Exhibit 10.1

 

the fresh market, INC.
2012 Annual Incentive compensation program for select

executives

 

SECTION 1. Purpose. The purpose of this 2012 Annual Incentive Compensation
Program for Select Executives (the “Program”) is to provide incentives and
reward select executives for achieving specified performance goals in fiscal
year 2012.

 

SECTION 2. Definitions. Capitalized terms used herein that are not defined
herein have the meanings as used or defined in The Fresh Market, Inc. 2010
Omnibus Incentive Compensation Plan (the “Plan”). As used herein, the following
terms shall have the meanings set forth below:

 

“Adjusted Net Income” shall mean net income determined in accordance with U.S.
generally accepted accounting principles as set forth on the Company’s audited
consolidated financial statements adjusted to exclude (i) restructuring charges
and expenses related to the exit or disposal of a business, (ii) income/expense
effect of business acquisitions or combinations, (iii) income/expense effect of
business divestitures, (iv) cumulative effect of changes in tax or U.S.
generally accepted accounting principles, (v) income/expense of discontinued
operations, (vi) income/expenses resulting from newly enacted laws and
regulations, (vii) documented, third-party costs and expenses of secondary
offerings initiated under the registration rights agreement entered into with
the Berry family in conjunction with the Company’s initial public offering, and
(viii) taxes, interest and penalties incurred by the Company in accordance with,
or required by, the tax indemnification agreement entered into with the Berry
family in conjunction with the Company’s initial public offering and the
documented, third-party costs and expenses incurred by the Company in connection
with audits, reviews and examinations of tax returns that are subject to such
tax indemnification agreement, all determined (x) on an income tax affected
basis, as applicable, and (y) in accordance with U.S. generally accepted
accounting principles.

 

“Award” shall mean any amount granted to a Participant under the Program.

 

“Award Notice” shall mean, with respect to any Participant, the award notice
delivered to such Participant in the form attached hereto as Schedule A.

 

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“Operating Income” shall mean the Company’s operating income as determined in
accordance with U.S. generally accepted accounting principles as set forth on
the Company’s audited consolidated financial statements and adjusted to exclude,
to the extent included in the calculation of operating income, (i) restructuring
charges and expenses related to the exit or disposal of a business, (ii)
income/expense effect of business acquisitions or combinations, (iii)
income/expense effect of business divestitures, (iv) cumulative effect of
changes in tax or U.S. generally accepted accounting principles, (v)
income/expense of discontinued operations, (vi) income/expenses resulting from
newly enacted laws and regulations, (vii) documented, third-party costs and
expenses of secondary offerings initiated under the registration rights
agreement entered into with the Berry family in conjunction with the Company’s
initial public offering, and (viii) taxes, interest and penalties incurred by
the Company in accordance with, or required by, the tax indemnification
agreement entered into with the Berry family in conjunction with the Company’s
initial public offering and the documented, third-party costs and expenses
incurred by the Company in connection with audits, reviews and examinations of
tax returns that are subject to such tax indemnification agreement, all
determined in accordance with U.S. generally accepted accounting principles.

 

“Performance Period” shall mean the Company’s fiscal year 2012.

 

“Return on Invested Capital” shall mean, with respect to the Performance Period,
the quotient of (A) (i) one (1) minus the Company’s effective tax rate
(expressed in decimal place), multiplied by (ii) the sum of (x) the Company’s
Adjusted Net Income plus (y) interest expense plus (z) provision for income
taxes, in each case, for the Performance Period divided by (B) the excess of (i)
the average of the Company’s total asset balance for each fiscal quarter in the
Performance Period minus (ii) the average of the Company’s cash and cash
equivalents balance for each fiscal quarter in the Performance Period minus
(iii) the average of the Company’s current liabilities balance (less any
interest bearing amounts included in such balance) for each fiscal quarter in
the Performance Period. For the avoidance of doubt, if the Company’s effective
tax rate is 40.1%, it shall be expressed as 0.401 in the calculation above.

 

“Total Sales” shall mean sales as determined in accordance with U.S. generally
accepted accounting principles and set forth on the statement of income (or
similar financial statement) for the Performance Period.

 

SECTION 3. Participants. Executives entitled to participate in the Program shall
be selected by the Committee, or such executive officers to whom the Committee
has delegated its authority in accordance with Section 9, in its sole discretion
(each, a “Participant”).

 

SECTION 4. Awards. Not later than 90 days after the commencement of the
Performance Period, each Participant in the Program shall receive an Award
Notice. Such Award Notice shall specify the maximum Award payable to each
Participant (the “Maximum Amount”) upon achievement of the Performance Goal (as
defined in Section 5(a)). Awards are intended to constitute Cash Incentive
Awards as defined in the Plan and to qualify as “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code.

 

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SECTION 5. Payment of Awards. (a) Performance Goal. Payments to each Participant
in respect of such Participant’s Award shall be contingent on the achievement of
positive Operating Income for the Performance Period (the “Performance Goal”).
In the event the Performance Goal is not attained, Participants shall not be
entitled to receive any payments in respect of any Awards.

 

(b) Committee Certification. Subject to section 5(e), following the completion
of the Performance Period, the Committee shall certify in writing whether, and
to what extent, the Performance Goal has been achieved. The Committee shall then
determine the applicable Award payment for each Participant.

 

(c) Negative Discretion. In determining the applicable Award payment the
Committee may, in its sole discretion, reduce or eliminate the Maximum Amount
(if any) based on the facts and circumstances as determined by the Committee in
its sole discretion, including as set forth on each Participant’s Award Notice,
even if the Performance Goal has been attained.

 

(d) Payment Date. As soon as reasonably practicable following the Committee’s
determination of the applicable Award payment, but in no event later than April
10 of the year following the end of the Performance Period, the Company shall
pay the applicable Award payment (if any) in cash to each Participant.

 

(e) Condition to Receipt of Payment. A Participant must be employed by the
Company or one of its Affiliates at the end of the Performance Period to be
eligible for payment in respect of any Award. For the avoidance of doubt, if the
Participant’s employment terminates prior to the end of the Performance Period,
the Participant shall forfeit any rights to payment in respect of such Award.

 

SECTION 6. Recoupment. The Company has adopted The Fresh Market, Inc.’s
Compensation Recoupment Policy (the “Recoupment Policy”) that requires certain
persons identified therein to repay the Company excess performance-based
compensation as and to the extent set forth therein. Awards are subject to the
terms and conditions of the Recoupment Policy. The Committee will review the
Compensation Recoupment Policy to ensure compliance with any rules or
regulations adopted by the Securities and Exchange Commission or The Nasdaq
Stock Market, LLC to implement Section 10D of the Securities Exchange Act, as
required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Any
changes required to be made to the Recoupment Policy to comply with such rules
or regulations shall apply to annual Performance Compensation Awards under the
Plan.

 

SECTION 7. No Limit on Other Compensation Arrangements. Nothing contained in the
Program shall prevent the Company or any Affiliate from adopting or continuing
in effect other compensation arrangements, which may, but need not, provide for
the grant of cash incentive awards, and such arrangements may be either
generally applicable or applicable only in specific cases.

 

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SECTION 8. The Plan. This Program is adopted pursuant to the Plan, all the terms
of which, other than those set forth in Section 8 of the Plan, are hereby
incorporated in this Program. In the event of any conflict between the terms of
the Plan, on the one hand, and the terms of this Program, on the other hand, the
terms of the Plan shall govern.

 

SECTION 9. Administration. The Program shall be administered by the Committee.
The Committee may delegate, on such terms and conditions as it determines in its
discretion, administration of the Program to one or more executive officers of
the Company, except that the Committee may not delegate such authority as it
relates to any executive officer. The Committee may amend, withdraw or terminate
the Program at any time and may make such determinations with respect to awards
under the Program as it deems necessary and/or appropriate in its reasonable
judgment, subject to the terms and conditions of the Plan and applicable law.

 

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Schedule A

THE FRESH MARKET, INC.

2012 ANNUAL INCENTIVE COMPENSATION PROGRAM FOR SELECT EXECUTIVES

 

FORM OF AWARD NOTICE

 

Granted To: [l]

 

Performance Period: Fiscal year 2012

 

Maximum Amount: [l]% of Operating Income

 

Non-Binding Target Bonus: [l]% of base salary

 

Negative Discretion Performance Factors: Levels of achievement of goals with
respect to Operating Income and Total Sales are described in the tables below.
In determining the percentage of the Non-Binding Target Bonus that may be
payable, Operating Income shall be weighted [l]% and Total Sales shall be
weighted [l]% (the amount of such percentage, the “Non-Binding Bonus Amount”).
Performance achievement levels between those specified below shall result in the
payment of an Award amount determined by linear interpolation. The Non-Binding
Bonus Amount shall be reduced by [l]% in the event Return on Invested Capital is
less than [l]%.

 

 

 

 

 

 

Operating Income

 

 

Total Sales

 

 

Percentage of Applicable Portion of Non-Binding Target Bonus

>Maximum >$ >$ [l]% Maximum $ $ [l]% Target $ $ [l]% Threshold $ $ [l]% <
Threshold <$ <$ 0%                

 

Awards granted pursuant to this Award Notice are subject to the terms of The
Fresh Market, Inc. 2012 Annual Incentive Compensation Program, The Fresh Market,
Inc. 2010 Omnibus Incentive Compensation Plan and The Fresh Market, Inc.
Compensation Recoupment Policy.

 

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