Exhibit 10.26

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED

 

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Pro-Rata Restricted Performance Share Unit Award

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Fiscal 2014 – Overview

April 1, 2013

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This Overview is qualified in its entirety by reference to the Memorandum to
Participants in the Ralph Lauren Corporation 2010 Long-Term Stock Incentive Plan
and to the Plan itself. Copies of the Memorandum and the Plan are available from
your Human Resources Department.
OVERVIEW
The Ralph Lauren Corporation (the “Company”) 2010 Long-Term Stock Incentive Plan
(the “Plan”) authorizes the Compensation & Organizational Development Committee
of the Board of Directors (the “Compensation Committee”) to grant equity awards
to officers and other employees of the Company and its Subsidiaries and
Affiliates.
As determined by the Compensation Committee, the Company may grant one or more
types of Restricted Performance Share Unit awards (RPSUs). This Overview
describes one type of RPSU that has three-year, pro-rata vesting (“Pro-Rata
RPSU”).
A Pro-Rata RPSU award provides the participant with the opportunity to receive
shares of the Company’s Class A Common Stock (traded on the New York Stock
Exchange under the symbol RL) at a later date contingent upon achievement of
performance goals and continued service with the Company.
AWARD OBJECTIVES
Objectives of RPSUs, including Pro-Rata RPSUs, are to:
1.
Attract and retain exceptional individuals of superior talent

2.
Motivate such individuals to achieve longer-range performance

3.
Enable such individuals to participate in the long-term growth and financial
success of the Company

PLAN ADMINISTRATION
The Company’s Human Resources Department administers the program and Merrill
Lynch Wealth Management (“Merrill Lynch”) is the recordkeeper. Participants must
have an open brokerage account at Merrill Lynch in order to facilitate
distribution of shares of the Company’s Class A Common Stock upon the vesting of
Pro-Rata RPSUs. To open a brokerage account, or for questions regarding your
account and account transactions, contact Merrill Lynch at (609) 818-8908 or
(877) 765-7656.

 
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The Company’s Board of Directors reserves the right to amend, modify or
terminate the Plan at any time, subject to stockholder approval, if required. No
such amendment to the Plan would adversely affect any Pro-Rata RPSU awards then
outstanding.
Nothing contained herein may be construed as creating a promise of future
benefits or a binding contract with the Company. Further, an individual’s
employment continues to be at will, subject to any applicable employment
agreement.
For questions regarding the Plan and its provisions, contact Human Resources.
ELIGIBILITY FOR GRANT
Equity awards, including Pro-Rata RPSU awards, may be granted annually to
designated, key executives who have a significant impact on the strategic
direction and business results of the Company, and who are actively employed on
April 1 of the year when the grant is made.
Guidelines have been established for the number and type of equity awards that
eligible participants may receive. The guidelines reflect a position’s scope,
accountability and impact on the organization, and may also reflect changes in
the value of the Company’s Class A Common Stock.
Please note that the guidelines do not constitute a guarantee that any specific
individual will receive an equity award in any given or subsequent year, or
guarantee the type or the size of any grant, if a grant is made.
An eligible employee who receives a Below Expectations (B) or Unsatisfactory (U)
rating
on their annual performance appraisal is not eligible for an equity award
in the fiscal year following that performance appraisal period.

GRANT AMOUNT AND AWARD VESTING
The number of units in a Pro-Rata RPSU award is set as of the grant date. The
award will vest in equal, annual installments (tranches) over a three-year
period. One third of the Pro-Rata RPSUs granted in fiscal 2014 will vest each
year after the end of fiscal 2014, fiscal 2015 and fiscal 2016, subject to
achievement of the applicable Company performance goal in the first year and the
participant having continuous service through each vesting date (see examples
beginning on page 5).

 
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PERFORMANCE MEASURES FOR PRO-RATA RPSU VESTING
The Company’s performance measure(s) are established by the Compensation
Committee at the time of the grant from a list of performance criteria set forth
in the Plan. Such measure(s) may include, for example, one or more of the
following:
▪
Net Earnings or Net Income (before or after taxes)

▪
Basic or Diluted Earnings Per Share (before or after taxes)

▪
Net Operating Profit (before or after taxes)

▪
Net Revenue or Net Revenue Growth

▪
Gross Profit or Gross Profit Growth

▪
Return Measures (including but not limited to Return on Assets, Investments,
Capital)

▪
Other measures of economic value added or value creation metrics

Once a Pro-Rata RPSU award is granted, the performance measure(s), vesting and
payout schedule will not be modified during the term for that particular award.
However, in determining performance against the goal, the Company’s results may
be adjusted to exclude the effects of certain events and transactions as
specified by the Compensation Committee at the time of grant. For any future
awards, the Compensation Committee may change the performance measure(s), goals,
vesting and payout schedule(s).
FISCAL 2014 GRANT PERFORMANCE MEASURE AND PERFORMANCE LEVEL FOR VESTING
The Company performance measure for fiscal 2014 Pro-Rata RPSU awards is
Corporate Net Income Before Tax (NIBT). This performance measure is also used
for bonus awards under the Executive Incentive Plan (EIP).
The performance level that must be achieved for Pro-Rata RPSU vesting is NIBT at
Threshold (80% of Target) or better and is communicated on your stock
notification.
FISCAL 2014 VESTING SCHEDULE
All three tranches of the fiscal 2014 Pro-Rata RPSUs are deemed earned and
available for vesting based on achievement of the fiscal 2014 performance goal
as follows:
▪
One-third would vest and be paid out after the end of fiscal 2014 based on
achievement of the fiscal 2014 Company performance goal and on the participant’s
continuous service with the Company from the grant date to the vesting date

 
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▪
One-third would vest and be paid out after the end of fiscal 2015 (participant
must have continuous service with the Company from the grant date to the vesting
date)

▪
One-third would vest and be paid out after the end of fiscal 2016 (participant
must have continuous service with the Company from the grant date to the vesting
date)

All three tranches of the fiscal 2014 Pro-Rata RPSU award will be forfeited if
the fiscal 2014
performance goal (Corporate NIBT at Threshold or better) is not achieved.

Vesting of the Pro-Rata RPSUs and the distribution of the Company’s Class A
Common Stock will occur as soon as administratively practical following
certification of achievement of the Company’s performance goals by the
Compensation Committee. The vesting date typically occurs in June of each year,
but may be earlier or later. Once the Pro-Rata RPSUs are vested and distributed
as Company Class A Common Stock, the participant owns the shares and as a
shareholder, will have voting rights and will receive dividends, if applicable,
on such shares. Prior to the vesting date, dividends are not earned on Pro-Rata
RPSUs and the participant does not have voting rights.
VESTING EXAMPLES
These examples illustrate how a Pro-Rata RPSU award granted in fiscal 2014 would
vest, in equal installments, over three fiscal years. Vesting is subject to
achievement of FY14 performance goal - Corporate Net Income Before Taxes (NIBT)
at Threshold or better - and the participant’s continuous service with the
Company from the grant date to each vesting date.
EXAMPLE 1: 210 FY14 Pro-Rata RPSUs (Granted July 2013)
   

Performance
Period

# Pro-Rata RPSUs
Eligible to Vest

Performance
Level 1
   # Pro-Rata RPSUs
  Vested and Distributed if Vesting Criteria Met2

Vesting
Date3
FY14
70
Threshold
70
June 2014
FY15
70
N/A
70
June 2015
FY16
70
N/A
70
June 2016
Total
210
 
210
  

1
Threshold refers to attaining at least 80% of the fiscal 2014 Corporate NIBT
goal. If Threshold or better performance

is not achieved in the first year, all three tranches will be forfeited

2
Vesting criteria includes a minimum of Threshold performance and the
participant’s continuous service with the Company

from grant date

3
The vesting date typically occurs in June of each year, but may be earlier or
later

 
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Additionally, depending on any previous grants received, more than one Pro-Rata
RPSU award may be eligible to vest each year, as shown below:
EXAMPLE 2: MULTIPLE PRIOR GRANTS WITH SHARES ELIGIBLE TO VEST
Year Granted
# of Pro-Rata RPSUs Granted
1/3 of Pro-Rata RPSUs Eligible to Vest 1
June 2014
June 2015
June 2016
FY12
(July 2011)
270
90
-
-
FY13
(July 2012)
300
  100
  100
-
FY14
(July 2013)
210
70
70
70
Total Pro-Rata RPSUs
780
260
170
70

1Assumes that goal measures, performance and service with the Company,
applicable to each tranche of each grant are met.
The vesting date typically occurs in June of each year, but may be earlier or
later.
In the U.S. and in many other jurisdictions, vesting of RPSUs and delivery of
shares of the Company’s Class A Common Stock is a taxable event. When shares are
distributed, a portion of the shares are withheld to satisfy withholding
requirements, and the net shares are delivered to participants in their Merrill
Lynch account.

Shares received from the vesting of a Pro-Rata RPSU award may be sold subject to
the Company’s trading restrictions as set forth in the Company’s Securities
Trading policy beginning on page 9. In certain circumstances, certain Executive
Officers may sell shares pursuant to Rule 144 or another applicable exemption
under the U.S. Securities Act of 1933, as amended.

In the U.S. and in many other jurisdictions, sale of such shares after vesting
has tax implications. Contact your financial advisor for important information
about how a subsequent sale of shares impacts you.
Once Pro-Rata RPSUs have vested and you receive shares of the Company’s Class A
Common Stock from the vesting of a particular Pro-Rata RPSU award, you retain
all rights to those shares, regardless of employment status with the Company.

 
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VALUE OF RESTRICTED PERFORMANCE SHARE UNITS
If Threshold or better performance against the fiscal year goal is achieved,
Pro-Rata RPSUs can provide participants with ownership of the Company’s Class A
Common Stock and the opportunity to benefit from any appreciation in price above
the price on grant date.

This example illustrates the opportunity for gains in the value of the award at
various Company Class A Common Stock prices.

EXAMPLE: POTENTIAL VALUE
Award of 210 Pro-Rata RPSUs

 
 
If Stock Price Reaches:
 
# of Shares
$160
$185
$210
$235
Value (assumes shares vest)
210
 $33,600
$38,850
$44,100
$49,350

Note: Value is before tax and a portion of the shares awarded would be withheld
to satisfy required tax withholding. Example is hypothetical and is not a
forecast of growth in the Company’s Class A Common Stock price.

 
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IF YOU LEAVE THE COMPANY
Event
Status of RPSU Awards
Normal Retirement
(Age 65)1

Early Retirement
(Age 55 through age 64
with 7 or more years of service)1

Long-Term Disability (LTD)4                                     

Death

• RPSUs vesting during the fiscal year are pro-rated2 as of the date of
retirement1, LTD, or death. The pro-rated number of shares will be eligible to
vest on their normal vesting date.3
• All remaining Pro-Rata RPSUs (for that fiscal year and any other fiscal years
remaining) are forfeited
Voluntary Resignation
• All unvested Pro-Rata RPSUs are forfeited
Involuntary Termination
(Without Cause)
• All unvested Pro-Rata RPSUs are forfeited
Dismissal for Cause
(As defined by the Company or,
if applicable, the participant’s employment agreement)
• All vested Pro-Rata RPSUs not yet distributed into shares of the Company’s
Class A Common Stock are forfeited
• All unvested Pro-Rata RPSUs are forfeited

1 Pro-rated RPSUs vest only if retirement date is on or after the last day of
the first quarter of the fiscal year.

2 The pro-rated portion is determined by taking the number of full months worked
in the fiscal year, dividing by 12, then multiplying by the number of Pro-Rata
RPSUs scheduled to vest for that fiscal year.

3 Vesting occurs after the end of the performance period following certification
of achievement of performance goals by The Compensation Committee. The vesting
date typically occurs in June of each year, but may be earlier or later. Your
Merrill Lynch statement reflects a performance end date, which is different from
the actual vesting date.
4 For purposes hereof, “disability” shall, unless otherwise determined by the
Committee, have the same meaning as such term or a similar term has under the
long-term disability plan or policy maintained by the Company or a Subsidiary
under which the Participant has coverage and which is in effect on the date of
the onset of the Participant’s disability.

 
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SECURITIES TRADING POLICY
INSIDER TRADING
As provided in the Company Employee Handbook, employees are prohibited by law
from buying or selling securities if an employee has or is aware of any
material, non-public information about the Company and its subsidiaries. This is
commonly referred to as “insider information.” Material, non-public information
is any information that has not been disclosed to the public that could affect
the price of Company Common Stock -- either positively or negatively -- or
affect a person’s decision to buy, hold or sell securities.

Examples of what might be considered “insider information” include, but are not
limited to, the following:
▪
Earnings or other financial information

▪
Changes in dividend policy

▪
Stock splits

▪
Mergers and acquisitions

▪
Major new contracts or product-line introductions

▪
Litigation involving substantial amounts of money

▪
Changes in management

These insider-trading rules are applicable to employees of Ralph Lauren and its
Subsidiaries and Affiliates, worldwide.

COMPANY BLACKOUT PERIODS
To avoid even the appearance of “insider trading,” our Company’s Securities
Trading policy prohibits members of the Board of Directors, all employees and
their “Related Parties” (as such term is defined in the Company’s Securities
Trading Policy) from making trades involving stock of the Company during certain
“blackout periods.” This prohibition covers all transactions in the Company’s
securities, including buying or selling shares, including shares of Class A
Common Stock received upon the vesting of RPSUs. These blackout periods
generally begin two weeks before the end of each of our fiscal quarters and
continue through one trading day after the Company issues its earnings release
for the fiscal quarter or year just ended. If the earnings release is issued
before the opening of the market on a trading day, trading may begin the next
day. The blackout periods are announced at the start of each year. The Company
may prohibit trading of the Company’s stock at any time it deems such trading to
be inappropriate, even outside the regular blackout periods. Individuals who
receive a specific notification prohibiting them from trading the Company’s
stock should note that such notification takes precedence over pre-announced
blackout periods. In addition, members of the Board of Directors, Officers (any
employee who is a Corporate Vice President / Division Senior Vice President or
above), and all employees in the Finance, Legal and Human Resources departments
must clear all trades with the
Corporate Counsel, or their designee, at all times.

 
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ADDITIONAL PROHIBITED TRANSACTIONS
Because we believe it is inappropriate for any Company personnel to engage in
short-term or speculative transactions involving the Company’s Common Stock, it
is Company policy that employees do not engage in any of the following
activities with respect to the securities of the Company:
▪
“In and out” trading in securities of the Company. Any Company stock purchased
in the market must be held for a minimum of six months and ideally longer. Note
that the Securities and Exchange Commission (SEC) has a “short-swing profit
recapture” rule that effectively prohibits Executive Officers and members of the
Board of Directors from selling any Company stock within six months of a
purchase. The Company has extended this prohibition to all employees. The
receipt of shares pursuant to the vesting of Pro-Rata RPSU awards is not
considered a purchase under the SEC’s rule.

▪
Short sales (i.e., selling stock one does not own and then borrowing the shares
to make delivery)

▪
Buying or selling “puts” or “calls” (i.e., making commitments to buy or sell
securities at a specified price for a fixed period of time)

CLEARANCE OF ALL TRADES BY DIRECTORS, OFFICERS AND OTHER KEY PERSONNEL
For employees at the Corporate Vice President and Division Senior Vice President
level or above (“Officers”) and for all employees in the Finance, Legal and
Human Resources departments, all transactions in the Company’s securities
(including, but not limited to purchases, sales, transfers, etc.) must be
conducted during an open trading window and pre-cleared with the Corporate
Counsel, or their designee. If contemplating a transaction, please provide a
written request via e-mail to RLTrading@ralphlauren.com, specifying the number
of Stock Options you wish to exercise and/or the number of shares you wish to
purchase or sell before contacting Merrill Lynch or any other broker, or taking
any other step to initiate a transaction.

    

 
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COMPLIANCE WITH SECTION 409A 
To the extent applicable, the Plan shall be interpreted in accordance with
Section 409A of the Internal Revenue Code of 1986 and the Department of Treasury
Regulations and other interpretive guidance issued hereunder (“Section 409A”). 
Notwithstanding any provision of the Plan to the contrary, it is intended that
this Plan comply with Section 409A, and all provision of this Plan shall be
construed and interpreted in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A. Each Participant is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on or in respect of such Participant in connection with this Plan or
any other plan maintained by the Company (including any taxes and penalties
under Section 409A), and neither the Company nor any Affiliate shall have any
obligation to indemnify or otherwise hold such Participant (or any beneficiary)
harmless from any or all of such taxes or penalties.

FOREIGN AWARDS AND RIGHTS
Notwithstanding any provision of the Plan to the contrary, to comply with
securities, exchange control, labor, tax, or other applicable laws, rules or
regulations in countries outside of the United States in which the Company and
its Subsidiaries operate or have Employees, Consultants, or directors, and/or
for the purpose of taking advantage of tax favorable treatment for Awards
granted to Participants in such countries, the Committee, in its sole
discretion, shall have the power and authority to (i) amend or modify the terms
and conditions of any Award granted to a Participants; (ii) establish, adopt,
interpret, or revise any rules and procedures to the extent such actions may be
necessary or advisable, including adoption of rules or procedures applicable to
particular Subsidiaries or Participants residing in particular locations; and
(iii) take any action, before or after an Award is made, that it deems advisable
to obtain approval or comply with any necessary local governmental regulatory
exemptions or approvals. Without limiting the generality of the foregoing, the
Committee is specifically authorized to adopt rules or procedures with
provisions that limit or modify rights on eligibility to receive an Award under
the Plan or on termination of Service, available methods of exercise or
settlement of an Award, payment of Tax-Related items, the shifting of employer
tax liability to the Participant, tax withholding procedures, restrictions on
the sale of shares of Class A Common Stock of the Company, and the handling of
stock certificates or other indicia of ownership. Notwithstanding the foregoing,
the Committee may not take actions hereunder, and no Awards shall be granted,
that would violate the U.S. Securities Act of 1933, as amended, the Exchange
Act, the Code, any securities law or governing statute.

EXCHANGE RATES
Neither the Company nor any Subsidiary shall be liable to a Participant for any
foreign exchange rate fluctuation between the Participant’s local currency and
the U.S. Dollar that may affect the value of the Participant’s Award or of any
amounts due to the Participant pursuant to the settlement of the Award or, if
applicable, the subsequent sale of Class A Common Stock acquired upon
settlement.
_____________________________________________________________

In the event of any discrepancy between this Pro-Rata RPSU Overview and either
the Plan or the provision under which the Plan is administered and governed by
the Compensation Committee, the Plan and the determination of the Compensation
Committee will govern, as applicable. This Overview is qualified in its entirety
based on the determinations, interpretations and other decisions made within the
sole discretion of the Compensation Committee.

 
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