FISCAL YEAR 2008 2005 MANAGEMENT INCENTIVE PLAN BONUS AGREEMENT
Exhibit 10.36
FISCAL YEAR 2008
2005 MANAGEMENT INCENTIVE PLAN
BONUS AGREEMENT
2005 MANAGEMENT INCENTIVE PLAN
BONUS AGREEMENT
This SYSCO CORPORATION FISCAL YEAR 2008 MANAGEMENT INCENTIVE PLAN BONUS AGREEMENT (this
“Agreement”) was adopted by the Plan Committee pursuant to the Sysco Corporation 2005 Management
Incentive Plan (the “Plan”) (a copy of which is attached as Exhibit 1) and agreed to by the
Company and ___ (“Executive”) effective June 29, 2007. This Agreement is effective for
the fiscal year ending June 28, 2008 (the “Plan Year”). Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Plan.
1. Calculation of Bonus. Subject to the further adjustments, limitations and additions
provided for in the Plan and this Agreement, Executive’s bonus under the Plan for the Plan Year
shall be based on a combination of the performance of (a) the Company as a whole (a “Company
Performance Bonus”); and (b) one or more Operating Companies as designated by the Plan Committee
(an “OpCo Performance Bonus”). Notwithstanding the foregoing, Executive will be entitled to a bonus
under this Agreement only if the Company achieves an Increase in Earnings Per Share of at least 6%
and a Return on Stockholder’s Equity of at least 14%.
(a) Calculation of Company Performance Bonus. Subject to the further adjustments and
additions provided for in the Plan and this Agreement, Executive’s Company Performance Bonus for
the 2008 fiscal year shall be equal to the product of: (i) Executive’s MIP Salary; and (B) 70% of
the Table B Percentage.
(b) Calculation of OpCo Performance Bonus. Subject to the further adjustments and
additions provided for in the Plan and this Agreement, Executive’s OpCo Performance Bonus will be
calculated by determining the number of Operating Companies of the Company that have attained a
Return on Capital of at least 20% (the “ROC Target”). If at least 20 Operating Companies have
attained or exceeded the ROC Target, and all Operating Companies which have attained or exceeded
the ROC Target employ at least 50% or more of the aggregate of the Total Capital of all Operating
Companies, then Executive will be entitled to receive an OpCo Performance Bonus equal to the
product of: (i) the sum of (A) 9% for the first 20 Operating Companies which attain or exceed the
ROC Target; and (B) 11/2% of for each additional Operating Company which attains or exceeds the ROC
Target; and (ii) Executive’s MIP Salary. By way of example, if 23 Operating Companies (which, in
the aggregate, employ 51% of the Total Capital of all Operating Companies) attain or exceed the ROC
Target, Executive will receive an OpCo Performance Bonus equal to the product of (i) Executive’s
MIP Salary and (ii) 13.5 % (the sum of 9% for the first 20 Operating Companies attaining or
exceeding the ROC Target, and 4.5% for the performance of the additional three Operating Companies
in excess of 20 attaining or exceeding the ROC Target).
(c) General Rules Regarding Bonus Calculation.
(i) Consistent Accounting. In determining whether or not Executive is entitled to a
bonus under this Agreement, the Company’s accounting practice and generally accepted accounting
principles shall be applied on a basis consistent with prior periods, and such determination shall
be based on the calculations made by the Company, approved by the Plan Compensation Committee and
binding on Executive. Notwithstanding the foregoing, if there is any material change in GAAP during
a Plan Year that results in a material change in accounting for the revenues or expenses of the
Company the calculations of the Table B Percentage for the Plan Year (the “GAAP Change Year”) shall
be made as if such change in GAAP had not occurred during the GAAP Change Year. In determining the
Table B Percentage for Executive in the year following the GAAP Change Year, the calculation shall
be made after taking into account such change in GAAP.
(ii) No Limit on Bonus. Except as otherwise provided in this Section 1(c)(ii), there
is no limit to the bonus that can be earned under the Plan or this Agreement. Although Tables A and
B have only been calculated to 370% and 172%, respectively, the “grids” shall be deemed to continue
to increase in the same ratios as set forth. However, notwithstanding the foregoing and any other
provision in this Agreement to the contrary, Executive’s bonus amount for the Plan Year including,
if applicable, the
value of any Additional Shares and Additional Cash Bonus) cannot exceed 1% of the Company’s
earnings before income taxes as publicly disclosed in the “Consolidated Results of Operations”
section of the Company’s annual report to the Securities and Exchange Commission on Form 10-K for
the Plan Year.
(iii) Tax Law Changes. If the Internal Revenue Code is amended during the fiscal year
and, as a result of such amendment(s), the effective tax rate applicable to the earnings of the
Company (as described in the “Summary of Accounting Policies” section of the Company’s annual
report to the Securities and Exchange Commission on Form 10-K) changes during the year, the
calculation of the net after-tax earnings per share of the Company for the Plan Year shall be made
as if such rate change had not occurred during the Plan Year.
2. Extraordinary Events. If, during the Plan Year, the Company experiences an
Extraordinary Event or Events that results in the Company recognizing a net-after tax gain with
respect to such Extraordinary Event or Events (an “Extraordinary Gain”), the Plan Committee may
reduce the Company Performance Bonus payable to Executive under this Agreement in its sole and
absolute discretion; provided however, that the Plan Committee may not reduce the Company
Performance Bonus payable to Executive to an amount less than the Company Performance Bonus
Executive would have earned if the Company did not include the Extraordinary Gain in the
calculation of the Company Performance Bonus for the Plan Year.
3. Payment. Within 90 days following the end of each fiscal year, the Company shall
determine and the Plan Committee shall approve the amount of any bonus earned by Executive under
this Agreement. Such bonus shall be payable in the manner, at the times and in the amounts
provided in the Plan.
4. Definitions
(a) For Calculations Regarding Table B (attached hereto as Exhibit 2):
(i) Return on Stockholders’ Equity — expressed as a percentage and computed by
dividing the Company’s net after-tax earnings for the Plan Year by the Company’s average
stockholders’ equity at the end of each quarter during the year.
(ii) Increase in Earnings Per Share — expressed as a percentage increase of the net
after-tax earnings per share for the Plan Year over the net after-tax earnings per share for fiscal
2007.
(iii) Table B Percentage – the percentage determined from Table B, attached hereto as
Exhibit 1, which coincides with the Return on Stockholder’s Equity and Increase in Earnings
Per Share for the Plan Year for the Company as a whole.
(b) For OpCo Performance Bonus Calculations
(i) Total Capital – with respect to an Operating Company, the sum of the following
components:
(A) Stockholders’ equity — the average of the amounts outstanding for such
Operating Company at the end of each quarter for which the computation is being made
(quarterly average basis).
(B) Long-term debt — the average of the long-term portion of debt of such Operating
Company outstanding at the end of each quarter for which the computation is being made
(quarterly average basis).
(C) Intercompany borrowings — the average of the amount outstanding at the end of
each day during the period for which the computation is being made (daily average
basis).
(D) Average patronage dividend receivable – the average of the amount outstanding
at the end of each period for which the computation is being made (monthly average
basis).
(E) Adjustments — amounts allocated to capital with respect to (i) fixed rate
intercompany loans, (ii) capitalized leases, and (iii) below market plant and equipment
costs.
(ii). Return on Capital — the Return on Capital for an Operating Company is expressed
as a percentage and is computed by dividing the Operating Company’s pretax earnings (the
calculation of which does not include gain on the sale of fixed assets and intercompany interest
income and is subject to adjustment to include taxes that would have been included but for the
timing of any tax deferrals so that results are consistent with fiscal 2007) by the Operating
Company’s Total Capital.
(c) Extraordinary Event. The sale or exchange of an operating division or subsidiary
of the Company.
(d) Method of Calculating Quarterly Averages — In determining the average amount
outstanding of stockholders’ equity, long-term debt and adjustments above, and the quarterly
average stockholders’ equity, such averages shall be determined by dividing five (5) into the sum
of the amounts outstanding of the relevant category at the end of each of the four quarters of the
fiscal year plus the amount outstanding of the relevant category at the beginning of the fiscal
year.
(e) MIP Percentage – the percentage of Executive’s base salary (as of the end of the
Plan Year) that shall be used to calculate such Executive’s bonus for the Plan Year. For purposes
of this Agreement, Executive’s MIP Percentage for the Plan Year shall be 100%.
(f) MIP Salary – Executive’s base salary (as of the end of the Plan Year) multiplied
by Executive’s MIP Percentage.
(g) Operating Company – an operating division or a subsidiary of the Company.
5. Term of Agreement. This Agreement shall be effective only for the Plan Year (i.e.,
the fiscal year ending June 28, 2008).
6. No Employment Arrangement Implied. Nothing in this Agreement or the Plan shall
imply any right of Employment for Executive, and except as set forth in Section 9 of the Plan with
respect to a Change of Control or as otherwise determined by the Committee, in its discretion, if
Executive is terminated, voluntarily or involuntarily, with or without cause, prior to the end of
the Plan Year, Executive shall not be entitled to any bonus for the Plan Year regardless of whether
or not such bonus had been or would have been earned in whole or in part, but any unpaid bonus
earned with respect to a prior fiscal year shall not be affected.
7. Plan Provisions shall Govern. This Agreement is subject to and governed by the
Plan and in the case of any conflict between the terms of this Agreement and the contents of the
Plan, the terms of the Plan will control.
8. Governing Law. The interpretation, construction and performance of this Agreement
shall be governed by and construed and enforced in accordance with the internal laws of the State
of Delaware without regard to the principle of conflict of laws.
9. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and the same instrument.
10. Severability. Provided the other provisions of this Agreement do not frustrate the
purpose and intent of the law, in the event that any portion of this Agreement shall be determined
to be invalid or unenforceable to any extent, the same shall to that extent be deemed severable
from this Agreement, and the invalidity or unenforceability thereof shall not affect the validity
and enforceability of the remaining portion of this Agreement.
11 Amendment and Termination. The Company may amend this Agreement at any time up to
and until the day that is ninety (90) days after the beginning of the Plan Year without the
approval of Executive. No amendments may be made to this Agreement after the date that is ninety
(90) days after the beginning of the Plan Year. Notwithstanding anything to the contrary contained
in this Agreement, the Company may terminate this Agreement at any time during the Plan Year and
Executive shall not be
entitled to any bonus under this Agreement for the Plan Year regardless of when during the Plan
Year this Agreement is terminated.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized
officer of the Company and Executive has executed this Agreement as of the day and year first
written above.
SYSCO CORPORATION
|
EXECUTIVE | |||
By: |
||||
Title:
|
[Name of Executive] | |||
EXHIBIT 1
“PLAN”
EXHIBIT 2
TABLE B
OVERALL COMPANY PERFORMANCE
Return on | PERCENTAGE INCREASE IN EARNINGS PER SHARE: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity: | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | __% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
20 | 24 | 28 | 45 | 50 | 55 | 60 | 65 | 70 | 75 | 80 | 85 | 90 | 100 | 110 | 120 | 130 | 140 | 150 | 160 | 170 | 180 | 190 | 200 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
27 | 31 | 35 | 55 | 60 | 65 | 70 | 75 | 80 | 85 | 90 | 95 | 100 | 110 | 120 | 130 | 140 | 150 | 160 | 170 | 180 | 190 | 200 | 210 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
34 | 38 | 42 | 65 | 70 | 75 | 80 | 85 | 90 | 95 | 100 | 105 | 110 | 120 | 130 | 140 | 150 | 160 | 170 | 180 | 190 | 200 | 210 | 220 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
41 | 45 | 49 | 75 | 80 | 85 | 90 | 95 | 100 | 105 | 110 | 115 | 120 | 130 | 140 | 150 | 160 | 170 | 180 | 190 | 200 | 210 | 220 | 230 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
48 | 52 | 56 | 85 | 90 | 95 | 100 | 105 | 110 | 115 | 120 | 125 | 130 | 140 | 150 | 160 | 170 | 180 | 190 | 200 | 210 | 220 | 230 | 240 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
55 | 59 | 63 | 95 | 100 | 105 | 110 | 115 | 120 | 125 | 130 | 135 | 140 | 150 | 160 | 170 | 180 | 190 | 200 | 210 | 220 | 230 | 240 | 250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
62 | 66 | 70 | 105 | 110 | 115 | 120 | 125 | 130 | 135 | 140 | 145 | 150 | 160 | 170 | 180 | 190 | 200 | 210 | 220 | 230 | 240 | 250 | 260 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
69 | 73 | 77 | 115 | 120 | 125 | 130 | 135 | 140 | 145 | 150 | 155 | 160 | 170 | 180 | 190 | 200 | 210 | 220 | 230 | 240 | 250 | 260 | 270 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
76 | 80 | 84 | 125 | 130 | 135 | 140 | 145 | 150 | 155 | 160 | 165 | 170 | 180 | 190 | 200 | 210 | 220 | 230 | 240 | 250 | 260 | 270 | 280 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
83 | 87 | 91 | 135 | 140 | 145 | 150 | 155 | 160 | 165 | 170 | 175 | 180 | 190 | 200 | 210 | 220 | 230 | 240 | 250 | 260 | 270 | 280 | 290 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
90 | 94 | 98 | 145 | 150 | 155 | 160 | 165 | 170 | 175 | 180 | 185 | 190 | 200 | 210 | 220 | 230 | 240 | 250 | 260 | 270 | 280 | 290 | 300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
97 | 101 | 105 | 155 | 160 | 165 | 170 | 175 | 180 | 185 | 190 | 195 | 200 | 210 | 220 | 230 | 240 | 250 | 260 | 270 | 280 | 290 | 300 | 310 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
104 | 108 | 112 | 165 | 170 | 175 | 180 | 185 | 190 | 195 | 200 | 205 | 210 | 220 | 230 | 240 | 250 | 260 | 270 | 280 | 290 | 300 | 310 | 320 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
111 | 115 | 119 | 175 | 180 | 185 | 190 | 195 | 200 | 205 | 210 | 215 | 220 | 230 | 240 | 250 | 260 | 270 | 280 | 290 | 300 | 310 | 320 | 330 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
118 | 122 | 126 | 185 | 190 | 195 | 200 | 205 | 210 | 215 | 220 | 225 | 230 | 240 | 250 | 260 | 270 | 280 | 290 | 300 | 310 | 320 | 330 | 340 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
125 | 129 | 133 | 195 | 200 | 205 | 210 | 215 | 220 | 225 | 230 | 235 | 240 | 250 | 260 | 270 | 280 | 290 | 300 | 310 | 320 | 330 | 340 | 350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
132 | 136 | 140 | 205 | 210 | 215 | 220 | 225 | 230 | 235 | 240 | 245 | 250 | 260 | 270 | 280 | 290 | 300 | 310 | 320 | 330 | 340 | 350 | 360 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
___% |
139 | 143 | 147 | 215 | 220 | 225 | 230 | 235 | 240 | 245 | 250 | 255 | 260 | 270 | 280 | 290 | 300 | 310 | 320 | 330 | 340 | 350 | 360 | 370 |