Exhibit 10.2
Deferred Compensation Plan
(amended November 14, 2003)
Section 1. Purpose.
The purpose of this Plan is to provide an additional incentive to the key
employees of The May Department Stores Company and its subsidiaries to achieve
superior performance.
Section 2. Definitions.
(a) "Board" means the Board of Directors of May, as hereinafter defined.
(b) "Committee" means the Committee appointed to administer the Plan, as
hereinafter defined, as provided in Section 8 hereof.
(c) "Common Stock" means the Common Stock of May, as hereinafter defined.
(d) "Corporation" means May, as hereinafter defined, or any subsidiary of May
which is an employer of an Executive, as hereinafter defined, who is a
Participant, as hereinafter defined, in the Plan, as hereinafter defined.
(e) "Executive" means any individual employed by the Corporation in an
executive capacity who receives regular stated compensation in respect of such
employer-employee relationship other than a pension, retainer or fee under a
contract.
(f) "Fiscal Year" means the fiscal year of the Corporation as established from
time to time.
(g) "May" means The May Department Stores Company, a Delaware corporation, its
successors and assigns.
(h) "Participant" means an Executive who has been designated by the Committee
as eligible, and who has elected to participate in the Plan, as hereinafter
defined.
(i) "Plan" means the Deferred Compensation Plan of the Corporation, as
described herein.
(j) "Restricted Stock" means shares of Common Stock described in Section 10
hereof.
(k) "Stock Unit" means an accounting equivalent of one share of Common Stock.
(l) "Stock Unit Account" means an account on the records of the Corporation in
respect of Stock Units which have been and/or may be allocated to a
Participant in the manner hereinafter set forth.
Section 3. Methods of Payment.
(a) Except as hereinafter provided, prior to the commencement of the
calendar year that includes the first day of a Fiscal Year, each Participant
shall be afforded the opportunity of making an election to have any one or
more of the following alternative methods of payment applied to all or a part
of any portion (which such portion shall not exceed one-half, unless
specifically provided for to the contrary in the participant's written
contract of employment) of any compensation of which such Participant shall be
the recipient in respect of his performance during such Fiscal Year:
(i) Alternative (i): Payment of any such compensation that is paid in
the form of a bonus on the first day of April next following the close
of such Fiscal Year or on such subsequent date as the amount thereof is
ascertainable.
(ii) Alternative (ii): Payment thereof at a deferred date or dates
either in a lump sum or in annual installments, as may be determined by
the Committee, such payment when made to include interest, as
hereinafter provided, from the first day of April next following the
Fiscal Year in respect of which the compensation was payable to the date
of payment.
(iii) Alternative (iii): [reserved]
(iv) Alternative (iv): Payment thereof at a deferred date or dates
either in a lump sum or in annual installments, as may be determined by
the Committee, and either in cash or in Common Stock or in both cash and
Common Stock, as may be determined by the Committee, in respect of Stock
Units to be allocated to the Participant as hereinafter provided.
If any Participant shall fail to make an election with respect to any year, he
shall be deemed to have elected not to defer any portion of his compensation
for such year. Notwithstanding the requirements imposed by this paragraph (a)
with respect to the time by which an election must be made, an employee who is
esignated by the Committee as a Participant for the first time may, within 60
days of such designation, make any election otherwise permitted under this
paragraph (a) with respect to the Participant's compensation in respect of
employment subsequent to the date on which the election is made.
(b) In connection with all determinations to be made by the Committee as
respects Alternative (ii) and, except for the determination of whether payment
thereunder is to be made in cash or in Common Stock or in both cash and Common
Stock (which determination shall be in the absolute discretion to the
Committee), Alternative (iv), the Participant shall be given an opportunity at
the time he makes his election of indicating his preferences, which
preferences shall be taken into account by the Committee in making its
determinations. Except as provided in Section 13 and Section 14 in no event
shall payments under Alternative (ii) or (iv) commence prior to the earliest
of the Participant's retirement, termination of employment or death (or prior
to the occurrence of a severe financial hardship, as provided below).
The Committee shall make its determination with respect to the payment
schedule (i.e., a lump sum payment or payments in annual installments) under
Alternative (ii) or (iv) prior to the commencement of the calendar year that
includes the first day of the Fiscal Year for which such alternative is
elected. Except in the event of a severe financial hardship, as provided
below, the Committee's determination with respect to a payment schedule shall
become irrevocable as of the first day of the calendar year that includes the
first day of the Fiscal Year for which the determination is made. However,
upon the written request of the Participant (or if applicable, the beneficiary
or distributee) the payment schedule may be revised by the Committee, in its
absolute discretion, in the event that the Participant (or if applicable, the
beneficiary or distributee) incurs a severe financial hardship. Such severe
financial hardship must have been caused by an accident, illness or other
event which was beyond the control of the Participant (or, if applicable, the
beneficiary or distributee); and the Committee shall revise the payment
schedule that it had previously established only to the extent that the
Committee considers necessary to eliminate the severe financial hardship.
Notwithstanding the requirements imposed by this paragraph (b) regarding the
date by which the Committee must make a determination with respect to the
payment schedule under Alternative (ii) or (iv) and the date as of which such
determination shall become irrevocable (except in the event of a severe
financial hardship), when a Participant makes an election pursuant to the last
sentence of paragraph (a) of this Section 3, the Committee shall make its
determination with respect to the payment schedule at any time prior to the
date as of which the Participant's election becomes effective, and its
determination shall become irrevocable (except in the event of a severe
financial hardship) as of such effective date.
(c) In the case of a Participant who elects to have all or any part of his
compensation for a particular Fiscal Year paid under Alternative (iv), Stock
Units shall be allocated to such Participant by crediting the same to his
Stock Unit Account, and the number of Stock Units to be so credited for such
Fiscal Year shall be the sum of the following:
(i) the quotient, disregarding fractions, resulting from dividing the
dollar amount of such portion of the Participant's compensation as is to
be so applied to Alternative (iv) by the average closing price of the
Common Stock on the New York Stock Exchange during the month of February
ending in the Fiscal Year next following the Fiscal Year in respect of
which such compensation was payable; plus
(ii) the quotient, disregarding fractions, resulting from dividing the
aggregate dollar amount of cash dividends which would have been paid to
the Participant during such Fiscal Year had the Stock Units standing in
his Stock Unit Account from time to time during such Fiscal Year been
shares of Common Stock by the average closing price of the Common Stock
on the New York Stock Exchange during the month of February ending in
the year next following such Fiscal Year; plus
(iii) the number of shares of Common Stock, disregarding fractions,
which would have been received by the Participant as stock dividends
during such Fiscal Year had the Stock Units standing in his Stock Unit
Account at the date or dates of payment of such stock dividend(s) been
shares of Common Stock.
Any allocation of Stock Units to a Participant's Stock Unit Account required
to be made pursuant to this paragraph (c) shall be made as of the first day of
April next following the Fiscal Year in respect of which such compensation was
payable or such dividends were paid, as the case may be. The aggregate value
of the fraction or fractions remaining after making the applicable
calculations referred to in subparagraphs (c)(i), (c)(ii) and (c)(iii) of this
Section 3 (based upon the average closing price of Common Stock on the
Composite Tape for New York Stock Exchange listed companies as reported in the
Wall Street Journal, or such other source as the Committee deems reliable,
during the month of February next preceding such month of April), shall not be
converted into Stock Units but shall be allocated and added to the amount
elected by the Participant to be paid to him under Alternative (ii) above, or,
if the Participant shall have made no such election under Alternative (ii),
then such remaining amount shall be paid to the Participant as if he had made
an election under Alternative (i) above to be so paid.
(d) Notwithstanding the provisions of Section 3(c) to the contrary, in the
event of a recapitalization of May pursuant to which the outstanding shares of
Common Stock shall be changed into a greater or smaller number of shares
(including, without limitation, a stock split or a stock dividend of 25% or
more of the number of outstanding shares of Common Stock), the number of Stock
Units credited to a Participant's Stock Unit Account shall be appropriately
adjusted as of the effective date of such recapitalization.
(e) Interest to be paid under Alternative (ii) shall be credited annually as
of April 1 of each year and shall be at the following rates:
(i) to and including March 31, 1974, the rate shall be 3%, compounded
annually, and
(ii) after March 31, 1974, the rate shall be equal to the average yield
on long-term United States Government Bonds (as determined by the Board
of Governors of the Federal Reserve Board and published in the Federal
Reserve Bulletin) for the calendar year prior to said April 1,
compounded annually, provided, however, that if the method of
calculation of such average yield shall be changed, or if the
determination and/or the publication thereof be discontinued, then the
Committee shall substitute therefor such alternative method of
determining such interest rate as it, in its discretion, shall deem
appropriate.
(f) Prior to the commencement of a specified period of time, the Corporation
may credit a Participant with a bonus ("Contingent Bonus") with respect to his
employment during such period of time. The Contingent Bonus will be subject
to forfeiture for such period as the Committee may determine and upon such
terms and conditions as the Committee may establish, either by adopting
resolutions of general applicability or by making individual determinations on
a case-by-case basis. Prior to the date on which a Contingent Bonus is
credited with respect to a Participant, the Committee will give the
Participant an opportunity to elect that one or more of the alternative
methods of payment provided for in Section 3(a)(ii) and (iv) shall be applied
to all or a portion of such Contingent Bonus, both with respect to the period
during which the Contingent Bonus is forfeitable and with respect to the
period after the forfeiture provisions lapse. The forfeiture provisions that
are applied to a Contingent Bonus in accordance with this paragraph (f) shall
also be applicable to any increments thereon under Alternative (ii) or (iv).
In the event that no election is made with respect to a Contingent Bonus (or
portion thereof) for the period after the forfeiture provisions lapse, then
such Contingent Bonus (or portion thereof) shall be distributed under
Alternative (i) upon the lapse of the forfeiture provisions.
Section 4. Limitation of Stock Units.
In no event shall the aggregate number of Stock Units allocated under this
Plan in respect of compensation for any Fiscal Year exceed a number equal to 2
of 1% of the total number of shares of Common Stock outstanding at the close
of such Fiscal Year (inclusive of any Restricted Stock then outstanding).
Section 5. Distribution from the Stock Unit Account.
(a) Distribution from a Participant's Stock Unit Account shall be made in
accordance with the determinations made by the Committee, as in this Plan
provided. Stock Units shall be adjusted from time to time in accordance with
this Plan until all distributions to which a Participant is entitled hereunder
shall have been made.
(b) If the Committee determines that distribution to a Participant is to be
made in annual installments, the Committee may determine from time to time
whether each particular installment shall be distributed in cash or in Common
Stock or in both cash and Common Stock.
(c) If the Committee determines that a distribution to a Participant is to
be made in a lump sum in Common Stock, the number of shares of Common Stock to
be so distributed to such Participant shall equal the number of Stock Units
then in his Stock Unit Account. For the purpose of determining the number of
shares of Common Stock to be distributed on a particular annual installment
distribution date, the Committee shall make its calculations as if that annual
installment and all subsequent annual installments were in fact to be made in
shares of Common Stock, as follows: the number of shares of Common Stock
which would be then so distributable, except in the case of the last
distribution, shall be equal to the product, disregarding fractions, of the
total number of Stock Units then credited to the Participant's Stock Unit
Account, multiplied by a fraction, the numerator of which shall be one and the
denominator of which shall be the number of remaining installments; and in the
case of the last distribution, shall be the number of shares of Common Stock
equal to the Stock Units then remaining in the Participant's Stock Unit
Account. The Participant's Stock Unit Account shall be decreased by one Stock
Unit for each share of Common Stock distributed to a Participant.
(d) If the Committee determines that a particular distribution to a
Participant is to be made in cash, a computation shall first be made of the
number of shares of Common Stock which would then be distributable pursuant to
paragraph (c) of this Section 5 if such distribution were to be made in shares
of Common Stock. The number of shares thus determined shall then be converted
into cash in respect of each such distribution by valuing such shares at the
average closing price of the Common Stock on the New York Stock Exchange
during the month of February next preceding the date of such distribution, and
the resulting amount of cash shall be distributed to the Participant. The
Participant's Stock Unit Account shall then be decreased by one Stock Unit for
each share of Common Stock which would have been distributed to the
Participant had such cash distribution been made in shares of Common Stock.
(e) If the Committee determines that a distribution is to be made in part in
Common Stock and in part in cash, paragraphs (c) and (d) of this Section 5
shall be applied separately to the respective parts of such distribution and
to the respective parts of the Stock Unit Account with respect to which the
distribution is to be made.
Section 6. Death of Participant.
In the event of the death of a Participant prior to complete distribution
under Alternatives (ii) and/or (iv) hereof, all cash and/or Stock Units then
remaining undistributed, or which shall thereafter become distributable to him
pursuant to such Alternatives, shall be distributed to such beneficiary as the
Participant shall have designated in writing to the Corporation, or, in the
absence of such designation, to his personal representative. Such
distribution shall be made at such date or dates either in a lump sum or in
annual installments, as may be determined by the Committee prior to the
beginning of the calendar year that includes the first day of the Fiscal Year
for which alternative is elected (or, where applicable, the date specified by
the last sentence of Section 3(b)); provided, however, that in the event of a
severe financial hardship, the Committee may subsequently revise its
determination in accordance with the applicable provisions of Section 3(b).
Section 7. Participant's Right Unsecured; Investments.
The right of a Participant to receive any distribution hereunder shall be an
unsecured claim against the general assets of the Corporation. Nothing in
this Agreement shall require the Corporation to invest any amount, the payment
of which has been deferred under Alternative (iv), in Common Stock or in any
other medium.
Section 8. Administration of the Plan--Committee.
(a) The Plan shall be administered by a Committee of not less than three nor
more than five persons designated by the Board (which may, but need not, be
the compensation committee of the Board), all of whom shall be directors of
the Corporation and shall serve at the pleasure of the Board. In no event
shall any member of the Committee be a Participant. The Committee shall act
by vote or written consent of a majority of its members. The Plan may be
amended, modified or terminated by the Board, except that no change may be
made without the approval of the Common Shareowners of May (i) in the maximum
number of shares or Stock Units deliverable or allocable in respect of any
Fiscal Year under the plan or (ii) in the provisions of subparagraphs (c)(i)
and (c)(ii) of Section 3 of this Plan relating to the method of determining
the number of Stock Units allocable to a Participant.
(b) The Committee shall prescribe such forms as it considers appropriate for
the administration of the Plan. The forms shall set forth such terms and
conditions not inconsistent with the terms of the Plan as the Committee may
determine and shall designate:
(i) the alternative or alternatives elected by the Participant
pursuant to Section 3(a);
(ii) the Committee's determination of the time or times when payment of
such compensation will be made to the Participant pursuant to Section
3(b)(in the absence of a severe financial hardship);
(iii) the beneficiary (if any) designated by the Participant pursuant to
Section 6; and
(iv) the Committee's determination of the time or times when payment of
such compensation will be made after the Participant's death pursuant to
Section 6 (in the absence of a severe financial hardship).
Section 9. Successors.
The provisions of the Plan with respect to each Participant shall bind the
legatees, heirs, executors, administrators or other successors in interest of
such Participant.
Section 10. Restricted Stock.
With respect to Fiscal Years ending prior to February 1, 1970, Participants
were entitled to elect a method of payment in shares of fully paid and non-
assessable Common Stock of May ("Restricted Stock"), the transfer of which
such shares was restricted. The following terms and conditions shall continue
to apply to shares of Restricted Stock:
(a) Such shares in the hands of the Participant will be subject to the
restrictions that they may not be sold, assigned, transferred, discounted or
pledged as collateral for a loan or as security for the performance of any
obligation or for any purpose by the Participant without the prior written
consent of the Committee. Such restrictions shall expire with respect to such
shares at the time or times determined by the Committee and specified on the
legend affixed to the certificate therefor.
(b) Any Participant to whom Restricted Stock is issued shall have all the
rights of a shareowner with respect to such stock including, without
limitation, the right to receive the dividends and to vote the same, subject
only to the restrictions on transfer set forth in paragraph (a) of this
Section 10.
(c) There shall be imprinted on each certificate for shares of Restricted
Stock delivered to a Participant the appropriate legend setting forth the
substance of the restriction. In the event that there becomes issuable to a
Participant a substitute certificate or an additional certificate by reason of
any corporate reorganization, recapitalization, stock dividend or like
corporate change, any share represented by such substitute certificate or
additional certificate shall be subject to the same restriction as the share
in respect of which it was issued and the certificate evidencing the same
shall be similarly stamped.
(d) In the granting of any consent by the Committee to release Restricted
Stock from the aforesaid restrictions, the Committee shall be governed by the
basic purpose of the Plan to provide an additional incentive to the
Participants, and in no event shall the Committee consent to any such change
in the absence of illness, accident or other form of hardship.
(e) In the event of the death of a Participant, any shares of Restricted
Stock registered in his name may, notwithstanding the restriction on the
transfer thereof, be transferred pursuant to his will or the laws of descent
and distribution; it being understood, however, that such shares in the hands
of the transferee shall be subject to the same restriction as was applicable
to their transfer by the Participant.
Section 11. Alienation.
(a) Subject to the provisions of Section 6 and paragraph (b) of this Section
11, no amount, the payment of which as been deferred under Alternative (ii) or
(iv), shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, levy or charge, and any attempt to
so anticipate, alienate, sell, transfer, assign, pledge, encumber, levy or
charge the same shall be void; nor shall any such amount be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or
torts of the person entitled to such benefit.
(b) Nothing in this Section 11 shall prohibit the personal representative of
a Participant from designating that any amount be distributed in accordance
with the terms of the Participant's will or pursuant to the laws of descent
and distribution.
Section 12. Withholding.
There shall be deducted from all amounts paid under this Plan any taxes
required to be withheld by any federal, state or local government. The
Participants and their beneficiaries, distributees and personal
representatives will bear any and all federal, foreign, state, local or other
income or other taxes imposed on amounts paid under this Plan as to which no
amounts are withheld, irrespective of whether withholding is required.
Section 13. Discretionary Payment.
(a) Notwithstanding any other provision in any other Section of the Plan to
be contrary, the Committee may, in its sole and absolute discretion, direct an
immediate payment of cash, distribution of Stock and/or release of
restrictions on Restricted Stock with respect to amounts (except those
referred to in the next proviso) previously deferred under this Plan if the
Committee determines that such action is in the best interests of May, the
Participants and their beneficiaries; provided, however, that the Committee
may not direct an immediate payment, distribution and/or release with respect
to amounts deferred pursuant to elections filed on or before October 1, 1985,
by a Participant unless such Participant shall have consented, during the
period, not to exceed thirty (30) days, designated by the Corporation and
communicated to all such Participants, to the application of this Section 13
to such amounts (which consent, once given, shall be irrevocable).
(b) In the event that the Committee shall so direct an immediate payment,
distribution and/or release in accordance with Section 13(a), then
(i) the amounts of cash and the numbers of shares of Stock to be so
paid and/or distributed shall be determined by the Committee so as to
reflect fairly and equitably appropriate interest and dividends since
the preceding April 1 and so as to reflect fairly and equitably such
other facts and circumstances as the Committee deems appropriate,
including, without limitation, recent price of the Stock;
(ii) amounts which were otherwise deferred or to be deferred with
respect to the Fiscal Year or long-term period in which such payment or
distribution occurs shall be paid when otherwise payable (such amounts
which would otherwise have been payable prior to the date of such
payment or distribution shall be paid as soon as practicable
thereafter);
(iii) in the event that cash is not paid or made available to a
Participant when otherwise due or that shares of Stock are not
distributed or otherwise made available to a Participant when otherwise
due, then such Participant may file a claim for such payment or
distribution and, if such Participant is successful, then the
Corporation shall reimburse such Participant for reasonable attorneys'
fees actually paid by the Participant in enforcing such Participant's
rights to such payment or distribution; and
(iv) in the event that cash is not paid or made available to a
Participant when otherwise due, then interest will accrue with respect
to such unpaid amount from the date it was otherwise due until the date
it is actually paid at a rate equal to two percentage points over the
prime rate as in effect from time to time, as determined in good faith
by the Committee based on the prime rate charged from time to time by
major banks in the City of New York.
Section 14. Change in Control.
Notwithstanding any other provision in any other Section of this Plan to the
contrary, (i) the value of all amounts deferred by a Participant which have
not yet been credited to the Participant's accounts under this Plan and (ii)
the value of all of a Participant's accounts under this Plan shall be paid to
such Participant in each case in a lump sum cash payment on the occurrence of
a Change in Control of the Corporation or as soon thereafter as practicable,
but in no event later than five days after the Change in Control of the
Corporation, and (iii) restrictions on all Restricted Stock, as defined in
Section 10 of this Plan shall lapse upon the occurrence of a Change in Control
of the Corporation. The amounts of cash credited to each Participant's
accounts prior to determining the amount of cash to be paid from these
accounts shall be determined by the Committee (which, for this purpose, shall
be comprised of members of the Board prior to the Change in Control of the
Corporation) so as to reflect fairly and equitably appropriate interest and
dividends since the preceding April 1 and so as to reflect fairly and
equitably such other facts and circumstances as the Committee deems
appropriate, including, without limitation, recent price of the stock. For
purposes of payments under this Section 14, the value of a Stock Unit shall be
computed as the greater of (a) the closing price of shares of Common Stock on
the Composite Tape for New York Stock Exchange listed companies as reported in
the Wall Street Journal, or such other source as the Committee deems reliable,
on or nearest the date on which the Change in Control is deemed to occur (or,
if not listed on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in the Common Stock is highest) or
(b) the highest per share price for shares of Common Stock actually paid in
connection with any Change in Control.
For purposes of this Plan, a "Change in Control of the Corporation" shall be
deemed to have occurred if
(a) any "person" as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation, or any company owned, directly or
indirectly, by the shareowners of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under Exchange Act), directly or
indirectly of securities of the Corporation representing 50% or more of the
combined voting power of the Corporation's then outstanding securities;
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Corporation to effect a transaction described in clause (a), (c) or (d) of
this Section whose election by the Board or nomination for election by the
Corporation's shareowners 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 cease for any reason to constitute at least a majority
thereof;
(c) the shareowners of the Corporation approve a merger or consolidation of
the Corporation with any other Corporation, other than (1) a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Corporation (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Corporation's then outstanding securities; or
(d) the shareowners of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets.