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EXHIBIT
10.3
EXECUTIVE
EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made
effective October 1, 2007, (the “ Effective Date
”) by and between Ross Stores, Inc. (the “
Company ”), a Delaware corporation, and John G.
Call (the “ Executive ”).
RECITALS
A. The Company wishes to employ the Executive, and the
Executive is willing to accept such employment, as Senior Vice
President, Chief Financial Officer .
B. It is now the mutual desire of the Company and the
Executive to enter into a written employment agreement to govern
the terms of the Executive’s employment by the Company as of
and following the Effective Date on the terms and conditions set
forth below.
TERMS AND
CONDITIONS
In consideration for the promises of the parties set forth
below, the Company and the Executive hereby agree as
follows:
1. Term . Subject to the provisions of Section 6 of
this Agreement, the term of employment of the Executive by the
Company under this Agreement (the “ Term of Employment
”) shall be as follows:
(a) Initial Term . The
initial Term of Employment of the Executive by the Company under
this Agreement shall begin on the Effective Date and end on
March 31, 2010 (the “ Initial Term ”),
unless extended or terminated earlier in accordance with this
Agreement.
(b) Renewal Term . Upon the
timely written request of the Executive to extend the Term of
Employment, the Compensation Committee (the “
Committee ”) of the Board of Directors (the “
Board ”) of the Company shall consider extending the
Executive’s employment with the Company under this Agreement.
To be timely, such request must be delivered to the Company’s
Chief Executive Officer not earlier than twelve (12) months prior
to the end of the then effective Initial Term or Renewal Term and,
in any case, while the Executive remains an employee of the
Company. Such request must contain no proposed modification to the
provisions of this Agreement other than an extension of the Term of
Employment as then in effect for an additional two (2) years.
Within thirty (30) days following the receipt of such notice, the
Chief Executive Officer will discuss such request with the
Committee and advise the Executive, in writing, within thirty (30)
days following its consideration of the Executive’s written
request, of the approval or disapproval of such extension request.
The failure to provide such written advice shall constitute a
denial of the Executive’s request for extension. If the
Executive’s request for an extension is approved, the Term of
Employment shall be extended for two (2) additional years
commencing on the date immediately following the date of expiration
of the Term of Employment in effect at the time of the
Executive’s written request. Such additional two-year period
is referred to herein as a “ Renewal Term
.”
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2. Position and
Duties. During the Term of Employment, the Executive shall
serve as Senior Vice President, Chief Financial Officer . As
used in this Agreement, the term “Company” includes
Ross Stores, Inc. and each and any of its divisions, affiliates or
subsidiaries (except that, where the term relates to stock,
stockholders, stock options or other stock-based awards or the
Board, it means Ross Stores, Inc.). The Executive’s
employment may be transferred, assigned, or re-assigned to Ross
Stores, Inc. or a division, affiliate or subsidiary of Ross Stores,
Inc., and such transfer, assignment, or re-assignment will not
constitute a termination of employment or “Good Reason”
for the Executive’s termination of employment under this
Agreement. During the Term of Employment, the Executive may engage
in outside activities provided those activities (including but not
limited to membership on boards of directors of not-for-profit and
for-profit organizations) do not conflict with the
Executive’s duties and responsibilities hereunder, and
provided further that the Executive gives written notice to the
Board of any significant outside business activity in which the
Executive plans to become involved, whether or not such activity is
pursued for profit.
3. Principal Place of
Employment. The Executive shall be employed at the
Company’s offices in Pleasanton, California , except
for required travel on the Company’s business to an extent
substantially consistent with present business travel obligations
of the Executive’s position.
4. Compensation and
Related Matters.
(a) Salary.
During the Term of Employment, the
Company shall pay to the Executive a salary at a rate of not less
than Four Hundred Sixty
Six Thousand Dollars ($466,000) per annum. The Executive’s salary shall be
payable in substantially equal installments in accordance with the
Company’s normal payroll practices applicable to senior
executives. Subject to the first sentence of this Section 4(a), the
Executive’s salary may be adjusted from time to time by the
Committee in accordance with normal business practices of the
Company.
(b) Bonus.
During the Term of Employment, the
Executive shall be eligible to receive an annual bonus paid under
the Company’s existing incentive bonus plan under which the
Executive is eligible (which is currently the Incentive
Compensation Plan) or any replacement plan that may subsequently be
established and in effect during the Term of Employment. The
current target annual bonus the Executive is eligible to earn upon
achievement of 100% of all applicable performance targets under
such incentive bonus plan is 55% of the
Executive’s then effective annual salary rate. The
Executive’s death, termination for Cause or Voluntary
Termination (as described in Sections 6(a), 6(c) and 6(f),
respectively) prior to the Company’s payment of the bonus for
a fiscal year of the Company will cause the Executive to be
ineligible for any annual bonus for that fiscal year or any
pro-rata portion of such bonus.
(c) Expenses. During the Term of Employment, 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 Company.
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(d) Benefits. During the Term of Employment, the Executive
shall be entitled to participate in all of the Company’s
employee benefit plans and arrangements in which senior executives
of the Company are eligible to participate. The Company shall not
make any changes in such plans or arrangements which would
adversely affect the Executive’s rights or benefits
thereunder, unless such change occurs pursuant to a program
applicable to all senior executives of the Company and does not
result in a proportionately greater reduction in the rights or
benefits of the Executive as compared with any other similarly
situated senior executive of the Company. The Executive shall be
entitled to participate in, or receive benefits under, any employee
benefit plan or arrangement made available by the Company in the
future to its senior executives, subject to, and on a basis
consistent with, the terms, conditions and overall administration
of such plans and arrangements. Except as otherwise specifically
provided herein, nothing paid to the Executive under any plan or
arrangement presently in effect or made available in the future
shall be in lieu of the salary or bonus otherwise payable under
this Agreement.
(e) Vacations . During the Term of Employment, the Executive
shall be entitled to twenty-five (25) vacation days in each
calendar year, and to compensation in respect of earned but unused
vacation days, determined in accordance with the Company’s
vacation plan. The Executive shall also be entitled to all paid
holidays given by the Company to its senior executives. Unused
vacation days shall not be forfeited once they have been earned
and, if still unused at the time of the Executive’s
termination of employment with the Company, shall be promptly paid
to the Executive at their then-current value, based on the
Executive’s daily salary rate at the time of the
Executive’s termination of employment.
(f) Services Furnished. The Company shall furnish the
Executive with office space and such services as are suitable to
the Executive’s position and adequate for the performance of
the Executive’s duties during the Term of
Employment.
5. Confidential
Information and Intellectual Property.
(a) Other than in the performance of the Executive’s duties
hereunder, the Executive agrees not to use in any manner or
disclose, distribute, publish, communicate or in any way cause to
be used, disclosed, distributed, published, or communicated in any
way or at any time, either while in the Company's employ or at any
time thereafter, to any person not employed by the Company, or not
engaged to render services to the Company, any Confidential
Information (as defined below) obtained while in the employ of the
Company.
(b) Confidential Information includes any written or unwritten
information which relates to and/or is used by the Company or its
subsidiaries, affiliates or divisions, including, without
limitation (i) the names, addresses, buying habits and other
special information regarding past, present and potential
customers, employees and suppliers of the Company, (ii) customer
and supplier contracts and transactions or price lists of the
Company and suppliers, (iii) methods of distribution, (iv) all
agreements, files, books, logs, charts, records, studies, reports,
processes, schedules and statistical information, (v) data,
figures, projections, estimates, pricing data, customer lists,
buying manuals or procedures, distribution manuals or procedures,
other policy and procedure manuals or handbooks, (vi) supplier
information, tax records, personnel histories and records, sales
information, and property information, (vii) information regarding
the present or future phases of business, (viii) ideas, inventions,
trademarks, business information, know-how, processes, techniques,
improvements, designs, redesigns, creations, discoveries, trade
secrets, and developments, (ix) all computer software licensed or
developed by the Company or its subsidiaries, affiliates or
divisions, computer programs, computer-based and web-based training
programs, and systems, and (x) finances and financial information,
but Confidential Information will not include information of the
Company or its subsidiaries, affiliates or divisions that (1)
became or becomes a matter of public knowledge through sources
independent of the Executive, (2) has been or is disclosed by the
Company or its subsidiaries, affiliates or divisions without
restriction on its use, or (3) has been or is required or
specifically permitted to be disclosed by law or governmental order
or regulation. The Executive also agrees that, if there is any
reasonable doubt whether an item is public knowledge, to not regard
the item as public knowledge until and unless the Company’s
Chief Executive Officer confirms to the Executive that the
information is public knowledge.
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(c) The provisions of this Section 5 shall not preclude the
Executive from disclosing such information to the Executive's
professional tax advisor or legal counsel solely to the extent
necessary to the rendering of their professional services to the
Executive if such individuals agree to keep such information
confidential.
(d) The Executive agrees that upon leaving the Company’s
employ the Executive will remain reasonably available to answer
questions from Company officers regarding the Executive’s
former duties and responsibilities and the knowledge the Executive
obtained in connection therewith.
(e) The Executive agrees that upon leaving the Company's employ the
Executive will not communicate with, or give statements to, any
member of the media (including print, television, or radio media)
relating to any matter (including pending or threatening lawsuits
or administrative investigations) about which the Executive has
knowledge or information (other than knowledge or information that
is not Confidential Information) as a result of employment with the
Company. The Executive further agrees to notify the Chief Executive
Officer or his or her designee immediately after being contacted by
any member of the media with respect to any matter affected by this
section.
(f) The Executive agrees that all information, inventions, and
discoveries, whether or not patented or patentable, made or
conceived by the Executive, either alone or with others, at any
time while employed by the Company, which arises out of such
employment or is pertinent to any field of business or research in
which, during such employment, the Company, its subsidiaries,
affiliates or divisions is engaged or (if such is known to or
ascertainable by the Executive) is considering engaging (“
Intellectual Property ”) shall (i) be and remain the
sole property of the Company and the Executive shall not seek a
patent with respect to such Intellectual Property without the prior
consent of an authorized representative of the Company and (ii) be
disclosed promptly to an authorized representative of the Company
along with all information the Executive possesses with regard to
possible applications and uses. Further, at the request of the
Company, and without expense or additional compensation to the
Executive, the Executive agrees to execute such documents and
perform such other acts as the Company deems necessary to obtain
patents on such Intellectual Property in a jurisdiction or
jurisdictions designated by the Company, and to assign to the
Company or its designee such Intellectual Property and all patent
applications and patents relating thereto.
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(g) The Executive and the Company agree that the Executive intends
all original works of authorship within the purview of the
copyright laws of the United States authored or created by the
Executive in the course of the Executive’s employment with
the Company will be works for hire within the meaning of such
copyright law.
(h) Upon termination of the Executive’s employment, or at any
time upon request of the Company, the Executive will return to the
Company all Confidential Information and Intellectual Property, in
any form, including but not limited to letters, memoranda, reports,
notes, notebooks, books of account, drawings, prints,
specifications, formulae, data printouts, microfilms, magnetic
tapes, disks, recordings, documents, and all copies
thereof.
6. Termination.
The Executive’s employment may be terminated during the Term
of Employment only as follows:
(a) Death. The Executive’s employment shall terminate
upon the Executive’s death.
(b) Disability. If, as a result of the Executive’s
Disability (as defined below), the Executive shall have been absent
from the Executive’s duties hereunder on a full-time basis
for the entire period of six consecutive months, and, within thirty
days after written notice of termination is given by the Company
(which may occur before or after the end of such six-month period),
the Executive shall not have returned to the performance of the
Executive’s duties hereunder on full-time basis, the
Executive’s employment shall terminate. For purposes of this
Agreement, the term “ Disability ” shall mean a
physical or mental illness, impairment or condition reasonably
determined by the Board that prevents the Executive from performing
the duties of the Executive’s position under this
Agreement.
(c) For Cause. The Company may terminate the
Executive’s employment for Cause. For this purpose, “
Cause ” means the occurrence of any of the following
(i) the Executive’s continuous failure to substantially
perform the Executive’s duties hereunder (unless such failure
is a result of a Disability as defined in Section 6(b)), (ii) the
Executive’s theft, dishonesty, breach of fiduciary duty for
personal profit or falsification of any documents of the Company,
(iii) the Executive’s material failure to abide by the
applicable code(s) of conduct or other policies (including, without
limitation, policies relating to confidentiality and reasonable
workplace conduct) of the Company, (iv) knowing or intentional
misconduct by the Executive as a result of which the Company is
required to prepare an accounting restatement, (v) the
Executive’s unauthorized use, misappropriation, destruction
or diversion of any tangible or intangible asset or corporate
opportunity of the Company (including, without limitation, the
Executive’s improper use or disclosure of confidential or
proprietary information of the Company), (vi) any intentional
misconduct or illegal or grossly negligent conduct by the Executive
which is materially injurious to the Company monetarily or
otherwise, (vii) any material breach by the Executive of the
provisions of Section 9 [Certain Employment Obligations] of this
Agreement, or (viii) the Executive’s conviction (including
any plea of guilty or nolo contendere) of any criminal act
involving fraud, dishonesty, misappropriation or moral turpitude,
or which materially impairs the Executive’s ability to
perform his or her duties with the Company. A termination for Cause
shall not take effect unless: (1) the Executive is given written
notice by the Company of its intention to terminate the Executive
for Cause; (2) the notice specifically identifies the particular
act or acts or failure or failures to act which are the basis for
such termination; (3) the notice is given within sixty (60) days of
the Company’s learning of such act or acts or failure or
failures to act; and (4) only in the case of clause (i), (iii),
(v), (vi) or (vii) of the second sentence of this Section 6(c), the
Executive fails to substantially cure such breach, to the extent
such cure is possible, within sixty (60) days after the date that
such written notice is given to the Executive.
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(d) Without Cause. The Company may terminate the
Executive’s employment at any time Without Cause. A
termination “ Without Cause ” is a termination
by the Company of the Executive’s employment with the Company
for any reasons other than the death or Disability of the Executive
or the termination by the Company of the Executive for Cause as
described in Section 6(c).
(e) Termination by the Executive for Good Reason. The
Executive may terminate the Executive’s employment with the
Company for “ Good Reason ,” which shall be
deemed to occur if the Executive terminates the Executive’s
employment with the Company within sixty (60) days after written
notice to the Company by the Executive of the occurrence of one or
more of the following conditions, which condition(s) have not been
cured within ten (10) business days after the Company’s
receipt of such written notice: (1) a failure by the Company to
comply with any material provision of this Agreement (including but
not limited to the reduction of the Executive’s salary or the
target annual bonus opportunity set forth in Section 4(b), (2) a
significant diminishment in the nature or scope of the authority,
power, function or duty attached to the position which the
Executive currently maintains without the express written consent
of the Executive, or (3) the relocation of the Executive’s
Principal Place of Employment as described in Section 3 to a
location that increases the regular one-way commute distance
between the Executive’s residence and Principal Place of
Employment by more than 25 miles without the Executive’s
prior written consent. The Executive’s failure to give
reasonably prompt written notice to the Company of the occurrence
of a condition constituting Good Reason or to terminate employment
for Good Reason within the 60-day period following the
Executive’s written notice of the occurrence of such
condition shall waive the Executive’s right to terminate
employment for Good Reason based upon such occurrence of such
condition.
(f) Voluntary Termination. The Executive may voluntarily
resign from the Executive’s employment with the Company at
any time (a “ Voluntary Termination ”). A
voluntary resignation from employment by the Executive for Good
Reason pursuant to Section 6(e) shall not be deemed a Voluntary
Termination.
(g) Non-Renewal
Termination. If the Executive
fails to request an extension of the Term of Employment in
accordance with Section 1(b) or if the Committee fails to approve
such request, this Agreement shall automatically expire at the end
of the then current Term of Employment (a “
Non-Renewal Termination
”).
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7.
Notice and Effective Date of Termination
(a) Notice. Any termination of the Executive’s
employment by the Company or by the Executive during the Term of
Employment (other than as a result of the death of the Executive or
a Non-Renewal Termination described in Section 6(g)) shall be
communicated by written notice of termination to the other party
hereto. Such notice shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under
that provision.
(b) Date of Termination. The date of termination of the
Executive’s employment shall be:
(i) if the Executive’s employment is terminated by the
Executive’s death, the date of the Executive’s
death;
(ii) if the Executive’s employment is terminated due to
Disability pursuant to Section 6(b), the date of termination shall
be the last to occur of the 31st day following delivery of the
notice of termination to the Executive by the Company or the end of
the consecutive six-month period referred to in Section
6(b).
(iii) if the Executive’s employment is terminated for any
other reason by either party, the date on which a notice of
termination is delivered to the other party; and
(iv) if the Agreement expires pursuant to a Non-Renewal Termination
described in Section 6(g), the parties’ employment
relationship shall terminate on the last day of the then current
Term of Employment without any notice.
8.
Compensation and Benefits Upon
Termination.
(a) Termination Due To Disability, Without Cause or For Good
Reason. If the Executive’s employment terminates pursuant
to Section 6(b) [Disability], Section 6(d) [Without Cause], or
Section 6(e) [Termination by Executive for Good Reason], then,
subject to Section 22 [Compliance with Section 409A], in addition
to all salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment, the Executive shall be entitled to the following,
provided that within sixty (60) days following the
Executive’s termination of employment the Executive executes
a general release of claims against the Company and its
subsidiaries, affiliates, stockholders, directors, officers,
employees, agents, successors and assigns in a form approved by the
Company (the “ Release ”) and the period for
revocation, if any, of such Release has expired without the Release
having been revoked:
(i) Salary. The Company shall continue to pay to the
Executive the Executive’s salary, at the rate in effect
immediately prior to such termination of employment, through the
remainder of the Term of Employment then in effect.
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(ii) Bonus. The Company shall continue to pay to the
Executive an annual bonus through the remainder of the Term of
Employment then in effect; provided, however, that the amount of
the annual bonus determined in accordance with this Section
8(a)(ii) for the fiscal year of the Company in which such Term of
Employment ends shall be prorated on the basis of the number of
days of such Term of Employment occurring within such fiscal year.
The amount of each annual bonus payable pursuant to this Section
8(a)(ii), prior to any proration, shall be equal to the greater of
(A) the annual bonus earned by the Executive for the most recent
fiscal year of the Company ending prior to the date of the
Executive’s termination of employment or (B) the annual bonus
that the Executive would have earned under the Company’s
bonus plan for the fiscal year of the Company in which the
Executive’s termination of employment occurs had the
Executive remained in its employment. However, in no case shall any
such post-termination annual bonus exceed the lesser of 100% of the
Executive's target bonus for the most recent fiscal year of the
Company ending prior to the date of the Executive's termination of
employment or 100% of the Executive's target bonus for the fiscal
year of the Company in which the Executive's termination of
employment occurs. Such bonuses shall not be paid until due under
the applicable Company bonus plan.
(iii) Stock Options. Stock options granted to the Executive
by the Company and which remain outstanding immediately prior to
the date of termination of the Executive’s employment, as
provided in Section 7(b), shall immediately become vested in full
upon such termination of employment.
(iv) Restricted Stock. Shares of restricted stock granted to
the Executive by the Company which have not become vested as of the
date of termination of the Executive’s employment, as
provided in Section 7(b), shall immediately become vested on a pro
rata basis. The number of such additional shares of restricted
stock that shall become vested as of the date of the
Executive’s termination of employment shall be that number of
additional shares that would have become vested through the date of
such termination of employment at the rate(s) determined under the
vesting schedule applicable to such shares had such vesting
schedule provided for the accrual of vesting on a daily basis
(based on a 365 day year). The pro rata amount of shares vesting
through the date of termination/non-renewal shall be calculated by
multiplying the number of unvested shares scheduled to vest in each
respective vesting year by the ratio of (a) the number of days from
the date of grant through the date of termination/non-renewal, and
the number of days from the date of grant through the original
vesting date of the respective vesting tranche. Any shares of
restricted stock remaining unvested after such pro rata
acceleration of vesting shall automatically be reacquired by the
Company in accordance with the provisions of the applicable
restricted stock agreement, and the Executive shall have no further
rights in such unvested portion of the restricted stock.
(v) Other Equity Awards. Except as set forth in Sections
8(a)(iii) and 8(a)(iv), performance share awards and all other
equity awards granted to the Executive by the Company which remain
outstanding immediately prior to the date of termination of the
Executive’s employment, as provided in Section 7(b), shall
vest and be settled in accordance with their terms.
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The Company shall have no further
obligations to the Executive as a result of termination of
employment described in this Section 8(a) except as set forth in
Section 12.
(b) Death, Termination for Cause or Voluntary Termination.
If the Executive’s employment terminates pursuant to Section
6(a) [Death], Section 6(c) [For Cause] or Section 6(f) [Voluntary
Termination], the Executive (or the Executive’s designee or
the Executive’s estate) shall be entitled to receive only the
salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment. The Executive shall not be entitled to any bonus not
paid prior to the date of the Executive’s termination of
employment, and the Executive shall not be entitled to any prorated
bonus payment for the year in which the Executive’s
employment terminates. Any stock options granted to the Executive
by the Company shall continue to vest only through the date on
which the Executive’s employment terminates, and unless
otherwise provided by their terms, any restricted stock,
performance share awards or other equity awards that were granted
to the Executive by the Company that remain unvested as of the date
on which the Executive’s employment terminates shall
automatically be forfeited and the Executive shall have no further
rights with respect to such awards. The Company shall have no
further obligations to the Executive as a result of termination of
employment described in this Section 8(b ) except as set forth in
Section 12.
(c) Non-Renewal Termination. If the Agreement expires as set
forth in Section 6(g) [Non-Renewal Termination], then, subject to
Section 22 [Compliance with Section 409A], in addition to all
salary, annual bonuses, expense reimbursements, benefits and
accrued vacation days earned by the Executive pursuant to Section 4
through the date of the Executive’s termination of
employment, the Executive shall be entitled to the following,
provided that within sixty (60) days following the
Executive’s termination of employment the Executive
execu
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