exv10w1






Exhibit 10.1




BORDERS GROUP, INC.




ANNUAL INCENTIVE BONUS PLAN

RESTATED AS OF MARCH 11, 2010


1. Purposes. The purposes of Borders Group, Inc. Annual Incentive Bonus Plan (the “Plan”)
are to attract and retain highly-qualified executives by providing appropriate performance-based
short-term incentive awards, to align executive and shareholder long-term interests by creating a
direct link between executive compensation and shareholder return, and to enable certain
executives, through share purchase features of the 2004 Long-Term Incentive Plan, to develop and
maintain a substantial stock ownership position in the Company’s Shares. An additional purpose of
the Plan is to serve as a qualified performance-based compensation program under Section 162(m) of
the Internal Revenue Code of 1986, as amended, in order to preserve the Company’s tax deduction for
compensation paid under the Plan to Covered Employees.



2. Definitions. The following terms, as used herein, shall have the following meanings:





	(a)	 	“Board” shall mean the Board of Directors of the Company.
	 
	(b)	 	“Bonus” shall mean any annual incentive bonus award granted pursuant to the Plan; the payment
of any such award shall be contingent upon the attainment of Performance Goals with respect to
a Plan Year.
	 
	(c)	 	“Change in Control” shall mean the occurrence of an event described in Section 6(e) hereof.
	 
	(d)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
	 
	(e)	 	“Committee” shall mean the Compensation Committee of the Board.
	 
	(f)	 	“Company” shall mean Borders Group, Inc., a corporation organized under the laws of the State
of Michigan, or any successor corporation.
	 
	(g)	 	“Covered Employee” shall have the meaning set forth in Section 162(m)(3) of the Code (or any
successor provision).
	 
	(h)	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
	 
	(i)	 	“2004 Long-Term Incentive Plan” (or “LTIP”) shall mean the Amended and Restated Borders
Group, Inc. 2004 Long-Term Incentive Plan, approved by the shareholders of Borders Group, Inc.
on May 21, 2009, as amended from time to time, or any successor or predecessor plan.
	 
	(j)	 	“LTIP Participant” shall mean a participant in the LTIP who has been granted stock purchase
rights for the relevant Plan Year of the Plan.
	 
	(k)	 	“Participant” shall mean an officer or other employee of the Company or one of its
Subsidiaries who is eligible to participate herein pursuant to Section 3 of the Plan and for
whom a target Bonus is established with respect to the relevant Plan Year.
	 
	(l)	 	“Performance Goal(s)” shall mean the criteria and objectives which must be met during the
Plan Year as a condition of the Participant’s receipt of payment with respect to a Bonus, as
described in Section 5 hereof.
	 
	(m)	 	“Plan” shall mean Borders Group, Inc. Annual Incentive Bonus Plan, as amended from time to
time.
	 
	(n)	 	“Plan Year” shall mean the Company’s fiscal year.
	 
	(o)	 	“Restricted Shares” shall mean the Shares in which a Bonus is partially or wholly payable
pursuant to Section 6(d) hereof; such




 









 






	 	 	Restricted Shares are issuable pursuant to the 2004 Long-Term Incentive Plan.
	 
	(p)	 	“Shares” shall mean common shares of the Company.
	 
	(q)	 	“Subsidiary” shall mean any subsidiary of the Company which is designated by the Board or the
Committee to have any one or more of its employees participate in the Plan.




3. Eligibility. All Company officers and such key employees of the Company and its
Subsidiaries as are designated by the Committee shall participate in the Plan. In determining the
persons to whom Bonuses shall be granted, the Committee shall take into account such factors as the
Committee shall deem relevant in connection with accomplishing the purposes of the Plan.



4. No Shares Subject to the Plan. No Shares of the Company shall be reserved for, or issued
under, the Plan. To the extent that annual bonuses are paid in Restricted Shares, such Restricted
Shares shall be issued under, and subject to the terms and conditions of, the 2004 Long-Term
Incentive Plan.



5. Performance Goals. Performance Goals may be expressed in terms of (i) the Company’s
return on equity, assets, capital or investment, (ii) pre-tax or after-tax profit levels of the
Company or the Subsidiaries or any combination thereof, (iii) expense reduction levels, (iv)
implementation of critical projects or processes, (v) level of sales and/or (vi) changes in market
price of the Shares. To the extent applicable, any such Performance Goal shall be determined in
accordance with generally accepted accounting principles and reported upon by the Company’s
independent accountants. Performance Goals shall include a threshold level of performance below
which no Bonus payment shall be made, levels of performance at which specified percentages of the
target Bonus shall be paid, and a maximum level of performance above which no additional Bonus
shall be paid. The Performance Goals established by the Committee may be (but need not be)
different each Plan Year and different goals may be applicable to different Participants.



6. Bonuses. (a) In General. For each Plan Year, the Committee shall specify the Performance
Goals applicable to such Plan Year and the amount of the target Bonus for each Participant with
respect to such Plan Year. A Participant’s target Bonus for each Plan Year shall be expressed as
either a dollar amount or as a percentage of the salary for the Participant’s salary. Unless
otherwise provided by the Committee in its discretion in connection with terminations of employment
of Participants who are not Covered Employees, or except as set forth in Section 6(e) hereof,
payment of a Bonus for a particular Plan Year shall be made only if all of the following conditions
are satisfied: (i) the Performance Goals with respect to such Plan Year are attained, (ii) the
Participant has satisfied any individual performance goals established for such Participant by his
or her supervisor (or by the Committee in accordance with Section 162(m) of the Code in the case of
any participant who is a Covered Employee), and (iii) the Participant is employed by the Company or
one of its Subsidiaries on the date of payment of the Bonus (or, alternatively, on the last day of
the Plan Year, if the Committee shall have substituted such alternative requirement for all
Participants at the time it established the Performance Goals for such Plan Year). No Bonus may be
paid to a Participant who is a Covered Employee prior to the attainment of the Performance Goals
and certification by the Committee of such attainment. Notwithstanding the forgoing, the Committee
may, in its sole discretion, permit the payment of a Bonus to a Participant who is a Covered
Employee in the case of death or disability of the Participant or a Change in Control of the
Company (as set forth in Section 6(e) below) without regard to actual achievement of the
Performance Goals and whether or not payment of such Bonus would be deductible under Section 162(m)
of the Code
but only if such payment would not cause other Bonus awards made under the Plan to fail
to be qualified performance-based compensation under Section 162(m) of the Code. The
actual amount of a Bonus payable under the Plan shall be determined as a percentage of the
Participant’s target Bonus, which percentage shall vary depending upon the extent to which the
Performance Goals have been attained and may be lesser than, greater than, or equal to 100%. The
Committee may, in its discretion, reduce or eliminate the amount payable to any Participant
(including a Covered Employee), in each case based upon such factors as the Committee may deem
relevant, but shall not increase the amount payable to any Covered Employee. Notwithstanding any
other provision of the Plan, the actual Bonus paid to any Participant in the Plan for any plan year
shall not exceed $900,000. Notwithstanding anything to the contrary herein, the Company reserves
the right to make bonus or other incentive awards to Participants under other plans maintained by
the Company or otherwise as determined by the Company in its sole discretion, which other plans or
arrangements need not be intended to meet the requirements of Section 162(m) of the Code




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	(b)	 	Special Limitation on Certain Bonuses. Notwithstanding anything to the contrary contained in
this Section 6, the actual Bonus paid to the Company’s Chief Executive Officer under the Plan
for any Plan Year may not exceed three times the salary midpoint for the salary grade of the
Chief Executive Officer, as determined by the Committee prior to the beginning of such Plan
Year based on competitive data, including a survey of comparable companies; and the Bonus for
each other Covered Employee under the Plan may not exceed two times the salary midpoint (as of
the beginning of such Plan Year) for such Covered Employee’s salary grade, as so determined by
the Committee prior to the beginning of such Plan Year.
	 
	(c)	 	Time of Payment. Unless otherwise determined by the Committee, or except as provided in
Section 6(e) hereof, all payments in respect of Bonuses granted under this Section 6 shall be
made within a reasonable period after the end of the Plan Year. In the case of Participants
who are Covered Employees, except as provided in Section 6(e) hereof, such payments shall be
made only after
achievement of the Performance Goals has been certified by the Committee but in no event later
than two and one-half (2.5) months after the end of the Plan Year .
	 
	(d)	 	Form of Payment. Payment of each Participant’s Bonus for any Plan Year shall be made in
cash. However, the Committee may, in its sole discretion, require that payment of a portion of
any LTIP Participant’s Bonus for any Plan Year (less applicable payroll deductions, which
shall not include Federal income tax withholding) be made in Restricted Shares pursuant to,
and subject to the terms and conditions of, the 2004 Long-Term Incentive Plan except as
provided in Section 6 (e) hereof. The Committee also may, in its sole discretion, allow an
LTIP Participant to make an election (made in accordance with the terms and conditions of the
2004 Long-Term Incentive Plan), with respect to up to 100 percent of the LTIP Participant’s
Bonus for any Plan Year (less applicable payroll deductions, which shall not include Federal
income tax withholding) to be paid in Restricted Shares pursuant to, and subject to the terms
and conditions of, the 2004 Long-Term Incentive Plan, except as provided in Section 6 (e)
hereof. The amount of the Bonus being paid in Restricted Shares shall, subject to the final
sentence of this paragraph, be calculated as follows: (i) multiply the gross Bonus by the
aggregate percentage of the Bonus being paid in Restricted Shares, and (ii) subtract
applicable payroll deductions from the result. The number of Restricted Shares to be paid
shall be calculated in accordance with the 2004 Long-Term Incentive Plan. Payment of the
balance of the LTIP Participant’s Bonus for any Plan Year shall be made in cash. Payments of
portions of any Bonuses made in Restricted Shares pursuant to the 2004 Long-Term Incentive
Plan may be referred to therein as “purchases” of such Shares.
	 
	(e)	 	Change in Control. Notwithstanding any other provision of the Plan to the contrary, (i) if a
“Change in Control” of the Company (as defined in this Section 6(e)) shall occur following a
Plan Year as to which the Committee has determined the actual Bonuses to be paid (but such
Bonuses have not yet been paid), such Bonuses shall be paid immediately in cash, (ii) if a
Change in Control shall occur following a Plan Year as to which the Committee has not yet
determined the actual Bonuses to be paid, such Bonuses shall be immediately determined and
paid in cash, and (iii) if a Change in Control shall occur during a Plan Year as to which
target Bonuses have been established (but the actual Bonuses to be paid have not yet been
determined), such Plan Year shall be deemed to have been completed, the target levels of
performance set forth under the respective Performance Goals shall be deemed to have been
attained, and a pro rata portion of the Bonus so determined for each Participant for such
partial Plan Year (based on the number of full and partial months which have elapsed with
respect to such Plan Year) shall be paid immediately in cash to each Participant for whom a
target Bonus for such Plan Year was established. Notwithstanding any other provision of the
Plan to the contrary, in no event shall the initial public offering of the Shares be treated
as a Change in Control of the Company for purposes of this Plan.




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For purposes of this Section 6, a Change in Control of the Company shall occur upon the first to
occur of the following:



“Change of Control” shall mean:



(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended) (the “Exchange Act”) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding Company
Voting Securities”); provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation controlled by the
Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this definition; or



(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or



(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (i) the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board, providing for such
Business Combination; or



(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the
Company.



7. Administration. The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in the administration of
the Plan, including, without limitation, the authority to grant Bonuses; to determine the persons
to whom and the time or times at which Bonuses shall be granted; to determine the terms,
conditions, restrictions and performance criteria relating to any Bonus; to make adjustments in the
Performance Goals in response to changes in applicable laws, regulations, or accounting principles;
except as otherwise provided in Section 6(a) hereof, to adjust compensation payable upon attainment
of Performance Goals; to construe and interpret the Plan and any Bonus; to prescribe, amend and
rescind rules and regulations relating to the Plan; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.




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The Committee shall consist of two or more persons each of whom is an “outside director” within the
meaning of Section 162(m) of the Code. The Committee may appoint a chairperson and a secretary and
may make such rules and regulations for the conduct of its
business as it shall deem advisable, and shall keep minutes of its meetings. All determinations of
the Committee shall be made by a majority of its members either present in person or participating
by conference telephone at a meeting or by unanimous written consent. The Committee may delegate to
one or more of its members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the Committee or such
person may have under the Plan. All decisions, determinations and interpretations of the Committee
shall be final and binding on all persons, including the Company, the Participant (or any person
claiming any rights under the Plan from or through any Participant) and any shareholder.



No member of the Board or the Committee shall be liable for any action taken or determination made
in good faith with respect to the Plan or any Bonus granted hereunder.



8. General Provisions.





	(a)	 	Compliance with Legal Requirements. The Plan and the granting of
Bonuses, and the other obligations of the Company under the Plan shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any regulatory or
governmental agency as may be required.
	 
	(b)	 	No Right To Continued Employment. Nothing in the Plan or in any Bonus granted shall confer
upon any Participant the right to continue in the employ of the Company or any of its
Subsidiaries or to be entitled to any remuneration or benefits not set forth in the Plan or to
interfere with or limit in any way the right of the Company to terminate such Participant’s
employment.
	 
	(c)	 	Withholding Taxes. The Company or Subsidiary employing any Participant shall deduct from all
payments and distributions under the Plan any taxes required to be withheld by federal, state
or local governments.
	 
	(d)	 	Amendment and Termination of the Plan. The Board may at any time and from time to time alter,
amend, suspend, or terminate the Plan in whole or in part; provided, however, that no
amendment which requires stockholder approval in order for the Plan to continue to comply with
Code Section 162(m) shall be effective unless the same shall be approved by the requisite vote
of the shareholders of the Company. Additionally, the Committee may make such amendments as it
deems necessary to comply with other applicable laws, rules and regulations. Notwithstanding
the foregoing, no amendment shall affect adversely any of the rights of any Participant,
without such Participant’s consent, under any Bonus theretofore granted under the Plan.
	 
	(e)	 	Participant Rights. No Participant shall have any claim to be granted any Bonus under the
Plan, and there is no obligation for uniformity of treatment for Participants.
	 
	(f)	 	Unfunded Status of Bonuses. The Plan is intended to constitute an “unfunded” plan for
incentive compensation. With respect to any payments which at any time are not yet made to a
Participant pursuant to a Bonus, nothing contained in the Plan or any Bonus shall give any
such Participant any rights that are greater than those of a general creditor of the Company.
	 
	(g)	 	Governing Law. The Plan and the rights of all persons claiming hereunder shall be construed
and determined in accordance with the laws of the State of Michigan without giving effect to
the choice of law principles thereof, except to the extent that such law is preempted by
federal law.
	 
	(h)	 	Effective Date. The Plan shall take effect upon its adoption by the Board, but the Plan (and
any grants of Bonuses made prior to the shareholder approval mentioned herein) shall be
subject to the requisite approval of the shareholders of the Company. In the absence of such
approval, such Bonuses shall be null and void.
	 
	(i)	 	Interpretation. The Plan is designed and intended to comply with Section 162(m) of the Code,
to the extent applicable, and all provisions hereof shall be construed in a manner to so
comply.
	 
	(j)	 	Term. The Plan shall remain in effect until terminated by the Board.







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