Exhibit 10.1
FAMILY DOLLAR STORES,
INC.
2006 INCENTIVE
PLAN
Guidelines for Long-Term
Incentive Performance Share Rights Awards
Section 1:
Purpose
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 Long-Term
Incentive Performance Share Rights Awards (the
“Guidelines”) are intended to implement the Plan by
providing eligible Team Members of the Company with an opportunity
to participate in the Company’s success by earning long-term
incentive compensation awards in the form of shares of Company
Stock (“Common Stock”) within the framework of the Plan
(the “Performance Share Rights Awards” or the
“Awards”), and as further described in these
Guidelines.
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 Share Rights Awards under Article 9 of the Plan and,
with respect to Team Members in the position of Vice President or
above, 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. If there is any conflict between
these Guidelines and the Plan, the terms and provisions of the Plan
shall control.
Section 2:
Scope
The Guidelines cover Team Members
who are eligible for participation in the Plan under these
Guidelines and are selected by the Committee for Performance Share
Rights Awards identified in Section 1 above. Awards under
these Guidelines cover three (3) year performance periods
relating to such Awards which generally track the Company’s
fiscal (not calendar) year that is the 12-month period that
generally runs from approximately September 1
st to August 31 st. (the “performance period”). The
actual dates for the fiscal year are determined and announced by
the Company at the beginning of each fiscal year. See
Section 7 below regarding transition periods.
Section 3: Eligibility
for Awards and Payouts
The Compensation Committee of the
Board (the “Committee”) and/or management of the
Company will determine annually which Team Members are eligible to
receive Performance Share Rights Awards under these Guidelines.
Participants are selected no later than 90 days following the
beginning of each performance period or upon
employment with the Company or promotion. Annual
Performance Share Rights Awards under these Guidelines will result
in overlapping performance periods. Additional eligibility
requirements are as follows:
New Hire and Promotion Awards
(New Equity Plan Participants)
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A Team Member who becomes
eligible for a Performance Share Rights Award under these
Guidelines after the beginning of a performance period as a new
hire will be granted a prorated Award for all pending performance
periods as of the Team Member’s date of hire, other than any
performance period that will lapse within six months of such date
of hire. A Team Member who becomes eligible for a Performance Share
Rights Award under these Guidelines after the beginning of a
performance period due to promotion will be granted a prorated
Award for all pending performance periods as of the Team
Member’s effective date of promotion. The dollar value of an
Award and the Performance Share Rights to be issued shall be
computed based upon an equitable proration recognizing the number
of months of a Team Member’s service in any applicable
performance period (rounded up to the nearest full
month).
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Promotion Awards for Active
Equity Plan Participants (Equity to Equity)
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A Team Member covered by these
Guidelines who has a job change that results in a higher
Performance Share Rights Award will have their Award for all
pending performance periods as of the date of the job change
adjusted upward on a pro rata basis. The additional equity award
will be calculated as the difference between the full year Award
for the new position and the actual Award for the old position for
each relevant performance period, prorated for the time in the new
position. Payments of all such Awards will be subject to Company
performance as outlined in section 4 below.
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Payout Eligibility
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A Team Member must be classified
as a regular full-time employee during the entire performance
period for which an Award is being made and at the time of the
actual issuance of the Common Stock pursuant to the Performance
Shares Rights Award in order to be issued Common Stock pursuant to
an Award.
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A Team Member on leave of
absence, regardless of type, will be issued Common Stock pursuant
to a Performance Share Rights Award only upon return to regular,
full time work/active status. A Team Member who is on an approved
military leave will be issued Common Stock pursuant to such Award
at the time such shares are issued even if the Team Member has not
returned to regular, full time work/active status at that
time.
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The Company will not issue common
stock pursuant to the Performance Share Rights Award for any
performance period if the Team Member’s most recent annual
performance rating is Unsatisfactory/Does Not Meet
Expectations.
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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. See Section 5 below for further information on the
consequences of termination of employment during a pending
performance period.
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Section 4: Payout
Calculation of PSR Awards
At the time a Team Member is
selected for an Award under these Guidelines for a particular
performance period, the Team Member will be assigned a
“target” number of shares of Common Stock to be earned
if the Company’s performance level is at the 50% level in
comparison to the peer group (as set forth below) for the
performance period. “Target” is defined as the actual
number of shares approved and awarded. Any payout is based on
cumulative yearly performance over the relevant performance period.
The Award will be expressed as a number of Performance Share Rights
and will be evidenced by an Award Certificate consistent with the
provisions of the Plan. The actual payout for the performance
period, if any, will be determined as a percentage of the target
Award payout depending on Company performance.
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Company performance for each
performance period will be
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