Exhibit 10.23

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

This AGREEMENT (the “Agreement”) made as of                      (the “Date of
Grant”) by and between MACY’S, INC., a Delaware corporation (the “Company”), and
                     (the “Grantee”).

1. Grant of Performance-Based Restricted Stock Units. Subject to and upon the
terms, conditions, and restrictions set forth in this Agreement and in the
Company’s 2009 Omnibus Incentive Compensation Plan (the “Plan”), as amended from
time to time, the Company hereby grants to the Grantee a “Target” award of
[insert target number of Performance Units] Performance-Based Restricted Stock
Units (“Performance Units”). Each Performance Unit represents the right to
receive one share of the common stock of the Company (“Common Stock”), subject
to the terms and conditions set forth below.

2. Limitations on Transfer of Performance Units; Performance Period.

(a) During the Performance Period hereinafter described, the Performance Units
may not be transferred, sold, pledged, exchanged, assigned or otherwise
encumbered or disposed of by the Grantee, except to the Company, until they are
earned and become nonforfeitable (“Vest”) in accordance with Section 3;
provided, however, that the Grantee’s interest in the Performance Units may be
transferred at any time by will or the laws of descent and distribution.

(b) The Performance Period shall commence on January 30, 2011 (the “Commencement
Date”) and, except as otherwise provided in this Agreement, will expire in full
on February 1, 2014.

3. Vesting of Performance Units.

(a) Subject to potential reduction as set forth in Section 3(b) below, one
hundred and fifty percent (150%) of the Target award of Performance Units will
be Vested on the date (“Vesting Date”) that the Compensation Committee certifies
that the Company has achieved a Cumulative EBITDA (as defined below) level of at
least $7.5 billion over the Performance Period, provided that the Grantee is
continuously employed by the Company through the Vesting Date. If the Company
does not achieve a Cumulative EBITDA level of at least $7.5 billion over the
Performance Period, then all Performance Units are forfeited as of the end of
the Performance Period. In all cases the Compensation Committee shall certify
whether the Company has achieved the specified level of Cumulative EBITDA as
soon as administratively feasible following the end of the Performance Period
but in no event later than two and a half months following the end of the
Performance Period.

(i) “Cumulative EBITDA” is defined as Earnings Before Interest, Taxes,
Depreciation and Amortization, which is equal to the sum of operating income and
depreciation and amortization as reported in the Company’s financial statements
included in its annual Form 10-K, adjusted to eliminate the effects of asset
impairments, restructurings, acquisitions, divestitures, other unusual or
non-recurring items, store closing costs, and the cumulative effect of tax or
accounting changes, as determined in accordance with generally accepted
accounting principles, as applicable.

 

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(b) The actual number of Performance Units that become Vested based on achieving
the level of Cumulative EDITDA during the Performance Period may be reduced by
the Compensation Committee in its sole and absolute discretion based on such
factors as the Compensation Committee determines to be appropriate and/or
advisable including without limitation the Company’s achievement of EBITDA
Margin and Return on Invested Capital (“ROIC”) goals for the Performance Period.
It is the current intention of the Compensation Committee that the Compensation
Committee will exercise its discretion to reduce the number of Performance Units
that will Vest based on the Company’s achievement of the EBITDA Margin and ROIC
goals during the Performance Period, weighted 70% and 30% respectively, as set
forth in the following schedule. However, the Compensation Committee reserves
the right to deviate from such schedule based on achievement of EBITDA Margin
and ROIC and may adjust the number of Performance Units that Vest based on such
other factors as the Compensation Committee in its sole and absolute discretion
determines to be appropriate and/or advisable; provided, however, that it is the
intention of the Compensation Committee that it will deviate from such EBITDA
Margin and ROIC schedule only in extreme and unusual circumstances.

 

     EBITDA Margin (70%)     ROIC (30%)  

Performance Level*

   3-year Average     Vesting Percentage     3-year Average    
Vesting Percentage  

Outstanding

     >13.4 %      150 %      >20.9 %      150 % 

Target

     12.9 %      100 %      19.9 %      100 % 

Threshold

     12.4 %      50 %      18.9 %      50 % 

Below Threshold

     <12.4 %      0 %      <18.9 %      0 % 

 

* Straight-line interpolation will apply to performance levels between the ones
shown.

(i) “EBITDA Margin” is defined as EBITDA (adjusted to eliminate the effects of
asset impairments, restructurings, acquisitions, divestitures, other unusual or
non-recurring items, store closing costs, and the cumulative effect of tax or
accounting changes, as determined in accordance with generally accepted
accounting principles, as applicable) divided by Net Sales (defined as owned
sales as presented in the Company’s internal books and records, including the
business plan for the performance period). EBITDA Margin will be measured on a
three-year average basis (i.e., the average of fiscal 2011, fiscal 2012 and
fiscal 2013 annual EBITDA Margin).

Notwithstanding anything to the contrary contained in any Performance Restricted
Stock Unit Agreement previously entered into between the Company and the Grantee
covering the grant of performance restricted stock units by the Company to the
Grantee, all such Performance Restricted Stock Unit Agreements shall be deemed
to define Net Sales in the same manner as Net Sales are defined herein.

(ii) “Return on Invested Capital” is defined as EBITDAR divided by Total Average
Gross Investment. EBITDAR is equal to the sum of EBITDA (adjusted to eliminate
the effects of asset impairments, restructurings, acquisitions, divestitures,
other unusual or non-recurring items, store closing costs, and the cumulative
effect of tax or accounting changes, as determined in accordance with generally
accepted accounting principles, as applicable) plus Net Rent Expense. Net Rent
Expense represents rent expense as reported in the Company’s financial
statements included in its Form 10-K less the deferred rent amortization related
to contributions received from landlords. Total Average Gross Investment is
equal to the sum of Gross Property, Plant and Equipment (PPE) plus Capitalized
Value of Non-Capitalized Leases, plus Working Capital – which includes
Receivables, Merchandise Inventories, Supplies and Prepaid Expenses – offset by
Accounts Payable and Accrued Liabilities, plus Other Assets, each as reported in
the Company’s financial statements in the applicable Form 10-K or Form 10-Q.
Gross PPE will be determined using a two-point average (i.e., beginning and end
of year). Capitalized Value of Non-Capitalized Leases will be calculated as 8 x
Net Rent Expense. Working Capital components

 

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and Other Assets will be determined using a four-point (i.e., quarterly)
average. ROIC will be measured on a three-year average basis (i.e., the average
of fiscal 2011, fiscal 2012 and fiscal 2013 annual ROIC).

4. Forfeiture of Performance Units. (a) Termination of Employment.
Notwithstanding the provisions of Section 3 above, and except as the Board may
determine on a case-by-case basis or as provided below, all unvested Performance
Units shall be forfeited if the Grantee ceases to be continuously employed by
the Company for any reason at any time prior to the end of the Performance
Period. For the purposes of this Agreement the continuous employment of the
Grantee with the Company shall not be deemed to have been interrupted, and the
Grantee shall not be deemed to have ceased to be an employee of the Company, by
reason of the transfer of the Grantee’s employment among the Company and its
Subsidiaries, divisions or affiliates or a leave of absence approved by the
Company. In the event of a termination for cause (as hereafter defined), all
unvested Performance Units shall be immediately forfeited.

(b) Death, disability or retirement. Notwithstanding the provisions of Section 3
above, and except as the Board may determine on a case-by-case basis or as
provided below, in the event the Grantee retires on or after age 62 with at
least 10 years of service, dies or becomes permanently and totally disabled
during the Performance Period, the Grantee (or his or her estate, as
appropriate) will receive at the end of the Performance Period the percentage of
Performance Units determined under Section 3 above, prorated from the
Commencement Date through the date of such retirement, death or disability based
on the number of completed months of service during the Performance Period
divided by 36.

(c) Change in Control. In the event of a Change in Control (as hereafter
defined), Performance Units will convert to time-based restricted stock without
proration for the percentage of the Performance Period that has elapsed since
the Commencement Date, as follows:

(i) If the Change in Control occurs prior to the 24-month anniversary of the
Commencement Date, then 100% of the Target award number of Performance Units
shall convert to time-based restricted stock;

(ii) If the Change in Control occurs after the 24-month anniversary of the
Commencement Date, the conversion of Performance Units to time-based restricted
stock will be based on the Company’s performance determined under Section 3
above from the Commencement Date through the first 24 months of the Performance
Period, plus the Company’s performance determined under Section 3 above during
any completed fiscal quarter thereafter to the date of the Change in Control.

(iii) The vesting of the time-based restricted stock as so converted:

 

  •  

Will be accelerated if, within the 24-month period following the Change in
Control, the Grantee is terminated by the Company or the continuing entity
without cause or if the Grantee voluntarily terminates employment with Good
Reason;

 

  •  

Will be accelerated at the Change in Control if awards are not assumed or
replaced by the acquiror/continuing entity on terms deemed by the Compensation
Committee to be appropriate; and

 

  •  

Will occur on the third anniversary of the Date of Grant, if Vesting has not
otherwise been accelerated as provided above.

5. Dividend, Voting and Other Rights. Except as otherwise provided herein, prior
to Vesting the Grantee shall not have any of the rights of a stockholder with
respect to the Performance

 

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Units, including the right to vote any of the Performance Units. An amount
representing dividends payable on shares of Common Stock equal in number to one
hundred and fifty percent (150%) of the Target award of Performance Units on a
dividend record date shall be deemed reinvested in Common Stock and credited to
the Grantee as restricted stock units as of the dividend payment date. If there
is any change in the outstanding Common Stock of the Company by reason of a
stock dividend, stock split, combination of shares, recapitalization, merger,
consolidation, separation or reorganization or any other change in the capital
structure of the Company, the Compensation Committee shall determine the
appropriate adjustment to the Performance Units, if any, needed to reflect such
change. Any restricted stock units or additional Performance Units credited to
the Grantee pursuant to this Section 5 will be subject to the terms and
restrictions set forth in this Agreement.

6. Settlement of Performance Units. As soon as administratively feasible
following the end of the Performance Period and certification by the
Compensation Committee as to the level of achievement of the Cumulative EBITDA
performance goal and, if the Compensation Committee exercises its discretion to
reduce the number of Performance Units that will Vest, determination of the
level of achievement of the applicable EBITDA Margin and ROIC performance goals,
but in no event later than two and a half months after the end of the
Performance Period, the Company shall cause to be paid to the Grantee:

(i) a number of shares of unrestricted Common Stock equal to the number of
Performance Units to which the Grantee is entitled, with a cash component
representing fractional shares, if any, plus

(ii) a number of shares of Common Stock equal to the number of restricted stock
units attributed to earned dividend equivalents on those Performance Units, with
a cash component representing fractional shares, if any.

Such shares of Common Stock shall be credited as book entry shares to the
Grantee’s trading account, unless the Grantee requests stock certificates, in
which case the Company shall deliver to the Grantee stock certificates
representing such Common Stock. In the event Performance Units are not earned,
those Performance Units, and the related restricted stock units attributed to
dividend equivalents on those Performance Units, shall be forfeited.

7. Clawback. Any incentive-based compensation received by Grantee from the
Company hereunder or otherwise shall be subject to recovery by the Company in
the circumstances and manner provided in any Incentive-Based Compensation
Recovery Policy that may be adopted or implemented by the Company and in effect
from time to time on or after the date hereof, and Grantee shall effectuate any
such recovery at such time and in such manner as the Company may specify. For
purposes of this Agreement, the term “Incentive-Based Compensation Recovery
Policy” means and includes any policy of the type contemplated by Section 10D of
the Securities Exchange Act, any rules or regulations of the Securities and
Exchange Commission adopted pursuant thereto, or any related rules or listing
standards of any national securities exchange or national securities association
applicable to the Company. Until the Company shall adopt such an Incentive-Based
Compensation Recovery Policy, the following clawback provision shall apply:

In the event that, within three years of the end of the Performance Period, the
Company restates its financial results with respect to the Company’s performance
during the Performance Period to correct a material error that the Compensation
Committee determines is the result of fraud or intentional misconduct, then the
Grantee shall repay to the Company all income, if any, derived from the
Performance Units.

 

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8. No Employment Contract. Nothing contained in this Agreement shall confer upon
the Grantee any right with respect to continuance of employment by the Company,
or limit or affect in any manner the right of the Company to terminate the
employment or adjust the compensation of the Grantee.

9. Taxes and Withholding. If the Company shall be required to withhold any
federal, state, local or foreign tax in connection with the issuance or Vesting
of any Performance Units or the issuance of any unrestricted shares of Common
Stock or other securities following Vesting pursuant to this Agreement, it shall
be a condition to such Vesting or issuance that the Grantee pay the tax or make
provisions that are satisfactory to the Company for the payment thereof. Unless
the Grantee makes alternative arrangements satisfactory to the Company prior to
the Vesting of the Performance Units or the issuance of shares of unrestricted
Common Stock, as the case may be, the Grantee will satisfy the minimum statutory
tax withholding obligations by surrendering to the Company a portion of the
shares of nonforfeitable and unrestricted Common Shares that are issued or
transferred to the Grantee hereunder following the Vesting Date, and the shares
of Common Stock so surrendered by the Grantee shall be credited against any such
withholding obligation at the Market Value per Share of such shares of Common
Stock on the Vesting Date.

10. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal and state securities laws; provided, however,
notwithstanding any other provision of this Agreement, the Company shall not be
obligated to issue any Performance Units or shares of unrestricted Common Stock
or other securities pursuant to this Agreement if the issuance thereof would
result in a violation of any such law.

11. Relation to Other Benefits. Any economic or other benefit to the Grantee
under this Agreement shall not be taken into account in determining any benefits
to which the Grantee may be entitled under any profit-sharing, retirement or
other benefit or compensation plan maintained by the Company and shall not
affect the amount of any life insurance coverage available to any beneficiary
under any life insurance plan covering employees of the Company.

12. Amendments. Any Amendment to the Plan shall be deemed to be an amendment to
this Agreement to the extent that the amendment is applicable hereto; provided,
however, that no amendment shall adversely affect the rights of the Grantee
under this Agreement without the Grantee’s consent.

13. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.

14. Relation to Plan; Miscellaneous. This Agreement is subject to the terms and
conditions of the Plan. In the event of any inconsistent provisions between this
Agreement and the Plan, the Plan shall govern. Capitalized terms used herein
without definition shall have the meanings assigned to them in the Plan. All
references in this Agreement to the Company shall be deemed to include, unless
the context in which it is used suggests otherwise, its subsidiaries, divisions
and affiliates.

15. Successors and Assigns. Subject to Section 2 hereof, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of the Grantee and the
successors and assigns of the Company.

16. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware.

 

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17. Definitions.

(a) “cause” shall mean that the Grantee has committed prior to termination of
employment any of the following acts:

(i) an intentional act of fraud, embezzlement, theft, or any other material
violation of law in connection with the Grantee’s duties or in the course of the
Grantee’s employment;

(ii) intentional wrongful damage to material assets of the Company;

(iii) intentional wrongful disclosure of material confidential information of
the Company;

(iv) intentional wrongful engagement in any competitive activity that would
constitute a material breach of the duty of loyalty;

(v) intentional breach of any stated material employment policy of the Company;
or

(vi) intentional neglect by the Grantee of the Grantee’s duties and
responsibilities.

(b) “Good Reason” shall mean:

(i) a material diminution in the Grantee’s base compensation;

(ii) a material diminution in the Grantee’s authority, duties or
responsibilities;

(iii) a material change in the geographic location at which the Grantee must
perform the Grantee’s services; or

(iv) any other action or inaction that constitutes a material breach by the
Company of an agreement under which the Grantee provides services.

(c) “Change in Control” shall mean the occurrence of any of the following
events:

(i) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the then-outstanding securities of the Company entitled to vote
generally in the election of directors (the “Voting Stock”); provided, however,
that for purposes of this subsection (i), the following acquisitions will not
constitute a Change of Control: (A) any acquisition of Voting Stock directly
from the Company that is approved by a majority of the Incumbent Board (as
defined in subsection (ii) below); (B) any acquisition of Voting Stock by any
entity in which the Company, directly or indirectly, beneficially owns 50% or
more ownership or other equity interest (a “Subsidiary”); (C) any acquisition of
Voting Stock by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary; or (D) any acquisition of Voting
Stock by any Person pursuant to a transaction that complies

 

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with clauses (A), (B) and (C) of subsection (iii) below; provided further, that:
(X) if any Person is or becomes the beneficial owner of 30% or more of the
Voting Stock as a result of a transaction described in clause (A) of this
subsection (i), and such Person thereafter becomes the beneficial owner of any
additional shares of Voting Stock, and after obtaining such additional
beneficial ownership beneficially owns 30% or more of the Voting Stock, other
than in an acquisition of Voting Stock directly from the Company that is
approved by a majority of the Incumbent Board or other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Voting Stock are treated equally, such subsequent
acquisition will be treated as a Change in Control; and (Y) a Change in Control
will not be deemed to have occurred if a Person is or becomes the beneficial
owner of 30% or more of the Voting Stock as a result of a reduction in the
number of shares of Voting Stock outstanding pursuant to a transaction or series
of transactions approved by a majority of the Incumbent Board unless and until
such Person thereafter becomes the beneficial owner of any additional shares of
Voting Stock, and after obtaining such additional beneficial ownership
beneficially owns 30% or more of the Voting Stock, other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Voting Stock are treated equally; or

(ii) Individuals who, on the effective date of the Plan, constitute the Board of
Directors of the Company (as modified by this subsection (ii), the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board of
Directors of the Company (the “Board”); provided, however, that any individual
becoming a director after the effective date of the Plan whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of
at least two-thirds of the directors then comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be considered as though such individual were a member of the
Incumbent Board such effective date, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or

(iii) The consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
(each, a “Business Combination”), unless, in each case, immediately following
such Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Voting Stock
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the entity resulting from such Business Combination (including,
without limitation, an entity that as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions relative
to each other as their ownership, immediately prior to such Business
Combination, of the Voting Stock, (B) no Person (excluding any employee benefit
plan (or related trust) sponsored or maintained by the Company or any Subsidiary
or such entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 30% or more of, respectively, the combined voting power
of the then-outstanding securities entitled to vote generally in the election of
directors of the entity resulting from such Business Combination except to the
extent that such ownership existed prior to the Business

 

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Combination, and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

(iv) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer, and Grantee has also executed this
Agreement in duplicate, as of the day and year first above written.

 

MACY’S, INC. By:       Dennis J. Broderick Title:   Executive Vice President,
General Counsel and Secretary   ______________________, Grantee

 

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