Exhibit 2
Employment and Other Agreements. Xx. Xxxxxxx was employed by Xxxxxx as its
President and Chief Executive Officer, effective April 19, 1993, pursuant to
an employment agreement having a three-year term ending on April 18, 1996. On
September 22, 1995, the Corporation and Xxxxxx entered into a new employment
agreement with Xx. Xxxxxxx which superseded the 1993 agreement except as
otherwise described in this paragraph. The term of the 1995 agreement extends
through April 18, 2001. Through April 18, 1996, Xx. Xxxxxxx was entitled to
receive a base salary at an annual rate of $450,000 (the rate for such period
provided for in the 1993 agreement); thereafter, Xx. Xxxxxxx is entitled to
receive a base salary at an annual rate of not less than $500,000 for the
remaining term of the 1995 agreement. Under the 1995 agreement, Xx. Xxxxxxx
was entitled to and did receive incentive bonuses for fiscal 1998 and 1999
based upon the financial performance of the Corporation and its subsidiaries
on a consolidated basis and the comparable store sales performance of Pamida's
stores. The 1995 agreement requires the Board of Directors and Xx. Xxxxxxx to
agree periodically upon incentive bonus programs for Xx. Xxxxxxx for fiscal
2000 and 2001. Xx. Xxxxxxx'x fiscal 2000 incentive bonus program provides for
a potential incentive bonus based upon the financial performance of the
Corporation and its subsidiaries on a consolidated basis and the comparable
store sales performance of Pamida's stores. Xx. Xxxxxxx also is entitled to
customary fringe benefits under the 1995 agreement. In the event of Xx.
Xxxxxxx'x death, his base salary would continue for 90 days, and his estate
would be entitled to a pro rata portion of his incentive bonus (if any) for
the fiscal year in which his death occurs. If Xx. Xxxxxxx'x employment
terminates for cause or by reason of his disability for a continuous period of
six months, then he would be entitled to his base salary to the termination
date, a pro rata portion of his incentive bonus (if any) for the fiscal year
in which such termination occurs, and (only in the case of his disability) the
continuation of certain fringe benefits until not later than his attainment of
age 65. If Xx. Xxxxxxx'x employment is terminated by the Corporation or Pamida
without cause prior to a Significant Corporate Event (as defined in the 1995
agreement), then he would be entitled to the continuation of his base salary
through April 18, 2001 (less amounts which Xx. Xxxxxxx might receive from
other employment), a pro rata portion of his incentive bonus (if any) for the
fiscal year in which such termination occurs, the continuation of certain
fringe benefits until the earlier of April 18, 2001, or his receipt of such
benefits from another employer, and the equivalent of certain deferred
compensation and 401(k) plan benefits which Xx. Xxxxxxx would lose as a result
of his termination without cause. If the termination without cause occurs
after a Significant Corporate Event, then Xx. Xxxxxxx also would be entitled
to receive an incentive bonus for each of the next two 12-month periods (but
not beyond April 18, 2001) in an amount equal to the average amount of the
incentive bonuses (if any) which he received for the three fiscal years prior
to the fiscal year during which such termination occurs. Significant Corporate
Events are the Corporation's ceasing to own all of the capital stock of
Pamida, the merger of Pamida into a corporation of which the Corporation does
not own a majority of the voting shares, the merger of the Corporation into
another corporation a majority of whose voting shares are owned by persons
other than the previous majority owners of the Corporation, the acquisition by
a person or group (other than 399 Venture Partners, Inc. or its affiliates) of
30% or more of the voting shares of the Corporation, and a stockholder vote to
dissolve Pamida or dispose of all of its property and assets. The 1995
agreement, as amended, also provides that Xx. Xxxxxxx is entitled to at least
12 months advance notice if the Corporation and Pamida determine not to
continue his employment after the agreement expires with at least the same
base salary as in effect on April 18, 2001, and with a substantially similar
incentive bonus program and fringe benefits; in the absence of such advance
notice, Xx. Xxxxxxx would be entitled to certain compensation through the end
of a 12-month period beginning when such notice actually is given. Xx.
Xxxxxxx'x current annual base salary is $525,000.
Xx. Xxxxxxxx has an employment agreement with the Corporation and Pamida,
providing for his employment as Executive Vice President and Chief Operating
Officer, which became effective on March 6, 1997, and has a term of three
years. The agreement provides for a base salary at an annual rate of not less
than $275,000 and in other material respects is substantially identical to Xx.
Xxxxxxx'x 1995 agreement described above. Xx. Xxxxxxxx'x current annual base
salary is $350,000.
Xx. Xxxxxxx has an employment agreement with the Corporation and Pamida,
providing for his employment as Senior Vice President and Chief Financial
Officer, which became effective on March 6, 1997, and has a term of three
years. The agreement provides for a base salary at an annual rate of not less
than $210,000. In most other material respects, Xx. Xxxxxxx'x agreement is
substantially similar to Xx. Xxxxxxx'x 1995 agreement described above;
however, Xx. Xxxxxxx'x agreement does not include provisions for certain bonus
payments or
certain continued salary payments and benefits in the event of the termination
of Xx. Xxxxxxx'x employment for various reasons prior to the expiration of the
three-year term or without at least 12 months' advance notice. Xx. Xxxxxxx'x
current annual base salary is $230,000.
During April 1999, Xxxxxx entered into Retention Bonus Agreements with
Messrs. Fishman, Xxxxxxxx, and Xxxxxxx and certain other senior executives of
Pamida which provide for potential payments to such persons following the
occurrence of any one of several specified Retention Events. If a Retention
Event occurs while the executive is employed by Xxxxxx and the executive
remains in the employ of Xxxxxx (or a successor to the business of Pamida) for
six months after the effective date of the Retention Event, then the executive
is entitled to receive a specified retention bonus. The executive also is
entitled to receive the retention bonus if a Retention Event occurs, the
executive is employed by Xxxxxx immediately prior to the time the Retention
Event occurs, and either upon the occurrence of the Retention Event or within
six months thereafter the executive's employment with Xxxxxx (or a successor
to Xxxxxx's business) is terminated without cause. Retention Events are
similar to the Significant Corporate Events described in the preceding
discussion of Xx. Xxxxxxx'x employment agreement. The retention bonuses which
are potentially payable to Messrs. Fishman, Washburn, and Xxxxxxx are
$400,000, $200,000, and $160,000, respectively.
Report of Compensation Committee.
(a) Chief Executive Officer. In September 1995, the Compensation Committee
of the Board of Directors negotiated a new employment agreement with Xx.
Xxxxxxx and, in doing so, considered information gathered by the corporation's
human resources department from published sources showing the compensation of
other executives holding comparable positions in the retail industry and the
various elements of such compensation. The Committee also considered the
operating results and financial condition of the Corporation and its
subsidiaries on a consolidated basis and various accomplishments of Xx.
Xxxxxxx during his tenure as Chief Executive Officer, which began in April
1993.
Xx. Xxxxxxx'x salary for fiscal 1999 was increased by the Board of
Directors at the recommendation of the Committee from the contractual minimum
of $500,000 to $525,000 based upon the Committee's evaluation of Xx. Xxxxxxx'x
performance and accomplishments and information relating to the compensation
of executives holding comparable positions in the retail industry. Xx.
Xxxxxxx'x current employment agreement also provided by a 1998 amendment for a
potential incentive bonus for Xx. Xxxxxxx for fiscal 1999 based upon the
financial performance of the Corporation and its subsidiaries on a
consolidated basis and the comparable store sales performance of Xxxxxx's
stores. The exact bonus amount was to be determined by a matrix involving both
the Corporation's consolidated earnings before interest, taxes, depreciation,
and amortization and the percentage growth in comparable store sales of
Pamida's stores. Because the threshold performance requirements were satisfied
for fiscal 1999, Xx. Xxxxxxx received a bonus based upon the terms of the
amended employment agreement and such matrix.
The Stock Option Committee of the Board of Directors (composed of the same
persons who constitute the Compensation Committee) granted a stock option to
Xx. Xxxxxxx during fiscal 1999 with the objective of further aligning the
interests of Xx. Xxxxxxx with the interests of the Corporation's stockholders
by providing an incentive for him to increase stockholder value through
improved performance of the Corporation.
(b) Other Executive Officers. The base salaries of Messrs. Xxxxxxxx and
Xxxxxxx for fiscal 1999 were increased from their contractual minimums by the
Board of Directors at the recommendation of the Compensation Committee to
reflect increases in their respective levels of responsibility and their
accomplishment of particular assignments within their respective areas of
responsibility. The Committee also considered information relating to the
compensation of executives holding comparable positions in the retail
industry. The bonus programs for Messrs. Xxxxxxxx and Xxxxxxx for fiscal 1999
were similar to Xx. Xxxxxxx'x, and bonuses were paid to Xx. Xxxxxxxx and Xx.
Xxxxxxx for such fiscal year because the applicable threshold performance
tests were met. Stock options were granted to Messrs. Xxxxxxxx and Xxxxxxx
during fiscal 1999 for the reasons discussed in the preceding paragraph
relating to the stock option granted to Xx. Xxxxxxx.
X. Xxxxxx Xxxxxxxx (Chairman),
Stuyvesant X. Xxxxxxx, and Xxxxx X. Xxxxxx
Compensation Committee of the Board of Directors
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