Neiman Marcus 2009 Annual Report Download - page 75

Table of Contents
make a one-time, lump-sum payment to Mr. Tansky in an amount equal to the monthly premium cost of certain continued medical
benefits multiplied by 60. The Company also will provide Mr. Tansky with office space and appropriate staff assistance at Bergdorf
Goodman in New York and reimburse him for travel and other expenses incurred in the fulfillment of his non-executive Chairman of
the Board responsibilities. The agreement provides that Mr. Tansky shall be subject to removal pursuant to the standards and
requirements of the Company's bylaws and applicable law.
Current Employment Agreement with Ms. Katz
In connection with the non-renewal of Mr. Tansky's employment agreement in April 2010, the Company entered into a new
employment agreement with Karen W. Katz wherein she will succeed Mr. Tansky as President and Chief Executive Officer. The new
employment agreement will become effective on October 6, 2010. Her current employment agreement provides that she will act as
Chief Executive Officer and President of Neiman Marcus Stores, a division of The Neiman Marcus Group, Inc., until October 2010,
subject to automatic one-year renewals of the term if neither party submits a notice of termination at least three months prior to the
end of the then-current term. Pursuant to the agreement, her base salary shall not be less than $760,000. Ms. Katz's agreement also
provides that she will participate in the Company's annual bonus plan. 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. However, Ms. Katz's agreement
provides that her target bonus may not be reduced below 65% of her base salary. In addition, the agreement provides that during the
term, Ms. Katz shall continue to accrue benefits under the SERP, provided that (i) the SERP shall not be amended or terminated in any
way that adversely affects her, and (ii) after she has reached the 25-year maximum set forth in the SERP, she shall be entitled to an
additional one year of credit for each full year of service thereafter. In addition, if (i) during the term, her employment is terminated
by the Company for any reason other than death, disability, or cause (as defined in the employment agreement), (ii) during the term,
she terminates her employment for good reason (as defined in the employment agreement), or (iii) her employment terminates upon
expiration of the term following the provision by the Company of a notice of non-renewal, and, in any such case, on the date of such
termination she has not yet reached age 65, her SERP benefit shall not be reduced according to the terms of the SERP solely by reason
of her failure to reach age 65 as of the termination date.
This agreement may be terminated by either party on three months' notice, subject to severance obligations in the event of
termination under certain circumstances (as described below).
If we terminate Ms. Katz's employment without cause or if she resigns for good reason or following her receipt of a notice of
non-renewal from the Company relating to the employment term, she will receive (i) an amount of annual incentive pay equal to a
prorated portion of her target bonus amount for the year in which the employment termination date occurs, and (ii) a lump sum equal
to (A) 6 times the monthly COBRA premium applicable to Ms. Katz plus (B) two times the sum of her base salary and target bonus, at
the level in effect as of the employment termination date; provided, however, that Ms. Katz shall be required to repay this payment if
she violates certain restrictive covenants in her agreement or if she is found to have engaged in certain acts of wrongdoing, all as
further described in the agreement. Ms. Katz is also entitled to continuation of certain benefits for a two-year period following a
termination of her employment for any reason as set forth more fully in her employment agreement.
If Ms. Katz's employment terminates before the end of the term due to her death or disability, we will pay her or her estate, as
applicable, (i) any unpaid salary through the date of termination and any bonus payable for the preceding fiscal year that has otherwise
not already been paid, (ii) any accrued but unused vacation days, (iii) any reimbursement for business travel and other expenses to
which she is entitled, and (iv) an amount of annual incentive pay equal to a prorated portion of her target bonus amount for the year in
which the employment termination date occurs.
Ms. Katz's agreement also contains a tax gross-up provision whereby if, in the event of a change in control following the
existence of a public market for the Company's stock, she incurs any excise tax by reason of her receipt of any payment that
constitutes an excess parachute payment as defined in Section 280G of the Code, she will receive a gross-up payment in an amount
that would place her in the same after-tax position that 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 her will be reduced so that no excise tax is imposed.
Ms. Katz's agreement also contains obligations on her part regarding non-competition and non-solicitation of employees
following the termination of her employment for any reason, confidential information and non-disparagement of the Company and its
business. The non-competition agreement generally prohibits Ms. Katz during employment and for a period of one year from
termination from becoming a director, officer, employee or consultant for any competing business that owns or operates a luxury
specialty retail store located in the geographic areas of the Company's operations. The
71