Exhibit 10.3

 

FOOT LOCKER LONG-TERM INCENTIVE COMPENSATION PLAN

 

Amended and Restated as of March 23, 2016

 

Effective as of February 1, 1981, the Board of Directors of Foot Locker
Specialty, Inc. adopted a Long-Term Incentive Compensation Plan (the “Plan”) for
certain executives of Foot Locker Specialty, Inc. and its subsidiaries.
Effective as of August 7, 1989, Foot Locker, Inc. (“Foot Locker” or the
“Company”) adopted the Plan, as amended. The Plan has been amended and restated
from time to time, and in accordance with the requirements of “Section 162(m) of
the Code” (as defined below), the performance goals under the Plan were
initially approved at the 1996 annual meeting of shareholders and were
reapproved in 2001, 2006 and 2011. The Plan is again amended and restated as of
March 23, 2016 in the form set forth below, subject to shareholder approval of
the performance goals set forth herein at the 2016 annual meeting of
shareholders.

 

The objectives of the Plan are:

 

(a) to reinforce corporate organizational and business-development goals.

 

(b) to promote the achievement of year-to-year and long-range financial and
other business objectives such as high quality of service and product, improved
productivity and efficiencies for the benefit of our customers’ satisfaction and
to assure a reasonable return to Foot Locker’s shareholders.

 

(c) to reward the performance of individual executives in fulfilling their
personal responsibilities for long-range achievements.

 

(d) to serve as a qualified performance-based compensation program under Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) or any
successor section and the Treasury regulations promulgated thereunder (“Section
162(m) of the Code”).

 

(e) to award shares of Common Stock (as defined below) after attainment of
pre-established performance goals and completion of the Performance Period (as
defined below), which shall be considered “Other Stock-Based Awards” under the
Foot Locker 2007 Stock Incentive Plan, amended and restated as of May 21, 2014,
and as further amended from time to time, or other applicable stock incentive
plan of the Company (the “Stock Incentive Plan”).

 

1. Definitions. The following terms, as used herein, shall have the following
meanings:

 

(a) “Annual Base Salary” shall mean the annual base salary approved by the
Committee with respect to the executive at the time the performance goals are
established by the Committee, as described in Section 5(b) hereof without
reduction for any amounts withheld pursuant to participation in a “cafeteria
plan” under Section 125 of the Code, a cash or deferred arrangement under
Section 401(k) of the Code or a qualified transportation arrangement under
Section 132(f) of the Code. Notwithstanding the

 

foregoing in the event of an executive’s promotion during a Performance Period,
such participant’s Annual Base Salary shall reflect any salary increase paid as
a result of the participant’s promotion.

 

(b) “Board” shall mean the Board of Directors of Foot Locker.

 

(c) “Change in Control” shall mean any of the following: (i) the merger or
consolidation of the Company with, or the sale or disposition of all or
substantially all of the assets of the Company to, any person other than (A) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) fifty percent (50%) or more of the combined voting
power of the voting securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation; or (B) a merger or
capitalization effected to implement a recapitalization of the Company (or
similar transaction) in which no person is or becomes the beneficial owner,
directly or indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing more than the
amounts set forth in (ii) below; (ii) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), in the aggregate, of securities of the Company
representing thirty-five percent (35%) or more of the total combined voting
power of the Company’s then issued and outstanding voting securities by any
person acting in concert; or (iii) during any period of not more than twelve
(12) months, individuals who at the beginning of such period constitute the
Board of Directors of the Company (referred to herein as the “Board”), and any
new director whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds (⅔) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof.

 

(d) “Committee” shall mean two or more members of the Compensation Committee of
the Board, each of whom is an “outside director” within the meaning of Section
162(m) of the Code.

 

(e) “Common Stock” shall mean common stock of Foot Locker, par value $0.01 per
share.

 

(f) “Consolidated Net Income” shall mean the net income of Foot Locker and its
subsidiaries for each fiscal year determined in accordance with generally
accepted accounting principles and reported upon by Foot Locker’s independent
accountants but before provision for accrued expenses net of the related income
tax reduction for payments to be made pursuant to this Plan.

 

(g) “Fair Market Value” of a share of Common Stock shall mean the average of the
closing prices of a share of such Common Stock as reported on the Composite Tape
for the New York Stock Exchange during the sixty (60) day period immediately
preceding the payment date relating to the applicable Performance Period.

2

(h) “Individual Target Award” shall mean the targeted performance award for a
Plan Year specified by the Committee as provided in Section 5 herein.

 

(i) “Performance Period” shall mean the period of three consecutive Plan Years
or such other period as determined by the Committee, beginning with the Plan
Year in which the award is made.

 

(j) “Plan Year” shall mean Foot Locker’s fiscal year during which the Plan is in
effect.

 

2. Administration of the Plan. The Plan shall be administered by the Committee.
No member of the Committee while serving as such shall be eligible for
participation in the Plan. The Committee shall have exclusive and final
authority in all determinations and decisions affecting the Plan and its
participants. The Committee shall also have the sole authority to interpret the
Plan, to establish and revise rules and regulations relating to the Plan, to
delegate such responsibilities or duties as it deems desirable, and to make any
other determination that it believes necessary or advisable for the
administration of the Plan including, but not limited to: (i) approving the
designation of eligible participants; (ii) setting the performance criteria
within the Plan guidelines; and (iii) certifying attainment of performance goals
and other material terms. To the extent any provision of the Plan, other than
Section 7 herein, creates impermissible discretion under Section 162(m) of the
Code or would otherwise violate Section 162(m) of the Code, such provision shall
have no force or effect.

 

3. Participation. Participation in the Plan is limited to officers or other key
employees of Foot Locker or any subsidiary thereof, as selected by the Committee
in its sole discretion. The Committee may from time to time designate additional
participants who satisfy the criteria for participation as set forth herein, and
shall determine when an officer or key employee of Foot Locker ceases to be a
participant in the Plan.

 

4. Right to Payment. Unless otherwise determined by the Committee in its sole
discretion, a participant shall have no right to receive payment under this Plan
unless the participant remains in the employ of Foot Locker at all times during
the applicable Performance Period; provided, however, that notwithstanding any
other provision of the Plan, the Committee may make a pro-rata payment following
the end of the Performance Period to any participant in circumstances the
Committee deems appropriate including, but not limited to a participant’s death,
disability, retirement, or other termination of employment during the
Performance Period, provided the performance goals for the Performance Period
are met. Furthermore, upon a Change in Control the Committee may, in its sole
discretion, but only to the extent permitted under Section 162(m) of the Code
(if applicable), make a payment to any participant who is a participant at the
time of such Change in Control, on the date of the Change in Control, or as soon
as practicable thereafter, and prior to the end of the Performance Period (to
the extent determinable), which is equal to or less than the pro-rata portion
(through the date of the Change in Control) of the Individual Target Award based
on (a) the actual performance results achieved relative to the Performance
Period’s performance goals with respect to the period from the commencement of
the Performance Period to the date of the Change in Control, and (b) the
performance results that would have been achieved had the Performance Period’s
Target been met for the balance of such Performance Period. Any

3

pro-ration required hereunder shall be based on a fraction, the numerator of
which is the number of months completed before the termination of employment or
Change in Control, as the case may be, and the denominator of which is the
number of months in the Performance Period.

 

5. Payment.

 

(a) Payment to a participant under this Plan for each Performance Period shall
be made in cash, shares of the Company’s Common Stock, or any combination
thereof, as determined by the Committee for each Performance Period. If payment
is to be made in shares of the Company’s Common Stock, the number of shares of
Common Stock shall be determined by the Committee by dividing the achieved
percentage of such participant’s Annual Base Salary payable in Common Stock (as
determined by the Committee for each Performance Period) by the Fair Market
Value of the Common Stock on the date of payment as determined in accordance
with Section 4 or 6 herein. Such achieved percentage shall be based on the
participant’s achievement of his or her Individual Target Award. Except to the
extent provided for in Section 4 hereof, payment shall be made only if and to
the extent the relevant performance goals with respect to the Performance Period
are attained. Awards of Common Stock made pursuant to this Plan are Other
Stock-Based Awards (as defined in the Stock Incentive Plan) and are issued under
and subject to, the applicable provisions of the Stock Incentive Plan including,
without limitation, Section 9 (Other Stock-Based Awards) and Section 5 (Stock
Subject to the Plan; Limitation on Grants). In the event that any payment
results in other than a whole number of shares of Common Stock, the value of the
fractional share of Common Stock shall be paid in cash.

 

(b) At the beginning of each Performance Period (or within the time period
prescribed by Section 162(m) of the Code), the Committee shall establish all
performance goals and the Individual Target Awards for such Performance Period
and Foot Locker shall inform each participant of the Committee’s determination
with respect to such participant for such Performance Period. Individual Target
Awards shall be expressed as a percentage of such participant’s Annual Base
Salary. At the time the performance goals are established, the Committee shall
prescribe a formula to determine the percentage of the Individual Target Award
which may be payable based upon the degree of attainment of the performance
goals during the Performance Period.

 

(c) Notwithstanding anything to the contrary contained in this Plan,

 

(1) the performance goals in respect of awards granted to participants
hereunder, shall be based on one or more of the following criteria:

 

(i) the attainment of certain target levels of, or percentage increase in,
pre-tax profit;

 

(ii) the attainment of certain target levels of, or percentage increase in,
division profit;

 

(iii) the attainment of certain target levels of, or a percentage increase in,
after-tax profits of Foot Locker (or a subsidiary, division, or other
operational unit of Foot Locker);

4

(iv) the attainment of certain target levels of, or a specified increase in,
operational cash flow or economic value added of Foot Locker (or a subsidiary,
division, or other operational unit of Foot Locker);

 

(v) the achievement of a certain level of, reduction of, or other specified
objectives with regard to limiting the level of increase in, all or a portion
of, Foot Locker’s bank debt or other long-term or short-term public or private
debt or other similar financial obligations of Foot Locker, if any, which may be
calculated net of such cash balances and/or other offsets and adjustments as may
be established by the Committee;

 

(vi) the attainment of a specified percentage increase in earnings per share or
earnings per share from continuing operations of Foot Locker (or a subsidiary,
division or other operational unit of Foot Locker);

 

(vii) the attainment of certain target levels of, or a specified percentage
increase in, revenues, net income, or earnings before (A) interest, (B) taxes,
(C) depreciation and/or (D) amortization, of Foot Locker (or a subsidiary,
division, or other operational unit of Foot Locker);

 

(viii) the attainment of certain target levels of, or a specified increase in,
return on invested capital or return on investment;

 

(ix) the attainment of certain target levels of, or a percentage increase in,
after-tax or pre-tax return on shareholders’ equity of Foot Locker (or any
subsidiary, division or other operational unit of Foot Locker);

 

(x) the attainment of a certain target level of, or reduction in, selling,
general and administrative expense as a percentage of revenue of Foot Locker (or
any subsidiary, division or other operational unit of Foot Locker);

 

(xi) the attainment of a certain target level of, or percentage increase in,
Consolidated Net Income;

 

(xii) the attainment of certain target levels of, or a specified increase in,
enterprise value or value creation targets of Foot Locker (or any subsidiary,
division or other operational unit of Foot Locker);

 

(xiii) the attainment of a certain target level of, or a specified increase in,
gross or operating margins of Foot Locker (or any subsidiary, division or other
operational unit of Foot Locker); and

 

(xiv) the attainment of certain target levels of, or a specified increase in,
the fair market value of the shares of Common Stock or total shareholder return,
including the value of an investment in Common Stock assuming the reinvestment
of dividends.

 

In addition, performance goals may be based upon the attainment of specified
levels of Foot Locker (or a subsidiary, division or other operational unit of
Foot Locker) performance under one or more of the measures described above
relative to the performance of other corporations. The Committee may designate
additional business

5

criteria on which the performance goals may be based or adjust, modify, or amend
those criteria.

 

(2) To the extent permitted under Section 162(m) of the Code, unless otherwise
determined by the Committee at the time the performance goals are set and
incorporated into the performance goals, the Committee shall exclude the impact
of any of the following events or occurrences:

 

(i) restructurings, discontinued operations, extraordinary items or other
special, unusual or non-recurring items or charges;

 

(ii) any acquisition or divestiture of an operating business during the Plan
Year or Performance Period;

 

(iii) impairment charges taken under relevant accounting rules;

 

(iv) an event either not directly related to the operations of the Company (or
any subsidiary, division or other operational unit of the Company) or not within
the reasonable control of the Company’s management; or

 

(v) a change in tax law or accounting standards required by generally accepted
accounting principles.

 

(3) In no event shall payment in respect of an award granted for a Performance
Period be made to a participant as of the end of such Performance Period in a
dollar value which exceeds the lesser of (i) 300% of such participant’s Annual
Base Salary or (ii) $5,000,000.

 

6. Time of Payment. Subject to Section 4 herein, all payments earned by
participants under the Plan shall be based on the achievement of performance
goals established by the Committee and will be paid in accordance with Section 5
herein after performance goal achievements for the Performance Period have been
finalized, reviewed, approved and certified by the Committee, but in no event
later than two and one-half months following the end of the fiscal year for the
last year of the applicable Performance Period. Foot Locker’s independent
accountants shall examine as of the close of the Performance Period and
communicate the results of such examination to the Committee as to the
appropriateness of the proposed payments under the Plan.

 

7. Interim Participation. Notwithstanding anything else herein, the Committee
may, in its sole discretion, grant an award hereunder to a participant who
commences employment with Foot Locker during a Plan Year. Such award is not
required to satisfy the exception for performance-based compensation set forth
in Section 162(m) of the Code.

 

8. Miscellaneous Provisions.

 

(a) A participant’s rights and interests under the Plan may not be sold,
assigned, transferred, pledged or alienated.

 

(b) In the case of a participant’s death, payment, if any, under the Plan shall
be made to his or her designated beneficiary, or in the event no beneficiary is
designated or surviving, to the participant’s estate.

6

(c) Neither the Plan nor any action taken hereunder shall be construed as giving
any employee any right to be retained in the employ of Foot Locker or any
subsidiary.

 

(d) Foot Locker and any of its subsidiaries shall have the right to make such
provisions as it deems necessary or appropriate to satisfy any obligations it
may have to withhold federal, state or local income or other taxes incurred by
reason of payments made pursuant to the Plan.

 

(e) Except with regard to an award made pursuant to Section 7 herein, the Plan
is designed and intended to comply with Section 162(m) of the Code and all
provisions hereof shall be limited, construed and interpreted in a manner to so
comply.

 

(f) While neither Foot Locker nor any of its subsidiaries guarantee any
particular tax treatment, the Plan is designed and intended to comply with the
short-term deferral rules under Section 409A of the Code and the applicable
regulations thereunder and shall be limited, construed and interpreted with such
intent. All amounts payable under the Plan shall be payable within the
short-term deferral period in accordance with Section 409A and regulations
issued thereunder.

 

(g) The Board or the Committee may at any time and from time to time alter,
amend, suspend or terminate the Plan in whole or in part; provided, that, no
amendment which requires shareholder approval in order for the Plan to continue
to comply with the exception for performance based compensation under Section
162(m) of the Code shall be effective unless the same shall be approved by the
requisite vote of the shareholders of Foot Locker as determined under Section
162(m) of the Code. Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any participant, without such participant’s
consent, under the award theretofore granted under the Plan.

 

(h) Notwithstanding anything herein to the contrary, amounts payable hereunder
shall be subject to Foot Locker’s clawback policy with respect to the recovery
of incentive compensation to the extent and in the manner provided therein.

7