8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

______________________________________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 

______________________________________________

Date of Report (Date of Earliest Event Reported): March 21, 2012

THE FRESH MARKET, INC. 

(Exact name of Registrant as specified in its Charter)

Delaware
(State or other Jurisdiction of
Incorporation or Organization) 1-34940  (Commission File Number)   56-1311233
(I.R.S. Employer Identification No.)

628 Green Valley Road, Suite 500, Greensboro, NC 27408 

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code): (336) 272-1338

Not Applicable 

(Former Name or Former Address, If Changed Since Last Report)

______________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Item 5.02(e): On March 21, 2012, the Board of Directors of The Fresh Market, Inc. (the “Company”) adopted The Fresh Market, Inc. 2012 Annual Incentive Compensation Program for Select Executives (the “2012 Program”) in which the Company’s principal executive officer, principal financial officer, and other named executive officers participate, and which is briefly described below.

The 2012 Program awards cash bonuses to participants based upon the Company’s achievement of specified performance goals in fiscal year 2012. Under the 2012 Program, a maximum amount is established for each named executive officer equal to a percentage of the Company’s operating income, and the Compensation Committee of the Board of Directors of the Company is granted discretion to reduce such amounts based on the facts and circumstances as determined by the Compensation Committee, including the same financial metrics used in determining bonuses for other employees of the Company. Such metrics include the Company’s operating income on an excluded items basis, the Company’s total sales, and the Company’s achievement of a threshold level of return on invested capital.

Awards under the 2012 Program are subject to the Company’s Compensation Recoupment Policy, described in Item 8.01 of this Form 8-K, and the Company’s 2010 Omnibus Incentive Compensation Plan.

The foregoing summary is qualified in its entirety by reference to the 2012 Program, which is attached as Exhibit 10.1 hereto and incorporated herein by reference.

Item 5.08 Shareholder Director Nominations

At its meeting on March 21, 2012, the Board of Directors of the Company approved June 6, 2012 as the date for the Company's 2012 Annual Meeting of Stockholders (the “Annual Meeting”). April 13, 2012 is the record date for stockholders entitled to notice of and to vote at the Annual Meeting. Because the Annual Meeting will be held more than 30 days from the date of the Company's 2011 Annual Meeting of Stockholders, the deadline for submitting any qualified stockholder proposal under the rules of the Securities and Exchange Commission is a reasonable time before the Company begins to print and send its proxy materials. Because the Company currently intends to print and send its proxy materials beginning on or about April 30, 2012, such nominations or proposals are now due to the Company no later than April 10, 2012.

Item 8.01 Other Events

On March 21, 2012, effective immediately, the Board of Directors of the Company adopted (i) amended Corporate Governance Guidelines; (ii) an amended Audit Committee Charter; (iii) an amended Compensation Committee Charter; (iv) an amended Nominating and Corporate Governance Committee Charter; (v) The Fresh Market, Inc. Compensation Recoupment Policy (the “Recoupment Policy”); and (vi) Common Stock Ownership and Retention Guidelines for Directors and Executive Officers of The Fresh Market, Inc. (the “Stock Retention Guidelines”), each of which is briefly described below.

The amended Corporate Governance Guidelines remove references to the Company’s prior status as a controlled company as defined by the rules of The NASDAQ Stock Market LLC, and establish that no director or nominee, other than the Company’s founder, may stand for re-election or election to the Board of Directors after his or her seventieth (70^th) birthday, as well as other non-material changes.

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The amended Audit Committee Charter, Compensation Committee Charter and Nominating and Corporate Governance Committee Charter remove references to the Company’s prior status as a controlled company as defined by the rules of The NASDAQ Stock Market LLC, as well as other non-material changes.

The Recoupment Policy requires that, in the event of a restatement of the Company’s financial statements due to material non-compliance with U.S. securities laws, rules or regulations: (i) all employees holding the title of Vice President or above will reimburse the Company for all performance-based compensation received and all gains realized on the exercise, settlement or sale of performance-based equity awards by such employees; and (ii) all outstanding performance-based equity awards (whether vested or unvested) held by such employees will be canceled. The foregoing applies, however, only to the extent that such compensation or awards exceed those that would have been received or vested if the restated financial results had been used to determine whether such awards should have been received or vested. The members of the Board of Directors who have been determined by the Board of Directors to be independent under the rules of The NASDAQ Stock Market LLC shall be responsible for enforcing the Recoupment Policy and may, to the extent not prohibited by applicable law, exercise discretion as to the enforcement of such Policy.

The Stock Retention Guidelines provide that non-employee directors are expected, over time, to acquire and hold shares of the Company’s common stock equal in value to at least five times the annual cash retainer for non-employee directors, and executive officers of the Company are expected, over time, to acquire and hold shares of the Company’s common stock equal in value to at least a multiple of their base salaries, as follows:

Chief Executive Officer	6X base salary
Chief Operating Officer	3X base salary
Chief Financial Officer	3X base salary
SVPs	2X base salary

Directors and executive officers are not required to purchase stock to meet this requirement; however, until they satisfy the ownership requirement, each director or executive officer will be required to hold a specified percentage of the shares of stock received (as applicable) upon lapse of restrictions upon restricted stock, settlement of restricted stock units, vesting of performance shares, and exercise of stock options (net of any shares utilized to pay for the exercise price of the option and tax withholding). The specified percentage described above is: (i) for directors, 100%; (ii) for the Chief Executive Officer, 75%; and (iii) for all other executive officers, 50%.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished herewith:

Exhibit No.	Description
10.1	The Fresh Market, Inc. 2012 Annual Incentive Compensation Program for Select Executives

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE FRESH MARKET, INC.
Dated:  March 27, 2012	By:	/s/ Lisa K. Klinger
		Name	Lisa K. Klinger
		Title:	Executive Vice President and CFO

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EXHIBIT INDEX

Exhibit No.	Description
10.1	The Fresh Market, Inc. 2012 Annual Incentive Compensation Program for Select Executives

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EX-10.1

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.

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“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.

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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.

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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.

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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.

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