Neiman Marcus 2009 Annual Report Download - page 73

Table of Contents
the SERP as of January 1, 2008), and who are otherwise designated as eligible by the Company's employee benefits committee. The
Company will make transitional and non-transitional credits to the accounts of eligible participants each pay period. Transitional
credits apply only to participants who were eligible to participate in the SERP as of December 31, 2007 but ceased participating in the
SERP as of that date and became a participant in the DC SERP on January 1, 2008. The amount of a transitional credit is the product
of a participant's eligible compensation in excess of the IRS Limit and an applicable percentage ranging from 0% to 6% depending
upon the age of the participant. Non-transitional credits apply to all eligible participants. The amount of a non-transitional credit is
the product of a participant's eligible compensation in excess of the IRS Limit and 10.5%. All transitional and non-transitional credits
are credited to a bookkeeping account and vest upon the earlier of (i) an eligible employee's attainment of five years of service, (ii) an
eligible employee's attainment of age 65, (iii) an eligible employee's death, (iv) an eligible employee's disability, or (v) a change of
control (as defined in the DC SERP) while in the employ of the Company. Notwithstanding the preceding, amounts credited to an
account are subject to forfeiture in the event the employee is terminated for cause. Accounts are credited monthly with interest at an
annual rate equal to the prime interest rate published in The Wall Street Journal on the last business day of the preceding calendar
quarter. Vested amounts credited to an employee's account become payable in the form of five annual installments beginning upon the
later of the employee's separation from service and age 55, or such later age as the employee may elect. Upon the employee's death or
disability or upon a change of control of the Company, vested amounts credited to an employee's account will be paid in a single lump
sum. The DC SERP is designed to comply with the requirements of Section 409A of the Internal Revenue Code.
Employment and Other Compensation Agreements
As discussed in "Compensation Discussion & Analysis," The Neiman Marcus Group, Inc. has entered into employment
agreements with Burton M. Tansky and Karen W. Katz. Following the submission by Mr. Tansky in April 2010 of his letter of non-
renewal of his employment agreement, new employment agreements were entered into between the Company, The Neiman Marcus
Group, Inc. and each of Karen W. Katz, James E. Skinner, and James J. Gold. These new employment agreements will become
effective on October 6, 2010. In addition, each of the named executive officers, except for Mr. Tansky and Ms. Katz, is a party to a
confidentiality, non-competition and termination benefits agreement, discussed below.
Employment Agreement with Mr. Tansky
The employment agreement with Mr. Tansky, as amended, has an employment term of five years until October 2010, subject
to automatic one-year renewals of the term if neither party submits a notice of termination at least six months prior to the end of the
then-current term, and provides for a base salary of not less than $1,300,000 per year. In April 2010, Mr. Tansky submitted a letter of
non-renewal of his employment agreement effective October 5, 2010 whereby he will retire as President and Chief Executive Officer.
Pursuant to a Director's Service Agreement dated April 26, 2010 by and among the Company, The Neiman Marcus Group, Inc. and
Mr. Tansky, he will continue as a non-employee chairman. The Director's Service Agreement will become effective October 6, 2010
and expire on December 31, 2011.
Provisions of Mr. Tansky's agreement include participation in the Company's annual bonus plan. If bonus levels for a fiscal
year are met, the minimum bonus amount he will receive will be at least 50% of his base salary, if the target bonus goal for the fiscal
year is met, he will receive at least 85% of his base salary, and if the maximum target goal is met, he will receive at least 170% of his
base salary. The actual amounts will be determined according to the terms of the annual bonus program and will be payable at the
discretion of the Compensation Committee.
In addition to the foregoing, the agreement provides that upon the occurrence of the earlier of a change of control or an initial
public offering, Mr. Tansky will be entitled to a cash bonus equal to $3,080,911, which represents his portion of the cash incentive
pool pursuant to the Cash Incentive Plan (more fully described beginning on page 73 of this section). The agreement also provides
that at the time of Mr. Tansky's termination of employment with the Company, his years of service for purposes of calculating his
benefit under the SERP shall be determined by multiplying his actual service for purposes of the SERP by 2, subject to the 25-year
maximum set forth in the SERP, and by then providing him with additional credit for each year of service by him to the Company
following his attainment of age sixty-five (65) (disregarding the 25-year maximum set forth in the SERP).
If (1) we terminate Mr. Tansky's employment without cause or if he resigns for good reason, or (2) Mr. Tansky resigns
without good reason during the 30 day period following the six month anniversary of a future change of control (referred to herein as a
change of control resignation), he will receive, subject to his execution of a mutual release and waiver of claims, a lump sum equal to
(A) 85% of base salary multiplied by a fraction, the numerator of which is the number of days during the fiscal year up to the
termination date and the denominator of which is 365, plus (B) 36 times the monthly COBRA
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