EXHIBIT 10.14
THE NEIMAN MARCUS GROUP, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Effective January 17, 1997
As Amended and Restated June 8, 1998
THE NEIMAN MARCUS GROUP, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Table of Contents
ARTICLE PAGE
ARTICLE I
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Adoption, amendment and restatement . . . . . . . . . . . . . . 1
ARTICLE 2
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. "Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. "Board" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. "Committee" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. "Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5. "Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6. "Compensation" . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7. "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8. "Market Price" . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9. "Non-Employee Director" . . . . . . . . . . . . . . . . . . . . 2
2.10 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11."Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12."Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13."Unforeseen Emergency" . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Commencement of participation . . . . . . . . . . . . . . . . . 3
3.2. Continuation of participation . . . . . . . . . . . . . . . . . 3
ARTICLE 4
Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Elective deferrals . . . . . . . . . . . . . . . . . . . . . . . 3
4.2. Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3. Investment equivalent alternatives . . . . . . . . . . . . . . . 4
4.4. Time of payment . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5. Form of payment . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6. Death prior to payment . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 5
Non-Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . 8
5.1. Crediting of Common Stock equivalent units . . . . . . . . . . 8
5.2. Method of payment . . . . . . . . . . . . . . . . . . . . . . . 8
5.3. Modification of form or time of payment . . . . . . . . . . . . 8
ARTICLE 6
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1. Plan administration and interpretation . . . . . . . . . . . . . 9
6.2. Powers, duties, procedures, etc . . . . . . . . . . . . . . . . 9
6.3. Information . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 7
Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . 10
7.1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2. Termination of Plan . . . . . . . . . . . . . . . . . . . . . . 10
7.3. Existing rights . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 8
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1. No funding . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2. Grantor trust . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.3. Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4. Limitation of Participants' rights . . . . . . . . . . . . . . . 12
8.5. Participants bound . . . . . . . . . . . . . . . . . . . . . . . 12
8.6. Receipt and release . . . . . . . . . . . . . . . . . . . . . . 12
8.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.8. Unforeseen Emergency . . . . . . . . . . . . . . . . . . . . . . 12
8.9. Governing law . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.10.Headings and subheadings . . . . . . . . . . . . . . . . . . . . 13
THE NEIMAN MARCUS GROUP, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
ARTICLE I
Introduction
1.1. Adoption, amendment and restatement. The Company adopted the Plan
effective January 17, 1997 to provide a means by which members of the Board
who are not employees of the Company may elect to defer receipt of designated
amounts of Compensation earned in that capacity. The Plan has been amended
and restated effective June 8, 1998, to provide for non-elective deferred
compensation as set forth in Article 5.
1.2. Status of Plan. The Plan is intended neither to be a qualified plan
within the meaning of 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), nor to constitute a "pension benefit plan" or a "welfare benefit
plan" subject to the requirements of the Employee Retirement Income Security
Act of 1974. The Plan shall be administered and interpreted to the extent
possible in a manner consistent with that intent.
ARTICLE 2
Definitions
Whenever used herein, the following terms have the meanings set forth
below, unless a different meaning is clearly required by the context:
2.1. "Account" means, for each Participant, the account maintained for
his or her benefit under Section 4.2 or 5.1.
2.2. "Board" means the Board of Directors of the Company.
2.3. "Committee" means the Compensation Committee of the Board.
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2.4. "Common Stock" means the Common Stock, $.01 par value, of the
Company.
2.5. "Company" means The Neiman Marcus Group, Inc., a Delaware
corporation, and any successor to all or substantially all of the Company's
assets or business which assumes the obligations of the Company.
2.6. "Compensation" means the amount of retainer payable for service on
the Board, plus any fees payable for attendance at or participation in a
meeting, for service as Chair or Vice Chair of the Board, or for service on or
as a chair of any committee of the Board, determined without reduction for any
elective deferrals under Article 4. Notwithstanding the foregoing,
Compensation does not include any Common Stock equivalent units which may be
credited pursuant to Section 5.1, which amounts are not subject to the
elective deferral provisions of Section 4.1.
2.7. "Effective Date" means January 17, 1997.
2.8. "Market Price" means, as of any date, the mean of the highest and
lowest sales prices of the Common Stock on such date (or, if no trading shall
have occurred on such date, on the next previous date on which trading shall
have occurred), as reported on the New York Stock Exchange Composite Tape.
2.9. "Non-Employee Director" means a member of the Board who is not an
officer or employee of the Company or Harcourt General, Inc. or any of the
subsidiaries of either the Company or Harcourt General, Inc.
2.10. "Participant" means any Non-Employee Director who participates in
the Plan as set forth in Article 3.
2.11. "Plan" means The Neiman Marcus Group, Inc. Deferred Compensation
Plan for Non-Employee Directors as set forth herein and all subsequent
amendments hereto.
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2.12. "Plan Year" means the calendar year.
2.13. "Unforeseen Emergency" means a severe financial hardship to a
Participant resulting from illness or accident of the Participant or of a
dependent (as defined in 152(a) of the Code) of the Participant, loss of
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.
ARTICLE 3
Participation
3.1. Commencement of participation. Each Non-Employee Director shall
become a Participant in this Plan upon the later of (a) the Effective Date or
(b) the day on which he or she becomes a Non-Employee Director.
3.2. Continuation of participation. An individual who has become a
Participant in the Plan shall continue to be a Participant so long as he or
she remains a Non-Employee Director, and so long thereafter as any amount is
payable to him or her in accordance with Article 4 or 5.
ARTICLE 4
Elective Deferrals
4.1. Elective deferrals. An individual who is a Non-Employee Director on
January 17, 1997 may elect, by filing a written election with the Committee
prior to February 14, 1997, to defer all or a specified portion of his or her
Compensation for services to be performed on or after such deferral election.
An individual who is a Non-Employee Director on the first day of any fiscal
year of the Company after the Effective Date may elect to defer all or a
specified portion of his or her Compensation for services to be performed on
or after such date by filing a written election with the Committee before such
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date. An individual who has been nominated or elected to serve as a Non-
Employee Director, and who was not a Non-Employee Director immediately prior
to such nomination or election, may elect before or within thirty (30) days
after becoming a Non-Employee Director to defer all or a specified portion of
his or her Compensation for services to be performed after such deferral
election.
Each deferral election under this Section 4.1 shall be made on a form
approved or prescribed by the Committee and shall also specify the time and
form of distribution of the amounts deferred and the investment equivalent
alternative described in Section 4.3 to be applied to such amounts.
An election to defer Compensation and to specify the time and form of
distribution may be revoked or modified, effective for amounts earned on and
after the first day of any fiscal year of the Company, by an election filed
before that date, but may not otherwise be revoked or modified except as
provided in Section 8.8 in the event of an Unforeseen Emergency.
4.2. Accounts. The Committee shall maintain a bookkeeping account (the
"Account") for each Participant reflecting elective deferrals made for the
Participant's benefit under Section 4.1, and the value of such elective
deferrals determined in accordance with Section 4.3, together with any
adjustments hereunder. Elective deferrals shall be credited to the Account as
of the day such amounts become payable to the Participant. As of each
February 15th, the Committee shall provide the Participant with a statement of
his or her Account as of the end of the preceding Plan Year.
4.3. Investment equivalent alternatives. When a Participant elects to
make elective deferrals in accordance with Section 4.1, he or she shall also
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elect whether the value of such elective deferrals shall be determined under
the cash-based option or the stock-based option described below.
(a) Cash-based option:
Under the cash-based option, elective deferrals shall accrue
interest, to be compounded at the end of each fiscal quarter of the
Company, at a rate equal to the average of the top rates paid by major
New York banks on primary new issues of three-month negotiable
certificates of deposit (usually on amounts of $1,000,000 or more) as
quoted in the Wall Street Journal on the last business day of the fiscal
quarter.
(b) Stock-based option:
Under the stock-based option, elective deferrals will be converted
hypothetically into Common Stock equivalent units. The number of such
units shall be determined by dividing the amount of elective deferrals
in each fiscal quarter by the average of the Market Prices of the Common
Stock during the last five (5) trading days of such fiscal quarter.
Units will be calculated to the nearest thousandth. On each dividend
payment date, if any, for the Common Stock dividend equivalents in the
form of additional units representing Common Stock will be credited to
the Participant's Account equal to (i) the per-share cash dividend
divided by the Market Price of Common Stock on the dividend payment
date, multiplied by (ii) the number of such units reflected in such
Account on the day before the dividend payment date.
At the end of the period of deferral elected by the Participant, the
Common Stock equivalent units will be valued for payment by multiplying the
applicable number of units by the average of the Market Prices of Common Stock
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during the last ten (10) trading days before the date on which the value of
the elective deferrals is to be paid or begin to be paid.
If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are
distributed with respect to such shares of Common Stock or other securities
through merger, consolidation, sale of all or substantially all the property
of the Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other distribution with respect
to such shares of Common Stock or other securities, appropriate adjustments
will be made by the Company in the number of Common Stock equivalent units
credited to a Participant's Account.
4.4. Time of payment. When a Participant elects to make elective
deferrals in accordance with Section 4.1, the Participant shall also elect
whether the value of the elective deferrals shall be paid, or begin to be
paid, (a) at a specified date at least twenty-four months in the future (which
date shall be the last day of a fiscal quarter) or (b) upon termination of his
or her service as a member of the Board. If alternative (a) under this Section
4.4 is elected, payment will be made or will commence on the date specified.
If alternative (b) under this Section 4.4 is elected, payment will be made or
will commence at the end of the fiscal quarter in which the Participant's
service as a member of the Board terminates. The foregoing election shall be
made on a form approved or prescribed by the Committee.
Payment of a Participant's Account shall be made in accordance with the
Participant's elections under this Section 4.4 and Section 4.5. Each
Participant's Account shall be reduced by the amount of any payment made to or
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on behalf of the Participant (including interest paid with respect to such
payment) as of the date such payment is made.
4.5. Form of payment. When a Participant elects to make elective
deferrals in accordance with Section 4.1, the Participant shall also elect
whether the value of such elective deferrals shall be paid in (a) a lump sum,
or (b) a specified number of annual installments (not to exceed 10). Each
installment (other than the first) shall accrue interest from the date of the
first installment to the date on which such installment is paid, compounded
quarterly at a rate equal to the average of the top rates paid by major New
York banks on primary new issues of three-month negotiable certificates of
deposit (usually on amounts of $1,000,000 or more) as quoted in the Wall
Street Journal on the last business day of the fiscal quarter. The foregoing
election shall be made on a form approved or prescribed by the Committee.
4.6. Death prior to payment. In the event that a Participant dies prior
to complete distribution of his or her Account, the balance of his or her
Account shall be paid in a single lump sum to the beneficiary or beneficiaries
designated by the Participant. If no such beneficiary has been designated or
if no designated beneficiary survives the Participant, the balance of such
Account shall be paid to the Participant's estate. Payment of such amount
shall be made within sixty (60) days from the date of receipt by the office of
the Secretary of the Company of notice of the Participant's death. Such
designation or designations of beneficiary must be in writing, dated and
signed by the Participant, and no such designation shall require Company
consent. No beneficiary designation shall be deemed effective unless the same
is on file in the office of the Secretary of the Company prior to the death of
the Participant. The Company may rely in all cases on the genuineness,
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accuracy and date of any such beneficiary designation and shall be fully
protected in making payment in accordance therewith. Any beneficiary
designation filed in the office of the Secretary of the Company prior to the
death of the Participant shall be deemed to have revoked all earlier
designations, and no beneficiary designation filed after the date of a
Participant's death shall be deemed effective.
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ARTICLE 5
Non-Elective Deferrals
5.1 Crediting of Common Stock equivalent units. It is contemplated
that Board compensation after the Effective Date may, in the Board's sole
discretion, include credits to the Accounts of Participants consisting of
Common Stock equivalent units, and that the value thereof shall be determined
under the stock-based option described in Section 4.3(b). For this purpose,
for each Participant who has not elected to defer Compensation pursuant to
Section 4.1, an Account shall be established. Any amounts so credited shall
remain in each Participant's Account until termination of his or her service
as a member of the Board, and payment from such Account will be made or will
commence at the end of the fiscal quarter in which the Participant's service
as a member of the Board terminates.
5.2 Method of payment. At the Participant's election, made prior to
October 1, 1998, on a form approved or prescribed by the Committee, the value
of any amount so credited shall be paid in a lump sum or in annual
installments (not to exceed 10), and if the latter, installments (other than
the first) shall accrue interest as described in Section 4.5. In the event
that a Participant dies prior to complete distribution of any amounts credited
to his or her Account pursuant to Section 5.1, the balance of such amounts
shall be paid in the manner prescribed and to the persons specified in Section
4.6.
5.3 Modification of form or time of payment. Each election under
Section 5.2 as to form of payment may be modified, effective for any amounts
credited under Section 5.1 for service on or after the first day of any fiscal
year of the Company, by an election filed before such date. Moreover, a
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majority of the disinterested members of the Committee may, at their
discretion, at the request or with the consent of a Participant, change the
form (or, in the case of elective deferrals, the time) of payment elected by
such Participant with respect to amounts previously credited to his or her
Account pursuant to Article 4 or this Article 5, provided that (a) the revised
form of payment be one of the forms permitted by Sections 4.5 and 5.2, and (b)
no such change shall be effective unless made at least 24 months prior to the
date such amounts would otherwise have been paid.
ARTICLE 6
Administration
6. 1. Plan administration and interpretation. The Plan shall be
administered by the Committee which may appoint persons to assist in the
administration of the Plan. The Committee shall have complete control and
authority to determine the rights and benefits and all claims, demands and
actions arising out of the provisions of the Plan of any Participant or other
person having or claiming to have any interest under the Plan. The Committee
shall have the exclusive power to interpret the Plan and to decide all matters
under the Plan. Such interpretation and decision shall be final, conclusive
and binding on all Participants and any person claiming under or through any
Participant, in the absence of clear and convincing evidence that the
Committee acted arbitrarily and capriciously. Any individual serving on the
Committee who is a Participant will not vote or act on any matter relating
solely to himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant
or the Company.
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6.2. Powers, duties, procedures, etc. The Committee shall have such
powers and duties, may adopt such rules and tables, may act in accordance with
such procedures, may appoint such officers or agents, and may delegate such
powers and duties as it deems necessary or advisable for the administration of
the Plan.
6.3. Information. To enable the Committee to perform its functions, the
Company shall supply full and timely information to the Committee on all
matters relating to the service of
Participants as members of the Board and such other pertinent facts as the
Committee may require.
ARTICLE 7
Amendment and Termination
7.1. Amendments. The Board shall have the right to amend the Plan from
time to time, subject to Section 7.3, by an instrument in writing approved by
the Board and executed on the Company's behalf by a duly authorized officer.
7.2. Termination of Plan. The Plan is strictly a voluntary undertaking
on the part of the Company and shall not be deemed to constitute a contract
between the Company and any Participant or a consideration for, or an
inducement or condition of, the performance of services by any Participant as
a member of the Board. The Board reserves the right to terminate the Plan at
any time, subject to Section 7.3, by an instrument in writing approved by the
Board and executed on the Company's behalf by a duly authorized officer. Upon
termination of the Plan, no further benefits shall accrue on behalf of any
individual then a Participant, nor shall any individual not a Participant as
of the date of termination be eligible to become a Participant thereafter.
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7.3. Existing rights. No amendment or termination of the Plan shall
reduce:
(a) any benefits payable to (or in respect of) a Participant who has
ceased to be a member of the Board, or
(b) any benefits to which a current Board member would have been
entitled, currently or in the future, in the event his or her service as a
Board member had terminated on the date of such amendment or termination.
ARTICLE 8
Miscellaneous
8.1. No funding. Nothing in the Plan will be construed to create a
trust or to obligate the Company or any other person to segregate a fund,
purchase an insurance contract, or in any other way currently to fund the
future payment of any benefits hereunder, nor will anything herein be
construed to give any Participant or any other person rights to any specific
assets of the Company or of any other person. The Plan constitutes a mere
promise by the Company to make benefit payments in the future, and is intended
to be unfunded for tax purposes. Any benefits which become payable hereunder
shall be paid from the general assets of the Company, and the rights of any
Participant or of his or her estate or beneficiary shall be those of an
unsecured general creditor.
8.2. Grantor trust. The Company in its sole discretion may establish a
trust (a "grantor trust") of which it is treated as the owner under Subpart E
of Subchapter J, Chapter 1 of the Code to provide for the payment of benefits
hereunder, subject to the claims of the Company's general creditors in the
event of insolvency, and subject to such other terms and conditions as the
Company may deem necessary or advisable to ensure that benefits are not
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includable, by reason of the trust, in the income of trust beneficiaries prior
to their actual distribution.
8.3. Nonassignability. None of the benefits, payments, proceeds or
claims of any Participant shall be subject to any claim of any creditor and,
in particular, the same shall not be subject to attachment or garnishment or
other legal process by any creditor of the Participant or his or her
beneficiary, nor shall any Participant or beneficiary have any right to
alienate, anticipate, commute, pledge, sell, transfer, encumber or assign any
of the benefits or payments or proceeds which he or she may expect to receive,
contingently or otherwise, under the Plan.
8.4. Limitation of Participants' rights. Participation in the Plan
shall not give any Participant the right to be retained as a member of the
Board or any right or interest in the Plan other than as herein provided.
8.5. Participants bound. Any action with respect to the Plan taken by
the Committee, the Board or the Company or any action authorized by or taken
at the direction of the Committee, the Board or the Company shall be
conclusive upon all Participants entitled to benefits under the Plan.
8.6. Receipt and release. Any payment to any Participant in accordance
with the provisions of the Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Company, the Board and the Committee
under the Plan, and the Committee may require such Participant, as a condition
precedent to such payment, to execute a receipt and release to such effect. If
any Participant is determined by the Committee to be incompetent by reason of
physical or mental disability to give a valid receipt and release, the
Committee may cause the payment or payments becoming due to such person to be
made to another person for his or her benefit without responsibility on the
13
part of the Committee, the Board or the Company to follow the application of
such funds.
8.7. Notices. All notices and elections to be delivered hereunder to
the Committee, the Board or the Company shall be delivered to the attention of
the Secretary of the Company.
8.8. Unforeseen Emergency. A Participant who has an Unforeseen
Emergency may, with the consent of a majority of the disinterested members of
the Committee, receive a distribution of that portion of his or her Account
which the Committee determines is necessary to satisfy the emergency need,
including any amounts necessary to pay any federal, state or local income
taxes reasonably anticipated to result from the distribution, but only to the
extent such need is not covered by insurance and cannot reasonably be relieved
by the liquidation of the Participant's assets (to the extent that such
liquidation would not in itself cause a severe financial hardship) or by
cessation of elective deferrals under the Plan. A Participant who has an
Unforeseen Emergency may also cease or reduce future deferrals under the Plan
with the consent of a majority of the disinterested members of the Committee.
A Participant requesting a distribution, or a cessation or reduction of future
deferrals, on account of an Unforeseen Emergency shall apply in writing in a
letter submitted to the Committee and shall provide such information as the
Committee may require.
8.9 Governing law. The Plan shall be construed, administered, and
governed in all respects under and by the laws of the Commonwealth of
Massachusetts. If any provision shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.
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8.10. Headings and subheadings. Headings and subheadings in the Plan
are inserted for convenience only and are not to be considered in the
construction of the provisions hereof.
IN WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused the Plan to
be
amended and restated by its duly authorized officer this 8th day of June,
1998.
THE NEIMAN MARCUS GROUP, INC.
By: s/ Eric P. Geller
Eric P. Geller, Senior Vice President,
General Counsel and Secretary
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