Harris Teeter 2011 Annual Report Download - page 84

Download and view the complete annual report

Please find page 84 of the 2011 Harris Teeter annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Despite the challenging global economic and regulatory environment, the Company delivered strong financial
results in Fiscal 2011. Subsequent to Fiscal 2011, in November 2011 the Company sold its American & Efird
business (“A&E”), the Company’s textile subsidiary. As a result, the Company’s Fiscal 2011 results related to A&E
were reported as discontinued operations. The Company reported earnings from continuing operations for Fiscal
2011 of $111.5 million, or $2.28 per diluted share, an increase from $98.7 million, or $2.03 per diluted share, for
Fiscal 2010. Consolidated net income was $91.2 million, comprised of the $111.5 million in earnings from
continuing operations, $16.2 million in earnings from discontinued operations and a loss on sale of discontinued
operations of $36.5 million (net of tax benefits). The Company also generated net sales of $4.29 billion for Fiscal
2011, a 4.5 percent increase in net sales from Fiscal 2010, attributable to new store activity and comparable store
sales increases. Comparable store sales increased by 3.27% for Fiscal 2011. The Company’s subsidiaries achieved
their operating profit targets for Fiscal 2011.
Based on a comprehensive performance assessment of the Company’s financial results, and combined with
a review of the economic environment and competitive trends, the Compensation Committee made the following
decisions for the four named executive officers listed in the Summary Compensation Table for 2011, which we
refer to as “NEOs”:
•Base salaries increased for each NEO, due to the Company’s and its subsidiaries’ meeting Fiscal 2010
performance targets, the relative success of each NEO in achieving his applicable individual performance
goals, and the discontinuation of certain perquisites historically provided to the NEOs, all as described
in more detail below.
•Fiscal 2011 annual cash plan incentive awards were granted to NEOs based upon the respective Fiscal
2011 operating results of the Company and its subsidiaries and as computed in accordance with the
respective bonus formulas approved by the Compensation Committee.
•The Compensation Committee granted long-term incentive awards covering 35,000 shares of Common
Stock to Mr. Dickson and covering an aggregate of 41,500 shares of Common Stock to the other NEOs.
For Fiscal 2011, Mr. Dickson received total compensation of $3,371,225, reflecting strong Company and
individual performance in Fiscal 2011. Mr. Dickson’s total compensation reflects the role he plays in establishing
the Company’s strategic agenda and long-range plan, overseeing the management and execution of the Company’s
day-to-day operations and leading the Company in a challenging global economic and regulatory environment.
Although his compensation is determined using the same methodology as used for each of the other NEOs,
Mr. Dickson’s compensation is higher than the compensation paid to any of the other NEOs as his responsibilities
and obligations at the Company are greater than those of any of the other NEOs.
Each of the other NEOs received total compensation in Fiscal 2011 as follows: Mr. Woodlief, $1,963,597,
Mr. Morganthall, $1,944,092 and Mr. Jackson, $1,384,612. The compensation paid to these NEOs reflects the
relative performances of the Company or subsidiary for which these officers were responsible during Fiscal 2011,
as well as individual performance. As of the sale of A&E, Mr. Jackson, A&E’s President, was no longer an employee
of the Company or its subsidiaries.
During Fiscal 2011, the Compensation Committee made minimal changes to the compensation programs, other
than the modification of the perquisites provided to NEOs as described below. Minor adjustments were made to
the cash incentive plans and bonus amounts to address the economic environment and projected performance. No
changes were made to the overall design of the long-term incentive portion of compensation.
Executive Compensation Philosophy
The primary objective of the Company’s executive compensation program is to enhance shareholder value
in the Company while attracting, retaining and rewarding highly qualified executives. Accordingly, the Company’s
executive compensation program encourages management to produce strong financial performance by tying
18