Supervalu announced late last month that Robert Bly has joined the company as president of its 56 unit Shoppers Food & Pharmacy division based in Bowie, MD. Bly began his new job on August 22 and will report to Chuck Elias, senior VP of retail operations. Bly replaces Tim Lowe, who recently accepted a new leadership role in Supervalu’s merchandising organization. Lowe served as president of the Baltimore-Washington based regional chain since October 2010 when Dick Bergman retired.
“Bob is a welcome addition to the Shoppers and Supervalu team. His knowledge of grocery operations and improving company performance through proven business acumen will lead Shoppers to improving the bottom line while maintaining our customer experience,” Elias said.
Bly, 49, who most recently served as a vice president of Kmart and Sears divisions for the Sears Holdings Co., has significant experience in his career turning around underperforming retail operations and helping companies streamline operational costs while ensuring that team members are engaged in the business, Supervalu said in making the announcement. During his recent experience at Kmart and Sears, he worked on efforts to improve sales and profits while increasing productivity and efficiency. Prior to Sears, Bly held positions with Road Ranger, a convenience store chain, and spent 22 years with Meijer Inc., a grocery and general merchandise retailer where he held executive and store level positions and implemented strategic plans to improve sales, inventory management and operational execution.
“Bob’s experience in transforming companies makes him an excellent addition to our leadership team. We look forward to his contributions to Shoppers as we pursue our sales, profitability and growth objectives,” Elias said.
Bly’s appointment was one of the first made under the regime of new Supervalu’s chief executive Wayne Sales.
The Supervalu board named Sales CEO on July 30 following the firing of Craig Herkert (whose three year run as chief executive could only be described as horrific).
The former Canadian Tire Corp. CEO will face many daunting challenges as he attempts to repair and/or sell off pieces of what once was a powerful wholesale and retail organization. Sales’ link to Supervalu dates back to 2006 when he joined the company’s board of directors and for the past two years he has served as Supervalu’s non-executive chairman.
And the primary reason theEden Prairie,MNcompany has performed so dismally since it acquired five key operating divisions from Albertson in 2006 is that it continues to fail in almost every aspect of its core supermarket business: pricing, store conditions, morale of the associates and real estate.
Many trade observers believe that Sales’ primary objective will be to sell Supervalu, and the company’s announcement on July 11 that it had hired financial advisors Goldman Sachs and Greenhill & Co. to review Supervalu’s assets gave analysts more reason to believe that Supervalu is in full asset disposition mode.
“All I needed to hear is that Goldman Sachs is spearheading the review and my first reaction was that everything is for sale,” said a Wall Street analyst who has tracked Supervalu for several years. “That doesn’t mean that everything is readily saleable or ultimately will be sold, because there are a lot of diverse parts to a company that has been backsliding for a long time, creating some dysfunctional pieces. But I believe the intent of Sales and the board is to sell the company, piece-by-piece if necessary.”
Sales will be given at least two years to improve Supervalu’s performance (or sell the firm) and he will be handsomely compensated for assuming the helm. According to Supervalu’s 8-K SEC filing on August 1, Sales’ new agreement runs through July 28, 2014 and he will be paid an annual salary of $1.5 million will receive a signing bonus of $1.26 million payable in two equal installments, one within 14 days of signing the agreement and the second on July 29, 2013. Sales will also be entitled to receive a cash bonus for the portion of Supervalu’s fiscal year ending February 23, 2013 equal to no less than $1 million, the opportunity to earn a bonus for Supervalu’s fiscal year ending February 22, 2014 with a minimum of zero, a target of $1.5 million and a maximum of $3 million, and the opportunity to earn a bonus for the period commencing on February 23, 2014 and ending at the end of the term with a minimum of zero, a target of $500,000 and a maximum of $1 million, each based on the achievement of performance goals approved by the leadership development and compensation committee of the board.
Additionally, on August 2, 2012, Supervalu’s board granted Sales 447,155 stock units under the company’s 2012 stock plan. Subject to his continued employment as chief executive officer of Supervalu, Sales will be entitled to receive an additional grant of stock units on July 29, 2013 equal to $1.1 million divided by the closing price of Supervalu’s common stock on the New York Stock Exchange on the date of grant. The stock units will convert into shares of common stock on a one-for-one basis at the earliest of: the second anniversary of the date of grant; Sales’ “separation from service”; the fifth business day after his death or “disability”; or a “change in control” (as defined in the plan).
On that same date (August 2, 2012), the board also granted Sales performance shares under the plan with a target number of shares of 447,155. Subject to his continued employment as CEO of Supervalu, Sales will be entitled to receive a grant of performance shares on July 29, 2013, with a target number of shares equal to $1.1 million divided by the closing price of Supervalu’s common stock on the New York Stock Exchange on the date of grant. The performance shares will convert into shares of common stock at the earliest of: the second anniversary of the date of grant; the fifth business day after Sales’ death or “disability”; or a change in control. The number of shares will equal: zero, if the average closing price of Supervalu ‘s common stock for the 20-trading day period prior to the measurement date is 50 percent or less than the closing price on the date of grant; 100 percent of the target number, if the average closing price on the measurement date is equal to the closing price on the date of grant; 200 percent of the target number, if the average closing price on the measurement date is 200 percent of the closing price on the date of grant; and 300 percent of the target number, if the average closing price on the measurement date is 300 percent or more of the closing price on the date of grant, with a straight-line interpolation of the number of shares where the average closing price on the measurement date does not equal 50 percent, 100 percent, 200 percent or 300 percent. The measurement date is the earliest of: the first anniversary of the applicable grant date; the date of a change in control; or the date of Sales’ separation from service due to a termination by Supervalu without cause. In the event that Sales’ employment is terminated by Supervalu without cause, he will be entitled to receive: the unpaid portion of his signing bonus; the portion of his annual salary that would have been paid from his termination date through the end of the term; the minimum cash bonus for Supervalu’s fiscal year ending February 23, 2013, the target bonus for Supervalu ‘s fiscal year ending February 22, 2014 and for the period from February 23, 2014 through the end of the term (to the extent Sales’ termination occurs prior to the end of such periods) and the actual bonus earned for Supervalu ‘s fiscal year ending February 23, 2014 (if Sales’ termination occurs on or after February 23, 2014); and the conversion of any performance shares which have been granted and for which the measurement date has not occurred into the greater of the number of shares of common stock determined using the termination date as the measurement date or the target number of shares. In addition, if Sales’ employment is terminated by Supervalu without cause prior to July 29, 2013, Sales will be additionally entitled to receive a lump sum payment of $2.2 million in lieu of the stock unit and performance share grants scheduled to be made to Sales on July 29, 2013. And, if Sales’ employment ends on account of his death or “disability,” any performance shares which have been granted and as to which the measurement date has not occurred will be converted into the target number of shares of common stock. Sales will not be entitled to receive these payments if his employment ends for any other reason during the term.
The agreement provides that Supervalu will pay or reimburse Sales for travel expenses, up to one round-trip visit per week, fromFloridaorMichigantoMinnesotato facilitate the performance of his duties. Sales will be eligible to participate in Supervalu’s executive nonqualified deferred compensation plan and to receive the standard annual physical for executives.
Sales is not eligible to participate in Supervalu’s multi-year performance awards for the fiscal 2012-2014 performance period or the fiscal 2013-2015 performance period. Sales will not be entitled to participate in Supervalu’s executive and officer severance pay plan and will not be provided with a change of control severance agreement. While Sales is serving as president and CEO, he will not receive any new grant of compensation solely for his service as a member and chairman of the board. The amount of the annual deferred stock retainer awarded to Sales as non-executive chairman of the board on July 17, 2012 was increased by $150,000 in recognition of his responsibilities for overseeing Supervalu’s review of strategic alternatives.
A prospectus of Supervalu properties along with other real estate related data is expected to be available to interested parties early this month.
Then the real action should begin.
