New Supervalu CEO Duncan to Make $1.5M Salary, Bonuses

New Supervalu CEO Duncan to Make $1.5M Salary, Bonuses

Sam Duncan will receive a $1.5 million annual salary, a $500,000 signing bonus, and be eligible for performance-based bonuses of up to $3 million annually.

Sam Duncan—who will take the reins at Eden Prairie-based Supervalu, Inc., when the company closes on a deal to sell off several of its brands—will net a $500,000 signing bonus and a $1.5 million annual salary, according to regulatory documents.

Supervalu said last week that it has struck a deal to sell five of its largest retail grocery brands to an investor group led by Cerberus Capital Management L.P. in a deal valued at $3.3 billion. Cerberus also plans to buy up to a 30 percent stake in the rest of the company.

Duncan, who has more than four decades of retail experience and most recently served as chairman, president, and CEO of Naperville, Illinois-based OfficeMax, will replace Wayne Sales as president and CEO of Supervalu following the close of the transaction. Supervalu said it expects the deal, which is subject to closing conditions, to close during the first quarter of this year.

Duncan, who will also serve on Supervalu’s board, will be eligible to earn performance-based cash bonuses each year, worth up to twice the amount of his $1.5 million salary, according to a filing with the U.S. Securities and Exchange Commission (SEC). In addition, he’ll be granted stock options to acquire 1.5 million shares of Supervalu’s common stock with an exercise price equal to the closing price of the stock on the grant date. (Supervalu’s stock was trading at $3.49 mid Tuesday morning.)

In addition, Duncan will be reimbursed for “all reasonable travel and other business” stemming from his leadership role—and he’ll be entitled to “reasonable personal use” of the company’s aircraft, according to the SEC filing.

Duncan’s pay package, although not his salary, is smaller than that of outgoing CEO Wayne Sales, who replaced ousted leader Craig Herkert last July. Sales also received an annual salary of $1.5 million, but he was given a signing bonus of $1.26 million, to be paid in two installments—one when he joined the company and the other scheduled for July 29 of this year. (A Supervalu spokesman said he was unable to confirm whether Sales will still receive the second installment, given his planned departure.) In addition, Sales was entitled to a cash bonus of at least $1 million and given the opportunity to earn a bonus of up to $3 million during the fiscal year that ends in February.

Duncan, however, will lead a much smaller Supervalu. Under the terms of the deal announced last week, Supervalu will sell 877 stores under the Albertsons, Acme, Jewel-Osco, Shaw’s, and Star Market banners, as well as the associated Osco and Sav-on in-store pharmacies.

Supervalu will retain its wholesale business; its discount brand Save-A-Lot, which has about 1,300 stores; and its regional grocery brands Farm Fresh, Shoppers, Shop ‘n Save, Hornbacher’s, and Cub Foods, which serves the Twin Cities area. Following the sale, Supervalu expects to generate about $17 billion in annual revenue—roughly half of the $36.1 billion it reported in its most recently completed fiscal year.

Prior to leading OfficeMax, Duncan was president and CEO of ShopKo Stores. Earlier in his career, he held several positions in the grocery industry, including roles at Albertsons; Fred Meyer, a division of Kroger; and Ralph’s Supermarket, a large food retailer in California.

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