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.


 






    	1



    	 



    
 


 


“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.


 






    	2



    	 



    



 


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.


 






    	3



    	 



    



 


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.


 



    	4



    	 



    

 


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.


 






    	5