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JACKSONVILLE, Fla. - Winn-Dixie Stores, Inc. placed a big vote of confidence in its president and c.e.o. Peter Lynch yesterday, in the form of a motion in Bankruptcy Court for a new employment contract for Lynch that establishes a $1.25 million base salary, plus multiple bonuses.
Winn-Dixie said the contract is the result of trilateral negotiations between and among the company, its creditors' committee, and Lynch.
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Under the contract, Lynch would continue to serve as Winn-Dixie's president and c.e.o., and would also serve as the chairman of the board. Lynch would report directly to the board.
The term of Lynch's employment under the contract would begin on the company's restructuring date, which hasn't been officially set; and would continue until June 30, 2010, unless terminated earlier.
Lynch would receive an annual base salary of $1.25 million, plus full benefits. For each fiscal year ending during the term of employment, he would be eligible to receive a bonus equal to 100 percent of his base salary if the company meets its target performance objectives.
Winn-Dixie would pay him an additional bonus for fiscal year 2007 in an amount equal to $2 million, less all applicable withholding taxes, promptly following the restructuring date.
Lynch would be granted an option to purchase a number of shares of Winn-Dixie's common stock representing 1.25 percent of the common stock of Winn-Dixie actually outstanding on the "initial distribution date," or at the time when distributions are made to unsecured creditors. Additionally, The executive would be granted restricted stock units representing 0.75 percent of Winn-Dixie's common stock actually outstanding on the initial distribution date. He would also be eligible to participate in long-term incentive grants.
Another bonus: He would be permitted to charter, on a reasonable basis, private planes for both professional and personal travel (with income imputed to the extent required under applicable tax rules or regulations).
The contract states that Winn-Dixie would be entitled to terminate Lynch's employment with or without cause at any time. Lynch would have the right to resign for "good reason," as defined in the contract. In either of these instances, Winn-Dixie would pay Lynch the accrued obligations in an aggregate amount equal to the sum of his base salary at the rate then in effect and his target bonus multiplied by the full and fractional years of the "restricted period," as defined in the contract.
Commenting on Lynch's performance thus far, Winn-Dixie said, "The events of the last year and a half have validated [our] belief in Lynch's leadership. Throughout the course of these cases, Lynch has led [our] reorganization efforts and is, more than any other person, responsible for the remarkable progress that [we've] made toward achieving a successful turnaround of the businesses and emergence from Chapter 11."
The company continued, "Lynch's continued service will be equally pivotal once [we] emerge from Chapter 11. The execution of the employment contract is necessary to ensure that service."
Because the contract is a transaction in the ordinary course of business, the company said it does not expect to have to receive court approval to execute it.
Winn-Dixie, which filed for reorganization under Chapter 11 bankruptcy protection in February 2005, has said it hopes to emerge from bankruptcy by mid-November.