Foot Locker 2005 Annual Report Download - page 116

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
We have employment agreements with the named executive officers. The material terms of these
agreements are described below.
M. D. Serra
The Company has entered into an employment agreement with Matthew D. Serra as Chairman of
the Board, President and Chief Executive Officer.
•Term. The term of the agreement began on January 30, 2005 and ends on February 2, 2008. Each
January of the term beginning in January 2007, the term of Mr. Serra’s employment agreement
will be extended for one additional year unless either Mr. Serra or the Board of Directors gives
notice of intention not to extend the term.
•Annual Base Salary and Bonus. We will pay Mr. Serra an annual base salary of not less than $1.5
million during the term of his agreement. Mr. Serra’s annual bonus at target is 125 percent of his
base salary, and his bonus at target under the long-term incentive compensation plan for any
three-year performance period is 90 percent of his base salary at the beginning of the
performance period.
•Stock Options and Restricted Stock. Mr. Serra was granted an award of restricted stock covering
105,000 shares and a stock option covering 115,000 shares. These awards vest in three
substantially equal annual installments and are reflected in the Summary Compensation Table on
Page 16. Mr. Serra may receive additional stock option or restricted stock awards during the
contract term, as may be determined by the Compensation and Management Resources
Committee.
•Benefits Plans and Perquisites. Mr. Serra is entitled to participate in all bonus, incentive and
equity plans offered to senior executives. He is also eligible to participate in all pension, welfare,
and fringe benefit plans and perquisites offered to senior executives. The benefits and perquisites
available to Mr. Serra include:
– Company-paid life insurance in the amount of the annual base salary
– Long-term disability insurance coverage of $25,000 per month
– Annual out-of-pocket medical expense reimbursement of up to $20,000
– Financial planning expenses of up to $7,500 annually
– Reimbursement of dues and membership fees of one private club of up to $20,000
per year
– Automobile expense allowance of up to $40,000 annually and the provision of the
services of a driver
Although Mr. Serra is eligible for these perquisites under his agreement, Mr. Serra chose not to
participate in some of these benefits in 2005.
•Payment and Benefits on Termination.
Termination for Cause, Death or Disability. If Mr. Serra’s employment is terminated for Cause,
death or disability, he would receive payment of his annual base salary through his termination
date. He would also receive those benefits, if any, that the Company provides under its policies to
employees whose employment is terminated for these reasons and any benefits required to be
provided under the terms of any benefit or incentive plan.
Termination Without Cause or for Good Reason. If Mr. Serra’s employment is terminated by us
without Cause or by Mr. Serra for Good Reason, or if we breach any material provision of his
employment agreement and, as a result, Mr. Serra elects to terminate his employment, he would
receive the following payments and benefits:
– his base salary to the end of the contract term,
– his annual bonus at target, prorated to his termination date,
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