Harris Teeter 2012 Annual Report Download - page 94

which prohibited participation by new employees, froze benefit accruals for certain participants, and provided
transition benefits to those participants that achieved specified age and service levels on December 31, 2005. These
transition benefits were provided to the majority of the Pension Plan participants as determined on the date of the
freeze. Each of the Company’s NEOs is entitled to these transition benefits and, as a result, the expected benefits
to each under the SERP and Pension Plan were not substantially affected by the plan changes.
Deferred Compensation Plan. The Company has a deferred compensation plan, the Harris Teeter
Supermarkets, Inc. Flexible Deferral Plan (the “Flexible Deferral Plan”), which allows eligible participants to forego
the receipt of earned compensation for specified periods of time. Each of the NEOs is eligible to participate in the
Flexible Deferral Plan. Pursuant to the Flexible Deferral Plan, compensation earned by participants (which is also
reported in the Summary Compensation Table for 2012) is deferred at the election of the plan participant. These
deferred amounts and a Company match based upon the same formula applicable to deferrals made pursuant to
the Retirement and Savings Plan are credited to the individual’s account. The value of an individual’s account will
increase or decrease based on the performance of the selected market investment alternatives elected by the
participant of the Flexible Deferral Plan. Additional details of the Flexible Deferral Plan are included under the
heading “Flexible Deferral Plan” below.
Perquisites and Other Benefits. The Company provides certain perquisites and other benefits to executive
management where they generally either (i) meet the business needs of the organization, or (ii) provide a level of
benefits commensurate with the group insurance plans offered to all employees to recognize limitations on wages.
The Company believes that these types of benefits are highly effective in recruiting and retaining qualified executive
officers because they provide the executive officer with longer term security and protection for the future. The
Company believes that providing these benefits is a relatively inexpensive way to enhance the competitiveness of
the executive’s compensation package and furthers the Company’s goal of attracting, retaining and rewarding highly
qualified executives. Furthermore, the Company believes that while its executives could purchase such coverage
individually, the superior purchasing power of the Company allows the Company to purchase the benefits in a more
cost effective manner. The Company generally believes that perquisites have greater value to the executives than
the cost to the Company to provide them, thus providing a return on the cost of providing such benefits. The
Compensation Committee considers these other forms of compensation, as well as perquisites made available to
executive officers, when setting annual base salary, incentive compensation and long-term incentive compensation.
Additionally, the Company provides tax gross-up reimbursements to the NEOs for the value of certain of these
benefits, in order to provide the NEOs with the full value of such benefits.
Perquisites. To the extent reportable perquisites, as defined by the SEC, are granted in Fiscal 2012, they are
disclosed in the footnotes to the Summary Compensation Table below. Perquisites are provided from time to time
consistent with the Company’s philosophy outlined above.
Retirement and Savings Plan. The Company also maintains the Retirement and Savings Plan in which
executives and other employees are entitled to participate upon satisfaction of the eligibility requirements. The
Retirement and Savings Plan provides participants a specified Company match on a portion of their pay contributed
to the Retirement and Savings Plan in accordance with plan rules. The Company provides a match equal to 50%
of the pay contributed to the Retirement and Savings Plan up to 4% of pay, subject to certain limitations. The
Retirement and Savings Plan also provides eligible participants a Company-paid automatic retirement contribution.
Based upon age and service points, eligible participants will receive an annual automatic retirement contribution
equal to between 2% and 5% of covered pay, subject to certain limitations.
Disability Benefits and Excess Liability Insurance. The Company generally provides income protection in the
event of disability under group insurance plans for its employees. These group plans have limitations on income
replacement and, as a result, highly compensated employees are not provided proportional income protection.
Accordingly, alternative disability coverage is provided by the Company to certain members of executive
management, including all current NEOs, pursuant to an executive long term disability plan (the “Executive Long
Term Disability Plan”). The premiums paid with respect to the Executive Long Term Disability Plan was grossed
up for tax purposes. The Company also provides personal group excess liability insurance coverage to certain
members of executive management, including all current NEOs.
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