Exhibit 10.1
Nordstrom, Inc. 2004 Equity Incentive Plan
performance share unit award agreement
AN AWARD FOR PERFORMANCE SHARE UNITS for the number of shares of Common
Stock (hereinafter the "Unit") as noted in your Notice of Award of
Performance Share Units (the "Notice"), of Nordstrom, Inc., a
Washington Corporation (the "Company"), is hereby granted to the "Unit
holder" on the date set forth in your Notice. The Unit is subject to
the terms, definitions and provisions of the Nordstrom, Inc. 2004
Equity Incentive Plan (the "Plan") adopted by the Company and approved
by its shareholders, which is incorporated in this agreement. Each
vested Unit is equal in value to one share of Nordstrom stock. To the
extent inconsistent with this Agreement, the terms of the Plan shall
govern. The Compensation Committee of the Board has the discretionary
authority to construe and interpret the Plan and this Agreement. The
Units are subject to the following:
1. VESTING AND SETTLEMENT OF UNITS
At the end of three fiscal years following the date of the awards ("the
performance cycle"), units shall vest and be settled in accordance with
the provisions of the Plan as follows:
(a) Vesting
Except as set forth in paragraph (c), Units shall vest at the
applicable percentage when the Compensation Committee of the Board
certifies that (1) the Company's Total Shareholder Return (TSR) is
positive, and (2) its TSR performance relative to the TSR of other
companies in the comparator group exceeds the following
corresponding percentile rankings. For purposes of determining the
Company's TSR relative to the TSR of other companies in the
comparator group, the share price of the Common Stock of the
Company, and the share prices of the companies in the comparator
group, shall be based on a thirty (30) trading day average
established prior to the commencement of the performance cycle and
a thirty (30) trading day average established at the end of the
performance cycle.
Percentile
Ranking Vest %
---------- ------
100.00% 125%
93.00% 125%
86.00% 125%
80.00% 100%
73.00% 85%
66.00% 85%
60.00% 75%
53.00% 75%
0-50.00% 0%
The relative percentile rankings may change during the
performance period based upon mergers, acquisitions, dissolutions
and other industry consolidation involving the companies in the
comparator group. Generally, PSU's will be earned if the
Nordstrom TSR for the three-year period following the grant is in
the top half of performers relative to the other companies in the
comparator group.
(b) Settlement
Units shall be settled upon vesting, unless the Unit holder has
elected to defer the Units into the Executive Deferred Compensation
Plan (EDCP). Such deferral election must be in writing, must be
executed at least 12 months prior to the beginning of the Plan Year
in which the Units vest, and must be irrevocable. Upon deferral,
the vested Units (and their subsequent settlement and payment)
shall be governed by the terms and conditions of the EDCP as that
Plan may be amended from time to time by the Company.
At the time of settlement, unless earlier deferred into the EDCP,
the Unit holder shall elect to receive one share of Common Stock for
each vested Unit or receive an equivalent amount of cash (in accordance
with procedures established by the Company). The amount of cash will be
determined on the basis of the market value of the Common Stock on the
last day of the performance cycle, determined at the time of vesting.
(c) Withholding Taxes
No stock certificates or cash will be distributed to the Unit
holder, or amounts deferred into the EDCP, unless the Unit holder
has made acceptable arrangements to pay any withholding taxes that
may be due as a result of the settlement of this Award. These
arrangements may include withholding shares of Common Stock that
otherwise would be distributed when the Units are settled. The fair
market value of these shares, determined as of the date when taxes
otherwise would have been withheld in cash, will be applied to the
withholding taxes.
(d) Restrictions on Resale
The Unit holder agrees not to sell any shares of the Company's
stock at a time when applicable laws or Company policies prohibit a
sale. This restriction will apply as long as the Unit holder is an
employee, consultant or director of the Company or a subsidiary or
affiliate of the Company.
2. TERMINATION OF EMPLOYMENT
Except as set forth below, Units vest and may only be settled while
the Unit holder is an employee of the Company. If the Unit holder's
employment is terminated, the Units shall continue to vest pursuant to
the schedule set forth in subparagraph 1(a) above, and the Unit holder
or his or her legal representative shall have the right to settlement
of the Units after such termination only as follows:
(a) If the Unit holder dies, the persons to whom the Unit holder's
rights have passed by will or the laws of descent and distribution
shall be entitled to settlement of the Units. The Unit holder's
beneficiary(ies) shall be entitled to a prorated payment with respect
to Units earned during the Performance Cycle based on their period of
service during the term of this agreement.
(b) If the Unit holder is separated due to his or her disability, as
defined in Section 22(e)(3) of the Internal Revenue Code, the Unit
holder shall be entitled to a prorated payment with respect to Units
earned during the Performance Cycle based on their period of service
during the term of this agreement.
(c) If the Unit holder is separated due to retirement between the
ages of 53 and 57 with 10 years of service to the Company, or upon
attaining age 58, the Unit holder shall be entitled to a prorated
payment with respect to Units earned during the Performance Cycle based
on their period of service during the term of this agreement.
(d) If the Unit holder is separated for any reason other than those
set forth in subparagraphs (a), (b) and (c) above, Units, to the extent
not vested and settled as of the date of his or her separation, shall
be forfeited as of that date.
Notwithstanding anything above to the contrary, if during the term of
this Award, the Unit holder directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner,
shareholder, corporate officer, director or in any other capacity,
engages or assists any third party in engaging in any business
competitive with the Company; divulges any confidential or
proprietary information of the Company to a third party who is not
authorized by the Company to receive the confidential or proprietary
information; or uses any confidential or proprietary information of
the Company, then the post-separation proration of Units and
settlement rights set forth above shall cease immediately, and all
outstanding vested and unvested portions of the Award shall be
automatically forfeited.
3. TERM
Units not certified by the Compensation Committee of the Board as
having vested as of the end of the three-year performance cycle for
which the Units were awarded, shall be forfeited.
4. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The number and kind of shares of Company stock subject to this Award
shall be appropriately adjusted pursuant to the Plan to reflect any
stock dividend, stock split, split-up or any combination or exchange of
shares, however accomplished.
5. ADDITIONAL UNITS
The Committee may or may not grant the Unit holder additional
performance share units in the future. Nothing in this Award or any
future award should be construed as suggesting that additional unit
awards to the Unit holder will be forthcoming.
6. RIGHTS AS A SHAREHOLDER
Neither the Unit holder nor the Unit holder's representative shall
have any rights as a shareholder with respect to any Common Shares
subject to these Units, unless and until the Units vest and are settled
in shares of Common Stock of the Company.
7. NO RETENTION RIGHTS
Nothing in this Agreement or in the Plan shall give the Unit holder
the right to be retained by the Company (or a subsidiary of the
Company) as an employee or in any capacity. The Company and its
subsidiaries reserve the right to terminate the Unit holder's service
at any time, with or without cause.
8. ENTIRE AGREEMENT
The Notice of Award of Performance Share Units, this Agreement and
the Plan constitute the entire contract between the parties hereto with
regard to the subject matter hereof. They supersede any other
agreements, representations or understandings (whether oral or written
and whether express or implied) that relate to the subject matter
hereof.
9. CHOICE OF LAW
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Washington, as such laws are applied to
contracts entered into and performed in such State.
