Exhibit 10(e)
EXECUTIVE
INCENTIVE
BONUS PLAN
I. INTRODUCTION
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The intent of the SUPERVALU Executive Incentive Bonus Plan is to provide
a means by which the successful performance of the Corporation's major business
groups, specific Profit Centers, and individual managers can be rewarded.
Each individual who participates in the plan will be aware of his or her
bonus opportunity and the factors that impact this opportunity. The bonus plan
provides for a wide range of bonus opportunities, from an unsatisfactory
individual or organization performance level which generates no award, to an
outstanding individual and organization performance level which would provide a
significant bonus payment, up to the maximum bonus percent provided under the
terms of the plan.
The continued profitability and growth of SUPERVALU is vital to all of
its employees. Through this plan, the Company is providing a means to reward
those who are instrumental in achieving those goals.
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II. INCENTIVE BONUS PLAN SUMMARY
----------------------------
The SUPERVALU Executive Incentive Bonus Plan is designed to reward participating
employees for their contributions to the continued growth and profitability of
the Corporation.
Plan Features
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1. For each fiscal year, a bonus opportunity, or norm, expressed as a
percentage of base salary dollars, is established for each participant in
the program.
2. Performance against organization (e.g., Profit Center, total Corporation)
budget objectives and improvement over previous year's net profit
performance serve as the principal bases for year-end bonus calculations.
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3. The bonus award is comprised of an individual portion which is determined
by the participant's job performance against specified objectives, and an
organizational (e.g., Profit Center or Corporation) portion which is
determined by financial performance against both pre-established budget
objectives and the previous year's performance.
4. The individual who meets satisfactory performance levels and whose
organization, (e.g., Profit Center or the total Corporation) meets its
budget objectives, would typically receive a "norm" bonus award. Higher
or lower individual or organization performance will result in a higher or
lower bonus award.
5. The funds for bonus payments are provided out of the earnings of the
Corporation, after a fair return to the stockholders has been assured.
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III. ELIGIBILITY AND DETERMINATION
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OF BONUS OPPORTUNITY
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1. Eligibility
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This SUPERVALU plan is designed to include executive and management
positions which have a significant impact on Company operating and
administrative performance levels. The determination of "significant
impact" is based on the Company's position evaluation plan with approval
for plan participation to be granted by the appropriate Executive Vice
President.
2. Determination of Individual Bonus Norms
---------------------------------------
Each management position has been evaluated and assigned a specific
point value, based on the position content in terms of know-how, problem-
solving and accountability. Every position in the incentive plan has a
percent figure (bonus norm) assigned to it for the purpose of calculating
the initial bonus opportunity.
Example only:
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Point Bonus Norm (as a
Evaluation Percent of Salary)
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Below 900 points 10%
900 - 940 points 11%
941 - 981 points 12%
etc.
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Every participant will be informed of their position's point value and
corresponding bonus norm. Each participant's fiscal year earnings are
multiplied by the bonus norm percent to determine his or her individual
bonus opportunity. If a participant is promoted to a bonus position at
some point during the fiscal year, only earnings after the date of
promotion will be used in the calculation.
Example of Bonus Norm Calculation:
- ---------------------------------
(A) (B) Bonus Norm Amount
Fiscal Year Bonus (A) x (B)
Earnings Norm % Dollar Amount
----------- ------ -----------------
$55,000 10% $ 5,500
$60,000 10% $ 6,000
$75,000 11% $ 8,250
$85,000 12% $10,200
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IV. STANDARDS OF PERFORMANCE
------------------------
Before the beginning of each fiscal year, budget objectives are
established; these will be used as the primary standards against which actual
performance will be compared. Bonus amounts are calculated according to the
procedure detailed later in this booklet and are subject to Board of Director
approval before there will be any payout. Bonus funds not utilized are returned
to earnings. There is no carryover to subsequent years. The following is an
explanation of the process.
1. Corporate Budget Objectives
---------------------------
Before the start of each fiscal year, a net profit budget objective is
established which represents the performance standard for the Corporation which,
if achieved, produces a bonus award at the norm level. At year end, the actual
corporate performance is calculated relative to the budget objectives and to
the previous year's net profit performance. The bonus award payable to
corporate staff participants will vary annually, depending on the actual
corporate results that are achieved both as these results relate to the profit
budget and the previous year's profit performance.
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2. Profit Center Budget Objectives
-------------------------------
Also before the start of each fiscal year, budget objectives are
established for each separate Profit Center and become standards of performance
for the year. At year end, Profit Center results are calculated as a percentage
of objectives established. The bonus award payable to Profit Center
participants will vary, depending on the actual Profit Center results that are
achieved.
3. Individual Performance
----------------------
As shown below, an individual's job performance is part of the
determination of bonus awards.
A factor based on an assessment of individual job performance against
specified objectives will be determined for each participant according to the
guidelines shown on page 11.
4. Award Makeup
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The incentive award heavily emphasizes organization performance
particularily in the case of corporate officers and division presidents.
Certain corporate jobs, highly measurable relative to individual performance
against objectives, will be equally weighted between organizational and
individual performance. Most positions at both the division and corporate staff
level will have awards weighted toward organization performance but with a
significant individual performance component.
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Corporate Positions
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Portion of Award Based on:
Corporate Individual
Results Performance
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Corporate Officers 90% 10%
Most Other Positions 75% 25%
Product Directors, etc. 50% 50%
Profit Center Positions
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Portion of Award Based on:
Profit Center Individual
Results Performance
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Profit Center Presidents 80% 20%
Profit Center Staff 75% 25%
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POINTS OF EMPHASIS
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Two points should be emphasized regarding the calculation of bonus awards:
1. Profit Center and Corporate operating results will reflect equally on
the awards of all members of a respective Profit Center or business
group.
2. The organization and individual portions of a bonus will be adjusted
independently of each other, subject only to the overall total bonus
fund limitation and to the minimum and maximum conditions stated
later.
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OVERALL INCENTIVE BONUS PLAN CONCEPT
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OPERATING RESULTS
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CORPORATE EARNINGS
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BONUS CALCULATIONS
(ACTUAL PERFORMANCE EXECUTIVE MANAGEMENT
BONUS AWARDS
vs. --------------------
CORPORATE RESULTS
--------------------
BUDGET/ INDIVIDUAL RESULTS
--------------------
PREVIOUS YEAR ACTUAL)
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PROFIT CENTER PRESIDENTS
BONUS AWARDS
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PROFIT CENTER RESULTS CORPORATE STAFF
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INDIVIDUAL RESULTS BONUS AWARDS
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--------------------------------
PROFIT CENTER STAFF CORPORATE RESULTS
--------------------------------
BONUS AWARDS INDIVIDUAL RESULTS
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PROFIT CENTER RESULTS
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INDIVIDUAL RESULTS
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V. BONUS CALCULATIONS
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1. Individual Awards
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As indicated previously 10% to 50% of a participant's bonus potential,
depending on position, will be based on individual performance. Individual
awards can range from 80% to 175% of the individual portion of the norm. The
adjustment guide below provides the appropriate individual award adjustment
factor for specific levels of performance against established objectives. Only
the numbers listed below should be used as adjustment factors.
INDIVIDUAL BONUS AWARD
ADJUSTMENT GUIDE
----------------------
Adjustment
Definition Guide
- ---------- ------------
Outstanding - During the year the individual 1.60 - 1.75
showed effort, skill, and achievement seldom seen,
greatly exceeding objectives & expectations.
Excellent - the individual far exceeded 1.40
expectations and objectives.
Very Good - the individual exceeded expectations 1.20
and performance objectives.
Good - met expectations and objectives. 1.00
Fair - did not totally meet performance .80
objectives and expectations, but came
reasonably close.
Unacceptable - immediate corrective action is No Bonus
required if individual is to remain in the assignment.
New employee (less than 6 months on the job. No More Than
Too soon to evaluate) 1.00
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2. Organization Awards
-------------------
Organization award adjustments are based on performance against budgeted
objectives and the previous year's performance for certain of the financial
factors. The budget objectives themselves will usually have been determined
before the fiscal year as a part of the budgeting process. In determining the
organization award, these points will be observed:
A. Appropriate financial factors for the fiscal year will be selected and
weighted according to the emphasis to be placed on these factors for
the year. Net profit will normally be the primary financial factor.
In addition sales and/or a return measure may also be included as
additional bonus factors. These factors and their weightings may
change from year to year, or from profit center to profit center,
depending on division or corporate strategic business plans.
B. The relationship of financial performance variance from budget to the
actual bonus award payout or adjustment will be linear in nature, and
will be illustrated on the payout curve that will be provided to each
participant for each fiscal year. In this manner, the adjustment is
accelerated (up or down) as performance varies more from budget.
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C. Normally the previous year's net profit performance will service as
the threshold performance required before any bonus will be paid.
D. As actual performance for the designated financial factors varies from
budget, the bonus will be increased or decreased pursuant to the
payout curve in effect for the fiscal year.
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INCENTIVE BONUS CONCEPT FOR THE INDIVIDUAL
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---------
Salary
Earnings
---------
times
---------
Norm %
---------
equals
---------
Bonus
Norm $
---------
(Split)
- ----------------- -------------------
Organization Individual
Norm $ Norm $
- ----------------- -------------------
Factored for Organizational* Factored for Individual
Performance Performance
- ------------------ -------------------
Organization* Individual
Award $ Award $
- ------------------ -------------------
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TOTAL
Award $
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* Home Office plan participants will have their organization award determined
by overall corporate performance; profit center plan participants will have
their organization award determined by profit center performance.
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VI. MINIMUM CONDITIONS
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The following limitations shall apply to bonus award payments:
1. If an individual's performance does not merit an individual award,
he/she shall also be ineligible to receive an organization award.
2. If an organization's profit performance is below that organization's
minimum payout threshold, there shall be no organization awards to
that organization's members, but they may receive individual awards.
VII. DISCRETIONARY ADJUSTMENTS
-------------------------
The Board of Directors of SUPERVALU has granted the Chief Executive Officer
the right to make discretionary adjustments, either upward or downward, to
incentive bonus awards. Typically, the Chief Executive Officer exercises this
right after having reviewed recommended awards and after consulting with
supervisors of the individuals affected.
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VIII. TERMINATION OF EMPLOYMENT
-------------------------
In the event of employment termination prior to the end of the fiscal year
(except for retirement, death, or disability), participants will not be eligible
for an Incentive Bonus award for that fiscal year. Nothing in this plan is to
be construed as an employment agreement between participants and the Company,
and each employee's employment and compensation can be terminated with or
without cause at any time at the option of the company or the employee. If
employment is terminated prior to the end of fiscal year, eligibility for an
award also terminates. Until an award has been approved by the Board of
Directors and actually paid, no employee shall have any claim nor have earned
any right to an award.
IX. PLAN CHANGE AND TERMINATION
---------------------------
The Company reserves the right in its sole and absolute discretion to
modify, change, or discontinue the plan with or without notice at any time.
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X. TIME OF PAYMENT
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Availability of funds for this program depend on completion of necessary
accounting work at the close of the fiscal year. Awards cannot be made until
final financial figures are available and are entered into the calculations.
The final awards are in turn approved by the Board of Directors. Typically,
this does not occur until mid-April.
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