Exhibit 10.4

 

Description of Nash Finch Company

2005 Executive Incentive Program

 

Objectives of the Program

 

The 2005 Executive Incentive Program is a key component of Nash Finch executive
compensation. The main objectives of the program are to:

 

•                  Support the creation of shareholder value and align executive
interest with that of shareholders.

 

•                  Drive the achievement of short-term business results needed
to achieve long-term strategic objectives.

 

•                  Provide competitive total compensation opportunities in order
to attract and retain the leadership needed for Nash Finch to be successful.

 

•                  Promote teamwork by encouraging the leadership team to work
together to achieve financial and operational goals.

 

Incentive Opportunities

 

Nash Finch intends to provide executives with compensation opportunities
competitive with those available in companies with which it competes for
associates and customers.  In order to support a high-performance culture, a
substantial portion of compensation is at-risk and tied to business results.

 

Bonus opportunities are based on an executive’s level of responsibility and
competitive practices.  The maximum bonus an executive may earn is expressed as
a percentage of base salary and is intended to give an executive the chance to
earn significant additional compensation tied to the achievement of key
objectives.  All calculations will be based on an executive’s annualized salary
as of the first day of the plan year, which was January 2, 2005.  In the event
of a promotion, transfer, or other change, bonus opportunities will be pro-rated
by date for each position.  Bonus potential is pro-rated from employment date
for new hires. Prorating is effected on a calendar year basis. A summary of an
individual executive’s bonus potential is outlined on a personal worksheet
provided to the individual.

 

Performance Focus

 

The extent to which bonuses are earned under the program depends on the extent
to which key performance objectives established at the start of the plan year
are achieved.  Performance is measured against financial and operational
results, with a primary focus on financial results.

 

Part A of the incentive program focuses on financial measures. For Corporate
positions, the financial portion of the bonus opportunity focuses exclusively on
the Company’s consolidated net earnings.  Division/Region positions (and
Corporate positions responsible for Division/Region earnings) have part of their
financial goals tied to Division/Region earnings and part tied to Company
consolidated net earnings.

 

Part B of the incentive program focuses on operational measures. For Retail
positions, the measure is the “G.R.E.A.T. Score,” an independent assessment of
retail store performance, and for Food Distribution positions it is the
“MATRIX,” which is a combined measurement of distribution center fill rate,
on-time deliveries, and selector accuracy.  Bonuses for Corporate positions
consider both measures.

 

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Part C of the incentive program focuses on individual goals which include:

 

1.               Achievement of individual performance goals that support and
are aligned with departmental and organizational goals for the year.

2.               Remaining within authorized budget.

3.               Developing a pipeline of successors to an executive’s position
and/or within the executive’s department by executing the succession planning
process.

4.               Developing and executing an individual development plan.

 

Weights within Part C may vary based on individual circumstances.

 

The performance measures and weighting between measures for the 2005 program are
summarized in the table below.

 

2005 Performance Measures and Weightings

 

 

 

Area

 

Weighting

 

Measurement

PART A-

 

Corporate

 

60%

 

Company net earnings

Financial

 

Retail/Food Distribution

 

15%

 

Company net earnings

 

 

 

 

45%

 

Division/Region earnings

 

 

 

 

 

 

 

PART B-

 

Corporate

 

10%

 

G.R.E.A.T. Score

Operational

 

 

 

10%

 

MATRIX*

 

 

Retail

 

20%

 

G.R.E.A.T. Score

 

 

Food Distribution

 

20%

 

MATRIX*

 

 

 

 

 

 

 

PART C-
Individual

 

All Areas

 

20%

 

Combination of: specific individual goals, operating budgets, succession
planning, individual dev. plans and other items

 

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*The MATRIX is a total of the results for fill rate, on-time deliveries, and
selector accuracy.

 

Performance Objectives

 

There are specific objectives for each Part A and Part B measurement that are
approved by the Compensation Committee shortly after the beginning of the plan
year.  The Compensation Committee reviews and approves the payment of bonuses
after the end of the plan year, based on the degree to which Part A and B
objectives and Part C individual goals have been attained.

 

Part A of the bonus program has minimum and maximum objectives, expressed in
terms of Company net earnings and, for certain individuals, Division/Region
earnings.  If results are below the minimum objective, no Part A bonus payment
will be made.  If results are at or above the maximum objective, 100% of the
Part A bonus amount will have been earned.  If results are between the minimum
and maximum objectives, a pro-rata portion of the Part A bonus amount will have
been earned.

 

Part B operational objectives are “all-or-nothing”.  The specified Retail
G.R.E.A.T. score must be met or surpassed for that portion of the Part B bonus
amount to be paid.  The specified Food Distribution MATRIX value likewise must
be met or surpassed for that portion of the Part B bonus amount to be paid.

 

Discretionary Adjustment of Award

 

The Compensation Committee retains the right to amend or terminate the 2005
bonus program at any time, and to adjust bonus payments in its discretion at any
time prior to the payment of any bonus.  The Compensation Committee may
specifically adjust a bonus payment downward for a particular program
participant if an Internal Audit report issued during 2005 and covering a
process for which that participant has substantial responsibility

 

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concludes that there is a deficiency in the system of internal controls for that
process.  In addition, if the provisions of Section 304 of the Sarbanes-Oxley
Act of 2002 are successfully invoked so as to require the Chief Financial
Officer and Chief Executive Officer of the Company not to receive, or to
reimburse the Company for, (1) any bonus or incentive based or equity based
compensation or (2) any profits realized from the sale of securities of the
Company with respect to 2005, then the Compensation Committee may reduce, in
whole or part, the 2005 bonuses payable to all executive officers and corporate
officers of the Company, or require the forfeiture of some or all of the 2005
bonuses previously paid to such individuals.

 

Termination of Employment

 

If an executive’s employment terminates for any reason – whether voluntary or
involuntary – before the last day of the 2005 fiscal year, that executive will
be ineligible to receive a bonus under this program.

 

Bonus Payments

 

Bonuses are expected to be paid as soon as practicable after the close of the
2005 fiscal year. While any approved bonus will ordinarily be paid in cash, a
participant in this program may elect, prior to the Compensation Committee’s
approval of bonus payout amounts, to receive all or part of any bonus payable in
shares of Nash Finch common stock.  To the extent that a participant receives
payment in stock, the participant will also receive additional restricted shares
of Nash Finch common stock equal to 15% of the number of unrestricted shares
received in lieu of cash. The restricted shares will vest in full on the date
two years after the date the Compensation Committee approves the payment of the
bonus, so long as the participant has retained beneficial ownership of the
unrestricted shares received in lieu of cash, and his or her employment with
Nash Finch has not ended under circumstances described in the 2000 Stock
Incentive Plan.

 

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