Harris Teeter 2010 Annual Report Download - page 131

TRANSACTIONS WITH RELATED PERSONS AND CERTAIN CONTROL PERSONS
The Company’s Code of Business Conduct and Ethics provides that all employees, officers and directors must
avoid any activity that is, or has the appearance of, conflicting with the interests of the Company and that transactions
in which certain related persons may have a material interest must be disclosed to the Company. Related party
transactions are reported to the Company’s Secretary in response to an annual written questionnaire, or by the parties
involved from time to time, and reviewed by legal counsel for inclusion in the proxy statement as appropriate. The
Company’s executive officers and legal counsel review any related party transaction and determine whether such
transaction should be reported to the Board of Directors.
The Company does not have a formal policy concerning the review, approval or ratification of related party
transactions, however as the transactions are reported, the Board of Directors considers any related party transactions
on a case by case basis to determine whether the Board of Directors must approve such transaction and, if the Board
of Directors determines such approval is required, the Board of Directors then determines, among other things,
whether the transaction or arrangement was undertaken in the ordinary course of business and whether the terms
of the transaction are no less favorable to the Company than terms that could have been reached with an unrelated
party. If any member of the Board of Directors is interested in the transaction, such director will recuse themselves
from the discussion and decision on the transaction. For transactions that have been recurring annually, such as
the transactions with Metro Marketing and John Dickson as described below, the Board of Directors reviews the
disclosure provided in the Proxy Statement, and determines if any additional action or approval is required.
During Fiscal 2010, Metro Marketing acted as a designated broker for Harris Teeter for several of its HT
Tradertprivate label products and other specialty products. Metro Marketing, in its role as independent broker,
performed various services on behalf of Harris Teeter including order placement, interface with manufacturers for
product issues or product problems, marketing and retail support services and the development of new products.
Third party manufacturers represented by Metro Marketing that provide these products to Harris Teeter are required
to pay Metro Marketing a fee based upon the amount of product sold. Rush Dickson (the brother of Thomas W.
Dickson) is the owner of Metro Marketing. During Fiscal 2010, Harris Teeter purchased approximately $33,531,000
of product from manufacturers represented by Metro Marketing resulting in fees of approximately $408,000 paid
to Metro Marketing. The terms of such services provided by Metro Marketing are, in management’s opinion, no
less favorable than the Company would have been able to negotiate with an unrelated party for similar services.
John Dickson (the brother of Thomas W. Dickson) is the Director of Property Development for Harris Teeter
and was paid an aggregate salary, bonus and taxable benefits of $144,096 during Fiscal 2010. The terms of the
employment relationship with John Dickson are, in management’s opinion, no less favorable than the Company
would have been able to enter into with a similarly situated employee that was an unrelated party.
Effective May 1, 2002,Alan T. Dickson and R. Stuart Dickson (the father of Thomas W. Dickson) (collectively,
the “Retired Executives”) retired from the Company as executive officers, but retained their positions on the Board
of Directors as Chairman of the Board of Directors and Chairman of the Executive Committee of the Board of
Directors, respectively. At that time, the Retired Executives became eligible to receive retirement benefits earned
during their employment with the Company. The targeted aggregate annual retirement benefit for each of the Retired
Executives pursuant to the SERP, Pension Plan and Social Security was $241,573. In addition, beginning in January
2003 each of Alan T. Dickson and R. Stuart Dickson began to receive monthly payments for a fifteen-year period
pursuant to, and in accordance with the terms of, an historical deferred compensation plan in the amounts of $26,315
and $19,899, respectively.
Effective March 31, 2006, Thomas W. Dickson was elected the new Chairman of the Board of Directors and
Alan T. Dickson and R. Stuart Dickson retired from their positions as Chairman of the Board of Directors and
Chairman of the Executive Committee of the Board of Directors, respectively. As described herein, since the Retired
Executives have retired from their respective leadership positions on the Board of Directors, effective March 31,
2006, they stopped receiving the benefits relating to their service as Chairman of the Board of Directors and
Chairman of the Executive Committee. However, in recognition of each of their 38 years of service as Company
executives and their invaluable contributions to the Company, upon the approval of the Board of Directors, the
Company entered into a new Supplemental Executive Retirement Plan with each of Alan T. Dickson and R. Stuart
53