STOCK CREDIT PLAN FOR 2008-2009

Of

MACY’S, INC.

(as amended as of August 22, 2008)

1. Purpose of the Plan.

The purpose of this Plan is to further the achievement of certain priorities of
the strategic plan of Macy’s, Inc. (the "Company") by offering long-term
incentives in addition to current compensation to those officers and key
employees of the Company and its subsidiaries who will be largely responsible
for such achievement.

 

2. Administration of the Plan.

The Plan shall be administered by the Compensation and Management Development
Committee of the Board of Directors of the Company (the "Committee").  No member
of the Committee while serving as such shall be eligible for participation in
the Plan.

Subject to the provisions of the Plan, the Committee shall have exclusive power
to select the employees to be granted Stock Credits, to determine the number of
Stock Credits to be granted to each employee selected, to determine the type of
Stock Credits to be granted to each participant, to determine the time or times
when Stock Credits will be granted, and to determine that all participants shall
be of a single class or to divide participants into different classes. Subject
to the requirements of Section 409A and the terms of this Stock Credit Plan, the
Committee shall determine the time or times, and the conditions, subject to
which any awards may become payable and may, in its sole discretion, waive or
accelerate any provision of this Plan. In the case of the CEO’s grants, any
actions recommended by the Committee are subject to approval by the Board of
Directors.

Decisions and determinations by the Committee shall be final and binding upon
all parties, including shareholders, participants, and other employees. The
Committee shall have the authority to interpret the Plan, to establish and
revise rules and regulations relating to the Plan, and to make any other
determinations that it believes necessary or advisable for the administration of
the Plan.

 

3. Participation.

Individual participants in the Plan shall be selected by the Committee from key
employees of the Company and its subsidiaries. The term "employee" shall mean
any person (including any officer) employed by the Company or a subsidiary on a
salaried basis and, except as provided in Section 2 above with respect to
Committee members, no employee shall be excluded because he is also a Director
of the Company or any of its subsidiaries.

 

4. Stock Credits.

Awards under this Plan shall be granted to a participant in the form of Stock
Credits (“Stock Credits”), which shall be credited to a Stock Credit Account to
be maintained for such participant. Each Stock Credit shall be deemed to be
equivalent in value to one share of Common Stock of the Company.  Stock Credits
awarded under this Plan shall be credited with dividend equivalents during the
Holding Period until such Stock Credits are forfeited or paid out pursuant to
Section 7or 8 below.  Dividend equivalents, which will be paid only on whole,
not fractional, Stock Credits, will be converted to additional Stock Credits (in
whole and fractional shares) based on the 20-trading day average closing price
of the Common Stock of the Company as reported on the New York Stock Exchange
ending on the record date for the dividend.

The Committee may award the following Stock Credits:  (i) Core Stock Credits, a
portion of which may be earned based on achievement of certain strategic
objectives of the Company during the Performance Period (“Performance-Based Core
Stock Credits”), and a portion of which may be earned based solely on the
participant’s service (“Time-Based Core Stock Credits”), and (ii) on a limited
basis, My Macy’s/Consolidation Stock Credits, which may be earned based on
achievement of certain strategic objectives related to sales in the My Macy’s
regions and division consolidation savings during the Performance Period.

 

5. Time of Grant of Awards.

The Committee shall make grants of awards of Stock Credits during the first year
of the Performance Period (i.e., Spring 2008).

 

6.   Right to Payment of Stock Credits.

 

A participant shall have no right to receive payment for any part of his Stock
Credits and all of his Stock Credits shall be forfeited unless he remains in the
employment of the Company or a subsidiary at all times from the date of grant of
the award through the earliest to occur of:

 

(a) the last day of the Holding Period;

 

(b) his retirement date (defined as any time after age 62 with at least 10 years
of vesting service, as determined for purposes of the Macy’s, Inc. Cash Account
Pension Plan) during the Performance Period or the Holding Period;

 

(c) his retirement date (defined as any time between age 55 and age 62, with at
least 10 years of vesting service, as determined for purposes of the Macy’s,
Inc. Cash Account Pension Plan) during the Holding Period;

 

(d) his involuntary termination without Cause;

 

(e)  his death while employed by the Company or a subsidiary;

 

(f) Total Disability while employed by the Company or a subsidiary; or

 

(g)  the circumstances described in Section 7.

 

The extent to which a participant earns the right to receive payment of all or
part of the Stock Credits in an award grant shall be determined by the Committee
based on the degree to which the Company has achieved certain strategic plan
objectives as established by the Committee for the Performance period, but in no
event will be less than the portion of the Core Stock Credits allocated to the
participant that are not based on achieving certain performance objectives. 
Each participant shall receive payment of the same percentage of his/her Stock
Credits.  Any Stock Credits allocated to a participant that are not paid shall
be forfeited.  Payment of Stock Credits shall include any applicable dividend
equivalents credited to such Stock Credits pursuant to Section 4.

 

A participant who, during the Performance Period (i) retires at or after age 62
with at least 10 years of vesting service, or (i) is terminated without Cause,
will receive a payment equal to the number of Stock Credits earned during the
Performance Period under this Section 6 multiplied by a fraction, the numerator
of which is the number of months that the participant was employed during the
Performance Period and the denominator of which is 24.  The payment will be made
at the same time and in the same manner as applicable to the active
participants.

 

A participant who, during the Holding Period (i) retires at or after age 62 with
at least 10 years of vesting service, or (ii) is terminated without Cause, will
receive the number of Stock Credits earned during the Performance Period under
this Section 6.  The payment will be made at the same time and in the same
manner as applicable to the active participants.

 

A participant who retires during the Holding Period between age 55 and 62 with
at least 10 years of vesting service, will be entitled to a pro-rata payment of
his/her Stock Credits equal to the number of Stock Credits (whether service
based or performance based, and including dividend equivalents) earned during
the Performance Period under this Section 6, one-half of which is multiplied by
a fraction, the numerator of which is the total number of months that the
participant was employed during the Performance Period plus the Holding Period
and the denominator of which is 48 and the other half of which is multiplied by
a fraction, the numerator of which is the total number of months that the
participant was employed during the Performance Period plus the Holding Period
and the denominator of which is 60.  The payment will be made at the same time
and in the same manner as applicable to the active participants.

 

In the case of death or Total Disability during the Performance Period, a
payment equal to the portion of the Core Stock Credits allocated to the
participant that are not based on achieving certain performance objectives,
discounted to present value (using the Company’s standard discount rate) at the
time of death or determination of the Total Disability, will be made to the
participant’s designated beneficiary, or if no beneficiary has been designated,
to the participant’s estate (in the event of death) or to the participant (in
the event of Total Disability).

 

In the case of death or Total Disability during the Holding period, a lump sum
payment of the discounted present value of the account (using the Company’s
standard discount rate) will be made to the participant’s designated
beneficiary, or if no beneficiary has been designated, to the participant’s
estate (in the event of death) or to the participant (in the event of Total
Disability).

 

Except as otherwise determined by the Committee in accordance with this Plan, a
participant’s right to receive payment for his Stock Credits shall be forfeited
automatically and without further notice on the date that the participant ceases
to be an employee of the Company or a subsidiary by reason other than as set
forth above prior to the last day of the Holding Period.

 

The Committee may, if in the opinion of the Committee circumstances warrant such
action, approve payment of any or all of Stock Credits which would otherwise be
forfeited as a result of a participant failing to remain in the employment of
the participating Companies for the required period, provided, however, that no
such payment shall be accelerated unless such acceleration would be permitted
under Section 409A of the Internal Revenue Code.

 

7. Change in Control

Upon a Change in Control, the strategic plan objectives for Performance-Based
Core Stock Credits, and if applicable, My Macy’s/Consolidation Stock Credits,
shall be deemed achieved, and all service requirements for Time-Based Core Stock
Credits will be deemed satisfied.  In addition, Participants shall be paid 100%
of the Stock Credit balance on the 10th day after a Change in Control.  The
value of a Participant’s Stock Credit balance shall be based on the value at
which the Company’s stock is purchased or exchanged pursuant to the Change in
Control agreement, or if the Change in Control does not involve a purchase or
exchange of the Company’s stock, such value shall be based on the 20-trading day
average closing price of the Company’s common stock immediately preceding the
Change in Control, as reported on the New York Stock Exchange.  Notwithstanding
the foregoing, in the event that a Change in Control fails to meet the
requirements of Section 409A, payment shall be made at the same time and in the
same manner as applicable to active participants absent a Change in Control.

 

8. Form and Timing of Payment.

All payments shall be made wholly in cash.  Except as otherwise provided herein
with respect to death, Total Disability or a Change in Control, payments shall
be made to the holder of Stock Credits in two installments.  The first
installment, equal to 50% of the Stock Credits and 50% of the dividends to be
paid pursuant to Section 6 above will be made in a lump sum on or as soon as
practicable after January 28, 2012, but in no event later than December 31,
2012.  The second installment, equal to the remainder of the participant’s Stock
Credits and dividends to be paid pursuant to Section 6, above, will be made in a
lump sum on or as soon as practicable after February 2, 2013, but in no event
later than December 31, 2013.  The amount of cash to be paid shall be based on
the 20-trading day average closing price of the Company’s common stock
immediately preceding the last day of the company’s fiscal year immediately
preceding the year of payment, as reported on the New York Stock Exchange.

For a participant (or a participant’s designated beneficiary or if no
beneficiary has been designated, the participant’s estate) who becomes entitled
to payment under Section 6, above as a result of death or Total Disability,
payment shall be made 90 days after the date of the death or determination by
the Committee of a participant’s Total Disability.  Such payment shall be made
in a single lump sum.  Notwithstanding the foregoing, in the event that Total
Disability fails to meet the requirements of Section 409A, payment shall be made
at the same time and in the same manner as applicable to active participants.

Payments shall not be considered compensation for purposes of the Company’s
qualified or nonqualified retirement plans or its group health and welfare
benefit plans.

 

9. Miscellaneous Provisions.

A. An employee's rights and interests under the Plan may not be assigned or
transferred. In the case of an employee's death, payment of Stock Credits due
under this Plan shall be made to his designated beneficiary or if no beneficiary
has been designated, to his estate.

B. No employee or other person shall have any claim or right to be granted an
award under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of any
participating Company.

C. The Company shall have the right to deduct from all awards paid in cash any
taxes or other amounts required by law to be withheld with respect to such cash
awards.

D. As used in this Plan, the following terms shall have the following meanings:

“Cause”, as it relates to the termination of a participant’s employment, means
"cause" as defined in any employment agreement the participant may have with the
Company or a Subsidiary or, if no such agreement exists cause shall mean:

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

(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 which would
constitute a material breach of the duty of loyalty; or

(v) Intentional breach of any stated material employment policy of the Company.

No act, or failure to act, on the part of an Employee shall be deemed
"intentional" if it was due primarily to an error in judgment or negligence but
shall be deemed “intentional" only if done, or omitted to be done, by the
Employee not in good faith and without reasonable belief that his action or
omission was in or not opposed to the best interest of the Employer.  Failure to
meet performance standards or objectives of the Company shall not constitute
Cause for purposes hereof. 

 

“Change in Control,” means the occurrence during the term of this plan of any of
the following events:

 

            (i) The Company is merged, consolidated, or reorganized into or with
another corporation or other legal entity, and as a result of or immediately
following such merger, consolidation, or reorganization less than a majority of
the combined voting power of the then-outstanding securities of such other
corporation or entity immediately after such transaction are held in the
aggregate by the holders of the then-outstanding securities entitled to vote
generally in the election of directors of the Company ("Voting Stock")
immediately prior to such transaction;

 

(ii) The Company sells or otherwise transfers all or substantially all of its
assets to another corporation or other legal entity and, as a result of or
immediately following such sale or transfer, less than a majority of the
combined voting power of the then-outstanding securities of such other
corporation or entity immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company immediately prior to
such sale or transfer;

 

(iii) There is a report filed on Schedule 13D or Schedule 14D‑1 (or any
successor schedule, form, or report or item therein), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d‑3 or any
successor rule or regulation promulgated under the Exchange Act) of securities
representing 25% or more the of the combined voting power of the Voting Stock of
the Company (a “25% holder”), provided, however that no such person will be
deemed to constitute a 25% holder by reason of such person’s increase in
percentage ownership of Voting Stock resulting from repurchases of Voting Stock
by the Company or any subsidiary unless thereafter such person purchases or
otherwise acquires more than 100,000 additional shares of Voting Stock;

 

(iv) The Company files a report or proxy statement with the Securities and
Exchange Commission pursuant to the Exchange Act disclosing in response to Form
8‑K or Schedule 14A (or any successor schedule, form, or report or item therein)
that a change in control of the Company has occurred or will occur in the future
pursuant to any then-existing contract or transaction; or

 

            (v) If, during any period of two consecutive years, individuals who
at the beginning of any such period constitute the directors of the Company
cease for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this clause (v) the following persons will in all
events be deemed to be directors of the Company as of the beginning of the
relevant two-year period: each director who is first elected, or first nominated
for election by the Company's stockholders, by a vote of at least two-thirds of
the directors of the Company (or a committee thereof) then still in office who
were directors of the Company at the beginning of the relevant two-year period
(including any person deemed to be a director pursuant to the immediately
preceding clause).

 

Notwithstanding the foregoing provisions of Section (iii) or (iv), unless
otherwise determined in a specific case by majority vote of the Board of
Directors of the Company (the "Board"), a "Change in Control" will not be deemed
to have occurred for purposes of clauses (iii) or (iv) solely because (1) the
Company, (2) an entity in which the Company, directly or indirectly,
beneficially owns 50% or more of the voting securities (an "Affiliate"), or (3)
any employee stock ownership plan or any other employee benefit plan of the
Company or any Affiliate either files or becomes obligated to file a report or a
proxy statement under or in response to Schedule 13D, Schedule 14D‑1, Form 8‑K,
or Schedule 14A (or any successor schedule, form, or report or item therein)
under the Exchange Act disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 25% or otherwise, or because the Company reports
that a change in control of the Company has occurred or will occur in the future
by reason of such beneficial ownership.

 

 “Holding Period,” means the period beginning on the date following the
Performance Period and ending on the following dates: (i) in the case of 50% of
the Stock Credits and any dividends thereon, the last day of Company’s fiscal
year that begins in 2011 and (ii) in the case of the remaining 50% of Stock
Credits and any dividends thereon, the last day of Company’s fiscal year that
begins in 2012.

“Performance Period” means the period during which the Company’s achievement of
its strategic plan for Performance-Based Core Stock Credits and/or My
Macy’s/Consolidation Stock Credits is measured (i.e., the fiscal years of the
Company that begin in 2008 and 2009).

“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as
amended, and also including final regulations or any other guidance, promulgated
with respect to such Section by the U.S. Department of the Treasury or the
Internal Revenue Service.

"Subsidiary" means any corporation or other entity a majority of whose
outstanding voting power is held, directly or indirectly, by the Company.

"Total Disability" means, because of physical or mental impairment a participant
is unable to perform his duties for a period of 12 months or the Social Security
Administration makes a determination that an employee is disabled.  The
Committee, upon the basis of such evidence, shall make all determinations as to
the date and extent of disability of any participant as the Committee deems
necessary and desirable.

 

10. Amendments and Termination.

 

The Board of Directors may at any time amend or terminate this Plan with regard
to any or all Stock Credits, whether awarded or not, including to comply with
Section 409A of the Internal Revenue Code; provided that, upon a Plan
termination, payments with respect to outstanding Stock Credits will be made 30
days after the earliest date, if any, permitted by Section 409A. . No amendment
of termination may be made or effected if it would cause the Plan to fail to
comply with Section 409A.  If circumstances warrant, the Committee may, during
the Performance Period, modify the objectives or the minimum level of
achievement necessary to earn payment of Performance-Based Core Stock Credits
and My Macy’s/Consolidation Stock Credits. Except as specifically provided in
this Plan, the acceleration of any payment is prohibited.

 

 

11. Governing Law; Plan Interpretation

 

The interpretation, performance, and enforcement of this Plan shall be governed
by the laws of the State of Ohio, without giving effect to the principles of
conflict of laws thereof. To the extent applicable, it is intended that the
compensation arrangements under this Plan be in full compliance with Section
409A.  This Plan shall be construed in a manner to give effect to such
intention. 

 

 

12. Effective Date of the Plan.

The Plan shall be effective as of March 21, 2008.