Operating Performance Bonus Plan for Executive Officers - Safeway Inc.
THE OPERATING PERFORMANCE BONUS PLAN
FOR EXECUTIVE OFFICERS OF SAFEWAY INC.
Safeway Inc., a Delaware corporation (the "Company"), hereby
adopts The Operating Performance Bonus Plan for Executive Officers of Safeway
Inc. (the "Plan"). The objectives of the Plan are to motivate and reward
executives to produce results that increase shareholder value and to encourage
individual and team behavior that helps the Company achieve both short and
long-term corporate objectives.
ARTICLE I
DEFINITIONS
Section 1.1 - Base Compensation. "Base Compensation" shall mean
the Participant's regular weekly base salary rate as of the first day of the
year, excluding moving expenses, bonus pay and other payments which are not
considered part of regular weekly salary rate, multiplied by the number of
weeks the Participant is eligible, including up to six weeks of Paid Leave of
Absence.
Section 1.2 - Paid Leave of Absence. "Paid Leave of Absence"
shall mean a period of time during which a Participant performs no duties due
to an illness, incapacity (including disability), layoff, jury duty, military
duty or a leave of absence for which the Participant is so paid or so entitled
to payment by the Company, whether direct or indirect, but excluding vacation
time.
Section 1.3 - Participant. "Participant" shall mean any of the
Chief Executive Officer ("CEO"), the Executive Vice President - Supply and any
Executive Officer.
ARTICLE II
BONUS AWARDS
Section 2.1 - CEO. For each fiscal year the Compensation
Committee (the "Committee") shall establish a performance target which shall
include three components of overall Company performance: (i) same store sales,
(ii) operating profit and (iii) working capital. Achievement of specified
levels above the performance target will result in an award not to exceed 80%
of Base Compensation, paid in accordance with Article III. Prior to the
payment of a bonus award the Committee must certify the level of performance
attained by the Company during the year to which such bonus award relates.
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Section 2.2 - Executive Officers. Each Executive Officer
(including the Executive Vice President - Supply, but excluding the CEO) is
eligible for this bonus award. Achievement of specified levels above the
performance target described under Section 2.1 will result in bonus awards not
to exceed 40% for some and up to 100% of other Executive Officers' Base
Compensation, as previously established by the Committee. At the CEO's
discretion, however, the CEO may reduce the amount payable to any Executive
Officer, paid in accordance with Article III. Prior to the payment of a bonus
award the Committee must certify the level of performance attained by the
Company during the year to which such bonus award relates.
Section 2.3 - Executive Vice President - Supply. For each fiscal
year the Committee shall establish a performance target which shall include
four components of performance for the Supply Division: (i) total Supply
Division income, (ii) plant performance, (iii) Glencourt income contribution
and (iv) working capital turnover. Achievement of specified levels above the
performance target will result in an award not to exceed 40% of Base
Compensation, paid in accordance with Article III. Prior to the payment of a
bonus award the Committee must certify the level of performance attained by the
Supply Division during the year to which such bonus award relates.
ARTICLE III
PAYMENT OF BONUS AWARD
Section 3.1 - Form of Payment. Each bonus award shall be divided
into two components, a cash bonus and a stock bonus. The amount of cash bonus
shall be between 70% and 80% of the bonus award and the amount of stock bonus
shall be between 20% and 30% of the bonus award. Stock bonuses shall be paid
in accordance with the provisions of the 1994 Amended and Restated Stock Option
and Incentive Plan for Key Employees of Safeway Inc.
Section 3.2 - Timing of Payment. Each bonus award shall be paid
as soon as practicable after the end of the fiscal year to which such bonus
award relates.
ARTICLE IV
SECTION 162(m)
Section 4.1 - Qualified Performance Based Compensation. The
Committee, in it discretion, may determine whether a bonus award should qualify
as performance-based compensation as described in Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and may take such
actions which it may deem necessary to ensure that such bonus award will so
qualify.
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Section 4.2 - Performance Goals. With respect to any bonus award
which the Committee determines should qualify as performance-based
compensation, any of the performance targets described in Sections 2.1 and 2.3,
if applicable to such bonus award, shall be established before the first day of
the fiscal year to which such bonus award relates, except as may be otherwise
provided under Section 162(m)(4)(C) of the Code.
ARTICLE V
TRANSFERS AND TERMINATIONS
Section 5.1 - Transfers. For a Participant who moves from one
Executive Officer position to another during a year, the bonus award for the
year will be the sum of the pro-rata bonus awards calculated for each position.
Section 5.2 - Terminations. Except as provided in Section 5.1 or
as otherwise provided by the Committee, a Participant who, whether voluntarily
or involuntarily, is terminated, demoted, transferred or otherwise ceases to be
an Executive Officer at any time during a year shall not be eligible to receive
a partial year bonus award, except when the reason for leaving the position is
for reasons of health or retirement; provided, however, that with respect to a
Participant who leaves for reasons of health or retirement, the Committee or
the CEO, in their discretion, may determine that such participant shall not
receive a partial year bonus award.
ARTICLE VI
ADMINISTRATION
Section 6.1 - Compensation Committee
(a) The Committee shall consist of at least two persons
appointed by and holding office at the pleasure of the Board.
(b) Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee shall be
filled by the Board.
Section 6.2 - Duties and Powers of Committee. It shall be the
duty of the Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the power to
interpret the Plan, and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan except with respect to matters which
under Section 162(m) of the Code are required to be determined in the sole and
absolute discretion of the Committee.
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Section 6.3 - Majority Rule. The Committee shall act by a
majority of its members in office. The Committee may act either by vote at a
meeting or by a memorandum or other written instrument signed by a majority of
the Committee.
ARTICLE VII
OTHER PROVISIONS
Section 7.1 - Amendment, Suspension or Termination of the Plan.
This Plan does not constitute a promise to pay and may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board. However, to the extent required by Section 162(m) with
respect to bonus awards which the Committee determines should qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code, no action of the Board may modify the performance targets described in
Sections 2.1 and 2.3 if applicable to such bonus awards, after the commencement
of the year with respect to which such bonus awards relate.
Section 7.2 - Approval of Plan by Stockholders. This Plan shall
be submitted for the approval of the Company's stockholders.