Exhibit 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”) is executed as of this 1
st day of September, 2009, by and between Kohl’s
Department Stores, Inc. and Kohl’s Corporation (collectively
referred to in this Agreement as “Company”) and John M.
Worthington (“Executive”).
RECITALS
The Company and Executive entered into an
employment agreement dated as of September 10, 2007, as amended on
November 17, 2008 (the “Original Agreement”),
whereby Company and Executive agreed to certain aspects of their
relationship during and after the period in which Executive is
employed by the Company;
The parties believe it is in their best
interests to amend and restate the Original Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the
premises and the mutual agreements and covenants contained
herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the
Company and Executive (“Parties”), the Parties agree as
follows:
ARTICLE I
EMPLOYMENT
1.1
Term of Employment
. The Company employs
Executive, and Executive accepts employment by the Company, for the
three (3) year period commencing on September 1, 2009 (the
“Initial Term”), subject to earlier termination as
hereinafter set forth in Article III, below. This
Agreement shall be automatically extended for one (1) day each day
during the term (the Initial Term as so extended, the
“Renewal Term”) unless either party shall give the
other a written notice of intention not to renew, in which
case this Agreement shall terminate as of the end of the Initial
Term or said Renewal Term, as applicable or unless this Agreement
is earlier terminated as set forth in Article III, below.
If this Agreement is extended, the terms of this
Agreement during such Renewal Term shall be the same as the terms
in effect immediately prior to such extension (including the early
termination provisions set forth in Article III, below), subject to
any such changes or modifications as mutually may be agreed
between the Parties as evidenced in a written instrument
signed by both the Company and Executive. If
Executive’s employment is terminated for any reason specified
in Section 3.1, below, after either party has provided a notice of
non-renewal under this Section 1.1, such termination will be
treated as a termination under the applicable provision of Section
3.1 and not as a termination due to non-renewal under this Section
1.1.
1.2
Position and Duties
. Executive shall be employed in
the position of Senior Executive Vice President,
and shall be subject to the authority of, and shall
report to, the Company’s Chairman, President and Chief
Executive Officer and/or Board of Directors (the
“Board”). Executive’s duties and
responsibilities shall include all those customarily attendant to
the position of Senior Executive Vice President and such other
duties and responsibilities as may be assigned from time to time by
Employee’s supervisor and/or the Company’s Board.
Executive shall devote Executive’s entire
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business time, attention and energies
exclusively to the business interests of the Company while
employed by the Company except as otherwise specifically approved
in writing by Employee’s supervisor and/or the
Company’s Board. During the Initial Term and the
Renewal Term, Executive may not participate on the board of
directors or any similar governing body of any for-profit entity
other than the Company, unless first approved in writing by the
Company’s Board.
ARTICLE II
COMPENSATION AND OTHER
BENEFITS
2.1
Base Salary . During the Initial Term and the Renewal
Term, the Company shall pay Executive an annual base
salary as described in Exhibit A (a copy of which is attached
hereto and incorporated herein), payable in accordance with
the normal payroll practices and schedule of the Company
(“Base Salary”). The Base Salary shall be subject
to adjustment from time to time as determined by the
Board.
2.2
Benefit Plans and Fringe
Benefits . During the
Initial Term and the Renewal Term, Executive will be eligible to
participate in the plans, programs and policies including, without
limitation, group medical insurance, fringe benefits, paid
vacation, expense reimbursement and incentive pay plans, which the
Company makes available to senior executives of the Company in
accordance with the eligibility requirements, terms and conditions
of such plans, programs and policies in effect from time to time.
Executive acknowledges and agrees that the Company may amend,
modify or terminate any of such plans, programs and policies at any
time at its discretion.
2.3
Equity Plans or Programs
. During the Initial Term and the
Renewal Term, Executive may be eligible to participate in stock
option, phantom stock, restricted stock or other similar equity
incentive plans or programs which the Company may establish from
time to time. The terms of any such plans or programs, and
Executive’s eligibility to participate in them, shall be
established by the Board at its sole discretion. Executive
acknowledges and agrees that the Company may amend, modify or
terminate any of such plans or programs at any time at its
discretion.
In no event will the reimbursements or
in-kind benefits to be provided by the Company pursuant to this
Agreement in one taxable year affect the amount of reimbursements
or in-kind benefits to be provided in any other taxable year, nor
will Executive’s right to reimbursement or in-kind benefits
be subject to liquidation or exchange for another benefit.
Further, any reimbursements to be provided by the Company
pursuant to this Agreement shall be paid to the Executive no later
than the calendar year following the calendar year in which the
Executive incurs the expenses.
ARTICLE III
TERMINATION
3.1
Right to Terminate; Automatic
Termination .
(a)
Termination Without Cause
. Subject to Section 3.2,
below, the Company may terminate Executive’s
employment and all of the Company’s obligations under this
Agreement at any time and for any reason.
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(b)
Termination For Cause
. Subject to Section 3.2,
below, the Company may terminate Executive’s employment and
all of the Company’s obligations under this Agreement at any
time for Cause (defined below) by giving notice
to Executive stating the basis for such termination,
effective immediately upon giving such
notice or at such other time thereafter as the
Company may designate. “Cause” shall mean any of
the following: (i) Executive’s continuous failure to
substantially perform Executive’s duties after a written
demand for substantial performance is delivered to Executive that
specifically identifies the manner in which the Company believes
that Executive has not substantially performed his/her duties, and
Executive has failed to demonstrate substantial efforts to resume
substantial performance of Executive’s duties on a continuous
basis within sixty (60) calendar days after receiving such demand;
(ii) Executive’s violation of a material provision of
“Kohl’s Ethical Standards and Responsibilities”
which is materially injurious to the Company, monetarily or
otherwise; (iii) any dishonest or fraudulent conduct which results,
or is intended to result, in gain to Executive or Executive’s
personal enrichment at the expense of the Company; (iv) any
material breach of this Agreement by Executive after a written
notice of such breach is delivered to Executive that specifically
identifies the manner in which the Company believes that Executive
has breached this Agreement, and Executive has failed to cure such
breach within thirty (30) calendar days after receiving such
demand; provided, however, that no cure period shall be required
for breaches of Articles IV, V, VI or VII, below, of this
Agreement; or (v) conviction of Executive, after all applicable
rights of appeal have been exhausted or waived, of any crime.
Notwithstanding the conviction of a crime as described in the
preceding subsection (v), the Board, in its sole discretion, may
waive such termination in the event it determines that such crime
does not discredit the Company or is not detrimental to the
Company's reputation or goodwill, and any decision by the Board
with respect to such waiver shall be final.
(c)
Termination for Good Reason
. Subject to Section 3.2,
below, Executive may terminate Executive’s employment and all
of the Company’s obligations under this Agreement at any time
for Good Reason (defined below) by giving written notice
to the Company stating the basis for such termination,
effective immediately upon giving such notice. “Good
Reason” shall mean any of the following: (i) a material
reduction in Executive’s status, title, position,
responsibilities or Base Salary; (ii) any material breach by the
Company of this Agreement; (iii) any purported termination of the
Executive’s employment for Cause which does not comply with
the terms of this Agreement; or (iv) a mandatory relocation of
Executive’s employment with the Company from the Milwaukee,
Wisconsin area, except for travel reasonably required in the
performance of Executive’s duties and responsibilities;
provided, however, that no termination shall be for Good Reason
until Executive has provided the Company with written notice of the
conduct alleged to have caused Good Reason and at least thirty (30)
calendar days have elapsed after the Company’s receipt of
such written notice from Executive, during which the Company has
failed to demonstrate substantial efforts to cure any such alleged
conduct.
(d)
Termination by Death or
Disability . Subject to Section 3.2, below,
Executive’s employment and the Company’s obligations
under this Agreement shall terminate automatically, effective
immediately and without any notice being necessary, upon
Executive’s death or a determination of Disability of
Executive. For purposes of this Agreement,
“Disability” means the Executive: (i) is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or (ii) has
been, by reason of any medically determinable physical or mental
impairment which can be expected to result
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in death or can be expected to last for a
continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than three (3)
months under an accident and health plan covering employees of the
Company. A determination of Disability shall be
made by the Company, which may, at its sole discretion,
consult with a physician or physicians satisfactory to the Company,
and Executive shall cooperate with any efforts to make such
determination. Any such determination shall be
conclusive and binding on the parties. Any determination of
Disability under this Section 3.1(d) is not intended to alter
any benefits any party may be entitled to receive under any
disability insurance policy carried by either the Company or
Executive with respect to Executive, which benefits shall be
governed solely by the terms of any such insurance
policy.
(e)
Termination by Resignation
. Subject to Section 3.2,
below, Executive’s employment and the Company’s
obligations under this Agreement shall terminate automatically,
effective immediately upon Executive’s provision of written
notice to the Company of Executive’s resignation from
employment with the Company or at such other time as may be
mutually agreed between the Parties following the provision of such
notice.
(f)
Separation of Service
. A termination of employment under
this Agreement shall only occur to the extent Executive has a
“separation from service” from Company in accordance
with Section 409A of the Code. Under Section 409A, a
“separation from service” occurs when Executive and the
Company reasonably anticipate that no further services will be
performed by Executive after a certain date or that the level of
bona fide services Executive would perform after such date (whether
as an employee or as a consultant) would permanently decrease to no
more than 20 percent of the average level of bona fide services
performed by Executive over the immediately preceding 36-month
period.
3.2
Rights Upon Termination
.
(a)
Termination By Company for Cause, By
Executive Other Than For Good Reason or By Executive’s
Non-Renewal . If
Executive’s employment is terminated by the Company pursuant
to Section 3.1(b), above, by Executive pursuant to Section 3.1(e),
above, or due to non-renewal by Executive pursuant to Section 1.1,
above, Executive shall have no further rights against the Company
hereunder, except for the right to receive (i) any unpaid Base
Salary with respect to the period prior to the effective
date of termination together with payment of any vacation that
Executive has accrued but not used through the date of termination;
(ii) reimbursement of expenses to which Executive
is entitled under Section 2.2, above; and (iii)
Executive’s unpaid bonus, if any, attributable to any
complete fiscal year of the Company ended before the date of
termination (in the aggregate, the “Accrued Benefits”).
Any such bonus payment shall be made at the same time as any
such bonus is paid to other similarly situated executives of the
Company. Furthermore, under this Section 3.2(a), vesting of
any Company stock options granted to Executive ceases on the
effective date of termination, and any unvested stock options lapse
and are forfeited immediately upon the effective date of
termination.
(b)
Termination By Company’s
Non-Renewal or Due to Executive’s Death
. If Executive’s employment
is terminated due to non-renewal by the Company pursuant to Section
1.1, above, or due to Executive’s death pursuant to Section
3.1(d), above, Executive shall have no further rights against the
Company hereunder, except for the right to receive (i) Accrued
Benefits; and (ii) a
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share of any bonus attributable to the
fiscal year of the Company during which the effective date of
termination occurs determined as follows: the product of (x)
the average bonuses paid or payable, including any amounts that
were deferred in respect of the three (3) fiscal years immediately
preceding the fiscal year in which the effective date of
termination occurs (the “Recent Average Bonus”) and (y)
a fraction, the numerator of which is the number of days completed
in the fiscal year in which the effective date of termination
occurs through the effective date of termination and the
denominator of which is three hundred sixty-five (365) (the
“Pro Rata Bonus”). Such Pro Rata Bonus shall be
paid at the same time as any such bonuses are paid to other
similarly situated executives of the Company. Executive shall
also be entitled to a severance payment equal to fifty percent
(50%) of Executive’s Base Salary payable for one (1) year
following the effective date of termination pursuant to normal
payroll practices. Furthermore, under this Section 3.2(b),
vesting of any Company stock options granted to Executive shall
cease on the effective date of termination, and any unvested stock
options shall lapse and be forfeited as of such date; provided,
however, that if Executive’s termination is due to
Executive’s death, all Company stock options granted to
Executive shall immediately vest upon the date of Executive’s
death.
(c)
Termination Due to
Disability . If
Executive’s employment is terminated due to Executive’s
Disability pursuant to Section 3.1(d), above, Executive shall have
no further rights against the Company hereunder, except for the
right to receive (i) Accrued Benefits; (ii) the Pro Rata
Bonus; plus; (iii) a Severance Benefit. The Pro Rata Bonus
payment shall be made at the same time as any such bonuses are paid
to other similarly situated executives of the Company. For
purposes of this Section 3.2(c), “Severance Benefit”
means six (6) months of Base Salary, payable in equal installments
during the six (6) month period following Executive’s
exhaustion of any short-term disability benefits provided by the
Company, in accordance with the normal payroll practices and
schedule of the Company. The amount of such Severance Benefit
shall be reduced by any compensation (including any payments from
the Company or any benefit plans, policies or programs sponsored by
the Company) earned or received by Executive during the six (6)
month period following the date of termination and the six (6)
month period during which Executive receives the Severance Benefit,
and Executive agrees to reimburse the Company for the amount of any
such reduction. Executive acknowledges and agrees that, upon
the cessation, if any, of such Disability during the period of the
payment of the Severance Benefit, he/she has an obligation to use
his/her reasonable efforts to secure other employment consistent
with Executive’s status and experience and that his/her
failure to do so, as determined at the sole discretion of the
Board, is a breach of this Agreement. Furthermore, under this
Section 3.2(c), vesting of any Company stock options granted to
Executive shall cease on the effective date of termination, and any
unvested stock options shall lapse and be forfeited as of such
date.
(d)
Termination By Company Without Cause
or By Executive for Good Reason .
i.
No Change of Control
. If Executive’s employment
is terminated by the Company pursuant to Section 3.1(a), above, or
by Executive pursuant to Section 3.1(c), above, and such
termination does not occur three (3) months prior to or within one
(1) year after the occurrence of a Change of Control (defined
below), Executive shall have no further rights against the Company
hereunder, except for the right to receive (A) Accrued
Benefits; (B) a Severance Payment (defined below); (C) the Pro
Rata Bonus; provided, however, that the Pro Rata Bonus payment
shall be made at the same time as any such bonuses are paid to
other similarly situated executives of the Company; (D)
outplacement services from an
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outplacement service company of the
Company’s choosing at a cost not to exceed Twenty Thousand
Dollars ($20,000.00), payable directly to such outplacement service
company (“Outplacement Services”); and (E) Health
Insurance Continuation (defined below) for a period of two (2)
years following the effective date of Executive’s
termination.
For purposes of this Section 3.2(d)(i),
“Severance Payment” means an amount equal to the sum
of:
(x) Executive’s Base Salary for the
remainder of the then current Initial Term or Renewal Term of this
Agreement, but not to exceed two and nine-tenths (2.9) years;
plus
(y) an amount equal to the average
(calculated at the sole discretion of the Company) of the three (3)
most recent annual incentive compensation plan payments, if
any, paid to Executive prior to the effective date of termination.
The Severance Payment shall be paid to
Executive in a lump sum within thirty (30) days after the effective
date of termination, subject to Section 3.2(e) below.
Furthermore, under this Section
3.2(d)(i), vesting of any Company stock options granted to
Executive prior to the date of termination shall continue as
scheduled until the term of this Agreement expires,
