Exhibit 10.2

COST PLUS, INC.

EXECUTIVE PERFORMANCE INCENTIVE PLAN

(Effective June 23, 2011)

TABLE OF CONTENTS

 

              Page  

SECTION 1 BACKGROUND, PURPOSE AND DURATION

     1     

1.1

   Effective Date      1     

1.2

   Purpose of the Plan      1   

SECTION 2 DEFINITIONS

     1     

2.1

   “Actual Award”      1     

2.2

   “Affiliate”      1     

2.3

   “Base Salary”      1     

2.4

   “Board”      1     

2.5

   “Change in Control”      1     

2.6

   “Code”      2     

2.7

   “Committee”      2     

2.8

   “Company”      2     

2.9

   “Determination Date”      2     

2.10

   “Disability”      2     

2.11

   “Employee”      2     

2.12

   “Fiscal Year”      2     

2.13

   “Maximum Award”      2     

2.14

   “Participant”      2     

2.15

   “Payout Formula”      2     

2.16

   “Performance Period”      2     

2.17

   “Performance Goals”      2     

2.18

   “Plan”      2     

2.19

   “Target Award”      3     

2.20

   “Termination of Employment”      3   

SECTION 3 SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

     3     

3.1

   Performance Goals      3     

3.2

   Selection of Participants      3     

3.3

   Determination of Performance Goals      4     

3.4

   Determination of Target Awards      4     

3.5

   Determination of Payout Formula      4     

3.6

   Date for Determinations      4     

3.7

   Determination of Actual Awards      4   

SECTION 4 PAYMENT OF AWARDS

     4     

4.1

   Right to Receive Payment      4     

4.2

   Timing of Payment      4     

4.3

   Form of Payment      5     

4.4

   Termination of Employment      5   

 

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TABLE OF CONTENTS

(continued)

 

              Page  

SECTION 5 ADMINISTRATION

     5     

5.1

   Committee is the Administrator      5     

5.2

   Committee Authority      5     

5.3

   Decisions Binding      5     

5.4

   Delegation by the Committee      5   

SECTION 6 GENERAL PROVISIONS

     5     

6.1

   Tax Withholding      5     

6.2

   No Effect on Employment      5     

6.3

   Participation      6     

6.4

   Indemnification      6     

6.5

   Successors      6     

6.6

   Beneficiary Designations      6     

6.7

   Nontransferability of Awards      6   

SECTION 7 AMENDMENT, TERMINATION AND DURATION

     6     

7.1

   Amendment, Suspension or Termination      6     

7.2

   Duration of the Plan      6   

SECTION 8 LEGAL CONSTRUCTION

     7     

8.1

   Gender and Number      7     

8.2

   Severability      7     

8.3

   Requirements of Law      7     

8.4

   Governing Law      7     

8.5

   Captions      7     

8.6

   Code Section 409A      7   

 

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COST PLUS, INC.

EXECUTIVE PERFORMANCE INCENTIVE PLAN

SECTION 1

BACKGROUND, PURPOSE AND DURATION

1.1 Effective Date. The Plan will become effective upon ratification by an
affirmative vote of the holders of a majority of the Shares that are present in
person or by proxy and entitled to vote at the 2011 Annual General Meeting of
the Company.

1.2 Purpose of the Plan. The Plan is intended to increase shareholder value and
the success of the Company by motivating Participants (1) to perform to the best
of their abilities, and (2) to achieve the Company’s objectives. The Plan’s
goals are to be achieved by providing Participants with the opportunity to earn
incentive awards for the achievement of goals relating to the performance of the
Company. The Plan is intended to permit the payment of bonuses that qualify as
performance-based compensation under Section 162(m) of the Code.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

2.1 “Actual Award” means as to any Performance Period, the actual award (if any)
payable to a Participant for the Performance Period. Each Actual Award is
determined by the Payout Formula for the Performance Period, subject to the
Committee’s authority under Section 3.7 to eliminate or reduce the award
otherwise determined by the Payout Formula.

2.2 “Affiliate” means a member of the Company’s “affiliated group,” as defined
in Section 1504 of the Code (determined without regard to Section 1504(b) of the
Code).

2.3 “Base Salary” means as to any Performance Period, unless the Committee
provides otherwise when establishing the Target Award, the Participant’s earned
salary during the Performance Period. Such Base Salary shall be before both
(a) deductions for taxes or benefits, and (b) deferrals of compensation pursuant
to Company-sponsored plans and Affiliate-sponsored plans. For avoidance of
doubt, “Base Salary” does not include bonuses, commissions, equity compensation,
incentive or compensation.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Change in Control” means the occurrence of any of the following, in one or
a series of related transactions:

a. Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act of 1934, as amended) becomes the “beneficial owner” (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power
represented by the Company’s then outstanding voting securities;

b. The consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;

 

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c. A change in the composition of the Board occurring within a two (2)-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors” means directors who either (A) are
Directors as of the effective date of the Plan, or (B) are elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or

d. The consummation of a merger or consolidation of the Company with any other
corporation, other than 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 entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation.

e. The approval by the Shareholders of the Company of a plan of complete
liquidation of the Company

f. The complete liquidation or dissolution of the Company.

2.6 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated thereunder, and any comparable
provision of any future legislation or regulation amending, supplementing or
superseding such section or regulation.

2.7 “Committee” means the committee appointed by the Board (pursuant to
Section 5.1) to administer the Plan.

2.8 “Company” means Cost Plus, Inc. or any successor thereto.

2.9 “Determination Date” means the latest possible date that will not jeopardize
a Target Award or Actual Award’s qualification as performance-based compensation
under Section 162(m) of the Code).

2.10 “Disability” means a permanent and total disability determined in
accordance with a policy or policies established by the Committee (in its
discretion) from time to time.

2.11 “Employee” means any employee of the Company or of an Affiliate, whether
such employee is so employed at the time the Plan is adopted or becomes so
employed subsequent to the adoption of the Plan.

2.12 “Fiscal Year” means the fiscal year of the Company.

2.13 “Maximum Award” means as to any Participant for any Performance Period,
$3,000,000.

2.14 “Participant” means as to any Performance Period, an Employee who has been
selected by the Committee for participation in the Plan for that Performance
Period.

2.15 “Payout Formula” means as to any Performance Period, the formula or payout
matrix established by the Committee pursuant to Section 3.5 in order to
determine the Actual Awards (if any) to be paid to Participants. The formula or
matrix may differ from Participant to Participant.

2.16 “Performance Period” means a Fiscal Year or such longer or shorter period
as determined by the Committee in its sole discretion.

2.17 “Performance Goals” shall have the meaning as set forth in Section 3.1 of
the Plan.

2.18 “Plan” means the Cost Plus, Inc. Executive Performance Incentive Plan, as
set forth in this instrument and as hereafter amended from time to time.

 

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2.19 “Target Award” means the target award payable under the Plan to a
Participant for the Performance Period, expressed as a percentage of his or her
Base Salary or a specific dollar amount, as determined by the Committee in
accordance with Section 3.4.

2.20 “Termination of Employment” means a cessation of the employee-employer
relationship between an Employee and the Company or an Affiliate for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, retirement, or the disaffiliation of an Affiliate,
but excluding any such termination where there is a simultaneous re-employment
by the Company or an Affiliate.

SECTION 3

SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

3.1 Performance Goals. The granting of awards pursuant to the Plan may be made
subject to the attainment of goal(s) (or combined goal(s)) determined by the
Committee (in its discretion) relating to one or more business criteria within
the meaning of Section 162(m) of the Code to be applicable to a Participant for
a Target Award for a Performance Period (“Performance Goals”). As determined by
the Committee, the Performance Goals for any Target Award applicable to a
Participant may provide for a targeted level or levels of achievement using one
or more of the following measures: cash flow, business unit or division
performance, earnings (which may include earnings before interest, taxes,
depreciation and amortization (EBITDA), or earnings before taxes and net
earnings), earnings per share, expense reduction, gross margin, shareholder
value, market share, net income, net sales, operating income, operating margin,
productivity, return on assets, return on capital, return on shareholder equity,
return on sales, and total shareholder return. Performance Goals may differ from
Participant to Participant, Performance Period to Performance Period and from
award to award. Any criteria used may be measured, as applicable, (i) in
absolute terms; (ii) in relative terms over the passage of time and/or any
measurement against other companies or financial or business or stock index
metrics particular to the Company); (iii) on a per share and/or share per capita
basis; (iv) against the performance of the Company as a whole or against any
Affiliate(s), or a particular segment(s), a business unit(s) or a product(s) of
the Company; (v) on a pre-tax or after-tax basis; and/or (vi) using an actual
foreign exchange rate or on a foreign exchange neutral basis. Prior to the
Determination Date, the Committee shall determine whether any element(s) (for
example, but not by way of limitation, the effect of mergers or acquisitions)
shall be included in or excluded from the calculation of any Performance Goal
with respect to any Participants (whether or not such determinations result in
any Performance Goal being measured on a basis other than generally accepted
accounting principles). In all other respects, Performance Goals will be
calculated in accordance with the Company’s financial statements, generally
accepted accounting principles, or under a methodology established by the
Committee prior to or at the time of the issuance of an award and which is
consistently applied with respect to a Performance Goal in the relevant
Performance Period. The Committee will appropriately adjust any evaluation of
performance under a Performance Goal to exclude (i) any extraordinary
non-recurring items as described in Accounting Principles Board Opinion No. 30
and/or in management’s discussion and analysis of financial conditions and
results of operations appearing in the Company’s annual report to shareholders
for the applicable year; or (ii) the effect of any changes in accounting
principles affecting the Company’s or a business units’ reported results. In
addition, the Committee will adjust any performance criteria, Performance Goal
or other feature of an award that relates to or is wholly or partially based on
the number of, or the value of, any stock of the Company, to reflect any stock
dividend or split, repurchase, recapitalization, combination, or exchange of
shares or other similar changes in such stock.

3.2 Selection of Participants. The Committee, in its sole discretion, shall
select the Employees who shall be Participants for any Performance Period. The
Committee, in its sole discretion, also may designate as Participants one or
more individuals (by name or position) who are expected to become Employees
during a Performance Period. Participation in the Plan is in the sole discretion
of the Committee, and shall be determined on a Performance Period by Performance
Period basis. Accordingly, an Employee who is a Participant for a given
Performance Period in no way is guaranteed or assured of being selected for
participation in any subsequent Performance Period.

 

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3.3 Determination of Performance Goals. The Committee, in its sole discretion,
shall establish the Performance Goals for each Participant for the Performance
Period. Such Performance Goals shall be set forth in writing.

3.4 Determination of Target Awards. The Committee, in its sole discretion, shall
establish a Target Award for each Participant. Each Participant’s Target Award
shall be determined by the Committee in its sole discretion, and each Target
Award shall be set forth in writing.

3.5 Determination of Payout Formula. On or prior to the Determination Date for a
Performance Period, the Committee, in its sole discretion, shall establish a
Payout Formula for purposes of determining the Actual Award (if any) payable to
each Participant. Each Payout Formula shall (a) be in writing, (b) be based on a
comparison of actual performance to the Performance Goals, (c) provide for the
payment of a Participant’s Target Award if the Performance Goals for the
Performance Period are achieved at the predetermined level, and (d) provide for
the payment of an Actual Award greater than or less than the Participant’s
Target Award, depending upon the extent to which actual performance exceeds or
falls below the Performance Goals. Notwithstanding the preceding, in no event
shall a Participant’s Actual Award for any Performance Period exceed the Maximum
Award.

3.6 Date for Determinations. The Committee shall make all determinations under
Sections 3.2 through 3.5 on or before the Determination Date.

3.7 Determination of Actual Awards. After the end of each Performance Period,
the Committee shall certify in writing (for example, in its meeting minutes) the
extent to which the Performance Goals applicable to each Participant for the
Performance Period were achieved or exceeded, as determined by the Committee. A
Participant will be eligible to receive an Actual Award intended to qualify as
performance-based compensation under Section 162(m) of the Code for a
Performance Period only if the Performance Goals for such period are achieved.
The Actual Award for each Participant shall be determined by applying the Payout
Formula to the level of actual performance that has been certified in writing by
the Committee. Notwithstanding any contrary provision of the Plan, in
determining the amounts earned by a Participant pursuant to an award intended to
qualified as performance-based compensation under Section 162(m) of the Code,
the Committee will have the right to (a) reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period,
(b) determine what Actual Award, if any, will be paid in the event of a
Termination of Employment as the result of a Participant’s death or Disability
or upon a Change in Control or in the event of a Termination of Employment
following a Change in Control prior to the end of the Performance Period, and
(c) determine what Actual Award, if any, will be paid in the event of a
Termination of Employment other than as the result of a Participant’s death or
Disability prior to a Change in Control and prior to the end of the Performance
Period to the extent an Actual Award would have otherwise been achieved had the
Participant remained employed through the end of the Performance Period.

SECTION 4

PAYMENT OF AWARDS

4.1 Right to Receive Payment. Each Actual Award that may become payable under
the Plan shall be paid solely from the general assets of the Company or the
Affiliate that employs the Participant (as the case may be), as determined by
the Committee. Nothing in this Plan shall be construed to create a trust or to
establish or evidence any Participant’s claim of any right to payment of an
Actual Award other than as an unsecured general creditor with respect to any
payment to which he or she may be entitled.

4.2 Timing of Payment. Subject to Section 3.7, payment of each Actual Award
shall be made as soon as administratively practicable following the
determination and certification of the Actual Award as set forth in Section 3.7,
but in no event later than the fifteenth day of the third month of the Fiscal
Year following the date

 

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the Participant’s Actual Award has been earned and is no longer subject to a
substantial risk of forfeiture; provided that the Committee may permit
Participants to elect to defer payment of their Actual Awards in a manner
satisfying the requirements of Section 409A of the Code.

4.3 Form of Payment. Each Actual Award shall be paid in cash (or its equivalent)
in a single lump-sum unless otherwise deferred in accordance with Section 4.2.

4.4 Termination of Employment. Except as permitted in Section 3.7, if a
Participant incurs a Termination or Employment for any reason prior to the date
of payment of an Actual Award, such Participant shall not be entitled to an
Award.

SECTION 5

ADMINISTRATION

5.1 Committee is the Administrator. As of the Effective Date of the Plan, the
Plan shall be administered by the Committee. The Committee shall consist of not
less than two (2) members of the Board. The members of the Committee shall be
appointed from time to time by, and serve at the pleasure of, the Board. Each
member of the Committee shall qualify as an “outside director” under
Section 162(m) of the Code. If it is later determined that one or more members
of the Committee do not so qualify, actions taken by the Committee prior to such
determination shall be valid despite such failure to qualify.

5.2 Committee Authority. It shall be the duty of the Committee to administer the
Plan in accordance with the Plan’s provisions. The Committee shall have all
powers and discretion necessary or appropriate to administer the Plan and to
control its operation, including, but not limited to, the power to (a) determine
which Employees shall be granted awards, (b) prescribe the terms and conditions
of awards, (c) interpret the Plan and the awards, (d) adopt such procedures and
sub-plans as are necessary or appropriate to permit participation in the Plan by
Employees who are foreign nationals or employed outside of the United States,
(e) adopt rules for the administration, interpretation and application of the
Plan as are consistent therewith, and (f) interpret, amend or revoke any such
rules.

5.3 Decisions Binding. All determinations and decisions made by the Committee,
the Board, and any delegate of the Committee pursuant to the provisions of the
Plan shall be final, conclusive, and binding on all persons, and shall be given
the maximum deference permitted by law.

5.4 Delegation by the Committee. The Committee, in its sole discretion and on
such terms and conditions as it may provide, may delegate all or part of its
authority and powers under the Plan to one or more directors and/or officers of
the Company; provided, however, that the Committee may not delegate its
authority and/or powers with respect to awards that are intended to qualify as
performance-based compensation under Section 162(m) of the Code.

SECTION 6

GENERAL PROVISIONS

6.1 Tax Withholding. The Company or an Affiliate, as determined by the
Committee, shall withhold all applicable taxes from any Actual Award, including
any federal, state, local and other taxes (including, but not limited to the
Participant’s FICA and SDI).

6.2 No Effect on Employment. Nothing in the Plan shall interfere with or limit
in any way the right of the Company or an Affiliate, as applicable, to terminate
any Participant’s employment or service at any time, with or without cause. For
purposes of the Plan, transfer of employment of a Participant between the
Company and any

 

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one of its Affiliates (or between Affiliates) shall not be deemed a Termination
of Employment. Employment with the Company and its Affiliates is on an at-will
basis only. The Company expressly reserves the right, which may be exercised at
any time and without regard to when during or after a Performance Period such
exercise occurs, to terminate any individual’s employment with or without cause,
and to treat him or her without regard to the effect which such treatment might
have upon him or her as a Participant.

6.3 Participation. No Employee shall have the right to be selected to receive an
award under this Plan, or, having been so selected, to be selected to receive a
future award.

6.4 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any award, and (b) from any and all amounts
paid by him or her in settlement thereof, with the Company’s approval, or paid
by him or her in satisfaction of any judgment in any such claim, action, suit,
or proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s charter and/or
organizational documents, by contract, as a matter of law, or otherwise, or
under any power that the Company may have to indemnify them or hold them
harmless.

6.5 Successors. All obligations of the Company and any Affiliate under the Plan,
with respect to awards granted hereunder, shall be binding on any successor to
the Company and/or such Affiliate, whether the existence of such successor is
the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business or assets of the Company
or such Affiliate.

6.6 Beneficiary Designations. If permitted by the Committee, a Participant under
the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid
award shall be paid in the event of the Participant’s death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Committee. In the
absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate.

6.7 Nontransferability of Awards. No award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will, by the laws of descent and distribution, or to the limited extent
provided in Section 6.6. All rights with respect to an award granted to a
Participant shall be available during his or her lifetime only to the
Participant.

SECTION 7

AMENDMENT, TERMINATION AND DURATION

7.1 Amendment, Suspension or Termination. The Board or the Committee, each in
its sole discretion, may amend or terminate the Plan, or any part thereof, at
any time and for any reason. The amendment, suspension or termination of the
Plan shall not, without the consent of the Participant, alter or impair any
rights or obligations under any Target Award theretofore granted to such
Participant. No award may be granted during any period of suspension or after
termination of the Plan.

7.2 Duration of the Plan. The Plan shall commence on the date specified herein,
and subject to Section 7.1 (regarding the Board or the Committee’s right to
amend or terminate the Plan), shall remain in effect until the 2016 Annual
General Meeting of Shareholders.

 

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SECTION 8

LEGAL CONSTRUCTION

8.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

8.2 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

8.3 Requirements of Law. The granting of awards under the Plan shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

8.4 Governing Law. The Plan and all awards shall be construed in accordance with
and governed by the laws of the State of California, but without regard to its
conflict of law provisions.

8.5 Captions. Captions are provided herein for convenience only, and shall not
serve as a basis for interpretation or construction of the Plan.

8.6 Code Section 409A. It is intended that this Plan comply with, or be exempt
from, Section 409A and any ambiguities herein will be interpreted to so comply
and/or be exempt from Section 409A. The Company and each Participant will work
together in good faith to consider either (i) amendments to the Plan; or
(ii) revisions to the Plan with respect to the payment of any awards, which are
necessary or appropriate to avoid imposition of any additional tax or income
recognition prior to the actual payment to the Participant under Section 409A.
In no event will the Company reimburse a Participant for any taxes that may be
imposed on the Participant as a result of Section 409A.

 

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