Neiman Marcus 2004 Annual Report Download - page 60

employee director, Mr. Tansky receives no compensation for his service as a Board member. Richard A. Smith receives no compensation for his service as a
Board member, committee chairman, or for his service as Chairman of the Board. Robert A. Smith and Brian J. Knez each receive $200,000 annually for their
services as Co-Vice Chairmen of the Board, plus reimbursement for travel and incidental expenses.
In fiscal year 2005, each independent director was paid an annual retainer fee of $60,000. The chairman of the Audit Committee receives an additional
$20,000 per year, and other committee chairs each receive an additional $15,000 per year. Board members do not receive per-meeting fees. The Board
believes that attendance at all meetings is expected and a substantial amount of each Board member's work is done in committee meetings and outside of
formal meetings. Each independent director is also entitled to receive stock-based units in an amount equal to the value of the annual cash retainer. The
number of stock-based units is calculated quarterly by dividing $15,000 (the amount of the quarterly cash retainer) by the trailing five-day average of the high
and low price of the Class A Common Stock at the end of each fiscal quarter. Dividend equivalents in the form of additional units representing Class A
Common Stock are credited to each independent directors' account on each dividend payment date equal to (i) the per-share cash dividend divided by the
average of the high and low price of our Class A Common Stock on the dividend payment date, multiplied by (ii) the number of units reflected in the
independent director's account on the day before the dividend payment date. The value of each of the independent director's stock-based units will be payable
only in cash when the independent director ceases to serve as a member of our Board of Directors. The stock-based units will be valued for payment by
multiplying the applicable number of units by the average of the high and low price of our Class A Common Stock during the last ten trading days before the
date on which the value of the units is to be paid. These stock-based units do not carry voting or dispositive rights. Richard A. Smith, Robert A. Smith,
Brian J. Knez, and Burton M. Tansky do not receive stock-based units.
Pursuant to the Deferred Compensation Plan for Non-Employee Directors, independent directors are offered the right to elect to receive all or a part of
the cash portion of their fees on a deferred basis. If the deferred basis is elected, it may be in the form of cash with interest calculated at a rate equal to the
average of the top rates paid by major New York banks on three-month negotiable certificates of deposit as quoted in the Wall Street Journal on the last
business day of the fiscal quarter, or in the form of stock-based units, calculated on the basis of the trailing five-day average of the average of the high and low
price of the Class A Common stock at the end of each fiscal quarter. Plan participants must irrevocably elect to receive the deferred funds either in a lump
sum or in equal installments (not to exceed 10). Each cash installment (other than the first) shall accrue interest from the date of the first installment to the
date on which such installment is paid, compounded quarterly. Dr. Horner and Mr. Countryman participated in the deferred compensation plan with respect to
fees for fiscal year 2005, and they and other directors have participated in prior years.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
We have entered into Confidentiality, Non-Competition and Termination Benefits Agreements with each of the Named Executive Officers. These
agreements entitle the employee to receive severance payments in the event his or her employment with us is terminated other than for cause or due to total
disability or death. Mr. Tansky will have the right to receive an amount equal to two times his annual base salary at the time of termination, payable in
24 monthly installments. Ms. Katz and Messrs. Skinner, Hoffman, and Gold will have the right to receive an amount equal to one and one-half times their
annual base salary at the time of termination, payable in 18 monthly installments.
On April 1, 2005, we entered into Change of Control Termination Protection Agreements (the "Agreements") with 11 senior executives, including the
Named Executive Officers. Under the terms of
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