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EXHIBIT 10.1
As Amended August 12, 1998
VENATOR GROUP, INC.
EXECUTIVE SEVERANCE PAY PLAN
(Effective February 1, 1996)
INTRODUCTION
The purpose of this Executive Severance Pay Plan (the "Plan") is to enable
Venator Group, Inc. (the Company') to offer a form of protection to officers and
other key employees of the Company and its Affiliates in the event their
employment with the Company and its Affiliates terminates.
Accordingly, the Company's Board of Directors has adopted this Plan, upon
the recommendation of the Compensation Committee, effective February 1, 1996 for
selected officers and key employees of the Company and its Affiliates in an
effort to assist in replacing the loss of income caused by a termination of
employment under the circumstances described herein.
The Plan, effective February 1, 1996, amended as of August 12, 1998, amends
and supersedes any severance plan, policies and/or practices of the Company or
any Affiliate in effect for Participants in the Plan. Any Participant in the
Plan shall not be eligible to participate in any other severance plan, policy or
practice of the Company or any Affiliate.
ARTICLE I
Definitions
1.1 "Affiliate" shall mean the Company and any entity affiliated with the
Company within the meaning of Code Section 414(b) with respect to a controlled
group of corporations, Code Section 414(c) with respect to trades or businesses
under common control with the Company, Code Section 414(m) with respect to
affiliated service groups and any other entity required to be aggregated with
the Company under Section 414(o) of the Code. No entity shall be treated as an
Affiliate for any period during which it is not part of the controlled group,
under common control or otherwise required to be aggregated under Code Section
414.
1.2 "Board" shall mean the Board of Directors of the Company.
1.3 "Bonus" shall mean an amount equal to the target bonus expected to be
earned by an Employee under the Company's Annual Incentive Compensation Plan or
such other annual bonus plan or program that may be applicable to the Employee
in a fiscal year, if the applicable target performance goal is satisfied.
1.4 "Cause" shall mean (with regard to a Participant's termination of
employment with the Control Group): (a) with regard to any member of the Control
Group or any of such member's assets or business, the refusal or willful failure
by the
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Participant to substantially perform his or her duties, (b) with regard to any
member of the Control Group or any of such member's assets or business, the
Participant's dishonesty, willful misconduct, misappropriation, breach of
fiduciary duty or fraud, or (c) the Participant's conviction of a felony (other
than a traffic violation) or any other crime involving, in the sole discretion
of the Committee, moral turpitude.
1.5 "Change in Control" shall have the meaning set forth in Appendix A
attached hereto.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended and as
hereafter amended from time to time.
1.7 "Committee" shall mean the Compensation Committee of the Board or an
administrative committee appointed by the Compensation Committee.
1.8 "Company" shall mean Venator Group, Inc., a New York corporation, and
any successor as provided in Article VI hereof.
1.9 "Control Group" shall mean the Company and its Affiliates.
1.10 "Effective Date" shall mean February 1, 1996.
1.11 "Employee" shall mean any officer, member of senior management or
other key employee employed by an Employer.
1.12 "Employer" shall mean the Company and any Affiliate which has adopted
this Plan in accordance with Section 6.1 hereof.
1.13 "Good Reason" shall mean (with respect to a Participant's termination
of employment with the Control Group): (a) any material demotion of the
Participant or any material reduction in the Participant's authority or
responsibility, except in each case in connection with the termination of the
Participant's employment for Cause or disability or as a result of the
Participant's death, or temporarily as a result of the Participant's illness or
other absence; (b) prior to a Change in Control, a reduction in the
Participant's rate of base salary as payable from time to time, other than a
reduction that occurs in connection with, and in the same percentage as, an
across-the-board reduction over any three-year period in the base salaries of
all Employees of the Company of a similar level and where the reduction is less
than 20 percent of the Participant's base salary measured from the beginning of
such three-year period; or (c) a reduction in the Participant's annual bonus
classification level other than in connection with a redesign of the applicable
bonus plan that affects all Employees at the Participant's bonus level.
1.14 "Participant" shall mean any Employee designated by the Committee to
be a participant in the Plan. The Committee may, in its sole discretion,
terminate the participation of a Participant at any time.
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1.15 "Plan" shall mean the Venator Group Executive Severance Pay Plan.
1.16 "Salary" shall mean an Employee's base monthly cash compensation rate
for services paid by the Employer to the Employee at the time of his or her
termination of employment from the Control Group, as reflected in the Employer's
payroll records. Salary shall not include commissions, bonuses, overtime pay,
incentive compensation, benefits paid under any qualified plan, any group
medical, dental or other welfare benefit plan, noncash compensation or any other
additional compensation but shall include amounts reduced pursuant to an
Employee's salary reduction agreement under Sections 125 or 401(k) of the Code
(if any) or a nonqualified elective deferred compensation arrangement to the
extent that in each such case the reduction is to base salary.
1.17 "Severance Benefit" shall mean (a) in the case of a Participant's
termination of employment that does not occur within the twelve (12) month
period following a Change in Control, one (1) week's Salary multiplied by the
Participant's Years of Service, with a minimum of thirteen (13) weeks; or (b) in
the case of a Participant's termination of employment within the twelve (12)
month period following a Change in Control, two (2) week's Salary plus prorated
Bonus for two (2) weeks multiplied by the Participant's Years of Service, with a
minimum of twenty-six (26) weeks. A Participant's prorated Bonus for one (1)
week shall equal a Participant's Bonus divided by fifty-two (52).
1.18 "Severance Period" shall mean (a) in the case of a Participant's
termination of employment that does not occur within the twelve (12) month
period following a Change in Control, one (1) week multiplied by the
Participant's Years of Service, with a minimum of thirteen (13) weeks; or (b) in
the case of a Participant's termination of employment within the twelve (12)
month period following a Change in Control, two (2) weeks multiplied by the
Participant's Years of Service, with a minimum of twenty-six (26) weeks.
1.19 "Year of Service" shall mean each twelve (12) consecutive month period
commencing on the Employee's date of hire by the Employer and each anniversary
thereof in which the Employee is paid by the Employer for the performance of
full-time services as an Employee. For purposes of this section, full-time
services shall mean that the Employee is employed for at least thirty (30) hours
per week. A Year of Service shall include any period during which an Employee is
not working due to disability, leave of absence or layoff so long as he or she
is being paid by the Employer (other than through an employee benefit plan). A
Year of Service also shall include service in any branch of the armed forces of
the United States by any person who is an Employee on the date such service
commenced, but only to the extent required by applicable law. If an Employee
terminates his or her employment prior to completing a Year of Service during
the period commencing on his or her date of hire or an anniversary thereof, the
Employee shall be credited with a fractional Year of Service equal to the number
of consecutive months he or she has been paid by the Employer for the
performance of full-time services as an Employee from his or her date of hire or
anniversary thereof through the date of the Employee's termination of
employment, over twelve (12).
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ARTICLE II
Benefits
2.1 Eligibility for Benefits. Any Participant whose employment with the
Control Group is terminated without Cause by an Employer or who terminates
employment with the Control Group within sixty (60) days after the occurrence of
a Good Reason event with regard to such Participant, shall be entitled to a
Severance Benefit in the manner set forth in Section 2.2 below. A Participant
shall not be entitled to a Severance Benefit if he or she is terminated for
Cause.
2.2 Form of Benefits. Any Participant described in Section 2.1 above shall
receive his or her Severance Benefit in the form of a lump sum cash payment as
soon as administratively feasible following his or her termination of employment
with the Control Group, provided, however, that interest shall be payable
beginning on the tenth day following such termination of employment at the prime
rate of interest as stated in The Wall Street Journal.
2.3 Additional Benefits. A Participant entitled to receive a Severance
Benefit shall continue, to the extent permitted under legal and underwriting
requirements (if any), to participate during his or her Severance Period in any
group medical, dental or life insurance plan he or she participated in prior to
his or her termination of employment, under substantially similar terms and
conditions as an active Employee; provided participation in such group medical,
dental and life insurance benefits shall correspondingly cease at such time as
the Participant becomes eligible for a future employer's medical, dental and/or
life insurance coverage (or would become eligible if the Participant did not
waive coverage). Notwithstanding the foregoing, the Participant may not continue
to participate in such plans on a pre-tax or tax-favored basis. Notwithstanding
anything else herein, a Participant shall not be entitled to any benefits during
the Severance Period other than the benefits provided in Sections 2.2 and 2.3
herein and, without limiting the generality of the foregoing, a Participant
specifically shall not be entitled to continue to participate in any group
disability or voluntary accidental death or dismemberment insurance plan he or
she participated in prior to his or her termination of employment. Without
limiting the generality of the foregoing, a Participant shall not accrue
additional benefits under any pension plan of the Employer (whether or not
qualified under Section 401(a) of the Code) during the Severance Period,
provided, however, that payment of any Severance Benefit shall be included in a
Participant's earnings for purposes of calculating a Participant's benefit under
the Venator Group Retirement Plan, Venator Group 401(k) Plan, and Venator Group
Excess Cash Balance Plan.
2.4 Release. As a condition of receiving benefits hereunder, the
Participant shall be required to provide the Employer with a release of all
claims of any kind whatsoever against the Control Group, its officers, directors
and employees, known or unknown, as of the date of his or her termination of
employment. The release shall be in such form as requested by the Employer.
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2.5 No Duty to Mitigate/Set-Off. No Participant entitled to receive a
Severance Benefit hereunder shall be required to seek other employment or to
attempt in any way to reduce any amounts payable to him or her pursuant to this
Plan. Further, the amount of the Severance Benefit payable hereunder shall not
be reduced by any compensation earned by the Participant as a result of
employment by another employer or otherwise. An Employer's obligations to make
payment of Severance Benefits and otherwise to perform its obligations hereunder
shall not be affected by any circumstances, including without limitation, any
set-off, counterclaim, recoupment, defense or other right which an Employer may
have against the Participant.
ARTICLE III
Funding
3.1 Funding. The Plan shall be funded out of the general assets of the
Company as and when benefits are payable under the Plan. All Participants shall
be solely general creditors of the Company. If the Company decides to establish
any advance accrued reserve on its books against the future expense of benefits
payable hereunder, or if the Company is required to fund a trust under this
Plan, such reserve or trust shall not under any circumstances be deemed to be an
asset of the Plan.
ARTICLE IV
Administration of the Plan
4.1 Plan Administrator. The general administration of the Plan on behalf of
the Employers shall be placed with the Committee.
4.2 Reimbursement of Expenses of Plan Committee. The Company may, in its
sole discretion, pay or reimburse the members of the Committee for all
reasonable expenses incurred in connection with their duties hereunder.
4.3 Action by the Plan Committee. Decisions of the Committee shall be made
by a majority of its members attending a meeting at which a quorum is present
(which meeting may be held telephonically), or by written action in accordance
with applicable law. All decisions of the Committee on any question concerning
the selection of Participants and the interpretation and administration of the
Plan shall be final, conclusive and binding upon all parties.
4.4 Decisions of Plan Committee are Binding on All Persons. The Committee
(or its delegate) shall have the exclusive right, power, and authority, in its
sole and absolute discretion, to administer, apply and interpret the Plan and
any other Plan documents and to decide all matters arising in connection with
the operation or administration of the Plan. Without limiting the generality of
the foregoing, the Committee (or its delegate) shall have the sole and absolute
discretionary authority: (a) to take all actions and make all decisions with
respect to the eligibility for, and the amount of, benefits payable under the
Plan; (b) to formulate, interpret and apply rules, regulations and policies
necessary to administer the Plan in accordance with its terms; (c) to decide
questions, including legal
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or factual questions, relating to the calculation and payment of benefits under
the Plan; (d) to resolve and/or clarify any ambiguities, inconsistencies and
omissions arising under the Plan or other Plan documents; (e) to decide for
purposes of paying benefits hereunder, whether, based on the terms of the Plan,
a termination of employment is for Good Reason or for Cause; and (f) except as
specifically provided to the contrary in Section 4.11, to process and approve or
deny benefit claims and rule on any benefit exclusions. All determinations made
by the Committee (or any delate) with respect to any matter arising under the
Plan and any other Plan documents shall be final, binding and conclusive on all
parties.
4.5 Delegation of Authority. The Committee may delegate any and all of its
powers and responsibilities hereunder to other persons by formal resolution
filed with and accepted by the Board. Any such delegation shall not be effective
until it is accepted by the Board and the persons designated and may be
rescinded at any time by written notice from the Committee to the person to whom
the delegation is made.
4.6 Retention of Professional Assistance. The Committee may employ such
legal counsel, accountants and other persons as may be required in carrying out
its work in connection with the Plan.
4.7 Accounts and Records. The Committee shall maintain such accounts and
records regarding the fiscal and other transactions of the Plan and such other
data as may be required to carry out its functions under the Plan and to comply
with all applicable laws.
4.8 Compliance with Applicable Law. The Company shall be deemed the Plan
Administrator for the purposes of any applicable law and shall be responsible
for the preparation and filing of any required returns, reports, statements or
other filings with appropriate governmental agencies. The Company shall also be
responsible for the preparation and delivery of information to persons entitled
to such information under any applicable law.
4.9 Liability. No member of the Committee and no officer, director or
employee of the Company or any other member of the Control Group shall be liable
for any action or inaction with respect to his or her functions under the Plan
unless such action or inaction is adjudged to be due to gross negligence,
willful misconduct or fraud. Further, no such person shall be personally liable
merely by virtue of any instrument executed by him or her or on his or her
behalf in connection with the Plan.
4.10 Indemnification. Each Employer shall indemnify, to the full extent
permitted by law and its Certificate of Incorporation and By-laws (but only to
the extent not covered by insurance) its officers and directors (and any
employee involved in carrying out the functions of such Employer under the Plan)
and each member of the Committee (and any employee designated by the Committee
as a delegate) against any expenses, including amounts paid in settlement of a
liability, which are reasonably incurred in connection with any legal action to
which such person is a party by reason of his or her duties or responsibilities
with respect to the Plan (other than as a Participant), except with
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regard to matters as to which he or she shall be adjudged in such action to be
liable for gross negligence, willful misconduct or fraud in the performance of
his or her duties.
4.11 Claims Procedure. Any claim by a Participant with respect to
eligibility, participation, contributions, benefits or other aspects of the
operation of the Plan shall be made in writing to the Secretary of the Company
or such other person designated by the Committee from time to time for such
purpose. If the designated person receiving a claim believes, following
consultation with the Chairman of the Committee, that the claim should be
denied, he or she shall notify the Participant in writing of the denial of the
claim within ninety (90) days after his or her receipt thereof (this period may
be extended an additional ninety (90) days in special circumstances and, in such
event, the Participant shall be notified in writing of the extension). Such
notice shall (a) set forth the specific reason or reasons for the denial making
reference to the pertinent provisions of the Plan or of Plan documents on which
the denial is based, (b) describe any additional material or information
necessary to perfect the claim, and explain why such material or information, if
any, is necessary, and (c) inform the Participant of his or her right pursuant
to this Section 4.11 to request review of the decision.
A Participant may appeal the denial of a claim by submitting a written
request for review to the Committee, within sixty (60) days after the date on
which such denial is received. Such period may be extended by the Committee for
good cause shown. The claim will then be reviewed by the Committee. A
Participant or his or her duly authorized representative may discuss any issues
relevant to the claim, may review pertinent documents and may submit issues and
comments in writing. If the Committee deems it appropriate, it may hold a
hearing as to a claim. If a hearing is held, the Participant shall be entitled
to be represented by counsel. The Committee shall decide whether or not to grant
the claim within sixty (60) days after receipt of the request for review, but
this period may be extended by the Committee for up to an additional sixty (60)
days in special circumstances. Written notice of any such special circumstances
shall be sent to the Participant. Any claim not decided upon in the required
time period shall be deemed denied. All interpretations, determinations and
decisions of the Committee with respect to any claim shall be made in its sole
discretion based on the Plan and other relevant documents and shall be final,
conclusive and binding on all persons.
ARTICLE V
Amendment and Termination
5.1 Amendment and Termination. The Company reserves the right, in its sole
and absolute discretion to amend or terminate, in whole or in part, any or all
of the provisions of this Plan by action of the Board (or a duly authorized
committee thereof) at any time, provided that any amendment reducing the
benefits provided hereunder or any Plan termination (a) shall not be effective
prior to the second anniversary of the Effective Date and (b) no such amendment
or Plan termination may take effect sooner than one (1) year following the date
on which the Board takes such action. Any termination or amendment of the Plan,
however, shall not affect the Severance Benefit or other benefits hereunder, if
any, payable to any Participant who is entitled to such Severance Benefit or
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other benefits as of the date of the amendment or termination of the Plan.
ARTICLE VI
Participating Employers and Successors
6.1 Participating Employers. Upon approval by the Committee, this Plan may
be adopted by any Affiliate of the Company. Upon such adoption, the Affiliate
shall become an Employer hereunder and the provisions of the Plan shall be fully
applicable to the Employees of that Affiliate.
6.2 Successors. Subject to Section 5.1 hereof, the Company shall require
any successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or assets
of the Company, expressly and unconditionally to assume and agree to perform the
Company's obligations under this Plan, in the same manner and to the same extent
that the Company would be required to perform if no such succession or
assignment had taken place. In such event, the term "Company," as used in this
Plan, shall mean the Company as hereinbefore defined and any successor or
assignee to the business or assets which by reason hereof becomes bound by the
terms and provisions of this Plan. In the event an Affiliate ceases to be a
member of the Control Group, it may by such written agreement, but shall not be
obligated to, continue the Plan as a separate plan and all references to the
"Company" shall become reference to the Affiliate. If this Plan is not
specifically continued by the Affiliate, it shall terminate as to Employees of
such Affiliate. If this Plan is specifically continued by the Affiliate, the
Affiliate, but not the Company, shall be liable to the Employees of the
Affiliate for any benefits due hereunder.
ARTICLE VII
Miscellaneous
7.1 Rights of Employees. Nothing herein contained shall be held or
construed to create any liability or obligation upon the Employer to retain any
Employee in its service. All Employees shall remain subject to discharge or
discipline to the same extent as if the Plan had not been put into effect.
7.2 Headings. The headings of the Plan are inserted for convenience of
reference only and shall have no effect upon the meaning of the provisions
hereof.
7.3 Use of Words. Whenever used in this instrument, a masculine pronoun
shall be deemed to include the masculine and feminine gender, and a singular
word shall be deemed to include the singular and plural, in all cases where the
context so requires.
7.4 Controlling Law. The construction and administration of the Plan shall
be governed by the Employee Retirement Income Security Act of 1974, as amended.
To the extent not so governed, it shall be governed by the laws of the State of
New York (without reference to rules relating to conflicts of law).
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7.5 Withholding. The Employer shall have the right to make such provisions
as it deems necessary or appropriate to satisfy any obligations it reasonably
believes it may have to withhold federal, state or local income or other taxes
incurred by reason of payments pursuant to this Plan. In lieu thereof, the
Employer shall have the right to withhold the amount of such taxes from any
other sums due or to become due from the Employer to the Participant upon such
terms and conditions as the Committee may prescribe.
7.6 Severability. Should any provisions of the Plan be deemed or held to be
unlawful or invalid for any reason, such fact shall not adversely affect the
other provisions of the Plan unless such determination shall render impossible
or impracticable the functioning of the Plan, and in such case, an appropriate
provision or provisions shall be adopted so that the Plan may continue to
function properly.
7.7 Incompetency. In the event that the Committee finds that a Participant
is unable to care for his or her affairs because of illness or accident, then
benefits payable hereunder, unless claim has been made therefor by a duly
appointed guardian, committee, or other legal representative, may be paid in
such manner as the Committee shall determine, and the application thereof shall
be a complete discharge of all liability for any payments or benefits to which
such Participant was or would have been otherwise entitled under this Plan.
7.8 Payments to a Minor. Any payments to a minor from this Plan may be paid
by the Committee in its sole and absolute discretion (a) directly to such minor;
(b) to the legal or natural guardian or such minor; or (c) to any other person,
whether or not appointed guardian of the minor, who shall have the care and
custody of such minor. The receipt by such individual shall be a complete
discharge of all liability under the Plan therefor.
7.9 Assignment and Alienation. The benefits payable under the Plan shall
not be subject to alienation, transfer, assignment, garnishment, execution or
levy of any kind, and any attempt to cause any benefits to be so subjected shall
not be recognized.
7.10 Top-hat Plan. This Plan is intended to be a "top-hat" welfare plan
within the meaning of Department of Labor Regulation Section 2520.104-24.
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APPENDIX A
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Change in Control
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A Change in Control shall mean any of the following: (i) (A) the making of
a tender or exchange offer by any person or entity or group of associated
persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act of 1934) (a "Person") (other than the Company or its Affiliates)
for shares of common stock pursuant to which purchases are made of securities
representing at least twenty percent (20%) of the total combined voting power of
the Company's then issued and outstanding voting securities; (B) the merger or
consolidation of the Company with, or the sale or disposition of all or
substantially all of the assets of the Company to, any Person other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (b) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Exchange Act), of securities representing more than the amounts set forth in (C)
below; (C) the acquisition of direct or indirect beneficial ownership (as
determined under Rule 13d-3 promulgated under the Securities Exchange Act of
1934), in the aggregate, of securities of the Company representing twenty
percent (20%) or more of the total combined voting power of the Company's then
issued and outstanding voting securities by any Person acting in concert as of
the date of the Plan; provided, however, that the Board may at any time and from
time to time and in the sole discretion of the Board, as the case may be,
increase the voting security ownership percentage threshold of this item (C) to
an amount not exceeding forty percent (40%); or (D) the approval by the
shareholders of the Company of any plan or proposal for the complete liquidation
or dissolution of the Company or for the sale of all or substantially all of the
assets of the Company; or (ii) during any period of not more than two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person
who has entered into agreement with the Company to effect a transaction
described in clause (i)) whose election by the Board or nomination for election
by the Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof.
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