Abercrombie & Fitch 2012 Annual Report Download - page 79

Table of Contents
The Board believes that it is in the best interests of the Company and its stockholders for the Company to have a stockholder-approved plan under
which bonuses awarded to its key associates could be designed in a manner intended to qualify as "performance-based compensation" within the meaning of
Section 162(m). Accordingly, the Incentive Plan is being submitted for re-approval by stockholders. In general, under Section 162(m), in order for the
Company to be able to deduct compensation in excess of $1,000,000 paid in any one year to our chief executive officer or any of our three other most highly
compensated executive officers (other than our chief financial officer), such compensation must qualify as "performance-based." One of the requirements of
"performance-based compensation" for purposes of Section 162(m) is that the material terms of the performance goals under which compensation may be
paid be disclosed to and approved by the Company's stockholders at least once every five years. Stockholders last approved the material terms of the Incentive
Plan at the 2007 Annual Meeting of Stockholders. For purposes of Section 162(m), the material terms include: (i) the individuals eligible to receive
compensation; (ii) a description of the business criteria on which the performance goal is based; and (iii) the maximum amount of compensation that can be
paid to an individual under the performance goal. Each of these aspects is discussed below, and stockholder approval of this proposal is intended to constitute
re-approval of each of these aspects of the Incentive Plan for purposes of the stockholder approval requirements of Section 162(m).
Summary of the Incentive Plan
The following summary of the material terms of the Incentive Plan is qualified in its entirety by reference to the complete text of the Incentive Plan,
which is set forth in Appendix A to this Proxy Statement.
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The Incentive Plan is administered by the Compensation Committee. The Compensation Committee has the authority to select participants in the
Incentive Plan from among the Company's key associates and to determine the performance goals, target amounts and other terms and conditions of awards
under the Incentive Plan in respect of each Spring and/or Fall selling season.
Eli
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The Company's associates with significant operating and financial responsibility and who are likely to be "covered employees" (within the meaning of
Section 162(m)) for the relevant fiscal year, are eligible to earn seasonal or annual cash incentive compensation payments to be paid under the Incentive Plan.
Approximately 1,000 associates currently qualify to participate in the Incentive Plan.
Te
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of Awards
Awards under the Incentive Plan will be payable upon the achievement during each performance period (which may be the Company's Spring and Fall
selling seasons or full fiscal year) of specified objectives. Annual incentive compensation targets may be established for eligible associates ranging from 5%
to 150% of base salary. Associates may earn their target incentive compensation if the pre-established performance goals are achieved. The amount of
incentive compensation paid to participating associates may range from zero to double their targets, based upon the extent to which performance goals are
achieved or exceeded.
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Amount of Compensation Payable Under the Incentive Plan
The maximum dollar amount payable to any participant in any one year under the Incentive Plan is $5,000,000.
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Performance Goals
For each performance period, the Compensation Committee will select one or more of the following measures as the performance goal(s), either
individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either individually, alternatively
or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a
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