
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Janel S. Haugarth
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575,305
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All current directors and executive officers as a group (21 persons)
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4,006,394
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1.51%
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Less than 1%
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(1)
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All persons listed have sole voting and investment power with respect to all of the shares listed except the following non-employee directors who have sole voting power, but no investment power, over shares held in the Directors’ Deferred Compensation Plan, as follows: Mr. Chappel, 226,680 shares; Mr. Cohen, 200,791 shares; Mr. Francis, 151,359 shares; Mr. Johnson, 76,793 shares; Mr. Pendo, 28,736 shares; Mr. Rubel, 151,399 shares; Ms. Luzuriaga, 13,143 shares; Mr. Sales, 294,322 shares; Mr. Savage, 54,754 shares; Mr. Storch, 106,382 shares; and Ms. Winston, 4,809 shares.
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(2)
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Includes shares underlying options exercisable or exercisable within 60 days of May 23, 2016, as follows: Mr. Chappel, 6,140 shares; Mr. Cohen, 12,280 shares; Mr. Francis, 12,280 shares; Mr. Rubel, 6,140 shares; Mr. Sales, 12,280 shares; Mr. Besanko, 445,981 shares; Ms. Grafton, 133,897 shares; Mr. Van Buskirk, 239,055 shares; Mr. Casteel, 175,904 shares; Ms. Murphy, 391,442 shares; Mr. Duncan, 1,725,764 shares; Ms. Haugarth, 408,865 shares; and all current directors and executive officers as a group, 2,100,726 shares.
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Director
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Audit Committee
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Corporate Governance and
Nominating Committee |
Leadership Development and
Compensation Committee |
Donald R. Chappel
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X
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Irwin S. Cohen
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Chair
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Philip L. Francis
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Chair
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Eric G. Johnson
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X
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Mathew M. Pendo
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X
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Matthew E. Rubel
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Chair
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Francesca Ruiz de Luzuriaga
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X
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Frank A. Savage
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X
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its oversight of our accounting and financial reporting principles and policies, and our internal controls and procedures;
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its review and oversight of our financial statements and the independent registered public accounting firm;
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selecting, appointing, compensating, evaluating and, where deemed appropriate, replacing the independent registered public accounting firm, which reports directly to the Audit Committee;
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evaluating the independence of the independent registered public accounting firm;
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its oversight of our major financial risk exposures and assessment of the steps that we have taken to assess and manage such exposures; and
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its oversight of our compliance with legal and regulatory requirements.
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review the scope of the annual audit plan and organizational structure of the internal auditors, and the results of the internal auditor’s activities;
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regularly meet separately with the senior internal audit executive and the independent registered public accounting firm;
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review reports by the independent registered public accounting firm describing and assessing our internal controls and discuss the adequacy and effectiveness of our internal controls and any specified audit procedures taken in light of any material weakness or significant deficiencies identified by us or the independent registered public accounting firm; and
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establish procedures concerning the receipt, retention and treatment of complaints regarding financial reporting, accounting, internal accounting controls or auditing and federal securities law matters.
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criteria for the size and composition of the Board;
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policies on the structure and operations of the Board, including its leadership structure and committees;
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procedures for the conduct of Board meetings, including executive sessions of the Board;
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policies on director retirement and resignation; and
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criteria regarding personal qualifications needed for Board membership.
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consider and recommend nominations for Board membership and the composition of Board committees;
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evaluate our Board practices and those of other well-managed companies and recommend appropriate changes to the Board (see “Board Practices” below);
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evaluate the members of our Board on an annual basis and provide opportunities for director education;
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consider governance issues raised by stockholders and recommend appropriate responses to the Board; and
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consider appropriate compensation for directors.
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determine the process to evaluate the performance of the Chief Executive Officer (the “CEO”);
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review and recommend to the independent members of the Board the compensation of the CEO;
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review and recommend to the Board major changes in executive compensation programs, executive stock options and retirement plans for officers;
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consider and make recommendations to the Board concerning the annual election of corporate officers and the succession plan for the CEO;
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approve the compensation, including annual salaries and incentives, of “Section 16” officers and any other corporate officers who directly report to the CEO;
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review and approve performance targets under our annual and long-term incentive compensation plans;
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approve equity grants and awards under our stock plan, and approve bonus and other incentive plans of “Section 16” officers and any other corporate officers who directly report to the CEO;
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retain or obtain the advice of and terminate any compensation consultant used to assist in the evaluation of directors and senior executives, including the CEO, and any outside legal counsel and other advisers, and to approve the terms of and fees for such retention; and
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review with management the Compensation Discussion and Analysis and related disclosures.
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Governance Highlights
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ü
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Independent Board Leadership:
The independent directors on the Board have selected an independent Non-Executive Chairman of the Board to lead our Board governance functions.
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Majority Independent Directors:
A super-majority of our Board is independent, and only independent directors serve on our Board committees.
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Board Refreshment:
Seven of our eleven director nominees have served on our Board for less than three years.
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Annual Election of Directors:
Our directors are elected annually.
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Board Evaluations:
Our Board and each committee conducts an annual performance evaluation of itself, and directors conduct similar individual evaluations, which process is facilitated by an outside consultant.
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Diverse Experiences Represented on Board:
Our Board nominees have broad perspectives, experiences and knowledge relevant to our business and include gender and ethnic diversity.
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Majority Voting:
Our directors are elected by a majority vote, except in the case of a contested election. Any director who does not receive a majority vote must tender his or her resignation.
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No Poison Pill:
We do not have a poison pill.
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ensuring that the respective responsibilities of the Board and management are understood, and that the boundaries between the Board and management responsibilities are respected;
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working with the CEO to develop an appropriate schedule of Board meetings and seeking to ensure that the Board can perform its duties responsibly while recognizing and supporting the operational demands of the Company;
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working with the CEO and Board members to develop the agendas for the Board meetings;
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conferring with the Corporate Governance and Nominating Committee regarding recommendations for the membership of the Board’s committees and the selection and rotation of committee chairs;
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chairing all meetings of the Board and presiding at all stockholder meetings;
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scheduling, developing the agenda for and presiding at all executive sessions of the Board and at meetings of the Board’s outside directors, and communicating to the CEO the substance of the discussions occurring at such sessions and meetings;
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acting as principal liaison between the non-employee directors and the CEO on sensitive issues, although any non-employee director maintains the right to communicate directly with the CEO on any matter;
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serving as an ex officio member of each committee and working with the Board committee chairs on the performance of their designated roles and responsibilities;
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assessing and advising the CEO as to the quality, quantity and timeliness of the flow of information from management that is necessary for the Board to effectively and responsibly perform its duties. Although management is responsible for the preparation of materials for the Board, the Non-Executive Chairman will consider requests from any Board member regarding the inclusion of specific information in such material and all directors maintain the right to communicate directly with members of management;
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recommending to the Board the retention of any consultants who will report directly to the Board on board matters (as opposed to committee consultants);
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acting as a direct conduit to the Board for major stockholders and for other stockholders, employees and the public as appropriate;
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monitoring significant issues and risks between meetings of the Board and assuring that the entire Board becomes involved when appropriate;
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leading the Board in anticipating and responding to crises, including temporary incapacity of the CEO;
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upon recommendation of the Corporate Governance and Nominating Committee, interviewing candidates for the Board who are proposed to be presented to the Board for consideration;
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in conjunction with the Corporate Governance and Nominating Committee, overseeing the evaluation process regarding the performance of individual directors;
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working with the Chair of the Leadership Development and Compensation Committee on the process for compensating and evaluating the CEO, consistent with the principle that the CEO reports to the full Board and not to the Non-Executive Chairman;
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working with the Chair of the Leadership Development and Compensation Committee on succession planning for the CEO and senior management;
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assisting the Board and the Company in assuring compliance with and implementation of the Governance Principles (as described below); and
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chairing the Executive Committee of the Board if one is established.
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Symphony Designees.
As discussed above under “—Symphony Designees,” Messrs. Pendo and Savage were designated as directors under the Tender Offer Agreement by Symphony. Before Symphony distributed its shares of SUPERVALU common stock to its eight members pro rata, Symphony had been the Company’s largest stockholder and an affiliate of AB Acquisition, a Cerberus-led consortium and the entity that acquired NAI from the Company. Cerberus had owned 38.8% of Symphony before the distribution and owns a significant amount of AB Acquisition, which is the ultimate parent entity of each of Albertson’s LLC and NAI. At the time of their appointment as directors in April 2014, the Board determined that their status as directors designated by Symphony would not interfere with either Mr. Pendo’s or Mr. Savage’s exercise of independent judgment in carrying out the responsibilities of a director. The Board’s consideration of this matter included the absence of any employment relationship or voting agreement, informal or formal, between Messrs. Pendo and Savage with Symphony or Cerberus, and the fact that Mr. Pendo and Mr. Savage each met the requirements for independence under the NYSE listing standards and the rules of the SEC. Messrs. Pendo and Savage are no longer Symphony designees, and Symphony no longer owns its shares of
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Mr. Pendo
. Mr. Pendo is a Managing Director at Oaktree Capital. Oaktree is one of the investment managers for SUPERVALU’s pension plan. Oaktree manages approximately $110 million of the pension plan assets, or roughly five percent of the pension plan’s assets, and receives approximately $600,000 annually in fees directly from the pension plan. The approximately $110 million of assets being managed by Oaktree is less than one percent of Oaktree’s assets under management, and the fees constitute less than one percent of Oaktree’s gross revenues in each of its last three fiscal years. Additionally, our pension plan uses a third party that selects and negotiates with these investment managers. Accordingly, the Board considered that the relationship was not material to either company and, therefore, does not impair Mr. Pendo’s independence.
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Mr. Savage
. Mr. Savage’s son is a vice president at Bank of America. We use Bank of America for cash management services, and Bank of America is a lender in our revolving credit facility and underwriter of long-term debt. For cash management services, we have paid Bank of America approximately $1.5 million in total service fees during the last three fiscal years. In its role as a lender and underwriter on debt transactions, we have paid Bank of America approximately $4.8 million during the last three fiscal years. The aggregate of these amounts represented less than one percent of the consolidated gross revenues of Bank of America and the Company for each company’s last fiscal year. These transactions were entered into in the ordinary course of business and at arm’s length, our relationships with Bank of America predated Mr. Savage’s service on the Board and Mr. Savage’s son is not directly involved with the relationships between Bank of America and the Company. Accordingly, the Board determined that these relationships were not material to either company and, therefore, do not impair Mr. Savage’s independence.
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Mr. Johnson.
In determining the independence of Mr. Johnson, the Board considered the relationship between the Company and Baldwin Richardson. See “Policy and Procedures Regarding Transactions with Related Persons—Transactions with Related Persons—Director Mr. Johnson, Baldwin Richardson” below for additional detail regarding this relationship. The Board determined that this relationship would not interfere with Mr. Johnson’s exercise of independent judgment in carrying out the responsibilities of a director and that Mr. Johnson met the requirements for independence under the NYSE listing standards and the rules of the SEC.
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Ms. Luzuriaga
. Ms. Luzuriaga’s brother-in-law is Senior Vice President and Chief Accounting Officer at Chubb. Chubb is one of our insurance companies and we have paid approximately $500,000 in total insurance premiums to Chubb over the past three fiscal years. This aggregate amount represented less than one percent of the consolidated gross revenues of Chubb and the Company for each company’s last fiscal year. These transactions were entered into in the ordinary course of business and at arm’s length. Additionally, our relationship with Chubb predated Ms. Luzuriaga’s service on the Board, and Ms. Luzuriaga’s brother-in-law is in a role where he would not be directly involved with the relationship between Chubb and the Company. Accordingly, the Board determined that this relationship was not material to either company and, therefore, does not impair Ms. Luzuriaga’s independence.
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Mr. Sales
. Mr. Sales was our Executive Chairman and served as our President and Chief Executive Officer from July 2012 to February 2013. Mr. Sales has not had any transactions, relationships and arrangements with us since that time other than his service as a director. The Board determined that, since more than three years have passed since Mr. Sales served as an executive officer of the Company, he is now independent.
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•
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Transition Services Agreement with each of Albertson’s LLC and NAI.
We continued to perform services for, and receive services from, each of Albertson’s LLC and NAI pursuant to the transition services agreements (the “TSA”) entered into in March 2013 in connection with the sale of NAI. Revenues received by us under the TSA were approximately $185 million in fiscal 2016. In connection with providing these services, we have and may in the future enter into merchandising, procurement, vendor and services contracts in the ordinary course of business under which we, Albertson’s LLC and/or NAI purchase jointly. On April 16, 2015, we entered into a letter agreement with NAI and Albertson’s LLC pursuant to which we are providing services to NAI and Albertson’s LLC as needed to transition and wind down the TSA. In exchange for these transition and wind down services, we are receiving eight payments of $6.25 million every six months for aggregate fees of $50 million. These payments are separate from and incremental to the fixed and variable fees we receive under the TSA. We have and expect to continue to enter into individual arrangements with NAI and/or Albertson’s LLC to facilitate this transition and wind down.
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•
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Trademark Cross-Licensing Agreement.
We entered into a Trademark Cross Licensing Agreement with NAI and Albertson’s LLC on March 21, 2013 pursuant to which we and NAI and Albertson’s LLC have licensed to the other party and their affiliates certain names and marks.
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•
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Escrow Agreement.
As part of AB Acquisition’s purchase of NAI, NAI’s subsidiary, American Stores Company (“ASC”), retained liability on certain bonds issued by it and guaranteed by us. Our guaranty of the bonds was not released as part of our sale of NAI, and we remain liable under our guaranty. AB Acquisition has agreed to indemnify us against any payment we are required to make on our guaranty and ASC has deposited cash into an escrow account, which gives us a first priority security interest and the trustee for the ASC bonds a second priority security interest in the escrow account. The principal amount of the bonds outstanding is approximately $5 million, and at least that amount of cash is maintained in the escrow account.
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•
|
Operating and Supply Agreements.
In connection with AB Acquisition’s purchase of NAI, we entered into an Operating and Supply Agreement with NAI under which we operate a distribution center owned by NAI for an initial term of five years, subject to renewal at our option for two additional five-year terms and certain termination rights of NAI and us. We exercised our first extension option, subject to such termination rights. We provide wholesale distribution of products to certain NAI banners and SUPERVALU independent retail customers from this distribution center. NAI and SUPERVALU are also party to an agreement for the Company to provide services related to supplying cosmetics products, such as promotional, inventory ordering, vendor negotiations and management of vendor promotional funding. The Company receives approximately $150,000 per year under this separate services agreement. In addition, SUPERVALU continued to provide wholesale distribution of certain products to certain stores owned by Albertson’s LLC that were not part of AB Acquisition’s purchase of NAI. This distribution ended in late September 2015. Net sales from these operating and supply agreements and supply and service relationships were approximately $100 million for fiscal 2016.
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Donald R. Chappel,
age 64
Mr. Chappel, a director of SUPERVALU since 2010, serves as Senior Vice President and Chief Financial Officer of The Williams Companies, Inc., a position he has held since April 2003. Williams is one of the leading energy infrastructure companies in North America. Williams owns an approximate 60% interest in Williams Partners L.P. (“Williams Partners”), including all of the general partnership interest. Williams Partners is a large-cap master limited partnership (“MLP”) with operations across the natural gas value chain from gathering, processing and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene and other olefins. Williams Partners was formerly known as Access Midstream Partners, L.P. and in February 2015 merged with another energy infrastructure MLP controlled by Williams also known as Williams Partners L.P. (“Pre-Merger Williams Partners”). Access Midstream Partners was the surviving entity in the merger and changed its name to Williams Partners L.P.
Mr. Chappel has served as a director of the general partner of Williams Partners since 2012 and as its Chief Financial Officer since December 31, 2014. Mr. Chappel served as Chief Financial Officer and a director of the general partner of Pre-Merger Williams Partners from 2005 until its merger in 2015. Mr. Chappel was Chief Financial Officer, from 2007, and a director, from 2008, of the general partner of Williams Pipeline Partners L.P., until its merger with Pre-Merger Williams Partners in 2010. Williams Pipeline Partners L.P. was an energy pipeline MLP formed and controlled by Williams. Prior to joining Williams, Mr. Chappel held various financial, administrative and operational leadership positions. Mr. Chappel is included in Institutional Investor magazine’s Best CFOs listing for 2006 to 2008 and 2010 to 2014. Among his many qualifications, Mr. Chappel brings significant experience in finance and accounting as a senior finance executive of several large public companies.
Mr. Chappel serves as a director of two non-profit organizations, The Children’s Hospital Foundation at St. Francis and Family & Children’s Services of Oklahoma.
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Irwin S. Cohen,
age 75
Mr. Cohen, a director of SUPERVALU since 2003, is a Retired Partner of Deloitte & Touche LLP, a professional services firm providing audit, tax, financial advisory and consulting services. Mr. Cohen, who joined Deloitte in 1962 and became a partner in 1972, served as the Global Managing Partner of the Consumer Products, Retail and Services Practice of Deloitte from 1997 to 2003. Mr. Cohen also founded and led Deloitte’s Consumer Products, Retail and Services Practice as it grew to serve over 100 countries in Europe, Asia Pacific and the Americas. Mr. Cohen brings considerable experience in retail and accounting as a result of his experience with Deloitte.
Mr. Cohen is also a director and chair of the Audit Committee of Stein Mart Inc., a discount fashion retailer with sales in excess of $1 billion. In addition, he currently serves or has served on the boards of several private and non-profit companies.
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Philip L. Francis,
age 69
Mr. Francis, a director of SUPERVALU since 2006, retired in 2012 from PetSmart, Inc. after serving ten years as Chief Executive Officer and two years as the Executive Chairman. PetSmart is a specialty retailer of services and solutions for pets. Prior to joining PetSmart, Mr. Francis was the President and CEO of Shaw’s Supermarkets, Inc. and Cardinal Foods. His formal education includes a Bachelor of Science degree from the University of Illinois in Agricultural Science and an MBA in Marketing and Management from Indiana University. Among his many qualifications, Mr. Francis brings significant retail industry experience, as well as experience in business strategy as a senior executive of a large public company.
Mr. Francis is a director of At Home Group Inc. He previously served as a director of PetSmart, Inc. from 1989 to 2012, and as a director of CareFusion from 2009 until it was sold in March 2015. He is active with several non-profit or service organizations that include Teach for America, Greater Phoenix Leadership (past chairman), Federal Reserve Board-Western Region Advisory Council, and TGEN—Translational Genomics Research Institute. He is a past campaign chair and board chair of Valley of the Sun United Way, active in UMOM (homeless) and ASU Idea Enterprise.
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Mark Gross
, age 53
Mr. Gross was named President and Chief Executive Officer of the Company effective February 5, 2016. Prior to joining the Company, Mr. Gross had served since 2006 as President of Surry Investment Advisors LLC, an advisory firm that Mr. Gross founded to provide consulting services to grocery distributors and retailers with respect to strategic and operational matters. In this role, Mr. Gross assisted grocery clients on several multi-billion dollar acquisitions and divestitures and consulted with private equity firms with respect to investments in food retail, distribution and consumer packaged goods sectors. From 1997 to 2006, Mr. Gross worked at C&S Wholesale Grocers, including serving as Co-President of C&S’s overall operations from 2005 to 2006. Additionally, during his tenure with C&S, Mr. Gross served as Chief Financial Officer, General Counsel, and President of its affiliated retail grocery operations.
Among his many qualifications, Mr. Gross brings a wealth of grocery wholesale and retail industry experience, including significant experience in business strategy and operations as a senior executive of a large grocery wholesale company and as an advisor to several grocery companies and investors. Mr. Gross graduated cum laude from the University of Pennsylvania Law School and holds a BA from Dartmouth College where he graduated with honors in his major.
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Eric G. Johnson
, age 65
Mr. Johnson, a director of SUPERVALU since July 2013, is the President and Chief Executive Officer of Baldwin Richardson Foods Company (“Baldwin Richardson”), one of the largest African-American-owned businesses in the food industry, a position he has held since 1997. Baldwin Richardson is a major producer of products and ingredients for McDonald’s, Kellogg, General Mills and Frito Lay. Baldwin Richardson also has retail brands and foodservice products that it distributes nationally. Mr. Johnson purchased Baldwin Ice Cream Co. in 1992, and, in 1997, he completed the acquisition of Richardson Foods from Quaker Oats Company to form Baldwin Richardson. From 1989 to 1991, Mr. Johnson served as Chief Executive Officer of Johnson Products Company. Among his many qualifications, Mr. Johnson brings considerable food industry and business experience from the perspective of a manufacturer and supplier of food products to the retail and foodservice markets.
Mr. Johnson serves as a member of the Board of Directors for Lincoln National Corporation and is chairman of its Finance Committee. He also sits on the Board of Trustees for Babson College and serves on the Board of the Urban League of Rochester. Mr. Johnson is a graduate of Babson College.
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Mathew M. Pendo
, age 52
Mr. Pendo, a director of SUPERVALU since April 2014, serves as Managing Director of Oaktree Capital, an investment firm that specializes in less efficient markets and alternative investments, and has held that position since June 2015. Prior to joining Oaktree, from September 2013 until June 2015, Mr. Pendo served as a Managing Director at Sandler O’Neill Partners, an investment banking boutique focused on the financial services industry. Prior to joining Sandler O’Neill Partners, Mr. Pendo served as the Chief Investment Officer for the Troubled Asset Relief Program (“TARP”) at the U.S. Department of the Treasury from November 2010 until March 2013. He previously served as Managing Director Investment Banking for Barclays Capital from 2003 until October 2010, where he served as Co-Head of the Industrials Group and the U.S. Investment Banking Group.
Mr. Pendo previously served as a director of Ally Financial Inc., a bank holding company focused on the auto finance and online banking industries, from 2013 to 2015. Mr. Pendo holds a Bachelor of Arts in Economics from Princeton University and received a Distinguished Service Award from the U.S. Department of Treasury for his work overseeing TARP’s investment activities. Among his many qualifications, Mr. Pendo brings substantial financial and investment banking experience to the Board.
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Francesca Ruiz de Luzuriaga,
age 62
Ms. Luzuriaga, a director of SUPERVALU since July 2015, has been an independent business development consultant since 2000. Previously, she was the Chief Operating Officer of Mattel Interactive, a business unit of Mattel, Inc., one of the major toy manufacturers in the world, from 1999 to 2000. Prior to holding this position, she served Mattel as its Executive Vice President, Worldwide Business Planning and Resources, from 1997 to 1999, and as its Chief Financial Officer from 1995 to 1997. Among her many qualifications, Ms. Luzuriaga brings substantial prior leadership experience in the operations and strategy side of businesses, both in the United States and internationally, as well as financial expertise and experience in corporate finance.
Ms. Luzuriaga is a director and serves as the chair of the Audit Committee for Office Depot, Inc. Previously, she was a director of OfficeMax Incorporated from 1998 to November 2013. Since January 2012, she has been a director of SCAN Health Plan, a not-for-profit Medicare Advantage health plan. From 2002 until 2005, she was also a director of Providian Financial Corporation.
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Wayne C. Sales,
age 66
Mr. Sales has been a director of SUPERVALU since 2006 and was Non-Executive Chairman of the Board from 2010 to 2012. He served as Executive Chairman of the Board and as Chief Executive Officer and President of SUPERVALU from July 2012 to February 2013. He is the retired Vice Chairman of Canadian Tire Corporation, Limited, Canada’s most-shopped general merchandise retailer and the country’s largest independent gasoline retailer, which he led as Chief Executive Officer and President from 2000 to 2006.
Mr. Sales’ retail executive experience spans more than 35 years. Prior to joining Canadian Tire in 1991, he served in several senior leadership positions with the U.S. division of Kmart Corporation in the areas of marketing, merchandising and store operations. Mr. Sales’ accomplishments earned him several industry awards, including Distinguished Retailer of the Year in 2004 by the Retail Council of Canada and CEO of the Year by Canadian Business Magazine in 2005. In 2009, Mr. Sales was also inducted into the Canadian Marketing Hall of Legends. Among his many qualifications, Mr. Sales brings extensive leadership and business experience in the retail industry as the former chief executive officer of two large public companies, including SUPERVALU.
Mr. Sales has previously served as a director of other public companies, including Toys “R” Us, Inc. from April 2014 to November 2015, and Tim Hortons Inc., the fourth-largest publicly traded quick service restaurant chain in North America based on market capitalization, from 2006 to 2014. Mr. Sales retired from his board positions with Georgia Gulf Corp, a leading integrated North American manufacturer of chemicals and vinyl-based building and home improvement products, and Discovery Air Inc., a specialty aviation company, when he became Chief Executive Officer and President of the Company in 2012.
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Frank A. Savage,
age 68
Mr. Savage, a director of SUPERVALU since April 2014, has been a senior advisor to investment banking firm Lazard Ltd. (“Lazard”) since January 2014 and served as Vice Chairman of U.S. Investment Banking at Lazard from 2009 to December 2013. He was the Co-Head of Lazard’s Restructuring Group from June 1999 to December 2013 and also served on Lazard’s Deputy Chairman Committee from 2006 to December 2013. Prior to joining Lazard, Mr. Savage served as Co-Head of the Restructuring Practice at investment banking firm BT Alex. Brown Inc. and before that was the Head of the Restructuring Group at investment bank UBS AG. Mr. Savage holds a degree from the University of Pennsylvania’s Wharton School of Business. Among his many qualifications, Mr. Savage brings extensive financial, restructuring and investment banking experience to the Board.
Mr. Savage has served as a director of Rite Aid Corporation since June 2015.
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Gerald L. Storch,
age 59
Mr. Storch, the Non-Executive Chairman and a director of SUPERVALU since January 2014, is Chief Executive Officer of Hudson’s Bay Company, a retail business group, and has held that position since January 2015. Prior to that, Mr. Storch was Founder, Chairman and Chief Executive Officer of Storch Advisors, Inc., a senior management advisory and consulting firm focused primarily on retailing, e-commerce, consumer products and services, and consumer financial services, from 2013 to January 2015. From 2006 to 2013, Mr. Storch was Chairman and Chief Executive Officer of Toys “R” Us, Inc., where he helped grow the company into a $13 billion global retailer, including expanding the company’s e-commerce business and overseeing several mergers and acquisitions. Prior to his tenure at Toys “R” Us, Mr. Storch served as Vice Chairman of Target Corporation, a $70 billion retailer. During more than a decade with Target, Mr. Storch led the retailer’s e-commerce site, target.com, the Target grocery business and the Target Financial Services credit card business, and oversaw Marshall Field’s Department Stores. Among his many qualifications, Mr. Storch brings substantial business and leadership experience in retail to the Board as a current chief executive officer and as the former chief executive officer and former senior executive officer of two large public companies.
Mr. Storch currently serves as a member of the Board of Directors of Hudson's Bay Company, Bristol Myers Squibb Company and Fanatics Inc. Mr. Storch received a Master of Business Administration from Harvard Business School, a Juris Doctor from Harvard Law School and a Bachelor of Arts from Harvard College.
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Mary A. Winston,
age 54
Ms. Winston, a director of SUPERVALU since April 27, 2016, served as Executive Vice President – Chief Financial Officer of Family Dollar Stores, Inc., a discount retailer with more than 8,300 stores and nearly $11 billion in revenues prior to its acquisition by Dollar Tree in July 2015, from 2012 until August 2015. Before joining Family Dollar, from 2008 to 2012, Ms. Winston served as Senior Vice President and Chief Financial Officer for Giant Eagle, Inc., a regional grocery and fuel retailer. Ms. Winston was President and Founder of WinsCo Financial, LLC, a financial solutions consulting firm, from 2007 to 2008 and served as Executive Vice President and Chief Financial Officer of Scholastic Corporation, a children’s publishing and media company, from 2004 to 2007. Among her many qualifications, Ms. Winston brings corporate executive leadership experience as well as extensive financial management and leadership.
Ms. Winston has served as a director of Dover Corporation, a diversified manufacturing company, since 2005 and is the chair of its Audit Committee, and as a director of Domtar Corporation, a paper manufacturer and marketer, since December 2015. Ms. Winston previously served as a director of Plexus Corporation, an electronic manufacturing services company, from 2008 to February 2016.
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Cash retainer
|
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$85,000
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Lead Director retainer, if any
|
|
$25,000
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Non-Executive Chairman retainer
|
|
$150,000
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Corporate Governance and Nominating Committee retainer
|
|
$10,000
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Audit Committee and Leadership Development and Compensation Committee retainer
|
$15,000
per committee |
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Corporate Governance and Nominating Committee Chair retainer
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|
$20,000
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Audit Committee Chair and Leadership Development and Compensation Committee Chair retainer
|
$25,000
per committee |
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Deferred Stock retainer
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|
$115,000
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Name
|
Fees Earned or
Paid In Cash ($) (2) |
Stock
Awards ($) (3) |
Option
Awards (4) |
Total ($)
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Donald R. Chappel
|
115,000
|
126,500
|
—
|
241,500
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Irwin S. Cohen
|
125,000
|
123,750
|
—
|
248,750
|
Philip L. Francis
|
115,000
|
115,000
|
—
|
230,000
|
Eric G. Johnson
|
95,000
|
124,500
|
—
|
219,500
|
Mathew M. Pendo
|
100,000
|
115,000
|
—
|
215,000
|
Matthew E. Rubel
|
125,000
|
118,125
|
—
|
243,125
|
Francesca Ruiz de Luzuriaga
|
100,000
|
115,000
|
—
|
215,000
|
Wayne C. Sales
|
200,000
|
—
|
—
|
200,000
|
Frank A. Savage
|
95,000
|
124,500
|
—
|
219,500
|
John T. Standley
(1)
|
—
|
—
|
—
|
—
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Gerald L. Storch
|
235,000
|
138,500
|
—
|
373,500
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(1)
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Mr. Standley did not stand for reelection as a director when his term ended at the 2015 Annual Meeting of Stockholders on July 22, 2015. The compensation for his service was paid to him in fiscal 2015 in accordance with our historic compensation payment schedule.
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(2)
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Reflects the amount of cash compensation earned in fiscal 2016 for Board and committee service. Amounts shown include any amounts deferred by the director under the Director’s Deferred Compensation Plan described above.
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(3)
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Includes (a) the annual deferred stock retainer for each director as described above and (b) any additional shares of common stock awarded to a director as a result of the director’s deferral of fees earned under the Director’s Deferred Compensation Plan described above. The grant date fair value of stock awards are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). Refer to Note 1—Summary of Significant Accounting Policies and Note 10—Stock-Based Awards within Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 27, 2016 for our policy and assumptions made in determining the grant date fair value of stock-based awards. The amounts shown above also reflect the full grant date fair value of stock awards made during fiscal 2016. As of February 27, 2016, the last day of our fiscal year, each of our non-employee directors had shares credited to their account under the Director’s Deferred Compensation Plan Trust as follows: Mr. Chappel, 226,680 shares; Mr. Cohen, 200,791 shares; Mr. Francis, 151,359 shares; Mr. Johnson, 76,793 shares; Mr. Pendo, 28,736 shares; Mr. Rubel, 151,399 shares; Ms. Luzuriaga, 13,143 shares; Mr. Sales, 294,322 shares; Mr. Savage, 54,754 shares; and Mr. Storch, 106,382 shares.
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(4)
|
As of February 27, 2016, the last day of our fiscal year, each of the following non-employee directors had the following stock options outstanding: Mr. Chappel, 6,140 shares; Mr. Cohen, 12,280 shares; Mr. Francis, 12,280 shares; Mr. Rubel, 6,140 shares; and Mr. Sales, 12,280 shares.
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Named Executive Officers
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Title(s) Held During/Since Fiscal 2016
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Dates During/Since Fiscal 2016
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Mark Gross
|
-President and Chief Executive Officer
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February 5, 2016 to present
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Bruce H. Besanko
|
-Executive Vice President, Chief Operating Officer and Chief Financial Officer
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April 18, 2016 to present
|
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-Executive Vice President, Chief Operating Officer
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October 1, 2015 to April 17, 2016
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-Executive Vice President, Chief Financial Officer
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March 1, 2015 to September 30, 2015
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Susan S. Grafton
|
-Senior Vice President, Finance, and Chief Accounting Officer
|
April 18, 2016 to present
|
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-Executive Vice President, Chief Financial Officer
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October 1, 2015 to April 17, 2016
|
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-Senior Vice President, Finance, and Chief Accounting Officer
|
March 1, 2015 to September 30, 2015
|
Mark L. Van Buskirk
|
-Executive Vice President, Merchandising, Marketing, Retail & Pharmacy
|
March 1, 2015 to present
|
Ritchie L. Casteel
|
-Former
President, Save-A-Lot
|
March 1, 2015 to March 11, 2016
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Michele A. Murphy
|
-Former
Executive Vice President, Human Resources and Communications
|
March 1, 2015 to May 20, 2016
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Sam Duncan
|
-Former
Special Advisor to the Board
-Former
President and Chief Executive Officer
|
February 5, 2016 to February 29, 2016
March 1, 2015 to February 4, 2016
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Janel S. Haugarth
|
-Former
Executive Vice President & President, Independent Business and Supply Chain Services
|
March 1, 2015 to December 26, 2015
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•
|
We modified our long-term incentive compensation program to include performance share units with 3-year goals in fiscal 2017 to better align compensation to our long-term performance. More information on the performance share units program can be found under “Significant Compensation Decisions—Fiscal 2017” in this CD&A below.
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•
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The additional incentive opportunities awarded to certain NEOs in fiscal 2015 and to Mr. Duncan in fiscal 2016 are not expected to be continued in fiscal 2017. These additional incentives in the previous two years were awarded, in part, in recognition of our leadership’s efforts related to stabilizing our business and continuing our turn-around. With the implementation of our performance share units program in fiscal 2017, our executive leaders will have the opportunity to be rewarded in the future by meeting objective performance goals and through appreciation of our stock price.
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•
|
In fiscal 2016, we did not have any guaranteed annual incentive payments for our NEOs as we had in past years. Guaranteed annual incentive payments is not a preferred practice, and in past years was the result of a legacy change-of-control agreement for a leader who was critical for the success of our turn-around efforts. We do not expect to utilize annual incentive guarantees in future employment agreements.
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•
|
We expanded disclosure about our annual incentive program to provide additional details about minimum thresholds for each performance metric.
|
•
|
align our executives’ interests with our stockholders by delivering a greater percentage of variable pay as leaders reach more senior levels in the organization;
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•
|
enhance both alignment with our stockholders’ interests and executive retention through the use of multi-year vesting and stock ownership guidelines for our executives;
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•
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maintain an emphasis on consistent and sustainable top-line and bottom-line growth, while discouraging excessive risk-taking; and
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•
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provide competitive total direct compensation for leaders at all levels in our organization.
|
ü
|
Pay versus Performance:
A significant portion of the compensation opportunities for our executives is based on the achievement of performance objectives and the Committee continually reviews the relationship between executive compensation and Company performance.
|
ü
|
Median Compensation Targets:
Total direct compensation for our executives is assessed in comparison to the median of our Peer Group (as defined below). The Committee ultimately considers median pay, recommendations from our head of HR, internal equity relationships and the advice of the Committee’s compensation consultant in determining final pay decisions.
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ü
|
Stock Ownership and Retention Guidelines:
We have stock ownership and retention guidelines in place for our directors and executives to encourage them to build and maintain an ownership position in our common stock.
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ü
|
No Repricing:
Option exercise prices are set at the closing price of our stock on the date of grant and may not be reduced or replaced with a lower exercise price without stockholder approval (except to adjust for stock splits or similar transactions).
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ü
|
Recoupment Policy:
Our recoupment (or clawback) policy is in place to provide for recovery of amounts paid under our annual incentive plan and awards under our long-term incentive plan in the event an accounting restatement is required due to material noncompliance with financial reporting requirements that results in performance-based compensation that would have been a lower amount if calculated on restated results.
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ü
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Anti-Hedging and Pledging Policy:
Our directors and executive officers are prohibited from pledging, engaging in short sales, hedging and trading put and call options with respect to our securities.
|
ü
|
Restrictive Covenants:
Our NEOs must adhere to restrictive covenants upon separation from SUPERVALU, including non-compete, non-solicitation and non-disclosure obligations.
|
ü
|
Use of Double Triggers:
All change of control severance agreements have a double, rather than a single, trigger for benefit eligibility. This means that a change of control will not automatically entitle an executive to severance benefits; the executive must also be terminated without cause or resign for good reason (which includes suffering a diminution in compensation, a reduction in title or a material adverse diminution in his or her duties or responsibilities).
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ü
|
Review of Compensation Peer Group:
Our Peer Group is reviewed annually by the Committee and adjusted as needed to ensure that the companies remain relevant and appropriate for our executive compensation program.
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ü
|
Review of Committee Charter:
The Committee reviews its charter annually to incorporate any new best practices or other changes deemed necessary.
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•
|
Base Pay:
The Committee approved a $75,000 increase in base salary for Mr. Casteel, his first pay increase since he was hired in 2013, to recognize the growth of the Save-A-Lot business in the prior year. Base salary increases for Mr. Besanko and Ms. Grafton were made in connection with their new positions and increased responsibilities.
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•
|
Annual Incentive Plan:
The annual incentive plan had a reduced overall weighting of 50% for the sales metrics, down from 70% for fiscal 2016, and the threshold performance for Consolidated EBITDA that needed to be met for any payout under the plan was set at 95% of target performance. In addition, an overhead expense metric was added to incentivize a focus on our cost control strategy as we continue to manage towards a lower cost structure. Ms. Grafton received an annual incentive target increase in connection with her new position and increased responsibilities.
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•
|
Long-Term Incentive Plan:
We adjusted the long-term incentive award (“LTI”) mix from 75% stock options and 25% stock-settled restricted stock units to 50% stock options and 50% restricted stock awards to provide greater retention value
. The Committee approved a $100,000 increase in LTI opportunity for Mr. Van Buskirk in recognition of strong performance in the prior year and to more closely align his LTI to the market median within our Peer Group.
The LTI opportunities for Mr. Besanko and Ms. Grafton were also increased in connection with their new positions and increased responsibilities.
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•
|
Compensation Package for New CEO:
The terms of Mr. Gross’s employment were determined by the Committee, and ratified by the independent members of the Board, in consultation with the Committee’s independent compensation consultant. Mr. Gross’s current total compensation is slightly below the market median of our Peer Group. See “CEO Pay Highlights” below for additional details.
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•
|
Additional Incentives For Our Former CEO:
To incentivize Mr. Duncan’s significant effort, focus and dedication necessary to continue the momentum in our performance through fiscal 2016, the Committee granted, and the independent members of the Board ratified, an additional award to our CEO in the form of cash-settled restricted stock units valued at $500,000 that vested in full at the end of fiscal 2016. The Committee felt that the near-term nature of the operational objectives associated with our continued turnaround was best motivated through incentive opportunities that vested over a one-year period. The realized value of the award was $186,208.
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•
|
Annual Incentive Plan:
The annual incentive plan for fiscal 2017 retains its 95% threshold performance level for Consolidated EBITDA. In addition, the definition of the overhead expense metric has been broadened to extend our focus on cost control to additional areas of the Company.
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•
|
Long-Term Incentive Plan:
We have made changes to our long-term incentive plan for fiscal 2017 by implementing a performance share unit program with a three-year performance period and three-year cliff-vesting to better align compensation to our long-term performance. In fiscal 2017, 50% of our long-term incentive grant to our executives was made in performance share units. The performance metrics include a balance of internal company and external metrics, including the Company’s EBITDA growth over the performance period and Total Shareholder Return (TSR). The remaining fiscal 2017 grant is a mix of 25% stock options and 25% stock-settled restricted stock units. Mr. Gross received an inducement award of 50% performance share units and 50% stock options for fiscal years 2017 and 2018 in connection with the commencement of his employment.
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•
|
Signing Bonus
– Mr. Gross received a cash signing bonus of $300,000, which is subject to repayment if Mr. Gross is terminated for cause or resigns for any reason other than good reason prior to the first anniversary of his start date.
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•
|
Inducement Long-Term Incentive Awards
– Mr. Gross was granted a long-term incentive award having an aggregate grant date fair value of $6 million. This inducement long-term incentive award, together with the stock option described below, represent Mr. Gross’s annual long-term incentive awards for fiscal years 2017 and 2018. The award is comprised of:
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◦
|
50% Stock Options
– The first 50% of the award was granted in the form of stock options on his start date. The number of inducement stock options was determined based on the Black-Scholes assumptions set forth in the Company’s Form 10-K filed with the SEC on April 28, 2015, but using the prevailing risk-free interest rate and the closing price of a share of our common stock on the date of grant (Mr. Gross’s start date). The inducement stock options will vest ratably on the first three anniversaries of his start date. If Mr. Gross’s employment is terminated by us without cause or he resigns for good reason, any unvested inducement stock options will vest as to a prorated portion of the options scheduled to vest on the next anniversary of his start date.
|
◦
|
50% Performance Shares
– The other 50% of the award was granted in the form of performance share units granted at the same time that long-term incentive awards were granted to other senior management for fiscal 2017. The inducement performance share units will vest at the end of a three-year performance period (consisting of fiscal years 2017 – 2019) based on the attainment of performance goals set by the Committee. If Mr. Gross’s employment is terminated by us without cause or he resigns for good reason during the performance period, the inducement performance share units will vest as to a portion of the award based on the actual attainment of performance goals over the entire three-year performance period and prorated for the portion of that period during which he was employed.
|
•
|
Other Long-Term Incentive Awards
– Subject to Mr. Gross’s continued employment, Mr. Gross will be granted stock options in respect of our 2018 fiscal year with a grant date fair value of $500,000, having terms consistent with the inducement stock options.
|
NEO
|
Base Salary
(fiscal 2016 year-end)
|
Incentive Target as
% of Base Salary |
Incentive Target in Dollars
|
Weighted Payout Percentage
|
Payment Earned
|
Bruce H. Besanko
|
$750,000
|
94%
(2)
|
$705,288
|
57%
|
$405,012
|
Susan S. Grafton
|
$500,000
|
54%
(3)
|
$270,673
|
57%
|
$155,434
|
Mark L. Van Buskirk
|
$600,000
|
75%
|
$450,000
|
49%
|
$219,204
|
Ritchie L. Casteel
|
$525,000
|
73%
(4)
|
$385,096
|
53%
|
$205,145
|
Michele A. Murphy
|
$425,000
|
75%
|
$318,750
|
57%
|
$183,042
|
Sam Duncan
|
$1,500,000
|
120%
|
$1,800,000
|
57%
|
$1,033,651
|
Janel S. Haugarth
|
$625,000
|
83%
(5)
|
$516,827
|
58%
|
$301,325
|
(1)
|
Mr. Gross was not eligible for an annual incentive award in fiscal 2016. He will be eligible for participation in our annual incentive plan, based on corporate-wide financial targets, in fiscal 2017.
|
(2)
|
Mr. Besanko’s incentive target remained at 100% and his base salary increased due to his promotion to Executive Vice President, Chief Operating Officer on October 1, 2015.
|
(3)
|
Ms. Grafton’s base salary increased and her incentive target increased from 50% to 75% as a part of her promotion to Executive Vice President, Chief Financial Officer on October 1, 2015.
|
(4)
|
Mr. Casteel’s incentive target remained at 75% and he received a base salary increase on April 25, 2015.
|
(5)
|
Ms. Haugarth retired from the Company on December 26, 2015.
|
Metric
|
Bruce H. Besanko
|
Susan S. Grafton
|
Mark L. Van Buskirk
|
Ritchie L. Casteel
|
Michele A. Murphy
|
Sam Duncan
|
Janel S. Haugarth
|
Consolidated Adjusted EBITDA
|
30%*
|
30%*
|
15%
|
15%
|
30%*
|
30%*
|
15%
|
Wholesale Sales
|
20%
|
20%
|
—
|
—
|
20%
|
20%
|
50%
|
Wholesale Adjusted EBITDA
|
—
|
—
|
—
|
—
|
—
|
—
|
15%*
|
Save-A-Lot Network ID Sales
|
15%
|
15%
|
—
|
50%
|
15%
|
15%
|
—
|
Save-A-Lot Adjusted EBITDA
|
—
|
—
|
—
|
15%*
|
—
|
—
|
—
|
Retail ID Sales
|
15%
|
15%
|
50%
|
—
|
15%
|
15%
|
—
|
Retail Adjusted EBITDA
|
—
|
—
|
15%*
|
—
|
—
|
—
|
—
|
Adjusted Overhead Expense
|
20%
|
20%
|
20%
|
20%
|
20%
|
20%
|
20%
|
|
Threshold
|
Target
|
Result
(1)
|
Unweighted Payout
|
Metric
|
(dollars in millions; 52 weeks)
|
Percentage
|
||
Consolidated Adjusted EBITDA
|
$746
|
$785
|
$763
|
58%
|
Wholesale Sales
|
$8,005
|
$8,426
|
$7,935
|
—%
|
Wholesale Adjusted EBITDA
|
$271
|
$301
|
$286
|
64%
|
Save-A-Lot Network ID Sales
|
1.00%
|
3.50%
|
-1.40%
|
—%
|
Save-A-Lot Adjusted EBITDA
|
$211
|
$235
|
$213
|
30%
|
Retail ID Sales
|
0.45%
|
2.95%
|
-2.45%
|
—%
|
Retail Adjusted EBITDA
|
$270
|
$300
|
$247
|
—%
|
Adjusted Overhead Expense
|
$371
|
$353
|
$300
|
200%
|
(1)
|
As explained below under “—Discretionary Adjustments,” our Consolidated Adjusted EBITDA results for our annual incentive plans varied from our publicly reported results because the Committee exercised negative discretion in making an adjustment to the metrics results for purposes of our annual incentive plan in fiscal 2016.
|
NEO
|
Stock Options
Granted |
Stock-Settled
Restricted Stock Awards Granted |
Cash-Settled Restricted
Stock Units Granted |
Mark Gross
|
1,625,172
|
—
|
—
|
Bruce H. Besanko
|
162,016
|
72,081
|
—
|
Susan S. Grafton
|
81,469
|
32,707
|
—
|
Mark L. Van Buskirk
|
78,211
|
34,130
|
—
|
Ritchie L. Casteel
|
87,987
|
38,396
|
—
|
Michele A. Murphy
|
87,987
|
38,396
|
—
|
Sam Duncan
|
456,230
|
199,090
|
56,883
|
Janel S. Haugarth
|
130,351
|
56,883
|
—
|
Pay Mix: CEO (Mr. Gross)
Target Total Direct Compensation |
Pay Mix: Other NEOs
Target Total Direct Compensation |
|
Position
|
Multiple of Base Salary
|
Chief Executive Officer
|
5 times
|
Chief Financial Officer
|
4 times
|
Executive Vice Presidents
|
3 times
|
Corporate Senior Vice Presidents &
Business Unit Presidents |
1 times
|
•
|
all amounts paid under the annual incentive plan, including any discretionary amounts, that were paid with respect to any fiscal year that is restated; and
|
•
|
all awards under the long-term incentive program, the 2007 Stock Plan, the 2012 Stock Plan or any preceding or successor plans that were issued or paid with respect to any fiscal year that is restated.
|
|
Respectfully submitted,
|
|
|
|
Matthew E. Rubel, Chairperson
Donald R. Chappel Mathew M. Pendo |
Name and Principal Position
|
Year
|
Salary
($) (1) |
Bonus
($) (2) |
|
Stock
Awards ($) (3) |
|
Option
Awards ($) (4) |
Non-Equity
Incentive Plan Compensation ($) (5) |
|
Change in Pension Value and Non-Qualified Deferred Compensation Earnings
($) (6) |
|
All Other
Compensation ($) (7) |
Total
($) |
Mark Gross
|
2016
|
61,538
|
300,000
|
|
—
|
|
3,374,995
|
—
|
|
—
|
|
64,084
|
3,800,617
|
President and Chief
|
|
|
|
|
|
|
|
|
|
||||
Executive Officer
(8)
|
|
|
|
|
|
|
|
|
|
||||
Bruce H. Besanko
|
2016
|
705,289
|
—
|
|
600,004
|
|
590,953
|
405,012
|
|
—
|
|
161,671
|
2,462,929
|
Executive Vice President,
|
2015
|
687,981
|
—
|
|
309,998
|
|
749,912
|
654,485
|
|
—
|
|
12,445
|
2,414,821
|
Chief Operating Officer
|
2014
|
371,250
|
1,500,000
|
|
1,746,000
|
|
1,260,938
|
202,431
|
|
—
|
|
85,957
|
5,166,576
|
and Chief Financial
|
|
|
|
|
|
|
|
|
|
||||
Officer
(9)
|
|
|
|
|
|
|
|
|
|
||||
Susan S. Grafton
|
2016
|
440,385
|
250,000
|
|
287,495
|
|
312,450
|
155,434
|
|
—
|
|
1,510
|
1,447,274
|
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
||||
Finance, and Chief
|
|
|
|
|
|
|
|
|
|
||||
Accounting Officer
(10)
|
|
|
|
|
|
|
|
|
|
||||
Mark L. Van Buskirk
|
2016
|
600,000
|
—
|
|
300,003
|
|
299,955
|
219,204
|
|
—
|
|
30,822
|
1,449,984
|
Executive Vice President,
|
|
|
|
|
|
|
|
|
|
||||
Merchandising, Marketing,
|
|
|
|
|
|
|
|
|
|
||||
Retail & Pharmacy
|
|
|
|
|
|
|
|
|
|
||||
Ritchie L. Casteel
|
2016
|
513,461
|
—
|
|
337,501
|
|
337,448
|
205,145
|
|
—
|
|
471
|
1,394,026
|
Former President,
|
2015
|
458,654
|
—
|
|
268,748
|
|
506,189
|
506,401
|
|
77,729
|
|
6,455
|
1,824,176
|
Save-A-Lot
(11)
|
|
|
|
|
|
|
|
|
|
||||
Michele A. Murphy
|
2016
|
425,000
|
—
|
|
337,501
|
|
337,448
|
183,042
|
|
2,903
|
|
23,155
|
1,309,049
|
Former Executive Vice
|
2015
|
433,173
|
—
|
|
228,750
|
|
506,189
|
309,063
|
|
23
|
|
19,359
|
1,496,557
|
President, Human
|
2014
|
417,308
|
130,000
|
|
203,124
|
|
536,744
|
167,595
|
|
8,254
|
|
163,510
|
1,626,535
|
Resources &
|
|
|
|
|
|
|
|
|
|
||||
Communications
(12)
|
|
|
|
|
|
|
|
|
|
||||
Sam Duncan
|
2016
|
1,500,000
|
—
|
|
2,250,003
|
|
1,749,733
|
1,033,651
|
|
—
|
|
82,102
|
6,615,489
|
Former President and Chief
|
2015
|
1,528,846
|
—
|
|
1,250,003
|
|
2,249,736
|
1,745,294
|
|
18,791
|
|
125,180
|
6,917,850
|
Executive Officer
(13)
|
2014
|
1,500,000
|
—
|
|
—
|
|
2,385,525
|
820,260
|
|
—
|
|
240,823
|
4,946,608
|
Janel S. Haugarth
|
2016
|
516,827
|
—
|
|
500,002
|
|
499,922
|
301,325
|
|
8,388
|
|
350,237
|
2,176,701
|
Former Executive Vice
|
2015
|
637,019
|
925,000
|
|
249,998
|
|
749,912
|
—
|
|
1,029,051
|
|
7,607
|
3,598,587
|
President & President,
|
2014
|
625,000
|
1,000,000
|
|
—
|
|
795,176
|
—
|
|
13,144
|
|
4,593
|
2,437,913
|
Independent Business and
|
|
|
|
|
|
|
|
|
|
||||
Supply Chain Services
(14)
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts shown are not reduced to reflect an NEO’s election, if any, to defer receipt of salary under the Executive Deferred Compensation Plan described below. In fiscal 2015, amounts are based on a 53 week fiscal year.
|
(2)
|
Amounts for fiscal 2016 reflect bonuses paid in connection with an executive’s hire with SUPERVALU. Mr. Gross’s amount is explained further in the “Compensation Discussion and Analysis—CEO Pay Highlights.” For Ms. Grafton, the bonus amount is the second and final installment of a signing bonus that was paid after her one year anniversary.
|
(3)
|
The amounts shown in this column reflect the full aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”) for: (a) fiscal 2016, 2015 and 2014 for restricted stock awards and (b) fiscal 2016 for both cash-settled and stock-settled restricted stock units. Details for the 2016 grants are provided in the Grants of Plan-Based Awards Table below. In
|
(4)
|
The amounts shown in this column reflect the full aggregate grant date fair value of option awards granted in fiscal years 2016, 2015 and 2014 calculated in accordance with FASB ASC 718. Refer to Note 1—Summary of Significant Accounting Policies and Note 10—Stock-Based Awards within Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 27, 2016 for our policy and assumptions made in determining the grant date fair value of option awards. Note that the amounts reported in this column do not necessarily correspond to the actual economic value that will be received by our NEOs from the options.
|
(5)
|
Non-equity incentive plan compensation for fiscal 2016 and 2015 represents the amounts earned in recognition of the achievement of performance goals under our annual incentive plan. Non-equity incentive plan compensation for fiscal 2014 represents the aggregate amount earned in recognition of the achievement of performance goals under a semi-annual incentive plan that was in effect for fiscal 2014.
|
(6)
|
This column represents both changes in pension value for our NEOs and above-market interest earnings on deferred compensation. The changes in values were as follows: Mr. Casteel, $(29,150) for fiscal 2016, and $77,729 for fiscal 2015; Mr. Duncan, $(11,595) for fiscal 2016, $18,791 for fiscal 2015, and $(641) for fiscal 2014; Ms. Haugarth, $(597,105) for fiscal 2016, $1,028,897 for fiscal 2015, and $(37,963) for fiscal 2014. No other NEOs were eligible for pension benefits. While Mr. Casteel is not eligible for new pension benefits due to his start date with the Company, he is receiving his Albertson’s pension plan benefit that merged into the Qualified Retirement Plan (as defined below) after his pension start date and prior to his start date with the Company. While Mr. Duncan was not eligible for new pension benefits due to his start date with the Company, he has frozen benefits based on prior service with Albertson’s under an Albertson’s pension plan that merged into the Qualified Retirement Plan. The decrease in pension value for fiscal 2016 resulted from a change in the discount rate. The above-market interest earnings on deferred compensation were as follows: Ms. Murphy, $2,903 for fiscal 2016, $23 for fiscal 2015, and $8,254 for fiscal 2014; Ms. Haugarth, $8,388 for fiscal 2016, $154 for fiscal 2015, and $13,144 for fiscal 2014. None of the other NEOs had above-market interest earnings on deferred compensation.
|
(7)
|
The following components comprise the amounts of “All Other Compensation” for our NEOs for fiscal 2016:
|
Name
|
Health Savings Account Employer Contributions ($)
|
Life Insurance ($)
(a)
|
Aircraft ($)
(b)
|
New Hire Benefits ($)
(c)
|
Termination Benefits ($)
(d)
|
Deferred Comp Company Match ($)
(e)
|
Total ($)
|
Mark Gross
|
—
|
—
|
—
|
64,084
|
—
|
—
|
64,084
|
Bruce H. Besanko
|
—
|
949
|
—
|
160,397
|
—
|
325
|
161,671
|
Susan S. Grafton
|
883
|
627
|
—
|
—
|
—
|
—
|
1,510
|
Mark L. Van Buskirk
|
883
|
806
|
—
|
—
|
—
|
29,133
|
30,822
|
Ritchie L. Casteel
|
—
|
471
|
—
|
—
|
—
|
—
|
471
|
Michele A. Murphy
|
441
|
571
|
—
|
—
|
—
|
22,143
|
23,155
|
Sam Duncan
|
—
|
2,016
|
80,086
|
—
|
—
|
—
|
82,102
|
Janel S. Haugarth
|
727
|
700
|
—
|
—
|
348,810
|
—
|
350,237
|
(a)
|
Represents premiums paid for current employee life insurance coverage under the group term life policy maintained by the Company for the benefit of the NEO.
|
(b)
|
For Mr. Duncan, this amount is associated with his personal use of the Company aircraft. We calculate the incremental cost to the Company of any personal use of the corporate aircraft based on the cost of fuel, trip-related maintenance, crew travel expenses, on-board catering, landing fees, trip-related hangar and parking costs and other variable costs. Because the corporate aircraft is primarily for business travel, we do not include the fixed costs that do not change based on usage, such as pilots’ salaries, the purchase cost of the corporate aircraft and the cost of maintenance not related to trips. No tax indemnification is provided by the Company relating to personal use of the aircraft.
|
(c)
|
For Mr. Gross, this amount represents $10,542 for relocation expenses under the Company’s standard relocation program, as well as $3,542 in tax indemnification payments related to those relocation expenses, and $50,000 associated with attorney consultation fees related to review of his employment agreement. For Mr. Besanko, this represents $160,397 for relocation expenses.
|
(d)
|
In connection with Ms. Haugarth’s retirement, Ms. Haugarth received $163,642 in accrued vacation payout and $137,879 in pension make-up provision determined as an amount representing the additional benefit that would have been payable if there had been no deferrals under the Executive Deferred Compensation Plan (Pension Make-Up Benefit) described on page 45. For Ms. Haugarth it also represents $47,470 of intrinsic value on her May 7, 2013 stock option grant from the acceleration of vesting on 91,288 shares in conjunction with her retirement. The value is the difference between the strike price of $6.49 and the $7.01 stock price on her last day with the Company.
|
(e)
|
For fiscal 2016, this includes contributions accrued for the Company’s deferred compensation plan participants as a Company match.
|
(8)
|
Mr. Gross was appointed to serve as President and Chief Executive Officer effective February 5, 2016.
|
(9)
|
Mr. Besanko was appointed to serve as Executive Vice President, Chief Operating Officer effective October 1, 2015. Prior to that, Mr. Besanko held the role of Executive Vice President, Chief Financial Officer. After fiscal 2016, Mr. Besanko was appointed to the role of Executive Vice President, Chief Operating Officer and Chief Financial Officer.
|
(10)
|
Ms. Grafton was appointed to serve as Executive Vice President, Chief Financial Officer effective October 1, 2015. After fiscal 2016, Ms. Grafton was appointed to the role of Senior Vice President, Finance, and Chief Accounting Officer.
|
(11)
|
Mr. Casteel’s employment with the Company terminated in fiscal 2017 effective March 11, 2016.
|
(12)
|
Ms. Murphy retired as Executive Vice President, Human Resources & Communications in fiscal 2017 effective May 20, 2016.
|
(13)
|
Mr. Duncan retired as President and Chief Executive Officer effective February 4, 2016. Mr. Duncan remained employed as a special advisor to the Board until February 29, 2016.
|
(14)
|
Ms. Haugarth retired as Executive Vice President and President, Independent Business and Supply Chain Services effective December 26, 2015.
|
Name
|
Grant
Date
|
Approval
Date
|
Estimated Possible Payouts under
Non-Equity Incentive Plan Awards (1) |
All Other
Stock Awards: Number of Shares of Stock or Units (#) |
All Other Option Awards: Number of Securities Underlying
Options (#)
|
Exercise or Base Price of Option Awards
($/Share)
|
Grant Date Fair Value of Stock and Option
Awards ($)
|
|||||||
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
|||||||||
Mark Gross
(5)
|
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
2/5/2016
|
1/31/2016
|
|
|
|
|
|
1,625,172
|
4.25
|
(2)
|
3,374,995
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Bruce H. Besanko
(6)
|
|
|
176,322
|
|
705,288
|
|
1,410,576
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
130,351
|
8.79
|
(2)
|
499,922
|
||||
10/23/2015
|
9/29/2015
|
|
|
|
|
|
31,665
|
6.58
|
(2)
|
91,031
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
56,883
|
(3)
|
|
|
|
500,002
|
||||
10/23/2015
|
9/29/2015
|
|
|
|
15,198
|
(3)
|
|
|
|
100,003
|
||||
Susan S. Grafton
|
|
|
67,668
|
|
270,673
|
|
541,346
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
22,811
|
8.79
|
(7)
|
87,485
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
|
|
58,658
|
8.79
|
(2)
|
224,965
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
7,110
|
(7)
|
|
|
|
62,497
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
25,597
|
(3)
|
|
|
|
224,998
|
||||
Mark L. Van Buskirk
|
|
|
112,500
|
|
450,000
|
|
900,000
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
78,211
|
8.79
|
(2)
|
299,955
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
34,130
|
(3)
|
|
|
|
300,003
|
||||
Ritchie L. Casteel
|
|
|
96,274
|
|
385,096
|
|
770,192
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
87,987
|
8.79
|
(2)
|
337,448
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
38,396
|
(3)
|
|
|
|
337,501
|
||||
Michele A. Murphy
|
|
|
79,688
|
|
318,750
|
|
637,500
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
87,987
|
8.79
|
(2)
|
337,448
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
38,396
|
(3)
|
|
|
|
337,501
|
||||
Sam Duncan
|
|
|
450,000
|
|
1,800,000
|
|
3,600,000
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
456,230
|
8.79
|
(2)
|
1,749,733
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
199,090
|
(3)
|
|
|
|
1,750,001
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
56,883
|
(4)
|
|
|
|
500,002
|
||||
Janel S. Haugarth
|
|
|
129,207
|
|
516,827
|
|
1,033,654
|
|
|
|
|
|
|
|
4/30/2015
|
4/23/2015
|
|
|
|
|
|
130,351
|
8.79
|
(2)
|
499,922
|
||||
4/30/2015
|
4/23/2015
|
|
|
|
56,883
|
(3)
|
|
|
|
500,002
|
(1)
|
Represents range of possible payouts under our annual incentive plan. The actual amount of the award earned for fiscal 2016 is presented in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. Annual incentive awards are performance-based, and are only paid if certain minimum performance criteria are met. The threshold amount represents the minimum payout that will be earned, if the minimum performance criteria for each metric are met. The threshold amount represents a payout of 25% of the participant’s annual target award and the maximum amount reflects a payout of 200% of such target award. The threshold, target and maximum amounts have been prorated for any NEO who had an adjustment to his or her base salary or annual incentive target during fiscal 2016. The annual incentive plan and these prorations are described above in “Compensation Discussion and Analysis—Components of Executive Compensation Program—Annual Incentive Plan.”
|
(2)
|
Represents options granted under our 2012 Stock Plan. The options vest with respect to 34 percent, 33 percent and 33 percent on each of the first, second and third anniversaries of the grant date.
|
(3)
|
Represents a stock-settled restricted stock unit granted under our 2012 Stock Plan. The award vests with respect to 34 percent, 33 percent and 33 percent on each of the first, second and third anniversaries of the grant date.
|
(4)
|
Represents a cash-settled restricted stock unit granted under our 2012 Stock Plan. The award vested on February 27, 2016. This award was to incentivize Mr. Duncan’s significant effort, focus and dedication necessary to continue the momentum in our performance through fiscal 2016.
|
(5)
|
Mr. Gross’s option award was granted in connection with his commencement of employment. The difference in Mr. Gross’s target inducement option value of $3,000,000 and the grant date fair value of $3,374,994 is the result of a new valuation that was performed on the award after the grant date. A
|
(6)
|
Mr. Besanko’s October 23, 2015 option and restricted stock grants were granted in connection with his promotion to Executive Vice President, Chief Operating Officer.
|
(7)
|
Ms. Grafton’s stock option and restricted stock grant, which are under our 2012 Stock Plan, represent the second portion of her make-whole award granted in connection with her hire. These awards vest 50 percent on the first two anniversaries of the grant date.
|
|
Option Awards
|
|
Stock Awards
|
|||||||
Name
|
Number of
Securities Underlying Unexercised Options (#) Exercisable |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
Option
Exercise Price ($) |
Option
Expiration Date |
|
Number
of Shares or Units of Stock Held that have not Vested |
Market Value
of Shares or Units of Stock that have not Vested ($) (20) |
|||
Mark Gross
|
|
|
1,625,172
|
(1)
|
4.25
|
2/5/2026
|
|
|
|
|
Totals:
|
|
|
1,625,172
|
|
|
|
|
|
|
|
Bruce H. Besanko
|
|
|
31,665
|
(2)
|
6.58
|
10/23/2025
|
|
15,198
|
(7)
|
74,926
|
|
|
|
130,351
|
(3)
|
8.79
|
4/30/2025
|
|
56,883
|
(8)
|
280,433
|
|
75,255
|
(4)
|
146,082
|
(4)
|
7.50
|
5/16/2024
|
|
21,999
|
(9)
|
108,455
|
|
150,000
|
(5)
|
75,000
|
(5)
|
7.76
|
8/7/2023
|
|
75,000
|
(10)
|
369,750
|
|
103,365
|
(6)
|
50,910
|
(6)
|
7.76
|
8/7/2023
|
|
|
|
|
Totals:
|
328,620
|
|
434,008
|
|
|
|
|
169,080
|
|
833,564
|
Susan S. Grafton
|
|
|
22,811
|
(11)
|
8.79
|
4/30/2025
|
|
7,110
|
(13)
|
35,052
|
|
|
|
58,658
|
(3)
|
8.79
|
4/30/2025
|
|
25,597
|
(8)
|
126,193
|
|
33,865
|
(4)
|
65,737
|
(4)
|
7.50
|
5/16/2024
|
|
9,900
|
(9)
|
48,807
|
|
18,174
|
(12)
|
35,277
|
(12)
|
7.11
|
4/25/2024
|
|
11,603
|
(14)
|
57,203
|
Totals:
|
52,039
|
|
182,483
|
|
|
|
|
54,210
|
|
267,255
|
Mark L. Van Buskirk
|
|
|
78,211
|
(3)
|
8.79
|
4/30/2025
|
|
34,130
|
(8)
|
168,261
|
|
37,628
|
(4)
|
73,040
|
(4)
|
7.50
|
5/16/2024
|
|
11,000
|
(9)
|
54,230
|
|
92,672
|
(15)
|
45,643
|
(15)
|
6.49
|
5/7/2023
|
|
|
|
|
Totals:
|
130,300
|
|
196,894
|
|
|
|
|
45,130
|
|
222,491
|
Ritchie L. Casteel
|
|
|
|
|
|
|
|
|
|
|
|
50,797
|
(16)
|
|
|
7.50
|
3/11/2017
|
|
|
|
|
|
125,107
|
(16)
|
|
|
6.49
|
3/11/2017
|
|
|
|
|
Totals:
|
175,904
|
|
|
|
|
|
|
|
|
|
Michele A. Murphy
|
29,916
|
(17)
|
|
|
8.79
|
5/20/2021
|
|
7,425
|
(9)
|
36,605
|
|
100,100
|
(4)
|
49,302
|
(4)
|
7.50
|
5/20/2021
|
|
|
|
|
|
186,726
|
(17)
|
|
|
6.49
|
6/20/2016
|
|
|
|
|
|
44,700
|
(17)
|
|
|
2.28
|
7/17/2022
|
|
|
|
|
|
30,000
|
(17)
|
|
|
12.68
|
6/4/2017
|
|
|
|
|
|
15,000
|
(17)
|
|
|
16.07
|
5/28/2016
|
|
|
|
|
Totals:
|
406,442
|
|
49,302
|
|
|
|
|
7,425
|
|
36,605
|
Sam Duncan
|
|
|
|
|
|
|
|
|
|
|
|
225,764
|
(18)
|
|
|
7.50
|
2/28/2017
|
|
|
|
|
|
1,500,000
|
(18)
|
|
|
3.88
|
2/28/2017
|
|
|
|
|
Totals:
|
1,725,764
|
|
|
|
|
|
|
|
|
|
Janel S. Haugarth
|
44,319
|
(19)
|
|
|
8.79
|
12/26/2020
|
|
10,999
|
(9)
|
54,225
|
|
148,296
|
(4)
|
73,041
|
(4)
|
7.50
|
12/26/2020
|
|
|
|
|
|
156,250
|
(19)
|
|
|
2.28
|
7/17/2022
|
|
|
|
|
|
60,000
|
(19)
|
|
|
12.68
|
6/4/2017
|
|
|
|
|
|
30,000
|
(19)
|
|
|
16.07
|
5/28/2016
|
|
|
|
|
|
30,000
|
(19)
|
|
|
16.07
|
5/28/2016
|
|
|
|
|
Totals:
|
468,865
|
|
73,041
|
|
|
|
|
10,999
|
|
54,225
|
(1)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of February 5, 2017, February 5, 2018 and February 5, 2019.
|
(2)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of October 23, 2016, October 23, 2017 and October 23, 2018.
|
(3)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of April 30, 2016, April 30, 2017 and April 30, 2018.
|
(4)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of May 16, 2015, May 16, 2016 and May 16, 2017.
|
(5)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of August 7, 2015, August 7, 2016 and August 7, 2017.
|
(6)
|
This non-qualified stock option vests in three equal installments per year, with vesting dates of August 7, 2014, August 7, 2015 and August 7, 2016.
|
(7)
|
Represents a restricted stock award granted in connection with the promotion of Mr. Besanko to Executive Vice President, Chief Operating Officer. The award vests in three equal installments per year, with vesting dates on October 23, 2016, October 23, 2017 and October 23, 2018.
|
(8)
|
Represents a restricted stock award that vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of April 30, 2016, April 30, 2017 and April 30, 2018.
|
(9)
|
Represents a stock-settled restricted stock unit that vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of May 16, 2015, May 16, 2016 and May 16, 2017.
|
(10)
|
Represents a restricted stock award granted in connection with the hiring of Mr. Besanko as Executive Vice President, Chief Financial Officer. The award vests in three equal installments per year, with vesting dates on August 7, 2014, August 7, 2015 and August 7, 2016.
|
(11)
|
This non-qualified stock option vests 50 percent on each anniversary of the grant date, with vesting dates of April 30, 2016 and April 30, 2017.
|
(12)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of April 25, 2015, April 25, 2016 and April 25, 2017.
|
(13)
|
Represents the second portion of a restricted stock award granted in connection with the hiring of Ms. Grafton. The award vests 50 percent on each anniversary of the grant date, with vesting dates on April 30, 2016 and April 30, 2017.
|
(14)
|
Represents a restricted stock award granted in connection with the hiring of Ms. Grafton. The award vests 34 percent, 33 percent, 33 percent on each anniversary of the grant date, with vesting dates on April 25, 2015, April 25, 2016 and April 25, 2017.
|
(15)
|
This non-qualified stock option vests 34 percent, 33 percent and 33 percent on each anniversary of the grant date, with vesting dates of May 7, 2014, May 7, 2015 and May 7, 2016.
|
(16)
|
Mr. Casteel’s employment terminated on March 11, 2016. His unvested equity awards were forfeited and his vested stock options will expire on March 11, 2017.
|
(17)
|
Ms. Murphy’s employment terminated on May 20, 2016. Her unvested equity awards forfeited and her vested stock options will expire between May 28, 2016 and July 17, 2022 (dates shown in table).
|
(18)
|
Mr. Duncan’s employment terminated on February 29, 2016. His unvested equity awards were forfeited and his vested stock options will expire on February 28, 2017.
|
(19)
|
Ms. Haugarth’s employment terminated on December 26, 2015. Any unvested equity awards that were scheduled to vest by the end of May 2016 were accelerated, but the rest of her unvested equity awards were forfeited. Her vested stock options will expire between May 28, 2016 and July 17, 2022 (dates shown in table).
|
(20)
|
The amounts shown in this column are calculated using a per share value of $4.93, the closing market price of a share of our common stock on the NYSE on February 26, 2016 (the last trading day of our 2016 fiscal year).
|
|
Option Awards
|
|
Stock Awards
|
||
Name
|
Number of
Shares Acquired on Exercise (1) (#) |
Value Realized
on Exercise (1) ($) |
|
Number of
Shares Acquired on Vesting (#) |
Value Realized
on Vesting (2) ($) |
Mark Gross
|
—
|
—
|
|
—
|
—
|
Bruce H. Besanko
|
—
|
—
|
|
86,334
|
770,709
|
Susan S. Grafton
|
—
|
—
|
|
11,078
|
111,025
|
Mark L. Van Buskirk
|
—
|
—
|
|
5,667
|
51,230
|
Ritchie L. Casteel
|
—
|
—
|
|
7,650
|
69,156
|
Michele A. Murphy
|
—
|
—
|
|
38,948
|
348,334
|
Sam Duncan
|
—
|
—
|
|
90,883
|
587,793
|
Janel S. Haugarth
|
—
|
—
|
|
30,674
|
238,033
|
(1)
|
There were no options exercised by our NEOs in fiscal 2016.
|
(2)
|
Amounts reflect the market value of the Company’s common stock on the day the stock vested, determined by multiplying the number of shares acquired on vesting by the closing sales price for the Company’s common stock on the NYSE on the vesting date, and, with respect to Mr. Duncan, the amounts also include a cash-settled restricted stock unit that vested on February 27, 2016 and paid out in cash shortly thereafter.
|
Name
|
Plan Name
|
Number of Years
Credited Service (1) (#) |
Present Value of
Accumulated Benefit (2) ($) |
Payments During
Last Fiscal Year ($) |
Mark Gross
(3)
|
—
|
—
|
—
|
—
|
Bruce H. Besanko
(3)
|
—
|
—
|
—
|
—
|
Susan S. Grafton
(3)
|
—
|
—
|
—
|
—
|
Mark L. Van Buskirk
(3)
|
—
|
—
|
—
|
—
|
Ritchie L. Casteel
(4)
|
Qualified Retirement Plan
|
23
|
384,528
|
23,880
|
Michele A. Murphy
(3)
|
—
|
—
|
—
|
—
|
Sam Duncan
(4)
|
Qualified Retirement Plan
|
13
|
156,550
|
—
|
Janel S. Haugarth
(5)
|
Qualified Retirement Plan
|
30
|
1,332,574
|
13,069
|
|
Excess Benefits Plan
|
30
|
2,946,040
|
459,314
|
|
EDCP (Pension Make-Up Benefit)
|
30
|
146,028
|
—
|
(1)
|
The Qualified Retirement Plan caps years of credited service at 30 years. Years of credited service were frozen effective December 31, 2007.
|
(2)
|
The calculation of present value of accumulated benefit assumes: (a) a measurement date of February 27, 2016; (b) a discount rate of 4.16 percent; (c) an assumed retirement at age 62 (earliest unreduced retirement age); (d) a single life annuity form of payment; (e) the use of the RP2006 Aggregate with MP2015 Generational projection scale; and (f) no pre-retirement decrements.
|
(3)
|
Mr. Gross, Mr. Besanko, Ms. Grafton, Mr. Van Buskirk and Ms. Murphy are not eligible for any retirement benefits.
|
(4)
|
Mr. Duncan has a frozen accrued benefit based on his prior service under the Albertson’s pension plan that merged into the Qualified Retirement Plan, while Mr. Casteel commenced his Albertson’s pension plan benefit prior to his start date with the Company.
|
(5)
|
Ms. Haugarth retired from the Company on December 26, 2015 and commenced an early retirement under the Qualified Retirement Plan. Under the Excess Benefits Plan, Ms. Haugarth elected a 5-year installment at the later of age 62 or separation of service for amounts credited after calendar year 2004. For amounts credited prior to calendar year 2005, Ms. Haugarth received a lump sum distribution at retirement.
|
Name
|
Executive
Contributions in Last Fiscal Year ($) |
Company
Contributions in Last Fiscal Year ($) |
Aggregate
Earnings in Last Fiscal Year (1) ($) |
Aggregate
Withdrawals/ Distributions ($) |
Aggregate
Balance at Last Fiscal Year End ($) |
Mark Gross
|
—
|
—
|
—
|
—
|
—
|
Bruce H. Besanko
|
5,769
|
288
|
19
|
—
|
6,077
|
Susan S. Grafton
|
—
|
—
|
—
|
—
|
—
|
Mark L. Van Buskirk
|
61,846
|
29,121
|
1,965
|
—
|
103,876
|
Ritchie L. Casteel
|
—
|
—
|
—
|
—
|
—
|
Michele A. Murphy
|
195,261
|
22,347
|
21,014
|
—
|
661,519
|
Sam Duncan
|
—
|
—
|
—
|
—
|
—
|
Janel S. Haugarth
|
—
|
—
|
45,513
|
—
|
1,169,794
|
(1)
|
Earnings for the current and inactive plans are determined based on a combination of a fixed percentage rate as well as variable interest rate methodologies based on current account balances.
|
Plan Provision
|
|
Description
|
Severance Triggers
|
•
|
Involuntary termination without “cause” as defined below, subject to certain exclusions.
|
•
|
“Cause” is defined as continued failure to perform duties, conviction of a felony, conduct materially and demonstrably injurious to the Company, personal dishonesty that results in substantial personal enrichment or failure to comply with certain Company policies.
|
|
Severance Benefits
|
•
|
2 times for our CEO and 1.5 times for our other NEOs, of annual base salary at time of termination.
|
•
|
2 times for our CEO and 1.5 times for our other NEOs, of the average of the performance results (expressed as a percentage) used to determine the NEOs’ bonus amounts under the annual bonus plan for the preceding three years (or all bonus amounts, if the NEO has been employed fewer than three years), multiplied by the NEO’s current target bonus amount.
|
|
•
|
Pro rata annual incentive, including the portion paid in stock, and payments for each long-term incentive plan cycle, not completed as of the termination date.
|
|
•
|
Reimbursement for COBRA coverage for medical and/or dental insurance.
|
|
•
|
Outplacement services not to exceed $25,000, paid to an outplacement provider and not to the executive.
|
|
•
|
Repayment of severance benefits received by an NEO whom the Company rehires in any capacity within six months of the termination date.
|
|
•
|
Requires execution of a release of claims acceptable to the Company.
|
|
Covenants
|
•
|
Non-disclosure of confidential information; non-solicitation of employees; non-solicitation of existing or prospective customers, vendors and suppliers; non-competition; return of property; and non-disparagement covenants.
|
•
|
the acquisition of 50% or more of the outstanding shares of SUPERVALU or the combined voting power of the outstanding voting shares of SUPERVALU, other than any acquisition from or by SUPERVALU or any SUPERVALU-sponsored employee benefit plan;
|
•
|
consummation of any merger or other business combination of SUPERVALU, sale or lease of all or substantially all of the assets of SUPERVALU or any combination of the foregoing, unless following such transaction SUPERVALU’s historic stockholders retain at least 60% ownership of the surviving entity and/or the purchaser or lessee; or
|
•
|
a change in our Board’s composition within any 24-month period such that a majority of the Board’s members does not include those who were members at the date of the beginning of such employment period.
|
•
|
the continued failure of the executive to substantially perform his or her duties after written demand and after the executive has had six months to improve performance to the Company’s expectations;
|
•
|
the conviction of, or plea of guilty or nolo contendere to, a felony;
|
•
|
the willful engaging in conduct that is materially and demonstrably injurious to SUPERVALU;
|
•
|
an act or acts of personal dishonesty intended to result in substantial personal enrichment at the expense of the Company; or
|
•
|
failure to comply with Company policies related to the Code of Business Conduct, Equal Employment Opportunities and Harassment or Workplace Violence.
|
•
|
the executive’s annual base salary is reduced below the amount in effect on the date immediately prior to the change of control date;
|
•
|
the executive’s actual annual bonus is less than the target bonus as it existed on the date immediately prior to the change of control date;
|
•
|
the executive’s title is reduced from the title held on the date immediately prior to the change of control date;
|
•
|
the executive’s duties and responsibilities are materially and adversely diminished other than a general reduction of the number or scope of personnel supervised as part of the Company’s restructuring or recapitalization;
|
•
|
the program of long-term incentive compensation is materially and adversely diminished, which for these purposes means a reduction of 15% or more of the annualized target dollar amount of long-term incentive as it existed on the date immediately prior to the change of control date; or
|
•
|
the relocation of the place of employment by more than 45 miles, the failure to provide for the assumption of the agreement by any successor entity or a material breach by the Company of the agreement.
|
Agreement Provision
|
|
Description
|
Severance Benefits
|
•
|
2 times for our CEO and other NEOs, of annual base salary and target annual incentive, plus welfare benefits continuation.
|
•
|
Earned but unpaid salary and accrued vacation and annual bonus plan and long-term incentive plan amounts due but not yet paid.
|
|
•
|
Pro rata annual incentive based on actual performance results for the year of termination.
|
|
•
|
Reimbursement for COBRA coverage for medical, dental and life insurance including a tax indemnification for such reimbursement.
|
|
•
|
Outplacement services not to exceed $25,000, paid to an outplacement provider and not to the executive.
|
|
•
|
“Best net” reduction of compensation to avoid excise tax.
|
|
•
|
Requires execution of a release of claims acceptable to the Company.
|
|
Covenants
|
•
|
Non-disclosure of confidential information; non-solicitation of employees; non-solicitation of existing or prospective customers, vendors and suppliers; non-competition; return of property; and non-disparagement covenants.
|
Type of Payment
|
Retirement ($)
|
Disability ($)
|
Death ($)
|
Termination Without
Cause (1) ($) |
Change of
Control ($) |
||||
Mark Gross
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
—
|
—
|
2,000,000
|
2,000,000
|
||||
Bonus (by plan multiple)
(3)
|
—
|
—
|
—
|
—
|
2,000,000
|
||||
Unvested stock options
(4)(5)
|
—
|
1,105,117
|
1,105,117
|
368,372
|
1,105,117
|
||||
Unvested restricted stock
(4)
|
—
|
—
|
—
|
—
|
—
|
||||
Health and welfare benefits
|
—
|
—
|
—
|
—
|
—
|
||||
Outplacement services
|
—
|
—
|
—
|
25,000
|
25,000
|
||||
Total
|
—
|
1,105,117
|
1,105,117
|
2,393,372
|
5,130,117
|
||||
Bruce H. Besanko
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
—
|
—
|
1,125,000
|
1,500,000
|
||||
Bonus (by plan multiple)
(3)
|
—
|
—
|
—
|
769,793
|
1,500,000
|
||||
Unvested stock options
(4)
|
—
|
—
|
—
|
—
|
—
|
||||
Unvested restricted stock
(4)
|
—
|
833,564
|
833,564
|
—
|
833,564
|
||||
Health and welfare benefits
|
—
|
—
|
—
|
17,653
|
17,653
|
||||
Outplacement services
|
—
|
—
|
—
|
25,000
|
25,000
|
||||
Total
|
—
|
833,564
|
833,564
|
1,937,446
|
3,876,217
|
Type of Payment
|
Retirement ($)
|
Disability ($)
|
Death ($)
|
Termination Without
Cause (1) ($) |
Change of
Control ($) |
||||
Susan S. Grafton
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
—
|
—
|
750,000
|
1,000,000
|
||||
Bonus (by plan multiple)
(3)
|
—
|
—
|
—
|
578,948
|
750,000
|
||||
Unvested stock options
(4)
|
—
|
—
|
—
|
—
|
—
|
||||
Unvested restricted stock
(4)
|
—
|
267,255
|
267,255
|
—
|
267,255
|
||||
Health and welfare benefits
|
—
|
—
|
—
|
26,989
|
26,989
|
||||
Outplacement services
|
—
|
—
|
—
|
25,000
|
25,000
|
||||
Total
|
—
|
267,255
|
267,255
|
1,380,936
|
2,069,244
|
||||
Mark L. Van Buskirk
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
—
|
—
|
900,000
|
1,200,000
|
||||
Bonus (by plan multiple)
(3)
|
—
|
—
|
—
|
343,532
|
900,000
|
||||
Unvested stock options
(4)
|
—
|
—
|
—
|
—
|
—
|
||||
Unvested restricted stock
(4)
|
—
|
222,491
|
222,491
|
—
|
222,491
|
||||
Health and welfare benefits
|
—
|
—
|
—
|
14,626
|
14,626
|
||||
Outplacement services
|
—
|
—
|
—
|
25,000
|
25,000
|
||||
Total
|
—
|
222,491
|
222,491
|
1,283,158
|
2,362,117
|
||||
Ritchie L. Casteel
(6)
|
|||||||||
Base salary (by plan multiple)
(2)
|
N/A
|
N/A
|
N/A
|
787,500
|
N/A
|
||||
Bonus (by plan multiple)
(3)
|
N/A
|
N/A
|
N/A
|
661,500
|
N/A
|
||||
Unvested stock options
(4)
|
N/A
|
N/A
|
N/A
|
—
|
N/A
|
||||
Unvested restricted stock
(4)
|
N/A
|
N/A
|
N/A
|
—
|
N/A
|
||||
Health and welfare benefits
|
N/A
|
N/A
|
N/A
|
13,499
|
N/A
|
||||
Outplacement services
|
N/A
|
N/A
|
N/A
|
25,000
|
N/A
|
||||
Total
|
N/A
|
N/A
|
N/A
|
1,487,499
|
N/A
|
||||
Michele A. Murphy
(7)
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Bonus (by plan multiple)
(3)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Unvested stock options
(4)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Unvested restricted stock
(4)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Health and welfare benefits
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Outplacement services
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Total
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Sam Duncan
(7)
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Bonus (by plan multiple)
(3)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Unvested stock options
(4)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Unvested restricted stock
(4)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Health and welfare benefits
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Outplacement services
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Total
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Janel S. Haugarth
|
|||||||||
Base salary (by plan multiple)
(2)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Bonus (by plan multiple)
(3)
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Unvested stock options
(8)
|
47,470
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Unvested restricted stock
(9)
|
135,573
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Health and welfare benefits
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Outplacement services
|
—
|
N/A
|
N/A
|
N/A
|
N/A
|
||||
Total
|
183,043
|
N/A
|
N/A
|
N/A
|
N/A
|
(1)
|
These amounts exclude reimbursements for COBRA.
|
(2)
|
Base salary multiple for “Termination Without Cause” is 2x for the CEO and 1.5x for other NEOs. Base salary multiple for “Change of Control” is 2x for the CEO and other NEOs.
|
(3)
|
Bonus multiple for “Termination Without Cause” is 2x for the CEO and 1.5x for other NEOs. Bonus multiple for “Change of Control” is 2x for the CEO and other NEOs.
|
(4)
|
The values presented for unvested stock options and unvested restricted stock and restricted stock units are calculated by multiplying the number of unvested shares by the closing stock price on the NYSE on February 26, 2016 ($4.93), the last trading day of our 2016 fiscal year, net of the exercise price in the case of stock options. Unvested shares are accelerated for “Disability,” “Death” and “Change of Control.”
|
(5)
|
Mr. Gross’s employment agreement provides for a prorated payout for his February 2016 stock option grant in the event of a “Termination Without Cause”. The prorated value represents 541,724 shares multiplied by the closing stock price on the NYSE on February 26, 2016 ($4.93) net of the exercise price.
|
(6)
|
Mr. Casteel was involuntarily terminated from the Company effective March 11, 2016. Per his severance protection, Mr. Casteel received a lump sum payment of $1,449,000 plus COBRA and outplacement services as detailed in the table above.
|
(7)
|
Ms. Murphy and Mr. Duncan voluntarily retired after the fiscal year and were not eligible for any additional termination benefits.
|
(8)
|
In conjunction with Ms. Haugarth’s December 26, 2015 voluntary retirement, the values presented for unvested stock options are calculated by multiplying the number of accelerated stock options from the May 7, 2016 grant by the closing stock price on the NYSE on December 24, 2015 ($7.01), net of the exercise price.
|
(9)
|
In conjunction with Ms. Haugarth’s December 26, 2015 voluntary retirement, the value presented for unvested restricted stock is calculated by multiplying the number of accelerated shares from her April 30, 2016 vesting by the closing stock price on the NYSE on December 24, 2015 ($7.01).
|
|
Respectfully submitted,
|
|
|
|
Irwin S. Cohen, Chairperson
Donald R. Chappel Francesca Ruiz de Luzuriaga |
|
2016
(3)
|
|
2015
(4)
|
||||
|
($ in thousands)
|
||||||
Audit fees
|
$
|
2,440
|
|
|
$
|
2,410
|
|
Audit-related fees
(1)
|
4,912
|
|
|
626
|
|
||
Total audit and audit-related fees
|
7,352
|
|
|
3,036
|
|
||
Tax fees
(2)
|
—
|
|
|
10
|
|
||
All other fees
|
—
|
|
|
—
|
|
||
Total fees
|
$
|
7,352
|
|
|
$
|
3,046
|
|
(1)
|
Audit-related fees consist principally of fees for audits of financial statements of certain businesses and subsidiaries and audits of financial statements of certain employee benefit plans.
|
(2)
|
Tax fees consist of fees related to tax compliance, including review of tax returns.
|
(3)
|
Fees for fiscal 2016 are estimates.
|
(4)
|
Fees for fiscal 2015 reflect final amounts billed.
|
|
Number of Shares
|
As a % of Common Shares Outstanding
(1)
|
Stock options outstanding
(2)
|
20,211,892
|
7.6%
|
Weighted average exercise price of outstanding options
|
$7.64
|
|
Weighted average remaining term of outstanding options
|
6.16
|
|
Restricted stock units outstanding
|
5,072,383
|
1.9%
|
Restricted stock awards outstanding
|
1,290,419
|
0.5%
|
Performance share units outstanding
(3)
|
3,101,062
|
1.2%
|
Shares available for grant
|
11,539,468
|
4.3%
|
(1)
|
Based on 265,809,983 shares of SUPERVALU common stock outstanding as of May 23, 2016.
|
(2)
|
Includes 2,563,035 stock options outstanding from the 2007 Stock Plan.
|
(3)
|
The total number of outstanding performance share units represents the maximum number of shares that could be issued under these awards.
|
•
|
Our ability to recruit, retain, reward and motivate employees and officers, particularly as we execute on our vision to be the leading distributor of consumable products and provider of services to retailers in the United States and work to grow our business, depends in part on our ability to offer competitive equity compensation. We believe we would be at a competitive disadvantage if we could not continue to use stock-based awards to recruit and compensate these individuals.
|
•
|
Despite the positive developments that took place over the past two years, we have continued to face industry and economic headwinds and experienced challenges relative to our market capitalization. Given our recent stock price and market capitalization, delivering competitive compensation to our employees has required granting more shares as compared to grants made by our peer companies with higher stock values. Despite the resulting additional dilution, we believe that it is critical that we continue to retain our employees by delivering competitive levels of equity compensation.
|
•
|
By approving the amendment to the 2012 Stock Plan, based on our current stock price, we anticipate we could deliver competitive equity compensation and grant stock-based awards consistent with historic grant levels for approximately two additional years through fiscal 2019.
|
•
|
We believe that the use of stock-based awards as part of our compensation program is important to our continued success because it fosters a pay for performance culture, which is an important element of our overall compensation program. We believe stock-based compensation motivates employees to create stockholder value because the value employees realize from stock-based compensation is based on our stock performance or other performance metrics.
|
•
|
As discussed above, we believe that stock-based compensation aligns the goals and objectives of our employees with the interests of our stockholders and promotes a focus on long-term value creation. This long-term alignment between our employees and the interests of our stockholders is critical as our management strives to execute on our vision and growth plans. Stock-based awards that are subject to time- or performance-based vesting are designed to help retain our management and employees during this period of execution and will motivate them to attain our potential.
|
•
|
As noted above, we have several new members on our management team and other new key employees. These new members of management and key employees have significant industry experience and expertise that will be critical to the execution of our vision and growth plans. However, this turnover has required additional grants of equity-based awards to help recruit key talent to join the Company and to align their goals and objectives with the interests of our stockholders. Despite these new-hire grants, which have resulted in increases in our overhang, we have limited our additional share request under the amendment to the 2012 Stock Plan, such that after giving effect to our proposed share increase, our resulting overhang would be approximately 19.3% based on awards and shares outstanding as of May 23, 2016.
|
•
|
Given our stock price, approximately 5.5 million of the approximately 20.2 million shares subject to outstanding stock option awards are significantly underwater (meaning they have an exercise price greater than $8.75) as of May 23, 2016. Stock option awards that are significantly underwater no longer have the same retentive or incentive capacity, making our ability to grant new stock awards at current stock prices even more important.
|
•
|
If we do not have the flexibility to grant stock-based awards made available by the increased reserve under the amendment to the 2012 Stock Plan, we will need to increase the cash component of our employees’ compensation in order to remain market competitive. Increasing cash compensation would increase our cash compensation expense and would divert cash that could otherwise be reinvested in the Company’s business or used to pay down debt.
|
•
|
No “Evergreen Provision.”
The 2012 Stock Plan specifies a fixed number of shares available for future grants and does not provide for any automatic increase based on the number of outstanding shares of our common stock.
|
•
|
No Discounted Awards.
The 2012 Stock Plan prohibits the granting of stock options and stock appreciation rights with an exercise or grant price that is less than the fair market value of our common stock on the date the award is granted.
|
•
|
No Re-pricing without Stockholder Approval.
The 2012 Stock Plan prohibits the re-pricing of stock options and stock appreciation rights, without first obtaining the approval of our stockholders.
|
•
|
Recoupment Policy.
Any award granted under the 2012 Stock Plan will be subject to the Company’s recoupment (or “clawback”) policy.
|
•
|
No Liberal Definition of Change of Control (“COC”).
No change of control would be triggered by stockholder approval of a business combination transaction, the announcement or commencement of a tender offer, or any Board assessment that a change of control is imminent.
|
•
|
“Double trigger” Accelerated Vesting following COC.
All of the equity awards granted after May 2010 contain a “double trigger” COC vesting provision, meaning that if an award is continued, assumed or replaced in connection with a COC, vesting is accelerated only if there is an involuntary termination of employment or a voluntary resignation for “good reason” within two years following the COC.
|
•
|
The Company’s historical 3-year average gross burn rate (shares used for equity awards as a percentage of the total common shares outstanding):
|
Fiscal Year
|
Options Granted
|
Full-Value Shares Granted
(1)
|
Total Granted
|
Weighted Average Number of Common Shares Outstanding
|
Burn Rate
(2)
|
2016
|
5,530,958
|
4,807,220
|
10,338,178
|
265,902,579
|
3.89%
|
2015
|
5,021,814
|
4,583,404
|
9,605,218
|
261,717,796
|
3.67%
|
2014
|
10,083,257
|
2,466,394
|
12,549,651
|
259,915,678
|
4.83%
|
3-year average burn rate:
|
4.13%
|
(1)
|
Each amount shown is 2.0 times the actual number of restricted shares and share units granted.
|
(2)
|
The gross burn rate was calculated by dividing the amount shown in the “Total Granted” column by the weighted average number of our common shares outstanding. These numbers do not take into account shares forfeited or cancelled.
|
•
|
If we do not increase the shares available for issuance under our 2012 Stock Plan, then based on our historical usage rates of shares under our equity plans, we would expect to exhaust the share reserve under our 2012 Stock Plan such that there may not be enough shares for a full grant in fiscal 2018, and we would thus lose an important compensation tool aligned with stockholder interests to attract, motivate and retain highly qualified talent.
|
•
|
If approved, the issuance of the additional shares to be reserved under the 2012 Stock Plan, as amended, would dilute the holdings of stockholders by an additional 2.7% on a fully-diluted basis, based on the number of shares of our common stock outstanding as of May 23, 2016. This “full dilution overhang” as of May 23, 2016, after giving effect to the proposed share increase, is 16.2%, calculated as summarized below:
|
•
|
the number of shares available for awards will be reduced by one share for each share covered by or payable under such award or to which the award relates;
|
•
|
awards that do not entitle the holder to receive or purchase shares and awards that may be settled solely in cash will not be counted against the aggregate number of shares available for awards under the 2012 Stock Plan; and
|
•
|
shares subject to substitute awards granted in substitution or exchange for awards granted by a company acquired by us will not be counted against the aggregate number of shares available for awards under the 2012 Stock Plan.
|
•
|
stock options (including both incentive and non-qualified stock options);
|
•
|
stock appreciation rights (“SARs”);
|
•
|
restricted stock and restricted stock units;
|
•
|
dividend equivalents;
|
•
|
performance awards of cash, stock or property;
|
•
|
stock awards; and
|
•
|
other stock-based awards.
|
|
Number of
securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted
average exercise price of outstanding options, warrants and rights |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Plan Category
|
(a)
|
(b)
|
(c)
|
Equity compensation plans approved by security holders
(1)
|
19,627,477
|
$7.63
|
17,822,784
(2)
|
Equity compensation plans not approved by security holders
|
—
|
—
|
—
|
Total
|
19,627,477
|
$7.63
|
17,822,784
(2)
|
(1)
|
Includes the Company’s 2007 Stock Plan, 2012 Stock Plan and Director’s Deferred Compensation Plan.
|
(2)
|
Consists of 17,104,045 shares available for issuance under the Company’s 2012 Stock Plan and 718,739 shares available for issuance under the Director’s Deferred Compensation Plan. Includes 2007 Stock Plan option expirations, stock appreciation right expirations, restricted stock award forfeitures and restricted stock unit forfeitures since May 22, 2014 totaling 3,471,740. The 2012 Plan provides that awards that expire or are forfeited under the 2007 Stock Plan are added back to the 2012 Stock Plan reserve for issuance.
|
a)
|
have beneficially owned 3% or more of SUPERVALU’s outstanding common stock continuously for at least three years;
|
b)
|
give SUPERVALU, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules about (i) the nominee, including consent to being named in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (information required by this subsection (b) is the “Disclosure”); and
|
c)
|
certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with SUPERVALU shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than SUPERVALU’s proxy materials; and (c) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control at SUPERVALU.
|
•
|
Has the potential to raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)
|
|
Fiscal 2016
(52 weeks)
|
|
|
Net earnings from continuing operations
|
$
|
178
|
|
Less: net earnings attributable to noncontrolling interests
|
(8)
|
|
|
Income tax provision
|
85
|
|
|
Interest expense, net
|
196
|
|
|
Depreciation and amortization
|
276
|
|
|
LIFO charge
|
3
|
|
|
Employee-related costs
|
8
|
|
|
Store closure and asset impairment charges
|
12
|
|
|
Costs incurred for potential Save-A-Lot separation
|
15
|
|
|
Intangible asset impairment charge
|
6
|
|
|
Adjusted EBITDA
|
$
|
771
|
|
|
Fiscal 2016
(52 weeks)
|
|
|
Selling and administrative expenses, as reported
|
$
|
2,124
|
|
Less expenses and adjustments included within Selling and administrative costs and Intangible asset impairment charges:
|
|
||
Wholesale, Save-A-Lot, Retail and corporate operating expenses
|
(1,396)
|
|
|
Depreciation and amortization expense
|
(217)
|
|
|
Pension expense
|
(41)
|
|
|
Employee-related costs
|
(8)
|
|
|
Store closure and asset impairment charges
|
(12)
|
|
|
Costs incurred for potential Save-A-Lot separation
|
(15)
|
|
|
Plus: Merchandising, procurement and other costs included within Cost of sales
|
57
|
|
|
Less: Transition services agreement fees included within Net sales, net of certain related costs
|
(195)
|
|
|
Adjusted Overhead Expense
|
$
|
297
|
|
Section 1.
|
Purpose
|
1
|
|
Section 2.
|
Definitions
|
1
|
|
Section 3.
|
Administration
|
4
|
|
(a)
|
Power and Authority of the Committee
|
4
|
|
(b)
|
Delegation
|
4
|
|
(c)
|
Power and Authority of the Board
|
4
|
|
Section 4.
|
Shares Available for Awards
|
4
|
|
(a)
|
Shares Available
|
4
|
|
(b)
|
Accounting for Awards
|
5
|
|
(c)
|
Adjustments
|
5
|
|
(d)
|
Award Limitations Under the Plan
|
5
|
|
(e)
|
Effect of Plans Operated by Acquired Companies
|
6
|
|
Section 5.
|
Eligibility
|
6
|
|
Section 6.
|
Awards
|
6
|
|
(a)
|
Options
|
6
|
|
(b)
|
Stock Appreciation Rights
|
7
|
|
(c)
|
Restricted Stock and Restricted Stock Units
|
8
|
|
(d)
|
Performance Awards
|
8
|
|
(e)
|
Dividend Equivalents
|
9
|
|
(f)
|
Stock Awards
|
9
|
|
(g)
|
Other Stock-Based Awards
|
9
|
|
(h)
|
General
|
9
|
|
Section 7.
|
Amendment and Termination; Corrections
|
11
|
|
(a)
|
Amendments to the Plan
|
11
|
|
(b)
|
Amendments to Awards
|
12
|
|
(c)
|
Correction of Defects, Omissions and Inconsistencies
|
12
|
|
Section 8.
|
Income Tax Withholding
|
12
|
|
Section 9.
|
General Provisions
|
12
|
|
(a)
|
No Rights to Awards
|
12
|
|
(b)
|
Award Agreements
|
12
|
|
(c)
|
Plan Provisions Control
|
12
|
|
(d)
|
No Rights of Stockholders
|
12
|
|
(e)
|
No Limit on Other Compensation Plans or Arrangements
|
12
|
|
(f)
|
No Right to Employment or Directorship
|
13
|
|
(g)
|
Governing Law
|
13
|
|
(h)
|
Severability
|
13
|
|
(i)
|
No Trust or Fund Created
|
13
|
|
(j)
|
Other Benefits
|
13
|
|
(k)
|
No Fractional Shares
|
13
|
|
(l)
|
Headings
|
13
|
|
(m)
|
Consultation With Professional Tax and Investment Advisors
|
13
|
|
(n)
|
Foreign Employees and Foreign Law Considerations
|
13
|
|
(o)
|
Blackout Periods
|
14
|
|
Section 10.
|
Clawback or Recoupment
|
14
|
|
Section 11.
|
Effective Date of the Plan; Effect on Prior Plan
|
14
|
|
Section 12.
|
Term of the Plan
|
14
|
|
(i)
|
the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company or (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;
|
(ii)
|
the consummation of any merger or other business combination of the Company, sale or lease of all or substantially all of the Company’s assets or combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which the stockholders of the Company and any trustee or fiduciary of any Company employee benefit plan immediately prior to the Transaction own at least sixty percent (60%) of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser or lessee of the Company’s assets or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions; or
|
(iii)
|
within any 24-month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period
|
(i)
|
Limitation for Option and Stock Appreciation Right Awards
. No Eligible Person may be granted Options, Stock Appreciation Rights or any other Award or Awards under the Plan, the value of which Award or Awards is based solely on an increase in the value of the Shares after the date of grant of such Award or Awards, for more than 2,000,000 Shares or, if such Award is payable in cash, for an amount greater than the Fair Market Value of 2,000,000 Shares at the time of payment (subject, in each case, to adjustment as provided for in Section 4(c) of the Plan) in the aggregate in any calendar year.
|
(ii)
|
Limitations for Performance Awards
.
|
(A)
|
Performance Awards Denominated in Shares
. No Eligible Person,
including one who is or may be a “covered person” within the meaning of Section 162(m), may be granted Awards under the Plan that are denominated in Shares and whose vesting or settlement is subject to the satisfaction of Performance Goals (including, without limitation, Performance Awards, Restricted Stock and Restricted Stock Units), for more than 2,000,000 Shares (subject to adjustment as provided for in Section 4(c) of the Plan) in
|
(B)
|
Performance Awards Denominated in Cash
. The maximum amount payable pursuant to all Performance Awards denominated in cash under the Plan to any Participant, including one who is or may be a “covered person” within the meaning of Section 162(m)
,
in the aggregate in any calendar year shall be $10,000,000 in value, whether payable in cash, Shares or other property. The limitation contained in this Section 4(d)(ii)(B) does not apply to any Award subject to the limitations contained in Section 4(d)(i) or Section 4(d)(ii)(A).
|
(iii)
|
Limitation for Awards to Consultants and Advisors
. Awards will only be granted to those consultants or advisors who may participate in an employee benefit plan as provided in the definition of “Employee Benefit Plan” in Rule 405 of the Securities Act.
|
(iv)
|
Plan-Specific Limitations.
The limitations contained in this Section 4(d) shall apply only with respect to Awards granted under this Plan, and limitations on awards granted under any other stockholder approved executive incentive plan maintained by the Company will be governed solely by the terms of such other plan.
|
(i)
|
Exercise Price
. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option;
provided, however,
that the Committee may designate a purchase price below Fair Market Value on the date of grant (A) to the extent necessary or appropriate, as determined by the Committee, to satisfy applicable legal or regulatory requirements of a foreign jurisdiction or (B) if the Option is a Substitute Award.
|
(ii)
|
Option Term
. The term of each Option shall be fixed by the Committee at the time of grant, but shall not be longer than 10 years from the date of grant.
|
(iii)
|
Time and Method of Exercise
. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms (including, without limitation, cash, Shares, other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price) in which, payment of the exercise price with respect thereto may be made or deemed to have been made. Alternatively, the Committee may, in its discretion, permit a Non-Qualified Stock Option (but not an Incentive Stock Option) to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Non-Qualified Stock Option being exercised, on the date of exercise, over the exercise price of the Non-Qualified Stock Option for such Shares.
|
(iv)
|
Incentive Stock Options
. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of Options which are intended to qualify as Incentive Stock Options:
|
(A)
|
The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000.
|
(B)
|
All Incentive Stock Options must be granted within 10 years from the earlier of the date on which this Plan was adopted by the Board or the date this Plan was approved by the stockholders of the Company.
|
(C)
|
Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant;
provided
,
however
, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliate, such Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant.
|
(D)
|
The purchase price per Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option;
provided
,
however
, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliate, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option.
|
(E)
|
Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option.
|
(i)
|
Restrictions
. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, the Committee may permit acceleration of vesting of such Awards in certain events including, but not limited to, the Participant’s death, disability, termination, retirement or a Change of Control.
|
(ii)
|
Issuance and Delivery of Shares
. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units.
|
(iii)
|
Forfeiture
. Except as otherwise determined by the Committee, upon a Participant’s termination of employment or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by the Participant at such time shall be forfeited and reacquired by the Company;
provided
,
however
, that the Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units, except as otherwise provided in the Award Agreement.
|
(i)
|
Timing of Designations; Duration of Performance Periods
. For each Award intended to be “qualified performance-based compensation,” the Committee shall, not later than 90 days after the beginning of each performance period, (i) designate all Participants for such performance period and (ii) establish the objective performance factors for each Participant for that performance period on the basis of one or more objective Performance Goals;
provided, however
, that, with respect to such Performance Goals, the outcome is substantially uncertain at the time the Committee actually establishes each Performance Goal. The Committee shall have sole discretion to determine the applicable performance period, provided that in the case of a performance period less than 12 months, in no event shall a Performance Goal be considered to be pre-established if it is established after 25 percent of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed.
|
(ii)
|
Certification
. Following the close of each performance period and prior to payment of any amount to a Participant with respect to an Award intended to be “qualified performance-based compensation,” the Committee shall certify in writing as to the attainment of all factors (including the performance factors for a Participant) upon which any payments to a Participant for that performance period are to be based.
|
(iii)
|
Payment of Qualified Performance Awards
. Certified Awards shall be paid no later than two and one-half months following the conclusion of the applicable performance period;
provided, however,
that the Committee may establish procedures that allow for the payment of Awards on a deferred basis subject to the requirements of Section 409A. The Committee may, in its discretion, reduce the amount of a payout achieved and otherwise to be paid in connection with an Award intended to be “qualified performance-based compensation,” but may not exercise discretion to increase such amount.
|
(i)
|
Consideration for Awards
. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law.
|
(ii)
|
Awards May Be Granted Separately or Together
. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards
|
(iii)
|
Forms of Payment under Awards
. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, other securities, other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments.
|
(iv)
|
Term of Awards
. Subject to Section 6(a)(iv)(C), the term of each Award shall be for a period not to exceed 10 years from the date of grant as determined by the Committee at the time of grant.
|
(v)
|
Limits on Transfer of Awards
. Except as provided by the Committee or by this Plan, any Award (other than Stock Awards) and any right under any such Award shall not be transferable by a Participant other than by will or by the laws of descent and distribution or by transfer of an Award back to the Company, including transfer of an Award (but not any Option) to the Company in connection with a deferral election under a Company deferred compensation plan. Notwithstanding the immediately preceding sentence, Awards of Incentive Stock Options shall not be transferable by a Participant other than by will or by the laws of descent and distribution. The Committee may establish procedures as it deems appropriate for a Participant to designate a Person or Persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. The Committee, in its discretion and subject to such additional terms and conditions as it determines, may permit a Participant to transfer a Non-Qualified Stock Option to any “family member” (as defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act) at any time that such Participant holds such Option,
provided
that such transfers may not be for “value” (as defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act) and the family member may not make any subsequent transfers other than by will or by the laws of descent and distribution. Each Award under the Plan or right under any such Award shall be exercisable during the Participant’s lifetime only by the Participant (except as provided herein or in an Award Agreement or amendment thereto relating to a Non-Qualified Stock Option) or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award (other than a Stock Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.
|
(vi)
|
Restrictions; Securities Exchange Listing
. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
|
(vii)
|
Section 409A Provisions
. It is intended that (i) all Option, Stock Appreciation Right, Restricted Stock and Stock Awards under the Plan will not provide for the deferral of compensation within the meaning of Section 409A and thereby be exempt from Section 409A, and (ii) all other
|
(A)
|
If any amount is payable under such Award upon a termination of employment or other service, a termination of employment or other service will be deemed to have occurred only at such time as the Participant has experienced a “separation from service” as such term is defined for purposes of Section 409A;
|
(B)
|
If such Award provides for a change in the time or form of payment upon a Change of Control, then no Change of Control shall be deemed to have occurred upon an event described in Section 2(e) or any applicable Award Agreement unless the event would also constitute a change in ownership or effective control of, or a change in the ownership of a substantial portion of the assets of, the Company under Section 409A;
|
(C)
|
If any amount is payable under such Award due to a Participant’s disability, the term “disability” shall be defined as provided in Treasury Regulation 1.409A-3(i)(4); and
|
(D)
|
If any amount shall be payable with respect to any such Award as a result of a Participant’s “separation from service” at such time as the Participant is a “specified employee” within the meaning of Section 409A (as determined by the Committee in good faith), then no payment shall be made, except as permitted under Section 409A, prior to the earlier of (i) the date that is six months after the Participant’s separation from service or (ii) the Participant’s death.
|
(i)
|
requires stockholder approval under the rules or regulations of the Securities and Exchange Commission, the New York Stock Exchange or any other securities exchange applicable to the Company;
|
(ii)
|
increases the number of shares authorized under the Plan as specified in Section 4(a) of the Plan;
|
(iii)
|
increases the number of shares subject to the limitations contained in Section 4(d)(i) or Section 4(d)(ii)(A) of the Plan or the dollar amount subject to the limitation contained in Section 4(d)(ii)(B) of the Plan;
|
(iv)
|
permits repricing of Options or Stock Appreciation Rights, which is prohibited by Section 3(a)(v) of the Plan;
|
(v)
|
permits the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a) and Section 6(b) of the Plan; or
|
(vi)
|
would cause Section 162(m) to become unavailable with respect to the Plan.
|
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