Exhibit 10.2
FAMILY DOLLAR STORES,
INC.
2006 INCENTIVE
PLAN
Guidelines for Annual Cash
Bonus Awards
Family Dollar Stores, Inc. (the
“Company”) maintains for the benefit of eligible
individuals the Family Dollar Stores, Inc. 2006 Incentive Plan (the
“Plan”), which is intended to provide flexibility to
the Company in its ability to motivate, attract, and retain the
services of such individuals upon whose judgment, interest, and
special effort the successful conduct of the Company’s
operation is largely dependent. These Guidelines for Annual Cash
Bonus Awards (the “Guidelines”) are intended to
implement the Plan by providing eligible Team Members of the
Company an opportunity to participate in the Company’s
success by earning annual incentive compensation in the form
of a cash bonus based on the Company’s achievement of
pre-tax earnings goals and the Team Members’ contributions to
meeting such goals.
These Guidelines are adopted
pursuant to relevant provisions of the Plan and are to be
interpreted and applied in accordance with the terms and provisions
thereof. Specifically, these Guidelines provide for the grant of
Performance-Based Cash Awards under Article 9 of the Plan and, with
respect to Covered Employees, the grant of Qualified
Performance-Based Awards under Article 14 of the Plan. Unless
otherwise provided herein, capitalized terms used in these
Guidelines will have the meaning given such terms in the
Plan.
The Guidelines cover eligible Team
Members as described in Section 3 of these Guidelines. The
Guidelines cover the Company’s fiscal (not calendar) year
that is the 12-month period that generally runs from approximately
September to August. The actual dates for the fiscal year are
determined and announced by the Company prior to the beginning of
each fiscal year.
Eligibility for participation in the
Plan under these Guidelines shall be determined by any of the
Chairman and Chief Executive Officer, the President or the Senior
Vice President, Human Resources (or their designees) and
communicated to department heads. Additional eligibility
requirements are as follows:
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A Team Member must be classified
as a regular, full-time employee for the entire fiscal year or the
Team Member’s entire employment period in the fiscal year if
the Team Member was hired subsequent to the beginning of the fiscal
year.
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A Team Member must be hired and
on the active payroll as a full-time employee as of the first
business day after May 31 of the applicable fiscal year in
order to participate during that fiscal year.
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If a Team Member, whose position
was previously not identified as eligible for participation in the
Plan under these Guidelines and who was eligible to participate in
another bonus plan, is promoted to a position eligible to
participate in the Plan under these Guidelines during the relevant
fiscal year, such Team Member will participate in each plan,
subject to its conditions, on a prorated basis. The prorated
calculation will be based upon the number of weeks and respective
salary in each position.
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If a Team Member’s position
is changed during the relevant fiscal year and as a result of that
change the bonus percentage applied in his or her individual bonus
calculation under these Guidelines is affected, such Team Member
will participate on a prorated basis at each bonus percentage level
based upon the number of weeks and respective salary in each
position.
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Except as otherwise provided
below, a Team Member must be on the payroll in a regular,
full-time, active status when bonus checks are issued in order to
receive payment under these Guidelines. A Team Member on leave of
absence, regardless of type, will receive the bonus payment only
upon return to regular, full-time, active status; provided,
however, that Team Members on military leave will be issued payment
at the time bonus checks are issued even if they have not returned
to regular, full-time, active status at that time.
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A Team Member whose employment
with the Company terminates for any reason, other than death or
termination of employment due to Disability or Retirement, prior to
the issuance of bonus checks will forfeit any bonus such Team
Member otherwise would have been entitled to receive.
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A Team Member who dies or
terminates employment due to Disability or Retirement after the end
of the fiscal year but before the issuance of bonus checks will not
forfeit the bonus which the Team Member would have otherwise been
entitled to receive.
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A Team Member who dies or
terminates employment due to Disability during a fiscal year will
participate on a prorated basis in the bonus program based upon the
number of weeks of employment with the Company during such fiscal
year and based upon an assumed performance rating of
Satisfactory.
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A Team Member who terminates
employment due to Retirement during a fiscal year will participate
on a prorated basis in the bonus program based upon the number of
weeks of employment with the Company during such fiscal year;
provided that the Team Member’s term of employment is at
least one-half of the fiscal year. A Team Member who terminates
employment due to Retirement in
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the first half of the fiscal year
will not receive any bonus amounts pursuant to these Guidelines for
such fiscal year.
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These Guidelines do not in any
manner restrict the right of the Company or the Team Member to
terminate employment at any time, for any reason, with or without
cause.
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A Team Member otherwise meeting
all of the eligibility requirements of these Guidelines, but whose
performance rating for the fiscal year is at the
Unsatisfactory/Does Not Meet Expectations level, will not
participate in the Plan under these Guidelines or be eligible for
bonus for that fiscal year.
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4.
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Target Bonus
Amount and Adjustments for Performance
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The target bonus amount for a Team
Member under these Guidelines equals a percentage of the Team
Member’s base compensation received in the relevant fiscal
year, generally ranging from 10% to 100%. (See above for changes in
the Team Member’s position during the fiscal year.) The
applicable percentage for a Team Member will be established by
Human Resources and communicated to department heads. The actual
bonus amount for the fiscal year, if any, will be determined as a
percentage of the target bonus amount depending on Company and
individual performance as follows:
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A.
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Company
pre-tax earnings vs. Target
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The Board of Directors of the
Company determines prior to, or within 90 days after the beginning
of, each fiscal year a pre-tax earnings goal for the fiscal
year.
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In addition, under relevant
provisions of the Plan, the pre-tax earnings goal for the relevant
fiscal year may be further adjusted to reflect extraordinary events
or circumstances affecting the Company or its business, which
render such goal unsuitable.
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Achievement of the pre-tax
earnings goal determines the
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