Document:

bws10k2009ex10_2.htm

  

  

  

Exhibit 10.2

Fiscal 2009 Director Compensation Guidelines

Compensation for non-employee directors is established by the board of directors upon the recommendation of the Governance and Nominating Committee.  

This includes an annual equity grant, based on an approximate market value of $40,000, to be granted as either restricted stock or  restricted stock units and with the number of shares or units issued to be determined based on a recent stock price, each of which is described in more detail below.

 

 

A director who is an employee does not receive payment for service as a director.

Standard meeting fees and retainer are generally in accordance with the guidelines below, with cash retainers payable quarterly in arrears:

 

 

	 	 ●	  $30,000 as an annual retainer,
	 	 	 
	 	 ●	 Chairs of the Compensation, Executive and Governance and Nominating Committees each received an additional $7,500 annual retainer,
	 	 	 
	 	 ●	 Chair of the Audit Committee received an additional $12,500 annual retainer,
	 	 	 
	 	 ●	 $1,500 fee for each board meeting attended, or each day of such meeting if such meeting was over multiple days, and $1,000 for each committee meeting attended, regardless of whether serving as a member of the committee, 
	 	 	 
	 	 ●	 Reimbursement of customary expenses (such as travel expenses, meals and lodging) for attending board, committee and shareholder meetings, and
	 	 	 
	 	 ●	 Option to participate in the deferred compensation plan, with cash fees and retainer to be invested in phantoms stock units (PSUs) that mirror our stock and are ultimately paid in cash; or to participate in the Non-Employee Share Plan, with shares of the company’s common stock to be issued in lieu of cash for directors’ fees and annual retainer.

 

 

In fiscal 2009, given Dr. Bower’s recognized expertise in succession planning, the board asked him to take the lead on these matters.  The board decided to pay Dr. Bower an additional retainer with a value of $25,000 for each of 2009 and 2010 to recognize his additional services to the board and management in connection with such matters.

We also carry liability insurance and travel accident insurance that covers our directors. We do not maintain a directors’ retirement plan or a directors’ legacy or charitable giving plan, although non-employee directors are permitted to participate in our employee matching gift program on the same terms as employees, thereby providing a match for charitable giving to institutions of higher education and arts and cultural organizations aggregating up to $5,000 per year per individual. Non-employee directors do not participate in the retirement plans available to employees, nor do they participate in the annual or long-term equity incentive programs that have been developed for employees.

For the annual equity grant made following the annual meeting of shareholders, non-employee directors  have a choice between restricted stock units.  The restricted stock awards vest after one year and earn cash dividends.  The RSUs are subject to a one-year vesting requirement, earn dividend equivalent units, and are payable in cash on the date the director terminates service or such earlier date as a director may elect (provided that the selected payout date is at least two years after the grant date for the award), based on the stock’s then-current market value.

Non-employee directors are eligible to participate on a voluntary basis in a deferred compensation plan that credits the participating director’s account at each fiscal quarter-end with “phantom units” based on total compensation deferred and dividend equivalents earned during the quarter, divided by the fair market value of our common stock on the last trading day of the fiscal quarter.  The PSUs are payable in cash, based on our stock’s market value at fiscal quarter-end on or following termination of the director’s service, either in a lump sum or over a five-year or ten-year period, at the director’s election.  The plan also provides for earlier payment of a participating director’s account based on demonstrated financial hardship. The plan accounts of inactive participants continue to earn dividend equivalents on the account balance.

Commencing with fiscal year 2009, our non-employee directors were able to participate in the Non-Employee Director Share Plan, which allows the participating director to receive retainer and meeting fees in shares of the Company’s stock in lieu of cash, with the number of shares issuable determined based on the mean of the high and low price of our stock, usually determined as of the first business day following the meeting or following the payment date for a retainer.bws10k2009ex10_11b.htm

  

  

  

EXHIBIT 10.11b

                                                            

	 	 December 18, 2009

 

Ronald A. Fromm

Chairman and CEO

Dear Ron:

 

Section 409A to the Internal Revenue Code (“IRC”) imposes significant limitations on amounts that are considered nonqualified deferred compensation (“NDC”).  Some payments under your Severance Agreement may be subject to these rules.  Therefore, in order to avoid potential negative tax implications to you, we must amend your Severance Agreement to ensure compliance with 409A.

 

In addition, the Internal Revenue Service (“IRS”) recently amended the rules governing the deductibility of compensation paid to top executives of a publicly traded company.  In general, IRC Section 162(m) provides that annual compensation in excess of $1 million is not deductible.  Performance based compensation, however, is not subject to the $1 million limitation.  To ensure payments made in connection with the bonus program are considered to be performance based compensation, we need to make revisions to your agreement.

 

Accordingly, in light of the 409A and 162(m) rules’ possible impact on your severance benefits, your Severance Agreement is amended as follows:

 

	
1.  

	
 Section 1.12 of your Severance Agreement is amended to read as follows:

 

1.12           “Termination Date” means the effective date as provided in this Agreement of the termination of Employee’s employment with the Company.  Employee will have a termination of employment only if he has a separation from service determined based on all of the facts and circumstances and in accordance with the rules and regulations issued by the Treasury Department under Code Section 409A.

 

	
2.  

	
Section 4.1(b) of your Severance Agreement is amended to read as follows:

 

(b)           The Company shall pay, or cause to be paid, to Employee (i) in a lump sum six (6) months after the Termination Date an amount equal to 200% of the sum of (A) Employee’s base annual salary at the highest rate in effect at any time during the twelve (12) months immediately preceding the Termination Date, and (B) Employee’s targeted bonus for the current year, and (ii) Employee’s bonus for the year of termination prorated to the Termination Date, paid at the time such bonus would have been paid if Employee had remained employed to the date of payment and calculated based on achievement of the applicable performance criteria applicable to such bonus payment.

 

	
3.  

	
Section 6 of your Severance Agreement is amended to read as follows:

 

Section 6.                      Employee Expenses After Change in Control

If Employee’s employment is terminated by the Company within twenty-four (24) months after a Change in Control and there is a dispute with respect to this Agreement, then all Employee’s costs and expenses (including reasonable legal and accounting fees) incurred by Employee (a) to defend the validity of this Agreement, (b) to contest any termination for Cause, (c) to contest any determinations by the Company concerning the amounts payable by or on behalf of the Company under this Agreement, or (d) to otherwise obtain or enforce any right or benefit provided to Employee by this Agreement, shall be paid by the Company.  The Company shall make payment of such reimbursements from time to time, but in no event later than the last day of the calendar year following the calendar year in which such expenses are incurred, provided Employee timely submits reasonable documentation of such expenses.  In the event Employee is not the prevailing party in any such contest, Employee shall pay back any reimbursements made by the Company hereunder within 30 days of final disposition of such contest.

	
4.  

	
Section 7 of your Severance Agreement is amended to read as follows:

 

Section 7.                      Release

 

Notwithstanding anything to the contrary stated in this Agreement, no benefits will be paid pursuant to Section 4 except under Section 4.1(a), 4.2(a) or 4.3 prior to execution by Employee of a release of the Company substantially in the form attached as Exhibit A, with such changes as may be made by the Company in its sole discretion in order to comply with and stay current with applicable laws and regulations.  Unless Employee executes such release and returns it to the Company within 45 days of his Termination Date, all benefits except under Sections 4.1(a), 4.2(a) or 4.3 shall be forfeited.

 

	
5.  

	
Section 12.2(a) of your Severance Agreement is amended to read as follows:

 

(a)           Brown Shoe shall require any successor to all or substantially all of the business and/or assets of the Company (whether such succession is direct or indirect, by purchase, merger, consolidation or otherwise), prior to or upon such succession, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place.  To the extent such transaction constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company under Code Section 409A and the rules and regulations thereunder, failure of Brown Shoe to obtain such agreement upon or prior to the effectiveness of any such succession shall be a material breach of this Agreement and shall entitle Employee to benefits from the Company in the same amounts and on the same terms as Employee would be entitled hereunder if Employee’s employment was terminated without Cause within twenty-four (24) months after a Change of Control.  For purposes of the preceding sentence, the date on which any such succession becomes effective shall be deemed the Termination Date.

	
6.  

	
A new Section 12.11 is added to your Severance Agreement as follows:

 

12.11           409A Interpretation.  With respect to those amounts payable hereunder which are subject to Code Section 409A, this Agreement shall be interpreted in a manner so as to be consistent with such provision and the rules and regulations promulgated thereunder.  The Company may modify the Agreement to the extent necessary to prevent a benefit or payment from being subject to a tax due to noncompliance with Code Section 409A.  Notwithstanding anything herein to the contrary, in the event that Executive is determined to be a specified employee within the meaning of Code Section 409A, for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service, to the extent required to avoid any adverse tax consequences under Code Section 409A.

Please indicate your agreement to the terms set forth above by signing a copy of this letter and returning it to me

 

Sincerely,

 

     /s/ Sarah Stephenson

 

Sarah Stephenson

 

Vice President Total Rewards

 

 

 

	 	 Agreed and accepted:
	 	 
	 	 /s/ Ronald A.Fromm
	 	 Ronald a. Fromm
	 	 
	 	 12/18/09
	 	 Date

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