EXHIBIT 10.1


 






 


 


CITI TRENDS, INC.


ANNUAL INCENTIVE BONUS PLAN


 


 






 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1 ESTABLISHMENT OF PLAN

  	
  1

  
	
  1.1

  	
  Background

  	
  1

  
	
  1.2

  	
  Purpose

  	
  1

  
	
  1.3

  	
  Effective Date

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 DEFINITIONS

  	
  1

  
	
  2.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 ADMINISTRATION

  	
  3

  
	
  3.1

  	
  Committee

  	
  3

  
	
  3.2

  	
  Authority of Committee

  	
  3

  
	
  3.3

  	
  Decisions Binding

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 ELIGIBILITY

  	
  4

  
	
  4.1

  	
  Designation of
  Participants

  	
  4

  
	
  4.2

  	
  Partial Year Participation

  	
  4

  
	
  4.3

  	
  Demotions

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 OPERATION OF THE PLAN

  	
  4

  
	
  5.1

  	
  Plan Structure

  	
  4

  
	
  5.2

  	
  Establishment of Target
  Bonuses

  	
  5

  
	
  5.3

  	
  Company Financial
  Objectives

  	
  5

  
	
  5.4

  	
  Individual Performance
  Objectives

  	
  5

  
	
  5.5

  	
  Minimum Required
  Performance Goal and Individual Award Limits

  	
  5

  
	
  5.6

  	
  Payout Form and Timing

  	
  6

  
	
  5.7

  	
  Terminations of Employment

  	
  6

  
	
  5.8

  	
  Change in Control

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 AMENDMENT,
  MODIFICATION AND TERMINATION

  	
  6

  
	
  6.1

  	
  Amendment, Modification
  and Termination

  	
  6

  
	
  6.2

  	
  Termination After or
  During Plan Year

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 GENERAL PROVISIONS

  	
  7

  
	
  7.1

  	
  No Right to Participate

  	
  7

  
	
  7.2

  	
  No Right to Employment

  	
  7

  
	
  7.3

  	
  Withholding

  	
  7

  
	
  7.4

  	
  Funding

  	
  7

  
	
  7.5

  	
  Expenses

  	
  7

  
	
  7.6

  	
  Titles and Headings

  	
  7

  
	
  7.7

  	
  Gender and Number

  	
  7

  
	
  7.8

  	
  Governing Law

  	
  7

  



 


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CITI TRENDS, INC.


ANNUAL INCENTIVE BONUS PLAN


 


ARTICLE 1


ESTABLISHMENT OF PLAN


 


1.1                                 BACKGROUND.  The Citi
Trends, Inc. Annual Incentive Bonus Plan (the “Plan”) provides a program
for the grant of annual Performance Bonuses. This Plan has been established and
approved, and will be administered by, the Committee.  It is intended that the Performance Bonuses
earned under this Plan shall be Qualified Performance-Based Cash Awards with
respect to Participants who are Covered Employees, with the intent that the
Performance Bonuses will be fully deductible by the Company without regard to
the limitations of Code Section 162(m). 
The aggregate dollar value of any Performance Bonus that may be paid to
any one Participant during any one calendar year under the Plan is $2 million.


 


1.2.                              PURPOSE.  The purpose of this Plan is to provide for
the payment of a cash bonus to key employees of the Company, the payment of
which will be based on the achievement of Performance Objectives during a Plan
Year.  Company Financial Objectives are
designed to focus on overall corporate financial results that drive shareholder
value.  Unless otherwise specified by the
Committee, the Performance Objectives include Minimum Required Performance,
Company Financial Objectives and Individual Performance Objectives.


 


1.3.                              EFFECTIVE DATE.  This Plan was approved by the
Committee on March 19, 2009, to be effective as of the beginning of the
Company’s 2009 fiscal year.  The Plan was
approved by the shareholders of the Company on May 27, 2009.


 


ARTICLE 2


DEFINITIONS


 


2.1.                              DEFINITIONS.  The following terms shall have the following
meanings for purposes of this Plan, unless the context in which they are used
clearly indicates that some other meaning is intended.


 


Beneficiary. A person
designated, in the manner determined by the Committee, to exercise the rights
of the Participant and to receive any distribution with respect to any
Performance Bonus upon the Participant’s death.


 


Change in Control. The occurrence of any one
of the following events:


 


(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 “1934 Act”))
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 50% or more of 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 by a Person who is on the Effective Date the beneficial owner of
50% or more of the Outstanding Company Voting Securities, (ii) any
acquisition directly from the Company, (iii) any acquisition by the
Company, (iv) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (v) 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 Effective Date, constitute the Board of Directors of the Company (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board of Directors of the Company; provided, however, that any individual
becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company’s


 


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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 of Directors of the Company; or


 


(c)                                  Consummation of
a reorganization, merger, consolidation or share exchange 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) all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors 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 Voting Securities, and (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 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.


 


Code
Section 162(m). Section 162(m) of the Internal Revenue
Code of 1986, as amended from time to time, and includes a reference to the
underlying final regulations.


 


Committee.  The Compensation Committee of the Board of
Directors of the Company.


 


Company
Financial Objectives.  The Company
Financial Objectives established by the Committee for a Plan Year, as provided
in Article 5.


 


Covered
Employee. A covered employee as defined in Code Section 162(m)(3).


 


Disability. Any illness or
other physical or mental condition of a Participant that renders the
Participant incapable of performing his customary and usual duties for the
Company, or any medically determinable illness or other physical or mental
condition resulting from a bodily injury, disease or mental disorder which, in
the judgment of the Committee, is permanent and continuous in nature. The
Committee may require such medical or other evidence as it deems necessary to
judge the nature and permanency of the Participant’s condition.


 


Effective
Date.  February 1, 2009.


 


GAAP.  Generally accepted accounting principles for
U.S. companies.


 


Individual
Award Limit.  Has the
meaning described in Section 5.5.


 


Individual
Performance Objectives.  The
Individual Performance Objectives established by the Committee for a Plan Year,
as provided in Article 5.


 


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Minimum
Required Performance.  Has the
meaning given such term in Section 5.5.


 


Participant. A person who,
as an employee of the Company or a Subsidiary, has been granted a Performance
Bonus under the Plan; provided that in the case of the death of a Participant,
the term “Participant” refers to a Beneficiary or the legal guardian or other
legal representative acting in a fiduciary capacity on behalf of the
Participant under applicable state law and court supervision.


 


Performance
Bonus.  The bonus payable to a
Participant under this Plan calculated by reference to the achievement of
applicable Performance Objectives, as determined in accordance with Article 5.


 


Performance
Objectives.  Collectively
with respect to a Participant, Minimum Required Performance and any other
Company Financial Objectives and Individual Performance Objectives (applicable
to the Participant), as provided in Article 5.


 


Plan.  The Citi Trends, Inc. Annual Incentive
Bonus Plan, as set forth in this document together with any subsequent
amendments hereto.


 


Plan
Year.  The Company’s fiscal year.


 


Qualified
Business Criteria. One or more of the criteria listed in Section 5.5
upon which the Minimum Required Performance goals for Qualified
Performance-Based Cash Awards may be established by the Committee.


 


Qualified
Performance-Based Cash Award. A Performance Bonus that is
intended to qualify for the exemption from the limitation on deductibility
imposed by Code Section 162(m) that is set forth in Code Section 162(m)(4)(C) or
any successor provision thereto and is made subject to performance goals based
on Qualified Business Criteria as set forth in Section 5.5.


 


Retirement. Termination of
employment with the Company or a Subsidiary after attaining age 65.


 


Schedule.  Means a document setting forth Company
Financial Objectives for a Plan Year and the relative weightings of such
measures and such other information as the Committee determines is appropriate.


 


Subsidiary. Any
corporation, limited liability company, partnership or other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.


 


Target
Bonus.  Has the meaning described in Section 5.2.


 


ARTICLE 3


ADMINISTRATION


 


3.1.                              COMMITTEE.  This Plan shall be administered by the
Committee.


 


3.2.                              AUTHORITY OF
COMMITTEE.  The
Committee has the exclusive power, authority and discretion to:


 


(a)  Designate Participants for each Plan Year;


 


(b)  Establish and review Performance Objectives and weightings for
different Performance Objectives for each Plan Year;


 


(c)  Establish Target Bonuses for Participants for each Plan Year;


 


(d)  Determine whether and to what extent Performance Objectives
were achieved for each Plan Year;


 


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(e)  Increase (subject to the Individual Award Limit) or decrease
the Performance Bonus otherwise payable to any Participant resulting from the
achievement of financial Performance Objectives in any Plan Year, based on such
subjective factors as the Committee shall deem relevant;


 


(f)  Establish, adopt or revise any rules and regulations as
it may deem necessary or advisable to administer this Plan;


 


(g)  Make all other decisions and determinations that may be
required under this Plan or as the Committee deems necessary or advisable to
administer this Plan; and


 


(h)  Amend this Plan as provided herein.


 


3.3.                              DECISIONS
BINDING.  The Committee’s interpretation
of this Plan and all decisions and determinations by the Committee with respect
to this Plan are final, binding, and conclusive on all parties.


 


ARTICLE 4


ELIGIBILITY


 


4.1.                              DESIGNATION OF
PARTICIPANTS.  Officers of
the Company or its Subsidiaries are eligible to participate in the Plan.  Exhibit A hereto lists the officers who
are designated as Participants in this Plan for the 2009 Plan Year.  The Chief Executive Officer may designate
additional Senior Vice Presidents or Executive Vice Presidents as Participants
and shall promptly report such additional names to the Committee; provided,
however, that such delegated authority shall be limited to individuals who are
not anticipated to be Covered Employees for the Plan Year.  The Committee, in its discretion, may
determine whether other positions may qualify for participation in all or any
portion of this Plan for any subsequent Plan Year or change Target Bonuses of
existing Participants.  Within the first
90 days of each Plan Year, the Committee shall approve and substitute a new Exhibit A
indicating the Participants and their Target Bonuses for that Plan Year.  The Company will notify Participants of their
eligibility to participate, and the terms thereof, in writing.


 


4.2.                              PARTIAL YEAR
PARTICIPATION.  If a
Participant begins employment or is promoted to an eligible position after the
beginning of a Plan Year, the Committee, in its discretion, may determine
whether such person may participate in this Plan and if so, the terms of such
participation, which will be prorated based on the number of days such person
participated in this Plan during the Plan Year, unless the Committee determines
otherwise.  If a Participant takes a
leave of absence during the Plan Year for any reason the Participant will
receive a pro rata share of a Performance Bonus, if any, for such Plan Year,
unless the Committee decides otherwise.


 


4.3.                              DEMOTIONS.  If a Participant is demoted during the Plan
Year, the Committee will determine whether Plan participation ends at that
time, or is continued, perhaps at a reduced level.  If participation ends, any Performance Bonus
earned during the time of participation will be prorated for the Plan Year.


 


ARTICLE 5


OPERATION OF THE PLAN


 


5.1.                              PLAN STRUCTURE.  Each Participant shall be eligible to receive
a Performance Bonus for the Plan Year if the Company meets or exceeds certain
Performance Objectives set by the Committee. 
It is anticipated that the Committee shall establish or approve
Performance Objectives and their respective weightings, and Target Bonuses as
provided in Sections 5.2, 5.3 and 5.4. 
In establishing Performance Objectives, the Committee may take into
account such factors as it deems appropriate, including, without limitation,
prior year results, planned business results, anticipated business trends,
performance relative to peer companies and macroeconomic conditions.  Those Performance Objectives


 


4

















 


shall
provide the framework for the Committee in determining the appropriate amount
of incentive awards to payout in each Plan Year.  However, this Plan is designed to provide the
Committee discretion to make pay-outs that differ from those that would result
from the application of Sections 5.2, 5.3 and 5.4, if circumstances warrant, so
long as, at a minimum, the requirements of Section 5.5 are met.  Such circumstances could include, for example
and without limitation, events that are not anticipated at the time the
Performance Objectives are established or extenuating circumstances or
extraordinary performance that is not recognized through the Performance
Objectives.


 


5.2.                              ESTABLISHMENT OF
TARGET BONUSES.  The
Committee plans to establish Performance Objectives (in addition to Minimum
Required Performance) and Target Bonuses (other than the Individual Award
Limit) for each Plan Year, by approving the percentage of each Participant’s
base salary that will be awarded to the Participant for that Plan Year if
Minimum Required Performance is achieved and if the other established
Performance Objectives are achieved at the target level (the “Target Bonus”).  Each Participant’s Target Bonus percentage
will be communicated in writing to the Participant.  The actual Performance Bonus to a Participant
may be greater or less than his or her Target Bonus, depending on the level of
achievement of Company Financial Objectives, as provided in the relevant
Schedule, and Individual Performance Objectives, and depending on whether the
Committee exercises its discretion to increase or reduce a resulting
Performance Bonus as provided herein.


 


5.3.                              COMPANY
FINANCIAL OBJECTIVES.  Within the
first 90 days of each Plan Year, it is anticipated that the Committee will
approve Company Financial Objectives for that Plan Year in addition to Minimum
Required Performance, and shall set forth such Company Financial Objectives in
one or more Schedules.  The Schedule
shall provide the formula that the Committee will use as a guide for
determining a Participant’s Performance Bonus at a level below the Individual
Award Limit.


 


5.4.                              INDIVIDUAL
PERFORMANCE OBJECTIVES. 
Within the first 90 days of each Plan Year, it is anticipated that the
Committee will approve Individual Performance Objectives for Participants who
are executive officers and that the Chief Executive Officer or other
appropriate officers will approve Individual Performance Objectives for other
Participants.  Any such Individual
Performance Objectives will be communicated to Participants in writing.  The Committee shall consider the degree of
achievement of Individual Performance Objectives as a guide in exercising its
discretion in determining a Participant’s Performance Bonus at a level below
the Individual Award Limit.


 


5.5                                 MINIMUM REQUIRED PERFORMANCE GOAL AND INDIVIDUAL AWARD LIMITS.  The Committee will establish for each Plan Year beginning with the 2009 Plan Year a minimum performance goal (“Minimum Required Performance”) under the Plan based on one or more of the following Qualified Business Criteria:
 
·                  EBITDA
·                  EBIT
·                  Earnings Per Share
·                  Net Income
·                  Pretax Income
·                  Sales
·                  Comparable Store Sales
 


In any Plan Year in
which Minimum Required Performance is achieved, the Performance Bonus payable
to each Participant under the Plan for such Plan Year shall be $2 million (the “Individual
Award Limit”) or any lesser amount determined by the Committee based on the
level of actual performance compared to Company Financial Objectives and/or
Individual Performance Objectives and


 


5

















 


such other Performance Objectives or any other
criteria determined by the Committee.  As
described herein, it is anticipated that the Committee will exercise discretion
such that the Performance Bonus paid to a Participant for a Plan Year would
represent the amount that would be payable pursuant to the applicable Company
Financial Objectives and/or Individual Performance Objectives, rather than the
full Individual Award Limit.  In any Plan
Year in which the Committee fails to set a Target Bonus for a Participant, the
Performance Bonus for that Participant shall be zero for that year unless the
Committee determines otherwise (but in no event shall the bonus exceed the
Individual Award Limit).


 


The Minimum Required
Performance shall be communicated in writing to each Participant within the
first 90 days of each Plan Year.


 


5.6.                              PAYOUT FORM AND
TIMING.  Performance Bonuses will be
paid within thirty (30) days after the Committee determines whether and to what
extent Performance Objectives were achieved, but no later than the 15th day of the third month following the end of
the Plan Year for which the Performance Bonuses, if any, were earned.


 


5.7.                              TERMINATION OF
EMPLOYMENT.  In the event
of the termination of a Participant’s employment prior to the end of the Plan
Year, the Participant shall not be entitled to payment of any Performance
Bonus; provided, however, that (i) if such termination is by reason of the
Participant’s death, Disability or Retirement, or (ii) if such termination
occurs for any reason other than death, Disability or Retirement and the
Committee, in its discretion, shall so determine, the Participant will be paid
a Performance Bonus equal to the pro rata portion (based on the number of days
worked during the Plan Year) of the Performance Bonus, if any, that would
otherwise be payable if the Participant had continued employment through the
end of the Plan Year, based on actual performance.  For example, no Performance Bonus shall be
paid if Minimum Required Performance is not achieved.  If Minimum Required Performance is achieved,
then the Participant’s Performance Bonus shall be based on the applicable
performance matrix.  Any such Performance
Bonus shall be paid at the normal time for payment of Performance Bonuses
hereunder.  Any amounts paid on behalf of
a deceased Participant will be paid to the Participant’s Beneficiary.  For terminations after the end of the Plan
Year, but before payout from this Plan, payout will be made as though the
termination had not occurred.


 


5.8.                              CHANGE IN
CONTROL.  In the event a Change in
Control occurs during the Plan Year, a pro rata portion of the Target Bonus
amounts for that Plan Year (based on the number of days in the Plan Year
preceding the Change in Control, divided by 365) shall be deemed earned,
notwithstanding the level of achievement of Performance Objectives or Minimum
Required Performance. Such pro rata Target Bonuses shall be paid to
Participants no later than 30 days after the effective date of the Change in
Control.


 


ARTICLE 6


AMENDMENT, MODIFICATION AND TERMINATION


 


6.1.                              AMENDMENT,
MODIFICATION AND TERMINATION.  The Committee may, at any time and from time
to time, amend, modify or terminate this Plan. 
The Committee may condition any amendment or modification on the
approval of shareholders of the Company if such approval is necessary or deemed
advisable with respect to tax, securities or other applicable laws, policies or
regulations, including without limitation Code Section 162(m).


 


6.2.                              TERMINATION
AFTER OR DURING PLAN YEAR.  Termination
of this Plan after a Plan Year but before Performance Bonuses are paid for that
Plan Year will not reduce Participants’ rights to receive Performance Bonuses
for the Plan Year.  Termination or
amendment of this Plan during a Plan Year may be retroactive to the beginning
of the Plan Year, at the discretion of the Committee.  If a Change in Control occurs, no amendment
or termination may adversely affect amounts payable to a Participant without
the consent of the Participant.


 


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ARTICLE 7


GENERAL PROVISIONS


 


7.1.                              NO RIGHT TO
PARTICIPATE.  No employee
has any right to be selected to participate in this Plan.


 


7.2.                              NO RIGHT TO
EMPLOYMENT.  Nothing in
this Plan shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant’s employment at any time, nor
confer upon any Participant any right to continue in the employ of the Company
or any Subsidiary.


 


7.3.                              WITHHOLDING.  The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant’s FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of this Plan.


 


7.4.                              FUNDING.  Benefits payable under this Plan to a Participant or to a Beneficiary will be paid by the Company from its general assets.  The Company is not required to segregate on its books or otherwise establish any funding procedure for any amount to be used for the payment of benefits under this Plan.  The Company may, however, in its sole discretion, set funds aside in investments to meet its anticipated obligations under this Plan.  Any such action or set-aside may not be deemed to create a trust of any kind between the Company and any Participant or beneficiary or to constitute the funding of any Plan benefits.  Consequently, any person entitled to a payment under this Plan will have no rights greater than the rights of any other unsecured creditor of the Company.
 


7.5.                              EXPENSES.  The expenses of administering this Plan shall
be borne by the Company and its Subsidiaries.


 


7.6.                              TITLES AND
HEADINGS.  The titles
and headings of the Sections in this Plan are for convenience of reference
only, and in the event of any conflict, the text of this Plan, rather than such
titles or headings, shall control.


 


7.7.                              GENDER AND
NUMBER.  Except where otherwise
indicated by the context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular shall include
the plural.


 


7.8.                              GOVERNING LAW.  To the extent not governed by federal law,
this Plan shall be construed in accordance with and governed by the laws of the
State of Delaware.


 


The
foregoing is hereby acknowledged as being the Citi Trends, Inc. Annual
Incentive Bonus Plan as adopted by the Committee on March 19, 2009 and by
the shareholders on May 27, 2009.


 


	
   

  	
  CITI TRENDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Bruce D. Smith

  



 


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EXHIBIT A


 


PARTICIPANTS AND TARGET BONUS PERCENTAGES EFFECTIVE MARCH 19,
2009


UNDER THE ANNUAL INCENTIVE BONUS PLAN


 


	
  Name

  	
   

  	
  % of Base Salary Payable at Target

  Achievement of

  Performance Objectives*

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  R. David Alexander, Jr.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Elizabeth R. Feher

  	
   

  	
  65

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Bruce D. Smith

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  James A. Dunn

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ivy D. Council

  	
   

  	
  50

  	
  %

  



 






*Subject
to the achievement of Minimum Required Performance