Exhibit 10.2

 

L BRANDS, INC.

2015 CASH INCENTIVE COMPENSATION PERFORMANCE PLAN

 

L Brands, Inc., a Delaware corporation (including any successor in name or
interest thereto), hereby adopts the L Brands, Inc. 2015 Cash Incentive
Compensation Performance Plan (the “Plan”) for the purpose of enhancing the
Company’s ability to attract and retain highly qualified executive and
managerial-level associates and to provide additional financial incentives to
such associates to promote the success of the Company and its subsidiaries.
Incentive Compensation payable under the Plan to Section 162(m) Executives (as
defined below) is intended to constitute qualified “performance-based
compensation” for purposes of Section 162(m) of the Code, and the Plan shall be
construed consistently with such intention. However, the Company reserves the
right to pay discretionary bonuses, or other types of compensation outside of
the Plan, including under the Company’s then effective Stock Option and
Performance Incentive Plan or otherwise.

 

1. Definitions. As used herein, the following terms shall have the respective
meanings indicated:

 

(a) “Board” shall mean the Board of Directors of the Company.

 

(b) “Cause” shall have the meaning set forth in the 2011 Stock Option and
Performance Incentive Plan, as may be amended from time to time, and any
successor thereto (the “SOPIP”). 

 

(c) “Change in Control” shall have the meaning set forth in the SOPIP. 

 

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any successor federal internal revenue law, along with related rules,
regulations, and interpretations.  

 

(e) “Common Stock” shall mean the common stock, $0.50 par value per share, of
the Company.

 

(f) “Committee” shall mean the Compensation Committee of the Board or such other
committee or subcommittee appointed by the Board to administer the Plan that in
the case of any actions taken with respect to any Incentive Compensation payable
to any Section 162(m) Executive is comprised of not less than two directors of
the Company, each of whom shall qualify in all respects as an “outside director”
within the meaning of Section 162(m) of the Code.  

 

(g) “Company” shall mean, collectively, L Brands and its subsidiaries.  

 

(h) “Good Reason” shall have the meaning set forth in the SOPIP.  

 

(i) “Incentive Compensation” shall mean, for each Participant, compensation to
be paid in the amount determined by the Committee pursuant to Section 6 below.

 

(j) “Participant” means, with respect to any fiscal year, an associate who is
eligible to participate in the Plan for such fiscal year in accordance with
Section 3.  

 

(k) “Performance Goal” shall mean the performance goals established by the
Committee pursuant to Section 4 hereof.  

 

(l) “Performance Period” shall mean each Spring or Fall selling season or the
fiscal year of the Company, or any other period of time (not less than one (1)
calendar quarter or more than five (5) years) as will be established by the
Committee pursuant to Section 4 of this Plan within which the Performance Goals
relating to any award of Incentive Compensation are to be achieved. Any
Performance Period may be subject to earlier lapse or other modification
pursuant to Section 11 of this Plan in the event of Termination without Cause,
resignation for Good Reason, Retirement, death or Total Disability of the
Participant or a Change in Control.  

 

(m) “Retirement” shall have the meaning set forth in the SOPIP.  

 

(n) “Section 162(m) Executive” shall mean any individual who the Committee
determines, in its discretion, is or may be a “covered employee” of the Company
within the meaning of Section 162(m) of the Code.

 

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(o) “Total Disability” shall have the meaning set forth in the SOPIP. 

 

2. Administration of the Plan. The Plan shall be administered by the Committee,
which shall have full power and authority to construe, interpret and administer
the Plan and shall have the exclusive right to establish, adjust, pay or decline
to pay Incentive Compensation for each Participant. Such power and authority
shall include the right to exercise discretion to reduce by any amount the
Incentive Compensation payable to any Participant; provided, however, that the
exercise of such discretion with respect to any Participant who is a Section
162(m) Executive shall not have the effect of increasing the Incentive
Compensation that is payable to any other Section 162(m) Executive. Decisions of
the Committee shall be final, conclusive and binding on all persons or entities,
including the Company, any Participant and any person claiming any benefit or
right under the Plan.  

 

3. Eligibility. All Section 162(m) Executives shall be Participants in the Plan
unless the Committee, in its sole and absolute discretion, designates that a
Section 162(m) Executive shall not be eligible for participation in the Plan for
a fiscal year. In addition, all other associates designated by the Committee or
other authorized individuals are eligible to participate in the Plan and shall
be Participants.  

 

4. Awards. The Committee shall establish Performance Goals with respect to each
Performance Period. The Performance Goals for a Performance Period must be
established, in writing, no later than forty-five (45) days after the
commencement of any Performance Period based on the Spring or Fall selling
season, and, for any other Performance Period, no later than the lesser of
either ninety (90) days or the number of days equal to 25 percent of the
Performance Period after the commencement of the Performance Period.

 

The Performance Goals established by the Committee shall be based on specified
levels of or changes in any one or more of the following criteria, which may be
expressed with respect to the Company or one or more operating units or groups,
as the Committee may determine: price of Common Stock, or the common stock of
any affiliate, shareholder return, return on equity, return on investment,
return on capital, sales productivity, comparable store sales growth, economic
profit, economic value added, net income, operating income, gross margin, sales,
free cash flow, earnings per share, operating company contribution or market
share. Performance Goals for a Performance Period shall include a minimum
performance standard below which no payments of Incentive Compensation will be
made, and a maximum performance standard in which any performance that exceeds
this standard will not increase the payment of Incentive Compensation. These
Performance Goals may be based on an analysis of historical performance and
growth expectations for the business, financial results of other comparable
businesses, and progress towards achieving the strategic plan for the business,
or any other factors as determined by the Committee. Performance Goals shall be
adjusted by the Committee for the following items, but only to the extent such
adjustment would not cause a payment of Incentive Compensation to fail to
qualify as performance-based compensation within the meaning of Section 162(m)
of the Code:

 

(i)all items of gain, loss or expense for the Performance Period determined to
be extraordinary or unusual in nature or infrequent in occurrence;

 

(ii)all items related to the disposal of a component of an entity or related to
a change in accounting principles, as such are defined by generally accepted
accounting principles and as identified in the Company’s audited financial
statements, notes to such financial statements, in management’s discussion and
analysis or any other filings with the Securities and Exchange Commission;

 

(iii)impact from changes in accounting policies approved by the Audit Committee
of the Board that were not contemplated in the initial Incentive Compensation
targets;

 

(iv)all items of gain, loss or expense for the Performance Period related to an
exit activity as defined under current generally accepted accounting principles;

 

(v)all items of gain, loss or expense for the Performance Period related to
discontinued operations as defined under current generally accepted accounting
principles;

 

(vi)any profit or loss attributable to the business operations of any entity
acquired or divested by the Company during the Performance Period;

 

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(vii)write-offs, accelerated depreciation or other operating expenses at the
participating subsidiary level related to the testing of a new brand concept,
not included in the original Incentive Compensation targets;

 

(viii)impacts from unanticipated changes in legal or tax structure or
unanticipated changes in jurisdictional tax rates of a participating subsidiary;
and

 

(ix)changes in applicable tax law.

  

Annual Incentive Compensation targets shall be established for Participants
ranging from 0% to 300% of each Participant’s base salary (provided that the
maximum projected adjustment that might be made during the Performance Period in
the referenced amount of base salary of a Section 162(m) Executive is included
in the initially established Performance Goal formula, so that no adjustment in
base salary during the Performance Period could result in the loss of the
otherwise available exemption of the Incentive Compensation under Section 162(m)
of the Code). In the case of an award of Incentive Compensation to any Section
162(m) Executive, the terms of the objective formula or standard setting such
targets must prevent any discretion from being exercised by the Committee to
later increase the amount payable that would otherwise be due upon attainment of
the targets, but may allow discretion to decrease the amount payable, including
discretion that is exercised through the establishment of additional objective
or subjective goals. Participants may earn their target Incentive Compensation
if the business achieves the pre-established Performance Goals. The target
Incentive Compensation percentage for each Participant will be based on the
level and functional responsibility of his or her position, size of the business
for which the Participant is responsible, and competitive practices. The amount
of Incentive Compensation paid to Participants may range from zero to triple
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 Participant will earn any Incentive Compensation, the
level at which a Participant will earn the maximum Incentive Compensation of
double the target, and the interpolation guidelines for calculating payments
within that range must be established by the Committee, in writing, within
forty-five (45) days after the commencement of any Performance Period based on
the Spring or Fall selling season, and, for any other Performance Period, no
later than the lesser of either ninety (90) days or the number of days equal to
25 percent of the Performance Period after the commencement of the Performance
Period.

 

5. Committee Certification. As soon as reasonably practicable after the end of
each Performance Period, and prior to the payment of any Incentive Compensation
to a Section 162(m) Executive, the Committee shall certify, in writing, that the
Performance Goals for such Performance Period were satisfied.  

 

6. Payment of Incentive Compensation. The selection of Participants to whom
Incentive Compensation shall actually be paid shall be conditioned upon each
Participant’s continued employment with the Company through the last day of the
Performance Period. The amount of the Incentive Compensation actually paid to a
Participant for a Performance Period shall be such amount as determined by the
Committee in its sole discretion, including zero, provided that the maximum
aggregate actual payment for all Incentive Compensation awards payable to any
Participant in any fiscal year of the Company shall be $20,000,000. For the
purpose of calculating this fiscal year limit, the Award for any Performance
Period of less than one year is deemed to be payable on the last day of the
Performance Period, and the Award for any Performance Period of over one year is
deemed to be payable ratably over the Performance Period. If, after amounts have
been earned with respect to Incentive Compensation awards, the payment of such
amounts is deferred, any additional amounts attributable to earnings during the
deferral period shall be disregarded for purposes of this limit. Subject to the
last sentence of this Section 6 and to Section 11 below, Incentive Compensation
shall be paid in cash at such times and on such terms as are determined by the
Committee in its sole and absolute discretion, but in no event later than sixty
(60) days following the end of the Performance Period to which such Incentive
Compensation relates. To the extent provided by the Committee, in its sole
discretion, the annual Incentive Compensation may be paid in the form of shares
of Common Stock under the Company’s then effective Stock Option and Performance
Incentive Plan, or may be deferred under the Company’s then effective
Supplemental Retirement Plan, subject to the terms and conditions of such plans.
 

 

7. No Right to Bonus or Continued Employment; Clawback.

 

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(a) Neither the establishment of the Plan, the provision for or payment of any
amounts hereunder, nor any action of the Company, the Board or the Committee
with respect to the Plan shall be held or construed to confer upon any person
(a) any legal right to receive, or any interest in, an Incentive Compensation or
any other benefit under the Plan or (b) any legal right to continue to serve as
an officer or associate of the Company or any affiliate of the Company.

 

(b) If the Committee determines in good faith either that: (i) if required by
applicable law with respect to a Participant or (ii) (x) a Participant engaged
in fraudulent conduct or activities relating to the Company, (y) a Participant
has knowledge of such conduct or activities, or (z) a Participant, based upon
the Participant’s position, duties or responsibilities, should have had
knowledge of such conduct or activities, the Committee shall have the power and
authority under the Plan to terminate without payment all outstanding incentive
awards under the Plan. If required by applicable law with respect to a
Participant or if a Participant described in (ii) above has been paid Incentive
Compensation that is based on or results from such conduct or activities, such
Participant shall promptly reimburse to the Company a sum equal to either an
amount required by such law or the amount of such Incentive Compensation paid in
respect of the year in which such conduct or activities occurred, as applicable.

 

8. Withholding. The Company shall have the right to withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy any
applicable federal, state, local or foreign withholding tax requirements imposed
with respect to the payment of any Incentive Compensation. The Company shall
also have the right to withhold from Incentive Compensation any amounts that may
be required to be withheld from other taxable noncash compensation or taxable
reimbursements payable to a Participant that may themselves have not been
subjected to withholding at the time of payment.  

 

9. Nontransferability. Except as expressly provided by the Committee, the rights
and benefits under the Plan are personal to the Participant and shall not be
subject to any voluntary or involuntary alienation, assignment, pledge, transfer
or other disposition.  

 

10. Unfunded Plan. The Company shall have no obligation to reserve or otherwise
fund in advance any amounts that are or may in the future become payable under
the Plan. Any funds that the Company, acting in its sole and absolute
discretion, determines to reserve for future payments under the Plan may be
commingled with other funds of the Company and need not in any way be segregated
from other assets or funds held by the Company. A Participant’s rights to
payment under the Plan shall be limited to those of a general unsecured creditor
of the Company.

 

11. Adoption, Amendment, Suspension and Termination of the Plan. 

 

(a) Subject to the approval of the Plan by the Company’s stockholders, the Plan
shall be effective for payments made with respect to Performance Periods that
commence during the Company’s 2015 fiscal year and thereafter and shall continue
in effect until terminated as provided below; provided, however, that no payment
of Incentive Compensation may be paid to Section 162(m) Executives prior to
approval of the Plan at the Company’s 2015 Annual Meeting of Stockholders. If
the Plan is not approved by stockholders at the Company’s 2015 Annual Meeting of
Stockholders, any awards granted under the Plan to Section 162(m) Executives
shall be null and void and of no effect.  

 

(b) Subject to the limitations set forth in paragraph (c) below, the Board may
at any time suspend or terminate the Plan and may amend it from time to time in
such respects as the Board may deem advisable, subject, with respect to any
Section 162(m) Executive, to any requirement for stockholder approval imposed by
applicable law, including Section 162(m) of the Code.

 

(c) No amendment, suspension or termination of the Plan shall, without the
consent of the person affected thereby, materially, adversely alter or impair
any rights or obligations under any Incentive Compensation previously awarded
under the Plan, except to the extent any such action is undertaken to cause the
Plan to comply with applicable law, stock market or exchange rules and
regulations or accounting or tax rules and regulations.

 

12. Governing Law. The validity, interpretation and effect of the Plan, and the
rights of all persons hereunder, shall be governed by and determined in
accordance with the laws of the State of Ohio, other than the choice of law
rules thereof.

 

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