WEIS MARKETS, INC. |
CHIEF EXECUTIVE
OFFICER INCENTIVE AWARD PLAN |
Effective July 1,
2011 |
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AMENDED AND
RESTATED |
Effective as of
January 1, 2014 |
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1. Purposes;
Transition; Committee. |
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(a) |
The purposes of the
Weis Markets, Inc. Chief Executive Officer
Incentive Award Plan are to provide a strong
financial incentive each year for performance of
the Company's Chief Executive Officer ("CEO" or
"Participant") by making a significant percentage
of the CEO's total cash compensation dependent upon
the level of corporate performance attained for the
year, and to encourage the CEO to remain in the
employ of the Company through the period described
in this Plan until the awards hereunder vest under
the Plan. |
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(b) |
Prior to the amendment
and restatement of this Plan effective January 1,
2014, this Plan for Jonathan H. Weis was the "Vice
Chairman Incentive Award Plan." Any awards earned
by Mr. Weis through December 31, 2013 under the
Plan are being paid in 2014. |
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(c) |
The Plan shall be
administered by the Compensation Committee of the
Board (the "Committee"), as set forth in Section
4. |
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2. Definitions
in Last Section. |
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Unless
defined where the term first appears in the Plan,
capitalized terms shall have the meanings given in
Section 6. |
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3. CEO
Incentive Award. |
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(a) |
Establishment of
Incentive Award. Pursuant to this Plan, the
Participant shall be entitled to an Incentive Award
for each Plan Year, consisting of two
parts: |
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(i) |
Retention Award.
The Participant shall be entitled to receive a
retention award equal to the Base Salary (as
defined in the then current employment agreement
between the Company and the CEO (the "Employment
Agreement")) in effect for the Participant under
the Employment Agreement at the end of a Plan Year
(which Base Salary, for the avoidance of doubt, may
change from year to year), multiplied by 1.375;
and |
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(ii) |
Performance
Award. The Participant shall be entitled to
receive a performance award (the "Performance
Award") equal to the Base Salary in effect for the
Participant under the Employment Agreement at the
end of a Plan Year, contingent upon the achievement
of specified performance requirements (each, a
"Performance Target," and together, the
"Performance Targets"), as follows: |
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A. |
The following
definitions shall apply to the Performance
Awards: |
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1) |
"Budgeted Capital Lease
Equivalent for Operating Leases" shall mean the
budgeted annual rent expense for the Company for a
Plan Year, multiplied by 20. |
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2) |
"Capital Lease
Equivalent for Operating Leases" shall mean the
actual annual rent expense for the Company for a
Plan Year, multiplied by 20. |
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3) |
"EBITDAR" shall mean
earnings (net income) of the Company, plus
interest, taxes, depreciation, amortization and
rent expense, all as determined by the
Committee. |
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4) |
"MROIC" shall mean
"modified return on invested capital" and shall be
calculated by reference to the Company's audited
financial statements, computing the EBITDAR and
dividing it by the sum of (x) Total Assets at
the end of the Plan Year plus (y) Capital
Lease Equivalent for Operating Leases. |
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5) |
"MROIC Ratio" shall
have the meaning given to such term in Section
3(a)(ii)(C). |
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6) |
"MROIC Target" shall
mean the target modified return on invested
capital, as determined by the Committee by using
the budgeted EBITDAR for a Plan Year and dividing
it by the sum of (x) Total Assets at the
beginning of such Plan Year plus (y) Budgeted
Capital Lease Equivalent for Operating Leases for
such Plan Year plus (z) the budgeted capital
expenditures for such Plan Year, which shall be
determined for Plan Years by the
Committee. |
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7) |
"Net Sales" shall mean
the "net sales" of the Company, as set forth in the
audited financial statements of the
Company. |
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8) |
"Net Sales Ratio" shall
have the meaning set forth in
Section 3(a)(ii)(B). |
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9) |
"Net Sales Target"
shall mean the target dollar amount for annual Net
Sales determined by the Committee, which shall be
determined for Plan Years by the
Committee. |
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10) |
"Total Assets" shall
mean the sum of the current and long-term assets of
the Company, as set forth in the audited financial
statements of the Company. |
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B. |
One-half of the
Performance Award is based on the Company's Net
Sales in comparison to the Net Sales Target for a
Plan Year. The calculated portion of the
Performance Award based on the Company's Net Sales
shall be determined by multiplying (i) the
performance level of actual Net Sales achieved in
comparison to the Net Sales Target (referred to
herein as the "Net Sales Ratio") by (ii) .6875
x Base Salary. The Net Sales Ratio shall have a
"Threshold" which must be met in order to qualify
for such Performance Award, a "Target" which shall
be the Net Sales Target, and a "Maximum" Net Sales
Ratio upon which a Performance Award may be made.
The Threshold is 97% of the Net Sales Target and
the Maximum is 103% of the Net Sales Target, with
0% performance achieved at Threshold, 100%
performance achieved at Target and 150% performance
achieved at Maximum, and with interpolation used to
determine the performance achieved between the
Threshold, Target and Maximum levels. The
interpolated percentages shall be rounded to the
nearest whole basis point (1/100th of a percent),
rounding up in the case of 5 or more and rounding
down in the case of 4 or less. |
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C. |
One-half of the
Performance Award is based on the Company's MROIC
in comparison to the MROIC Target for a Plan Year.
The calculated portion of the Performance Award
based on the Company's MROIC shall be determined by
multiplying (i) the performance level of actual
MROIC achieved in comparison to the MROIC Target
(referred to herein as the "MROIC Ratio") by (ii)
.6875 x Base Salary. The MROIC Ratio shall have a
"Threshold" which must be met in order to qualify
for such Performance Award, a "Target" which shall
be the MROIC Target, and a "Maximum" MROIC Ratio
upon which a Performance Award may be made. The
Threshold is 98% of the MROIC Target and the
Maximum is 105% of the MROIC Target, with 0%
performance achievement at Threshold, 100%
performance achieved at Target and 150% performance
achieved at Maximum, and with interpolation used to
determine the performance achieved between the
Threshold, Target and Maximum levels. The
interpolated percentages shall be rounded to the
nearest whole basis point (1/100th of a percent),
rounding up in the case of 5 or more and rounding
down in the case of 4 or less. |
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The Committee retains
the right to adjust the Target and related
Threshold and Maximum levels at any time in their
sole discretion. Although the right to receive
awards under this Plan are measured and determined
on an annual basis as described in
subsections (i) and (ii) above, except as set
forth in Section 3(f), no award shall be
payable or paid to the CEO until after December
31, 2016, subject to the terms set forth in
Section 3(d), and failure to meet the
requirements of Section 3(d) shall result in
the forfeiture of such awards. |
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(b) |
Determination and
Certification of Incentive Award Amount. Within
2½ months following the end of the Plan
Year, the Committee shall determine in accordance
with the terms of the Plan and shall certify in
writing whether a Performance Target was achieved.
For this purpose, approved minutes of the meeting
of the Committee at which the certification is made
shall be sufficient to satisfy the requirement of a
written certification. The amount of any Incentive
Award, as so certified by the Committee, shall be
communicated in writing to the
Participant. |
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(c) |
Definition of
Accounting Terms. In considering a Performance
Target for any Plan Year, the Committee may define
accounting terms so as to specify in an objectively
determinable manner the effect of changes in
accounting principles, extraordinary items,
discontinued operations, mergers or other business
combinations, acquisitions or dispositions of
assets and the like, including in connection with
the definitions set forth in Section 3(a)(ii)(A).
Unless otherwise so determined by the Committee,
accounting terms used by the Committee in
determining a Performance Target shall be defined,
and the results based thereon shall be measured, in
accordance with generally accepted accounting
principles as applied by the Company in preparing
its consolidated financial statements and related
financial disclosures for the Plan Year, as
included in its reports filed with the Securities
and Exchange Commission. |
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(d) |
Employment
Requirement for Incentive Award Payment and
Exception Thereto. |
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(i) |
Payment of an Incentive
Award to a Participant for a Plan Year shall be
made only if, and to the extent that, the foregoing
and following requirements of this Section 3 have
been met with respect to the Plan Year. |
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(ii) |
Unless otherwise
determined by the Committee, and except as provided
in Section 3(f), payment of an Incentive Award to a
Participant shall be made only if the Participant
is employed by the Company as its Vice Chairman,
Chairman, CEO, President or other position
determined by the Company's Board of Directors for
the entire term of this Plan (from January 1, 2014
through December 31, 2016). |
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(e) |
Time of Payment.
Except as provided in Section 3(f) hereof, and
subject to any deferral election made by the
Participant under any deferral plan of the Company
then in effect, any Incentive Award to which a
Participant becomes entitled under this Section 3
shall be paid in a lump sum cash payment within 2
½ months after December 31, 2016, subject to
determination and certification by the Committee of
each Performance Award for each Plan Year as set
forth in Section 3(b), provided,
however, in the event an amount is deferred
compensation and is conditioned upon a separation
from service and not compensation the Participant
could receive without separating from service, then
payment shall be made to a Participant who is a
"specified employee" under Section 409A of the Code
on the first day following the six-month
anniversary of the Participant's separation from
service. |
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(f) |
Termination Without
Cause; Death. Notwithstanding
Section 3(d), if the Participant's employment
is subject to a Without Cause Termination (as
defined in the Employment Agreement), the Company
shall pay the Participant as follows: |
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If the Without Cause
Termination occurs |
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on or between the
following dates: |
Amount to be
Paid |
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January 1, 2014 to
December 31, 2014 |
$2,500,000 |
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January 1, 2015 to
December 31, 2015 |
$3,000,000 |
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January 1, 2016 to
December 31, 2016 |
$3,500,000 |
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Any such amount shall
be paid in a lump sum cash payment within 2
½ months after the end of the calendar year
in which such Without Cause Termination occurs;
provided, however, in the event an
amount is deferred compensation and is conditioned
upon a separation from service and not compensation
the Participant could receive without separating
from service, then payment shall be made to a
Participant who is a "specified employee" under
Section 409A of the Code on the first day following
the six-month anniversary of the Participant's
separation from service. |
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Notwithstanding Section
3(d), upon the death of the Participant during
employment, the Company shall pay $1,000,000 to the
spouse of the Participant should she survive him or
otherwise to the estate of the Participant. Such
payment shall be made within sixty (60) days of the
date of death of the Participant. |
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For the avoidance of
doubt, in the case of any other termination of
employment of Participant prior to December 31,
2016, including for disability, retirement,
resignation by Participant or Termination for Cause
(as defined in the Employment Agreement),
Participant shall not be entitled to receive
payment of any amounts hereunder. |
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4. Administration. |
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The
Plan shall be administered by the Committee. The
Committee shall have the authority in its sole
discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer
the Plan and to exercise all the powers and
authorities either specifically granted to it under
the Plan or necessary or advisable in the
administration of the Plan, including, without
limitation, to construe and interpret the Plan; to
prescribe, amend and rescind rules and regulations
relating to the Plan; and to make all other
determinations deemed necessary or advisable for
the administration of the Plan. |
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All
determinations of the Committee shall be made by a
majority of its members either present in person or
participating by conference telephone at a meeting
or by unanimous written consent. The Committee may
delegate to one or more of its members or to one or
more agents such administrative duties as it may
deem advisable, and the Committee or any person to
whom it has delegated duties as aforesaid may
employ one or more persons to render advice with
respect to any responsibility the Committee or such
person may have under the Plan. All decisions,
determinations and interpretations of the Committee
shall be final and binding on all persons,
including the Company, any Participant (or any
person claiming any rights under the Plan from or
through any Participant) and any
shareholder. |
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No
member of the Committee shall be liable for any
action taken or determination made in good faith
with respect to the Plan or any Incentive Award
hereunder. |
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5. General
Provisions. |
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(a) |
No Right to
Continued Employment. Nothing in the Plan or in
any Incentive Award hereunder shall confer upon any
Participant the right to continue in the employ of
the Company either as CEO or in any other capacity
or to be entitled to any remuneration or benefits
not set forth in the Plan or to interfere with or
limit in any way the right of the Company to
terminate such Participant's
employment. |
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(b) |
Cancellation and
Recoupment of Awards. Incentive Awards may be
cancelled without payment and/or a demand for
repayment of any Incentive Awards may be made upon
a Participant pursuant to the provisions set forth
below. |
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If the Committee
determines that the Participant has been
incompetent or negligent in the performance of his
or her duties or has engaged in fraud or willful
misconduct, in each case in a manner that has
caused or otherwise contributed to the need for a
material restatement of the Company's financial
results, the Committee will review all
performance-based compensation awarded to or earned
by the Participant on the basis of performance
during fiscal periods affected by the restatement.
If, in the Committee's view, the performance-based
compensation would have been lower if it had been
based on the restated results, the Committee and
the Company will, to the extent permitted by
applicable law, seek recoupment from the
Participant of any portion of such
performance-based compensation as it deems
appropriate after a review of all relevant facts
and circumstances. Generally, this review would
include consideration of: |
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the Committee's view of
what performance-based compensation would have been
awarded to or earned by the Participant had the
financial statements been properly
reported; |
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the nature of the
events that led to the restatement; |
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the conduct of the
Participant in connection with the events that led
to the restatement; |
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whether the assertion
of a claim against the Participant could prejudice
the Company's overall interests and whether other
penalties or punishments are being imposed on the
Participant, including by third parties such as
regulators or other authorities; and |
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any other facts and
circumstances that the Committee deems
relevant. |
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(c) |
Withholding
Taxes. The Company shall deduct from all
payments under the Plan any taxes required to be
withheld by federal, state or local
governments. |
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(d) |
Amendment of the
Plan. The Committee may make such amendments as
it deems necessary to comply with the Code or other
applicable laws, rules and regulations. |
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(e) |
Participant
Rights. No Participant in the Plan for a
particular Plan Year shall have any claim to be
granted any target Incentive Award under the Plan
for any subsequent Plan Year, and there is no
obligation for uniformity of treatment of
Participants. |
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(f) |
Unfunded Status of
Incentive Awards. The Plan is intended to
constitute an "unfunded" plan for incentive
compensation. With respect to any payments which at
any time are not yet made to a Participant with
respect to an Incentive Award, nothing contained in
the Plan or any related document shall give any
such Participant any rights that are greater than
those of a general creditor of the
Company. |
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(g) |
Governing Law.
The Plan and the rights of all persons claiming
hereunder shall be construed and determined in
accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to the choice of
law principles thereof, except to the extent that
such law is preempted by federal law. |
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(h) |
Effective Date and
Term. The effective date of the amended and
restated Plan shall be January 1, 2014. The Plan
shall continue in effect until the Plan Year ending
December 31, 2016, subject to the continued
employment of the Participant. |
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6. Definitions. |
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The following terms, as
used herein, shall have the following
meanings: |
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(a) |
"Board" shall mean the
Board of Directors of the Company. |
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(b) |
"Chief Executive
Officer" or "CEO" shall mean the Chief Executive
Officer of the Company. |
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(c) |
"Code" shall mean the
Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, and
regulations thereunder, in each case as in effect
from time to time. References to sections of the
Code shall be construed also to refer to any
successor sections. |
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(d) |
"Committee" shall mean
the Compensation Committee or any other committee
or subcommittee designated by the Board to
administer the Plan. |
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(e) |
"Company" shall mean
Weis Markets, Inc., a corporation organized under
the laws of the Commonwealth of Pennsylvania, or
any successor corporation. |
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(f) |
"Employment Agreement"
shall have the meaning given to such term in
Section 3(a)(i). |
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(g) |
"Incentive Award" shall
mean any Incentive Award to which a Participant
becomes entitled pursuant to the Plan under
Section 3(a)(i) or Section 3(a)(ii), as
the case may be, in the aggregate; the
establishment of an Incentive Award with respect to
a Participant pursuant to Section 3(a) hereof does
not, by itself, entitle the Participant to payment
of any Incentive Award hereunder; an Incentive
Award must be earned and become payable pursuant to
other provisions hereof. |
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(h) |
"Participant" shall
mean an individual serving as CEO of the Company
for whom an Incentive Award is established by the
Committee with respect to the relevant Plan
Year. |
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(i) |
"Performance Award"
shall have the meaning
given to such term in
Section 3(a)(ii). |
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(j) |
"Performance Target"
and "Performance Targets" shall have the meanings
given to such terms in
Section 3(a)(ii). |
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(k) |
"Plan" shall mean this
Weis Markets, Inc. Chief Executive Officer
Incentive Award Plan, as amended from time to
time. |
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(l) |
"Plan Year" shall mean
the Company's fiscal year (which is, on the
effective date of this Plan, the calendar year with
a year-end date as determined pursuant to the
Company's audited financial
statements). |
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The undersigned acknowledges
that he has reviewed and agrees to the terms of
this Chief Executive
Officer Award Plan. |
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/s/ Jonathan H.
Weis |
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Jonathan H. Weis |
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