EXHIBIT 10.1
 
ABERCROMBIE & FITCH CO.

 
INCENTIVE COMPENSATION PERFORMANCE PLAN
 
The Abercrombie & Fitch Co. Incentive Compensation Performance Plan (the
“Incentive Plan”) is intended to satisfy the applicable provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
The Incentive Plan shall be administered by the Compensation Committee (the
“Committee”) of the Board of Directors of Abercrombie & Fitch Co. (the
“Company”), which is intended to consist solely of “outside directors” as such
term is defined in Section 162(m) of the Code. The Committee shall select those
key executives of the Company with significant operating and financial
responsibility and who are likely to be “covered employees” (within the meaning
of Section 162(m) of the Code) for the relevant fiscal year, to be eligible to
earn seasonal or annual cash incentive compensation payments to be paid under
the Incentive Plan. In addition, all associates of the Company selected to
participate for a given fiscal year shall be eligible to earn seasonal or annual
cash incentive compensation under the Incentive Plan.
 
In respect of each Spring and/or Fall selling season or fiscal year, the
Committee may establish performance goals for the Company. For purposes of the
Incentive Plan, a “performance goal” shall mean any one or more of the following
business criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or subsidiary,
either individually, alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Committee:
(i) gross sales, net sales, or comparable store sales; (ii) gross margin, cost
of goods sold, mark-ups or mark-downs; (iii) selling, general and administrative
expenses; (iv) operating income, earnings from operations, earnings before or
after taxes, earnings before or after interest, depreciation, amortization, or
extraordinary or special items; (v) net income or net income per common share
(basic or diluted); (vi) inventory turnover or inventory shrinkage; (vii) return
on assets, return on investment, return on capital, or return on equity;
(viii) cash flow, free cash flow, cash flow return on investment, or net cash
provided by operations; (ix) economic profit or economic value created;
(x) stock price or total stockholder return; and (xi) market penetration,
geographic expansion or new concept development; customer satisfaction;
staffing; diversity; training and development; succession planning; employee
satisfaction; acquisitions or divestitures of subsidiaries, affiliates or joint
ventures. These factors may be adjusted by the Committee to eliminate the
effects of charges for restructurings, discontinued operations, extraordinary
items and all items of gain, loss or expense determined to be extraordinary or
unusual in nature or infrequent in occurrence or related to the disposal of a
segment of a business or related to a change in accounting principle all as
determined in accordance with standards established by opinion No. 30 of the
Accounting Principles Board or other applicable or successor accounting
provisions, as well as the cumulative effect of accounting changes, in each case
as determined in accordance with generally accepted accounting principles or
identified in the Company’s financial statements or notes to the financial
statements. These factors shall have a minimum performance standard below which
no payments will be made, and a maximum performance standard above which, no
additional payments will be made. These performance goals may (but need not) be
based on an analysis of historical performance and growth expectations for the
Company, financial results of other comparable businesses and progress toward
achieving the Company’s long-range strategic plan. These performance goals and
determination of results shall be based entirely on objective measures. The
Committee may not use any discretion to modify award results except as permitted
under Section 162(m) of the Code.
 

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Annual incentive compensation targets may be established for eligible executives
ranging from 5% to 150% of base salary. Executives may earn their target
incentive compensation if the pre-established performance goals are achieved.
The target incentive compensation percentage for each executive will be based on
the level and functional responsibility of his or her position, size of the
business for which the executive is responsible and competitive practices. The
amount of incentive compensation paid to participating executives may range from
zero to double their targets, based upon the extent to which performance goals
are achieved or exceeded. Except as otherwise permitted by Section 162(m) of the
Code, the minimum level at which a participating executive will earn any
incentive payment, and the level at which an executive will bear the maximum
incentive payment of double the target, must be established by the Committee no
later than before 25% of the applicable bonus period has elapsed (or, if less,
90 days of such bonus period have elapsed). Actual payouts must be based on
either a straight-line or pre-established graded interpolation based on these
minimum and maximum levels and the performance goals. The Committee may, in its
sole discretion, adjust payouts downward from the amount a covered employee is
entitled to receive under the applicable formula.
 
At such time as it shall determine appropriate following the conclusion of each
bonus period, the Committee shall certify, in writing, that the applicable
performance goals were satisfied and the amount of a covered employee’s cash
incentive compensation for such bonus period. No payments shall be made under
the Incentive Plan until such certification has been made. Any payments under
the Incentive Plan shall in all events be paid no later than the fifteenth day
of the third month following the end of the fiscal year in which the applicable
bonus period ends.
 
The maximum dollar amount to be paid for any year under the Incentive Plan to
any participant may not exceed $5,000,000.
 
The Board may, from time to time, alter, amend, suspend or terminate the
Incentive Plan as it shall deem advisable, subject to any requirement for
stockholder approval imposed by applicable law, including Section 162(m) of the
Code. No amendments to, or termination of, the Incentive Plan shall in any way
impair the rights of a covered employee under any award previously granted
without such employee’s consent.
 
If at any time after the date on which an Incentive Plan participant has
received payments under the Incentive Plan pursuant to the achievement of a
performance goal, the Committee determines that the earlier determination as to
the achievement of the performance goal was based on incorrect data and that in
fact the performance goal had not been achieved or had been achieved to a lesser
extent than originally determined and a portion of such payment would not have
been paid, given the correct data, then such portion of any such payment paid to
the Incentive Plan participant shall be paid by such participant to the Company
upon notice from the Company as provided by the Committee.