Exhibit
10.31
EXECUTIVE COMPENSATION
AGREEMENT
THIS EXECUTIVE COMPENSATION
AGREEMENT (“Agreement”) is executed as of this
day of
, 200 , by and between Kohl’s
Department Stores, Inc. (“Company”) and
(“Employee”).
RECITALS
Employee is employed as
and is a
valuable employee of the Company. The Company and the Employee have
agreed to make provision for certain aspects of their relationship
during and after the period in which Employee is employed by the
Company.
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 Employee (“Parties”), the Parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 “ Board ”
shall mean the Board of Directors of the Company.
1.2 “ Cause ”
shall mean any of the following:
(i) Employee’s willful failure
to substantially perform Employee’s duties after a written
demand for performance is delivered to Employee that specifically
identifies the manner in which the Company believes that Employee
has not substantially performed his/her duties, and Employee has
failed to demonstrate substantial efforts to resume performance of
Employee’s duties on a continuous basis within thirty
(30) calendar days after receiving such demand; provided,
however, that failure to meet sales or financial performance
objectives, by itself, will not constitute
“Cause”;
(ii) Employee’s willful
violation of a material provision of “Kohl’s Ethical
Standards and Responsibilities” which is materially injurious
to the Company, monetarily or otherwise. The term
“willful” as used herein means any act or omission
committed in bad faith or without a reasonable belief that the act
or omission was in the best interest of the Company;
(iii) Any dishonest or fraudulent
conduct by Employee which results, or is intended to result, in
gain to Employee or Employee’s personal enrichment at the
expense of the Company;
(iv) Any material breach of Articles
IV, V, VI or VII, below of this Agreement by Employee;
or
(v) Conviction of Employee, after
all applicable rights of appeal have been exhausted or waived, of
any crime that materially discredits the Company or is materially
detrimental to the Company’s reputation or
goodwill.
1.3 “ Change of Control
” means the occurrence of any of the following:
(i) the acquisition (other than from
the Company) by any person, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (“Exchange Act”)), other than the
Company, a subsidiary of the Company or any employee benefit plan
or plans sponsored by the Company or any subsidiary of the Company,
directly or indirectly, of beneficial ownership (within the meaning
of Exchange Act Rule 13d-3) of thirty-three percent (33%) or
more of the then outstanding shares of common stock of the Company
or voting securities representing thirty-three percent
(33%) or more of the combined voting power of the
Company’s then outstanding voting securities ordinarily
entitled to vote in the election of directors unless the Incumbent
Board (defined below), before such acquisition or within thirty
(30) days thereafter, deems such acquisition not to be a
Change of Control;
(ii) individuals who, as of the date
of this Agreement, constitute the Board (as of such date,
“Incumbent Board”) ceasing for any reason to constitute
at least a majority of such Board; provided, however, that any
person becoming a director subsequent to the date of this Agreement
whose election, or nomination for election by the shareholders of
the Company, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be for purposes
of this Agreement, considered as though such person were a member
of the Incumbent Board but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule
14a-12(c);
(iii) the consummation of any
merger, consolidation or share exchange of the Company with any
other corporation, other than a merger, consolidation or share
exchange which results in more than sixty percent (60%) of the
outstanding shares of the common stock, and voting securities
representing more than sixty percent (60%) of the combined
voting power of then outstanding voting securities entitled to vote
generally in the election of directors, of the surviving,
consolidated or resulting corporation being then beneficially
owned, directly or indirectly, by the persons who were the
Company’s shareholders immediately prior to such transaction
in substantially the same proportions as their ownership,
immediately prior to such transaction, of the Company’s then
outstanding Common Stock or then outstanding voting securities, as
the case may be; or
(iv) the consummation of any
liquidation or dissolution of the Company or a sale or other
disposition of all or substantially all of the assets of the
Company.
Following the occurrence of an event
which is not a Change of Control whereby there is a successor
company to the Company, or, if there is no such successor, whereby
the Company is not the surviving corporation in a merger or
consolidation, the surviving corporation or successor holding
company (as the case may be), for purposes of this Agreement, shall
thereafter be referred to as the Company.
1.4 “ Company ”
means Kohl’s Department Stores, Inc.
1.5 “ Designated
Beneficiary ” means the person or persons designated by
the Employee, on a form provided by the Company, to receive
benefits payable under this Agreement, if any, after the death of
Employee.
1.6 “ Disability
” means the inability of Employee, due to a physical or
mental impairment, to perform the essential functions of
Employee’s job with the Company, with or without a reasonable
accommodation and such inability has or is reasonably anticipated
to continue for a period in excess of one hundred eighty
(180) calendar days. 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 Employee 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 1.6 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 Employee with
respect to Employee, which benefits shall be governed solely by the
terms of any such insurance policy.
1.7 “ Final Expenses
” means reimbursement of expenses to which Employee
is entitled under programs and policies which the Company has
made available to senior executives of the Company and which are in
effect at the Company from time to time.
1.8 “ Final Pay ”
means any unpaid base salary with respect to the period prior
to the effective date of Employee’s termination of
employment together with payment of any vacation that Employee has
accrued but not used through the date of Employee’s
termination of employment.
1.9 “ Good Reason
” means any of the following: (i) a significant
reduction in the Employee’s status, title, position,
responsibilities or base salary which is not agreed to by Employee;
(ii) any purported termination of the Employee’s
employment for Cause which does not comply with the definition of
Cause under this Agreement; or (iii) a mandatory relocation of
Employee’s employment with the Company more than 50 miles
from the employee’s current principal place of business in
Milwaukee, Wisconsin, except for travel reasonably required in the
performance of Employee’s duties and responsibilities;
provided, however, that no termination shall be for Good Reason
unless the Employee has provided the Company with written notice of
the conduct alleged to have caused Good Reason within ten
(10) days of such conduct and the Company fails to demonstrate
substantial efforts to cure any such alleged conduct within thirty
(30) calendar days after the Company’s receipt of such
written notice from Employee.
1.10 “ Health Insurance
Continuation ” means that, if Employee, following
termination from employment, is eligible for, and timely elects to
participate in, the Company’s group health insurance plans
pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”), the Company will pay the
normal monthly employer’s cost of coverage under the
Company’s group health insurance plans for full-time
employees toward such COBRA coverage for the specified period of
time, if any, set forth in Article II of this Agreement. If the
specified period of time provided for in this Agreement is longer
than the end of the 18-month period for which Employee is eligible
for COBRA, the Company will, until the end of such longer period,
pay the normal monthly employer’s cost
of coverage under the Company’s group
health insurance plans to, at its sole discretion, allow Employee
to continue to participate in such plans (if allowed by law and the
Company’s policies, plans and programs) or allow Employee to
purchase reasonably comparable individual health insurance coverage
through the end of such longer period. Employee acknowledges and
agrees that Employee is responsible for paying the balance of any
costs not paid for by the Company under this Agreement which are
associated with Employee’s participation in the
Company’s health insurance plans or individual health
insurance and that Employee’s failure to pay such costs may
result in the termination of Employee’s participation in such
plans or insurance. Employee acknowledges and agrees that the
Company may deduct from any Severance Payment Employee receives
pursuant to this Agreement, amounts that Employee is responsible to
pay for Health Insurance Continuation. Any Health Insurance
Continuation provided for herein will cease on the date on which
Employee becomes eligible for health insurance coverage under
another employer’s group health insurance plan, and, within
five (5) calendar days of Employee becoming eligible for
health insurance coverage under another employer’s group
health insurance plan, Employee agrees to inform the Company of
such fact in writing.
1.11 “ Outplacement
Services ” means outplacement services from an
outplacement service company of the Company’s choosing at a
cost not to exceed Twenty Thousand and no/100 Dollars ($20,000.00),
payable directly to such outplacement service company.
1.12 “ Prorated Bonus
” means a share of any bonus attributable to the fiscal year
of the Company during which the date of termination of
Employee’s employment with the Company occurs to which the
Employee would be entitled if he/she had worked for the entire
fiscal year, as determined in the sole discretion of the Company
(pro-rated, as determined by the Company, for the portion of the
fiscal year prior to the date of Employee’s termination of
employment).
1.13 “ Retirement Age
” means an Employee is at least fifty-five (55) years
old and has completed ten (10) years or more of service as an
Employee of the Company.
1.14 “ Unpaid Bonus
” means Employee’s unpaid bonus, if any, attributable
to any complete fiscal year of the Company ended before the date of
Employee’s termination of employment with the
Company.
ARTICLE II
COMPENSATION AND
BENEFITS
UPON TERMINATION OF
EMPLOYMENT
2.1 Termination By Company for
Cause . If Employee’s employment is terminated by the
Company for Cause, Employee shall have no further rights against
the Company hereunder, except for the right to receive
(i) Final Pay; (ii) Final Expenses; and
(iii) Employee’s Unpaid Bonus. The payment of the Unpaid
Bonus 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 2.1, vesting of any Company stock options
and restricted stock granted to Employee ceases on the date of
termination, and any unvested stock options and restricted stock
lapse and are forfeited immediately upon termination.
2.2 Termination by Employee
without Good Reason . If Employee’s employment is
terminated by Employee voluntarily without Good Reason, Employee
shall have no further rights against the Company hereunder, except
for the right to receive (i) Final Pay, (ii) Final
Expenses; (iii) Employee’s Unpaid Bonus, payment of
which shall be made at the same time as any such bonus is paid to
other similarly situated executives of the Company; and (iv) a
Severance Payment (defined below), the payment of which is
contingent upon (a) Employee’s execution of a written
release agreement (in a form satisfactory to the Company)
containing, among other things, a general release of claims against
the Company and(b) Employee’s failure to revoke such release
within the statutory period permitted for such revocation. For
purposes of this Section 2.2, “Severance Payment”
means payment of 50 percent (50%) of Employee’s base
salary in effect as of the date of Employee’s termination of
employment, payable for one (1) year following the effective
date of Employee’s termination pursuant to the normal payroll
practices of the Company. The amount of such Severance Payment
shall be reduced by the value of any compensation (including, but
not limited to, the value of any cash compensation, deferred
compensation or equity-based compensation, valued in the sole
discretion of the Company) received by Employee from another
employer or service recipient during the one-year period following
Employee’s termination of employment, and Employee agrees to
reimburse the Company for the amount of such reduction. Employee
acknowledges and agrees that he/she has an obligation to use
his/her reasonable efforts to secure other employment following
his/her termination of employment from the Company and that his/her
failure to do so, as determined at the sole discretion of the
Company, is a breach of this Agreement
subject to Section 8.6, below. Furthermore,
under this Section 2.2, vesting of any Company stock options
and restricted stock granted to Employee ceases on the date of
termination, and any unvested stock options and restricted stock
lapse and are forfeited immediately upon termination.
2.3 Termination Due to
Retirement . If Employee’s employment is voluntarily
terminated by Employee after he/she has reached Retirement Age and
prior to the termination, Employee certifies to the Company of
his/her intention not to continue employment for another employer
after such termination, Employee shall have no further rights
against the Company hereunder, except for the right to receive
(i) Final Pay, (ii) Final Expenses;
(iii) Employee’s Unpaid Bonus,
(iv) Employee’s Prorated Bonus and (v) a Severance
Payment (defined below), the payment of which is contingent upon
(a) Employee’s execution of a written release agreement
(in a form satisfactory to the Company) containing, among other
things, a general release of claims against the Company and
(b) Employee’s failure to revoke such release within the
statutory period permitted for such revocation. Payment of the
Unpaid Bonus and the Prorated Bonus shall be made at the same time
as any such bonuses for such fiscal years are paid to other
similarly situated executives of the Company. For purposes of this
Section 2.3, “Severance Payment” means payment of
50 percent (50%) of Employee’s base salary in effect as
of the date of Employee’s termination of employment, payable
for one (1) year following the effective date of
Employee’s termination pursuant to the normal payroll
practices of the Company. Furthermore, under this Section 2.3,
vesting of any Company stock options and restricted stock granted
to Employee prior to the date of termination shall be as provided
in the stock option and restricted stock agreements between
Employee and the Company.
2.4 Termination Due to
Employee’s Death . If Employee’s employment is
terminated due to Employee’s death, Employee’s
Designated Beneficiary shall have no further rights against the
Company hereunder, except for the right to receive (i) Final
Pay; (ii) Final Expenses; (iii) Employee’s Unpaid
Bonus, and (iv) Employee’s Prorated Bonus. Payment of
the Unpaid Bonus and the Prorated Bonus shall be made to the
Employee’s Designated Beneficiary at the same time as any
such bonuses for such fiscal years are paid to other similarly
situated executives of the Company. Furthermore, under this
Section 2.4, vesting of any Company stock options and
restricted stock granted to Employee prior to the date of
termination shall be as provided in the stock option and restricted
stock agreements between Employee and the Company.
2.5 Termination Due to
Disability . If Employee’s employment is terminated due
to Employee’s Disability, Employee shall have no further
rights against the Company hereunder, except for the right to
receive (i) Final Pay; (ii) Final Expenses,
(iii) Employee’s Unpaid B
