Harris Teeter 2011 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 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

cost effective manner. The Company generally believes that perquisites have greater value to the executives than
the cost to the Company to provide them, thus providing a return on the cost of providing such benefits. The
Compensation Committee considers these other forms of compensation, as well as perquisites made available to
executive officers, when setting annual base salary, incentive compensation and long-term incentive compensation.
Additionally, the Company provides tax gross-up reimbursements to the NEOs for the value of certain of these
benefits, in order to provide the NEOs with the full value of such benefits.
Perquisites. The cost of certain golf and social club memberships was historically covered for the NEOs,
provided that the club membership provided for a business-use opportunity such as use of the facilities for functions
and meetings, and client networking and entertainment. The country club membership reimbursements were
historically grossed up for tax purposes. However, during Fiscal 2011 the Compensation Committee determined
to discontinue reimbursement of such golf and social club membership dues after a review of the total compensation
packages provided to the NEOs. Other perquisites are provided from time to time.
RRSP. The Company also maintains the RRSP in which executives and other employees are entitled to
participate upon satisfaction of the eligibility requirements. The RRSP provides participants a specified Company
match on a portion of their pay contributed to the RRSP in accordance with plan rules. The Company provides
a match equal to 50% of the pay contributed to the RRSP up to 4% of pay for participants employed by the Company
or Harris Teeter, subject to certain limitations. Effective January 1, 2011, the Company match for A&E participants
became 25% of the pay contributed to the RRSP up to 4% of pay. The RRSP also provides eligible participants
a Company-paid automatic retirement contribution. Based upon the employing company and age and service points,
eligible participants will receive an annual automatic retirement contribution equal to between 1% and 5% of
covered pay, subject to certain limitations.
Disability Benefits and Excess Liability Insurance. The Company generally provides income protection in the
event of disability under group insurance plans for its employees. These group plans have limitations on income
replacement and, as a result, highly compensated employees are not provided proportional income protection.
Accordingly, alternative disability coverage is provided by the Company to certain members of executive
management, including all NEOs, pursuant to the Executive Long Term Disability Plan. The amount of the
premiums paid with respect to the Executive Long Term Disability Plan were grossed up for tax purposes. Beginning
in Fiscal 2011, the Company began providing personal group excess liability insurance coverage to certain members
of executive management, including all NEOs.
Life Insurance. The Company maintains a group universal insurance plan through the Key Employee Life
Insurance Plan (the “KELIP”) which provides for life insurance coverage equal to two and one-half times an
executive’s base salary. As part of the KELIP, the Company also makes a contribution into a cash value investment
account on behalf of KELIP participants in the amount of 0%, 1.2% or 2.4% of base salary. All NEOs are in the
2.4% category. In addition, the Ruddick Corporation Executive Bonus Insurance Plan (the “EBIP”) provides the
Company’s executives with a whole life insurance policy as to which the Company makes the premium payments
while the participant is employed by the Company. The amount of the premiums paid with respect to the Executive
Bonus Insurance Plan were grossed up for tax purposes. The EBIP generally requires the Company to continue
premium payments on behalf of participants until age 65 if their employment is terminated within two years
following a change in control. This provision is coordinated with the Change-in-Control and Severance Agreements
discussed below such that, in the case of a change in control, the Company will continue EBIP premium payments
for a NEO until the later of the end of the continuation period provided under the EBIP or the Change-in-Control
and Severance Agreements. In Fiscal 2011, the Compensation Committee determined to increase Mr. Dickson’s
death benefits under EBIP by $500,000 to a total of $2.5 million, in order to more closely align his benefit as a
multiple of base salary similar to other EBIP participants.
Change-in-Control and Severance Agreements. The Company entered into Change-in-Control and Severance
Agreements with the NEOs during the Company’s fiscal year ended September 30, 2007 (“Fiscal 2007”). Please
see the discussion of the Change-in-Control and Severance Agreements contained below in “Potential Payments
Upon Termination of Employment or Change in Control.”
26