Harris Teeter 2012 Annual Report Download - page 112

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The payment of a bonus in accordance with the Plan requires that the executive officer be an active employee
on the payroll of the Company or an affiliate on the last day of the performance period and at the time the payment
is made, unless the executive officer’s employment was earlier terminated due to early, normal or late retirement
under the terms of the Company’s pension or similar retirement plan.
Plan Operation
Within the earlier of (i) 90 days after commencement of a performance period, or (ii) the expiration of 25%
of the performance period, the Compensation Committee will designate and approve in writing:
•the performance period (the Plan defines “performance period” to mean the Company’s fiscal year or such
other period that the Compensation Committee may establish),
•the employees (designated by position or name) who will be participants in the Plan for the performance
period,
•the performance measures and targeted performance goals for those measures during the performance
period, and
•the bonus formula applicable to each participant for the performance period (which can be set on an
individual or group basis).
When the Compensation Committee establishes a bonus program, the Compensation Committee first
determines the length of the performance period in which a bonus program applies. For example, the Compensation
Committee determined at its November 2012 meeting that the Fiscal 2013 cash incentive awards will have a
performance period that coincides with Fiscal 2013. The Compensation Committee also determines the performance
measures and targeted goals for the applicable performance period.
Business Criteria and Maximum Amount of Compensation Payable Under the Plan
The performance measures for any performance period will be any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to
a region, business unit, affiliate or business segment, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target, to a previous period’s results or to a
designated comparison group, in each case as specified by the Compensation Committee: (i) return on invested
capital, (ii) net operating profit (before or after tax), (iii) operating profit margin, (iv) gross margin, (v) operating
profit, (vi) earnings before income taxes, (vii) earnings (which may include earnings before interest and taxes and
net earnings, and may be determined in accordance with United States Generally Accepted Accounting Principles
(“GAAP”) or adjusted to include or exclude any or all items), (viii) earnings per share (on a GAAP or non-GAAP
basis), (ix) growth in any of the foregoing measures, (x) stock price, (xi) return on equity or average shareholders’
equity, (xii) total shareholder return, (xiii) growth in shareholder value relative to the moving average of the S&P
500 Index or another index, (xiv) return on capital, (xv) return on assets or net assets, (xvi) return on investment,
(xvii) economic value added, (xviii) market shares, (xix) overhead or other expense reduction, (xx) credit rating,
strategic plan development and implementation, (xxi) succession plan development and implementation, (xxii)
improvement in workforce, (xxiii) diversity, (xxiv) customer indicators, (xxv) improvements in productivity, (xxvi)
attainment of objective operating goals and (xxvii) employee metrics.
The Plan further provides that the Compensation Committee may appropriately adjust any evaluation of
performance under a performance measure to exclude any of the following events that occurs during a performance
period: (A) the effects of currency fluctuations, (B) any or all items that are excluded from the calculation of non-
GAAP earnings as reflected in any the Company press release and Form 8-K filing relating to an earnings
announcement, (C) asset write-downs, (D) litigation or claim judgments or settlements, (E) the effect of changes
in tax law, accounting principles or other such laws or provisions affecting reported results, (F) accruals for
reorganization and restructuring programs, and (G) any other extraordinary or non-operational items. However, in
no event will the Compensation Committee use its discretion to increase a bonus paid to a participant.
The maximum bonus that any one participant may be paid under the Plan in any one fiscal year is $2 million.
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