Neiman Marcus 2012 Annual Report Download - page 63

Table of Contents
Compensation Following Employment Termination or Change of Control
Employment Agreements. In order to support the continuity of senior leadership, we have employment agreements with Ms. Katz and Messrs.
Skinner and Gold which 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 us without “cause.” The triggering events constituting “good reason” and “cause” were negotiated to provide
protection to us for unwarranted termination of employment that could cause harm to us as well as to provide protection to the executive. 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, see “Employment and Other Compensation Agreements” beginning on page 69.
Confidentiality, Non-Competition and Termination Benefits Agreements. Each of Messrs. Koryl and Schulman is a party to a confidentiality,
non-competition and termination benefits agreement with us. 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 “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. The employment agreements of Ms. Katz and Messrs. Skinner and Gold contain similar provisions as described beginning on
page 69.
Other. We have change of control provisions in our Management Incentive Plan 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 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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