Abercrombie & Fitch 2012 Annual Report Download - page 86

Table of Contents
APPENDIX A
ABERCROMBIE & FITCH CO.
INCENTIVE COMPENSATION PERFORMANCE PLAN
The Abercrombie & Fitch Co. Incentive Compensation Performance Plan (the "Incentive Plan") is intended to satisfy the applicable provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Incentive Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of Abercrombie & Fitch Co. (the "Company"), which is intended to consist solely of "outside directors" as such
term is defined in Section 162(m) of the Code. The Committee shall select those key executives of the Company with significant operating and financial
responsibility and who are likely to be "covered employees" (within the meaning of Section 162(m) of the Code) for the relevant fiscal year, to be eligible to
earn seasonal or annual cash incentive compensation payments to be paid under the Incentive Plan. In addition, all associates of the Company selected to
participate for a given fiscal year shall be eligible to earn seasonal or annual cash incentive compensation under the Incentive Plan.
In respect of each Spring and/or Fall selling season or fiscal year, the Committee may establish performance goals for the Company. For purposes of
the Incentive Plan, a "performance goal" shall mean any one or more of the following business criteria, 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 pre-established target, to previous years' results or to a
designated comparison group, in each case as specified by the Committee: (i) gross sales, net sales, or comparable store sales; (ii) gross margin, cost of goods
sold, mark-ups or mark-downs; (iii) selling, general and administrative expenses; (iv) operating income, earnings from operations, earnings before or after
taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items; (v) net income or net income per common share (basic or
diluted); (vi) inventory turnover or inventory shrinkage; (vii) return on assets, return on investment, return on capital, or return on equity; (viii) cash flow, free
cash flow, cash flow return on investment, or net cash provided by operations; (ix) economic profit or economic value created; (x) stock price or total
stockholder return; and (xi) market penetration, geographic expansion or new concept development; customer satisfaction; staffing; diversity; training and
development; succession planning; employee satisfaction; acquisitions or divestitures of subsidiaries, affiliates or joint ventures. These factors may be
adjusted by the Committee to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or
expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a
change in accounting principle all as determined in accordance with standards established by Opinion No. 30 of the Accounting Principles Board or other
applicable or successor accounting provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with
generally accepted accounting principles or identified in the Company's financial statements or notes to the financial statements. These factors shall have a
minimum performance standard below which no payments will be made, and a maximum performance standard above which no additional payments will be
made. These performance goals may (but need not) be based on an analysis of historical performance and growth expectations for the Company, financial
results of other comparable businesses and progress toward achieving the Company's long-range strategic plan. These performance goals and determination of
results shall be based entirely on objective measures. The Committee may not use any discretion to modify award results except as permitted under
Section 162(m) of the Code.
Annual incentive compensation targets may be established for eligible executives ranging from 5% to 150% of base salary. Executives may earn their
target incentive compensation if the pre-established performance goals are achieved. The target incentive compensation percentage for each executive will be
based on the level and functional responsibility of his or her position, size of the business for which the executive is responsible and competitive practices.
The amount of incentive compensation paid to participating executives may range from zero to double their targets, based upon the extent to which
performance goals are achieved or exceeded. Except as otherwise permitted by Section 162(m) of the Code, the minimum level at which a participating
executive will
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