Neiman Marcus 2009 Annual Report Download - page 64

Table of Contents
Compensation Following Employment Termination or Change in Control
• Employment Agreements
Employment agreements with Mr. Tansky and Karen W. Katz were entered into in conjunction with the consummation of the
Acquisition and amended effective January 1, 2009 to comply with Section 409A of the Internal Revenue Code. In April 2010,
Mr. Tansky submitted a letter of non-renewal of his employment agreement effective October 5, 2010. In connection therewith, the
Company entered into new agreements with Karen W. Katz, James E. Skinner, and James J. Gold, all of which will become effective
on October 6, 2010. The Company and the Compensation Committee believe that the employment agreements are an important
component in retaining these key executives.
The Compensation Committee considered the importance of the continuity of senior leadership to be a compelling reason to
enter into the employment agreements with Mr. Tansky, Ms. Katz, Mr. Skinner and Mr. Gold. The employment agreements provide,
among other things, for payments to the executive following a termination of employment by the executive for "good reason" or a
termination of the executive's employment by the Company without "cause." The triggering events constituting "good reason" and
"cause" were negotiated to provide protection to the Company and to the executive for unwarranted termination of employment that
could cause harm to the Company. The employment agreements also provide for certain payments to the executives upon death or
disability. For a detailed description of the terms of the employment agreements with Mr. Tansky, Ms. Katz, Mr. Skinner and
Mr. Gold, see "Employment and Other Compensation Agreements" beginning on page 69 of this section.
• Confidentiality, Non-Competition and Termination Benefits Agreements
Each of the named executive officers (and certain other officers except for Mr. Tansky) is a party to a confidentiality, non-
competition and termination benefits agreement with the Company. The confidentiality, non-competition and termination benefits
agreements provide for severance benefits if the employment of the affected individual is terminated other than for death, disability, or
for cause. These agreements provide for a severance payment equal to one and one-half annual base salary of the named executive
officer, payable over an eighteen month period, and reimbursement for COBRA premiums for the same period.
• Other
The Company has change in control provisions in its Management Incentive Plan and its retirement plans that may provide
for accelerated vesting and/or distributions in certain circumstances and these provisions apply equally to all participants in the plans,
including the named executive officers, except to the extent an executive is party to an individual agreement that provides otherwise.
Consideration of Tax and Accounting Treatment of Compensation
• Internal Revenue Code §409A
The American Jobs Creation Act of 2004 added a new Section 409A to the Internal Revenue Code, which applies to
compensation deferred under a nonqualified deferred compensation plan after December 31, 2004. Compliance with the new
Section 409A became fully effective on January 1, 2009. Section 409A imposes restrictions on funding, distributions, and election to
participate in the affected plans. We believe our executive compensation plans and arrangements comply with Section 409A.
• Accounting for Stock-Based Compensation
We began accounting for stock-based payments in accordance with the provisions of ASC Topic 718, "Compensation —
Stock Compensation" on July 31, 2005. When setting equity compensation, the Compensation Committee considers the estimated
cost for financial reporting purposes of any equity compensation it is considering. However, the accounting impact does not have a
material impact on the design of our equity compensation plan.
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