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Exhibit 10.37
FEDERATED DEPARTMENT STORES, INC.
1992 INCENTIVE BONUS PLAN
(AS AMENDED AND RESTATED AS OF MARCH 28, 1997 AND DECEMBER 12, 1997)
Federated Department Stores, Inc., a Delaware corporation (the
"Company"), hereby amends and restates this 1992 Incentive Bonus Plan (this
"Bonus Plan") effective as of December 12, 1997.
1. PURPOSE. The purpose of this Bonus Plan is to promote the attainment
of the Company's performance goals by providing incentive compensation for
certain designated key executives and employees of the Company and its
Subsidiaries.
2. DEFINITIONS. As used in this Bonus Plan, the following terms have
the following meanings when used herein with initial capital letters:
(a) "Annual Incentive Award" means the incentive bonus earned by a
Participant 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
12, the Compensation Committee.
(c) "Chief Executive Officer" means the Chief Executive Officer of the
Company.
(d) "Chief Operating Officer" means the Chief Operating Officer of the
Company.
(e) "Chief Merchandising Officer" means the Chief Merchandising Officer
of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "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.
(h) "Covered Employee" means a Participant who is, or is determined by
the Board to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).
(i) "Long-Term Incentive Award" means the incentive bonus, if any,
earned by a Participant pursuant to Section 6.
(j) "Non-Employee Director" means a Director of the Company who is not
a full-time employee of the Company or any Subsidiary.
(k) "Operating Unit" means the Company as a whole and each other
individual subsidiary, division, store, or other business unit of the Company in
which individuals employed thereby or therein have been approved to participate
in this Bonus Plan by the Board.
(l) "Participant" means a person who is designated by the Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer, with the approval of the Board, to receive benefits under this Bonus
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.
(m) "Performance Goal" means the target level of performance for each
Performance Period for the Company as a whole and for each Operating Unit of the
Company and, where applicable, for an individual Participant, in each case as
established by the Board pursuant to Section 4. The Performance Goals applicable
to
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any Annual Incentive Award or Long-Term Incentive Award made to a Covered
Employee will be based solely upon one or more of the following measures of
performance:
(1) total sales;
(2) comparable store sales;
(3) gross margin;
(4) operating or other expenses;
(5) earnings before interest and taxes ("EBIT");
(6) earnings before interest, taxes, depreciation and
amortization;
(7) net income;
(8) earnings per share;
(9) cash flow;
(10) return on investment (determined with reference to
one or more categories of income or cash flow and one
or more categories of assets, capital or equity); and
(11) stock price appreciation.
Such Performance Goals may be expressed with respect to the Company or one or
more other Operating Units and may be expressed in terms of absolute levels or
percentages or ratios expressing relationships between two or more of the
foregoing measures of performance (E.G., EBIT as a percentage of total sales),
period-to-period changes, relative to business plans or budgets, or relative to
one or more other companies or one or more indices. The two immediately
preceding sentences are intended to comply with the exception from Section
162(m) of the Code for qualified performance-based compensation, and will be
construed, applied, and administered accordingly.
(n) "Performance Period" means, in the case of determining Annual
Incentive Awards pursuant to Section 5, one fiscal year of the Company, and in
the case of determining Long-Term Incentive Awards pursuant to Section 6, a
period determined by the Board not longer than five consecutive fiscal years of
the Company. The initial Performance Period under this Bonus Plan in either case
will commence on February 2, 1992 and terminate, in the case of Annual Incentive
Awards and Long-Term Incentive Awards, on such date or dates as the Board may
determine. Any new Performance Period in each case would commence on the first
day of each fiscal year of the Company.
(o) "Retirement" means a Participant's voluntary termination of
employment with the Company on or after attainment of age 65, or such other age
as may from time to time be established as the normal retirement date under the
Company's principal retirement benefit plan in which the Participant is a
participant, and before being informed by the Company that his or her employment
will be terminated.
(p) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (or any successor rule substantially to the
same effect), as in effect from time to time.
(q) "Subsidiary" has the meaning specified in Rule 405 promulgated
under the Securities Act of 1933, as amended (or under any successor rule
substantially to the same effect).
3. ELIGIBILITY. (a) Except as otherwise provided in this Section 3, an
employee of the Company or one of its Subsidiaries will become a Participant for
a particular Performance Period (i) in respect of Annual Incentive Awards if
such employee (x) is an executive of the Company (including without limitation a
store principal, general merchandise manager, divisional merchandise manager,
store manager, senior vice president, or other vice president or elected officer
of the Company or another Operating Unit) on or as of the first day of the
Performance Period, (y) is recommended for participation by the Chief Executive
Officer, the Chief Operating
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Officer, or the Chief Merchandising Officer or any designee thereof, and (z) is
approved as a Participant by the Board, and (ii) in respect of Long-Term
Incentive Awards if such employee has overall responsibility for day-to-day and
long-term achievement of results of the Company or is in a key broad-based
strategy formulation and decision-making position of the Company or another
Operating Unit selected by the Board to participate in this Bonus Plan, in each
case as specifically determined by the Chief Executive Officer, the Chief
Operating Officer, or the Chief Merchandising Officer and approved by the Board
on or as of the first day of the Performance Period.
(b) An executive employee who first becomes eligible to participate
after the beginning of a particular Performance Period will become a Participant
for such Performance Period only in accordance with this Section 3(b). The Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer may, with the approval of the Board, allow participation for a portion
of such Performance Period for such employee on such terms and conditions as the
Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer (with such approval) may determine. In the event that at any time during
any Performance Period with respect to Annual Incentive Awards an executive
employee is first hired by the Company or a Subsidiary, or is promoted by the
Company or any such Subsidiary to a position in a different Operating Unit and
as a result thereof becomes eligible to participate in this Bonus Plan, then,
except as otherwise determined by the Board or as otherwise provided in Section
10, such employee will be entitled to be a Participant for purposes of Annual
Incentive Awards, which will be prorated on the basis of the number of months of
such employee's participation during such Performance Period to the aggregate
number of months in such Performance Period. In the event that within the first
one-half of any Performance Period with respect to Long-Term Incentive Awards an
executive employee is first hired by the Company or a Subsidiary, or is promoted
by the Company or any such Subsidiary to a position in a different Operating
Unit and as a result thereof becomes eligible to participate in this Bonus Plan,
then, except as otherwise determined by the Board or as otherwise provided in
Section 10, such employee will be entitled to be a Participant for purposes of
Long-Term Incentive Awards, which will be prorated on the basis of the ratio of
the number of months of such employee's participation during such Performance
Period to the aggregate number of months in such Performance Period.
(c) The Board may, in its discretion, allow an executive employee who
is not otherwise eligible to participate in this Bonus Plan to be treated as a
Participant for all or a portion of any Performance Period on such basis as the
Board may determine.
4. PERFORMANCE GOALS. (a) The Board will approve for each Performance
Period the applicable Performance Goals for the Company and each other Operating
Unit, as well as for individual Participants in this Bonus Plan, where
appropriate, based upon the consolidated business plan of the Company. Such
Performance Goals will not be adjusted during a Performance Period, except that
such Performance Goals may be so adjusted to prevent dilution or enlargement of
any Annual Incentive Award or Long-Term Incentive Award as a result of
extraordinary events or circumstances as determined by the Board or to exclude
the effects of extraordinary, unusual or nonrecurring events, changes in
accounting principles, discontinued operations, acquisitions, divestitures and
material restructuring charges; provided, however, in the case of a Covered
Employee, that no such adjustment will be made if the effect of such adjustment
would be to cause the related compensation to fail to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code.
(b) Prior to the beginning of each Performance Period, the Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer or any designee thereof will (i) notify each eligible employee who has
been selected to participate in this Bonus Plan that he or she is a Participant
under this Bonus Plan for such Performance Period and (ii) communicate in
writing to each Participant the minimum, maximum, and target Performance Goals
applicable to such Participant for the Company and each other Operating Unit for
such Performance Period, and the corresponding minimum, maximum, and target
levels of Annual Incentive Awards and Long-Term Incentive Awards for performance
by the Participant with respect to such Performance Goals.
5. ANNUAL INCENTIVE AWARDS. (a) Subject to Section 4, unless changed by
the Board, each eligible Participant may earn Annual Incentive Awards as
hereinafter provided. Each Operating Unit's actual performance during a
particular Performance Period will be measured against the Performance Goals
established therefor by the Board in accordance with Section 4. In the event
such Operating Unit's performance for the Performance Period
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(A)(i) in respect of Participant's who are Covered Employees, is below the
minimum Performance Goal established therefor, no Annual Incentive Awards will
be paid to such Participants in respect thereof, or (ii) in respect of
Participants who are not Covered Employees, is below the minimum Performance
Goal established therefor, the level of Annual Incentive Awards to be paid to
such Participants in respect thereof will be a level extrapolated by the Board
below the minimum level of Annual Incentive Award paid in respect of such
minimum Performance Goal, (B) is equal to the minimum Performance Goal
established therefor, the minimum level of Annual Incentive Awards will be paid
to Participants in respect thereof, (C) is equal to the target Performance Goal
established therefor, the target level of Annual Incentive Awards will be paid
to Participants in respect thereof, (D) is equal to or greater than the maximum
Performance Goal established therefor, the maximum level of Annual Incentive
Awards will be paid to Participants in respect thereof, and (E) is between any
two of the Performance Goal levels described in the immediately preceding
clauses (B), (C), and (D), the level of Annual Incentive Awards to be paid to
Participants in respect thereof will be a level interpolated by the Board
between the corresponding levels of Annual Incentive Awards paid in respect of
such Performance Goal levels.
(b) Except in the case of a Covered Employee, the Annual Incentive
Award determined pursuant to Section 5(a) may be modified by the Board to
recognize a Participant's individual performance or in other circumstances
deemed appropriate by the Board.
(c) Notwithstanding any other provision of this Bonus Plan to the
contrary, in no event will an Annual Incentive Award paid to any Participant for
a fiscal year exceed $2.0 million.
6. LONG-TERM INCENTIVE AWARDS. (a) Unless changed by the Board, each
eligible Participant may earn Long-Term Incentive Awards as hereinafter
provided. Each Operating Unit's actual performance during a particular
Performance Period will be measured against the Performance Goals established
therefor by the Board in accordance with Section 4. In the event such Operating
Unit's performance for such Performance Period (A) is below the minimum
Performance Goal established therefor, no Long-Term Incentive Awards will be
paid to Participants in respect thereof, (B) is equal to the minimum Performance
Goal established therefor, the minimum level of Long-Term Incentive Awards will
be paid to Participants in respect thereof, (C) is equal to the target
Performance Goal established therefor, the target level of Long-Term Incentive
Awards will be paid to Participants in respect thereof, (D) is equal to or
greater than the maximum Performance Goal established therefor, the maximum
level of Long-Term Incentive Awards will be paid to Participants in respect
thereof, and (E) is between any two of the Performance Goal levels described in
the immediately preceding clauses (B), (C), and (D), the level of Long-Term
Incentive Awards to be paid to Participants in respect thereof will be a level
interpolated by the Board between the corresponding levels of Long-Term
Incentive Awards paid in respect of such Performance Goal levels.
(b) Except in the case of a Covered Employee, the Long-Term Incentive
Award determined pursuant to Section 6(a) may be modified by the Board to
recognize a Participant's individual performance or in other circumstances
deemed appropriate by the Board.
(c) Notwithstanding any other provision of this Bonus Plan to the
contrary, in no event will a Long-Term Incentive Award paid to any Participant
for a Performance Period exceed $3.0 million.
7. PAYMENT OF AWARDS. Annual Incentive Awards and Long-Term Incentive
Awards will be paid to Participants in respect of any particular Performance
Period (i) in cash and/or Company equity (including stock options, stock credits
or equity equivalents), (ii) in a lump sum and/or in deferred payments or
grants, and (iii) on the date(s) and other terms, including any premium in
respect of deferred payments or grants, as each of (i), (ii) and (iii) shall be
determined by the Board at the time that Performance Goals are established for a
particular Performance Period. All Annual Incentive Awards and Long-Term
Incentive Awards that are paid in cash will be paid in U.S. dollars. The Company
may deduct from any payment such amounts as may be required to be withheld under
any federal, state, or local tax laws.
8. TERMINATION OF EMPLOYMENT. If a Participant terminates employment
with the Company and its Subsidiaries before the last day of a Performance
Period due to death, disability, or Retirement with the consent of
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the Company, the Participant's Annual Incentive Awards and Long-Term Incentive
Awards will be prorated on the basis of the ratio of the number of months of
participation during the Performance Period to which the Annual Incentive Awards
and Long-Term Incentive Awards relate to the aggregate number of months in such
Performance Period. If a Participant's employment with the Company and its
Subsidiaries is terminated by the Company or any such Subsidiary before the last
day of a Performance Period for any reason other than for Cause (as hereinafter
defined), the Participant's Annual Incentive Awards and Long-Term Incentive
Awards will be prorated on the basis of the ratio of the number of months of
participation during the Performance Period to which the Annual Incentive Awards
and the Long-Term Incentive Awards relate to the aggregate number of months in
such Performance Period, unless otherwise determined by the Board. Except as
otherwise provided in this Section 8, if a Participant's employment with the
Company and its Subsidiaries is terminated before the last day of a Performance
Period for any reason, the Participant will not be entitled to any Annual
Incentive Award or Long-Term Incentive Award for such Performance Period unless
otherwise determined by the Board. For purposes of this Agreement, "Cause" means
any act of dishonesty, fraud, or willful misconduct by a Participant in the
performance of the Participant's duties as an employee of the Company, or any
conviction of a Participant for any felony involving moral turpitude.
9. CHANGE IN CONTROL. In connection with any actual or potential change
in control of the Company, whether as a result of any stock acquisition, merger,
or other business combination transaction, or any restructuring or
recapitalization of the Company, then the Board will take all such actions
hereunder as it may determine to be necessary or appropriate to treat
Participants equitably hereunder, including without limitation the modification
or waiver of applicable Performance Goals, Performance Periods, Annual Incentive
Awards, or Long-Term Incentive Awards, notwithstanding the terms of any initial
award, and whether to establish or fund a trust or other arrangement intended to
secure the payment of such awards.
10. TRANSFERS AND CHANGES IN RESPONSIBILITIES. (a) If a Participant's
responsibilities materially change or the Participant is transferred during a
Performance Period to another Operating Unit or to a position that is not
designated or eligible to participate in this Bonus Plan, the Company may, as
determined by the Board, either (i) continue the Participant's participation in
this Bonus Plan and, except in the case of a Covered Employee, as of the date of
such change or transfer, establish new performance awards (as determined
pursuant to Section 10(b)) in respect of Annual Incentive Awards and/or
Long-Term Incentive Awards, as the case may be, for the Participant with respect
to his or her new position, or (ii) terminate the Participant's participation in
this Bonus Plan in respect of Annual Incentive Awards and/or Long-Term Incentive
Awards, as the case may be, and, as of the date of such change or transfer, the
Participant's Annual Incentive Awards and/or Long-Term Incentive Awards, as the
case may be, would be prorated on the basis of the ratio of the number of months
of the Participant's participation during the Performance Period to which such
Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be,
relate to the aggregate number of months in such Performance Period.
(b) If in the event of such a change or transfer the Participant's
participation in this Bonus Plan in respect of Annual Incentive Awards and/or
Long-Term Incentive Awards, as the case may be, is not terminated pursuant to
Section 10(a)(ii), then the Participant's Annual Incentive Awards and/or
Long-Term Incentive Awards, as the case may be, will be prorated on the basis of
the number of months of service by the Participant at each Operating Unit during
the Performance Period.
11. SECURITY OF PAYMENT OF BENEFITS. Unless otherwise determined by the
Board, all Annual Incentive Awards and Long-Term Incentive Awards will be paid
from the Company's general assets, and nothing contained in this Bonus Plan will
require the Company to set aside or hold in trust any funds for the benefit of
any Participant, who will have the status of a general unsecured creditor of the
Company.
12. ADMINISTRATION OF THE PLAN. (a) This Bonus Plan will be
administered by the Board, which may from time to time delegate all or any part
of its authority under this Bonus Plan to the Compensation Committee.
(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 Bonus Plan and to adopt,
amend, and rescind rules and regulations for implementing and administering this
Bonus Plan. All such actions will be in the sole discretion of the Board and,
when taken, will be final, conclusive, and binding. Without
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limiting the generality or effect of the foregoing, the interpretation and
construction by the Board of any provision of this Bonus Plan or of any
agreement, notification, or document evidencing the grant of benefits payable to
Participants and any determination by the Board in its sole discretion pursuant
to any provision of this Bonus Plan or any provision of 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, neither the Chief Executive Officer, the Chief Operating Officer, or
the Chief Merchandising Officer nor any member of the Board will be liable for
any action or determination made in good faith.
(c) The provisions of Sections 5 and 6 will be interpreted as
authorizing the Board, in taking any action under or pursuant to this Bonus
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 either such Section or any other provision of this Bonus Plan is intended or
may be deemed to constitute a limitation on the authority of the Board.
(d) The existence of this Bonus 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 annual or long-term bonus or other right or benefit, whether or not
authorized by this Bonus Plan, subject only to limitations imposed by applicable
law as from time to time applicable thereto.
13. MISCELLANEOUS. (a) This Bonus 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.
(b) Except as otherwise provided in this Bonus Plan, no right or
benefit under this Bonus Plan will be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance, or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber, or charge such right or benefit will
be void. No such right or benefit will in any manner be liable for or subject to
the debts, liabilities, or torts of a Participant.
(c) This Bonus Plan may be amended or terminated from time to time by
the Board. In the event this Bonus Plan is terminated before the last day of a
Performance Period, Annual Incentive Awards and Long-Term Incentive Awards
payable for such Performance Period will be prorated on the basis of the ratio
of the number of months in such Performance Period prior to such termination to
the aggregate number of months in such Performance Period and will be paid only
after the end of such Performance Period, which will be deemed to continue until
the expiration thereof as if this Bonus Plan had not been terminated.
(d) If any provision in this Bonus Plan is held to be invalid or
unenforceable, no other provision of this Bonus Plan will be affected thereby.
(e) This Bonus Plan will be governed by and construed in accordance
with applicable United States federal law and, to the extent not preempted by
such federal law, in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflict of laws thereof.
14. EFFECTIVENESS. The amendment and restatement of this Bonus Plan set
forth herein will become effective as of December 12, 1997.
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