Exhibit 10.41
FEDERATED DEPARTMENT STORES, INC.
1995 Executive Equity Incentive Plan
(As Amended and Restated as of May 18, 2001)
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 18,
2001 (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
1
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 TO (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 TO, 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.
2
(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
3
(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).
4
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) 10 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 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 5,000 (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
5
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:
6
(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
canceled, 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
7
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 83 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.
8
(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,
9
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
10
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) The Board shall not, without further approval of the
shareholders of the Company, authorize the amendment
of any outstanding Option Right to reduce the Option
Price. Furthermore, no Option Right shall be canceled
and replaced with awards having a lower Option Price
without further approval of the shareholders of the
Company. This Section 12(b) is intended to prohibit
the repricing of
11
"underwater" Option Rights and shall not be construed
to prohibit the adjustments provided for in Section 8
of this Plan.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
12