Neiman Marcus 2013 Annual Report Download - page 65

Table of Contents
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We have reviewed our compensation policies and programs for all employees, including the named executive officers, and we do not believe that
these policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. The three major components of our
overall compensation program were reviewed and the following conclusions were made:
• Base salaries are determined by an industry peer group analysis and on the overall experience of each individual. Merit increases are based on
financial as well as individual performance and are generally kept within a specified percentage range for all employees, including the named
executive officers.
• Because of our non-public status, long-term incentive awards in the form of stock option grants can be exercised but the shares must be held
until such time as there is a liquidity event or a public market exists for Parent's common stock, thereby aligning the interests of participants
with those of our equity investors.
• Annual incentive bonus awards are based on our Adjusted EBITDA and sales. For Bergdorf Goodman, annual incentive bonus awards are based
on Adjusted EBITDA and sales of both the Company as a whole and Bergdorf Goodman specifically. The annual incentive bonus awards are all
set at the beginning of each fiscal year based on the achievement of goals that the Compensation Committee believes will be challenging.
Maximum target payouts are capped at a pre-established percentage of base salary.
The Compensation Committee has discretionary authority to adjust incentive plan payouts and the granting of stock option awards, which may
further reduce any business risk associated with such plan payouts and stock option grants. The Compensation Committee also monitors compensation
policies and programs to determine whether risk management objectives are being met.
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Process for Evaluating Executive Officer Performance
Role of the Compensation Committee. The Compensation Committee is responsible for determining the compensation of our named executive
officers and for establishing, implementing and monitoring adherence to our executive compensation philosophy. The Compensation Committee charter
authorizes the committee to retain and terminate compensation consultants to provide advice with respect to compensation of the named executive officers.
The Compensation Committee is further authorized to approve the fees the Company will pay, and terms of engagement of, any consultant it may retain.
The Compensation Committee considers input from our CEO and compensation consultants in making determinations regarding our executive
compensation program and the individual contribution of each of our named executive officers. The CEO does not play a role in decisions affecting her own
compensation. The CEO’s performance and compensation are reviewed and determined solely by the Compensation Committee.
In developing and reviewing the executive incentive programs, the Compensation Committee considers the business risks inherent in program
designs to ensure that they do not incentivize executives to take unacceptable levels of business risk for the purpose of increasing their incentive plan
awards. The Committee intends for the plan design to be conservative in this respect and that the compensation components provide appropriate checks and
balances to encourage executive incentives to be consistent with the interests of our equity investors. The Compensation Committee believes that the mix of
compensation components used in the determination of our named executive officers’ total compensation does not encourage our named executive officers
to take undesirable risks relating to the business. For further information, see “Risk Assessment of Compensation Policies and Programs” above.
Role of Management. As part of our annual planning process, the CEO, with assistance from external consultants, develops and recommends a
compensation program for all executive officers. Based on performance assessments, the CEO attends a meeting of the Compensation Committee held for the
purpose of considering each individual executive’s annual compensation and recommends the base salary and any incentive bonus awards or long-term
incentive awards, if applicable, for each of the executive officers, including the named executive officers. The CEO does not participate in the portion of the
Compensation Committee meeting during which her own compensation is discussed and does not provide recommendations with respect to her own
compensation package.
Role of the Compensation Consultants. The Compensation Committee generally retains services of compensation consultants for limited purposes.
Management retains an independent compensation consultant, Haigh & Company, to provide
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