Harris Teeter 2011 Annual Report Download - page 102

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in lieu thereof receive a single lump sum payment, equal to the Company’s costs in providing such benefits, including
any related tax gross-up, if applicable.
If it is determined that any payment or distribution will be subject to the excise tax imposed under Internal
Revenue Code Section 280G, then the NEO may be entitled to receive an additional payment or “gross up” to ensure
that their severance payments are kept whole as follows:
•For Messrs. Dickson and Woodlief, there is an unconditional gross-up to cover 280G excise tax, but not
ordinary tax obligations;
•For Messrs. Morganthall and Jackson, there is a conditional gross-up to cover 280G excise tax, but not
ordinary tax obligations. The “change in control” benefit payments for Messrs. Morganthall and Jackson
are capped at the 280G threshold if the safe harbor is exceeded by 10% or less (the “280G Cap”).
When used in the Change-in-Control and Severance Agreements, “severance accrued bonus” means an amount
based upon the current bonus schedule provided in the Cash Incentive Plan, calculated (i) utilizing the Company’s
annualized NOPAT return on the Company’s invested capital in the case of each of Messrs. Dickson and Woodlief;
(ii) utilizing A&E’s annualized NOPAT return on invested capital of A&E in the case of Mr. Jackson; or (iii) utilizing
operating profit margin of Harris Teeter in the case of Mr. Morganthall, for the cumulative fiscal period-to-date
as of the end of the most recent fiscal quarter ending on or before such NEO’s termination.
When used in the Change-in-Control and SeveranceAgreements, “CIC accrued bonus” means a bonus payment
based upon the current bonus schedule provided in the Cash Incentive Plan, calculated utilizing (a) the Company’s
annualized NOPAT return on the Company’s invested capital in the case of each of Messrs. Dickson and Woodlief;
(b) A&E’s annualized NOPAT return on invested capital of A&E in the case of Mr. Jackson; or (c) operating profit
margin of Harris Teeter for Mr. Morganthall, for the fiscal period-to-date as of the most recent fiscal quarter ending
on or before either: (1) the date of such NEO’s termination or (2) the date of the “change in control” transaction;
provided that the date which shall be used shall be the date that produces the greater payment to the NEO.
When used in the Change-in-Control and Severance Agreements, “CIC average prior bonus payments” means
the greater of the average of a NEO’s total bonus payments for the prior three full fiscal years ending (1) on or
before such NEO’s termination or (2) on or before the “change in control” transaction.
When used in the Change-in-Control and Severance Agreements, “CIC prorated bonus” means a bonus
payment calculated utilizing (a) the Company’s annualized NOPAT return on the Company’s invested capital in
the case of each of Messrs. Dickson and Woodlief; (b) A&E’s annualized NOPAT return on invested capital of A&E
in the case of Mr. Jackson; or (c) operating profit margin of Harris Teeter for Mr. Morganthall, calculated for the
portion of the fiscal year period to date as of the most recent fiscal quarter ending on or before the “change in control”
transaction.
When used in the Change-in-Control and Severance Agreements, “cause” means the termination of the NEO
due to (a) fraud; (b) embezzlement; (c) conviction or other final adjudication of guilt of the NEO of any felony;
(d) a material breach of, or the willful failure to perform and discharge such NEO’s duties, responsibilities and
obligations under their Change-in-Control and Severance Agreement; (e) any act of moral turpitude or willful
misconduct intended to result in personal enrichment of the NEO at the expense of the Company, or any of its
affiliates or which has a material adverse impact on the business or reputation of the Company or any of its affiliates;
(f) intentional material damage to the property or business of the Company; or (g) gross negligence. The
determination of “cause” under (d), (e), (f) and (g) shall be made by the Board of Directors in its reasonable
judgment.
When used in the Change-in-Control and Severance Agreements, “good reason” shall mean the termination
by the NEO of the NEO’s employment with the Company within the two (2) year period following a “change in
control” which is due to (i) a material diminution of responsibilities, or working conditions, or duties, or in the
case of Messrs. Dickson and Woodlief, ceasing to be the Chief Executive Officer or Chief Financial Officer,
respectively, of a publicly traded company; (ii) a material diminution in base salary or potential incentive
compensation; (iii) a material negative change in the terms or status of the Change-in-Control and Severance
36