Document:

exv10w15

Exhibit 10.15

EXECUTIVE AGREEMENT

     This Executive Agreement (“Agreement”) is made as of the 12th day of July, 2012, between
Eloqua, Inc., a Delaware corporation (the “Company”), and Steve Holsten (the “Executive”).

     In consideration of the mutual covenants and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:

     1. Employment.

          (a) Term. The Company and the Executive desire to continue their employment
relationship pursuant to the terms of this Agreement, for an initial term commencing as of the date
hereof and continuing for a three-year period thereafter (the “Initial Term”), unless sooner
terminated in accordance with the provisions of Section 3. Such employment relationship will
automatically continue following the Initial Term for additional three-year periods in accordance
with the terms of this Agreement unless either party notifies the other party in writing of its
intention not to renew this Agreement at least 30 days prior to the expiration of the Initial Term
or any additional three-year term, as applicable (the Initial Term, together with any such
extension, will hereinafter be referred to as the “Term”). The Executive’s employment with the
Company will be “at will,” meaning that the Executive’s employment may be terminated by the Company
or the Executive at any time and for any reason.

          (b) Position. During the Term, the Executive will serve as the Vice President and
General Counsel of the Company, and will have such powers and duties as may from time to time be
prescribed by the Chief Executive Officer of the Company (the “CEO”), provided that such duties are
consistent with the Executive’s position. While the Executive renders services to the Company, the
Executive will not engage in any other employment, consulting or business activity that would
create a conflict of interest with the Company.

     2. Compensation and Related Matters.

          (a) Base Salary. During the Term, the Executive’s initial annual base salary will be
$225,000, subject to redetermination from time-to-time by the Board of Directors or Compensation
Committee. The base salary in effect at any given time is referred to herein as “Base Salary.”
The Base Salary will be payable in a manner that is consistent with the Company’s usual payroll
practices for senior executives.

 

 

          (b) Incentive Compensation. During the Term, the Executive will be eligible to be
considered for annual cash incentive compensation as determined by the Board of Directors or
Compensation Committee from time to time. The Executive’s initial annual target bonus will be
$70,000. To earn incentive compensation, the Executive must be employed by the Company on the day
such incentive compensation is paid.

          (c) Other Benefits. During the Term, the Executive will be entitled to continue to
participate in the Company’s employee benefit plans, subject to the terms and the conditions of
such plans and to the Company’s ability to amend and modify such plans. The Executive will be
entitled to paid vacation in accordance with the terms of the Company’s vacation policy, as in
effect from time to time.

          (d) Equity Compensation. The Executive shall be eligible to receive stock options or
other equity compensation from time to time under the Company’s equity incentive plans as
determined in the sole discretion of the Board or the Compensation Committee.

     3. Termination. During the Term, the Executive’s employment may be terminated under
the following circumstances:

          (a) Death. The Executive’s employment will terminate upon the Executive’s death.

          (b) Disability. The Company may terminate the Executive’s employment if the Executive
is disabled and unable to perform the essential functions of the Executive’s then existing position
or positions under this Agreement with or without reasonable accommodation for a period of 180 days
(which need not be consecutive) in any 12-month period. Nothing in this Section 3(b) will be
construed to waive the Executive’s rights, if any, under existing law including, without
limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans
with Disabilities Act, 42 U.S.C. §12101 et seq.

          (c) Termination by Company for Cause. The Company may terminate the Executive’s
employment for Cause as determined by the Board of Directors. For purposes of this Agreement,
“Cause” means: (i) the Executive’s commission (including any plea of guilty or nolo contendere) of
any crime (whether or not involving the Company) which constitutes a felony, or a misdemeanor
involving moral turpitude, deceit, dishonesty or fraud, in the jurisdiction involved (other than
unintentional motor vehicle crimes); (ii) any action or omission that constitutes gross negligence,
dishonesty, willful misconduct, fraud, embezzlement, misappropriation of funds or breach of
fiduciary duty to the Company or any of its subsidiaries; (iii) the Executive’s continuing,
repeated and willful failure or refusal to perform the Executive’s duties and services under this
Agreement; (iv) the

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Executive’s material violation or breach of this Agreement, or violation or breach of the
Confidentiality Agreement (defined below), or the Company’s policies and procedures; (v) the
Executive’s willful failure to cooperate with a bona fide internal investigation or an
investigation by regulatory or law enforcement authorities, after being instructed by the Company
to cooperate, or willful destruction or failure to preserve documents or other materials known to
be relevant to such investigation, or willful inducement of others to fail to cooperate or to
produce documents or other materials in connection with such investigation; or (vi) the Executive’s
material violation of United States federal or state securities laws or applicable Canadian and/or
provincial securities laws, except to the extent that the Executive has relied upon, and acted in
accordance with, the advice of the Company’s legal counsel with respect to the matter involved in
such violation and believed he or she was acting in accordance with such laws.

          (d) Termination Without Cause. The Company may terminate the Executive’s employment
at any time without Cause. Any termination by the Company of the Executive’s employment that does
not constitute a termination for Cause under Section 3(c) and does not result from the death or
disability of the Executive under Sections 3(a) or (b) will be deemed a termination without Cause.
For the avoidance of doubt, a non-renewal of this Agreement by the Company (in accordance with
Section 1(a) above) shall constitute a termination of employment by the Company without Cause and
the Executive acknowledges that the severance provisions of Section 4(b) will apply.

          (e) Termination by the Executive. The Executive may terminate employment at any time
for any reason, including but not limited to Good Reason. For purposes of this Agreement, “Good
Reason” means that the Executive has complied with the “Good Reason Process” (hereinafter defined)
following the occurrence of any of the following events: (i) a material diminution in the
Executive’s Base Salary or (ii) the required relocation of the Executive’s principal place of
employment by more than 50 miles from its location at the effective date of this Agreement. “Good
Reason Process” means that (1) the Executive reasonably determines in good faith that a “Good
Reason” condition has occurred; (2) the Executive notifies the Company in writing of the first
occurrence of the Good Reason condition within 60 days of the first occurrence of such condition;
(3) the Executive cooperates in good faith with the Company’s efforts, for a period not less than
30 days following such notice (the “Cure Period”), to remedy the condition; (4) notwithstanding
such efforts, the Good Reason condition continues to exist; and (5) the Executive terminates
employment within 60 days after the end of the Cure Period. If the Company cures the Good Reason
condition during the Cure Period, Good Reason will be deemed not to have occurred.

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          (f) Notice of Termination. Except for termination as specified in Section 3(a), any
termination of the Executive’s employment by the Company or any such termination by the Executive
will be communicated by written Notice of Termination to the other party hereto. For purposes of
this Agreement, a “Notice of Termination” means a notice that indicates the specific termination
provision in this Agreement relied upon.

          (g) Date of Termination. “Date of Termination” means: (i) if the Executive’s
employment is terminated by death, the date of Executive’s death; (ii) if the Executive’s
employment is terminated on account of disability under Section 3(b) or by the Company for Cause
under Section 3(c), the date on which Notice of Termination is given; (iii) if the Executive’s
employment is terminated by the Company under Section 3(d), 30 days after the date on which a
Notice of Termination is given; (iv) if the Executive’s employment is terminated by the Executive
under Section 3(e) without Good Reason, 30 days after the date on which a Notice of Termination is
given, (v) if the Executive’s employment is terminated by the Executive under Section 3(e) with
Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period,
and (vi) if the Executive’s employment is terminated by the Company due to a non-renewal of this
Agreement by the Company (in accordance with Section 1(a) above), the date specified in the
Company’s notice of non-renewal, but not later than the last day of the applicable Term.
Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the
Company, the Company may unilaterally accelerate the Date of Termination and such acceleration will
not result in a termination by the Company for purposes of this Agreement.

     4. Compensation Upon Termination.

          (a) Termination Generally. If the Executive’s employment with the Company is
terminated for any reason, the Company will pay or provide to the Executive (or to Executive’s
authorized representative or estate), on or before the time required by law but in no event more
than 30 days after the Executive’s Date of Termination, any Base Salary earned through the Date of
Termination, unpaid expense reimbursements and unused vacation that accrued through the Date of
Termination (collectively, the “Accrued Benefits”). Upon any termination of the Executive’s
employment for any reason, the Executive will tender to the Company the Executive’s resignation
from all positions with the Company and its subsidiaries, including without limitation, any
positions as a member of the Board of Directors of the Company and/or any of its subsidiaries.

          (b) Termination by the Company Without Cause or by the Executive with Good Reason.
During the Term, if the Executive’s employment is terminated by the Company without Cause as
provided in Section 3(d) or the Executive terminates his employment for Good Reason as

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provided in Section 3(e), then the Company will pay the Executive the Accrued Benefits. In
addition, subject to the Executive signing a general release of claims in favor of the Company and
related persons and entities in a form and manner satisfactory to the Company (the “Release”) and
the expiration of the seven-day revocation period for the Release, the Company will pay the
Executive an amount equal to six months of the Executive’s Base Salary as of the Date of
Termination (the “Severance Amount”). The Severance Amount will be paid out in substantially equal
installments in accordance with the Company’s payroll practice over six months commencing within 60
days after the Date of Termination; provided, however, that if the 60-day period begins in one
calendar year and ends in a second calendar year, the Severance Amount will begin to be paid in the
second calendar year. Solely for purposes of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), each installment payment is considered a separate payment. 

     5. Change in Control.

          (a) Additional Benefits. If, during the Term, the Executive’s employment is
terminated by the Company without Cause as provided in Section 3(d) or the Executive terminates his
or her employment for Good Reason as provided in Section 3(e), in either case, within 12 months
following a Sale Event (as defined in the Company’s 2012 Stock Option and Incentive Plan) then, in
addition to the Severance Amount described in Section 4(b), above, (x) the Company will pay the
Executive a lump-sum payment in an amount equal to six months of the Executive’s target annual
bonus for the year of termination, payable on the date the first installment of the Severance
Amount is paid, provided the Release is effective as of such date, and (y) any unvested and/or
unexercisable Company equity awards then held by the Executive, whether in the form of options,
restricted stock, restricted stock units or other form, shall be immediately vested and/or
exercisable as of the Date of Termination.

          (b) Additional Limitation.

          (i) Anything in this Agreement to the contrary notwithstanding, in the event that the
amount of any compensation, acceleration, payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent
with Section 280G of the Code and the applicable regulations thereunder (the “Severance
Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the
following provisions will apply:

          (A) If the Severance Payments, reduced by the sum of (1) the Excise Tax and
(2) the total of the Federal,

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state, and local income and employment taxes payable by the Executive on
the amount of the Severance Payments which are in excess of the Threshold
Amount, are greater than or equal to the Threshold Amount, the Executive will be
entitled to the full benefits payable under this Agreement.

          (B) If the Threshold Amount is less than (x) the Severance Payments, but
greater than (y) the Severance Payments reduced by the sum of (1) the Excise Tax
and (2) the total of the Federal, state, and local income and employment taxes
on the amount of the Severance Payments which are in excess of the Threshold
Amount, then the Severance Payments will be reduced (but not below zero) to the
extent necessary so that the sum of all Severance Payments will not exceed the
Threshold Amount. In such event, the Severance Payments will be reduced in the
following order: (1) cash payments not subject to Section 409A of the Code; (2)
cash payments subject to Section 409A of the Code; (3) equity-based payments and
acceleration; and (4) non-cash forms of benefits. To the extent any payment is
to be made over time (e.g., in installments, etc.), then the payments will be
reduced in reverse chronological order.

          (ii) For the purposes of this Section 5(b), “Threshold Amount” means three times the
Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the
regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax” means the
excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by
the Executive with respect to such excise tax.

          (iii) The determination as to which of the alternative provisions of Section 5(b)(i)
will apply to the Executive will be made by an accounting firm selected by the Company
(the “Accounting Firm”), which will provide detailed supporting calculations both to the
Company and the Executive within 10 business days of the Date of Termination, if
applicable, or at such earlier time as is reasonably requested by the Company or the
Executive. For purposes of determining which of the alternative provisions of Section
5(b)(i) will apply, the Executive will be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation applicable to individuals for the
calendar year in which the determination is to be made, and state and local income taxes
at the highest marginal rates of individual taxation in the state and locality of the
Executive’s residence on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of

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such state and local taxes. Any determination by the Accounting Firm will be binding
upon the Company and the Executive.

     6. Section 409A.

          (a) Anything in this Agreement to the contrary notwithstanding, if at the time of the
Executive’s separation from service within the meaning of Section 409A of the Code, the Company
determines that the Executive is a “specified employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes
entitled to under this Agreement on account of the Executive’s separation from service would be
considered deferred compensation subject to the 20 percent additional tax imposed pursuant to
Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code,
such payment will not be payable and such benefit will not be provided until the date that is the
earlier of (A) six months and one day after the Executive’s separation from service, or (B) the
Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis,
the first payment will include a catch-up payment covering amounts that would otherwise have been
paid during the six-month period but for the application of this provision, and the balance of the
installments will be payable in accordance with their original schedule.

          (b) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement
will be provided by the Company or incurred by the Executive during the time periods set forth in
this Agreement. All reimbursements will be paid as soon as administratively practicable, but in no
event will any reimbursement be paid after the last day of the taxable year following the taxable
year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable
expenses incurred in one taxable year will not affect the in-kind benefits to be provided or the
expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or
in-kind benefits is not subject to liquidation or exchange for another benefit.

          (c) To the extent that any payment or benefit described in this Agreement constitutes
“non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such
payment or benefit is payable upon the Executive’s termination of employment, then such payments or
benefits will be payable only upon the Executive’s “separation from service.” The determination of
whether and when a separation from service has occurred will be made in accordance with the
presumptions set forth in Treasury Regulation Section 1.409A-1(h).

          (d) The parties intend that this Agreement will be administered in accordance with Section
409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its
compliance with

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Section 409A of the Code, the provision will be read in such a manner so that all payments
hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be
amended, as reasonably requested by either party, and as may be necessary to fully comply with
Section 409A of the Code and all related rules and regulations in order to preserve the payments
and benefits provided hereunder without additional cost to either party.

          (e) The Company makes no representation or warranty and will have no liability to the
Executive or any other person if any provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or
the conditions of, such Section.

     7. Consent to Jurisdiction. The parties hereby consent to the jurisdiction of the
Federal and State courts located in Fairfax County or Alexandria, VA with respect to all matters
arising under this Agreement. Accordingly, with respect to any such court action, the Executive
(a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and
(c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with
respect to personal jurisdiction or service of process.

     8. Integration. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements between the parties
concerning such subject matter, including without limitation the General Employment Offer, provided
that the following agreements will not be superseded by this Agreement but will remain in full
force and effect in accordance with their terms: Employee Confidential Information and
Non-Disclosure, Developments, Non-Solicitation and Non Competition Undertaking between the Company
and the Executive dated March 24, 2010 (the “Confidentiality Agreement”).

     9. Enforceability. If any portion or provision of this Agreement (including, without
limitation, any portion or provision of any section of this Agreement) will to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, will not be affected thereby, and each portion
and provision of this Agreement will be valid and enforceable to the fullest extent permitted by
law.

     10. Survival. The provisions of this Agreement will survive the termination of this
Agreement and/or the termination of the Executive’s employment to the extent necessary to
effectuate the terms contained herein.

     11. Waiver. No waiver of any provision hereof will be effective unless made in
writing and signed by the waiving party. The failure of any party to require the performance of
any term or obligation of this Agreement,

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or the waiver by any party of any breach of this Agreement, will not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

     12. Notices. Any notices, requests, demands and other communications provided for by
this Agreement will be sufficient if in writing and delivered in person or sent by a nationally
recognized overnight courier service or by registered or certified mail, postage prepaid, return
receipt requested, to the Executive at the last address the Executive has filed in writing with the
Company or, in the case of the Company, at its main offices, attention of the Board.

     13. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by a duly authorized representative of the Company.

     14. Governing Law. This is a Virginia contract and will be construed under and be
governed in all respects by the laws of the Commonwealth of Virginia, without giving effect to the
conflict of laws principles of such State. With respect to any disputes concerning federal law,
such disputes shall be determined in accordance with the law as it would be interpreted and applied
by the United States Court of Appeals for the Fourth Circuit.

     15. Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered will be taken to be an original; but such counterparts will
together constitute one and the same document.

     16. Successor to Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree to perform this Agreement to the
same extent that the Company would be required to perform it if no succession had taken place.
Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness
of any succession will be a material breach of this Agreement.

     17. Gender Neutral. Wherever used herein, a pronoun in the masculine gender will be
considered as including the feminine gender unless the context clearly indicates otherwise.

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     IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year
first above written.

	 	 	 	 	 

	 

	 	ELOQUA, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Joseph Payne 

Joseph Payne
	 	 
	 

	 	CEO	 	 
	 
	 	 	 	 
	 

	 	EXECUTIVE	 	 
	 
	 	 	 	 
	 

	 	/s/ Stephen Holsten 

Stephen Holsten
	 	 
	 
	 	 	 	 
	 

	 	July 12, 2012 

Date
	 	 

10eh1200883_ex1001.htm

EXHIBIT 10.1

 

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS

COVERING SECURITIES THAT HAVE BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED

 

 

 

 

 

 

Cliff Restricted Performance Share Unit with TSR 

Modifier Award 

Fiscal 2013 – Overview

July 13, 2012

  

  

  

This Overview is qualified in its entirety by reference to the Memorandum to Participants in the Ralph Lauren Corporation 2010 Long-Term Stock Incentive Plan and to the Plan itself.  Copies of the Memorandum and the Plan are available online at http://totalrewards.ralphlauren.com or from your Human Resources Department.

OVERVIEW

 

The Ralph Lauren Corporation (the “Company”) 2010 Long-Term Stock Incentive Plan (the “Plan”) authorizes the Compensation & Organizational Development Committee of the Board of Directors (the “Compensation Committee”) to grant equity awards to officers and other employees of the Company and its Subsidiaries and Affiliates.

 

As determined by the Compensation Committee, the Company may grant one or more types of Restricted Performance Share Unit awards (“RPSUs”).  This Overview describes an additional type of RPSU award, effective beginning in fiscal year 2013, that has three-year cliff vesting with a Total Shareholder Return modifier (“Cliff RPSU with TSR Modifier”).  The term “cliff” vesting is used since all units in a given Cliff RPSU with TSR Modifier award are eligible to vest at the same time.

 

A Cliff RPSU with TSR Modifier award provides a participant the opportunity to receive shares of the Company’s Class A Common Stock (traded on the New York Stock Exchange under the symbol RL) at a later date contingent upon achievement of performance goals over a specified period, generally three fiscal years, and contingent upon continued service with the Company.

 

AWARD OBJECTIVES

 

Objectives of RPSUs, including Cliff RPSUs with TSR Modifier, are to:

 

	
1.

	
Attract and retain exceptional individuals of superior talent

 

	
2.

	
Motivate such individuals to achieve longer-range performance goals

 

	
3. 

	
Enable such individuals to participate in the long-term growth and financial success of the Company

 

 

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	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

PLAN ADMINISTRATION

 

The Company’s Human Resources Department administers the program and Merrill Lynch Wealth Management (“Merrill Lynch”) is the recordkeeper.  Participants must have an open brokerage account at Merrill Lynch in order to facilitate distribution of shares of the Company’s Class A Common Stock upon the vesting of Cliff RPSUs with TSR Modifier.  To open a brokerage account, or for questions regarding your account and account transactions, contact Merrill Lynch at (609) 818-8908 or (877) 765-7656.

 

The Company’s Board of Directors reserves the right to amend, modify or terminate the Plan, subject to stockholder approval, if required.  No such amendment to the Plan would adversely affect any Cliff RPSU with TSR Modifier awards then outstanding.

 

Nothing contained herein may be construed as creating a promise of future benefits or a binding contract with the Company.  Further, an individual’s employment continues to be at will, subject to any applicable employment agreement.

 

For questions regarding the Plan and its provisions, contact Human Resources.

 

ELIGIBILITY FOR GRANT

 

Equity awards, including Cliff RPSU with TSR Modifier awards, may be granted annually to designated, key executives who have a significant impact on the strategic direction and business results of the Company, and who are actively employed on April 1 of the year when the grant is made.

 

Guidelines have been established for the number and type of equity awards that eligible participants may receive.  The guidelines reflect a position’s scope, accountability and impact on the organization, and may also reflect changes in the value of the Company’s Class A Common Stock.

Please note that the guidelines do not constitute a guarantee that any specific individual will receive an equity award in any given or subsequent year, or guarantee the type, value, or size of any grant, if a grant is made.

 

	
 An eligible employee who receives a Below Expectations (B) or Unsatisfactory (U) rating 

on his or her annual performance appraisal is not eligible for an equity award 

in the fiscal year following that performance appraisal period.

 

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	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

 

PERFORMANCE MEASURES FOR CLIFF VESTING

 

The Company’s performance measure(s) and TSR Modifier are set by the Compensation Committee at the time of grant.  The performance measure or measures will be taken from a list of performance criteria set forth in the Plan. Such measure(s) may include, for example, one or more of the following:

 

	
  

	
§

	
Net Earnings or Net Income (before or after taxes)

 

	
  

	
§

	
Basic or Diluted Earnings Per Share (before or after taxes)

 

	
  

	
§

	
Net Operating Profit (before or after taxes)

 

	
  

	
§

	
Net Revenue or Net Revenue Growth

 

	
  

	
§

	
Gross Profit or Gross Profit Growth

 

	
  

	
§

	
Return Measures (including but not limited to Return on Assets, Investments, Capital)

 

	
  

	
§

	
Other measures of economic value added or other value creation metrics

 

The TSR Modifier is based on the Company’s total shareholder’s return over the performance period compared to the TSR of the companies in the S&P 500 index for the same period.  TSR shall be measured by share price appreciation, plus dividends reinvested, with starting and ending share prices being based on the average closing prices for the 20 trading days ending immediately prior to the beginning and end of the three year performance period.

 

 

STRUCTURE OF GRANTS AND PAYOUT SCHEDULE

 

The target number of units in a Cliff RPSU with TSR Modifier award is set at the grant date. Applicable Threshold, Target and Maximum levels of Company financial performance are established at the beginning of the performance period.  After the number of shares earned based on the financial performance measure is determined, the relative TSR modifier may either increase or decrease the number of shares earned from +25% to -25%.

 

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	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

 

The shares will be modified based on the TSR performance as shown in the charts below.

 

TSR MODIFIER AND PAYOUT ADJUSTMENT

 

	
Relative TSR Performance

 

	
TSR Modifier

Payout 

Adjustment

	
≥ 80th Percentile

	
+ 25%

	
≥ 60th Percentile and < 80th Percentile

	
+12.5%

	
≥ 40th Percentile and < 60th Percentile

	
0%

	
≥ 30th Percentile and < 40th Percentile

	
-12.5%

	
< 30th Percentile  

	
-25%

 

EFFECT OF TSR MODIFIER ON TOTAL PAYOUT

 

Net Income Performance                                                                                                TSR Performance

	
Performance 

Level

	
Performance 

as % of 

Target

	
Payout 

as % of 

Target

	  	
TSR Modifier

	
Total Payout as 

% of Target

	
Maximum

	
110%

	
150%

	
-25% to +25%

	
112.5% – 187.5%

	
Target

	
100%

	
100%

	
-25% to +25%

	
75% – 125%

	
Threshold

	
70%

	
75%

	
-25% to +25%

	
56.25% – 93.75%

 

	
Vesting is interpolated for performance between 70%-110% of 

target and then adjusted based on the TSR modifier.

	 	
Adjustment for TSR Modifier will not be interpolated 

between performance levels.

 

 

Once a Cliff RPSU with TSR Modifier award is granted, the performance measure (s), performance goals, vesting and payout schedule will not be modified during the term for that particular award.  However, in determining performance against the goal, the Company’s results may be adjusted to exclude the effects of certain events and transactions as specified by the Compensation Committee at the time of grant.  The TSR Modifier will not be subject to any adjustment.  For any future awards, the Compensation Committee may change the performance measure(s), goals, vesting and payout schedule(s).

 

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FISCAL 2013 GRANT PERFORMANCE MEASURE, PERFORMANCE LEVELS AND VESTING

 

The performance measure for fiscal 2013 Cliff RPSU with TSR Modifier awards is Cumulative Net Earnings for fiscal years 2013-2015.  The TSR Modifier is based on the Company’s TSR over the 2013-2015 fiscal year performance period.  Vesting of Cliff RPSUs with TSR Modifier, and the distribution of the Company’s Class A Common Stock, will occur as soon as administratively practical following certification of achievement of the performance goals and relative TSR performance by the Compensation Committee.  The vesting date typically occurs in June of each year, but may be earlier or later.

 

If Threshold or better performance is achieved, and the participant has had continuous service with the Company through the vesting date, shares of the Company’s Class A Common Stock will be distributed to participants upon the vesting of Cliff RPSUs with TSR Modifier. Upon vesting, the participant will own the shares and as a shareholder of the Company’s Class A Common Stock, will have voting rights and will receive dividends on such shares.  Prior to the vesting date, dividends are not earned on Cliff RPSUs with TSR Modifier and the participant does not have voting rights. If performance is below Threshold at the end of the performance period, all Cliff RPSUs with TSR Modifier granted for that award will be forfeited.

 

Cliff RPSUs with TSR Modifier granted in fiscal 2013 are scheduled to vest after fiscal 2015, subject to the Company’s achievement of the cumulative performance goals specified, and the participant’s continuous service with the Company.

EXAMPLES OF PERFORMANCE LEVEL, VESTING AND PAYOUT OF FY13 GRANT 1

 

	
# Cliff

RPSUs with

TSR Modifier

Granted

 

	
Net Income (NI) 

Performance 

Level 2

 

	
% of Target 

Award 

Earned Based 

on NI 

Performance1

 

	
 

 

 

TSR 

Performance

 Level 2

 

	
 

 

 

TSR 

Modifier 

Adjustment

	
 

 

Vested 

Percentage

with TSR 

Modifier

	
 

 

 

# of 

Shares 

Vested

	
1,000

	
115%

	
150%

	
 

 

84th Percentile

	
 

 

+25%

	
 

 

187.5%

	
 

 

1,875

	
1,000

	
100%

	
100%

	
 

 

65th Percentile

	
 

 

+12.5%

	
 

 

112.5%

	
 

 

1,125

	
1,000

	
85%

	
87.5%

	
 

 

35th Percentile

	
 

 

-12.5%

	
 

 

76.6%

	
 

 

765

 

1  FY13 – FY15 Performance Period

 

2  Examples are hypothetical and not a forecast of future performance or payout percentages

 

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	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

 

In the U.S. and in many other jurisdictions, vesting of RPSUs and the delivery of shares of Class A Common Stock is a taxable event.  When shares are distributed, a portion of the shares are withheld to satisfy withholding requirements, and the net shares are delivered to participants in their Merrill Lynch account.

 

VALUE OF RESTRICTED PERFORMANCE SHARE UNITS

 

If Threshold or better performance against the applicable goal is achieved, Cliff RPSUs with TSR Modifier offer the opportunity to recognize value in several ways:

 

	
  

	
§

	
Receive shares of RL Class A Common Stock without paying any exercise price

 

	
  

	
§

	
The number of Cliff RPSUs with TSR Modifier vesting can range from 56.25% to 187.5% of the target shares granted

 

	
  

	
§

	
Any increases in the Company’s Class A Common Stock price above the price on the grant date increases the value of the award

The example below illustrates the opportunity for gains in the value of the award at various Company Class A Common Stock prices.

 

EXAMPLE:  POTENTIAL VALUE

Award of 1,000 Cliff RPSUs with TSR Modifier

 

	  	  	  	
If Stock Price Reaches:

	
Value At

Relative TSR:

	
Payment Modifier %

	
# of Shares

	
$135

	
$140

	
$145

	
$150

	
< 30th Percentile

Threshold Performance

	
56.25%

	
 

562

	
 

$75,870

	
 

$78,680

	
$81,490

	
 

$84,300

	
≥40th and < 60th Percentile

Target Performance

	
100%

	
 

1,000

	
 

$135,000

	
$140,000

	
$145,000

	
 

$150,000

	
 

> 80th Percentile

	
187.5%

	
 

1,875

	
 

$253,125

	
$262,500

	
$271,875

	
 

$281,250

Note: Value is before tax and a portion of the shares will be withheld to satisfy required tax withholding. 

Example is hypothetical and is not a forecast of growth in the Company’s Class A Common Stock price.

If performance calculation results in fractional shares, the fractional shares will be paid in cash.

 

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	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

 

SALE OF SHARES SUBSEQUENT TO DISTRIBUTION

 

Shares received from the vesting of a Cliff RPSU with TSR Modifier award may be sold subject to the Company’s trading restrictions as set forth in the Company’s Securities Trading policy beginning on page 9.  In certain circumstances, certain Executive Officers may sell shares pursuant to Rule 144 or another applicable exemption under the U.S. Securities Act of 1933, as amended.

 

In the U.S. and in many other jurisdictions, sale of such shares after vesting has tax implications. Contact your financial advisor for important information about how a subsequent sale of shares impacts you. Once Cliff RPSUs with TSR Modifier awards have vested and you receive shares of the Company’s Class A Common Stock from the vesting of a particular Cliff RPSU with TSR Modifier award, you retain all rights to those shares, regardless of your employment status with the Company.

IF YOU LEAVE THE COMPANY

 

	
Event

	
Status of Cliff RPSU Awards

	
 

Normal Retirement

(Age 65)

 

Early Retirement

(Age 55 through age 64

with 7 or more years of service)

 

Long-Term Disability (LTD)

 

Death

	
·  In the case of retirement, LTD or death, a pro-rated1 target number of Cliff RPSUs with TSR Modifier will be determined

 

·     These pro-rated Cliff RPSUs with TSR Modifier will be eligible to vest at the end of the applicable performance period based on the actual degree of achievement, and the number of shares paid out will be adjusted based on relative TSR performance. If performance against the financial performance goal does not reach the Threshold level, then the pro-rated Cliff RPSUs with TSR Modifier will be forfeited.

 

·     All remaining Cliff RPSUs with TSR Modifier are forfeited

	
Voluntary Resignation

	
·     All unvested Cliff RPSUs with TSR Modifier are forfeited

	
Involuntary Termination

(Without Cause)

	
·     All unvested Cliff RPSUs with TSR Modifier are forfeited

	
Dismissal for Cause

(As defined by the Company or,

if applicable, the participant’s employment agreement)

	
·     All vested Cliff RPSUs with TSR Modifier not yet distributed into shares of the Company’s Class A Common Stock are forfeited

·     All unvested Cliff RPSUs with TSR Modifier are forfeited

	
1 

	
The pro-rata portion will be determined by taking the number of full months worked during the corresponding performance 

period, dividing it by the number of months in the performance period, and then multiplying the resulting decimal by the 

number of Cliff RPSUs with TSR Modifier granted for that performance period.

       

 

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July 13, 2012

	 
	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

 

SECURITIES TRADING POLICY

 

INSIDER TRADING

 

As provided in the Ralph Lauren (The Company) Employee Handbook, employees are prohibited by law from buying or selling securities if an employee has or is aware of any material, non-public information about the Company and its Subsidiaries and Affiliates.  This is commonly referred to as “insider information.”  Material, non-public information is any information that has not been disclosed to the public that could affect the price of Company Common Stock -- either positively or negatively -- or affect a person’s decision to buy, hold or sell securities.

 

 

Examples of what might be considered “insider information” include but are not limited to the following:

 

	
  

	
·

	
Earnings or other financial information

 

	
  

	
·

	
Changes in dividend policy

 

	
  

	
·

	
Stock splits

 

	
  

	
·

	
Mergers and acquisitions

 

	
  

	
·

	
Major new contracts or product-line introductions

 

	
  

	
·

	
Litigation involving substantial amounts of money

 

	
  

	
·

	
Changes in management

 

These insider-trading rules are applicable to employees of Ralph Lauren and its Subsidiaries and Affiliates, worldwide.

 

COMPANY BLACKOUT PERIODS

 

To avoid even the appearance of “insider trading,” our Company’s Securities Trading policy prohibits members of the Board of Directors,  all employees and their “Related Parties“ (as such term is defined in the Company’s Securities Trading Policy) from making trades involving stock of the Company during certain “blackout periods.” This prohibition covers all transactions in the Company’s securities, including buying or selling shares, including shares of Class A Common Stock received upon the vesting of RPSUs.  These blackout periods generally begin two weeks before the end of each of our fiscal quarters and continue through one trading day after the Company issues its earnings release for the fiscal quarter or year just ended.  If the earnings release is issued before the opening of the market on a trading day, trading may begin the next day.  The blackout periods are announced at the start of each year.  The Company may prohibit trading of the Company’s stock at any time it deems such trading to be inappropriate, even outside the regular blackout periods.  Individuals who receive a specific notification prohibiting them from trading the Company’s stock should note that such notification takes precedence over pre-announced blackout periods.  In addition, members of the Board of Directors, Officers (any employee who is a Vice President or above), and all employees in the Finance and Legal departments must clear all trades with the Corporate Counsel- or their designee - at all times.

 

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July 13, 2012

	 
	Fiscal 2013 Cliff RPSU with TSR Modifier Overview	 

 

  

  

  

 

ADDITIONAL PROHIBITED TRANSACTIONS

 

Because we believe it is inappropriate for any Company personnel to engage in short-term or speculative transactions involving the Company’s Common Stock, it is Company policy that employees do not engage in any of the following activities with respect to the securities of the Company:

 

	
·

	
“In and out” trading in securities of the Company.  Any Company stock purchased in the market must be held for a minimum of six months, and ideally longer. Note that the Securities and Exchange Commission (SEC) has a “short-swing profit recapture” rule that effectively prohibits Executive Officers and members of the Board of Directors from selling any Company stock within six months of a purchase. The Company has extended this prohibition to all employees.  The receipt of shares pursuant to the vesting of Cliff RPSU awards is not considered a purchase under the SEC’s rule.

 

	
·

	
Short sales (i.e., selling stock one does not own and then borrowing the shares to make delivery)

 

	
·

	
Buying or selling “puts” or “calls” (i.e., making commitments to buy or sell securities at a specified price for a fixed period of time)

CLEARANCE OF ALL TRADES BY DIRECTORS, OFFICERS AND OTHER KEY PERSONNEL

 

 

	  

For employees at the Vice President level or above (“Officers”) and all employees in the Finance and Legal departments, all transactions in the Company’s securities (including, but not limited to purchases, sales, transfers, etc.) must be pre-cleared with the Corporate Counsel, or their designee.  If contemplating a transaction, please provide a written request via e-mail to RLTrading@ralphlauren.com, specifying the number of shares you wish to purchase or sell before contacting Merrill Lynch or any other broker, or taking any other step to initiate a transaction.

 

COMPLIANCE WITH SECTION 409A 

 

To the extent applicable, the Plan shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986 and the Department of Treasury Regulations and other interpretive guidance issued hereunder (“Section 409A”).  Notwithstanding any provision of the Plan to the contrary, it is intended that this Plan comply with Section 409A and all provision of this Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.  Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with this Plan or any other plan maintained by the Company (including any taxes and penalties under Section 409A), and neither the Company nor any Affiliate shall have any obligation to indemnify or otherwise hold such Participant (or any beneficiary) harmless from any or all of such taxes or penalties.

In the event of any discrepancy between this Cliff  RPSU with TSR Modifier Overview and either the Plan or the provisions under which the Plan is administered by the Compensation Committee, the Plan and the determination of the Compensation Committee will govern, as applicable.  This Overview is qualified in its entirety based on the determinations, interpretations and other decisions made within the sole discretion of the Compensation Committee.

 

 

 

 

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July 13, 2012

	 
	Fiscal 2013 Cliff RPSU with TSR Modifier Overview

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