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Exhibit 10.1
NORDSTROM, INC.
2002 NONEMPLOYEE DIRECTOR STOCK INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The purpose of the Plan is to promote the long-term success of the
Company and the creation of Shareholder value by (a) encouraging the
attraction and retention of Nonemployee Directors with exceptional
qualifications and (b) linking Nonemployee Directors directly to Shareholder
interests through increased stock ownership. The Plan seeks to achieve this
purpose by providing for Awards in the form of Restricted Shares, Stock
Units, Options or stock appreciation rights. Capitalized terms are defined
in Section 15 below.
ARTICLE 2. ADMINISTRATION.
2.1 Committee Composition. The Plan shall be administered by the
Corporate Governance and Nominating Committee (the "Committee").
2.2 Committee Responsibilities. The Committee shall (a) select the
Nonemployee Directors who are to receive Awards under the Plan, (b) determine
the type, number, vesting requirements and other features and conditions of
such Awards, (c) interpret the Plan and (d) make all other decisions relating
to the operation of the Plan. The Committee may adopt such rules or
guidelines as it deems appropriate to implement the Plan. The Committee's
determinations under the Plan shall be final and binding on all persons.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 Basic Limitation. Common Shares issued pursuant to the Plan may
be authorized but unissued shares. The aggregate number of Options, SARs,
Stock Units and Restricted Shares awarded under the Plan shall not exceed
450,000. The limitations of this Section 3.1 shall be subject to adjustment
pursuant to Article 10.
3.2 Additional Shares. If Restricted Shares or Common Shares issued
upon the exercise of Options are forfeited, then such Common Shares shall
again become available for Awards under the Plan. If Stock Units, Options or
SARs are forfeited or terminate for any other reason before being exercised,
then the corresponding Common Shares shall again become available for Awards
under the Plan. If Stock Units are settled, then only the number of Common
Shares (if any) actually issued in settlement of such Stock Units shall
reduce the number available under Section 3.1 and the balance shall again
become available for Awards under the Plan. If SARs are exercised, then only
the number of Common Shares (if any) actually issued in settlement of such
SARs shall reduce the number available under Section 3.1 and the balance
shall again become available for Awards under the Plan.
3.3 Dividend Equivalents. Any dividend equivalents paid or credited
under the Plan shall not be applied against the number of Restricted Shares,
Stock Units, Options or SARs available for Awards, whether or not such
dividend equivalents are converted into Stock Units.
ARTICLE 4. ELIGIBILITY.
4.1 Grants. Only Nonemployee Directors shall be eligible for the
grant of Restricted Shares, Stock Units, NSOs or SARs.
ARTICLE 5. OPTIONS.
5.1 Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various Stock Option Agreements entered into
under the Plan need not be identical. Options may be granted in
consideration of a reduction in the Optionee's other compensation. A Stock
Option Agreement may provide that a new Option will be granted automatically
to the Optionee when he or she exercises a prior Option and pays the Exercise
Price in the form described in Section 6.2.
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5.2 Number of Shares. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10.
5.3 Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price, as determined by the Committee.
5.4 Exercisability and Term. Each Stock Option Agreement shall
specify the date or event when all or any installment of the Option is to
become exercisable. The Stock Option Agreement shall also specify the term
of the Option. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement
or other events and may provide for expiration prior to the end of its term
in the event of the termination of the Optionee's service. Options may be
awarded in combination with SARs, and such an Award may provide that the
Options will not be exercisable unless the related SARs are forfeited.
5.5 Modification or Assumption of Options. Within the limitations of
the Plan, the Committee may modify outstanding Options; provided that no
Option shall be repriced. The foregoing notwithstanding, no modification of
an Option shall, without the consent of the Optionee, alter or impair his or
her rights or obligations under such Option.
5.6 Buyout Provisions. The Committee may at any time (a) offer to
buy out for a payment in cash or cash equivalents an Option previously
granted or (b) authorize an Optionee to elect to cash out an Option
previously granted, in either case at such time and based upon such terms and
conditions as the Committee shall establish.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 General Rule. The entire Exercise Price of Common Shares issued
upon exercise of Options shall be payable in cash or cash equivalents at the
time when such Common Shares are purchased, except the Committee (in its sole
discretion) may at any time accept payment in any form(s) described in this
Article 6.
6.2 Surrender of Stock. To the extent that this Section 6.2 is
applicable, all or any part of the Exercise Price may be paid by
surrendering, or attesting to the ownership of, Common Shares that have been
owned by the Optionee for at least six months. Such Common Shares shall be
valued at their Fair Market Value on the date when the new Common Shares are
purchased under the Plan. The Optionee shall not surrender, or attest to the
ownership of, Common Shares in payment of the Exercise Price if such action
would cause the Company to recognize compensation expense (or additional
compensation expense) with respect to the Option for financial reporting
purposes.
6.3 Exercise/Sale. To the extent that this Section 6.3 is
applicable, all or any part of the Exercise Price may be paid by delivering
(on a form prescribed by the Company) an irrevocable direction to a
securities broker approved by the Company to sell all or part of the Common
Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.
6.4 Exercise/Pledge. To the extent that this Section 6.4 is
applicable, all or any part of the Exercise Price may be paid by delivering
(on a form prescribed by the Company) an irrevocable direction to pledge all
or part of the Common Shares being purchased under the Plan to a securities
broker or lender approved by the Company, as security for a loan, and to
deliver all or part of the loan proceeds to the Company.
6.5 Promissory Note. To the extent that this Section 6.5 is
applicable, all or any part of the Exercise Price may be paid by delivering
(on a form prescribed by the Company) a full-recourse promissory note.
6.6 Other Forms of Payment. To the extent that this Section 6.6 is
applicable, all or any part of the Exercise Price may be paid in any other
form that is consistent with applicable laws, regulations and rules.
ARTICLE 7. STOCK APPRECIATION RIGHTS.
7.1 SAR Agreement. Each grant of an SAR under the Plan shall be
evidenced by an SAR Agreement between the Optionee and the Company. Such SAR
shall be subject to all applicable terms of the Plan and may be subject to
any other terms that are not inconsistent with the Plan. The provisions of
the various SAR Agreements entered into under the Plan need not be identical.
SARs may be granted in consideration of a reduction in the Optionee's other
compensation.
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7.2 Number of Shares. Each SAR Agreement shall specify the number of
Common Shares to which the SAR pertains and shall provide for the adjustment
of such number in accordance with Article 10.
7.3 Exercise Price. Each SAR Agreement shall specify the Exercise
Price.
7.4 Exercisability and Term. Each SAR Agreement shall specify the
date when all or any installment of the SAR is to become exercisable. The
SAR Agreement shall also specify the term of the SAR. An SAR Agreement may
provide for accelerated exercisability in the event of the Optionee's death,
disability or retirement or other events and may provide for expiration prior
to the end of its term in the event of the termination of the Optionee's
service. SARs may be awarded in combination with Options, and such an Award
may provide that the SARs will not be exercisable unless the related Options
are forfeited. An SAR may be included in an NSO at the time of grant or
thereafter.
7.5 Exercise of SARs. Upon exercise of an SAR, the Optionee (or any
person having the right to exercise the SAR after his or her death) shall
receive from the Company (a) Common Shares, (b) cash or (c) a combination of
Common Shares and cash, as the Committee shall determine. The amount of cash
and/or the Fair Market Value of Common Shares received upon exercise of SARs
shall, in the aggregate, be equal to the amount by which the Fair Market
Value (on the date of surrender) of the Common Shares subject to the SARs
exceeds the Exercise Price. If, on the date when an SAR expires, the
Exercise Price under such SAR is less than the Fair Market Value on such date
but any portion of such SAR has not been exercised or surrendered, then such
SAR shall automatically be deemed to be exercised as of such date with
respect to such portion.
7.6 Modification or Assumption of SARs. Within the limitations of
the Plan, the Committee may modify outstanding SARs; provided that no SAR
shall be repriced. The foregoing notwithstanding, no modification of an SAR
shall, without the consent of the Optionee, alter or impair his or her rights
or obligations under such SAR.
ARTICLE 8. RESTRICTED SHARES.
8.1 Restricted Stock Agreement. Each grant of Restricted Shares
under the Plan shall be evidenced by a Restricted Stock Agreement between the
recipient and the Company. Such Restricted Shares shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various Restricted
Stock Agreements entered into under the Plan need not be identical.
8.2 Vesting Conditions. Each Award of Restricted Shares may or may
not be subject to vesting. Vesting shall occur, in full or in installments,
upon satisfaction of the conditions specified in the Restricted Stock
Agreement. A Restricted Stock Agreement may provide for accelerated vesting
in the event of the Participant's death, disability or retirement or other
events.
8.3 Voting and Dividend Rights. The holders of Restricted Shares
awarded under the Plan shall have the same voting, dividend and other rights
as the Company's other Shareholders. A Restricted Stock Agreement, however,
may require that the holders of Restricted Shares invest any cash dividends
received in additional Restricted Shares. Such additional Restricted Shares
shall be subject to the same conditions and restrictions as the Award with
respect to which the dividends were paid.
ARTICLE 9. STOCK UNITS.
9.1 Stock Unit Agreement. Each grant of Stock Units under the Plan
shall be evidenced by a Stock Unit Agreement between the recipient and the
Company. Such Stock Units shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various Stock Unit Agreements entered into under
the Plan need not be identical. Stock Units may be granted in consideration
of a reduction in the recipient's other compensation.
9.2 Payment for Awards. To the extent that an Award is granted in
the form of Stock Units, no cash consideration shall be required of the Award
recipients.
9.3 Vesting Conditions. Each Award of Stock Units may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Stock Unit Agreement. A
Stock Unit Agreement may provide for accelerated vesting in the event of the
Participant's death, disability or retirement or other events.
9.4 Voting and Dividend Rights. The holders of Stock Units shall
have no voting rights. Prior to settlement or forfeiture, any Stock Unit
awarded under the Plan may, at the Committee's discretion, carry with it a
right to dividend equivalents.
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Such right entitles the holder to be credited with an amount equal to all
cash dividends paid on one Common Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units.
Settlement of dividend equivalents may be made in the form of cash, in the
form of Common Shares, or in a combination of both. Prior to distribution,
any dividend equivalents which are not paid shall be subject to the same
conditions and restrictions as the Stock Units to which they attach.
9.5 Form and Time of Settlement of Stock Units. Settlement of vested
Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any
combination of both, as determined by the Committee. Methods of converting
Stock Units into cash may include (without limitation) a method based on the
average Fair Market Value of Common Shares over a series of trading days.
Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to
the Stock Units have been satisfied or have lapsed, or it may be deferred to
any later date. The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment
pursuant to Article 10.
9.6 Death of Recipient. Any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's
beneficiary or beneficiaries. Each recipient of a Stock Units Award under the
Plan shall designate one or more beneficiaries for this purpose by filing the
prescribed form with the Company. A beneficiary designation may be changed
by filing the prescribed form with the Company at any time before the Award
recipient's death. If no beneficiary was designated or if no designated
beneficiary survives the Award recipient, then any Stock Units Award that
becomes payable after the recipient's death shall be distributed to the
recipient's estate.
9.7 Creditors' Rights. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent
an unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.
ARTICLE 10. PROTECTION AGAINST DILUTION.
10.1 Adjustments. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a lesser number of Common Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall
make such adjustments as it, in its sole discretion, deems appropriate in one
or more of:
(a) The number of Options, SARs, Restricted Shares and
Stock Units
available for future Awards under Article 3;
(b) The number of Common Shares covered by each
outstanding Option
and SAR;
(c) The Exercise Price under each outstanding Option and
SAR; or
(d) The number of Stock Units included in any prior Award
which has not yet been settled.
Except as provided in this Article 10, a Participant shall have no
rights by reason of any issue by the Company of stock of any class or
securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class.
10.2 Dissolution or Liquidation. To the extent not previously
exercised or settled, Options, SARs and Stock Units shall terminate
immediately prior to the dissolution or liquidation of the Company.
10.3 Reorganizations. In the event that the Company is a party to a
merger or other reorganization, outstanding Awards shall be subject to the
agreement of merger or reorganization. Such agreement shall provide for
settlement of the full value, if any, of the outstanding Awards in cash or
cash equivalents followed by cancellation of such Awards.
ARTICLE 11. DEFERRAL OF AWARDS.
To the extent permitted and consistent with the terms of the Nordstrom,
Inc. Directors Deferred Compensation Plan ("DDCP"), the Committee (in its
sole discretion) may permit or require a Participant to:
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(a) Have cash that otherwise would be paid to such
Participant as a result of the exercise of an SAR or the settlement of
Stock Units credited to such Participant's DDCP account;
(b) Have Common Shares that otherwise would be delivered
to such Participant as a result of the exercise of an Option or SAR
converted into an equal number of Stock Units and credited to such
Participant's DDCP account; or
(c) Have Common Shares that otherwise would be delivered
to such Participant as a result of the exercise of an Option or SAR or
the settlement of Stock Units converted into amounts credited as Stock
Units to such Participant's DDCP account. Such amounts shall be
determined by reference to the Fair Market Value of such Common Shares
as of the date when they otherwise would have been delivered to such
Participant.
Provided, however, that such deferral shall not be effective unless the
Participant enters into a deferral agreement with respect to the particular
award at such time and in such form and manner as the Committee determines
appropriate.
ARTICLE 12. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such
awards may be settled in the form of Common Shares issued under this Plan.
Such Common Shares shall be treated for all purposes under the Plan like
Common Shares issued in settlement of Stock Units and shall, when issued,
reduce the number of Common Shares available under Article 3.
ARTICLE 13. LIMITATION ON RIGHTS.
13.1 Shareholders' Rights. A Participant shall have no dividend
rights, voting rights or other rights as a Shareholder with respect to any
Common Shares covered by his or her Award prior to the time when a stock
certificate for such Common Shares is issued or, if applicable, the time when
he or she becomes entitled to receive such Common Shares by filing any
required notice of exercise and paying any required Exercise Price. No
adjustment shall be made for cash dividends or other rights for which the
record date is prior to such time, except as expressly provided in the Plan.
13.2 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under
the Plan shall be subject to all applicable laws, rules and regulations and
such approval by any regulatory body as may be required. The Company
reserves the right to restrict, in whole or in part, the delivery of Common
Shares pursuant to any Award prior to the satisfaction of all legal
requirements relating to the issuance of such Common Shares, to their
registration, qualification or listing or to an exemption from registration,
qualification or listing.
ARTICLE 14. FUTURE OF THE PLAN.
14.1 Term of the Plan. The Plan, as set forth herein, shall become
effective upon approval by the Company's shareholders. The Plan shall remain
in effect until it is terminated under Section 14.2.
14.2 Amendment or Termination. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be
subject to the approval of the Company's Shareholders only to the extent
required by applicable laws, regulations or rules. No Awards shall be
granted under the Plan after the termination thereof. The termination of the
Plan, or any amendment thereof, shall not affect any Award previously granted
under the Plan.
ARTICLE 15. DEFINITIONS.
15.1 "Award" means any award of an Option, an SAR, a Restricted Share
or a Stock Unit under the Plan.
15.2 "Board" means the Company's Board of Directors, as constituted
from time to time.
15.3 "Code" means the Internal Revenue Code of 1986, as amended.
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15.4 "Committee" means a committee of the Board, as described in
Article 2.
15.5 "Common Share" means one share of the common stock of the
Company.
15.6 "Company" means Nordstrom, Inc., a Washington corporation.
15.7 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
15.8 "Exercise Price," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR
Agreement, which is subtracted from the Fair Market Value of one Common Share
in determining the amount payable upon exercise of such SAR.
15.9 "Fair Market Value" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems
appropriate. Whenever possible, the determination of Fair Market Value by
the Committee shall be based on the prices reported in the Wall Street
Journal of the closing bid price of the Common Shares on the New York Stock
Exchange. Such determination shall be conclusive and binding on all persons.
15.10 "NSO" means a stock option not described in sections 422 or 423
of the Code.
15.11 "Option" means a NSO granted under the Plan and entitling the
holder to purchase Common Shares.
15.12 "Optionee" means an individual or estate who holds an Option or
SAR.
15.13 "Nonemployee Director" shall mean a member of the Board who is
not an employee or an officer of the Company.
15.14 "Participant" means an individual or estate who holds an Award.
15.15 "Plan" means this Nordstrom, Inc. 2002 Nonemployee Director Stock
Incentive Plan, as amended from time to time.
15.16 "Restricted Share" means a Common Share awarded under the Plan.
15.17 "Restricted Stock Agreement" means the agreement between the
Company and the recipient of a Restricted Share which contains the terms,
conditions and restrictions pertaining to such Restricted Share.
15.18 "SAR" means a stock appreciation right granted under the Plan.
15.19 "SAR Agreement" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to
his or her SAR.
15.20 "Stock Option Agreement" means the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.
15.21 "Stock Unit" means a bookkeeping entry representing the
equivalent of one Common Share, as awarded under the Plan.
15.22 "Stock Unit Agreement" means the agreement between the Company
and the recipient of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.