Exhibit
10.1
June 29, 2005
Mr. Thomas DiDonato
605 Grandview Drive
Gibsonia, PA 15044
Dear Tom,
I am pleased to offer you the
position of Executive Vice President-Human Resources for American
Eagle Outfitters, Inc. or
its designated subsidiary (the "Company"). The following summarizes
the terms and conditions of your employment.
Position and
Duties : You
will be employed as Executive Vice President-Human Resources, with
such authority and duties as are customary for the position, and
shall perform such other services and duties as the President, CEO
or Board may from time to time designate.
Annual Base
Salary : For
our 2005 fiscal year, your base salary will be at an annual rate of
$400,000.00 payable in accordance with Company's payroll practices
for executive employees.
Start Date
: Monday, July 25, 2005
Annual Incentive
Bonus :
For fiscal years after 2005, you
will be eligible to receive an annual incentive bonus targeted at
50% of your annual base salary in each fiscal year or other
performance period established under Company's Management Incentive
Plan ("the Bonus Plan"), with a maximum annual incentive bonus
equal to 100% of your annual base salary. The Bonus Plan conditions
the payment of this annual performance bonus based on achievement
of pre-determined performance goals set forth in writing and based
on objective measurements all established by the Compensation
Committee of the Board of Directors (the "Committee"). The
Committee must verify that the performance goals and other material
terms are met prior to payment. It is the parties' intention that
the Bonus Plan be adopted and administered in a manner that enables
Company to deduct for federal income tax purposes the amount of any
annual incentive bonus. Notwithstanding the forgoing, your annual
incentive bonus for fiscal 2005 will be a guaranteed fixed amount
of $200,000 not based on performance goals and conditioned on your
continuous employment with the Company through the date in 2006
when executive fiscal 2005 annual incentive bonuses are paid. You
are not eligible for an annual incentive bonus above target for
fiscal 2005 even if performance goals are achieved. No annual
incentive bonus is guaranteed for any subsequent period.
Long Term Incentive Cash
Plan .
You will be eligible to receive a
long term incentive bonus under the Bonus Plan (the "LTI Plan"),
where an amount targeted at 25% of annual base salary and a maximum
of 50% of base salary will be contributed to your LTI bonus
account, conditioned on achievement of pre-determined performance
goals set forth in writing and based on objective measurements all
established by the Committee. The Committee must verify that the
performance goals and other material terms have been met prior to
crediting the LTI bonus account. You will receive payment of: (a)
one-third of the amount in your LTI bonus account in each fiscal
year beginning in fiscal 2008; (b) the entire amount in your LTI
bonus account on death, disability or retirement; and (c) no amount
of your LTI bonus account, which will be forfeited, on any
voluntary termination of employment. It is the parties' intention
that the LTI Plan be adopted and administered in a manner that
enables the Company to deduct for federal income tax purposes all
amounts paid pursuant to the LTI Plan. Your LTI bonus calculation
for fiscal 2005 will be based on your full year base salary of
$400,000 and not a prorated portion of your base salary. No amount
of your LTI bonus is guaranteed and the entire amount will depend
on whether applicable performance goals are achieved.
Restricted
Stock: You will
receive 25,000 shares of restricted stock in a grant made by the
Committee pursuant to and subject to all terms and conditions set
forth in Company's 2005 Stock Award and Incentive Plan ("the 2005
Plan"). Pursuant to the terms of the 2005 Plan, the Committee will
condition the vesting of this restricted stock based on achievement
of pre-determined performance goals set forth in writing and based
on objective measurements all established by the Committee. The
Committee must verify that the performance goals and other material
terms are met prior to vesting. If the performance goals are not
met then the restricted stock will be forfeited. It is the parties'
intention that the 2005 Plan be adopted and administered in a
manner that enables the Company to deduct for federal income tax
purposes the full value of all restricted stock grants.
Stock
Options: You will
receive options to purchase 30,000 shares of the Company's common
stock in a grant made by the Committee pursuant to and subject to
all terms and conditions set forth in the 2005 Plan. The option
exercise price will be the fair market value on the grant date and
the options will
