Exhibit 10.2
POLO RALPH LAUREN
CORPORATION
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is made effective as of the 14th day of
October, 2009 (the “Effective Date”), by and between
Polo Ralph Lauren Corporation, a Delaware corporation (the
“Corporation”), and Jackwyn Nemerov (the
“Executive”).
WHEREAS, the Executive has been
employed with the Corporation pursuant to an Employment Agreement
dated September 9, 2004 (as amended as of the date hereof the
“2004 Employment Agreement”); and
WHEREAS, the Corporation and
Executive wish to amend and restate such 2004 Employment Agreement
effective as of the date hereof;
NOW THEREFORE, in consideration of
the mutual covenants and premises contained herein, the parties
hereby agree as follows:
ARTICLE I
EMPLOYMENT
1.1 Employment Term . The
Corporation hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Corporation, on the terms and
conditions set forth herein, and in the Executive’s term
sheet dated October 14, 2009, a copy of which is attached
hereto as Exhibit 1 (the “Term Sheet”). The employment
of the Executive by the Corporation shall be effective as of the
date hereof and shall continue until the close of business on
March 31, 2013 (the “Term”), unless terminated
earlier in accordance with Article II hereof.
1.2 Position and Duties .
During the Term, the Executive shall faithfully, and in conformity
with the directions of the Board of Directors of the Corporation
and any Committee thereof (the “Board”) or the
management of the Corporation (“Management”), perform
the duties of her employment, and shall devote to the performance
of such duties her full time and attention. During the Term, the
Executive shall serve in the position of Executive Vice President.
During the Term, the Executive may engage in outside activities
provided those activities do not conflict with the duties and
responsibilities enumerated hereunder, and provided further that
the Executive receives written approval in advance from Management
for any outside business activity that may require significant
expenditure of the Executive’s time in which the Executive
plans to become involved, whether or not such activity is pursued
for profit. The Executive shall be excused from performing any
services hereunder during periods of temporary incapacity and
during vacations in accordance with the Corporation’s
disability and vacation policies.
1.3 Place of Performance .
The Executive shall be employed at the principal offices of the
Corporation located in New York, New York, except for required
travel on the Corporation’s business.
1
1.4 Compensation and Related
Matters .
(a) Base Compensation . In
consideration of her services during the Term, the Corporation
shall pay the Executive cash compensation at an annual rate of not
less than nine hundred thousand dollars ($900,000) (“Base
Compensation”), less applicable withholdings.
Executive’s Base Compensation shall be subject to such
increases as may be approved by the Board or Management. The Base
Compensation shall be payable as current salary, in installments
not less frequently than monthly, and at the same rate for any
fraction of a month unexpired at the end of the Term.
(b) Bonus . During the Term,
the Executive shall have the opportunity to earn an annual bonus in
accordance with any annual bonus program that the Corporation
maintains that would be applicable to the Executive and that is in
accordance with the Executive’s Term Sheet.
(c) Stock Awards . During the
Term, the Executive shall be eligible to participate in the Polo
Ralph Lauren Corporation 1997 Long-Term Stock Incentive Plan (the
“Incentive Plan”). All grants to the Executive of stock
options, restricted shares and restricted performance share units
(“RPSUs”), if any, are governed by the terms of the
Incentive Plan and are subject, in all cases, to approval by the
Compensation Committee of the Board of Directors (the
“Compensation Committee”) in its sole discretion. In
accordance with the Executive’s Term Sheet and with the terms
of the Incentive Plan, and subject to approval by the Compensation
Committee in its sole discretion, the Executive shall receive,
during the Term, annual grants of stock options and RPSUs that are
equivalent to the award amounts specified in the Executive’s
Term Sheet, subject to Executive’s continued employment at
the time of each such grant. Such stock options and RPSUs shall
vest in accordance with the terms of the Incentive Plan. The
Committee has the right, in its good faith discretion, to reduce
the value of any annual award provided to the Executive in
accordance with the Term Sheet.
(d) Car and Driver Allowance
. During the Term, the Corporation shall reimburse the Executive
for the use of a car and driver.
(e) Expenses . During the
Term, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive
in performing services hereunder, including all reasonable expenses
of travel and living while away from home, provided that
such expenses are incurred and accounted for in accordance with the
policies and procedures established by the Corporation.
(f) Vacations . During the
Term, the Executive shall be entitled to the number of vacation
days in each fiscal year, and to compensation in respect of earned
but unused vacation days, determined in accordance with the
Corporation’s vacation program. The Executive shall also be
entitled to all paid holidays given by the Corporation to its
employees.
(g) Other Benefits . The
Executive shall be entitled to participate in all of the
Corporation’s employee benefit plans and programs in effect
during the Term as would by their terms be applicable to the
Executive, including, without limitation, any pension and
retirement plan, supplemental pension and retirement plan, deferred
compensation plan,
2
incentive plan, stock option plan,
life insurance plan, medical insurance plan, dental care plan,
accidental death and disability plan, and vacation, sick leave or
personal leave program. The Corporation shall not make any changes
in such plans or programs that would adversely affect the
Executive’s benefits thereunder, unless such change occurs
pursuant to a program applicable to other similarly situated
employees of the Corporation and does not result in a
proportionately greater reduction in the rights or benefits of the
Executive as compared with other similarly situated employees of
the Corporation. Except as otherwise specifically provided herein,
nothing paid to the Executive under any plan or program presently
in effect or made available in the future shall be in lieu of the
Base Compensation or any bonus payable under Sections 1.4(a) and
1.4(b) hereof.
ARTICLE II
TERMINATION OF
EMPLOYMENT
2.1 Termination of Employment
. The Executive’s employment may terminate prior to the
expiration of the Term under the following
circumstances:
(a) Without Cause . The
Executive’s employment may terminate upon the Corporation
notifying the Executive that her services will no longer be
required, including at the end of the Term.
(b) Death . The
Executive’s employment shall terminate upon the
Executive’s death.
(c) Disability . If, as a
result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent and unable to
perform the duties hereunder on a full-time basis for an entire
period of six consecutive months, the Executive’s employment
may be terminated by the Corporation following such six-month
period.
(d) Cause . The Corporation
may terminate the Executive’s employment for Cause. For
purposes hereof, “Cause” shall mean: (1) the
willful and continued failure by the Executive to substantially
perform her duties hereunder after demand for substantial
performance is delivered to her by the Corporation that
specifically identifies the manner in which the Corporation
believes the Executive has not substantially performed her duties,
(2) Executive’s conviction of, or plea of nolo
contendere to, a crime (whether or not involving the Corporation)
constituting any felony or (3) the willful engaging by the
Executive in gross misconduct relating to the Executive’s
employment that is materially injurious to the Corporation,
monetarily or otherwise (including, but not limited to, conduct
that constitutes competitive activity, in violation of Article III)
or which subjects, or if generally known would subject, the
Corporation to public ridicule. For purposes of this paragraph, no
act, or failure to act, on the Executive’s part shall be
considered “willful” unless done, or omitted to be
done, by her not in good faith and without reasonable belief that
her action or omission was in the best interest of the Corporation.
Notwithstanding the foregoing, the Executive’s employment may
be terminated for Cause only by act of the Board of Directors of
the Corporation and, in any event, the Executive’s employment
shall not be deemed to have been terminated for Cause without
(x) reasonable written notice to the Executive setting forth
the reasons for the Corporation’s intention to terminate for
Cause, (y) the opportunity to cure (if curable) within 30 days
of such written notice of the event(s) giving rise to such notice
and (z) an opportunity for the Executive, together with her
counsel, to be heard by the Board of Directors of the
Corporation.
3
(e) Voluntary Termination .
The Executive may voluntarily terminate the Executive’s
employment with the Corporation at any time, with or without Good
Reason. For purposes of this Agreement, “Good Reason”
shall mean a termination of employment by the Executive within one
(1) year following the occurrence of (A) a material
diminution in or adverse alteration to Executive’s title,
base salary, benefits, position, status or duties, (B) the
relocation of the Executive’s principal office outside the
area which comprises a fifty (50) mile radius from New York
City, (C) a failure of the Corporation to comply with any
material provision of this Agreement, or (D) the Corporation
requires Executive to report to anyone other than Ralph Lauren
and/or Roger Farah; provided that the events described in clauses
(A), (B), (C) and (D) above shall not constitute Good
Reason (1) until the Executive provides written notice to the
Corporation of the existence of such diminution, change, reduction,
relocation or failure within ninety (90) days of its
occurrence and (2) unless such diminution, change, reduction
or failure (as applicable) has not been cured within thirty
(30) days after written notice of such noncompliance has been
given by the Executive to the Corporation.
2.2 Date of Termination . The
date of termination shall be:
(a) if the Executive’s
employment is terminated by the Executive’s death, the date
of the Executive’s death;
(b) if the Executive’s
employment is terminated by reason of Executive’s disability
pursuant to Section 2.1(c) or by the Corporation pursuant to
Sections 2.1(a) or 2.1(d), the date specified by the
Corporation; and
(c) if the Executive’s
employment is terminated by the Executive, the date on which the
Executive notifies the Corporation of her termination.
2.3 Effect of Termination of
Employment .
(a) If the Executive’s
employment is terminated by the Corporation Without Cause pursuant
to Section 2.1(a), or if the Executive resigns for Good Reason
pursuant to Section 2.1(e), the Executive shall only be
entitled to the following:
(i) Severance . Subject to
Section 2.3(a)(v) and Section 4.1(a) hereof, the
Corporation shall: (a) beginning with the first payroll period
following the thirtieth (30 th ) day following the date of termination of
Executive’s employment, continue to pay the Executive, in
accordance with the Corporation’s normal payroll practice,
Executive’s Base Compensation, as in effect immediately prior
to such termination of employment, for the longer of the balance of
the Term or the one-year period commencing on the date of such
termination (whichever period is applicable shall be referred to
herein as the “Severance Period”) provided that the
initial payment shall include Base Compensation amounts for all
payroll periods from the date of termination through the date of
such initial payment; and (b) pay to the Executive, on the
last business day of the Severance Period, an amount equal to the
bonus paid to the Executive for the most recently completed fiscal
year prior to the fiscal year in which Executive’s employment
is terminated. Notwithstanding the foregoing, in order to receive
any severance
4
benefits under this
Section 2.3(a)(i), the Executive must sign and not timely
revoke a release and waiver of claims against the Corporation, its
successors, affiliates, and assigns, in a form acceptable to the
Corporation on or prior to the thirtieth (30
th ) day following the date of termination of
Executive’s employment.
(ii) Stock Awards . The
Executive shall immediately vest in any unvested stock options as
of the date of termination of the Executive’s
employment. With respect to vested stock options, if any, the
Executive shall have one year (except as provided for in
Section 4.1(a)) from the date of termination of
Executive’s employment to exercise any vested options, but in
no event later than the expiration date of such vested options.
With respect to any unvested pro-rata RPSUs and unvested cliff
RPSUs awarded through the date on which the Executive’s
employment terminates, except as provided for in
Section 4.1(a): (1) any unvested pro-rata RPSUs will
fully vest upon the Corporation’s attainment of the
applicable performance goals and will be paid in their entirety as
per the terms of the Incentive Plan as soon as practicable (but in
no event later than 30 days) after each applicable vesting date
without regard to Executive’s continued employment; and
(2) any unvested cliff RPSUs will remain outstanding and the
Executive will vest in such cliff RPSUs at the end of the
applicable performance period based on the Corporation’s
actual degree of achievement of the applicable performance goals,
as described in the Term Sheet, and any such cliff RPSUs will be
paid in their entirety as per the terms of the Incentive Plan as
soon as practicable (but in no event later than 30 days) after each
applicable vesting date, without regard to Executive’s
continued employment.
(iii) Welfare Plan Coverages
. The Executive shall continue to participate during the Severance
Period in any group medical, dental or life insurance plan she
participated in prior to the date of her termination, under
substantially similar terms and conditions as an active employee (
i.e. , the Corporation will continue to pay the
Corporation’s portion of the costs of such participation);
provided that participation in such group medical, dental or
life insurance plan shall correspondingly cease at such time as the
Executive becomes eligible for a future employer’s medical,
dental and/or life insurance coverage (or would become eligible if
the Executive did not waive coverage).
(iv) Retirement Plans .
Without limiting the generality of the foregoing, it is
specifically provided that the Executive shall not accrue
additional benefits under any pension plan of the Corporation
(whether or not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended) during the Severance
Period.
(v) Section 409A .
Notwithstanding any provision in this Agreement to the contrary, no
amounts shall be payable pursuant to Section 2.3(a) or
Section 4.1(a) unless the Executive’s termination of
employment constitutes a “separation from service”
within the meaning of Section 1.409A-1(h) of the Department of
Treasury Regulations. If the Executive is determined to be a
“specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as
amended, and the rules and regulations issued thereunder (the
“Code”), then any amount that becomes payable under
Sections 2.3(a)(i) or 4.1(a) hereof (the “Severance
Payment”) on account of the Executive’s
“separation from service” shall not be paid to the
Executive until the first business day following the expiration of
the six (6) month period immediately following the
Executive’s “separation from service” (or if
earlier, the date of the Executive’s death) if and to the
extent that the Severance Payment constitutes deferred
5
compensation (or may be nonqualified
deferred compensation, as mutually agreed by the Corporation and
the Executive, such agreement not to be unreasonably withheld or
delayed by the Executive) under Section 409A of the Code and
such deferral is required to comply with the requirements of
Section 409A of the Code. For the avoidance of doubt, no
portion of the Severance Payment shall be delayed for six
(6) months after the Executive’s “separation from
service” if such portion (x) constitutes a “short
term deferral” within the meaning of
Section 1.409A-1(a)(4) of the Department of Treasury
Regulations, or (y) (A) it is being paid due to the
Corporation’s termination of the Executive’s employment
without Cause or the Executive’s termination of employment
for Good Reason; (B) it does not exceed two times the lesser
of (1) the Executive’s annualized compensation from the
Corporation for the calendar year prior to the calendar year in
which the termination of the Executive’s employment occurs,
or (2) the maximum amount that may be taken into account under
a qualified plan pursuant to Section 401(a)(17) of the Code
for the year in which the Executive’s employment terminates;
and (C) the payment is required under this Agreement to be
paid no later than the last day of the second calendar year
following the calendar year in which the Executive incurs a
“separation from service”. For purposes of
Section 409A of the Code, the Executive’s right to
receive installment payments pursuant to Section 2.3(a) shall
be treated as a right to receive a series of separate and distinct
payments. To the extent that any reimbursement of any expense under
Section 1.4(e) or in-kind benefits provided under this
Agreement are deemed to constitute taxable compensation to the
Executive, such amounts will be reimbursed or provided no later
than December 31 of the year following the year in which the
expense was incurred. The amount of any such expenses reimbursed or
in-kind benefits provided in one year shall not affect the expenses
or in-kind benefits eligible for reimbursement or payment in any
subsequent year, and the Executive’s right to such
reimbursement or payment of any such expenses will not be subject
to liquidation or exchange for any other benefit. The determination
of whether the Executive is a “specified employee” for
purposes of Section 409A(a)(2)(B)(i) of the Code as of the
time of the Executive’s separation from service shall made by
the Corporation in accordance with the terms of Section 409A
of the Code and applicable guidance thereunder (including without
limitation Treasury Regulation Section 1.409A-1(i) and any
successor provision thereto).
(b) If the Executive’s
employment is terminated by reason of the Executive’s death
or disability, pursuant to Sections 2.1(b) or 2.1(c), the Executive
(or the Executive’s designee or estate) shall only be
entitled to whatever welfare plans benefits are available to the
Executive pursuant to the welfare plans the Executive participated
in prior to such termination, and whatever stock awards may have
been provided to the Executive by the Corporation the terms of
which shall be governed by the provisions of the
Corporation’s Incentive Plan and the respective award
agreements, if any, under which such stock awards were
provided.
(c) If the Executive’s
employment is terminated by the Corporation for Cause or by the
Executive without Good Reason (as defined in Section 2.1(e)),
the Executive shall receive only that portion of the
Executive’s then current Base Compensation payable through
the Executive’s termination date. The Executive’s
rights with respect to any stock awards provided to the Executive
by the Corporation shall be governed by the provisions of the
Corporation’s Incentive Plan and the respective award
agreements, if any, under which such stock awards were
provided.
6
(d) If the Corporation elects not to
renew Executive’s employment at the end of the Term, the
Corporation shall provide Executive with written notice if its
decision at least six (6) months prior to the end of the Term,
and such a termination will be considered a termination Without
Cause as defined in Section 2.1(a).
ARTICLE III
COVENANTS OF THE
EXECUTIVE
3.1 Non-Compete .
(a) The Corporation and the
Executive acknowledge that: (i) the Corporation has a special
interest in and derives significant benefit from the unique skills
and experience of the Executive; (ii) the Executive will use
and have access to proprietary and valuable Confidential
Information (as defined in Section 3.2 hereof) during the
course of the Executive’s employment; and (iii) the
agreements and covenants contained herein are essential to protect
the business and goodwill of the Corporation or any of its
subsidiaries, affiliates or licensees. Accordingly, except as
hereinafter noted, the Executive covenants and agrees that during
the Term and for the period of one (1) year following the
termination of Executive’s employment for any reason, the
Executive shall not provide any labor, work, services or assistance
(whether as an officer, director, employee, partner, agent, owner,
independent contractor, consultant, stockholder or otherwise) to a
“Competing Business.” For purposes hereof,
“Competing Business” shall mean any business engaged in
the designing, marketing or distribution of premium lifestyle
products, including but not limited to apparel, home, accessories
and fragrance products, which competes in any material respects
with the Corporation or any of its subsidiaries, affiliates or
licensees, and shall include, without limitation, those brands and
companies that the Corporation and the Executive have jointly
designated in writing on the date hereof, which is incorporated
herein by reference and which is attached as Schedule A, as being
in competition with the Corporation or any of its subsidiaries,
affiliates or licensees as of the date hereof. Thus, Executive
specifically acknowledges that Executive understands that she may
not become employed by any Competing Business in any capacity
during the Term, provided that the Executive may own, solely as an
investment, securities of any entity which are traded on a national
securities exchange if the Executive is not a controlling person
of, or a member of a group that controls such entity and does not,
directly or indirectly, own 2% or more of any class of securities
of such entity.
(b) The non-compete provisions of
this Section shall no longer be applicable to Executive if she has
been notified pursuant to Section 2.1(a) hereof that her
services will no longer be required or if the Executive has
terminated her employment for Good Reason pursuant to
Section 2.1(e).
(c) It is acknowledged by the
Executive that the Corporation has determined to relieve the
Executive from any obligation of non-competition upon the
expiration of one (1) year following the termination of
Executive’s employment for any reason, and/or if the
Corporation terminates the Executive’s employment under
Section 2.1(a) or if the Executive has terminated her
employment for Good Reason pursuant to Section 2.1(e). In
consideration of that, and in consideration of all of the
compensation provisions in this Agreement (including the potential
for the award of stock options, restricted shares and/or RPSUs and
severance payments
7
that may be provided to the
Executive), Executive agrees to the provisions of
Section 3.1(a) and also agrees that the non-competition
obligations imposed herein are fair and reasonable under all the
circumstances.
3.2 Confidential Information
.
(a) The Corporation owns and has
developed and compiled, and will own, develop and compile, certain
proprietary techniques and confidential information as described
below which have great v
