Looking for savings at SUPERVALU …

October 21, 2010

SUPERVALU Inc. (SVU) announced this summer that its chief financial officer of 13 years, Pamela Knous, would step down to pursue other career interests. With a name like SUPERVALU — and with a chain named Shop ‘N’ Save, in addition to the more prosaic names like Albertson’s and Jewel-Osco — you’d expect a bargain send-off.

Or maybe not, judging from the terms of the Severance Agreement and General Release that the company filed with yesterday’s 10-Q. Knous stands to collect more than $1.4 million in cash, and a bunch of other emoluments. That includes $995,197.32 (or 1.5 times her salary), another $433,438.29 calculated based on past bonuses and her current target bonus, and unspecified amounts for long-term incentives payments and a pro-rated portion of her current target bonus.

She’ll also be reimbursed for 18 months of health-care coverage, and receive outplacements services of up to $25,000. And all that’s despite the fact that the plan is structured to make payouts for employees who are “involuntarily terminated without Cause,” rather than those leaving “to pursue other career interests,” as the company’s press release described Knous’s departure.

Of course, Knous has been on the job more than a decade, and when it comes to her stock options, she’s being treated as if she’s retiring: They vest immediately, and she can exercise them under the original timeline. That’s not such a big boost, as it turns out: As of the company’s February 28 proxy filing, Knous had options on 396,312 shares, mostly expiring between 2013 and 2015; but all of them are underwater at the current share price of a little over $10.

SUPERVALU will continue to provide Knous and her family or heirs more value, however: Despite her departure from the company, her heirs will receive a “post-retirement death benefit” of another $928,851. And, of course, she’ll collect her pension (worth $845,290 as of the last proxy) and $43,636 in deferred compensation and earnings.

All in all, a nice deal for Knous. For shareholders struggling with a slumping stock price, we’re not sure it’s much solace.

Image source: SUPERVALU website

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