FORM DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
240.14a-12
American Eagle Outfitters, Inc.
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Check box if any part of the fee is offset as provided by
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and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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(2)
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Form, Schedule or Registration Statement No.:
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AMERICAN
EAGLE OUTFITTERS, INC.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
to be held
June 16, 2009
and
PROXY STATEMENT
TABLE OF CONTENTS
American Eagle Outfitters, Inc.
77 Hot Metal Street
Pittsburgh, Pennsylvania 15203
412-432-3300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 2009
May 4,
2009
To the Stockholders of
American Eagle Outfitters, Inc.:
The 2009 Annual Meeting of Stockholders of American Eagle
Outfitters, Inc., a Delaware corporation, will be held at the
Companys offices located at 77 Hot Metal Street,
Pittsburgh, Pennsylvania, on Tuesday, June 16, 2009, at
11:00 a.m., local time, for the following purposes:
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1.
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To elect three Class II directors to serve until the 2012
Annual Meeting of Stockholders, or until their successors are
duly elected and qualified;
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2.
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To amend and restate the Companys 2005 Stock Award and
Incentive Plan to increase the number of shares available for
issuance under the Plan and to make certain other changes to the
Plan;
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3.
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To ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending January 30, 2010; and
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4.
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To transact such other business as may properly come before the
meeting or any adjournment thereof.
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We have elected to furnish proxy materials and our Fiscal 2008
Annual Report on
Form 10-K
(Annual Report) to many of our stockholders over the
Internet pursuant to Securities and Exchange Commission rules.
On or about May 4, 2009, we mailed to most of our
stockholders a Notice of Internet Availability of Proxy
Materials (the Notice) containing instructions on
how to access our Proxy Statement and Annual Report and how to
vote online. All other stockholders received a copy of the Proxy
Statement and Annual Report by mail. The Notice also contains
instructions on how you can elect to receive a printed copy of
the Proxy Statement and Annual Report, if you only received a
Notice by mail.
Whether or not you plan to attend the meeting, please vote your
shares promptly as outlined in the following Proxy Statement. If
you attend the meeting, you may vote in person and your proxy
will not be used.
By Order of the Board of Directors
Neil Bulman, Jr.
Secretary
AMERICAN
EAGLE OUTFITTERS, INC.
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 16, 2009
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of American
Eagle Outfitters, Inc., a Delaware corporation, for use at the
Annual Meeting of Stockholders to be held on June 16, 2009,
at 11:00 a.m., local time, at the Companys offices
located at 77 Hot Metal Street, Pittsburgh, Pennsylvania
and at any adjournment thereof. It is being mailed to the
stockholders on or about May 4, 2009. (We,
our, and the Company refer to American
Eagle Outfitters, Inc.)
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
Who is
entitled to vote?
Stockholders of record at the close of business on
April 20, 2009, the record date for the Annual Meeting, are
entitled to vote at the Annual Meeting. As of the record date,
there were 206,530,578 shares of Common Stock, with
$.01 par value, outstanding and entitled to vote. Each
share that you own entitles you to one vote.
What am I
voting on?
There are three matters scheduled for a vote at the Annual
Meeting:
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1.
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Election of three Class II directors to serve until the
2012 Annual Meeting of Stockholders, or until their successors
are duly elected and qualified;
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2.
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Amendment and restatement of the Companys 2005 Stock Award
and Incentive Plan to increase the number of shares available
for issuance under the Plan and to make certain other changes to
the Plan; and
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3.
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Ratification of the appointment of Ernst & Young LLP
as our independent registered public accounting firm for the
fiscal year ending January 30, 2010.
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How does
the Board recommend I vote on these proposals?
The Board of Directors recommends a vote FOR each of the
nominees for director listed in this Proxy Statement, FOR the
amendment and restatement of the Companys 2005 Stock Award
and Incentive Plan, and FOR the ratification of the appointment
of Ernst & Young LLP as our independent registered
public accounting firm for the fiscal year ending
January 30, 2010.
Why did I
receive a Notice of Internet Availability of Proxy
Materials?
We have elected to provide access to our proxy materials and
Fiscal 2008 Annual Report on
Form 10-K
(Annual Report) on the Internet, instead of mailing
the full set of printed proxy materials, in accordance with
Securities and Exchange Commission (SEC) rules for
the electronic distribution of proxy materials. On or about
May 4, 2009, we mailed to most of our stockholders a Notice
of Internet Availability of Proxy Materials (the
Notice) containing instructions on how to access our
Proxy Statement and Annual Report and how to vote online. If you
received a Notice by mail, you will not receive a printed copy
of the proxy materials in the mail unless you request it.
Instead, the Notice instructs you on how to access and review
all of the important information contained in the Proxy
Statement and Annual Report. The Notice also instructs you on
how you may submit your proxy over the Internet. If you received
a Notice by mail and would like to
receive a printed copy of our proxy materials, you should follow
the instructions for requesting such materials included in the
Notice.
How do I
vote my shares?
If your shares are registered directly in your name (you are a
registered stockholder), you received a proxy card
along with a printed copy of the proxy materials. You may
complete and sign the enclosed proxy card and return it in the
pre-paid envelope. Alternatively, you may attend and vote in
person at the Annual Meeting.
If you are a beneficial owner of shares registered in the name
of your broker, bank or other agent (in street
name), you should receive either a Notice or a voting
instruction form along with a Proxy Statement. You should follow
the instructions on the Notice or the voting instruction form in
order to ensure that your vote is counted. To vote in person at
the Annual Meeting, you must obtain a legal proxy from the
broker, bank or agent that holds your shares to present at the
meeting.
Can I
change or revoke my proxy?
Yes. If you are a registered stockholder, you may revoke your
proxy at any time before it is voted by delivering written
notice to the Company (Attention: Neil Bulman, Jr.,
Secretary), by submitting a properly executed proxy bearing a
later date or by attending the meeting and voting in person.
If your shares are held in street name, you may revoke your
proxy by submitting new voting instructions to your broker or,
if you have obtained a legal proxy from your broker, by
attending the Annual Meeting and voting in person.
What
constitutes a quorum?
A quorum of stockholders is necessary to transact business at
the Annual Meeting. A quorum will be present if a majority of
the outstanding shares of the Companys common stock, as of
the close of business on the record date, are represented by
stockholders present at the meeting or by proxy. At the close of
business on the record date, there were 206,530,578 shares
of Common Stock outstanding and entitled to vote. Therefore,
103,265,290 shares will be required to be represented by
stockholders present at the meeting or by proxy in order to
establish a quorum.
Abstentions and broker non-votes will be counted towards the
quorum. Broker non-votes occur when brokers, who hold their
customers shares in street name, sign and submit proxies
for such shares and vote such shares on some matters but not
others. This would occur when brokers have not received any
instructions from their customers, in which case the brokers, as
the holders of record, are permitted to vote on
routine matters, which include the election of
directors and the ratification of the appointment of an
independent registered public accounting firm, but not on
non-routine matters.
What vote
is required to approve each proposal?
Once a quorum is established, directors in an uncontested
election are elected by a majority of the votes cast in respect
to that directors election. In the event of a contested
election of directors, directors shall be elected by the vote of
a plurality of the votes represented by the shares of Common
Stock present at the meeting in person or by proxy. Properly
executed proxies marked Abstain and broker non-votes
are not voted with respect to the nominee or nominees indicated,
although they are counted for purposes of determining if a
quorum is present.
Amendment and restatement of the Companys 2005 Stock Award
and Incentive Plan requires the affirmative vote of the majority
of the shares of Common Stock present at the meeting, in person
or by proxy.
2
Appointment of Ernst & Young LLP as our independent
registered public accounting firm is ratified by the affirmative
vote of a majority of the shares of Common Stock present at the
meeting, in person or by proxy.
For any other item that is properly submitted to stockholders
for approval at the Annual Meeting, an affirmative vote of a
majority of the shares of Common Stock voting on the matter is
required for approval. For purposes of determining the number of
shares of Common Stock voting on a matter, abstentions are
counted and will have the effect of a negative vote; broker
non-votes are not counted and have no effect on the vote.
Who bears
the costs of this solicitation?
We bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of stock.
Our representatives may solicit proxies by mail, telegram,
telephone or personal interview. To solicit proxies, we request
the assistance of banks, brokerage houses and other custodians,
and, upon request, reimburse such organizations for their
reasonable expenses in forwarding soliciting materials to
beneficial owners and in obtaining authorization for the
execution of proxies.
Can I
nominate someone for election to the Board of
Directors?
Yes, for election at next years Annual Meeting. You may do
so by delivering to the Corporate Secretary, no earlier than
March 20, 2010 and no later than April 19, 2010, a
notice stating: (i) the name and address of the stockholder
who intends to make the nomination; (ii) the name, age,
business address and, if known, residence address of each
nominee; (iii) the principal occupation or employment of
each nominee; (iv) the number of shares of stock of the
Company that are beneficially owned by each nominee and the
nominating stockholder; and (v) the other information
specified in Article Tenth (b) of our Certificate of
Incorporation. Our Certificate of Incorporation is available on
our website at www.ae.com under the links About AE, AE
Investment Info, Corporate Governance, Other Governance
Documents.
Additionally, you may recommend a nominee for consideration by
our Nominating and Corporate Governance Committee (the
Nominating Committee). Recommendations should be
submitted to our Nominating Committee in accordance with the
procedures described below under the Nominating
Committee section.
May I
submit a stockholder proposal for next years Annual
Meeting?
Yes. Stockholder proposals to be included in the proxy statement
for the 2010 Annual Meeting of Stockholders must be received by
the Company (addressed to the attention of the Secretary) by
January 4, 2010. We may omit from the proxy statement and
form of proxy any proposals that are not received by the
Secretary by January 4, 2010. Any stockholder proposal
submitted outside the processes of
Rule 14a-8
under the Securities Exchange Act of 1934 for presentation at
our 2010 Annual Meeting will be considered untimely for purposes
of
Rule 14a-4
and 14a-5
under the Securities Exchange Act of 1934 if notice thereof is
received before March 20, 2010 or after April 19,
2010. To be submitted at the meeting, any such proposal must be
a proper subject for stockholder action under the laws of the
State of Delaware, and must otherwise conform to applicable
requirements of the proxy rules of the SEC.
3
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table shows, as of April 1, 2009, certain
information with regard to the beneficial ownership of our
Common Stock by: (i) each person known by the Company to
own beneficially more than 5% of the outstanding shares of
Common Stock; (ii) each of the Companys directors;
(iii) each executive officer named in the summary
compensation table below; and (iv) all directors and
executive officers as a group.
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Shares Beneficially Owned
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Common
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Right to
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Percent
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Stock (1)
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Acquire (2)
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Total
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(3)
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5% Beneficial Owners
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Geraldine Schottenstein (4)
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15,768,682
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15,768,682
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7.6
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%
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Jay L. Schottenstein (5)
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13,826,255
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1,560,172
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15,386,427
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7.4
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%
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Directors and Executive Officers
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Jon P. Diamond (6)
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4,767,022
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4,767,022
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2.3
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%
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Joan Holstein Hilson
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37,175
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137,590
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174,765
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*
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Michael G. Jesselson
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101,013
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2,813
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103,826
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*
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Alan T. Kane
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14,946
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14,946
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*
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Roger S. Markfield
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40,055
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2,300,609
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2,340,664
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1.1
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%
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Susan P. McGalla (7)
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417
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77,385
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77,802
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*
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Cary D. McMillan
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8,789
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10,743
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19,532
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*
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LeAnn Nealz
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54,528
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262,585
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317,113
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James V. ODonnell
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1,108,731
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2,312,127
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3,420,858
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1.6
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%
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Janice E. Page
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21,482
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21,644
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43,126
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J. Thomas Presby
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11,650
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6,030
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17,680
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Kathy J. Savitt (8)
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19,994
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19,994
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Jay L. Schottenstein (5)
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13,826,255
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1,560,172
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15,386,427
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7.4
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%
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Gerald E. Wedren
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27,188
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25,313
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52,501
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*
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All directors and executive officers as a group
(15 in group)
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20,108,023
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7,063,233
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27,171,256
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12.7
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%
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* |
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Represents less than 1% of the Companys shares of Common
Stock. |
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Unless otherwise indicated, each of the stockholders has sole
voting power and power to sell with respect to the shares of
Common Stock beneficially owned. |
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Includes shares for options exercisable within 60 days of
April 1, 2009 as well as total share units. |
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Percent is based upon the 206,449,603 shares outstanding at
April 1, 2009, 7,044,504 shares which the directors
and executive officers have the right to acquire upon options
exercisable within 60 days of April 1, 2009 and
18,729 share units. |
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Ms. Schottenstein has sole voting power and power to sell
as trustee of a trust that owns 4,649,148 shares, shares
voting power and has sole power to sell as trustee of trusts
that own 10,874,128 shares, and shares voting power and the
power to sell as trustee of a trust that owns
245,406 shares, and in each case all of the shares are
included under her name in the table. The business address for
Ms. Schottenstein is 1800 Moler Road, Columbus, OH
43207-1698. |
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Mr. Schottenstein has shared voting power as trustee or
trust advisor of trusts that own 5,764,903 shares, which
includes 245,406 shares of which Mr. Schottenstein has
shared power to sell. Additionally, Mr. Schottenstein
serves as Chairman of SEI, Inc. and has or shares voting power
for 69.9% of SEI, Inc. Accordingly, he may be deemed to be the
beneficial owner of the 7,979,994 shares of the Company
held by SEI, Inc., and they are included under his name in the
table. The business address for Mr. Schottenstein is 1800
Moler Road, Columbus, OH
43207-1698. |
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(6) |
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Mr. Diamond is deemed to be the beneficial owner of
1,076,718 shares of which Susan Diamond, his spouse, has
sole voting power and power to sell as well as a trust that owns
6,300 shares of which Ms. Diamond has sole voting
power and power to sell as trustee and 3,596,328 shares of
which Ms. Diamond has shared voting power as trust advisor. |
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(7) |
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Ms. McGalla, former President and Chief Merchandising
Officer, ended her employment with the Company on
January 31, 2009 but she is deemed to be a named executive
officer for Fiscal 2008 because of the level of her total
compensation and because she served as an executive officer
during the year. |
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(8) |
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Ms. Savitt, former Executive Vice President and Chief
Marketing Officer, ended her employment with the Company on
January 30, 2009 but she is deemed to be a named executive
officer for Fiscal 2008 because of the level of her total
compensation and because she served as an executive officer
during the year. Shares were calculated based on the last
Form 4 filed by Ms. Savitt on February 3, 2009
and the Companys stock records. No further ownership
information was available to the Company after Ms. Savitt
ceased being a Section 16 reporting person. |
5
PROPOSAL ONE:
ELECTION OF DIRECTORS
General
The Board of Directors is divided into three classes. Each class
of directors is elected for a three-year term. On the
recommendation of the Nominating Committee, the Board of
Directors fixed the size of the board at ten directors and
nominated three candidates, all of whom are currently directors
of the Company, to be elected as Class II directors at the
Annual Meeting. Class II directors serve for three-year
terms ending at the 2012 annual meeting, or when their
successors are duly elected and qualified. The terms of the
remaining Class I and Class III directors expire at
the annual meetings to be held in 2011 and 2010, respectively.
Any director over age 72 shall not be eligible for
re-election.
Your proxy, if executed and not revoked, will be voted as
specified in the proxy, or if no instructions are given will be
voted FOR each of the nominees listed below. If any nominee
should become unavailable to serve, the Board of Directors may
decrease the number of directors pursuant to the Bylaws or may
designate a substitute nominee, in which event the proxy will be
voted FOR such substitute nominee. The Board has no reason to
believe that any nominee will be unavailable or, if elected,
unable to serve.
Certain information regarding each nominee and incumbent
director is set forth below as of April 1, 2009, including
age, principal occupation, a brief description of business
experience during at least the last five years, and other
directorships.
Information Regarding Nominees for Class II Directors
with Terms Expiring in 2012
Janice E. Page, age 60, has served as a Director of the
Company since June 2004. Prior to her retirement in 1997,
Ms. Page spent 27 years in retailing holding numerous
merchandising, marketing and operating positions with Sears
Roebuck & Company, including Group Vice President from
1992 to 1997. Ms. Page is currently a private investor. She
also serves on the Board of Directors of R.G. Barry Corporation.
J. Thomas Presby, age 69, has been a Director of the
Company since December 2005. Mr. Presby has used his
business experience and professional qualifications to forge a
second career of essentially full-time board service since he
retired in 2002 as a partner in Deloitte Touche Tohmatsu. At
Deloitte he held numerous positions in the United States and
abroad, including the posts of Deputy Chairman and Chief
Operating Officer. He also serves as a Director and Audit
Committee Chair of First Solar, Inc., Invesco Ltd.,
Tiffany & Co. and World Fuel Services, Inc. As
Mr. Presby has no significant business activities other
than board service, he is available full time to fulfill his
board responsibilities. He is a certified public accountant and
a holder of the NACD Certificate of Director Education. He holds
a BSEE from Rutgers University and a MBA from Carnegie Mellon
University. The Board has determined that Mr. Presbys
simultaneous service on five audit committees will not impair
his ability to effectively serve on the Companys Audit
Committee.
Gerald E. Wedren, age 72, has been a Director of the
Company since November 1997. Mr. Wedren has served as
President of Craig Capital Co., a Washington D.C. based merger
and acquisition firm since 1973. Mr. Wedren was President
of G.E.W. Inc., an owner of fast food restaurants, from 1981 to
1988. Mr. Wedren also serves on the Board of Directors of
Encompass Group, Inc. and Westaff, Inc.
The Board of Directors recommends that the stockholders vote
FOR each of the nominees for Director.
Information
Regarding Class I Directors with Terms Expiring in
2011
Michael G. Jesselson, age 57, has served as a Director of
the Company since November 1997. Mr. Jesselson is President
of Jesselson Capital Corporation, a private investment
corporation headquartered in New York City. He also serves on
the Board of Directors of a number of nonprofit institutions.
Roger S. Markfield, age 67, has served as Vice Chairman and
Executive Creative Director of the Company since February 2009
and as a Director since March 1999. From February 2007 to
February 2009, Mr. Markfield served as a non-executive
officer employee of the Company. Prior to February 2007, he
served the Company as Vice-Chairman since November 2003, as
President from February 1995 to February 2006, and as Co-Chief
Executive Officer of the Company from December 2002 to November
2003. Mr. Markfield
6
also served the Company and its predecessors as Chief
Merchandising Officer from February 1995 to December 2002 and as
Executive Vice President of Merchandising from May 1993 to
February 1995. Prior to joining the Company, he served as
Executive Vice President-General Merchandising Manager for the
Limited Division of The Limited, Incorporated, a large national
specialty retailer, from May 1992 to April 1993. From 1969 to
1976 and from 1979 to 1992, he was employed by R.H.
Macy & Co., a national retailer operating department
and specialty stores, as a Buyer in Boys Wear rising to
the office of President of Corporate Buying-Mens. From
1976 to 1979, Mr. Markfield served as Senior Vice President
of Merchandising and Marketing for the Gap Stores, Inc. He also
serves on the Board of Directors of DSW, Inc.
Jay L. Schottenstein, age 54, has served as Chairman of the
Company and its predecessors since March 1992. He served the
Company as Chief Executive Officer from March 1992 until
December 2002 and prior to that time, he served as a Vice
President and Director of the Companys predecessors since
1980. He has also served as Chairman of the Board and Chief
Executive Officer of Schottenstein Stores Corporation
(SSC), a private company owned by the
Schottenstein-Deshe-Diamond families, since March 1992 and as
President since 2001. Prior thereto, Mr. Schottenstein
served as Vice Chairman of SSC from 1986 to 1992. He has been a
Director of SSC since 1982. He has also served as Chairman since
March 1992 and as Chief Executive Officer from July 1999 through
December 2000 and from April 1991 through July 1997 of Retail
Ventures, Inc. (RVI), a company traded on the New
York Stock Exchange. Mr. Schottenstein also served as Chief
Executive Officer from March 2005 to April 2009 and as Chairman
of the Board since March 2005 of DSW, Inc., a company traded on
the New York Stock Exchange. He has also served as an
officer and director of various other corporations owned or
controlled by members of his family since 1976. Jay L.
Schottenstein is the
brother-in-law
of Jon P. Diamond.
Information
Regarding Class III Directors with Terms Expiring in
2010
Jon P. Diamond, age 51, has been a Director of the Company
since November 1997. Since 1996, Mr. Diamond has served as
President and Chief Operating Officer of Safe Auto Insurance
Company, a property and casualty insurance company and as
Executive Vice President and Chief Operating Officer from 1993
to 1996. Mr. Diamond served as Vice President of SSC, from
March 1987 to March 1993 and served in various management
positions with SSC since 1983. He also serves on the Board of
Directors of RVI.
Alan T. Kane, age 67, has been a Director of the Company
since January 2007. Mr. Kane served as Dean of the School
of Business and Technology at the Fashion Institute of
Technology from 2005 to 2008. Mr. Kane also served as
Professor of Retailing at the Columbia University Graduate
School of Business from 1997 to 2006. Before joining the faculty
at Columbia, Mr. Kane spent 28 years in the retailing
industry with Federated Department Stores, The May Company,
Grossmans Inc. and a privately held retailer. He also
serves on the Board of Directors of Circuit City Stores, Inc.
Cary D. McMillan, age 51, has been a Director of the
Company since June 2007. He has served as Chief Executive
Officer of True Partners Consulting, LLC, a professional
services firm providing tax and other financial services, since
December 2005. From October 2001 to April 2004, he was the Chief
Executive Officer of Sara Lee Branded Apparel. Mr. McMillan
served as Executive Vice President and on the Board of Directors
of Sara Lee Corporation, a branded consumer packaged goods
company, from January 2000 to April 2004. From November 1999 to
December 2001, he served as Chief Financial and Administrative
Officer of Sara Lee Corporation. He also serves on the Board of
Directors of McDonalds Corporation and Hewitt Associates,
Inc.
James V. ODonnell, age 68, has served as Chief
Executive Officer of the Company since November 2003 and prior
thereto as Co-Chief Executive Officer of the Company since
December 2002 and as Chief Operating Officer for the Company
since December 2000. Mr. ODonnell became a member of
the Board in December 2000. Prior to joining the Company, since
December 1999, he served as President and Chief Operating
Officer of Lyte, Inc., a retail technology services company.
From 1997 to 2000, Mr. ODonnell served as Director of
Merchant Banking for Colmen Capital Advisors, Inc., and as a
Project Consultant for the C. Everett Koop Foundation. From 1992
to 1997, Mr. ODonnell was an owner and Chief
Executive Officer of Computer Aided Systems, Inc. From 1980 to
1992, Mr. ODonnell held various executive positions
at The Gap Inc., and from 1987 to 1992, he was a member of the
Board of Directors and was Executive Vice President. From 1989
to 1992, he served as Chief Operating Officer of The Gap Inc.
Mr. ODonnell is also a member of the Advisory Board
to the Villanova School of Nursing.
7
INFORMATION
CONCERNING THE BOARD OF DIRECTORS
During the fiscal year ended January 31, 2009 (Fiscal
2008), the Board of Directors met nine times. During
Fiscal 2008, all members of the Board of Directors attended 75%
or more of the total number of meetings of the Board and of the
committees of the Board on which they served. It is the
expectation of the Company that all incumbent directors attend
the Annual Meeting of Stockholders. All incumbent members of the
Board of Directors were present at our 2008 Annual Meeting
except for Mr. Kane.
Director
Compensation
Directors who are employees of the Company do not receive
additional compensation for serving as directors. The table
below sets forth the compensation for directors who are not
employees of the Company as well as Mr. Schottenstein, who
is considered a part-time employee of the Company. In addition,
the Company pays attorneys fees related to the preparation and
filing of director stock ownership forms with the SEC. The
Company also reimburses travel expenses to attend Board and
committee meetings and director continuing education expenses.
Fiscal
2008 Director Compensation (1)
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Fees Earned or
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Stock
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Paid in Cash
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Awards
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Total
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Name
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($)
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($)
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($)
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(2)
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(3)
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Jon P. Diamond
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$
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55,000
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$
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105,001
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$
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160,001
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Michael G. Jesselson (4)
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$
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138,685
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$
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105,001
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$
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243,686
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Alan T. Kane
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$
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95,000
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$
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104,946
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$
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199,946
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Cary D. McMillan
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$
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102,500
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$
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105,001
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$
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207,501
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Janice E. Page
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$
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127,000
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$
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105,001
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$
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232,001
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J. Thomas Presby
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$
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124,750
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$
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105,001
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$
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229,751
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Jay L. Schottenstein (5)
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$
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275,000
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$
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199,992
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$
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474,992
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Gerald E. Wedren
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$
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122,500
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$
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105,001
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$
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227,501
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(1) |
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Fiscal 2008 refers to the fifty-two week period ended
January 31, 2009. |
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(2) |
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Amounts represent fees paid during Fiscal 2008. Directors who
are not employees of the Company are paid a retainer of $55,000
per year, payable in installments on the first business day of
each calendar quarter. Non-employee directors who serve on a
Board committee receive a retainer of $20,000 per year for each
committee, paid in installments on the first business day of
each calendar quarter. Non-employee directors who serve as
committee chairs receive an additional retainer, also paid in
installments on the first day of each calendar quarter, as
follows: $25,000 per year for the Audit Committee effective
January 1, 2009. (Until January 2009, the Audit Committee
chair received $18,000 per year); $15,000 per year for the
Compensation Committee; and $12,000 per year for the Nominating
Committee. Effective January 1, 2009, non-employee
directors also receive a per meeting fee of $1,500 for an
in-person meeting or $1,000 for a telephonic meeting for serving
on a special committee of the Board and the non-employee
director chair of a special committee receives a per meeting fee
of $3,000 for an in-person meeting or $2,000 for a telephonic
meeting. The Lead Independent Director also receives an
additional retainer of $20,000 per year paid in installments on
the first day of each calendar quarter. |
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(3) |
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Until January 2009, under the Companys 2005 Stock Award
and Incentive Plan, directors who are not employees of the
Company received an automatic stock grant of a number of shares
equal in value to $25,000 based on the closing sale price of the
Companys stock on the first day of each calendar quarter.
Effective January 1, 2009, the value of shares granted to
non-employee directors was increased to $30,000. |
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Directors may defer receipt of up to 100% of the shares payable
under the quarterly stock grant in the form of a share unit
account. From February 2008 to December 2008, Mr. McMillan
elected to defer 50% of his |
8
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quarterly share retainer in accordance with the Director
Deferred Compensation Agreement (the Agreement)
until the date of a distribution event as described in the
Agreement. Beginning January 2009, Mr. McMillan elected to
increase his deferral amount to 100% of his quarterly share
retainer. Additionally, from February 2008 to December 2008,
Mr. Presby elected to defer 100% of his quarterly share
retainer in accordance with the Agreement until the date of a
distribution event as described in the Agreement. Beginning
January 2009, Mr. Presby elected to cancel his deferral of
the quarterly share retainer. |
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(4) |
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Mr. Jesselsons Fiscal 2008 compensation includes
retroactive payments for his service as Lead Independent
Director during the year ended February 2, 2008. |
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(5) |
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In connection with his services as our Chairman,
Mr. Schottenstein receives compensation of $275,000 per
year. Under the Companys 2005 Stock Award and Incentive
Plan, Mr. Schottenstein receives an automatic quarterly
stock grant of a number of shares equal in value to $50,000
based on the closing sale price of the Companys stock on
the first day of each calendar quarter. |
Until June 2005, non-employee directors received an automatic
quarterly grant of options to purchase shares of common stock.
At January 31, 2009, the aggregate number of option awards
outstanding was: Mr. Jesselson2,813 shares;
Ms. Page19,688 shares; and
Mr. Wedren25,313 shares. Mr. Schottenstein
also received various stock option awards prior to June 2005, as
determined by the Compensation Committee, and awards for
1,560,172 shares remain outstanding.
In June 2005, the Board of Directors determined that each
director should own common stock of the Company and established
the following ownership guidelines. Within three years of
joining the Board or the implementation of the ownership
guidelines, each director must hold stock of the Company worth
at least four times the current annual cash base retainer
amount, or currently $220,000. The following forms of equity
interests in the Company count towards the stock ownership
requirement: shares purchased on the open market; shares
obtained through stock option exercise; shares held as deferred
stock units; shares held in benefit plans; shares held in trust
for the economic benefit of the director or spouse or dependent
children of the director; and shares owned jointly or separately
by the spouse or dependent children of the director. Stock
options do not count towards the stock ownership requirement.
Board
Committees
The Board has a standing Audit Committee, a standing
Compensation Committee and a standing Nominating Committee.
These committees are governed by written charters, which were
approved by the Board of Directors and are available on the
Companys website at www.ae.com under the links About
AE, AE Investment Info, Corporate Governance.
The Board has determined that the following directors who are
members of each of the standing committees are independent as
defined in the applicable rules of the New York Stock Exchange:
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Michael G. Jesselson
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Cary D. McMillan
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J. Thomas Presby
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Alan T. Kane
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Janice E. Page
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Gerald E. Wedren
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In particular, the Board has determined that none of these
directors have relationships that would cause them not to be
independent under the specific criteria of Section 303A.02
of the NYSE Listed Company Manual.
In making these determinations, the Board took into account all
factors and circumstances that it considered relevant, including
the following:
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Whether any family member of the director is or has been in any
of the past three years an employee, director, or nominee for
director of the Company;
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Whether the director or any family member of the director is a
partner, controlling shareholder, director, trustee, or
executive officer of any organization (including charitable or
non-profit organizations) to which the Company made, or from
which the Company received, payments (other than those arising
solely from investments in the Companys securities) that
exceed 2% of the recipients gross revenues or
$1 million, whichever is more, in the current year or any
of the past three fiscal years;
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9
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Whether the director is or has been in the past three years,
employed by a company that has or had, during the same period,
an executive officer of the Company on its compensation
committee;
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Whether the director is or has been in the past three years, a
partner of, employee of, or affiliated with, an accounting firm;
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Whether the director or any of the directors family
members accepted any payment from the Company or any of its
Subsidiaries or affiliates in excess of $10,000 during the
current fiscal year or any of the past three fiscal years, other
than compensation for board or board committee service, payments
arising solely from investment in the Companys securities,
compensation paid to a family member who is a non-executive
employee of the Company or one of its Subsidiaries, or benefits
under a tax-qualified retirement plan; and
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Whether there are any relationships which exist between the
director, the directors family member(s), or an entity
controlled by the director or the directors family
member(s) and the Companys other directors or officers
(other than in their capacity as a director or officer).
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The following sets forth Committee memberships as of the date of
this proxy statement:
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Audit
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Compensation
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Nominating
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Director
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Committee
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Committee
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Committee
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Michael G. Jesselson (1)
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X
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X
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Alan T. Kane
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X
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X
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Cary D. McMillan
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X
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XX
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Janice E. Page
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X
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X
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XX
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J. Thomas Presby
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XX
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X
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X
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Gerald E. Wedren
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X
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X
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X
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X = Member
XX = Committee Chair
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(1) |
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Mr. Jesselson also serves as the Companys Lead
Independent Director |
Audit
Committee
The primary function of the Audit Committee is to assist the
Board in monitoring (1) the integrity of the financial
statements of the Company, (2) the qualifications,
performance and independence of the independent registered
public accounting firm, (3) the performance of the internal
auditors, and (4) the Companys compliance with
regulatory and legal requirements. The Audit Committee also
reviews and approves the terms of any new related party
agreements. The Audit Committee met fifteen times in Fiscal 2008.
The Board has determined that Mr. Presby and
Mr. McMillan qualify as audit committee financial
experts as defined by the SEC rules adopted pursuant to
the Sarbanes-Oxley Act of 2002.
Compensation
Committee
The function of the Compensation Committee is to aid the Board
in meeting its responsibilities with regard to oversight and
determination of executive compensation. The Compensation
Committee reviews and approves salaries and other compensation
of executive officers, administers the Companys 1994 Stock
Option Plan, 1999 Stock Incentive Plan and 2005 Stock Award and
Incentive Plan and administers the Companys Management
Incentive Plan. The Compensation Committee met nine times in
Fiscal 2008.
Nominating
Committee
The function of the Nominating Committee is to aid the Board in
meeting its responsibilities with regard to the organization and
operation of the Board, selection of nominees for election to
the Board and other corporate governance matters. The Nominating
Committee met three times in Fiscal 2008. The Nominating
10
Committee developed and reviews each year the Companys
Corporate Governance Guidelines, which were adopted by the Board
and are available on our website at www.ae.com under the links
About AE, AE Investment Info, Corporate Governance.
The Nominating Committee periodically reviews the appropriate
size of the Board, whether any vacancies are expected due to
retirement or otherwise, and the need for particular expertise
on the Board. In evaluating and determining whether to recommend
a candidate to the Board, the Committee reviews the appropriate
skills and characteristics required of Board members in the
context of the background of existing members and in light of
the perceived needs for the future development of the
Companys business, including issues of diversity and
experience in different substantive areas such as retail
operations, marketing, technology, distribution, real estate and
finance. Candidates may come to the attention of the Committee
from a variety of sources, including current Board members,
stockholders, and management. All candidates are reviewed in the
same manner regardless of the source of the recommendation. In
the past, the Nominating Committee has retained the services of
a search firm to assist in identifying and evaluating qualified
director candidates.
The Committee will consider the recommendations of stockholders
regarding potential director candidates. In order for
stockholder recommendations regarding possible candidates for
director to be considered by the Nominating Committee:
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such recommendations must be submitted to the Nominating
Committee in care of: Corporate Secretary, American Eagle
Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, PA 15203, in
writing at least 120 days prior to the date of the next
scheduled Annual Meeting;
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the nominating stockholder must meet the eligibility
requirements to submit a valid stockholder proposal under
Rule 14a-8
of the Securities Exchange Act of 1934; and
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the stockholder must describe the qualifications, attributes,
skills or other qualities of the recommended director candidate.
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Meetings
of Non-Management and Independent Directors
The Boards policy is to have the non-management directors
meet separately in executive session in connection with each
regularly scheduled board meeting (at least four times
annually). Additionally, the independent directors meet at least
annually. During each meeting of the non-management or
independent directors, the Lead Independent Director will lead
the discussion.
Compensation
Committee Interlocks and Insider Participation
During Fiscal 2008, the members of the Compensation Committee
included Messrs. McMillan (Chairman), Kane, Presby, Wedren
and Ms. Page. None of the current or former members of the
Compensation Committee are present or former officers of the
Company or its subsidiaries or have affiliates that are parties
to agreements with the Company.
Communications
with the Board
The Board provides a process for all interested parties to send
communications to the non-management members of the Board. That
process is described on the Companys website at www.ae.com
under the links About AE, AE Investment Info, Corporate
Governance, Board of Directors.
Corporate
Governance Information
The Companys corporate governance materials, including our
corporate governance guidelines, the charters of our audit,
compensation and nominating committees and our Code of Ethics
that applies to all of our directors, officers (including the
Principal Executive Officer, Principal Financial Officer,
Principal Accounting Officer and Controller) and employees may
be found on the Companys website at www.ae.com under the
links About AE, AE Investment Info, Corporate
Governance. Any amendments or waivers to our code of
ethics will also be available on our website. A copy of the
corporate governance materials is also available in print to any
stockholder who requests it.
11
EXECUTIVE
OFFICERS
The following persons are executive officers of the Company. For
information regarding officers who are also directors, see
Election of Directors. The officers of the Company
are elected annually by the Board and serve at the pleasure of
the Board.
Thomas A. DiDonato, age 50, has served the Company as
Executive Vice President of Human Resources since July 2005.
Prior to joining the Company, Mr. DiDonato served the H.J.
Heinz Company as Chief People Officer from September 2004 to
July 2005, as Vice President of Global Leadership and
Development for the Heinz World Headquarters from December 2003
to September 2004 and prior thereto as Vice President of Human
Resources for Heinz North America since July 2001. From 1997 to
2001, Mr. DiDonato served as Senior Vice President of Human
Resources for Merck-Medco Managed Care LLC. Prior to that time,
Mr. DiDonato held various Vice President level positions
with Pepsico from 1990 to 1997 and with Philip Morris
Companies, Inc. from 1982 to 1990.
Joan Holstein Hilson, age 49, has served the Company as
Executive Vice President, Chief Financial Officer, since April
2009 and as Principal Financial and Accounting Officer since
April 2006. Prior thereto, Ms. Hilson served as Executive
Vice President, Chief Financial Officer, AE Brand, since April
2006 and as Senior Vice President, Finance from September 2005
to April 2006. Prior to joining the Company, Ms. Hilson
held various positions at the Victorias Secret Stores
division of Limited Brands, Inc., including Executive Vice
President and Chief Financial Officer from July 2002 to August
2005, Vice President of Planning and Allocation from April 1997
to June 2002, Vice President of Finance from February 1996 to
March 1997 and Vice President of Financial Planning from August
1995 to January 1996. Prior to that time, Ms. Hilson held
various other management level positions with Limited Brands,
Inc. from April 1993 to July 1995. Ms. Hilson held various
finance management positions at Sterling Jewelers, Inc. from
August 1985 to January 1993 and prior thereto she worked as a
Certified Public Accountant at the accounting firm
Coopers & Lybrand.
Joseph E. Kerin, age 63, has served the Company as
Executive Vice President, Supply Chain and Real Estate since
April 2009. Prior thereto, he served the Company and its
predecessors as Executive Vice President of Store Operations
since November 2007 and from January 1991 to March 2006. From
March 2006 to November 2007, he served as Executive Vice
President of Store Operations and Real Estate. Prior to that
time, he held various positions with the Companys
predecessors, including Senior Vice President-Store Operations
from October 1987 to October 1988, Vice President-General
Manager Store Operations from February 1979 to October 1987,
General Manager Store Operations from November 1975 to February
1979, and Regional/District Manager of the Silvermans
Division from October 1972 to November 1975.
LeAnn Nealz, age 52, has served the Company as Executive
Vice President and Chief Design Officer since May 2004. Prior to
joining the Company, Ms. Nealz served as Senior Vice
President-Design of GapKids and babyGap from March 2002 to April
2004. From May 2000 to March 2002, she was a consultant for
Esprit. From June 1997 to April 2000, Ms. Nealz was Vice
President-Creative Director of Nine West Group Inc. and
President, creator and owner of Le Havlin Piro. From 1996 to
September 1997 she was one of the creators of Theory. From 1993
to 1996 Ms. Nealz acted as the Senior Vice President of
Design and Marketing for Pepe Jeans. From 1989 to 1993
Ms. Nealz served as both mens and womens Senior
Design Director at Banana Republic. Prior to that time,
Ms. Nealz held several positions, including Design Director
of CK Jeans and Calvin Klein Sport as well as the Creative
Director for Guess Jeans.
Dennis R. Parodi, age 57, has served the Company as
Executive Vice President, Store Operations since April 2009.
Prior thereto, he served the Company as Executive Vice President
and Chief Operating Officer, New York Design Center, since
February 2006, as Senior Vice President of Real Estate and
Construction since May 2004 and as Vice President and Chief
Operating Officer, New York Design Center, since March 2003.
Prior to joining the Company, Mr. Parodi served as a
consultant for Whelans International Corporation from
January 2002 to March 2003. From February 1983 to December 2001,
Mr. Parodi held various positions with GAP, Inc., including
Executive Vice President-U.S. Stores & Global
Operations from 1998 to 2001, Senior Vice
President-Director
of Stores from 1993 to 1998, Vice President-Eastern Zone from
1988 to 1993 and Regional Manager from 1983 to 1988.
12
Michael R. Rempell, age 35, has served the Company as
Executive Vice President and Chief Operating Officer, New York
Design Center, since April 2009. Prior thereto, he served the
Company as Senior Vice President and Chief Supply Chain Officer
from May 2006 to April 2009, Senior Vice President of
Information Technology and Supply Chain from May 2003 to April
2006, Vice President of Supply Chain from April 2002 to May 2003
and Senior Director of AE Direct from February 2000 to April
2002. Prior to joining the Company, Mr. Rempell was an
associate with PricewaterhouseCoopers Consulting and Accenture.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys officers, directors or persons who
are beneficial owners of more than ten percent of the
Companys Common Stock (reporting persons) to
file reports of ownership and changes in ownership with the SEC.
Reporting persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms filed by
them. Based on its review of the copies of Section 16(a)
forms received by it, the Company believes that, during Fiscal
2008, with the exception of one late Form 4 filing for each
of Messrs. Schottenstein, Diamond, Jesselson, Kane,
McMillan, Presby and Wedren and Ms. Page, all reporting
persons complied with applicable filing requirements.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis describes the
compensation philosophy, objectives, policies and practices with
respect to our named executive officers (the NEOs).
For Fiscal 2008, our NEOs included our Chief Executive Officer,
President/Chief Merchandising Officer, Chief Design Officer,
Chief Marketing Officer, and Chief Financial Officer.
Performance-Results
For Fiscal 2008, NEO compensation was driven by the
Companys financial results, as measured by earnings before
interest, taxes, and depreciation and amortization
(EBITDA). Fiscal 2008 EBITDA incorporates
operational results including American Eagle, Inc., aerie,
Martin & Osa, and 77kids. As described herein, our
EBITDA growth was below threshold and did not meet target-level
performance. Accordingly, this resulted in no payout nor vesting
of performance-based compensation for the fiscal year. All
performance awards were based on pre-established goals and
discretion was not exercised in determining any NEO awards.
The NEOs resulting realized compensation based on Fiscal
2008 Company performance reflects the performance-oriented
nature of the plan. In a year with below threshold performance,
executives realized compensation was significantly lower
than grant date target value. Earn-outs under the annual
incentive bonus plan, the long-term incentive cash plan, and the
restricted stock program were all eliminated due to Company
performance. As a result, there was no realized
performance-based compensation for NEOs for Fiscal 2008.
Role of
Our Compensation Committee
Our Compensation Committee reviews and approves salaries and
other compensation of named executive officers, administers the
Companys 1994 Stock Option Plan, 1999 Stock Incentive Plan
and 2005 Stock Award and Incentive Plan and administers the
Companys Management Incentive Plan. The Committee also
reviews and approves, where applicable, the design of
compensation, severance, and perquisite programs.
Role of
Executive Officers in Compensation Decisions
Mr. ODonnell, our Chief Executive Officer, annually
reviews the performance of each NEO with the Compensation
Committee and makes recommendations with respect to each element
of executive compensation for each NEO, excluding himself. Based
in part on these recommendations and other
13
considerations discussed below, the Compensation Committee
approves, when appropriate, the annual compensation package of
our NEOs. Mr. ODonnell reviews and recommends changes
to the Company peer group, as deemed appropriate, for approval
by the Compensation Committee.
Variations
for NEOs with Employment Agreements
The Chief Executive Officer is employed pursuant to an
individual employment agreement and, prior to the termination of
her employment with the Company, so was the President/Chief
Merchandising Officer. Because these agreements were separately
negotiated with the Compensation Committee based on the
individual NEOs circumstances and the criticality of
retaining these key leaders, the value of some of the
compensation elements are above the range of our general plan
design. However, the primary compensation elements are the same
as those in our overall plan and align with our governing
philosophy and objectives regarding executive compensation.
Compensation
Program Objectives
The overall objective of our executive compensation program is
to attract highly skilled, performance-oriented executives and
to motivate them to achieve outstanding results through
appropriate means. We focus on the following core principles in
structuring an effective compensation program that meets our
stated objective:
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PerformanceWe endeavor to align executive
compensation with the achievement of operational and financial
results and increases in shareholder value. Our compensation
program includes significant performance based remuneration and
is designed for our executives to have a larger portion of their
total compensation at risk based on Company
performance than our peer companies. The mix of short/long-term
and cash/equity awards along with the performance
metrics/targets mitigates the possibility of management pursuing
overly risky business strategies in order to maximize payouts
under any plan component. We believe these features create
meaningful incentives for outstanding performance and are
effective retention tools. In addition, our program features a
substantial equity component in order to align executive
interests with the interests of our stockholders.
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CompetitivenessWe structure executive compensation
to be competitive relative to a group of retail peers. We target
total compensation at approximately the 75th percentile of
our peer group in recognition of our emphasis on performance
based compensation, the larger size of our Company relative to
the peer group as measured by revenue, the setting of
stretch growth and performance goals, and our
aggressive business strategy.
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AffordabilityWe design our compensation program to
limit fixed compensation expense and increase budget
predictability by emphasizing variable, performance based
compensation. In addition, we structure our incentive plans to
maximize financial efficiency by establishing programs that are
tax deductible and by making performance based payments only to
the extent that underlying performance supports the expense.
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SimplicityWe have endeavored to create a simple,
straight-forward compensation program; one that our associates
and stockholders can easily understand.
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Compensation
Program Elements
Our executive compensation program is designed to place a large
amount of pay at risk for all executives. Our philosophy serves
to cultivate a pay-for-performance environment. Our executive
compensation plan design has five key elements:
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Base Salary
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Annual Incentive Bonus
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Long-term Incentive Cash Plan (LTICP)
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Restricted Stock
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Non-Qualified Stock Options (NSOs)
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Three of the elements (Annual Incentive Bonus, LTICP, and
Restricted Stock) were entirely at risk based on
Company performance and were subject to forfeiture if the
Company did not achieve threshold performance goals. Company
performance below threshold levels results in forfeiture of all
elements of direct compensation other than base salary and NSOs.
At threshold performance and below, the NEOs total annual
compensation declines by an average of 62% relative to target
performance. Annual compensation at threshold levels and below
includes only base salary and the stock option component of the
long-term incentive opportunity, the latter of which provides
compensation only to the extent that vesting requirements are
satisfied and share price appreciates.
We strategically allocate compensation between short-term and
long-term components and between cash and equity in order to
maximize executive performance and retention. While we endeavor
to design compensation packages consistently for our executives,
long-term compensation and equity awards comprise an
increasingly larger proportion of total compensation as position
level increases. The portion of total pay attributable to
long-term incentive cash/equity compensation increases at
successively higher levels of management, which ensures that
executive compensation closely aligns with changes in
stockholder value and achievement of performance objectives and
that executives are held accountable for results relative to
position level.
The following components form the foundation of the executive
compensation program in place during Fiscal 2008. Beginning in
the second half of Fiscal 2008, the Companys executive
compensation management team partnered with our compensation
consultant to research and determine the need to make changes to
the existing program based on internal philosophy/objectives and
external market data/practice. As a result, after four years
with minimal change, changes were made to the program effective
for the fifty-two week period ending January 30, 2010
(Fiscal 2009). In short, our goal was to design a
new program that balanced the focus on both our short- and
long-term financial and strategic goals, while retaining the
performance-based nature of the program and the original program
objectives. Notwithstanding the changes, our executives will
continue to have a larger portion of their total compensation
at risk based on Company performance than our peer
companies. The plan components, mix and metrics continue to
minimize the possibility that the compensation system could
encourage management to pursue overly risky business strategies
to maximize compensation payouts. Full details of the changes
made will be described in the Fiscal 2009 Compensation
Discussion & Analysis.
Base
Salary
Base salary represents the annual salary paid to each executive.
The objective of base salary is to provide a baseline
compensation level that delivers current cash income to the NEOs
and reflects his or her job responsibilities, experience and
value to the Company. To aid in attracting and retaining high
quality executives, salaries for our NEOs are generally targeted
at the 75th percentile of our peer group to reflect the
Companys large size relative to the peer group as measured
by revenue, the aggressive nature of our overall business plan,
and the highly performance-based nature of the other elements of
the direct compensation program. We review base salaries in the
last quarter of the fiscal year and increases, where applicable,
are typically effective for the beginning of the new fiscal
year. Individual salaries range above or below the
75th percentile based on a variety of factors, including
position level, executive experience relative to industry peers,
individual performance, future potential, leadership qualities
and unique skill sets.
Annual
Incentive Bonus
We structure the Annual Incentive Bonus to encourage the
achievement of above market annual performance targets and to
recognize and reward short-term Company performance. The Annual
Incentive Bonus focuses the executive team on key annual
objectives and business drivers that support growth of Company
EBITDA, improvement in overall operations and increases in
stockholder value. We establish an
15
executives annual incentive bonus as a percentage of base
salary, with increases in target percentages directly related to
position level and individual performance. This approach places
a proportionately larger percentage of total annual pay at risk
for our executives relative to position level and ensures that
accountability is directly proportionate to each
executives role and responsibility. In Fiscal 2008, the
target award opportunity for our Chief Executive Officer was
equal to 125% of base salary and the target award opportunities
for our other NEOs ranged from 60% to 100% of base salary.
Annual incentive bonus payouts fluctuate based upon Company
EBITDA, with actual Annual Incentive Bonus payments ranging from
0% of the targeted percentage below threshold performance, to
50% of the targeted percentage at threshold performance, to 100%
of the targeted percentage at target performance, to 200% of the
targeted percentage if the Company achieves goals that are
substantially above our business plan for the fiscal year. Refer
to the Fiscal 2008 Performance Metrics section for a description
of the Fiscal 2008 Annual Incentive Bonus metrics. There were no
bonuses earned based on Fiscal 2008 actual EBITDA of
$411.9 million.
Long-term
Incentive Cash Plan
The LTICP is a performance based variable incentive plan that
supports both retention and performance motivation objectives.
The Company instituted the LTICP in Fiscal 2005 and makes LTICP
awards, if earned, to the NEOs and to certain other executives
who participate in the plan. Executives that do not participate
in the LTICP receive the same long-term incentive/equity
proportion of total compensation as similarly situated
executives participating in the LTICP; however, their total
long-term incentive/equity value is delivered entirely through
Restricted Stock and NSOs and their total equity includes a
relatively larger percentage of Restricted Stock and NSOs
than a LTICP participant. Target award opportunities under the
LTICP are equal to 50% of the participants Annual
Incentive Bonus target opportunity. LTICP awards are contingent
upon the achievement of pre-established annual EBITDA goals,
which are described below.
Like the Annual Incentive Bonus plan, LTICP awards are
contingent upon satisfaction of EBITDA targets. However, the
performance goals in the LTICP are set below the goals in the
Annual Incentive Bonus and Restricted Stock program, each of
which contains aggressive performance requirements. The more
modest goals in the LTICP support retention oriented objectives
and help to mitigate the potential volatility in compensation
opportunity that may result from the setting of aggressive
targets in the other variable compensation plans.
Actual LTICP awards range from zero for performance below the
threshold EBITDA goal, to 25% of the targeted percentage amount
at the threshold EBITDA goal, to 100% of the targeted percentage
amount at the target EBITDA goal, to 200% of the targeted
percentage amount if the Company achieves goals that are
substantially above our business plan. For Fiscal 2008, the
LTICP awards were not earned based on actual EBITDA of
$411.9 million. Each year, upon achievement of stated
goals, the Company defers LTICP awards (if any) into notional
accounts. For Fiscal 2008, the value of previously earned LTICP
notional accounts was based on a single diversified fund,
selected by the Company. After a three year waiting period from
a participants first award, the executive begins to
receive an annual payout of one-third of their existing account
balance. The payments are taxed at distribution to the
executive. The Company pays all account balances in full upon an
executives retirement.
During the fifty-two week period ended February 2, 2008
(Fiscal 2007), the Company and Compensation
Committee researched and approved plan design changes to the
LTICP as described in the Fiscal 2007 proxy. To mitigate the
possibility of senior executives entering into direct
competition with the Company and to protect the Companys
investment in human capital following termination of a
NEOs employment, these changes incorporated formal twelve
month non-compete and eighteen month non-solicitation
agreements. These agreements were executed in the spring of 2008
for certain executives who participate in this feature of the
plan, including certain NEOs (Chief Design Officer, Chief
Marketing Officer and Chief Financial Officer).
16
Equity
Awards
Equity compensation is designed to align executive compensation
with short-term and long-term Company performance. The Company
utilizes a combination of performance-based Restricted Stock
awards and time-based NSO grants to focus management on
corporate performance and sustainable earnings growth. The
overall plan design has a heavier emphasis on NSOs than on
Restricted Stock due to the growth positioning of the Company
and our commitment to increasing long-term stockholder value.
Total equity grant value pools are pre-determined based upon the
framework of the executive compensation plan design.
Restricted Stock: Restricted Stock awards represent
approximately 40% of the value of an executives overall
long-term incentive/equity, once the LTICP (if any) has been
calculated. This value may vary depending on position level and
eligibility for the LTICP. We determine the number of shares of
Restricted Stock based on the overall dollar value of the award,
adjusted for performance risk, divided by the closing price of
our common stock on the grant date. We adjust the overall dollar
value of the award for risk in order to take into account the
inherent volatility of the specialty retail industry and the
potential risk of forfeiture due to Company performance.
Restricted Stock grants feature one-year performance based
vesting. Restricted Stock vests upon achievement of
pre-established annual EBITDA goals, which are described below.
Vesting of Restricted Stock awards range from zero for
performance below the threshold EBITDA goal, to 50% of the
targeted amount at the threshold EBITDA goal, to 100% of the
targeted amount at the target EBITDA goal. If threshold
performance is not met, the award recipient forfeits all shares.
An award recipient cannot earn more than 100% of target, and
unlike the Annual Incentive Bonus and LTICP, above-target
performance does not result in receipt of additional shares of
Restricted Stock. Based on Fiscal 2008 EBITDA of
$411.9 million, 0% of the target restricted shares granted
during Fiscal 2008 were earned and all shares were forfeited.
The table below describes key features of our Restricted Stock
award program:
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Timing
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Grant Date/Grant Price
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Approval
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New Hires & Promotions
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Awarded to all eligible newly hired or promoted executives on
the first business day of the fiscal quarter following
hire/promotion.
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The hire date or promotion date is the grant date and the
closing price of our common stock on the grant date is the grant
price.
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New hire/Promotion award amounts are determined by our executive
compensation team and presented to our Chief Executive Officer
for review and approval based on delegation of authority from
the Compensation Committee. If the grant date fair value of a
new hire or promotion award exceeds $200,000, the Compensation
Committee must approve the award.
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Annual Award
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Awarded to all eligible active executives in the first quarter
of each fiscal year.
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Unless otherwise specified in an employment agreement, the date
of the first regularly scheduled meeting of the Compensation
Committee for the fiscal year is used as the grant date and the
closing price on that date is the grant price.
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We present final annual award amounts for all NEOs to the
Compensation Committee for approval at the first regularly
scheduled Committee meeting of the new fiscal year.
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The CEO may exercise discretion in his recommendations to the
Compensation Committee with regard to grants of Restricted Stock
for all executives based on individual performance, including
the named executive officers, excluding himself. However,
adjustments suggested by the Chief Executive Officer must not
result in
17
an expansion of the overall grant value pool under any
circumstances. Compensation Committee approval of individual
Restricted Stock awards is final and no changes are permitted
after that approval.
Non-Qualified Stock Options: NSOs represent 60% of the
value of an executives overall long-term incentive/equity,
once the LTICP (if any) has been calculated. This value may vary
depending on position level and eligibility for the LTICP. We
determine the number of shares underlying each NSO grant based
on the overall value of the grant using a Black-Scholes option
pricing model and the closing price of our common stock on the
grant date. In no event will we grant NSOs at an exercise price
below the fair market value of our common stock on the date of
grant. NSO grants vest proportionally over three years with a
seven year term from the grant date, assuming continued
employment.
The table below describes key features of our NSO award program:
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Timing
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Grant Date/Exercise Price
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Approval
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New Hires & Promotions
First Fiscal Quarter (following the first Compensation Committee meeting of the fiscal year) through Third Fiscal Quarter
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Awarded to all eligible newly hired or promoted executives on
the first business day of the fiscal quarter following
hire/promotion.
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The first business day of the following fiscal quarter is the
grant date and the closing price on that date is the exercise
price.
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New hire/Promotion award amounts are determined by our executive
compensation team and presented to our Chief Executive Officer
for review and approval based on delegation of authority from
the Compensation Committee. If the grant date fair value of a
new hire or promotion award exceeds $200,000, the Compensation
Committee must approve the award. We present final annual award
amounts for all NEOs to the Compensation Committee for approval
at the first regularly scheduled Committee meeting of the new
fiscal year.
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New Hires & Promotions
Fourth Fiscal Quarter through First Fiscal Quarter(through the first Compensation Committee meeting of the fiscal year)
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Awarded to all eligible newly hired or promoted executives;
timed with the annual award in the first quarter of each fiscal
year.
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The date of the first regularly scheduled meeting of the
Compensation Committee for the fiscal year is used as the grant
date and the closing price on that date is the exercise price.
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Annual Award
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Awarded to all eligible active executives in the first quarter
of each fiscal year.
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Unless otherwise specified in an employment agreement, the date
of the first regularly scheduled meeting of the Compensation
Committee for the fiscal year is used as the grant date and the
closing price on that date is the exercise price.
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18
The Chief Executive Officer may exercise discretion in his
recommendations to the Compensation Committee with regard to
grants of NSOs for all executives based on individual
performance, including the named executive officers, excluding
himself. However, adjustments suggested by the Chief Executive
Officer must not result in an expansion of the overall grant
value pool under any circumstances. Compensation Committee
approval of individual NSO awards is final and no changes are
permitted after that approval.
Delegation of Authority: The Compensation Committee
delegates authority to the Chief Executive Officer to grant
Restricted Stock
and/or NSO
awards for internal promotions and new hires, subject to an
overall dollar value for each award and for all awards in total.
No authority is delegated for awards to NEOs.
Ownership Requirements: The Company has share ownership
requirements to establish commonality of interest between
management and stockholders and to encourage executives to think
and act like owners. By encouraging executives to accumulate a
specific level of ownership, the program ensures that pay
remains at risk not only with regard to outstanding awards but
also with regard to realized gains. Effective with
NSO & Restricted Stock grants for the fifty-three week
period ended February 3, 2007 (Fiscal 2006),
the Company instituted a requirement for certain senior
executives to hold the equivalent value equal to one times their
current salary in Company stock. The Chief Executive Officer has
an ownership requirement of five times his current salary and
the President/Chief Merchandising Officer had an ownership
requirement of three times her current salary.
This requirement can be met through various forms of equity;
vested NSOs, vested Restricted Stock, employee stock purchase
plan shares and personal holdings.
Until a given executive has satisfied their ownership
requirement, they must hold half of their after-tax gains from
any sale, of grants from Fiscal 2006 and beyond, in Company
stock. If an executive does not hold half of after-tax gains in
Company stock, they jeopardize eligibility for future stock
grants. The compensation team monitors and communicates
executive compliance with the requirements throughout the fiscal
year.
Executive
Perquisites
Executive perquisites, which are disclosed in the Summary
Compensation Table, are not a significant component of our
executive compensation program.
Fiscal
2008 Performance Metrics
In the continued interest of simplicity and focus, for Fiscal
2008, the Compensation Committee chose a single performance
metric, EBITDA, to develop targets for awarding
performance-based compensation. Annual Incentive Bonus, LTICP
and Restricted Stock awards are all contingent upon the
achievement of specific EBITDA goals. The Compensation Committee
has chosen EBITDA as the key performance metric because it
reflects the Companys success in managing its core
operations, growing the business and driving sustained increases
in profit. We believe that EBITDA reflects all key controllable
financial and operational performance objectives, while
maintaining simplicity in the design and execution of our
executive compensation program. Moreover, we believe that EBITDA
targets encourage management to focus on all aspects of
performance, including both top line growth in revenue, expense
control and bottom line results.
Our Compensation Committee establishes performance goals at the
beginning of each fiscal year based on a variety of factors such
as internal budget, investor expectations, peer company results,
prior year Company performance, upcoming fiscal year business
plan and strategic initiatives. To ensure a direct correlation
between the level of responsibility and accountability for
results, the Company has developed EBITDA goals for the
executive team that are higher than those below the executive
level.
For Fiscal 2008, the Compensation Committee established the
following EBITDA goals for executive-level associates, measuring
EBITDA growth against prior year realized EBITDA:
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For Annual Incentive Bonus: $736 million at Threshold
(reflecting 4% growth), $779 million at Target (reflecting
10% growth) and $814 million at Maximum (reflecting 15%
growth).
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19
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For Restricted Stock awards: $736 million at Threshold
(reflecting 4% growth) and $779 million at Target
(reflecting 10% growth).
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For LTICP awards: $708 million at Threshold (reflecting 0%
growth), $750 million at Target (reflecting 6% growth) and
$779 million at Maximum (reflecting 10% growth).
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A 10% EBITDA growth target aligned with our business strategy
and with our status as a growth company. Moreover, the 10%
EBITDA growth target established at the beginning of Fiscal 2008
also aligned with the then general analyst consensus for the
Company of 10% growth. Fiscal 2008 actual EBITDA was
$411.9 million (-42% growth) and, as discussed above, there
were no payouts under the Annual Incentive Bonus, Restricted
Stock, nor LTICP plans.
Compensation
Benchmarking
In addition to many other factors that affect compensation
determinations, we take into account the compensation practices
of comparable companies in formulating our compensation program.
We consider three key factors in choosing the companies that
comprise our peer group:
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TalentCompanies with which we compete for executive-level
talent.
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SizeCompanies within the specialty retail industry with
comparable revenue.
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ComparabilityCompanies with which we compete for customers
and investors.
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For Fiscal 2008, the Company used a peer group of specialty
retailers consisting of the following component companies.
(Note: Company named followed by stock ticker symbol):
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Abercrombie & Fitch Co.(ANF)
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Aeropostale, Inc. (ARO)
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AnnTaylor Stores Corp. (ANN)
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Chicos FAS, Inc. (CHS)
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Dicks Sporting Goods, Inc. (DKS)
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Gap, Inc. (GPS)
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Guess ?, Inc (GES)
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Hot Topic, Inc. (HOTT)
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J. Crew Group, Inc. (JCG)
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Limited Brands, Inc. (LTD)
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New York & Company, Inc. (NWY)
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Pacific Sunwear of California, Inc. (PSUN)
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Polo Ralph Lauren (RL)
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Quiksilver, Inc. (ZQK)
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The Talbots, Inc. (TLB)
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Urban Outfitters,Inc. (URBN)
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We evaluate our peer group on an annual basis for relevance and
propose changes when appropriate. The Compensation Committee
reviews and approves the recommended peer group changes as
necessary. For Fiscal 2008, there were no changes to the peer
group.
Timing of
Equity Awards
Although the Company does not have a formal policy surrounding
the timing of equity awards and the release of material
non-public information, the Company does utilize a consistent
approach in selecting both the grant dates and the terms of
equity awards as previously described. The Company makes annual
equity grants in the first quarter of the fiscal year. For the
past four years, the grant date was the Compensation Committee
meeting date during which earnings were certified for the prior
fiscal year.
Severance
and Change of Control Payments
Some of our NEOs are entitled to receive severance payments and
other benefits in the event of a change in control of the
Company
and/or upon
the termination of the executives employment with the
Company under specified circumstances. These arrangements
provide essential protections to both the executive and the
Company. Agreements providing for severance and change in
control payments assist the Company in
20
attracting and retaining qualified executives that could have
other job alternatives. At the same time, the applicable
agreements preserve valuable Company assets by imposing upon the
executives non-competition and non-solicitation
restrictions, confidentiality obligations and cooperation
covenants. For a description and quantification of these
severance and change of control benefits, please refer to the
proxy section entitled Post-Employment Compensation.
As of January 31, 2009, Susan P. McGalla, President and
Chief Merchandising Officer, ended her contract term with the
Company. She did not seek to renew her contract with the
Company. Ms. McGalla was offered and accepted a separation
and severance agreement per the terms of her contract. Refer to
the proxy section entitled Post-Employment
Compensation for additional information regarding her
separation and related agreement.
As of January 30, 2009, Kathy J. Savitt, Executive Vice
President and Chief Marketing Officer, ended her employment with
the Company. Ms. Savitt was offered and accepted a
separation and severance agreement per the terms of her
employment letter. Refer to the proxy section entitled
Post-Employment Compensation for additional
information regarding her separation and related agreement.
Role of
Compensation Consultants
The Compensation Committee has the authority under the
Compensation Committee Charter to retain outside consultants or
advisors to assist the Committee. In accordance with this
authority, the Committee engaged the services of Watson
Wyatt & Company at the beginning of Fiscal 2008. In
September 2008, the Compensation Committee changed consultants
and engaged the services of Frederic W. Cook & Co.,
Inc. as its primary outside independent compensation consultant
to advise the Committee on all matters related to Chief
Executive Officer and other executive compensation. The services
provided by Frederic W. Cook & Co., Inc. are subject
to agreement and engagement letters and the Committee has sole
authority to terminate the relationship. Representatives of
Watson Wyatt & Company or Frederic W. Cook &
Co., Inc. attended four of nine of the Compensation Committee
meetings during Fiscal 2008. Frederic W. Cook & Co.,
Inc does not provide any other services to the Company. The
Compensation Committee may engage other consultants as needed in
order to provide analysis, recommendations or other market data.
Under the direction of the Compensation Committee, Frederic W.
Cook & Co., Inc. interacts with members of the senior
management team to provide insights into market practices and to
ensure that management is fully informed with regard to emerging
best practices and market trends. This ensures that proposals
developed by management align with the marketplace, the
Companys overall compensation objectives and the
objectives of stockholders.
Management engages the Hay Group, Inc. as needed to provide
market data and analysis with regard to competitive market
compensation rates. This data is used as a supplement to that
provided to the Compensation Committee by Frederic W.
Cook & Co. and to validate and verify the accuracy of
data used by the Committee in its deliberations.
21
Tax
Matters
Section 162(m) of the Internal Revenue Code
(Section 162(m)) generally permits a tax
deduction to public corporations for compensation over
$1,000,000 paid in any fiscal year to a corporations Chief
Executive Officer and certain other highly compensated executive
officers only if the compensation qualifies as being
performance-based under Section 162(m). The Company
endeavors to structure its compensation policies to qualify as
performance-based under Section 162(m) whenever it is
reasonably possible to do so while meeting our compensation
objectives.
Nonetheless, from time to time certain non-deductible
compensation may be paid and the Board of Directors and the
Compensation Committee reserve the authority to award
non-deductible compensation in appropriate circumstances. In
addition, it is possible that some compensation paid pursuant to
certain equity awards that have already been granted may be
non-deductible as a result of Section 162(m). The
Section 162(m) disallowance for the tax year ended July
2008 was $128,000 with a tax impact of $49,000 at 38%.
Additionally, Section 409A of the Internal Revenue Code
(Section 409A) governs our ability to establish
the time and form of payment under our nonqualified deferred
compensation arrangements. We believe that we have been
operating our nonqualified deferred compensation arrangements in
good faith compliance with Section 409A and the guidance
available thereunder in effect since January 1, 2005.
22
EXECUTIVE
OFFICER COMPENSATION
General
The following table summarizes the compensation for each of the
last three fiscal years of the Companys Principal
Executive Officer, Principal Financial Officer and the three
other most highly compensated executive officers ranked by their
total compensation as listed in the table below. Both
Ms. McGalla and Ms. Savitt terminated their employment
with the Company on the last day of Fiscal 2008.
Summary
Compensation Table
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Non-Equity
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Base
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Stock
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Option
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Incentive Plan
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All Other
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Fiscal
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Salary
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Awards
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Awards
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)
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($)
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($)
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($)
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(1)
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(2)
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(3)
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(4)
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(5)
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James V. ODonnell
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2008
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$
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1,475,000
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$
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602,999
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$
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1,978,160
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$
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(299,624
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$
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39,520
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$
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3,796,055
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Principal Executive Officer
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2007
|
|
|
$
|
1,350,000
|
|
|
$
|
5,835,611
|
|
|
$
|
2,966,356
|
|
|
$
|
1,780,895
|
|
|
$
|
41,308
|
|
|
$
|
11,974,170
|
|
|
|
|
2006
|
|
|
$
|
1,019,231
|
|
|
$
|
5,339,469
|
|
|
$
|
5,155,433
|
|
|
$
|
3,741,372
|
|
|
$
|
24,835
|
|
|
$
|
15,280,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LeAnn Nealz
|
|
|
2008
|
|
|
$
|
750,000
|
|
|
$
|
46,333
|
|
|
$
|
692,058
|
|
|
$
|
(130,462
|
)
|
|
$
|
27,500
|
|
|
$
|
1,385,429
|
|
EVP and Chief
|
|
|
2007
|
|
|
$
|
725,000
|
|
|
$
|
595,024
|
|
|
$
|
543,997
|
|
|
$
|
605,752
|
|
|
$
|
8,680
|
|
|
$
|
2,478,453
|
|
Design Officer
|
|
|
2006
|
|
|
$
|
677,788
|
|
|
$
|
960,782
|
|
|
$
|
501,377
|
|
|
$
|
1,569,893
|
|
|
$
|
11,000
|
|
|
$
|
3,720,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan Holstein Hilson
|
|
|
2008
|
|
|
$
|
510,000
|
|
|
$
|
33,269
|
|
|
$
|
502,421
|
|
|
$
|
(45,685
|
)
|
|
$
|
15,500
|
|
|
$
|
1,015,505
|
|
Principal Financial Officer
|
|
|
2007
|
|
|
$
|
485,000
|
|
|
$
|
328,165
|
|
|
$
|
330,271
|
|
|
$
|
267,099
|
|
|
$
|
107,680
|
|
|
$
|
1,518,215
|
|
|
|
|
2006
|
|
|
$
|
468,846
|
|
|
$
|
394,573
|
|
|
$
|
161,688
|
|
|
$
|
703,001
|
|
|
$
|
273,117
|
|
|
$
|
2,001,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan P. McGalla
|
|
|
2008
|
|
|
$
|
1,000,000
|
|
|
$
|
109,637
|
|
|
$
|
(225,194
|
)
|
|
$
|
(201,616
|
)
|
|
$
|
35,572
|
|
|
$
|
718,399
|
|
Former President and
|
|
|
2007
|
|
|
$
|
1,000,000
|
|
|
$
|
1,086,826
|
|
|
$
|
1,638,595
|
|
|
$
|
1,103,357
|
|
|
$
|
28,404
|
|
|
$
|
4,857,182
|
|
Chief Merchandising Officer
|
|
|
2006
|
|
|
$
|
866,346
|
|
|
$
|
1,197,489
|
|
|
$
|
815,092
|
|
|
$
|
2,384,744
|
|
|
$
|
22,980
|
|
|
$
|
5,286,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathy J. Savitt
|
|
|
2008
|
|
|
$
|
675,000
|
|
|
$
|
86,044
|
|
|
$
|
(51,601
|
)
|
|
$
|
(86,356
|
)
|
|
$
|
1,042,795
|
|
|
$
|
1,665,882
|
|
Former EVP and Chief
|
|
|
2007
|
|
|
$
|
650,000
|
|
|
$
|
708,287
|
|
|
$
|
411,412
|
|
|
$
|
492,952
|
|
|
$
|
219,043
|
|
|
$
|
2,481,694
|
|
Marketing Officer
|
|
|
2006
|
|
|
$
|
542,308
|
|
|
$
|
740,433
|
|
|
$
|
193,512
|
|
|
$
|
1,260,000
|
|
|
$
|
1,359,253
|
|
|
$
|
4,095,506
|
|
|
|
|
(1) |
|
2008, 2007 and 2006 refer to the fifty-two week periods ended
January 31, 2009 and February 2, 2008 and the
fifty-three week period ended February 3, 2007,
respectively. |
|
(2) |
|
The value of the restricted stock included in the Summary
Compensation Table, including both time and performance based
awards, is based on the compensation cost for financial
reporting purposes for the fiscal year under Statement of
Financial Accounting Standard No. 123(R)
(SFAS 123(R)). Dividends are payable on vested
and unvested restricted stock awards when dividends are paid on
common stock, if applicable. The right to receive these
dividends was factored into the grant date fair value of the
awards granted during Fiscal 2006 and Fiscal 2007 and therefore
dividends paid on these awards are not presented in the Summary
Compensation Table. Dividends paid during Fiscal 2008 attributed
to awards that were forfeited are presented in the Summary
Compensation Table as follows: Mr. ODonnell - $155,075;
Ms. Nealz - $12,218; Ms. Hilson - $8,692; Ms. McGalla -
$28,196 and Ms. Savitt - $17,166. |
|
(3) |
|
The value of Option awards included in the Summary Compensation
Table is based on the compensation cost for financial reporting
purposes for the fiscal year under SFAS 123(R) and is
derived using the Black-Scholes option pricing model. Additional
information regarding this model is available in Note 10 of
the Consolidated Financial Statements contained in the
Companys Fiscal 2008 Annual Report on
Form 10-K.
In the case of Ms. McGalla and Ms. Savitt, amounts
include compensation expense reversed for forfeited options,
resulting in a negative number. |
23
(4) Non-equity incentive plan compensation includes the
following for each of 2008, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
|
ODonnell
|
|
|
Nealz
|
|
|
Hilson
|
|
|
McGalla
|
|
|
Savitt
|
|
|
Fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTICP award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTICP investment losses
|
|
$
|
(299,624
|
)
|
|
$
|
(130,462
|
)
|
|
$
|
(45,685
|
)
|
|
$
|
(201,616
|
)
|
|
$
|
(86,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
(299,624
|
)
|
|
$
|
(130,462
|
)
|
|
$
|
(45,685
|
)
|
|
$
|
(201,616
|
)
|
|
$
|
(86,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive bonus
|
|
$
|
1,134,000
|
|
|
$
|
380,625
|
|
|
$
|
169,750
|
|
|
$
|
700,000
|
|
|
$
|
317,558
|
|
LTICP award
|
|
|
583,200
|
|
|
|
195,750
|
|
|
|
87,300
|
|
|
|
360,000
|
|
|
|
163,315
|
|
LTICP investment gains
|
|
|
63,695
|
|
|
|
29,377
|
|
|
|
10,049
|
|
|
|
43,357
|
|
|
|
12,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
1,780,895
|
|
|
$
|
605,752
|
|
|
$
|
267,099
|
|
|
$
|
1,103,357
|
|
|
$
|
492,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual incentive bonus
|
|
$
|
2,400,000
|
|
|
$
|
997,500
|
|
|
$
|
460,000
|
|
|
$
|
1,530,000
|
|
|
$
|
840,000
|
|
LTICP award
|
|
|
1,200,000
|
|
|
|
498,750
|
|
|
|
230,000
|
|
|
|
765,000
|
|
|
|
420,000
|
|
LTICP investment gains
|
|
|
141,372
|
|
|
|
73,643
|
|
|
|
13,001
|
|
|
|
89,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
3,741,372
|
|
|
$
|
1,569,893
|
|
|
$
|
703,001
|
|
|
$
|
2,384,744
|
|
|
$
|
1,260,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
All other compensation for 2008 includes the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
Ms.
|
|
|
|
ODonnell
|
|
|
Nealz
|
|
|
Hilson
|
|
|
McGalla
|
|
|
Savitt
|
|
|
Severance payment (a)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,012,500
|
|
Car benefit
|
|
|
15,250
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
9,000
|
|
Tax gross up for car benefit
|
|
|
8,770
|
|
|
|
|
|
|
|
|
|
|
|
8,072
|
|
|
|
5,795
|
|
Financial consulting
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer 401(k) contribution
|
|
|
15,500
|
|
|
|
15,500
|
|
|
|
15,500
|
|
|
|
15,500
|
|
|
|
15,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
39,520
|
|
|
$
|
27,500
|
|
|
$
|
15,500
|
|
|
$
|
35,572
|
|
|
$
|
1,042,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The Company accrued $1,012,500 during Fiscal 2008 for a
severance payment to Ms. Savitt pursuant to her Separation
Agreement and Release dated January 20, 2009. Refer to the
proxy section entitled Post-Employment Compensation
for additional information regarding her separation agreement. |
In addition, the Company pays attorneys fees related to the
preparation and filing of NEO stock ownership forms with the SEC.
24
Grants of
Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan
|
|
|
Under Equity Incentive Plan
|
|
|
Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
James V. ODonnell
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
921,875
|
|
|
$
|
1,843,750
|
|
|
$
|
3,687,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
N/A
|
|
|
$
|
230,469
|
|
|
$
|
921,875
|
|
|
$
|
1,843,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
387,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,250,001
|
|
|
|
|
(4
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
315,089
|
|
|
$
|
21.28
|
|
|
$
|
1,978,160
|
|
LeAnn Nealz
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
281,250
|
|
|
$
|
562,500
|
|
|
$
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
N/A
|
|
|
$
|
70,313
|
|
|
$
|
281,250
|
|
|
$
|
562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
30,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
649,998
|
|
|
|
|
(4
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,373
|
|
|
$
|
21.28
|
|
|
$
|
731,346
|
|
Joan Holstein Hilson
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
153,000
|
|
|
$
|
306,000
|
|
|
$
|
612,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
N/A
|
|
|
$
|
38,250
|
|
|
$
|
153,000
|
|
|
$
|
306,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
21,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
462,393
|
|
|
|
|
(4
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,693
|
|
|
$
|
21.28
|
|
|
$
|
520,272
|
|
Susan P. McGalla
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
500,000
|
|
|
$
|
1,000,000
|
|
|
$
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
N/A
|
|
|
$
|
125,000
|
|
|
$
|
500,000
|
|
|
$
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
70,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,500,006
|
|
|
|
|
(4
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356,112
|
|
|
$
|
21.28
|
|
|
$
|
2,500,298
|
|
Kathy J. Savitt
|
|
|
(1
|
)
|
|
|
N/A
|
|
|
$
|
236,250
|
|
|
$
|
472,500
|
|
|
$
|
945,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
N/A
|
|
|
$
|
59,063
|
|
|
$
|
236,250
|
|
|
$
|
472,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
27,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
594,010
|
|
|
|
|
(4
|
)
|
|
|
3/5/08
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,812
|
|
|
$
|
21.28
|
|
|
$
|
668,340
|
|
|
|
|
(1) |
|
Amount represents annual incentive cash bonus under the
Companys Management Incentive Plan (the Bonus
Plan). The Compensation Committee established individual
annual bonus targets under the Bonus Plan as a target percentage
of the respective participants base salary (ranging from
60% to 125%), with the actual bonus payment ranging from zero
below threshold, to 50% of the targeted percentage at threshold,
to 100% of the targeted percentage at target and 200% of the
targeted percentage if the outstanding goals are achieved for
Fiscal 2008 (the EBITDA Goals). On March 3,
2009, the Compensation Committee certified that the Company had
not achieved its target level of EBITDA goals, resulting in 100%
of the awards above being forfeited. |
|
(2) |
|
Amount represents the LTICP bonus under the Companys Bonus
Plan. The Compensation Committee established individual LTICP
bonus targets under the Bonus Plan as a target percentage of the
respective participants base salary (ranging from 30% to
62.5%), with the actual bonus amounts ranging from zero below
the threshold LTICP EBITDA Goal, to 25% of the targeted
percentage amount at the threshold LTICP EBITDA Goal, 100% of
the targeted percentage at the target LTICP EBITDA Goal and 200%
of the targeted percentage if the outstanding LTICP EBITDA Goal
was achieved or exceeded for Fiscal 2008. On March 3, 2009,
the Compensation Committee certified that the Company had not
achieved its target level of EBITDA goals, resulting in 100% of
the awards above being forfeited. |
|
(3) |
|
Amount represents a grant of shares of performance-based
Restricted Stock under the Companys 2005 Stock Award and
Incentive Plan. On March 3, 2009, the Compensation
Committee certified that the Company had not achieved its target
level of EBITDA goals and 0% of this award vested. Shares not
vested were forfeited. |
|
(4) |
|
Amount represents a grant of stock options under the
Companys 2005 Stock Award and Incentive Plan which are
exercisable at the fair market value on the grant date and vest
over three years. Ms. McGalla and Ms. Savitts
awards of 356,112 and 90,812 shares, respectively, were
subsequently terminated on their respective separation dates in
accordance with the terms of the awards and the Companys
2005 Plan. Refer to the proxy section entitled
Post-Employment Compensation for additional
information regarding their separations and related agreements. |
25
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
of
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
of
|
|
|
Market
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
Number
|
|
|
Number
|
|
|
Number
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value of
|
|
|
Units or
|
|
|
Units or
|
|
|
|
of
|
|
|
of
|
|
|
of
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Shares or
|
|
|
Other
|
|
|
Other
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Units of
|
|
|
Rights
|
|
|
Rights
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
That
|
|
|
Stock
|
|
|
That
|
|
|
That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Have
|
|
|
That Have
|
|
|
Have
|
|
|
Have
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
Not
|
|
|
Not
|
|
|
Not
|
|
|
Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#) (1)
|
|
|
($) (1)
|
|
|
James V. ODonnell
|
|
|
817,200
|
|
|
|
|
|
|
|
|
|
|
$
|
8.76
|
|
|
|
12/4/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.68
|
|
|
|
3/4/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
294,872
|
|
|
|
147,436
|
|
|
|
|
|
|
$
|
31.05
|
|
|
|
12/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,513
|
|
|
|
195,027
|
|
|
|
|
|
|
$
|
29.83
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
315,089
|
|
|
|
|
|
|
$
|
21.28
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
387,688
|
|
|
$
|
3,493,069
|
|
LeAnn Nealz
|
|
|
73,800
|
|
|
|
36,900
|
|
|
|
|
|
|
$
|
16.98
|
|
|
|
2/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,880
|
|
|
|
43,762
|
|
|
|
|
|
|
$
|
29.83
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
$
|
9.63
|
|
|
|
6/1/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,373
|
|
|
|
|
|
|
$
|
21.28
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,545
|
|
|
$
|
275,210
|
|
Joan Holstein Hilson
|
|
|
55,000
|
|
|
|
27,500
|
|
|
|
|
|
|
$
|
16.98
|
|
|
|
2/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,763
|
|
|
|
31,527
|
|
|
|
|
|
|
$
|
29.83
|
|
|
|
3/6/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,693
|
|
|
|
|
|
|
$
|
21.28
|
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,729
|
|
|
$
|
195,778
|
|
Susan P. McGalla (2)
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
$
|
18.78
|
|
|
|
3/2/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
$
|
17.78
|
|
|
|
3/2/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,385
|
|
|
|
|
|
|
|
|
|
|
$
|
29.83
|
|
|
|
1/31/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,489
|
|
|
$
|
635,106
|
|
Kathy J. Savitt (3)
|
|
|
58,600
|
|
|
|
|
|
|
|
|
|
|
$
|
19.60
|
|
|
|
3/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,919
|
|
|
|
|
|
|
|
|
|
|
$
|
29.83
|
|
|
|
3/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,914
|
|
|
$
|
251,505
|
|
|
|
|
(1) |
|
Amount represents a grant of shares of performance-based
Restricted Stock under the Companys 2005 Stock Award and
Incentive Plan. On March 3, 2009, the Compensation
Committee certified that the Company had not achieved its target
level of EBITDA goals and 0% of this award vested. Shares not
vested were forfeited. |
|
(2) |
|
In accordance with Ms. McGallas Separation Agreement
and Release dated August 27, 2008, her outstanding vested
stock option awards for 330,000 shares shall remain
exercisable for 30 days from her separation date or through
March 2, 2009; the vested portion of her Fiscal 2007 stock
option award for 77,385 shares shall remain exercisable for
one year from her separation date, or through January 31,
2010; and her unvested stock option awards for a total of
528,883 shares shall terminate on her separation date, all
in accordance with the terms of the award and the Companys
2005 Plan. |
|
(3) |
|
In accordance with Ms. Savitts Separation Agreement
and Release dated January 20, 2009, her outstanding vested
stock option awards shall remain exercisable for thirty days
from her separation date, or March 1, 2009 and her unvested
stock option awards shares shall terminate on her separation
date, all in accordance with the terms of the award and the
Companys 2005 Plan. |
26
Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#) (1)
|
|
|
($) (1)
|
|
|
James V. ODonnell
|
|
|
|
|
|
|
|
|
|
|
193,598
|
|
|
$
|
4,119,765
|
|
LeAnn Nealz
|
|
|
|
|
|
|
|
|
|
|
14,745
|
|
|
$
|
313,774
|
|
Joan Holstein Hilson
|
|
|
|
|
|
|
|
|
|
|
10,623
|
|
|
$
|
226,057
|
|
Susan P. McGalla
|
|
|
|
|
|
|
|
|
|
|
35,200
|
|
|
$
|
749,056
|
|
Kathy J. Savitt
|
|
|
|
|
|
|
|
|
|
|
28,423
|
|
|
$
|
543,941
|
|
|
|
|
(1) |
|
70% of the shares of performance based restricted stock granted
in Fiscal 2007 vested on March 5, 2008 upon certification
from the Compensation Committee that the Company partially met
certain EPS performance goals. The value realized on vesting
related to these awards is based on the fair market value on
March 5, 2008 of $21.28. Ms. Savitt also acquired shares of
time based restricted stock on March 14, 2008, with the
value realized on vesting based on the fair market value on
March 14, 2008 of $17.22. |
Nonqualified
Deferred Compensation
The Company has a nonqualified deferred compensation program
which allows eligible participants to defer a portion of their
salary
and/or bonus
on an annual basis into the plan. Participants can defer up to
90% of their annual salary (with a minimum annual deferral of
$2,000) and up to 100% of their annual performance-based bonus
into the plan. Distributions from the plan automatically occur
upon retirement, termination of employment, disability or death
during employment. Participants may also choose to receive a
scheduled distribution payment while they are still employed
with the Company. The plan operates in compliance with the
requirements of Section 409A. The following table
summarizes the activity in each of the NEOs nonqualified
deferred compensation accounts during Fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contribution
|
|
|
Earnings (Loss)
|
|
|
Withdrawals/
|
|
|
Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
James V. ODonnell (1)
|
|
$
|
449,008
|
|
|
|
|
|
|
$
|
(180,158
|
)
|
|
|
|
|
|
$
|
665,852
|
|
LeAnn Nealz (2)
|
|
|
|
|
|
|
|
|
|
$
|
(24,444
|
)
|
|
|
|
|
|
$
|
37,120
|
|
Joan Holstein Hilson (3) (5)
|
|
$
|
5,093
|
|
|
|
|
|
|
$
|
(5,811
|
)
|
|
$
|
(10,192
|
)
|
|
|
|
|
Susan P. McGalla
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathy J. Savitt (4) (5)
|
|
$
|
32,593
|
|
|
|
|
|
|
$
|
(6,958
|
)
|
|
$
|
(27,165
|
)
|
|
$
|
1,214
|
|
|
|
|
(1) |
|
Mr. ODonnell is deferring a total of $600,000 in
calendar 2009 pursuant to the terms of his employment agreement.
His Fiscal 2008 contribution of $449,008 is reported in the
Summary Compensation Table as Base Salary. |
|
(2) |
|
Ms. Nealz elected not to participate in the Companys
deferred compensation program during Fiscal 2008. The Fiscal
2008 losses relate to contributions made in prior years. |
|
(3) |
|
Ms. Hilson deferred $5,093 of her salary earned during
Fiscal 2008 in accordance with the Companys deferred
compensation program. Her contribution is reported in the
Summary Compensation Table for Fiscal 2008 as Base Salary. |
|
(4) |
|
Ms. Savitt deferred $32,593 of her salary earned during
Fiscal 2008 in accordance with the Companys deferred
compensation program. Her contribution is reported in the
Summary Compensation Table for Fiscal 2008 as Base Salary. |
|
(5) |
|
In accordance with the terms of the plan and Section 409A,
Ms. Hilson and Ms. Savitt each elected to receive a
payout of 100% of their deferred compensation balances during
Fiscal 2008. |
27
Post-Employment
Compensation
Mr. ODonnell was employed in Fiscal 2008 pursuant to
an employment agreement dated December 28, 2006 (the
Agreement). Pursuant to the Agreement,
Mr. ODonnell will serve as the Companys Chief
Executive Officer through Fiscal 2009 and as a non-executive
employee through January 29, 2011 (Fiscal
2010). The Agreement provides for a retirement benefit
upon its expiration equal to the greater of (a) $2,200,000,
or (b) Mr. ODonnells total cash
compensation (base salary plus annual cash incentive bonus,
which is limited to target bonus for purposes of the
calculation) for the highest compensated fiscal year of the
prior six fiscal years. The retirement benefit is payable by the
Company over five years after the expiration of the
Agreements term in Fiscal 2010. If the Company were to
achieve its annual cash bonus goals in each year of the
Agreement, the retirement benefit payable would be $3,600,000.
Additionally, in the event of a non-cause termination by the
Company, the Agreement provides for severance payments equal to
one year of base salary payable in a lump sum within
30 days of termination; the retirement benefit, payable in
a lump sum within 30 days of termination; any incentive
bonus that would have been paid to the extent that the
performance goals established at the time of grant are met for
the fiscal year during which termination occurred, even though
he was not employed for the entire fiscal year; outstanding
stock options shall vest and shall be exercisable for one year
after the date of termination; restricted stock awards
outstanding at the time of the termination and not previously
forfeited shall vest to the extent that the performance goals
established at the time of grant are met for the fiscal year
during which termination occurred, even though he was not
employed for the entire fiscal year; and payment of his LTICP
account in a lump sum payment within 30 days of the date of
termination. To the extent that any provisions of the Agreement
do not comply with Section 409A, which would cause
Executive to incur any additional tax or interest under
Section 409A, such terms of the Agreement shall be deemed
to be modified, to the extent reasonably possible to do so, and
applied by the Company in a manner to be consistent with
Section 409A.
Ms. Nealz is employed pursuant to an employment letter
dated March 31, 2004. In the event of a non-cause
termination by the Company, this letter provides for a lump-sum
severance payment equal to one year of base salary.
Ms. Hilson is employed pursuant to an employment letter
dated July 18, 2005. It provides for severance payments
equal to up to one year of base salary in the form of salary
continuation during a non-compete period.
Prior to August 2008, Ms. McGalla was employed pursuant to
an employment agreement dated March 1, 2007. Pursuant to
this agreement, Ms. McGalla was employed as President and
Chief Merchandising Officer of the Company through
January 31, 2009. During June 2008, Ms. McGalla
advised the Company that she would not be renewing her
employment agreement. On August 27, 2008, the Company
entered into a Separation Agreement and Release (the
McGalla Separation Agreement) with
Ms. McGalla related to her separation from employment with
the Company. Pursuant to the McGalla Separation Agreement, in
exchange for a twenty-four month non-solicitation arrangement
and a general release of any claims against the Company,
Ms. McGalla shall receive:
|
|
|
|
|
her base salary earned through the termination of her employment
with the Company effective on Saturday, January 31, 2009
(the McGalla Separation Date);
|
|
|
|
the amount of any annual cash bonus she would have earned if the
Company had achieved its Fiscal 2008 performance goals;
|
|
|
|
70,489 shares of previously granted restricted stock if the
Company achieved its Fiscal 2008 performance goals;
|
|
|
|
the value of her account under the Company LTICP, including the
amount, if any, earned if the Company achieved its 2008
performance goals; Ms. McGallas LTICP account will be
paid out in three payments, the first third to be paid six
months after the McGalla Separation Date and the remaining two
thirds in two payments when payouts under the LTICP are made in
Fiscal 2010 and Fiscal 2011,
|
28
|
|
|
|
|
subject in each case to her continuous compliance with her
obligations under the McGalla Separation Agreement; and
|
|
|
|
|
|
thirty days from the McGalla Separation Date to exercise
previously granted stock options for 330,000 shares and one
year from the McGalla Separation Date to exercise the vested
portion of her 2007 stock option award for 77,385 shares.
|
Prior to January 2009, Ms. Savitt was employed pursuant to
an employment letter dated January 3, 2006. On
January 20, 2009, the Company entered into a Separation
Agreement and Release (the Savitt Separation
Agreement) with Ms. Savitt related to her separation
from employment with the Company. Pursuant to the Savitt
Separation Agreement, in exchange for a general release of any
claims against the Company, Ms. Savitt shall receive the
following:
|
|
|
|
|
her base salary earned through the termination of her employment
with the Company effective on January 30, 2009 (the
Savitt Separation Date);
|
|
|
|
a lump-sum severance pay in the amount of $1,012,500 less all
legally required payroll and withholding taxes;
|
|
|
|
the value of her account under the Companys LTICP;
Ms. Savitts LTICP account will be paid out in three
payments, the first third to be paid six months after the Savitt
Separation Date and the remaining two thirds in two payments
when payouts under the LTICP are made in Fiscal 2010 and Fiscal
2011, subject in each case to her continuous compliance with her
obligations under the Savitt Separation Agreement;
|
|
|
|
thirty days from the Savitt Separation Date to exercise
previously granted vested stock options.
|
For Mr. ODonnell, Ms. Nealz and Ms. Hilson,
the following tables set forth the expected benefit to be
received by each of the respective NEOs in the event of
his or her termination resulting from various scenarios,
assuming a termination date of January 31, 2009 and a stock
price of $9.01, our closing stock price on January 30,
2009. The tables do not include the payment of the aggregate
balance of the NEOs nonqualified deferred compensation
that is disclosed in the Nonqualified Deferred Compensation
table above.
James V.
ODonnell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Retirement
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base/Retirement (1)
|
|
$
|
2,484,000
|
|
|
$
|
2,484,000
|
|
|
$
|
3,959,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,843,750
|
|
LTICP (3)
|
|
|
1,673,364
|
|
|
|
1,673,364
|
|
|
|
1,673,364
|
|
|
|
1,673,364
|
|
|
|
1,673,364
|
|
Stock Option Vesting Acceleration (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Award Vesting Acceleration (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,157,364
|
|
|
$
|
4,157,364
|
|
|
$
|
5,632,364
|
|
|
$
|
1,673,364
|
|
|
$
|
3,517,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to Mr. ODonnells employment agreement,
amount represents a retirement benefit equal to
Mr. ODonnells total cash compensation (base
salary plus annual incentive bonus) for the highest compensated
fiscal year of the prior six fiscal years with certain
limitations. Additionally, in the event of a termination without
cause, amount includes severance in an amount equal to one year
of Mr. ODonnells base salary. |
|
(2) |
|
Pursuant to Mr. ODonnells employment agreement,
in the event of a termination without cause, the Company is
obligated to pay the annual incentive bonus to the extent the
performance goals were met. In all other cases, except for a
change in control, amount assumes that the Compensation
Committee paid the annual incentive bonus to the extent the
performance goals were met. In the case of a change in control,
amount assumes that the Compensation Committee paid the annual
incentive bonus based on the target amount. |
29
|
|
|
(3) |
|
Pursuant to Mr. ODonnells employment agreement,
in the event of a termination without cause, the Company is
obligated to pay the LTICP account balance. In all other cases,
amount assumes that the Compensation Committee paid the LTICP
account balance, including the losses during Fiscal 2008 of
$(299,624). |
|
(4) |
|
Based upon the stock price as of January 30, 2009, the
value of Mr. ODonnells unvested portions of
stock option awards that are outstanding is zero. |
|
(5) |
|
Pursuant to Mr. ODonnells employment agreement,
in the event of a termination without cause, the Company is
obligated to vest any restricted stock awards outstanding to the
extent the performance goals were met. In all other cases,
amount assumes that the Compensation Committee vested the
outstanding restricted stock awards to the extent the
performance goals were met. |
LeAnn
Nealz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation for
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Good
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Reason
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
750,000
|
|
|
$
|
750,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562,500
|
|
LTICP (3)
|
|
|
724,967
|
|
|
|
|
|
|
|
724,967
|
|
|
|
|
|
|
|
724,967
|
|
Stock Option Vesting Acceleration (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Award Vesting Acceleration (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
724,967
|
|
|
$
|
750,000
|
|
|
$
|
1,474,967
|
|
|
$
|
|
|
|
$
|
1,287,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to Ms. Nealzs employment letter, amount
represents one year of base salary. |
|
(2) |
|
In the event of a change in control, amount assumes that the
Compensation Committee paid the annual incentive bonus at target. |
|
(3) |
|
In the event of Ms. Nealzs death or disability,
amount represents the balance in her LTICP account. In the event
of a termination without cause or change in control, amount
assumes that the Compensation Committee paid the LTICP account
balance, including the loss during Fiscal 2008 of $(130,462). |
|
(4) |
|
Based upon the stock price as of January 30, 2009, the
value of Ms. Nealzs unvested portions of stock option
awards that are outstanding is zero. |
|
(5) |
|
Amount assumes that the Compensation Committee vested the
outstanding restricted stock awards to the extent the
performance goals were met. |
Joan
Holstein Hilson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation for
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Good
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Reason
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
|
|
|
$
|
510,000
|
|
|
$
|
510,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
306,000
|
|
LTICP (3)
|
|
|
255,043
|
|
|
|
|
|
|
|
255,043
|
|
|
|
|
|
|
|
255,043
|
|
Stock Option Vesting Acceleration (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Award Vesting Acceleration (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
255,043
|
|
|
$
|
510,000
|
|
|
$
|
765,043
|
|
|
$
|
|
|
|
$
|
561,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to Ms. Hilsons employment letter, amount
represents one year of base salary. |
|
(2) |
|
In the event of a change in control, amount assumes that the
Compensation Committee paid the annual incentive bonus at target. |
30
|
|
|
(3) |
|
In the event of Ms. Hilsons death or disability,
amount represents the balance in her LTICP account. In the event
of a termination without cause or change in control, amount
assumes that the Compensation Committee paid the LTICP account
balance, including the loss during Fiscal 2008 of $(45,685). |
|
(4) |
|
Based upon the stock price as of January 30, 2009, the
value of Ms. Hilsons unvested portions of stock
option awards that are outstanding is zero. |
|
(5) |
|
Amount assumes that the Compensation Committee vested the
outstanding restricted stock awards to the extent the
performance goals were met. |
For Ms. McGalla and Ms. Savitt, the following tables
set forth the expected benefit to be received pursuant to each
of their separation agreements based on their termination dates
of January 31, 2009 and January 30, 2009,
respectively. The tables do not include the payment of the
aggregate balance of the NEOs nonqualified deferred
compensation that is disclosed in the Nonqualified Deferred
Compensation table above.
Susan P.
McGalla
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation for
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Good
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Reason
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Bonus (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTICP (2)
|
|
|
1,123,970
|
|
|
|
|
|
|
|
1,123,970
|
|
|
|
|
|
|
|
1,123,970
|
|
Stock Option Vesting Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Award Vesting Acceleration (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,123,970
|
|
|
$
|
|
|
|
$
|
1,123,970
|
|
|
$
|
|
|
|
$
|
1,123,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amount assumes that the Compensation Committee paid the annual
incentive bonus to the extent the performance goals were met. |
|
(2) |
|
Pursuant to Ms. McGallas separation agreement, amount
represents Ms. McGallas balance in her LTICP account,
including the loss during Fiscal 2008 of $(201,616). |
|
(3) |
|
Pursuant to Ms. McGallas separation agreement, amount
represents the vesting of outstanding restricted stock awards to
the extent the performance goals were met. |
Kathy J.
Savitt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resignation for
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Good
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
|
Disability
|
|
|
Reason
|
|
|
w/out Cause
|
|
|
for Cause
|
|
|
Control
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base (1)
|
|
$
|
675,000
|
|
|
$
|
675,000
|
|
|
$
|
675,000
|
|
|
$
|
|
|
|
$
|
675,000
|
|
Bonus (2)
|
|
|
337,500
|
|
|
|
337,500
|
|
|
|
337,500
|
|
|
|
|
|
|
|
337,500
|
|
LTICP (3)
|
|
|
509,038
|
|
|
|
509,038
|
|
|
|
509,038
|
|
|
|
|
|
|
|
509,038
|
|
Stock Option Vesting Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Award Vesting Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,521,538
|
|
|
$
|
1,521,538
|
|
|
$
|
1,521,538
|
|
|
$
|
|
|
|
$
|
1,521,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Pursuant to Ms. Savitts separation agreement, amount
represents one year of base salary. |
|
(2) |
|
Pursuant to Ms. Savitts separation agreement, amount
represents a bonus equal to six months salary. |
|
(3) |
|
Pursuant to Ms. Savitts separation agreement, amount
represents the balance in her LTICP account, including the loss
during Fiscal 2008 of $(86,356). |
31
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We have a Related Party Transaction Policy (the
Policy) to allow the Company to identify, document
and properly disclose related party transactions. The Policy
applies to all associates who have authority to enter into
commitments on behalf of the Company. Per the Policy, a related
party transaction is any transaction to which the Company or any
of its subsidiaries is a participant and in which a related
party has a direct or indirect material interest. Examples of
transactions include, without limitation, those for the purchase
or sale of goods, the provision of services, the rental of
property, or the licensing of intellectual property rights.
Additionally, if an associate or a member of an associates
immediate family is a supplier of goods or services or owns or
is employed by a business that supplies the Company, or if a
member of an associates immediate family is employed by
the Company, it is a related party transaction. All related
party transactions must be approved in advance by the Audit
Committee if they involve a significant stockholder, Director or
executive officer. All other related party transactions must be
disclosed in writing to, and approved in advance by, the
Companys General Counsel and either the Chief Financial
Officer or Chief Accounting Officer. Each quarter, the
Companys Directors and associates who have authority to
enter into commitments on behalf of the Company are required to
provide a certification regarding the existence of any related
party transactions that they have knowledge of and which have
not been fully and accurately disclosed in the Companys
filings with the Securities and Exchange Commission.
During Fiscal 2004, we entered into an employment agreement with
Charles Chupein,
son-in-law
of James V. ODonnell. Mr. Chupeins employment
as Vice President and Chief Operating Officer of MARTIN + OSA
began on February 14, 2005. During Fiscal 2008,
Mr. Chupein received an annual salary of $320,000. He was
granted 14,351 stock options with an exercise price of $21.28 on
March 5, 2008. For Fiscal 2009, Mr. Chupein will
receive an annual salary of $331,200. Additionally, he will be
eligible to receive an annual cash bonus of $132,480 and a
long-term incentive award of 6,832 restricted stock units with
the amounts realized contingent on performance goals.
Mr. Chupein was also granted 15,528 shares of time
based restricted stock units which vest over three years in
equal annual increments but may fully vest in one year if
certain performance goals for Fiscal 2009 are met.
Mr. Chupein also participates in various compensation and
employee benefits plans or arrangements on the same basis as
other employees in comparable positions.
PROPOSAL TWO:
APPROVAL OF AMENDMENTS TO
THE AMERICAN EAGLE OUTFITTERS, INC. 2005 STOCK AWARD AND
INCENTIVE PLAN
The Board of Directors has unanimously approved an amendment and
restatement of the American Eagle Outfitters, Inc. 2005 Stock
Award and Incentive Plan (the 2005 Plan), subject to
approval of the amendment by the stockholders, to increase the
number of shares of stock available for issuance under the 2005
Plan, to make certain other changes to the 2005 Plan, and to
seek approval of the material terms of the amended and restated
2005 Plan.
As of January 31, 2009, there were stock options
outstanding under the 2005 Plan and the Companys 1994 and
1999 Stock Option Plans (the Prior Plans) with
respect to 14,496,734 shares with a weighted average
exercise price of $15.25 and a weighted average remaining term
of 4.1 years and there were 798,812 restricted shares
outstanding. At January 31, 2009, there were
9,610,963 shares available for issuance under the 2005
Plan. During the period since January 31, 2009, there were
5,641,727 shares granted under awards under the 2005 Plan
leaving an available balance of 3,969,236 shares available
for issuance. The Board believes the adoption of the amendments
to the 2005 Plan are necessary because the number of shares
currently available are insufficient for future awards.
Proposed
2005 Plan Amendments
At the Annual Meeting, there will be submitted to stockholders a
proposal to approve the amendment and restatement of the 2005
Plan to provide that as of the effective date of the amendment
and restatement of the 2005 Plan, 31,850,000 shares will be
available for issuance under the 2005 Plan, reduced by grants
made under the 2005 Plan after January 31, 2009 as
described below under Stock Subject to 2005 Plan (an
32
increase of 22,239,037 shares from the
9,610,963 shares available as of January 31,
2009) and to make certain other amendments to the plan,
including the following amendments:
|
|
|
|
|
to provide for a fungible pool method of accounting
for awards;
|
|
|
|
to increase the per-person award limitations;
|
|
|
|
to provide for the automatic exercise of
in-the-money stock options and SARs on the last day
of the term;
|
|
|
|
to provide for modifications to the performance award business
criteria in establishing performance goals;
|
|
|
|
to modify the change in control provisions;
|
|
|
|
to provide for clawback provisions for certain activity of
participants, including misconduct that causes the restatement
of financial statements; and
|
|
|
|
to extend vesting periods of non-performance based awards upon
retirement.
|
We believe it is in the best interest of the Company and its
stockholders to continue offering a long-term incentive program
to our management-level employees. Proxies solicited on behalf
of the Board of Directors will be voted FOR this proposal
unless stockholders specify a contrary choice.
Summary
of the 2005 Plan
This summary is qualified in its entirety by reference to the
full text of the 2005 Plan as amended and restated which is
attached to this Proxy Statement as Appendix A.
Purpose
The purpose of the 2005 Plan is to aid the Company in
attracting, retaining, motivating and rewarding employees and
non-employee directors of the Company or its subsidiaries or
affiliates, to provide for equitable and competitive
compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and
promote the creation of long-term value for stockholders by
closely aligning the interests of participants with those of
stockholders.
Eligibility
Awards may be granted under the 2005 Plan only to an employee of
the Company or any subsidiary or affiliate, including any
executive officer, to any non-employee director of the Company
or a subsidiary or affiliate, and to any person who has been
offered employment by the Company or a subsidiary or affiliate,
as selected by the Compensation Committee. The estimated number
of participants is 400 persons. The actual number of
employees who will ultimately receive Awards under the 2005 Plan
cannot be determined because eligibility for participation in
the Plan is at the discretion of the Committee.
Permissible
Awards
The 2005 Plan authorizes the granting of awards in any of the
following forms:
|
|
|
|
|
options to purchase shares of stock;
|
|
|
|
restricted or unrestricted shares of stock, or restricted stock
units;
|
|
|
|
stock appreciation rights (SARs);
|
|
|
|
other stock-based awards; and
|
|
|
|
performance awards payable in cash or stock, including annual
incentive awards.
|
33
Stock
Subject to 2005 Plan
As described above, a total of 31,850,000 shares of stock
shall be authorized for grant under the Plan less one share of
stock for every one share of stock that was subject to an option
or SAR granted after January 31, 2009 under the 2005 Plan
and 1.85 shares for every one share that was subject to an
award other than an option or SAR granted after January 31,
2009 under the 2005 Plan. Any shares that are subject to options
or SARs granted under the 2005 Plan shall be counted against
this limit as one share for every one share granted, and any
shares that are subject to awards other than options or SARs
shall be counted against this limit as 1.85 shares for
every one share granted. Shares of stock represented by awards
that have been forfeited expired or settled in cash after
January 31, 2009 under the 2005 Plan or the Prior Plans
shall again be available for awards under the Plan to the extent
of such forfeiture, expiration or cash settlement. The following
shares shall not again be available for grants under the Plan:
shares tendered or withheld by the Company in payment of the
exercise price of a stock option under the 2005 Plan or the
Prior Plans; shares tendered or withheld by the Company to
satisfy tax withholding; the shares not issued upon exercise of
SARs under the 2005 Plan or the Prior Plans; and shares
reacquired by the Company using the proceeds from the exercise
of options under the 2005 Plan or the Prior Plans.
Shares issued under the 2005 Plan through the assumption or
substitution of outstanding awards granted by a company acquired
by the Company or a subsidiary or affiliate (Substitute
Awards) will not reduce the maximum number of shares
available for grants under the 2005 Plan. In addition, available
shares under a stockholder approved plan of a company acquired
by the Company or a subsidiary (adjusted to reflect the
transaction) may be used for awards under the 2005 Plan and will
not reduce the number of shares available under the 2005 Plan.
Limitations
on Awards to Any Employee
Additionally, with respect to grants to any employee during a
calendar year, no more than six million shares may be granted
with respect to each of options and SARs and no more than four
million shares may be granted with respect to each of restricted
shares of stock and restricted stock units plus in each case any
unused carryover limit from the prior calendar year. In
addition, the maximum aggregate amount that can be earned in any
calendar year by an employee under stock-based performance
awards is four million shares and an amount equal to $5,000,000
under each type of cash-based performance award, in each case
plus any unused carryover limit from the prior calendar year.
Administration
The 2005 Plan is administered by the Compensation Committee (the
Committee), subject to its right to create
subcommittees or delegate authority as required or permitted by
law. The Committee has the sole authority to designate
participants and determine the type, terms and conditions of
awards to be granted, except that the Board of Directors will
perform the functions of the Committee for granting awards to
non-employee directors.
Stock
Options
The Committee is authorized to grant incentive stock options or
non-qualified stock options under the 2005 Plan. The exercise
price of an option granted under the 2005 Plan may not be less
than the fair market value of the underlying stock on the date
of grant (other than for Substitute Awards) and the exercise
period shall not exceed ten (10) years.
Stock
Appreciation Rights (SARs)
The Committee may grant SARs under the 2005 Plan; a SAR may be
free-standing or tandem in combination with another award. A SAR
award permits the participant to receive the appreciation, if
any, of the fair market value of a share of common stock on the
date of exercise over the fair market value of such a share on
the date of grant. In no event may the grant price of a SAR be
less than the fair market value of the
34
underlying stock on the date of grant (other than for Substitute
Awards). Payment of any appreciation will be paid in cash,
common stock or a combination of cash and stock as the Committee
directs. The exercise period with respect to any SAR shall not
exceed ten (10) years.
Restricted
Stock Awards and Restricted Stock Units
The Committee may make awards of restricted stock or restricted
stock units (which may consist of a combination of stock and
other awards) to participants, subject to such restrictions on
transferability and other restrictions as the Committee may deem
appropriate. Except as set forth in certain forfeiture
provisions, restricted stock and restricted stock units will
vest over a minimum period of three years, unless the grant or
vesting is based on the achievement of one or more performance
conditions, in which case, the restricted stock and restricted
stock units will vest over a minimum period of one year.
Other
Stock-Based Awards
The Committee may make awards that may be denominated or payable
in stock or factors that may influence the value of stock,
including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into stock,
purchase rights for stock, awards with value and payment
contingent upon performance of the Company or business units
thereof or any other factors designated by the Committee, and
awards valued by reference to the book value of stock or the
value of securities of or the performance of specified
subsidiaries or affiliates or other business units of the
Company.
Performance
Awards, Including Annual Incentive Awards
The Committee may grant performance awards that are payable in
cash, or restricted or unrestricted shares of stock. Subject to
the specific limitations discussed above under Limitations
on Awards to Any Employee, the Committee has the complete
discretion to determine the number of performance awards granted
to any participant and to set performance goals and other terms
or conditions to payment of the performance awards. The extent
to which these performance goals are met determines the amount
of cash or stock that can be received by a participant.
The Committee may grant an annual incentive award to an employee
who is designated by the Committee as likely to be a
covered employee under Section 162(m); i.e., an
employee who at the end of the year is the Companys chief
executive officer or one of its three other most highly
compensated officers other than the Companys chief
financial officer. Such Annual Incentive Award will be intended
to qualify as performance-based compensation for
purposes of Section 162(m), and its grant, exercise
and/or
settlement shall be contingent upon achievement of
preestablished performance goals and other terms set forth in
the 2005 Plan.
Performance
Goals
If the Committee determines that a performance award granted to
an employee for whom the Companys tax deductions would
likely to be subject to the deduction limitations of
Section 162(m) as discussed under Section 162(m)
Deduction Limitations below, the Committee may establish
objectively determinable performance goals for awards during
specified performance periods based on one or more of the
business criteria listed in Section 7(b)(ii) of the 2005
Plan. The goals may be particular to an officer or may be based,
in whole or part, on the performance of the division,
department, line of business, subsidiary or other business unit
in which the officer works, or on the performance of the Company
generally. The Committee must establish such goals prior to the
beginning of the period to which such performance goals relate
(or such later date as may be permitted under applicable tax
regulations). Any payment of an award granted with performance
goals is conditioned on the written certification of the
Committee in each case that the performance goals and any other
material conditions were satisfied.
35
Limitations
on Transfer; Beneficiaries
No award is assignable or transferable by a participant other
than by will or the laws of descent and distribution. However,
the Committee may (but need not) permit other transfers (other
than for incentive stock options or SARs in tandem with
incentive stock options) where it concludes that such
transferability is appropriate and desirable, taking into
account applicable securities laws. In no event may a transfer
for value or consideration be made without the prior approval of
the Companys stockholders. A participant may, in the
manner determined by the Committee, designate a beneficiary to
exercise the rights of the participant and to receive any
distribution with respect to any award upon the
participants death.
Change in
Control
Except as otherwise provided in an award document or in another
written agreement, plan or policy with respect to a Participant,
upon both a change in control (as defined in the
2005 Plan) and a qualifying termination (an
involuntary termination without cause or a voluntary
termination with good cause, as defined in the 2005
Plan), the vesting of all outstanding non-performance based
awards will be accelerated. Except as otherwise provided in an
award document or in another written agreement, plan or policy
with respect to a Participant, on the date of a change in
control performance based awards will be converted into
restricted stock based on performance to the change in control
date or the target level value, depending on the portion of the
performance period completed prior to the change in control, and
upon a qualifying termination the vesting of the performance
based awards will be accelerated. If an acquiring entity does
not assume the awards the vesting of all outstanding awards will
be accelerated on the change in control date and performance
based awards will be paid, either pro rata or based on the
target level value, depending on the portion of the performance
period completed prior to the change in control.
Adjustments
In the event of a merger, reorganization, recapitalization,
stock dividend, stock split or other change in corporate
structure affecting our common stock, the Committee shall make
adjustments in the aggregate number and kind of shares reserved
for issuance under the 2005 Plan, in the maximum number of
shares that may be granted in any calendar year to any employee,
in the number, kind and exercise price of shares subject to
outstanding awards, and such other adjustments as it may
determine to be appropriate to ensure that participants are
treated equitably and there is no dilution or enlargement of
rights. No adjustments will be made that would cause any award
to a covered employee to not comply with Section 162(m).
No
Repricing
No option or stock appreciation right may be amended to reduce
the price per share of the shares subject to such option or the
grant price of such stock appreciation right, as applicable,
below the option price or grant price as of the date the option
or stock appreciation right is granted, without the prior
approval of the Companys stockholders. In addition,
without the prior approval of the Companys stockholders,
no option or stock appreciation right may be cancelled or
surrendered for another award or cash nor may any option or
stock appreciation rights may be granted in exchange for, or in
connection with, the cancellation or surrender of an option,
stock appreciation right or other award having a higher option
or grant price.
Dividends
and Dividend Equivalents on Certain Awards
The Committee may grants dividend equivalents on a free-standing
basis or in connection with other awards, except for options and
SARs. Dividends and dividend equivalents with respect to
restricted stock, restricted stock units and other stock-based
awards that vest based on the achievement of performance goals
and dividend equivalents on performance awards will be subject
to the same restrictions and risk of forfeiture as the shares
subject to the applicable award with respect to which the
dividends and dividend equivalents are distributed or payable.
36
Additional
Award Forfeiture Provisions
Each Award granted under the 2005 Plan, other than Awards
granted to non-employee directors, may be subject to additional
forfeiture conditions, if certain events occur, including but
not limited to, (i) the Participant acts in competition
with the Company; (ii) the Participant discloses
confidential or proprietary information; (iii) the
Participant fails to cooperate with the Company in regards to a
legal suit; or (iv) the Participant engages in misconduct
that causes the need for restatement of financial statements.
Termination
and Amendment
Our Board of Directors may terminate or amend the 2005 Plan at
any time without stockholder approval, but only to the extent
that stockholder approval is not required by applicable law or
regulation. Stockholder approval is required with respect to any
amendment to increase any of the award limitations set forth in
the 2005 Plan, extend the term of the 2005 Plan, materially
change the eligibility provisions, change the provisions
governing the minimum exercise price for options and the grant
price of SARs, or any other provisions of the 2005 Plan that
expressly requires stockholder approval.
The Committee may amend or terminate outstanding awards.
However, such amendments may require the consent of the
participant. Unless approved by our stockholders or otherwise
permitted by the antidilution provisions of the 2005 Plan, the
exercise price of an outstanding option may not be reduced,
directly or indirectly, and the original term of an option may
not be extended.
Awards to
Named Executive Officers and Others
Future awards under the 2005 Plan will be made at the discretion
of the Compensation Committee. Consequently, we cannot determine
with respect to any particular person or group the awards that
will be made in the future pursuant to the 2005 Plan or their
benefits or amounts. During Fiscal 2008, the following amounts
were awarded under the Preexisting Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
|
|
|
|
Annual Incentive
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Compensation Plan
|
|
|
|
Bonus $
|
|
|
(#)
|
|
|
(#)
|
|
|
Bonus $
|
|
|
Executive Officers as a Group
|
|
|
|
|
|
|
932,079
|
|
|
|
14,993
|
|
|
|
|
|
Non-Employee Directors as a Group
|
|
|
|
|
|
|
|
|
|
|
45,769
|
|
|
|
|
|
Employees, excluding Executive Officers, as a Group
|
|
|
|
|
|
|
2,582,574
|
|
|
|
|
|
|
|
|
|
For information on awards earned by certain executive officers
under the Preexisting Plans during Fiscal 2008 see
Executive Officer Compensation.
Stock
Price
The closing market price of a share reported on the New York
Stock Exchange on April 27, 2009 was $15.17 per share.
U.S.
Federal Income Tax Consequences
The following is a general description of the federal income tax
consequences to the participant and the Company with regard to
awards granted under the 2005 Plan under present law. This
discussion does not purport to discuss all tax consequences
related to awards under the 2005 Plan.
Nonqualified
Stock Options
There will typically be no federal income tax consequences to
the optionee or to us upon the grant of a nonqualified stock
option under the 2005 Plan. When the optionee exercises a
nonqualified option, however, he or she will realize ordinary
income in an amount equal to the excess of the fair market value
of the common stock received at the time of exercise over the
exercise price, and we will be allowed a corresponding
37
deduction, subject to any applicable limitations under
Section 162(m). The tax basis for the shares purchased is
their fair market value on the date of exercise. Any gain that
the optionee realizes when he or she later sells or disposes of
the option shares will be short-term or long-term capital gain,
depending on how long the shares were held.
Incentive
Stock Options
There typically will be no federal income tax consequences to
the optionee or to us upon the grant or exercise of an incentive
stock option. If the optionee holds the option shares for the
required holding period of at least two years after the date the
option was granted and one year after exercise, the difference
between the exercise price and the amount realized upon sale or
disposition of the option shares will be long-term capital gain
or loss, and we will not be entitled to a federal income tax
deduction. If the optionee disposes of the option shares in a
sale, exchange, or other disqualifying disposition before the
required holding period ends, he or she will realize taxable
ordinary income in an amount equal to the excess of the fair
market value of the option shares at the time of exercise over
the exercise price, and we will be allowed a federal income tax
deduction equal to such amount. While the exercise of an
incentive stock option does not result in current taxable
income, the excess of the fair market value of the option shares
at the time of exercise over the exercise price will be an item
of adjustment for purposes of determining the optionees
alternative minimum taxable income.
Restricted
Stock and Restricted Stock Units
Unless a participant makes an election to accelerate recognition
of the income to the date of grant (as described below), the
participant will not recognize income, and we will not be
allowed a tax deduction, at the time a restricted stock or
restricted stock unit award is granted. When the restrictions
lapse, the participant will recognize ordinary income equal to
the fair market value of the common stock as of that date (less
any amount paid for the stock), and we will be allowed a
corresponding federal income tax deduction at that time, subject
to any applicable limitations under Section 162(m). If the
participant files an election under Section 83(b) of the
Internal Revenue Code (Section 83(b)) within
30 days of the date of grant of the restricted stock, he or
she will recognize ordinary income as of the date of grant equal
to the fair market value of the stock as of that date (less any
amount paid for the stock), and we will be allowed a
corresponding federal income tax deduction at that time, subject
to any applicable limitations under Section 162(m). Any
future appreciation in the stock will be taxable to the
participant at capital gains rates. However, if the stock is
later forfeited, the participant will not be able to recover the
tax previously paid pursuant to a Section 83(b) election.
Performance
Awards
A participant generally will not recognize income, and we will
not be allowed a tax deduction, at the time performance awards
are granted, so long as the awards are subject to a substantial
risk of forfeiture. When the participant receives or has the
right to receive payment of cash or shares under the performance
award, the cash amount or the fair market value of the shares of
stock will be ordinary income to the participant, and we will be
allowed a corresponding federal income tax deduction at that
time, subject to any applicable limitations under
Section 162(m).
Stock
Appreciation Rights (SARs)
There will typically be no federal income tax consequences to
the participant or to us upon the grant of a SAR under the 2005
Plan. When the participant exercises a SAR, he or she will
realize ordinary income in an amount equal to the excess of the
fair market value of the common stock received at the time of
exercise over the fair market value of a share of common stock
on date of grant, and we will be allowed a corresponding
deduction, subject to any applicable limitations under
Section 162(m).
38
Section 409A
Compliance
Section 409A provides that covered amounts deferred under a
non-qualified deferred compensation plan are includable in the
participants gross income to the extent not subject to a
substantial risk of forfeiture and not previously included in
income, unless certain requirements are met, including
limitations on the timing of deferral elections and events that
may trigger the distribution of deferred amounts.
Based on final regulations and other guidance issued under
Section 409A, the awards under the 2005 Plan could be
affected. In general, if an award either (1) meets the
requirements imposed by Section 409A or (2) qualifies
for an exception from coverage under Section 409A, the tax
consequences described above will continue to apply. If an award
is subject to Section 409A and it does not comply with the
requirements of Section 409A, then amounts deferred in the
current year and in previous years will become subject to
immediate taxation to the participant, and the participant will
be required to pay (1) a penalty equal to interest at the
underpayment rate plus 1% on the tax that should have been paid
on the amount of the original deferral and any related earnings
and (2) in addition to any regular tax, an additional tax
equal to 20% of the original deferral and any earnings credited
on the deferral.
Section 162(m)
Deduction Qualifications
Section 162(m) limits the deductions a publicly held
company can claim for compensation in excess of $1 million
in a given year paid to the chief executive officer or any of
its three other most highly compensated executive officers other
than the chief financial officer serving on the last day of the
fiscal year. Performance based compensation that
meets certain requirements is not counted against the
$1 million deductibility cap, and therefore remains fully
deductible. The Committee intends to structure awards under the
2005 Plan to be deductible under Section 162(m) unless the
Committee determines that compliance with
Section 162(m)s performance-based rules is not
desirable.
Shareholder approval of the material terms of the 2005 Plan will
permit qualification of incentive awards for full tax
deductibility under Section 162(m). For purposes of
Section 162(m), the material terms include (1) the
employees eligible to receive compensation under the 2005 Plan,
(2) a description of the business criteria on which the
performance goals are based, and (3) the maximum amount of
compensation that can be paid to a participant under the
performance goal. Approval of the 2005 Plan will be deemed to
include approval of the material terms of the 2005 Plan,
including the general business criteria upon which performance
objectives for Performance Awards are based. The key aspects of
the 2005 Plan are discussed above.
We do not intend the preceding discussion to be a complete
explanation of all of the income tax consequences of
participating in the 2005 Plan. Participants in the 2005 Plan
should consult their own personal tax advisor to determine the
particular tax consequences of the 2005 Plan to them, including
the application and effect of foreign, state and local taxes,
and any changes in the federal tax laws from the date of this
proxy statement.
39
Equity
Compensation Plan Table
The following table sets forth additional information as of the
end of Fiscal 2008, about shares of our common stock that may be
issued upon the exercise of options and other rights under our
existing equity compensation plans and arrangements, divided
between plans approved by our stockholders and plans or
arrangements not submitted to the Companys stockholders
for approval. The information includes the number of shares
covered by, and the weighted average exercise price of,
outstanding options and other rights and the number of shares
remaining available for future grants excluding the shares to be
issued upon exercise of outstanding options, warrants, and other
rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column (a)
|
|
|
Column (b)
|
|
|
Column (c)
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
Number of Securities
|
|
|
Weighted-Average
|
|
|
for Issuance Under
|
|
|
|
to be Issued Upon
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Exercise of Outstanding
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding
|
|
|
|
Options,
|
|
|
Warrants and
|
|
|
Securities Reflected
|
|
|
|
Warrants and Rights (1)
|
|
|
Rights (1)
|
|
|
in Column (a)) (1)(2)
|
|
|
Equity compensation plans approved by stockholders
|
|
|
14,496,734
|
|
|
$
|
15.25
|
|
|
|
9,610,963
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
14,496,734
|
|
|
$
|
15.25
|
|
|
|
9,610,963
|
|
|
|
|
(1) |
|
Of the 9.6 million securities remaining available for
issuance under equity compensation plans, 5.5 million are
available for stock options, stock appreciation rights, dividend
equivalents, performance awards or other non-full value stock
awards, and 4.1 million are available for restricted stock
awards, restricted stock units or other full value stock awards. |
|
(2) |
|
Equity compensation plans approved by stockholders are the 1994
Stock Option Plan, the 1999 Stock Incentive Plan and the 2005
Stock Award and Incentive Plan. |
Required
Vote
Approval of the Amendment and Restatement of the 2005 Plan
requires the affirmative vote of a majority of the shares
represented and voting, in person or by proxy, at the Annual
Meeting.
The Board of Directors recommends that the stockholders vote
FOR the adoption of the Amendment and Restatement of
the 2005 Stock Award and Incentive Plan.
PROPOSAL THREE:
RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending January 30,
2010. In the event the stockholders do not ratify the
appointment of Ernst & Young LLP, the Audit Committee
will reconsider its appointment. In addition, even if the
stockholders ratify the appointment of Ernst & Young
LLP, the Audit Committee may in its discretion appoint a
different independent registered public accounting firm at any
time during the year if the Audit Committee determines that a
change is in the best interest of the Company.
Representatives of Ernst & Young LLP are expected to
be present at the annual meeting to respond to appropriate
questions and to make a statement if such representatives so
desire.
The Board of Directors recommends that the stockholders vote
FOR the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending January 30,
2010.
40
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Committee reviewed the audited financial statements in the
Annual Report for the year ended January 31, 2009 with
management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness
of significant judgments, and the clarity of disclosures in the
financial statements.
The Audit Committee reviewed with the independent registered
public accounting firm, who is responsible for expressing an
opinion on the conformity of those audited financial statements
with generally accepted accounting principles, its judgments as
to the quality, not just acceptability, of the Companys
accounting principles and such other matters as are required to
be discussed with the Audit Committee by Statement on
Auditing Standards No. 61, as amended by Statement on
Auditing Standards No. 90 (Communications with Audit
Committees). In addition, the Audit Committee has discussed
with the independent registered public accounting firm, its
independence from management and the Company, including the
matters in the written disclosures required by Rule 3526 of
the Public Company Accounting Oversight Board, Communication
with Audit Committees Concerning Independence and considered
the compatibility of nonaudit services with the firms
independence.
The Audit Committee discussed with the Companys internal
auditors and its independent registered public accounting firm
the overall scope and plans for their respective audits. The
Audit Committee meets with the internal auditors and the
independent registered public accounting firm, with and without
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
controls, and the overall quality of the Companys
financial reporting. The Audit Committee also carried out the
additional responsibilities and duties as outlined in its
charter.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board that the audited
financial statements be included in the Annual Report on
Form 10-K
for the year ended January 31, 2009 for filing with the
Securities and Exchange Commission.
J. Thomas Presby, Audit Committee Chair
Michael G. Jesselson, Audit Committee Member
Cary D. McMillan, Audit Committee Member
Janice E. Page, Audit Committee Member
Gerald E. Wedren, Audit Committee Member
41
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
During Fiscal 2008, Ernst & Young LLP served as our
independent registered public accounting firm and in that
capacity rendered an unqualified opinion on our consolidated
financial statements as of and for the year ended
January 31, 2009.
The following table sets forth the aggregate fees billed to us
by our independent registered public accounting firm in each of
the last two fiscal years:
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
Fiscal
|
|
Description of Fees
|
|
2008
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
1,106,160
|
|
|
$
|
1,020,955
|
|
Audit-Related Fees
|
|
|
1,995
|
|
|
|
95,500
|
|
Tax Fees
|
|
|
93,730
|
|
|
|
262,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,201,885
|
|
|
$
|
1,378,455
|
|
Audit Fees include fees billed for professional
services rendered in connection with the audit of our
consolidated financial statements, including the audit of our
internal control over financial reporting, and the review of our
interim consolidated financial statements included in quarterly
reports as well as fees for services that generally only the
independent registered public accounting firm can reasonably be
expected to provide, including comfort letters, consents,
assistance with the review of registration statements filed with
the SEC and consultation regarding financial accounting
and/or
reporting standards. Audit-Related Fees include fees
billed for certain agreed upon procedures, accounting
consultations and accounting research software. Tax
Fees primarily include fees billed related to federal and
state consulting.
The Audit Committee has adopted a policy that requires
pre-approval of all auditing services and permitted non-audit
services to be performed by the independent registered public
accounting firm, subject to the de minimus exceptions for
non-audit services as described in SEC Exchange Act
Section 10A(i)(1)(B) which are approved by the Audit
Committee prior to the completion of the audit. The Audit
Committee may form and delegate the authority to grant
pre-approvals of audit and permitted non-audit services to
subcommittees consisting of one or more members when it deems
appropriate, provided that decisions of such subcommittee shall
be presented to the full Audit Committee at its next scheduled
meeting.
OTHER
MATTERS
The only business which the management intends to present at the
meeting consists of the matters set forth in this statement. The
management knows of no other matters to be brought before the
meeting by any other person or group. If any other matter should
properly come before the meeting, the proxy enclosed confers
upon the persons designated herein authority to vote thereon in
their discretion.
HOUSEHOLDING
In order to reduce expenses, we are taking advantage of certain
SEC rules, commonly known as householding, that
permit us to deliver, in certain cases, only one Notice, Annual
Report or Proxy Statement, as applicable, to multiple
stockholders sharing the same address, unless we have received
contrary instructions from one or more of the stockholders. If
you received a householded mailing this year and would like to
have additional copies of the Notice, Annual Report, Proxy
Statement or other proxy materials sent to you, please submit
your request directed to the Corporate Secretary of the Company,
at 77 Hot Metal Street, Pittsburgh, Pennsylvania 15203,
(412) 432-3300.
If you hold your stock in street name, you may revoke your
consent to householding at any time by notifying your broker.
42
If you are currently a stockholder sharing an address with
another Company stockholder and wish to have your future proxy
statements and annual reports householded, please contact the
Corporate Secretary of the Company at the above address or
telephone number.
ADDITIONAL
INFORMATION
We will furnish without charge to each person whose proxy is
being solicited, upon request of any such person, a copy of the
Fiscal 2008
Form 10-K
as filed with the SEC, including the financial statements and
schedules thereto. In addition, such report is available, free
of charge, through the investor relations section of our
Internet website at www.ae.com under the links
Investment Information, Annual Reports. A request
for a copy of such report should be directed to Judy Meehan,
Vice President of Investor Relations of the Company, at 77 Hot
Metal Street, Pittsburgh, Pennsylvania 15203,
(412) 432-3300.
43
Appendix A
AMERICAN
EAGLE OUTFITTERS, INC.
2005
STOCK AWARD AND INCENTIVE PLAN
(Amended and Restated Effective June 16, 2009)
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Page
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1.
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Purpose
|
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A-2
|
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2.
|
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Definitions
|
|
|
A-2
|
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|
3.
|
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Administration
|
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A-5
|
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|
4.
|
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Stock Subject to Plan
|
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A-5
|
|
|
5.
|
|
|
Eligibility; Per-Person Award Limitations
|
|
|
A-6
|
|
|
6.
|
|
|
Specific Terms of Awards
|
|
|
A-7
|
|
|
7.
|
|
|
Performance Awards, Including Annual Incentive Awards
|
|
|
A-11
|
|
|
8.
|
|
|
Certain Provisions Applicable to Awards
|
|
|
A-14
|
|
|
9.
|
|
|
Change of Control
|
|
|
A-15
|
|
|
10.
|
|
|
Additional Award Forfeiture Provisions
|
|
|
A-18
|
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|
11.
|
|
|
General Provisions
|
|
|
A-20
|
|
A-1
AMERICAN
EAGLE OUTFITTERS, INC.
2005
STOCK AWARD AND INCENTIVE PLAN
(Amended and Restated Effective June 16, 2009)
1. Purpose. The purpose of this 2005 Stock Award and
Incentive Plan, as amended and restated (the Plan)
is to aid American Eagle Outfitters, Inc., a Delaware
corporation (together with its successors and assigns, the
Company), in attracting, retaining, motivating and
rewarding employees and non-employee directors of the Company or
its subsidiaries or affiliates, to provide for equitable and
competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and
promote the creation of long-term value for stockholders by
closely aligning the interests of Participants with those of
stockholders. The Plan authorizes stock-based and cash-based
incentives for Participants.
2. Definitions. In addition to the terms defined in
Section 1 above and elsewhere in the Plan, the following
capitalized terms used in the Plan have the respective meanings
set forth in this Section:
(a) Annual Incentive Award means a type
of Performance Award granted to a Participant under
Section 7(c) representing a conditional right to receive
cash, Stock or other Awards or payments, as determined by the
Committee, based on performance in a performance period of one
fiscal year or a portion thereof.
(b) Annual Limit shall have the meaning
specified in Section 5(b).
(c) Award means any Option, SAR,
Restricted Stock, Restricted Stock Unit, Stock granted as a
bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, Performance Award or Annual Incentive Award,
together with any related right or interest, granted to a
Participant under the Plan.
(d) Beneficiary means the legal
representatives of the Participants estate entitled by
will or the laws of descent and distribution to receive the
benefits under a Participants Award upon a
Participants death, provided that, if and to the extent
authorized by the Committee, a Participant may be permitted to
designate a Beneficiary, in which case the
Beneficiary instead will be the person, persons,
trust or trusts (if any are then surviving) which have been
designated by the Participant in his or her most recent written
and duly filed beneficiary designation to receive the benefits
specified under the Participants Award upon such
Participants death. Unless otherwise determined by the
Committee, any designation of a Beneficiary other than a
Participants spouse shall be subject to the written
consent of such spouse.
(e) Board means the Companys Board
of Directors.
(f) Cause shall have the meaning defined
in an Award document or any employment agreement or severance
agreement, plan or policy with respect to the Participant and
the Company or a subsidiary or affiliate then in effect or, if
not defined in an Award document and no such agreement, plan or
policy is then in effect, Cause shall mean
(i) the Participants willful and continued failure
substantially to perform the duties of his or her position after
notice and opportunity to cure; (ii) any willful act or
omission by the Participant constituting dishonesty, fraud or
other malfeasance, which in any such case is demonstrably
injurious to the financial condition or business reputation of
the Company or any of its subsidiaries or affiliates;
(iii) an act that constitutes misconduct resulting in a
restatement of the Companys financial statements due to
material non-compliance with any financial reporting requirement
within the meaning of Section 304 of The Sarbanes-Oxley Act
of 2002; or (iv) a plea of guilty or no contest or a felony
conviction in a court of law under the laws of the United States
or any state thereof or any other jurisdiction in which the
Company or a subsidiary or affiliate conducts business which
materially impairs the value of the Participants Service
to the Company or any of its subsidiaries or affiliates;
provided, however, that for purposes of this definition, no act
or failure to act shall be deemed willful unless
effected by the Participant not in good faith and without a
reasonable belief that such action or failure to act was in or
not opposed to the Companys best interests, and no act or
failure to act
A-2
shall be deemed willful if it results from any
incapacity of the Participant due to physical or mental illness.
(g) Change in Control and related terms
have the meanings specified in Section 9.
(h) Code means the Internal Revenue Code
of 1986, as amended. References to any provision of the Code or
regulation thereunder shall include any successor provisions and
regulations, and reference to regulations includes any
applicable guidance or pronouncement of the Department of the
Treasury and Internal Revenue Service.
(i) Committee means the Compensation
Committee of the Board, the composition and governance of which
is established in the Committees Charter as approved from
time to time by the Board and subject to the listing
requirements of the New York Stock Exchange or any other stock
exchange or automated quotation system on which the Stock may
then be listed or quoted (the Listing Requirements),
and other corporate governance documents of the Company. No
action of the Committee shall be void or deemed to be without
authority due to the failure of any member, at the time the
action was taken, to meet any qualification standard set forth
in the Committee Charter or this Plan. The full Board may
perform any function of the Committee hereunder except to the
extent limited under the Listing Requirements, in which case as
used in this Plan the term Committee shall refer to
the Board.
(j) Covered Employee means an Eligible
Person who is a Covered Employee as specified in
Section 11(j).
(k) Disability means a permanent and
total disability within the meaning of Code
section 409A(2)(C), provided that in the case of Awards
other than Incentive Stock Options, the Committee in its
discretion may determine whether a permanent and total
disability exists in accordance with uniform and
non-discriminatory standards adopted by the Committee from time
to time.
(l) Dividend Equivalent means a right,
granted under this Plan, to receive cash, Stock, other Awards or
other property equal in value to all or a specified portion of
the dividends paid with respect to a specified number of shares
of Stock. Dividend Equivalents shall not be permitted on Options
and SARs. An adjustment referenced in Section 11
(c) shall not be considered a Dividend
Equivalent.
(m) Effective Date means the effective
date specified in Section 11(p).
(n) Eligible Person has the meaning
specified in Section 5.
(o) Employee means any person
treated as an employee (including an officer of the Company or
member of the Board who also is treated as an employee) in the
records of the Company or any affiliate, and with respect to any
Incentive Stock Option granted to such person, who is an
employee for purposes of Code Section 422; provided,
however, that neither Service as a member of the Board nor
payment of a directors fee shall be sufficient to
constitute employment for purposes of the Plan. The term
Employee shall not include a person hired as an
independent contractor, leased employee, consultant, or such
other person not on the payroll of the Company or an affiliate.
The Company will determine in good faith and in its sole
discretion whether a person has become or ceased to be an
Employee, and the effective dates of such persons
employment and termination of employment.
(p) Exchange Act means the Securities
Exchange Act of 1934, as amended. References to any provision of
the Exchange Act or rule (including a proposed rule) thereunder
shall include any successor provisions and rules.
(q) Fair Market Value means the fair
market value of Stock, Awards or other property as determined in
good faith by the Committee or under procedures established by
the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of Stock shall be the closing sale price per
share of Stock reported on a consolidated basis for securities
listed on the principal stock exchange or market on which Stock
is traded on the day as of which such value is being determined
or, if there is no sale on that day, then on the last previous
day on which a sale was reported. Fair Market Value relating to
A-3
the exercise price or base price of any Non-409A Option or SAR
shall conform to requirements so as to exempt them from Code
Section 409A.
(r) 409A Awards means Awards that
constitute a deferral of compensation under Code
Section 409A and regulations thereunder. Non-409A
Awards means Awards other than 409A Awards. Although the
Committee retains authority under the Plan to grant Options,
SARs and Restricted Stock on terms that will qualify those
Awards as 409A Awards, Options, SARs, and Restricted Stock are
intended to be Non-409A Awards unless otherwise expressly
specified by the Committee.
(s) Full-Value Award means Awards
relating to Stock where the value of such Award includes the
intrinsic value of the Stock on the date of grant, which
generally is Awards other than Options or SARs. References to a
Full-Value Award under a Preexisting Plan mean an
award of a type that would be a Full-Value Award if granted
under the Plan.
(t) Incentive Stock Option or
ISO means any Option designated as an incentive
stock option within the meaning of Code Section 422 and
qualifying thereunder.
(u) Option means a right, granted under
this Plan, to purchase Stock.
(v) Other Stock-Based Awards means
Awards granted to a Participant under Section 6(h).
(w) Participant means a person who has
been granted an Award under the Plan which remains outstanding,
including a person who is no longer an Eligible Person.
(x) Performance Award means a
conditional right, granted to a Participant under
Sections 6(i) and 7, to receive cash, Stock or other Awards
or payments.
(y) Preexisting Plans means each of the
following Company plans: the 1994 Stock Option Plan, as amended,
the 1999 Stock Incentive Plan, as amended, and the 2005 Stock
Award and Incentive Plan, prior to this amendment and
restatement.
(z) Restricted Stock means Stock granted
under this Plan which is subject to certain restrictions and to
a risk of forfeiture.
(aa) Restricted Stock Unit or
RSU means a right, granted under this Plan, to
receive Stock or other Awards or a combination thereof at the
end of a specified deferral period.
(bb) Retirement means, in the case of an
Employee, a termination of Service (other than by death,
Disability or for Cause) at or after his or her having achieved
a combination of years of age and years of employment by the
Company or any affiliate which equal or exceed 70 years, or
such other combination of age and years of Service as may be
fixed from time to time by the Committee. With respect to a
non-employee director, Retirement means termination
of Service on the Board with the consent of the remaining
Directors.
(cc) Rule 16b-3
means
Rule 16b-3,
as from time to time in effect and applicable to Participants,
promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(dd) Service means a Participants
work with the Company or an affiliate, either as an Employee or
as a non-Employee director. For purposes of determining payment
of a 409A Award, a Participant will be considered to have
terminated or separated from Service in accordance with Code
Section 409A and the guidance promulgated thereunder.
(ee) Stock means the Companys
Common Stock, par value $0.01 per share, and any other equity
securities of the Company that may be substituted or
resubstituted for Stock pursuant to Section 11(c).
(ff) Stock Appreciation Rights or
SAR means a right granted to a Participant
under Section 6(c).
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3. Administration.
(a) Authority of the Committee. The Plan shall be
administered by the Committee, which shall have full and final
authority, in each case subject to and consistent with the
provisions of the Plan, to select Eligible Persons to become
Participants; to grant Awards; to determine the type and number
of Awards, the dates on which Awards may be exercised and on
which the risk of forfeiture or deferral period relating to
Awards shall lapse or terminate, the acceleration of any such
dates, the expiration date of any Award, whether, to what
extent, and under what circumstances an Award may be settled, or
the exercise price of an Award may be paid, in cash, Stock,
other Awards, or other property, and other terms and conditions
of, and all other matters relating to, Awards; to prescribe
documents evidencing or setting terms of Awards (such Award
documents need not be identical for each Participant),
amendments thereto, and rules and regulations for the
administration of the Plan and amendments thereto; to construe
and interpret the Plan and Award documents and correct defects,
supply omissions or reconcile inconsistencies therein; and to
make all other decisions and determinations as the Committee may
deem necessary or advisable for the administration of the Plan.
Decisions of the Committee with respect to the administration
and interpretation of the Plan shall be final, conclusive, and
binding upon all persons interested in the Plan, including
Participants, Beneficiaries, transferees under
Section 11(b) and other persons claiming rights from or
through a Participant, and stockholders. The foregoing
notwithstanding, the Board shall perform the functions of the
Committee for purposes of granting Awards under the Plan to
non-employee directors.
(b) Manner of Exercise of Committee Authority. The
express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee. The Committee
may act through subcommittees, including for purposes of
perfecting exemptions under
Rule 16b-3
or qualifying Awards under Code Section 162(m) as
performance-based compensation, in which case the subcommittee
shall be subject to and have authority under the charter
applicable to the Committee, and the acts of the subcommittee
shall be deemed to be acts of the Committee hereunder, provided
that any such subcommittee intended to qualify Awards under Code
Section 162(m) shall be made up solely of two or more
outside directors within the meaning of Treasury Reg.
1.162-27(e)(3). The Committee may delegate to officers or
managers of the Company or any subsidiary or affiliate, or
committees thereof, the authority, subject to such terms as the
Committee shall determine, to perform such functions, including
administrative functions, as the Committee may determine, to the
extent (i) that such delegation will not result in the loss
of an exemption under
Rule 16b-3(d)
for Awards granted to Participants subject to Section 16 of
the Exchange Act in respect of the Company and will not cause
Awards intended to qualify as performance-based
compensation under Code Section 162(m) to fail to so
qualify, and (ii) permitted under Section 157 and
other applicable provisions of the Delaware General Corporation
Law. As such, the aforementioned delegation does not permit
officers or managers of the Company to make, cancel or suspend
Awards to Covered Employees or to members of the Board.
(c) Limitation of Liability. The Committee and each
member thereof, and any person acting pursuant to authority
delegated by the Committee, shall be entitled, in good faith, to
rely or act upon any report or other information furnished by
any executive officer, other officer or Employee of the Company
or a subsidiary or affiliate, the Companys independent
registered public accounting firm, consultants or any other
agents assisting in the administration of the Plan. Members of
the Committee, any person acting pursuant to authority delegated
by the Committee, and any officer or Employee of the Company or
a subsidiary or affiliate acting at the direction or on behalf
of the Committee or a delegee shall not be personally liable for
any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law,
be fully indemnified and protected by the Company with respect
to any such action or determination.
4. Stock Subject To Plan.
(a) Subject to adjustment as provided in
Section 11(c), a total of 31,850,000 shares of Stock
shall be authorized for grant under the Plan less one share of
Stock for every one share of Stock that was subject to an option
or stock appreciation right granted after January 31, 2009
under the Preexisting Plans and 1.85 shares for every one
share that was subject to an award other than an option or stock
appreciation right granted after
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January 31, 2009 under the Preexisting Plans. Any shares
that are subject to Options or Stock Appreciation Rights shall
be counted against this limit as one share for every one share
granted, and any shares that are subject to Awards other than
Options or Stock Appreciation Rights shall be counted against
this limit as 1.85 shares for every one share granted.
After the effective date of the Plan no awards may be granted
under any Preexisting Plan.
(b) If (i) any shares subject to an Award are
forfeited, an Award expires or an Award is settled for cash (in
whole or in part), or (ii) after January 31, 2009 any
shares subject to an award under the Preexisting Plans are
forfeited, or an award under the Preexisting Plans expires or is
settled for cash (in whole or in part), the shares subject to
such Award or award under the Preexisting Plans shall, to the
extent of such forfeiture, expiration or cash settlement, again
be available for Awards under the Plan. Notwithstanding anything
to the contrary contained herein, the following shares shall not
be added to the shares authorized for grant under paragraph
(a) of this Section: (i) shares tendered by the
Participant or withheld by the Company in payment of the
purchase price of an Option or an option granted under the
Preexisting Plans, (ii) shares tendered by the Participant
or withheld by the Company to satisfy any tax withholding
obligation with respect to an Award or awards granted under the
Preexisting Plans, or (iii) shares subject to a Stock
Appreciation Right or a stock appreciation right granted under
the Preexisting Plans that are not issued in connection with its
stock settlement on exercise thereof and (iv) shares
reacquired by the Company on the open market or otherwise using
cash proceeds from the exercise of Options or options granted
under the Preexisting Plans.
(c) Substitute Awards as provided in Section 6(b)(i)
shall not reduce the shares authorized for grant under the Plan
or the applicable limitations for grant to a Participant under
Section 5(b), nor shall shares subject to a substitute
award again be available for Awards under the Plan to the extent
of any forfeiture, expiration or cash settlement as provided in
paragraph (b) above. Additionally, in the event that a
company acquired by the Company or any Subsidiary or with which
the Company or any Subsidiary combines has shares available
under a pre-existing plan approved by stockholders and not
adopted in contemplation of such acquisition or combination, the
shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the shares
authorized for grant under the Plan; provided that Awards using
such available shares shall not be made after the date awards or
grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be
made to individuals who were not Employees or directors
preexisting to such acquisition or combination.
(d) Any shares that again become available for grant
pursuant to this Section shall be added back as (i) one
share if such shares were subject to Options or Stock
Appreciation Rights granted under the Plan or options or stock
appreciation rights granted under the Preexisting Plans, and
(ii) as 1.85 shares if such shares were subject to
Awards other than Options or Stock Appreciation Rights granted
under the Plan or awards other than options or stock
appreciation rights granted under the Preexisting Plans. The
total number of shares with respect to which ISOs may be granted
shall not exceed twenty million shares.
5. Eligibility; Per-Person Award Limitations.
(a) Eligibility. Awards may be granted under the Plan
only to Eligible Persons. For purposes of the Plan, an
Eligible Person means an Employee of the Company or
any subsidiary or affiliate, a non-employee director of the
Company or a subsidiary or affiliate, and any person who has
been offered employment by the Company or a subsidiary or
affiliate, provided that such prospective employee may not
receive any payment or exercise any right relating to an Award
until such person has commenced employment with the Company or a
subsidiary or affiliate. An Employee on leave of absence may be
considered as still in the employ of the Company or a subsidiary
or affiliate for purposes of eligibility for participation in
the Plan. For purposes of the Plan, a joint venture in which the
Company or a subsidiary has a substantial direct or indirect
equity investment shall be deemed an affiliate, if so determined
by the Committee. Holders of awards granted by a company or
business acquired by the Company or a subsidiary or affiliate,
or with which the Company or a
A-6
subsidiary or affiliate combines, are eligible for grants of
substitute awards as provided in Section 6(b)(i) granted in
assumption of or in substitution for such outstanding awards
previously granted under the Plan in connection with such
acquisition or combination transaction.
(b) Per-Person Award Limitations. In each calendar year
during any part of which the Plan is in effect, an Eligible
Person may be granted Awards intended to qualify as
performance-based compensation under Code
Section 162(m) under each of Section 6(b), 6(c), 6(d),
6(e), 6(f), 6(g), 6(h) or 6(i) relating to up to his or her
Annual Limit (such Annual Limit to apply separately to the type
of Award authorized under each specified subsection, except that
the limitation applies to Dividend Equivalents under
Section 6(g) only if such Dividend Equivalents are granted
separately from and not as a feature of another Award). A
Participants Annual Limit, in any year during any part of
which the Participant is then eligible under the Plan, shall
equal six million shares for each of Options and Stock
Appreciation Rights and four million shares with respect to each
of restricted shares of stock, restricted stock units and
Performance Awards (other than Options and Stock Appreciation
Rights) plus the amount of the Participants unused Annual
Limit relating to the same type of Award as of the close of the
previous year, subject to adjustment as provided in
Section 11(c). In the case of an Award which is not valued
in a way in which the limitation set forth in the preceding
sentences of this Section would operate as an effective
limitation satisfying applicable law (including Treasury
Regulation 1.162-27(e)(4)),
an Eligible Person may not be granted Awards authorizing the
earning during any calendar year of an amount that exceeds the
Eligible Persons Annual Limit, which for this purpose
shall equal $5,000,000 for each of Performance Awards Under
Section 7(b) and Annual Incentive Awards under
Section 7(c) plus the amount of the Eligible Persons
unused cash Annual Limit relating to the same type of Award as
of the close of the previous year (this limitation is separate
and not affected by the number of Awards granted during such
calendar year subject to the limitation in the preceding
sentence). For this purpose, (i) earning means
satisfying performance conditions so that an amount becomes
payable, without regard to whether it is to be paid currently or
on a deferred basis or continues to be subject to any Service
requirement or other non-performance condition, and (ii) a
Participants Annual Limit is used to the extent an amount
or number of shares may be potentially earned or paid under an
Award, regardless of whether such amount or shares are in fact
earned or paid.
6. Specific Terms Of Awards.
(a) General. Awards may be granted on the terms and
conditions set forth in this Section 6. In addition, the
Committee may impose on any Award or the exercise thereof, at
the date of grant or thereafter (subject to Sections 11(e)
and 11(k)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards
in the event of termination of employment or Service by the
Participant and terms permitting a Participant to make elections
relating to his or her Award. The Committee shall retain full
power and discretion with respect to any term or condition of an
Award that is not mandatory under the Plan, subject to
Section 11(k). The Committee shall require the payment of
lawful consideration for an Award to the extent necessary to
satisfy the requirements of the Delaware General Corporation
Law, and may otherwise require payment of consideration for an
Award except as limited by the Plan.
(b) Options. The Committee is authorized to grant Options
to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of
Stock purchasable under an Option (including both ISOs and
non-qualified Options) shall be determined by the Committee,
provided that such exercise price shall be not less than the
Fair Market Value of a share of Stock on the date of grant of
such Option, subject to Section 8(a). Notwithstanding the
foregoing, any substitute award granted in assumption of or in
substitution for an outstanding award granted by a company or
business acquired by the Company or a subsidiary or affiliate,
or with which the Company or a subsidiary or affiliate combines
may be granted with an exercise price per share of Stock other
than as required above.
(ii) Option Term; Time and Method of Exercise. The
Committee shall determine the term of each Option, provided that
in no event shall the term of any Option exceed a period of ten
years from the date
A-7
of grant. The Committee shall determine the time or times at
which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of
performance goals
and/or
future Service requirements), the methods by which such exercise
price may be paid or deemed to be paid and the form of such
payment (subject to Sections 11(k) and 11(l)), including,
without limitation, cash, Stock (including by withholding Stock
deliverable upon exercise), other Awards or awards granted under
other plans of the Company or any subsidiary or affiliate, or
other property (including through broker-assisted cashless
exercise arrangements, to the extent permitted by
applicable law), and the methods by or forms in which Stock will
be delivered or deemed to be delivered in satisfaction of
Options to Participants (including, in the case of 409A Awards,
deferred delivery of shares subject to the Option, as mandated
by the Committee, with such deferred shares subject to any
vesting, forfeiture or other terms as the Committee may
specify). Notwithstanding the foregoing, the Committee may
provide that if on the last day of the Option term, the Fair
Market Value of a share of Common Stock exceeds the exercise
price by a specified amount, the Participant has not exercised
the Option and the Option has not expired, the Option shall be
deemed to have been exercised by the Participant on such day
with payment made by withholding Shares otherwise issuable in
connection with the exercise of the Option. In such event, the
Company shall deliver to the Participant the number of Shares
for which the Option was deemed exercised, less the number of
Shares required to be withheld for the payment of the total
purchase price and required withholding taxes; provided,
however, any fractional Share shall be settled in cash.
(iii) ISOs. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of Code
Section 422.
(c) Stock Appreciation Rights. The Committee is
authorized to grant SARs to Participants on the following terms
and conditions:
(i) Right to Payment. An SAR shall confer on the
Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value
of one share of Stock on the date of exercise over (B) the
grant price of the SAR as determined by the Committee. The grant
price of an SAR shall not be less than the Fair Market Value of
a share of Stock on the grant date of such SAR, subject to
Section 8(a); provided, however, that the grant price of an SAR
that is granted subsequent to the related Option may be less
than Fair Market Value on the grant date if it is equal to the
exercise price of the related Option so long as such
subsequently granted SAR does not cause a Non-409A Award to
become subject to Code Section 409A or cause a 409A Award
to violate Code Section 409A.
(ii) Other Terms. The Committee shall determine the
term of each SAR, provided that in no event shall the term of an
SAR exceed a period of ten years from the date of grant. The
Committee shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under which a
SAR may be exercised in whole or in part (including based on
achievement of performance goals
and/or
future Service requirements), the method of exercise, method of
settlement, form of consideration payable in settlement, method
by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not a SAR shall be
free-standing or in tandem or combination with any other Award,
and whether or not the SAR will be a 409A Award or Non-409A
Award. The Committee may require that an outstanding Option be
exchanged for an SAR exercisable for Stock having vesting,
expiration, and other terms substantially the same as the
Option, so long as such exchange will not result in additional
accounting expense to the Company. Notwithstanding the
foregoing, the Committee may provide that if on the last day of
the term of a Stock Appreciation Right the Fair Market Value of
one Share exceeds the grant price per Share of the Stock
Appreciation Right, the Participant has not exercised the Stock
Appreciation Right or the tandem Option (if applicable), and
neither the Stock Appreciation Right nor the Option has expired,
the Stock Appreciation Right shall be deemed to have been
exercised by the Participant on such day. In such event, the
Company shall make payment to the Participant in accordance with
this Section, reduced by the number of Shares (or cash) required
for withholding taxes; provided, however, any fractional Share
shall be settled in cash.
A-8
(d) Restricted Stock. The Committee is authorized to
grant Restricted Stock to Participants on the following terms
and conditions:
(i) Grant and Restrictions. Restricted Stock shall
be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may
impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including
based on achievement of performance goals
and/or
future Service requirements), in such installments or otherwise
and under such other circumstances as the Committee may
determine at the date of grant or thereafter. Except to the
extent restricted under the terms of the Plan and any Award
document relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder,
including the right to vote the Restricted Stock and the right
to receive dividends thereon.
(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment or Service during
the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited and
reacquired by the Company; provided that the Committee may
provide, by rule or regulation or in any Award document, or may
determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock will lapse in
whole or in part, including in the event of terminations
resulting from specified causes.
(iii) Certificates for Stock. Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant,
the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, that the
Company retain physical possession of the certificates, and that
the Participant deliver a stock power to the Company, endorsed
in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the
grant of an Award of Restricted Stock, the Committee may require
that any dividends paid on a share of Restricted Stock shall be
either (A) paid with respect to such Restricted Stock at
the dividend payment date in cash, in kind, or in a number of
shares of unrestricted Stock having a Fair Market Value equal to
the amount of such dividends, or (B) automatically
reinvested in additional Restricted Stock or held in kind, which
shall be subject to the same terms as applied to the original
Restricted Stock to which it relates, or (C) deferred as to
payment, either as a cash deferral or with the amount or value
thereof automatically deemed reinvested in RSUs, other Awards or
other investment vehicles, subject to such terms as the
Committee shall determine or permit a Participant to elect.
Unless otherwise determined by the Committee, Stock distributed
in connection with a Stock split or Stock dividend, and other
property distributed as a dividend shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other
property has been distributed. Cash dividends, Stock distributed
in connection with a Stock split or Stock dividend, and other
property distributed as a dividend in connection with Restricted
Stock that vests based on achievement of performance goals shall
be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such cash,
Stock or other property has been distributed,
(e) Restricted Stock Units. The Committee is authorized
to grant RSUs to Participants, subject to the following terms
and conditions:
(i) Award and Restrictions. Issuance of Stock will
occur upon expiration of the deferral period specified for an
Award of RSUs by the Committee (or, if permitted by the
Committee, as elected by the Participant). In addition, RSUs
shall be subject to such restrictions on transferability, risk
of forfeiture and other restrictions, if any, as the Committee
may impose, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including
based on achievement of performance goals
and/or
future Service requirements), separately or in combination, in
installments or otherwise, and under such other circumstances as
the Committee may determine at the date of grant or thereafter.
RSUs may be satisfied by delivery of Stock, other Awards, or a
combination thereof, as determined by the Committee at the date
of grant or thereafter.
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(ii) Forfeiture. Except as otherwise determined by
the Committee, upon termination of employment or Service during
the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award document
evidencing the RSU), all RSUs that are at that time subject to
such forfeiture conditions shall be forfeited; provided that the
Committee may provide, by rule or regulation or in any Award
document, or may determine in any individual case, that
restrictions or forfeiture conditions relating to RSUs will
lapse in whole or in part, including in the event of
terminations resulting from specified causes.
(iii) Dividend Equivalents. Unless otherwise
determined by the Committee, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of RSUs
shall be either (A) paid with respect to such RSUs at the
dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such RSUs,
either as a cash deferral or with the amount or value thereof
automatically deemed reinvested in additional RSUs, other Awards
or other investment vehicles having a Fair Market Value equal to
the amount of such dividends, as the Committee shall determine
or permit a Participant to elect. Dividend Equivalents
distributed in connection with RSUs that vest based on the
achievement of performance goals shall be subject to
restrictions and a risk of forfeiture to the same extent as the
RSUs with respect to which such Stock or other property has been
distributed.
(f) Bonus Stock and Awards in Lieu of Obligations. The
Committee is authorized to grant Stock as a bonus, or to grant
Stock or other Awards in lieu of obligations of the Company or a
subsidiary or affiliate to pay cash or deliver other property
under the Plan or under other plans or compensatory
arrangements, subject to such terms as shall be determined by
the Committee.
(g) Dividend Equivalents. The Committee is authorized to
grant Dividend Equivalents to a Participant, which may be
awarded on a free-standing basis or in connection with another
Award (other than Options or SARs). The Committee may provide
that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional
Stock, Awards, or other investment vehicles, and subject to
restrictions on transferability, risks of forfeiture and such
other terms as the Committee may specify, except as otherwise
provided in the Plan.
(h) Other Stock-Based Awards. The Committee is
authorized, subject to limitations under applicable law, to
grant to Participants such other Awards that may be denominated
or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock or factors that may
influence the value of Stock, including, without limitation,
convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for
Stock, Awards with value and payment contingent upon performance
of the Company or business units thereof or any other factors
designated by the Committee, and Awards valued by reference to
the book value of Stock or the value of securities of or the
performance of specified subsidiaries or affiliates or other
business units. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award
in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration,
paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, notes,
or other property, as the Committee shall determine. Cash
awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this
Section 6(h). Cash dividends, Stock distributed in
connection with a Stock split or Stock dividend, and other
property distributed as a dividend in connection with other
Awards that vest based on achievement of performance goals shall
be subject to restrictions and a risk of forfeiture to the same
extent as the other Awards with respect to which such cash,
Stock or other property has been distributed.
(i) Performance Awards. Performance Awards, denominated
in cash or in Stock or other Awards, may be granted by the
Committee in accordance with Section 7.
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7. Performance Awards, Including Annual Incentive Awards.
(a) Performance Awards Generally. Performance Awards may
be denominated as a cash amount, number of shares of Stock, or
specified number of other Awards (or a combination) which may be
earned upon achievement or satisfaction of performance
conditions specified by the Committee. In addition, the
Committee may specify that any other Award shall constitute a
Performance Award by conditioning the right of a Participant to
exercise the Award or have it settled, and the timing thereof,
upon achievement or satisfaction of such performance conditions
as may be specified by the Committee. The Committee may use such
business criteria and other measures of performance as it may
deem appropriate in establishing any performance conditions, and
may exercise its discretion to reduce or increase the amounts
payable under any Award subject to performance conditions,
except as limited under Sections 7(b) and 7(c) in the case
of a Performance Award intended to qualify as
performance-based compensation under Code
Section 162(m). Dividend Equivalents distributed in
connection with performance Awards shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock Units with respect to which such Stock or other
property has been distributed.
(b) Performance Awards Granted to Covered Employees. If
the Committee determines that a Performance Award to be granted
to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee should qualify as
performance-based compensation for purposes of Code
Section 162(m), the grant, exercise
and/or
settlement of such Performance Award shall be contingent upon
achievement of a preestablished performance goal and other terms
set forth in this Section 7(b).
(i) Performance Goal Generally. The performance goal
for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the
Committee consistent with this Section 7(b). The performance
goal shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations
thereunder, including the requirement that the level or levels
of performance targeted by the Committee result in the
achievement of performance goals being substantially
uncertain. The Committee may determine that such
Performance Awards shall be granted, exercised
and/or
settled upon achievement of any one performance goal or that two
or more of the performance goals must be achieved as a condition
to grant, exercise
and/or
settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or
to different Participants.
(ii) Business Criteria. One or more of the following
business criteria shall be used by the Committee in establishing
performance goals for such Performance Awards:
(1) Income (loss) per common share from continuing
operations as disclosed in the Companys annual or
quarterly report filed with the Securities and Exchange
Commission (SEC) for a particular performance
period, either basic or fully diluted and with or without
expenses for stock options;
(2) Net income (loss) per common share as disclosed in the
Companys annual or quarterly report filed with the SEC for
a particular performance period, either basic or fully diluted
and with or without expenses for stock options;
(3) Income (loss) per common share from continuing
operations as specified in (1), or net income (loss) per common
share as specified in (2), in each case excluding
(i) extraordinary charge(s);
and/or
(ii) any accruals for restructuring programs, merger
integration costs, or merger transaction costs;
and/or
(iii) other unusual or infrequent items (whether gains or
losses) which may be disclosed as a separate component of income
or loss on the face of the income statement or as may be
disclosed in the notes to the financial statements (hereinafter
EPS);
(4) Earnings before interest, taxes, depreciation and
amortization;
(5) Earnings before interest and taxes;
(6) Stock price;
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(7) Total stockholder return expressed on a dollar or
percentage basis as is customarily disclosed in the proxy
statement accompanying the notice of annual meetings of
stockholders;
(8) Net income;
(9) Percentage increase in total net sales or comparable
store sales or another revenue measure as disclosed by the
Company in an annual or quarterly report filed with the SEC or
in a press release;
(10) Gross margin, cost of goods sold,
mark-ups or
mark-downs;
(11) Selling, general and administrative (S,G&A)
expense, other operating expenses;
(12) Inventory turnover or inventory shrinkage;
(13) Return on assets, return on investment, return on
capital, or return on equity;
(14) Cash flow, free cash flow, cash flow return on
investment, or net cash provided by operations;
(15) Economic profit or value created;
(16) Strategic or operational business criteria, consisting
of one or more objectives based on meeting specified market
penetration, geographic expansion or new concept development
goals; cost targets; customer satisfaction; employee
satisfaction; human resources goals, including staffing,
training and development and succession planning; supervision of
litigation and information technology; and goals relating to
acquisitions or divestitures of subsidiaries, affiliates or
joint ventures;
(17) Any of items (1) through ( 16) above with
respect to any subsidiary, affiliate, business unit or business
group of the Company whether or not such information is included
in the Companys annual report to stockholders, proxy
statement or notice of annual meeting of stockholders;
(18) Any of items (1) through (17) above with
respect to a performance period whether or not such information
is included in the Companys annual report to stockholders,
proxy statement or notice of annual meetings of stockholders;
(19) Any of items (1) through (18) above
excluding any expense for performance based cash or equity
compensation, including without limitation, amounts payable
under this Plan or the Preexisting Plans or any similar
plan; and
With respect to per share items above, other terminology may be
used for income (loss) per common share (such as
basic EPS, earnings per common share,
diluted EPS, or earnings per common
share-assuming dilution) as contemplated by Statement of
Financial Accounting Standards No. 128.
The targeted level or levels of performance with respect to such
business criteria may be established at such levels and in such
terms as the Committee may determine, in its discretion,
including in absolute terms, as a goal relative to performance
in prior periods, or as a goal compared to the performance of
one or more comparable companies or an index covering multiple
companies.
The Committee shall specify how any performance objectives shall
be adjusted to the extent necessary to prevent dilution or
enlargement of any award as a result of extraordinary events or
circumstances, as determined by the Committee, or to exclude the
effects of extraordinary, unusual, or non-recurring items;
changes in applicable laws, regulations, or accounting
principles; currency fluctuations; discontinued operations;
non-cash items, such as amortization, depreciation, or reserves;
asset impairment; or any recapitalization, restructuring,
reorganization, merger, acquisition, divestiture, consolidation,
spin-off,
split-up,
combination, liquidation, dissolution, sale of assets, or other
similar corporation transaction; provided, however, that no such
adjustment will be made if the effect of such adjustment would
cause an award to fail to qualify as performance-based
compensation within the meaning of Code Section 162(m). The
Committee may not use any discretion to modify award results
except as permitted under Code Section 162(m).
(iii) Performance Period; Timing for Establishing
Performance Goals. Achievement of performance goals in
respect of such Performance Awards shall be measured over a
performance period of up to one year or
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more than one year, as specified by the Committee. A performance
goal shall be established not later than the earlier of
(A) 90 days after the beginning of any performance
period applicable to such Performance Award or (B) the time
25% of such performance period has elapsed.
(iv) Performance Award Pool. The Committee may
establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring performance of the Company in
connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business
criteria set forth in Section 7(b)(ii) during the given
performance period, as specified by the Committee in accordance
with Section 7(b)(iii). The Committee may specify the
amount of the Performance Award pool as a percentage of any of
such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria. In
all cases, however, the portion of the Performance Award pool
potentially payable to each Covered Employee shall be
pre-established by the Committee.
(v) Settlement of Performance Awards; Other Terms.
Settlement of Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee.
The Committee may, in its discretion, increase or reduce the
amount of a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in
respect of a Performance Award subject to this Section 7(b). Any
settlement which changes the form of payment from that
originally specified shall be implemented in a manner such that
the Performance Award and other related Awards do not, solely
for that reason, fail to qualify as performance-based
compensation for purposes of Code Section 162(m). The
Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant or other event
(including a Change in Control) prior to the end of a
performance period or settlement of such Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered
Employees. The Committee may grant an Annual Incentive Award
to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee. Such Annual Incentive Award
will be intended to qualify as performance-based
compensation for purposes of Code Section 162(m), and
its grant, exercise
and/or
settlement shall be contingent upon achievement of
preestablished performance goals and other terms set forth in
this Section 7(c).
(i) Grant of Annual Incentive Awards. Not later than
the earlier of 90 days after the beginning of any
performance period applicable to such Annual Incentive Award or
the time 25% of such performance period has elapsed, the
Committee shall determine the Covered Employees who will
potentially receive Annual Incentive Awards, and the amount(s)
potentially payable thereunder, for that performance period. The
amount(s) potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more
of the business criteria set forth in Section 7(b)(ii) in
the given performance period, as specified by the Committee. The
Committee may designate an annual incentive award pool as the
means by which Annual Incentive Awards will be measured, which
pool shall conform to the provisions of Section 7(b)(iv). In
such case, the portion of the Annual Incentive Award pool
potentially payable to each Covered Employee shall be
preestablished by the Committee. In all cases, the maximum
Annual Incentive Award of any Participant shall be subject to
the limitation set forth in Section 5.
(ii) Payout of Annual Incentive Awards. After the
end of each performance period, the Committee shall determine
the amount, if any, of the Annual Incentive Award for that
performance period payable to each Participant. The Committee
may, in its discretion, determine that the amount payable to any
Participant as a final Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever, but
may not exercise discretion to increase any such amount. The
Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant or other event
prior to the end of a performance period or settlement of such
Annual Incentive Award.
(d) Written Determinations. Determinations by the
Committee as to the establishment of performance goals, the
amount potentially payable in respect of Performance Awards and
Annual Incentive Awards, the
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level of actual achievement of the specified performance goals
relating to Performance Awards and Annual Incentive Awards, and
the amount of any final Performance Award and Annual Incentive
Award shall be recorded in writing in the case of Performance
Awards intended to qualify under Section 162(m).
Specifically, the Committee shall certify in writing, in a
manner conforming to applicable regulations under
Section 162(m), prior to settlement of each such Award
granted to a Covered Employee, that the performance objective
relating to the Performance Award and other material terms of
the Award upon which settlement of the Award was conditioned
have been satisfied.
8. Certain Provisions Applicable To Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards.
Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any subsidiary
or affiliate, or any business entity to be acquired by the
Company or a subsidiary or affiliate, or any other right of a
Participant to receive payment from the Company or any
subsidiary or affiliate; provided, however, that a 409A Award
may not be granted in tandem with a Non-409A Award. Awards
granted in addition to or in tandem with other Awards or awards
may be granted either as of the same time as or a different time
from the grant of such other Awards or awards. Subject to
Sections 11(k) and (l), the Committee may determine that,
in granting a new Award, the in-the-money value or fair value of
any surrendered Award or award or the value of any other right
to payment surrendered by the Participant may be applied to
reduce the exercise price of any Option, grant price of any SAR,
or purchase price of any other Award.
(b) Term of Awards. The term of each Award shall be for
such period as may be determined by the Committee, subject to
the express limitations set forth in Sections 6(b)(ii),
6(c)(ii) and 8 or elsewhere in the Plan.
(c) Form and Timing of Payment under Awards; Deferrals.
Subject to the terms of the Plan (including
Sections 11(k) and (l)) and any applicable Award document,
payments to be made by the Company or a subsidiary or affiliate
upon the exercise of an Option or other Award or settlement of
an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or
transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in
lieu of Stock in connection with such settlement, in the
discretion of the Committee or upon occurrence of one or more
specified events, subject to Sections 11(k) and
(l) and so long as such an acceleration does not cause a
Non-409A Award to become subject to Code Section 409A.
Subject to Section 11(k), installment or deferred payments
may be required by the Committee (subject to Section 11(e))
or permitted at the election of the Participant on terms and
conditions established by the Committee.; provided, however,
that no election deferral will be permitted if it would make a
Non-409A Award become subject to Code Section 409A.
Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or
deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock. In the case of any 409A
Award that is vested and no longer subject to a risk of
forfeiture (within the meaning of Code Section 83), such
Award will be distributed to the Participant, upon application
of the Participant, if the Participant has had an unforeseeable
emergency within the meaning of Code
Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in
accordance with Section 409A(a)(2)(B)(ii).
(d) Limitation on Vesting of Certain Awards. Subject to
Section 10, Restricted Stock and RSUs will vest over a
minimum period of three years except in the event of a
Participants death, disability, or Retirement, or in the
event of a Change in Control or other special circumstances as
determined by the Committee, or Awards made in the event of a
new hire or promotion, to a non-employee director, made in
assumption or substitution for Awards of an acquired company, or
made in payment of earned incentive compensation. The foregoing
notwithstanding, Restricted Stock and RSUs as to which either
the grant or vesting is based on, among other things, the
achievement of one or more performance conditions generally will
vest over a minimum period of one year except in the event of a
Participants death, disability, or Retirement, or in the
event of a Change in Control or other special circumstances as
determined by the Committee, or Awards made
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in the event of a new hire or promotion, made to a non-employee
director, made in assumption or substitution for Awards of an
acquired company, or made in payment of earned incentive
compensation. For purposes of this Section 8(d), (i) a
performance period that precedes the grant of the Restricted
Stock or RSUs will be treated as part of the vesting period if
the participant has been notified promptly after the
commencement of the performance period that he or she has the
opportunity to earn the Award based on performance and continued
Service, and (ii) vesting over a three-year period or
one-year period will include periodic vesting over such period
if the rate of such vesting is proportional (or less rapid)
throughout such period.
9. Change in Control.
(a) Effect of Change in Control. In the event
that there occurs a Change in Control of the Company, if the
Company and any successor entity assumes outstanding Awards or
issues substitute awards as provided in Section 6(b)(i) and
if the Participants employment with the Company and its
subsidiaries and affiliates terminates in an event constituting
a Qualifying Termination (as defined in
Section 9(e)) during the eighteen-month period following
the Change in Control, the following provisions shall apply to
the Participants Awards upon such Qualifying Termination,
unless otherwise provided by the Committee in the Award document
or in another written agreement, plan or policy with respect to
a Participant (in language specifically negating the effect of
this Section 9(a)):
(i) In the case of an Award other than a performance based
Award (i.e., a Performance Award or Restricted Stock, RSUs, or
Other Stock-Based Awards that vest based on the achievement of
performance conditions), all forfeiture conditions and other
restrictions applicable to such Award shall lapse and such Award
shall be fully payable as of the time of the Participants
Qualifying Termination without regard to vesting or other
conditions, and any such Award carrying a right to exercise that
was not previously vested and exercisable shall become fully
vested and exercisable as of the time of the Participants
Qualifying Termination, and all deferral of settlement and
similar restrictions applicable to such Award shall lapse and
such Award shall be fully payable as of the time of such
Qualifying Termination without regard to deferral conditions,
subject to Section 11(k) (including any applicable
six-month delay in distribution) and subject to applicable
restrictions set forth in Section 11(a).
(ii) In the case of a performance based Award, (i) if
50% or more of the performance period has been completed as of
the date of the Change in Control, then the value of such Award
will be converted into Restricted Stock based on performance to
the Change in Control date and will vest at the end of the
Performance Period, subject to the provisions set forth in
Section 9(a)(i) in the event of a Qualifying Termination;
or (ii) if less than 50% of the performance period has been
completed as of the date of the Change in Control, then the
value of such Award will be converted into Restricted Stock
based on the Performance Awards target level value and
will vest at the end of the Performance Period, subject to the
provisions set forth in Section 9(a)(i) in the event of a
Qualifying Termination.
(iii) Awards subject to accelerated vesting
and/or
settlement under this Section 9(a) may be settled in cash,
if and to the extent authorized by the Committee.
The Company and any successor that has assumed an Award in
connection with a Change in Control must acknowledge and agree
to be bound by the provisions hereof following the Change in
Control in a legally binding agreement with the Participant.
(b) Non-Performance Based AwardsNot Assumed. In the
event of a Change in Control, if the Company and any successor
entity do not assume outstanding Awards or issue substitute
awards as provided in Section 6(b)(i), then the following
provisions shall apply to non-performance based Awards,
including Awards as to which performance conditions previously
have been satisfied or are deemed satisfied under
Section 9(a),
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unless otherwise provided by the Committee in the Award document
or in another written agreement, plan or policy with respect to
a Participant (in language specifically negating the effect of
this Section 9(b)):
(i) In the case of Non-409A Awards, to the extent permitted
without causing the Award to become subject to Code
Section 409A:
(A) All forfeiture conditions and other restrictions
applicable to Awards granted under the Plan shall lapse and such
Awards shall be fully payable as of the time of the Change in
Control without regard to vesting or other conditions, except to
the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 11(a); and
(B) Any Award carrying a right to exercise that was not
previously exercisable
and/or
vested shall become fully exercisable
and/or
vested as of the time of the Change in Control and shall remain
exercisable
and/or
vested for the balance of the stated term of such Award without
regard to any termination of employment or Service by the
Participant other than a termination for Cause, subject only to
applicable restrictions set forth in
Section 11(a).; and
(C) The Committee may, in its discretion, determine to
extend to any Participant who holds an Option the right to
elect, during the
60-day
period immediately following the Change in Control, in lieu of
acquiring the shares of Stock covered by such Option, to receive
in cash the excess of the Change in Control Price over the
exercise price of such Option, multiplied by the number of
shares of Stock covered by such Option, and to extend to any
Participant who holds other types of Awards denominated in
shares the right to elect, during the
60-day
period immediately following the Change in Control, in lieu of
receiving the shares of Stock covered by such Award, to receive
in cash the Change in Control Price multiplied by the number of
shares of Stock covered by such Award.
(ii) In the case of 409A Awards, if and to the extent
permitted under Code Section 409A (for this purpose, if
Section 409A would permit any of the following events to
occur following 409A Ownership/Control Change but not otherwise,
such event shall occur only if a Change in Control also
constitutes a 409A Ownership/Control Change):
(A) All deferral of settlement, forfeiture conditions and
other restrictions applicable to an unvested Award granted under
the Plan shall lapse and such Awards shall be fully payable as
of the time of the Change in Control without regard to deferral
and vesting conditions, except to the extent of any waiver by
the Participant (if permitted under Section 409A) and
subject to applicable restrictions set forth in
Section 11(a); and
(B) Any Award carrying a right to exercise that was not
previously exercisable
and/or
vested shall become fully exercisable
and/or
vested as of the time of the Change in Control and shall remain
exercisable
and/or
vested for the balance of the stated term of such Award without
regard to any termination of employment or Service by the
Participant other than a termination for Cause, subject only to
applicable restrictions set forth in
Section 11(a).; and
(C) The Committee may, in its discretion, determine to
extend to any Participant who holds an Option the right to
elect, during the
60-day
period immediately following the Change in Control, in lieu of
acquiring the shares of Stock covered by such Option, to receive
in cash the excess of the Change in Control Price over the
exercise price of such Option, multiplied by the number of
shares of Stock covered by such Option, and to extend to any
Participant who holds other types of Awards denominated in
shares the right to elect, during the
60-day
period immediately following the Change in Control, in lieu of
receiving the shares of Stock covered by such Award, to receive
in cash the Change in Control Price multiplied by the number of
shares of Stock covered by such Award.
(c) Performance Based AwardsNot Assumed. In the
event of a Change in Control, if the Company and any successor
entity do not assume outstanding Awards or issue substitute
awards as provided in Section 6(b)(i), then the following
provisions shall apply to performance based Awards unless
otherwise provided by the Committee in the Award document or in
another written agreement, plan or policy with
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respect to a Participant (in language specifically negating the
effect of this Section 9(c)) and except to the extent not
permitted under Section 409A in the case of 409A Awards,
(i) if 50% or more of the performance period has been
completed as of the date of the Change in Control, then the
value of the Award will be converted, based on performance to
the Change in Control date, to (x) fully vested Stock if a
non-cash Award or (y) cash if a cash Award; or (ii) if
less than 50% of the performance period has been completed as of
the date of the Change in Control, then the value of the Award
will be converted, based on the Awards target level value,
to (x) fully vested Stock if a non-cash Award or
(y) cash if a cash Award and be fully payable as of the
time of the Change in Control without regard to vesting or other
conditions, except to the extent of any waiver by the
Participant and subject to applicable restrictions set forth in
Section 11(a).
(d) Definition of Change in Control. A
Change in Control shall be deemed to have occurred
if, after the Effective Date, there shall have occurred any of
the following:
(i) Any person, as such term is used in
Section 13(d) and 14(d) of the Exchange Act (other than the
Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock
of the Company), acquires voting securities of the Company and
immediately thereafter is a 30% Beneficial Owner.
For purposes of this provision, a 30% Beneficial
Owner shall mean a person who is the beneficial
owner (as defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
of the Company representing 30% or more of the combined voting
power of the Companys then-outstanding voting securities;
provided that the term 30% Beneficial Owner shall
not include any person who, at all times following such an
acquisition of securities, remains eligible to file a
Schedule 13G pursuant to
Rule 13d-1(b)
under the Exchange Act, or remains exempt from filing a
Schedule 13D under Section 13(d)(6)(b) of the Exchange
Act, with respect to all classes of Company voting securities;
(ii) During any period of two consecutive years commencing
on or after the Effective Date, individuals who at the beginning
of such period constitute the Board, and any new director (other
than a director designated by a person (as defined above) who
has entered into an agreement with the Company to effect a
transaction described in subsections (i), (iii) or
(iv) of this definition or a new director approved in
connection with an actual or threatened proxy contest or as a
result of any other actual or threatened solicitation of proxies
by or on behalf of any person other than the Board) whose
election by the Board or nomination for election by the
Companys shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so approved
(the Continuing Directors) cease for any reason to
constitute at least a majority thereof;
(iii) The consummation of a merger, consolidation,
recapitalization, or reorganization of the Company, or a reverse
stock split of any class of voting securities of the Company,
other than any such transaction which would result in at least
50% of the combined voting power of the voting securities of the
Company or the surviving entity outstanding immediately after
such transaction being beneficially owned by persons who held at
least 50% of the combined voting power of the voting securities
of the Company immediately prior to such transaction with the
relative voting power of each such continuing holder compared to
the voting power of each other continuing holder not
substantially altered as a result of the transaction; provided
that, for purposes of this paragraph (iii), such continuity of
ownership (and preservation of relative voting power) shall be
deemed to be satisfied if the failure to meet such 50% threshold
(or to substantially preserve such relative voting power) is due
solely to the acquisition of voting securities by an employee
benefit plan of the Company, such surviving entity or a
subsidiary thereof; and provided further, that, if consummation
of the corporate transaction referred to in this
Section 9(c)(iii) is subject to the consent of any
government or governmental agency or other material contingency,
no Change in Control shall occur until such time any other
material contingency has been satisfied;
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(iv) The shareholders of the Company have approved a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Companys assets (or any transaction having a
similar effect); provided that, if consummation of the
transaction referred to in this Section 9(d)(iv) is
subject, at the time of such approval by shareholders, to the
consent of any government or governmental agency or approval of
the shareholders of another entity or other material
contingency, no Change in Control shall occur until such time as
such consent and approval has been obtained and any other
material contingency has been satisfied; and
(v) Any other event which the Board of Directors of the
Company determines shall constitute a Change in Control for
purposes of this Plan.
(e) Definition of Qualifying Termination. A
Qualifying Termination shall be deemed to have
occurred if, except as otherwise provided in an Award document
or any employment agreement or severance agreement, plan or
policy with respect to the Participant and the Company or a
subsidiary or affiliate then in effect, there shall have
occurred any of the following:
(i) A Company-initiated termination for reason other than
willful misconduct, activity deemed detrimental to the interests
of the Company, or disability, provided that the Participant
executes a general release and, where applicable, a
non-solicitation
and/or
non-compete agreement with the Company.
(ii) The Participant resigns with good cause within the
time period specified by the Committee, for which purpose
good cause means (A) change in duties or
responsibilities (including reporting responsibilities) that are
inconsistent in any material and adverse respect with position,
duties or responsibilities, (B) reduction in annual base
salary or target annual bonus opportunity as in effect
immediately prior to such Change in Control or as the same may
be increased from time to time thereafter, other than up to a
10% across the board reduction for all executives,
(C) relocation of more than 50 miles from office
location on date of such Change in Control that also increases
commute from principal residence by more than 50 miles, or
(D) reduction of more than 5% in aggregate value of
benefits under employee benefit plans, welfare benefit plans and
fringe benefit plans in which the Participant is participating
immediately prior to such Change in Control.
A Participants death or voluntary resignation without good
cause will not constitute a Qualifying Termination.
(f) Definition of 409A Ownership/Control
Change. A 409A Ownership/Control Change
shall be deemed to have occurred if a Change in Control occurs
which constitutes a change in the ownership or effective control
of the Company, or in the ownership of a substantial portion of
the assets of the Company, within the meaning of Code
Section 409A(a)(2)(A)(v).
(g) Definition of Change in Control Price.
The Change in Control Price means an amount in cash
equal to the amount of cash and fair market value of property
that is the price per share paid (including extraordinary
dividends) in any transaction triggering the Change in Control
or any liquidation of shares following a sale of substantially
all assets of the Company.
(h) Termination of Employment After Change in Control
Negotiations Have Commenced. For purposes of this
Section 9, a termination of a Participants employment
by the Company without Cause after the commencement of
negotiations with a potential acquirer or business combination
partner will be deemed to be a termination of employment
immediately after a Change in Control if such negotiations
result in a transaction constituting a Change in Control within
24 months of the commencement date of such negotiations.
10. Additional Award Forfeiture Provisions.
(a) Forfeiture of Options and Other Awards and Gains Realized
Upon Prior Option Exercises or Award Settlements. Unless
otherwise determined by the Committee, each Award granted
hereunder, other than Awards granted to non-employee directors,
shall be subject to the following additional forfeiture
conditions, to
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which the Participant, by accepting an Award hereunder, agrees.
If any of the events specified in Section 10(b)(i), (ii),
(iii) or (iv) occurs (a Forfeiture Event), all
of the following forfeitures will result:
(i) The unexercised portion of the Option, whether or not
vested, and any other Award not then settled (except for an
Award that has not been settled solely due to an elective
deferral by the Participant and otherwise is not forfeitable in
the event of any termination of Service of the Participant) will
be immediately forfeited and canceled upon the occurrence of the
Forfeiture Event; and
(ii) The Participant will be obligated to repay to the
Company, in cash, within five business days after demand is made
therefor by the Company, the total amount of Award Gain (as
defined herein) realized by the Participant upon each exercise
of an Option or settlement of an Award (regardless of any
elective deferral) that occurred on or after (A) the date
that is one-year prior to the occurrence of the Forfeiture
Event, if the Forfeiture Event occurred while the Participant
was employed by the Company or a subsidiary or affiliate, or
(B) the date that is one-year prior to the date the
Participants employment by the Company or a subsidiary or
affiliate terminated, if the Forfeiture Event occurred after the
Participant ceased to be so employed. For purposes of this
Section, the term Award Gain shall mean (i), in
respect of a given Option exercise, the product of (X) the
Fair Market Value per share of Stock at the date of such
exercise (without regard to any subsequent change in the market
price of shares) minus the exercise price times (Y) the
number of shares as to which the Option was exercised at that
date, and (ii), in respect of any other settlement of an Award
granted to the Participant, the Fair Market Value of the cash or
Stock paid or payable to Participant (regardless of any elective
deferral) less any cash or the Fair Market Value of any Stock or
property (other than an Award or award which would have itself
then been forfeitable hereunder and excluding any payment of tax
withholding) paid by the Participant to the Company as a
condition of or in connection with such settlement.
(b) Events Triggering Forfeiture. The forfeitures
specified in Section 10(a) will be triggered upon the
occurrence of any one of the following Forfeiture Events at any
time during the Participants employment by the Company or
a subsidiary or affiliate and resulting in his or her
termination of employment, or during the one-year period
following termination of such employment:
(i) The Participant, acting alone or with others, directly
or indirectly, prior to a Change in Control, (A) engages,
either as employee, employer, consultant, advisor, or director,
or as an owner, investor, partner, or stockholder unless the
Participants interest is insubstantial, in any business in
an area or region in which the Company conducts business at the
date the event occurs, which is directly in competition with a
business then conducted by the Company or a subsidiary or
affiliate; (B) induces any customer or supplier of the
Company or a subsidiary or affiliate with which the Company or a
subsidiary or affiliate has a business relationship, to curtail,
cancel, not renew, or not continue his or her or its business
with the Company or any subsidiary or affiliate; or
(C) induces, or attempts to influence, any employee of or
service provider to the Company or a subsidiary or affiliate to
terminate such employment or Service. The Committee shall, in
its discretion, determine which lines of business the Company
conducts on any particular date and which third parties may
reasonably be deemed to be in competition with the Company. For
purposes of this Section 10(b)(i), a Participants
interest as a stockholder is insubstantial if it represents
beneficial ownership of less than five percent of the
outstanding class of stock, and a Participants interest as
an owner, investor, or partner is insubstantial if it represents
ownership, as determined by the Committee in its discretion, of
less than five percent of the outstanding equity of the entity;
(ii) The Participant discloses, uses, sells, or otherwise
transfers, except in the course of employment with or other
Service to the Company or any subsidiary or affiliate, any
confidential or proprietary information of the Company or any
subsidiary or affiliate, including but not limited to
information regarding the Companys current and potential
customers, organization, employees, finances, and methods of
operations and investments, so long as such information has not
otherwise been disclosed to the public or is not otherwise in
the public domain, except as required by law or pursuant to
legal process, or the Participant makes statements or
representations, or otherwise communicates, directly or
indirectly, in
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writing, orally, or otherwise, or takes any other action which
may, directly or indirectly, disparage or be damaging to the
Company or any of its subsidiaries or affiliates or their
respective officers, directors, employees, advisors, businesses
or reputations, except as required by law or pursuant to legal
process; or
(iii) The Participant fails to cooperate with the Company
or any subsidiary or affiliate in any way, including, without
limitation, by making himself or herself available to testify on
behalf of the Company or such subsidiary or affiliate in any
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, or otherwise fails to assist
the Company or any subsidiary or affiliate in any way,
including, without limitation, in connection with any such
action, suit, or proceeding by providing information and meeting
and consulting with members of management of, other
representatives of, or counsel to, the Company or such
subsidiary or affiliate, as reasonably requested.
(iv) The Participant engages in misconduct that causes or
partially causes the need for restatement of financial
statements that would have resulted in a lower Award where the
payment was predicated upon the achievement of certain financial
results that were the subject of the restatement.
(c) Agreement Does Not Prohibit Competition or Other
Participant Activities. Although the conditions set forth in
this Section 10 shall be deemed to be incorporated into an
Award, a Participant is not thereby prohibited from engaging in
any activity, including but not limited to competition with the
Company and its subsidiaries and affiliates. Rather, the
non-occurrence of the Forfeiture Events set forth in
Section 10(b) is a condition to the Participants
right to realize and retain value from his or her compensatory
Options and Awards, and the consequence under the Plan if the
Participant engages in an activity giving rise to any such
Forfeiture Event are the forfeitures specified herein. The
Company and the Participant shall not be precluded by this
provision or otherwise from entering into other agreements
concerning the subject matter of Sections 10(a) and 10(b)
and those other provisions shall not be affected by this
Agreement.
(d) Committee Discretion. The Committee may, in its
discretion, waive in whole or in part the Companys right
to forfeiture under this Section, but no such waiver shall be
effective unless evidenced by a writing signed by the chief
executive officer of the Company. In addition, the Committee may
impose additional conditions on Awards, by inclusion of
appropriate provisions in the document evidencing or governing
any such Award.
11. General Provisions.
(a) Compliance with Legal and Other Requirements. The
Company may, to the extent deemed necessary or advisable by the
Committee and subject to Section 11(k), postpone the
issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification
of such Stock or other required action under any federal or
state law, rule or regulation, listing or other required action
with respect to any stock exchange or automated quotation system
upon which the Stock or other securities of the Company are
listed or quoted, or compliance with any other obligation of the
Company, as the Committee may consider appropriate, and may
require any Participant to make such representations, furnish
such information and comply with or be subject to such other
conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in
compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the
Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation,
that results or would result in any postponement of the issuance
or delivery of Stock or payment of benefits under any Award or
the imposition of any other conditions on such issuance,
delivery or payment, to the extent that such postponement or
other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the
Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or
other right or interest of a Participant under the Plan shall be
pledged, hypothecated or otherwise encumbered or subject to any
lien, obligation or liability of such Participant to any party
(other than the Company or a subsidiary or affiliate thereof),
or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution or to a
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Beneficiary upon the death of a Participant, and such Awards or
rights that may be exercisable shall be exercised during the
lifetime of the Participant only by the Participant or his or
her guardian or legal representative, except that Awards and
other rights (other than ISOs and SARs in tandem therewith) may
be transferred to one or more transferees during the lifetime of
the Participant, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the
extent such transfers are permitted by the Committee, subject to
any terms and conditions which the Committee may impose thereon
(which may include limitations the Committee may deem
appropriate in order that offers and sales under the Plan will
meet applicable requirements of registration forms under the
Securities Act of 1933 specified by the Securities and Exchange
Commission), and provided further, that no transfer for value or
consideration will be permitted without the prior approval of
the Companys stockholders. A Beneficiary, transferee, or
other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of
the Plan and any Award document applicable to such Participant,
except as otherwise determined by the Committee, and to any
additional terms and conditions deemed necessary or appropriate
by the Committee.
(c) Adjustments. In the event that any large, special and
non-recurring dividend or other distribution (whether in the
form of cash or property other than Stock), recapitalization,
forward or reverse split, Stock dividend, reorganization,
merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate
transaction or event affects the Stock such that an adjustment
is determined by the Committee to be appropriate and, in the
case of any outstanding Award, necessary in order to prevent
dilution or enlargement of the rights of the Participant, then
the Committee shall, in an equitable manner as determined by the
Committee, adjust any or all of (i) the number and kind of
shares of Stock which are authorized for grant under
Section 4(a), (ii) the number and kind of shares of Stock
by which annual per-person Award limitations are measured under
Section 5, (iii) the number and kind of shares of
Stock subject to or deliverable in respect of outstanding Awards
and (iv) the exercise price, grant price or purchase price
relating to any Award or, if deemed appropriate, the Committee
may make provision for a payment of cash or property to the
holder of an outstanding Option. In addition, the Committee is
authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards (including Performance
Awards and performance goals and any hypothetical funding pool
relating thereto) in recognition of unusual or nonrecurring
events (including, without limitation, events described in the
preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting the Company, any subsidiary or
affiliate or other business unit, or the financial statements of
the Company or any subsidiary or affiliate, or in response to
changes in applicable laws, regulations, accounting principles,
tax rates and regulations or business conditions or in view of
the Committees assessment of the business strategy of the
Company, any subsidiary or affiliate or business unit thereof,
performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other
circumstances deemed relevant; provided that no such adjustment
shall be authorized or made if and to the extent that the
existence of such authority (i) would cause Options, SARs,
or Performance Awards granted under the Plan to Participants
designated by the Committee as Covered Employees and intended to
qualify as performance-based compensation under Code
Section 162(m) and regulations thereunder to otherwise fail
to qualify as performance-based compensation under
Code Section 162(m) and regulations thereunder, or
(ii) would cause the Committee to be deemed to have
authority to change the targets, within the meaning of Treasury
Regulation 1.162-27(e)(4)(vi),
under the performance goals relating to Options or SARs granted
to Covered Employees and intended to qualify as
performance-based compensation under Code
Section 162(m) and regulations thereunder.
(d) Tax Provisions.
(i) Withholding. The Company and any subsidiary or
affiliate is authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a
distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving
an Award, and to take such other action as the Committee may
deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to
make cash payments in respect thereof in satisfaction of a
Participants
A-21
withholding obligations, either on a mandatory or elective basis
in the discretion of the Committee, or in satisfaction of other
tax obligations. Other provisions of the Plan notwithstanding,
only the minimum amount of Stock deliverable in connection with
an Award necessary to satisfy statutory withholding requirements
will be withheld, unless withholding of any additional amount of
Stock will not result in additional accounting expense to the
Company.
(ii) Required Consent to and Notification of Code
Section 83(b) Election. No election under
Section 83(b) of the Code (to include in gross income in
the year of transfer the amounts specified in Code
Section 83(b)) or under a similar provision of the laws of
a jurisdiction outside the United States may be made unless
expressly permitted by the terms of the Award document or by
action of the Committee in writing prior to the making of such
election. In any case in which a Participant is permitted to
make such an election in connection with an Award, the
Participant shall notify the Company of such election within ten
days of filing notice of the election with the Internal Revenue
Service or other governmental authority, in addition to any
filing and notification required pursuant to regulations issued
under Code Section 83(b) or other applicable provision.
(iii) Requirement of Notification Upon Disqualifying
Disposition Under Code Section 421(b). If any
Participant shall make any disposition of shares of Stock
delivered pursuant to the exercise of an ISO under the
circumstances described in Code Section 421(b) (i.e., a
disqualifying disposition), such Participant shall notify the
Company of such disposition within ten days thereof.
(e) Changes to the Plan. The Board may amend, suspend or
terminate the Plan or the Committees authority to grant
Awards under the Plan without the consent of stockholders or
Participants; provided, however, that any amendment to the Plan
shall be submitted to the Companys stockholders for
approval not later than the earliest annual meeting for which
the record date is at or after the date of such Board action if
such stockholder approval is required by any federal or state
law or regulation or the rules of the New York Stock Exchange or
any other stock exchange or automated quotation system on which
the Stock may then be listed or quoted, or if such amendment
would materially increase the number of shares reserved for
issuance and delivery under the Plan or increase individual
award limits under Section 5(b) or amend any other
provision of the Plan that expressly requires stockholder
approval, and the Board may otherwise, in its discretion,
determine to submit other amendments to the Plan to stockholders
for approval; and provided further, that, without the consent of
an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under any
outstanding Award (for this purpose, actions that alter the
timing of federal income taxation of a Participant will not be
deemed material unless such action results in an income tax
penalty on the Participant). Notwithstanding any provision in
this Plan to the contrary, without the prior approval of the
Companys stockholders, no option or stock appreciation
right may be amended to reduce the price per share of the shares
subject to such option or the exercise price of such stock
appreciation right, as applicable, below the option price or
exercise price as of the date the option or stock appreciation
right is granted. In addition, without the prior approval of the
Companys stockholders, no option or stock appreciation
rights may be cancelled or surrendered in exchange for another
Award or cash and no option or stock appreciation rights may be
granted in exchange for, or in connection with, the cancellation
or surrender of an option, stock appreciation right or other
award having a higher option or exercise price. With regard to
other terms of Awards, the Committee shall have no authority to
waive or modify any such Award term after the Award has been
granted to the extent the waived or modified term would be
mandatory under the Plan for any Award newly granted at the date
of the waiver or modification.
(f) Right of Setoff. The Company or any subsidiary or
affiliate may, to the extent permitted by applicable law, deduct
from and set off against any amounts the Company or a subsidiary
or affiliate may owe to the Participant from time to time,
including amounts payable in connection with any Award, owed as
wages, fringe benefits, or other compensation owed to the
Participant, such amounts as may be owed by the Participant to
the Company, including but not limited to amounts owed under
Section 10(a), although the Participant shall remain liable
for any part of the Participants payment obligation not
satisfied through such deduction and setoff. By accepting any
Award granted hereunder, the Participant agrees to any deduction
or setoff under this Section 11(f).
A-22
(g) Unfunded Status of Awards; Creation of Trusts. The
Plan is intended to constitute an unfunded plan for
incentive and deferred compensation. With respect to any
payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company;
provided that the Committee may authorize the creation of trusts
and deposit therein cash, Stock, other Awards or other property,
or make other arrangements to meet the Companys
obligations under the Plan. Such trusts or other arrangements
shall be consistent with the unfunded status of the
Plan unless the Committee otherwise determines with the consent
of each affected Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of
the Plan by the Board nor its submission to the stockholders of
the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to
adopt such other incentive arrangements, apart from the Plan, as
it may deem desirable, including incentive arrangements and
awards which do not qualify under Code Section 162(m), and
such other arrangements may be either applicable generally or
only in specific cases.
(i) Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee, in the event
of a forfeiture of an Award with respect to which a Participant
paid cash consideration, the Participant shall be repaid the
amount of such cash consideration. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award.
The Committee shall determine whether cash, other Awards or
other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the
intent of the Company that Options and SARs granted to Covered
Employees and other Awards designated as Awards to Covered
Employees subject to Section 7 shall constitute qualified
performance-based compensation within the meaning of
Code Section 162(m) and regulations thereunder, unless
otherwise determined by the Committee at the time of allocation
of an Award. Accordingly, the terms of Sections 7(b), (c),
and (d), including the definitions of Covered Employee and other
terms used therein, shall be interpreted in a manner consistent
with Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a
Covered Employee with respect to a performance period that has
not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee as likely
to be a Covered Employee with respect to a specified performance
period. If any provision of the Plan or any Award document
relating to a Performance Award that is designated as intended
to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such
requirements, and no provision shall be deemed to confer upon
the Committee or any other person discretion to increase the
amount of compensation otherwise payable in connection with any
such Award upon attainment of the applicable performance
objectives.
(k) Certain Limitations on Awards to Ensure Compliance with
Section 409A. For purposes of this Plan, references to
an Award term or event (including any authority or right of the
Company or a Participant) being permitted under
Section 409A mean, for a 409A Award, that the term or event
will not cause the Participant to be liable for payment of
interest or a tax penalty under Section 409A and, for a
Non-409A Award, that the term or event will not cause the Award
to be treated as subject to Section 409A. Other provisions
of the Plan notwithstanding, the terms of any 409A Award and any
Non-409A Award, including any authority of the Company and
rights of the Participant with respect to the Award, shall be
limited to those terms permitted under Section 409A, and
any terms not permitted under Section 409A shall be
automatically modified and limited to the extent necessary to
conform with Section 409A. For this purpose, other
provisions of the Plan notwithstanding, the Company shall have
no authority to accelerate distributions relating to 409A Awards
in excess of the authority permitted under Section 409A,
any distribution subject to Section 409A(a)(2)(A)(i)
(separation from Service) to a key employee as
defined under Section 409A(a)(2)(B)(i), shall not occur
earlier than the earliest time permitted under
Section 409A(a)(2)(B)(i), and any authorization of payment
of cash to settle a Non-409A Award shall apply only to the
extent permitted under Section 409A for such Award.
A-23
(l) Governing Law. The validity, construction, and effect
of the Plan, any rules and regulations relating to the Plan and
any Award document shall be determined in accordance with the
laws of the State of Delaware, without giving effect to
principles of conflicts of laws, and applicable provisions of
federal law.
(m) Awards to Participants Outside the United States. The
Committee may modify the terms of any Award under the Plan made
to or held by a Participant who is then resident or primarily
employed outside of the United States in any manner deemed by
the Committee to be necessary or appropriate in order that such
Award shall conform to laws, regulations, and customs of the
country in which the Participant is then resident or primarily
employed, or so that the value and other benefits of the Award
to the Participant, as affected by foreign tax laws and other
restrictions applicable as a result of the Participants
residence or employment abroad shall be comparable to the value
of such an Award to a Participant who is resident or primarily
employed in the United States. An Award may be modified under
this Section 11(m) in a manner that is inconsistent with
the express terms of the Plan, so long as such modifications
will not contravene any applicable law or regulation or result
in actual liability under Section 16(b) for the Participant
whose Award is modified.
(n) Limitation on Rights Conferred under Plan. Neither
the Plan nor any action taken hereunder shall be construed as
(i) giving any Eligible Person or Participant the right to
continue as an Eligible Person or Participant or in the employ
or Service of the Company or a subsidiary or affiliate,
(ii) interfering in any way with the right of the Company
or a subsidiary or affiliate to terminate any Eligible
Persons or Participants employment or Service at any
time (subject to the terms and provisions of any separate
written agreements), (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or
to be treated uniformly with other Participants and Employees,
or (iv) conferring on a Participant any of the rights of a
stockholder of the Company unless and until the Participant is
duly issued or transferred shares of Stock in accordance with
the terms of an Award or an Option is duly exercised. Except as
expressly provided in the Plan and an Award document, neither
the Plan nor any Award document shall confer on any person other
than the Company and the Participant any rights or remedies
thereunder.
(o) Severability; Entire Agreement. If any of the
provisions of this Plan or any Award document is finally held to
be invalid, illegal or unenforceable (whether in whole or in
part), such provision shall be deemed modified to the extent,
but only to the extent, of such invalidity, illegality or
unenforceability, and the remaining provisions shall not be
affected thereby; provided, that, if any of such provisions is
finally held to be invalid, illegal, or unenforceable because it
exceeds the maximum scope determined to be acceptable to permit
such provision to be enforceable, such provision shall be deemed
to be modified to the minimum extent necessary to modify such
scope in order to make such provision enforceable hereunder. The
Plan and any Award documents contain the entire agreement of the
parties with respect to the subject matter thereof and supersede
all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them,
whether written or oral with respect to the subject matter
thereof.
(p) Plan Effective Date and Termination. The Plan shall
become effective if, and at such time as, the stockholders of
the Company have approved it by the affirmative votes of the
holders of a majority of the voting securities of the Company
present, or represented, and entitled to vote on the subject
matter at a duly held meeting of stockholders (provided that the
total vote cast on the proposal represents over 50% in interest
of all securities entitled to vote on the proposal). Upon such
approval of the Plan by the stockholders of the Company, no
further awards shall be granted under the Preexisting Plans, but
any outstanding awards under the Preexisting Plans shall
continue in accordance with their terms. Unless earlier
terminated by action of the Board of Directors, the authority of
the Committee to make grants under the Plan shall terminate on
the date that is ten years after the latest date upon which
stockholders of the Company have approved the Plan, and the Plan
will remain in effect until such time as no Stock remains
available for delivery under the Plan and the Company has no
further rights or obligations under the Plan with respect to
outstanding Awards under the Plan.
A-24
(q) Retirement, Death or Disability. In the event of a
termination of employment due to death, Disability or
Retirement, then:
(1) Effect on Non-Performance Based Awards.
The following provisions shall apply to non-performance based
Awards, including Awards as to which performance conditions
previously have been satisfied or are deemed satisfied under
Section 11(q)(ii), unless otherwise provided by the
Committee in the Award document:
(i) In the case of Non-409A Awards, to the extent permitted
without causing the Award to become subject to Code
Section 409A:
(A) All forfeiture conditions and other restrictions
applicable to Awards granted under the Plan shall lapse and such
Awards shall be fully payable as of the time of the termination
of employment without regard to vesting or other conditions,
except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in
Section 11(a); and
(B) Any Award carrying a right to exercise that was not
previously exercisable
and/or
vested shall, in the discretion of the Committee as set forth in
the Award agreement, either (1) continue to vest in
accordance with the original vesting schedule without the
requirement for continued employment, or (2) become fully
exercisable
and/or
vested as of the time of the termination of employment; and, in
each case, shall remain exercisable
and/or
vested for the earlier of (x) the balance of the stated
term of such Award without regard to any termination of
employment or (y) one year from the termination of
employment or vesting.
(ii) In the case of 409A Awards, if and to the extent
permitted under Code Section 409A:
(A) All deferral of settlement, forfeiture conditions and
other restrictions applicable to an unvested Award granted under
the Plan shall lapse and such Awards shall be fully payable as
of the time of the termination of employment without regard to
deferral and vesting conditions, except to the extent of any
waiver by the Participant (if permitted under Section 409A)
and subject to applicable restrictions set forth in
Section 11(a);
(B) Any Award carrying a right to exercise that was not
previously exercisable
and/or
vested shall, in the discretion of the Committee as set forth in
the Award agreement, either (1) continue to vest in
accordance with the original vesting schedule without the
requirement for continued employment, or (2) become fully
exercisable
and/or
vested as of the time of termination of employment and, in each
case, shall remain exercisable
and/or
vested for the earlier of (x) the balance of the stated
term of such Award without regard to any termination of
employment or (y) one year from the termination of
employment or vesting.
(2) Effect on Performance-Based Awards. With
respect to an outstanding Award subject to achievement of
performance goals and conditions, such performance goals and
conditions shall be deemed to be met or exceeded if and to the
extent that such performance goals are actually met or exceeded
subsequent to the termination of employment or as otherwise
provided by the Committee in the Award document governing such
Award or other agreement with the Participant, to the maximum
extent permitted under Section 409A in the case of 409A
Awards.
A-25
PLEASE DETACH PROXY CARD HERE IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1,
PROPOSAL 2 AND PROPOSAL 3. Please sign and date this Proxy belo w and return n i the enclosed
envelope. DATE: , 2009 (Signature) (Signature of joint owner) Signature(s) must agree with the
name(s) prin ted on this proxy. If signing as attorney, executor, administrator, This proxy is
solicited on behalf of the Board of Directors.trustee or guardian, please give your full title as
such. |
PLEASE DETACH PROXY CARD HERE PROXYAMERICAN EAGLE OUTFITTERS, INC. The undersigned Stockholder of
American Eagle Outfitters, Inc. hereby appoints Joan Holstein Hils on and Neil Bulman, Jr., or
either of them n i dividually, as attorneys and proxies wit h full power of substitutio n to vote
all of the shares of Common Stock of American Eagle Outfitters, Inc. which the undersigned s i
entitled to vote at the Annual Meeting of Stockholders of American Eagle Outfitters, Inc. to be
held at the Company8s offices lo cated at 77 Hot Metal Street, Pittsburgh, Pennsylvania on Tuesday,
June 16, 2009 at 11:00 a.m., lo cal time, and at any adjournment or adjournments thereof as
follows: 1.Proposal One. Electio n of DirectorsFOR AGAINST ABSTAIN2. Proposal Two. Amend and
restate the Companys 2005 FOR AGAINST ABSTAIN JANICE E. PAGEStock Award and Incentive Plan to in
crease the number of shares available for is suance under the Plan and FOR AGAINST ABSTAINto make
certain other changes to the Plan. 3.Proposal Three. Ratify the appointment of Ernst & FOR AGAINST
ABSTAIN J. THOMAS PRESBYYoung LLP as the Companys n i dependent registered public accounting firm
for the fiscal year ending FOR AGAINST ABSTAINJanuary 30, 2010. GERALD E. WEDREN4. In their
discretion to vote upon such other matters as may properly come before the meeting. (Continued, and
to be dated and signed, on the other side) |