Harris Teeter 2011 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 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

the approval of the Compensation Committee. The Company does not coordinate the timing of equity incentive
awards with the release of material non-public information.
In Fiscal 2011, the Company granted restricted stock and performance shares to a broad range of management
employees of the Company and its operating subsidiaries, including the NEOs. All of the Fiscal 2011 grants were
made in November 2010 and generally each employee received a grant of equal amounts of restricted stock and
performance shares. The restricted stock vests 20% per year on each of the first five anniversaries of the date of
the award. The performance shares entitled each recipient to receive shares of restricted stock, only upon the
achievement of certain performance objectives as described herein for Fiscal 2011. Restricted stock issued in
satisfaction of performance shares vests 25% per year on each of the first four anniversaries of the issuance of the
restricted stock. For the NEO employed by Harris Teeter, the issuances of restricted stock from performance shares
were 100% subject to Harris Teeter meeting its operating profit projections for Fiscal 2011. For executives employed
by A&E, the issuances of restricted stock from performance shares were 100% subject to A&E meeting its operating
profit projections for Fiscal 2011. Issuances of restricted stock from performance shares to executives employed
by the Company were dependent as to 95% of their performance shares on Harris Teeter meeting its operating profit
projections and as to 5% of their performance shares on A&E meeting its operating profit projections, reflecting
the relative size of the operating subsidiaries. For Fiscal 2011 the operating profit projection for Harris Teeter was
$172.5 million, and for A&E it was $18.5 million.
The belief of the Compensation Committee is that the equity awards incentivize employees by tying their
compensation to the value of the Company’s Common Stock. The performance share grants are designed to incent
the broad range of management employees, including the NEOs, to achieve the annual operating profit projections
which are provided to the Company’s Board of Directors. During Fiscal 2011, with respect to performance share
awards, the Harris Teeter executives, the A&E executives and the Company’s executives earned the full amount
of awards. The performance share awards for Fiscal 2011 are designed to be achievable by all of the participants
in such award plans. Reference is made to the Grants of Plan-Based Awards for 2011 table for more information
regarding the equity award grants.
The criteria considered by the Compensation Committee in granting restricted stock and performance shares
to NEOs included level of responsibility or position with the Company or its subsidiaries, performance and length
of employment. The Compensation Committee also considers the number of options, shares of restricted stock and
performance shares previously granted to employees when approving new grants. The Company’s equity based
incentive compensation awards are intended to provide executive officers a vested interest in the long-term financial
performance of the Company and closely align the interests of the shareholders and executives, with the goal of
increasing shareholder value in the Company. The vesting schedule utilized for both the restricted stock and
performance shares is a retention feature designed to encourage long-term employment by executives.
2011 Restricted Stock Awards
Name
Shares of Restricted Stock
Awarded in FY 2011 (a)
Thomas W. Dickson ...................................... 17,500
John B. Woodlief ......................................... 7,500
Frederick J. Morganthall, II ............................... 8,750
Fred A. Jackson ........................................... 4,500
(a) These awards of restricted stock will vest 20% per year on each of the first five anniversaries of the date of
the award.
24