Exhibit 10.1

August 27, 2019

 

Paul Gaffney

[Personal information omitted]

 

 

Dear Paul,

 

It is my pleasure to invite you to join the team at Kohl’s Department Stores.   

 

Your Position:  You are being offered the position of Senior Executive Vice
President, Chief Technology Officer.  In this capacity, you will report directly
to me, and will be a member of Kohl’s Operating Committee.  

 

Your Start Date:  Your first day with the company will be mutually determined,
but is expected to be in September, 2019.  

 

Your Salary:  Your annualized salary will be $800,000.  You will be paid
semi-monthly, on the 15th and 30th of each month.  

 

Signing Incentive:  In addition to your salary, we are offering you a gross
signing incentive of $750,000.  This incentive payment will be made within
fifteen (15) days of your start date, and is intended to fully or partially
offset any obligations you may incur as a result of your resignation from your
current employment and relocation expenses that are not covered by the Kohl’s
Relocation Policy.  

 

Annual Incentive Program:  An important part of Kohl’s overall executive
compensation program is our Annual Incentive Plan.  This plan provides for
annual incentive payments to key officers upon the achievement of specific
annual corporate objectives.  You will be eligible to participate in Kohl’s
Annual Incentive Plan with a target of 110% of your base salary.  This will
provide an opportunity for an annual cash incentive payment equal to 0% to 150%
of your base salary, with the actual amount based upon Kohl’s annual performance
relative to specific objectives that are established by Kohl’s Board of
Directors’ Compensation Committee at the beginning of each year.  You will be
eligible for a non-prorated Annual Incentive Plan award based upon our 2019
performance.  This award will be paid in March, 2020, and for this first year
only, Kohl’s guarantees that the minimum amount of your Annual Incentive Plan
award will not be less than $880,000.  Award amounts in subsequent years are
contingent on Kohl’s performance and cannot be guaranteed.  As well, the Board
does reserve the right to modify our existing bonus programs.

 

Equity Awards:

 

1.Recruitment Awards: 

 

a.Restricted Shares:  You will receive a recruitment award of Kohl’s restricted
stock valued at $3,000,000.  In accordance with Kohl’s Equity Compensation Award
Guidelines, the grant date for this award will be the last NYSE trading day on
or before the 15th of the month following the month of your start date at
Kohl’s.  The number of restricted shares awarded will be based upon the closing
share price on the grant date.  These restricted shares will vest in 3
installments – 60% on the first anniversary of the grant date, 20% on the second
anniversary of the grant date and 20% on the third anniversary of the grant
date, all contingent on your continued employment by Kohl’s on each vesting
date.   

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b.2019/2021 LTIP Award:  You will receive a 2019/2021 LTIP Award valued at
$625,000 which is 50% of your normal annual grant.  In accordance with Kohl’s
Equity Compensation Award Guidelines, the grant date for this award will be the
last NYSE trading day on or before the 15th of the month following the month of
your start date at Kohl’s.  This award will consist of 60% Performance Share
Units (PSUs) and 40% Restricted Shares.  The number of PSUs and Restricted
Shares awarded will be based upon the closing share price on the grant date,
with Restricted Shares valued at that closing price and PSUs valued in
accordance with Kohl’s standard Monte Carlo valuation methodology.  The
Restricted Shares will vest in four equal annual installments.  The PSUs
cliff-vest following fiscal year 2021.  The actual value of the PSUs is
dependent upon Kohl’s cumulative performance in 2019, 2020 and 2021, and can be
worth up to 200% of the grant date value.  The value of the PSUs could be
modified by 25% (plus or minus) based upon Kohl’s “Total Shareholder Return”
over that 3 year period.  Further detail on Kohl’s LTIP is provided in our proxy
materials for our 2019 Annual Meeting of Shareholders.  The Board does reserve
the right to modify our existing equity programs.

 

2.Annual Awards:  You will be eligible to participate in Kohl’s annual equity
award process in the Spring of 2020.  The Compensation Committee’s practice has
been to award executives at your level an award valued at $1,250,000.  This
award is expected to consist of 60% Performance Share Units (PSUs) and 40%
Restricted Shares, all vesting in the same manner as described above based upon
Kohl’s performance in 2020, 2021 and 2022.   

 

Relocation:  This offer is being made with the understanding and expectation
that you and your spouse will relocate to the greater Milwaukee area within one
year from commencement of your employment with Kohl's.  You are eligible for
relocation benefits under the Kohl’s relocation policy.  This policy provides
assistance with expenses for home sale and purchase, house or apartment hunting,
temporary residency, meals, final move related travel, and the movement of your
household goods.  Kohl’s relocation representatives are standing by to assist
you with this process.  

 

Relocation Gross Up:  Kohl’s will assist, at Kohl’s discretion, with the tax
liability on your non-deductible moving expenses at the end of the calendar
year.  

 

Benefits:  Kohl’s Department Stores offers a competitive benefit package.  These
benefits are designed to promote health, assist you in your financial future and
manage the demand of work and your personal life.  Detailed information on all
of our benefit programs will be mailed to your home.  In addition, you will be
able to access the information and enrollment services website at
www.yourtotalrewards.com/kohls on the Monday after your start date.  

 

Medical, Dental and Vision coverage starts on the first of the month after 60
days from your hire date. You have 45 days from your hire date to enroll in
benefits.  If you do not have your packet within 3 weeks of your hire date, or
you have questions, please contact the Kohl’s HR Shared Service Center at
1-844-KohlsHR.  

 

COBRA Reimbursement:  Kohl’s health benefits are available to all newly hired
Executives on the first of the month following 60 days of employment.
 Executives may continue their prior medical coverage through their previous
employer under the COBRA law.  Details regarding your COBRA rights will be
provided by your prior employer.  For the period between your start date and
eligibility date, we will provide you with full COBRA assistance minus the
applicable Kohl’s monthly premium.  

 

Executive Medical Plan:  In addition to Kohl’s standard medical plans, you will
be eligible for the Kohl’s Executive Medical Supplement Program.  The Executive
Medical Supplement Program provides up to an additional $25,000 annually to
reimburse out of pocket expenses for customary medical and dental

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services as well as co-payments and deductibles.  Eligible expenses must be
authorized by your physician and be medically necessary for the treatment of
illness or injury.  

 

Kohl’s Department Stores 401 (k) Savings Plan:  Immediately upon your date of
hire you can begin contributions to the 401 (k) savings plan, up to the annual
IRS contribution limits.  Our plan will also accept a rollover from your prior
employers plan.  After one year of service you will be eligible to receive a
100% match on your future personal savings, up to 5% of your elected
contributions, subject to regulatory limits pertaining to highly compensated
employees.  

 

Non-Qualified Deferred Compensation Plan:  This plan provides an avenue to save
pre-tax dollars in a tax-deferred investment program for your personal financial
goals.  Each year, you may elect to contribute all or a portion of your money
from your compensation into the Plan and enjoy tax deferral of your
contributions and their investment earnings until they are paid to you as you
elect to receive them.  Eligibility is based on plan requirements and IRS
guidelines.  

 

PTO for exempt:  As an associate of Kohl’s you will become eligible for PTO on
the first day of the month following your hire date.  On an annual basis you
will be eligible for 25 days of PTO.   We do value our executives and trust them
to make their own appropriate decisions on time off, as long as, there are no
negative business implications.   There is no current requirement at your level
to log PTO time.

 

Automotive Allowance:  An automobile allowance of $1,500 per month will be
provided to you as a Senior Executive Vice President.  

 

Associate Discount:  You will receive a 15% discount on merchandise you purchase
for yourself and your eligible dependents.  

 

Authorization to Work:  Kohl’s is required to verify your identity and
authorization to work in the United States.  You must provide us with documents
that confirm your identity and authorization to work.  Provided with this letter
is a copy of the List of Acceptable Documents.   Please provide either one
document (one from List A) or two documents (one from List B and one from List
C).  Please bring these document(s) with you on your first day of employment.  

 

Executive Compensation Agreement:  On or before your start date you and Kohl’s
will enter into an Executive Compensation Agreement which provides a two-year
severance benefit upon certain involuntary terminations.  Except as stated
otherwise in this letter, the terms and conditions of that agreement will be
substantially the same as those of the Senior Executive Vice President, Chief
People Officer.

 

Miscellaneous:  

 

Reimbursement of Certain Payments Upon Termination of Employment:  If you
voluntarily end your employment with Kohl’s or are terminated for cause within
the first twelve (12) months from the effective date of your relocation, you
will be required to repay 100% of any payments made by Kohl’s for your
relocation expenses.  If you voluntarily end your employment or are terminated
for cause from twelve (12) to within twenty-four (24) months from the effective
date of your relocation, you will be required to repay 50% of such amounts.  You
will also be required to repay 100% of any cash signing incentives paid by
Kohl’s if you voluntarily end your employment with Kohl’s or are terminated for
cause within the first twenty-four (24) months of your hire date.  Kohl’s may
deduct these amounts from any final compensation owed to you.  

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No Prior Obligations:  Kohl’s is offering you this position with the
understanding that you have no contractual obligation to any current or previous
employer that would prohibit or restrict your ability to perform your duties for
Kohl’s.  

 

Proprietary or Confidential Information:  As we advise all future employees,
Kohl’s has no interest in obtaining any proprietary or confidential information
from your current or former employer(s).  You should not bring any forms of such
information with you to Kohl’s and Kohl’s will not accept such information from
you for its use.  If you have any questions with respect to what may constitute
“trade secrets” or otherwise confidential information, I would urge you to
contact your employer’s legal department for clarification.  

 

This letter covers the key aspects of our employment offer to you.  Please note
that this letter serves as a non-binding confirmation of an employment offer and
it is neither intended nor implied as a contract of employment.  The terms of
this offer, and your acceptance, shall not be binding upon either party until
the above-referenced Executive Compensation Agreement is signed by you and
authorized Kohl’s representatives.  

 

Paul, it is our pleasure to welcome you to Kohl’s.  We look forward to working
with you in supporting the success and growth of our company.  

 

 

Very Truly Yours,

 

 

/s/ Michelle Gass

 

Michelle Gass

Chief Executive Officer

Kohl’s Department Stores

 

 

Please date, sign and return a copy of this letter to me via email.  

 

I accept the terms of this offer letter.  

 

Dated this 28th day of August, 2019.  

 

 

/s/ Paul Gaffney

Paul Gaffney