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EXHIBIT 10.5
2003
INCENTIVE COMPENSATION PLAN
PURPOSE
This plan is designed to provide financial reward to employees of The J. Jill
Group and its subsidiaries for their contribution toward the attainment of the
company's financial goals in 2003.
PARTICIPATION
Participation in the plan and assignment of bonus percentages is made either by
the Compensation Committee of the Board of Directors in the case of executive
officers or by the President of the company in the case of everyone else. The
Compensation Committee and the President may also award additional bonuses at
their discretion.
Eligibility to Receive Bonus
- - Bonus plan participants will be eligible to receive their bonus if (i) the
company meets or exceeds its operating income (earnings before interest and
taxes) goal for the performance period and (ii) the Compensation Committee,
in the case of executive officers, or the President, in the case of
everyone else, determines in its or his discretion that bonuses shall be
paid for such performance period.
- - Participants in performance counseling will not be eligible for a bonus
payout for that season.
- - Participants must be actively employed for a minimum of three months in the
season for which the bonus is earned.
- - Participants must be employed on the last day of the bonus performance
period.
- - Participants terminated for cause will not be eligible for bonus.
CALCULATION OF BONUS PAYMENT
To determine the amount of bonus for which an employee is eligible, multiply the
employee's bonus percentage by his base salary earnings for the performance
period.
PERFORMANCE PERIOD
This plan pertains to the fiscal year ending December 27, 2003. For measurement
purposes the fiscal year will be divided into two seasonal performance periods:
Spring-December 29, 2002 to June 28, 2003
Fall-June 29, 2003 to December 27, 2003
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ADDITIONAL BONUSES
The Compensation Committee and the President may also award additional bonuses
at their discretion. The criteria for eligibility, the calculation of the bonus
payment and the performance period(s) for such bonuses shall all be determined
at the time of the additional bonus award.
PAYMENTS
Bonus payments will be made as soon as possible after the close of the
performance period (i.e.season).
EXAMPLE
Assume: Base annual salary of $50,000 and a bonus percentage of 10%
CASE 1: The Company meets the financial plan for both seasons and the
President determines in his discretion that bonuses will be paid for
both periods:
<Table>
<Caption>
Season Salary Bonus % Bonus
----------- ---------- ---------- ----------
Spring $ 25,000 10% $ 2,500
Fall $ 25,000 10% $ 2,500
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Fiscal 2003 $ 50,000 $ 5,000
---------- ----------
</Table>
CASE 2: The Company meets the Spring financial plan but not the Fall financial
plan and the President determines in his discretion that bonuses will
be paid for the Spring performance period:
<Table>
<Caption>
Season Salary Bonus % Bonus
----------- ---------- ---------- ----------
Spring $ 25,000 10% $ 2,500
Fall $ 25,000 -- --
---------- ----------
Fiscal 2003 $ 50,000 $ 2,500
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</Table>