Exhibit 10.3


 


THE J. JILL GROUP, INC.


2006 LEADERSHIP INCENTIVE PLAN


 





















TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Introduction

  	
  1

  
	
  2.

  	
  Purpose of the Plan

  	
  1

  
	
  3.

  	
  Defined Terms

  	
  1

  
	
  4.

  	
  Effective Date and Termination Date

  	
  3

  
	
  5.

  	
  Eligibility and Participation

  	
  3

  
	
  6.

  	
  LIP Awards

  	
  4

  
	
  7.

  	
  Additional Bonus

  	
  6

  
	
  8.

  	
  Tax Withholding

  	
  6

  
	
  9.

  	
  Employment Rights

  	
  6

  
	
  10.

  	
  Unfunded Status

  	
  7

  
	
  11.

  	
  No Limit on Capital Structure Changes

  	
  7

  
	
  12.

  	
  Plan Administration

  	
  7

  
	
  13.

  	
  Amendment, Modification, or Termination of Plan

  	
  8

  
	
  14.

  	
  Severability

  	
  9

  
	
  15.

  	
  No Waiver

  	
  9

  
	
  16.

  	
  Governing Law

  	
  9

  
	
  17.

  	
  All Provisions

  	
  9

  
	
  18.

  	
  Adoption

  	
  9

  



 





















 


THE J. JILL GROUP, INC.
2006 LEADERSHIP INCENTIVE PLAN


 


1.             Introduction


 


This is the official document for The J. Jill Group, Inc. 2006
Leadership Incentive Plan (the “Plan”), which contains the exclusive and
complete description of the terms of this Plan.


 


The Plan rewards individual achievement of results toward objectives
established by The J. Jill Group, Inc. for the Plan Year.  The amount of the incentive pay earned
depends on the financial performance of The J. Jill Group, Inc. and the
performance of the individual participant.


 


2.             Purpose
of the Plan


 


The purpose of the Plan is to align the goals of The J. Jill Group, Inc.
and its executive officers to better drive financial performance.


 


3.             Defined
Terms


 


A.            Active
Employment means the Eligible Executive is on the active payroll of the
Company and has not experienced a voluntary or involuntary termination of
employment from the Company, including discharge for any reason, resignation,
layoff, death, Retirement or Disability.


 


B.            Base
Salary means the Eligible Executive’s base wages earned for the Plan Year,
excluding bonuses and any other additional compensation.  Base Salary during certain periods of
employment may be excluded, as set forth under Section 5.


 


C.            Board
means the Board of Directors of The J. Jill Group, Inc.


 


D.            Company
means The J. Jill Group, Inc. and its Subsidiaries.


 


E.             Disabled
or Disability means the Eligible Executive has met the conditions to
receive a benefit under either a long-term or short-term disability insurance
program or equivalent program maintained by the Company.


 


F.             Eligible
Executive means the CEO, any Executive Vice President and any Senior Vice
President that is an executive officer of The J. Jill Group, Inc.


 


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G.            Individual
Performance Component means a number between 0.10 and -0.10 based
on an individual performance assessment of the Eligible Executive for the Plan
Year.  The Compensation Committee will
conduct the performance assessment of the CEO. 
The CEO (or the Compensation Committee in the CEO’s absence) will
conduct a performance assessment of each other Eligible Executive, which shall
be subject to Compensation Committee approval.


 


H.            LIP Award
means the amount of the bonus payment calculated under Section 6 of this
Plan.


 


I.              Maximum
Award for any Eligible Executive means the percentage of the Eligible
Executive’s Base Salary corresponding to Maximum Performance as set forth in
Appendix A.


 


J.             Maximum
EPS means the pro forma earnings per share amount for the Company for the
Plan Year established by the Compensation Committee for purposes of the Plan,
calculated in the same fashion as Pre-Bonus EPS, that must be achieved for the
LIP Awards to be Maximum Awards, disregarding any adjustment in respect of
Individual Performance Components.


 


K.            MIP
Awards means the amount of bonus payments, if any, under The J. Jill Group, Inc.
2006 Management Incentive Plan.


 


L.             Payment
Date means the date the LIP Awards are paid.  The Payment Date shall not be later than the
last business day of the first quarter of The J. Jill Group, Inc.’s fiscal
year immediately following the end of the Plan Year.


 


M.           Plan
means The J. Jill Group, Inc. 2006 Leadership Incentive Plan, as set forth
herein and as amended from time to time.


 


N.            Plan
Year means the period commencing January 1, 2006 and ending December 30,
2006.


 


O.            Pre-Bonus
EPS means the Company’s pro forma earnings per share for the Plan Year
before the payment of any LIP Awards and the portion of any MIP Awards based on
Company performance and excluding any extraordinary non-recurring expenses.


 


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P.             Retirement
means a voluntary termination of employment by an Eligible Executive who is age
55 or older and who has at least 10 years of service with the Company.


 


Q.            Subsidiary
means any corporation of which more than 50% of the outstanding equity
interests are owned or controlled by the Company, and any other entity that the
Board, in its sole discretion, deems to be a Subsidiary.


 


R.            Target
Award for any Eligible Executive means the percentage of the Eligible
Executive’s Base Salary corresponding to Target Performance as set forth in
Appendix A.


 


S.             Target
EPS means the pro forma earnings per share amount for the Company for the
Plan Year established by the Compensation Committee for purposes of the Plan,
calculated in the same fashion as Pre-Bonus EPS, that must be achieved for the
LIP Awards to be equal to the Target Awards, disregarding any adjustment in
respect of Individual Performance Components.


 


T.            Threshold
Award for any Eligible Executive means the percentage of the Eligible
Executive’s Base Salary corresponding to Threshold Performance as set forth in
Appendix A.


 


U.            Threshold
EPS means the pro forma earnings per share amount for the Company for the
Plan Year established by the Compensation Committee for purposes of the Plan,
calculated in the same fashion as Pre-Bonus EPS, that must be achieved for the
LIP Awards to be equal to the Threshold Awards, disregarding any adjustment in
respect of Individual Performance Components.


 


4.             Effective
Date and Termination Date


 


The Plan is effective only with respect to the 2006 fiscal year of The
J. Jill Group, Inc.


 


5.             Eligibility
and Participation


 


To be eligible for a LIP Award, an Eligible Executive
must (i) be in Active Employment during the Plan Year; (ii) remain in
Active Employment through the Payment Date (except as provided below); (iii) not
already be guaranteed a bonus from the Company under any other bonus pay
arrangement; and (iv) not be in performance counseling at any time during
the Plan Year.  The following 


 


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paragraphs address changes in status that occur after
the first day of the Plan Year.


 


A.            New
Hires.  An individual hired as an
Eligible Executive after the beginning of the Plan Year but before July 1
of the Plan Year shall be deemed to be in Active Employment during the Plan
Year, but any LIP Award for such Eligible Executive shall be calculated using
only the Base Salary he or she earns while he or she is an Eligible Executive
during the Plan Year, unless otherwise provided through any separate agreement
between the Company and the Eligible Executive.  An individual hired after July 1 of the
Plan Year shall not be eligible to participate in the Plan.


 


B.            Promotions.  An employee may not become an Eligible
Executive on account of a promotion after the first day of the Plan Year.


 


C.            Changes
in Status.  Except as set forth in
paragraphs D, E or F below, if an individual ceases to be an Eligible Executive
before the end of the Plan Year, he or she shall not be eligible for a LIP
Award under the Plan.  However, such individual
may be eligible to receive service and/or pay credit toward a bonus under a
separate Company bonus program, to the extent permitted under such program.


 


D.            Terminations.  If an Eligible Executive Retires, dies or
becomes Disabled before the Payment Date, any LIP Award for such Eligible Executive
shall be calculated using only the Base Salary earned while he or she was in
Active Employment as an Eligible Executive during the Plan Year; provided
however that if an Eligible Executive is Disabled on the Payment Date, he or
she must return to Active Employment on or before the last day of the Company’s
fiscal year in which the Payment Date occurs in order to receive a LIP
Award.  Because one of the objectives of
the Plan is to encourage continuity of service, in all other cases of
termination before the Payment Date, an Eligible Executive shall have no right
to any LIP Award.


 


E.             Leaves
of Absence.  If an Eligible Executive
takes a leave of absence during the Plan Year, any LIP Award for such Eligible
Executive shall be calculated using only the Base Salary he or she earned while
an Eligible Executive in Active Employment during the Plan Year; provided
however that if an Eligible Executive is on a leave of absence on


 


4





















 


the Payment Date, he or she must return to Active Employment on or
before the last day of the Company’s fiscal year in which the Payment Date
occurs in order to receive a LIP Award.


 


F.             Other.  The Compensation Committee in its discretion
may provide for an individual to receive a LIP Award despite such individual’s
having ceased to be an Eligible Executive before the end of the Plan Year.


 


6.             LIP
Awards


 


The amount of LIP Awards, if any, will be determined based on the
performance of the Company and the Eligible Executive.  The LIP Award amount is calculated as
follows:


 


Step 1.            Determine
Pre-Bonus EPS.


 


a.             If
Pre-Bonus EPS is less than Threshold EPS, no LIP Awards shall be paid.


 


b.             If
Pre-Bonus EPS is greater than or equal to Threshold EPS, proceed to Step 2.


 


Step 2.                    Calculate
the LIP Award for each Eligible Executive.


 


a.             If
Pre-Bonus EPS is greater than or equal to Threshold EPS but less than Target
EPS, the Eligible Executive’s LIP Award shall be an amount calculated according
to the following formula:


 


[A +
(B – A)(C – D)/(E – D)](1 + F)


 


Where:


 


A =
Eligible Executive’s Threshold Award


B =
Eligible Executive’s Target Award


C =
Pre-Bonus EPS


D =
Threshold EPS


E =
Target EPS


F = Eligible Executive’s
Individual Performance Component


 


b.             If
Pre-Bonus EPS is greater than or equal to Target EPS but less than Maximum EPS,
the Eligible Executive’s LIP Award shall be an amount calculated according to
the following formula:


 


[B +
(G – B)(C – E)/(H – E)](1 + F)


 


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Where:


 


B =
Eligible Executive’s Target Award


C =
Pre-Bonus EPS


E =
Target EPS


F = Eligible Executive’s
Individual Performance Component


G =
Eligible Executive’s Maximum Award


H =
Maximum EPS


 


provided,
however, that in no event may the LIP Award for any Eligible
Executive exceed his or her Maximum Award.


 


c.             If
Pre-Bonus EPS is greater than or equal to Maximum EPS, the Eligible Executive’s
LIP Award shall be an amount calculated according to the following formula:


 


G(1 +
I)


 


Where:


 


G =
Eligible Executive’s Maximum Award


I = Eligible Executive’s
Individual Performance Component if negative, otherwise 0.


 


7.             Additional
Bonus


 


Nothing herein shall be deemed to limit the ability of the Board or the
Compensation Committee to award additional compensation, in the form of a bonus
or otherwise, to any Eligible Executive.


 


8.             Tax
Withholding


 


The Company will deduct from all payments any and all applicable taxes
(e.g., federal, state, local or other taxes of any kind) required by law to be
withheld from such payment.


 


9.             Employment
Rights


 


Neither this document nor the existence of the Plan is intended to, nor
do they imply, any promise of continued employment by the Company.  Employment may be terminated with or without
notice, at any time, for any reason, at the option of the Company or the Eligible
Executive.


 


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10.          Unfunded
Status


 


The Plan is unfunded.  An
Eligible Executive’s right to receive incentive payments under the Plan is an
unsecured claim against the general assets of the Company.  Although the Company may establish a
bookkeeping reserve to meet its obligations, any rights acquired by any
Eligible Executive are no greater than the right of any unsecured general
creditor of the Company.


 


The Company is not required to segregate any assets for incentive
payments, and neither the Company, the Board, nor the Plan Administrator is
deemed to be a trustee as to any incentive payment under this Plan.  Any liability of the Company to any Eligible
Executive under this Plan is based solely upon any contractual obligations that
may be created by this Plan.  No
provision of the Plan, under any circumstances, gives any Eligible Executive or
other person any interest in any particular property or assets of the
Company.  No incentive payment is deemed
to be secured by any pledge of, or other encumbrance or security interest in,
any property of the Company.  Neither the
Company, the Board, nor the Plan Administrator is required to give any security
or bond for the performance of any obligation that may be created under this
Plan.


 


11.          No
Limit on Capital Structure Changes


 


The establishment and operation of this Plan will not limit the ability
of the Company to reclassify, recapitalize, or otherwise change its capital or
debt structure; to merge, consolidate, convey any or all of its assets;
dissolve, liquidate, windup, or otherwise reorganize; to pay dividends or make
other distributions to stockholders; to repurchase stock or to issue stock; or
to take any action in respect of its manufacturing, marketing, distribution,
merchandising, operations, management or any other aspect of its business.


 


Notwithstanding the above, the Plan Administrator may, in its
discretion, adjust the manner in which the performance measures are calculated
at any time or from time to time to take into account changes in the Company’s
business that the Plan Administrator believes affect the relationship between
the Company’s performance and such value.


 


12.          Plan
Administration


 


The Plan is administered by the Compensation Committee of the Board
(the “Plan Administrator”).  The Plan
Administrator may delegate its authority to such other person or persons as the
Plan Administrator designates from time to time.  In administering the Plan, the Plan
Administrator may, at its


 


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option, employ compensation consultants, accountants and counsel and
other persons to assist or render advice and other services, all at the expense
of the Company.


 


The Plan Administrator has the power, in its sole discretion, to
approve and interpret the Plan and to adopt rules and procedures it deems
appropriate for the administration and implementation of the Plan. The Plan
Administrator’s determinations and interpretations shall be conclusive and
binding on all individuals.


 


The Plan Administrator may delegate its day-to-day administrative
responsibilities to Company employees.


 


The Company shall indemnify and hold harmless each of
the members of the Board, the Compensation Committee and any employee to whom
any of the duties of the Board or the Compensation Committee may be delegated,
from and against any and all claims, losses, costs, damages, expenses or
liabilities arising from any action or failure to act with respect to this
Plan, except in the case of willful misconduct by such member or such
employee.  This indemnification shall be
in addition to, and not in limitation of, any other indemnification available
to any such member or employee.


 


13.          Amendment,
Modification, or Termination of Plan


 


The Company, through action of the Board, may modify, amend or
terminate any and all provisions of the Plan at any time during its existence,
and establish rules and procedures for its administration, at its
discretion and without notice.


 


Notwithstanding the provision above, the Plan Administrator may amend
and modify the Plan to comply with or conform to local law, regulation or
custom.  Such amendments and
modifications can have limited application to a specific subsidiary, division
or jurisdiction, and need not apply to all Eligible Executives.  Each such amendment or modification will be
made in writing and attached to this Plan.


 


The Board may, to the full extent permitted by or
consistent with applicable laws or regulations (including, without limitation,
applicable state law), delegate any or all of its powers under the Plan to the
Compensation Committee or another committee appointed by the Board and
consisting of members of the Board, and if such delegation to the Compensation
Committee or other committee is made, all references to the Board in the Plan
shall mean and relate to the Compensation Committee or such other committee, as
the case may be.


 


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14.          Severability


 


If any provision of this Plan is held to be illegal or invalid for any
reason, the illegality or invalidity of such provision shall not affect the
remaining provisions of the Plan, and the Plan will be construed and enforced
as if the illegal or invalid provision were not part of the Plan.


 


15.          No
Waiver


 


Failure of the Company to enforce at any time any provision of this
Plan shall in no way be construed to be a waiver of such provision or any other
provision of the Plan.


 


16.          Governing
Law


 


The Plan and all LIP Awards hereunder will be governed by the laws of
The Commonwealth of Massachusetts.  In
applying the laws of The Commonwealth of Massachusetts, its rules on
choice of law will be disregarded.


 


17.          All
Provisions


 


This official Plan document represents the exclusive and complete
statement of the terms of the Plan, and supersedes any and all prior or
contemporaneous understandings, representations, documents and communications
between the Company and any Eligible Executive, whether oral or written,
relating to its subject matters.  In the
event of any conflict between the provisions of this official Plan document, as
amended from time to time, and any other document or presentation describing or
otherwise relating to the Plan, this official document shall control.


 


18.          Adoption


 


To record the adoption of the Plan, The J. Jill Group, Inc. has
caused its duly authorized officer to execute this document on the date
indicated herein.


 


	
   

  	
  The J. Jill
  Group, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Olga L.
  Conley

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  1/27/06

  	
   

  
						



 


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Appendix A


 


	
  Title

  	
   

  	
  Performance Incentive Range

  	
   

  	
  Incentive Payment as

  Percentage of Base Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  Threshold Performance

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
  Target Performance

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
  Maximum Performance

  	
   

  	
  200

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Vice
  President

  	
   

  	
  Threshold Performance

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
  Target Performance

  	
   

  	
  80

  	
  %

  
	
   

  	
   

  	
  Maximum Performance

  	
   

  	
  120

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Senior Vice President

  	
   

  	
  Threshold Performance

  	
   

  	
  30

  	
  %

  
	
  (Executive Officer)

  	
   

  	
  Target Performance

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
  Maximum Performance

  	
   

  	
  90

  	
  %