Employment Agreement - Albertson's Inc. and John Sims
April 3, 2002
John Sims
9310 Old Indian Hill Road
Cincinnati, OH 45243
Dear John:
I am pleased to confirm my verbal offer of employment for the position of
Executive Vice President and General Counsel for Albertson's, Inc. (the
"Company"). In this assignment, you will report directly to Larry Johnston, our
CEO. Your employment with the Company will commence on March 25, 2002 (the
"Effective Date").
Your initial base salary ("Base Salary") will be $400,000 per annum, payable in
accordance with the Company's policies relating to salaried employees. Your Base
Salary may be changed by the Compensation Committee of the Board of Directors of
the Company (the "Compensation Committee") in its sole discretion.
Commencing with the fiscal year of the Company ("Fiscal Year") in which the
Effective Date occurs, you will have the opportunity to earn an incentive for
each Fiscal Year as recommended by the Compensation Committee in accordance with
the Company's annual incentive plan applicable to the Company's senior officers
(the "Annual Incentive Compensation Plan"). The amount of each annual incentive
shall be set by the Compensation Committee and is currently equal to seventy
percent (70%) of Base Salary for the fiscal year if the applicable "target"
performance goals (as defined in the Annual Bonus Plan for such period) are met
(the "Target Award"), except that the award cannot exceed one hundred fifty
percent (150%) of Target Award. The criteria for determining the amount of any
Target Award and the bases upon which such Target Award shall be payable shall
be no less favorable to you than those used for other senior executives of the
Company, such criteria and bases to be determined in the sole discretion of the
Compensation Committee.
As of the Effective Date, you will receive a $100,000 sign-on bonus.
As of the Effective Date, you will be granted 40,000 shares of deferrable
restricted stock units of the Company ("Restricted Stock Unit Award") in
accordance with the form of grant used by the Company for grants made to its
senior executive officers. Such grants shall vest at twenty percent (20%) per
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Mr. John Sims
March 22, 2002
Page 2
year on the first, second, third, fourth, and fifth anniversaries of the
Effective Date; provided in each case that you have been continuously employed
as a senior executive with the Company from the Effective Date through the
applicable vesting date, except as otherwise provided in this letter agreement
and in such deferrable restricted stock unit agreement. To the extent that
dividends are paid on Company common stock after the Effective Date and prior to
the date that the Company common stock that is subject to a Restricted Stock
Unit Award is issued to you, you shall be entitled to receive a cash payment in
an amount equal to the dividends you would have been entitled to receive had you
been the owner of such unissued shares on the date such dividends are paid. Such
cash payment shall be made at the same time payment of dividends are made to
other shareholders of Company common stock.
As of the Effective Date, you will be granted an option ("Initial Option") to
purchase an amount equal in value to three million dollars ($3,000,000) of
common stock of the Company at a per share exercise price equal to the fair
market value of the common stock of the Company on the Effective Date in
accordance with the form of grant used by the Company for grants made to its
senior executive officers; provided that the provisions of such grant shall not
be inconsistent with, or provide for additional obligations upon you beyond, the
terms of this letter agreement, and shall be subject to reasonable review by
your counsel. Such grant will vest and become exercisable in annual installments
at the rate of 20% of the total shares granted on each of the first, second,
third, fourth, and fifth anniversaries of the Effective Date (each such
installment, an "Initial Option Installment"); provided in each case that you
have been continuously employed as a senior executive with the Company from the
Effective Date through the applicable vesting date, except as otherwise provided
in this letter agreement and in such stock option grant agreement.
You will be eligible to receive additional grants of stock options to purchase
shares of common stock of the Company from time to time as recommended by the
Compensation Committee in its sole discretion in accordance with the Company's
usual form of grant. The average option for an Executive Vice President is an
amount equal in value to three million dollars ($3,000,000), the number of
shares of which shall be equal to three million dollars ($3,000,000) divided by
the closing New York Stock Exchange price of the Company's stock on the date of
such grant (which would be approximately 100,000 shares based on a stock price
of $30), and vesting at the rate of twenty percent (20%) of the total shares
granted on each of the first, second, third, fourth, and fifth anniversaries of
the date of such grant. Subsequent annual option awards otherwise shall be
subject to the terms and conditions as generally apply to stock options granted
to other senior executive officers who participate in the Company's equity
incentive plans.
The Company will maintain, for your benefit, officer liability insurance in
a form it maintains for its other senior executive officers. You will be
indemnified by the Company against liability as an officer of the Company and
any subsidiary or affiliate of the Company to the same extent as the Company's
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Mr. John Sims
March 22, 2002
Page 3
other senior officers. Your rights to such indemnification and insurance will
continue so long as you may be subject to liability, whether or not your
employment may have terminated prior thereto.
You will be provided with four (4) weeks of paid vacation per year
beginning with the 2002 calendar year and sick leave and paid holidays in
accordance with the Company's standard policy regarding these benefits for
senior executive officers of the Company.
You will also be eligible to participate in each fringe, welfare,
retirement and incentive programs adopted from time to time by the Company for
the benefit of, and which generally apply to, its highest level of senior
executive officers from time to time, including the Company's 401(k) and profit
sharing plans, in accordance with the terms of such plans and programs. The
Company will waive any otherwise applicable waiting periods for its medical
benefits and life insurance plans.
The Company will reimburse you in accordance with the Company's relocation
policy provided under its "Full Service Move Program for Senior Executive
Officers" (the "Relocation Program"), a copy of which has been provided to you
previously, in connection with your relocation to Boise, Idaho. Pursuant to the
Relocation Program, you will be entitled to a "gross-up" payment with respect to
those reimbursement payments described in the Relocation Program in an amount
such that, after payment of all applicable taxes on such reimbursement payments
and "gross-up" payment, you retain an amount equal to the amount of such
reimbursement payments.
In the event of your termination of employment by the Company within two
(2) years of the Effective Date for any reason other than cause, you shall be
entitled to receive:
(a) Any earned, but unpaid, Base Salary;
(b) Any earned, but unpaid, bonus for any Fiscal Year that ended prior to
the Fiscal Year in which the date of termination occurs;
(c) The cash equivalent of any accrued, but unused, vacation; and
(d) Any accrued employee benefits, subject to the terms of the applicable
employee benefit plans.
The Company will provide a severance program that will be effective for the
first two (2) years of your employment. If your employment is terminated during
the two years for any reason other than for cause, you will be eligible to
receive a lump sum severance payment equal to $680,000 (commencement base salary
plus target award).
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Mr. John Sims
March 22, 2002
Page 4
Please understand that this offer is subject to the Company having completed to
its satisfaction any background or reference checks, as it may deem appropriate.
Further, this letter shall not be construed to create an employment contract of
any kind, express or implied, and your employment status shall be and remain
"employment at will"; provided, however, that upon termination you shall be
entitled to the benefits as set forth in this letter.
As a condition to receipt of any severance payments or continued benefits
under this letter upon your termination for any reason, you will execute a
release agreement reasonably satisfactory to the Company releasing any and all
claims arising out of your employment with the Company.
In the event of any conflict between the terms of this letter agreement and
the terms of any other agreement, award or arrangement contemplated hereby, the
terms of this letter agreement shall control.
If the terms outlined above reflect your understanding of our offer and you
accept employment based on these terms, please indicate your acceptance by
signing the two original letters provided. Please keep one letter for your
records and return the other to me.
We are extremely pleased to have you join the Albertson's team, and I look
forward to our association with you in this important role at Albertson's.
Sincerely,
/s/ Kathy Herbert
Kathy Herbert
Executive Vice President
Human Resources
Accepted and agreed to this
4th day of April, 2002
/s/ John R. Sims
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John R. Sims