UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) February 19, 2008
NORDSTROM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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WASHINGTON
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001-15059
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91-0515058
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(STATE OR OTHER JURISDICTION
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(COMMISSION FILE
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(I.R.S. EMPLOYER
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OF INCORPORATION)
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NUMBER)
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IDENTIFICATION NO.)
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1617 SIXTH AVENUE, SEATTLE, WASHINGTON
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98101
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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(ZIP CODE)
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REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE (206) 628-2111
INAPPLICABLE
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On February 19, 2008 the Compensation Committee (the “Committee”) of the
Board of Directors of Nordstrom, Inc. (the “Company”) approved the following
executive compensation actions relative to the Company’s Named Executive
Officers as set forth in the Company’s proxy statement dated April 12, 2007
(the “NEOs”):
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2007
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Named Executive
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Bonus
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Officer
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(1)
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Blake W. Nordstrom
President
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$
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377,860
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Peter E. Nordstrom
EVP and President,
Merchandising
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$
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350,870
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Erik B. Nordstrom
EVP and President,
Stores
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$
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350,870
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Michael G. Koppel
EVP and Chief
Financial Officer
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$
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197,597
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Daniel F. Little
EVP and Chief
Administrative Officer
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$
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180,772
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(1)
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The 2007 cash bonuses were determined based on the achievement of pre-
established performance measures set by the Committee under the shareholder
approved Nordstrom, Inc. Executive Management Group Bonus Plan.
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No changes in base compensation were approved.
On February 19, 2008, the Committee also awarded stock option grants to the
Company’s five NEOs, effective February 28, 2008. Stock options were granted
pursuant to the terms of the Nordstrom, Inc. 2004 Equity Incentive Plan (the
“Plan”). Stock option grants have a term of ten years with an exercise price
equivalent to the fair market value of the Company’s stock on February 28, 2008. Vesting occurs at
the rate of 25% annually beginning one year from the date of grant. The number of options to be
awarded to each individual is a
function of base pay, a long-term incentive (LTI) percentage and the fair
value of an option. The Binomial Lattice model is used to estimate the fair
value of an option. This model requires the input of certain assumptions,
including risk-free interest rate, volatility, dividend yield, and expected
life. The formula for determining the number of options granted is:
No. of Options = (base pay * LTI %) / option fair value
The 2008 Stock Option Award Agreement and Form of Notice is attached hereto
as Exhibit 10.1.
On February 19, 2008, the Committee also awarded Performance Share Units
(“PSUs”) to the Company’s five NEOs. PSUs are granted pursuant to the
terms of the Nordstrom, Inc. 2004 Equity Incentive Plan. PSUs entitle the
participant to settle in shares of Company Common Stock or to elect cash in lieu thereof upon the
achievement of such performance goals as may be established by the Committee at the time of grant
based on any one or combination of certain performance criteria enumerated in the Plan. The 2008
PSUs are earned over a three-year period from fiscal year 2008 through fiscal year 2010. The
percentage of PSUs granted that will actually be earned at the end of the three-year period is
based upon the Company’s total shareholder return compared to the total shareholder return of
companies in a pre-defined group of retail peers. Additionally, PSUs will only be earned if the
Company’s total shareholder return for the period is positive. The number of units to be awarded
to each individual is a function of base pay, a long-term incentive (LTI) percentage and the value
of a performance share unit (discounted to reflect the risk of forfeiture). The formula for
determining the number of units granted is:
No. of Units = (base pay * LTI %) / discounted stock price
The 2008 Performance Share Unit Award Agreement and Form of Notice is
attached hereto as Exhibit 10.2.
Also on February 19, 2008, the Committee certified the level of attainment of the pre-established
performance goals for the 2005 PSU grant relating to fiscal years 2005 through 2007 at 125%. The
PSUs for the NEOs were all paid in cash. The number of PSUs vested and the corresponding cash
payment to settle those PSUs for each of the NEOs was as follows:
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2005
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Value of
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Named Executive
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PSUs
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PSUs Paid
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Officer
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Vested
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in Cash
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Blake W. Nordstrom
President
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16,875
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$
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670,613
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Peter E. Nordstrom
EVP and President,
Merchandising
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10,245
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$
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407,136
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Erik B. Nordstrom
EVP and President,
Stores
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10,245
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$
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407,136
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Michael G. Koppel
EVP and Chief
Financial Officer
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9,282.5
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$
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368,887
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Daniel F. Little
EVP and Chief
Administrative Officer
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8,437.5
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335,306
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On February 20, 2008, the Committee established bonus goals, performance levels and award levels
that may be earned during the fiscal year ending January 31, 2009 (“Fiscal Year 2008”) under the
Company’s shareholder approved Executive Management Group Bonus Plan (the “Plan”). Under the Plan,
bonus awards are paid only when performance goals are achieved. The bonus target and maximum
payments are expressed as a percentage of base salary and the bonus goals vary by position
depending on each participant’s area of responsibility and influence.
Fiscal Year 2008 bonus arrangements for the Company’s NEOs were established by the Compensation
Committee as follows (Earnings before interest and taxes is referred to in the table below as
“EBIT” and Return on Invested Capital is referred to as “ROIC”)
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Name and
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Bonus Target
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Bonus Maximum
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Principal
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as a % of
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as a % of
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Bonus Measures
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Position
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Base Salary
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Base Salary
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and Weighting
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Blake W. Nordstrom
President
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100%
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250%
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EBIT with an ROIC threshold 100%
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Peter E. Nordstrom
EVP and President,
Merchandising
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100%
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250%
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EBIT with an ROIC threshold 100%
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Erik B. Nordstrom
EVP and President,
Stores
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100%
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250%
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EBIT with an ROIC threshold 100%
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Michael G. Koppel
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60%
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150%
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EBIT with an ROIC threshold 75%
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EVP and Chief
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Cost/asset productivity 12.5%
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Financial Officer
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Reporting, Forecasting and Communication 12.5%
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Daniel F. Little
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60%
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150%
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EBIT with an ROIC threshold 75%
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EVP and Chief
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Cost/asset productivity 12.5%
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Administrative Officer
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Multi-channel Strategy / Social
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Responsibility 12.5%
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ITEM 8.01 Other Events.
On
February 20, 2008, Nordstrom, Inc. issued a press release announcing that its Board of Directors has approved an increased quarterly dividend. A copy of the press release
is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On February 20, 2008, the Company’s Board of Directors amended the Corporate Governance Guidelines
to add a compensation recovery policy commonly referred to as a “clawback” as new Section 11 to the
Guidelines. The policy permits the Board to recover compensation previously paid to the Company’s
executive officers based on financial statements that are ultimately materially restated if the
executive officer engaged in grossly negligent or intentional misconduct that caused or
substantially caused the need for the material misstatement. The Company’s Corporate Governance
Guidelines can be found on the Company’s website at
www.nordstrom.com
, Investors Relations tab,
Corporate Governance, then Guidelines. The clawback policy has also been incorporated into the
2008 Stock Option Award Agreement attached hereto as Exhibit 10.1, the 2008 Performance Share Unit
Award Agreement attached hereto as Exhibit 10.2 and also applies to the Fiscal Year 2008 bonus
arrangements for the Company’s NEOs.
ITEM 9.01 Financial Statements and Exhibits
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(d)
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Exhibits
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10.1
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2008 Stock Option Award Agreement and Form of Notice
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10.2
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2008 Performance Share Unit Award Agreement and Form of Notice
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99.1
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Nordstrom, Inc. Press Release dated February 20, 2008
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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NORDSTROM, INC.
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By:
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/s/ Lisa G. Iglesias
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Lisa G. Iglesias
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Executive Vice President,
General Counsel and Corporate
Secretary
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Dated: February 21, 2008
EXHIBIT INDEX
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EXHIBIT
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NUMBER
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DESCRIPTION
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10.1
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2008 Stock Option Notice Award Agreement and Form of Notice
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10.2
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2008 Performance Share Unit Award Agreement and Form of Notice
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99.1
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Nordstrom, Inc. Press Release dated February 20, 2008
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Exhibit 10.1
A NONQUALIFIED STOCK OPTION GRANT
for the number of shares of Common Stock (hereinafter
the “Option”) as noted in the
2008 Notice of Grant of Stock Options
(the “Notice”), of Nordstrom,
Inc., a Washington Corporation (the “Company”), is hereby granted to the “Optionee” on the date set
forth in the Notice, subject to the terms and conditions of the Agreement. The Option is also
subject to the terms, definitions and provisions of the Nordstrom, Inc. 2004 Equity Incentive Plan
(the “Plan”) adopted by the Board of Directors of the Company and approved by the Company’s
shareholders, which is incorporated in this Agreement. To the extent inconsistent with this
Agreement, the terms of the Plan shall govern. The Compensation Committee of the Board has the
discretionary authority to construe and interpret the Plan and this Agreement. The Option is
subject to the following:
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1.
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OPTION PRICE
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The option price is one hundred percent (100%) of the fair market value of the Company’s Common
Stock, as determined by the closing price of the Company’s Common Stock on the New York Stock
Exchange on the date of grant. For this purpose, the “date of grant” is indicated in the
2008
Notice of Grant of Stock Options
and reflects either the date the Compensation Committee approves
the grant, or if this date falls within a closed trading period, the first trading day thereafter
that falls within an open trading window.
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2.
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VESTING AND EXERCISING OF OPTION
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Except as set forth in Section 5, the Option shall vest and be exercisable in accordance with the
provisions of the Plan as follows:
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(a)
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Schedule of Vesting and Rights to Exercise.
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Years of Continuous Service
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Percent of
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Following Grant of Option
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Option Vested
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After 1 year
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25
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%
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After 2 years
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50
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%
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After 3 years
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75
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%
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After 4 years
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100
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%
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(b)
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Method of Exercise.
The Option shall be exercisable (only to the
extent vested) by a written notice in a form prescribed by the
Company that shall:
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(i)
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state the election to exercise the Option, the number of shares, the total option
price, and the name, address and Social Security number of the Optionee;
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(ii)
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be signed by the person entitled to exercise the Option; and
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(iii)
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be in writing and delivered to Nordstrom Leadership Benefits (either directly
or through a broker).
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The Company has made arrangements with a broker for stock option management and exercises.
Procedures for management and exercises shall be disseminated to the Optionee with the
Agreement.
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(c)
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Payment upon Exercise.
Payment of the purchase price of any
shares with respect to which an Option is being exercised shall be by:
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(i)
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check or bank wire transfer,
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(ii)
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the surrender of shares of Common Stock previously held for at least six months by
Optionee, or where not acquired by Optionee by exercising a stock option, having a fair
market value at least equal to the exercise price, or
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(iii)
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giving an irrevocable direction for a broker approved by the Company to sell all
or part of the Option shares and to deliver to the Company from the sale proceeds in an
amount sufficient to pay the option exercise price and any amount required to be withheld
to meet the Company’s minimum statutory withholding requirements, including the
employee’s share of payroll taxes. (The balance of the sale proceeds, if any, will be
delivered to the Optionee.)
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The certificate(s) or shares of Common Stock as to which the Option shall be exercised shall
be registered in the name of the person(s) exercising the Option unless another person is
specified. An Option hereunder may not at any time be exercised for a fractional number of
shares.
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(d)
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Restrictions on Exercise.
These Options may not be exercised if the issuance of the
shares upon such exercise would constitute a violation of any applicable federal or state
securities or other law or valid regulation, or the Company’s Insider Trading Policy. As a
condition to the exercise of these Options, the Company may require the person exercising
the Options to make any representation and warranty to the Company as the Company’s counsel
advises and as may be required by the Company or by any applicable law or regulation.
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3.
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ACCEPTANCE OF OPTIONS
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Although the Company does not require the Optionee’s signature upon accepting the grant, the
Optionee remains subject to the terms and conditions of this Agreement.
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4.
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NONTRANSFERABILITY OF OPTIONS
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The Option may not be sold, pledged, assigned or transferred in any manner otherwise than, in the
event of the Optionee’s death, either indicated on a valid Nordstrom Beneficiary Designation
form, by will or the laws of descent and distribution and, except as set forth in Section 5
below, may be exercised during the lifetime of the Optionee only by the Optionee or by the
guardian or legal representative of the Optionee. The terms of the Option shall be binding upon
the executors, administrators, heirs and successors of the Optionee.
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5.
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SEPARATION OF EMPLOYMENT
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Except as set forth below, a vested Option may only be exercised while the Optionee is an
employee of the Company. If an Optionee’s employment is terminated, the Optionee or his or her
legal representative shall have the right to exercise the Option after such termination as
follows:
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1 | Nonqualified Stock Option Agreement Time-Vested Option
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(a)
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If the Optionee dies while employed by the Company, the persons
named on the Optionee’s Beneficiary Designation form may exercise
such rights. If no valid Beneficiary Designation form is on file with
the Company, then the person to whom the Optionee’s rights have
passed by will or the laws of descent and distribution may exercise
such rights. If the Option was granted at least six months prior to
the death of the Optionee while employed by the Company, it shall
continue to vest and may be exercised during the period ending four
years after the Optionee’s death, but in no event later than 10 years
after the date of grant. If the Option was granted less than six months
prior to death, such Option shall be forfeited as of the date of death.
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(b)
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If the Optionee is separated due to his or her disability, as defined in
Section 22(e)(3) of the Internal Revenue Code, the Option, if granted
at least six months prior to such separation, shall continue to vest
and may be exercised during the period ending four years after
separation, but in no event later than 10 years after the date of grant.
If the Option was granted less than six months prior to separation
due to the Optioner’s disability, such Option shall be forfeited as of
the date of separation.
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(c)
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If the Optionee is separated due to retirement between the ages of 53
and 57 with 10 continuous years of service to the Company, or upon
attaining age 58, the Option, if granted at least six months prior to
such retirement, shall continue to vest and may be exercised during
the period ending four years after separation, but in no event later
than 10 years after the date of grant. If the Option was granted less
than six months prior to retirement, such Option shall be forfeited as
of the date of separation.
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(d)
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If the Optionee’s employment is terminated due to his or her
embezzlement or theft of Company funds, defraudation of the
Company, violation of Company rules, regulations or policies, or any
intentional act that harms the Company, such Option, to the extent
not exercised as of the date of termination, shall be forfeited as of
that date.
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(e)
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If the Optionee is separated for any reason other than those set
forth in subparagraphs (a), (b), (c) and (d) above, the Optionee (or
Optionee’s beneficiary) may exercise his or her Option, to the extent
vested as of the date of his or her separation, within 100 days after
separation, but in no event later than 10 years after the date of grant.
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Notwithstanding anything above to the contrary, if during the term of this Option, the Optionee
directly or indirectly, either as an employee, employer, consultant, agent, principal, partner,
shareholder, corporate officer, director or in any other capacity, engages or assists any third
party in engaging in any business competitive with the Company; divulges any confidential or
proprietary information of the Company to a third party who is not authorized by the Company to
receive the confidential or proprietary information; or improperly uses any confidential or
proprietary information of the Company, then the post-separation vesting and exercise rights of
Options set forth above shall cease immediately, and all outstanding vested and unvested portions
of the Options shall be automatically forfeited.
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6.
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TERM OF OPTIONS
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The Option may not be exercised more than 10 years from the date of original grant of these
Options, and the vested portion of such Option may be exercised during such term only in
accordance with the Plan and the terms of this Option.
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7.
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ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
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The number and kind of shares of Company stock subject to this Option shall be appropriately
adjusted, pursuant to the Plan, along with a corresponding adjustment in the option price to
reflect any stock dividend, stock split, split-up, extraordinary dividend distribution, or any
combination or exchange of shares, however accomplished.
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8.
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ADDITIONAL OPTIONS
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The Nordstrom Compensation Committee of the Board of Directors may or may not grant the Optionee
additional stock options in the future. Nothing in this Option or any future grant should be
construed as suggesting that additional grants of options to the Optionee will be forthcoming.
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9.
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LEAVES OF ABSENCE
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For purposes of this Option, the Optionee’s service does not terminate due to a military leave, a
sick leave or another bona fide leave of absence if the leave was approved by the Company in
writing and if continued crediting of service is required by the terms of the leave or by
applicable law. But, service terminates when the approved leave ends unless the Optionee
immediately returns to active work.
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If the Optionee goes on a leave of absence approved by the Company, then the vesting schedule
specified in the
2008 Notice of Grant of Stock Options
may be adjusted in accordance with the
Company’s leave of absence policy or the terms of the leave.
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10.
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TAX WITHHOLDING
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In the event that the Company determines that it is required to withhold any tax as a result of
the exercise of this Option, the Optionee, as a condition to the exercise of their Options, shall
make arrangements satisfactory to the Company to enable it to satisfy all withholding
requirements.
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11.
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RIGHTS AS A SHAREHOLDER
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Neither the Optionee nor the Optionee’s beneficiary or representative shall have any rights as a
shareholder with respect to any Common Shares subject to this Option, unless and until (i) the
Optionee or the Optionee’s beneficiary or representative becomes entitled to receive such Common
Shares by filing a notice of exercise and paying the Option Price pursuant to this Option, and
(ii) the Optionee or Optionee’s beneficiary or representative has satisfied any other requirement
imposed by applicable law or the Plan.
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12.
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NO RETENTION RIGHTS
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Nothing in this Option or in the Plan shall give the Optionee the right to be retained by the
Company (or a subsidiary of the Company) as an employee or in any capacity. The Company and its
subsidiaries reserve the right to terminate the Optionee’s service at any time, with or without
cause.
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2 | Nonqualified Stock Option Agreement Time-Vested Option
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13.
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CLAWBACK POLICY
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This Option is subject to the Clawback Policy adopted by the Company’s Board of Directors, which
provides as follows:
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To the extent permitted by law, if the Board of Directors, with the recommendation of the
Compensation Committee, determines that any bonus, equity award, equity equivalent award or other
incentive compensation has been awarded or received by a Section 16 executive officer of the
Company, and that:
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(a)
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such compensation was based on the achievement of certain
financial results that were subsequently the subject of a material
restatement of the Company’s financial statements filed with the
Securities and Exchange Commission,
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(b)
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the Section 16 executive officer engaged in grossly negligent or
intentional misconduct that caused or substantially caused the need
for the material restatement, and
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(c)
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the amount or vesting of the bonus, equity award, equity equivalent
or other incentive compensation would have been less had the
financial statements been correct,
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then the Board shall recover from the Section 16 executive officer such compensation (in whole or
in part) as it deems appropriate under the circumstances.
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In the event the Clawback Policy is deemed unenforceable with respect to the Options, then the
award of Options subject to this Agreement shall be deemed unenforceable due to lack of adequate
consideration.
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14.
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ENTIRE AGREEMENT
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The
2008 Notice of Grant of Stock Options,
this Agreement and the Plan constitute the entire
contract between the parties hereto with regard to the subject matter hereof. They supersede any
other agreements, representations or understandings (whether oral or written and whether express
or implied) that relate to the subject matter hereof.
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15.
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CHOICE OF LAW
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This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Washington, as such laws are applied to contracts entered into and performed in such State.
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3 | Nonqualified Stock Option Agreement Time-Vested Option
Nordstrom, Inc.
2008 Notice of Grant of Stock Options
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Name
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Employee No: xxxxx
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Grant No: xxxxx
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Effective
February 28, 2008
, you were awarded nonqualified stock
options under the Nordstrom, Inc. 2004 Equity Incentive Plan (the “Plan”)
to purchase
x,xxx
shares of Nordstrom, Inc. stock at
$x.xx
per share.
Your grant is governed by your 2008 Nonqualified Stock Option Agreement
and the terms of the Plan. Your options under this grant will vest over
the four-year vesting period as outlined below:
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Shares
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Vest Date
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Expiration
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x,xxx
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2/28/2009
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2/27/2018
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x,xxx
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2/28/2010
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2/27/2018
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x,xxx
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2/28/2011
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2/27/2018
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x,xxx
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2/28/2012
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2/27/2018
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Please keep this Notice for your records.
If you have any questions about your grant, please contact Nordstrom Leadership
Benefits at (206) 303-5855, tie line 8-805-5855, or
leadership.benefits@nordstrom.com.
Exhibit 10.2
AN AWARD FOR PERFORMANCE SHARE UNITS,
representing a number of shares of Common Stock
(hereinafter the “Units”) as noted in the
2008 Notice of Award of Performance Share Units
(the
“Notice”), of Nordstrom, Inc., a Washington Corporation (the “Company”), is hereby granted to the
“Unit holder” on the date set forth in the Notice, subject to the terms of this Agreement. The
Units are also subject to the terms, definitions and provisions of the Nordstrom, Inc. 2004 Equity
Incentive Plan (the “Plan”) adopted by the Board of Directors of the Company and approved by the
Company’s shareholders, which is incorporated in this Agreement. Each vested Unit is equal in value
to one share of Nordstrom Common Stock. To the extent inconsistent with this Agreement, the terms
of the Plan shall govern. The Compensation Committee of the Board has the discretionary authority
to construe and interpret the Plan and this Agreement. The Units are subject to the following:
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1.
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VESTING AND SETTLEMENT OF UNITS
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At the end of three fiscal years following the date of the Award (“the Performance Cycle”), Units
shall vest and be settled in accordance with the provisions of the Plan as follows:
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(a)
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Vesting
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Except as set forth in Section 4, Units shall vest at the applicable percentage when the
Compensation Committee of the Board certifies that (1) the Company’s Total Shareholder Return
(TSR) is positive, and (2) its TSR performance relative to the TSR of other companies in the
peer group exceeds the following corresponding percentile rankings. For purposes of
determining the Company’s TSR relative to the TSR of other companies in the peer group, the
share price of our Common Stock, and the share prices of the companies in the peer group, are
based on the thirty (30) trading day closing price average immediately prior to the start of
the Performance Cycle and the thirty (30) trading day closing price average immediately prior
to the end of the Performance Cycle.
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PSU Vesting % Based on Nordstrom Percentile Rank
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If Nordstrom Percentile Is:
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PSU Vesting Is:
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>85%
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125%
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>75%
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100%
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>65%
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85%
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>50%
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75%
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<50%
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0%
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While the relative percentile rankings may change during the Performance Cycle based upon
mergers, acquisitions, dissolutions and other industry consolidation involving the companies
in the peer group, the application of the percentile vesting above is applied consistently.
Generally, Units will be earned if the Nordstrom TSR for the Performance Cycle is in the top
half of performers relative to the other companies in the peer group.
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(b)
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Settlement
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Units shall be settled upon vesting, unless the Unit holder has elected to defer the Units
into the Executive Deferred Compensation Plan (EDCP). Such deferral election must be in
writing, must be executed at least six months prior to the last day of the Performance Cycle
in which the Units vest, and must be irrevocable. Upon deferral,
the vested Units (and their subsequent settlement and payment) shall be governed by the terms
and conditions of the EDCP as that Plan may be amended from time to time by the Company.
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Unless earlier deferred into the EDCP, the Unit holder shall elect (during a period prior to
settlement as prescribed by and in accordance with procedures established by the Company) to
settle the Units upon vesting in either one share of Common Stock for each vested Unit, receive
an equivalent amount of cash for each vested Unit, or receive a combination of cash and stock.
In the event the Unitholder does not or is unable to make such a settlement election, the Units
shall be settled in stock. In the event the Units are settled in cash, the amount of cash will
be determined on the basis of the closing price of the Company’s Common Stock on the New York
Stock Exchange on the last day of the Performance Cycle, determined at the time of vesting.
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(c)
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Withholding Taxes
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No stock certificates or cash will be distributed to the Unit holder, or amounts deferred into
the EDCP, unless the Unit holder has made acceptable arrangements to pay any withholding taxes
that may be due as a result of the settlement of this Award. These arrangements may include
withholding shares of Common Stock that otherwise would be distributed when the Units are
settled. The fair market value of the shares required to cover withholding will be applied to
the withholding of taxes prior to the Unit holder receiving the remaining shares or the cash
value of those shares.
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(d)
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Restrictions on Resale
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The Unit holder agrees not to sell any shares of the Company’s stock at a time when applicable
laws or Company policies prohibit a sale. This restriction will apply as long as the Unit
holder is an employee, consultant or director of the Company or a subsidiary or affiliate of
the Company.
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2.
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ACCEPTANCE OF UNITS
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Although the Company does not require the Unit holder’s signature upon accepting the award, the
Unit holder remains subject to the terms and conditions of this Agreement.
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3.
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NONTRANSFERABILITY OF UNITS
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The Units may not be sold, pledged, assigned or transferred in any manner otherwise than in the
event of the Unit holder’s death, either indicated on a valid Nordstrom Beneficiary Designation
form, by will or the laws of descent and distribution and, except as set forth in Section
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1 | Performance Share Unit Award Agreement
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4 below, may be settled during the lifetime of the Unit holder only by the Unit holder or by the
guardian or legal representative of the Unit holder. The terms of the award shall be binding upon
the executors, administrators, heirs and successors of the Unit holder.
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4.
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SEPARATION OF EMPLOYMENT
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Except as set forth below, Units vest and may only be settled while the Unit holder is an
employee of the Company. If the Unit holder’s employment is terminated, the Units shall continue
to vest pursuant to the schedule set forth in subparagraph 1(a) above, and the Unit holder or his
or her legal representative shall have the right to settlement of the Units after such
termination only as follows:
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(a)
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If the Unit holder dies while employed by the Company, the persons
named on the Unit holder’s Beneficiary Designation form shall
be entitled to settlement of the Units. If no valid Beneficiary Designation form is on file
with the Company, then the persons to whom the Unit holder’s rights have passed by will or the
laws of descent and distribution shall be entitled to settlement of the Units. If the Units
were granted at least six months prior to the death of the Unit holder while employed by the
Company, the Unit holder’s beneficiary(ies) shall be entitled to a prorated payment with
respect to Units earned during the Performance Cycle based on the period of service during the
term of this Agreement. If the Units were granted less than six months prior to death, the
Units shall be forfeited as of the date of death with no rights to a prorated payment at
settlement.
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(b)
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If the Unit holder is separated due to his or her disability, as defined
in Section 22(e)(3) of the Internal Revenue Code, and the Units were
granted at least six months prior to such separation, the Unit holder
(or his or her beneficiary) shall be entitled to a prorated payment
with respect to Units earned during the Performance Cycle based on
the period of service during the term of this Agreement. If the Units
were granted less than six months prior to separation due to the
Unit holder’s disability, the Units shall be forfeited as of the date of
separation with no rights to a prorated payment at settlement.
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(c)
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If the Unit holder is separated due to retirement between the ages
of 53 and 57 with 10 years of continuous service to the Company,
or upon attaining age 58, and the Units were granted at least six
months prior to such separation, the Unit holder (or his or her
beneficiary) shall be entitled to a prorated payment with respect to
Units earned during the Performance Cycle based on the period of
service during the term of this Agreement. If the Units were granted
less than six months prior to retirement, the Units shall be forfeited
as of the date of retirement with no rights to a prorated payment
at settlement.
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(d)
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If the Unit holder is separated for any reason other than those set
forth in subparagraphs (a), (b) and (c) above, Units, to the extent not
vested and settled as of the date of his or her separation, shall be
forfeited as of that date.
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Notwithstanding anything above to the contrary, if during the term of this Award, the Unit holder
directly or indirectly, either as an employee, employer, consultant, agent, principal, partner,
shareholder, corporate officer, director or in any other capacity, engages or assists any third
party in engaging in any business competitive with the Company; divulges any confidential or
proprietary information of the Company to a third party who is not authorized by the Company to
receive
the confidential or proprietary information; or improperly uses any confidential or proprietary
information of the Company, then the post-separation proration of Units and settlement rights set
forth above shall cease immediately, and all outstanding vested but not settled and unvested
portions of the Award shall be automatically forfeited.
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5.
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TERM OF UNITS
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Units not certified by the Compensation Committee of the Board as having vested as of the end
of the Performance Cycle for which the Units were awarded, shall be forfeited.
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6.
|
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ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
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The number and kind of shares of Company stock subject to this Award shall be appropriately
adjusted pursuant to the Plan to reflect any stock dividend, stock split, split-up,
extraordinary dividend distribution, or any combination or exchange of shares, however
accomplished.
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7.
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ADDITIONAL UNITS
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The Compensation Committee may or may not grant the Unit holder additional Units in the future.
Nothing in this Award or any future Award should be construed as suggesting that additional Unit
awards to the Unit holder will be forthcoming.
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8.
|
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LEAVES OF ABSENCE
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For purposes of this Award, the Unit holder’s service does not terminate due to a military leave,
a sick leave or another bona fide leave of absence if the leave was approved by the Company in
writing and if continued crediting of service is required by the terms of the leave or by
applicable law. But, service terminates when the approved leave ends unless the Unit holder
immediately returns to active work.
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9.
|
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TAX WITHHOLDING
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|
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In the event that the Company determines that it is required to withhold any tax as a result of
the settlement of Units, the Unit holder shall make arrangements satisfactory to the Company to
enable it to satisfy all withholding requirements.
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10.
|
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RIGHTS AS A SHAREHOLDER
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Neither the Unit holder nor the Unit holder’s beneficiary or representative shall have any rights
as a shareholder with respect to any Common Shares subject to these Units, unless and until the
Units vest and are settled in shares of Common Stock of the Company.
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11.
|
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NO RETENTION RIGHTS
|
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Nothing in this Agreement or in the Plan shall give the Unit holder the right to be retained by
the Company (or a subsidiary of the Company) as an employee or in any capacity. The Company and
its subsidiaries reserve the right to terminate the Unit holder’s service at any time, with or
without cause.
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12.
|
|
CLAWBACK POLICY
|
|
|
|
|
|
The Units are subject to the Clawback Policy adopted by the Company’s Board of Directors, which
provides as follows:
|
|
|
|
|
|
To the extent permitted by law, if the Board of Directors, with the recommendation of the
Compensation Committee, determines that any bonus, equity award, equity equivalent award or other
incentive compensation has been awarded or received by a Section 16 executive officer of the
Company, and that:
|
2 | Performance Share Unit Award Agreement
|
|
(a)
|
|
such compensation was based on the achievement of certain financial
results that were subsequently the subject of a material restatement of
the Company’s financial statements filed with the Securities and Exchange
Commission,
|
|
|
|
|
(b)
|
|
the Section 16 executive officer engaged in grossly negligent or
intentional misconduct that caused or substantially caused the need for
the material restatement, and
|
|
|
|
|
(c)
|
|
the amount or vesting of the bonus, equity award, equity equivalent or
statements been correct,
|
|
|
|
then the Board shall recover from the Section 16 executive officer such
compensation (in whole or in part) as it deems appropriate under the
circumstances.
|
|
|
|
|
|
In the event the Clawback Policy is deemed unenforceable with respect to the
Units, then the award of Units subject to this Agreement shall be deemed
unenforceable due to lack of adequate consideration.
|
|
|
|
13.
|
|
ENTIRE AGREEMENT
|
|
|
|
|
|
The
2008 Notice of Award of Performance Share Units
, this Agreement and the Plan
constitute the entire contract between the parties hereto with regard to the
subject matter hereof. They supersede any other agreements, representations or
understandings (whether oral or written and whether express or implied) that
relate to the subject matter hereof.
|
|
|
|
14.
|
|
CHOICE OF LAW
|
|
|
|
|
|
This Agreement shall be governed by, and construed in accordance with, other
incentive compensation would have been less had the financial the laws of the
State of Washington, as such laws are applied to contracts entered into and
performed in such State.
|
3 | Performance Share Unit Award Agreement
Nordstrom, Inc.
2008 Notice of Award of Performance Share Units
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Employee No: xxxxx
|
|
|
|
Award No: xxxxx
|
|
|
On
February 19, 2008
, you were awarded
x,xxx
Performance Share Units (PSUs) under
the Nordstrom, Inc. 2004 Equity Incentive Plan (the “Plan”).
Your PSUs are governed by the terms of your 2008 PSU Award Agreement and the terms of
the Plan. Your PSUs are earned based on the Nordstrom Total Shareholder Return (TSR)
relative to the performance of our retail peer group over the three-year period ending
on January 29, 2011 (“Performance Cycle”).
At the end of the Performance Cycle, if Nordstrom TSR is a positive number, your PSUs
will be earned as shown below:
|
|
|
|
|
|
|
If Nordstrom Percentile Ranking
|
|
PSU Vesting
|
|
> 85%
|
|
|
125
|
%
|
|
> 75%
|
|
|
100
|
%
|
|
> 65%
|
|
|
85
|
%
|
|
> 50%
|
|
|
75
|
%
|
|
< 50%
|
|
|
0
|
%
|
The relative percentile rankings may change during the Performance Cycle based upon
mergers, acquisitions, dissolutions and other industry consolidation involving the
companies in the peer group. If that occurs, the application of the percentile vesting
above will still be applied consistently, relative to the remaining or resulting members
of the peer group at the end of the Performance Cycle.
TSR results are provided to you via e-mail on a quarterly basis during the fiscal year.
The periodic TSR communication shows you how Nordstrom stock is performing in relation
to our retail peer group for each PSU grant, and the progress that has been made toward
earning your PSUs. Final vesting of PSUs will be determined by the Compensation
Committee of the Board of Directors and based on the actual TSR measured at the end of
the Performance Cycle.
Please keep this Notice for your records.
If you have any questions about your grant, please contact Nordstrom Leadership Benefits
at (206) 303-5855, tie line 8-805-5855, or leadership.benefits@nordstrom.com.
