Neiman Marcus 2014 Annual Report Download - page 72

Table of Contents
Compensation Committee believes that these benefits are aligned with the Company’s desire to attract and retain highly skilled management talent for the
benefit of all stockholders. The value of these benefits to the named executive officers is set forth in the Summary Compensation Table under the column
“All Other Compensation” and details about each benefit are set forth in a table following the Summary Compensation Table.

Employment Agreements. To support the continuity of senior leadership, we have employment agreements with Ms. Katz and Messrs. Grimes and
Gold that 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.” In connection with his move to Vice Chairman, we entered into an employment agreement
with Mr. Skinner that provides, among other things, for payments to Mr. Skinner in connection with his termination of employment for any reason other than
“cause.” The triggering events constituting “good reason” and “cause” were negotiated to provide protection to us for certain terminations of employment
that could cause harm to us as well as to provide protection to the executive. The employment agreements for the named executive officers other than Mr.
Grimes 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.”
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 by us other than for death, “disability,” or “cause” or by the executive for "good reason."
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. Gold and Skinner contain
similar restrictive covenant provisions as described more fully under the heading “Employment and Other Compensation Agreements” in this section.
Other. We have change of control provisions in the Management Incentive Plan that allow the Parent Board or Compensation Committee to
accelerate the vesting of equity awards upon a change of control.

As a general matter, the Parent Board and the Compensation Committee review and consider the various tax and accounting implications of
compensation programs we utilize.
Accounting for Stock-Based Compensation.We account for stock-based payments in accordance with the provisions of ASC Topic 718,
“Compensation-Stock Compensation.” 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.
Section 162(m). Section 162(m) of the Code (Section 162(m)) generally disallows public companies a tax deduction for compensation in excess of
$1,000,000 paid to their chief executive officers and the three other most highly compensated executive officers (excluding the chief financial officer) unless
certain performance and other requirements are met. Our intent generally is to design and administer executive compensation programs in a manner that will
preserve the deductibility of compensation paid to our named executive officers, and we believe that a substantial portion of our current executive
compensation program (including the stock options and other awards that may be granted to our named executive officers as described above) satisfies the
requirements for exemption from the $1,000,000 deduction limitation. We intend to comply with applicable laws in order to rely on the transition rules under
Section 162(m) for newly public companies. To the extent the transition rules under Section 162(m) apply to us, the $1,000,000 deduction limitation would
not apply. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the
compensation paid under such programs may not be deductible.
71