Long-Term Incentive Plan - Albertson's Inc.
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ALBERTSONS
LONG-TERM INCENTIVE PLAN
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INTRODUCTION
The Albertsons Long-term Incentive Plan ("Plan") is a long-term incentive plan
for eligible employees of Albertsons and its subsidiaries. The Plan is intended
to provide cash-based incentive opportunities to executives and other key
employees of the Company and its subsidiaries. Plan payments, if any, will be
conditioned on attainment of one or more Performance Measures for one or more
fiscal years as established by the Committee. It is intended that payments made
pursuant to the Plan to Covered Employees will qualify as performance-based
compensation that is exempt from the limitation on deductions imposed by Section
162(m), and that the Plan will be construed, applied and administered
accordingly.
I. PURPOSE
The purpose of the Plan is to allow the Company to attract, motivate and retain
highly qualified employees; to obtain from each employee the best possible
performance; to establish performance goals that support the Company's long-term
business strategies; and to provide consistency in and alignment with the
Company's approach to performance-based pay and overall executive compensation
strategy.
II. DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings:
A. AWARD PERIOD. An award period under the Plan shall be one or more
consecutive fiscal years of the Company, not to exceed three fiscal years, as
established by the Committee. Nothing in this Plan shall preclude the Committee
from establishing an Award Period that commences prior to the termination of one
or more other Award Periods.
B. BOARD OF DIRECTORS. The Board of Directors of the Company.
C. CHANGE IN CONTROL. This term shall have the meaning in the Amended and
Restated 1995 Stock-Based Incentive Plan or any successor plan thereto.
D. COMMITTEE. The Management Development/Compensation Committee of the
Board of Directors of the Company or any successor thereto.
E. COMPANY. Albertson's, Inc., a Delaware corporation.
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F. COVERED EMPLOYEE. Any Participant who is, or is determined by the
Committee to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended, as such section
may be amended ("Section 162(m)").
G. DEFERRED AWARD. This term is defined in Section VII (A) of the Plan.
H. DEFERRED COMPENSATION PLAN. The Albertson's, Inc. 2000 Deferred
Compensation Plan, as amended.
I. LONG-TERM INCENTIVE COMPENSATION AWARD. Any cash-based award paid
pursuant to the Plan.
J. PARTICIPANT. An executive or other key employee of the Company or one or
more of its subsidiaries, or a person who has agreed to commence serving in any
of such capacities, and who is designated to participate in the Plan.
K. PERFORMANCE MEASURES. This term is defined in Section V of the Plan.
L. RETIREMENT. A Participant's voluntary termination of employment with the
Company or any of its subsidiaries on or after attainment of age 55.
III. EFFECTIVE DATE
The Plan has been adopted effective as of February 1, 2003; provided,
however, that no Long-term Incentive Award will be paid to a Covered Employee
under this Plan unless, prior to such payment, the holders of a majority of the
shares of common stock of the Company actually voting on the matter approve this
Plan at a meeting of the shareholders of the Company.
IV. DETERMINATION OF AMOUNTS OF AND ELIGIBILITY FOR LONG-TERM INCENTIVE
COMPENSATION AWARDS
A. Participants will be eligible to receive Long-term Incentive
Compensation Awards conditioned on achievement of Performance Measure(s) as
approved by the Committee.
B. If the Performance Measures are not achieved, then no Long-term
Incentive Compensation Awards will be paid to Covered Employees pursuant to the
Plan. If the Performance Measures are achieved, then Long-term Incentive
Compensation Awards will be paid in amounts at levels determined by the
Committee pursuant to the Plan. The maximum Long-term Incentive Compensation
Award that can be paid to a Covered Employee with respect to any Award Period is
$10 million.
C. Long-term Incentive Compensation Awards may be paid following the end of
the Award Period to which they relate; provided, however, that no Long-term
Incentive Compensation Awards shall be paid to Covered Employees prior to the
certification in writing by the Committee that the Performance Measures have
been achieved for the relevant Award Period.
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D. The Committee will determine the final amounts of Long-term Incentive
Compensation Awards to Participants. The Committee may exercise negative
discretion to reduce the amount of, or eliminate, a Long-term Incentive
Compensation Award that otherwise would be payable. Such determinations, except
in the case of the Long-term Incentive Compensation Award for the Chief
Executive Officer, shall be made after considering the recommendations of the
Chief Executive Officer and such other matters as the Committee shall deem
relevant. Such determination in the case of the Long-term Incentive Compensation
Award for the Chief Executive Officer shall be made by the Committee.
E. A Participant who is designated to participate in the Plan effective
after the beginning of a particular Award Period will participate on a prorated
basis in all Award Periods that have not ended as of such effective time and
will receive Long-term Incentive Compensation Awards prorated on the basis of
the ratio of the number of weeks of actual participation during each such Award
Period to the aggregate number of weeks in each such Award Period. Such prorated
Long-term Incentive Awards will be paid on the dates that all other Participants
are paid such awards.
V. PERFORMANCE MEASURES
A. Payment of Long-term Incentive Compensation Awards is conditioned on the
attainment of Performance Measures as established by the Committee. Performance
Measures applicable to Award Periods for Covered Employees must be established
in writing no later than ninety (90) days after the beginning of an Award Period
and must be limited to criteria and objectives related to:
(1) The consolidated performance of the Company or the performance of one
or more of its subsidiaries or divisions, where performance is determined as set
forth in (2) below.
(2) Performance shall be determined solely by reference to levels of and/or
growth in one or more of the following business criteria as measured over the
Award Period:
(i) Total shareholder return, including its components of stock price
appreciation, dividends and/or dividend yield;
(ii) Return on assets, equity, invested capital, cash flow,
investment, or sales;
(iii) Sales, including food items, non-food items, or private label
sales;
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(iv) Pre-tax or after-tax profit levels, including: earnings per
share; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; net operating profits after tax, and net income;
(v) Cash flow and cash flow return on investment;
(vi) Economic profit and/or cost of capital;
(vii) Turnover of assets, capital, or inventory;
(viii) Levels of operating expense or other expense items as reported
on the income statement, including operating and maintenance expense;
(ix) Measures of customer satisfaction and customer service as
surveyed from time to time, including the relative improvement therein; or
(x) Market share.
B. Further, in establishing Performance Measures for Participants, the
Committee may include or exclude the impact of specified objective events,
including any of the following except where the action would result in the loss
of an otherwise available exemption under Section 162(m): expenses as a result
of restructuring or productivity initiatives, non-operating items; acquisition
expenses; and any other items of gain, loss or expense that are determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business or to a change of accounting principles.
C. The Committee may impose additional Performance Measures that have the
effect of reducing awards. It also may modify Performance Measures applicable to
Participants that have the effect of reducing awards. It also may modify
Performance Measures applicable to Participants, except in the case where the
action would result in the loss of an otherwise available exemption under
Section 162(m), if it determines that the Performance Measures have become
unsuitable as a result of certain events.
VI. FORM OF LONG-TERM INCENTIVE COMPENSATION AWARDS
Long-term Incentive Compensation Awards shall be paid in cash.
VII. PAYMENT OF LONG-TERM INCENTIVE COMPENSATION AWARDS
A. Long-term Incentive Compensation Awards shall be paid currently, unless
the payment is deferred by the Participant pursuant to the Deferred Compensation
Plan or unless the Committee shall determine that any Long-term Incentive
Compensation Award shall be deferred ("Deferred Awards"). Any Deferred Awards
shall be credited to the Participant's account in the Deferred Compensation Plan
and shall be subject to the provisions of the Deferred Compensation Plan.
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B. When a Long-term Incentive Compensation Award is made, the Company shall
cause the cash to be paid to the individual to whom the award is made at the
time or times specified by the Committee, or, if no time or times are specified,
as soon as practicable after the award is made, but in no event later than two
and one-half months after the Award Period ends.
VIII. CHANGE IN CONTROL
In connection with any actual or potential Change in Control, the Committee
will take all such actions hereunder as it may determine to be necessary or
appropriate to treat Participants equitably hereunder, including without
limitation the modification or waiver of applicable Performance Measures, Award
Periods or Long-term Incentive Compensation Awards, notwithstanding the terms of
any initial Long-term Incentive Compensation Award, and whether to establish or
fund a trust or other arrangement intended to secure the payment of such Awards.
IX. TERMINATION OF SERVICE OR DEMOTION
A. If a Participant terminates employment with the Company and its
subsidiaries before the date prescribed for payment with respect to an Award
Period due to death, disability, or Retirement, the Participant's Long-term
Incentive Compensation Awards for all Award Periods in effect at the time of
such termination of service will be prorated on the basis of the ratio of the
number of weeks of participation during each such Award Period to the aggregate
number of weeks in each such Award Period. Payment of such prorated Long-term
Compensation Awards will occur at the end of the applicable Award Periods on the
dates that all other Participants receive payment of such Long-term Compensation
Awards.
B. If a Participant's employment with the Company and its subsidiaries is
terminated by the Company or any such subsidiary before the date prescribed for
payment with respect to an Award Period for any reason other than for Cause (as
defined in subsection E below), the Participant's Long-term Incentive
Compensation Award only for the Award Period(s), if any, ending at the end of
the fiscal year in which the termination of service occurs will be prorated on
the basis of the ratio of the number of weeks of participation during such Award
Period to the aggregate number of weeks in such Award Period, unless otherwise
determined by the Committee. Payment of the prorated Long-term Incentive
Compensation Award will occur at the end of the Award Period on the date that
all other Participants receive payment of such Long-term Incentive Compensation
Award.
C. If a Participant is demoted to a position that at the time of such
demotion is not eligible to be designated for participation in the Plan before
the date prescribed for payment with respect to an Award Period, the
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Participant's Long-term Incentive Compensation Award only for the Award
Period(s), if any, ending at the end of the fiscal year in which the demotion
occurs will be prorated on the basis of the ratio of the number of weeks of
participation prior to demotion during such Award Period to the aggregate number
of weeks in such Award Period, unless otherwise determined by the Committee.
Payment of the prorated Long-term Incentive Compensation Award will occur at the
end of the Award Period on the date that all other Participants receive payment
of such Long-term Incentive Compensation Award.
D. Except as otherwise provided in this Section IX, if a Participant's
employment with the Company and its subsidiaries is terminated before the date
prescribed for payment with respect to an Award Period for any reason or if the
Participant voluntarily terminates his or her employment, the Participant will
not be entitled to any Long-term Incentive Compensation Award for any such Award
Period, unless otherwise determined by the Committee.
E. For purposes of this Plan, "Cause" means that the Participant shall
have: (i) committed an act of fraud, embezzlement or theft in connection with
his or her duties or in the course of his or her employment with the Company or
of its subsidiaries; (ii) committed intentional wrongful damage to property of
the Company or any of its subsidiaries; or (iii) committed intentional wrongful
disclosure of secret processes or confidential information of the Company or any
of its subsidiaries.
X. SPECIAL AWARDS AND OTHER PLANS
A. Nothing contained in the Plan shall prohibit the Company or any of its
subsidiaries from granting special performance or recognition awards, under such
conditions and in such form and manner as it sees fit, to employees (including
Participants) for meritorious service of any nature.
B. In addition, nothing contained in the Plan shall prohibit the Company or
any of its subsidiaries from establishing other incentive compensation plans
providing for the payment of incentive compensation to employees (including
Participants).
XI. ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN
A. The Board of Directors or the Committee shall have the right to amend
the Plan from time to time or to repeal it entirely or to direct the
discontinuance of Long-term Incentive Compensation Awards either temporarily or
permanently; provided, however, that (i) no amendment of the Plan shall operate
to annul, without the consent of the Participant, a Long-term Incentive
Compensation Award already made hereunder; and (ii) with respect to Long-term
Incentive Compensation Awards for Covered Employees, no amendment to change the
maximum Long-term Incentive Compensation Award of a Covered Employee, the
definition of Covered Employee, or the enumerated Performance Measures shall be
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effective without approval by the shareholders of the Company. Notwithstanding
the foregoing, in the event this Plan is terminated before the last day of an
Award Period, Long-term Incentive Compensation Awards payable for such Award
Period will be prorated on the basis of the ratio of the number of weeks in such
Award Period prior to such termination to the aggregate number of weeks in such
Award Period and will be paid only after the end of such Award Period, which
will be deemed to continue until the expiration thereof as if this Plan had not
been terminated.
B. This Plan will be administered by the Committee. The decision of the
Committee or the Board of Directors with respect to any questions arising in
connection with the administration or interpretation of the Plan shall be final,
conclusive and binding.
XII. MISCELLANEOUS
A. All expenses and costs in connection with the operation of the Plan
shall be borne by the Company.
B. All Long-term Incentive Compensation Awards under the Plan are subject
to withholding, where applicable, for federal, state and local taxes.
C. Unless otherwise determined by the Committee, all Long-term Incentive
Compensation Awards will be paid from the Company's general assets, and nothing
contained in this Plan will require the Company to set aside or hold in trust
any funds for the benefit of any Participant, who will have the status of a
general unsecured creditor of the Company.
D. This Plan will not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any subsidiary,
nor will it interfere in any way with any right the Company or any subsidiary
would otherwise have to terminate or modify the terms of such Participant's
employment or other service at any time.
E. Except as otherwise provided in this Plan, no right or benefit under
this Plan will be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge such right or benefit will be void. No such right or
benefit will in any manner be liable for or subject to the debts, liabilities,
or torts of a Participant.
F. If any provision in this Plan is held to be invalid or unenforceable, no
other provision of this Plan will be affected thereby.
G. This Plan will be governed by and construed in accordance with
applicable United States federal law and, to the extent not preempted by such
federal law, in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflict of laws thereof.
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