Neiman Marcus 2005 Annual Report Download - page 66

If a Named Executive Officer becomes entitled to receive these severance amounts, the Named Executive Officer will also be
entitled to the following:
• Deemed participation in and accelerated vesting of benefits under the SERP and a lump sum cash payment equal to the
actuarial equivalent of the incremental benefits payable under the SERP if the Named Executive Officer were credited
with enhanced years of service (two or three years) for purposes of eligibility for participation, eligibility for retirement,
for early commencement of actuarial subsidies and for purposes of benefit accrual (modified as described above for Mr.
Tansky and Ms. Katz);
• Accelerated vesting of any outstanding equity awards held by such Named Executive Officer that are not otherwise
accelerated pursuant to the terms under which such awards were granted other than any equity awards granted in
connection with the Transactions;
• Continuing coverage under our group health, dental and life insurance plans for the Named Executive Officer, their
spouse and any dependents for two years (three in the case of Mr. Tansky) (any such medical and dental benefits will
become secondary to coverage provided by a subsequent employer) and certain retiree medical coverage benefits; and
• Reimbursement for outplacement expenses and merchandise discounts for the Named Executive Officer, his or her
spouse and dependents.
Each agreement also contains a tax gross-up provision whereby if the Named Executive Officer incurs any excise tax by
reason of his or her receipt of any payment that constitutes an excess parachute payment as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), the Named Executive Officer will receive a gross-up payment in an amount that
would place the Named Executive Officer in the same after-tax position that he or she would have been in if no excise tax had
applied. However, under certain conditions, rather than receive a gross-up payment, the payments payable to the Named Executive
Officer will be reduced so that no excise tax is imposed. As a condition to receiving any payments or benefits under the agreements,
the officers must execute a release of claims in respect of their employment with us.
In addition to the change of control termination protection agreements, each of the Named Executive Officers and certain
other officers, except for Mr. Tansky, are party to a confidentiality, non-competition and termination benefits agreement that will
provide for severance benefits once the change of control termination protection agreements expire if the employment of the affected
individual is terminated by the Company other than in the event of death, disability or termination for cause. These agreements
provide for a severance payment equal to one and one-half annual base salary payable over an eighteen month period, and
reimbursement for COBRA premiums for the same period.
Cash Incentive Plan
Following the consummation of the Transactions, the Newton Acquisition, Inc. Cash Incentive Plan (the "Cash Incentive
Plan") was adopted to aid in the retention of certain key executives, including the Named Executive Officers. The Cash Incentive Plan
provides for the creation of a $14 million cash bonus pool to be shared by all participants based on the number of vested and unvested
stock options and underlying shares that were granted pursuant to the Management Equity Incentive Plan. Each participant in the
Cash Incentive Plan will be entitled to a cash bonus upon the earlier to occur of a change of control or an initial public offering, as
defined in the Cash Incentive Plan, provided that the internal rate of return to the Sponsors is positive.
Compensation Committee Interlocks and Insider Participation
In fiscal year 2006 prior to the consummation of the Transactions, Walter J. Salmon, Matina S. Horner, Paula Stern, and John
R. Cook served as members of the Compensation Committee. All were qualified as independent directors and none of them were
considered employees during fiscal year 2006. John R. Cook served as our Senior Vice President and Chief Financial Officer from
September 1992 to July 2001. Following the Acquisition in fiscal year 2006, Jonathan Coslet, Kewsong Lee, and John G. Danhakl
served as members of our Compensation Committee. No officer or employee served on the compensation committee (or equivalent),
or the board of directors, of another entity whose executive officer(s) served on our compensation committee or board.
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