EXHIBIT 10.2

[image7.jpg]

Award Recipient:

«First_Name» «Last»

Grant Date:

 

Dear «First_Name»:

 

Re:

Long-Term Executive Incentive Plan Award - Fiscal Year 2011

                    I am pleased to inform you that Spartan Stores, Inc.
("Spartan") has awarded to you the opportunity to earn cash incentive
compensation under the Executive Incentive Plan of 2010 (the "Plan") for a
multi-year performance period as described in this letter. Please note that this
award is contingent upon the Plan's approval by Spartan's shareholders at the
2010 Annual Meeting. If the Plan is not approved, this award will automatically
be canceled without compensation. By accepting this award, you agree that the
award is subject to the terms and conditions of this letter and the Plan (which
are incorporated into this letter by reference). If there is any conflict
between the terms of the Plan and this letter, the terms of the Plan will
control. Capitalized terms not defined in this letter have the meanings given to
them in the Plan.

          1.          Target Bonus Amount. Your threshold, target, and maximum
Long-Term Incentive Bonus opportunity for the three-year period covering fiscal
2011, 2012 and 2013 will be communicated to you separately. As discussed in more
detail below, your Long-Term Incentive Bonus, if any, will be paid if Spartan
achieves at least the threshold levels of performance specified by the
Compensation Committee for the applicable Performance Period and you satisfy the
vesting requirements discussed in this letter.

          2.          Performance Measurement and Performance Period. The amount
of the Long-Term Incentive Bonus paid to you will be determined by Spartan's
performance with respect to two Performance Measurements: Earnings Per Share
("EPS") and Return on Invested Capital ("ROIC"). Sixty percent (60%) of your
Long-Term Incentive Bonus will be determined by Spartan's EPS performance, and
forty percent (40%) of your Long-Term Incentive Bonus will be determined by
Spartan's ROIC performance, in each case during the Performance Period set forth
on the following page:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Performance
Measurement

--------------------------------------------------------------------------------

Percentage of Long-
Term Incentive
Bonus

--------------------------------------------------------------------------------

Performance Period
 

--------------------------------------------------------------------------------

Vesting Period
 

--------------------------------------------------------------------------------

EPS

60%

1 year (fiscal 2011)

2 years after completion
of the Performance
Period (paid after FYE
2013)
 

ROIC*

 

--------------------------------------------------------------------------------

40%

 

--------------------------------------------------------------------------------

2 years (fiscal 2011 and 2012)

 

--------------------------------------------------------------------------------

1 year after completion of
the Performance Period
(paid after FYE 2013)

--------------------------------------------------------------------------------

*Spartan defines ROIC as profit after tax, adjusted for asset impairment, exit
costs and LIFO expense, divided by total invested capital (total assets plus
LIFO reserve less cash and non-interest bearing current liabilities).

          Your Long-Term Incentive Bonus will be calculated as follows:

 

 

 

(Target Bonus x 0.60) x (Percentage of EPS Target Achieved)

 

 

+

 

(Target Bonus x 0.40) x (Percentage of ROIC Target Achieved)

--------------------------------------------------------------------------------

 

 

=

 

Long-Term Incentive Bonus

 

          3.          Performance Goals and Payouts. Your Long-Term Incentive
Bonus will be determined according to the matrix presented below. The levels of
performance for EPS and ROIC have been established by the Compensation Committee
and will be communicated to you separately. No Long-Term Incentive Bonus will be
paid unless Spartan achieves the threshold level of performance for at least one
of the Performance Measurements.

Earnings Per Share

 

Performance

Payout

 

 

Level

--------------------------------------------------------------------------------

% of EPS Goal

--------------------------------------------------------------------------------

% of Target

--------------------------------------------------------------------------------

 

 

--

<80%         

0%

 

 

Threshold

80%         

10%

 

 

--

90%         

55%

 

 

Target

100%         

100%

 

 

--

108%         

150%

 

 

Maximum

≥116%         

200%

 

2

--------------------------------------------------------------------------------

ROIC

 

Performance

Payout

 

 

Level

--------------------------------------------------------------------------------

% of ROIC GOAL

--------------------------------------------------------------------------------

% of Target

--------------------------------------------------------------------------------

 

 

--

<97.3%         

0%

 

 

Threshold

97.3%         

50%

 

 

--

98.7%         

75%

 

 

Target

100%         

100%

 

 

--

101.4%         

150%

 

 

Maximum

≥ 102.7%         

200%

 

                    If Spartan's actual performance achieved exceeds the
threshold level and falls between specified levels, then the Compensation
Committee may determine by interpolation the percentage of the Target Bonus that
will be paid.

          4.          Vesting Period. Your Long-Term Incentive Bonus is designed
to be earned and vested over a total period of three years. Each component of
your Long-Term Incentive Bonus earned according to the matrix above, if any,
will be subject to an additional vesting period during which you must remain
employed by Spartan or one of its subsidiaries (unless the vesting period is
terminated earlier in accordance with this letter and the Plan). For the EPS
component, the vesting period is two (2) years following completion of the
Performance Period, and for the ROIC component, the vesting period is one (1)
year following completion of the Performance Period. Except as provided by the
Plan and the terms of this letter, your Long-Term Incentive Bonus, even if
earned, will be forfeited if your employment terminates prior to the expiration
of the vesting.

          5.          Effect of Termination of Employment. Except as provided in
this Section 5 and Section 6 below, if your employment with Spartan is
terminated for any reason, you will forfeit any: (a) unearned Long-Term
Incentive Bonus; (b) earned but unvested Long-Term Incentive Bonus; and (c)
earned and vested but unpaid Long-Term Incentive Bonus. If your employment with
Spartan terminates for retirement, death or total disability your eligibility
for a Long-Term Incentive Bonus will be determined in accordance with the
following table:

3

--------------------------------------------------------------------------------

Reason for
Termination

Timing of Termination

More than 12 Months
Remaining in
Performance Period

Less than 12 Months
remaining in
Performance Period

After Performance
Period, during vesting
period

Death or Total Disability

Your Target Bonus will be paid on a pro-rata basis based on the number of full
months you were employed during the 36 month total performance and vesting
period.

Following the completion of the Performance Period, any earned Long-Term
Incentive Bonus will be paid based on actual performance results on a pro-rata
basis based on the number of full months you were employed during the 36 month
total performance and vesting period.

Any earned Long-Term Incentive Bonus will be paid on a pro-rata basis according
to the number of full months you were employed during the 36 month total
performance and vesting period.

Retirement

Your Long-Term Incentive Bonus, if any, will be the amount you would have earned
had you remained employed with Spartan for the Performance Period and the
vesting period based on actual performance results, paid on a pro-rated basis
for the number of full months you were employed during the combined 36 month
performance and vesting period.

Your Long-Term Incentive Bonus, if any, will be the amount you would have earned
had you remained employed with Spartan for the Performance Period and the
vesting period based on actual performance results, paid on a pro-rated basis
for the number of full months you were employed during the combined 36 month
performance and vesting period.

Any earned Long-Term Incentive Bonus will be paid on a pro-rata basis according
to the number of full months you were employed during the 36 month total
performance and vesting period.

          6.          Change in Control.

          (a)          During Performance Period. Upon a Change in Control of
Spartan Stores (as defined in the Spartan Stores, Inc. Supplemental Executive
Retirement Plan) during the Performance Period, you will earn an Incentive Award
equal to the greater of the Target Bonus or the projected Incentive Award based
on the Company's performance as

4

--------------------------------------------------------------------------------

of the date of the Change in Control, to be paid on a pro-rata basis for the
number of full months completed of the combined 36 month performance and vesting
period prior to the Change in Control. The Incentive Award will be paid no later
than the 15th day of the third month following the Change in Control.

          (b)          After Performance Period. Upon a Change in Control
following the Performance Period, any earned but unvested Incentive Award will
be payable in full upon the earliest to occur of the termination of your
employment for any reason, the applicable vesting date, or the date that is the
15th day of the third month following the Change in Control.

          7.          Executive Severance Agreement. The Long-Term Incentive
Bonus opportunity described in this letter is not subject to the provisions of
your Executive Severance Agreement with the Company. In the event of a Change in
Control, your right to receive any portion of the Long-Term Incentive Bonus
described in this letter will be governed exclusively by the terms and
conditions of this letter, and you will not receive any additional payment for
the Long-Term Incentive Bonus under your Executive Severance Agreement.

          8.          Annual Incentive Award. You will be separately notified of
your eligibility to earn an annual incentive award for Fiscal 2011.

          9.          Compensation Committee Authority and Discretion. The Plan
is administered and interpreted by the Compensation Committee of the Board of
Directors. The Committee may provide that any evaluation of performance may
include or exclude special charges or extraordinary items. Although the
Committee has authority to exercise reasonable discretion to interpret the Plan
and the performance goals, it may not amend or waive any performance goal after
the 90th day of the Performance Period. The Committee has no authority or
discretion to increase any Long-Term Incentive Bonus.

          10.          Withholding. Spartan is entitled to withhold and deduct
from your future wages (or from other amounts that may be due and owing to you
from Spartan), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any and all federal, state, local and
foreign withholding and employment-related tax requirements attributable to a
Long-Term Incentive Bonus.

          11.          Miscellaneous.

                    (a)          This letter and your rights hereunder are
subject to all the terms and conditions of the Plan, as the same may be amended
from time to time, as well as to such rules and regulations as the Committee may
adopt for administration of the Plan. It is expressly understood that the
Committee is authorized to administer, construe, and make all determinations
necessary or appropriate to the administration of the Plan and this letter, all
of which shall be binding upon you.

                    (b)          The Board may terminate, amend, or modify the
Plan in accordance with the terms of the Plan.

5

--------------------------------------------------------------------------------

                    (c)          This letter and the Plan shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
heirs, successors and permitted assigns. This letter agreement shall not be
modified except in a writing executed by you and Spartan.

                    (d)          This letter shall be governed by, and construed
in accordance with, the laws of the state of Michigan.

 

Very truly yours,

 

 

 

 

 

 

 

Dennis Eidson

 

President and Chief Executive Officer

Accepted and Agreed to:

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

«First_Name» «Last»

 

 

--------------------------------------------------------------------------------

 

Date

 

6

--------------------------------------------------------------------------------