Earlier this week, grocery chain Supervalu (SVU), whose brands include Albertson’s, Jewel Osco, and Shaw’s announced that it was replacing its once highly touted CEO, Craig R. Herkert with the company’s current chairman, Wayne C. Sales.

Herkert joined Supervalu in mid-2009 after spending nine years climbing the ladder at Wal-Mart (WMT). In the press release announcing his appointment, Supervalu’s outgoing CEO, Jeff Noddler said that Herkert was

But as Supervalu’s chart shows, things didn’t quite work out that way. Shares have fallen a whopping 85% on Herkert’s watch. (This WSJ story provides some good context). Despite this, the company’s board approved a $75K raise for Herkert in mid-June, bringing his base salary to $925K.

That may seem like a lot of money, especially to unhappy shareholders. But it’s a super-bargain compared to what the company is offering Sales. In an 8-K filed yesterday, the company spelled out what amounts to an all-you-can eat buffet for Sales:

• $1. 5 million base salary
• $1.2 million signing bonus
• Guaranteed minimum bonus of $1 million for the first year
• 447,155 options
• An additional $1.1 million in stock next July
• 447,155 in performance shares
• An additional $1.1 million in performance shares next July

Trust us, this is a very unusual package. That a company whose stock is trading at under $3 a share is offering it in an industry notorious for razor-thin margins, makes it all the more so. According to the proxy, Sales was the former CEO of Canadian Tire Corp. He joined Supervalu’s board in 2006 and became non-executive chairman in 2010. He owned around 118,000 shares of Supervalu stock, according to the June proxy.

One might thing (ok, at least hope) that the challenge of turning a company around might be compensation enough, especially given the heaping pile of options and performance shares thrown at Sales. That the board had to also throw a $1.5 million salary and $1.2 million signing bonus his way seems almost unconscionable.

Image source: Smorgasbord via Shutterstock

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