Neiman Marcus 2006 Annual Report Download - page 75

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 and change of control agreements with each of the named executive officers.
In addition, each of the named executive officers, except for Mr. Tansky, is a party to a confidentiality, non-competition and
termination benefits agreement that, under certain circumstances, will provide for severance benefits once the change of control
agreements expire.
Employment Agreement with Mr. Tansky
The employment agreement with Mr. Tansky has an employment term of five years and provides that he will act as our Chief
Executive Officer until October 2008. Thereafter, under the terms of the agreement and until October 2010, he will act as chairman of
the Board and shall have such duties as are customary for that position. During the time that Mr. Tansky is the Chief Executive
Officer (referred to herein as the "CEO term"), his base salary shall not be less then $1,300,000. During the period he serves as
chairman (referred to herein as the "Chairman term"), he will be entitled to 75% of the base compensation he earned as Chief
Executive Officer. Mr. Tansky's agreement also provides that he 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 Board of
Directors. Mr. Tansky's agreement provides that if bonus levels for a fiscal year are met, the minimum bonus amount he will receive
will be 50% of his base salary, if the target bonus goal for the fiscal year is met, he will receive 85% of his base salary, and if the
maximum target goal is met, he will receive 170% of his base salary.
In addition to the foregoing, the agreement provides that upon the occurrence of the earlier of a change of control (as defined
in the employment agreement) or an initial public offering (as defined in the employment agreement), 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 on page 74 of this section), provided that no such bonus will be paid unless (A) he remains employed with the
Company through the earlier of (x) the date of the change of control, (y) the initial public offering or (z) the fourth anniversary of the
effective date of the agreement (which effective date was October 6, 2005), and (B) the internal rate of return (as calculated in
accordance with provisions contained in the agreement) to the majority stockholder (as defined in the employment agreement) in
respect of their direct and indirect investment in the Company is positive. 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 an 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).
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). The agreement also provides that payments to Mr. Tansky under his
change of control agreement, which is described below, is in lieu of any severance payment provided for in his employment
agreement.
If we terminate Mr. Tansky's employment for cause (as defined in the employment agreement) or if he resigns without good
reason (as defined in the employment agreement) , Mr. Tansky will receive (i) any unpaid salary through the date of termination or
resignation and any bonus payable for the preceding fiscal year that has otherwise not already been paid, (ii) any accrued but unused
vacation days, and (iii) any reimbursement for business travel and other expenses to which he is entitled. In addition, in the event that
following a resignation by Mr. Tansky without good reason, a change of control or initial public offering occurs in which certain of
our investors recognizes a positive internal rate of return, Mr. Tansky will be entitled to a payment equal to the product of (i)
$3,080,911 and (ii) 25% multiplied by the number of full years (and not fractions thereof) from the effective date of the agreement to
the resignation date.
If (1) we terminate Mr. Tansky's employment without cause or if he resigns for good reason and, in each case, he is not
entitled to receive payments or benefits under his change of control agreement described below, 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 (i) any unpaid salary through the date of termination or resignation and any bonus payable for
the preceding fiscal year that has otherwise not already been paid, (ii) any accrued but unused vacation days, and (iii) any
reimbursement for business travel and other expenses to which he is entitled. In addition, subject to his execution of a mutual release
and waiver of claims, he will receive 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) if such termination
occurs prior to the commencement of the Chairman term and is
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