Document:

Exhibit

Exhibit 10.2
Senior Executive Annual Incentive Compensation Plan 
Fiscal 2017
Plan Overview
Awards under this Senior Executive Annual Incentive Compensation Plan (the "Annual Plan") are granted under and governed by the terms and conditions of the Vera Bradley, Inc. 2010 Equity and Incentive Plan (the “2010 Plan”), as amended.  Any term capitalized herein but not defined will have the meaning set forth in the 2010 Plan.   
This Annual Plan is designed to give each eligible Participant (as defined in the attached Administrative Guidelines) an opportunity to share in the Company's success for the fiscal year ending January 28, 2017 (the "Performance Period").  The incentive opportunity for the Performance Period is based on a percentage of each Participant's Base Salary (as defined herein) and will be earned based on three to four independent performance measures as more fully described herein (collectively, the “FY17 Performance Measures”).
Calculation of Incentive Opportunity
The target incentive opportunity for each Participant is determined based on a percentage of each Participant's Base Salary (as defined below) based upon the Participant’s level.  
	
				
	 
	Incentive Opportunity (Percent of Base Salary)

	Participant Level
	Threshold
	Target
	Excellence

	EVP
	25%
	50%
	87.5%

	SVP/VP2 
	25%
	40%
	65%

"Base Salary" is defined as the Participant's gross base salary (before taxes and deductions) paid by the Company to the Participant during the Performance Period.
Each Participant will have the opportunity to earn the incentive set forth above based on the level of achievement against the FY17 Performance Measures.
The applicability and weighting of the FY17 Performance Measures relative to the total incentive opportunity is also based upon the Participant’s level: 
	
						
	 
	Corporate Performance
	Corporate Strategic Objective Performance
	Individual Personal Financial Objectives
	Individual Performance Evaluation

	Participant Level
	Net Revenue
	Operating Income

	EVP
	25%
	25%
	25%
	25%
	0%

	SVP/VP2
	12.5%
	12.5%
	25%
	25%
	25%

        

Corporate Performance
Payouts for Corporate Performance are based on meeting two independent financial metrics, net revenue and operating income. Each financial metric is weighted at 50% of the Corporate Performance goal.  Assuming at least threshold levels of performance against the Corporate Performance goals are met during the Performance Period, the actual payout levels will range from 25%-200% of target.  The actual amount of the Corporate Performance goals is considered to be confidential information and so is not included in this document, but can be obtained from Human Resources.
	
		
	Net Revenue Performance Level
	Payout as a Percentage of the Portion of Incentive Tied to Corporate Performance*

	Threshold
	25%

	Target
	100%

	Excellence
	200%

	
		
	Operating Income Performance Level
	Payout as a Percentage of the Portion of Incentive Tied to Corporate Performance

	Threshold
	25%

	Target
	100%

	Excellence
	200%

*  Payout levels are determined using linear interpolation for results falling between the three performance levels.

Corporate Strategic Objective Performance
Payouts for performance against the Corporate Strategic Objectives will be based on performance against the following objectives, with underlying success measures to be provided by your manager:
		
	•
	Reignite the Brand:  Reignite the brand to drive desirability and purchase intent, creating and ownable and differentiated market position centered on delivering beautiful solutions to our Day Maker consumer

		
	•
	Drive Core Growth:  Profitably grow our core business - Delivering our core product (bags, travel and accessories) to our core Day Maker customers (current and future), in our core channels (yielding strong, positive comparable store sales)

		
	•
	Develop New Growth Vehicles:  Find and obtain new avenues for growth - expanding the Day Maker lifestyle offering, creating new sources of consumer demand domestically and abroad, and leveraging the brand’s value through a strong network of collaborations

		
	•
	Power Performance Through People: Build a world-class team of empowered and high-performance individuals and teams, who rally around our brand and core values and are passionate about both winning together and bringing women together through the secret languate of beauty

		
	•
	Leverage Core Expense

Assuming threshold levels are met, the actual payout levels range from 0%-150% of target based on the schedule below.   
	
		
	Incentive Rating
	Strategic Objectives Payout

	Significantly Exceeded
	150%

	Exceeded
	125%

	Met All Expectations
	100%

	Met Most Expectations
	75%

	Did Not Meet Expectations
	0%

The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall determine the level of performance achieved against the Corporate Objectives in its sole discretion.
Payout levels for achievement of the Corporate Strategic Objectives range from 0%-150% of that portion of incentive tied to Corporate Strategic Objectives.   
Individual Financial Goals
Payouts for performance against the Individual Financial Goals will be based on a Participant’s overall achievement of personal financial objectives, as determined by the Participant’s supervisor.  Payout levels for achievement of the Individual Financial Goals range from 0%-150% of that portion of incentive tied to the Individual Financial Goals.   

	
		
	Performance Against Individual Financial Goals
	Payout

	Significantly Exceeded
	150%

	Exceeded
	125%

	Met All Expectations
	100%

	Met Most Expectations
	75%

	Did Not Meet Expectations
	0%

Individual Performance
Payouts for Individual Performance will be based on each Participant's overall annual performance score during the Performance Period.  Payout levels for achievement of Individual Performance targets range from 0%-150% of that portion of incentive tied to Individual Performance
	
		
	Individual Performance Rating
	Payout

	Outstanding
	150%

	Exceeding Expectations
	125%

	Meeting All Expectations
	100%

	Meeting Some Expectations/New to Role
	75%

	Not Meeting Expectations/Too New
	0%

Administrative Guidelines - Provide additional information regarding how the Annual Plan will be administered.
 
		
	1.
	The CEO direct reports at a level of Vice President, Senior Vice President and Executive Vice President are eligible to participate 

in this Annual Plan, except participants in any other annual incentive compensation plan.  Any question regarding eligibility for participation in this Annual Plan shall be resolved by the Compensation Committee, in the Committee’s sole discretion.  
		
	2.
	Participation in this Annual Plan neither gives any employee the right to be retained as an employee nor limits the Company's right to discharge or discipline any employee.

		
	3.
	Final payout of any bonus under this Plan is subject to the final approval of the Chief Financial Officer and Vice President, Human Resources.

		
	4.
	Certification of Results.  Before any Awards under the Annual Plan are deemed earned with respect to a Performance Period, the Compensation Committee shall certify, in accordance with Section 9.5 of the 2010 Plan, in writing (i) that the performance goals have been met for the Performance Period, and (ii) the calculation of "Operating Income" and "Net Revenue" for the Performance Period.

		
	a.
	Definition of "Operating Income".  For purposes of this Annual Plan, the term "Operating Income" means, with respect to the Performance Period related to any Awards, the Company's consolidated operating income, as determined in accordance with U.S. GAAP, adjusted to exclude the effects, as shown on the financial statements furnished as part of Form 8-K (announcing the Company's fiscal year-end financial results) for any fiscal year of the Company ending with or within the Performance Period, of (i) any acquisition during the Performance Period, including the amortization expense of intangible assets acquired during the Performance Period, (ii) material charges or income arising from litigation, (iii) corporate restructuring, asset impairment (other than store impairment), or other special charges, and (iv) cumulative effect of changes to U.S. GAAP accounting.

		
	b.
	Definition of "Net Revenue".  For purposes of this Annual Plan, the term "Net Revenue" means, with respect to the Performance Period related to any Awards, the Company's consolidated net revenue, as determined in accordance with U.S. GAAP.  

		
	5.
	All Participants will receive an award that is prorated based on Base Salary earned during the Performance Period. 

		
	6.
	In the event that a Participant joins the Company at any time during the final three fiscal months of the Performance Period, such participant will not be eligible to participate in this Plan.

		
	7.
	All goal attainment calculations will follow normal rounding guidelines (i.e., 93.1% to 93.49% = 93%; 93.5% to 93.9% = 94%).  

		
	8.
	Payments under the Annual Plan will be paid in cash after the end of the Company's fiscal tax year but no later than the 15th day of the third month following the Company's fiscal tax year on which the annual incentives under this Annual Plan are based.  

		
	9.
	The Company shall have the power and the right to deduct or withhold an amount sufficient to satisfy federal, state, and local taxes (including FICA obligations), domestic or foreign, and other deductions required to be withheld by law with respect to this Award.

		
	10.
	Record keeping and computation required by this Annual Plan will be subject to review by third-party auditors, and by the Compensation Committee.

		
	11.
	Interpretations, determinations, and actions regarding plan administration shall be made by the Compensation Committee.  Any such determinations and any interpretation, rule, or decision under the Annual Plan or in carrying out or administering the Annual Plan, is final and binding for all purposes and upon all interested persons, their heirs, and personal representatives.  The Company or its designee may rely conclusively on determinations made by the Company and its auditors to determine related information for purposes of administration of the Annual Plan, whether such information is determined by the Company, its auditors, or a third-party vendor engaged to provide such information to the Company.  

		
	12.
	While it is the intent of the Company to continue this Annual Plan as stated herein, the Company reserves the right to amend 

or discontinue the plan at any time in its sole discretion.
		
	13.
	No Participant can assign, encumber or transfer any of his or her rights and interests under the Award described in this document, except, in the event of his or her death, by will or the laws of descent and distribution.

		
	14.
	The rights granted under this document are in all respects subject to the provisions of the 2010 Plan to the same extent and with the same effect as if they were set forth fully therein.  If the terms of this document or the Award conflict with the terms of the 2010 Plan, the 2010 Plan will control.Exhibit

Exhibit 10.3
[Date]

Re:    Award Agreement - Grant of Performance Units

Dear  ____________,

Congratulations!  In recognition of your continued dedication to Vera Bradley, we are pleased to award you with a discretionary grant of Performance Units ("Award").  This letter constitutes an Award Agreement between you and Vera Bradley regarding the terms and conditions of the grant.  In order for the Award referenced in this Award Agreement to become effective, you must electronically accept your grant no later than two weeks from the grant date.
While complete details of this grant are defined in the enclosed documents, a high-level summary of this Award is as follows:
	
		
	Type of Grant
	Discretionary grant of Performance Units (“Performance RSUs”). This is a one-time, discretionary grant to reward you for your continued contribution to the success of Vera Bradley.

	 
	 

	Number of Performance RSUs
	[Insert XX]

	 
	 

	Date of Grant of Award
	[Insert XX]

	 
	 

	Performance Period
	[Insert XX]

	 
	 

	Earning of Performance RSUs
	The Performance RSUs will be divided into three equal tranches of 1/3 each (each a separate "Tranche") of the total Award and allocated to each of the three fiscal years of the Company ending during the Performance Period, with each such fiscal year being considered a performance year ("Performance Year").  Importantly, each Tranche of Performance RSUs must be "earned" and "vested" before it will be settled in the form of Shares of the Company.  Except as otherwise provided herein, (i) each Tranche of Performance RSUs will be deemed earned only if the Earnings Per Share (as defined in the FY17 Restricted Stock Unit/Performance Unit Terms and Conditions) of the Company for the applicable Performance Year meets or exceeds the threshold level established by the Compensation Committee for such Performance Year, and (ii) each Tranche of Performance RSUs will be deemed vested only if you are continuously employed with the Company throughout the Performance Period. 

	
				
	 
	Performance Level* for each Tranche

	 
	Threshold
	Target
	Excellence

	Performance Level Attainment as % of Target (FY17)
	88%
	100%
	112%

	Performance Level Attainment as % of Target (FY18)
	88%
	100%
	112%

	Performance Level Attainment as % of Target (FY19)
	88%
	100%
	112%

	Payout level** for Tranche of Performance RSUs
	25%
	100%
	200%

	 
	 
	 
	 

	* The actual number of Performance RSUs allocated to each Tranche that can be earned under this Award Agreement is based on the level of performance achieved (as summarized in the table above) during the applicable Performance Year and can range from 0% of the "Target" (for performance levels below the "Threshold" level) to a maximum of 200% of the "Target" (for performance levels at or above the "Excellence" level).

	 
	 
	 
	 

	** Payout levels for each Tranche of Performance RSUs are based on the attained percentage of the target Earnings Per Share for each respective Performance Year (using linear interpolation for results falling between the three performance levels).

	
			
	Termination of Service
	In general, should your Service with Vera Bradley be terminated prior to the last day of the Performance Period, all then outstanding Performance RSUs (whether or not one or more Tranches have been earned as a result of the Earnings per Share for such Performance Year) will be forfeited to the Company.  However, the following provisions will apply if, during the Performance Period, you cease providing Services due to death, Disability or Retirement (and provided that you have not otherwise engaged in an act that would constitute Cause):  

	 
	 
	Ÿ Death or Disability: In the event that your Service with the Company terminates as a result of your death or Disability during the Performance Period, (i) with respect to Performance Years that have been completed at the time of such death or Disability, each such Tranche shall be earned only to the extent of actual performance for such Performance Year, and (ii) with respect to Performance Years that have not been completed at the time of such death or Disability, each such Tranche shall be deemed to be earned based on the "Target" level of performance for such Performance Year, but prorated based on the number of full fiscal months (in which you provided Service throughout such month) during the Performance Period.  Any such earned Awards shall become fully vested and paid out in Shares of Company stock pursuant to the settlement provisions below.  For purposes of this Award Agreement, "Disability" shall have the meaning assigned to such term in the 2010 Plan.

	 
	 
	Ÿ Retirement:  In the event your Service terminates as a result of your Retirement during the Performance Period, each Tranche of outstanding Awards shall be treated as earned (i) with respect to Performance Years that have been completed at the time of such Retirement, each such Tranche shall be earned and vested only to the extent of actual performance for such Performance Year, and (ii) with respect to Performance Years that have not been completed at the time of such Retirement, each such Tranche shall be deemed to be earned based on the actual performance level attained for such Performance Year, but prorated based on the number of full fiscal months (in which you provided Service throughout such month) during the Performance Period.  Any such earned Awards shall become fully vested and paid out in Shares of Company stock pursuant to the settlement provisions below.  For purposes of this Award Agreement, "Retirement" shall have the meaning assigned to such term in the 2010 Plan.

	 
	If your Service with the Company shall terminate during the Performance Period for any reason other than death, Disability, or Retirement, all Performance RSUs granted hereunder (whether or not a Tranche was previously earned) shall be forfeited to the Company.

	 
	 

	Change in Control
	Notwithstanding anything to the contrary in this Award Agreement, in the event of the consummation of a Change in Control of the Company (and provided that you remain continuously employed with the Company until such Change in Control) during the Performance Period, then each Tranche of outstanding Awards shall be treated as earned (i) with respect to Performance Years that have been completed at the time of such Change in Control, such Tranche shall be earned and vested only to the extent of actual performance for such Performance Year, and (ii) with respect to Performance Years that have not been completed at the time of such Change in Control, each such Tranche shall be deemed to be earned at the Target level, with any such earned Performance RSUs becoming fully vested.  Performance RSUs payable upon a Change in Control shall be paid immediately prior to the Change in Control in the form of one Share of Company stock for each vested Performance RSU.  Partial Shares (along with any accumulated dividends) will be paid in cash at the same time the Shares are delivered. 

	 
	 

	Settlement
	Except as it applies to Tranches that are deemed to be earned at "Target" and become payable due to a Change in Control or due to termination of Service as a result of death or Disability, no Awards will become payable unless the Committee certifies that the performance goals in the Award Agreement have been attained with respect to the applicable Performance Year during the Performance Period in a manner that complies with Code Section 162(m) and the 2010 Plan.  Any earned Performance RSUs will be paid in the form of one Share of Company stock for each earned whole Performance RSU.  Delivery of the Share(s) will be made, including delivery with respect to a Disabled Participant, or to the estate of a deceased Participant, after the end of the Performance Period and not later than the 15th day of the third month following the end of the Performance Period.  Shares will be credited to an account established for the benefit of the Participant with the Company's administrative agent.  The Participant will have full legal and beneficial ownership with respect to the Shares at that time.  Partial Shares (along with any accumulated dividends) will be paid in cash at the same time the Shares are delivered.  

	 
	 

	Withholding Taxes

	You acknowledge and agree that the Company shall have the power and the right to deduct or withhold, an amount sufficient to satisfy federal, state, and local taxes (including your FICA obligation), domestic or foreign, required by law to be withheld with respect to this Award.

These Performance RSUs have been granted under and are governed by the terms and conditions of the Vera Bradley, Inc. 2010 Equity and Incentive Plan (the “2010 Plan”), as amended.  The enclosed Statement of General Information and Availability of Information for the 2010 Plan forms part of a Section 10(a) prospectus covering securities that have been registered under the 

Securities Act of 1933, as amended.  This document is also enclosed to provide further information and background.  Any term capitalized herein but not defined will have the meaning set forth in the 2010 Plan.
Please see the enclosed Fiscal 2017 Long Term Incentive Restricted Stock Unit/Performance Unit Terms and Conditions for further information regarding your Award.  It is very important that you keep these documents in a safe place because they describe your rights and responsibilities under the Performance Units and 2010 Plan and explain where and how to obtain other documents and information to which you are entitled.

Again, thank you for your continued contribution to the success of our organization! Your efforts are applauded and truly appreciated. If you have any questions regarding this discretionary grant, please contact Julie North, Vice President - Human Resources, or Kevin Sierks - Chief Financial Officer.

Sincerely,

Kevin Sierks

Acknowledgement & Acceptance of Award Agreement and Related Terms

By your electronic acceptance of this grant and the signature of the Company’s representative (above) on this Award Agreement, you and the Company agree that this Award of Performance Units is granted under and governed by the terms and conditions of the 2010 Plan, the Fiscal 2017 Long Term Incentive Restricted Stock Unit/Performance Unit Terms and Conditions and this Award Agreement.  You acknowledge that you have reviewed the 2010 Plan, Fiscal 2017 Long Term Incentive Restricted Stock Unit/Performance Unit Terms and Conditions, and this Award Agreement in their entirety, have had an opportunity to obtain the advice of counsel prior to executing this Award Agreement, and fully understand all provisions of the 2010 Plan, Fiscal 2017 Long Term Incentive Restricted Stock Unit/Performance Unit Terms and Conditions and this Award Agreement.  Further, by your electronic acceptance of this grant, you hereby agree to (i) accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the 2010 Plan, Fiscal 2017 Long Term Incentive Restricted Stock Unit/Performance Unit Terms and Conditions and this Award Agreement, and (ii) notify the Company upon any change in your residence address.

I/2785778.2

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