EXHIBIT 10.11
December 24, 2002
C.J. Gabriel, Jr.
3307 Winding Creek Drive
Austin, TX 78735
Dear Gabe:
I am pleased to confirm my verbal offer of employment for the position of
Executive Vice President, Supply Chain for Albertson's, Inc. (the "Company"). In
this assignment, you will report directly to Peter Lynch, our President and COO.
Your employment with the Company will commence on January 13, 2003 (the
"Effective Date").
Your initial base salary ("Base Salary") will be $425,000 per annum, payable in
accordance with the Company's policies relating to salaried employees. Your Base
Salary may be changed by the Management Development/Compensation Committee of
the Board of Directors of the Company (the "Management Development/Compensation
Committee") in its sole discretion.
Commencing with the fiscal year of the Company ("Fiscal Year") in which the
Effective Date occurs, you will have the opportunity to earn an incentive for
each Fiscal Year (prorated for any partial year) as recommended by the
Compensation Committee in accordance with the Company's annual incentive plan
applicable to the Company's senior officers (the "Annual Incentive Compensation
Plan"). The amount of each annual incentive shall be set by the Compensation
Committee and is currently equal to seventy percent (70%) of Base Salary for the
fiscal year if the applicable "target" performance goals (as defined in the
Annual Bonus Plan for such period) are met (the "Target Award"), except that the
award cannot exceed one hundred fifty percent (150%) of Target Award. The
criteria for determining the amount of any Target Award and the bases upon which
such Target Award shall be payable shall be no less favorable to you than those
used for other senior executives of the Company, such criteria and bases to be
determined in the sole discretion of the Compensation Committee.
As of the Effective Date, you will be granted 40,000 shares of deferred
restricted stock units of the Company ("Restricted Stock Unit Award") in
accordance with the form of grant used by the Company for grants made to its
senior executive officers. Such grants shall vest at twenty percent (20%) per
year on the first, second, third, fourth, and fifth anniversaries of the
Effective Date; provided in each case that you have been continuously employed
as a senior executive with the Company from the Effective Date through the
applicable vesting date, except as otherwise provided in this letter agreement
and in such deferred restricted stock unit agreement. Receipt of the vested
Company common stock that is subject to a restricted stock unit award is
automatically deferred until the date your employment with the company
terminates. To the extent that dividends are paid on Company common stock after
the Effective Date and prior to the date that the Company common stock that is
subject to a Restricted Stock Unit Award is issued to you, you shall be entitled
to receive a cash payment in an amount equal to the dividends you would have
Mr. C. J. Gabriel, Jr.
December 16, 2002
Page 2
been entitled to receive had you been the owner of such unissued shares on the
date such dividends are paid. Such cash payment shall be made at the same time
payment of dividends are made to other shareholders of Company common stock.
As of the Effective Date, you will be granted an option ("Initial Option") to
purchase 100,000 shares of common stock of the Company at a per share exercise
price equal to the fair market value of the common stock of the Company on the
Effective Date in accordance with the form of grant used by the Company for
grants made to its senior executive officers; provided that the provisions of
such grant shall not be inconsistent with, or provide for additional obligations
upon you beyond, the terms of this letter agreement, and shall be subject to
reasonable review by your counsel. Such grant will vest and become exercisable
in annual installments at the rate of 20% of the total shares granted on each of
the first, second, third, fourth, and fifth anniversaries of the Effective Date
(each such installment, an "Initial Option Installment"); provided in each case
that you have been continuously employed as a senior executive with the Company
from the Effective Date through the applicable vesting date, except as otherwise
provided in this letter agreement and in such stock option grant agreement.
You will be eligible to receive additional grants of stock options to purchase
shares of common stock of the Company from time to time as recommended by the
Management Development/Compensation Committee in its sole discretion in
accordance with the Company's usual form of grant. Subsequent annual option
awards otherwise shall be subject to the terms and conditions as generally apply
to stock options granted to other senior executive officers who participate in
the Company's equity incentive plans.
The Company will maintain, for your benefit, officer liability insurance in a
form it maintains for its other senior executive officers. You will be
indemnified by the Company against liability as an officer of the Company and
any subsidiary or affiliate of the Company to the same extent as the Company's
other senior officers. Your rights to such indemnification and insurance will
continue so long as you may be subject to such liability, whether or not your
employment may have terminated prior thereto.
Beginning with your effective date you will be provided with four (4) weeks of
paid vacation per calendar year as well as sick leave and paid holidays in
accordance with the Company's standard policy regarding these benefits for
senior executive officers of the Company.
You will also be eligible to participate in each fringe, welfare, retirement and
incentive programs adopted from time to time by the Company for the benefit of,
and which generally apply to, its highest level of senior executive officers
from time to time, including the Company's 401(k) and profit sharing plans, in
accordance with the terms of such plans and programs. The Company will waive any
otherwise applicable waiting periods for its medical benefits and life insurance
plans.
The Company will reimburse you in accordance with the Company's relocation
policy provided under its "Full Service Move Program for Senior Executive
Officers" (the "Relocation Program"), a copy of which has been provided to you
previously, in connection with your relocation to Boise, Idaho. Pursuant to the
Relocation Program, you will be entitled to a "gross-up" payment with respect to
those reimbursement payments described in the Relocation Program in an amount
such that, after payment of all applicable taxes on such reimbursement payments
Mr. C. J. Gabriel, Jr.
December 16, 2002
Page 3
and "gross-up" payment, you retain an amount equal to the amount of such
reimbursement payments.
In the event of your termination of employment by the Company within two (2)
years of the Effective Date for any reason other than Cause, you shall be
entitled to receive the following (the "Accrued Obligations"):
(a) Any earned, but unpaid, Base Salary;
(b) Any earned, but unpaid, bonus for any Fiscal Year that ended prior to
the Fiscal Year in which the date of termination occurs;
(c) The cash equivalent of any accrued, but unused, vacation; and
(d) Any accrued employee benefits, subject to the terms of the applicable
employee benefit plans.
In the event that your employment is terminated by the Company without Cause,
you shall receive the following severance benefits, in addition to the Accrued
Obligations:
(a) Severance payments and continuation of benefits as follows:
(i) For any such termination which occurs prior to the first
anniversary of the Effective Date, a lump sum payment equal to
three (3) times the sum of Base Salary and Target Bonus, and
continued participation in the Company's welfare benefit plans,
fringe benefits, and employee perquisites for a period
("Continuation Period") of three (3) years (which shall be
concurrent with any health care continuation benefits under
COBRA);
(ii) For any such termination which occurs after the first
anniversary of the Effective Date but prior to the second
anniversary of the Effective Date, a lump sum payment equal to
two (2) times the sum of Base Salary and Target Bonus, and
continued participation in the Company's welfare benefit plans,
fringe benefits, and employee perquisites for a Continuation
Period of two (2) years (which shall be concurrent with any
health care continuation benefits under COBRA); and
(iii) For any such termination which occurs after the second
anniversary of the Effective Date but prior to the third
anniversary of the Effective Date, a lump sum payment equal to
one (1) times the sum of Base Salary and Target Bonus, and
continued participation in the Company's welfare benefit plans,
fringe benefits, and employee perquisites for a Continuation
Period of one (1) year (which shall be concurrent with any
health care continuation benefits under COBRA).
(b) For any such termination, you shall be entitled to receive a pro-rata
portion of the amount due to you under the Annual Bonus Plan for the
fiscal year in which the date of
Mr. C. J. Gabriel, Jr.
December 16, 2002
Page 4
termination occurs, which amount shall be payable at the time of
payment of bonuses under such plan to senior executives of the Company.
Please understand that this offer is subject to the Company having completed to
its satisfaction any background or reference checks, as it may deem appropriate.
Further, this letter shall not be construed to create an employment contract of
any kind, express or implied, and your employment status shall be and remain
"employment at will"; provided, however, that upon termination you shall be
entitled to the benefits as set forth in this letter.
As a condition to receipt of any severance payments or continued benefits under
this letter upon your termination for any reason, you will execute a release
agreement reasonably satisfactory to the Company releasing any and all claims
arising out of your employment with the Company.
In the event of any conflict between the terms of this letter agreement and the
terms of any other agreement, award or arrangement contemplated hereby, the
terms of this letter agreement shall control.
If the terms outlined above reflect your understanding of our offer and you
accept employment based on these terms, please indicate your acceptance by
signing the two original letters provided. Please keep one letter for your
records and return the other to me.
We are extremely pleased to have you join the Albertson's team, and I look
forward to our association with you in this important role at Albertson's.
Sincerely,
/s/ Kathy Herbert
Kathy Herbert
Executive Vice President,
Human Resources
Accepted and agreed to this
24th day of December, 2002
/s/ C. J. Gabriel
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C. J. Gabriel, Jr.