EXHIBIT 10.1
THE NEIMAN-MARCUS GROUP, INC.
1987 STOCK INCENTIVE PLAN
THE NEIMAN-MARCUS GROUP, INC.
1987 STOCK INCENTIVE PLAN
1. Purposes of the Plan.
The purposes of The Neiman-Marcus Group, Inc. 1987 Stock Incentive Plan
are to provide a means to attract and retain competent personnel and to provide
to participating officers and other key employees long-term incentive for high
levels of performance and for unusual efforts to improve the financial
performance of The Neiman-Marcus Group, Inc. These purposes may be achieved
through the grant of options to purchase Common Stock of The Neiman-Marcus
Group, Inc., the grant of Stock Appreciation Rights, and the grant of other
Stock-Based Awards. This Plan also shall apply to outstanding stock options
granted under the Prior Stock Option Plans which, in the Restructuring, are
converted, in whole or in part, into Stock Options for shares of Common Stock.
2. Definitions.
(a) "Affiliate" means any corporation or other entity which is not a
parent or subsidiary corporation (as defined in Section 425 of the Code) and (i)
with respect to which the Company possesses a direct or indirect ownership
interest in, and has the power to exercise management control over, such
corporation or entity, or (ii) which posses a direct or indirect ownership
interest in, and has the power to exercise management control over, the Company.
(b) "Board" means the Board of Directors of the Company or the
Executive Committee thereof.
(c) "Carter Hawley" Means Carter Hawley Hale Stores, Inc.
(d) "Committee" means the Compensation Committee of the Board, or any
other committee the Board may subsequently appoint to administer the Plan, as
herein defined. The Committee shall be composed entirely of members of the Board
who meet the requirements of Section 4(a) hereof.
(e) "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
(f) "Common Stock" means the common stock of the Company having a par
value of $0.01 per share.
(g) "Company" means The Neiman-Marcus Group, Inc., and any present or
future parent or subsidiary corporations (as defines in Section 425 of the Code)
or any successor to such corporations.
(h) "Employee" means any employee of the Company or its Affiliates.
(i) "Fair Market Value" means the closing price of Common Stock as
quoted on the composite Tape as published in The Wall Street Journal on the date
as of which fair market value is to be determined, or if there is no trading of
Common Stock on such date, the closing price of Common Stock as quoted on such
Composite Tape on the next preceding date on which there was trading in such
shares.
(j) "Incentive Award" means a Stock Option, Stock Appreciation Right or
Stock-Based Award granted under the Plan, as herein defined.
(k) "Incentive Award" means a Stock Option that is intended to meet the
requirements of Section 422A of the Code and regulations thereunder.
(l) "Nonstatutory Stock Option" means a Stock Option other than an
Incentive Stock Option.
(m) "Participant" means any key Employee selected to receive an
Incentive Award under the Plan.
(n) "Plan" means The Neiman-Marcus Group, Inc. 1987 Stock Incentive
Plan as set forth herein, as it may be amended from time to time.
(o) "Prior Stock Option Plans" means the Long-Term Incentive
Compensation Plan, Nonqualified Stock Option Plan and 1985 Stock Incentive Plan
of Carter Hawley.
(p) "Restructuring" means the restructuring of Carter Hawley pursuant
to a plan of restructuring adopted by the Board of Directors of Carter Hawley
and approved by the stockholders of Carter Hawley at Carter Hawley's 1987 annual
meeting.
2
(q) "Stock Appreciation Right" means the right to receive an amount up
to the excess of the Fair Market Value of a share of Common Stock (as determined
on the date of exercise), over (i) if the Stock Appreciation Right is granted
without relationship to a Stock Option, the Fair Market Value of a share of
Common Stock on the date the Stock Appreciation Right was granted, or (ii) if
the Stock Appreciation Right is related to a Stock Option, the purchase price of
a share of Common Stock specified in the related Stock Option.
(r) "Stock-Based Award" means any award granted under Section 8.
(s) "Stock Option" means a right to purchase Common Stock.
3. Shares of Common Stock Subject to the Plan.
(a) Subject to the provisions of Section 3 (c) and Section 9 of the
Plan, the aggregate number of shares of Common Stock that may be issued or
transferred pursuant to Incentive Awards under the Plan will not exceed
1,250,000 shares, plus the number of shares issued upon exercises of outstanding
stock options granted under the Prior Stock Option Plans or under any other plan
whose outstanding stock options are assumed under this Plan.
(b) The common Stock to be delivered under the Plan will be made
available, at the discretion of the Board of the Committee, either from
authorized but unissued shares of Common Stock or from previously issued shares
of Common Stock reacquired by the Company, including shares purchased on the
open market.
(c) If any Incentive Award shall expire or terminate for any reason,
without being exercised or paid, shares of Common Stock subject to such
Incentive Award shall again be available for grant under subsequent Incentive
Awards. Shares of Common Stock reserved for issuance upon payment of a
Stock-Based Award when payment of the Stock-Based Award is made in cash shall be
available for grant under subsequent Incentive Awards. Shares as to which a
Stock Option has been surrendered in connection with the exercise of a related
Stock Appreciation Right will not be available for grant under subsequent
Incentive Award.
(d) Subject to the general limitations contained in Sections 6, 7, 9
and 11, the Committee may make any adjustment in the exercise price, the number
of shares subject to, or the terms of a Nonstatutory Stock Option or Stock
Appreciation Right by cancellation of an outstanding Nonstatutory Stock Option
or Stock Appreciation Right and a subsequent regranting of a Nonstatutory Stock
Option or Stock Appreciation Right, by amendment or by substitution of an
outstanding Nonstatutory Stock Option or Stock Appreciation Right. Such
amendment, substitution, or regrant may result in an exercise price that is
higher or lower than the exercise price of the Nonstatutory Stock Option or
Stock Appreciation Right, provide for a greater or lesser number of shares
subject to the Nonstatutory Stock Option or Stock Appreciation Right, or provide
for a longer or shorter term than the prior Nonstatutory Stock Option or Stock
Appreciation Right, or provide for a longer or shorter term than the prior
Nonstatutory Stock Option or Stock Appreciation Right; provided, however, that
the Committee may not adversely affect the rights of any Participant to
previously granted Incentive Awards without the consent of such Participant. If
such action is effected by amendment, the effective date of such amendment may
be the date of the original grant.
4. Administration of the Plan.
(a) The Plan will be administered by the Committee, which will consist
of three or more persons (i) who are not eligible to receive Incentive Awards
under the Plan, and (ii) who have not been eligible within one year before
appointment to the Committee, for selection as persons to whom Incentive Awards
may be granted pursuant to the Plan, or to whom shares may be allocated or stock
options, stock appreciation rights or other stock-based awards may be granted
pursuant to an other plan of the Company entitling the participants to acquire
stock, stock appreciation rights, stock options or stock-based rights in the
Company.
3
(b) The Committee has and may exercise such powers and authority of the
Board as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. The Committee has authority in its
discretion to determine the key Employees to whom and the time or times at which
Incentive Awards may be granted or sold, to determine the number of shares of
Common Stock, Stock Appreciation Rights or the number and type of Stock-Based
Awards that make up each Incentive Award and to grant Incentive Awards. Each
Incentive Award will be evidenced by a written instrument and may include any
other terms and conditions consistent with the Plan, as the Committee may
determine. The Committee also has authority to interpret the Plan, to determine
the terms and provisions of the respective Incentive Award agreements and to
make all other determinations necessary or advisable for Plan administration.
The Committee has authority to prescribe, amend, and rescind rules and
regulations relating to the Plan. All interpretations, determinations and
actions by the Committee will be final, conclusive and binding upon all parties.
Any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote or by the unanimous written consent of its
members.
(c) No member of the Board or the Committee and no Employee will be
liable for any action taken, or determination or omission made, in good faith by
the Board, the Committee or any Employee with respect to the Plan or any
Incentive Award granted under it.
5. Participation.
(a) The Committee shall from time to time designate those key
Employees, if any, to be granted Incentive Awards under the Plan, the type of
awards granted, the number of shares, options, rights or units, as the case may
be, which shall be granted to each such Employee, and any other terms or
conditions relating to the awards as it may deep appropriate, consistent with
the provisions of the Plan. Participants may be designated at any time, and it
shall not be necessary that all Participants be designated at the same meeting
of the Committee. An individual who has been granted an Incentive Award may, if
otherwise eligible, be granted additional Incentive Awards if the Committee so
determines.
(b) No person will be eligible for the grant of an Incentive Stock
Option who owns or would own immediately before the grant of such Stock Option,
directly or indirectly, stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company. This restriction
does not apply if, at the time such Incentive Stock Option is granted, the
Incentive Stock Option exercise price is at least 110% of the Fair Market Value
on the date of grant and the Incentive Stock Option by its terms is not
exercisable after the expiration of five years from the date of grant.
(c) In no event may any member of the Board who is not an officer or
other Employee be granted an incentive Award under the Plan.
6. Terms and Conditions of Stock Options.
(a) Nonstatutory Stock Options may be granted to any key employee
selected by the Committee. Incentive Stock Options may be granted only to key
employees of the Company as selected by the Committee.
(b) The purchase price of Common Stock under each Stock Option will be
determined by the Committee, but may not be less than the Fair Market Value on
the date of grant.
(c) Stock Options may be exercised as determined by the Committee but
in no event after ten years from the date of grant in the case of Incentive
Stock Options, or after ten years and one day from the date of grant in the case
of Nonstatutory Stock Options.
(d) Upon the exercise of a Stock Option, this purchase price will be
payable in full in cash or its equivalent acceptable to the Company. To the
extent provided by the Stock Option, the purchase price may be paid by the
assignment and delivery to the Company of shares of Common Stock or a
combination of cash and such shares equal in value to the exercise price. Any
shares so assigned and
4
delivered to the Company in payment or partial payment of the purchase price
will be valued at their Fair Market Value on the exercise date.
(e) Notwithstanding any other provision of the Plan, any Participant
who disposes of shares of Common Stock acquired on the exercise of an Incentive
Stock Option by sale or exchange either (i) within two years after the date of
the grant of the Stock Option which the stock was acquired or (ii) within one
year after the transfer of such shares to him pursuant to exercise shall notify
the Company of such disposition and of the amount realized and of his adjusted
basis in such shares; and
(i) in the case of any Incentive Stock Option granted under
any of t he Prior Stock Option Plans through December 31, 1986, (A) the
aggregate Fair Market Value (determined as of the time the Stock Option
was granted) of the shares of Common Stock for which any Employee was
granted Incentive Stock Options in any calendar year shall not have
exceeded $100,000 plus any unused carryover, computed in accordance
with Section 422(c)(4) of the Internal Revenue Code of 1954, as such
Section read prior to its deletion by the Tax Reform Act of 1986; and
(B) no such Stock Option shall have been or shall be exercisable while
there was or is outstanding any Incentive Stock Option which was
granted to the Participant before the grant of such Stock Option (and,
for this purpose, an Incentive Stock Option shall be treated as
outstanding until it is exercised in full or expires by reason of lapse
of time); and
(ii) in the case of any Incentive Stock Option granted under
the Plan, the Fair Market Value (determined at the time the Incentive
Stock Option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
Employee during any calendar year under this Plan or any other stock
option plan of the Company will not exceed $100,000.
(f) No fractional shares will be issued pursuant to the exercise of a
Stock Option; payment for the fractional shares will be made in cash. Upon the
exercise of a Stock Option, not less than 50 shares may be purchased at one time
unless the number then available for purchase is less than 50 in which case the
full number available must be purchased.
(g) A Stock Option granted under this Plan shall, by its terms, be
non-transferable by a Participant other than by will or the laws of descent and
distribution, and shall be exercisable during the Participant's lifetime solely
by the Participant or the Participant's duly appointed guardian or personal
representative.
(h) Outstanding stock options granted under the Prior Stock Option
Plans which, in the Restructuring, are converted, in whole or in part, into
Stock Options for shares of Common Stock, will be subject to the same terms and
conditions as were in effect immediately prior to the Restructuring.
7. Terms and Conditions of Stock Appreciation Rights.
(a) A Stock Appreciation Right may be granted in connection with a
Stock Option, either at the time of grant or at any time thereafter during the
term of the Stock Option, or may be granted unrelated to a Stock Option.
(b) A Stock Appreciation Right related to a Stock Option shall require
the holder, upon exercise, to surrender such Stock Option with respect to the
number of shares as to which such Stock Appreciation Right is exercised, in
order to receive payment of an amount computed pursuant to Section 7(e). Such
Stock Option will, to the extent surrendered, then cease to be exercisable.
(c) In the case of Stock Appreciation Rights granted in relation to
Stock Options, if the Stock Appreciation Right covers as many shares as the
related Stock Option, the exercise of a related Stock Option shall cause the
number of shares covered by the Stock Appreciation Right to be reduced by the
number of shares with respect to which the related Stock Option is exercised. If
the Stock Appreciation Right covers fewer shares than the related Stock Option,
when a portion of the related Stock Option is
5
exercised, the number of shares subject to the unexercised Stock Appreciation
Right shall be reduced only to the extent necessary so that the number of
remaining shares subject to the Stock Appreciation Right is not more than the
remaining shares subject to the Stock Option.
(d) Subject to Section 7(k), a Stock Appreciation Right granted in
connection with a Stock Option will be exercisable at such time or times, and
only to the extent that a related Stock Option is exercisable, and will not be
transferable except to the extent that such related Stock Option may be
transferable.
(e) Upon exercise of a Stock Appreciation Right related to a Stock
Option, the holder will be entitled to receive payment of an amount determined
by multiplying:
(i) The difference obtained by subtracting the purchase price
of a share of Common Stock specified in the related Stock Option from
the Fair Market Value of a share of Common Stock on the date of
exercise of such Stock Appreciation Right, by
(ii) The number of shares as to which each Stock Appreciation
Right will have been exercised.
(f) A Stock Appreciation Right granted without relationship to a Stock
Option will be exercisable as determined by the Committee but in no event after
ten years from the date of grant.
(g) A Stock Appreciation Right granted without relationship to a Stock
Option will entitle the holder, upon exercise of the Stock Appreciation Right,
to receive payment of an amount determined by multiplying:
(i) The difference obtained by subtracting the Fair Market
Value of a share of Common Stock on the date the Stock Appreciation
Right is granted from the Fair Market Value of a share of Common Stock
on the date of exercise of such Stock Appreciation Right, by
(ii) The number of shares as to which such Stock Appreciation
Right will have been exercised.
(h) Notwithstanding subsections (e) and (g) above, the Committee may
place a limitation on the amount payable upon exercise of a Stock Appreciation
Right. Any such limitation must be determined as of the date of grant and noted
on the instrument evidencing the Participant's Stock Appreciation Right granted
hereunder.
(i) Payment of the amount determined under subsections (e) and (g)
above made be made solely in whole shares of Common Stock valued at their Fair
Market Value on the date of exercise of the Stock Appreciation Right or
alternatively, in the sole discretion of the Committee, solely in cash or a
combination of cash and shares as the Committee deems advisable. If the
Committee decides to make full payment in shares of Common Stock, and the amount
payable results in a fractional share, payment for the fractional share will be
made in cash.
(j) A Stock Appreciation Right granted under this Plan shall, by its
terms, be non-transferable by a Participant other than by will or the laws of
descent and distribution and shall be exercisable during the Participant's
lifetime solely by the Participant or the Participant's duly appointed guardian
or personal representative.
(k) So long as required by the federal securities laws, no Stock
Appreciation Right granted to an Employee subject to Section 16 of the
Securities Exchange Act of 1934, as amended, may be exercised before six months
after the date of grant except in the event of death or disability of such
Employee occurs before the expiration of the six-month period; any exercise of a
Stock Appreciation Right for cash will be made only during the period beginning
on the third business day following the date of release for publication of the
Company's regular quarterly or annual summary statement of revenues
6
and income (assuming such financial data appears on a wire service, in a
financial news service, or in a newspaper of general circulation, or is
otherwise made publicly available) and ending on the twelfth business date
following such date.
(l) The Committee may impose such additional conditions or limitations
on the exercise of a Stock Appreciation Right as it may deem necessary or
desirable to secure for holders of Stock Appreciation Rights the benefits of
Rule 18b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934, as amended, or any successor provision in effect at the time of grant or
exercise of a Stock Appreciation Right or as it may otherwise deem advisable.
(m) The Committee may, in it discretion, defer payment with respect to
an exercise of a Stock Appreciation Right to some later time, but in no event
later than 12 months after the exercise of the Stock Appreciation Right;
provided, however, the Committee may not defer payment with respect to a Stock
Appreciation Right which is related to an Incentive Stock Option.
8. Stock-Based Awards.
The Committee may grant awards of shares, share units, or cash payments
valued with reference to the Fair Market Value of Common Stock, including
(without limitation) restricted shares, restricted share units, performance
shares, performance share units, and tax-offset payments. Subject to the
provisions of the Plan, the Committee shall have complete discretion to
determine the terms and conditions applicable to such awards. Such terms and
conditions may require, among other things, continued employment and/or the
attainment of specified performance objectives. The Committee shall determine
whether awards granted under this Section 8 shall be settled in cash, Common
Stock or a combination of cash and Common Stock.
9. Adjustment Provisions
(a) 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, an appropriate and proportionate adjustment may be
made in (i) the maximum number and kind of shares provided in Section 3, (ii)
the number and kind of shares or other securities subject to the
then-outstanding Incentive Awards, and (iii) the price for each share or other
unit of any other securities subject to then-outstanding Incentive Awards
without change in the aggregate purchase price or value as to which such
Incentive Awards remain exercisable or subject to restrictions.
(b) Adjustments under paragraph (b) will be made by the Committee,
whose determination as to what adjustments will be made and the extent thereof
will be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments.
10. General Provisions.
(a) Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Participant any right to continue in the employ of the
Company or its Affiliates or affect the right of the Company or its Affiliates
to terminate the employment of any Participant at any time for any reason.
(b) No shares of Common Stock will be issued or transferred pursuant to
an Incentive Award unless and until all then-applicable requirements imposed by
federal and state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction and by any stock exchanges upon which
the Common Stock may be listed, have been fully met. As a condition precedent to
the
7
issuance of shares pursuant to the grant or exercise of an Incentive Award, the
Company may require the Participant to take any reasonable action to meet such
requirements.
(c) No Participant and no beneficiary or other person claiming under or
through such Participant will have any right, title or interest in or to any
shares of Common Stock allocated or reserved under the Plan or subject to any
Incentive Award except as to such shares of Common Stock, if any, that have been
issued or transferred to such Participant, beneficiary or other person.
(d) The Company may make such provisions as it deems appropriate to
withhold any taxes the Company determines it is required to withhold in
connection with any Incentive Award. The Company may require the Participant to
satisfy any relevant tax requirements before authorizing any issuance of Common
Stock to the Participant.
(e) No Incentive Award and no right under the Plan, contingent or
otherwise, will be assignable or subject to any encumbrance, pledge or charge of
any nature except that, under such rules and regulations as the Company may
establish pursuant to the terms of the Plan, a beneficiary may be designated
with respect to an Incentive Award in the event of death of a Participant. If
such beneficiary is the executor or administrator of the estate of the
Participant, any rights with respect to such Incentive Award may be transferred
to the person or persons or entity (including a trust) entitled thereto under
the will of the holder of such Incentive Award.
(f) The Committee shall have sole discretion to determine the time or
times and conditions under which Stock Options or Stock Appreciation Rights may
be exercised and, as provided in Section 8, the terms and conditions of
Stock-Based Awards and the extent to which Participants or their beneficiaries
may exercise Stock Options and Stock Appreciation Rights and receive payment
with respect to, or otherwise obtain the benefits of Stock-Based Awards upon
such Participant's retirement, death or other termination of the Participant's
employment with the Company of its affiliates. The provisions applicable to the
Stock Options, Stock Appreciation Rights and/or Stock-Based Awards of a
particular Participant upon the Participant's termination of employment with the
Company of its Affiliates will be set forth in each agreement under which an
Incentive Award is made.
(g) (i) If the Committee in its sole discretion to determine that as a
matter of law such procedure is or may be desirable, it may require the
Participant, on any exercise or payment of an Incentive Award, or any portion
thereof, and as a condition to the Company's obligation to deliver to the
Participant certificates representing shares of Common Stock, to execute and
deliver to the Company a written statement, in form satisfactory to the Company,
representing and warranting that his purchase or receipt of shares of Common
Stock is for his own account for investment and not with a view to resale or
distribution thereof and that any subsequent sale or offer for sale of any of
such shares shall be made pursuant to either (A) a Registration Statement on an
appropriate form under the Securities Act of 1933, as amended, which has become
effective and is current with respect to the shares being offered and sold or
(B) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the Participant shall, before any sale or
offer of sale of such shares, obtain a favorable written opinion from counsel
for or approved by the Company as to the availability of such exemption.
(ii) The Company may endorse an appropriate legend referring to the
foregoing restrictions or other restrictions which may be applied under the Plan
on the certificate or certificates representing any shares of Common Stock
issued or transferred to a Participant under any Incentive Award granted under
the Plan.
(h) If at any time the Board shall determine in its discretion that the
listing, registration or qualifications of the shares of Common Stock covered by
the Plan on any national securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is necessary or
desirable as a condition to or in connection with the sale or transfer of shares
of Common Stock under the Plan, no shares will be delivered unless and until
such listing, registration, qualification,
8
consent or approval shall have been effected or obtained or otherwise provided
for, free of any conditions not acceptable to the Board.
11. Amendment and Termination of Plan; Amendment of Incentive Awards.
(a) The Board or the Committee will have the power, in it s discretion,
to amend, suspend or terminate the Plan at any time. No such amendment will,
without approval of the shareholders of the Company:
(i) Change the class of persons eligible to receive Incentive
Awards under the Plan;
(ii) Materially increase the benefits accruing to Participants
under the Plan;
(iii) Increase the number of shares of Common Stock subject to
the Plan; or
(iv) Transfer the administration of the Plan to any person who
is not a "disinterested administrator" under rule 16b.
(b) Except as otherwise provided by Section 3(d) and Section 9, the
Committee may not, without the consent of a Participant, make modifications in
the terms and conditions of an Incentive Award which may adversely affect the
Participant's Incentive Award.
(c) No amendment, suspension or termination of the Plan will, without
the consent of the Participant, alter, terminate or adversely affect any right
or obligation under any Incentive Award previously granted under the Plan.
(d) The Committee may refrain from designating any participants or may
refrain from making any Incentive Awards, but such action shall not be deemed a
termination of the Plan. No Employee shall have any claim or right to be granted
Incentive Awards under the Plan.
12. Effective Date of Plan and Duration of Plan.
This Plan will become effective upon adoption by the Board of Directors
of Carter Hawley, subject to approval by the shareholders of Carter Hawley of
the Restructuring, of which approval of this Plan is a part. No grants of
Incentive Awards will be made under the Plan until after the effective time of
the Restructuring. The Plan will terminate, unless sooner terminated under
Section 11, the day before the tenth anniversary of the day on which the Plan
was adopted by the Board of Directors.
9