The Board has an Audit Committee, a Human Resources and Compensation Committee, a Governance and Nominating Committee and an Executive Committee. Beginning in May 2008 the Board also established, on a temporary basis, the Ad Hoc Leadership Transition Committee. The primary functions of each committee, its members, the number of times the committee met during 2009,2010, and certain other information regarding each committee, are described below.
The current members of the Audit Committee are Philip M. Browne (Chair), Lucinda M. Baier and Todd C. McCarty. The Board has determined that each of Mr. Browne and Ms. Baier is an “audit committee financial expert” as defined by SEC rules and the listing standards of the NASDAQ Stock Market. The Audit Committee is comprised entirely of “independent” directors underas defined by applicable SEC rules and NASDAQ Stock Market listing standards and operates under a charter that was adopted by the Board of Directors.Board. This charter is posted in the Investor Relations section of the Company’s website at www.bonton.com.
The Audit Committee appoints and establishes the compensation for the Company’s independent registered public accounting firm and approves in advance all engagements with the independent registered public accounting firm to perform audit or non-audit services. The Audit Committee oversees (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the qualification, independence and performance of the Company’s independent registered public accounting firm and (4) the performance of the Company’s internal audit function. The Audit Committee also oversees the financial reporting processes of the Company and the audits of the Company’s financial statements. To assist it in carrying out its responsibilities, the Audit Committee is authorized to retain the services of independent advisors.
The members of the Human Resources and Compensation Committee (referred to in this proxy statement as the “HRCC”) are Marsha M. Everton (Chair), Shirley A. Dawe and Todd C. McCarty. The HRCC is comprised entirely of “independent” directors, as defined by the listing standards of the NASDAQ Stock Market, and all members are “non-employee directors” underas defined by applicable SEC rules and “outside directors” underas defined by applicable Internal Revenue Service Rules. The HRCC operates under a charter that was adopted by the Board of Directors.Board. This charter is posted in the Investor Relations section of the Company’s website at www.bonton.com.
The HRCC reviews and evaluates the Company’s overall compensation strategy to ensure that it promotes shareholder interests, supports the Company’s strategic objectives and provides for appropriate rewards and incentives for the Company’s management and employees. The HRCC reviews, evaluates and provides recommendations to the Board regarding the plans, policies and programs relating to the compensation of the Company’s executive officers, the general compensation policies of the Company, succession planning, management development, and termination policies and arrangements. In addition, the HRCC reviews and approves the structure of the Company’s bonus plans, administers the Company’s stock option plans and oversees the Company’s retirement, defined benefit and health and welfare plans.
continued service, taking into consideration the value of continuity and familiarity with the Company’s business.
Director Attendance at Annual Meetings
The Company has adopted a policy that encourages Board members who reside in the York area to attend the annual meeting of shareholders. Four of the eight members of the Board attended the 20092010 Annual Meeting of Shareholders.
Shareholder Communication with the Board of Directors
Any shareholder who wishes to communicate with the Board of Directors or any individual director may do so by directing correspondence, which prominently displays the fact that it is a shareholder-board communication, to such director or directors,c/o Office of the Secretary, The Bon-Ton Stores, Inc., P.O. Box 2821, York, Pennsylvania 17405. Until and unless a procedure is adopted by a majority of the independent members of the Board whereby it may be deemed unnecessary or inappropriate to relay certain shareholder communications to the appropriate parties, all shareholder communications will be relayed to the intended director or directors.
Compensation of Directors
Messrs. Grumbacher and Bergren are employees of the Company and are not paid any separate compensation for serving as directors. They are the only employees who serve as directors.
In 2009, eachEach non-employee director receivedreceives both cash compensation and stock compensation comprised of the following:
| | |
| • | a $110,000$120,000 annual fee, $50,000 of which wasis paid in cash (the “annual cash retainer”) and $60,000$70,000 of which wasis paid in RSUs that vestedvest at the end of the fiscal year;current term; |
|
| • | a $20,000 annual cash fee for serving on the Executive Committee; |
|
| • | a $5,000 annual cash fee for serving on each committee other(other than the Executive Committee), including the Ad Hoc Leadership Transition Committee; |
|
| • | a $10,000 supplemental annual fee for each committee chair; and |
|
| • | a $3,000$15,000 supplemental annual fee for serving oneach committee chair, including the Ad Hoc Leadership Transition Committee, with an additional annual fee$10,000 of which is paid in cash and $5,000 paid toin RSUs that vest at the chairend of this committee.the current term. |
One of the Company’s non-employee directors, currently Lucinda M. Baier, serves as the Board’s representative on the committee that oversees the Company’s Retirement Contribution Plan.retirement contribution plan. For her service on this committee, Ms. Baier receives $1,250 for each meeting attended.
13
As of January 1, 2010, the Board elected Mr. Gleim as Lead Director of the Board. For his service as Lead Director, Mr. Gleim receives a supplemental fee of $150,000$140,000 per year. Mr. Gleim was previously paid a fee under a consulting agreement with the Company. That consulting agreement expired December 31, 2009.
Directors may defer all or any part of their cash compensation into additional RSUs.
The following table presents the compensation provided by the Company during 20092010 to each non-employee director:director. The portion of the annual fee that was paid in RSUs was increased in 2010 to $70,000 from the previous amount of $60,000. In addition, the grant date for the RSUs was set to coincide with the annual meeting of shareholders each year. With the institution of the change in 2010, directors received a grant of RSUs with a vesting period of 18 months, and the amount of the grant was adjusted accordingly for 2010.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Change in
| | | | | | | |
| | | | | | | | Pension
| | | | | | | |
| | | | | | | | Value and
| | | | | | | |
| | | | | | | | Nonqualified
| | | | | | | |
| | Fees Earned
| | | | | | Deferred
| | | | | | | |
| | or Paid
| | | Stock
| | | Compensation
| | | All Other
| | | | |
| | In Cash
| | | Awards
| | | Earnings
| | | Compensation
| | | Total
| |
Name | | ($) | | | ($)(1) | | | ($) | | | ($) | | | ($) | |
|
Lucinda M. Baier | | | 58,000 | | | | 60,000 | | | | — | | | | 2,500 | (2) | | | 120,500 | |
Philip M. Browne | | | 65,000 | | | | 60,000 | | | | — | | | | — | | | | 125,000 | |
Shirley A. Dawe | | | 83,000 | | | | 60,000 | | | | — | | | | — | | | | 143,000 | |
Marsha M. Everton | | | 73,000 | | | | 60,000 | | | | — | | | | — | | | | 133,000 | |
Michael L. Gleim | | | 85,000 | | | | 60,000 | | | | 21,565 | (3) | | | 150,000 | (4) | | | 316,565 | |
Todd C. McCarty | | | 57,500 | | | | 60,000 | | | | — | | | | — | | | | 117,500 | |
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| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Change in
| | | | | | | |
| | | | | | | | Pension
| | | | | | | |
| | | | | | | | Value and
| | | | | | | |
| | | | | | | | Nonqualified
| | | | | | | |
| | Fees Earned
| | | | | | Deferred
| | | | | | | |
| | or Paid
| | | Stock
| | | Compensation
| | | All Other
| | | | |
| | In Cash
| | | Awards
| | | Earnings
| | | Compensation
| | | Total
| |
Name | | ($) | | | ($)(1) | | | ($) | | | ($) | | | ($) | |
|
Lucinda M. Baier | | | 55,000 | | | | 100,000 | | | | — | | | | 5,000 | (2) | | | 160,000 | |
Philip M. Browne | | | 70,000 | | | | 105,000 | | | | — | | | | — | | | | 175,000 | |
Shirley A. Dawe | | | 85,000 | | | | 105,000 | | | | — | | | | — | | | | 190,000 | |
Marsha M. Everton | | | 70,000 | | | | 105,000 | | | | — | | | | — | | | | 175,000 | |
Michael L. Gleim | | | 95,000 | | | | 110,000 | | | | — | (3) | | | 140,000 | (4) | | | 345,000 | |
Todd C. McCarty | | | 65,000 | | | | 100,000 | | | | — | | | | — | | | | 165,000 | |
| | |
(1) | | The amounts reported in this column reflect the aggregate grant date fair value of RSUs computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718,Compensation — Stock Compensation(“ASC 718”) for RSUs granted on August 24, 2009June 15, 2010 and July 8, 2010 to each non-employee director. The amounts do not reflect compensation actually received by the non-employee directors. RSUs do not confer on the non-employee director voting or dispositive control over common shares until one year following termination of Board services. Assumptions used in the calculation of these amounts are included in Note 15 to our audited financial statements included in ourForm 10-K filed with the SEC on April 16, 2010.13, 2011. |
|
| | The aggregate number of RSUs held by each non-employee director as of January 30, 201029, 2011 was: |
28,86338,033 held by Ms. Baier
28,94038,110 held by Mr. McCarty
39,24648,973 held by each of Mmes. Dawe and Everton and Messrs.Mr. Browne and
49,530 held by Mr. Gleim
| | |
(2) | | Fees received for Ms. Baier’s service on the Company’s Retirement Contribution Plan Committee. |
|
(3) | | This amount is theThe actuarial valuation of the change in the pension value of Mr. Gleim’s benefit in the Bon-Ton SERP.Supplemental Executive Retirement Plan (“SERP”) was a decrease of $4,654. |
|
(4) | | Fees received for Mr. Gleim andGleim’s service as Lead Director of the Company entered into a consulting agreement under which Mr. Gleim received $150,000 in cash compensation in 2009. The consulting agreement terminated December 31, 2009.Board. |
Share Ownership Guidelines
In December 2007, the Company adopted guidelines requiring each director to maintain an equity stake in the Company equal to three times the annual cash retainer paid to the director. This links the directors’ interests with those of other shareholders. Shares of Common Stock actually owned and RSUs that are time-based count towards the equity ownership requirement. Each director is required to achieve this share ownership level by the later of five years after joining the Board or five years after adoption of the guideline. Accordingly, each non-employee director standing for election in 20102011 must meet this guideline by December 2012.
All of the non-employee directors standing for election currently satisfy the guideline.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING “FOR” THE ELECTION OF
THE NOMINEES LISTED ABOVE
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PROPOSAL TWO
APPROVAL, ON AN ADVISORY BASIS, OF COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
The recently enacted Dodd-Frank Act provides that the Company’s shareholders have the opportunity to vote to approve, on an advisory (nonbinding) basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. Pursuant to Section 14A of the Securities Exchange Act, the Company is presenting the following “say on pay” proposal, which gives shareholders the opportunity to approve or not approve the Company’s compensation program for named executive officers, as disclosed pursuant to Item 402 ofRegulation S-K, by voting for or against the resolution set out below. While our Board intends to carefully consider the shareholder vote resulting from this proposal, the final vote will not be binding on the Company and is advisory in nature. The Company submits the following proposal:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 ofRegulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”
As described in the “Executive Compensation” section, the Company’s executive compensation programs are designed to attract, motivate and retain talented executives. In addition, the programs are structured to create an alignment of interests between the Company’s executives and shareholders. The Board and the HRCC monitor executive compensation programs and adopt changes to reflect the competitive market in which the Company competes for talent, as well as general economic, regulatory and legislative developments affecting executive compensation. The HRCC will continue to emphasize compensation arrangements that align the financial interests of our executives with the interests of long-term shareholders. Accordingly, we believe that the Company’s executive compensation programs are appropriately designed and work to ensure that management’s interests are closely aligned with shareholders’ interests to create long-term value. Please refer to the section entitled “Executive Compensation” of this proxy statement for a detailed discussion of the Company’s executive compensation practices and philosophy.
THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” APPROVAL OF THE
COMPENSATION AWARDED TO THE COMPANY’S NAMED EXECUTIVE
OFFICERS FOR FISCAL YEAR 2010
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PROPOSAL THREE
APPROVAL, ON AN ADVISORY BASIS, OF FREQUENCY OF VOTE
TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
The Dodd-Frank Act also provides that the Company’s shareholders have the opportunity to indicate how frequently the Company should seek an advisory vote on the compensation of the Company’s named executive officers. By voting on this proposal, shareholders may indicate whether they would prefer that the advisory vote on the compensation of the Company’s named executive officers occur once every one, two, or three years.
After careful consideration, the Board has determined that an advisory vote on executive compensation that occurs annually is the most appropriate alternative for the Company, and therefore the Board recommends that shareholders vote for a one-year interval for the advisory vote on the compensation of the Company’s named executive officers.
An annual advisory vote on executive compensation will allow shareholders to provide direct input on the Company’s compensation philosophy, policies and practices as disclosed in the proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with the Company’s policy of seeking input from, and engaging in discussions with, our shareholders on corporate governance matters and our executive compensation philosophy, policies and practices. Therefore, the Board recommends that shareholders vote to approve the compensation awarded to the Company’s named executive officers once every year.
The Company submits the following proposal:
“RESOLVED, that the option of once every one year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold an advisory shareholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules, including the Compensation Discussion and Analysis, the tabular disclosure regarding such compensation and the accompanying narrative disclosure.”
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to this proposal. The option of one year, two years or three years that receives the highest number of votes cast by the shareholders will be the frequency for the advisory vote on executive compensation that has been recommended by the shareholders. However, because this vote is advisory and not binding on the Board or the HRCC, the Board may decide that it is in the best interests of the Company and its shareholders to hold an advisory vote on executive compensation that differs from the option that received the highest number of votes from the Company’s shareholders.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR “ANNUALLY” FOR
THE FREQUENCY OF THE VOTE ON THE APPROVAL OF THE COMPENSATION
AWARDED TO THE COMPANY’S NAMED EXECUTIVE OFFICERS
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PROPOSAL FOUR
RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has recommended ratification of its appointment of KPMG LLP (“KPMG”), which served as our independent registered public accounting firm in 2009,2010, to serve as our independent registered public accounting firm for 2010.2011.
In making its selection of KPMG, the Audit Committee considered whether the non-audit services provided by KPMG are compatible with maintaining KPMG’s independence.
FEES PAID TO KPMG
| | | | | | | | | | | | | | | | |
| | 2009 | | 2008 | | | 2010 | | 2009 | |
| | | | |
|
Audit Fees(1) | | $ | 1,819,436 | | | $ | 1,813,925 | | | $ | 1,783,931 | | | $ | 1,819,436 | |
Audit-Related Fees | | | — | | | | — | | | | — | | | | — | |
Tax Fees(2) | | | 315,942 | | | | 358,833 | | | | 281,885 | | | | 315,942 | |
All Other Fees | | | — | | | | — | | | | — | | | | — | |
| | |
(1) | | Audit Fees include fees associated with audit services, consultation on matters related to the consolidated financial statements, consents, reviews of the Company’s quarterly reports onForm 10-Q and reviews of the Company’s filings under the Securities Exchange Act of 1934. |
|
(2) | | Tax Fees reflect various tax-related services, including consultation, return preparation, planning and compliance. |
The Audit Committee is responsible for the pre-approval of all audit services and non-audit services performed by the Company’s independent registered public accounting firm. All of the fees shown in the chart above were pre-approved by the Audit Committee. The Audit Committee may delegate to one of its members the authority to grant such pre-approvals, and any such approvals are presented to the full Audit Committee at its next scheduled meeting.
A representative of KPMG is expected to be present at the meeting, will have the opportunity to make a statement if he or she so desires, and will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING “FOR” RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
1517
PROPOSAL FIVE
AMENDMENT OF THE COMPANY’S ARTICLES OF INCORPORATION TO REQUIRE
THAT DIRECTORS BE ELECTED BY A MAJORITY OF VOTES CAST
The Board recommends that shareholders approve an amendment to the Company’s Articles of Incorporation to require that, in an uncontested election, each director be elected by a majority of votes cast. Currently, under Pennsylvania law, absent a contrary requirement in the Articles of Incorporation or bylaws, directors are elected through plurality voting in which the nominees with the most votes are elected. Under plurality voting, only “for” votes are counted, not any “withhold” votes, so in an uncontested election a director could be elected with only one “for” vote, despite an overwhelming number of “withhold” votes.
The proposed amendment would add a new Article 9 to the Articles of Incorporation, requiring that, in any election of directors in which the number of nominees equals the number of directors to be elected, a nominee must receive a majority of the votes cast in order to be elected. A majority of votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. In contrast, in a contested election where the number of nominees exceeds the number of directors to be elected, the current plurality voting rules will be in effect, meaning that the nominees receiving the highest numbers of votes, up to the number of directors to be elected, will be elected.
In an uncontested election, an incumbent director who is not re-elected because he or she does not receive a majority of the votes cast would nonetheless continue in office because no successor has been elected. This is referred to as the “director holdover rule.” In that event, the incumbent director must tender his or her resignation to the Board. If a majority of the votes entitled to be cast in the election of directors are voted “against” such director, then his or her resignation will be effective immediately. If fewer than a majority of the votes entitled to be cast in the election of directors are voted “against” such director, then the Board must decide whether to accept or reject such director’s resignation, or whether other action should be taken, within 90 days after the date of the certification of the election results. The director who tenders his or her resignation will not participate in the decisions of the Board or any committee with respect to his or her own resignation.
Given recent changes in corporate governance standards, the Board now believes that, in uncontested elections, requiring directors to be elected by a simple majority vote is more appropriate than plurality voting.
With the approval of the Company’s shareholders, the following resolutions will be adopted to effectuate the proposed amendment to require that the directors be elected by a majority of the votes cast:
RESOLVED, that the adoption of an amendment to the Articles of Incorporation of the Company is hereby approved to add a new Article 9 to read as set forth in these resolutions; and
FURTHER RESOLVED, that the new Article 9 of the Articles of Incorporation of the Company shall read as follows:
9. Each nominee for election as a director shall be elected by the vote of the majority of the votes cast by all shareholders entitled to vote with respect to the election of such nominee at any meeting for the election of directors, provided that if the number of nominees exceeds the number of directors to be elected at such meeting, then the nominees receiving the highest number of votes up to the number of directors to be elected shall be elected. For purposes of this Article, a majority of the votes cast means that the number of votes that are cast “for” a nominee must exceed the number of votes cast “against” such nominee. If any incumbent director is not elected, such director shall immediately tender his or her resignation to the Board of Directors. If a majority of the votes entitled to be cast in the election of
18
directors are voted “against” such director, then his or her resignation shall be effective immediately. If fewer than a majority of the votes entitled to be cast in the election of directors are voted “against” such director, then the Board of Directors shall decide whether to accept or reject such director’s resignation, or whether other action should be taken, within 90 days after the date of the certification of the election results. No director required to tender his or her resignation shall participate in the decisions of the Board of Directors or any committee thereof with respect to his or her own resignation.
THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE AMENDMENT
OF THE COMPANY’S ARTICLES OF INCORPORATION TO REQUIRE THAT
DIRECTORS BE ELECTED BY A MAJORITY OF VOTES CAST
19
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three independent directors. The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting, and rely, without independent verification, on the information provided to them and on the representations made to them by management and the Company’s independent registered public accounting firm.
The role of the Audit Committee is to assist the Board of Directors in its general oversight of the integrity of the Company’s consolidated financial statements and compliance with legal and regulatory requirements. The Audit Committee is directly responsible for the appointment, compensation and oversight of the Company’s independent registered public accounting firm, KPMG. Management is responsible for the preparation, presentation and integrity of the Company’s consolidated financial statements, for its accounting and financial reporting principles and for the establishment and effectiveness of internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. KPMG is responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and expressing an opinion as to the conformity of such consolidated financial statements with accounting principles generally accepted in the United States and an opinion on the effectiveness of internal control over financial reporting based on criteria established in the Internal Control-Integrated Framework issued by the Committee on Sponsoring Organizations of the Treadway Commission. KPMG has free access to the Audit Committee to discuss any matter it deems appropriate.
The Audit Committee has reviewed and discussed with management and KPMG the audited consolidated financial statements, management’s assessment of the effectiveness of the Company’s internal control over financial reporting and KPMG’s evaluation of the Company’s internal control over financial reporting. Management represented to the Audit Committee that the Company’s audited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees.Committees” and the additional matters required to be discussed by Statement on Auditing Standards No. 114, as modified or supplemented, “The Auditor’s Communication with Those Charged with Governance.”
KPMG also provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence and the Audit Committee discussed KPMG’s independence with them.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report onForm 10-K for the fiscal year ended January 30, 2010.29, 2011.
Members of the Audit Committee:
Philip M. Browne, Chairperson
Lucinda M. Baier
Todd C. McCarty
1620
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
This Compensation Discussion and Analysis primarily addresses the compensation of the Company’s Chief Executive Officer, the Chief Financial Officer and the three other highest paid executive officers. These five executive officers are referred to as the “named executive officers” throughout this proxy statement:
| | |
Name | | Title |
|
Tim Grumbacher | | Executive Chairman of the Board |
Byron L. Bergren | | President and Chief Executive Officer |
Anthony J. Buccina | | Vice Chairman, President — Merchandising |
Stephen R. Byers | | Vice Chairman — Stores, Visual, Construction, Real Estate, Distribution & Logistics, Loss Prevention |
Keith E. Plowman | | Executive Vice President, Chief Financial Officer and Principal Accounting Officer |
Barbara J. Schrantz | | Chief Operating Officer |
Our Compensation Philosophy and Objectives
The HRCC’s philosophy is to directly link an increasing portion of an executive officer’s compensation with corporate performance and in alignment with shareholder value and to decrease an executive officer’s base salary as a percentage of his or her total compensation as his or her scope of responsibility increases. The following are the objectives that guide the HRCC’s decisions regarding compensation:
| | |
| • | Provide a compensation package that enables the Company to attract, motivate and retain key personnel. |
|
| • | Provide variable compensation opportunities, primarily on an annual basis, that are directly linked to corporate performance goals that drive operational success and enhance shareholder value. |
|
| • | Provide long-term equity incentive compensation opportunities through the award of stock options, shares of restricted stock and restricted stock units that align executive compensation with increases in shareholder value. These opportunities are available primarily to those executive officers who can influence the Company’s medium- and long-term results, generate value for shareholders and ensure the long-term growth of the Company. Equity grants are also designed to reward significant achievement of top performing executive officers and to attract new talent. |
Based on the foregoing objectives, the HRCC has structured annual and long-term executive compensation to provide incentives to executive officers to achieve the business goals set by the Company and reward them for achieving such goals. In addition, in structuring compensation, especially performance-based compensation, the HRCC conducts a risk assessment to ensure that the Company’s compensation program does not encourage unreasonable risk.
Share Ownership Guidelines
In December 2007, the Company adopted share ownership guidelines for our executive officers. The guidelines help ensure that our executive officers maintain an equity stake in the Company, and by doing so, appropriately link their interests with those of other shareholders. Shares beneficially owned, time-based restricted shares,stock, time-based restricted sharestock units and vested stock options with an exercise price below the current market price count towards the equity ownership requirement. Outstanding non-vested stock options, performance-based restricted sharesstock and
1721
performance-based restricted stock units do not count towards the requirement. Executive officers are required to achieve these share ownership levels within five years of becoming an executive officer, or by December 2012 for those who were executive officers at the time we adopted the guidelines. The guidelines are:
| | |
Position | | Ownership Guideline |
|
Chief Executive Officer | | 3x base salary |
Vice Chairman | | 2x base salary |
Executive Vice President | | 1x base salary |
Share ownership requirements for fiscal 20092010 were measured based on the average price of the Company’s common stock during the first six months of fiscal 2007. Share ownership requirements are reviewed annually by the HRCC. The HRCC has not yet established a share ownership requirement for the position of Chief Operating Officer, a position that did not exist when the guidelines were adopted in 2007.
Each of the named executive officers in the positions listed above currently owns shares sufficient to meet the requirement.
Role of the HRCC in Compensation Decisions
The HRCC’s responsibilities include the following:
| | |
| • | Review and approve, and in some cases recommend for the approval of the full Board, the compensation for the Company’s executive officers, including the named executive officers. The total compensation of each of the executive officers is evaluated to ensure it is competitive in the marketplace and reflects the HRCC’s assessment of each executive officer’s contributions and value to the Company. |
|
| • | Approve the performance goals and metrics with respect to annual performance-based bonuses and equity awards to executive officers, including the Executive Chairman, the Chief Executive Officer and the other named executive officers. |
|
| • | Monitor total compensation paid to the named executive officers and other key executives and consider whether such compensation is fair, reasonable and competitive in consideration of each executive’s capacity to influence shareholder value and promote the long-term growth of the Company. |
|
| • | Prepare an annual review and evaluation of the Chief Executive Officer’s performance for the year compared to pre-determined, HRCC-approved, performance metrics. |
|
| • | Prepare an annual review and evaluation of the Executive Chairman’s performance for the year compared to pre-determined, HRCC-approved, performance metrics. |
Role of Management in Compensation Decisions
The Chief Executive Officer annually prepares a review of his direct reports, including the named executive officers and other key executives, excluding the Executive Chairman, compared to pre-determined, HRCC-approved performance metrics. The total compensation for the respective executives, the performance appraisals and the recommendations made by the Chief Executive Officer are presented for HRCC approval.
Other members of management also support the HRCC in its work. Management assists the Chair of the HRCC in establishing the agendas for HRCC meetings and preparing materials for the review of HRCC members in advance of each meeting. With respect to most compensation and benefit matters, including compensation of the named executive officers excluding the Executive Chairman and the President and Chief Executive Officer, management provides recommendations to the HRCC. The HRCC relies on management and, as appropriate, the advice of outside experts to evaluate employee
22
executive performance and to make recommendations for salary and bonus levels as well as for grants of stock options or awards of restricted stock. Management also works with the HRCC to
18
establish performance goals under the Company’s performance-based annual incentive compensation program. Members of management who provide this support include Byron L. Bergren; Dennis R. Clouser, Executive Vice President, Human Resources, Corporate Procurement & Operations and Information Services; and J. Gregory Yawman, Divisional Vice President and Associate General Counsel, each of whom generally attend meetings of the HRCC. Each of them is excused from a meeting during deliberation and approval of matters regarding his own compensation and from regularly scheduled HRCC executive sessions.
Benchmarking
The HRCCCompany competes against a wide range of companies in retaining and attracting executive personnel. Each year, the Company compares salary, annual incentive compensation and long-term equity incentive values for its executive officers against various retail companies (the “Compensation Peer Group”). In 2009,2010, the following retail companies were included in the Compensation Peer Group:
| | |
Abercrombie & Fitch Co. | | Macy’s, Inc.L.L. Bean Incorporated |
Auto Zone, Inc. Ann Taylor Stores Corporation | | McDonald’s CorporationMacy’s, Inc. |
Belk, Inc. | | Nordstrom, Inc. |
Big Lots, Inc. | | OfficeMax Incorporated |
Brown Shoe Company, Inc. | | Papa John’s InternationalPhillips-Van Heusen Corporation |
Collective Brands, Inc. | | Sears Holding Corporation |
CVS Corporation | | Staples,Ross Stores, Inc. |
Darden Restaurants,Dillard’s, Inc. | | Target CorporationSaks, Inc. |
Dollar General Corporation | | The Gap, Inc.Target Corporation |
Eddie Bauer, Inc. | | The Home Depot,Gap, Inc. |
Hot Topic, Inc. | | Toys R Us, Inc.The Timberland Company |
J. C. Penney Company, Inc. | | True Value CompanyThe TJX Companies, Inc. |
Limited Brands,Liz Claiborne Inc. | | Williams-Sonoma, Inc. |
L.L. Bean Incorporated | | Yum! Brands, Inc. |
Lowe’s Companies, Inc. | | |
TheIn addition, Meridian provided the Company with compensation data from the Hewitt 2010 Total Compensation database (the “Hewitt Database”) that contains information for a large number of retail companies in the Compensation Peer Group have revenues ranging from $761 million to $87and has a median revenue of $4.7 billion. Because of the variance in size among thesethe companies in the Hewitt AssociatesDatabase, Meridian assists the Company in preparing a regression analysis that adjusts the compensation data for differences in company sales. Regression analysis is a statistical technique that establishes a “line of best fit” or “trend line” between variables. In the context of compensation, regression analysis is used to determine the relationship between company size (typically defined by revenue) and pay level. This enables organizations to use a peer group that includes companies both larger and smaller than the organization in question and, through regression analysis, “size adjust” the compensation data to reflect the organization’s revenue. This adjusted value is used as the basis of comparison of compensation comparisons between the Company and the companies in the Compensation Peer Group.Group and the Hewitt Database.
The HRCC has currently determined that it is appropriate to deliver total compensation at approximately the 50th percentile of the Compensation Peer Group for each element of compensation. However, as the Company competes with many larger companies for the best executive-level talent, the HRCC may decide it is in the best interests of the Company and its shareholders to provide compensation for selected positions that exceeds the targeted compensation levels depending on the circumstances, including the Company’s needs, market factors, the executive’s experience, the contribution of the executive to the Company, and in the HRCC’s view, the positive impact the executive may have on the Company as a whole.
In addition, in 2009,2010, the HRCC reviewed proxy statement compensation data from specific retailers in its benchmarking effort with respect to compensation of the Chief Executive Officer. These retailers included Kohl’s Corporation; J.C. Penney Company, Inc.; Macy’s, Inc.; Dillard’s Inc.; Belk Inc. and
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retailers included Belk Inc.; Dillard’s Inc.; J.C. Penney Company, Inc.; Kohl’s Corporation; Macy’s, Inc.; Nordstrom, Inc.; and Saks, Inc. These companies were chosen because they are retailers with competitive assortments and a similar customer base as the Company. The HRCC recognizes that most of these retailers are larger in size than the Company, but the HRCC also believes that the Company competes directly with them for executive talent. The HRCC reviewed the compensation practices of, and the compensation packages provided by, these retailers. The data also provided context for ongoing deliberations of the HRCC.
Components of Named Executive Officer Compensation
The principal components of compensation for the named executive officers are base salary, performance-based annual cash incentive compensation, long-term equity incentive compensation, perquisites, and retirement and other benefits. The HRCC seeks to achieve a mix of these components such that total compensation is competitive in the marketplace. The HRCC also assesses the risks relating to performance-based compensation. The HRCC is transitioninghas transitioned the Company’s compensation program from its historical short-term orientation, which focused on base salary and annual incentive compensation, to a program with an increasing emphasis on long-term equity incentive compensation to better align the interests of the named executive officers with the interests of shareholders in long-term growth. The HRCC does not have a pre-established policy for allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, it evaluates the actual mix against market data and attempts to provide each named executive officer with a balanced compensation package that addresses retention and competitive requirements.
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The following table shows the components of named executive officer compensation:
| | | | |
Component | | Purpose | | Characteristics |
|
Base Salary | | Compensate named executive officers for performing their roles and assuming their levels of executive responsibility. Intended to provide a competitive level of compensation, it is a necessary component in recruiting and retaining executives. | | Fixed component. Annually reviewed by the HRCC and adjusted as appropriate. |
Performance-based Annual Cash Incentive Compensation | | Promote improvement of the Company’s financial results and performance. Intended to drive performance in a particular year without being a deterrent to long-term Company goals and initiatives or encouraging unreasonable risk. | | BonusCash bonus opportunity based on the achievement of certain goals, which may be individual performance goals, Company performance goals or a combination of the two. Where applicable, goals are typically established annually and bonus amounts awarded will vary based on performance. |
Long-Term Equity Incentive Compensation | | Promote the achievement of the Company’s long-term financial goals and stock price appreciation. Align named executive officers and shareholder interests, promote named executive officers’ retention and reward named executive officers for superior Company performance over time. | | Reviewed annually and granted, if appropriate, by the HRCC in the form of stock options, restricted stock awards and RSUs. Amounts actually earned by each named executive officer will vary and will depend on stock price. |
Perquisites and Other Benefits | | Provide health and welfare benefits as available to all employees. Additional perquisites and benefits are designed to attract, retain and reward named executive officers by providing an overall benefit package similar to those provided by comparable companies. | | Health and welfare benefits are a fixed component that may vary based on employee elections. Perquisites and other benefits may vary from year to year. |
Retirement Benefits | | Provide basic retirement benefits as available to all Company associates and supplemental coverage necessary to retain key executives. | | Participation in pension plans for certain named executive officers is a required element under applicable employment agreements. |
The HRCC has reviewed a summary, or “tally sheet,” with all components of compensation of the named executive officers, including base salary, performance-based cash incentive compensation, long-term equity incentive compensation, accumulated realized and unrealized stock option and restricted stock gains, and the dollar value to the executive and cost to the Company of all perquisites and other benefits and obligations under the Company’s supplemental executive retirement plans. The HRCC did not use the tally sheet in making individual pay decisions, but rather reviewed it to ensure the total package met the needs of both the Company and the executives. The HRCC believes the level of compensation of the Company’s named executive officers reflects the Company’s performance and total compensation to each of the named executive officers is appropriate.
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Base Salary
The base salaries of the Company’s named executive officers are determined by evaluating their roles and responsibilities and compensation data compared with the Compensation Peer Group. The base salary of each named executive officer is reviewed annually. If appropriate, the Chief Executive Officer recommends salary increases for each of the named executive officers other than himself and the Executive Chairman of the Board.himself. The HRCC’s decision to increase base salary for any named executive officer is based on the HRCC’s compensation philosophy and takes into specific account the level of responsibility of the named executive officer, the Company’s performance, the named executive officer’s individual performance and the named executive officer’s compensation compared to similarly situated executives in the Compensation Peer Group.
Minimum base salaries for Tim Grumbacher, Byron L. Bergren, Anthony J. Buccina, and Stephen R. Byers and Barbara J. Schrantz were established in employment agreements approved by the HRCC and, with respect to Mr. Bergren’s and Mr. Grumbacher’s employment agreements,agreement, the Board of Directors at the recommendation of the HRCC. These minimum base salaries were based on a variety of factors, including market data from the Compensation Peer Group and an evaluation of each person’s capacity to positively affect the Company’s performance. The HRCC decided that the current base salaries were properly aligned with competitors and more emphasis should be placed on variable compensation linked to corporate performance.
2009 was a challenging year for the Company and virtually all retail companies. In determining executive compensation for 2009, the HRCC anticipated the continuing difficult economic environment and did not approve base salary increases for the named executive officers during the year.
Performance-Based Annual Incentive Compensation
The Company has an annual incentive Cash Bonus Plan (the “Cash Bonus Plan”) in which the named executive officers participate. Awards of cash bonuses under this plan are variable, and the payout of any cash bonus under the plan is dependent upon the achievement of pre-determined Company performance goals which are pre-approved by the HRCC.
For 2009,2010, the Cash Bonus Plan for the named executive officers focused on the achievement of twoone or threetwo of the following goals:
| | |
| • | net income, (loss), with a “threshold” of approximately $(42.3)$0.4 million, a “target” of approximately $0.9$17.2 million and a “maximum” of approximately $65.4$120.0 million; |
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| • | net sales, with a “threshold” of approximately $2.912$2.903 billion, a “target” of approximately $3.021$2.985 billion and a “maximum” of approximately $3.276$3.246 billion; and |
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| • | EBITDA (defined as earnings before interest, income taxes, depreciation and amortization, including amortization of lease-related interests, and non-cash impairment charges), with a “threshold” of approximately $170.1$219.8 million, a “target” of approximately $212.6$236.6 million and a “maximum” of approximately $311.9 million; and |
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| • | borrowing availability (excess capacity) under the Company’s revolving credit agreement at a minimum level of $150.0 million at the end of each fiscal month.$339.4 million. |
The HRCC assigns goals and weightings for each named executive officer depending on the capacity of the named executive officer to influence the goal and the named executive officer’s area of responsibility. Payment of any portion of a bonus under the Cash Bonus Plan is dependent upon the Company’s achievement of at least the “threshold” level of net income. If the threshold level of net income is not achieved, there is no bonus payout under any of the goals for that year. In addition, if the net income “threshold” is attained, but the “threshold” performance for a goal other than net income is not attained, the portion of the bonus attributable to such other goal is forfeited.
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The HRCC reviewed and established competitive “threshold,” “target” and “maximum” payout potentials under the Cash Bonus Plan for each named executive officer. The following table sets forth (1) the approximate payouts, stated as a percentage of base salary, which could be earned
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by each named executive officer under the Cash Bonus Plan for 2009,2010, and (2) the Cash Bonus Plan performance goals and the weighting of such goals for each named executive officer for 2009:2010:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payout at
| | Payout at
| | Payout at
| | Bonus Criteria
| | Payout at
| | Payout at
| | Payout at
| | Bonus Criteria
|
Name | | Threshold | | Target | | Maximum | | (weighting) | | Threshold | | Target | | Maximum | | (weighting) |
|
Tim Grumbacher | | | 20 | % | | | 40 | % | | | 80 | % | | | Net income (80 | )% | |
| | | | | | | | | | | | Excess capacity (20 | )% | |
Byron L. Bergren | | | 50 | % | | | 100 | % | | | 200 | % | | | Net income (80 | )% | | | 50 | % | | | 100 | % | | | 200 | % | | | Net income (100 | )% |
| | | | | | | | | | | | Excess capacity (20 | )% | |
Anthony J. Buccina | | | 50 | % | | | 100 | % | | | 200 | % | | | Net sales (50 | )% | | | 50 | % | | | 100 | % | | | 200 | % | | | Net sales (50 | %) |
| | | | | | | | | | | | EBITDA (30 | )% | |
| | | | | | | | | | | | Excess capacity (20 | )% | | | | | | | | | | | | EBITDA (50 | )% |
Stephen R. Byers | | | 50 | % | | | 100 | % | | | 200 | % | | | Net sales (60 | )% | | | 50 | % | | | 100 | % | | | 200 | % | | | Net sales (50 | %) |
| | | | | | | | | | | | EBITDA (40 | )% | | | | | | | | | | | | EBITDA (50 | )% |
Keith E. Plowman | | | 50 | % | | | 100 | % | | | 200 | % | | | Net income (80 | )% | | | 37.5 | % | | | 75 | % | | | 150 | % | | | Net income (100 | )% |
Barbara J. Schrantz | | | | 25 | % | | | 50 | % | | | 100 | % | | | Net sales (50 | %) |
| | | | | | | | | | | | Excess capacity (20 | )% | | | | | | | | | | | | EBITDA (50 | %) |
The HRCC reviewed performance data as of the end of 20092010 and determined the extent to which the targeted levels of performance were achieved. The amount of annual incentive compensation paid for 20092010 to each named executive officer is reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 28.33.
In addition to bonuses that may be awarded under the Cash Bonus Plan, a cash bonus may be awarded at the discretion of the HRCC for extraordinary individual achievement or for other reasons, such as a signing bonus upon joining the Company or an executive extending the term of his or her employment agreement. No extraordinary bonuses were awarded to any of the named executive officers for 2009.2010.
Long-Term Equity Incentive Compensation
Another component of named executive officer compensation is long-term incentive compensation in the form of stock options, time-based and performance-based restricted stock and time-based and performance-based RSUs. The HRCC annually reviews the performance and compensation of the named executive officers to determine whether annual grants of options or awards of restricted stock or RSUs are warranted. Option grants and awards of restricted stock and RSUs are made periodically at the discretion of the HRCC but generally are made within the first quarter of each fiscal year. Grants and awards are made on the recommendation of the Company’s Chief Executive Officer, primarily to reward significant individual achievement and to motivate and retain key talent. The proportion of long-term equity incentive compensation in relation to base salary is a function of the named executive officer’s level of responsibility and capacity to enhance shareholder value.
The HRCC has decided that grants made to the Company’s Chief Executive Officer should be directly aligned withto the short- and long-term performance of the Company. In addition, the Chief Executive Officer and the other named executive officers are awarded restricted stock as a retention tool. The other named executive officers are also granted options to align their interests with those of shareholders.
The exercise price of options granted by the HRCC is usually set at the closing price of the Company’s common stock on the NASDAQ Stock Market on the date of the HRCC meeting at which the grant is approved. In certain instances, the HRCC has set the exercise price at the closing price on
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a grant date in the future to allow time to notify the grantee of the option grant or to set the grant date and exercise price on the same date as the starting date of a new employee.executive. If the HRCC sets a grant date and option exercise price based on the closing price on the NASDAQ Stock Market on a date in the future, the HRCC confirms that management does not anticipate any material announcements during the period from the HRCC meeting until such future date. No options were granted to the named executive officers in 2010.
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Pursuant to the amendment of Mr. Bergren’s employment agreement on March 18, 2009, the HRCC granted Mr. Bergren an award of 400,000 time-based restricted stock shares, 100,000 of which vested on February 1, 2010, 100,000 of which will vestvested on February 1, 2011, and 200,000 of which will vest on February 5, 2012. In addition, Mr. Bergren received 400,000 performance-based restricted shares, 200,000 of which were subject to vesting based on achievement of Company performance goals for 2009, 100,000 of which were subject to vesting based on achievement of Company performance goals for 2010 and 100,000 of which are subject to vesting based on achievement of Company performance goals for each of 2010 and 2011. Ninety percent of the 2009 performance-based restricted shares (180,000 shares) vested based upon the achievement of performance targets for 2009. One hundred percent of the 2010 performance-based restricted shares (100,000 shares) vested based upon the achievement of performance targets for 2010.
Pursuant to an employment agreement dated February 1, 2009, the HRCC granted Mr. Buccina 100,000 restricted shares of the Company’s common stock. Such grant was awarded on February 2, 2009 and such restricted shares vested on April 30, 2011. In addition, Mr. Buccina received, as performance-based compensation, a grant of 50,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares were determined each year by the HRCC. The terms of the grants are set forth in the applicable Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (45,000 shares) vested based upon the achievement of performance targets for 2009. One hundred percent of the 2010 performance-based restricted shares (50,000 shares) vested based upon the achievement of performance targets for 2010.
On April 12, 2010, Mr. Buccina was awarded a grant of 20,000 shares of time-based restricted shares, 10,000 of which vested on April 12, 2011 and 10,000 of which vest on April 12, 2013. In addition, Mr. Buccina received, as performance-based compensation, a grant of 10,000 restricted shares subject to vesting on the basis of the achievement of certain performance goals established for the Company’s 2010 fiscal year. One hundred percent of the 2010 performance-based restricted shares (10,000 shares) vested based upon the achievement of performance targets for 2010.
Pursuant to an employment agreement dated February 1, 2009, the HRCC granted Mr. Byers 70,000 restricted shares of the Company’s common stock. Such grant was awarded on February 2, 2009 and such restricted shares vested on April 30, 2011. In addition, Mr. Byers received, as performance-based compensation, a grant of 35,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares were determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (31,500 shares) vested based upon the achievement of performance targets for 2009. One hundred percent of the 2010 performance-based restricted shares (35,000 shares) vested based upon the achievement of performance targets for 2010.
On April 12, 2010, Mr. Byers was awarded a grant of 11,500 shares of time-based restricted shares, 6,500 of which vested on April 12, 2011 and 5,000 of which vest on April 12, 2013. In addition, Mr. Byers received, as performance-based compensation, a grant of 5,000 restricted shares subject to vesting on the basis of the achievement of certain performance goals established for the Company’s 2010 fiscal year. One hundred percent of the 2010 performance-based restricted shares (5,000 shares) vested based upon the achievement of performance targets for 2010.
During 2010, the HRCC granted Mr. Plowman an award of 30,000 time-based restricted shares, 5,000 of which vested on April 12, 2011 and 25,000 of which vest on April 12, 2013. In addition, Mr. Plowman was granted an award of 25,000 performance-based restricted shares, all of which were subject to vesting based on achievement of Company performance goals for 2010. One hundred percent of the 2010 performance-based restricted shares (25,000 shares) vested based upon the achievement of performance targets for 2010.
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During 2010, the HRCC granted Ms. Schrantz an award of 15,000 time-based restricted shares, all of which vest on April 12, 2013. In addition, Ms. Schrantz was granted an award of 15,000 performance-based restricted shares, all of which were subject to vesting based on achievement of Company performance goals for 2010. One hundred percent of the 2010 performance-based restricted shares (15,000 shares) vested based upon the achievement of performance targets for 2010. On January 28, 2011, in connection with her election to the position of Chief Operating Officer, the Company granted Ms. Schrantz an award of 75,000 time-based restricted shares, of which 25,000 shares vest on each of February 3, 2014, February 2, 2015 and February 1, 2016.
Awards of performance-based restricted stock reflect the HRCC’s objectives to link an increasing portion of compensation to Company performance and to align the interests of key executives with those of shareholders.
Pursuant to respective employment agreements dated February 1, 2009, the HRCC granted Mr. Buccina and Mr. Byers an award of 100,000 and 70,000 time-based restricted shares, respectively, all of which vest on April 30, 2011, and 100,000 and 70,000 performance-based restricted shares, respectively, half of which were subject to vesting based on achievement of Company performance goals for 2009, and half of which are subject to vesting based on achievement of Company performance goals for 2010. Ninety percent of the 2009 performance-based restricted shares (45,000 and 31,500 shares for Mr. Buccina and Mr. Byers, respectively) vested based upon the achievement of performance targets for 2009. Awards of performance-based restricted stock reflect the HRCC’s objectives to link an increasing portion of compensation to Company performance and to align the interests of key executives with those of shareholders.
During 2009, the HRCC granted Mr. Plowman an award of 50,000 time-based restricted shares, all of which vest on April 27, 2012.
The aforementioned awards are reflected in the “Grants of Plan-Based Awards” table on page 30.35.
Perquisites and Other Benefits
The Company provides the named executive officers with perquisites and other benefits that the Company and the HRCC believe are reasonable and consistent with the Company’s objective to motivate and retain superior employeesexecutives for key positions. The HRCC periodically reviews the levels of perquisites and other benefits provided to named executive officers. Perquisites primarily consist of supplemental medical benefits, automobile allowances, relocation benefits and reimbursement of legal fees incurred in connection with the negotiation of employment agreements. Perquisites traditionally have not constituted significant portions of an executive’s compensation.
The named executive officers also participate in benefit programs available to employees generally, such as health and dental insurance, life insurance and long-term disability insurance.
Retirement Benefits
The named executive officers participate in The Bon-Ton Stores, Inc. Retirement Contribution Plan, a tax-qualified defined-contribution plan. Under this plan, employees are able to contribute a portion of their annual salaries on a pre-tax basis and the Company may make discretionary retirement contributions to each eligible employee’s account. In pastCompany matching contributions consist of two parts: a match based on an employee’s years theof service and a profit sharing match. Company generally has matched 30% of the first 6% of eligible compensation that is contributed to the plan. No contribution was made in 2009 for 2008. For 2009, a 30% matching contribution was made by the
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Company in March 2010. In addition to the matching contribution, the Company has provided a discretionary retirement contribution to each eligible employee in past years. No discretionary retirement contribution was made for 2008 (in 2009) or for 2009 (in 2010). For 2009, each named executive officer received a matching contribution of $4,556. These amounts are included in the Summary Compensation Table on page 28.33.
In connection with an acquisition in March 2006, the Company assumed the Carson Pirie Scott & Co. Pension Plan (the “Carson’s Pension Plan”). The Carson’s Pension Plan is a qualified defined-benefit cash-balance plan in which the only named executive officer who participates is Anthony J. Buccina. The Carson’s Pension Plan was frozen to new participants in 2002 and all future benefit accruals were frozen in May 2006.
Additionally, in connection with the same acquisition, a subsidiary of the Company assumed the Carson Pirie Scott & Co. Supplemental Executive Retirement Plan (the “Carson’s SERP”). The Carson’s SERP is a nonqualified, unfunded supplemental retirement plan. The Carson’s SERP was terminated by the Company effective December 31, 2008. The only named executive officer who participated in the Carson’s SERP was Anthony J. Buccina. Pursuant to an employment agreement entered into on January 23, 2009, in the first quarter of 2009 the Company paid Mr. Buccina $2,931,821, the actuarial equivalent present value of his interest in the SERP. Additional detail on these plans can be found under the heading “Pension Benefits” on page 32.
Employment Agreements and Payments Upon Termination or Change in Control
As discussed more fully below, the Company has entered into employment agreements with Tim Grumbacher, Byron L. Bergren, Anthony J. Buccina, and Stephen R. Byers.Byers and Barbara J. Schrantz. The decisions to enter into employment agreements and the terms of those agreements were based on the Company’s need to motivate and retain talent for the long-term growth of the Company.
Following Mr. Grumbacher’s resignation as Chief Executive Officer in 2004, the HRCC determined it would be beneficial to the Company to continue Mr. Grumbacher’s employment as Executive Chairman of the Board, and both Mr. Grumbacher and the HRCC desired to evidence the arrangement in a written agreement. In December 2007, the HRCC approved an extension of Mr. Grumbacher’s term as Executive Chairman by two years, through January 2010. In January 2010, the HRCC approved a further extension of his term as Executive Chairman to December 31, 2010. The HRCC’s key objectives in further extending Mr. Grumbacher’s term as Executive Chairman included: (1) retaining Mr. Grumbacher’s experience and expertise to maximize the Company’s potential as a larger retailer; and (2) maintaining stability of leadership and strategic focus.
The Company entered into an employment agreement with Mr. Bergren following the Company’s acquisition of The Elder-Beerman Stores Corp in 2003. The term of Mr. Bergren’s employment agreement originally ran through 2008. In July 2007, theThe Company and Mr. Bergren subsequently entered into an amendmenta series of amendments of Mr. Bergren’s employment agreement that, among other matters, extended Mr. Bergren’s term as Chief Executive Officer through January 31, 2009 and provided for additional long-term incentive compensation. His employment agreement, as amended, provided that Mr. Bergren was to perform an important role with the Company from January 31, 2009 through February 5, 2010. In August 2008, the Company asked Mr. Bergren to continue in the role of Chief Executive Officer through February 5, 2010. On March 18, 2009, the Company entered into an amendment of Mr. Bergren’s employment agreement that provides for Mr. Bergren to serve as President and Chief Executive Officer through January 31,
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2011 and toprovided that Mr. Bergren would serve in an important role to be determined by the Board of Directors from February 1, 2011 through February 5, 2012. In addition,On January 21, 2011, the Board has agreed to nominateCompany entered into a further amendment of Mr. BergrenBergren’s employment agreement providing that he will serve as a member of the Board of Directors for the periodPresident and Chief Executive Officer through February 5, 2012. The term of the agreement will extend automatically from year to year thereafter unless either party elects not to renew the agreement. The HRCC’s key objectives in entering into the July 2007 and March 2009various amendments of Mr. Bergren’s employment agreement included: (1) retaining Mr. Bergren’s experience and expertise to maximize the Company’s potential as a larger retailer; (2) maintaining stability of leadership and strategic focus; and (3) facilitating the Company’s
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succession planning process and enabling Mr. Bergren to assist the HRCC and the Board of Directors with this process.
With respect to Mr. Buccina, the HRCC and management of the Company determined his services and merchandising expertise would be critical following the acquisition of Carson’sCarson Pirie Scott to ensure a smooth integration and to lead the development and execution of a comprehensive merchandising strategy for the combined Company. With respect to Mr. Byers, the HRCC and Company management determined it would be in the best interests of the Company to enter into an employment agreement to retain Mr. Byers due to his significant level of experience in retail, his direct experience with the Carson’s stores, and for the long-term growth of the Company. In January 2009, the Company entered into new employment agreements with both Mr. Buccina and Mr. Byers, extending the term of their respective employment relationships with the Company. In January 2011, the employment agreement of Mr. Buccina automatically renewed for an additional one-year period, and the Company elected not to renew the employment agreement of Mr. Byers. The Company anticipates entering into a new employment agreement with Mr. Byers to provide for his continued employment with the Company after April 30, 2011. In April 2011, the Company and Mr. Buccina entered into an amendment to his employment agreement, as discussed on page 41.
On January 30, 2011, the Company appointed Barbara J. Schrantz as its Chief Operating Officer, and the Company determined that it would be in its best interests to enter into an employment agreement to retain Ms. Schrantz due to her years of experience with the Company and in the retail department store industry and for the long-term growth of the Company.
The material terms of the employment agreements with the named executive officers are described under the heading “Summary of Employment Agreements with Named Executive Officers” beginning on page 34.39.
Under the employment agreements, the Company has agreed to provide severance compensation in the event of a termination, change in control or other triggering event. In addition, Keith E. Plowman, with whom the Company does not have an employment agreement, is a participant in the Company’s severance plan. These arrangements are designed to promote stability and continuity of senior management through a change in control of the Company. Stock options and restricted stock will generally vest upon a change in control. The Company adopted “single trigger” treatment for equity awards to retain, focus and motivate executives during change in control discussions and to be competitive with current market practice in order to attract the best talent. However, any cash severance benefits require a “double trigger” (including the executive’s separation from the Company under specified circumstances) for payment.
Information on these arrangements for the named executive officers is provided under the heading “Potential Payments Upon Termination or Change in Control” on page 39.45.
Recoupment of Incentive-Based Compensation
In order to further align management’s interests with those of shareholders and to support the Company’s governance practices, the Board adopted in 2010 a recoupment policy applicable to annual cash incentive awards, performance-based RSUs and other performance-based compensation to executive officers of the Company. The policy provides that in the event the Company is required to prepare an accounting restatement due to the Company’s noncompliance with any
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financial reporting requirement under the securities laws, the Company shall take action to recoup from executive officers the amount by which such awards exceeded the payment that would have been made based on the restated financial results. Compensation subject to recoupment will include equity or contingent income exercised, earned or distributed during the periods, not to exceed three years, that required restatement of financial statements. The recoupment policy is set forth in amendments to the 2009 Omnibus Incentive Plan and the Cash Bonus Plan, filed as Exhibits 10.1 and 10.3, respectively, to the Company’s current report onForm 8-K dated November 24, 2010.
Prohibition on Derivative Trading and Short Selling
The Company prohibits derivative transactions and selling short in the Company’s securities by officers, directors and their families. Specifically, they may not, at any time:
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| • | trade in any puts, calls, covered calls or other derivative products involving Company securities; |
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| • | engage in any hedging transactions with respect to Company securities; or |
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| • | engage in short sales of the Company’s securities. |
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code (the “Code”(“Section 162(m)”) limits the deductibility of compensation in excess of $1,000,000 paid to the Chief Executive Officer and certain executive officers unless specified criteria are satisfied. The HRCC reviews and considers the deductibility of executive compensation under Section 162(m), and has generally designed the Company’s compensation program in a manner that permits compensation to be deductible. However, grants of restricted stock, when and if those grants vest for tax purposes, may create compensation for the grantee that is subject to the limitations on deductibility under Section 162(m). The HRCC may award non-deductible compensation when it believes such action would be in the best interests of the Company.
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Report of the Human Resources and Compensation Committee
The HRCC has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) ofRegulation S-K with management and, based on such review and discussion, the HRCC recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
The Human Resources and Compensation Committee
Marsha M. Everton, Chair
Shirley A. Dawe
Todd C. McCarty
Risk Considerations in our Compensation Policies
The HRCC performs an annual risk assessment on the Company’s compensation policies and plans. This risk assessment process includes a review of plan design and performance measures. Incentive compensation targets are reviewed annually and adjusted as necessary to align with the individual goals for executive officers.
The HRCC has determined that the Company’s compensation program does not encourage excessive and unnecessary risk taking.risk-taking. The Company designs the individual components of its compensation programs to encourage appropriate risk-taking to maximize long-term business potential, while avoiding undue risk that does not align with short- and long-term shareholder objectives. This design encourages the Company’s managers to remain focused on both the short- and long-term operational and financial goals of the Company. The following factors mitigate risk with respect to compensation programs: approval of executive compensation by a committee of independent directors, performance-based long-term incentive awards aligned with shareholder interests, stock ownership guidelines and an incentive recoupment policy (described on page 30).
2732
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Change in
| | | | | | | | | | | | | | | | | | | Change in
| | | | | |
| | | | | | | | | | | | | | Pension
| | | | | | | | | | | | | | | | | | | Pension
| | | | | |
| | | | | | | | | | | | | | Value and
| | | | | | | | | | | | | | | | | | | Value and
| | | | | |
| | | | | | | | | | | | | | Nonqualified
| | | | | | | | | | | | | | | | | | | Nonqualified
| | | | | |
| | | | | | | | | | | | Non-Equity
| | Deferred
| | | | | | | | | | | | | | | | | Non-Equity
| | Deferred
| | | | | |
| | | | | | | | Stock
| | Option
| | Incentive Plan
| | Compensation
| | All Other
| | | | | | | | | | | Stock
| | Option
| | Incentive Plan
| | Compensation
| | All Other
| | | |
Name and
| | | | Salary
| | Bonus
| | Awards
| | Awards
| | Compensation
| | Earnings
| | Compensation
| | Total
| | | | | Salary
| | Bonus
| | Awards
| | Awards
| | Compensation
| | Earnings
| | Compensation
| | Total
| |
Principal Position | | Year | | ($)(1) | | ($)(2) | | ($)(3) | | ($)(4) | | ($)(5) | | ($) | | ($)(6) | | ($) | | | Year | | ($)(1) | | ($)(2) | | ($)(3) | | ($)(4) | | ($)(5) | | ($) | | ($)(6) | | ($) | |
|
Tim Grumbacher, | | | 2009 | | | | 650,000 | | | | — | | | | — | | | | — | | | | 239,200 | | | | 222,575 | (7) | | | 53,506 | | | | 1,165,281 | | |
Executive Chairman of | | | 2008 | | | | 650,000 | | | | — | | | | — | | | | — | | | | — | | | | 10,820 | | | | 23,784 | | | | 684,604 | | |
the Board | | | 2007 | | | | 650,000 | | | | — | | | | — | | | | — | | | | — | | | | 142,934 | | | | 36,592 | | | | 829,526 | | |
Byron L. Bergren, | | | 2009 | | | | 1,000,000 | | | | — | | | | 794,829 | (8) | | | — | | | | 920,000 | | | | — | | | | 75,908 | | | | 2,790,737 | | | | 2010 | | | | 1,000,000 | | | | — | | | | 2,620,800 | (7) | | | — | | | | 1,000,000 | | | | — | | | | 70,773 | | | | 4,691,573 | |
President and Chief | | | 2008 | | | | 1,000,000 | | | | — | | | | 1,286,600 | (9) | | | — | | | | — | | | | — | | | | 248,605 | | | | 2,535,205 | | | | 2009 | | | | 1,000,000 | | | | — | | | | 794,829 | (8) | | | — | | | | 920,000 | | | | — | | | | 75,908 | | | | 2,790,737 | |
Executive Officer | | | 2007 | | | | 1,000,000 | | | | 150,000 | | | | 2,490,378 | (10) | | | — | | | | — | | | | — | | | | 173,348 | | | | 3,813,726 | | | | 2008 | | | | 1,000,000 | | | | — | | | | 1,286,600 | (9) | | | — | | | | — | | | | — | | | | 248,605 | | | | 2,535,205 | |
Anthony J. Buccina, | | | 2009 | | | | 791,800 | | | | — | | | | 197,000 | (11) | | | — | | | | 649,276 | | | | — | (12) | | | 17,461 | | | | 1,655,537 | | | | 2010 | | | | 812,950 | | | | — | | | | 859,030 | (10) | | | — | | | | 779,000 | | | | 22,677 | | | | 14,367 | | | | 2,488,024 | |
Vice Chairman, | | | 2008 | | | | 780,000 | | | | — | | | | 49,600 | | | | 93,500 | | | | — | | | | — | (13) | | | 20,241 | | | | 943,341 | | | | 2009 | | | | 791,800 | | | | — | | | | 197,000 | (11) | | | — | | | | 649,276 | | | | — | (12) | | | 17,461 | | | | 1,655,537 | |
President — | | | 2007 | | | | 780,000 | | | | — | | | | 160,010 | | | | 291,122 | | | | — | | | | 888,887 | | | | 29,516 | | | | 2,149,535 | | | | 2008 | | | | 780,000 | | | | — | | | | 49,600 | | | | 93,500 | | | | — | | | | — | (13) | | | 20,241 | | | | 943,341 | |
Merchandising | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stephen R. Byers | | | 2009 | | | | 533,500 | | | | — | | | | 137,900 | (14) | | | — | | | | 416,130 | | | | — | | | | 12,366 | | | | 1,099,896 | | |
Stephen R. Byers, | | | | 2010 | | | | 545,875 | | | | — | | | | 540,130 | (14) | | | — | | | | 522,500 | | | | — | | | | 10,516 | | | | 1,619,021 | |
Vice Chairman — | | | 2008 | | | | 525,000 | | | | — | | | | 49,600 | | | | 93,500 | | | | — | | | | — | | | | 12,890 | | | | 680,990 | | | | 2009 | | | | 533,500 | | | | — | | | | 137,900 | (15) | | | — | | | | 416,130 | | | | — | | | | 12,366 | | | | 1,099,896 | |
Stores, Visual, | | | 2007 | | | | 525,000 | | | | — | | | | 160,010 | | | | 291,122 | | | | — | | | | — | | | | 21,184 | | | | 997,316 | | | | 2008 | | | | 525,000 | | | | — | | | | 49,600 | | | | 93,500 | | | | — | | | | — | | | | 12,890 | | | | 680,990 | |
Construction, Real Estate, Distribution & Logistics, Loss Prevention | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction, Distribution & Logistics, Loss Prevention | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Keith E. Plowman, | | | 2009 | | | | 450,000 | | | | — | | | | 110,000 | | | | — | | | | 414,000 | | | | — | | | | 15,402 | | | | 989,402 | | | | 2010 | | | | 478,875 | | | | — | | | | 745,275 | (16) | | | — | | | | 366,375 | | | | — | | | | 9,769 | | | | 1,600,294 | |
Executive Vice | | | 2008 | | | | 438,750 | | | | — | | | | 34,720 | | | | 74,800 | | | | — | | | | — | | | | 10,948 | | | | 559,218 | | | | 2009 | | | | 450,000 | | | | — | | | | 110,000 | | | | — | | | | 414,000 | | | | — | | | | 15,402 | | | | 989,402 | |
President, Chief | | | 2007 | | | | 401,538 | | | | — | | | | 160,010 | | | | 291,122 | | | | — | | | | — | | | | 20,337 | | | | 873,007 | | | | 2008 | | | | 438,750 | | | | — | | | | 34,720 | | | | 74,800 | | | | — | | | | — | | | | 10,948 | | | | 559,218 | |
Financial Officer and Principal Accounting Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Barbara J. Schrantz, | | | | 2010 | | | | 395,875 | | | | — | | | | 1,235,595 | (17) | | | — | | | | 190,000 | | | | — | | | | 7,925 | | | | 1,829,395 | |
Chief Operating | | | | 2009 | | | | 383,500 | | | | — | | | | 55,000 | | | | — | | | | 314,470 | | | | — | | | | 6,538 | | | | 759,508 | |
Officer | | | | 2008 | | | | 378,923 | | | | — | | | | 17,360 | | | | 37,400 | | | | — | | | | — | | | | 6,410 | | | | 440,093 | |
| | |
(1) | | Actual base salary payments made in 2010, 2009 2008 and 2007.2008. |
|
(2) | | “Bonus” refers to non-performance-based guaranteed cash payments. In 2007, Mr. Bergren received a $150,000 bonus pursuant to the terms of the amendment of his employment agreement.There were no such payments made in 2010, 2009 and 2008. Other cash incentives were performance-based and are reflected under the column labeled “Non-Equity Incentive Plan Compensation.” |
|
(3) | | The amounts reported in this column reflect the aggregate grant date fair value of restricted stock share or unit awards computed in accordance with ASC 718 for restricted stock granted in 2010, 2009 2008 and 20072008 to each named executive officer. The calculation of these amounts disregards any estimate of forfeitures related to time-based vesting conditions. The amounts do not reflect compensation actually received by the named executive officers. Assumptions used in the calculation of these amounts are included in Note 15 to our audited financial statements included in ourForm 10-K filed with the SEC on April 16, 2010.13, 2011. |
|
(4) | | The amounts reported in this column reflect the aggregate grant date fair value of option awards computed in accordance with ASC 718 for stock options granted in 2008 and 2007 to each named executive officer. The calculation of these amounts disregards the estimated forfeitures related to time-based vesting conditions. The amounts do not reflect compensation actually received by the named executive officers. Assumptions used in the calculation of these amounts are included in Note 15 to our audited financial statements included in ourForm10-K filed with the SEC on April 16, 2010.13, 2011. |
|
(5) | | The amounts reported in this column reflect the annual performance-based bonus awards to the named executive officers under the Company’s Cash Bonus Plan, which is discussed on page 2226 of the Compensation Discussion and Analysis under the heading “Performance-Based Annual Incentive Compensation.” |
|
(6) | | The compensation reflected in the “All Other Compensation” column for each of the named executive officers for 20092010 includes the following: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Supplemental
| | Insurance
| | Tax Gross-Up of
| | Life
| | Reimbursement
| | 401(k) Plan
| | | | | | Supplemental
| | Insurance
| | Tax Gross-Up of
| | Life
| | 401(k) Plan
| | | | | |
| | Automobile
| | Medical
| | Consultation
| | Certain
| | Insurance
| | of Legal
| | Company
| | Furniture
| | Automobile
| | Medical
| | Consultation
| | Certain
| | Insurance
| | Company
| | | | | |
Name | | Usage($) | | Benefits($) | | Expenses($) | | Perquisites($) | | Premiums($) | | Expenses($) | | Match($) | | Storage($) | | Usage ($) | | Benefits ($) | | Expenses ($) | | Perquisites ($) | | Premiums ($) | | Match ($) | | Total($) | | | |
|
| | |
Tim Grumbacher | | | 5,711 | | | | — | | | | 14,075 | | | | 9,612 | | | | 12,760 | | | | — | | | | 4,556 | | | | 6,792 | | |
| | |
Byron L. Bergren | | | 24,596 | | | | 8,000 | | | | 8,500 | | | | 6,733 | | | | 15,444 | | | | 8,079 | | | | 4,556 | | | | — | | | | 24,596 | | | | 8,000 | | | | 9,150 | | | | 7,248 | | | | 16,634 | | | | 5,145 | | | | 70,773 | | | | | |
| | |
Anthony J. Buccina | | | — | | | | — | | | | — | | | | — | | | | 7,905 | | | | 5,000 | | | | 4,556 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,487 | | | | 5,880 | | | | 14,367 | | | | | |
| | |
Stephen R. Byers | | | — | | | | — | | | | — | | | | — | | | | 5,245 | | | | 2,565 | | | | 4,556 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,371 | | | | 5,145 | | | | 10,516 | | | | | |
| | |
Keith E. Plowman | | | 6,200 | | | | 2,300 | | | | — | | | | — | | | | 2,346 | | | | — | | | | 4,556 | | | | — | | | | 1,550 | | | | 575 | | | | — | | | | — | | | | 2,499 | | | | 5,145 | | | | 9,769 | | | | | |
| | |
Barbara J. Schrantz | | | | — | | | | — | | | | — | | | | — | | | | 2,045 | | | | 5,880 | | | | 7,925 | | | | | |
| | |
(7) | | Amount reflectsThe grant date fair value of 2010 time-based restricted stock awarded to Mr. Bergren was $1,750,000. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Bergren was $870,800, computed based upon an assessment, as of the increasegrant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Bergren for 2010 performance-based restricted stock was $1,244,000. An additional 100,000 performance-based restricted shares |
33
| | |
| | were awarded to Mr. Bergren in 2010 but are excluded from the actuarial present value during 2009 of Mr. Grumbacher’s retiree continuing medical benefits. SeeSummary Compensation Table as the Pension Benefits Table on page 32award is contingent upon 2011 performance for more information about these benefits.which criteria was not established by the HRCC until March 2011. |
|
(8) | | The grant date fair value of 2009 time-based restricted stock awarded to Mr. Bergren was $284,000. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Bergren was $510,829, computed based upon an |
28
| | |
| | assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual payoutgrant date fair value to Mr. Bergren for 2009 performance-based restricted stock was $459,747. |
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(9) | | The grant date fair value of 2008 performance-based restricted stock awarded to Mr. Bergren was $1,286,600, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2008 year. Based upon 2008 performance, the actual payoutgrant date fair value to Mr. Bergren for 2008 performance-based restricted stock was zero. |
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(10) | | The grant date fair value of 20072010 time-based restricted stock awarded to Mr. BergrenBuccina was $1,349,999.$313,800. The grant date fair value of 20072010 performance-based RSUsrestricted stock awarded to Mr. BergrenBuccina was $1,140,379,$545,230, computed based upon an assessment, as of the grant date, that it was probable 100%that 70% of the performance target would be met for the 20072010 year. Based upon 2007the achievement of 100% of the 2010 performance target, the actual payoutgrant date fair value to Mr. BergrenBuccina for 20072010 performance-based RSUsrestricted stock was zero.$778,900. The grant date fair value of 20072010 performance-based restricted stock includes 50,000 performance-based restricted shares awarded to Mr. BergrenBuccina in 2009 that were excluded from the Summary Compensation Table in 2009 as the award was zero, computed basedcontingent upon an assessment, as of2010 performance for which criteria was not established by the grant date, that it was probable 0% of the performance target would be met for the 2007 year. The maximum value of restricted stock share awards assuming the highest level of performance conditions of this performance-based restricted stock was $674,983. Based upon 2007 performance, the actual payout to Mr. Bergren for 2007 performance-based restricted stock shares was zero.HRCC until March 2010. See footnote 11 below. |
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(11) | | The grant date fair value of 2009 time-based restricted stock awarded to Mr. Buccina was $135,000. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Buccina was $62,000, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual payoutgrant date fair value to Mr. Buccina for 2009 performance-based restricted stock was $55,800. An additional 50,000 performance-based restricted shares were awarded to Mr. Buccina in 2009 but are excluded from the Summary Compensation Table as the award is contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010. |
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(12) | | The actuarial valuation of the change during 2009 in Mr. Buccina’s benefits under the Carson’s Pension Plan and the Carson’s SERP was a net decrease of $2,898,985. The Company terminated the Carson’s SERP in 2008 and, as a result,2008. Mr. Buccina received a payment of $2,931,821 for his accumulated benefits in the first quarter of 2009, reducing his accumulated benefits under the Carson’s SERP to zero. The actuarial valuation of the change during 2009 in Mr. Buccina’s benefits under the Carson’s Pension Plan was an increase of $32,836. See the Pension Benefits Table on page 32 for more information about these benefits. |
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(13) | | The actuarial valuation of the change during 2008 in Mr. Buccina’s benefits under the Carson’s Pension Plan and the Carson’s SERP was a decrease of $62,393. |
|
(14) | | The grant date fair value of 2010 time-based restricted stock awarded to Mr. Byers was $180,435. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Byers was $359,695, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Byers for 2010 performance-based restricted stock was $513,850. The grant date fair value of 2010 performance-based restricted stock includes 35,000 performance-based restricted shares awarded to Mr. Byers in 2009 that were excluded from the Summary Compensation Table in 2009 as the award was contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010. See footnote 15 below. |
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(15) | | The grant date fair value of 2009 time-based restricted stock awarded to Mr. Byers was $94,500. The grant date fair value of 2009 performance-based restricted stock awarded to Mr. Byers was $43,400, computed based upon an assessment, as of the grant date, that it was probable that 100% of the performance target would be met for the 2009 year. Based upon the achievement of 90% of the 2009 performance target, the actual payoutgrant date fair value to Mr. Byers for 2009 performance-based restricted stock was $39,060. An additional 35,000 performance-based restricted shares were awarded to Mr. Byers in 2009 but are excluded from the Summary Compensation Table as the award is contingent upon 2010 performance for which criteria was not established by the HRCC until March 2010. |
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(16) | | The grant date fair value of 2010 time-based restricted stock awarded to Mr. Plowman was $470,700. The grant date fair value of 2010 performance-based restricted stock awarded to Mr. Plowman was $274,575, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Mr. Plowman for 2010 performance-based restricted stock was $392,250. |
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(17) | | The grant date fair value of 2010 time-based restricted stock awarded to Ms. Schrantz was $1,070,850. The grant date fair value of 2010 performance-based restricted stock awarded to Ms. Schrantz was $164,745, computed based upon an assessment, as of the grant date, that it was probable that 70% of the performance target would be met for the 2010 year. Based upon the achievement of 100% of the 2010 performance target, the actual grant date fair value to Ms. Schrantz for 2010 performance-based restricted stock was $235,350. |
2934
Grants of Plan-Based Awards
Stock options and awards of restricted stock generally vest over a number of years. Any vested options are usually forfeited 90 days after termination of the recipient’s employment, and any unvested shares of restricted stock and unvested options are usually forfeited upon termination of employment.
The table below provides information regarding grants of options and awards of restricted stock made during 20092010 to the named executive officers under the Company’s Stock Incentive Plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | All
| | | | Grant
| | | | | | | | | | | | | | | | All
| | | | Grant
|
| | | | | | | | | | | | | | All
| | Other
| | | | Date
| | | | | | | | | | | | | | | | Other
| | | | Date
|
| | | | | | | | | | | | | | Other
| | Option
| | | | Fair
| | | | | | | | | | | | | | All
| | Option
| | | | Fair
|
| | | | | | | | | | Estimated Possible
| | Stock
| | Awards;
| | Exercise or
| | Value of
| | | | | | | | | | Estimated Possible
| | Other
| | Awards;
| | Exercise
| | Value of
|
| | | | Estimated Possible
| | Payouts Under Equity
| | Awards;
| | Number of
| | Base
| | Stock
| | | | Estimated Possible
| | Payouts Under
| | Stock
| | Number of
| | or Base
| | Stock
|
| | | | Payouts Under Non-Equity
| | Incentive Plan
| | Number of
| | Securities
| | Price of
| | and
| | | | Payouts Under Non-Equity
| | Equity Incentive
| | Awards;
| | Securities
| | Price of
| | and
|
| | | | Incentive Plan Awards(1) | | Awards(2) | | Shares of
| | Underlying
| | Option
| | Option
| | | | Incentive Plan Awards(1) | | Plan Awards(2) | | Number of
| | Underlying
| | Option
| | Option
|
| | Grant
| | Threshold
| | Target
| | Maximum
| | Threshold
| | Target
| | Stock or
| | Options
| | Awards
| | Awards
| | Grant
| | Threshold
| | Target
| | Maximum
| | Threshold
| | Target
| | Shares of Stock or
| | Options
| | Awards
| | Awards
|
Name | | Date | | ($) | | ($) | | ($) | | (#) | | (#) | | Units (#)(3) | | (#)(4) | | ($/share) | | ($)(5) | | Date | | ($) | | ($) | | ($) | | (#) | | (#) | | Units (#)(3) | | (#)(4) | | ($/share) | | ($)(5) |
|
Tim Grumbacher | | N/A | | | 130,000 | | | | 260,000 | | | | 520,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |
Byron L. Bergren | | N/A | | | 500,000 | | | | 1,000,000 | | | | 2,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | N/A | | | 500,000 | | | | 1,000,000 | | | | 2,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | 2/4/08 | | | — | | | | — | | | | — | | | | 91,464 | | | | 182,927 | (6) | | | — | | | | — | | | | — | | | | 226,829 | | |
| | 3/25/09 | | | — | | | | — | | | | — | | | | 100,000 | | | | 200,000 | (7) | | | — | | | | — | | | | — | | | | 284,000 | | | 1/31/10 | | | — | | | | — | | | | — | | | | 50,000 | | | | 100,000 | (6) | | | — | | | | — | | | | — | | | | 870,800 | |
| | 3/25/09 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 200,000 | | | | — | | | | — | | | | 284,000 | | | 1/31/10 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 200,000 | | | | — | | | | — | | | | 1,750,000 | |
Anthony J. Buccina | | N/A | | | 395,900 | | | | 791,800 | | | | 1,583,600 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | N/A | | | 410,000 | | | | 820,000 | | | | 1,640,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | 3/17/09 | | | — | | | | — | | | | — | | | | 25,000 | | | | 50,000 | (8) | | | — | | | | — | | | | — | | | | 62,000 | | | 2/2/09 | | | — | | | | — | | | | — | | | | 25,000 | | | | 50,000 | (7) | | | — | | | | — | | | | — | | | | 435,400 | |
| | 2/2/09 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 100,000 | | | | — | | | | — | | | | 135,000 | | | 4/12/10 | | | — | | | | — | | | | — | | | | 5,000 | | | | 10,000 | (8) | | | — | | | | — | | | | — | | | | 109,830 | |
| | | 4/12/10 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 20,000 | | | | — | | | | — | | | | 313,800 | |
Stephen R. Byers | | N/A | | | 266,750 | | | | 533,500 | | | | 1,067,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | N/A | | | 275,000 | | | | 550,000 | | | | 1,100,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 2/2/09 | | | — | | | | — | | | | — | | | | 17,500 | | | | 35,000 | (9) | | | — | | | | — | | | | — | | | | 304,780 | |
| | 3/17/09 | | | — | | | | — | | | | — | | | | 17,500 | | | | 35,000 | (9) | | | — | | | | — | | | | — | | | | 43,400 | | | 4/12/10 | | | — | | | | — | | | | — | | | | 2,500 | | | | 5,000 | (10) | | | — | | | | — | | | | — | | | | 54,915 | |
| | 2/2/09 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 70,000 | | | | — | | | | — | | | | 94,500 | | | 4/12/10 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,500 | | | | — | | | | — | | | | 180,435 | |
Keith E. Plowman | | N/A | | | 225,000 | | | | 450,000 | | | | 900,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | N/A | | | 183,200 | | | | 366,400 | | | | 732,800 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | 4/27/09 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | | | | — | | | | — | | | | 110,000 | | | 4/12/10 | | | — | | | | — | | | | — | | | | 12,500 | | | | 25,000 | (11) | | | — | | | | — | | | | — | | | | 274,575 | |
| | | 4/12/10 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 30,000 | | | | — | | | | — | | | | 470,700 | |
Barbara J. Schrantz | | | N/A | | | 100,000 | | | | 200,000 | | | | 400,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 4/12/10 | | | — | | | | — | | | | — | | | | 7,500 | | | | 15,000 | (12) | | | — | | | | — | | | | — | | | | 164,745 | |
| | | 4/12/10 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,000 | | | | — | | | | — | | | | 235,350 | |
| | | 1/28/11 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 75,000 | | | | — | | | | — | | | | 835,500 | |
| | |
(1) | | Represents the range of cash payouts targeted for 20092010 performance under the Cash Bonus Plan described in the Compensation Discussion and Analysis on page 2226 under the heading “Performance-Based Annual Incentive Compensation.” The amounts shown in the “Threshold” column reflect the minimum payout opportunity if threshold performance was achieved. If performance thresholds are not met, it is possible to have no payout under the Cash Bonus Plan. Actual payout amounts for 20092010 performance are included under “Non-Equity Incentive Compensation” in the Summary Compensation Table. |
|
(2) | | Represents the range of performance-based restricted share payouts targeted for 20092010 performance. These performance-based restricted shares are earned based on the achievement of goals for 20092010 established by the HRCC. If performance thresholds are not met, it is possible to have no payout of these performance-based restricted shares. Dividends are not paid on performance-based restricted shares until such shares are vested. Because 90%100% of the performance target for 20092010 was met, 90%100% of the target performance-based restricted shares were actually earned. |
|
(3) | | Represents awards of restricted shares made under the Stock Incentive Plan. Information regarding the vesting schedules of these awards is included in the footnotes to the Outstanding Equity Awards at Fiscal Year-End table on page 31.37. Dividends are generally paid on unvested restricted shares when dividends are paid on Company common stock. Restricted shares will vest on an accelerated basis upon the executive’s termination of employment under certain circumstances. Additional information regarding the vesting acceleration provisions applicable to equity awards is included under the heading “Potential Payments upon Termination or Change in Control.” |
|
(4) | | Represents options issued under the Stock Incentive Plan, of which there were none in 2009.2010. |
|
(5) | | Represents the grant date fair value of each equity award computed in accordance with ASC 718. The dollar value of time-based restricted shares shown represents the grant date fair value calculated as the fair market value of our common stock on the respective grant dates. The dollar value of performance-based restricted shares awarded to Messrs. Bergren, Buccina and Byers is computed based upon an assessment, as of the grant date, that it was probable 100%70% of the performance target would be met for the 20092010 year. Because 90%100% of the performance target for 20092010 was met, 90%100% of the 20092010 target performance-based restricted shares were actually earned. Reference Notes 8, 11footnotes 7, 10, 14, 16 and 1417 to the Summary Compensation Table. |
|
(6) | | Represents the target award of the second tranche of two equal tranches of performance-based restricted shares granted to Mr. Bergren on February 4, 2008. The performance goals for the second tranche were established by the HRCC on March 17, 2009. |
|
(7) | | Represents the target award of performance-based restricted shares granted to Mr. Bergren on March 25, 2009. The performance goals were established by the HRCC on March 17, 2009. |
|
(8) | | Represents the target award of the first tranche of two equal tranches of performance-based restricted shares granted to Mr. BuccinaBergren on February 2, 2009.January 31, 2010. The performance goals for the first tranche were established by the HRCC on March 17, 2009.16, 2010. The performance goals for the second tranche were not established by the HRCC until March 16, 2010.15, 2011. The second |
3035
| | |
| | second tranche is not reflected in this table because, for purposes of ASC 718 accounting, performance-based restricted shares are not considered to be “granted” until the respective performance goals have been established. |
|
(7) | | Represents the target award of the second tranche of two equal tranches of performance-based restricted shares granted to Mr. Buccina on February 2, 2009. The performance goals for the second tranche were established by the HRCC on March 16, 2010. |
|
(8) | | Represents the target award of performance-based restricted shares granted to Mr. Buccina on April 12, 2010. The performance goals were established by the HRCC on March 16, 2010. |
|
(9) | | Represents the target award of the firstsecond tranche of two equal tranches of performance-based restricted shares granted to Mr. Byers on February 2, 2009. The performance goals for the firstsecond tranche were established by the HRCC on March 17, 2009.16, 2010. |
|
(10) | | Represents the target award of performance-based restricted shares granted to Mr. Byers on April 12, 2010. The performance goals for the second tranche were not established by the HRCC untilon March 16, 2010. The second tranche is not reflected in this table because, for purposes |
|
(11) | | Represents the target award of ASC 718 accounting, performance-based restricted shares are not consideredgranted to be “granted” until the respectiveMr. Plowman on April 12, 2010. The performance goals have been established.were established by the HRCC on March 16, 2010. |
|
(12) | | Represents the target award of performance-based restricted shares granted to Ms. Schrantz on April 12, 2010. The performance goals were established by the HRCC on March 16, 2010. |
36
Outstanding Equity Awards at Fiscal Year-End
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | | | Option Awards | | Stock Awards | |
| | | | | | | | | | | | | | | | | | Equity
| | | | | | | | | | | | | | | | | | | Equity
| |
| | | | | | | | | | | | | | | | Equity
| | Incentive
| | | | | | | | | | | | | | | | | Equity
| | Incentive
| |
| | | | | | | | | | | | | | | | Incentive
| | Plan
| | | | | | | | | | | | | | | | | Incentive
| | Plan
| |
| | | | | | | | | | | | | | | | Plan
| | Awards:
| | | | | | | | | | | | | | | | | Plan
| | Awards:
| |
| | | | | | | | | | | | | | | | Awards:
| | Market
| | | | | | | | | | | | | | | | | Awards:
| | Market
| |
| | | | | | | | | | | | | | | | Number
| | or Payout
| | | | | | | | | | | | | | | | | Number
| | or Payout
| |
| | | | | | Equity
| | | | | | | | Market
| | of
| | Value of
| | | | | | | Equity
| | | | | | | | Market
| | of
| | Value of
| |
| | | | | | Incentive
| | | | | | | | Value of
| | Unearned
| | Unearned
| | | | | | | Incentive
| | | | | | | | Value of
| | Unearned
| | Unearned
| |
| | | | | | Plan
| | | | | | | | Shares
| | Shares,
| | Shares,
| | | | | | | Plan
| | | | | | | | Shares
| | Shares,
| | Shares,
| |
| | | | | | Awards:
| | | | | | Number of
| | or
| | Units or
| | Units or
| | | | | | | Awards:
| | | | | | Number of
| | or
| | Units or
| | Units or
| |
| | | | | | Number of
| | | | | | Shares or
| | Units of
| | Other
| | Other
| | | | | | | Number of
| | | | | | Shares or
| | Units of
| | Other
| | Other
| |
| | Number of
| | Number of
| | Securities
| | | | | | Units of
| | Stock
| | Rights
| | Rights
| | | Number of
| | Number of
| | Securities
| | | | | | Units of
| | Stock
| | Rights
| | Rights
| |
| | Securities
| | Securities
| | Underlying
| | | | | | Stock
| | That
| | That
| | That
| | | Securities
| | Securities
| | Underlying
| | | | | | Stock
| | That
| | That
| | That
| |
| | Underlying
| | Underlying
| | Unexercised
| | Option
| | | | That
| | Have
| | Have
| | Have
| | | Underlying
| | Underlying
| | Unexercised
| | Option
| | | | That
| | Have
| | Have
| | Have
| |
| | Unexercised
| | Unexercised
| | Unearned
| | Exercise
| | Option
| | Have Not
| | Not
| | Not
| | Not
| | | Unexercised
| | Unexercised
| | Unearned
| | Exercise
| | Option
| | Have Not
| | Not
| | Not
| | Not
| |
| | Options-
| | Options-
| | Options
| | Price
| | Expiration
| | Vested
| | Vested
| | Vested
| | Vested
| | | Options -
| | Options -
| | Options
| | Price
| | Expiration
| | Vested
| | Vested
| | Vested
| | Vested
| |
Name | | Exercisable | | Unexercisable | | (#) | | ($) | | Date | | (#) | | ($)(1) | | (#) | | ($)(1) | | | Exercisable | | Unexercisable | | (#) | | ($) | | Date | | (#) | | ($)(1) | | (#) | | ($)(1) | |
|
Tim Grumbacher | | | — | | | | — | | | | — | | | | — | | | | — | | | | 365,205 | (2) | | | 3,195,544 | | | | — | | | | — | | |
Byron L. Bergren | | | 125,000 | | | | — | | | | — | | | | 13.05 | | | | 8/23/2014 | | | | — | | | | — | | | | — | | | | — | | | | 125,000 | | | | — | | | | — | | | | 13.05 | | | | 8/23/2014 | | | | — | | | | — | | | | — | | | | — | |
| | | | 95,000 | | | | — | | | | — | | | | 20.44 | | | | 7/6/2012 | | | | — | | | | — | | | | — | | | | — | |
| | | 95,000 | | | | — | | | | — | | | | 20.44 | | | | 7/6/2012 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 100,000 | (2) | | | 1,114,000 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 20,648 | (3) | | | 180,670 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 200,000 | (3) | | | 2,228,000 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 200,000 | (4) | | | 1,750,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 100,000 | (4) | | | 1,114,000 | |
Anthony J. Buccina | | | 96,000 | | | | — | | | | — | | | | 27.15 | | | | 5/31/2013 | | | | — | | | | — | | | | — | | | | — | | | | 96,000 | | | | — | | | | — | | | | 27.15 | | | | 5/31/2013 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | 11,019 | (5) | | | — | | | | 55.85 | | | | 3/26/2014 | | | | — | | | | — | | | | — | | | | — | | | | 11,019 | | | | — | | | | — | | | | 55.85 | | | | 3/26/2014 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | 50,000 | (6) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | (5) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,865 | (7) | | | 25,069 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | (6) | | | 111,400 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | (8) | | | 87,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 100,000 | (7) | | | 1,114,000 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 100,000 | (9) | | | 875,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | (8) | | | 111,400 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | (10) | | | 437,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | (9) | | | 111,400 | | | | — | | | | — | |
Stephen R. Byers | | | 15,000 | | | | — | | | | — | | | | 31.84 | | | | 4/2/2013 | | | | — | | | | — | | | | — | | | | — | | | | 15,000 | | | | — | | | | — | | | | 31.84 | | | | 4/2/2013 | | | | — | | | | — | | | | — | | | | — | |
| | | 21,500 | | | | — | | | | — | | | | 29.90 | | | | 10/1/2013 | | | | — | | | | — | | | | — | | | | — | | | | 21,500 | | | | — | | | | — | | | | 29.90 | | | | 10/1/2013 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | 11,019 | (5) | | | — | | | | 55.85 | | | | 3/26/2014 | | | | — | | | | — | | | | — | | | | — | | | | 11,019 | | | | — | | | | — | | | | 55.85 | | | | 3/26/2014 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | 50,000 | (6) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | (5) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,865 | (7) | | | 25,069 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | (6) | | | 111,400 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | (8) | | | 87,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 70,000 | (7) | | | 779,800 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 70,000 | (9) | | | 612,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,500 | (8) | | | 72,410 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 35,000 | (10) | | | 306,250 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | (9) | | | 55,700 | | | | — | | | | — | |
Keith E. Plowman | | | 10,000 | | | | — | | | | — | | | | 17.91 | | | | 5/26/2012 | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | | | | — | | | | — | | | | 17.91 | | | | 5/26/2012 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | 11,019 | (5) | | | — | | | | 55.85 | | | | 3/26/2014 | | | | — | | | | — | | | | — | | | | — | | | | 11,019 | | | | — | | | | — | | | | 55.85 | | | | 3/26/2014 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | 40,000 | (6) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40,000 | (5) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,865 | (7) | | | 25,069 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,000 | (6) | | | 77,980 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,000 | (8) | | | 61,250 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | (10) | | | 557,000 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | (11) | | | 437,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | (8) | | | 55,700 | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,000 | (9) | | | 278,500 | | | | — | | | | — | |
Barbara J. Schrantz | | | | 10,000 | | | | — | | | | — | | | | 19.97 | | | | 9/11/2012 | | | | — | | | | — | | | | — | | | | — | |
| | | | 4,452 | | | | — | | | | — | | | | 51.83 | | | | 4/26/2014 | | | | — | | | | — | | | | — | | | | — | |
| | | | 15,000 | | | | — | | | | — | | | | 12.90 | | | | 11/26/2014 | | | | — | | | | — | | | | — | | | | — | |
| | | | — | | | | 20,000 | (5) | | | — | | | | 4.96 | | | | 3/17/2015 | | | | — | | | | — | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,500 | (6) | | | 38,990 | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,000 | (10) | | | 278,500 | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,000 | (9) | | | 167,100 | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | 75,000 | (11) | | | 835,500 | | | | — | | | | — | |
| | |
(1) | | Market values reflect the closing price of the Company’s common stock on the NASDAQ Stock Market on January 29, 201028, 2011 (the last business day of the fiscal year), which was $8.75$11.14 per share. |
|
(2) | | Restricted shares vested 100% on February 1, 2010.2011. |
|
(3) | | Restricted shares vestedvest 100% on February 5, 2010.2012. |
|
(4) | | RestrictedThese performance-based shares vested 50%vest based on February 1, 2010 and vest 50% on February 1, 2011.fiscal 2011 performance criteria established by the HRCC. |
|
(5) | | Stock options vested 100% on March 26, 2010.17, 2011. |
|
(6) | | Stock options vestRestricted shares vested 100% on March 17, 2011. |
|
(7) | | Restricted shares vested 100% on March 26, 2010.April 30, 2011. |
|
(8) | | Restricted shares vestvested 100% on March 17,April 12, 2011. |
|
(9) | | Restricted shares vest 100% on April 30, 2011.12, 2013. |
|
(10) | | These performance-based restricted shares vest based on fiscal 2010 performance criteria established by the HRCC. |
|
(11) | | Restricted shares vest 100% on April 27, 2012. |
|
(11) | | Restricted shares vest 25,000 each on February 3, 2014, February 2, 2015 and February 1, 2016. |
3137
Pension Benefits
The Pension Benefits Table below shows the actuarial present value of accumulated benefits payable to each of our named executive officers and the number of years credited to each named executive officer under each of the Carson’s SERP, the Carson’s Pension Plan, and the Executive Transition Agreement dated February 1, 2005, as amended, between the Company andin which only Mr. Grumbacher (the “Executive Transition Agreement”), pursuant to which Mr. and Mrs. Grumbacher are entitled to continue participation in the Company’s group medical plan upon cessation of Mr. Grumbacher’s employment with the Company.Buccina is a participant.
The present valuesvalue set forth havehas been calculated for the named executive officersMr. Buccina assuming that eachhe will remain in service until normal retirement age as defined under each plan.the Carson’s Pension Plan. The assumptions set forth in Note 8 to our audited financial statements included in ourForm 10-K filed with the SEC on April 16, 201013, 2011 were used to calculate the numbers below and are incorporated by reference.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Present Value of
| | | | | | | | Present Value of
| | | |
| | | | Number of Years
| | Accumulated
| | Payments During
| | | | Number of Years
| | Accumulated Benefit
| | Payments During
| |
Name | | Plan Name | | Credited Service | | Benefit ($) | | Last Fiscal Year ($) | | Plan Name | | Credited Service | | ($) | | Last Fiscal Year ($) | |
|
Tim Grumbacher | | Retiree Medical Benefits | | | N/A | | | | 515,333 | | | | — | | |
Byron L. Bergren | | — | | | — | | | | — | | | | — | | | — | | | — | | | | — | | | | — | |
Anthony J. Buccina | | Carson’s Pension Plan | | | 13 | (1) | | | 231,469 | | | | — | | | Carson’s Pension Plan | | | 13 | (1) | | | 254,146 | | | | — | |
| | Carson’s SERP | | | — | | | | — | | | | 2,931,821 | (2) | |
Stephen R. Byers | | — | | | — | | | | — | | | | — | | | — | | | — | | | | — | | | | — | |
Keith E. Plowman | | — | | | — | | | | — | | | | — | | | — | | | — | | | | — | | | | — | |
Barbara J. Schrantz | | | — | | | — | | | | — | | | | — | |
| | |
(1) | | Although Mr. Buccina has 1718 years of actual service, he is credited with only 13 years of service under the terms of the Carson’s Pension Plan as all future benefit accruals were frozen in May 2006. |
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(2) | | The Company terminated the Carson’s SERP in 2008. Mr. Buccina received a payment of $2,931,821 for his accumulated benefit in the first quarter of 2009. |
Description of PlansPlan Named in Pension Benefits Table
Carson’s Pension Plan
In connection with the acquisition of Carson’s in March 2006, the Company assumed the Carson’s Pension Plan. The Carson’s Pension Plan is a qualified defined-benefit cash-balance plan in which the only named executive officer who participates is Anthony J. Buccina. The Carson’s Pension Plan was frozen to new participants in 2002 and all future benefit accruals were frozen in May 2006. The Carson’s Pension Plan was amended in 2007 in compliance with the Pension Protection Act of 2006.
Requirements Forfor Retirement Benefits
Normal Retirement: Employees who terminate employment with three or more years of service and have attained age 65 qualify for normal retirement. Payment of the full benefit commences as soon as practicable following termination. Mr. Buccina is not currently eligible for normal retirement under the Carson’s Pension Plan.
Early Retirement: Employees who have completed three or more years of service and are age 55 or older upon termination are eligible for early retirement. In addition, employees who participated in Carson’s previous plan, which was merged into the Carson’s Pension Plan, are eligible for early retirement after 30 years of service. Payment of pension benefits will commence at age��age 65, unless the employee elects to begin such payments earlier in which case the pension benefit amount may be reduced. Mr. Buccina is currently eligible for early retirement under the Carson’s Pension Plan.
Termination Other than Normal Retirement or Early Retirement:Employees who terminate employment with three years or more years of service prior to attaining age 55 qualify to receive a
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deferred vested pension. Payment of deferred vested pension benefits will commence at age 65, unless the employee elects to begin such payments earlier in which case the deferred vested pension benefit amount may be reduced. Mr. Buccina is currently eligible for deferred vested pension benefits under the Carson’s Pension Plan.
Form of Payment
For an unmarried employee, the normal form of payment is a life annuity. For a married employee, the normal form of payment is a qualified joint and surviving spouse annuity; however, the
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married employee may elect to receive payment in the form of a single life annuity. Any employee may elect to receive pension benefits in the form of an actuarially equivalent life annuity, joint and survivor annuity, life annuity with ten years guaranteed, ten-year annuity with specified monthly payments, or, under certain circumstances, a lump sum.
Calculation of Benefits
Effective May 1, 2002, the Carson’s Pension Plan was amended and restated to convert the plan’s benefit formula to a cash-balance design. Under this design, the pension benefit is expressed as a cash-balance account. Employees with accrued pension benefits as of April 30, 2002, including Mr. Buccina, are considered continued participants under the current Carson’s Pension Plan.
Effective May 20, 2006, future accruals in the Carson’s Pension Plan were eliminated. Generally, the lump sum benefit payable under the Plan is the cash balance account value as of that date, with annual interest credits at the greater of 4.75% or the yield on3-year U.S. Treasury constant maturities as of the last day of the prior calendar year. However, the lump sum benefit is not less than the lump sum value of benefits accrued under prior Plan formulas as of May 20, 2006.
Carson’s Supplemental Executive Retirement Plan
In connection with the acquisition of Carson’s in March 2006, the Company assumed the Carson’s SERP. As a result of the acquisition of Carson’s, participants under the Carson’s SERP who remained employed with the Company after the acquisition became fully vested in their entire accrued benefit. The only named executive officer who participated in the Carson’s SERP is Anthony J. Buccina.
The Company terminated the Carson’s SERP in 2008. The Carson’s SERP had been a nonqualified, unfunded supplemental retirement plan intended to provide supplemental retirement benefits to a select group of management or highly-compensated employees. During the first quarter of 2009, each participant in the Carson’s SERP received a lump-sum payment which represented the net present value of their respective accrued benefits. Mr. Buccina received a payment of $2,931,821.
Benefits were calculated based on a percentage (limited to 40%) of the average of the five most highly compensated calendar years out of the participant’s previous ten years as an employee, the product of which was multiplied by the number of calendar months of service, to a maximum of 144 months. The amount of a participant’s accrued benefit was offset against certain other benefits to which the participant was entitled.
Retiree Medical Benefits for Tim Grumbacher
Pursuant to the Executive Transition Agreement, Mr. Grumbacher and his spouse are entitled to continue participation in the Company’s group medical plan and to continue participation in a supplemental medical benefits plan following the cessation of Mr. Grumbacher’s employment with the Company for any reason. Such participation will occur at no cost to the Grumbachers for the duration of their respective lifetimes. If Mr. Grumbacherand/or his spouse are unable to participate in the group medical plan, heand/or she shall either (i) receive cash payments from the Company to enable the purchase of similar coverage on an individual basis or (ii) the Company shall purchase an insurance policy to provide similar coverage.
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Option Exercises and Stock Vested During 20092010
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | | Option Awards | | Stock Awards | |
| | Number of Shares
| | Value Realized
| | Number of Shares
| | Value Realized
| | Number of Shares
| | Value Realized
| | Number of Shares
| | Value Realized
| |
| | Acquired on Exercise
| | on Exercise
| | Acquired on Vesting
| | on Vesting
| | Acquired on Exercise
| | on Exercise
| | Acquired on Vesting
| | on Vesting
| |
| | (#) | | ($) | | (#) | | ($)(1) | | (#) | | ($) | | (#) | | ($)(1) | |
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Tim Grumbacher | | | — | | | | — | | | | — | | | | — | | |
Byron L. Bergren | | | — | | | | — | | | | 344,634 | | | | 3,015,550 | (2) | | — | | — | | | 120,648 | | | | 1,098,897 | |
| | | — | | — | | | 100,000 | | | | 1,114,000 | (2) |
Anthony J. Buccina | | | — | | | | — | | | | 45,000 | | | | 393,750 | (2) | | — | | — | | | 2,865 | | | | 36,156 | |
| | | — | | — | | | 60,000 | | | | 668,400 | (2) |
Stephen R. Byers | | | — | | | | — | | | | 5,250 | | | | 33,390 | | | — | | — | | | 2,865 | | | | 36,156 | |
| | | — | | | | — | | | | 31,500 | | | | 275,625 | (2) | | — | | — | | | 40,000 | | | | 445,600 | (2) |
Keith E. Plowman | | | — | | | | — | | | | 8,000 | | | | 13,440 | | | — | | — | | | 2,865 | | | | 36,156 | |
| | | — | | — | | | 25,000 | | | | 278,500 | (2) |
Barbara J. Schrantz | | | — | | — | | | 6,158 | | | | 92,318 | |
| | | — | | — | | | 15,000 | | | | 167,100 | (2) |
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(1) | | Value reflects the closing price of the Company’s common stock on the NASDAQ Stock Market on the respective vesting date of the restricted stock awards. |
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(2) | | 20092010 performance-based restricted stock awards vested January 30, 201029, 2011 as determined by the HRCC on March 16, 2010.8, 2011. |
Summary of Employment Agreements with Named Executive Officers
Tim Grumbacher, Executive Chairman of the Board
Mr. Grumbacher and the Company entered into the Executive Transition Agreement on February 1, 2005, which was amended on December 6, 2007 and January 28, 2010. The agreement, as amended, runs through December 31, 2010. Pursuant to the amended agreement, Mr. Grumbacher will serve as the Company’s Executive Chairman of the Board and as a member of the Executive Committee of the Board during the term of the agreement, receive an annual base salary of $650,000 and be eligible to earn an annual cash bonus in accordance with pre-determined criteria established by the HRCC under the Cash Bonus Plan. The amended agreement also provides that beginning January 1, 2011, Mr. Grumbacher will serve as non-Executive Chairman of the Board, for such term and with such duties and compensation as the Board of Directors and Mr. Grumbacher may agree.
Pursuant to the December 6, 2007 amendment to the agreement, the provision for a payment by the Company to Mr. Grumbacher to cover, on a net after-tax basis, the excise tax imposed on all amounts treated as “excess parachute payments” under Section 280G of the Code was eliminated. The amended agreement also provides for a reduction of cash payable to Mr. Grumbacher upon a change in control if, and to the extent necessary, such reduction would be sufficient to avoid treatment of any payments or benefits as “excess parachute payments” under Section 280G of the Code.
Under his agreement, Mr. Grumbacher was granted 365,205 restricted shares of the Company’s common stock pursuant to the terms of the Stock Incentive Plan. The shares vested on February 1, 2010. The Company has agreed to provide Mr. Grumbacher and his wife with medical insurance and supplemental medical benefits for the duration of each of their lives. In addition, for the duration of Mr. Grumbacher’s life, the Company will provide him with secretarial support and office space and allow him to participate in the Company’s associate discount program. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Grumbacher may be entitled upon certain termination eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page 39.
Byron L. Bergren, President and Chief Executive Officer
Mr. Bergren’s employment agreement with the Company was entered into on August 24, 2004 (the “2004 Agreement”) and amended on May 1, 2005; May 23, 2006; July 19, 2007 and2007; March 18, 2009. The term of
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his employment agreement continues to February 5, 2012 unless sooner terminated in accordance with its terms.2009 and January 21, 2011. Mr. Bergren’s employment agreement, as amended, provides for a minimum annual base salary of $1,000,000 and a bonus in accordance with the Cash Bonus Plan. In January 2011, the Company entered into an amendment of Mr. Bergren’s employment agreement as amended, providesproviding that Mr. Bergrenhe will serve as President and Chief Executive Officer through January 31, 2011 and will serve in an important role to be determined by the Board of Directors from February 1, 2011 through February 5, 2012. In addition,The term of the agreement will extend automatically from year to year thereafter unless either party elects not to renew the agreement. If Mr. Bergren elects not to renew, the Board has agreed to nominate Mr. Bergren as a member of the Board of Directors forto serve until the period through February 5, 2012.annual meeting that is at least one year after expiration of the agreement. If the Company elects not to renew the agreement,
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the Board has agreed to nominate Mr. Bergren as a member of the Board of Directors and to effect his appointment as the non-executive Chairman of the Board to serve until the annual meeting that is at least one year after expiration of the agreement.
Pursuant to the July 19, 2007 amendment to his employment agreement, Mr. Bergren was granted the following long-term incentive compensation awards:
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| • | 41,297 time-based restricted shares of the Company’s common stock which had an aggregate value of $1,350,000 as of July 19, 2007. Fifteen percent (6,195 shares) vested on February 2, 2008, thirty-five percent (14,454 shares) vested on January 31, 2009 and fifty percent (20,648 shares) vested on February 5, 2010. |
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| • | 41,297 performance-based restricted shares with a value of $1,350,000 as of July 19, 2007. One hundred percent of these restricted shares were forfeited based upon the failure to achieve the net income performance targets for 2007 and 2008. |
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| • | 365,854 performance-based restricted shares with a value of $2,700,000 as of February 4, 2008. One-half of these restricted shares were forfeited based upon the failure to achieve the performance targets for 2008. Ninety percent of the remaining 182,927 performance-based restricted shares (164,634 shares) vested based upon the achievement of performance targets for 2009. |
Pursuant to the fourthMarch 18, 2009 amendment to thehis employment agreement, dated March 18, 2009, Mr. Bergren was granted the following long-term incentive awards:
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| • | 200,000 time-based restricted shares of the Company’s common stock which had an aggregate value of $354,000 as of March 25, 2009. Fifty percent (100,000 shares) vested on February 1, 2010, and the remainder (100,000 shares) will vestvested on February 1, 2011, provided Mr. Bergren is continuously employed by the Company through such date, except that vesting of such shares may be accelerated in certain circumstances. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Bergren may be entitled upon certain eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page 39.2011. |
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| • | 200,000 performance-based restricted shares with a value of $354,000 as of March 25, 2009. Ninety percent of these performance-based restricted shares (180,000 shares) vested based upon the achievement of performance targets for 2009. |
The fourthThis amendment to the employment agreement also providesprovided that Mr. Bergren will receive two grants of shares of restricted stock in fiscal year 2010:
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| • | 200,000 time-based restricted shares of the Company’s common stock shallthat vest one hundred percent on February 5, 2012, provided Mr. Bergren is continuously employed by the Company through such date, except that vesting of such shares may be accelerated in certain circumstances.2012. |
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| • | 200,000 performance-based restricted shares of the Company’s common stock shallthat vest based on the achievement of performance goals. Thesegoals, 100,000 of which were subject to vesting based on achievement of Company performance goals for 2010 and 100,000 of which are subject to vesting based on achievement of Company performance goals for 2011. One-hundred percent of the 2010 performance-based restricted shares shall vest fifty percent (100,000 shares) vested based upon the achievement of performance goalstargets for 2010 established by the HRCC and fifty percent (100,000 shares) based upon the achievement of performance goals for 2011 to be established by the HRCC.2010. |
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In the event that Mr. Bergren is discharged without cause or resigns for good reason on or prior to January 31, 2011 and provided that Mr. Bergren executes a general release consistent with certain terms of his employment agreement, the 2010 grant of performance-based restricted shares based upon Company performance for 2010 granted to Mr. Bergren shall become vested, and the underlying shares shall be delivered, to the same extent as would have applied had Mr. Bergren remained employed through the date the determination of vesting for these shares would otherwise have been. In the event that Mr. Bergren is discharged without cause or resigns for good reason on or after January 30, 2011 and prior to January 29,February 5, 2012, and provided that Mr. Bergren executes a general release consistent with certain terms of his employment agreement, the 2010 grant of performance-based restricted shares based upon Company performance for 2011 granted to Mr. Bergren shall become vested, and the underlying shares shall be delivered, to the same extent as would have applied had Mr. Bergren remained employed through the date the determination of vesting for these shares would otherwise have been. In addition, Mr. Bergren will be entitled to receive severance pay for a period of two years following termination of his employment payable in installments over such period. Mr. Bergren will also receive the bonus that would have been earned if Mr. Bergren had completed the fiscal year in which termination of employment occurs. The vesting of restricted stock and the payment of severance benefits are contingent on Mr. Bergren executing a general release consistent with certain terms of his employment agreement.
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If Mr. Bergren is discharged without cause during the term of his employment agreement following a “Change in Control” (as defined in the employment agreement) or resigns from the Company with or without good reason during the term of his employment agreement after the expiration of three months following a Change in Control, Mr. Bergren will receive a payment equal to the lesser of 2.99 times his base salary (at the salary level immediately preceding the Change in Control plus his average bonus for the three immediately preceding fiscal years) or, if applicable, the “280G Permitted Payment” (as defined in the 2004 Agreement). The Change in Control severance payment is contingent on Mr. Bergren signing and not timely revoking a general release of claims.
For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Bergren may be entitled upon certain termination eventsand/or a Change in Control, see “Potential Payments Upon Termination or Change in Control” on page 45.
Mr. Bergren’s employment agreement contains a non-competition clause that, during Mr. Bergren’s employment and for a period of one year after termination of his employment, prohibits Mr. Bergren from engaging in or being financially interested in the retail department stores business of any competitor of the Company identified in the employment agreement. Mr. Bergren’s employment agreement also contains confidentiality provisions relating to the Company’s confidential information. For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Bergren may be entitled upon certain termination eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page 39.
Anthony J. Buccina, Vice Chairman, President — Merchandising
On January 23, 2009, the Company entered into an employment agreement (the “Buccina Employment Agreement”), Restricted Stock Agreement and Restricted Stock Agreement — Performance Shares with Mr. Buccina. The Buccina Employment Agreement was amended by Amendment No. 1 to Employment Agreement dated April 12, 2011 (the “Amendment No. 1”).
The Buccina Employment Agreement follows an employment agreement dated June 1, 2006 that expired January 31, 2009. The new Buccina Employment Agreement was effective asprovides that the term runs for a period of February 1, 2009one year and will terminate onshall renew for successive periods of one year unless either the Company or Mr. Buccina elects not to renew the Employment Agreement. The Employment Agreement automatically renewed for an additional one-year term to April 30, 2011, unless sooner terminated in accordance with2012. Amendment No. 1 continues the termsprovision of the Buccina Employment Agreement. Unless terminated, the Buccina Employment Agreement that provides that the term shall be for one year and shall renew for successive one-year terms beginning May 11st of each year.year, unless terminated pursuant to the terms of the Employment Agreement.
Mr. Buccina’s initial base salary under the Buccina Employment Agreement iswas $791,800 per year. This base salary is subject to review during the term of the Buccina Employment Agreement and may be increased in the sole discretion of the Company, upon approval of the HRCC.
The Buccina Employment Agreement provides that Mr. Buccina is eligible for a bonus under the Cash Bonus Plan under the following parameters: a target bonus of 100% of base salary in effect on the last day of the relevant fiscal year, with threshold and maximum bonuses as determined by the HRCC. The performance measures to be utilized, and the weighting of these performance measures, will be determined by the HRCC consistent with its determinations for other senior executives under the Cash Bonus Plan.
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The Buccina Employment Agreement provided that Mr. Buccina receive a grant of 100,000 restricted shares of the Company’s common stock pursuant to the terms of the Company’s Stock Incentive Plan. Such grant was awarded on February 2, 2009. Such2009 and such restricted shares shall vestvested on April 30, 2011, provided that Mr. Buccina is still employed by the Company on such date.2011. In addition, Mr. Buccina received, as performance-based compensation, a grant of 50,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares shall bewere determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (45,000 shares) vested based upon the achievement of performance targets
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for 2009. One-hundred percent of the 2010 performance-based restricted shares (50,000 shares) vested based upon the achievement of performance targets for 2010.
For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Buccina may be entitled upon certain eventsand/or a change in control, see “Potential Payments Upon Termination or Change in Control” on page 39.
Mr. Buccina is eligible to participate in plans and programs that are generally made available to the other employees of the Company.On April 12, 2010, Mr. Buccina was awarded a participant in the Carson’s SERP,grant of 20,000 shares of time-based restricted shares, 10,000 of which was terminated by the Company in 2008. Pursuant to the Buccina Employment Agreement, the Company paidvested on April 12, 2011 and 10,000 of which vest on April 12, 2013. In addition, Mr. Buccina $2,931,821,received, as performance-based compensation, a grant of 10,000 restricted shares subject to vesting on the actuarial equivalent present valuebasis of his accrued benefits in the Carson’s SERP, inachievement of certain performance goals established for the first quarterCompany’s 2010 fiscal year. One-hundred percent of 2009.the 2010 performance-based restricted shares (10,000 shares) vested based upon the achievement of performance targets for 2010.
In the event of discharge without cause or resignation for good reason during the initial term of the Buccina Employment Agreement ending April 30, 2011, during the first renewal term ending April 30, 2012 or if the Company has not offered to renew the Buccina Employment Agreement for the first renewal term ending April 30, 2012,at any time prior to February 1, 2014, Mr. Buccina will be entitled to receive severance pay equal to the greater of his base pay for the remaining contract term or two times his base salary, payable in a lump sum as soon as practicable following the six month anniversary of the termination of Mr. Buccina’s employment. The severance payment is contingent on Mr. Buccina signing and not timely revoking a general release of claims.
Upon a “Change in Control” (as defined in the Buccina Employment Agreement), (1) the vesting of stock options and restricted shares held by Mr. Buccina shall be governed by the terms of such stock option or restricted share grantsvest and (2) Mr. Buccina is prohibited from resigning for good reason for a period of six months following the Change in Control. If following a Change in Control he is discharged without cause or resigns for good reason within two years of the Change in Control, Mr. Buccina will receive a severance payment equal to two times his average base pay for the most recently completed three years plus two times the average bonus paid to him for the most recently completed three years, or, if applicable, the “280G Permitted Payment” (as such term is defined in the Buccina Employment Agreement). The Change in Control severance payment is contingent on Mr. Buccina signing and not timely revoking a general release of claims.
For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Buccina may be entitled upon certain eventsand/or a Change in Control, see “Potential Payments Upon Termination or Change in Control” on page 45.
The Buccina Employment Agreement contains a non-competition clause that, during Mr. Buccina’s employment and for a period equal to one-half of the period for which he receives severance payments after termination of his employment, prohibits Mr. Buccina from engaging in or being financially interested in the retail department stores business of any competitor of the Company named in the Buccina Employment Agreement. The Buccina Employment Agreement also contains confidentiality provisions relating to the Company’s confidential information.
Stephen R. Byers, Vice Chairman — Stores, Visual, Construction, Real Estate, Distribution & Logistics and Loss Prevention
On January 23, 2009, the Company entered into an employment agreement (the “Byers Employment Agreement”), Restricted Stock Agreement and Restricted Stock Agreement — Performance Shares with Stephen R. Byers. In January 2011, the Company elected not to renew the employment agreement of Mr. Byers upon its expiration on April 30, 2011. As of the preparation of this proxy statement, the Company was negotiating a new employment agreement with Mr. Byers to provide for his continued employment with the Company after April 30, 2011.
The Byers Employment Agreement follows an employment agreement dated June 28, 2006, as amended by the first amendment to the employment agreement dated December 20, 2006,
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which expired January 31, 2009. The new Byers Employment Agreement was effective as of February 1, 2009 and, will terminatepursuant to the Company’s January 2011 election not to renew, terminated on April 30, 2011, unless sooner terminated in accordance with the terms of the Byers Employment Agreement. Unless terminated, the Byers Employment Agreement shall renew for successive one-year terms beginning May 1 of each year.2011.
Mr. Byers’s initial base salary under the Byers Employment Agreement iswas $533,500 per year. This base salary is subject to review during the term of the Byers Employment Agreement and may be increased in the sole discretion of the Company, upon approval of the HRCC.
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The Byers Employment Agreement providesprovided that Mr. Byers iswas eligible for a bonus under the Cash Bonus Plan under the following parameters: a target bonus of 100% of base salary in effect on the last day of the relevant fiscal year, with threshold and maximum bonuses as determined by the HRCC. The performance measures to be utilized and the weighting of these performance measures will beare determined by the HRCC consistent with its determinations for other senior executives under the Cash Bonus Plan.
The Byers Employment Agreement provided that Mr. Byers receive a grant of 70,000 restricted shares of the Company’s common stock pursuant to the terms of the Company’s Stock Incentive Plan. Such grant was awarded on February 2, 2009. Such2009 and such restricted shares shall vestvested on April 30, 2011, provided that Mr. Byers is still employed by the Company on such date.2011. In addition, Mr. Byers received, as performance-based compensation, a grant of 35,000 restricted shares of the Company’s common stock for each of 2009 and 2010. The metrics for earning such performance-based shares shall bewere determined each year by the HRCC. The terms of the grants are set forth in the Restricted Stock Agreements. Ninety percent of the 2009 performance-based restricted shares (31,500 shares) vested based upon the achievement of performance targets for 2009. One-hundred percent of the 2010 performance-based restricted shares (35,000 shares) vested based upon the achievement of performance targets for 2010.
For information regarding potential severance payments and accelerated vesting of equity awards to whichOn April 12, 2010, Mr. Byers may be entitled upon certain eventsand/orwas awarded a change in control, see “Potential Payments Upon Termination or Change in Control”grant of 11,500 shares of time-based restricted shares, 6,500 of which vested on page 39.
April 12, 2011 and 5,000 of which vest on April 12, 2013. In addition, Mr. Byers is eligiblereceived, as performance-based compensation, a grant of 5,000 restricted shares subject to participate in plans and programs that are generally made available tovesting on the other employeesbasis of the Company.achievement of certain performance goals established for the Company’s 2010 fiscal year. One-hundred percent of the 2010 performance-based restricted shares (5,000 shares) vested based upon the achievement of performance targets for 2010.
In the event of discharge without cause or resignation for good reason during the initial term of the Byers Employment Agreement, ending April 30, 2011, Mr. Byers will bewould have been entitled to receive severance pay equal to the greater of his base pay for the remaining contract term or two times his base salary, payable in a lump sum as soon as practicable following the six month anniversary of the termination of Mr. Byers’s employment. The severance payment iswas contingent on Mr. Byers signing and not timely revoking a general release of claims.
Upon a “Change in Control” (as defined in the Byers Employment Agreement), (1) the vesting of stock options and restricted shares held by Mr. Byers shall beis governed by the terms of such stock option or restricted share grants and (2) Mr. Byers is prohibited from resigning for good reason for a period of six months following the Change in Control. If following a Change in Control he is discharged without cause or resigns for good reason within two years of the Change in Control, Mr. Byers will receive a severance payment equal to two times his average base pay for the most recently completed three years plus two times the average bonus paid to him for the most recently completed three years, or, if applicable, the “280G Permitted Payment” (as such term is defined in the Byers Employment Agreement). The Change in Control severance payment is contingent on Mr. Byers signing and not timely revoking a general release of claims.
For information regarding potential severance payments and accelerated vesting of equity awards to which Mr. Byers may be entitled upon certain eventsand/or a Change in Control, see “Potential Payments Upon Termination or Change in Control” on page 45.
The Byers Employment Agreement contains a non-competition clause that, during Mr. Byers’s employment and for a period equal to one-half of the period for which he receives severance payments after termination of his employment, prohibits Mr. Byers from engaging in or being financially interested in the retail department stores business of any competitor of the Company named in the Byers Employment Agreement. The Byers Employment Agreement also contains confidentiality provisions relating to the Company’s confidential information.
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