EXHIBIT 10.1
NIKE, INC.
FY '__-'__ LONG-TERM INCENTIVE AWARD AGREEMENT
This FY '__-'__ Long-Term Incentive Award Agreement (this
"Agreement") is entered into as of _____________, 20__, between NIKE,
Inc., an Oregon corporation (the "Company"), and _______________
("Recipient").
On _________, 20__, the Compensation Committee (the "Committee")
of the Company's Board of Directors authorized a performance-based
award to Recipient pursuant to Section 6 of the Company's Long-Term
Incentive Plan (the "Plan"). Compensation paid pursuant to the award
is intended to qualify as performance-based compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Recipient desires to accept the award subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Award. Subject to the terms and conditions of this
_____
Agreement, the Company shall pay to Recipient the dollar amount (the
"Dollar Target Award Payment") determined under this Agreement based on
(a) the Company's financial performance during the _____-year period
from June 1, 20__ to May 31, 20__ (the "Performance Period") as
described in Section 2 and (b) Recipient's continued employment during
the Performance Period as described in Section 3. Recipient's "Dollar
Target Award" for purposes of this Agreement is $_______________.
2. Revenue and EPS Performance Conditions.
______________________________________
2.1 Subject to Section 3, the Dollar Target Award Payment
to be paid to Recipient shall be determined by multiplying the Payout
Factor by the Dollar Target Award. The "Payout Factor" equals the
average of the Revenue-Related Percentage Level for the Performance
Period and the EPS-Related Percentage Level for the Performance Period.
The Revenue-Related Percentage Level for the Performance Period shall
be determined under the table below based on the Company's Cumulative
Revenue (as defined below) for the Performance Period. The EPS-Related
Percentage Level for the Performance Period shall be determined under
the table below based on the Company's Cumulative EPS (as defined below)
for the Performance Period. For example, if the Company's Cumulative
Revenue for the Performance Period is $_______ and the Company's
Cumulative EPS for the Performance Period is $_______, then the
Revenue-Related Percentage Level will be 110%, the EPS-Related
Percentage Level will be 140%, and the Payout Factor will therefore
equal 125%.
Revenue-Related EPS-Related
Cumulative Revenue Percentage Level Cumulative EPS Percentage Level
__________________ ________________ ______________ ________________
(in millions)
Less than $____ 0% Less than $____ 0%
$____ 10% $____ 10%
$____ 20% $____ 20%
Revenue-Related EPS-Related
Cumulative Revenue Percentage Level Cumulative EPS Percentage Level
__________________ ________________ ______________ ________________
(in millions)
$____ 30% $____ 30%
$____ 40% $____ 40%
$____ 50% $____ 50%
$____ 60% $____ 60%
$____ 70% $____ 70%
$____ 80% $____ 80%
$____ 90% $____ 90%
$____ 100% $____ 100%
$____ 110% $____ 110%
$____ 120% $____ 120%
$____ 130% $____ 130%
$____ 140% $____ 140%
$____ or more 150% $____ or more 150%
If the Company's Cumulative Revenue is between any two data points
set forth in the first column of the above table, the Revenue-Related
Percentage Level shall be determined by interpolation between the
corresponding data points in the second column of the table as follows:
the difference between the Cumulative Revenue and the lower data point
shall be divided by the difference between the higher data point and
the lower data point, the resulting fraction shall be multiplied by the
difference between the two corresponding data points in the second
column of the table, and the resulting product shall be added to the
lower corresponding data point in the second column of the table, with
the resulting sum being the Revenue-Related Percentage Level. If the
Company's Cumulative EPS is between any two data points set forth in
the third column of the above table, the EPS-Related Percentage Level
shall be similarly determined by interpolation between the
corresponding data points in the fourth column of the table. For
example, if the Company's Cumulative Revenue is $_______ and the
Company's Cumulative EPS is $_______, then the Revenue-Related
Percentage Level will be 115%, the EPS-Related Percentage Level will be
135%, and the Payout Factor will therefore equal 125%.
2.2 Subject to adjustment in accordance with Sections 2.4,
2.5 and 2.6 below, the Company's "Cumulative Revenue" for the
Performance Period shall equal the sum of the Company's revenues for
the _____ fiscal years of the Company in the Performance Period. For
this purpose, the Company's revenues for each fiscal year of the
Company during the Performance Period shall be as set forth in the
audited consolidated financial statements of the Company and its
subsidiaries.
2.3 Subject to adjustment in accordance with Sections 2.4,
2.5 and 2.6 below, the Company's "Cumulative EPS" for the Performance
Period shall equal the sum of the Company's diluted earnings per common
share for the _____ fiscal years of the Company in the Performance
Period. The Company's diluted earnings per common share for each
fiscal year of the Company during the Performance Period shall be as
set forth in the audited consolidated financial statements of the
Company and its subsidiaries.
2.4 In the event that any acquisition of a business shall
occur during the Performance Period, the Company's Cumulative Revenue
for the Performance Period shall be appropriately adjusted to exclude
the revenues of the acquired business, and the Company's Cumulative EPS
for the Performance Period shall be appropriately adjusted to
approximate the Cumulative EPS as if the acquisition had not occurred,
by (a) excluding any costs of the acquisition recorded by the Company,
(b) excluding the operating income of the acquired business, (c)
reducing interest expense for any cash paid or debt incurred to fund
the acquisition based on the actual interest rate of such debt or the
Company's average interest rate for borrowed funds, (d) adjusting the
tax provision to reflect the adjusted amount of pre-tax income after
making the above adjustments, and (e) reducing weighted average shares
outstanding used for the EPS calculation by the number of Company
shares, if any, issued in the acquisition.
2.5 In the event that any divestiture of a business shall
occur during the Performance Period, the Company's Cumulative Revenue
for the Performance Period shall be appropriately adjusted as provided
in Section 2.5(i) below to reflect an assumed level of revenue of the
divested business for that portion of the Performance Period occurring
after the divestiture, and the Company's Cumulative EPS for the
Performance Period shall be appropriately adjusted (a) to exclude any
gain or loss on the sale, (b) as provided in Section 2.5(ii) below to
reflect an assumed level of operating income of the divested business
for that portion of the Performance Period occurring after the
divestiture, (c) to reduce interest income for any cash or notes
received in the divestiture based on the actual interest rate on such
notes or the Company's average interest rate for borrowed funds, and (d)
to adjust the tax provision to reflect the adjusted amount of pre-tax
income after making the above adjustments.
(i) The Company's Cumulative Revenue for the
Performance Period shall be appropriately adjusted to include the
Imputed Revenues of the divested business. "Imputed Revenues" shall
mean the result obtained by multiplying the Average Daily Revenues of
the divested business by the number of calendar days in the Performance
Period occurring after the divestiture. "Average Daily Revenues" shall
mean the result obtained by dividing (x) the revenues of the divested
business during that portion of the Performance Period occurring prior
to the divestiture by (y) the number of calendar days in the
Performance Period occurring prior to the divestiture.
(ii) The Company's Cumulative EPS for the Performance
Period shall be appropriately adjusted to reflect the Imputed Operating
Income of the divested business. "Imputed Operating Income" shall mean
the result obtained by multiplying the Average Daily Operating Income
of the divested business by the number of calendar days in the
Performance Period occurring after the divestiture. "Average Daily
Operating Income" shall mean the result obtained by dividing (x) the
operating income of the divested business during that portion of the
Performance Period occurring prior to the divestiture by (y) the number
of calendar days in the Performance Period occurring prior to the
divestiture.
2.6 If the Company implements a change in accounting
principle during the Performance Period either as a result of issuance
of new accounting standards or otherwise, and the effect of the
accounting change was not reflected in the Company's business plan at
the time of approval of this award, then Cumulative Revenue and
Cumulative EPS shall be adjusted to eliminate the impact of the change
in accounting principle.
2.7 All financial computations required to effect
adjustments pursuant to Sections 2.4, 2.5 and 2.6 shall be calculated
by the Company in accordance with generally accepted accounting
principles applied in a manner consistent with the application of such
principles to the preparation of the audited consolidated financial
statements of the Company and its subsidiaries.
3. Employment Condition. In order to receive the Dollar
____________________
Target Award Payment determined under Section 2, Recipient must be
employed by the Company on the last day of the Performance Period. If
Recipient's employment by the Company is terminated at any time prior
to the end of the Performance Period, for any reason or no reason, with
or without cause, including because of death or disability, Recipient
shall not be entitled to receive the Dollar Target Award Payment or any
portion thereof.
4. Certification and Payment. As soon as practicable
_________________________
following the completion of the audit of the Company's consolidated
financial statements for the final year of the Performance Period, the
Company shall calculate the Dollar Target Award Payment payable to
Recipient. This calculation shall be submitted to the Committee.
Notwithstanding anything to the contrary in this Agreement, the
Committee may, in its sole discretion, reduce or eliminate the
calculated Dollar Target Award Payment based on circumstances relating
to the performance of the Company or Recipient. Without limiting the
generality of the foregoing, if at any time during the Performance
Period Recipient's base pay is reduced or Recipient is assigned a
different title, job or set of responsibilities resulting in a decrease
in Recipient's level of responsibility for the Company (any such
reduction in base pay or assignment resulting in a decrease in
Recipient's level of responsibility for the Company, a "Demotion"), the
Committee may, in its sole discretion, reduce or eliminate the
calculated Dollar Target Award Payment. Recipient acknowledges and
agrees that, in the event the Committee reduces or eliminates the
calculated Dollar Target Award Payment in connection with any Demotion
occurring during the Performance Period, the Company intends for such
reduction or elimination to constitute the "proration" of Recipient's
Dollar Target Award with respect to such Demotion described in Plan-
related documents prepared by the Company and delivered to Participant;
and that, in connection with any Demotion, in the event of any
inconsistency between the "proration" provisions of any such Plan-
related documents and the provisions of this Agreement, the provisions
of this Agreement shall control.
The Committee shall certify in writing (which may consist of
approved minutes of a Committee meeting) the level of Cumulative
Revenue and Cumulative EPS attained by the Company and the Dollar
Target Award Payment (if any) payable to Recipient. A portion of the
Dollar Target Award Payment so certified, which portion shall be equal
to the required tax withholding amount on the Dollar Target Award
Payment, shall be payable in cash and shall be used to satisfy such
required tax withholding, as provided in Section 5 below. The
Recipient may elect to receive the balance of the Dollar Target Award
Payment (the "Dollar Target Award Payment Balance") in either (a) cash,
(b) shares of Class B Common Stock of the Company ("Performance Shares")
valued at the closing price of the Class B Common Stock as reported by
the New York Stock Exchange on August 15, 20__, or (c) a specified
percentage in cash and a specified percentage in Performance Shares.
The Recipient's election regarding the form of payment (the "Election")
must be in writing or such other form as may be specified by the
Company and must be delivered by Recipient to the Company no later than
July 31, 20__. If Recipient does not timely deliver the Election, the
Dollar Target Award Payment Balance shall be paid in the form of
Performance Shares. The portion, if any, of the Dollar Target Award
Payment Balance payable to Recipient in cash shall be paid on August 15,
20__. The portion, if any, of the Dollar Target Award Payment Balance
payable to Recipient in Performance Shares shall be delivered to
Recipient as soon as practicable after August 15, 20__. No fractional
shares shall be delivered to Recipient in connection with the Dollar
Target Award Payment and the number of Performance Shares deliverable
shall be rounded to the nearest whole share. Notwithstanding the
foregoing, if Recipient shall have made a valid election to defer
receipt of all or any portion of the Dollar Target Award Payment
pursuant to the terms of the Company's Deferred Compensation Plan (a
"Deferral Election"), payment of all or such portion of the Dollar
Target Award Payment so deferred shall be made in accordance with the
terms of the Deferred Compensation Plan and the Deferral Election.
5. Tax Withholding. Recipient acknowledges that the amount of
_______________
the Dollar Target Award Payment payable to Recipient (other than any
amount deferred pursuant to a Deferral Election) will be treated as
ordinary compensation income for federal and state income and FICA tax
purposes, and that the Company will be required to withhold taxes on
this income amount. To satisfy the required withholding amount, the
Company shall withhold all or part of that portion of the Dollar Target
Award Payment that is payable in cash.
6. Promotions. If at any time during the Performance Period
__________
Recipient's base pay is increased or Recipient is assigned a different
title, job or set of responsibilities resulting in an increase in
Recipient's level of responsibility for the Company (any such increase
in base pay or assignment resulting in an increase in Recipient's level
of responsibility for the Company, a "Promotion"), the Company may, but
shall not be required to, grant to Recipient an additional award (the
"Mid-Plan Grant") on terms similar to those provided in this Agreement,
except that any such award shall be payable solely in cash. Any such
Mid-Plan Grant shall constitute a grant separate from and independent
of the grant represented by this Agreement, and any such Mid-Plan Grant
shall not be granted under the Plan and shall not qualify as
performance-based compensation under Section 162(m) of the Code. The
terms and conditions of any Mid-Plan Grant shall be set forth in a
separate, Mid-Plan Grant agreement between the Company and Recipient in
the form determined by the Company in its sole discretion (a "Mid-Plan
Grant Agreement"). Recipient acknowledges and agrees that no Mid-Plan
Grant shall be payable to Recipient unless Recipient executes and
delivers a Mid-Plan Grant Agreement in connection therewith. Recipient
acknowledges and agrees that any Mid-Plan Grant granted to Recipient in
connection with any Promotion during the Performance Period will be
intended to constitute the "proration" of Recipient's Dollar Target
Award with respect to such Promotion described in Plan-related
documents prepared by the Company and delivered to Recipient; and that,
in connection with any Promotion, in the event of any inconsistency
between the "proration" provisions of any such Plan-related documents
and the provisions of this Section 6 and the Mid-Plan Grant Agreement,
the provisions of this Section 6 and the Mid-Plan Grant Agreement shall
control.
7. Changes in Capital Structure. If the outstanding Class B
____________________________
Common Stock of the Company is hereafter increased or decreased or
changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of any stock split,
combination of shares or dividend payable in shares, recapitalization
or reclassification, appropriate adjustment shall be made by the
Committee in the number and kind of shares subject to this Agreement so
that Recipient's proportionate interest before and after the occurrence
of the event is maintained. Notwithstanding the foregoing, the
Committee shall have no obligation to effect any adjustment that would
or might result in the issuance of fractional shares, and any
fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Committee. Any such
adjustments made by the Committee shall be conclusive.
8. Approvals. The obligations of the Company under this
_________
Agreement are otherwise subject to the approval of state and federal
authorities or agencies with jurisdiction in the matter. The Company
will use its best efforts to take steps required by state or federal
law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange on which the
Company's Class B Common Stock may then be listed, in connection with
the award under this Agreement. The foregoing notwithstanding, the
Company shall not be obligated to issue or deliver Class B Common Stock
under this Agreement if such issuance or delivery would violate
applicable state or federal law.
9. No Right to Employment. Nothing contained in this
______________________
Agreement shall confer upon Recipient any right to be employed by the
Company or any of its subsidiaries or to continue to provide services
to the Company or any of its subsidiaries or to interfere in any way
with the right of the Company or any of its subsidiaries to terminate
Recipient's services at any time for any reason, with or without cause.
10. Miscellaneous.
_____________
10.1 Entire Agreement; Amendment. This Agreement
___________________________
constitutes the entire agreement of the parties with regard to the
subjects hereof and may be amended only by written agreement between
the Company and Recipient.
10.2 Notices. Any notice required or permitted under
_______
this Agreement shall be in writing and shall be deemed sufficient when
delivered personally to the party to whom it is addressed or when
deposited into the United States Mail as registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company,
Attention: Secretary, at its principal executive offices or to
Recipient at the address of Recipient in the Company's records, or at
such other address as such party may designate by ten (10) days'
advance written notice to the other party.
10.3 No Assignment; Rights and Benefits. Recipient shall
__________________________________
not sell, assign, pledge or otherwise transfer this Agreement or any
rights hereunder, whether voluntarily or by operation of law, or by
gift, bequest or otherwise. Any purported sale, assignment, pledge or
transfer by Recipient shall be null and void. The rights and benefits
of this Agreement shall inure to the benefit of and be enforceable by
the Company's successors and assigns and, subject to the foregoing
restriction on assignment, be binding upon Recipient's heirs, executors,
administrators, successors and assigns.
10.4 Further Action. The parties agree to execute such
______________
further instruments and to take such further action as may reasonably
be necessary to carry out the intent of this Agreement.
10.5 Applicable Law; Attorneys' Fees. The terms and
_______________________________
conditions of this Agreement shall be governed by the laws of the State
of Oregon. In the event either party institutes litigation hereunder,
the prevailing party shall be entitled to reasonable attorneys' fees to
be set by the trial court and, upon any appeal, the appellate court.
10.6 Headings. The headings in this Agreement are for
________
convenience only and will not control or affect the meaning or
construction of the provisions of this Agreement.
10.7 Counterparts. This Agreement may be executed in two
____________
or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
NIKE, INC.
By ______________________________
Title ___________________________
RECIPIENT
__________________________________