Neiman Marcus 2006 Annual Report Download - page 65

-- Annual Incentive Compensation
For fiscal year 2007, the financial component of the annual bonus for each named executive officer was based on EBITDA
and inventory turnover performance. The Compensation Committee sets minimum, target, and maximum performance levels. If the
minimum threshold level is not achieved, no annual bonuses are paid. The final award amount depends on the actual level of
performance achieved; however, the Compensation Committee has the discretion to make adjustments. The threshold, target, and
maximum levels as a percentage of salary for Mr. Tansky are set by the terms of his employment agreement discussed on page 70 of
this section and Ms. Katz' target bonus may not be less than 65% of her base salary, as per the terms of her employment agreement
discussed on page 71 of this section.
Minimum, target, and maximum bonuses are paid based on a percentage of base salary. If the target level is achieved, each
named executive officer will receive the percentage of base salary indicated below. If the maximum level is achieved, the annual
bonus incentives are paid at double the target percentage. Minimum levels are payable at 25% of the target percentage. The target
percentages for Mr. Tansky and Mr. Skinner are weighted 75% on the overall financial results of the Company (EBITDA and
inventory turnover) and 25% on individual objectives. The target percentages for Ms. Katz, Mr. Hoffman, and Mr. Gold are weighted
30% on the overall financial results of the Company, 50% on the financial results of their respective divisions, and 20% on their
individual objectives.
The target percentages set for fiscal year 2007 and the threshold, target, and maximum goals for each of the named executive
officers for fiscal year 2007 are as follows:
Burton M.
Tansky
Karen W.
Katz
James E.
Skinner
Brendan L.
Hoffman
James J.
Gold
Target Bonus
Percent of Base Salary 85% 65% 50% 50% 50%
Financial Weightings
Overall Corporate Results 75% 30% 75% 30% 30%
Division Financial Results 50% 50% 50%
Individual Objectives 25%20%25%20%20%
Total 100%100%100%100%100%
Actual amounts paid to the named executive officers in fiscal year 2007 are listed in the Summary Compensation Table under
the heading "Non-Equity Incentive Plan Compensation" on page 65 of this section.
In addition, discretionary bonuses have been awarded by the Compensation Committee to some or all of the named executive
officers from time to time to award these individuals for exemplary performance. Actual amounts of discretionary bonuses awarded to
the named executive officers in fiscal year 2007 are listed in the Summary Compensation Table in the column under the heading
"Bonus" on page 65 of this section.
-- Long-Term Incentive
Stock option grants were made to certain executive officers, including each of the named executive officers, on November
29, 2005. As mentioned above, no grants of stock options were made to the named executive officers in fiscal year 2007 and none are
anticipated until the vesting period of the initial stock option grants has lapsed, on October 6, 2010, or as a result of a promotion or a
new hire. The stock options are discussed further beginning on page 67 of this section under the heading "Outstanding Equity Awards
at Fiscal Year End."
Personal Benefits, Perquisites, and Other Executive Compensation
A competitive benefit package is considered an important factor in our overall compensation package. Accordingly,
executives enjoy a variety of benefits, including retirement benefits, health and life insurance, and a deferred compensation plan. We
also provide certain perquisites to executive officers that are not generally available to other employees. These benefits are further
described below.
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