Harris Teeter 2010 Annual Report Download - page 123

the amounts payable upon achievement of the performance goals after the start of a performance period, but may
reduce or eliminate the payments. However, to the extent permitted by Code Section 162(m), the Committee may
adjust performance goals if it determines that nonrecurring, extraordinary or non-operational items have materially
affected the fairness of the performance goals and have unduly affected the Company’s ability to meet them,
including without limitation, items such as the effects of currency fluctuations and litigation or claim judgments
or settlements.
The Committee may, in its discretion, provide that a recipient of a restricted stock units or performance shares
award will receive dividend equivalents on the outstanding units or shares. Dividend equivalents will be credited
to the participant as additional restricted stock units or performance shares (as applicable), subject to the same
vesting and other terms and conditions as the awards with respect to which the dividend equivalents were paid.
Stock Options
The 2011 Plan authorizes grants of incentive stock options or nonstatutory stock options. Incentive stock
options are designed to qualify for favorable tax treatment under Internal Revenue Code Section 422, while
nonstatutory stock options are not. The exercise price of either type of option may not be less than 100 percent
of the fair market value per share of Common Stock covered by the option on the date the option is granted. Fair
market value is the mean between the highest and lowest composite sales price per share of the Common Stock
as reported on the consolidated transaction reporting system for the NYSE on the date on which the value of the
Common Stock is determined (or if there are no reported prices for that date, the reported mean price on the last
preceding day on which a composite sale or sales occurred).
Options may be exercised at the times specified by the Committee. The maximum term of any option is ten
years from the date of grant. Incentive stock options may not be exercised after the first to occur of (i) ten years
from the date of grant, (ii) three months from the participant’s termination of employment for reasons other than
death or disability, or (iii) one year from the participant’s termination of employment due to death or disability.
The value of incentive stock options, based on the exercise price, that can be exercisable for the first time in
any calendar year under the 2011 Plan or any other similar plan the Company maintains is limited to $100,000
for each participant. A participant may pay the purchase price of an option in cash, or, if the participant’s incentive
award and applicable law so permits, by having the Company withhold shares sufficient to pay the exercise price,
by delivering shares owned by the participant, or by exercising in a broker-assisted transaction.
Absent specific written authorization by the shareholders, options may not be repriced except in connection
with a recapitalization event and otherwise generally may not be materially modified after the date of grant or
extended or renewed beyond their original terms. The Committee may suspend the right to exercise an option any
time it determines that the issuance of the Common Stock would violate any securities or other laws and may provide
that the exercise period is tolled during any period of suspension.
Transferability of Awards
Participants’ interests in restricted stock units and performance shares are not transferable prior to payment,
settlement or exercise of the awards, as the case may be, and if settled in the form of restricted stock, such restricted
stock is not transferable until the restrictions lapse. Restricted stock is not transferable until the restrictions have
lapsed or been removed. Nonstatutory stock options are transferable only to the extent provided by the Committee
(or, with respect to non-employee director awards, the Board of Directors) in the award agreement and permitted
by applicable securities laws. Incentive stock options are not transferable except by will or the laws of descent and
distribution.
Amendment of the 2011 Plan and Awards
The Board of Directors may amend the 2011 Plan from time to time as it deems advisable and may terminate
the 2011 Plan at any time. Amendments to increase the total number of shares of Common Stock reserved under
the 2011 Plan, or that otherwise constitute material changes to the 2011 Plan under applicable tax or securities laws
or the listing standards of the NYSE, require shareholder approval. The Board of Directors must obtain the consent
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