Exhibit 10.42
FEDERATED DEPARTMENT STORES, INC.
Description of Non-Employee Directors’ Compensation Program
As of April 1, 2006
| • |
|
Retainer and Meeting Fees |
Non-Employee Directors receive the following compensation:
| |
|
|
| Type
of Compensation |
|
Amount
of Compensation |
Base Retainer
|
|
$60,000 annually *
|
Board
or Board Committee Meeting Fee
|
|
$2,000 for each meeting attended and for
each review session with one or more
members of management |
Committee
Chairperson Fee
|
|
$10,000 annually |
Equity Grant
|
|
Options to
purchase up to 5,000 shares of common stock ** |
|
|
|
| * |
|
Effective January 1, 1999, the annual base retainer fee (including the fee payable to a
committee chair) and the meeting fee payable to Non-Employee Directors was paid 50% (or such
greater percentage, in ten percent increments, as any individual director may have elected) in
credits representing the right to receive shares of common stock, with the balance being paid
in cash, in each case three years following the crediting of such stock credits (or at such
later time as any individual director’s service on the Board ends, if such individual director
has elected to defer compensation under the Non-Employee Directors’ deferred
compensation plan). Effective as of March 31, 2006, the
Non-Employee Directors’
compensation program was amended to provide that such stock credits credited between April
2004 and through the date of the 2007 annual shareholder’s
meeting will be settled in cash. |
| |
| ** |
|
In connection with the termination of the retirement plan for Non-Employee Directors
described below, the 1995 Equity Plan was amended to make each Non-Employee Director eligible
to receive annual grants of options to purchase up to 3,500 shares of common stock. The 1995
Equity Plan was further amended to make each Non-Employee Director eligible to receive,
commencing with fiscal year 2001, annual grants of options to purchase up to 5,000 shares of
common stock. |
| • |
|
Directors’ Deferred Compensation Plan |
Subject to the holding period described above for stock credits covering a portion of retainer
and meeting fees, any Non-Employee Director may defer all or a portion of the total fees received
by him or her either as stock credits or cash credits under
the Non-Employee Directors’ deferred compensation
plan until such director’s service on the Board ends, provided that the stock credits
subject to
the holding period described above may be deferred under the
Non-Employee Directors’ deferred
compensation plan only as stock credits.
Federated’s retirement plan for Non-Employee Directors was terminated on a prospective basis
effective May 16, 1997 (the “Plan Termination Date”). As a result of such termination, persons who
first become Non-Employee Directors after the Plan Termination Date will not be entitled to receive
any payment thereunder. Persons who were Non-Employee Directors as of the Plan Termination Date
will be entitled to receive retirement benefits accrued as of the Plan Termination Date. Subject
to an overall limit in an amount equal to the aggregate retirement benefit accrued as of the Plan
Termination Date (i.e., the product of the amount of the annual base retainer fee earned
immediately prior to retirement and the years of Board service prior to the Plan Termination Date),
and the vesting requirements described below, persons who retire from service as Non-Employee
Directors after the Plan Termination Date will be entitled to receive an annual payment equal to
the amount of the annual base retainer fee earned immediately prior to retirement, payable in
monthly installments, commencing at age 60 (if such person’s termination of Board service occurred
prior to reaching age 60) and continuing for the lesser of such person’s remaining life or a number
of years equal to such person’s years of Board service prior to the Plan Termination Date. Full
vesting will occur for Non-Employee Directors who reach age 60 while serving on the Board,
irrespective of such person’s years of Board service. Vesting will occur as follows for
Non-Employee Directors whose Board service terminates before the director reaches age 60: 50%
vesting after five years of Board service and an additional 10% vesting for each year of Board
service after five years. Board service following the Plan Termination Date will be given effect
for purposes of the foregoing vesting requirements. There are no survivor benefits under the terms
of the retirement plan.
Each
Non-Employee Director, his or her spouse and eligible dependents also receive executive discounts on merchandise
purchased at Federated
stores, which benefit remains available to them following such
director’s retirement from the Board.