FEDERATED DEPARTMENT STORES, INC.
1995 Executive Equity Incentive Plan
(As Amended and Restated as of May 16, 1997)
Federated Department Stores, Inc., a Delaware corporation
(the "Company"), hereby amends and restates this 1995 Executive
Equity Incentive Plan (this "Plan") effective, subject to the
provisions of Section 13, as of May 16, 1997 (the "Effective
Date").
1. Purpose. The purpose of this Plan is to attract and
retain directors, officers, and other key executives and
employees of the Company and its subsidiaries and to provide to
such persons incentives and rewards relating to the Company's
business plans.
2. Definitions. In addition to the terms defined
elsewhere herein, the following terms have the following meanings
when used herein with initial capital letters:
(a) "Appreciation Right" means a right granted
pursuant to Section 5.
(b) "Board" means the Board of Directors of the
Company or, pursuant to any delegation by the Board to the
Compensation Committee pursuant to Section 11, the
Compensation Committee.
(c) "Change in Control" means the occurrence of any of
the following events:
(i) The Company is merged, consolidated, or
reorganized into or with another corporation or other
legal entity, and as a result of such merger,
consolidation, or reorganization less than a majority
of the combined voting power of the then-outstanding
securities of such corporation or entity immediately
after such transaction are held in the aggregate by the
holders of the then-outstanding securities entitled to
vote generally in the election of directors of the
Company (the "Voting Stock") immediately prior to such
transaction;
(ii) The Company sells or otherwise transfers
all or substantially all of its assets to another
corporation or other legal entity and, as a result of
such sale or transfer, less than a majority of the
combined voting power of the then-outstanding
securities of such other corporation or entity
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule
13D or Schedule 14D-1 (or any successor schedule, form,
or report or item therein), each as promulgated
pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act)
of securities representing 30% or more of the combined
voting power of the Voting Stock of the Company;
(iv) The Company files a report or proxy
statement with the Securities and Exchange Commission
pursuant to the Exchange Act disclosing in response to
Form 8-K or Schedule 14A (or any successor schedule,
form, or report or item therein) that a change in
control of the Company has occurred or will occur in
the future pursuant to any then-existing contract or
transaction; or
(v) If, during any period of two consecutive
years, individuals who at the beginning of any such
period constitute the directors of the Company cease
for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this
clause (v) each director who is first elected, or first
nominated for election by the Company's stockholders,
by a vote of at least two-thirds of the directors of
the Company (or a committee thereof) then still in
office who were directors of the Company at the
beginning of any such period will be deemed to have
been a director of the Company at the beginning of such
period.
Notwithstanding the foregoing provisions of Section
2(d)(iii) or 2(d)(iv), unless otherwise determined in a
specific case by majority vote of the Board, a "Change in
Control" will not be deemed to have occurred for purposes of
Section 2(d)(iii) or 2(d)(iv) solely because (1) the
Company, (2) a Subsidiary, or (3) any employee stock
ownership plan or any other employee benefit plan of the
Company or any Subsidiary either files or becomes obligated
to file a report or a proxy statement under or in response
to Schedule 13D, Schedule 14D-1, Form 8-K, or Schedule 14A
(or any successor schedule, form, or report or item therein)
under the Exchange Act disclosing beneficial ownership by it
of shares of Voting Stock, whether in excess of 30% or
otherwise, or because the Company reports that a change in
control of the Company has occurred or will occur in the
future by reason of such beneficial ownership.
(d) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Common Shares" means shares of Common Stock of
the Company or any security into which such Common Shares
may be changed by reason of any transaction or event of the
type referred to in Section 8.
(f) "Compensation Committee" means a committee
appointed by the Board in accordance with the By-Laws of the
Company consisting of at least three Non-Employee Directors.
(g) "Date of Grant" means the date determined in
accordance with the Board's authorization on which a grant
of Option Rights or Appreciation Rights, or a grant of
Restricted Shares, becomes effective.
(h) "Immediate Family" has the meaning ascribed
thereto in Rule 16a-1(e) under the Exchange Act.
(i) "Incentive Stock Options" means Option Rights that
are intended to qualify as "incentive stock options" under
Section 422 of the Code or any successor provision.
(j) "Market Value per Share" means any of the
following, as determined in accordance with the Board's
authorization: (i) the closing sale price per share of the
Common Shares as reported in the New York Stock Exchange
Composite Transactions Report (or any other consolidated
transactions reporting system which subsequently may replace
such Composite Transactions Report) for the New York Stock
Exchange (the "NYSE") trading day immediately preceding the
date determined in accordance with the Board's
authorization, or if there are no sales on such date, on the
next preceding day on which there were sales, (ii) the
average (whether weighted or not) or mean price, determined
by reference to the closing sales prices, average between
the high and low sales prices, or any other standard for
determining price adopted by the Board, per share of the
Common Shares as reported in the NYSE Composite Transactions
Report as of the date or for the period determined in
accordance with the Board's authorization, or (iii) in the
event that the Common Shares are not listed for trading on
the NYSE as of a relevant Date of Grant, an amount
determined in accordance with standards adopted by the
Board.
(k) "Non-Employee Director" means a Director of the
Company who is not a full-time employee of the Company or
any Subsidiary.
(l) "Nonqualified Stock Option" means Option Rights
other than Incentive Stock Options.
(m) "Optionee" means the optionee named in an
agreement with the Company evidencing an outstanding Option
Right.
(n) "Option Price" means the purchase price payable on
exercise of an Option Right.
(o) "Option Right" means the right to purchase Common
Shares upon exercise of an option granted pursuant to
Section 4.
(p) "Participant" means a person who is approved by
the Board to receive benefits under this Plan and who is at
the time an officer, executive, or other employee of the
Company or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities, and
also includes each Non-Employee Director.
(q) "Restricted Shares" means Common Shares issued
pursuant to Section 6 as to which neither the substantial
risk of forfeiture nor the prohibition on transfers referred
to in Section 6 has expired.
(r) "Rule 16b-3" means Rule 16b-3 promulgated under
the Exchange Act (or any successor rule substantially to the
same effect), as in effect from time to time.
(s) "Spread" means the excess of the Market Value per
Share of the Common Shares on the date when an Appreciation
Right is exercised, or on the date when Option Rights are
surrendered in payment of the Option Price of other Option
Rights, over the Option Price provided for in the related
Option Right.
(t) "Subsidiary" has the meaning specified in Rule 405
promulgated under the Securities Act of 1933, as amended (or
in any successor rule substantially to the same effect).
3. Shares Available Under the Plan. Subject to adjustment
as provided in Section 8, the number of Common Shares that may be
issued or transferred under this Plan upon the exercise of Option
Rights or Appreciation Rights or as Restricted Shares and
released from substantial risks of forfeiture thereof, may not
exceed the sum of (i) 7.5 million and (ii) the number of Common
Shares which remain available for issuance under this Plan
immediately prior to the Effective Date. The aggregate number of
Common Shares issued under this Plan upon the grant of Restricted
Shares may not exceed the sum of (i) 1.0 million and (ii) the
number of Common Shares which remain available for issuance under
this Plan upon the grant of Restricted Shares immediately prior
to the Effective Date. Shares issued under this Plan may be
shares of original issuance or treasury shares or a combination
of the foregoing. No Participant will be granted Option Rights
or Appreciation Rights, in the aggregate, for more than 1.0
million Common Shares in any period of three fiscal years of the
Company, subject to adjustment as provided in Section 8.
4. Option Rights. The Board may from time to time
authorize the grant to Participants of options to purchase Common
Shares upon such terms and conditions as it may determine in
accordance with the following provisions:
(a) Each grant will specify the number of Common
Shares to which it pertains and the term during which the
rights granted thereunder will exist. The aggregate number
of Common Shares to which the grants to any Non-Employee
Director in any fiscal year of the Company pertain shall not
exceed 3,500 (subject to adjustment as provided in Section
8).
(b) Each grant will specify an Option Price per share,
which may not be less than the Market Value per Share as of
the Date of Grant.
(c) Each grant will specify whether the Option Price
is payable (i) in cash, (ii) by the actual or constructive
transfer to the Company of nonforfeitable, unrestricted
Common Shares already owned by the Optionees (or other
consideration authorized pursuant to Section 4(d)) having an
actual or constructive value as of the time of exercise as
determined by the Board or in accordance with the applicable
agreement referred to in Section 4(i), equal to the total
Option Price, or (iii) by a combination of such methods of
payment.
(d) The Board may determine, at or after the Date of
Grant, that payment of the Option Price of any option (other
than an Incentive Stock Option) may also be made in whole or
in part in the form of Restricted Shares or other Common
Shares that are forfeitable or subject to restrictions on
transfer, or other Option Rights (based on the Spread on the
date of exercise). Unless otherwise determined by the Board
at or after the Date of Grant, whenever any Option Price is
paid in whole or in part by means of any of the forms of
consideration specified in this paragraph, the Common Shares
received upon the exercise of the Option Rights will be
subject to such risks of forfeiture or restrictions on
transfer as may correspond to any that apply to the
consideration surrendered, but only to the extent of (i) the
number of shares surrendered in payment of the Option Price
or (ii) the Spread of any unexercisable portion of Option
Rights surrendered in payment of the Option Price.
(e) Any grant may provide for deferred payment of the
Option Price from the proceeds of sale through a bank or
broker on the exercise date of some or all of the shares to
which such exercise relates.
(f) Successive grants may be made to the same
Participant whether or not any Option Rights previously
granted to such Participant remain unexercised.
(g) Each grant will specify the period or periods of
continuous service by the Optionee with the Company or any
Subsidiary which is necessary before the Option Rights or
installments thereof will become exercisable and may provide
for the earlier exercise of such Option Rights in the event
of a Change in Control or other event.
(h) Option Rights granted under this Plan may be
(i) Incentive Stock Options, (ii) Nonqualified Stock
Options, or (iii) combinations of the foregoing.
(i) Each grant of Option Rights will be evidenced by
an agreement executed on behalf of the Company by any
officer, director, or, if authorized by the Board, employee
of the Company and delivered to the Optionee and containing
such terms and provisions as the Board may approve, except
that in no event will any such agreement include any
provision prohibited by the express terms of this Plan.
5. Appreciation Rights. The Board may also authorize the
grant to any Optionee (other than a Non-Employee Director) of
Appreciation Rights in respect of Option Rights granted
hereunder. An Appreciation Right will be a right of the
Optionee, exercisable by surrender of the related Option Right or
in accordance with the applicable agreement referred to in
Section 5(f), to receive from the Company an amount, as
determined by the Board, which will be expressed as a percentage
of the Spread at the time of exercise. Each such grant will be
in accordance with the following provisions:
(a) Any grant may provide that the amount payable on
exercise of an Appreciation Right may be paid by the Company
in cash, in Common Shares, or in any combination thereof and
may either grant to the Optionee or retain in the Board the
right to elect among those alternatives.
(b) Any grant may specify that the amount payable on
exercise of an Appreciation Right may not exceed a maximum
specified by the Board as of the Date of Grant.
(c) Any grant may specify waiting periods before
exercise and permissible exercise dates or periods and will
provide that no Appreciation Right may be exercised except
at a time when the related Option Right is also exercisable
and at a time when the Spread is positive.
(d) Any grant may specify that such Appreciation Right
may be exercised only in the event of a Change in Control or
other event.
(e) Any grant may provide that, in the event of a
Change in Control, then any such Appreciation Right will
automatically be deemed to have been exercised by the
Optionee, the related Option Right will be deemed to have
been surrendered by the Optionee and will be cancelled, and
the Company forthwith upon the consummation thereof will pay
to the Optionee in cash an amount equal to the Spread at the
time of such consummation.
(f) Each grant of Appreciation Rights will be
evidenced by an agreement executed on behalf of the Company
by any officer, director, or, if authorized by the Board,
employee of the Company and delivered to and accepted by the
Optionee, which agreement will describe such Appreciation
Rights, identify the related Option Rights, state that such
Appreciation Rights are subject to all the terms and
conditions of this Plan, and contain such other terms and
provisions as the Board may approve, except that in no event
will any such agreement include any provision prohibited by
the express terms of this Plan.
6. Restricted Shares. The Board may also authorize the
issuance or transfer of Restricted Shares to Participants (other
than Non-Employee Directors) in accordance with the following
provisions:
(a) Each such issuance or transfer will constitute an
immediate transfer of the ownership of Common Shares to the
Participant in consideration of the performance of services,
entitling such Participant to voting, dividend, and other
ownership rights, but subject to the substantial risk of
forfeiture provided below.
(b) Each such issuance or transfer may be made without
additional consideration.
(c) Each such issuance or transfer will provide that
the Restricted Shares covered thereby will be subject,
except (if the Board so determines) in the event of a Change
in Control to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code, for a period to be
determined by the Board at the Date of Grant; provided,
however, that at least a portion of the Restricted Shares
covered by such issuance or transfer will be subject to a
"substantial risk of forfeiture" within the meaning of
Section 8.3 of the Code for a period of (i) at least one (1)
year following the Date of Grant in the case of a
performance-based grant of Restricted Shares, and (ii) at
least three (3) years following the Date of Grant in the
case of any grant of Restricted Shares that is not
performance based.
(d) Each such issuance or transfer will provide that
during the period for which such substantial risk of
forfeiture is to continue, the transferability of the
Restricted Shares will be prohibited or restricted in the
manner and to the extent prescribed in or pursuant to the
agreement referred to in Section 6(e) (which restrictions
may include, without limitation, rights of repurchase or
first refusal or provisions subjecting the Restricted Shares
to a continuing substantial risk of forfeiture in the hands
of any transferee).
(e) Each issuance or transfer of Restricted Shares
will be evidenced by an agreement executed on behalf of the
Company by any officer, director, or, if authorized by the
Board, employee of the Company and delivered to and accepted
by the Participant and containing such terms and provisions
as the Board may approve except that in no event will any
such agreement include any provision prohibited by the
express terms of the Plan. All certificates representing
Restricted Shares will be held in custody by the Company
until all restrictions thereon have lapsed, together with a
stock power executed by the Participant in whose name such
certificates are registered, endorsed in blank and covering
such Restricted Shares, which may be executed by any officer
of the Company upon a determination by the Board that an
event causing the forfeiture of the Restricted Shares has
occurred.
7. Transferability. (a) Except as provided in Section
7(b), no Option Right, Appreciation Right, or Restricted Share
granted, issued, or transferred under this Plan will be
transferable otherwise than (i) upon death, by will or the laws
of descent and distribution, (ii) pursuant to a qualified
domestic relations order, as that term is defined in the Code or
the rules thereunder Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules
thereunder, or (iii) to a fully revocable trust of which the
Optionee is treated as the owner for federal income tax purposes.
(b) Notwithstanding the provisions of Section 7(a),
Option Rights, Appreciation Rights, and Restricted Shares
(including Option Rights, Appreciation Rights, and
Restricted Shares granted, issued, or transferred under this
Plan prior to the Effective Date) will be transferable by a
Participant who at the time of such transfer is eligible to
earn "Long-Term Incentive Awards" under the Company's 1992
Incentive Bonus Plan, as amended (or any successor plan
thereto) or is a Non-Employee Director, without payment of
consideration therefor by the transferee, to any one or more
members of the Participant's Immediate Family (or to one or
more trusts established solely for the benefit of one or
more members of the Participant's Immediate Family or to one
or more partnerships in which the only partners are members
of the Participant's Immediate Family); provided, however,
that (i) no such transfer will be effective unless
reasonable prior notice thereof is delivered to the Company
and such transfer is thereafter effected in accordance with
any terms and conditions that shall have been made
applicable thereto by the Company or the Board and (ii) any
such transferee will be subject to the same terms and
conditions hereunder as the Participant.
(c) The Board may specify at the Date of Grant that
part or all of the Common Shares that are (i) to be issued
or transferred by the Company upon the exercise of Option
Rights or Appreciation Rights or (ii) no longer subject to
the substantial risk of forfeiture and restrictions on
transfer referred to in Section 6, will be subject to
further restrictions on transfer.
8. Adjustments. The Board may make or provide for such
adjustments in the numbers of Common Shares covered by
outstanding Option Rights or Appreciation Rights granted
hereunder, in the prices per share applicable to such Option
Rights and Appreciation Rights, and in the kind of shares covered
thereby, as the Board may determine is equitably required to
prevent dilution or enlargement of the rights of Participants
that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization, or other change
in the capital structure of the Company, (b) any merger,
consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation, or other
distribution of assets or issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction or
event having an effect similar to any of the foregoing; provided,
however, that no such adjustment in the numbers of Common Shares
covered by outstanding Option Rights or Appreciation Rights will
be made unless such adjustment would change by more than 5% the
number of Common Shares issuable upon exercise of Option Rights
or Appreciation Rights; provided, further, however, that any
adjustment which by reason of this Section 8 is not required to
be made currently will be carried forward and taken into account
in any subsequent adjustment. In the event of any such
transaction or event, the Board may provide in substitution for
any or all outstanding awards under this Plan such alternative
consideration as it may determine to be equitable in the
circumstances and may require in connection therewith the
surrender of all awards so replaced. The Board may also make or
provide for such adjustments in the numbers of shares specified
in Section 3 as the Board may determine is appropriate to reflect
any transaction or event described in this Section 8.
9. Fractional Shares. The Company will not be required to
issue any fractional Common Shares pursuant to this Plan. The
Board may provide for the elimination of fractions and for the
settlement of fractions in cash.
10. Withholding Taxes. To the extent that the Company is
required to withhold federal, state, local, or foreign taxes in
connection with any payment made or benefit realized by a
Participant or other person under this Plan, and the amounts
available to the Company for such withholding are insufficient,
it will be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other
person make arrangements satisfactory to the Company for payment
of the balance of such taxes required to be withheld, which
arrangements may include relinquishment of a portion of such
benefit.
11. Administration of the Plan. (a) This Plan will be
administered by the Board, which may from time to time delegate
all or any part of its authority under this Plan to the
Compensation Committee or any subcommittee thereof.
(b) The Board will take such actions as are required
to be taken by it hereunder, may take the actions permitted
to be taken by it hereunder, and will have the authority
from time to time to interpret this Plan and to adopt,
amend, and rescind rules and regulations for implementing
and administering this Plan. All such actions will be in
the sole discretion of the Board, and when taken, will be
final, conclusive, and binding. Without limiting the
generality or effect of the foregoing, the interpretation
and construction by the Board of any provision of this Plan
or of any agreement, notification, or document evidencing
the grant of Option Rights, Appreciation Rights, or
Restricted Shares, and any determination by the Board in its
sole discretion pursuant to any provision of this Plan or of
any such agreement, notification, or document will be final
and conclusive. Without limiting the generality or effect
of any provision of the Certificate of Incorporation of the
Company, no member of the Board will be liable for any such
action or determination made in good faith.
(c) The provisions of Sections 4, 5, and 6 will be
interpreted as authorizing the Board, in taking any action
under or pursuant to this Plan, to take any action it
determines in its sole discretion to be appropriate subject
only to the express limitations therein contained and no
authorization in any such Section or other provision of this
Plan is intended or may be deemed to constitute a limitation
on the authority of the Board.
(d) The existence of this Plan or any right granted or
other action taken pursuant hereto will not affect the
authority of the Board or the Company to take any other
action, including in respect of the grant or award of any
option, security, or other right or benefit, whether or not
authorized by this Plan, subject only to limitations imposed
by applicable law as from time to time applicable thereto.
12. Amendments, Etc. (a) This Plan may be amended from
time to time by the Board, but without further approval by the
holders of a majority of the Common Shares actually voting on the
matter at a meeting of the Company's stockholders or such other
approval as may be required by Rule 16b-3, no such amendment will
(i) increase the maximum numbers of Common Shares or Restricted
Shares issuable pursuant to Section 3 or the maximum number of
Common Shares that may be subject to Option Rights or
Appreciation Rights granted to any Participant in any period of
three fiscal years of the Company (except that adjustments and
additions authorized by this Plan will not be limited by this
provision) or (ii) cause Rule 16b-3 to become inapplicable to
this Plan or Option Rights, Appreciation Rights, or Restricted
Shares granted, issued, or transferred hereunder during any
period in which the Company has any class of equity securities
registered pursuant to Section 13 or 15 of the Exchange Act.
(b) In case of termination of employment by reason of
death, disability, or normal or early retirement, or in the
case of hardship or other special circumstances, of a
Participant who holds an Option Right or Appreciation Right
not immediately exercisable in full, or any Restricted
Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, or
who holds Common Shares subject to any transfer restriction
imposed pursuant to Section 7(b), the Board may take such
action as it deems equitable in the circumstances or in the
best interests of the Company, including without limitation
waiving or modifying any other limitation or requirement
under any such award.
(c) This Plan will not confer upon any Participant any
right with respect to continuance of employment or other
service with the Company or any Subsidiary, nor will it
interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate or modify the
terms of such Participant's employment or other service at
any time.
(d) To the extent that any provision of this Plan
would prevent any Option Right that was intended to qualify
as an Incentive Stock Option from qualifying as such, that
provision will be null and void with respect to such Option
Right, but will remain in effect for other Option Rights and
there will be no further effect on any provision of this
Plan.
(e) This Plan will be governed by and construed in
accordance with the laws of the State of Delaware, without
giving effect to the principles of conflict of laws thereof.
If any provision of this Plan is held to be invalid or
unenforceable, no other provision of this Plan will be
affected thereby.
13. Effectiveness. The amendment and restatement of this
Plan set forth herein will not become effective unless the
holders of a majority of the Common Shares present in person or
by proxy at a meeting of the stockholders of the Company and
entitled to vote generally in the election of directors approve
the amendments to be effected hereby.