Fiscal Year 2017 SUPERVALU Incentive Program

Transcription

1 Incentive Program Fiscal Year 2017 SUPERVALU Incentive Program Incentive Program 1

2 Dear -eligible employee, Your contributions were important to SUPERVALU s performance over the last year, and I know you worked hard to deliver these results. We have a lot of opportunities for our business going forward and I m excited at the prospects for a great year and hope you share my enthusiasm. Our bonus program is designed to reward you for your positive impact to the company s financial results. Each plan is carefully designed to balance overall company performance with each business group s results. This program booklet outlines how incentive payouts are calculated, and provides you with specific details about how your bonus plan is measured. I d like to thank you again for the hard work over the past year, which is critical to the future success of SUPERVALU. Let s make it a great Fiscal Year 2017! Sincerely, Andre LaMere Chief Human Resources Officer Short Term Incentive Program 2

3 Plan Overview The SUPERVALU bonus program (referred to as the Plan) rewards you for achieving performance objectives such as increasing earnings and sales, controlling expenses and maximizing profits. It is part of SUPERVALU s commitment to providing you with market competitive compensation. This plan provides an opportunity for additional rewards beyond your base pay and allows you to increase your compensation as you contribute to your business group s and the company s success. In this brochure, you will first find general plan information and examples, followed by detailed information regarding your plan in the My Plan Section (located at the end of the brochure). Eligibility You are eligible for the F17 Plan, unless otherwise provided by law, if: You work in a bonus-eligible position; You are employed through the end of the performance period; During the performance period, your performance consistently meets expectations and you are not on a performance improvement plan at the end of the performance period; and You meet any other requirements established by the Company such as the Separation/Terminations provisions (page 5) of the Plan. Eligibility rules are subject to change at any time. How the Plan Works Your bonus payment is based on two factors; your bonus target and the achievement of company and business group performance objectives for the eligible period. Target Your bonus target is an annual value that is either a percentage of your base salary or a flat dollar amount. eligible employees can review their bonus target in the HR Self Service Portal (previously MIO) throughout the year. For calculation purposes, the bonus target is divided between performance periods (e.g. quarterly, semi-annual or annual). In addition, your target is prorated based upon the number of weeks you work in a bonus-eligible position and reflects any salary changes throughout the bonus performance period as well as certain leaves of absence. Performance Objectives Each business group has a set of performance objectives, or metrics, which are measured against a plan approved by senior leadership. payout percentages are calculated based upon achievement of these goals. Adding each of the bonus payout percentages together will result in your total bonus payout percent. Qualifiers plans also contain two qualifiers that must be met in order for payout to occur. First, the corporate qualifier, Consolidated EBITDA, must be met before any SUPERVALU plans pay out. Second, each plan has a business group qualifier (usually an EBITDA or operational metric) that aligns with their business, which must be achieved in order for the business group metrics to qualify for bonus payouts. Note: Your performance objectives and qualifier details for Fiscal Year 2017 are listed in the My Plan Guide section at the end of the brochure. Short Term Incentive Program 3

4 Calculation Once your bonus target and performance objective achievement are determined, bonus payments can be calculated based upon factors listed above, and in accordance with the payment rules detailed below. Calculation Example Below are two sample calculations that illustrate how bonus payouts are calculated (Note: This is a representative example, and may not represent your actual bonus plan). Example 1: Quarterly Plan Quarterly Target Calculation Example 2: Semi-Annual Plan Semi-Annual Target Calculation Plan Type: Quarterly Plan Plan Type: Semi-Annual Plan Annual Salary: $75,000 Annual Salary: $75,000 Annual Target %: 10% Annual Target %: 10% Annual Target $: $7,500 Annual Target $: $7,500 Annual Target # of Perf. Periods Prorated Target Annual Target # of Perf. Periods Prorated Target $7,500 4 = $1,875 per quarter $7,500 2 = $3,750 per halfyear Quarterly Calculation Semi-Annual Calculation Achievement Weighted Achievement Weighted EBITDA Metric %: 98% 35% EBITDA Metric %: 99% 43% Sales Metric %: 100% 50% Sales Metric %: 100% 50% Total %: 85% Total %: 93% Payment Target * Total % = Target * Total % = $1,875 85% $1,594 $3,750 93% $3,488 *Note: Keep in mind, your target may be prorated for job moves, pay changes or other situations. The following governs bonus payments: payments typically will be paid in cash after the end of each performance period and no later than two-and-a-half months following the end of the performance period. For semi-annual plans, first-half payouts will be capped at target. For performance above target, the excess amount you earn above target will be paid at the end of the fiscal year at the same time as second-half bonuses are paid. You must be employed through the end of the second-half performance period to be eligible for the additional payment. Your bonus payment for the eligible period is subject to all applicable tax, FICA deductions and other payroll deductions. Short Term Incentive Program 4

5 Separation/Termination If your employment with SUPERVALU voluntarily or involuntarily terminates for any reason prior to the end of the bonus performance period, you will not be entitled to receive a bonus payment, except as otherwise provided by applicable law. SUPERVALU retains the right to remove any participant from this Plan at any time, with or without cause. Leave of Absence If you are absent from work for medical, personal, military, or any other approved leave, for a period of four weeks or less, there will be no impact to your bonus eligibility. You will remain eligible for a prorated bonus, based on the number of weeks otherwise worked or paid, assuming that a bonus is otherwise payable. For leaves in excess of four weeks, you will not be eligible for a bonus for any weeks over four until you return to work unless otherwise required by law. Leave is tracked as entered in the Human Resource Information System. Plan Administration The program is governed by the 2012 Stock Plan. calculations will be computed based on SUPERVALU s financial results for the specified performance period as reported by Corporate Finance, and approved by the Leadership Development & Compensation Committee of the Board of Directors. SUPERVALU has the sole discretionary authority to interpret, apply and administer the Plan and to amend or terminate the Plan at any time, with or without notice. Until an award has been approved by the appropriate Committee of the Board of Directors, no employee shall have any claim or earn any right to an award. Amendment/Termination of the Plan SUPERVALU, in its discretion, may adjust plan targets or results and may make other changes to the Plan deemed necessary or appropriate during the applicable performance period. Participant Rights Please be aware that your employment continues to be at-will, meaning either you or SUPERVALU are free to terminate the employment relationship at any time, for any reason. This Plan is not an employment contract, direct or implied, and does not change the nature of at-will employment and does not guarantee employment for any specific length of time. Your status as an at-will employee cannot be modified except by written agreement signed by the Chief Human Resources Officer of SUPERVALU. Contact Information If you have bonus related questions, you should always reach out to your HR partner first. If you have additional questions, please contact the compensation team at compbonus@supervalu.com. Short Term Incentive Program 5

6 My Plan Guide Fiscal 2017 Pharmacy Store Plan This section provides specific information regarding the bonus plan you are a participant in, and performance objectives that are included in the plan. Plan Highlights Performance Periods: 4 Each quarter of Fiscal Year 2017 is a performance period (e.g. Q1, Q2, Q3 and Q4) The bonus target for each period will represent 25% of your annual bonus target; Pharmacy targets are based upon the following, and are available in MIO: Pharmacy Group Scripts per Week Pharmacy Manager Target Staff Pharmacist Target A >3,000 $10,300 $3,050 B ,999 $8,000 $2,625 C 1,650-2,299 $6,500 $2,200 D 1,250-1,649 $5,500 $1,800 E 900-1,249 $4,600 $1,350 F <900 $4,000 $1,000 Qualifiers: In order for any bonus to pay out, the corporate qualifier Supervalu Consolidated EBITDA must be met In order for the Store Controllable EBITDA, Total ID Sales or Script Growth to pay out, the Store Controllable EBITDA threshold must be met Metrics and Weightings Measure Weighting Store Controllable EBITDA 35% Script Growth 25% Store Total ID Sales 25% Supervalu Consolidated EBITDA 15% Table These performance objectives or metrics are measured against a target approved by senior leadership. The minimum, target and maximum achievement and corresponding weighted payout percentages are listed in the table below. Remember that the minimum achievement must be met for an objective to pay out. Minimum Target Maximum Performance Objective Achievement % Achievement % Achievement % Store Controllable EBITDA 75.0% 8.75% 100.0% 35.0% 125.0% 70.0% Store Total ID Sales* -3.5% 6.25% 0.0% 25.0% 3.5% 50.0% Script Growth 95.0% 6.25% 100.0% 25.0% 110.0% 50.0% Supervalu Consolidated EBITDA 92.5% 3.75% 100.0% 15.0% 107.5% 30.0% *Note: ID Sales represents the difference between actual ID sales and plan ID sales. (i.e. actual ID sales % plan ID sales % = achievement) Short Term Incentive Program 6

7 Special Provisions Due to the nature of retail stores, some additional considerations must be taken into account for calculating bonuses for locations with special circumstances. These situations are outlined in the following pages. Low Earnings Store Adjustment To allow the bonus award table to generate enough Store Controllable EBITDA to pay for the bonuses, stores with budgeted Store Controllable EBITDA between ($150,000) and $150,000 for the quarter that have achieved or exceeded their budgeted Store Controllable EBITDA, will receive an adjustment to bring their budgeted Store Controllable EBITDA to $150,000. The same amount will also be added to actual Store Controllable EBITDA, and both adjusted amounts will be used to calculate the percent of budget achieved. Actual Budget % Achieved Store Controllable EBITDA FROM P&L $110,000 $100,000 LOW EARNINGS ADJUSTMENT $50,000 $50,000 ADJUSTED Store Controllable EBITDA $160,000 $150, % Newly Opened Stores A store is considered new for bonus purposes for one full year after it is opened. For newly opened stores, the bonus payment for store level bonus components will be paid at 75% of target payout or higher (if actual results are better) for each period designated as a new store. For example, a store that opened in week 23 of the last fiscal year would be treated as newly opened for weeks 1-22 for the current fiscal year. An adjustment is made for performance results as illustrated below for the overall time frame the store is considered under this special provision during a performance period. QUARTER 2 NEW TIME FRAME: WEEKS Quarterly Target $5,000 Guarantee at 75% $3,750 Ratio of quarter in guarantee (6/12 weeks) 50% Minimum annual bonus payment ($3,750 X 50%) $1,875 Acquired Stores A store is considered Acquired for bonus purposes through the end of the current fiscal year or for two full fiscal quarters after it is opened whichever is longer. For acquired stores, the bonus payment for store-level bonus components will be paid at 50% of target payout or higher (if actual results are better) for each period designated as an acquired store. For example, a store acquired in period 11 of last fiscal year would be treated as an acquired store for Q1 and Q2 of the current fiscal year. An adjustment is made for performance results as illustrated below for the overall time frame the store is considered under this special provision during a performance period. ACQUISITION HALFWAY THROUGH Q2 Quarterly Target $5,000 Guarantee at 50% $2,500 Ratio of quarter in guarantee (6/12 weeks) 50% Minimum annual bonus payment ($2,500 X 50%) $1,250

8 New or Acquired Store Sales Metrics A store is considered New or Acquired will not have an ID Sales Metric. For those stores, Sales targets will be set in dollars and achievements will be calculated as: Actual sales dollars/target sales dollars for a period. For fiscal year 2017, payout percentages will be calculated based on the following matrix: Achievement % 110.0% % 105.0% % 100.0% 70.00% 95.0% 43.75% 90.0% 17.50% Major Remodels or Enlargements Stores are designated by leadership as a major remodel or enlargement store for a specified period of time based on the degree of the store changes (for bonus purposes). The bonus for store level bonus components (Store Controllable EBITDA, Store Total Sales and Script Growth) will be calculated as if the store achieved budget or higher (if actual results are better than budget) for the period designated as a remodel or enlargement store. For example, a store designated as a remodel due to a major remodeling project during periods 1-4 of Quarter 1 would be treated this way for these specific periods only. An adjustment is made for performance results as illustrated below for the overall time frame the store is considered under this special provision during a performance period. REMODEL TIME FRAME SCRIPT GROWTH PERIOD Total Budget $3,600 $3,600 $3,600 $3,600 $14,400 Actual $4,050 $3,300 $2,715 $3,450 $13,515 Adjustment Added to Actuals $885 Closing Stores For the final three fiscal periods before the store s closure, the bonus for store level bonus components will be calculated as if the store achieved budget or higher (if actual results are better than budget) for the periods. An adjustment is made for performance results as illustrated below for the overall time frame the store is considered under this special provision. For example, assume a store closed at the end of period 8. The actual store performance will be calculated assuming performance at target for periods 6, 7 and 8. CLOSING TIME FRAME STORE CONTROLLABLE EBITDA PERIOD Total Budget $193,000 $193,000 $96,000 $482,000 Actual $206,000 $170,000 $50,000 $426,000 Adjustment Added to Actuals $56,000