Exhibit 10.31


[Company
Letterhead]


 


 


 


 


July
19, 2005


 


 


Mr. Robert George


10 Saddleridge Road


Holliston, MA 01746


 


Dear Robert:


 


                Pursuant to our various conversations, I am
confirming the offer by Family Dollar Stores, Inc. (the “Company”) for your
employment in the position of Executive Vice President and Chief Merchandising
Officer. The terms of your employment are set forth below, subject to your
acceptance and the approval of the Compensation Committee of the Company’s
Board of Directors.


 


Starting
Date of Employment


You will begin your
employment with the Company on a full-time basis, not later than August 15,
2005.


 


Annual
Compensation


Your starting annual base
salary will be $350,000 and may be increased from time to time in the
Compensation Committee’s discretion. In addition, you will qualify for a bonus
for the Company’s 2006 fiscal year under our Target Bonus Program with a “target”
payment of 50% of your salary, subject to all terms of said Plan and the
Company’s achievement of its earnings goals; provided that payment of 50% of
your target bonus for the 2006 fiscal year will be made without regard to the
Company’s achievement of its target bonus earning goals.


 


Stock
Options


Within the first week of
your employment you will receive a stock option grant for the purchase of
75,000 shares of the Company’s common stock pursuant to the Company’s 1989
Non-Qualified Stock Option Plan.  In
addition, you will receive a stock option grant for 70,000 shares of the
Company’s common stock as a part of the Company’s stock option grant program on
or about September of 2005 and will be eligible for additional stock option
grants in future years.  As discussed,
the Company is currently considering adding a stock performance plan to its
long-term incentive (“LTI”) plan.  If
this program is adopted as part of our LTI program, you may receive a
combination of performance





















shares and stock options
which will have a combined value at least as great as the 70,000 options noted
above.  Appropriate valuations with
regard to these grants will be made by HayGroup Consulting.


 


Cash
Payments


In addition to the other
payments set forth herein, the Company will pay you the sum of $50,000 within
thirty days of the commencement of your employment and, an additional $50,000
on the first anniversary of the date of your initial employment with the
Company, whether or not you are still employed by the Company on that date.


 


Severance
Payments 


If your employment with the
Company is terminated by the Company for any reason, other than for Cause,
within the initial two years of such employment, the Company will provide
severance benefits to you equal to your then current annual base salary for a
period of one hundred twenty (120) days. 
Severance payments shall be made in four (4) equal monthly payments and
shall be reduced or eliminated by any salary, bonus or other compensation paid,
payable or earned by you during such period from any subsequent employment. You
will use your best efforts to promptly obtain suitable employment during such severance
period.  For purposes of this provision, “Cause”
shall mean: (i) your willful failure to comply with reasonable written
directives of the Board or executive management of the Company; (ii) chronic
absenteeism not resulting from an illness or medical condition that prevents
you from performing your duties for 90 days or longer; or (iii) willful
misconduct or gross negligence.


 


Indemnification


The Company will reimburse
you for reasonable attorneys’ fees and related expenses you may incur in
connection with any action, suit or proceeding to which you may be made a party
by reason of restrictive covenants you made with your prior employer as to
which you have advised the Company.


 


Other
Benefits


You will be eligible to
receive four weeks (20 days) of vacation per year consistent with the Company’s
vacation policies.  In addition, you will
receive various benefits offered to other officers of the Company in accordance
with the terms of the Company’s benefit plans, effective thirty (30) days after
your actual start date.  A summary of
those benefits has previously been provided to you. Please note that you will
qualify for our supplemental health care program (MERP) which pays 70% of
health care costs in addition to those covered under basic health insurance
programs. We will also provide relocation and moving benefits as previously
provided to you. Of course, you will receive all of the tools useful to perform
your duties at Family Dollar such as a cell phone, computer and “Blackberry”
device.


 





















 


Robert, I believe the
foregoing fully sets forth our understandings regarding your employment.  If you concur, please sign one copy of this
letter and return it to me.  We are
excited that you are joining the Family Dollar team and look forward to seeing
you soon.


 




	
  Sincerely,

  
	
   

  
	
   

  
	
  /s/ Howard R. Levine

  
	
  Howard R. Levine

  
	
  Chairman of the Board and

  
	
  Chief Executive Officer

  






 


 


Accepted by:


 


	
  /s/ Robert George

  
	
  Robert George

  
	
  Date:

  	
  7/19/05